UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2020~~March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

IPALCO ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Indiana

(State or other jurisdiction of incorporation)

1-8644

(Commission File Number)

35-1575582

(IRS Employer Identification No.)

One Monument Circle

Indianapolis, Indiana 46204

(Address of principal executive offices, including zip code)

317-261-8261

(Registrant's telephone number, including area code)

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 the 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. Yes ☐ No ☑

(The registrant iswas a voluntary ~~filer.~~filer during 2021 until its March 22, 2021 Registration Statement on Form S-4 filed with the Securities and Exchange Commission was declared effective on April 7, 2021. The registrant has 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 the 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). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

☐

☑

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At ~~August~~May 5, ~~2020,~~2021, 108,907,318 shares of IPALCO Enterprises, Inc. common stock were outstanding, of which 89,685,177 shares were owned by AES U.S. Investments, Inc. and 19,222,141 shares were owned by CDP Infrastructures Fund G.P., a wholly-owned subsidiary of La Caisse de dépôt et placement du Québec.

IPALCO ENTERPRISES, INC.

QUARTERLY REPORT ON FORM 10-Q

For Quarter Ended ~~June 30, 2020~~March 31, 2021

TABLE OF CONTENTS


Item No.	Item No.		Page No.	Item No.		Page No.
		DEFINED TERMS	4		DEFINED TERMS	4

		FORWARD-LOOKING STATEMENTS	5		FORWARD-LOOKING STATEMENTS	5

		PART I - FINANCIAL INFORMATION			PART I - FINANCIAL INFORMATION
1.	1.	Financial Statements		1.	Financial Statements
		Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended			Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended
		June 30, 2020 and 2019	7		March 31, 2021 and 2020	7
		Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six			Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three
		Months Ended June 30, 2020 and 2019	8		Months Ended March 31, 2021 and 2020	8
		Unaudited Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	9		Unaudited Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	9
		Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended			Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended
		June 30, 2020 and 2019	10		March 31, 2021 and 2020	10
		Unaudited Condensed Consolidated Statements of Common Shareholders' Equity (Deficit) and			Unaudited Condensed Consolidated Statements of Common Shareholders' Equity and
		Noncontrolling Interest for the Three and Six Months Ended June 30, 2020 and 2019	11		Noncontrolling Interest for the Three Months Ended March 31, 2021 and 2020	11
		Notes to Unaudited Condensed Consolidated Financial Statements	12		Notes to Unaudited Condensed Consolidated Financial Statements	12
		Note 1 - Overview and Summary of Significant Accounting Policies	12		Note 1 - Overview and Summary of Significant Accounting Policies	12
		Note 2 - Regulatory Matters	15		Note 2 - Regulatory Matters	14
		Note 3 - Fair Value	15		Note 3 - Fair Value	15
		Note 4 - Derivative Instruments and Hedging Activities	18		Note 4 - Derivative Instruments and Hedging Activities	17
		Note 5 - Debt	19		Note 5 - Debt	18
		Note 6 - Income Taxes	21		Note 6 - Income Taxes	20
		Note 7 - Benefit Plans	21		Note 7 - Benefit Plans	20
		Note 8 - Commitments and Contingencies	22		Note 8 - Commitments and Contingencies	20
		Note 9 - Business Segment Information	23		Note 9 - Business Segment Information	21
		Note 10 - Revenue	23		Note 10 - Revenue	22
		Note 11 - Leases	25		Note 11 - Leases	23
		Note 12 - Risks and Uncertainties	26		Note 12 - Risks and Uncertainties	23
2.	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
3.	3.	Quantitative and Qualitative Disclosure About Market Risk	43	3.	Quantitative and Qualitative Disclosure About Market Risk	35
4.	4.	Controls and Procedures	43	4.	Controls and Procedures	35

		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	Legal Proceedings	44	1.	Legal Proceedings	36
1A.	1A.	Risk Factors	44	1A.	Risk Factors	36
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	46	2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
3.	3.	Defaults Upon Senior Securities	46	3.	Defaults Upon Senior Securities	36
4.	4.	Mine Safety Disclosures	46	4.	Mine Safety Disclosures	36
5.	5.	Other Information	46	5.	Other Information	36
6.	6.	Exhibits	47	6.	Exhibits	37

		SIGNATURES	48		SIGNATURES	38


DEFINED TERMS
The following is a list of frequently used abbreviations or acronyms that are found in this Form 10-Q:

~~2018 Base Rate Order~~			~~The order issued in October 2018 by the IURC authorizing IPL to, among other things, increase its basic rates and charges by $43.9 million annually~~
~~2019~~2020 Form 10-K			IPALCO’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as amended
~~2020 IPALCO Notes~~			~~$405 million of 3.45% Senior Secured Notes due July 15, 2020~~
2024 IPALCO Notes			$405 million of 3.70% Senior Secured Notes due September 1, 2024
2030 IPALCO Notes			$475 million of 4.25% Senior Secured Notes due May 1, 2030
AES			The AES Corporation
AES Indiana			Indianapolis Power & Light Company, which does business as AES Indiana
AES U.S. Investments			AES U.S. Investments, Inc.
AOCI			Accumulated Other Comprehensive Income
AOCL			Accumulated Other Comprehensive Loss
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
CAA			U.S. Clean Air Act
CCGT			Combined Cycle Gas Turbine
CCR			Coal Combustion Residuals
CDPQ			CDP Infrastructures Fund G.P., a wholly-owned subsidiary of La Caisse de dépôt et placement du Québec
~~CECL~~			~~Current Expected Credit Loss~~
CO₂			Carbon Dioxide
COVID-19			The disease caused by the novel coronavirus that caused a global pandemic beginning in ~~the first quarter~~2020.
CPCN			Certificate of ~~2020.~~ Public Convenience and Necessity
CPP			Clean Power Plan
Credit Agreement			$250 million ~~IPL~~AES Indiana Revolving Credit Facilities Amended and Restated Credit Agreement, dated as of June 19, 2019
CSAPR			Cross-State Air Pollution Rule
~~Cumulative Deficiencies~~			Cumulative Net Operating Income Deficiencies. The Cumulative Deficiencies calculation provides that only five years' worth of historical earnings deficiencies or surpluses are included, unless it has been greater than five years since the most recent rate case.
CWA			U.S. Clean Water Act
~~ECCRA~~DOJ			~~Environmental Compliance Cost Recovery Adjustment~~U.S. Department of Justice
EPA			U.S. Environmental Protection Agency
FAC			Fuel Adjustment Clause
FERC			Federal Energy Regulatory Commission
Financial Statements			Unaudited Condensed Consolidated Financial Statements of IPALCO in “Item 1. Financial Statements” included in Part I – Financial Information of this Form 10-Q
FTRs			Financial Transmission Rights
GAAP			Generally Accepted Accounting Principles in the United States
GHG			Greenhouse Gas
IDEM			Indiana Department of Environmental Management
IPALCO			IPALCO Enterprises, Inc.
IPL			Indianapolis Power & Light Company, which does business as AES Indiana
IRP			Integrated Resource Plan
IURC			Indiana Utility Regulatory Commission
kWh			Kilowatt hours
LIBOR			London Interbank Offered Rate
MISO			Midcontinent Independent System Operator, Inc.
MW			Megawatts
MWh			Megawatt hours
NAAQS			National Ambient Air Quality Standards
NOV			Notice of Violation
NO_x			Nitrogen Oxide
~~NWP 12~~NSR			~~Nationwide Permit 12~~New Source Review
Pension Plans			Employees’ Retirement Plan of Indianapolis Power & Light Company and Supplemental Retirement Plan of Indianapolis Power & Light Company


PSD			Prevention of Significant Deterioration
SEC			United States Securities and Exchange Commission


SIP			State Implementation Plan
SO₂			Sulfur Dioxide
~~T&D~~			~~Transmission & Distribution~~
Term Loan			$65 million IPALCO Term Loan Facility Credit Agreement, dated as of October 31, 2018
TDSIC			Transmission, Distribution, and Storage System Improvement Charge
U.S.			United States of America
USD			United States Dollars
VEBA			Voluntary Employees' Beneficiary Association

Throughout this document, the terms “the Company,” “we,” “us,” and “our” refer to IPALCO and its consolidated subsidiaries.

We encourage investors, the media, our customers and others interested in the Company to review the information we post at https://www.iplpower.com. None of the information on our website is incorporated into, or deemed to be a part of, this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any reference to our website is intended to be an inactive textual reference only.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 including, in particular, the statements about our plans, strategies and prospects under the heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I – Financial Information of this Form 10-Q. Forward-looking statements express an expectation or belief and contain a projection, plan or assumption with regard to, among other things, our future revenues, income, expenses or capital structure. Such statements of future events or performance are not guarantees of future performance and involve estimates, assumptions and uncertainties. The words “could,” “may,” “predict,” “anticipate,” “would,” “believe,” “estimate,” “expect,” “forecast,” “project,” “objective,” “intend,” “continue,” “should,” “plan,” and similar expressions, or the negatives thereof, are intended to identify forward-looking statements unless the context requires otherwise.

Some important factors that could cause our actual results or outcomes to differ materially from those discussed in the forward-looking statements include, but are not limited to:

•impacts of weather on retail sales;

•growth in our service territory and changes in retail demand and demographic patterns;

•weather-related damage to our electrical system;

•commodity and other input costs;

•performance of our suppliers;

•transmission and distribution system reliability and capacity, including natural gas pipeline system and supply constraints;

•regulatory actions and outcomes, including, but not limited to, the review and approval of our rates and charges by the IURC;

•federal and state legislation and regulations;

•changes in our credit ratings or the credit ratings of AES;

•fluctuations in the value of pension plan assets, fluctuations in pension plan expenses and our ability to fund defined benefit pension plans;

•changes in financial or regulatory accounting policies;

•environmental matters, including costs of compliance with, and liabilities related to, current and future environmental laws and requirements;

•interest rates and the use of interest rate hedges, inflation rates and other costs of capital;

•the availability of capital;

•the ability of subsidiaries to pay dividends or distributions to IPALCO;

•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;

•cyber-attacks and information security breaches;

•catastrophic events such as fires, explosions, terrorist acts, acts of war, pandemic events, including the outbreak of the novel coronavirus COVID-19, or natural disasters such as floods, earthquakes, tornadoes, severe winds, ice or snow storms, droughts, or other similar occurrences;

•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 MISO, including the cost associated with membership, our continued ability to recover costs incurred, and the risk of default of other MISO participants;

•changes in tax laws and the effects of our tax strategies;

•the use of derivative contracts;

•product development, technology changes, and changes in prices of products and technologies; and

•the risks and other factors discussed in this report and other IPALCO filings with the SEC.

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” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in IPALCO’s ~~2019~~2020 Form 10-K for a more detailed discussion of the foregoing and certain other factors that could cause actual results to differ materially from those reflected in any forward-looking statements. These risks may also be specifically described in our Quarterly Reports on Form 10-Q in "Part II - Item 1A. Risk Factors", Current Reports on Form 8-K and other documents that we may file from time to time with the SEC. Except as required by the federal securities laws, we undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information, future events or otherwise. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements. Our SEC filings are available to the public from the SEC’s website at www.sec.gov.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


IPALCO ENTERPRISES, INC. and SUBSIDIARIES	IPALCO ENTERPRISES, INC. and SUBSIDIARIES													IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations	Unaudited Condensed Consolidated Statements of Operations													Unaudited Condensed Consolidated Statements of Operations
(In Thousands)	(In Thousands)													(In Thousands)
		Three Months Ended						Six Months Ended					Three Months Ended
		June 30,						June 30,					March 31,
		2020		2019		2020		2019			2021		2020

REVENUES	REVENUES	$	311,503	$	340,869	$	668,885	$	723,178	REVENUES	$	362,201	$	357,382

OPERATING COSTS AND EXPENSES:	OPERATING COSTS AND EXPENSES:									OPERATING COSTS AND EXPENSES:
Fuel	Fuel	43,351		72,217		112,139		161,016		Fuel	84,731		68,788
Power purchased	Power purchased	43,082		36,719		78,549		69,643		Power purchased	24,583		35,467
Operation and maintenance	Operation and maintenance	94,659		113,661		200,248		215,807		Operation and maintenance	103,949		105,590
Depreciation and amortization	Depreciation and amortization	61,099		59,897		121,807		119,566		Depreciation and amortization	63,089		60,708
Taxes other than income taxes	Taxes other than income taxes	11,606		6,983		23,664		20,966		Taxes other than income taxes	12,951		12,057

Total operating costs and expenses	Total operating costs and expenses	253,797		289,477		536,407		586,998		Total operating costs and expenses	289,303		282,610

OPERATING INCOME	OPERATING INCOME	57,706		51,392		132,478		136,180		OPERATING INCOME	72,898		74,772

OTHER INCOME / (EXPENSE), NET:	OTHER INCOME / (EXPENSE), NET:									OTHER INCOME / (EXPENSE), NET:
Allowance for equity funds used during construction	Allowance for equity funds used during construction	1,160		817		2,017		1,728		Allowance for equity funds used during construction	1,374		857
Interest expense	Interest expense	(33,935)		(30,291)		(64,016)		(60,773)		Interest expense	(30,067)		(30,081)
Loss on early extinguishment of debt		(2,415)		—		(2,415)		—

Other income / (expense), net	Other income / (expense), net	1,772		(2,045)		1,979		(5,273)		Other income / (expense), net	4,614		207
Total other income / (expense), net	Total other income / (expense), net	(33,418)		(31,519)		(62,435)		(64,318)		Total other income / (expense), net	(24,079)		(29,017)

EARNINGS FROM OPERATIONS BEFORE INCOME TAX	EARNINGS FROM OPERATIONS BEFORE INCOME TAX	24,288		19,873		70,043		71,862		EARNINGS FROM OPERATIONS BEFORE INCOME TAX	48,819		45,755

Less: Income tax expense	Less: Income tax expense	5,165		4,960		14,937		15,164		Less: Income tax expense	10,035		9,772
NET INCOME	NET INCOME	19,123		14,913		55,106		56,698		NET INCOME	38,784		35,983

Less: Dividends on preferred stock	Less: Dividends on preferred stock	804		804		1,607		1,607		Less: Dividends on preferred stock	803		803
NET INCOME APPLICABLE TO COMMON STOCK	NET INCOME APPLICABLE TO COMMON STOCK	$	18,319	$	14,109	$	53,499	$	55,091	NET INCOME APPLICABLE TO COMMON STOCK	$	37,981	$	35,180

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.													See notes to unaudited condensed consolidated financial statements.


IPALCO ENTERPRISES, INC. and SUBSIDIARIES	IPALCO ENTERPRISES, INC. and SUBSIDIARIES													IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)	Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)													Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)
(In Thousands)	(In Thousands)													(In Thousands)
		Three Months Ended						Six Months Ended					Three Months Ended
		June 30,						June 30,					March 31,
		2020		2019		2020		2019			2021		2020

Net income applicable to common stock	Net income applicable to common stock	$	18,319	$	14,109	$	53,499	$	55,091	Net income applicable to common stock	$	37,981	$	35,180

Derivative activity:	Derivative activity:									Derivative activity:
Change in derivative fair value, net of income tax benefit of $1,388, $3,976, $13,910 and $5,866, for each respective period		(4,026)		(11,649)		(40,339)		(17,188)
Reclassification to earnings, net of income tax benefit of $463, $0, $463 and $0, for each respective period		1,344		—		1,344		—
Change in derivative fair value, net of income tax (expense)/benefit of $(9,655) and $12,522, for each respective period										Change in derivative fair value, net of income tax (expense)/benefit of $(9,655) and $12,522, for each respective period	30,050		(36,313)
Reclassification to earnings, net of income tax expense of $146 and $0, for each respective period										Reclassification to earnings, net of income tax expense of $146 and $0, for each respective period	(456)		0
Net change in fair value of derivatives	Net change in fair value of derivatives	(2,682)		(11,649)		(38,995)		(17,188)		Net change in fair value of derivatives	29,594		(36,313)

Other comprehensive loss		(2,682)		(11,649)		(38,995)		(17,188)
Other comprehensive income / (loss)										Other comprehensive income / (loss)	29,594		(36,313)

Net comprehensive income		$	15,637	$	2,460	$	14,504	$	37,903
Net comprehensive income / (loss)										Net comprehensive income / (loss)	$	67,575	$	(1,133)

See notes to unaudited condensed consolidated financial statements.


