UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended SeptemberJune 30, 20172022
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12291
aeslogominia02a01a01a02a03.jpgaes-20220630_g1.jpg
THE AES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware54 116372554-1163725
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
4300 Wilson Boulevard
Arlington,Virginia22203
(Address of principal executive offices)(Zip Code)
(703) 522-1315
Registrant’s
Registrant's telephone number, including area code:(703)522-1315
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareAESNew York Stock Exchange
Corporate UnitsAESCNew York Stock Exchange

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 x ☒No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx
☒
Accelerated filer¨
☐
Smaller reporting company¨
☐
Emerging growth company¨
☐
Non-accelerated filer¨
(Do not check if a smaller reporting 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 x☒

The number of shares outstanding of Registrant’s Common Stock, par value $0.01 per share, on October 27, 2017August 2, 2022 was 660,386,566.
667,933,612.


THE AES CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017
TABLE OF CONTENTS



The AES Corporation
Form 10-Q for the Quarterly Period ended June 30, 2022
Table of Contents
1
1
PART I: FINANCIAL INFORMATION
2
ITEM 1.
2
2
3
4
5
57
68
Note 1 - Financial Statement Presentation
68
Note 2 - Inventory
910
Note 3 - Fair Value
910
Note 4 - Derivative Instruments and Hedging Activities
1214
Note 5 - Financing Receivables
1315
Note 6 - Investments in and Advances to Affiliates
1316
Note 7 - Debt
1417
Note 8 - Commitments and Contingencies
1517
Note 9 - Pension PlansLeases
1619
Note 10 - Redeemable Stock of Subsidiaries
1720
Note 11 - Equity
1720
Note 12 - Segments
1923
Note 13 - Revenue
25
Note 14 - Other Income and Expense
2026
Note 1415 - Asset Impairment Expense
2127
Note 15 - Discontinued Operations
22
Note 16 - Held-for-Sale Businesses and DispositionsIncome Taxes
2327
Note 1717 - Held-for-Sale and Dispositions
28
Note 18 - Acquisitions
2428
Note 1819 - Earnings Per Share
2430
Note 1920 - Risks and Uncertainties
2531
Note 20 - Subsequent Events
26
ITEM 2.
2732
Executive Summary
2832
Overview of Q3 2017 Results and Strategic Performance
29
Review of Consolidated Results of Operations
3136
SBU Performance Analysis
3743
Key Trends and Uncertainties
5051
Capital Resources and Liquidity
5556
Critical Accounting Policies and Estimates
6762
ITEM 3.
6763
ITEM 4.
7065
7166
ITEM 1.
7166
ITEM 1A.
7569
ITEM 2.
7571
ITEM 3.
7571
ITEM 4.
7571
ITEM 5.
7571
ITEM 6.
7572
7673



1 | The AES Corporation | June 30, 2022 Form 10-Q
GLOSSARY OF TERMSGlossary of Terms
The following terms and acronyms appear in the text of this report and have the definitions indicated below:
Adjusted EPSAdjusted Earnings Per Share, a non-GAAP measure
Adjusted PTCAdjusted PretaxPre-tax Contribution, a non-GAAP measure of operating performance
AFSAESAvailable For SaleThe Parent Company and its subsidiaries and affiliates
AOCLAES AndesAES Andes S.A., formerly AES Gener
AES BrasilAES Tietê Energia S.A., formerly branded as AES Tietê
AES Clean Energy DevelopmentAES Clean Energy Development, LLC
AES IndianaIndianapolis Power & Light Company, formerly branded as IPL. AES Indiana is wholly-owned by IPALCO
AES OhioThe Dayton Power & Light Company, formerly branded as DP&L. AES Ohio is wholly-owned by DPL
AES Renewable HoldingsAES Renewable Holdings, LLC, formerly branded as AES Distributed Energy
AFUDCAllowance for Funds Used During Construction
AIMCoAlberta Management Investment Corporation
ANEELBrazilian National Electric Energy Agency
AOCLAccumulated Other Comprehensive Loss
ASC
ASCAccounting Standards Codification
ASUAccounting Standards Update
BNDESBEATBrazilian Development BankBase Erosion and Anti-Abuse Tax
CAA
CAAUnited States Clean Air Act
CAMMESAWholesale Electric Market Administrator in Argentina
CDPQLa Caisse de depot et placement du Quebec
CHPCCEECombined Heat and PowerBrazilian Chamber of Electric Energy Commercialization
COFINSCCRContribution for the Financing of Social SecurityCoal Combustion Residuals, which includes bottom ash, fly ash and air pollution control wastes generated at coal-fired generation plant sites
DP&LThe Dayton Power & Light Company
DPLDPL Inc.
DPLERCECLDPL Energy Resources, Inc.Current Expected Credit Loss
DPP
CO2
Dominican Power Partners, LDCCarbon Dioxide
EPA
CSAPRCross-State Air Pollution Rule
DG CompDirectorate-General for Competition
DPLDPL Inc.
EPAUnited States Environmental Protection Agency
EPCEngineering, Procurement and Construction
EURIBOREuro Interbank Offered Rate
FASBESPElectric Security Plan
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FXFluenceForeign ExchangeFluence Energy, Inc and its subsidiaries, including Fluence Energy, LLC, which was previously our joint venture with Siemens (NASDAQ: FLNC)
GAAP
FXForeign Exchange
GAAPGenerally Accepted Accounting Principles in the United States
GHGGreenhouse Gas
IPALCO
GILTIGlobal Intangible Low Taxed Income
GWhGigawatt Hours
HLBVHypothetical Liquidation Book Value
IPALCOIPALCO Enterprises, Inc.
IPLIndianapolis Power & Light Company
kWhKilowatt Hours
LIBOR
LIBORLondon Interbank Offered Rate
LNGLiquid Natural Gas
MATSMercury and Air Toxics Standards
MMIMini Maritsa Iztok (state-owned electricity public supplier in Bulgaria)
MWMMBtuMegawattsMillion British Thermal Units
MWhMegawatt Hours
NCIMWNoncontrolling InterestMegawatts
NEKMWhNatsionalna Elektricheska Kompania (state-owned electricity public supplier in Bulgaria)Megawatt Hours
NMNAAQSNot MeaningfulNational Ambient Air Quality Standards
NOVNCINoncontrolling Interest
NMNot Meaningful
NOVNotice of Violation
NOX
Nitrogen OxidesOxide
NPDESNational Pollutant Discharge Elimination System
PISProgram of Social Integration
PJMPJM Interconnection, LLC
PPA
OTC PolicyStatewide Water Quality Control Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling
PPAPower Purchase Agreement
PREPAPuerto Rico Electric Power Authority
RSU
RSURestricted Stock Unit
SICCentral Interconnected Electricity System
SINGNorte Grande Interconnected Electricity System
SBUStrategic Business Unit
SECUnited States Securities and Exchange Commission
SO2
Sulfur Dioxide
U.S.United States
USD
TDSICTransmission, Distribution, and Storage System Improvement Charge
U.S.United States
USDUnited States Dollar
VATValue-Added Tax
VIEVariable Interest Entity



2 | The AES Corporation | June 30, 2022 Form 10-Q
PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE AES CORPORATION
Condensed Consolidated Balance Sheets(Unaudited)
(Unaudited)
June 30, 2022December 31, 2021
September 30, 2017 December 31, 2016
(in millions, except share and per share data)(in millions, except share and per share amounts)
ASSETS   ASSETS
CURRENT ASSETS   CURRENT ASSETS
Cash and cash equivalents$1,398
 $1,305
Cash and cash equivalents$1,075 $943 
Restricted cash437
 278
Restricted cash412 304 
Short-term investments563
 798
Short-term investments595 232 
Accounts receivable, net of allowance for doubtful accounts of $90 and $111, respectively2,357
 2,166
Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectivelyAccounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively1,675 1,418 
Inventory660
 630
Inventory871 604 
Prepaid expenses89
 83
Prepaid expenses182 142 
Other current assets1,080
 1,151
Other current assets1,269 897 
Current assets of held-for-sale businesses76
 —
Current held-for-sale assetsCurrent held-for-sale assets844 816 
Total current assets6,660
 6,411
Total current assets6,923 5,356 
NONCURRENT ASSETS   NONCURRENT ASSETS
Property, Plant and Equipment:   Property, Plant and Equipment:
Land798
 779
Land433 426 
Electric generation, distribution assets and other29,916
 28,539
Electric generation, distribution assets and other25,351 25,552 
Accumulated depreciation(10,199) (9,528)Accumulated depreciation(8,387)(8,486)
Construction in progress3,841
 3,057
Construction in progress3,356 2,414 
Property, plant and equipment, net24,356
 22,847
Property, plant and equipment, net20,753 19,906 
Other Assets:   Other Assets:
Investments in and advances to affiliates1,164
 621
Investments in and advances to affiliates1,098 1,080 
Debt service reserves and other deposits786
 593
Debt service reserves and other deposits164 237 
Goodwill1,157
 1,157
Goodwill1,179 1,177 
Other intangible assets, net of accumulated amortization of $563 and $519, respectively474
 359
Other intangible assets, net of accumulated amortization of $402 and $385, respectivelyOther intangible assets, net of accumulated amortization of $402 and $385, respectively1,646 1,450 
Deferred income taxes760
 781
Deferred income taxes395 409 
Service concession assets, net of accumulated amortization of $182 and $114, respectively1,382
 1,445
Other noncurrent assets2,095
 1,905
Other noncurrent assets, net of allowance of $42 and $23, respectivelyOther noncurrent assets, net of allowance of $42 and $23, respectively2,775 2,188 
Noncurrent held-for-sale assetsNoncurrent held-for-sale assets1,137 1,160 
Total other assets7,818
 6,861
Total other assets8,394 7,701 
TOTAL ASSETS$38,834
 $36,119
TOTAL ASSETS$36,070 $32,963 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
CURRENT LIABILITIES   CURRENT LIABILITIES
Accounts payable$2,091
 $1,656
Accounts payable$1,685 $1,153 
Accrued interest353
 247
Accrued interest214 182 
Accrued non-income taxesAccrued non-income taxes242 266 
Accrued and other liabilities2,020
 2,066
Accrued and other liabilities1,099 1,205 
Non-recourse debt, includes $439 and $273, respectively, related to variable interest entities2,257
 1,303
Current liabilities of held-for-sale businesses15
 —
Non-recourse debt, including $353 and $302, respectively, related to variable interest entitiesNon-recourse debt, including $353 and $302, respectively, related to variable interest entities2,202 1,367 
Current held-for-sale liabilitiesCurrent held-for-sale liabilities547 559 
Total current liabilities6,736
 5,272
Total current liabilities5,989 4,732 
NONCURRENT LIABILITIES   NONCURRENT LIABILITIES
Recourse debt4,954
 4,671
Recourse debt4,177 3,729 
Non-recourse debt, includes $1,305 and $1,502, respectively, related to variable interest entities14,822
 14,489
Non-recourse debt, including $2,142 and $2,223, respectively, related to variable interest entitiesNon-recourse debt, including $2,142 and $2,223, respectively, related to variable interest entities14,997 13,603 
Deferred income taxes742
 804
Deferred income taxes1,086 977 
Pension and other postretirement liabilities1,387
 1,396
Other noncurrent liabilities3,047
 3,005
Other noncurrent liabilities3,117 3,358 
Noncurrent held-for-sale liabilitiesNoncurrent held-for-sale liabilities678 740 
Total noncurrent liabilities24,952
 24,365
Total noncurrent liabilities24,055 22,407 
Commitments and Contingencies (see Note 8)
 
Commitments and Contingencies (see Note 8)
Redeemable stock of subsidiaries967
 782
Redeemable stock of subsidiaries1,173 1,257 
EQUITY   EQUITY
THE AES CORPORATION STOCKHOLDERS’ EQUITY   THE AES CORPORATION STOCKHOLDERS’ EQUITY
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 816,312,913 issued and 660,386,566 outstanding at September 30, 2017 and 816,061,123 issued and 659,182,232 outstanding at December 31, 2016)8
 8
Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and outstanding at June 30, 2022 and December 31, 2021, respectively)Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and outstanding at June 30, 2022 and December 31, 2021, respectively)838 838 
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 818,735,314 issued and 667,878,925 outstanding at June 30, 2022 and 818,717,043 issued and 666,793,625 outstanding at December 31, 2021)Common stock ($0.01 par value, 1,200,000,000 shares authorized; 818,735,314 issued and 667,878,925 outstanding at June 30, 2022 and 818,717,043 issued and 666,793,625 outstanding at December 31, 2021)8 8 
Additional paid-in capital8,670
 8,592
Additional paid-in capital6,924 7,106 
Accumulated deficit(934) (1,146)Accumulated deficit(1,153)(1,089)
Accumulated other comprehensive loss(2,666) (2,756)Accumulated other comprehensive loss(1,790)(2,220)
Treasury stock, at cost (155,926,347 and 156,878,891 shares at September 30, 2017 and December 31, 2016, respectively)(1,892) (1,904)
Treasury stock, at cost (150,856,389 and 151,923,418 shares at June 30, 2022 and December 31, 2021, respectively)Treasury stock, at cost (150,856,389 and 151,923,418 shares at June 30, 2022 and December 31, 2021, respectively)(1,832)(1,845)
Total AES Corporation stockholders’ equity3,186
 2,794
Total AES Corporation stockholders’ equity2,995 2,798 
NONCONTROLLING INTERESTS2,993
 2,906
NONCONTROLLING INTERESTS1,858 1,769 
Total equity6,179
 5,700
Total equity4,853 4,567 
TOTAL LIABILITIES AND EQUITY$38,834
 $36,119
TOTAL LIABILITIES AND EQUITY$36,070 $32,963 
See Notes to Condensed Consolidated Financial Statements.



THE
3 | The AES CORPORATIONCorporation
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
2017 2016 2017 20162022202120222021
       
(in millions, except per share data)(in millions, except share and per share amounts)
Revenue:       Revenue:
Regulated$1,793
 $1,785
 $5,157
 $4,926
Regulated$802 $672 $1,637 $1,379 
Non-Regulated1,839
 1,757
 5,437
 5,116
Non-Regulated2,276 2,028 4,293 3,956 
Total revenue3,632
 3,542
 10,594
 10,042
Total revenue3,078 2,700 5,930 5,335 
Cost of Sales:       Cost of Sales:
Regulated(1,574) (1,623) (4,640) (4,521)Regulated(734)(580)(1,439)(1,162)
Non-Regulated(1,347) (1,231) (3,980) (3,750)Non-Regulated(1,781)(1,392)(3,398)(2,781)
Total cost of sales(2,921) (2,854) (8,620) (8,271)Total cost of sales(2,515)(1,972)(4,837)(3,943)
Operating margin711
 688
 1,974
 1,771
Operating margin563 728 1,093 1,392 
General and administrative expenses(52) (40) (155) (135)General and administrative expenses(46)(45)(98)(91)
Interest expense(353) (354) (1,034) (1,086)Interest expense(279)(237)(537)(427)
Interest income101
 110
 291
 365
Interest income95 73 170 141 
Loss on extinguishment of debt(49) (16) (44) (12)Loss on extinguishment of debt(1)(18)(7)(19)
Other expense(47) (13) (95) (42)Other expense(29)(4)(41)(20)
Other income18
 18
 105
 43
Other income70 183 76 226 
Gain (loss) on disposal and sale of businesses(1) —
 (49) 30
Gain (loss) on disposal and sale of business interestsGain (loss) on disposal and sale of business interests(2)64 (1)59 
Asset impairment expense(2) (79) (260) (473)Asset impairment expense(482)(872)(483)(1,345)
Foreign currency transaction gains (losses)21
 (20) 13
 (16)
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES347
 294
 746
 445
Income tax expense(110) (75) (270) (165)
Net equity in earnings of affiliates24
 11
 33
 25
INCOME FROM CONTINUING OPERATIONS261
 230
 509
 305
Loss from operations of discontinued businesses, net of income tax benefit of $4 for the nine months ended September 30, 2016—
 (1) —
 (7)
Net loss from disposal and impairments of discontinued businesses, net of income tax benefit of $401 for the nine months ended September 30, 2016—
 —
 —
 (382)
Foreign currency transaction lossesForeign currency transaction losses(49)(2)(68)(37)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATESINCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES(160)(130)104 (121)
Income tax benefit (expense)Income tax benefit (expense)19 59 (41)51 
Net equity in earnings (losses) of affiliatesNet equity in earnings (losses) of affiliates5 (10)(28)(40)
INCOME (LOSS) FROM CONTINUING OPERATIONSINCOME (LOSS) FROM CONTINUING OPERATIONS(136)(81)35 (110)
Gain from disposal of discontinued businessesGain from disposal of discontinued businesses— 4 — 4 
NET INCOME (LOSS)261
 229
 509
 (84)NET INCOME (LOSS)(136)(77)35 (106)
Less: Net income attributable to noncontrolling interests and redeemable stock of subsidiaries(109) (54) (328) (97)
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiariesLess: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries(43)105 (99)(14)
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$152
 $175
 $181
 $(181)NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$(179)$28 $(64)$(120)
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:       AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:
Income from continuing operations, net of tax$152
 $176
 $181
 $208
Loss from discontinued operations, net of tax—
 (1) —
 (389)
Income (loss) from continuing operations, net of taxIncome (loss) from continuing operations, net of tax$(179)$24 $(64)$(124)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax— 4 — 4 
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$152
 $175
 $181
 $(181)NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$(179)$28 $(64)$(120)
BASIC EARNINGS PER SHARE:       BASIC EARNINGS PER SHARE:
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax$0.23
 $0.26
 $0.28
 $0.31
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax—
 —
 —
 (0.59)
Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of taxIncome (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax$(0.27)$0.03 $(0.10)$(0.19)
Income from discontinued operations attributable to The AES Corporation common stockholders, net of taxIncome from discontinued operations attributable to The AES Corporation common stockholders, net of tax— 0.01 — 0.01 
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS$0.23
 $0.26
 $0.28
 $(0.28)NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS$(0.27)$0.04 $(0.10)$(0.18)
DILUTED EARNINGS PER SHARE:       DILUTED EARNINGS PER SHARE:
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax$0.23
 $0.26
 $0.27
 $0.31
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax—
 —
 —
 (0.59)
Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of taxIncome (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax$(0.27)$0.03 $(0.10)$(0.19)
Income from discontinued operations attributable to The AES Corporation common stockholders, net of taxIncome from discontinued operations attributable to The AES Corporation common stockholders, net of tax— 0.01 — 0.01 
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS$0.23
 $0.26
 $0.27
 $(0.28)NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS$(0.27)$0.04 $(0.10)$(0.18)
DILUTED SHARES OUTSTANDING663
 662
 662
 662
DILUTED SHARES OUTSTANDING668 671 668 666 
DIVIDENDS DECLARED PER COMMON SHARE$0.12
 $0.11
 $0.24
 $0.22
See Notes to Condensed Consolidated Financial Statements.



THE
4 | The AES CORPORATIONCorporation
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
2017 2016 2017 20162022202120222021
       
(in millions)(in millions)
NET INCOME (LOSS)$261
 $229
 $509
 $(84)NET INCOME (LOSS)$(136)$(77)$35 $(106)
Foreign currency translation activity:       Foreign currency translation activity:
Foreign currency translation adjustments, net of income tax benefit (expense) of $1, $(1), $0 and $0, respectively80
 (16) 29
 232
Reclassification to earnings, net of $0 income tax—
 —
 98
 —
Foreign currency translation adjustments, net of $0 income tax for all periodsForeign currency translation adjustments, net of $0 income tax for all periods(149)38 (17)(31)
Reclassification to earnings, net of $0 income tax for all periodsReclassification to earnings, net of $0 income tax for all periods— 3 — 3 
Total foreign currency translation adjustments80
 (16) 127
 232
Total foreign currency translation adjustments(149)41 (17)(28)
Derivative activity:       Derivative activity:
Change in derivative fair value, net of income tax benefit (expense) of $(6), $(7), $15 and $39, respectively5
 19
 (42) (138)
Reclassification to earnings, net of income tax benefit (expense) of $5, $(4), $(6) and $(5), respectively1
 21
 50
 23
Change in derivative fair value, net of income tax benefit (expense) of $(61), $48, $(134), and $(19), respectivelyChange in derivative fair value, net of income tax benefit (expense) of $(61), $48, $(134), and $(19), respectively270 (175)542 68 
Reclassification to earnings, net of income tax expense of $3, $6, $13, and $13, respectivelyReclassification to earnings, net of income tax expense of $3, $6, $13, and $13, respectively20 26 38 49 
Total change in fair value of derivatives6
 40
 8
 (115)Total change in fair value of derivatives290 (149)580 117 
Pension activity:       Pension activity:
Reclassification to earnings due to amortization of net actuarial loss, net of income tax expense of $4, $2, $10 and $4, respectively7
 3
 20
 10
Change in pension adjustments due to net actuarial gain (loss) for the period, net of income tax expense of $0, $1, $0, and $0, respectivelyChange in pension adjustments due to net actuarial gain (loss) for the period, net of income tax expense of $0, $1, $0, and $0, respectively— (1)— — 
Reclassification to earnings, net of income tax expense of $0, $1, $0, and $1, respectivelyReclassification to earnings, net of income tax expense of $0, $1, $0, and $1, respectively— 1 1 1 
Total pension adjustments7
 3
 20
 10
Total pension adjustments— — 1 1 
OTHER COMPREHENSIVE INCOME93
 27
 155
 127
COMPREHENSIVE INCOME354
 256
 664
 43
Less: Comprehensive income attributable to noncontrolling interests(127) (66) (360) (94)
OTHER COMPREHENSIVE INCOME (LOSS)OTHER COMPREHENSIVE INCOME (LOSS)141 (108)564 90 
COMPREHENSIVE INCOME (LOSS)COMPREHENSIVE INCOME (LOSS)5 (185)599 (16)
Less: Comprehensive loss (income) attributable to noncontrolling interests and redeemable stock of subsidiariesLess: Comprehensive loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries(75)104 (157)(47)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$227
 $190
 $304
 $(51)COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$(70)$(81)$442 $(63)
See Notes to Condensed Consolidated Financial Statements.