IPALCO ENTERPRISES, INC. and SUBSIDIARIES	IPALCO ENTERPRISES, INC. and SUBSIDIARIES									IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets	Unaudited Condensed Consolidated Balance Sheets									Unaudited Condensed Consolidated Balance Sheets
(In Thousands)	(In Thousands)									(In Thousands)
		June 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	33,491	$	48,152	Cash and cash equivalents	$	48,592	$	20,502
Restricted cash	Restricted cash	19,760		400		Restricted cash	5		6,120
Accounts receivable, net of allowance for credit losses of $4,053 and $921, respectively		163,679		161,090
Accounts receivable, net of allowance for credit losses of $1,966 and $3,155, respectively						Accounts receivable, net of allowance for credit losses of $1,966 and $3,155, respectively	160,735		165,193
Inventories	Inventories	102,041		83,569		Inventories	80,610		95,506
Regulatory assets, current	Regulatory assets, current	48,842		37,398		Regulatory assets, current	47,675		45,430
Taxes receivable	Taxes receivable	21,046		23,670		Taxes receivable	15,270		24,384
Prepayments and other current assets	Prepayments and other current assets	20,433		17,264		Prepayments and other current assets	41,441		17,842
Total current assets	Total current assets	409,292		371,543		Total current assets	394,328		374,977
NON-CURRENT ASSETS:	NON-CURRENT ASSETS:					NON-CURRENT ASSETS:
Property, plant and equipment	Property, plant and equipment	6,460,208		6,398,612		Property, plant and equipment	6,559,864		6,530,395
Less: Accumulated depreciation	Less: Accumulated depreciation	2,490,642		2,414,652		Less: Accumulated depreciation	2,690,636		2,643,695
		3,969,566		3,983,960			3,869,228		3,886,700
Construction work in progress	Construction work in progress	146,248		130,609		Construction work in progress	230,199		209,584
Total net property, plant and equipment	Total net property, plant and equipment	4,115,814		4,114,569		Total net property, plant and equipment	4,099,427		4,096,284
OTHER NON-CURRENT ASSETS:	OTHER NON-CURRENT ASSETS:					OTHER NON-CURRENT ASSETS:
Intangible assets - net	Intangible assets - net	60,756		64,861		Intangible assets - net	56,713		59,141
Regulatory assets, non-current	Regulatory assets, non-current	347,599		355,614		Regulatory assets, non-current	385,995		392,801
Other non-current assets	Other non-current assets	19,896		22,082		Other non-current assets	48,792		46,716
Total other non-current assets	Total other non-current assets	428,251		442,557		Total other non-current assets	491,500		498,658
TOTAL ASSETS	TOTAL ASSETS	$	4,953,357	$	4,928,669	TOTAL ASSETS	$	4,985,255	$	4,969,919
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Short-term debt and current portion of long-term debt (Note 5)	Short-term debt and current portion of long-term debt (Note 5)	$	119,943	$	559,199	Short-term debt and current portion of long-term debt (Note 5)	$	184,945	$	169,907
Accounts payable	Accounts payable	112,272		128,521		Accounts payable	122,399		127,089
Accrued taxes	Accrued taxes	38,960		22,012		Accrued taxes	37,831		26,620
Accrued interest	Accrued interest	33,383		35,334		Accrued interest	42,914		31,733
Customer deposits	Customer deposits	33,976		34,635		Customer deposits	26,685		27,929
Regulatory liabilities, current	Regulatory liabilities, current	59,001		52,654		Regulatory liabilities, current	10,968		30,036
Derivative liabilities, current		—		26,560

Accrued and other current liabilities	Accrued and other current liabilities	18,904		23,300		Accrued and other current liabilities	14,426		19,453
Total current liabilities	Total current liabilities	416,439		882,215		Total current liabilities	440,168		432,767
NON-CURRENT LIABILITIES:	NON-CURRENT LIABILITIES:					NON-CURRENT LIABILITIES:
Long-term debt (Note 5)	Long-term debt (Note 5)	2,561,497		2,092,430		Long-term debt (Note 5)	2,556,848		2,556,278
Deferred income tax liabilities	Deferred income tax liabilities	264,989		272,861		Deferred income tax liabilities	288,825		275,714
Taxes payable	Taxes payable	6,229		4,658		Taxes payable	7,552		7,458
Regulatory liabilities, non-current	Regulatory liabilities, non-current	838,187		846,430		Regulatory liabilities, non-current	835,269		839,360
Accrued pension and other postretirement benefits	Accrued pension and other postretirement benefits	15,892		19,344		Accrued pension and other postretirement benefits	5,380		5,334
Asset retirement obligations	Asset retirement obligations	201,494		204,219		Asset retirement obligations	195,704		195,236
Derivative liabilities, non-current	Derivative liabilities, non-current	80,809		—		Derivative liabilities, non-current	23,511		63,215
Other non-current liabilities	Other non-current liabilities	198		252		Other non-current liabilities	13,683		13,785
Total non-current liabilities	Total non-current liabilities	3,969,295		3,440,194		Total non-current liabilities	3,926,772		3,956,380
Total liabilities	Total liabilities	4,385,734		4,322,409		Total liabilities	4,366,940		4,389,147
COMMITMENTS AND CONTINGENCIES (Note 8)	COMMITMENTS AND CONTINGENCIES (Note 8)					COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY:	SHAREHOLDERS' EQUITY:					SHAREHOLDERS' EQUITY:
Paid in capital	Paid in capital	590,870		590,784		Paid in capital	589,007		588,966
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(58,745)		(19,750)		Accumulated other comprehensive loss	(13,826)		(43,420)
Accumulated deficit	Accumulated deficit	(24,286)		(24,558)		Accumulated deficit	(16,650)		(24,558)
Total common shareholders' equity	Total common shareholders' equity	507,839		546,476		Total common shareholders' equity	558,531		520,988
Preferred stock of subsidiary	Preferred stock of subsidiary	59,784		59,784		Preferred stock of subsidiary	59,784		59,784
Total shareholders' equity	Total shareholders' equity	567,623		606,260		Total shareholders' equity	618,315		580,772
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	4,953,357	$	4,928,669	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	4,985,255	$	4,969,919

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.									See notes to unaudited condensed consolidated financial statements.


IPALCO ENTERPRISES, INC. and SUBSIDIARIES	IPALCO ENTERPRISES, INC. and SUBSIDIARIES									IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows	Unaudited Condensed Consolidated Statements of Cash Flows									Unaudited Condensed Consolidated Statements of Cash Flows
(In Thousands)	(In Thousands)									(In Thousands)
		Six Months Ended							Three Months Ended
		June 30,							March 31,
		2020		2019			2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	55,106	$	56,698	Net income	$	38,784	$	35,983
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	121,807		119,566		Depreciation and amortization	63,089		60,708
Amortization of deferred financing costs and debt premium		2,087		2,053
Amortization of deferred financing costs and debt discounts						Amortization of deferred financing costs and debt discounts	998		1,100
Deferred income taxes and investment tax credit adjustments - net	Deferred income taxes and investment tax credit adjustments - net	860		16,350		Deferred income taxes and investment tax credit adjustments - net	922		2,467
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(2,017)		(1,728)		Allowance for equity funds used during construction	(1,374)		(857)
Loss on early extinguishment of debt		2,415		—

Change in certain assets and liabilities:	Change in certain assets and liabilities:					Change in certain assets and liabilities:
Accounts receivable	Accounts receivable	(2,589)		3,638		Accounts receivable	4,458		4,655
Inventories	Inventories	(23,346)		3,416		Inventories	12,568		(8,265)
Accounts payable	Accounts payable	(16,396)		(23,261)		Accounts payable	3,610		(7,940)
Accrued and other current liabilities	Accrued and other current liabilities	(3,996)		778		Accrued and other current liabilities	(6,271)		(2,514)
Accrued taxes payable/receivable	Accrued taxes payable/receivable	21,144		(24,751)		Accrued taxes payable/receivable	20,419		15,382
Accrued interest	Accrued interest	(1,951)		347		Accrued interest	11,181		2,599
Pension and other postretirement benefit expenses	Pension and other postretirement benefit expenses	(3,452)		2,721		Pension and other postretirement benefit expenses	46		(1,726)
Short-term and long-term regulatory assets and liabilities	Short-term and long-term regulatory assets and liabilities	(799)		5,707		Short-term and long-term regulatory assets and liabilities	(14,905)		(3,226)
Prepayments and other current assets	Prepayments and other current assets	(3,169)		(6,758)		Prepayments and other current assets	(23,599)		(5,488)
Other - net	Other - net	619		(3,898)		Other - net	(2,038)		4,698
Net cash provided by operating activities	Net cash provided by operating activities	146,323		150,878		Net cash provided by operating activities	107,888		97,576
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(92,848)		(107,610)		Capital expenditures	(62,792)		(54,490)
Project development costs	Project development costs	(1,206)		(955)		Project development costs	(386)		(751)
Cost of removal and regulatory recoverable ARO payments	Cost of removal and regulatory recoverable ARO payments	(19,488)		(6,625)		Cost of removal and regulatory recoverable ARO payments	(6,589)		(7,962)
Other		101		278

Net cash used in investing activities	Net cash used in investing activities	(113,441)		(114,912)		Net cash used in investing activities	(69,767)		(63,203)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term debt borrowings		30,000		10,000
Borrowings under revolving credit facilities						Borrowings under revolving credit facilities	60,000		0
Repayments under revolving credit facilities						Repayments under revolving credit facilities	(45,000)		0

Long-term borrowings, net of discount		474,568		—
Retirement of long-term debt, including early payment premium		(472,135)		—

Distributions to shareholders	Distributions to shareholders	(53,227)		(59,935)		Distributions to shareholders	(30,073)		(26,631)
Preferred dividends of subsidiary	Preferred dividends of subsidiary	(1,607)		(1,607)		Preferred dividends of subsidiary	(803)		(803)
Deferred financing costs paid	Deferred financing costs paid	(5,664)		—		Deferred financing costs paid	(270)		0
Payments for financed capital expenditures		—		(5,508)
Other		(118)		(710)

Net cash used in financing activities	Net cash used in financing activities	(28,183)		(57,760)		Net cash used in financing activities	(16,146)		(27,434)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	4,699		(21,794)		Net change in cash, cash equivalents and restricted cash	21,975		6,939
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	48,552		33,599		Cash, cash equivalents and restricted cash at beginning of period	26,622		48,552
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	53,251	$	11,805	Cash, cash equivalents and restricted cash at end of period	$	48,597	$	55,491

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest (net of amount capitalized)	Interest (net of amount capitalized)	$	62,167	$	58,542	Interest (net of amount capitalized)	$	18,512	$	26,438
Income taxes		12,000		21,700

Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Accruals for capital expenditures	Accruals for capital expenditures	$	35,617	$	60,618	Accruals for capital expenditures	$	46,060	$	28,184

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.									See notes to unaudited condensed consolidated financial statements.


IPALCO ENTERPRISES, INC. and SUBSIDIARIES	IPALCO ENTERPRISES, INC. and SUBSIDIARIES																					IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Common Shareholders' Equity (Deficit)
Unaudited Condensed Consolidated Statements of Common Shareholders' Equity												Unaudited Condensed Consolidated Statements of Common Shareholders' Equity
and Noncontrolling Interest	and Noncontrolling Interest																					and Noncontrolling Interest
For the Three and Six Months Ended June 30, 2020 and 2019
For the Three Months Ended March 31, 2021 and 2020												For the Three Months Ended March 31, 2021 and 2020
(In Thousands)	(In Thousands)																					(In Thousands)
													Paid in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Common Shareholders' Equity		Cumulative Preferred Stock of Subsidiary
2021												2021
Beginning Balance												Beginning Balance	$	588,966	$	(43,420)	$	(24,558)	$	520,988	$	59,784
Net comprehensive income/(loss)												Net comprehensive income/(loss)	—		29,594		37,981		67,575		803
Preferred stock dividends												Preferred stock dividends	—		—		—		—		(803)
Distributions to shareholders												Distributions to shareholders	—		—		(30,073)		(30,073)		—
Other												Other	41		—		—		41		—
Balance at March 31, 2021												Balance at March 31, 2021	$	589,007	$	(13,826)	$	(16,650)	$	558,531	$	59,784

		Paid in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Common Shareholders' Equity		Cumulative Preferred Stock of Subsidiary
2020	2020											2020
Beginning Balance	Beginning Balance	$	590,784	$	(19,750)	$	(24,558)	$	546,476	$	59,784	Beginning Balance	$	590,784	$	(19,750)	$	(24,558)	$	546,476	$	59,784
Net comprehensive loss		—		(36,313)		35,180		(1,133)		803
Net comprehensive income/(loss)												Net comprehensive income/(loss)	—		(36,313)		35,180		(1,133)		803
Preferred stock dividends	Preferred stock dividends	—		—		—		—		(803)		Preferred stock dividends	—		—		—		—		(803)
Distributions to shareholders	Distributions to shareholders	—		—		(26,631)		(26,631)		—		Distributions to shareholders	—		—		(26,631)		(26,631)		—
Other	Other	49		—		—		49		—		Other	49		—		—		49		—
Balance at March 31, 2020	Balance at March 31, 2020	590,833		(56,063)		(16,009)		518,761		59,784		Balance at March 31, 2020	$	590,833	$	(56,063)	$	(16,009)	$	518,761	$	59,784
Net comprehensive income		—		(2,682)		18,319		15,637		804
Preferred stock dividends		—		—		—		—		(804)
Distributions to shareholders		—		—		(26,596)		(26,596)		—
Other		37		—		—		37		—
Balance at June 30, 2020		$	590,870	$	(58,745)	$	(24,286)	$	507,839	$	59,784

2019
Beginning Balance		$	597,824	$	—	$	(24,558)	$	573,266	$	59,784
Net comprehensive income		—		(5,539)		40,982		35,443		803
Preferred stock dividends		—		—		—		—		(803)
Distributions to shareholders		—		—		(31,590)		(31,590)		—
Other		34		—		—		34		—
Balance at March 31, 2019		597,858		(5,539)		(15,166)		577,153		59,784
Net comprehensive income		—		(11,649)		14,109		2,460		804
Preferred stock dividends		—		—		—		—		(804)
Distributions to shareholders		—		—		(28,345)		(28,345)		—
Other		59		—		—		59		—
Balance at June 30, 2019		$	597,917	$	(17,188)	$	(29,402)	$	551,327	$	59,784

See notes to unaudited condensed consolidated financial statements.

IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

IPALCO is a holding company incorporated under the laws of the state of Indiana. IPALCO is owned by AES U.S. ~~Investments~~Investments (82.35%) and CDPQ (17.65%). AES U.S. Investments is owned by AES U.S. Holdings, LLC (85%) and CDPQ (15%). IPALCO owns all of the outstanding common stock of ~~IPL.~~IPL, which does business as AES Indiana. Substantially all of IPALCO’s business consists of generating, transmitting, distributing and selling of electric energy conducted through its principal subsidiary, ~~IPL. IPL~~AES Indiana. AES Indiana was incorporated under the laws of the state of Indiana in 1926. ~~IPL~~AES Indiana has ~~approximately 510,000~~ approximately 513,000 retail customers in the city of Indianapolis and neighboring cities, towns and communities, and adjacent rural areas all within the state of Indiana, with the most distant point being approximately forty miles from Indianapolis. ~~IPL~~AES Indiana has an exclusive right to provide electric service to those customers. ~~IPL~~AES Indiana owns and operates 4 generating stations, all within the state of Indiana. ~~IPL’s~~AES Indiana’s largest generating station, Petersburg, is ~~coal-fired.~~coal-fired, and AES Indiana has plans to retire approximately 630 MW of coal-fired generation at Petersburg Units 1 and 2 in 2021 and 2023, respectively (for further discussion, see Note 2, "Regulatory Matters - IRP Filing and Replacement Generation"). The second largest station, Harding Street, uses natural gas and fuel oil to power combustion turbines. In addition, ~~IPL~~AES Indiana operates a 20 MW battery energy storage unit at this location, which provides frequency response. The third station, Eagle Valley, is a CCGT natural gas plant. ~~IPL took operational control and commenced commercial operations of this CCGT plant in April 2018.~~ The fourth station, Georgetown, is a small peaking station that uses natural gas to power combustion turbines. As of ~~June 30, 2020, IPL’s~~March 31, 2021, AES Indiana’s net electric generation capacity for winter is 3,705 MW and net summer capacity is 3,560 MW.

~~Principles of~~ Consolidation

The accompanying Financial Statements include the accounts of IPALCO, ~~IPL~~AES Indiana and Mid-America Capital Resources, Inc., a non-regulated wholly-owned subsidiary of IPALCO. All significant intercompany amounts have been ~~eliminated.~~ eliminated in consolidation.

Interim Financial Presentation

The accompanying Financial Statements are unaudited; however, they have been prepared in accordance with GAAP, as contained in the FASB ASC, for interim financial information and ~~in conjunction with the rules and regulations~~Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all of the ~~disclosures~~information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation ~~have been included.~~of the results of operations, financial position, comprehensive income, changes in equity, and cash flows. The electric utility business is affected by seasonal weather patterns throughout the year and, therefore, the operating revenues and associated operating expenses are not generated evenly by month during the year. These unaudited Financial Statements have been prepared in accordance with the accounting policies described in IPALCO’s ~~2019~~2020 Form 10-K and should be read in conjunction therewith.

Use of Management Estimates

The preparation of financial statements in conformity with GAAP requires that management make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenues and expenses during the reporting period may also be affected by the estimates and assumptions that management is required to make. Actual results may differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

The following table provides a summary of cash, cash equivalents and restricted cash amounts as shown on the Condensed Consolidated Statements of Cash Flows:


		June 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020
		(In Thousands)							(In Thousands)
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash					Cash, cash equivalents and restricted cash
Cash and cash equivalents	Cash and cash equivalents	$	33,491	$	48,152	Cash and cash equivalents	$	48,592	$	20,502
Restricted cash	Restricted cash	19,760		400		Restricted cash	5		6,120
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	53,251	$	48,552	Total cash, cash equivalents and restricted cash	$	48,597	$	26,622

Accounts Receivable

The following table summarizes our accounts receivable balances at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


		June 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020
		(In Thousands)							(In Thousands)
Accounts receivable, net	Accounts receivable, net					Accounts receivable, net
Customer receivables	Customer receivables	$	89,257	$	90,747	Customer receivables	$	97,231	$	91,335
Unbilled revenue	Unbilled revenue	65,190		65,822		Unbilled revenue	57,578		72,334
Amounts due from related parties	Amounts due from related parties	5,657		2,717		Amounts due from related parties	375		490
Other	Other	7,628		2,725		Other	7,517		4,189
Allowance for credit losses	Allowance for credit losses	(4,053)		(921)		Allowance for credit losses	(1,966)		(3,155)
Total accounts receivable, net	Total accounts receivable, net	$	163,679	$	161,090	Total accounts receivable, net	$	160,735	$	165,193

The following table is a rollforward of our allowance for credit losses related to the accounts receivable balances for the ~~six months ended June 30, 2020~~periods indicated (in Thousands):

Beginning Allowance Balance at January 1, 2020 Current Period Provision Write-offs Charged Against Allowances Recoveries Collected Ending Allowance Balance at
June 30, 2020
Allowance for credit losses $ 921 $ 4,312 $ (3,697) $ 2,517 $ 4,053


Three Months Ended March 31, 2021	Beginning Allowance Balance at January 1, 2021		Current Period Provision		Write-offs Charged Against Allowances		Recoveries Collected		Ending Allowance Balance at March 31, 2021
Allowance for credit losses	$	3,155	$	124	$	(1,885)	$	572	$	1,966


Three Months Ended March 31, 2020	Beginning Allowance Balance at January 1, 2020		Current Period Provision		Write-offs Charged Against Allowances		Recoveries Collected		Ending Allowance Balance at March 31, 2020
Allowance for credit losses	$	921	$	773	$	(1,114)	$	469	$	1,049

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 30, 2020.~~March 31, 2021. Amounts are written off when reasonable collections efforts have been exhausted. On March 19, 2020, the Governor of Indiana issued an Executive Order prohibiting electric utilities, including us, from discontinuing electric utility service to customers due to the economic impacts of the COVID-19 pandemic. The IURC extended this order through August 14, 2020. This order along with the economic impacts of COVID-19 has resulted in an increase in past due customer receivable balances, and thusDuring 2021, the current period provision and ~~the~~ allowance for credit losses ~~has increased during the second quarter of 2020. Please see additional discussion in Note 2, "Regulatory Matters - IURC COVID-19 Order” and Note 12, "Risks and Uncertainties~~."have decreased due to lower past due customer receivable balances.