5 | The AES Corporation
THECondensed Consolidated Statements of Changes in Equity
(Unaudited)
Six Months Ended June 30, 2022
Preferred StockCommon StockTreasury Stock
Additional
Paid-In
Capital (1)
Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Noncontrolling
Interests
Shares
Amount(1)
SharesAmountSharesAmount
(in millions)
Balance at January 1, 20221.0 $838 818.7 $8 152.0 $(1,845)$7,106 $(1,089)$(2,220)$1,769 
Net income— — — — — — — 115 — 94 
Total foreign currency translation adjustment, net of income tax— — — — — — — — 131 1 
Total change in derivative fair value, net of income tax— — — — — — — — 265 22 
Total pension adjustments, net of income tax— — — — — — — — 1 — 
Total other comprehensive income— — — — — — — — 397 23 
Distributions to noncontrolling interests— — — — — — — — — (25)
Acquisitions of noncontrolling interests— — — — — — (93)— (76)(367)
Contributions from noncontrolling interests— — — — — — — — — 86 
Sales to noncontrolling interests— — — — — — 7 — — 30 
Issuance of preferred shares in subsidiaries— — — — — — — — — 60 
Dividends declared on common stock ($0.1580/share)— — — — — — (105)— — — 
Issuance and exercise of stock-based compensation benefit plans, net of income tax— — — — (1.1)13 (12)— — — 
Balance at March 31, 20221.0 $838 818.7 $8 150.9 $(1,832)$6,903 $(974)$(1,899)$1,670 
Net income (loss)— — — — — — — (179)— 50 
Total foreign currency translation adjustment, net of income tax— — — — — — — — (146)(3)
Total change in derivative fair value, net of income tax— — — — — — — — 255 15 
Total other comprehensive income— — — — — — — — 109 12 
Distributions to noncontrolling interests— — — — — — — — — (45)
Acquisitions of noncontrolling interests— — — — — — — — — (2)
Contributions from noncontrolling interests— — — — — — — — — 3 
Sales to noncontrolling interests— — — — — — 10 — — 170 
Issuance and exercise of stock-based compensation benefit plans, net of income tax— — — — — — 11 — — — 
Balance at June 30, 20221.0 $838 818.7 $8 150.9 $(1,832)$6,924 $(1,153)$(1,790)$1,858 

(1) The balance at January 1, 2022 includes a $13 million reclass from Additional paid-in capital to Preferred stock to reflect the retrospective adoption of ASU 2020-06. For further information, see Note 1—Financial Statement Presentation.


6 | The AES CORPORATIONCorporation
Six Months Ended June 30, 2021
Preferred StockCommon StockTreasury StockAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Noncontrolling
Interests
SharesAmountSharesAmountSharesAmount
(in millions)
Balance at January 1, 2021— $— 818.4 $8 153.0 $(1,858)$7,561 $(680)$(2,397)$2,086 
Net income (loss)— — — — — — — (148)— 119 
Total foreign currency translation adjustment, net of income tax— — — — — — — — (53)(16)
Total change in derivative fair value, net of income tax— — — — — — — — 219 27 
Total pension adjustments, net of income tax— — — — — — — — — 1 
Total other comprehensive income— — — — — — — — 166 12 
Fair value adjustment (1)
— — — — — — 33 — — — 
Distributions to noncontrolling interests— — — — — — — — — (17)
Acquisitions of noncontrolling interests— — — — — — (5)— (6)(3)
Contributions from noncontrolling interests— — — — — — — — — 94 
Issuance of preferred stock1.0 1,043 — — — — (235)— — — 
Dividends declared on common stock ($0.1505/share)— — — — — — (101)— — — 
Issuance and exercise of stock-based compensation benefit plans, net of income tax— — 0.2 — (0.7)8 (12)— — — 
Balance at March 31, 20211.0 $1,043 818.6 $8 152.3 $(1,850)$7,241 $(828)$(2,237)$2,291 
Net income (loss)— — — — — — — 28 — (103)
Total foreign currency translation adjustment, net of income tax— — — — — — — — 30 11 
Total change in derivative fair value, net of income tax— — — — — — — — (140)(9)
Total pension adjustments, net of income tax— — — — — — — — 1 (1)
Total other comprehensive income (loss)— — — — — — — — (109)1 
Fair value adjustment (1)
— — — — — — (36)— — — 
Disposition of business interests (2)
— — — — — — — — — (109)
Distributions to noncontrolling interests— — — — — — — — — (117)
Acquisitions of noncontrolling interests— — — — — — (2)— (1)— 
Contributions from noncontrolling interests— — — — — — — — — 1 
Sales to noncontrolling interests— — — — — — — — — 17 
Issuance of preferred shares in subsidiaries— — — — — — — — — 151 
Issuance of preferred stock— — — — — — 1 — — — 
Issuance and exercise of stock-based compensation benefit plans, net of income tax— — 0.1 — — — 7 — — — 
Balance at June 30, 20211.0 $1043 818.7 $8 152.3 $(1,850)$7,211 $(800)$(2,347)$2,132 

(1) Adjustment to record the redeemable stock of Colon at fair value.
(2) See Note 17—Held-For-Sale and Dispositions for further information.

See Notes to Condensed Consolidated Financial Statements.

7 | The AES Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
20222021
(in millions)
OPERATING ACTIVITIES:
Net income (loss)$35 $(106)
Adjustments to net income (loss):
Depreciation and amortization534 538 
Loss (gain) on disposal and sale of business interests1 (59)
Impairment expense483 1,345 
Deferred income taxes(43)(73)
Loss on extinguishment of debt7 19 
Loss on sale and disposal of assets2 20 
Gain on remeasurement to acquisition date fair value— (212)
Loss of affiliates, net of dividends52 46 
Emissions allowance expense239 124 
Other46 139 
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(262)(120)
(Increase) decrease in inventory(227)7 
(Increase) decrease in prepaid expenses and other current assets(187)(13)
(Increase) decrease in other assets94 8 
Increase (decrease) in accounts payable and other current liabilities151 (292)
Increase (decrease) in income tax payables, net and other tax payables(114)(439)
Increase (decrease) in deferred income59 (307)
Increase (decrease) in other liabilities(5)(21)
Net cash provided by operating activities865 604 
INVESTING ACTIVITIES:
Capital expenditures(1,659)(999)
Acquisitions of business interests, net of cash and restricted cash acquired(107)(81)
Proceeds from the sale of business interests, net of cash and restricted cash sold1 58 
Sale of short-term investments345 316 
Purchase of short-term investments(694)(258)
Contributions and loans to equity affiliates(169)(173)
Purchase of emissions allowances(293)(88)
Other investing(7)80 
Net cash used in investing activities(2,583)(1,145)
FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities3,100 998 
Repayments under the revolving credit facilities(2,269)(932)
Issuance of recourse debt— 7 
Repayments of recourse debt(29)(7)
Issuance of non-recourse debt3,132 700 
Repayments of non-recourse debt(1,469)(939)
Payments for financing fees(38)(12)
Distributions to noncontrolling interests(93)(129)
Acquisitions of noncontrolling interests(540)(17)
Contributions from noncontrolling interests28 95 
Sales to noncontrolling interests229 20 
Issuance of preferred shares in subsidiaries60 151 
Issuance of preferred stock— 1,015 
Dividends paid on AES common stock(211)(200)
Payments for financed capital expenditures(9)(4)
Other financing33 (64)
Net cash provided by financing activities1,924 682 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(18)(4)
(Increase) decrease in cash, cash equivalents and restricted cash of held-for-sale businesses(21)62 
Total increase in cash, cash equivalents and restricted cash167 199 
Cash, cash equivalents and restricted cash, beginning1,484 1,827 
Cash, cash equivalents and restricted cash, ending$1,651 $2,026 
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of amounts capitalized$423 $406 
Cash payments for income taxes, net of refunds141 372 
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Non-cash consideration transferred for Clean Energy acquisitions (see Note 18)— 99 
 Nine Months Ended September 30,
 2017 2016
    
 (in millions)
OPERATING ACTIVITIES:   
Net income (loss)$509
 $(84)
Adjustments to net income (loss):   
Depreciation and amortization884
 877
Loss (gain) on sales and disposals of businesses49
 (30)
Impairment expenses260
 475
Deferred income taxes(3) (475)
Provisions for contingencies30
 28
Loss on extinguishment of debt44
 12
Loss on sales of assets34
 26
Impairments of discontinued operations—
 783
Other61
 106
Changes in operating assets and liabilities   
(Increase) decrease in accounts receivable(279) 335
(Increase) decrease in inventory(66) 36
(Increase) decrease in prepaid expenses and other current assets140
 670
(Increase) decrease in other assets(266) (237)
Increase (decrease) in accounts payable and other current liabilities162
 (567)
Increase (decrease) in income tax payables, net and other tax payables(4) (270)
Increase (decrease) in other liabilities134
 497
Net cash provided by operating activities1,689
 2,182
INVESTING ACTIVITIES:   
Capital expenditures(1,587) (1,770)
Acquisitions of businesses, net of cash acquired, and equity method investments(606) (61)
Proceeds from the sale of businesses, net of cash sold, and equity method investments39
 157
Sale of short-term investments2,942
 3,747
Purchase of short-term investments(2,673) (3,797)
Increase in restricted cash, debt service reserves. and other assets(311) (123)
Other investing(86) (22)
Net cash used in investing activities(2,282) (1,869)
FINANCING ACTIVITIES:   
Borrowings under the revolving credit facilities1,489
 1,079
Repayments under the revolving credit facilities(851) (856)
Issuance of recourse debt1,025
 500
Repayments of recourse debt(1,353) (808)
Issuance of non-recourse debt2,703
 2,118
Repayments of non-recourse debt(1,731) (1,720)
Payments for financing fees(96) (86)
Distributions to noncontrolling interests(263) (356)
Contributions from noncontrolling interests and redeemable security holders59
 154
Proceeds from the sale of redeemable stock of subsidiaries—
 134
Dividends paid on AES common stock(238) (218)
Payments for financed capital expenditures(100) (108)
Purchase of treasury stock—
 (79)
Proceeds from sales to noncontrolling interests60
 —
Other financing(26) (12)
Net cash provided by (used in) financing activities678
 (258)
Effect of exchange rate changes on cash9
 7
(Increase) decrease in cash of discontinued operations and held-for-sale businesses(1) 6
Total increase in cash and cash equivalents93
 68
Cash and cash equivalents, beginning1,305
 1,257
Cash and cash equivalents, ending$1,398
 $1,325
SUPPLEMENTAL DISCLOSURES:   
Cash payments for interest, net of amounts capitalized$797
 $837
Cash payments for income taxes, net of refunds$291
 $425
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:   
Assets acquired through capital lease and other liabilities$—
 $5
Reclassification of Alto Maipo loans and accounts payable into equity (see Note 11—Equity)
$279
 $—


See Notes to Condensed Consolidated Financial Statements.



THE AES CORPORATION
8 | Notes to Condensed Consolidated Financial Statements | June 30, 2022 and 2021
Notes to Condensed Consolidated Financial Statements
For the Three and NineSix Months Ended SeptemberJune 30, 20172022 and 20162021
(Unaudited)
1. FINANCIAL STATEMENT PRESENTATION
Consolidation — In this Quarterly Report, the terms “AES,” “the Company,” “us” or “we” refer to the consolidated entity, including its subsidiaries and affiliates. The terms “The AES Corporation” or “the Parent Company” refer only to the publicly held holding company, The AES Corporation, excluding its subsidiaries and affiliates. Furthermore, VIEs in which the Company has a variable interest have been consolidated where the Company is the primary beneficiary. Investments in which the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting.accounting, except for our investment in Alto Maipo, for which we have elected the fair value option as permitted under ASC 825. All intercompany transactions and balances have been eliminated in consolidation.
Interim Financial Presentation — The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP, as contained in the FASB ASC, for interim financial information and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all the 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 of the results of operations, financial position, comprehensive income, changes in equity, and cash flows. The results of operations for the three and ninesix months ended SeptemberJune 30, 2017,2022 are not necessarily indicative of expected results for the year ending December 31, 2017.2022. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 20162021 audited consolidated financial statements and notes thereto, which are included in the 20162021 Form 10-K filed with the SEC on February 27, 201728, 2022 (the “2016“2021 Form 10-K”).
Reclassifications — To comply with newly adopted accounting standards, certain prior period adjustments in the consolidated financial statements have been reclassified to conform to the current presentation. The beneficial conversion feature associated with the Equity Units was reclassified from Additional paid-in capital to Preferred stock in the Consolidated Balance Sheet for the year ended December 31, 2021. See further detail in the new accounting pronouncements discussion.
Cash, Cash Equivalents, and Restricted Cash— The following table provides a summary of cash, cash equivalents, and restricted cash amounts reported on the Condensed Consolidated Balance Sheet that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows (in millions):
June 30, 2022December 31, 2021
Cash and cash equivalents$1,075 $943 
Restricted cash412 304 
Debt service reserves and other deposits164 237 
Cash, Cash Equivalents, and Restricted Cash$1,651 $1,484 
ASC 326 - Financial Instruments - Credit Losses - The following table represents the rollforward of the allowance for credit losses for the period indicated (in millions):

9 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Six Months Ended June 30, 2022
Accounts Receivable (1)
Mong Duong Loan Receivable (2)
Argentina Receivables
Lease Receivable (3)
OtherTotal
CECL reserve balance at beginning of period$3 $30 $23 $— $7 $63 
Current period provision5 — 3 20 — 28 
Write-offs charged against allowance(5)— — — (6)(11)
Recoveries collected1 (1)— — — — 
Foreign exchange— — (5)— — (5)
CECL reserve balance at end of period$4 $29 $21 $20 $1 $75 
Six Months Ended June 30, 2021
Accounts Receivable (1)
Mong Duong Loan Receivable (2)
Argentina ReceivablesOtherTotal
CECL reserve balance at beginning of period$9 $32 $20 $1 $62 
Current period provision1 — 3 — 4 
Write-offs charged against allowance(6)— — — (6)
Recoveries collected1 (1)— — — 
Foreign exchange— — (3)— (3)
CECL reserve balance at end of period$5 $31 $20 $1 $57 
_____________________________
(1)Excludes operating lease receivable allowances and contractual dispute allowances of $5 million and $4 million as of June 30, 2022 and June 30, 2021, respectively. These reserves are not in scope under ASC 326.
(2)Mong Duong loan receivable credit losses allowance was reclassified toheld-for-sale assetson the Condensed Consolidated Balance Sheet as of June 30, 2022.
(3)Lease receivable credit losses allowance at Southland Energy (AES Gilbert).
New Accounting Pronouncements Adopted in 2022 — The following table provides a brief description of recent accounting pronouncements that had an impact on the Company’s consolidated financial statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or maydid not have a material impact on the Company’s consolidated financial statements.
New Accounting Standards Adopted
ASU Number and NameDescriptionDate of AdoptionEffect on the financial statements upon adoption
2021-05, Leases (Topic 842), Lessors—Certain Leases with Variable Lease PaymentsThe amendments in this update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (a) The lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3, (b) The lessor would have otherwise recognized a day-one loss. This update could be applied either (1) retrospectively to leases that commenced or were modified on or after the adoption of Update 2016-02 or (2) prospectively to leases that commence or are modified on or after the date that an entity first applies the amendments.January 1, 2022The Company adopted this standard on a prospective basis and it did not have a material impact on the financial statements.
2020-06, Debt - Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Equity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Equity’s Own EquityThe amendments in this update affect entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity’s own equity. The new ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.January 1, 2022
The Company adopted this standard on a fully retrospective basis and its adoption resulted in a $13 million increase to Preferred Stock and a corresponding decrease to Additional paid-in capital. No impact to Earnings per Share amounts reported in 2021 or 2022.
2020-04 and 2021-01, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ReportingThe amendments in these updates provide 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, and clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. These amendments are effective for a limited period of time (March 12, 2020 - December 31, 2022).
Effective for all entities as of March 12, 2020 through December 31, 2022The Company is implementing the reference rate reform and does not expect these amendments to have a material impact on the financial statements.

10 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

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 consolidated 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 consolidated financial statements.
New Accounting Standards Adopted
ASU Number and NameDescriptionDate of AdoptionEffect on the financial statements upon adoption
2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
The standard simplifies the following aspects of accounting for share-based payments awards: accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities and classification of employee taxes paid on statement of cash flows when an employer withholds shares for tax-withholding purposes.
Transition method: The recognition of excess tax benefits and tax deficiencies arising from vesting or settlement were applied retrospectively. The elimination of the requirement that excess tax benefits be realized before they are recognized was adopted on a modified retrospective basis.
January 1, 2017The recognition of excess tax benefits in the provision for income taxes in the period when the awards vest or are settled, rather than in paid-in-capital in the period when the excess tax benefits are realized, resulted in a decrease of $31 million to deferred tax liabilities, offset by an increase to retained earnings. 
New Accounting Standards Issued But Not Yet Effective
ASU Number and NameDescriptionDate of AdoptionEffect on the financial statements upon adoption
2017-12, Derivatives and Hedging
2021-08, Business Combinations (Topic 815)805): Targeted improvements to Accounting for Hedging ActivitiesContract Assets and Contract Liabilities from Contracts with Customers
The standard updatesThis update is to improve the hedge accounting modelfor acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to expand the ability to hedge risk, reduce complexity,following: (1) Recognition of an acquired contract liability, and ease certain documentation(2) Payment terms and assessment requirements. It also eliminatestheir effect on subsequent revenue recognized by the requirement to separately measure and report hedge ineffectiveness, and generally requires the change in fair value of a hedging instrument to be presented in the same income statement line as the hedged item.
Transition method: modified retrospective and prospective for presentation and disclosures.
January 1, 2019.acquirer. Early adoption of the amendments is permitted.

permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application.
For fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): Accounting for Certain Financial Instruments and Certain Mandatorily Redeemable Noncontrolling Interests
Part 1 of this standard changes the classification of certain equity-linked financial instruments when assessing whether the instrument is indexed to an entity’s own stock.
Transition method: retrospective.
January 1, 2019. Early adoption is permitted.The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.


2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities
This standard shortens the period of amortization for the premium on certain callable debt securities to the earliest call date.
Transition method: modified retrospective.
January 1, 2019. Early adoption is permitted.The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
This standard changes the presentation of non-service cost associated with defined benefit plans and updates the guidance so that only the service cost component will be eligible for capitalization.
Transition method: Retrospective for presentation of non-service cost expense. Prospective for the change in capitalization.
January 1, 2018. Early adoption is permitted.The Company expects the adoption of this standard to result in a $144 million reclassification of non-service pension costs from Cost of Sales to Other Expense for 2016. The Company plans to adopt the standard as of January 1, 2018.
2017-05, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20)
This standard clarifies the scope and application of ASC 610-20 on the sale, transfer, and derecognition of nonfinancial assets and in substance nonfinancial assets to non-customers, including partial sales. It also clarifies that the derecognition of businesses is under scope of ASC 810. The standard must be adopted concurrently with ASC 606, however an entity will not have to apply the same transition method as ASC 606.
Transition method: full or modified retrospective.

Under a modified retrospective approach, the guidance shall be applied to all contracts that are not completed as of the initial application date (January 1, 2018). The Company is in the process of identifying contracts that would not be completed as of January 1, 2018. Based on the assessment of contracts already executed as of September 30, 2017, the contracts that may require any type of assessment under the new standard are limited.
January 1, 2018. Early adoption is permitted only as of January 1, 2017.
The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements, will adopt the standard on January 1, 2018, and plans to use the modified retrospective approach.

2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill ImpairmentThis standard simplifies the accounting for goodwill impairment by removing the requirement to calculate the implied fair value. Instead, it requires that an entity records an impairment charge based on the excess of a reporting unit's carrying amount over its fair value.
Transition method: prospective.		January 1, 2020. Early adoption is permitted as of January 1, 2017.The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)
This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
Transition method: retrospective.
January 1, 2018. Early adoption is permitted.The Company has performed a preliminary evaluation. However, foreign exchange impacts on movements related to restricted cash have not been quantified.
2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
This standard requires that an entity recognizes the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.
Transition method: modified retrospective.
January 1, 2018. Early adoption is permitted.The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
The standard updates the impairment model for financial assets measured at amortized cost to an expected loss model rather than an incurred loss model. It also allows for the presentation of credit losses on available-for-sale debt securities as an allowance rather than a write down.
Transition method: various.
January 1, 2020. Early adoption is permitted only as of January 1, 2019.The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.


2016-02, Leases (Topic 842)
This standard requires lessees to recognize assets and liabilities for most leases but recognize expenses in a manner similar to today’s accounting. For Lessors, the guidance modifies the lease classification criteria and the accounting for sales-type and direct financing leases. The guidance also eliminates today’s real estate-specific provisions.
Transition method: modified retrospective at the beginning of the earliest comparative period presented in the financial statements (January 1, 2017).

The Company has established a task force focused on the identification of contracts that would be under the scope of the new standard and on the assessment and measurement of the right-of-use asset and related liability. The implementation team is in the process of evaluating changes to our business processes, systems and controls to support recognition and disclosure under the new standard.
January 1, 2019. Early adoption is permitted.The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements and intends to adopt the standard as of January 1, 2019.
2014-09, 2015-14, 2016-08, 2016-10, 2016-12, 2016-20, 2017-13, Revenue from Contracts with Customers (Topic 606)See discussion of the ASU below.January 1, 2018. Early adoption is permitted only as of January 1, 2017.The Company will adopt the standard on January 1, 2018; see below for the evaluation of the impact of its adoption on the consolidated financial statements.
ASU 2014-09 and its subsequent corresponding updates provide the principles an entity must apply to measure and recognize revenue. The core principle is that an entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Amendments to the standard were issued that provide further clarification of the principle and to provide certain transition expedients. The standard will replace most existing revenue recognition guidance in GAAP.
In 2016, the Company established a cross-functional implementation team and is in the process of evaluating and implementing changes to our business processes, systems, and controls to support recognition and disclosure under the new standard. At this time, we do not expect any significant impact on our financial systems or a material change to controls as a result of the implementation of the new revenue recognition standard.
Given the complexity and diversity of our non-regulated arrangements, the Company is assessing the standard on a contract-by-contract basis and is in the process of completing the contract assessments by applying the interpretations reached during 2017 on key issues. These issues include the application of the practical expedient for measuring progress towards satisfaction of a performance obligation, when variable quantities would be considered variable consideration versus an option to acquire additional goods and services and how to allocate variable consideration to one or more, but not all, distinct goods or services promised in a series of distinct goods or services that forms part of a single performance obligation. Additionally, the Company is working on the application of the standard to contracts that are under the scope of Service Concession Arrangements (Topic 853) and assessing the gross versus net presentation for spot energy sales and purchases. Through this assessment, the Company to date has identified limited situations where revenue recognized under ASC 606 could differ from that recognized under ASC 605 and where the presentation of sales to and purchases from the energy spot markets will change. The main change that the Company is expecting to have is related to a contract under the scope of Topic 853. The Company will continue its work to complete the assessment of the full population of contracts and determine the overall impact to the consolidated financial statements.
The standard requires retrospective application and allows either a full retrospective adoption in which all periods are presented under the new standard or a modified retrospective approach in which the cumulative effect of initially applying the guidance is recognized at the date of initial application. Although we had previously been working toward adopting the standard using the full retrospective method, given the limited impact of the situations where revenue recognized under ASC 606 differs from that recognized under ASC 605, we now expect to use the modified retrospective approach. However, the Company will continue to assess this conclusion which is dependent on the final impact to the financial statements.
We are continuing to work with various non-authoritative industry groups, and monitoring the FASB and Transition Resource Group activity, as we finalize our accounting policy on these and other industry specific interpretative issues, which is expected in 2017.


2. INVENTORY
The following table summarizes the Company’s inventory balances as of the periods indicated (in millions):
June 30, 2022December 31, 2021
Fuel and other raw materials$573 $366 
Spare parts and supplies298 238 
Total$871 $604 
 September 30, 2017 December 31, 2016
Fuel and other raw materials$350
 $302
Spare parts and supplies310
 328
Total$660
 $630
3. FAIR VALUE
The fair value of current financial assets and liabilities, debt service reserves, and other deposits approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. By virtue ofBecause these amounts beingare 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. The Company made no changes during the period to the fairFor further information on our valuation techniques described inand policies, see Note 4—5—Fair Value in Item 8.—Financial Statements and Supplementary Data of its 2016our 2021 Form 10-K.
Recurring Measurements—
The following table presents, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of the dates indicated (in millions). For the Company’s investments in marketable debt and equity securities, the security classes presented arewere determined based on the nature and risk of the security and are consistent with how the Company manages, monitors, and measures its marketable securities:

11 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

September 30, 2017 December 31, 2016 June 30, 2022December 31, 2021
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets               Assets
AVAILABLE FOR SALE:               
Debt securities:               
Unsecured debentures$—
 $157
 $—
 $157
 $—
 $360
 $—
 $360
DEBT SECURITIES:DEBT SECURITIES:
Available-for-sale:Available-for-sale:
Certificates of deposit—
 340
 —
 340
 —
 372
 —
 372
Certificates of deposit$— $566 $— $566 $— $199 $— $199 
Government debt securities—
 —
 —
 —
 —
 9
 —
 9
Subtotal—
 497
 —
 497
 —
 741
 —
 741
Equity securities:               
Total debt securitiesTotal debt securities— 566 — 566 — 199 — 199 
EQUITY SECURITIES:EQUITY SECURITIES:
Mutual funds—
 54
 —
 54
 —
 49
 —
 49
Mutual funds27 10 — 37 31 13 — 44 
Subtotal—
 54
 —
 54
 —
 49
 —
 49
Total available for sale—
 551
 —
 551
 —
 790
 —
 790
TRADING:               
Equity securities:               
Mutual funds20
 —
 —
 20
 16
 —
 —
 16
Total trading20
 —
 —
 20
 16
 —
 —
 16
Total equity securitiesTotal equity securities27 10 — 37 31 13 — 44 
DERIVATIVES:               DERIVATIVES:
Interest rate derivatives—
 13
 —
 13
 —
 18
 —
 18
Interest rate derivatives— 315 2 317 — 51 2 53 
Cross-currency derivatives—
 14
 —
 14
 —
 4
 —
 4
Cross-currency derivatives— — — — — 5 — 5 
Foreign currency derivatives—
 37
 242
 279
 —
 54
 255
 309
Foreign currency derivatives— 28 50 78 — 29 108 137 
Commodity derivatives—
 44
 8
 52
 —
 38
 7
 45
Commodity derivatives— 143 50 193 — 32 6 38 
Total derivatives — assets—
 108
 250
 358
 —
 114
 262
 376
Total derivatives — assets— 486 102 588 — 117 116 233 
TOTAL ASSETS$20
 $659
 $250
 $929
 $16
 $904
 $262
 $1,182
TOTAL ASSETS$27 $1,062 $102 $1,191 $31 $329 $116 $476 
Liabilities               Liabilities
DERIVATIVES:               DERIVATIVES:
Interest rate derivatives$—
 $104
 $192
 $296
 $—
 $121
 $179
 $300
Interest rate derivatives$— $15 $1 $16 $— $286 $8 $294 
Cross-currency derivatives—
 5
 —
 5
 —
 18
 —
 18
Cross-currency derivatives— 42 — 42 — 11 — 11 
Foreign currency derivatives—
 42
 —
 42
 —
 64
 —
 64
Foreign currency derivatives— 33 — 33 — 35 — 35 
Commodity derivatives—
 16
 2
 18
 —
 40
 2
 42
Commodity derivatives— 111 13 124 — 37 7 44 
Total derivatives — liabilities—
 167
 194
 361
 —
 243
 181
 424
Total derivatives — liabilities— 201 14 215 — 369 15 384 
TOTAL LIABILITIES$—
 $167
 $194
 $361
 $—
 $243
 $181
 $424
TOTAL LIABILITIES$— $201 $14 $215 $— $369 $15 $384 
As of SeptemberJune 30, 2017,2022, all AFSavailable-for-sale debt securities had stated maturities within one year. For the three and nine months ended September 30, 2017 and 2016,There were no other-than-temporary impairments of marketable securities wereduring the three and six months ended June 30, 2022. Credit-related impairments are recognized in earnings or Other Comprehensive Income (Loss).under ASC 326. Gains and losses on the sale of investments are determined using the specific-identification method. The following table presents gross proceeds from the sale of AFSavailable-for-sale securities during the periods indicated (in millions):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Gross proceeds from sale of AFS securities$1,020
 $812
 $2,982
 $3,216


Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Gross proceeds from sale of available-for-sale securities$150 $55 $347 $300 
The following tables present a reconciliation of net derivative assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and ninesix months ended SeptemberJune 30, 20172022 and 20162021 (presented net by type of derivative in millions). Transfers between Level 3 and Level 2 are determined as of the end of the reporting period and principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.

12 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Three Months Ended September 30, 2017Interest Rate Foreign Currency Commodity Total
Balance at July 1$(195) $239
 $9
 $53
Three Months Ended June 30, 2022Three Months Ended June 30, 2022Interest RateCross CurrencyForeign CurrencyCommodityTotal
Balance at April 1Balance at April 1$1 $— $93 $(13)$81 
Total realized and unrealized gains (losses):       Total realized and unrealized gains (losses):
Included in earnings(5) 12
 —
 7
Included in earnings1 — (32)(4)(35)
Included in other comprehensive income — derivative activity(2) —
 —
 (2)Included in other comprehensive income — derivative activity5 — (11)6 — 
Included in regulatory (assets) liabilitiesIncluded in regulatory (assets) liabilities— — — 15 15 
Settlements10
 (9) (3) (2)Settlements— — — 2 2 
Balance at September 30$(192) $242
 $6
 $56
Transfers of assets (liabilities), net into Level 3Transfers of assets (liabilities), net into Level 3— — — 31 31 
Transfers of (assets) liabilities, net out of Level 3Transfers of (assets) liabilities, net out of Level 3(6)— — — (6)
Balance at June 30Balance at June 30$1 $— $50 $37 $88 
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$(1) $3
 $—
 $2
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$1 $— $(32)$— $(31)
Three Months Ended June 30, 2021Three Months Ended June 30, 2021Interest RateCross CurrencyForeign CurrencyCommodityTotal
Balance at April 1Balance at April 1$(166)$(3)$98 $1 $(70)
Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):
Included in earningsIncluded in earnings(1)(32)6 — (27)
Included in other comprehensive income — derivative activityIncluded in other comprehensive income — derivative activity(16)— 1 12 (3)
Included in regulatory (assets) liabilitiesIncluded in regulatory (assets) liabilities— — — 3 3 
SettlementsSettlements11 3 (8)— 6 
Transfers of assets (liabilities), net into Level 3Transfers of assets (liabilities), net into Level 3(20)— — — (20)
Transfers of (assets) liabilities, net out of Level 3Transfers of (assets) liabilities, net out of Level 3— — — (1)(1)
Balance at June 30Balance at June 30$(192)$(32)$97 $15 $(112)
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the periodTotal losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$(1)$— $(4)$— $(5)
Six Months Ended June 30, 2022Interest RateCross CurrencyForeign CurrencyCommodityTotal
Balance at January 1$(6)$— $108 $(1)$101 
Total realized and unrealized gains (losses):
Included in earnings3 — (44)(4)(45)
Included in other comprehensive income — derivative activity10 — (14)(8)(12)
Included in regulatory (assets) liabilities— — — 15 15 
Settlements— — — 2 2 
Transfers of assets (liabilities), net into Level 3— — — 31 31 
Transfers of (assets) liabilities, net out of Level 3(6)— — 2 (4)
Balance at June 30$1 $— $50 $37 $88 
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$3 $— $(44)$1 $(40)
Six Months Ended June 30, 2021Interest RateCross CurrencyForeign CurrencyCommodityTotal
Balance at January 1$(236)$(2)$146 $2 $(90)
Total realized and unrealized gains (losses):
Included in earnings1 (33)(23)— (55)
Included in other comprehensive income — derivative activity19 — (8)12 23 
Included in regulatory (assets) liabilities— — — 3 3 
Settlements24 3 (18)(1)8 
Transfers of (assets) liabilities, net out of Level 3— — — (1)(1)
Balance at June 30$(192)$(32)$97 $15 $(112)
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$1 $— $(44)$— $(43)


Three Months Ended September 30, 2016Interest Rate Foreign Currency Commodity Total
Balance at July 1$(421) $271
 $11
 $(139)
Total realized and unrealized gains (losses):       
Included in earnings(1) 12
 1
 12
Included in other comprehensive income — derivative activity6
 —
 —
 6
Included in other comprehensive income — foreign currency translation activity—
 (5) —
 (5)
Settlements17
 (4) (3) 10
Transfers of liabilities into Level 3(2) —
 —
 (2)
Transfers of liabilities out of Level 394
 —
 —
 94
Balance at September 30$(307) $274
 $9
 $(24)
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$—
 $8
 $1
 $9
13 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Nine Months Ended September 30, 2017Interest Rate Foreign Currency Commodity Total
Balance at January 1$(179) $255
 $5
 $81
Total realized and unrealized gains (losses):      
Included in earnings(5) 12
 (1) 6
Included in other comprehensive income — derivative activity(29) —
 —
 (29)
Included in regulatory liabilities—
 —
 10
 10
Settlements28
 (25) (8) (5)
Transfers of liabilities into Level 3(7) —
 —
 (7)
Balance at September 30$(192) $242
 $6
 $56
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$—
 $(12) $—
 $(12)
Nine Months Ended September 30, 2016Interest Rate Foreign Currency Commodity Total
Balance at January 1$(304) $277
 $3
 $(24)
Total realized and unrealized gains (losses):       
Included in earnings—
 30
 3
 33
Included in other comprehensive income — derivative activity(172) 6
 —
 (166)
Included in other comprehensive income — foreign currency translation activity(3) (43) —
 (46)
Included in regulatory liabilities—
 —
 11
 11
Settlements56
 (8) (8) 40
Transfers of liabilities into Level 3(2) —
 —
 (2)
Transfers of assets out of Level 3118
 12
 —
 130
Balance at September 30$(307) $274
 $9
 $(24)
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period$5
 $25
 $3
 $33
The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of SeptemberJune 30, 20172022 (in millions, except range amounts):
Type of Derivative Fair Value Unobservable Input Amount or Range (Weighted Average)
Interest rate $(192) Subsidiaries’ credit spreads 2.4% to 5.1% (4.7%)
Foreign currency:      
Argentine Peso 242
 
Argentine Peso to USD currency exchange rate after one year (1)
 21.3 to 47.8 (33.8)
Commodity:      
Other 6
    
Total $56
    
 _____________________________
(1)
Type of Derivative		During the nine months ended September 30, 2017, the Company began utilizing the interestFair ValueUnobservable InputAmount or Range (Weighted Average)
Interest rate differential approach$1 Subsidiaries’ credit spreads0.8% - 5.7% (4.4%)
Foreign currency:
Argentine peso50 Argentine peso to construct the remaining portion of the forward curveU.S. dollar currency exchange rate after one year (beyond the traded points). In previous periods, the Company used the purchasing price parity approach to construct the forward curve.213 - 499 (374)
Commodity:
Other37 
Total$88 


For interest rate derivatives and foreign currency derivatives, increases (decreases) in the estimates of the Company’s own credit spreads would decrease (increase) the value of the derivatives in a liability position. For foreign currency derivatives, increases (decreases) in the estimate of the above exchange rate would increase (decrease) the value of the derivative.
Nonrecurring Measurements
When evaluating impairment of long-lived assets and equity method investments, theThe Company measures fair value using the applicable fair value measurement guidance. Impairment expense, shown as pre-tax loss below, is measured by comparing the fair value at the evaluation date to the then-latest available carrying amount.amount and is included in Asset impairment expense or Other non-operating expense, as applicable, on the Condensed Consolidated Statements of Operations. The following table summarizes our major categories of assets and liabilities measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions):.
Nine Months Ended September 30, 2017Measurement Date 
Carrying Amount (1)
 Fair Value Pretax Loss
Assets Level 1 Level 2 Level 3 
Long-lived assets held and used: (2)
           
DPL02/28/2017 $77
 $—
 $—
 $11
 $66
Tait Energy Storage02/28/2017 15
 —
 —
 7
 8
Dispositions and held-for-sale businesses: (3)
           
Kazakhstan Hydroelectric06/30/2017 190
 —
 92
 —
 92
Kazakhstan CHPs03/31/2017 171
 —
 29
 —
 94
Nine Months Ended September 30, 2016Measurement Date 
Carrying Amount (1)
 Fair Value Pretax Loss
Assets Level 1 Level 2 Level 3 
Long-lived assets held and used: (2)
           
Buffalo Gap I08/31/2016 $113
 $—
 $—
 $35
 $78
DPL06/30/2016 324
 —
 —
 89
 235
Buffalo Gap II03/31/2016 251
 —
 —
 92
 159
Discontinued operations and held-for-sale businesses: (3)
           
Sul06/30/2016 1,581
 —
 470
 —
 783
Measurement Date
Carrying Amount (1)
Fair ValuePre-tax Loss
Six Months Ended June 30, 2022Level 1Level 2Level 3
Long-lived assets held and used:
Maritza4/30/2022$927 $— $— $452 $475 
Measurement Date
Carrying Amount (1)
Fair ValuePre-tax Loss
Six Months Ended June 30, 2021Level 1Level 2Level 3
Long-lived assets held and used:
Puerto Rico3/31/2021$548 $— $— $73 $475 
Mountain View I & II4/30/202178 — — 11 67 
Ventanas 3 & 46/30/2021661 — — 12 649 
Angamos6/30/2021241 — — 86 155 
_____________________________
(1)
(1)Represents the carrying values at the dates of measurement, before fair value adjustment.
Represents the carrying values at the dates of measurement, before fair value adjustment.
(2)
See Note 14—Asset Impairment Expense for further information.
(3)
Per the Company’s policy, pretax loss is limited to the impairment of long-lived assets. Any additional loss will be recognized on completion of the sale. See Note 16—Held-for-Sale Businesses and Dispositions for further information.
The following table summarizes the significant unobservable inputs used in the Level 3 measurement of long-lived assets held and used measured on a nonrecurring basis during the ninesix months ended SeptemberJune 30, 20172022 (in millions, except range amounts):
 Fair Value Valuation Technique Unobservable Input Range (Weighted Average)
Long-lived assets held and used:       
DPL$11
 Discounted cash flow Pretax operating margin (through remaining life) 10% to 22% (15%)
     Weighted average cost of capital 7%
Tait Energy Storage7
 Discounted cash flow Annual pretax operating margin 46% to 85% (80%)
     Weighted average cost of capital 9%
Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Long-lived assets held and used:
Maritza$452 Discounted cash flowAnnual revenue growth(66)% to 11% (-11%)
Annual variable margin(66)% to 23% (-1%)
Weighted-average cost of capital20% to 25% (21%)
Total$452 
Financial Instruments not Measured at Fair Value in the Condensed Consolidated Balance Sheets
The following table presents (in millions) the carrying amount, fair value, and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016,the periods indicated, but for which fair value is disclosed:

14 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

 September 30, 2017June 30, 2022
 
Carrying
Amount
 Fair Value
Carrying
Amount
Fair Value
 Total Level 1 Level 2 Level 3TotalLevel 1Level 2Level 3
Assets:
Accounts receivable — noncurrent (1)
$200
 $262
 $—
 $6
 $256
Assets:
Accounts receivable — noncurrent (1)
$44 $81 $— $— $81 
Liabilities:Non-recourse debt17,079
 17,706
 —
 15,479
 2,227
Liabilities:Non-recourse debt17,020 17,654 — 15,451 2,203 
Recourse debt4,958
 5,266
 —
 5,266
 —
Recourse debt4,177 3,812 — 3,812 — 
 December 31, 2016December 31, 2021
 
Carrying
Amount
 Fair Value
Carrying
Amount
Fair Value
 Total Level 1 Level 2 Level 3TotalLevel 1Level 2Level 3
Assets:
Accounts receivable — noncurrent (1)
$264
 $350
 $—
 $20
 $330
Assets:
Accounts receivable — noncurrent (1)
$55 $117 $— $— $117 
Liabilities:Non-recourse debt15,792
 16,188
 —
 15,120
 1,068
Liabilities:Non-recourse debt14,811 16,091 — 16,065 26 
Recourse debt4,671
 4,899
 —
 4,899
 —
Recourse debt3,754 3,818 — 3,818 — 
_____________________________
(1)
These amounts primarily relate to amounts due from CAMMESA, the administrator of the wholesale electricity market in Argentina, and are included in Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. The fair value and carrying amount of these receivables exclude VAT of $38 million and $24 million as of September 30, 2017 and December 31, 2016, respectively.

(1)These amounts primarily relate to amounts due from CAMMESA, the administrator of the wholesale electricity market in Argentina, and amounts impacted by the Stabilization Fund enacted by the Chilean government, and are included in Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. The fair value and carrying amount of these receivables exclude VAT of $2 million as of June 30, 2022 and December 31, 2021.

4. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
There are no changes toFor further information on the information disclosed inCompany’s derivative and hedge accounting policies, see Note 1—General and Summary of Significant Accounting Policies—DerivativesDerivative Instruments and Hedging Activities of Item 8.—Financial Statements and Supplementary Data in the 20162021 Form 10-K.
Volume of Activity — The following table presentstables present the Company’s maximum notional (in millions) over the remaining contractual period by type of derivative as of SeptemberJune 30, 2017,2022, regardless of whether they are in qualifying cash flow hedging relationships, and the dates through which the maturities for each type of derivative range:
Interest Rate and Foreign Currency DerivativesMaximum Notional Translated to USDLatest Maturity
Interest rate$5,596 2059
Cross-currency swaps (Brazilian real)254 2026
Foreign Currency:
Colombian peso132 2024
Euro58 2024
Mexican peso53 2023
Brazilian real37 2024
Chilean peso29 2024
Argentine peso9 2026
Derivatives Maximum Notional Translated to USD Latest Maturity
Interest Rate (LIBOR and EURIBOR) $4,557
 2035
Cross-Currency Swaps (Chilean Unidad de Fomento and Chilean Peso) 394
 2029
Foreign Currency:    
Argentine Peso 233
 2026
Chilean Peso 504
 2020
Colombian Peso 255
 2019
Others, primarily with weighted average remaining maturities of a year or less 326
 2020
Commodity DerivativesMaximum NotionalLatest Maturity
Natural Gas (in MMBtu)115 2029
Power (in MWhs)25 2040
Coal (in Tons or Metric Tons)7 2027
Accounting and Reporting —Assets and Liabilities — The following tables present the fair value of assets and liabilities related to the Company’s derivative instruments as of September 30, 2017 and December 31, 2016the periods indicated (in millions):
Fair ValueJune 30, 2022December 31, 2021
AssetsDesignatedNot DesignatedTotalDesignatedNot DesignatedTotal
Interest rate derivatives$317 $— $317 $53 $— $53 
Cross-currency derivatives— — — 5 — 5 
Foreign currency derivatives14 64 78 28 109 137 
Commodity derivatives31 162 193 6 32 38 
Total assets$362 $226 $588 $92 $141 $233 
Liabilities
Interest rate derivatives$15 $1 $16 $288 $6 $294 
Cross-currency derivatives42 — 42 11 — 11 
Foreign currency derivatives21 12 33 23 12 35 
Commodity derivatives13 111 124 11 33 44 
Total liabilities$91 $124 $215 $333 $51 $384 

15 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Fair ValueSeptember 30, 2017 December 31, 2016
AssetsDesignated Not Designated Total Designated Not Designated Total
Interest rate derivatives$13
 $—
 $13
 $18
 $—
 $18
Cross-currency derivatives14
 —
 14
 4
 —
 4
Foreign currency derivatives5
 274
 279
 9
 300
 309
Commodity derivatives7
 45
 52
 20
 25
 45
Total assets$39
 $319
 $358
 $51
 $325
 $376
Liabilities           
Interest rate derivatives$151
 $145
 $296
 $295
 $5
 $300
Cross-currency derivatives5
 —
 5
 18
 —
 18
Foreign currency derivatives7
 35
 42
 19
 45
 64
Commodity derivatives5
 13
 18
 26
 16
 42
Total liabilities$168
 $193
 $361
 $358
 $66
 $424
June 30, 2022December 31, 2021
Fair ValueAssetsLiabilitiesAssetsLiabilities
Current$216 $86 $85 $83 
Noncurrent372 129 148 301 
Total$588 $215 $233 $384 
 September 30, 2017 December 31, 2016
Fair ValueAssets Liabilities Assets Liabilities
Current$101
 $221
 $99
 $155
Noncurrent257
 140
 277
 269
Total$358
 $361
 $376
 $424
        
Credit Risk-Related Contingent Features (1)
    September 30, 2017 December 31, 2016
Present value of liabilities subject to collateralization $12
 $41
Cash collateral held by third parties or in escrow 5
 18
 _____________________________
(1)
Based on the credit rating of certain subsidiaries


Earnings and Other Comprehensive Income (Loss) — The nextfollowing table presents (in millions) the pretaxpre-tax gains (losses) recognized in AOCL and earnings related to all derivative instruments for the periods indicated:indicated (in millions):
Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended September 30, Nine Months Ended September 30,2022202120222021
Cash flow hedges
Gains (losses) recognized in AOCLGains (losses) recognized in AOCL
Interest rate derivativesInterest rate derivatives$323 $(222)$627 $87 
2017 2016 2017 2016
       
Gains (losses) recognized in AOCL       
Cross-currency derivativesCross-currency derivatives— 1 — 3 
Foreign currency derivativesForeign currency derivatives(24)(19)(12)(20)
Commodity derivativesCommodity derivatives32 17 61 17 
TotalTotal$331 $(223)$676 $87 
Losses reclassified from AOCL into earningsLosses reclassified from AOCL into earnings
Interest rate derivatives$(6) $7
 $(79) $(213)Interest rate derivatives$(23)$(28)$(50)$(52)
Cross-currency derivatives12
 15
 14
 12
Cross-currency derivatives— (1)— (2)
Foreign currency derivatives(4) (6) (15) (11)Foreign currency derivatives— (2)— (5)
Commodity derivatives9
 10
 23
 35
Commodity derivatives— (1)(1)(3)
Total$11
 $26
 $(57) $(177)Total$(23)$(32)$(51)$(62)
Gains (losses) reclassified from AOCL into earnings       
Gains (losses) on fair value hedging relationshipGains (losses) on fair value hedging relationship
Cross-currency derivativesCross-currency derivatives$8 $(32)$(35)$(32)
Hedged itemsHedged items(25)35 22 35 
TotalTotal$(17)$3 $(13)$3 
Loss reclassified from AOCL to earnings due to impairment of assetsLoss reclassified from AOCL to earnings due to impairment of assets$(16)$(9)$(16)$(13)
Loss reclassified from AOCL to earnings due to de-designation of hedgeLoss reclassified from AOCL to earnings due to de-designation of hedge$(15)$— $(15)$— 
Gains (losses) recognized in earnings related toGains (losses) recognized in earnings related to
Not designated as hedging instruments:Not designated as hedging instruments:
Interest rate derivatives$(19) $(26) $(63) $(81)Interest rate derivatives$1 $(9)$3 $105 
Cross-currency derivatives14
 4
 18
 14
Foreign currency derivatives(1) (7) (24) (3)
Commodity derivatives10
 4
 13
 42
Total$4
 $(25) $(56)
$(28)
Gains (losses) recognized in earnings related to       
Ineffective portion of cash flow hedges$4
 $(2) $4
 $—
Not designated as hedging instruments:       
Foreign currency derivatives$5
 $(6) $(13) $10
Foreign currency derivatives4 7 (15)(4)
Commodity derivatives and other1
 7
 7
 (11)Commodity derivatives and other30 12 17 (81)
Total$6
 $1
 $(6) $(1)Total$35 $10 $5 $20 
Pretax losses reclassified to earnings as a result of discontinuance of cash flow hedge because it was probable that the forecasted transaction would not occur$—
 $—
 $(16) $—
AOCL is expected to decrease pretaxpre-tax income from continuing operations for the twelve months ended SeptemberJune 30, 2018,2023 by $67$24 million, primarily due to interest rate derivatives.
5. FINANCING RECEIVABLES
Financing receivables are defined as receivablesReceivables with contractual maturities of greater than one year. The Company’syear are considered financing receivables are primarily related to amended agreements or government resolutions that are due from CAMMESA, the administrator of the wholesale electricity market in Argentina.receivables. The following table presents financing receivables by country as of the dates indicated (in millions):
June 30, 2022December 31, 2021
Gross ReceivableAllowanceNet ReceivableGross ReceivableAllowanceNet Receivable
Chile$16 $— $16 $17 $— $17 
Argentina8 1 7 11 1 10 
Other23 — 23 30 — 30 
Total$47 $1 $46 $58 $1 $57 
Chile— AES Andes has recorded noncurrent receivables pertaining to revenues recognized on regulated energy contracts that were impacted by the Stabilization Fund created by the Chilean government in October 2019, in conjunction with the Tariff Stabilization Law. Historically, the government updated the prices for these contracts every six months to reflect the indexation the contracts have to exchange rates and commodities prices. The Stabilization Fund does not allow the pass-through of these contractual indexation updates to customers beyond the pricing in effect at July 1, 2019, until new lower-cost renewable contracts are incorporated into pricing in 2023. Consequently, costs incurred in excess of the July 1, 2019 price will be accumulated and borne by generators.