Inventories

The following table summarizes our inventories balances at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


		June 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020
		(In Thousands)							(In Thousands)
Inventories	Inventories					Inventories
Fuel	Fuel	$	43,462	$	26,907	Fuel	$	20,215	$	36,953
Materials and supplies		58,579		56,662
Materials and supplies, net						Materials and supplies, net	60,395		58,553
Total inventories	Total inventories	$	102,041	$	83,569	Total inventories	$	80,610	$	95,506

Accumulated Other Comprehensive Income / (Loss)

The amounts reclassified out of Accumulated Other Comprehensive ~~Loss~~Income/(Loss) by component during the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ are as follows (in thousands):


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 June 30,						Six Months Ended June 30,					Details about Accumulated Other Comprehensive Loss components	Affected line item in the Condensed Consolidated Statements of Operations			Three Months Ended March 31,
							2020		2019		2020		2019							2021	2020
Gains and losses on cash flow hedges (Note 4):	Gains and losses on cash flow hedges (Note 4):	Interest expense	$	(1,807)	$	—	$	(1,807)	$	—	Gains and losses on cash flow hedges (Note 4):	Interest expense				$	(602)	$	0
		Income tax expense	$	463	$	—	$	463	$	—		Income tax expense				146		0
Total reclassifications for the period, net of income taxes	Total reclassifications for the period, net of income taxes		$	(1,344)	$	—	$	(1,344)	$	—	Total reclassifications for the period, net of income taxes					$	(456)	$	0

The changes in the components of Accumulated Other Comprehensive Income/(Loss) during the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 are as follows (in thousands):


~~Gains and losses on cash flow hedges (Note 4):~~	~~Six Months Ended June 30, 2020~~
~~Balance at January 1~~	$	~~(19,750)~~
~~Other comprehensive loss before reclassifications~~	$	~~(40,339)~~
~~Amounts reclassified from AOCI to earnings~~	$	~~1,344~~
~~Balance at June 30~~	$	~~(58,745)~~


	Three Months Ended March 31,
Gains and losses on cash flow hedges (Note 4):	2021		2020
Balance at January 1	$	(43,420)	$	(19,750)
Other comprehensive gain (loss) before reclassifications	30,050		(36,313)
Amounts reclassified from AOCI to earnings	(456)		0
Balance at March 31	$	(13,826)	$	(56,063)

~~New Accounting Pronouncements Adopted in 2020~~

The following table provides a brief description of recent accounting pronouncements that had an impact on the Company’s Financial Statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or did not have a material impact on the Company’s Financial Statements.

~~New Accounting Standards Adopted~~

~~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.~~

~~ASC 326 - Financial Instruments - Credit Losses~~

~~On January 1, 2020, the Company 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.

The Company applied the modified retrospective method of adoption for ASC 326. Under this transition method, the Company applied the transition provisions starting at the date of adoption. The CECL model primarily impacts the calculation of the Company's expected credit losses in gross customer trade accounts receivable. The adoption of ASC 326 and the application of CECL on our trade accounts receivable did not have a material impact on our 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 the Company’s Financial Statements once adopted. Accounting pronouncements not listed below were assessed and determined to be either not applicable or are expected to have no material impact on the Company’s Financial Statements.

New Accounting Standards Issued But Not Yet Effective

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).

March 12, 2020 - December 31, 2022

The Company is currently evaluating the impact of adopting the standard on the 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 intra-period 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.~~

~~The Company is currently evaluating the impact of adopting the standard on the Financial Statements.~~

2. REGULATORY MATTERS

~~TDSIC~~IRP Filing and Replacement Generation

On February 5, 2021, AES Indiana announced an agreement to acquire a 195 MW solar project. Expected to be completed in 2023, the solar project will be located in Clinton County, Indiana and Invenergy will develop the project and manage construction. On February 12, 2021, AES Indiana filed a petition and case-in-chief with the IURC seeking a CPCN for this solar project.

On February 26, 2021, as a result of the plans to retire approximately 630 MW of coal-fired generation at Petersburg Units 1 and 2 in 2021 and 2023, respectively, AES Indiana filed a petition with the IURC for approvals and cost recovery associated with these retirements, including: (1) approval of AES Indiana's creation of regulatory assets for the net book value of Petersburg units 1 and 2 upon retirement; (2) amortization of the regulatory assets based upon the Company’s depreciation rates; and (3) recovery of the regulatory assets through inclusion in AES Indiana’s rate base and ongoing amortization in AES Indiana’s future rate cases.

Excess Distributed Generation Rates

On March ~~4, 2020,~~1, 2021, AES Indiana filed a petition with the IURC ~~issued an order approving~~for approval of its proposed rate for the ~~projects in a seven-year TDSIC Plan for eligible transmission, distribution~~procurement of excess distributed generation ("EDG") and ~~storage system improvements totaling $1.2 billion from 2020 through 2027. On June 18, 2020, IPL filed its first annual TDSIC~~related consumer EDG credit issues. The EDG rate ~~adjustment for a return on~~will replace the current net metering program and ~~of investments through March 31, 2020. An order~~will be offered beginning July 2022, when net metering is ~~expected in October 2020.~~no longer available to new customers.

~~FAC and Authorized Annual Jurisdictional Net Operating Income~~Electric Vehicle Portfolio Program

~~As discussed~~On March 2, 2021, AES Indiana filed with the IURC a request to approve its Electric Vehicle (EV) portfolio and associated accounting and ratemaking treatment. The EV portfolio aims to accelerate electric car adoption by reducing friction in ~~Note 2,~~ ~~"Regulatory Matters"~~ ~~of IPALCO's 2019 Form 10-K,~~the car buying process, and by providing customers incentives to optimize electric car charging during off-peak periods. The EV portfolio is designed to produce net benefits for all customers through new retail margins and grid optimization. The projected costs to successfully implement the services proposed in ~~each of~~ the ~~last three calendar years IPL has reported earnings in excess of~~EV portfolio are estimated at $5.1 million over the ~~authorized level for each of the four quarterly reporting periods in those years, however IPL was not required~~3 year period. AES Indiana requested approval to ~~reduce its fuel cost recovery because of its Cumulative Deficiencies. During 2020, IPL’s Cumulative Deficiencies were exhausted and thus IPL was required to accrue~~defer as a regulatory ~~liability of $5.4 million during~~asset and recover in future base rates the ~~quarter ended June 30, 2020. This is recorded within "Regulatory liabilities, current" on~~cost necessary to implement the ~~accompanying Unaudited Condensed Consolidated Balance Sheets and as a reduction to revenue on the Unaudited Condensed Consolidated Statements of Operations.~~EV portfolio, including carrying charges.

~~IURC COVID-19 Order~~

In its June 29, 2020 order, the IURC denied a request from 10 utilities to recover lost revenues due to declining sales. It also extended the disconnection moratorium for IURC-jurisdictional utilities through August 14, 2020. Additionally, the IURC authorized Indiana utilities to use regulatory accounting for any impacts associated with prohibiting utility disconnections, waiver or exclusion of certain utility fees (i.e., late fees, convenience fees, deposits, and reconnection fees). The IURC also required utilities to use expanded payment arrangements to aid customers. The IURC also authorized regulatory accounting treatment for COVID-19 related uncollectible and incremental bad debt expense. IPL recorded a $4.6 million regulatory asset as of June 30, 2020 as a result of this order.

Phase Two of the IURC investigation is expected to focus on longer-term issues related to COVID-19. Among other things, the issues may include consideration of appropriate methodology to review the reasonableness, necessity, and prudency of any COVID-19-related cost recovery requests in future rate cases. For further discussion on the COVID-19 pandemic, see Note 12, "~~Risks and Uncertainties~~".

3. FAIR VALUE

The fair value of financial assets and liabilities approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. As these amounts are 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 4, "Fair Value" to IPALCO’s ~~2019~~2020 Form 10-K.

Financial Assets

VEBA Assets

~~IPL~~IPALCO has VEBA investments that are to be used to fund certain employee postretirement health care benefit plans. These assets are primarily comprised of open-ended mutual funds, which are valued using the net assets value per unit. These investments are recorded at fair value within "Other non-current assets" on the accompanying Unaudited Condensed Consolidated Balance Sheets and classified as equity securities. ~~ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities~~” was effective as of January 1, 2018. This ASU requires the change in the fair value of equity instruments to be recorded in income. Equity Instruments were defined to include all mutual funds, regardless of the underlying investments. Therefore, allAll changes to fair value on the VEBA investments are included in income in the period that the changes occur. These changes to fair value were not material for the periods covered by this report. Any unrealized gains or losses are recorded in "Other income / (expense), net" on ~~our~~the accompanying Unaudited Condensed Consolidated Statements of Operations.

FTRs

In connection with ~~IPL’s~~AES Indiana’s participation in MISO, in the second quarter of each year ~~IPL~~AES Indiana is granted financial instruments that can be converted into cash or FTRs based on ~~IPL’s~~AES Indiana’s forecasted peak load for the period. FTRs are used in the MISO market to hedge ~~IPL’s~~AES Indiana’s exposure to congestion charges, which result

from constraints on the transmission system. ~~IPL’s~~AES Indiana’s FTRs are valued at the cleared auction prices for FTRs in MISO’s annual auction. Because of the infrequent nature of this valuation, the fair value assigned to the FTRs is considered a Level 3 input under the fair value hierarchy required by ASC 820. An offsetting regulatory liability has been recorded as these revenues or costs will be flowed through to customers through the FAC. As such, there is no impact on our Unaudited Condensed Consolidated Statements of Operations.

Financial Liabilities

Interest Rate Hedges

In March 2019, we entered into forward interest rate hedges, which were amended in April 2020. The interest rate hedges have a combined notional amount of $400.0 million. All changes in the market value of the interest rate hedges are recorded in AOCL. See also Note 4, "Derivative Instruments and Hedging Activities - Cash Flow Hedges" for further information.

Recurring Fair Value Measurements

The fair value of assets and liabilities at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 measured on a recurring basis and the respective category within the fair value hierarchy for IPALCO was determined as follows:


Assets and Liabilities at Fair Value	Assets and Liabilities at Fair Value																	Assets and Liabilities at Fair Value
				Level 1		Level 2		Level 3					Level 1		Level 2		Level 3
		Fair value at June 30, 2020		Based on quoted market prices in active markets		Other observable inputs		Unobservable inputs			Fair value at March 31, 2021		Based on quoted market prices in active markets		Other observable inputs		Unobservable inputs
		(In Thousands)															(In Thousands)
Financial assets:	Financial assets:									Financial assets:
VEBA investments:	VEBA investments:									VEBA investments:
Money market funds	Money market funds	$	16	$	16	$	—	$	—	Money market funds	$	14	$	14	$	0	$	0
Mutual funds	Mutual funds	2,801		—		2,801		—		Mutual funds	3,335		0		3,335		0
Total VEBA investments	Total VEBA investments	2,817		16		2,801		—		Total VEBA investments	3,349		14		3,335		0
Financial transmission rights	Financial transmission rights	1,707		—		—		1,707		Financial transmission rights	139		0		0		139
Total financial assets measured at fair value	Total financial assets measured at fair value	$	4,524	$	16	$	2,801	$	1,707	Total financial assets measured at fair value	$	3,488	$	14	$	3,335	$	139
Financial liabilities:	Financial liabilities:									Financial liabilities:
Interest rate hedges	Interest rate hedges	$	80,809	$	—	$	80,809	$	—	Interest rate hedges	$	23,511	$	0	$	23,511	$	0

Total financial liabilities measured at fair value	Total financial liabilities measured at fair value	$	80,809	$	—	$	80,809	$	—	Total financial liabilities measured at fair value	$	23,511	$	0	$	23,511	$	0

Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3
Fair value at December 31, 2019 Based on quoted market prices in active markets Other observable inputs Unobservable inputs
(In Thousands)
Financial assets:
VEBA investments:
     Money market funds $ 25 $ 25 $ — $ —
     Mutual funds 2,854 — 2,854 —
          Total VEBA investments 2,879 25 2,854 —
Financial transmission rights 864 — — 864
Total financial assets measured at fair value $ 3,743 $ 25 $ 2,854 $ 864
Financial liabilities:
Interest rate hedges $ 26,560 $ — $ 26,560 $ —
Total financial liabilities measured at fair value $ 26,560 $ — $ 26,560 $ —


Assets and Liabilities at Fair Value
			Level 1		Level 2		Level 3
	Fair value at December 31, 2020		Based on quoted market prices in active markets		Other observable inputs		Unobservable inputs
	(In Thousands)
Financial assets:
VEBA investments:
Money market funds	$	16	$	16	$	0	$	0
Mutual funds	3,209		0		3,209		0
Total VEBA investments	3,225		16		3,209		0
Financial transmission rights	543		0		0		543
Total financial assets measured at fair value	$	3,768	$	16	$	3,209	$	543
Financial liabilities:
Interest rate hedges	$	63,215	$	0	$	63,215	$	0
Total financial liabilities measured at fair value	$	63,215	$	0	$	63,215	$	0

Financial Instruments not Measured at Fair Value in the Consolidated Balance Sheets

Debt

The fair value of our outstanding fixed-rate debt has been determined on the basis of the quoted market prices of the specific securities issued and outstanding. In certain circumstances, the market for such securities was inactive and therefore the valuation was adjusted to consider changes in market spreads for similar securities. Accordingly, the purpose of this disclosure is not to approximate the value on the basis of how the debt might be refinanced.

The following table shows the face value and the fair value of fixed-rate and variable-rate indebtedness (Level 2) for the periods ending:


		June 30, 2020						December 31, 2019							March 31, 2021				December 31, 2020
		Face Value		Fair Value		Face Value		Fair Value			Face Value		Fair Value		Face Value		Fair Value
		(In Thousands)															(In Thousands)
Fixed-rate	Fixed-rate	$	2,593,800	$	3,159,770	$	2,523,800	$	2,876,140	Fixed-rate	$	2,683,800	$	3,057,958	$	2,683,800	$	3,295,588
Variable-rate	Variable-rate	120,000		120,000		155,000		155,000		Variable-rate	90,000		90,000		75,000		75,000
Total indebtedness	Total indebtedness	$	2,713,800	$	3,279,770	$	2,678,800	$	3,031,140	Total indebtedness	$	2,773,800	$	3,147,958	$	2,758,800	$	3,370,588

The difference between the face value and the carrying value of this indebtedness consists of the following:

•unamortized deferred financing costs of ~~$25.6~~$25.4 million and ~~$20.7~~$26.0 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively; and

•unamortized discounts of ~~$6.8~~$6.6 million and ~~$6.5~~$6.6 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

4. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

~~We use derivatives principally~~For further information on the Company’s derivative and hedge accounting policies, see Note 1, "Overview and Summary of Significant Accounting Policies - Financial Derivatives" and Note 5, "Derivative Instruments and Hedging Activities" to manage the interest rate risk associated with refinancing our long-term debt. The derivatives that we use to economically hedge these risks are governed by our risk management policies for forward and futures contracts. Our net positions are continually assessed within our structured hedging programs to determine whether new or offsetting transactions are required. We monitor and value derivative positions monthly as part of our risk management processes. We use published sources for pricing, when possible, to mark positions to market. All of our derivative instruments are used for risk management purposes and are designated as cash flow hedges if they qualify under ASC 815 for accounting purposes.IPALCO’s 2020 Form 10-K.

At ~~June 30, 2020~~March 31, 2021, ~~IPL's outstanding~~AES Indiana's outstanding derivative instruments were as follows:


Commodity	Commodity	Accounting Treatment ^(a)	Unit	Purchases (in thousands)		Sales (in thousands)		Net Purchases/(Sales) (in thousands)		Commodity	Accounting Treatment (a)	Unit	Purchases (in thousands)		Sales (in thousands)		Net Purchases/(Sales) (in thousands)
Interest rate hedges	Interest rate hedges	Designated	USD	$	400,000	$	—	$	400,000	Interest rate hedges	Designated	USD	$	400,000	$	0	$	400,000
FTRs	FTRs	Not Designated	MWh	7,528		—		7,528		FTRs	Not Designated	MWh	1,046		0		1,046

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

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 now recorded in other comprehensive income and amounts deferred are reclassified to earnings in the same income statement line as the hedged item in the period in which it settles.

In March 2019, we entered into three forward interest rate swaps to hedge the interest rate risk associated with refinancing the IPALCO 2020 maturities. The 3 interest rate swaps had a combined notional amount of $400.0 million. In April 2020, we de-designated the swaps as cash flow hedges and froze the AOCL of $72.3 million at the date of de-designation. The interest rate swaps were then amended and re-designated as cash flow hedges to hedge the interest rate risk associated with refinancing the 2024 IPALCO Notes. The amended interest rate swaps have a combined notional amount of $400.0 million and will be settled when the 2024 IPALCO Notes are refinanced. The $72.3 million of AOCL associated with the interest rate swaps through the date of the amendment will be amortized out of AOCL into interest expense over the remaining life of the 2030 IPALCO Notes, while any changes in fair value associated with the amended interest rate swaps will be recognized in AOCL going forward.