16 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

 September 30, 2017 December 31, 2016
Argentina$216
 $236
Brazil9
 8
United States6
 20
Other7
 —
Total$238
 $264
Argentina— Collection of the principal and interest on these receivables is subject to various business risks and uncertainties, including, but not limited to, the operation of power plants which generate cash for payments of these receivables, regulatory changes that could impact the timing and amount of collections, and economic conditions in Argentina. The Company monitors these risks, including the credit ratings of the Argentine government, on a quarterly basis to assess the collectability of these receivables. The Company accrues interest on these receivables once the recognition criteria have been met. The Company’s collection estimates are based on assumptions that it believes to be reasonable, but are inherently uncertain. Actual future cash flows could differ from these estimates. The decrease in Argentina financing receivables was primarily due to planned collections, as well as the recognition of a $15 million allowance on a non-trade receivable.
6. INVESTMENTS IN AND ADVANCES TO AFFILIATES
Summarized Financial Information — The following table summarizes financial information of the Company’s 50%-or-less-owned affiliates and majority-owned unconsolidated subsidiaries that are accounted for using the equity method (in millions):
 
50%-or-less Owned Affiliates (1)
Majority-Owned Unconsolidated Subsidiaries
Six Months Ended June 30,2022202120222021
Revenue$792 $726 $1 $1 
Operating margin (loss)(249)12 — (1)
Net loss(323)(93)— (2)

(1)         As of July 1, 2021, AES began to account for its investment in Fluence quarterly, on a three-month lag. This shift in timing is necessary due to the nature of the entity subsequent to its IPO.
 Nine Months Ended September 30,
50%-or-less-Owned Affiliates2017 2016
Revenue$532
 $439
Operating margin91
 108
Net income44
 46
sPowerAlto Maipo — In February 2017,On May 26, 2022, Alto Maipo emerged from bankruptcy in accordance with Chapter 11 of the U.S. Bankruptcy Code. Alto Maipo, as restructured, is considered a VIE. As the Company lacks the power to make significant decisions, it does not meet the criteria to be considered the primary beneficiary of Alto Maipo and Alberta Investment Management Corporation (“AIMCo”) entered into an agreementtherefore will not consolidate the entity. The Company has elected the fair value option to acquire FTP Power LLC (“sPower”). On July 25, 2017, AES closed onaccount for its investment in Alto Maipo as management believes this approach will better reflect the acquisition


economics of its 48%equity interest. As of June 30, 2022, the fair value is insignificant. Alto Maipo is reported in the South America SBU reportable segment.
Fluence — On June 9, 2021, Fluence issued new shares to the Qatar Investment Authority (“QIA”) for $125 million, which following the completion of the transaction, represented a 13.6% ownership interest in sPowerFluence. As a result of the transaction, which AES has accounted for $461 million.as a partial disposition, AES’ ownership interest in Fluence decreased from 50% to 43.2%. The Company recognized a gain of $61 million in Gain (loss) on disposal and sale of business interests.
On November 1, 2021, Fluence completed its IPO of 35,650,000 of its Class A common stock at a price of $28 per share, including the exercise of the underwriter’s option. Fluence received approximately $936 million in proceeds, after expenses, and as a result of the transaction, AES’ ownership interest in Fluence decreased to 34.2%. As the Company still does not control Fluence after these transactions, it continues to be accounted for as an equity method investment and is reported as part of Corporate and Other.
Grupo Energía Gas Panamá — In April 2021, Grupo Energía Gas Panamá, a joint venture between AES and InterEnergy Power & Gas Limited, completed the acquisition of a combined cycle natural gas development project. AES holds a 49% ownership interest in the affiliate. The Company contributed $21 million to the joint venture as of June 30, 2021 and has contributed a total of $45 million as of June 30, 2022. As the Company does not control sPower,the joint venture, it wasis accounted for as an equity method investment. The investment and is reported in the MCAC SBU reportable segment.
sPower portfolio includes solar— On February 1, 2021, the Company substantially completed the merger of the sPower and windAES Renewable Holdings development platforms to form AES Clean Energy Development, a consolidated entity, which will serve as the development vehicle for all future renewable projects in operation, under construction, andthe U.S. Since the sPower development platform was carved-out of AES’ existing equity method investment, this transaction resulted in development locateda $104 million decrease in the United States. Thecarrying value of the sPower investment and the Company recognized a gain of $212 million in Other income. See Note 18—Acquisitions for further information. As the Company still does not control sPower after the transaction, it continues to be accounted for as an equity method investment and is reported in the US and Utilities SBU reportable segment.
Guacolda — In February 2021, AES Andes entered into an agreement to sell its 50% ownership interest in Guacolda for $34 million and in May 2021, the Company received a $10 million advance on the sales price. On July 20, 2021, the Company completed the sale of Guacolda and received the remaining $24 million. Prior to its sale, the Guacolda equity method investment was reported in the South America SBU reportable segment.

17 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

7. DEBT
RecourseNon-Recourse Debt
In August 2017,During the Company issued $500 million aggregate principal amount of 5.125% senior notes due in 2027. The Company used these proceeds to redeem at par $240 million aggregate principal of its existing LIBOR + 3.00% senior unsecured notes due in 2019 and repurchased $217 million of its existing 8.00% senior unsecured notes due in 2020. As a result of the latter transactions, the Company recognized a loss on extinguishment of debt of $36 million for the ninesix months ended SeptemberJune 30, 2017.
In May 2017, the Company closed on $525 million aggregate principal LIBOR + 2.00% secured term loan due in 2022. In June 2017, the Company used these proceeds to redeem at par all $517 million aggregate principal of its existing Term Convertible Securities. As a result of the latter transaction, the Company recognized a loss on extinguishment of debt of $6 million for the nine months ended September 30, 2017.
In March 2017, the Company redeemed via tender offers $276 million aggregate principal of its existing 7.375% senior unsecured notes due in 2021 and $24 million of its existing 8.00% senior unsecured notes due in 2020. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $47 million for the nine months ended September 30, 2017.
In July 2016, the Company redeemed in full the $181 million balance of its 8.00% outstanding senior unsecured notes due 2017 using proceeds from its senior secured credit facility. As a result, the Company recognized a loss on extinguishment of debt of $16 million for the three and nine months ended September 30, 2016.
In May 2016, the Company issued $500 million aggregate principal amount of 6.00% senior notes due in 2026. The Company used these proceeds to redeem at par $495 million aggregate principal of its existing LIBOR + 3.00% senior unsecured notes due 2019. As a result of the latter transaction, the Company recognized a loss on extinguishment of debt of $4 million for the nine months ended September 30, 2016.
In January 2016, the Company redeemed $125 million of its senior unsecured notes outstanding. The repayment included a portion of the 7.375% senior notes due in 2021, the 4.875% senior notes due in 2023, the 5.5% senior notes due in 2024, the 5.5% senior notes due in 2025 and the floating rate senior notes due in 2019. As a result of these transactions, the Company recognized a net gain on extinguishment of debt of $7 million for the nine months ended September 30, 2016.
Non-Recourse Debt
During the nine months ended September 30, 2017,2022, the Company’s subsidiaries had the following significant debt transactions:
Subsidiary Issuances Repayments Gain (Loss) on Extinguishment of Debt
Tietê $585
 $(293) $(5)
IPALCO 532
  
(480) (9)
Southland 360
 —
 —
AES Argentina 307
 (181) 65
Los Mina 278
 (259) (4)
Gener 243
  
(78) —
Colon 220
 —
 —
Eletropaulo 189
  
(147) —
Other 261
 (509) (3)
Total $2,975
 $(1,947) $44
SubsidiaryTransaction PeriodIssuancesRepayments
AES Andes (1)
Q1, Q2$477 $(95)
AES BrasilQ1, Q2469 (201)
United KingdomQ1710 (350)
Netherlands/PanamaQ1500 — 
El SalvadorQ2348 (345)
AES Clean Energy DevelopmentQ2267 — 
AES IndianaQ2200 — 
AES OhioQ2140 — 
Southland _____________________________
(1)Issuances relate to AES Andes S.A. and Chivor.
Netherlands and Panama — In June 2017,March 2022, AES Southland Energy LLC closed on $2 billion of aggregate principal long-term non-recourse debt financing to fund the Southland re-powering construction projects (“the Southland financing”).Hispanola Holdings BV, a Netherlands based company, and Colon, as co-borrowers, executed a $500 million bridge loan due in 2023. The Southland financing consists of $1.5 billion senior secured notes, amortizing through 2040,Company allocated $450 million and $492 million senior secured term loan, amortizing through 2027. The long term debt financing has a combined weighted average cost of approximately 4.5%. As of September 30, 2017, $360$50 million of the senior secured notes were outstanding underproceeds from the Southland financing.agreement to AES Hispanola Holdings BV and Colon, respectively.


United Kingdom — On January 6, 2022, Mercury Chile HoldCo LLC (“Mercury Chile”), a UK based company, executed a $350 million bridge loan, and used the proceeds, as well as an additional capital contribution of $196 million from the Parent Company, to purchase the minority interest in AES Argentina — In February 2017, AES ArgentinaAndes through intermediate holding companies (see Note 11—Equity for further information). On January 24, 2022, Mercury Chile issued $300$360 million aggregate principal of unsecured and unsubordinated6.5% senior secured notes due in 2024. The net2027 and used the proceeds from thisthe issuance were used forto fully prepay the prepayment of $75$350 million of non-recourse debt related to the construction of the San Nicolas Plant resulting in a gain on extinguishment of debt of approximately $65 million.bridge loan.
Non-Recourse Debt in Default — The following table summarizes the Company’s subsidiary non-recourse debt in default (in millions) as of June 30, 2022. Due to the defaults, these amounts are included in the current portion of non-recourse debt includesdebt:
SubsidiaryPrimary Nature of DefaultDebt in DefaultNet Assets
AES Puerto RicoCovenant$177 $(185)
AES Jordan PSC (1)
Covenant75 126 
AES Ilumina (Puerto Rico)Covenant28 26 
AES Jordan SolarCovenant7 9 
Total$287 
_____________________________
(1)Classified as current held-for-sale liability on the following subsidiary debt in default as of September 30, 2017 (in millions).
Subsidiary Primary Nature of Default Debt in Default Net Assets
Alto Maipo (Chile) Covenant $623
 $352
AES Puerto Rico Covenant 365
 566
AES Ilumina Covenant 36
 56
    $1,024
  
Condensed Consolidated Balance Sheets.
The above defaults are not payment defaults. All ofIn Puerto Rico, the subsidiary non-recourse debt defaults were triggered by failure to comply with covenants and/or other conditions such as (but not limited to) failure to meet information covenants, complete construction or other milestones in an allocated time, meet certain minimum or maximum financial ratios, or other requirements contained in the non-recourse debt documents due to the bankruptcy of the applicable subsidiary.offtaker.
The AES Corporation’s recourse debt agreements include cross-default clauses that will trigger if a subsidiary or group of subsidiaries for which the non-recourse debt is in default provides more than 20% or more of the Parent Company’s total cash distributions from businesses for the four most recently completed fiscal quarters. As of SeptemberJune 30, 2017,2022, the Company hashad no defaults which resultresulted in, or arewere at risk of triggering, a cross-default under the recourse debt of the Parent Company. In the event the Parent Company is not in compliance with the financial covenants of its senior secured revolving credit facility, restricted payments will be limited to regular quarterly shareholder dividends at the then-prevailing rate. Payment defaults and bankruptcy defaults would preclude the making of any restricted payments.
8. COMMITMENTS AND CONTINGENCIES
Guarantees, Letters of Credit and Commitments— In connection with certain project financings, acquisitions and dispositions, power purchases and other agreements, the Parent Company has expressly undertaken limited obligations and commitments, most of which will only be effective or will be terminated upon the occurrence of future events. In the normal course of business, the Parent Company has entered into various agreements, mainly guarantees and letters of credit, to provide financial or performance assurance to third parties on behalf of AES businesses. These agreements are entered into primarily to support or enhance the

18 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

creditworthiness otherwise achieved by a business on a stand-alone basis, thereby facilitating the availability of sufficient credit to accomplish their intended business purposes. Most of the contingent obligations relate to future performance commitments which the Company or its businesses expect to fulfill within the normal course of business. The expiration dates of these guarantees vary from less than one year to no more than 17 years.
The following table summarizes the Parent Company’s contingent contractual obligations as of SeptemberJune 30, 2017.2022. Amounts presented in the following table represent the Parent Company’s current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure. The maximum exposure is not reduced by the amounts, if any, that could be recovered under the recourse or collateralization provisions in the guarantees.
Contingent Contractual ObligationsAmount (in millions)Number of AgreementsMaximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments$2,252 81 $0 — 400
Letters of credit under the unsecured credit facilities155 44 $0 — 36
Letters of credit under the revolving credit facility26 12 $0 — 15
Surety bonds2 2 $1
Total$2,435 139 
Contingent Contractual Obligations 
Amount
(in millions)
 Number of Agreements Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments $806
 21
 <$1 — 272
Letters of credit under the unsecured credit facility 125
 5
 $2 — 73
Asset sale related indemnities (1)
 27
 1
 $27
Letters of credit under the senior secured credit facility 9
 17
 <$1 — 2
Total $967
 44
  
_____________________________
(1)
Excludes normal and customary representations and warranties in agreements for the sale of assets (including ownership in associated legal entities) where the associated risk is considered to be nominal.
During the ninesix months ended SeptemberJune 30, 2017,2022, the Company paid letter of credit fees ranging from 0.25%1% to 2.25%3% per annum on the outstanding amounts of letters of credit.
Contingencies
Environmental — The Company periodically reviews its obligations as they relate to compliance with environmental laws, including site restoration and remediation. As of SeptemberFor the periods ended June 30, 20172022 and December 31, 2016,2021, the Company had recognized liabilities of $9$4 million and $12 million, respectively, for projected environmental


remediation costs. Due to the uncertainties associated with environmental assessment and remediation activities, future costs of compliance or remediation could be higher or lower than the amount currently accrued. Moreover, where no liability has been recognized, it is reasonably possible that the Company may be required to incur remediation costs or make expenditures in amounts that could be material but could not be estimated as of SeptemberJune 30, 2017.2022. In aggregate, the Company estimates the range of potential losses related to environmental matters, where estimable, to be up to $19$12 million. The amounts considered reasonably possible do not include amounts accrued as discussed above.
Litigation —The Company is involved in certain claims, suits and legal proceedings in the normal course of business. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company has recognized aggregate liabilities for all claims of approximately $174$28 million and $179$23 million as of SeptemberJune 30, 20172022 and December 31, 2016,2021, respectively. These amounts are reported on the Condensed Consolidated Balance Sheets within Accrued and other liabilities and Other noncurrent liabilities. A significant portion of these accrued liabilities relate to laborregulatory matters and employment, non-income tax and customercommercial disputes in international jurisdictions. Certain of the Company’s subsidiaries, principally in Brazil, are defendants in a number of labor and employment lawsuits. The complaints generally seek unspecified monetary damages, injunctive relief, or other relief. The subsidiaries have denied any liability and intend to vigorously defend themselves in all of these proceedings. There can be no assurance that these accrued liabilities will be adequate to cover all existing and future claims or that we will have the liquidity to pay such claims as they arise.
Where no accrued liability has been recognized, it is reasonably possible that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material but could not be estimated as of SeptemberJune 30, 2017.2022. The material contingencies where a loss is reasonably possible primarily include claims under financing agreements, including the Eletrobrás case; disputes with offtakers, suppliers and EPC contractors; alleged breaches of contract; alleged violation of monopoly laws and regulations; income tax and non-income tax matters with tax authorities; and regulatory matters. In October 2017, Eletropaulo and Eletrobrás entered into a memorandum of understanding to engage in settlement discussions. If settlement is achieved, it will be subject to the approval of the Eletropaulo Board of Directors and the majority of non-AES board members of Eletropaulo. As such, no contingency has been recorded as it does not meet the criteria under ASC 450. In aggregate, the Company estimates the range of potential losses, where estimable, related to these reasonably possible material contingencies to be between $1.6 billion$247 million and $1.9 billion.$728 million. The amounts considered reasonably possible do not include the amounts accrued, as discussed above. These material contingencies do not include income tax-related contingencies which are considered part of our uncertain tax positions.
Tietê GSF Settlement— In accordance with the regulation published by ANEEL in December 2020 regarding the incorrect application of the GSF mechanism between 2013 and 2018, Tietê will be compensated in the form of a concession extension period, initially determined to be 2.7 years, which will be amortized from the date of the agreement until the end of the new concession period. As of December 31, 2020, the compensation to be received from the concession extension was estimated to have a fair value of $184 million, based on a preliminary time-value equivalent calculation made by the CCEE. In March 2021, the CCEE’s final calculation of fair value was $190 million and the Company recognized an additional reversal of Non-RegulatedCost of Sales of $6 million. In August 2021, ANEEL published Resolution 2.919/2021, establishing an extension for the end of the concession originally granted to AES Brasil’s hydroelectric plants, from 2029 to 2032. On April 14, 2022, the amended term was finalized and agreed upon by ANEEL and AES.

19 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

9. PENSION PLANSLEASES
Total pension costLESSOR — The Company has operating leases for certain generation contracts that contain provisions to provide capacity to a customer, which is a stand-ready obligation to deliver energy when required by the customer. Capacity receipts are generally considered lease elements as they cover the majority of available output from a facility. The allocation of contract payments between the lease and employer contributions werenon-lease elements is made at the inception of the lease. Lease receipts from such contracts are recognized as followslease revenue on a straight-line basis over the lease term, whereas variable lease receipts are recognized when earned.
The following table presents lease revenue from operating leases in which the Company is the lessor for the periods indicated (in millions):
Three Months Ended June 30,Six Months Ended June 30,
Operating Lease Revenue2022202120222021
Total lease revenue$140 $118 $274 $261 
Less: Variable lease revenue(16)(25)(23)(39)
Total Non-variable lease revenue$124 $93 $251 $222 
The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant and equipment, net for the periods indicated (in millions):
Property, Plant and Equipment, NetJune 30, 2022December 31, 2021
Gross assets$1,600 $2,423 
Less: Accumulated depreciation(419)(765)
Net assets$1,181 $1,658 
The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, and lack of performance on energy delivery. The Company has not recognized any early terminations as of June 30, 2022. Certain leases may provide for variable lease payments based on usage or index-based (e.g., the U.S. Consumer Price Index) adjustments to lease payments.
The following table shows the future lease receipts as of June 30, 2022 for the remainder of 2022 through 2026 and thereafter (in millions):
Future Cash Receipts for
Sales-Type LeasesOperating Leases
2022$12 $215 
202324 384 
202424 384 
202524 385 
202624 277 
Thereafter361 747 
Total$469 $2,392 
Less: Imputed interest(268)
Present value of total lease receipts$201 
Battery Storage Lease Arrangements — The Company constructs and operates projects consisting only of a stand-alone battery energy storage system (“BESS”) facility, as well as projects that pair a BESS with solar energy systems. These projects allow more flexibility on when to provide energy to the grid. The Company will enter into PPAs for the full output of the facility that allow customers the ability to determine when to charge and discharge the BESS. These arrangements include both lease and non-lease elements under ASC 842, with the BESS component typically constituting a sales-type lease. The Company recognized lease income on sales-type leases through interest income of $13 million and $16 million for the three and six months ended June 30, 2022, respectively; and $4 million and $8 million for the three and six months ended June 30, 2021, respectively. During the second quarter of 2022, the Company recognized a full allowance of $20 million on a sales-type lease receivable at AES Gilbert. See Note 14—Other Income and Expense for further information.
Prior to January 1, 2022, due to the variable-based nature of lease payments under certain contracts, the Company recorded a loss at commencement of sales-type leases of $13 million for the six months ended June 30, 2021. These amounts are recognized in Other expense in the Condensed Consolidated Statement of Operations. See Note 14—Other Income and Expense for further information. Effective January 1, 2022, the Company adopted ASU 2021-05 in which lessors classify and account for certain leases with primarily variable-based lease payments as operating leases. The Company adopted this standard on a prospective basis. See Note 1—Financial Statement Presentation for further information.