The following tables provide information on gains or losses recognized in AOCL for the cash flow hedges for the periods indicated:

Interest Rate Hedges for the Three Months Ended June 30,
$ in thousands (net of tax) 2020 2019
Beginning accumulated derivative loss in AOCL $ (56,063) $ (5,539)
Net losses associated with current period hedging transactions (4,026) (11,649)
Net losses reclassified to interest expense, net of tax 1,344 —
Ending accumulated derivative loss in AOCL $ (58,745) $ (17,188)


		Interest Rate Hedges for the Six Months Ended June 30,							Interest Rate Hedges for the Three Months Ended March 31,
$ in thousands (net of tax)	$ in thousands (net of tax)	2020		2019		$ in thousands (net of tax)	2021		2020
Beginning accumulated derivative loss in AOCL	Beginning accumulated derivative loss in AOCL	$	(19,750)	$	—	Beginning accumulated derivative loss in AOCL	$	(43,420)	$	(19,750)

Net losses associated with current period hedging transactions		(40,339)		(17,188)
Net losses reclassified to interest expense, net of tax		1,344		—
Net gains / (losses) associated with current period hedging transactions						Net gains / (losses) associated with current period hedging transactions	30,050		(36,313)
Net (gains) / losses reclassified to interest expense, net of tax						Net (gains) / losses reclassified to interest expense, net of tax	(456)		0
Ending accumulated derivative loss in AOCL	Ending accumulated derivative loss in AOCL	$	(58,745)	$	(17,188)	Ending accumulated derivative loss in AOCL	$	(13,826)	$	(56,063)

Loss expected to be reclassified to earnings in the next twelve months	Loss expected to be reclassified to earnings in the next twelve months	$	(7.228)	$	—	Loss expected to be reclassified to earnings in the next twelve months	$	(5,375)
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months)	Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months)	51		13		Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months)	42

Derivatives Not Designated as Hedge

FTRs do not qualify for hedge accounting or the normal purchases and sales exceptions under ASC 815. Accordingly, such contracts are recorded at fair value when acquired and subsequently amortized over the annual period as they are used. FTRs are initially recorded at fair value using the income approach.

Certain qualifying derivative instruments have been designated as normal purchases or normal sales contracts, as provided under GAAP. Derivative contracts that have been designated as normal purchases or normal sales under GAAP are not subject to hedge or mark to market accounting and are recognized in the consolidated statements of operations on an accrual basis.

When applicable, IPALCO has elected not to offset derivative assets and liabilities and not to offset net derivative positions against the right to reclaim cash collateral pledged (an asset) or the obligation to return cash collateral received (a liability) under derivative agreements. As of ~~June 30, 2020,~~March 31, 2021, IPALCO did not have any offsetting positions.

The following table summarizes the fair value, balance sheet classification and hedging designation of IPALCO's derivative instruments:


Commodity	Commodity	Hedging Designation	Balance sheet classification	June 30, 2020		December 31, 2019		Commodity	Hedging Designation	Balance sheet classification	March 31, 2021		December 31, 2020
Financial transmission rights	Financial transmission rights	Not a Cash Flow Hedge	Prepayments and other current assets	$	1,707	$	864	Financial transmission rights	Not a Cash Flow Hedge	Prepayments and other current assets	$	139	$	543

Interest rate hedges	Interest rate hedges	Cash Flow Hedge	Derivative liabilities, current	$	—	$	26,560	Interest rate hedges	Cash Flow Hedge	Derivative liabilities, non-current	$	23,511	$	63,215
Interest rate hedges		Cash Flow Hedge	Derivative liabilities, non-current	$	80,809	$	—

1918

5. DEBT

Long-Term Debt

The following table presents our long-term debt:


			June 30,		December 31,					March 31,		December 31,
Series	Series	Due	2020		2019		Series	Due		2021		2020
			(In Thousands)									(In Thousands)
IPL first mortgage bonds:
AES Indiana first mortgage bonds:							AES Indiana first mortgage bonds:
3.875% (1)	3.875% (1)	August 2021	$	55,000	$	55,000	3.875% (1)	August 2021		$	55,000	$	55,000
3.875% (1)	3.875% (1)	August 2021	40,000		40,000		3.875% (1)	August 2021		40,000		40,000
3.125% (1)	3.125% (1)	December 2024	40,000		40,000		3.125% (1)	December 2024		40,000		40,000
6.60%	6.60%	January 2034	100,000		100,000		6.60%	January 2034		100,000		100,000
6.05%	6.05%	October 2036	158,800		158,800		6.05%	October 2036		158,800		158,800
6.60%	6.60%	June 2037	165,000		165,000		6.60%	June 2037		165,000		165,000
4.875%	4.875%	November 2041	140,000		140,000		4.875%	November 2041		140,000		140,000
4.65%	4.65%	June 2043	170,000		170,000		4.65%	June 2043		170,000		170,000
4.50%	4.50%	June 2044	130,000		130,000		4.50%	June 2044		130,000		130,000
4.70%	4.70%	September 2045	260,000		260,000		4.70%	September 2045		260,000		260,000
4.05%	4.05%	May 2046	350,000		350,000		4.05%	May 2046		350,000		350,000
4.875%	4.875%	November 2048	105,000		105,000		4.875%	November 2048		105,000		105,000
0.75% (2)							0.75% (2)	April 2026		30,000		30,000
0.95% (2)							0.95% (2)	April 2026		60,000		60,000
Unamortized discount – net	Unamortized discount – net		(6,078)		(6,156)		Unamortized discount – net			(5,968)		(6,006)
Deferred financing costs	Deferred financing costs		(16,333)		(16,629)		Deferred financing costs			(17,159)		(17,384)
Total IPL first mortgage bonds					1,691,389		1,691,015
IPL unsecured debt:
Variable - 1.063% ⁽²⁾		December 2020	30,000		30,000
Variable - 1.063% ⁽²⁾		December 2020	60,000		60,000
Deferred financing costs			(57)		(114)
Total IPL unsecured debt			89,943		89,886
Total Long-term Debt – IPL					1,781,332		1,780,901
Total AES Indiana first mortgage bonds							Total AES Indiana first mortgage bonds			1,780,673		1,780,410
Total Long-term Debt – AES Indiana							Total Long-term Debt – AES Indiana			1,780,673		1,780,410
Long-term Debt – IPALCO:	Long-term Debt – IPALCO:								Long-term Debt – IPALCO:
Term Loan		July 2020	—		65,000
3.45% Senior Secured Notes		July 2020	—		405,000
3.70% Senior Secured Notes	3.70% Senior Secured Notes	September 2024	405,000		405,000		3.70% Senior Secured Notes	September 2024		405,000		405,000
4.25% Senior Secured Notes	4.25% Senior Secured Notes	May 2030	475,000		—		4.25% Senior Secured Notes	May 2030		475,000		475,000
Unamortized discount – net	Unamortized discount – net		(672)		(313)		Unamortized discount – net			(600)		(625)
Deferred financing costs	Deferred financing costs		(9,220)		(3,959)		Deferred financing costs			(8,280)		(8,600)
Total Long-term Debt – IPALCO	Total Long-term Debt – IPALCO				870,108		870,728		Total Long-term Debt – IPALCO			871,120		870,775
Total Consolidated IPALCO Long-term Debt	Total Consolidated IPALCO Long-term Debt				2,651,440		2,651,629		Total Consolidated IPALCO Long-term Debt			2,651,793		2,651,185
Less: Current Portion of Long-term Debt	Less: Current Portion of Long-term Debt		89,943		559,199		Less: Current Portion of Long-term Debt			94,945		94,907
Net Consolidated IPALCO Long-term Debt	Net Consolidated IPALCO Long-term Debt		$	2,561,497	$	2,092,430	Net Consolidated IPALCO Long-term Debt			$	2,556,848	$	2,556,278

(1)First mortgage bonds issued to the Indiana Finance Authority, to secure the loan of proceeds from tax-exempt bonds issued by the Indiana Finance Authority.

(2)~~Unsecured notes~~First mortgage bonds issued to the Indiana Finance Authority, ~~by IPL~~ to ~~facilitate~~secure the loan of proceeds from ~~various~~ tax-exempt ~~notes~~bonds issued by the Indiana Finance Authority. The notes have a final maturity date of December 31, 2038, but are subject to a mandatory put in ~~December 2020.~~April 2026.

~~IPL~~AES Indiana First Mortgage Bonds

~~IPL~~AES Indiana has $95 million of 3.875% ~~IPL~~ first mortgage bonds that are due August 1, 2021. Management plans to refinance these first mortgage bonds with new debt. In the event that we are unable to refinance these first mortgage bonds on acceptable terms, ~~IPL has available borrowing capacity on its revolving credit facility that could be used to satisfy the obligation.~~

~~IPL Unsecured Notes~~

~~In December 2015, the~~AES Indiana Finance Authority issued on behalf of IPL an aggregate principal amount of $90 million of Environmental Facilities Refunding Revenue Notes due December 2038 (Indianapolis Power & Light Company Project). These unsecured notes were issued in two series: $30 million Series 2015A notes and $60 million 2015B notes. These notes were initially purchased by a syndication of banks who will hold the notes until the mandatory put date of December 22, 2020.

IPL has classified its outstanding $90 million aggregate principal amount of these unsecured notes as short-term indebtedness as they are due December 2020. Management plans to refinance these unsecured notes with new debt. In the event that we are unable to refinance these unsecured notes on acceptable terms, IPL has available borrowing capacity on its revolving credit facility that could be used to satisfy the obligation.

IPALCO’s Senior Secured Notes ~~and Term Loan~~

~~In April 2020,~~ IPALCO completed the sale of the $475 million aggregate principal amount of 4.25% 2030 IPALCO Notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The 2030 IPALCO Notes were issued pursuant to an Indenture dated April 14, 2020, by and between IPALCO and U.S. Bank, National Association, as trustee. The 2030 IPALCO Notes were priced to the public at 99.909% of the principal amount. Net proceeds to IPALCO were approximately $468.6 million after deducting transaction costs and estimated offering expenses. We used the net proceeds from this offering to retire the $65 million Term Loan on April 14, 2020. The remaining net proceeds, together with cash on hand, were used to redeem the 2020 IPALCO Notes on May 14, 2020, and to pay certain related fees, expenses and make-whole premiums. A loss on early extinguishment of debt of $2.4 million for the 2020 IPALCO Notes is included as a separate line item within "~~Other Income/(Expense), Net" in the accompanying Unaudited Condensed Consolidated Statements of Operations.~~

The 2030 IPALCO Notes are secured by IPALCO’s pledge of all of the outstanding common stock of IPL. The lien on the pledged shares is shared equally and ratably with IPALCO’s existing senior secured notes. IPALCO has also agreed to register the 2030 IPALCO Notes under the Securities Act by filing an exchange offer registration statement or, under specified circumstances, a shelf registration statement with the SEC pursuant to a Registration Rights Agreement dated April 14, 2020. IPALCO filed its registration statement on Form S-4 with respect to the 2030 IPALCO Notes with the SEC on March 22, 2021, and this registration statement was declared effective on April 7, 2021.

Line of Credit

As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019, IPL~~2020, AES Indiana had ~~$30.0~~$90.0 million and ~~$0.0~~$75.0 million in outstanding borrowings on the committed line of credit, respectively.

6. INCOME TAXES

Effective Tax Rate

IPALCO’s effective combined state and federal income tax rate was ~~21.3% and 21.3%~~20.6% for the three ~~and six~~ months ended ~~June 30, 2020, respectively,~~March 31, 2021, as compared to ~~25.0% and 21.1%~~21.4% for the three ~~and six~~ months ended ~~June 30, 2019, respectively.~~March 31, 2020. The decrease in the effective tax rate ~~for the three months ended June 30, 2020~~ versus the comparable period was primarily due to the impact of the reversal of excess deferred income taxes as a percentage of pre-tax income. The rate for the three months ended March 31, 2021 is lower than the combined federal and state statutory rate of 25.01% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of AES Indiana, which was partially offset by the net tax expense related to the amortization of allowance for equity funds used during construction.

7. BENEFIT PLANS

Pension Expense

The following table presents net periodic benefit (credit) / cost information relating to the Pension Plans combined:


		For the Three Months Ended						For the Six Months Ended					For the Three Months Ended
		June 30,						June 30,					March 31,
		2020		2019		2020		2019			2021		2020
		(In Thousands)						(In Thousands)					(In Thousands)
Components of net periodic benefit cost:
Components of net periodic benefit (credit) / cost:										Components of net periodic benefit (credit) / cost:
Service cost	Service cost	$	2,068	$	1,852	$	4,136	$	3,705	Service cost	$	2,334	$	2,068
Interest cost	Interest cost	5,538		6,836		11,076		13,672		Interest cost	3,915		5,538
Expected return on plan assets	Expected return on plan assets	(9,445)		(7,477)		(18,890)		(14,954)		Expected return on plan assets	(10,454)		(9,445)
Amortization of prior service cost	Amortization of prior service cost	919		957		1,838		1,913		Amortization of prior service cost	736		919
Amortization of actuarial loss	Amortization of actuarial loss	2,028		2,770		4,057		5,541		Amortization of actuarial loss	1,382		2,029
Net periodic benefit cost		$	1,108	$	4,938	$	2,217	$	9,877
Net periodic benefit (credit) / cost										Net periodic benefit (credit) / cost	$	(2,087)	$	1,109

In addition, ~~IPL~~AES Indiana provides postretirement health care benefits to certain active or retired employees and the spouses of certain active or retired employees. These postretirement health care benefits and the related unfunded obligation of ~~$6.6 million~~ ~~and $6.4~~$4.3 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively,~~2020, were not material to the Financial Statements in the periods covered by this report.

8. COMMITMENTS AND CONTINGENCIES

Legal Loss Contingencies

IPALCO and ~~IPL~~AES Indiana are involved in litigation arising in the normal course of business. We accrue for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. As of March 31, 2021 and December 31, 2020, total legal loss contingencies accrued were $13.4 million and $13.4 million, respectively, which were included in "Other Non-Current Liabilities," on the accompanying Unaudited Condensed Consolidated Balance Sheets. A significant portion of these accrued liabilities relate to a personal injury legal claim involving injuries to a contractor. We maintain an amount of insurance protection for such litigation that we believe is adequate. While the ~~results~~ultimate outcome of such litigation cannot be predicted with certainty, management believes that ~~the~~ final ~~outcome~~outcomes will not have a material adverse effect on IPALCO’s results of operations, financial condition and cash flows. ~~Amounts accrued or expensed for legal or environmental contingencies collectively during the periods covered by this report have not been material to the Financial Statements.~~

Environmental Loss Contingencies

We are subject to various federal, state, regional and local environmental protection and health and safety laws and regulations governing, among other things, the generation, storage, handling, use, disposal and transportation of regulated materials, including ash; the use and discharge of water used in generation boilers and for cooling purposes; the emission and discharge of hazardous and other materials into the environment; and the health and safety of our employees. These laws and regulations often require a lengthy and complex process of obtaining and renewing permits and other governmental authorizations from federal, state and local agencies. Violation of these laws, regulations or permits can result in substantial fines, other sanctions, permit revocation and/or facility shutdowns. We cannot ~~provide assurance~~assure that we have been or will be at all times in full compliance with such laws, regulations and permits.

New Source Review and Other CAA NOVs

In October 2009, ~~IPL~~AES Indiana received a NOV and Finding of Violation from the EPA pursuant to the CAA Section 113(a). The NOV ~~alleges~~alleged violations of the CAA at ~~IPL’s~~AES Indiana’s 3 primarily coal-fired electric generating facilities at the time, dating back to 1986. The alleged violations primarily pertain to the PSD and ~~nonattainment~~non-attainment New Source Review (NSR) requirements under the CAA. In addition, on October 1, 2015, ~~IPL~~AES Indiana received a NOV from the EPA pursuant to CAA Section 113(a) alleging violations of the CAA, the Indiana SIP, and the Title V operating permit related to alleged particulate matter and opacity violations at ~~IPL~~AES Indiana Petersburg Unit 3. Also, on February 5, 2016, the EPA issued a NOV pursuant to CAA Section 113(a) alleging violations of ~~New Source Review~~PSD, non-attainment NSR and other CAA regulations, the Indiana SIP, and the Title V operating permit at Petersburg Generating Station. ~~Since receiving the letters, IPL management has been working~~On August 31, 2020, AES Indiana reached a settlement with the EPA, ~~staff regarding possible resolutions~~the DOJ and IDEM resolving the purported violations of the ~~NOVs. Settlements~~CAA with respect to AES Indiana's four coal-fired generation units currently operating at AES Indiana's Petersburg location. The settlement agreement, in the form of a proposed judicial consent decree, was approved and ~~litigated outcomes~~

entered by the U.S. District Court for the Southern District of ~~similar New Source Review cases have required companies to pay~~Indiana on March 23, 2021, and includes, among other items, the following requirements: annual caps on NOx and SO2 emissions and more stringent emissions limits than AES Indiana's current Title V air permit; payment of civil penalties totaling $1.525 million (which payment was satisfied by AES Indiana in April 2021); a $5 million environmental mitigation project consisting of the construction and operation of a new, non-emitting source of generation at the site; expenditure of $0.325 million on a state-only environmentally beneficial project to preserve local, ecologically-significant lands; and retirement of Units 1 and 2 prior to July 1, 2023. If AES Indiana does not meet this retirement obligation, it must install additional pollution control technology in coal-fired electric generating units, retire existing generating units, and invest in additional environmental projects. A similar outcome in these cases could have a ~~material impact~~Selective Non-Catalytic Reduction System (SNCR) on our business. At this time, we cannot determine whether these NOVs will have a material impact on our business, financial condition and results of operations. We would seek recovery of any operating or capital expenditures, but not fines or penalties, related to air pollution control technology to reduce regulated air emissions; however, there can be no assurances that we would be successful in recovering any operating or capital expenditures. IPL has recordedUnit 4. AES Indiana had a contingent liability recorded related to these New Source Review ~~cases~~ and other CAA NOV matters.

9. BUSINESS SEGMENT INFORMATION

Operating segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, for which separate financial information is available, and is evaluated regularly by the chief operating decision maker in assessing performance and deciding how to allocate resources. Substantially all of our business consists of the generation, transmission, distribution and sale of electric energy conducted through ~~IPL~~ which is a vertically integrated electric utility. IPALCO’s reportable business segment is its utility segment, with all other nonutility business activities aggregated separately. The “All Other” nonutility category primarily includes the ~~Term Loan, 2020 IPALCO Notes,~~ 2024 IPALCO Notes and 2030 IPALCO ~~Notes; approximately $4.1 million~~Notes and $6.0 million of cash and cash equivalents as of June 30, 2020 and December 31, 2019, respectively; restricted cash of $19.4 million and $0.0 million as of June 30, 2020 and December 31, 2019, respectively; long-term investments of $2.8 million at June 30, 2020 and December 31, 2019, respectively; long-term liabilities forrelated interest expense, balance associated with IPALCO's interest rate hedges, ~~of $80.8 million~~cash and ~~$26.6 million as of June 30, 2020 and December 31, 2019, respectively; and income taxes and interest related to those items. All~~ other ~~assets represented less than 1% of IPALCO’s total assets as of June 30, 2020 and December 31, 2019.~~immaterial balances. The accounting policies of the identified segment are consistent with those policies and procedures described in the summary of significant accounting policies.

The following table provides information about IPALCO’s business segments (in thousands):

Three Months Ended Three Months Ended
June 30, 2020 June 30, 2019
Utility All Other Total Utility All Other Total
Revenues $ 311,503 $ — $ 311,503 $ 340,869 $ — $ 340,869
Depreciation and amortization $ 61,099 $ — $ 61,099 $ 59,897 $ — $ 59,897
Interest expense $ 21,882 $ 12,053 $ 33,935 $ 22,252 $ 8,039 $ 30,291
Earnings/(loss) from operations before income tax $ 38,770 $ (14,482) $ 24,288 $ 28,044 $ (8,171) $ 19,873
Six Months Ended Six Months Ended
June 30, 2020 June 30, 2019
Utility All Other Total Utility All Other Total
Revenues $ 668,885 $ — $ 668,885 $ 723,178 $ — $ 723,178
Depreciation and amortization $ 121,807 $ — $ 121,807 $ 119,566 $ — $ 119,566
Interest expense $ 43,802 $ 20,214 $ 64,016 $ 44,513 $ 16,260 $ 60,773
Earnings/(loss) from operations before income tax $ 93,737 $ (23,694) $ 70,043 $ 88,272 $ (16,410) $ 71,862
Capital expenditures⁽¹⁾
$ 92,848 $ — $ 92,848 $ 113,118 $ — $ 113,118
As of June 30, 2020 As of December 31, 2019
Utility All Other Total Utility All Other Total
Total assets $ 4,940,338 $ 13,019 $ 4,953,357 $ 4,918,408 $ 10,261 $ 4,928,669

⁽¹⁾~~Capital expenditures includes payments for financed capital expenditures of $0.0 million and $5.5 million for the six months ended June 30, 2020 and June 30, 2019, respectively.~~



















	Three Months Ended						Three Months Ended
	March 31, 2021						March 31, 2020
	Utility		All Other		Total		Utility		All Other		Total
Revenues	$	362,201	$	0	$	362,201	$	357,382	$	0	$	357,382
Depreciation and amortization	$	63,089	$	0	$	63,089	$	60,708	$	0	$	60,708
Interest expense	$	21,521	$	8,546	$	30,067	$	21,920	$	8,161	$	30,081
Earnings/(loss) from operations before income tax	$	57,295	$	(8,476)	$	48,819	$	54,967	$	(9,212)	$	45,755
Capital expenditures	$	62,792	$	0	$	62,792	$	54,490	$	0	$	54,490

	As of March 31, 2021						As of December 31, 2020
	Utility		All Other		Total		Utility		All Other		Total
Total assets	$	4,966,065	$	19,190	$	4,985,255	$	4,952,408	$	17,511	$	4,969,919

10. REVENUE

Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities. Please see Note 13, “Revenue” to IPALCO’s ~~2019~~2020 Form 10-K for further discussion of our retail, wholesale and miscellaneous revenues.

~~IPL’s~~AES Indiana’s revenue from contracts with customers was ~~$302.4~~$353.6 million and $351.9 million for the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and $332.9 million for the~~ ~~three months~~ ~~ended June 30, 2019, respectively, and $654.3 million~~ ~~for the~~ ~~six months ended June 30, 2020 and $709.0 million~~ ~~for the~~ ~~six months ended June 30, 2019,~~ respectively. The following table presents our revenue from contracts with customers and other revenue (in thousands):


		For the Three Months Ended					For the Three Months Ended
		June 30, 2020		June 30, 2019			March 31, 2021		March 31, 2020
Retail Revenues	Retail Revenues					Retail Revenues
Retail revenue from contracts with customers:	Retail revenue from contracts with customers:					Retail revenue from contracts with customers:
Residential	Residential	$	127,752	$	124,654	Residential	$	160,503	$	155,408
Small commercial and industrial	Small commercial and industrial	43,402		48,864		Small commercial and industrial	54,517		54,253
Large commercial and industrial	Large commercial and industrial	119,302		140,258		Large commercial and industrial	113,440		122,038
Public lighting	Public lighting	2,309		2,490		Public lighting	2,186		2,305
Other ⁽¹⁾	Other ⁽¹⁾	2,805		3,725		Other (1)	4,191		3,888
Total retail revenue from contracts with customers	Total retail revenue from contracts with customers	295,570		319,991		Total retail revenue from contracts with customers	334,837		337,892
Alternative revenue programs	Alternative revenue programs	8,789		7,697		Alternative revenue programs	7,595		4,896
Wholesale Revenues	Wholesale Revenues					Wholesale Revenues
Wholesale revenue from contracts with customers:		4,501		10,006
Wholesale revenues from contracts with customers:						Wholesale revenues from contracts with customers:	16,109		11,308
Miscellaneous Revenues	Miscellaneous Revenues					Miscellaneous Revenues
Transmission and other revenue from contracts with customers	Transmission and other revenue from contracts with customers	2,329		2,898		Transmission and other revenue from contracts with customers	2,681		2,732
Other miscellaneous revenues ⁽²⁾	Other miscellaneous revenues ⁽²⁾	314		277		Other miscellaneous revenues (2)	979		554
Total Revenues	Total Revenues	$	311,503	$	340,869	Total Revenues	$	362,201	$	357,382

(1)Other retail revenue from contracts with customers includes miscellaneous charges to customers

(2)Other miscellaneous revenue includes lease and other miscellaneous revenues not accounted for under ASC 606

For the Six Months Ended For the Six Months Ended
June 30, 2020 June 30, 2019
Retail Revenues
     Retail revenue from contracts with customers:
          Residential $ 283,161 $ 295,194
          Small commercial and industrial 97,655 109,770
          Large commercial and industrial 241,340 272,532
          Public lighting 4,614 2,490
          Other ⁽¹⁾
6,693 6,508
                    Total retail revenue from contracts with customers 633,463 686,494
     Alternative revenue programs 13,684 12,590
Wholesale Revenues
     Wholesale revenue from contracts with customers: 15,809 17,107
Miscellaneous Revenues
     Transmission and other revenue from contracts with customers 5,061 5,383
     Other miscellaneous revenues ⁽²⁾
868 1,604
Total Revenues $ 668,885 $ 723,178

~~(1)Other retail revenue from contracts with customers includes miscellaneous charges to customers~~

~~(2)Other miscellaneous revenue includes lease and other miscellaneous revenues not accounted for under ASC 606~~

The balances of receivables from contracts with customers were ~~$154.3~~$152.8 million and ~~$155.0~~$163.8 million as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Payment terms for all receivables from contracts with customers typically do not extend beyond 30 ~~days, though see Note 2,~~ days.

~~"Regulatory Matters - IURC COVID-19 Order"~~
~~for a discussion of the June 29, 2020 IURC order requiring expanded payment arrangements for customers.~~

Contract Balances — The timing of revenue recognition, billings, and cash collections results in accounts receivable and contract liabilities. The contract liabilities from contracts with customers were ~~$1.1~~$0.2 million and $0.5 million as of ~~June 30, 2020.~~March 31, 2021 and December 31, 2020, respectively. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, we recognized revenue of $0.3 million and ~~$0.7~~$0.4 million related to this contract liability balance, respectively.

11. LEASES

~~LESSEE~~

The Company enters into long-term non-cancelable lease arrangements which are classified as either operating or finance leases; however, lease balances were not material to the Financial Statements in the periods covered by this report.

LESSOR

The Company is the lessor under operating leases for land, office space and operating equipment. Minimum lease payments from such contracts are recognized as operating lease revenue on a straight-line basis over the lease term whereas contingent rentals are recognized when earned. Lease revenue included in the Unaudited Condensed Consolidated Statements of Operations was ~~$0.2 million and~~ $0.3 million for the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and was $0.5 millionfor the six months ended June 30, 2020 and 2019,~~ respectively. Underlying gross assets and accumulated depreciation of operating leases included in Total net property, plant and equipment on the Unaudited Condensed Consolidated Balance Sheet were ~~$4.4~~$4.6 million and ~~$0.7~~$1.0 million, re~~spectively,~~respectively, as of ~~June 30,~~March 31, 2021 and $4.3 million and $0.8 million, respectively, as of December 31, 2020.

The option to extend or terminate a lease is based on customary early termination provisions in the contract. The Company has not recognized any early terminations as of ~~June 30, 2020.~~March 31, 2021.

The following table shows the future minimum lease receipts as of ~~June 30, 2020~~March 31, 2021 for the remainder of ~~2020~~2021 through ~~2024~~2025 and thereafter (in thousands):


		Operating Leases			Operating Leases
2020		$	443
2021	2021	886		2021	$	665
2022	2022	906		2022	903
2023	2023	906		2023	906
2024	2024	786		2024	786
2025				2025	553
Thereafter	Thereafter	2,628		Thereafter	2,113
Total	Total	$	6,555	Total	$	5,926

12. 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 U.S., have reacted by instituting quarantines, mandating business and school closures and social distancing measures as well as restricting travel. ~~The~~Responses to the COVID-19 pandemic by the State of Indiana ~~implemented, among other things, stay-at-home~~and its residents and businesses, in particular, continue to evolve, including with respect to business and school closures and limitations and other social distancing measures and the effectiveness and timing of vaccine availability and distribution efforts. Social distancing measures designed to slow the spread of the virus, ~~which has resulted in decreased~~such as business closures and operations limitations, impact energy demand within our service ~~territory, though these stay-at-home restrictions have now been lifted in our service~~ territory. On March 19, 2020, the Governor of Indiana also issued an Executive Order prohibiting electric utilities, including us, from discontinuing electric utility service to customers, which the IURC extended through August 14, 2020. We are taking a variety of measures in response to the spread of COVID-19 to ensure our ability to generate, 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~~including those that relate to events outside of our control.

For the three and six months ending June 30, 2020, the COVID-19 pandemic primarily impacted our retail sales demand, as the economic impact of the pandemic started to materialize in Indiana in the second half of March and more so in the second quarter of 2020. For small commercial and industrial and large commercial and industrial customers, weather-normalized volumes of kWh sold decreased by 10.3% and 11.0%, respectively, for the three months ended June 30, 2020 as compared to the same period in the prior year. For residential customers, weather-normalized volumes of kWh sold increased by 6.6% for the three months ended June 30, 2020 as compared to the same period in the prior year. We also have incurred and expect to continue to incur expenses relating to COVID-19, however see Note 2, ~~"Regulatory Matters - IURC COVID-19 Order"~~ ~~for a discussion of regulatory measures which partially mitigate the impact of these expenses.~~ The ultimate 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.

2623

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Financial Statements and the notes thereto included in “Item 1. Financial Statements” included in Part I – Financial Information of this Form 10-Q.

FORWARD-LOOKING INFORMATION

The following discussion may contain forward-looking statements regarding us, our business, prospects and our results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in IPALCO’s ~~2019~~2020 Form 10-K and subsequent filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise of the risks and uncertainties that may affect our business.

OVERVIEW OF OUR BUSINESS

IPALCO is a holding company incorporated under the laws of the state of Indiana. Our principal subsidiary is ~~IPL,~~AES Indiana, a regulated electric utility operating in the state of Indiana. Substantially all of our business consists of the generation, transmission, distribution and sale of electric energy conducted through ~~IPL.~~AES Indiana. Our business segments are “utility” and “all other.” For additional information regarding our business, see "Item 1. Business” of our ~~2019~~2020 Form 10-K.

EXECUTIVE SUMMARY

Compared with the same ~~period~~periods in the prior year, the results for the three months ended ~~June 30, 2020~~March 31, 2021 reflect higher earnings from operations before income tax of ~~$4.4~~$3.1 million, or ~~22.2%~~6.7%, respectively, primarily due to factors including, but not limited to:

•a net increase in margin due to higher volumes of retail kWh sold mostly due to favorable weather;

•a decrease in maintenance expenses; and

•lower pension costs.

These were partially offset by:

•~~a net decrease in the volume of retail kWh sold (mostly due to~~ lower demand resulting from ~~large and small commercial and industrial customers; partially offset by higher demand from residential customers);~~impacts of the COVID-19 pandemic and

•a reduction in revenues in 2021 due to an accrued regulatory liability for excess earnings under the FAC provisions.

Compared with the same period in the prior year, the results for the six months ended June 30, 2020 reflect lower earnings from operations before income tax of $1.8 million, or 2.5%, primarily due to factors including, but not limited to:

•~~a net decrease in the volume of retail kWh sold mostly due to milder weather and lower demand; and~~

•~~a reduction in revenues due to an accrued regulatory liability for excess earnings under FAC provisions.~~

~~These were partially offset by:~~

•~~a decrease in maintenance expenses; and~~

•~~lower pension costs.~~

2724

RESULTS OF OPERATIONS

The electric utility business is affected by seasonal weather patterns throughout the year and, therefore, operating revenues and associated expenses are not generated evenly by month during the year.

Statements of Operations Highlights


		Three Months Ended						Six Months Ended					Three Months Ended
		June 30,						June 30,					March 31,
		2020		2019		2020		2019			2021		2020		$ change		% change

REVENUES	REVENUES	$	311,503	$	340,869	$	668,885	$	723,178	REVENUES	$	362,201	$	357,382	$	4,819	1.3	%

OPERATING COSTS AND EXPENSES:	OPERATING COSTS AND EXPENSES:									OPERATING COSTS AND EXPENSES:
Fuel	Fuel	43,351		72,217		112,139		161,016		Fuel	84,731		68,788		15,943		23.2	%
Power purchased	Power purchased	43,082		36,719		78,549		69,643		Power purchased	24,583		35,467		(10,884)		(30.7)	%
Operation and maintenance	Operation and maintenance	94,659		113,661		200,248		215,807		Operation and maintenance	103,949		105,590		(1,641)		(1.6)	%
Depreciation and amortization	Depreciation and amortization	61,099		59,897		121,807		119,566		Depreciation and amortization	63,089		60,708		2,381		3.9	%
Taxes other than income taxes	Taxes other than income taxes	11,606		6,983		23,664		20,966		Taxes other than income taxes	12,951		12,057		894		7.4	%

Total operating costs and expenses	Total operating costs and expenses	253,797		289,477		536,407		586,998		Total operating costs and expenses	289,303		282,610		6,693		2.4	%

OPERATING INCOME	OPERATING INCOME	57,706		51,392		132,478		136,180		OPERATING INCOME	72,898		74,772		(1,874)		(2.5)	%

OTHER INCOME / (EXPENSE), NET:	OTHER INCOME / (EXPENSE), NET:									OTHER INCOME / (EXPENSE), NET:
Allowance for equity funds used during construction	Allowance for equity funds used during construction	1,160		817		2,017		1,728		Allowance for equity funds used during construction	1,374		857		517		60.3	%
Interest expense	Interest expense	(33,935)		(30,291)		(64,016)		(60,773)		Interest expense	(30,067)		(30,081)		14		—	%
Loss on early extinguishment of debt		(2,415)		—		(2,415)		—

Other income / (expense), net	Other income / (expense), net	1,772		(2,045)		1,979		(5,273)		Other income / (expense), net	4,614		207		4,407		2129.0	%
Total other income / (expense), net	Total other income / (expense), net	(33,418)		(31,519)		(62,435)		(64,318)		Total other income / (expense), net	(24,079)		(29,017)		4,938		(17.0)	%

EARNINGS FROM OPERATIONS BEFORE INCOME TAX	EARNINGS FROM OPERATIONS BEFORE INCOME TAX	24,288		19,873		70,043		71,862		EARNINGS FROM OPERATIONS BEFORE INCOME TAX	48,819		45,755		3,064		6.7	%

Less: Income tax expense	Less: Income tax expense	5,165		4,960		14,937		15,164		Less: Income tax expense	10,035		9,772		263		2.7	%
NET INCOME	NET INCOME	19,123		14,913		55,106		56,698		NET INCOME	38,784		35,983		2,801		7.8	%

Less: Dividends on preferred stock	Less: Dividends on preferred stock	804		804		1,607		1,607		Less: Dividends on preferred stock	803		803		—		—	%
NET INCOME APPLICABLE TO COMMON STOCK	NET INCOME APPLICABLE TO COMMON STOCK	$	18,319	$	14,109	$	53,499	$	55,091	NET INCOME APPLICABLE TO COMMON STOCK	$	37,981	$	35,180	$	2,801	8.0	%

2825

Comparison of three months ended ~~June 30, 2020~~March 31, 2021 and three months ended ~~June 30, 2019~~March 31, 2020

Revenues

Revenues during the three months ended ~~June 30, 2020 decreased $29.4~~March 31, 2021 increased $4.8 million compared to the same period in ~~2019,~~2020, which resulted from the following changes (dollars in thousands):


		Three Months Ended										Three Months Ended
		June 30,							Percentage			March 31,					Percentage
		2020		2019		Change				2021		2020		Change
Revenues:	Revenues:								Revenues:
Retail revenues	Retail revenues	304,359		327,688		$	(23,329)	(7.1)%	Retail revenues	$	342,432	$	342,788	$	(356)	(0.1)%
Wholesale revenues	Wholesale revenues	4,501		10,006		(5,505)		(55.0)%	Wholesale revenues	16,109		11,308		4,801		42.5%
Miscellaneous revenues	Miscellaneous revenues	2,643		3,175		(532)		(16.8)%	Miscellaneous revenues	3,660		3,286		374		11.4%
Total revenues	Total revenues	$	311,503	$	340,869	$	(29,366)	(8.6)%	Total revenues	$	362,201	$	357,382	$	4,819	1.3%

Heating degree days:	Heating degree days:								Heating degree days:
Actual	Actual	640		457		183		40.0%	Actual	2,704		2,434		270		11.1%
30-year average	30-year average	531		527					30-year average	2,749		2,780

Cooling degree days:
Actual		342		312		30		9.6%
30-year average		310		309

The following table presents additional data on kWh sold:


	Three Months Ended March 31,
	2021	2020	kWh Change	% Change
kWh Sales (In Millions):
Residential	1,529	1,422	107	7.5	%
Small commercial and industrial	483	476	7	1.5	%
Large commercial and industrial	1,389	1,437	(48)	(3.3)	%
Public lighting	6	10	(4)	(40.0)	%
Sales – retail customers	3,407	3,345	62	1.9	%
Wholesale	647	485	162	33.4	%
Total kWh sold	4,054	3,830	224	5.8	%

The following graph shows the percentage changes in weather-normalized and actual retail electric sales volumes by customer class for the three months ended March 31, 2021 as compared to the same period in the prior year:

Retail Revenues

The decrease in retail revenues of ~~$23.3~~$0.4 million was primarily due to the following (in millions):


Volume:
Net ~~decrease~~increase in the volume of kWh sold, primarily due to ~~lower demand resulting from impacts of COVID-19, partially offset by~~ favorable weather in our service territory versus the comparable period, partially offset by lower weather normalized demand primarily due to the impacts of the COVID-19 pandemic	$	~~(7.1)~~7.6
Price:
Net decrease in the weighted average price of retail kWh sold, primarily due to lower fuel revenues, including a ~~$5.4~~$3.6 million reduction due to excess earnings under FAC provisions, ~~(see Note 2, "~~and unfavorable block rate~~Regulatory Matters - FAC~~(1) and ~~Authorized Annual Jurisdictional Net Operating Income" to the Financial Statements for more information)~~other retail rate variances	~~(16.4)~~(11.0)

Other	~~0.2~~3.0

Net decrease in retail revenues	$	~~(23.3)~~(0.4)

(1)Block rate variances are primarily attributable to our declining block rate structure, which generally provides for residential and commercial customers to be charged a lower per kWh rate at higher consumption levels. Therefore, as volumes increase, the weighted average price per kWh decreases and vice versa.