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 U.S. Foreign U.S. Foreign U.S. Foreign U.S. Foreign
Service cost$3
 $4
 $3
 $3
 $10
 $11
 $9
 $9
Interest cost10
 99
 10
 92
 31
 296
 30
 255
Expected return on plan assets(17) (73) (17) (59) (52) (219) (50) (164)
Amortization of prior service cost1
 —
 2
 —
 4
 —
 6
 —
Amortization of net loss5
 10
 5
 5
 14
 31
 14
 14
Curtailment loss recognized—
 —
 —
 —
 4
 —
 —
 —
Total pension cost$2
 $40
 $3
 $41
 $11
 $119
 $9
 $114
                
         Nine Months Ended 
 September 30, 2017		 Remainder of 2017 (Expected)
         U.S. Foreign U.S. Foreign
Total employer contributions        $14
 $118
 $—
 $41

20 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021


10. REDEEMABLE STOCK OF SUBSIDIARIES
The following table summarizes the Company’s redeemable stock of subsidiaries balances as of the periods indicated (in millions):
 September 30, 2017 December 31, 2016
IPALCO common stock$618
 $618
Eletropaulo preferred stock152
 —
Colon quotas (1)
137
 100
IPL preferred stock60
 60
Other common stock—
 4
Redeemable stock of subsidiaries$967
 $782
June 30, 2022December 31, 2021
IPALCO common stock$700 $700 
AES Clean Energy Development common stock400 497 
AES Indiana preferred stock60 60 
Potengi common and preferred stock13 — 
Total redeemable stock of subsidiaries$1,173 $1,257 
 _____________________________
(1)
Characteristics of quotas are similar to common stock.
EletropauloPotengi — In September 2017, Eletropaulo obtained shareholder approvalMarch 2022, Tucano Holding I (“Tucano”), a subsidiary of AES Brasil, completed the sale of 24% of its ownership in the Potengi wind development project to BRF S.A. (“BRF”) for $12 million, reducing the transfer of Eletropaulo’s sharesCompany’s indirect ownership interest in Potengi to Novo Mercado, which is a listing segment35.5%. As the Company maintained control after the transaction, Potengi continues to be consolidated by the Company. As part of the Brazilian stock exchange withtransaction, BRF was given an option to sell its entire ownership interest at the highest standards of corporate governance. Certain preferred shareholders who did not vote in favorconclusion of the share transferPPA term. As a result, the minority ownership interest is considered temporary equity, which will be adjusted for earnings or losses allocated to the Novo Mercado have withdrawal rights which allow the shareholder to receive a cash payment for tendering their shares to Eletropaulo over a 30-day withdrawal rights window that expired on October 30, 2017. Due to these withdrawal rights, these shares were probable of becoming redeemable as of September 30, 2017 and the corresponding non-controllingnoncontrolling interest was reclassified to temporary equity.
Colon — Our partner in Colon made capital contributions of $30 million and $106 million during the nine months ended September 30, 2017 and 2016, respectively.under ASC 810. Any subsequent adjustments to allocate earnings and dividends to our partner, or measurechanges in the investment at fairredemption value of the exit rights will be classified as temporaryrecognized against permanent equity each reporting periodin accordance with ASC 480-10-S99, as it is probable that the shares will become redeemable.
IPALCO AES Clean Energy Development— In March 2016, CDPQ exercised its final purchase option by investing $134 million in IPALCO. The company also recognized an increase to additional paid-in capital and a reduction to retained earnings of $84 million forOn February 1, 2021, the excessCompany substantially completed the merger of the sPower and AES Renewable Holdings development platforms to form AES Clean Energy Development, which will serve as the development vehicle for all future renewable projects in the U.S. As part of the transaction, AlMCo, our existing partner in the sPower equity method investment, received a 25% minority ownership interest in the newly formed entity along with certain partnership rights, though not currently in effect, that would enable AIMCo to exit in the future. As a result, the minority ownership interest is considered temporary equity.
During the second quarter of 2021, the Company recorded measurement period adjustments to the estimated fair values of the sPower and AES Renewable Holdings development platforms and the value of the shares over their book value. In June 2016, CDPQ contributed anpartnership rights initially recorded in the first quarter of 2021, which resulted in a $81 million increase in the value of the temporary equity. These measurement period adjustments primarily relate to higher expected developer profits and a higher growth rate, reflective of additional $24 millioninformation that became available regarding market participants’ views of the value of early-stage renewable development projects as of the date of acquisition. The temporary equity will be adjusted for earnings or losses allocated to IPALCO.the noncontrolling interest under ASC 810. Any subsequent adjustments to allocate earnings and dividends to CDPQchanges in the redemption value of the exit rights will be classified as NCI withinrecognized against permanent equity in accordance with ASC 480-10-S99, as it is not probable that the shares will become redeemable. See Note 18—Acquisitions for further information.
11. EQUITY
Equity Units
In March 2021, the Company issued 10,430,500 Equity Units with a total notional value of $1,043 million. Each Equity Unit has a stated amount of $100 and was initially issued as a Corporate Unit, consisting of a forward stock purchase contract (“2024 Purchase Contracts”) and a 10% undivided beneficial ownership interest in one share of 0% Series A Cumulative Perpetual Convertible Preferred Stock, issued without par and with a liquidation preference of $1,000 per share (“Series A Preferred Stock”).
Upon reconsideration of the nature of the Equity Units, the Company re-evaluated its accounting assessment and concluded that the Equity Units should be accounted for as one unit of account based on the economic linkage between the 2024 Purchase Contracts and the Series A Preferred Stock, as well as the Company's assessment of the applicable accounting guidance relating to combining freestanding instruments. The Equity Units represent mandatorily convertible preferred stock. Accordingly, the shares associated with the combined instrument are reflected in diluted earnings per share using the if-converted method.
In the fourth quarter of 2021, the Company also corrected the classification of certain amounts in the Consolidated Balance Sheet and Statement of Changes in Equity —to reflect the 2024 Purchase Contracts and Series A Preferred Stock as one unit of account. The following table is a reconciliationcorrections have no impact on the Company's net earnings, total assets, cash flows, or segment information.

21 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

In conjunction with the issuance of the beginningEquity Units, the Company received approximately $1 billion in proceeds, net of underwriting costs and ending equity attributablecommissions, before offering expenses. The proceeds for the issuance of 1,043,050 shares are attributed to stockholders of The AES Corporation, NCIthe Series A Preferred Stock for $838 million and total equity as$205 million for the present value of the periods indicated (in millions):quarterly payments due to holders of the 2024 Purchase Contracts ("Contract Adjustment Payments"). The proceeds will be used for the development of the AES renewable businesses, U.S. utility businesses, LNG infrastructure, and for other developments determined by management.
The Series A Preferred Stock will initially not bear any dividends and the liquidation preference of the convertible preferred stock will not accrete. The Series A Preferred Stock has no maturity date and will remain outstanding unless converted by holders or redeemed by the Company. Holders of the shares of the convertible preferred stock will have limited voting rights.
 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
 The Parent Company Stockholders’ Equity NCI Total Equity The Parent Company Stockholders’ Equity NCI Total Equity
Balance at the beginning of the period$2,794
 $2,906
 $5,700
 $3,149
 $3,022
 $6,171
Net income (loss) (1)
181
 328
 509
 (181) 97
 (84)
Total foreign currency translation adjustment, net of income tax117
 10
 127
 179
 53
 232
Total change in derivative fair value, net of income tax5
 3
 8
 (52) (63) (115)
Total pension adjustments, net of income tax1
 19
 20
 3
 7
 10
Cumulative effect of a change in accounting principle (2)
31
 —
 31
 —
 —
 —
Fair value adjustment (3)
(19) —
 (19) (4) —
 (4)
Disposition of businesses—
 —
 —
 —
 18
 18
Distributions to noncontrolling interests—
 (261) (261) (2) (293) (295)
Contributions from noncontrolling interests—
 17
 17
 —
 23
 23
Dividends declared on common stock(158) —
 (158) (144) —
 (144)
Purchase of treasury stock—
 —
 —
 (79) —
 (79)
Issuance and exercise of stock-based compensation benefit plans12
 —
 12
 15
 —
 15
Sale of subsidiary shares to noncontrolling interests22
 47
 69
 —
 17
 17
Acquisition of subsidiary shares from noncontrolling interests200
 (85) 115
 (2) (3) (5)
Less: Net loss attributable to redeemable stock of subsidiaries—
 9
 9
 —
 8
 8
Balance at the end of the period$3,186
 $2,993
 $6,179
 $2,882
 $2,886
 $5,768
The Series A Preferred Stock is pledged as collateral to support holders’ purchase obligations under the 2024 Purchase Contracts and can be remarketed. In connection with any successful remarketing, the Company may increase the dividend rate, increase the conversion rate, and modify the earliest redemption date for the convertible preferred stock. After any successful remarketing in connection with which the dividend rate on the convertible preferred stock is increased, the Company will pay cumulative dividends on the convertible preferred stock, if declared by the board of directors, quarterly in arrears from the applicable remarketing settlement date.
_____________________________
(1)
Net income attributable to noncontrolling interest of $337 million and net loss attributable to redeemable stocks of subsidiaries of $9 million for the nine months ended September 30, 2017. Net income attributable to noncontrolling interest of $105 million and net loss attributable to redeemable stock of subsidiaries of $8 million for the nine months ended September 30, 2016.
(2)
See Note 1—Financial Statement Presentation, New Accounting Standards Adopted for further information.
(3)
Adjustment to record the of redeemable stock of Colon at fair value.

Holders of Corporate Units may create Treasury Units or Cash Settled Units from their Corporate Units as provided in the Purchase Contract Agreement by substituting Treasury securities or cash, respectively, for the Convertible Preferred Stock comprising a part of the Corporate Units.

The Company may not redeem the Series A Preferred Stock prior to March 22, 2024. At the election of the Company, on or after March 22, 2024, the Company may redeem for cash, all or any portion of the outstanding shares of the Series A Preferred Stock at a redemption price equal to 100% of the liquidation preference, plus any accumulated and unpaid dividends.
The 2024 Purchase Contracts obligate the holders to purchase, on February 15, 2024, for a price of $100 in cash, a maximum number of 57,256,144 shares of the Company’s common stock (subject to customary anti-dilution adjustments). The 2024 Purchase Contract holders may elect to settle their obligation early, in cash. The Series A Preferred Stock is pledged as collateral to guarantee the holders’ obligations to purchase common stock under the terms of the 2024 Purchase Contracts. The initial settlement rate determining the number of shares that each holder must purchase will not exceed the maximum settlement rate and is determined over a market value averaging period preceding February 15, 2024.
The initial maximum settlement rate of 3.864 was calculated using an initial reference price of $25.88, equal to the last reported sale price of the Company’s common stock on March 4, 2021. As of June 30, 2022, due to the customary anti-dilution provisions, the maximum settlement rate was 3.8667, equivalent to a reference price of $25.86. If the applicable market value of the Company’s common stock is less than or equal to the reference price, the settlement rate will be the maximum settlement rate; and if the applicable market value of common stock is greater than the reference price, the settlement rate will be a number of shares of the Company’s common stock equal to $100 divided by the applicable market value. Upon successful remarketing of the Series A Preferred Stock (“Remarketed Series A Preferred Stock”), the Company expects to receive additional cash proceeds of $1 billion and issue shares of Remarketed Series A Preferred Stock.
The Company pays Contract Adjustment Payments to the holders of the 2024 Purchase Contracts at a rate of 6.875% per annum, payable quarterly in arrears on February 15, May 15, August 15, and November 15, commencing on May 15, 2021. The $205 million present value of the Contract Adjustment Payments at inception reduced the Series A Preferred Stock. As each quarterly Contract Adjustment Payment is made, the related liability is reduced and the difference between the cash payment and the present value will accrete to interest expense, approximately $5 million over the three-year term. As of June 30, 2022, the present value of the Contract Adjustment Payments was $124 million.
The holders can settle the purchase contracts early, for cash, subject to certain exceptions and conditions in the prospectus supplement. Upon early settlement of any purchase contracts, the Company will deliver the number of shares of its common stock equal to 85% of the number of shares of common stock that would have otherwise been deliverable.
Equity Transactions with Noncontrolling Interests
Dominican Republic

22 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

AES Clean Energy Development — On September 28, 2017, Linda Group, an investor-based groupDuring the second quarter of 2022, AES Clean Energy Development, through multiple transactions, sold noncontrolling interests in multiple project companies to tax equity partners, resulting in a $98 million increase to NCI. AES Clean Energy Development is reported in the Dominican Republic acquired an additional 5%US and Utilities SBU reportable segment.
Guaimbê Holding — In April 2021, Guaimbê Solar Holding S.A (“Guaimbê Holding”), a subsidiary of our Dominican Republic businessAES Brasil which wholly owns the Guaimbê solar complex and the Alto Sertão II wind facility, issued preferred shares representing 19.9% ownership in the subsidiary for $60 million, pre tax. Thistotal proceeds of $158 million. The transaction resulted in a net increase of $25 million todecreased the Company’s indirect ownership interest in the operational entities from 45.3% to 36.3%.
In January 2022, Guaimbê Holding issued additional paid-in capital and noncontrollingpreferred shares representing 3.5% ownership in the subsidiary for total proceeds of $63 million. The transaction further decreased the Company’s indirect ownership interest respectively. No gain or loss was recognized in net income as the sale was not considered a sale of in-substance real estate.to 35.8%. As the Company maintained control after the sale, our businesses in the Dominican Republic continuethese transactions, Guaimbê Holding continues to be consolidated by the Company within the MCACSouth America SBU reportable segment.
Alto Maipo Chile Renovables — Under its agreement with Global Infrastructure Management, LLC (“GIP”), the minority interest holder in Chile Renovables SpA since July 2021, AES Andes will contribute a specified pipeline of renewable development projects to Chile Renovables as the projects reach commercial operations, and GIP will make additional contributions to maintain its 49% ownership interest. In January 2022, AES Andes completed the sale of Andes Solar 2a to Chile Renovables for $37 million, resulting in an increase to NCI of $28 million and an increase to additional paid-in capital of $9 million. In June 2022, the sale of Los Olmos was completed for $80 million, resulting in an increase to NCI of $68 million and an increase to additional paid-in capital of $12 million. As the Company maintained control after these transactions, Chile Renovables continues to be consolidated by the Company within the South America SBU reportable segment.
AES Andes — On March 17, 2017,December 29, 2020, AES Gener completed the legalAndes commenced a preemptive rights offering for its existing shareholders to subscribe for up to 1.98 billion of newly issued shares to fund its renewable growth program. The period ended on February 5, 2021 and financial restructuringInversiones Cachagua SpA (“Cachagua”), an AES subsidiary, subscribed for 1.35 billion shares at a cost of Alto Maipo. As part of this restructuring, AES indirectly acquired the 40% ownership interest of the noncontrolling shareholder, for a de minimis payment, and sold a 6.7%$205 million, increasing AES’ indirect beneficial interest in AES Andes from 67% to 67.1%. The noncontrolling interest holders subscribed for 629 million shares, resulting in additional capital contributions of $94 million.
In January 2022, Cachagua completed a tender offer for the projectshares of AES Andes held by minority shareholders for $522 million, net of transaction costs. Upon completion, AES' indirect beneficial interest in AES Andes increased from 67.1% to 98%. Through multiple transactions following the construction contractor. This transactiontender offer, Cachagua acquired an additional 1% ownership in AES Andes for $13 million, further increasing AES’ indirect beneficial interest to 99%. These transactions resulted in a $196$169 million increasedecrease to the Parent Company’s Stockholders’Company Stockholder’s Equity due to an increasea decrease in additional-paid-inadditional paid-in capital of $229$93 million offset byand the reclassification of accumulated other comprehensive losses from NCI to the Parent Company Stockholders’ EquityAOCL of $33$76 million. No gain or loss was recognized in net income as the sale was not considered to be a sale of in-substance real estate. After completion of the sale, the Company has an effective 62% economic interest in Alto Maipo. As the Company maintained control of the partnership after the sale, Alto Maipo continues to be consolidated by the Company within theAES Andes SBU reportable segment.
Jordan — On February 18, 2016, the Company completed the sale of 40% of its interest in a wholly owned subsidiary in Jordan which owns a controlling interest in the Jordan IPP4 gas-fired plant, for $21 million. The transaction was accounted for as a sale of in-substance real estate and a pretax gain of $4 million, net of transaction costs, was recognized in net income. The cash proceeds from the sale are reflected in Proceeds from the sale of businesses, net of cash sold, and equity investments on the Consolidated Statement of Cash Flows for the period ended September 30, 2016. After completion of the sale, the Company has a 36% economic interest in Jordan IPP4 and will continue to manage and operate the plant, with 40% owned by Mitsui Ltd. and 24% owned by Nebras Power Q.S.C. As the Company maintained control after the sale, Jordan IPP4 continues to be consolidated by the Company within the Eurasia SBU reportable segment.
Deconsolidations
UK Wind — During the second quarter of 2016, the Company determined it no longer had control of its wind development projects in the United Kingdom (“UK Wind”) as the Company no longer held seats on the board of directors. In accordance with the accounting guidance, UK Wind was deconsolidated and a loss on deconsolidation of $20 million was recorded to Gain (loss) on disposal and sale of businesses in the Condensed Consolidated Statement of Operations to write off the Company’s noncontrolling interest in the project. The UK Wind projects wereis reported in the EurasiaSouth America SBU reportable segment.
AES Brasil — On December 18, 2020, the AES Tietê board approved a proposal for the corporate reorganization and exchange of shares issued by AES Tietê with newly issued shares of AES Brasil, a formerly wholly-owned entity of AES Tietê, with the intent to list AES Brasil on Novo Mercado, a listing segment of the Brazilian stock exchange that requires equity capital to be composed only of common shares, as the 100% shareholder of AES Tietê. The reorganization and the exchange of shares was completed on March 26, 2021, and the shares issued by AES Brasil started trading on Novo Mercado on March 29, 2021. The Company maintains majority representation on AES Brasil’s board of directors, and as such, continues to consolidate AES Brasil.
Through multiple transactions in the first half of 2021, AES Holdings Brasil Ltda. acquired an additional 1.6% ownership in AES Brasil for $17 million. These transactions increased the Company’s ownership interest in AES Brasil to 45.7% and resulted in a $13 million decrease in Parent Company Stockholder’s Equity due to a decrease in additional paid-in capital of $6 million and the reclassification of accumulated other comprehensive losses from NCI to AOCL of $7 million. AES Brasil is reported in the South America SBU reportable segment.

23 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Accumulated Other Comprehensive Loss — The following table summarizes the changes in AOCL by component, net of tax and NCI, for the ninesix months ended SeptemberJune 30, 20172022 (in millions):
 Foreign currency translation adjustment, net Unrealized derivative gains (losses), net Unfunded pension obligations, net Total
Balance at the beginning of the period$(2,147) $(323) $(286) $(2,756)
Other comprehensive income (loss) before reclassifications19
 (35) (3) (19)
Amount reclassified to earnings98
 40
 4
 142
Other comprehensive income117
 5
 1
 123
Reclassification from NCI due to Alto Maipo Restructuring—
 (33) —
 (33)
Balance at the end of the period$(2,030) $(351) $(285) $(2,666)


Foreign currency translation adjustment, netUnrealized derivative gains (losses), netUnfunded pension obligations, netTotal
Balance at the beginning of the period$(1,734)$(456)$(30)$(2,220)
Other comprehensive income (loss) before reclassifications(15)490 — 475 
Amount reclassified to earnings— 30 1 31 
Other comprehensive income (loss)(15)520 1 506 
Reclassification from NCI due to share repurchases(53)(20)(3)(76)
Balance at the end of the period$(1,802)$44 $(32)$(1,790)
Reclassifications out of AOCL are presented in the following table. Amounts for the periods indicated are in millions and those in parenthesisparentheses indicate debits to the Condensed Consolidated Statements of Operations:
AOCL ComponentsAffected Line Item in the Condensed Consolidated Statements of OperationsThree Months Ended June 30,Six Months Ended June 30,
2022202120222021
Foreign currency translation adjustment, net
Gain (loss) on disposal and sale of business interests$— $(3)$— $(3)
Net income (loss) attributable to The AES Corporation$— $(3)$— $(3)
Derivative gains (losses), net
Non-regulated revenue$— $— $(1)$— 
Non-regulated cost of sales(1)(3)(2)(4)
Interest expense(10)(13)(33)(29)
Gain (loss) on disposal and sale of business interests(16)— (16)— 
Asset impairment expense— (9)— (13)
Foreign currency transaction losses— (2)— (5)
Income from continuing operations before taxes and equity in earnings of affiliates(27)(27)(52)(51)
Income tax benefit (expense)3 6 13 13 
Net equity in earnings (losses) of affiliates4 (5)1 (11)
Net income (loss)(20)(26)(38)(49)
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries(3)7 8 13 
Net income (loss) attributable to The AES Corporation$(23)$(19)$(30)$(36)
Amortization of defined benefit pension actuarial gain (loss), net
Regulated cost of sales$(1)$(1)$(1)$(1)
Other expense1 (1)— (1)
Income (loss) from continuing operations before taxes and equity in earnings of affiliates— (2)(1)(2)
Income tax benefit (expense)— 1 — 1 
Net income (loss) attributable to The AES Corporation$— $(1)$(1)$(1)
Total reclassifications for the period, net of income tax and noncontrolling interests$(23)$(23)$(31)$(40)
Details About AOCL Components Affected Line Item in the Condensed Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Foreign currency translation adjustment, net  
  Loss on disposal and sale of businesses $—
 $—
 $(98) $—
  Net income (loss) attributable to The AES Corporation $—
 $—
 $(98) $—
Unrealized derivative gains (losses), net  
  Non-regulated revenue $12
 $20
 $22
 $94
  Non-regulated cost of sales (2) (17) (11) (54)
  Interest expense (20) (25) (63) (86)
  Foreign currency transaction gains (losses) 14
 (3) (4) 18
  Income (loss) from continuing operations before taxes and equity in earnings of affiliates 4
 (25) (56) (28)
  Income tax benefit (expense) (5) 4
 6
 5
  Loss from continuing operations (1) (21) (50) (23)
  Less: Net loss from operations attributable to noncontrolling interests and redeemable stock of subsidiaries 1
 5
 10
 4
  Net income (loss) attributable to The AES Corporation $—
 $(16) $(40) $(19)
Amortization of defined benefit pension actuarial loss, net  
  Regulated cost of sales $(10) $(4) $(30) $(13)
  General and administrative expenses —
 —
 1
 —
  Other expense (1) —
 (1) —
  Loss from continuing operations before taxes and equity in earnings of affiliates (11) (4) (30) (13)
  Income tax benefit 4
 2
 10
 4
  Loss from continuing operations (7) (2) (20) (9)
  Net loss from disposal and impairments of discontinued businesses —
 (1) —
 (1)
  Net loss (7) (3) (20) (10)
  Less: Net loss from operations attributable to noncontrolling interests and redeemable stock of subsidiaries 6
 2
 16
 7
  Net income (loss) attributable to The AES Corporation $(1) $(1) $(4) $(3)
Total reclassifications for the period, net of income tax and noncontrolling interests $(1) $(17) $(142) $(22)
Common Stock Dividends — The Parent Company paid dividends of $0.12$0.1580 per outstanding share to its common stockholders during the first second and thirdsecond quarters of 20172022 for dividends declared in December 2016,2021 and February 2017, and July 2017, respectively.2022.
On October 6, 2017,July 15, 2022, the Board of Directors declared a quarterly common stock dividend of $0.12$0.1580 per share payable on NovemberAugust 15, 2017,2022, to shareholders of record at the close of business on NovemberAugust 1, 2017.2022.
12. SEGMENTS
The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally and is mainly organized by geographic regions, which provides a socio-political-economic understanding of our business. During the third quarter of 2017, the Europe and Asia SBUs were merged in order to leverage scale and are now reported as part of the Eurasia SBU. The management reporting structure is organized by five4 SBUs led by our President and Chief Executive Officer: US Andes, Brazil,and Utilities, South America, MCAC, and Eurasia SBUs. Using the accounting guidance on segment reporting, the Company determined that it has fiveits 4 operating and fivesegments are aligned with its 4 reportable segments corresponding to its SBUs. All prior period results have been retrospectively revisedIn January 2022, we internally announced a reorganization as a part of our ongoing strategy to reflect the new segment reporting structure.align our business to meet our customers' needs and deliver on our major strategic objectives. The Company performed an assessment in accordance with ASC 280 and determined there were no changes to its operating or reportable segments.
Corporate and Other — CorporateIncluded in “Corporate and Other” are the results of the AES self-insurance company and certain equity affiliates, corporate overhead costs which are not directly associated with the operations of our five4 reportable segments, are included in “Corporate and Other.” Also included are certain intercompany charges such as self-insurance premiums which are fully