Wholesale Revenues

The ~~decrease~~increase in wholesale revenues of ~~$5.5~~$4.8 million was primarily due to ~~(i)~~ a ~~$5.2~~$3.8 million volume decrease primarily due to decreased unit availability versus the comparable period mostly due to IPL's generation units running less frequently during the second quarter of 2020 due to lower natural gas prices driving lower market prices of purchased powerincrease and ~~decreased demand and (ii)~~ a ~~$0.3~~$1.0 million ~~decrease~~increase in the weighted average price per kWh sold. We sold ~~189.3~~646.8 million kWh in the wholesale market during the ~~second quarter~~first three months of ~~2020~~2021 compared to ~~397.1~~485.0 million kWh during the ~~second quarter~~first three months of ~~2019.~~2020. Our ability to be dispatched in the MISO market is primarily driven by the locational marginal price of electricity and variable generation costs. The amount of electricity available for wholesale sales is impacted by our retail load requirements, generation capacity and unit availability.

Operating Costs and Expenses

The following table illustrates our changes in Operating costs and expenses during the three months ended ~~June 30, 2020~~March 31, 2021 compared to the same period in ~~2019~~2020 (in thousands):


		Three Months Ended											Three Months Ended
		June 30,											March 31,
		2020		2019		$ Change		% Change			2021		2020		$ Change		% Change
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Fuel	Fuel	$	43,351	$	72,217	$	(28,866)	(40.0)	%	Fuel	$	84,731	$	68,788	$	15,943	23.2	%
Power purchased	Power purchased	43,082		36,719		6,363		17.3	%	Power purchased	24,583		35,467		(10,884)		(30.7)	%
Operation and maintenance	Operation and maintenance	94,659		113,661		(19,002)		(16.7)	%	Operation and maintenance	103,949		105,590		(1,641)		(1.6)	%
Depreciation and amortization	Depreciation and amortization	61,099		59,897		1,202		2.0	%	Depreciation and amortization	63,089		60,708		2,381		3.9	%
Taxes other than income taxes	Taxes other than income taxes	11,606		6,983		4,623		66.2	%	Taxes other than income taxes	12,951		12,057		894		7.4	%

Total operating costs and expenses	Total operating costs and expenses	$	253,797	$	289,477	$	(35,680)	(12.3)	%	Total operating costs and expenses	$	289,303	$	282,610	$	6,693	2.4	%

Fuel

The ~~decrease~~increase in fuel costs of ~~$28.9~~$15.9 million was primarily due to ~~(i) a $17.3~~the following:

•an $18.1 million ~~decrease in the quantity of fuel consumed versus the comparable period, (ii) a $12.3 million decrease~~increase due to the ~~lower~~higher price of natural gas consumed versus the comparable period driven by ~~decreased~~increased market ~~prices,~~prices;

•a $14.3 million increase in the quantity of fuel consumed versus the comparable period;

•a $14.5 million decrease from deferred fuel costs; and ~~(iii)~~

•a ~~$1.8~~$1.7 million decrease due to the lower price of coal consumed versus the comparable ~~period, partially offset by (iv) a $3.0 million increase from deferred fuel costs.~~ period.

We are generally permitted to recover underestimated fuel and purchased power costs to serve our retail customers in future rates through quarterly FAC proceedings. These variances are deferred when incurred and amortized into expense in the same period that our rates are adjusted to reflect these variances. ~~For further discussion, please see Note 2, "Regulatory Matters - FAC and Authorized Annual Jurisdictional Net Operating Income”~~ ~~to the Financial Statements of this Form 10-Q.~~ Additionally, fuel and purchased power costs incurred for wholesale energy sales are considered in the Off System Sales Margin rider.

Power Purchased

The ~~increase~~decrease in purchased power costs of ~~$6.4~~$10.9 million was primarily due to ~~(i)~~ the following:

•a ~~85% increase~~$19.2 million decrease due to a 65% decrease in the volume of power purchased during the ~~period ($25.2 million),~~period; partially offset by ~~(ii) a $19.0~~

•an $8.7 million ~~decrease~~increase in the market price of purchased power.

The volume of power purchased each period is primarily influenced by retail demand, generating unit capacity and outages, and the relative cost of producing power versus purchasing power in the market. The primary driver for the ~~$25.2~~$19.2 million volume ~~increase~~decrease was due to ~~IPL's~~AES Indiana's generation units running ~~less~~more frequently during 2021, as well as the ~~second quarter~~timing and duration of ~~2020 due to lower market prices of purchased power.~~outages during these respective periods. The market price of purchased power is influenced primarily by changes in the market price of delivered fuel (primarily natural gas), the supply of and demand for electricity, and the time of day during which power is purchased.

Operation and Maintenance

The decrease in Operation and maintenance of ~~$19.0~~$1.6 million was ~~mostly attributed~~primarily due to ~~(i)~~ the following:

•decreased maintenance expenses of ~~$11.2~~$4.5 million primarily due to decreased outage costs, ~~(ii) lower health~~partially offset by

•higher insurance ~~costs~~expense of ~~$1.7~~$1.1 million.

Depreciation and Amortization

The increase in Depreciation and amortization expense of $2.4 million ~~(iii) lower steam power expenses~~was mostly attributed to the impact of ~~$1.2 million (mostly due to IPL's generation units running less frequently~~additional assets placed in ~~the second quarter of 2020), (iv) lower meter reading and bill collection expenses of $1.0 million, and (v) lower transmission related charges of $0.8 million.~~service.

Taxes Other Than Income Taxes

The increase in Taxes other than income taxes of ~~$4.6~~$0.9 million was mostly attributed to higher property taxes of ~~$1.4~~$1.0 million primarily as a result of higher assessed values.

Other Income / (Expense), Net

The following table illustrates our changes in Other income / (expense), net during the three months ended ~~June 30, 2020~~March 31, 2021 compared to the same period in ~~2019~~2020 (in thousands):

Three Months Ended
June 30,
2020 2019 $ Change % Change
Other income/(expense), net
Allowance for equity funds used during construction $ 1,160 $ 817 $ 343 42.0 %
Interest expense (33,935) (30,291) (3,644) 12.0 %
Loss on early extinguishment of debt (2,415) — (2,415) 100.0 %
Other income / (expense), net 1,772 (2,045) 3,817 (186.7) %
Total other income/(expense), net $ (33,418) $ (31,519) $ (1,899) 6.0 %

~~Interest Expense~~

The increase in Interest expense of $3.6 million was primarily due to (i) amortization of unrealized losses on interest rate hedges of $1.8 million beginning in April 2020 and (ii) higher interest expense on long-term debt of $1.9 million due to higher rates and a higher average debt balance.

~~Loss on Early Extinguishment of Debt~~

The increase in Loss on Early Extinguishment of Debt of $2.4 million was primarily due to a make-whole premium and write-off of deferred financing costs due to the redemption of $405 million of 2020 IPALCO Notes and $65 million IPALCO Term Loan in the second quarter of 2020.


	Three Months Ended
	March 31,
	2021		2020		$ Change		% Change
Other income/(expense), net
Allowance for equity funds used during construction	$	1,374	$	857	$	517	60.3	%
Interest expense	(30,067)		(30,081)		14		—	%

Other income / (expense), net	4,614		207		4,407		2,129.0	%
Total other income/(expense), net	$	(24,079)	$	(29,017)	$	4,938	(17.0)	%

Other Income/(Expense), Net

The increase in Other income/(expense), net of ~~$3.8~~$4.4 million was primarily due to a decrease in defined benefit plan costs of ~~$4.0~~$3.7 million due to a higher expected return on plan assets and lower interest cost compared to the prior ~~year due to higher plan asset balances from 2019 market performance and changes to investment mix.~~

year.

~~Comparison of six months ended June 30, 2020 and six months ended June 30, 2019~~

~~Revenues~~

~~Revenues during the six months ended June 30, 2020 decreased $54.3 million compared to the same period in 2019, which resulted from the following changes (dollars in thousands):~~

Six Months Ended
June 30, Percentage
2020 2019 Change Change
Revenues:
Retail revenues $ 647,147 $ 699,084 $ (51,937) (7.4)%
Wholesale revenues 15,809 17,107 (1,298) (7.6)%
Miscellaneous revenues 5,929 6,987 (1,058) (15.1)%
Total revenues $ 668,885 $ 723,178 $ (54,293) (7.5)%
Heating degree days:
Actual 3,074 3,306 (232) (7.0)%
30-year average 3,290 3,297
Cooling degree days:
Actual 342 312 30 9.6%
30-year average 310 309

~~Retail Revenues~~

~~The decrease in retail revenues of $51.9 million was primarily due to the following (in millions):~~


~~Volume:~~
~~Net decrease in the volume of kWh sold, primarily due to milder weather in our service territory and lower demand resulting from impacts of COVID-19~~	$	~~(33.2)~~
~~Price:~~
~~Net decrease in the weighted average price of retail kWh sold, primarily due to lower fuel revenues, including a $5.4 million reduction due to excess earnings under FAC provisions (see Note 2, "Regulatory Matters - FAC and Authorized Annual Jurisdictional Net Operating Income" to the Financial Statements for more information), partially offset by favorable block rate~~⁽¹⁾ ~~and other retail rate variances~~	~~(20.0)~~

~~Other~~	~~1.3~~

~~Net decrease in retail revenues~~	$	~~(51.9)~~

~~(1)~~Block rate variances are primarily attributable to our declining block rate structure, which generally provides for residential and commercial customers to be charged a higher per kWh rate at lower consumption levels. Therefore, as volumes decrease, the weighted average price per kWh increases and vice versa.

~~Wholesale Revenues~~

The decrease in wholesale revenues of $1.3 million was primarily due to a $1.5 million decrease in the weighted average price per kWh sold; partially offset by a $0.2 million volume increase. We sold 674.2 million kWh in the wholesale market during the first half of 2020 compared to 665.4 million kWh during the first half of 2019. Our ability to be dispatched in the MISO market is primarily driven by the locational marginal price of electricity and variable generation costs. The amount of electricity available for wholesale sales is impacted by our retail load requirements, generation capacity and unit availability.

~~Operating Costs and Expenses~~

~~The following table illustrates our changes in Operating costs and expenses during the six months ended June 30, 2020 compared to the same period in 2019 (in thousands):~~

Six Months Ended
June 30,
2020 2019 $ Change % Change
Operating costs and expenses:
Fuel $ 112,139 $ 161,016 $ (48,877) (30.4) %
Power purchased 78,549 69,643 8,906 12.8 %
Operation and maintenance 200,248 215,807 (15,559) (7.2) %
Depreciation and amortization 121,807 119,566 2,241 1.9 %
Taxes other than income taxes 23,664 20,966 2,698 12.9 %
Total operating costs and expenses $ 536,407 $ 586,998 $ (50,591) (8.6) %

~~Fuel~~

The decrease in fuel costs of $48.9 million was primarily due to (i) a $30.1 million decrease due to the lower price of natural gas consumed versus the comparable period driven by decreased market prices, (ii) a $16.3 million decrease in the quantity of fuel consumed versus the comparable period, and (ii) a $7.0 million decrease due to the lower price of coal consumed versus the comparable period, partially offset by (iv) a $4.5 million increase from deferred fuel costs. We are generally permitted to recover underestimated fuel and purchased power costs to serve our retail customers in future rates through quarterly FAC proceedings. These variances are deferred when incurred and amortized into expense in the same period that our rates are adjusted to reflect these variances. For further discussion, please see Note 2, "~~Regulatory Matters - FAC and Authorized Annual Jurisdictional Net Operating Income”~~ ~~to the Financial Statements of this Form 10-Q. Additionally, fuel and purchased power costs incurred for wholesale energy sales are considered in the Off System Sales Margin rider.~~

~~Power Purchased~~

The increase in purchased power costs of $8.9 million was primarily due to (i) a 66% increase in the volume of power purchased during the period ($38.1 million), partially offset by (ii) a $28.6 million decrease in the market price of purchased power. The volume of power purchased each period is primarily influenced by retail demand, generating unit capacity and outages, and the relative cost of producing power versus purchasing power in the market. The primary driver for the $38.1 million volume increase was due to IPL's generation units running less frequently during the second quarter of 2020 due to lower market prices of purchased power. The market price of purchased power is influenced primarily by changes in the market price of delivered fuel (primarily natural gas), the supply of and demand for electricity, and the time of day during which power is purchased.

~~Operation and Maintenance~~

The decrease in Operation and maintenance of $15.6 million was mostly attributed to (i) decreased maintenance expenses of $8.3 million primarily due to decreased outage costs, (ii) lower steam power expenses of $2.7 million, (iii) lower meter reading and bill collection costs of $1.2 million, and (iv) lower transmission related charges of $0.6 million.

~~Other Income / (Expense), Net~~

~~The following table illustrates our changes in Other income / (expense), net during the six months ended June 30, 2020 compared to the same period in 2019 (in thousands):~~

Six Months Ended
June 30,
2020 2019 $ Change % Change
Other income/(expense), net
Allowance for equity funds used during construction $ 2,017 $ 1,728 $ 289 16.7 %
Interest expense (64,016) (60,773) (3,243) 5.3 %
Loss on early extinguishment of debt (2,415) — (2,415) 100.0 %
Other income / (expense), net 1,979 (5,273) 7,252 (137.5) %
Total other income/(expense), net $ (62,435) $ (64,318) $ 1,883 (2.9) %

~~Interest Expense~~

The increase in Interest expense of $3.2 million was primarily due to (i) amortization of unrealized losses on interest rate hedges of $1.8 million beginning in April 2020 and (ii) higher interest expense on long-term debt of $1.5 million due to higher rates and a higher average debt balance.

~~Loss on Early Extinguishment of Debt~~

~~Other Income/(Expense), Net~~

The increase in Other income/(expense), net of $7.3 million was primarily due to a decrease in defined benefit plan costs of $8.0 million due to a higher expected return on plan assets compared to prior year due to higher plan asset balances from 2019 market performance and changes to investment mix.

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KEY TRENDS AND UNCERTAINTIES

During the remainder of ~~2020~~2021 and beyond, we expect that our financial results will be driven primarily by retail demand, weather and maintenance costs. In addition, our financial results will likely be driven by many other factors including, but not limited to:

•regulatory outcomes and impacts;

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

•timely recovery of capital expenditures.

If favorable outcomes related to these factors do not occur, or if the challenges described below and elsewhere in this Quarterly Report impact us more significantly than we currently anticipate, then these ~~adverse~~ factors, or other ~~adverse~~ factors unknown to us, may impact our operating margin, net income and cash flows. We continue to monitor our operations and address challenges as they arise. For a discussion of the risks related to our business, see “Item 1. Business” and “Item 1A. Risk Factors” as described in IPALCO’s ~~2019~~2020 Form ~~10-K and "Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q.~~10-K.

COVID-19 Pandemic

~~In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China.~~The COVID-19 ~~has since spread to over 180 countries, including every state in the U.S. On March 11, 2020 the World Health Organization declared COVID-19 a~~ pandemic and on March 13, 2020 the U.S. declared a national emergency with respect to COVID-19. On March 19, 2020, the Governor of Indiana issued an Executive Order prohibiting electric utilities, including us, from discontinuing electric utility service to customers, which has ~~been extended through August 14, 2020.~~

~~The outbreak of COVID-19 has severely~~ impacted global economic activity, including electricity and energy consumption, and caused significant volatility ~~and negative pressure~~ in financial ~~markets~~markets. Responses to the COVID-19 pandemic by the State of Indiana and ~~reduced the demand for energy~~its residents and businesses, in ~~our service territory. The global impact of the outbreak has been rapidly evolving and many countries,~~particular, continue to evolve, including ~~the U.S., have reacted by instituting quarantines, mandating~~with respect to business and school closures and ~~restricting travel.~~limitations and other social distancing measures and the effectiveness and timing of vaccine availability and distribution efforts.