24 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

eliminated in consolidation.
The Company uses Adjusted PTC as its primary segment performance measure. Adjusted PTC, a non-GAAP measure, is defined by the Company as pretaxpre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses related to derivative transactions;transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, or losses, and associated benefits and costs due toassociated with dispositions and acquisitions of business interests, including early plant closures, and the tax impact from the repatriationgains and losses recognized at commencement of sales proceeds;sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt.debt; and (f) net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence. Adjusted PTC also includes net equity in earnings of affiliates on an after-tax basis


adjusted for the same gains or losses excluded from consolidated entities. The Company has concluded that Adjusted PTC better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments. Additionally, given its large number of businesses and complexity, the Company has concluded that Adjusted PTC is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company’s results.
Revenue and Adjusted PTC are presented before inter-segment eliminations, which includes the effect of intercompany transactions with other segments except for interest, charges for certain management fees, and the write-off of intercompany balances, as applicable. All intra-segment activity has been eliminated within the segment. Inter-segment activity has been eliminated within the total consolidated results.
The following tables present financial information by segment for the periods indicated (in millions):
Three Months Ended June 30,Six Months Ended June 30,
Total Revenue2022202120222021
US and Utilities SBU$1,197 $972 $2,314 $1,921 
South America SBU880 964 1,690 1,848 
MCAC SBU686 490 1,252 1,025 
Eurasia SBU318 277 686 547 
Corporate and Other36 37 59 61 
Eliminations(39)(40)(71)(67)
Total Revenue$3,078 $2,700 $5,930 $5,335 
Three Months Ended June 30,Six Months Ended June 30,
Total Adjusted PTC2022202120222021
Income (loss) from continuing operations before taxes and equity in earnings of affiliates$(160)$(130)$104 $(121)
Add: Net equity in losses of affiliates5 (10)(28)(40)
Less: Income from continuing operations before taxes, attributable to noncontrolling interests and redeemable stock of subsidiaries(53)140 (119)(23)
Pre-tax contribution(208)— (43)(184)
Unrealized derivative and equity securities losses (gains)(35)8 6 77 
Unrealized foreign currency losses (gains)39 (12)20 (6)
Disposition/acquisition losses23 (229)32 (244)
Impairment losses479 628 480 1,103 
Loss on extinguishment of debt6 18 16 24 
Net gains from early contract terminations at Angamos— (110)— (220)
Total Adjusted PTC$304 $303 $511 $550 
Three Months Ended June 30,Six Months Ended June 30,
Total Adjusted PTC2022202120222021
US and Utilities SBU$70 $128 $127 $172 
South America SBU145 96 273 184 
MCAC SBU87 71 124 132 
Eurasia SBU42 48 107 99 
Corporate and Other(75)(55)(150)(62)
Eliminations35 15 30 25 
Total Adjusted PTC$304 $303 $511 $550 

25 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

 Three Months Ended September 30, Nine Months Ended September 30,
Total Revenue2017 2016 2017 2016
US SBU$852
 $916
 $2,445
 $2,582
Andes SBU689
 667
 1,979
 1,864
Brazil SBU1,085
 1,027
 3,106
 2,761
MCAC SBU630
 547
 1,851
 1,596
Eurasia SBU380
 386
 1,204
 1,249
Corporate and Other9
 6
 29
 8
Eliminations(13) (7) (20) (18)
Total Revenue$3,632
 $3,542
 $10,594
 $10,042
Total AssetsJune 30, 2022December 31, 2021
US and Utilities SBU$18,541 $16,512 
South America SBU8,838 7,728 
MCAC SBU4,968 4,545 
Eurasia SBU2,904 3,466 
Corporate and Other819 712 
Total Assets$36,070 $32,963 
13. REVENUE
The following table presents our revenue from contracts with customers and other revenue for the periods indicated (in millions):
Three Months Ended June 30, 2022
US and Utilities SBUSouth America SBUMCAC SBUEurasia SBUCorporate, Other and EliminationsTotal
Regulated Revenue
Revenue from contracts with customers$794 $— $— $— $— $794 
Other regulated revenue8 — — — — 8 
Total regulated revenue802 — — — — 802 
Non-Regulated Revenue
Revenue from contracts with customers281 877 662 266 (3)2,083 
Other non-regulated revenue (1)
114 3 24 52 — 193 
Total non-regulated revenue395 880 686 318 (3)2,276 
Total revenue$1,197 $880 $686 $318 $(3)$3,078 
Three Months Ended June 30, 2021
US and Utilities SBUSouth America SBUMCAC SBUEurasia SBUCorporate, Other and EliminationsTotal
Regulated Revenue
Revenue from contracts with customers$659 $— $— $— $— $659 
Other regulated revenue12 — — — — 12 
Total regulated revenue671 — — — — 671 
Non-Regulated Revenue
Revenue from contracts with customers232 959 465 215 (3)1,868 
Other non-regulated revenue (1)
69 5 25 62 — 161 
Total non-regulated revenue301 964 490 277 (3)2,029 
Total revenue$972 $964 $490 $277 $(3)$2,700 
Six Months Ended June 30, 2022
US and Utilities SBUSouth America SBUMCAC SBUEurasia SBUCorporate, Other and EliminationsTotal
Regulated Revenue
Revenue from contracts with customers$1,622 $— $— $— $— $1,622 
Other regulated revenue15 — — — — 15 
Total regulated revenue1,637 — — — — 1,637 
Non-Regulated Revenue
Revenue from contracts with customers550 1,682 1,203 575 (12)3,998 
Other non-regulated revenue (1)
127 8 49 111 — 295 
Total non-regulated revenue677 1,690 1,252 686 (12)4,293 
Total revenue$2,314 $1,690 $1,252 $686 $(12)$5,930 
Six Months Ended June 30, 2021
US and Utilities SBUSouth America SBUMCAC SBUEurasia SBUCorporate, Other and EliminationsTotal
Regulated Revenue
Revenue from contracts with customers$1,357 $— $— $— $— $1,357 
Other regulated revenue21 — — — — 21 
Total regulated revenue1,378 — — — — 1,378 
Non-Regulated Revenue
Revenue from contracts with customers456 1,842 975 424 (6)3,691 
Other non-regulated revenue (1)
87 6 50 123 — 266 
Total non-regulated revenue543 1,848 1,025 547 (6)3,957 
Total revenue$1,921 $1,848 $1,025 $547 $(6)$5,335 


Three Months Ended September 30, Nine Months Ended September 30,
Total Adjusted PTC2017 2016 2017 2016
Reconciliation from Income from Continuing Operations before Taxes and Equity In Earnings of Affiliates:       
Income from continuing operations before taxes and equity in earnings of affiliates$347
 $294
 $746
 $445
Add: Net equity in earnings of affiliates24
 11
 33
 25
Less: Income from continuing operations before taxes, attributable to noncontrolling interests(148) (82) (454) (196)
Pretax contribution223
 223
 325
 274
Unrealized derivative losses (gains)(8) 5
 (7) 1
Unrealized foreign currency transaction losses (gains)(21) 3
 (54) 12
Disposition/acquisition losses (gains)1
 (3) 107
 (5)
Impairment expense2
 24
 264
 309
Losses on extinguishment of debt48
 20
 43
 26
Total Adjusted PTC$245
 $272
 $678
 $617
        
 Three Months Ended September 30, Nine Months Ended September 30,
Total Adjusted PTC2017 2016 2017 2016
US SBU$129
 $114
 $240
 $257
Andes SBU62
 134
 232
 279
Brazil SBU12
 6
 64
 18
MCAC SBU98
 74
 256
 197
Eurasia SBU61
 46
 218
 197
Corporate and Other(117) (102) (332) (331)
Total Adjusted PTC$245
 $272
 $678
 $617
26 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

(1)         Other non-regulated revenue primarily includes lease and derivative revenue not accounted for under ASC 606.
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 $265 million and $216 million as of June 30, 2022 and December 31, 2021, respectively.
During the six months ended June 30, 2022 and 2021, we recognized revenue of $32 million and $355 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.
In August 2020, AES Andes reached an agreement with Minera Escondida and Minera Spence to early terminate two PPAs of the Angamos coal-fired plant in Chile, further accelerating AES Andes' decarbonization strategy. As a result of the termination payment, Angamos recognized a contract liability of $655 million, of which $55 million was derecognized each month through the end of the remaining performance obligation in August 2021.
A significant financing arrangement exists for our Mong Duong plant in Vietnam. The plant was constructed under a build, operate, and transfer contract and will be transferred to the Vietnamese government after the completion of a 25 year PPA. The performance obligation to construct the facility was substantially completed in 2015. Contract consideration related to the construction, but not yet collected through the 25 year PPA, was reflected on the Condensed Consolidated Balance Sheet. As of June 30, 2022 and December 31, 2021, Mong Duong met the held-for-sale criteria and the loan receivable balance of approximately $1.2 billion net of CECL reserve of $29 million and $30 million, respectively, was classified as held-for-sale assets. Of the loan receivable balance, $95 million and $91 million was classified as Current held-for-sale assets, respectively, and $1.1 billion was classified as Noncurrent held-for-sale assets.
Remaining Performance Obligations — The transaction price allocated to remaining performance obligations represents future consideration for unsatisfied (or partially unsatisfied) performance obligations at the end of the reporting period. As of June 30, 2022, the aggregate amount of transaction price allocated to remaining performance obligations was $10 million, primarily consisting of fixed consideration for the sale of renewable energy credits (“RECs”) in long-term contracts in the U.S. We expect to recognize revenue on approximately one-fifth of the remaining performance obligations in 2022 and 2023, with the remainder recognized thereafter.
Total AssetsSeptember 30, 2017 December 31, 2016
US SBU$10,104
 $9,333
Andes SBU9,339
 8,971
Brazil SBU7,416
 6,448
MCAC SBU5,640
 5,162
Eurasia SBU5,938
 5,777
Assets of held-for-sale businesses76
 —
Corporate and Other321
 428
Total Assets$38,834
 $36,119
13.14. OTHER INCOME AND EXPENSE
Other income generally includes gains on insurance recoveries in excess of property damage, gains on asset sales and liability extinguishments, favorable judgments on contingencies, gains on contract terminations, allowance for funds used during construction, and other income from miscellaneous transactions. Other expense generally includes losses on asset sales and dispositions, losses on


legal contingencies, defined benefit plan non-service costs, and losses from other miscellaneous transactions. The components are summarized as follows (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Other IncomeOther Income
Gain on remeasurement of investment (1)
$26 $— $26 $— 
Insurance proceeds (2)
16 — 16 — 
Legal settlements6 — 6 — 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016AFUDC (US Utilities)2 2 5 4 
Other Income
Legal settlements (1)
$—
 $—
 $60
 $—
Gain on acquired customer contracts5 — 5 — 
Allowance for funds used during construction (US Utilities)7
 8
 20
 22
Gain on remeasurement of contingent consideration3 — 3 — 
Gain on sale of assets2
 —
 3
 3
Gain on remeasurement to acquisition-date fair value (3)
— 176 — 212 
Other9
 10
 22
 18
Other12 5 15 10 
Total other income$18
 $18
 $105
 $43
Total other income$70 $183 $76 $226 
        
Other ExpenseLoss on sale and disposal of assets$16
 $12
 $54
 $26
Other Expense
Allowance for lease receivable (4)
$20 $— $20 $— 
Water rights write-off15
 —
 18
 7
Loss on sale and disposal of assets5 4 9 7 
Allowance for other receivables (2)
15
 —
 15
 —
Legal contingencies and settlements1
 1
 2
 5
Other—
 —
 6
 4
Loss on commencement of sales-type leases (5)
— — — 13 
Total other expense$47
 $13
 $95
 $42
Other
4 — 12 — 
Total other expense$29 $4 $41 $20 
_____________________________
(1)
In December 2016, the Company and YPF entered into a settlement agreement in which all parties agreed to give up any and all legal action related to gas supply contracts that were terminated in 2008 and have been in dispute since 2009. In January 2017, the YPF board approved the agreement and paid the Company $60 million, thereby resolving all uncertainties around the dispute.
(2)
During the third quarter of 2017, we recognized a full allowance on a non-trade receivable in Andes due to collection uncertainties.
(1)    Related to the remeasurement of our existing investment in 5B, accounted for using the measurement alternative.
14.(2)    Primarily related to insurance recoveries associated with property damage at TermoAndes.
(3)     Related to the remeasurement of our existing equity interest in sPower’s development platform as part of the step acquisition to form AES Clean Energy Development. See Note 18—Acquisitions for further information.
(4)     Related to a full allowance recognized on a sales-type lease receivable at AES Gilbert due to a fire incident in April 2022.
(5)     Related to a loss recognized at commencement of a sales-type lease at AES Renewable Holdings. See Note 9—Leases for further information.

27 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

15. ASSET IMPAIRMENT EXPENSE
The following table presents our asset impairment expense for the periods indicated (in millions):
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017 2016 2017 2016
Kazakhstan Hydroelectric$2
 $—
 $92
 $—
Kazakhstan CHPs—
 —
 94
 —
Buffalo Gap I—
 78
 —
 78
DPL—
 —
 66
 235
Tait Energy Storage—
 —
 8
 —
Buffalo Gap II—
 —
 —
 159
Other—
 1
 —
 1
Total$2
 $79
 $260
 $473
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Maritza$475 $— $475 $— 
Ventanas 3 & 4— 649 — 649 
Puerto Rico— — — 475 
Angamos— 155 — 155 
Mountain View I & II— 67 — 67 
Other7 1 8 (1)
Total$482 $872 $483 $1,345 
Kazakhstan Hydroelectric Maritza — In May 2022, the Council for the European Union approved Bulgaria’s National Recovery and Resilience plan which commits the country to cease generating electricity from coal beyond 2038. As this plan is expected to prohibit the Company from operating the Maritza coal-fired plant through its estimated useful life, it was determined that an indicator of impairment had occurred. The Company reassessed the useful life of the facility and performed an impairment analysis as of April 2017,30, 2022, in which it was determined that the Republic of Kazakhstan stated the concession would not be extended for Shulbinsk HPP and Ust-Kamenogorsk HPP, two hydroelectric plants in Kazakhstan, and initiated the process to transfer these plants back to the government. The fair valuecarrying amount of the asset group was not recoverable. The Maritza asset group was determined to be below carrying value.have a fair value of $452 million using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $92 million during the nine months ended September 30, 2017. The Kazakhstan hydroelectric plants are$475 million. Maritza is reported in the Eurasia SBU reportable segment. See Note 16—Held-for-Sale Businesses
Ventanas and Dispositions of this Form 10-Q for further information.
DPL Angamos — On March 17, 2017, the board of directors of DPL approvedIn July 2021, AES Andes entered into an agreement committing to accelerate the retirement of the DPL operatedVentanas 3, Ventanas 4, Angamos 1, and co-owned Stuart StationAngamos 2 coal-fired and diesel-fired generating units, andplants in Chile in order to further advance its decarbonization strategy. Due to these strategic developments, the Killen Station coal-fired generating unit and combustion turbine on or before June 1, 2018. The Company performed a long-lived asset impairment analysisanalyses as of June 30, 2021, and determined that the carrying amounts of the facilitiesasset groups were not recoverable. The Stuart StationVentanas 3 & 4 and Killen StationAngamos asset groups were determined to have fair values of $3$12 million and $8$86 million, respectively, using the income approach. As a result, the Company recognized a totalpre-tax asset impairment expense of $66 million. DPL is$649 million and $155 million, respectively. Ventanas and Angamos are reported in the USSouth America SBU reportable segment.
During the second quarter of 2016,Mountain View I & II — In April 2021, the Company testedapproved plans to execute a repowering project for the recoverabilityMountain View I & II wind facility and signed two new PPAs for the energy and capacity related to the repowered asset. As the repowering will result in decommissioning the majority of its long-lived generation assets at DPL. Uncertainty created by the Supreme Courtexisting wind turbines in advance of Ohio’s June 20, 2016 opinion, lower expectationstheir depreciable lives, the execution of future revenue resulting from the most recent PJM capacity auction, and higher anticipated environmental compliance costs resulting from third party studies were collectively determined to benew PPAs was identified as an impairment indicator for these assets.indicator. The Company performed a long-lived asset impairment analysis and determined that the carrying amount of Killen, a coal-fired generation facility, and certain DPL peaking generation facilities were not recoverable. The Killen and DPL peaking generation asset groups were determined to have a fair value of $84 million and $5 million, respectively, using the income approach. As a result, the Company recognized a total asset impairment expense of $235 million. DPL is reported in the US SBU reportable segment.
Kazakhstan CHPs — In January 2017, the Company entered into an agreement for the sale of Ust-Kamenogorsk CHP and Sogrinsk CHP, its combined heating and power coal plants in Kazakhstan. The fair value of the Kazakhstan asset group was determined to be below carrying value. As a result, the Company recognized asset


impairment expense of $94 million during the three months ended March 31, 2017. The Company completed the sale of its interest in the Kazakhstan CHP plants on April 7, 2017. Prior to their sale, the plants were reported in the Eurasia SBU reportable segment. See Note 16—Held-for-Sale Businesses and Dispositions of this Form 10-Q for further information.
Buffalo Gap I — During the third quarter of 2016, the Company tested the recoverability of its long-lived assets at Buffalo Gap I. As a result of decreases in wind production, management underwent a process to enhance the methodology for forecasting wind dispatch. The change in management’s estimate of dispatch resulted in lower forecasted revenues from September 2016 through the end of the asset group’s useful life. The Company determined that the carrying amount of the Buffalo Gap I asset group was not recoverable. The Buffalo Gap I asset group was determined to have a fair value of $35$11 million using the income approach. As a result, the Company recognized anpre-tax asset impairment expense of $78 million ($23 million attributable to AES). Buffalo Gap$67 million. Mountain View I is reported in the US SBU reportable segment.
Buffalo Gap II — During the first quarter of 2016, the Company tested the recoverability of its long-lived assets at Buffalo Gap II. Impairment indicators were identified based on a decline in forward power curves. The Company determined that the carrying amount was not recoverable. The Buffalo Gap II asset group was determined to have a fair value of $92 million using the income approach. As a result, the Company recognized asset impairment expense of $159 million ($49 million attributable to AES). Buffalo Gap& II is reported in the US and Utilities SBU reportable segment.
15. DISCONTINUED OPERATIONS
Brazil DistributionPuerto Rico — Due to a portfolio evaluation New factors arose in the first halfquarter of 2016, management decided to pursue a strategic shift2021 associated with the economic costs and operational and reputational risks of its distribution companies in Brazil, Sul and Eletropaulo. In June 2016, the Company executed an agreement for the sale of Sul and reported its results of operations and financial position as discontinued operations. The disposal of Sul was completedcoal combustion residuals off island. In addition, new legislative initiatives surrounding the prohibition of coal generation assets in October 2016. PriorPuerto Rico were introduced. Collectively, these factors along with management’s decision on how to its classification as discontinued operations, Sul was reportedbest achieve our stated decarbonization goals resulted in the Brazil SBU reportable segment. In December 2016, Eletropaulo underwentan indicator of impairment at our asset group in Puerto Rico. As such, management performed a corporate restructuring which is expected to, among other things, provide more liquidity of its shares. AES is continuing to pursue strategic options for Eletropaulorecoverability test in order to complete its strategic shift to reduce AES’ exposure to the Brazilian distribution businesses, including preparation for listing its shares into the Novo Mercado, which is a listing segment of the Brazilian stock exchangeaccordance with the highest standards of corporate governance.
As the sale of Sul was completed during 2016, there were no assets or liabilities of discontinued operations at September 30, 2017 or December 31, 2016. There were no significant losses from discontinued operations orASC 360 and concluded that Puerto Rico’s undiscounted cash flows used in operating or investing activities of discontinued operations for the three and nine months ended September 30, 2017.
The following table summarizes the major line items constituting the loss from discontinued operations for the three and nine months ended September 30, 2016 (in millions):
 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
Loss from discontinued operations, net of tax   
Revenue — regulated
$213
 $632
Cost of sales(200) (608)
Asset impairment expense—
 (783)
Other income and expense items that are not major, net(14) (35)
Pretax loss from discontinued operations$(1) $(794)
Income tax benefit—
 405
Loss from discontinued operations, net of tax$(1) $(389)
The following table summarizes the operating and investing cash flows from discontinued operations for the nine months ended September 30, 2016 (in millions):
 Nine Months Ended September 30, 2016
Cash flows provided by operating activities of discontinued operations$68
Cash flows used in investing activities of discontinued operations(63)


16. HELD-FOR-SALE BUSINESSES AND DISPOSITIONS
Held-for-Sale Businesses
Kazakhstan Hydroelectric— Affiliates of the Company (the “Affiliates”) previously operated Shulbinsk HPP and Ust-Kamenogorsk HPP (the “HPPs”), two hydroelectric plants in Kazakhstan, under a concession agreement with the Republic of Kazakhstan (“RoK”). In April 2017, the RoK initiated the process to transfer these plants back to the RoK. Management considered it probable that the transfer would occur, and these plants met the held-for-sale criteria in the second quarter of 2017. For the nine months ended September 30, 2017, impairment charges of $92 million were recorded and were limited todid not exceed the carrying value of the long lived assets. As of September 30, 2017, the remaining carryingasset group. The fair value of the asset group which was classified as held-for-sale, totaled $114 million, which included cumulative translation losses of $103 million.
On September 29, 2017, rather than paying the Affiliates, the RoK deposited $77 million into an escrow account that was not established in accordance with the requirements of the concession agreement. The amount deposited by the RoK equaled the Affiliates’ calculation of the transfer payment. In return, the RoK asserted that the Affiliates would be required to transfer the HPPs and that arbitration would be necessary to determine the correct transfer payment. On October 2, 2017, the Affiliates transferred 100% of the shares in the plants to the RoK, under protest and with a reservation of rights. As such, the HPPs remained classified as held-for-sale as of September 30, 2017. The Company expects to record a loss on disposal of at least $37 million in the fourth quarter of 2017. The Affiliates will proceed with arbitration to recover the $77 million that was placed in escrow, unless the parties can resolve the dispute prior to the initiation of arbitration. Additional losses may be incurred if some or all of the disputed consideration is not subsequently paid by the RoK. The transfer does not meet the criteriadetermined to be reported as discontinued operations. The Kazakhstan HPPs are$73 million, resulting in pre-tax impairment expense of $475 million. Puerto Rico is reported in the EurasiaUS and Utilities SBU reportable segment. Excluding
16. INCOME TAXES
The Company’s provision for income taxes is based on the impairment charge, pretax income attributableestimated annual effective tax rate, plus discrete items. The effective tax rates for the three and six months ended June 30, 2022 were 12% and 39%, respectively. The effective tax rates for the three and six months ended June 30, 2021 were 45% and 42%, respectively. The difference between the Company’s effective tax rates for the 2022 and 2021 periods and the U.S. statutory tax rate of 21% related primarily to U.S. taxes on foreign earnings, foreign tax rate differentials, the impacts of foreign currency fluctuations at certain foreign subsidiaries, nondeductible expenses, and valuation allowance.
The Company recognized discrete tax expense in 2021 resulting from several transactions. For the three and six months ended June 30, 2021, the Company recorded discrete tax expense of approximately$39 millionand$46 million, respectively, due to the formation of AES was as follows:Clean Energy Development. Additionally, the issuance of new shares by Fluence resulted in approximately $13 million of discrete tax expense for the three and six months endedJune 30, 2021.
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017 2016 2017 2016
Kazakhstan Hydroelectric$12
 $10
 $33
 $28

Zimmer
28 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and Miami Fort2021

17. HELD-FOR-SALE AND DISPOSITIONS
Held-for-Sale
Mong Duong — In April 2017, DP&L and AES Ohio GenerationDecember 2020, the Company entered into an agreement for the sale of DP&L’s undividedto sell its entire 51% ownership interest in ZimmerMong Duong, a coal-fired plant in Vietnam, and Miami Fort51% equity interest in Mong Duong Finance Holdings B.V, an SPV accounted for $50 million in cash and the assumption of certain liabilities, including environmental, subject to predefined closing adjustments.as an equity affiliate. The sale is subject to regulatory approval by the Federal Energy Regulatory Commission and is expected to close in the fourth quartersecond half of 2017. Accordingly, Zimmer2023. As of June 30, 2022, the Mong Duong plant and Miami Fort remainedSPV were classified as held-for-sale, as of September 30, 2017, but did not meet the criteria to be reported as discontinued operations. ZimmerOn a consolidated basis, the carrying value of the plant and Miami Fort areSPV held-for-sale as of June 30, 2022 was $552 million. Mong Duong is reported in the USEurasia SBU reportable segment. Their combined pretax
Jordan — In November 2020, the Company signed an agreement to sell 26% ownership interest in Amman East and IPP4 for $58 million. The closing of the transaction was delayed by an extended lender approval process triggered by a restructuring in the buyer’s group. The Company and the buyer continue to work closely with the lenders to achieve closing in the second half of 2022. After completion of the sale, the Company will retain a 10% ownership interest in Amman East and IPP4, which will be accounted for as an equity method investment. As of June 30, 2022, the generation plants were classified as held-for-sale, but did not meet the criteria to be reported as discontinued operations. On a consolidated basis, the carrying value of the plants held-for-sale as of June 30, 2022 was $203 million. Jordan is reported in the Eurasia SBU reportable segment.
Excluding any impairment charges, pre-tax income (loss) attributable to AES of businesses held-for-sale as of June 30, 2022 was as follows:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(in millions)2017 2016 2017 2016(in millions)2022202120222021
Zimmer and Miami Fort$11
 $1
 $19
 $(10)
Mong DuongMong Duong$16 $15 $41 $30 
JordanJordan6 5 11 10 
TotalTotal$22 $20 $52 $40 
Dispositions
Kazakhstan CHPsAES Tietê Inova Soluções — In April 2017,June 2021, the Company completed the sale of Ust-Kamenogorsk CHP and Sogrinsk CHP, its combined heating and power coal plantsownership in Kazakhstan,AES Inova Soluções, an investment platform in distributed solar generation, for net proceeds of $24 million. The carrying value of the asset group of $171$20 million, was greater than its fair value less costs to sell of $29 million. The Company recognized an impairment charge of $94 million, which was limited to the carrying value of the long lived assets, and recognizedresulting in a pretaxpre-tax loss on sale of $49 million, primarily related to cumulative translation losses.$1 million. The sale did not meet the criteria to be reported as discontinued operations. Prior to their sale, the Kazakhstan CHP plants were reported in the Eurasia SBU reportable segment. Excluding the impairment charge and loss on sale, pretaxPre-tax income (loss) attributable to AES was as follows:
immaterial for the three and six months ended June 30, 2021. Prior to its sale, AES Tietê Inova Soluções was reported in the South America SBU reportable segment.
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017 2016 2017 2016
Kazakhstan CHPs$—
 $(2) $13
 $5
DPLERItabo — On January 1, 2016,In April 2021, the Company completed the sale of its 43% ownership interest in DPLER,Itabo, a competitive retail marketer selling electricity to customerscoal-fired plant and gas turbine in Ohio. Upon completion, proceeds of $76Dominican Republic, for $88 million, were received andresulting in a pre-tax gain on sale of $49 million was recognized.$4 million. The sale of DPLER did not meet the criteria to be reported as a discontinued operation.operations. Pre-tax income attributable to AES was $1 million and $5 million for the three and six months ended June 30, 2021. Prior to its sale, DPLERItabo was reported in the USMCAC SBU reportable segment.


18. ACQUISITIONS
KelanitissaAgua Clara — On January 27, 2016,June 17, 2022, the Company, completedthrough its subsidiaries AES Dominicana Renewable Energy and AES Andres DR, S.A., acquired 100% of the saleequity interests in Agua Clara, S.A.S., a wind project for consideration of its interest in Kelanitissa, a diesel-fired generation station in Sri Lanka. Upon completion, proceeds of $18 million were received and a loss on sale of $5 million$98 million. The transaction was recognized. The sale of Kelanitissaaccounted for as an asset acquisition that did not meet the criteriadefinition of a business. As Agua Clara is not a VIE, any difference between the fair value of the assets and consideration transferred will be allocated to be reported asPP&E on a discontinued operation. Prior to its sale, Kelanitissa wasrelative fair value basis. Agua Clara is reported in the EurasiaMCAC SBU reportable segment.
UKTunica Windpower, LLC — On June 17, 2022, the Company entered into an agreement for the purchase of 100% of the membership interests in Tunica Windpower, LLC. The transaction was accounted for as an asset acquisition of variable interest entities that did not meet the definition of a business. The assets acquired and liabilities assumed were recorded at their fair values, which equaled the fair value of the consideration paid of approximately $22 million, including contingent consideration of $7 million. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. Tunica Windpower is reported in the US and Utilities SBU reportable segment.

29 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Windsor PV1, LLC — On May 27, 2022, the Company entered into an agreement for the purchase of 100% of the membership interests in Windsor PV1, LLC, an early development-stage solar project. The transaction was accounted for as an asset acquisition of variable interest entities that did not meet the definition of a business. The assets acquired and liabilities assumed were recorded at their fair values, which equaled the fair value of the consideration paid of approximately $17 million, including contingent consideration of $5 million. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. Windsor is reported in the US and Utilities SBU reportable segment.
Community Energy — In the first quarter of 2022, the Company finalized the purchase price allocation related to the acquisition of Community Energy, LLC. There were no significant adjustments made to the preliminary purchase price allocation recorded in the fourth quarter of 2021 when the acquisition was completed. Community Energy is reported in the US and Utilities SBU reportable segment.
New York Wind — In the first quarter of 2022, the Company finalized the purchase price allocation related to the acquisition of Cogentrix Valcour Intermediate Holdings, LLC. There were no significant adjustments made to the preliminary purchase price allocation recorded in the fourth quarter of 2021 when the acquisition was completed. New York Wind is reported in the US and Utilities SBU reportable segment.
Cajuina Wind Complex — On May 21, 2021, AES Brasil completed the acquisition of the Cajuina Wind Complex phase I for $22 million. The Company made initial cash payments of $6 million and the remaining balance will be paid in three annual installments ending on March 31, 2024. The transaction was accounted for as an asset acquisition of variable interest entities that did not meet the definition of a business, therefore the assets acquired and liabilities assumed were recorded at their fair values, which equaled the fair value of the consideration. Cajuina is reported in the South America SBU.
Cubico Wind Complex — On April 30, 2021, AES Brasil completed the acquisition of the Cubico Wind Complex for $109 million, subject to customary working capital adjustments. The transaction was accounted for as an asset acquisition, therefore the consideration transferred, plus transaction costs, were allocated to the individual assets acquired and liabilities assumed based on their relative fair values. Cubico is reported in the South America SBU.
AES Clean Energy Development — On February 1, 2021, the Company substantially completed the merger of the sPower and AES Renewable Holdings development platforms to form AES Clean Energy Development, which will serve as the development vehicle for all future renewable projects in the U.S. As part of the transaction, AES acquired an additional 25% ownership interest in the sPower development platform from AIMCo, our existing partner in the sPower equity method investment, in exchange for a 25% ownership interest in specifically identified development entities of AES Renewable Holdings, certain future exit rights in the new partnership, and $7 million of cash.
The sPower development platform was carved-out of AES’ existing equity method investment. AES’ basis in the portion of assets transferred was $104 million, and the contribution to AES Clean Energy Development resulted in a corresponding decrease in the carrying value of the sPower investment. See Note 6—Investments in and Advances to Affiliates for further information.
During the secondfirst quarter of 2016,2021, the Company deconsolidated UK Wind andsPower development assets transferred were remeasured at their acquisition-date preliminary fair values, resulting in the recognition of a $36 million gain, recorded a loss in Other income on deconsolidation of $20 million to Gain (loss) on disposal and sale of businesses in the Condensed Consolidated Statement of Operations. Prior to deconsolidation, UK Wind was reportedThe Company recorded $81 million in Goodwill as of the acquisition date, representing the difference between the fair value of the consideration transferred, the noncontrolling interest in the Eurasia SBU reportable segment.sPower development platform, and the acquisition-date fair value of the Company’s previously held equity interest and the fair value of the identifiable assets acquired and liabilities assumed.
17. ACQUISITIONS
Alto Sertão II — On August 3, 2017,During the second quarter of 2021, the Company completedrecorded measurement period adjustments as result of additional facts and circumstances that existed as of the date of the acquisition of 100%but were not yet known as of the Alto Sertão II Wind Complex (“Alto Sertão II”) from Renova Energia S.A. for $189 million, subject to customary purchase pricetime of the valuation performed in the first quarter of 2021. These measurement period adjustments plus the assumption of $363 million of non-recourse debt, and up to $32 million of contingent consideration. At closing, the Company made an initial cash payment of $143 million, which excludes holdbacksprimarily related to indemnificationshigher expected developer profits and purchase price adjustments.a higher growth rate, reflective of additional information that became available regarding market participants’ views of the value of early-stage renewable development projects as of the date of acquisition. As a result, the estimated acquisition-date carrying value and fair values of September 30, 2017,the sPower development assets transferred were increased, which resulted in the recognition of an additional $176 million gain, for an updated gain of $212 million. Furthermore, the estimated goodwill as of the acquisition date was reduced to the estimated goodwill as of the acquisition date was reduced to $46 million, as a result of adjustments to the fair value of the consideration paid and updates to the fair values of separately identifiable intangible assets. The Company finalized the purchase price allocation for Alto Sertão II is preliminary. The Company is in the processthird quarter of assessing2021, which did not result in any material measurement period adjustments.

30 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

Subsequent to the closing of the transaction, AES holds a 75% ownership interest in AES Clean Energy Development. AIMCo holds the remaining 25% minority interest along with certain partnership rights, though currently not in effect, that would enable AIMCo to exit in the future. AIMCo’s minority interest is recorded as temporary equity in Redeemable stock of subsidiaries on the Condensed Consolidated Balance Sheet. See Note 10—Redeemable Stock of Subsidiaries for further information. AES Clean Energy Development is reported in the US and Utilities SBU reportable segment.
Great Cove Solar— On January 25, 2021, and May 3, 2021, AES Clean Energy Development completed the acquisitions of Great Cove I and II, respectively. The fair value of the initial consideration paid to acquire Great Cove I and Great Cove II was $13 million and $24 million, which included contingent consideration liabilities of $6 million and $22 million, respectively. These acquisitions were accounted for as asset acquisitions of variable interest entities that did not meet the definition of a business; therefore, the assets acquired and liabilities assumed inwere recorded at their fair values, which equaled the acquisition, and expects to completefair value of the purchase price allocation within the one year measurement period. Alto Sertão IIconsideration. Great Cove Solar is a wind farm with total installed capacity of 386 MW reported in the BrazilUS and Utilities SBU reportable segment.
Bauru Solar Complex — On September 25, 2017, AES Tietê executed an investment agreement with Cobra do Brasil to provide approximately $150 million of non-convertible debentures in project financing for the construction of photovoltaic solar plants in Brazil with total forecasted capacity of 180 MW. Upon completion of the project, expected to be concluded in the first half of 2018, and subject to the solar plants’ compliance with certain technical specifications defined in the agreement, Tietê expects to acquire the solar complex in exchange for the non-convertible debentures and an additional investment of approximately $60 million.
18.19. EARNINGS PER SHARE
Basic and diluted earnings per share are based on the weighted average number of shares of common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, includes the effects of dilutive RSUs, stock options, and convertible securities.equity units. The effect of such potential common stock is computed using the treasury stock method orfor RSUs and stock options, and is computed using the if-converted method as applicable.for equity units.
The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for income from continuing operations for the three and ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, where income or loss represents the numerator and weighted average shares represent the denominator.
Three Months Ended September 30,2017 2016
(in millions, except per share data)Income Shares $ per Share Income Shares $ per Share
            
BASIC EARNINGS PER SHARE           
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax (1)
$152
 660
 $0.23
 $171
 659
 $0.26
EFFECT OF DILUTIVE SECURITIES    
      
Restricted stock units—
 3
 —
 —
 3
 —
DILUTED EARNINGS PER SHARE$152
 663
 $0.23
 $171
 662
 $0.26
            
Nine Months Ended September 30,2017 2016
(in millions, except per share data)Income Shares $ per Share Income Shares $ per Share
            
BASIC EARNINGS PER SHARE           
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax (2)
$181
 660
 $0.28
 $203
 660
 $0.31
EFFECT OF DILUTIVE SECURITIES           
Restricted stock units—
 2
 (0.01) —
 2
 —
DILUTED EARNINGS PER SHARE$181
 662
 $0.27
 $203
 662
 $0.31
_____________________________
(1)
Income from continuing operations, net of tax, of $176 million less the $5 million adjustment to retained earnings to record the DP&L redeemable preferred stock at its redemption value as of September 30, 2016.
(2)
Income from continuing operations, net of tax, of $208 million less the $5 million adjustment to retained earnings to record the DP&L redeemable preferred stock at its redemption value as of September 30, 2016.


Three Months Ended June 30,20222021
(in millions, except per share data)LossShares$ per ShareIncomeShares$ per Share
BASIC EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders$(179)668 $(0.27)$24 666 $0.03 
EFFECT OF DILUTIVE SECURITIES
Stock options— — — — 1 — 
Restricted stock units— — — — 3 — 
Equity units— — — — 1 — 
DILUTED EARNINGS (LOSS) PER SHARE$(179)668 $(0.27)$24 671 $0.03 
Six Months Ended June 30,20222021
(in millions, except per share data)LossShares$ per ShareLossShares$ per Share
BASIC EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders$(64)668 $(0.10)$(124)666 $(0.19)
EFFECT OF DILUTIVE SECURITIES
Stock options— — — — — — 
Restricted stock units— — — — — — 
Equity units— — — — — — 
DILUTED EARNINGS (LOSS) PER SHARE$(64)668 $(0.10)$(124)666 $(0.19)
For the three and ninesix months ended SeptemberJune 30, 20172022, the calculation of diluted earnings per share excluded 4 million outstanding stock awards and 2016,40 million shares underlying our March 2021 Equity Units because their impact would be anti-dilutive given the loss from continuing operations. These shares could potentially dilute basic earnings per share in the future. Had the Company generated income, 2 million and 40 million potential shares of common stock related to the stock awards and the Equity Units, respectively, would have been included in diluted weighted-average shares outstanding.
The calculation of diluted earnings per share excluded 1 million outstanding stock awards for the three months ended June 30, 2021, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future. Due to the full retrospective adoption of ASU 2020-06, an additional 1 million potential shares of common stock related to the assumed share settlement of the Contract Adjustment Payments were included in diluted weighted-average shares outstanding for the three months ended June 30, 2021.

31 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2022 and 2021

For the six months ended June 30, 2021, the calculation of diluted earnings per share excluded 6 million and 7 million outstanding stock awards thatbecause their impact would be anti-dilutive given the loss from continuing operations. These stock awards could potentially dilute basic earnings per share in the future. All 15Had the Company generated income, 4 million potential shares of potential common stock associated with convertible debentures (“TECONs”) were omitted fromrelated to the earnings per share calculation for the three and nine months ended September 30, 2016. The company redeemed all of its existing TECONs in June 2017. The stock awards, and convertible debentures were excluded froman additional 1 million potential shares of common stock related to the calculation because they were anti-dilutive.assumed share settlement of the Contract Adjustment Payments due to the full retrospective adoption of ASU 2020-06, would have been included in diluted weighted-average shares outstanding.
As described in Note 11—Equity, the Company issued 10,430,500 Equity Units in March 2021 with a total notional value of $1,043 million. Each Equity Unit has a stated amount of $100 and was initially issued as a Corporate Unit, consisting of a 2024 Purchase Contract and a 10% undivided beneficial ownership interest in one share of Series A Preferred Stock. Prior to February 15, 2024, the Series A Preferred Stock may be converted at the option of the holder only in connection with a fundamental change. On and after February 15, 2024, the Series A Preferred Stock may be converted freely at the option of the holder. Upon conversion, the Company will deliver to the holder with respect to each share of Series A Preferred Stock being converted (i) a share of our Series B Preferred Stock, or, solely with respect to conversions in connection with a redemption, cash and (ii) shares of our common stock, if any, in respect of any conversion value in excess of the liquidation preference of the preferred stock being converted. The conversion rate was initially 31.5428 shares of common stock per one share of Series A Preferred Stock, which was equivalent to an initial conversion price of approximately $31.70 per share of common stock. As of June 30, 2022, due to customary anti-dilution provisions, the conversion rate was 31.5649, equivalent to a conversion price of approximately $31.68 per share of common stock. The Series A Preferred Stock and the 2024 Purchase Contracts are being accounted for as one unit of account. In calculating diluted EPS, the Company has applied the if-converted method to determine the impact of the forward purchase feature and considered if there are incremental shares that should be included related to the Series A Preferred conversion value.
19.
20. 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 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.
Alto Maipo— On August 27, 2021, Alto Maipo — As disclosed in Note 26—Risksupdated its creditors with respect to the construction budget and Uncertainties in Item 8.—Financial Statements and Supplementary Data of the 2016 Form 10-K, as of December 31, 2016, the Company has 531 MW under construction at Alto Maipo. Increased project costs, or delays in construction, could have an adverse impact on the Company. Alto Maipo has experienced construction difficulties, which have resulted in an increase in projected costlong-term business plan for the project, which considers different scenarios for spot prices, decarbonization initiatives, and hydrological conditions, among other significant variables. Under some of upthese scenarios, Alto Maipo may experience reduced future cash flows, which would limit its ability to 22%repay debt. Alto Maipo’s management initiated negotiations with its creditors to restructure its obligations and achieve a sustainable long-term capital structure for Alto Maipo. On November 17, 2021, Alto Maipo SpA commenced a reorganization proceeding in accordance with Chapter 11 of the original $2U.S. Bankruptcy Code, through a voluntary petition. Consequently, after the Chapter 11 filing, the Company is no longer considered to have control over Alto Maipo, which resulted in its deconsolidation. The Company recognized an after-tax loss of approximately $1.2 billion, budget. These overages led to a seriesnet of negotiationsnoncontrolling interests, in the Consolidated Statement of Operations in the fourth quarter of 2021, associated with the intentionloss of restructuringcontrol attributable to the project’s existing financial structure and obtaining additional funding. former controlling interest.
On March 17, 2017, AES Gener completedMay 26, 2022, Alto Maipo emerged from bankruptcy in accordance with Chapter 11 of the legal and financial restructuringU.S. Bankruptcy Code. Alto Maipo, as restructured, is considered a VIE. As the Company lacks the power to make significant decisions, it does not meet the criteria to be considered the primary beneficiary of Alto Maipo and throughtherefore will not consolidate this entity. The Company has elected the Company’s 67% ownership interest in AES Gener, AES now has an effective 62% indirect economic interestfair value option to account for its investment in Alto Maipo. See Note 11—Equity for additional information regarding the restructuring.
Following the restructuring described above, the project continued to face construction difficulties including greater than expected costs and slower than anticipated productivity by construction contractors towards agreed-upon milestones. Furthermore, during the second quarter of 2017, as a result of the failure to perform by one of its construction contractors, Constructora Nuevo Maipo S.A. (“CNM”), Alto Maipo terminated CNM’s contract and is seeking a permanent replacement contractor to complete CNM’s work. Alto Maipo has hired a temporary replacement contractor to complete a portion of CNM’s work while the search for a permanent replacement contractor continues. As a result of the termination of CNM, Alto Maipo’s construction debt of $623 million and derivative liabilities of $139 million are in technical default and presented as current in the balance sheet as of September 30, 2017.
Construction at the project is continuing and Alto Maipo is working to resolve the challenges described above. Alto Maipo is seeking a permanent replacement contractor to complete CNM’s work, and continues to negotiate with lenders and other parties. However, there can be no assurance that Alto Maipo will succeed in these efforts and if there are further delays or cost overruns, or ifIf Alto Maipo is unable to reach an agreement with the non-recourse lenders, there is a risk that these lenders may seek to exercise remedies available as a result of the default noted above, or that Alto Maipo may not be able to meet its contractual or other obligations andunder the restructured arrangements as they come due, the creditors may be unableenforce their rights under the credit agreements. These finance agreements are non-recourse with respect to continue with the project. If any of the above occur, there could be a material impairment for the Company.The AES Corporation.