Social distancing measures designed to slow the spread of the virus, such as business closures and operations limitations, impact energy demand within our service industry. 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. We experienced impacts from the pandemic in 2020 and into 2021 and expect to continue to experience impacts for the remainder of ~~2020,~~2021, and any such impacts during that time or in other future periods could have material and adverse effects on our results of operations, financial condition and cash flows. The following discussion highlights our assessment of the impacts of the COVID-19 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 -~~1A. Risk Factors" ~~of this~~to IPALCO’s 2020 Form ~~10-Q.~~10-K.

Business Continuity - AsDuring the COVID-19 pandemic, ~~progresses,~~ we are taking a variety of measures to ensure our ability to generate, transmit, distribute and sell electric energy, to ensure the health and safety of our employees, contractors, customers and communities and to provide essential services to the communities in which we operate. We continue to respond to this global crisis through comprehensive measures to protect our employees and others while fulfilling our vital role in providing our customers with electric energy. While ~~there have been~~ stay-at-home ~~restrictions in place in Indiana, 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~~As the economic impact of the COVID-19 pandemic started to materialize in Indiana in the second half of March 2020 and ~~more so in~~continued for the ~~second quarter~~duration of ~~2020. For the three~~2020 and ~~six months ending June 30, 2020,~~into 2021, the COVID-19 pandemic primarily impacted our retail sales ~~demand. For small commercial and industrial and large commercial and industrial customers,~~demand, including for the quarter ended March 31, 2021, as shown by the changes in weather-normalized volumes of kWh sold ~~decreased~~ by ~~10.3%~~customer class as follows:


Customer Class	For the three months ended March 31, 2021 compared to the same period in 2020
Residential	(0.9)	%
Small commercial and industrial	(1.8)	%
Large commercial and industrial	(4.1)	%

As noted above, we also have incurred and ~~11.0%, respectively, for the three months ended June 30,~~expect to continue to incur expenses relating to COVID-19, however see Note 2, “Regulatory Matters - IURC COVID-19 Orders” to IPALCO’s 2020 as compared to the same period in the prior year. For residential customers, weather-normalized volumes of kWh sold increased by 6.6% for the three months ended June 30, 2020 as compared to the same period in the prior year. See Note 10, "~~Revenue" to the Financial Statements~~Form 10-K for a ~~disaggregation~~discussion of ~~retail revenues by customer class.~~regulatory measures which partially mitigate the impact of these expenses. We have continued to experience COVID-19 impacts into 2021. The ~~declines for small~~ultimate magnitude and ~~large commercial and industrial~~duration of the COVID-19 pandemic is unknown at this

3529

~~customers were more severe in April~~time and ~~May,~~may have material and ~~partially recovered in June as stay-at-home orders were lifted, while the increase for residential stayed consistent. While we cannot predict the length~~adverse effects on our results of operations, financial condition and ~~magnitude of the pandemic or how it could ultimately impact global or local economic conditions, continuous and/or further declines~~cash flows in future ~~demand would adversely impact our financial results for 2020 and beyond.~~periods.

Liquidity - We anticipate ~~having~~continuing to have sufficient liquidity to make all required payments, including payments for salaries and wages owed to our employees, during the COVID-19 pandemic. We doalso continue to not foresee a significant impact to our access to capital or our liquidity position as a result of the COVID-19 pandemic. During the three months ended June 30, 2020, IPALCO accessed the capital markets to issue $475 million in principal amount of 4.25%, ten-year notes, which has been used to repay IPALCO debt due to mature in 2020. 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.

Credit Exposures - We continue to monitor and manage our credit exposures in a prudent manner. During the ~~three months~~year ended ~~June 30,~~December 31, 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 (prohibition ended August 14, 2020), and due to the economic impacts of the COVID-19 ~~pandemic. This has resulted~~pandemic, which began to improve in ~~an increase in past due customer receivable balances,~~2021. See Note 1, "Overview and Summary of Significant Accounting Policies - Accounts Receivable" for further discussion of our allowance for credit ~~losses has increased $3.0 million during the second quarter of 2020. We expect significant economic disruptions~~losses. If these credit-related impacts from the COVID-19 pandemic ~~potentially for the remainder of 2020 and beyond. If these disruptions occur,~~continue into 2021 or beyond, further deterioration in our credit exposures and customer collections ~~could~~may result. See Note 2, "“Regulatory ~~Matters"~~Matters - IURC COVID-19 Orders” to IPALCO’s 2020 Form 10-K for a discussion of regulatory measures which mitigate this impact.

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~~we have deferred the ~~deferral~~payment of federal payroll taxes ~~may provide some cash benefits~~ in accordance with the ~~near term.~~

~~Income Taxes~~ ~~- The demands placed on~~provisions of this act. At March 31, 2021, the U.S. Government to respond to the pandemic may cause delays to the expected issuance of regulations pursuant to the Tax Cuts and Jobs Act (“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.total deferral was approximately $5.0 million.

See Note 12, "Risks and Uncertainties" to the Financial Statements ~~and "Part II - Item 1A. Risk Factors~~" of this Form 10-Q for more information.

Operational

As part of ~~IPL's~~AES Indiana's December 2019 Integrated Resource Plan filing, ~~it was determined that~~AES Indiana has plans to retire 630 MW of coal-fired generation ~~would be retired~~ at Petersburg Units 1 and 2. ~~IPL~~AES Indiana issued an all-source request for proposal to competitively procure replacement capacity by June 1, 2023, which is the first year ~~IPL~~AES Indiana is expected to have a capacity shortfall. Proposals were received through February 28, 2020 and are currently being evaluated. On February 5, 2021, AES Indiana announced an agreement to acquire a 195 MW solar project, subject to approval from the IURC. For further discussion, see Note 2, "Regulatory Matters - IRP Filing" in IPALCO’s ~~2019~~2020 Form 10-K.

Regulatory and Environmental

Please see Note 2, "Regulatory Matters” to the Financial Statements of this Form 10-Q and Note 2, “Regulatory Matters” to IPALCO’s ~~2019~~2020 Form 10-K for a discussion of regulatory matters. We also are subject to numerous environmental laws and regulations in the jurisdictions in which we operate. We face certain risks and uncertainties related to these environmental laws and regulations, including existing and potential GHG legislation or regulations, and actual or potential laws and regulations pertaining to water discharges, waste management (including disposal or beneficial reuse of CCR) and certain air emissions, such as SO₂, NO_x, particulate matter and mercury. Such risks and uncertainties could result in increased capital expenditures or other compliance costs which could have a material adverse effect on our consolidated results of operations. Please see Note 8, “Commitments and

Contingencies” to the Financial Statements of this Form 10-Q for a description of certain environmental matters. In addition, the following discussion of the impact of environmental laws and regulations on the Company updates the discussion provided in “Item 1. Business - Regulatory Matters” and “Item 1. Business - Environmental Matters” in IPALCO’s ~~2019~~2020 Form 10-K.

~~TDSIC~~

~~On March 4, 2020, the IURC issued an order approving the projects in IPL's TDSIC Plan. For further discussion, please see Note 2, "Regulatory Matters”~~ ~~to the Financial Statements.~~

~~U.S. Executive Order Regarding Power Equipment~~

On May 1, 2020, President Trump issued an executive order banning transactions involving the acquisition, importation, transfer, or installation of certain equipment to be used in connection with the operation of the U.S. interconnected transmission network 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 is subject to, or controlled by, the jurisdiction of a country considered by the U.S. to be a foreign adversary and such transaction would pose an unacceptable risk to the national security of the U.S. (the “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 Order on our business is uncertain.

~~Waste Management and CCR~~

The EPA's final CCR rule became effective in October 2015. Generally, the rule regulates CCR as nonhazardous solid waste and establishes national minimum criteria for existing and new CCR landfills and existing and new CCR ash ponds, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements and post-closure care. The EPA has indicated that they will implement a phased approach to amending the CCR rule. On March 3, 2020, the EPA published proposed amendments to the CCR rule titled “A Holistic Approach to Closure Part B” which would address the beneficial use of CCR for closure of ash ponds subject to forced closure per the CCR Rule. This could impact IPL's Petersburg plant's ability to use CCR for closure of ash ponds. 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, 2020, EPA released a pre-publication version of final amendments to the CCR rule title “A Holistic Approach to Closure Part A: Deadline to Initiate Closure,” which we are still reviewing. The CCR rule, current or proposed amendments to the CCR rule, the results of groundwater monitoring data or the outcome of CCR-related litigation could have a material impact on our business, financial condition and results of operations. We would seek recovery of any resulting expenditures; however, there is no guarantee we would be successful in this regard. See Note 3, “~~Property, Plant and Equipment - ARO” to the Financial Statements in IPALCO's 2019 Form 10-K for further information.~~

Climate Change ~~Legislation and~~ Regulation

On August 31, 2018, the EPA published in the Federal Register proposed Emission Guidelines for Greenhouse Gas

Emissions from Existing Electric Utility Generating Units, known as the ACE Rule. On July 8, 2019, the EPA

published the final ACE Rule along with associated revisions to implementing regulations. The final ACE Rule ~~replaces~~

established CO2 emission rules for existing power plants under CAA Section 111(d) and replaced the ~~CPP and determines~~EPA's 2015

CPP. In accordance with the ACE rule, the EPA determined that heat rate improvement measures are the Best

System of Emissions Reductions for existing coal-fired electric generating units. The final rule ~~requires~~required the State of

Indiana to develop a State Plan to establish CO2emission limits for designated facilities, including ~~IPL~~AES Indiana Petersburg's coal-fired electric generating units. States ~~have~~had three years to develop their plans under the rule. However, on January 19, 2021, the D.C. Circuit vacated and remanded to EPA the ACE Rule, but withheld issuance of the mandate that would effectuate its decision. On February ~~19, 2020, Indiana published~~22, 2021, the D.C. Circuit granted EPA’s unopposed motion for a ~~First Notice for~~partial stay of the ~~Indiana~~issuance of the mandate on vacating the repeal of the CPP. On March 5, 2021, the D.C. Circuit issued the partial mandate effectuating the vacatur of the ACE ~~Rule indicating that IDEM intends~~Rule. In effect, the CPP will not take effect while EPA is addressing the remand of the ACE rule by promulgating a new Section 111(d) rule to ~~determine the best system~~regulate greenhouse gases from existing electric generating units. The impact of such future greenhouse gas emissions ~~reductions and CO~~2 ~~standards for affected units. Impacts remain largely~~regulations remains uncertain, ~~because Indiana's State Plan has not yet been developed.~~but it could be material.

CSAPR

CSAPR, which became effective in January 2015, addresses the "good neighbor" provision of the CAA, which

prohibits sources within each state from emitting any air pollutant in an amount which will contribute significantly to

any other state’s nonattainment, or interference with maintenance of, any NAAQS. The CSAPR is implemented, in

part, through a market-based program under which compliance may be achievable through the acquisition and use

of emissions allowances created by the EPA. In October 2016, the EPA published a final rule to update the CSAPR

to address the 2008 ozone NAAQS (“CSAPR Update Rule”). The CSAPR Update Rule found that NOx NOx ozone

season emissions in 22 states (including Indiana) affect the ability of downwind states to attain and maintain the

2008 ozone NAAQS, and accordingly, the EPA issued federal implementation plans that both generally provide

updated CSAPR NOx NOx ozone season emission budgets for electric generating units within these states and that

implement these budgets through modifications to the CSAPR NOx NOx ozone season allowance trading program.

Implementation began in the 2017 ozone season (May through September 2017). Affected facilities receive fewer

ozone season NOx allowances in 2017 and later, possibly resulting in the need to purchase additional allowances.

Additionally, on September 13, 2019, the D.C. Circuit remanded a portion of the October 2016 CSAPR Update Rule

to the EPA. OnIn December 2018, EPA determined that the 2016 CSAPR Update Rule fully satisfied 20 states ~~(including~~

(including Indiana) good neighbor obligations with respect to the 2008 Ozone NAAQS (“CSAPR Close-Out Rule”),

obviating the need for EPA to promulgate Federal Implementation Plans (FIPs) in these states. In October 2019, the

D.C. Circuit vacated and remanded the CSAPR Close-Out Rule. On July 28, 2020, the D.C. Circuit ordered EPA to

issue FIPs addressing seven states’ (including Indiana) outstanding 2008 NAAQS “good neighbor” obligations by

March 15, 2021. On April 30, 2021, EPA published a final rule to address the 2020 D.C. Circuit decision. EPA is issuing new or amended federal implementation plans for 12 states, including Indiana, with revised CSAPR NOx ozone season emission budgets for electric generating units within these states via a new CSAPR NOx Ozone Season Group 3 Trading Program. Implementation is expected to begin during the 2021 ozone season (May through September 2021) with an effective date 60 days following publication in the Federal Register of the final rule. AES Indiana facilities will receive fewer ozone season NOx allowances for future NOx Ozone Seasons beginning in 2021 and later, possibly resulting in the need to purchase additional allowances.

~~With respect to these standards and requirements, there has not been a significant impact to date.However at this time we cannot predict what the impact will be in future years or if there will be an impact resulting from future rulemakings or legal outcomes, but it could be material.~~

~~NAAQS~~

SO2. ~~In 2010, a new one-hour SO~~2 ~~primary NAAQS became effective. In 2013, the EPA published in the~~ ~~Federal Register~~ ~~its final designations, which include portions of Marion, Morgan, and Pike counties as nonattainment with respect to the one-hour SO~~2 ~~standard. In 2015, IDEM published its final rule establishing reduced SO~~2 limits for IPL facilities in accordance with the new one-hour standard, for the areas in which IPL’s Harding Street, Petersburg, and Eagle Valley generating stations operate, with compliance required by January 1, 2017. Improvements to the existing FGD systems at Petersburg station were required to meet the emission limits imposed by the rule. The rule has not impacted IPL’s Eagle Valley or Harding Street generating stations as these facilities ceased coal combustion in advance of the compliance date.

~~On August 15, 2018, the EPA proposed to approve Indiana's State Implementation Plan (SIP) addressing attainment of the 2010 SO~~2 standard for certain locations including those of IPL's Harding Street and Petersburg Generating Stations. On March 22, 2019, the EPA finalized approval of Indiana's attainment plan for the area that includes Harding Street. Effective May 21, 2020, the EPA finalized the redesignation of Marion County to attainment of the SO2 ~~NAAQS. On July 14, 2020, the EPA proposed redesignation of Morgan County to attainment of the SO~~2 ~~NAAQS. The EPA has not approved the attainment plan for the area that includes Petersburg. Instead IDEM has imposed additional SO~~2 limits on Petersburg through a Commissioner's Order issued July 31, 2019. On September 18, 2019, IDEM requested EPA approval of those limits as part of the SIP. On February 24, 2020, EPA proposed to approve those limits. Once the limits are approved as part of the SIP, IDEM can resubmit the attainment plan for EPA approval for the area that includes Petersburg.

Based on these current and potential national ambient air quality standards, the state of Indiana is required to determine whether certain areas within the state meet the NAAQS. With respect to Marion, Morgan and Pike Counties, as well as any other areas determined to be in "nonattainment," the state of Indiana will be required to modify its State Implementation Plan to detail how the state will regain its attainment status. As part of this process, it is possible that the IDEM or the EPA may require reductions of emissions from our generating stations to reach attainment status for ozone, fine particulate matter or SO2. At this time we cannot predict what the impact ~~will be to IPL with respect to~~of these ~~new ambient standards,~~rule revisions or potential future legal outcomes, but itany such impact could be ~~material.~~

~~In March 2018, the state of New York submitted a petition~~material to the EPA pursuant to Section 126 of the CAA requesting new limitations on NOx emissions from dozens of upwind generating stations, including IPL's Petersburg, Harding Street, and Eagle Valley stations on the basis that they are contributing significantly to New York’s ability to meet the 2008 ozone NAAQS. On October 18, 2019, the EPA published final denial of the petition. On July 14, 2020, the D.C. Circuit Court vacated and remanded EPA’s denial of the petition. EPA must now issue a new decision based on the Court’s decision. If the Section 126 petition is ultimately granted, our units could be subject to additional requirements, which could be material. We would seek recovery of any resulting capital expenditures; however, there is no guarantee we would be successful.

~~CWA - Regulation of Water Discharge~~

IPL 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 activities required for construction and maintenance, provided the activity does not result in the loss of greater than ½-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 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 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 may have a material impact on our business, financial condition or results of ~~operations.~~

~~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 CWA permit is required when pollutants originate from a point source but are conveyed to navigable waters through a nonpoint source such as groundwater. The 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. operation.

Macroeconomic and Political

Reference Rate Reform

As discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties" of IPALCO's ~~2019~~2020 Form 10-K, in July 2017, the UK Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021. In the U.S., the Alternative Reference Rate Committee at the Federal Reserve identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative rate for LIBOR; alternative reference rates in other key markets are under development. ~~While IPALCO maintains~~On November

30, 2020, the ICE Benchmark Association ("IBA") announced it had begun consultation on its intention to cease publication of two specific LIBOR rates by December 31, 2021, while extending the timeline for the overnight, one-month, three-month, six-month, and 12-month USD LIBOR rates through June 30, 2023. On March 5, 2021, IBA published a feedback statement for the consultation, announcing its intention to cease the publication of these rates on the specified dates. We maintain financial instruments ~~referencing~~that use LIBOR as an interest rate ~~benchmark, we have not yet executed any technical amendments or other contractual alternatives to address this matter.~~benchmark. Although the full impact of the reform remains unknown, we have begun to engage with ~~IPALCO and IPL~~our counterparties to discuss specific action items to be undertaken in order to prepare for amendments when ~~such contracts~~they become due.

CAPITAL RESOURCES AND LIQUIDITY

Overview

As of ~~June 30, 2020,~~March 31, 2021, we had unrestricted cash and cash equivalents of ~~$33.5~~$48.6 million and available borrowing capacity of ~~$220~~$160 million under our unsecured revolving Credit Agreement. All of ~~IPL’s~~AES Indiana’s long-term borrowings must first be approved by the IURC and the aggregate amount of ~~IPL’s~~AES Indiana’s short-term indebtedness must be approved by the FERC. We have approval from the FERC to borrow upup to $500 million of short-term indebtedness outstanding at any time ~~throu~~ghthrough July 26, 2022. In December 2018, we received an order from the IURC granting us authority through December 31, 2021 to, among other things, issue up to $350 million in aggregate principal amount of long-term de~~bt and refinance up to $185 million in existing indebtedness,~~debt, all of which authority remains available under the order as of ~~June 30, 2020.~~March 31, 2021, and refinance up to $185 million in existing indebtedness, of which $95 million of authority remains available under the order as of March 31, 2021. This order also grants us authority to have up to $500 million of long-term credit agreements and liquidity facilities outstanding at any one time, of which $250 million remains available under the

order as of ~~June 30, 2020.~~March 31, 2021. As an alternative to the sale of all or a portion of $65 million in principal of the long-term debt, we have the authority to issue up to $65 million of new preferred stock, all of which authority remains available under the order as of ~~June 30, 2020.~~March 31, 2021. We also have restrictions on the amount of new debt that may be issued due to contractual obligations of AES and by financial covenant restrictions under our ~~existin~~gexisting debt obligations. We do not believe such restrictions will be a limiting factor in our ability to issue debt in the ordinary course of prudent business operations.

We believe that existing cash balances, cash generated from operating activities, and borrowing capacity on our committed Credit Agreement will be adequate for the foreseeable future to meet anticipated operating expenses, interest expense on outstanding indebtedness, recurring capital expenditures, and to pay dividends to AES U.S. Investments and CDPQ. Sources for principal payments on outstanding indebtedness and nonrecurring capital expenditures are expected to be obtained from: (i) existing cash balances; (ii) cash generated from operating activities; (iii) borrowing capacity on our committed Credit Agreement; (iv) additional debt financing; and (v) equity capital contributions. 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.

~~IPL~~AES Indiana First Mortgage Bonds

~~IPL~~AES Indiana has $95 million of 3.875% ~~IPL~~AES Indiana first mortgage bonds that are due August 1, 2021. For further discussion, please see Note 5, “Debt - ~~IPL~~AES Indiana First Mortgage Bonds.”

~~IPL Unsecured Notes~~

~~IPL has $90 million of unsecured notes due December 22, 2020. For further discussion, please see Note 5, “Debt -~~

~~IPL Unsecured Notes.~~”

~~IPALCO’s Senior Secured Notes and Term Loan~~

In April 2020, IPALCO completed the sale of the $475 million 2030 IPALCO Notes priced at 4.25%, with the net proceeds from this offering used to retire the Term Loan on April 14, 2020. The remaining net proceeds, together with cash on hand, were used to redeem the 2020 IPALCO Notes on May 14, 2020, and to pay certain related fees, expenses and make-whole premiums. For further discussion, please see Note 5, “~~Debt - IPALCO's Senior Secured Notes and Term Loan.~~”

Cash Flows

The following table provides a summary of our cash flows (in thousands):


		Six Months Ended June 30,									Three Months Ended March 31,
		2020		2019		$ Change			2021		2020		$ Change
Net cash provided by operating activities	Net cash provided by operating activities	$	146,323	$	150,878	$	(4,555)	Net cash provided by operating activities	$	107,888	$	97,576	$	10,312
Net cash used in investing activities	Net cash used in investing activities	(113,441)		(114,912)		1,471		Net cash used in investing activities	(69,767)		(63,203)		(6,564)
Net cash used in financing activities	Net cash used in financing activities	(28,183)		(57,760)		29,577		Net cash used in financing activities	(16,146)		(27,434)		11,288
Net change in cash and cash equivalents	Net change in cash and cash equivalents	4,699		(21,794)		26,493		Net change in cash and cash equivalents	21,975		6,939		15,036
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	48,552		33,599		14,953		Cash, cash equivalents and restricted cash at beginning of period	26,622		48,552		(21,930)
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	53,251	$	11,805	$	41,446	Cash, cash equivalents and restricted cash at end of period	$	48,597	$	55,491	$	(6,894)

Operating Activities

The following table summarizes the key components of our consolidated operating cash flows (in thousands):


		Six Months Ended June 30,									Three Months Ended March 31,
		2020		2019		$ Change			2021		2020		$ Change
Net income	Net income	$	55,106	$	56,698	$	(1,592)	Net income	$	38,784	$	35,983	$	2,801
Depreciation and amortization	Depreciation and amortization	121,807		119,566		2,241		Depreciation and amortization	63,089		60,708		2,381
Deferred income taxes and investment tax credit adjustments - net	Deferred income taxes and investment tax credit adjustments - net	860		16,350		(15,490)		Deferred income taxes and investment tax credit adjustments - net	922		2,467		(1,545)
Other adjustments to net income	Other adjustments to net income	2,485		325		2,160		Other adjustments to net income	(376)		243		(619)
Net income, adjusted for non-cash items	Net income, adjusted for non-cash items	180,258		192,939		(12,681)		Net income, adjusted for non-cash items	102,419		99,401		3,018
Net change in operating assets and liabilities⁽¹⁾	Net change in operating assets and liabilities⁽¹⁾	(33,935)		(42,061)		8,126		Net change in operating assets and liabilities(1)	5,469		(1,825)		7,294
Net cash provided by operating activities	Net cash provided by operating activities	$	146,323	$	150,878	$	(4,555)	Net cash provided by operating activities	$	107,888	$	97,576	$	10,312

⁽¹⁾Refer to the table below for explanations of the variance in operating assets and liabilities.	⁽¹⁾Refer to the table below for explanations of the variance in operating assets and liabilities.													(1) Refer to the table below for explanations of the variance in operating assets and liabilities.

The net change in operating assets and liabilities for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 compared to the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 was driven by changes in the following (in thousands):


Increase from ~~accrued taxes payable/receivable~~inventories is primarily due to ~~lower tax sharing payments and~~ higher ~~current tax expense~~consumption in ~~the current year~~2021	$	~~45,895~~20,833
~~Decrease from inventories primarily due to higher inventory balances as IPL's generation units ran less frequently during the second quarter of 2020~~	~~(26,762)~~
Increase from accounts payable is primarily due to timing of payments	~~6,865~~11,550
Increase from accrued interest is due to timing of interest payments	8,582
Decrease from prepayments and other current assets is primarily due to increased funding with the Service Company in 2021	(18,111)
Decrease from short-term and long-term regulatory assets and liabilities is primarily due to ~~a decrease~~higher deferred fuel expense in ~~the ECCRA regulatory liability as we return certain benefits to customers~~2021	~~(6,506)~~(11,679)
~~Decrease from accounts receivable is primarily due to timing of collections~~	~~(6,227)~~
~~Decrease from pension and other postretirement benefit obligations is primarily due to higher expected return on plan assets~~	~~(6,173)~~
Other	~~1,034~~ (3,881)
Net change in operating assets and liabilities	$	~~8,126~~7,294

Investing Activities

Net cash used in investing activities ~~decreased $1.5~~increased $6.6 million for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 compared to the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, which was primarily driven by (in thousands):


~~Lower~~Higher cash outflows for capital expenditures due to higher growth related capital expenditures primarily tofrom TDSIC Plan investments, partially offset by lower maintenance and ~~growth~~environmental related capital expenditures	$	~~14,762~~ (8,302)
~~Higher cash outflows on cost of removal and regulatory recoverable ARO payments primarily due to timing of such payments~~	~~(12,863)~~
Other	~~(428)~~1,738
Net change in investing activities	$	~~1,471~~ (6,564)

Financing Activities

Net cash used in financing activities decreased ~~$29.6~~$11.3 million for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 compared to the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, which was primarily driven by (in thousands):


Increase from ~~long-term~~net borrowings under revolving credit facilities due to higher net draws on AES Indiana's line of ~~discount due primarily to the April 2020 issuance of the $475.0 million 4.25% 2030 senior secured notes~~credit in 2021	$	~~474,568~~15,000
~~Decrease from retirement of long-term debt, including early payment premium primarily due~~Higher distributions to ~~the April 2020 retirement of a $65.0 million Term Loan, and the May 2020 retirement of the $405.0 million 3.45% Senior Secured Notes~~shareholders	~~(472,135)~~(3,442)
~~Increase from short-term debt borrowings due to higher draws on IPL's line of credit in 2020~~	~~20,000~~
Other	~~7,144~~ (270)
Net change in financing activities	$	~~29,577~~11,288

Capital Requirements

Capital Expenditures

Our capital expenditure program, including development and permitting costs, for the three-year period from ~~2020~~2021 through ~~2022~~2023 (including amounts already expended in the first ~~six~~three months of ~~2020)~~2021) is currently estimated to cost approximately ~~$1.1~~$1.5 billion (excluding environmental compliance), and includes estimates as follows (amounts in millions):

For the three-year period
2020 2021 2022 from 2020 through 2022
Transmission and distribution related additions, improvements and extensions $ 208 $ 277 $ 307 $ 792
⁽¹⁾
Power plant related projects 61 59 70 190
Other miscellaneous equipment 31 42 41 114
Total estimated costs of capital expenditure program $ 300 $ 378 $ 418 $ 1,096
⁽¹⁾Additions, improvements and extensions to transmission and distribution lines, substations, power factor and voltage regulating equipment, distribution transformers and street lighting facilities

~~Additionally, estimated capital expenditure spending on environmental compliance costs for the three-year period from 2020 through 2022 includes the following (amounts in millions):~~

Total Estimated Costs Total Costs Expended Remaining Costs
of Project Through June 30, 2020 of Project
NAAQS SO₂ ⁽¹⁾
$ 27 $ 26 $ 1
Cooling water intake regulations ⁽²⁾
$ 8 $ 2 $ 6
⁽¹⁾Includes spending for projects underway related to environmental compliance for NAAQS SO₂.
⁽²⁾Includes spending for studies related to cooling water intake requirements in section 316(b) of the CWA.

~~Please see “Item 1. Business - Environmental Matters"~~ ~~in IPALCO’s 2019 Form 10-K for additional details on each of these projects.~~


							For the three-year period
	2021		2022		2023		from 2021 through 2023
Transmission and distribution related additions, improvements and extensions	$	287	$	268	$	287	$	842	(1)
Power plant related projects	55		266		222		543
Other miscellaneous equipment	63		53		35		151
Total estimated costs of capital expenditure program	$	405	$	587	$	544	$	1,536

(1) Additions, improvements and extensions to transmission and distribution lines, substations, power factor and voltage regulating equipment, distribution transformers and street lighting facilities

The amounts described in the capital expenditure program above include spending under ~~IPL's~~AES Indiana's TDSIC plan approved by the IURC on March 4, 2020 for eligible transmission, distribution and storage system improvements totaling $1.2 billion from 2020 through ~~2027.~~2027 (which includes estimated spending of $176.5 million in 2021, $190.0 million in 2022 and $212.6 million in 2023, respectively). Total TDSIC costs expended from project inception through March 31, 2021 were $176.8 million.

Additionally, estimated capital expenditure spending on environmental compliance costs for the three-year period from 2021 through 2023 includes the following (amounts in millions):


	Total Estimated Costs		Total Costs Expended		Remaining Costs
	of Project		Through March 31, 2021		of Project
NAAQS SO2 (1)	$	27	$	26	$	1
Cooling water intake regulations (2)	$	9	$	2	$	7

(1) Includes spending for projects underway related to environmental compliance for NAAQS SO2.
(2) Includes spending for studies related to cooling water intake requirements in section 316(b) of the CWA.

Please see “Item 1. Business - Environmental Matters" in IPALCO’s 2020 Form 10-K for additional details on each of these projects.

Credit Ratings

Our ability to borrow money or to refinance existing indebtedness and the interest rates at which we can borrow money or refinance existing indebtedness are affected by our credit ratings. In addition, the applicable interest rates on ~~IPL’s~~AES Indiana’s Credit Agreement ~~and other unsecured notes (and~~(as well as the amount of certain other fees in the Credit Agreement) are dependent upon the credit ratings of ~~IPL.~~AES Indiana. Downgrades in the credit ratings of AES could result in ~~IPL’s~~AES Indiana’s and/or IPALCO’s credit ratings being downgraded. Any reduction in our debt or credit ratings may adversely affect the trading price of our outstanding debt securities.

The following table presents the debt ratings and credit ratings (issuer/corporate rating) and outlook for IPALCO and ~~IPL, along with the dates each rating was effective or affirmed.~~AES Indiana.

Debt ratings

IPALCO

~~IPL~~AES Indiana

Outlook

~~Effective or Affirmed~~

Fitch Ratings

BBB ^(a)

A^(b)

Stable

~~November 2019~~

Moody’s Investors Service

Baa3^(a)

A2^(b)

Stable

~~November 2018~~

S&P Global Ratings

BBB-^(a)

A-^(b)

Stable

~~November 2019~~

Credit ratings

IPALCO

~~IPL~~AES Indiana

Outlook

~~Effective or Affirmed~~

Fitch Ratings

BBB-

BBB+

Stable

~~November 2019~~

Moody’s Investors Service

—

Baa1

Stable

~~November 2018~~

S&P Global Ratings

BBB

Stable

~~November 2019~~

(a)Ratings relate to IPALCO’s Senior Secured Notes

(b)Ratings relate to ~~IPL~~AES Indiana’s Senior Secured Bonds.

We cannot predict whether our current debt and credit ratings or the debt and credit ratings of ~~IPL~~AES Indiana will remain in effect for any given period of time or that one or more of these ratings will not be lowered or withdrawn entirely by a rating agency. A security rating is not a recommendation to buy, sell or hold securities. Such ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

Dividend Distributions

All of IPALCO’s outstanding common stock is held by AES U.S. Investments and CDPQ. During the first ~~six~~three months of ~~2020~~2021 and ~~2019,~~2020, IPALCO paid ~~$53.2~~$30.1 million and ~~$59.9~~$26.6 million, respectively, in dividends and returns of capital to its shareholders. Future distributions to our shareholders will be determined at the discretion of our Board of Directors and will depend primarily on dividends received from ~~IPL.~~AES Indiana. Dividends from ~~IPL~~AES Indiana are affected by ~~IPL’s~~AES Indiana’s actual results of operations, financial condition, cash flows, capital requirements, regulatory considerations, and such other factors as ~~IPL’s~~AES Indiana’s Board of Directors deems relevant.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no material changes to our quantitative and qualitative disclosure about market risk as previously disclosed in the ~~2019~~2020 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures — The Company, under the supervision and with the participation of its management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of its “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under 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 have concluded that our disclosure controls and procedures were effective as of ~~June 30, 2020,~~March 31, 2021, to ensure that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC 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 in light of 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 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~~Please see Note 7, “Commitments and Contingencies” to the Financial Statements included in Part I - Financial Information of this Form 10-Q for a summary of certain legal proceedings involving us. In addition, our Form 10-K for the fiscal year ended December 31, ~~2019~~2020 and the Notes to IPALCO's Consolidated 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 Form 10-K, and should be read in conjunction with such Form ~~10-K.~~

~~The following information is incorporated by reference into this Item: information about the legal proceedings contained in Part I, Item 2, "Management's Discussion~~10-K and ~~Analysis of Financial Condition and Results of Operations" and Part I, Item 1, Note 2, "Regulatory Matters" and Note 8, "Commitments and Contingencies" to IPALCO's Condensed Consolidated 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 for the fiscal year ended December 31, 2019, as supplemented in our Form 10-Q for the three months ended March 31, 2020. Except as described below, there hasThere have been no material ~~change in our~~changes to the risk factors as previously disclosed in our 2019 Form 10-K and 2020 first quarter Form 10-Q. 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 the Company set forth in the Notes to the Company’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 supplementing our risk factors. The risk factor below amends and supersedes the risk factor that we filed in connection with the 2020 ~~first quarter Form 10-Q and should be considered together with the other risk factors described in the 2019~~ 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 150 countries, including every state in the U.S. On March 11, 2020 the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020 the U.S. declared a national emergency with respect to COVID-19. On March 19, 2020, the Governor of Indiana issued an Executive Order

~~prohibiting electric utilities, including us, from discontinuing electric utility service to customers, which the IURC extended through August 14, 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. 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 U.S., have reacted by instituting quarantines, mandating business and school closures and 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:

•~~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 and the review and approval of our applications, rates and charges by the IURC;

•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 fuel or other materials to our facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers;~~

•~~the inability to hedge the entire exposure of our operations from availability and cost of fuel and other commodities that experience significant volatility;~~

•~~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, 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.

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 generation facilities, 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 SALES 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


Exhibit No.			Document

~~4.1~~			Indenture between IPALCO Enterprises, Inc. and U.S. Bank National Association, as Trustee, dated April 14, 2020 for the 4.250% Senior Secured Notes due 2030 (Incorporated by reference to Exhibit No. 4.1 to IPALCO's April 14, 2020 Form 8-K)
~~4.2~~			Pledge Agreement Supplement between IPALCO Enterprises, Inc. and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent, dated April 14, 2020 to the Pledge Agreement between IPALCO Enterprises, Inc. and The Bank of New York Mellon Trust Company dated November 14, 2001, as amended and supplemented (Incorporated by reference to Exhibit No. 4.2 to IPALCO's April 14, 2020 Form 8-K)
~~4.3~~			Registration Rights Agreement, dated April 14, 2020, among IPALCO Enterprises, Inc. and J.P. Morgan Securities LLC and BofA Securities, Inc., as representatives of the initial purchasers of the Notes (Incorporated by reference to Exhibit No. 4.3 to IPALCO's April 14, 2020 Form 8-K)
31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			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
32.2			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
101.INS			XBRL Instance Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.SCH			XBRL Taxonomy Extension Schema Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.LAB			XBRL Taxonomy Extension Label Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)

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SIGNATURES

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

IPALCO ENTERPRISES, INC.

Date:

~~August~~May 5, ~~2020~~2021

/s/ Gustavo Garavaglia

Gustavo Garavaglia

Chief Financial Officer

(Principal Financial Officer)

Date:

~~August~~May 5, ~~2020~~2021

/s/ ~~Karin M. Nyhuis~~Jon S. Byers

~~Karin M. Nyhuis~~Jon S. Byers

Controller

(Principal Accounting Officer)

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