32 | The carrying value of the long-lived assets and deferred tax assets of Alto Maipo as of SeptemberAES Corporation | June 30, 2017 was approximately $1.4 billion and $60 million, respectively. Through its 67% ownership interest in Gener, the Parent Company has invested approximately $360 million in Alto Maipo and has an additional equity commitment of $55 million to be funded as part of the March 2017 restructuring described above. Even though certain of the construction difficulties have not been formally resolved, construction costs continue to be capitalized as management believes the project is probable of completion. Management believes the carrying value of the long-lived asset group is recoverable and was not impaired as of September 30, 2017. In addition, management believes it is more likely than not that the deferred tax assets will be realized, they could be reduced if estimates of future taxable income are decreased.2022 Form 10-Q
Puerto Rico — In September 2017, Puerto Rico was severely impacted by Hurricanes Irma and Maria, disrupting the operations of AES Puerto Rico and AES Ilumina. Puerto Rico’s infrastructure was severely damaged, including electric infrastructure and transmission lines. The extensive structural damage caused by hurricane winds and flooding is expected to take considerable time to repair. Although a more detailed assessment of the damage to its facilities is still ongoing, the Company sustained modest damage to its 24 MW AES Ilumina solar plant, resulting in an estimated $6 million loss, and minor damage to its 524 MW AES Puerto Rico thermal plants.
Our subsidiaries in Puerto Rico have long-term PPAs with state-owned PREPA. As a result of the Hurricanes, PREPA has declared an event of Force Majeure. However, both units of AES Puerto Rico and approximately 75% of AES Ilumina are available to generate electricity which, in accordance with the PPAs, will allow AES Puerto Rico to invoice capacity, even under Force Majeure.
Starting prior to the hurricanes, PREPA has been facing economic challenges that could impact the Company, and on July 2, 2017, filed for bankruptcy under Title III. As a result of the bankruptcy filing, AES Puerto Rico and


AES Ilumina’s non-recourse debt of $365 million and $36 million, respectively, are in default and have been classified as current as of September 30, 2017. In addition, the Company's receivable balances in Puerto Rico as of September 30, 2017 totaled $63 million, of which $30 million was overdue. After the filing of Title III protection, and up until the disruption caused by the hurricanes, AES in Puerto Rico was collecting the overdue amounts from PREPA in line with historic payment patterns.
Considering the information available as of the filing date, Management believes the carrying amount of our assets in Puerto Rico of $622 million is recoverable as of September 30, 2017.
20. SUBSEQUENT EVENTS
Kazakhstan Hydroelectric — On October 2, 2017, the Company transferred 100% of shares in Shulbinsk HPP and Ust-Kamenogorsk HPP to the Republic of Kazakhstan in accordance with the termination of the concession agreement. The Company expects to record a loss on disposal of at least $37 million in the fourth quarter of 2017. See Note 16—Held-for-Sale Businesses and Dispositions for further discussion.
Eletropaulo — In September 2017, the majority of Eletropaulo’s shareholders approved the transfer of Eletropaulo’s shares to the Novo Mercado. However, shareholders holding approximately 3 million shares, representing 2.7% of the total preferred shares, have indicated their preference to exercise withdrawal rights, which allows them to redeem their shares and receive a cash payment at book value for tendering their shares to Eletropaulo. Eletropaulo has now received all third party approvals to migrate to the Novo Mercado. The migration will be submitted to the Eletropaulo Board for confirmation that the costs associated with the exercise of the withdrawal rights are not significant enough to prevent migration. Once confirmed and the preferred shares are converted into ordinary shares, AES will no longer control Eletropaulo. Losing control will result in deconsolidation of Eletropaulo and the recording of an equity method investment for the remaining interest held in Eletropaulo. As of September 30, 2017, Eletropaulo had cumulative translation losses attributable to AES of $452 million and pension losses attributable to AES in other comprehensive income of $243 million, both of which will be recognized in earnings if Eletropaulo is deconsolidated. See Note 15—Discontinued Operations for further discussion.


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The condensed consolidated financial statements included in Item 1.—Financial Statements of this Form 10-Q and the discussions contained herein should be read in conjunction with our 20162021 Form 10-K.
FORWARD-LOOKING INFORMATIONForward-Looking Information
The following discussion may contain forward-looking statements regarding us, our business, prospects and our results of operations, including our expectations regarding the impact of the COVID-19 pandemic on our business, 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. These statements include, but are not limited to, statements regarding management’s intents, beliefs, and current expectations and typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “forecast,” “target,” “will,” “would,” “intend,” “believe,” “project,” “estimate,” “plan,” and similar words. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute current expectations based on reasonable assumptions. Factors that could cause or contribute to such differences include, but are not limited to, those described in Item 1A.—Risk Factorsof this Form 10-Q, Item 1A.—Risk Factors and Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 20162021 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 factors that may affect our business.
Overview of Our Business—
We are a diversified power generation and utility company organized into the following fivefour market-oriented SBUs: US and Utilities (United States)States, Puerto Rico and El Salvador); AndesSouth America (Chile, Colombia, Argentina and Argentina)Brazil); Brazil; MCAC (Mexico, Central America and the Caribbean); and Eurasia (Europe and Asia). During the third quarter of 2017, the Europe and Asia SBUs were merged in order to leverage scale and are now reported as part of the Eurasia SBU. For additional information regarding our business, see Item 1.—Business of our 20162021 Form 10-K.
Within our five SBUs, weWe have two lines of business. Thebusiness: generation and utilities. Each of our SBUs participates in our first business line, is generation, wherein which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. TheOur US and Utilities SBU participates in our second business line, is utilities, wherein which we own and/or operate utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market.

Executive Summary
Compared with last year, second quarter diluted earnings per share from continuing operations decreased $0.30, from earnings of $0.03 to a loss of $0.27. This decrease is mainly driven by the resultsprior year gains on remeasurement of our interest in sPower’s development platform and on the issuance of new shares by Fluence, which was accounted for as a partial disposition, and the prior year net gains from early contract terminations at Angamos; partially offset by lower impairments in the current year.
Adjusted EPS, a non-GAAP measure, increased $0.03 to $0.34, mainly due to a lower adjusted tax rate and higher contributions from our South America SBU due to increased ownership in AES Andes, partially offset by lower contributions from our US and Utilities SBU due to impacts of outages and timing of renewables projects coming online.
Compared with last year, diluted earnings per share from continuing operations for the three and ninesix months ended SeptemberJune 30, 2017 reflect higher margins resulting2022 increased $0.09, from increased tariffs,a loss of $0.19 to a loss of $0.10. This increase is mainly driven by lower fixed costs,impairments in the current year, partially offset by the prior year gains on remeasurement of our interest in sPower’s development platform and revenue associated with a favorable opinion on the basis calculationissuance of new shares by Fluence, which was accounted for PISas a partial disposition, prior year net gains from early contract terminations at Angamos, lower capitalized interest at construction projects, and COFINS taxes from prior years at Eletropaulo. In addition, operating margins increasedhigher income tax expense.
Adjusted EPS, a non-GAAP measure, decreased $0.04 to $0.55, mainly due to higher contract capacity and the commencement of the Los Mina combined cycle operations at the MCAC SBU.
Net cash provided by operating activities decreased for the three months ended September 30, 2017compared to the prior year primarily driven byimpact of

33 | The AES Corporation | June 30, 2022 Form 10-Q
realized gains on de-designated interest rate swaps at the Parent Company and lower collections of net regulatory assetscontributions from our US and current year sales at Eletropaulo, and the absence of Sul’s operating cash flow in 2017. In addition to the quarterly drivers, net cash provided by operating activities decreased for the nine months ended September 30, 2017Utilities SBU due to the collectiontiming of overdue receivables at Maritzarenewables projects coming online, partially offset by higher contributions from our South America SBU due to increased ownership in Bulgaria in 2016.AES Andes and a lower adjusted tax rate.
aesgraphic1031v5.jpg

Overview of Q3 2017 Results and Strategic Performance
Strategic Priorities — We continue to make progress towards meeting our strategic goals to maximize value for our shareholders.

34 | The AES Corporation | June 30, 2022 Form 10-Q
aes-20220630_g2.jpg
Leveraging Our Platforms
Focusing our growth in markets where we already operate and have a competitive advantage to realize attractive risk-adjusted returns
●4,795 MW currently under construction
○Represents $8.7 billion in total capital expenditures
○Majority of AES’ $1.5 billion in equity already funded
○Expected to come on-line through 2021
●Completed 122 MW conversion at DPP in the Dominican Republic
●Completed $2.0 billion non-recourse financing for 1,384 MW Southland re-powering project in California
●Will continue to advance select projects from our development pipeline
Reducing Complexity
Exiting businesses and markets where we do not have a competitive advantage, simplifying our portfolio and reducing risk
●Announced the sale or shutdown of 3,737 MW of merchant coal-fired generation in Ohio and Kazakhstan
Performance Excellence
Striving to be the low-cost manager of a portfolio of assets and deriving synergies and scale from our businesses
●Expect to achieve a total of $400 million in savings through 2020
○Includes overhead reductions, procurement efficiencies and operational improvements
Expanding Access to Capital
Optimizing risk-adjusted returns in existing businesses and growth projects
●Building strategic partnerships at the project and business level with an aim to optimize our risk-adjusted returns in our business and growth projects
●Adjust our global exposure to commodity, fuel, country and other macroeconomic risks
Allocating Capital in a Disciplined Manner
Maximizing risk-adjusted returns to our shareholders by investing our free cash flow to strengthen our credit and deliver attractive growth in cash flow and earnings
●Prepaid $300 million and refinanced $1 billion of Parent Company bonds
●Closed the acquisition of sPower, the largest independent solar developer in the United States
Q3 2017 Strategic Performance
Earnings Per Share and Free Cash Flow Results in Q3 2017 (in millions, except per share amounts):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Diluted earnings per share from continuing operations$0.23
 $0.26
 $(0.03) -12 % $0.27
 $0.31
 $(0.04) -13 %
Adjusted EPS (a non-GAAP measure) (1)
0.24
 0.32
 (0.08) -25 % 0.66
 0.64
 0.02
 3 %
Net cash provided by operating activities735
 819
 (84) -10 % 1,689
 2,182
 (493) -23 %
Free Cash Flow (a non-GAAP measure) (1)
601
 665
 (64) -10 % 1,253
 1,709
 (456) -27 %
_____________________________
(1)
See Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition.
(2) GWh sold in 2021.
Three Months Ended September

35 | The AES Corporation | June 30, 20172022 Form 10-Q
Diluted earnings per shareOverview of Strategic Performance
AES is leading the industry's transition to clean energy by investing in clean power growth and innovative technology businesses. The Company is well-positioned to benefit from continuing operations decreased $0.03,very favorable trends in clean power generation, distribution, and supporting technologies.
•In year-to-date 2022, the Company signed or 12%was awarded 1,618 MW of renewables and energy storage under long-term PPAs expected to incomecome online in 2023 and 2024, primarily including 1,250 MW of $0.23. This was primarily driven by lower margin at our Andes SBU, higher losses on extinguishmentsolar and energy storage in the U.S.
◦In the second quarter of debt, higher income tax expense, unfavorable impact at Andes SBU2022, the Company signed 531 MW of renewables and energy storage under long-term PPAs.
•In year-to-date 2022, the Company completed the construction or acquisition of 390 MW of solar projects in the U.S. and the Dominican Republic.
•The Company’s backlog is now 10,468 MW expected to be completed through 2025, including:
◦3,792 MW under construction; and
◦6,676 MW of renewable energy projects signed under long-term PPAs, but not yet under construction.
•In June 2022, the Company formed the U.S. Solar Buyer Consortium with three other leading solar companies to drive the expansion of the U.S. solar supply chain and support the growth of the American solar industry.
•In year-to-date 2022, the Company signed agreements that will direct excess LNG from the full recognition of a non-trade receivable allowance and the write-off of water rights relatedCompany's business in Panama to a business development project that is no longer pursued, and losses due to damages caused by hurricanes Irma and Maria. These decreases were partially offset by prior year impairments at Buffalo Gap I, unrealized foreign currency transaction gains and higher margin at our MCAC SBU.international customers.
Adjusted EPS, a non-GAAP measure, decreased $0.08, or 25%, to $0.24, primarily driven by lower margin at


our Andes SBU, higher income tax expense, unfavorable impact at Andes SBU from the full recognition of a non-trade receivable allowance and the write-off water rights related to a business development project that is no longer pursued, and losses due to the damages caused by hurricanes Irma and Maria. These decreases were partially offset by higher margins at our MCAC SBU.
Net cash provided by operating activities decreased by $84 million, or 10%, to $735 million, primarily driven by lower collections of net regulatory assets and current year sales at Eletropaulo, delay in collections at Gener, and the absence of Sul’s operating cash flow in 2017. These decreases were partially offset by the timing of payments for energy purchases at Eletropaulo.
Free cash flow, a non-GAAP measure, decreased by $64 million, or 10%, to $601 million, primarily driven by an $84 million decrease in net cash provided by operating activities, which was partially offset by a decrease of $18 million in maintenance (net of reinsurance proceeds) and non-recoverable environmental expenditures.
Nine Months Ended September36 | The AES Corporation | June 30, 20172022 Form 10-Q
Diluted earnings per share from continuing operations decreased $0.04, or 13%, to $0.27. This was primarily driven by impairments at DPL and Kazakhstan CHPs and hydroelectric plants, losses incurred for the disposition of the Kazakhstan CHPs and higher income tax expense. These decreases were partially offset by prior year impairments at DPL and Buffalo Gap I and II, higher margins at our MCAC, Eurasia and Brazil SBUs and the favorable impact of the YPF legal settlement at AES Uruguaiana in 2017.
Adjusted EPS, a non-GAAP measure, increased $0.02, or 3%, to $0.66, primarily driven by higher margins at our MCAC, Eurasia and Brazil SBUs, the favorable impact of the YPF legal settlement at AES Uruguaiana, which was partially offset by higher income tax expense.
Net cash provided by operating activities decreased by $493 million, or 23%, to $1,689 million, primarily driven by lower collections of net regulatory assets and current year sales at Eletropaulo, the 2016 collection of overdue receivables at Maritza, and the absence of Sul’s operating cash flow in 2017. These decreases were partially offset by the timing of payments for energy purchases at Eletropaulo.
Free cash flow, a non-GAAP measure, decreased by $456 million, or 27%, to $1,253 million, primarily driven by a $493 million decrease in net cash provided by operating activities (exclusive of lower service concession asset expenditures of $22 million), which was partially offset by a decrease of $59 million in maintenance (net of reinsurance proceeds) and non-recoverable environmental expenditures.


Review of Consolidated Results of Operations (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(in millions, except per share amounts)20222021$ change% change20222021$ change% change
Revenue:
US and Utilities SBU$1,197 $972 $225 23 %$2,314 $1,921 $393 20 %
South America SBU880 964 (84)-9 %1,690 1,848 (158)-9 %
MCAC SBU686 490 196 40 %1,252 1,025 227 22 %
Eurasia SBU318 277 41 15 %686 547 139 25 %
Corporate and Other36 37 (1)-3 %59 61 (2)-3 %
Eliminations(39)(40)1 3 %(71)(67)(4)-6 %
Total Revenue3,078 2,700 378 14 %5,930 5,335 595 11 %
Operating Margin:
US and Utilities SBU124 165 (41)-25 %254 272 (18)-7 %
South America SBU192 345 (153)-44 %396 697 (301)-43 %
MCAC SBU150 121 29 24 %232 243 (11)-5 %
Eurasia SBU55 53 2 4 %142 112 30 27 %
Corporate and Other38 44 (6)-14 %85 76 9 12 %
Eliminations4 — 4 NM(16)(8)(8)-100 %
Total Operating Margin563 728 (165)-23 %1,093 1,392 (299)-21 %
General and administrative expenses(46)(45)(1)2 %(98)(91)(7)8 %
Interest expense(279)(237)(42)18 %(537)(427)(110)26 %
Interest income95 73 22 30 %170 141 29 21 %
Loss on extinguishment of debt(1)(18)17 -94 %(7)(19)12 -63 %
Other expense(29)(4)(25)NM(41)(20)(21)NM
Other income70 183 (113)-62 %76 226 (150)-66 %
Gain (loss) on disposal and sale of business interests(2)64 (66)NM(1)59 (60)NM
Asset impairment expense(482)(872)390 -45 %(483)(1,345)862 -64 %
Foreign currency transaction losses(49)(2)(47)NM(68)(37)(31)84 %
Income tax benefit (expense)19 59 (40)-68 %(41)51 (92)NM
Net equity in earnings (losses) of affiliates5 (10)15 NM(28)(40)12 -30 %
INCOME (LOSS) FROM CONTINUING OPERATIONS(136)(81)(55)68 %35 (110)145 NM
Gain from disposal of discontinued businesses— 4 (4)-100 %— 4 (4)-100 %
NET INCOME (LOSS)(136)(77)(59)77 %35 (106)141 NM
Less: Loss (income) from continuing operations attributable to noncontrolling interests and redeemable stock of subsidiaries(43)105 (148)NM(99)(14)(85)NM
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$(179)$28 $(207)NM$(64)$(120)$56 -47 %
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:
Income (loss) from continuing operations, net of tax$(179)$24 $(203)NM$(64)$(124)$60 -48 %
Income from discontinued operations, net of tax— 4 (4)-100 %— 4 (4)-100 %
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$(179)$28 $(207)NM$(64)$(120)$56 -47 %
Net cash provided by operating activities$408 $351 $57 16 %$865 $604 $261 43 %
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share amounts)2017 2016 $ change % change 2017 2016 $ change % change
Revenue:               
US SBU$852
 $916
 $(64) -7 % $2,445
 $2,582
 $(137) -5 %
Andes SBU689
 667
 22
 3 % 1,979
 1,864
 115
 6 %
Brazil SBU1,085
 1,027
 58
 6 % 3,106
 2,761
 345
 12 %
MCAC SBU630
 547
 83
 15 % 1,851
 1,596
 255
 16 %
Eurasia SBU380
 386
 (6) -2 % 1,204
 1,249
 (45) -4 %
Corporate and Other9
 6
 3
 50 % 29
 8
 21
 NM
Intersegment eliminations(13) (7) (6) -86 % (20) (18) (2) -11 %
Total Revenue3,632
 3,542
 90
 3 % 10,594
 10,042
 552
 5 %
Operating Margin:      

       

US SBU184
 189
 (5) -3 % 421
 436
 (15) -3 %
Andes SBU151
 203
 (52) -26 % 452
 466
 (14) -3 %
Brazil SBU107
 53
 54
 NM
 311
 174
 137
 79 %
MCAC SBU165
 140
 25
 18 % 430
 370
 60
 16 %
Eurasia SBU102
 95
 7
 7 % 343
 308
 35
 11 %
Corporate and Other2
 7
 (5) -71 % 17
 11
 6
 55 %
Intersegment eliminations—
 1
 (1) 100 % —
 6
 (6) 100 %
Total Operating Margin711
 688
 23
 3 % 1,974
 1,771
 203
 11 %
General and administrative expenses(52) (40) (12) 30 % (155) (135) (20) 15 %
Interest expense(353) (354) 1
 — % (1,034) (1,086) 52
 -5 %
Interest income101
 110
 (9) -8 % 291
 365
 (74) -20 %
Loss on extinguishment of debt(49) (16) (33) NM
 (44) (12) (32) NM
Other expense(47) (13) (34) NM
 (95) (42) (53) NM
Other income18
 18
 —
 — % 105
 43
 62
 NM
Gain (loss) on disposal and sale of businesses(1) —
 (1) NM
 (49) 30
 (79) NM
Asset impairment expense(2) (79) 77
 -97 % (260) (473) 213
 -45 %
Foreign currency transaction gains (losses)21
 (20) 41
 NM
 13
 (16) 29
 NM
Income tax expense(110) (75) (35) 47 % (270) (165) (105) 64 %
Net equity in earnings of affiliates24
 11
 13
 NM
 33
 25
 8
 32 %
INCOME FROM CONTINUING OPERATIONS261
 230
 31
 13 % 509
 305
 204
 67 %
Loss from operations of discontinued businesses, net of income tax benefit of $4 for the nine months ended September 30, 2016—
 (1) 1
 -100 % —
 (7) 7
 -100 %
Net loss from disposal and impairments of discontinued businesses, net of income tax benefit of $401 for the nine months ended September 30, 2016—
 —
 —
 — % —
 (382) 382
 -100 %
NET INCOME (LOSS)261
 229
 32
 14 % 509
 (84) 593
 NM
Less: Net income attributable to noncontrolling interests and redeemable stock of subsidiaries(109) (54) (55) NM
 (328) (97) (231) NM
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$152
 $175
 $(23) -13 % $181
 $(181) $362
 NM
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:    
 

       
Income from continuing operations, net of tax$152
 $176
 $(24) -14 % $181
 $208
 $(27) -13 %
Loss from discontinued operations, net of tax—
 (1) 1
 -100 % —
 (389) 389
 -100 %
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION$152
 $175
 $(23) -13 % $181
 $(181) $362
 NM
Net cash provided by operating activities$735
 $819
 $(84) -10 % $1,689
 $2,182
 $(493) -23 %
DIVIDENDS DECLARED PER COMMON SHARE$0.12
 $0.11
 $0.01
 9 % $0.24
 $0.22
 $0.02
 9 %
Components of Revenue, Cost of Sales, and Operating Margin and Operating Cash Flow — Revenue includes revenue earned from the sale of energy from our utilities and the production and sale of energy from our generation plants, which are classified as regulated and non-regulated, respectively, on the Condensed Consolidated Statements of Operations. Revenue also includes the gains or losses on derivatives associated with the sale of electricity.
Cost of sales includes costs incurred directly by the businesses in the ordinary course of business. Examples include electricity and fuel purchases, operations and maintenance costs, depreciation and amortization expense,expenses, bad debt expense and recoveries, and general administrative and support costs (including employee-related costs directly associated with the operations of the business). Cost of sales also includes the gains or losses on derivatives (including embedded derivatives other than foreign currency embedded derivatives) associated with the purchase of electricity or fuel.
Operating margin is defined as revenue less cost of sales.



37 | The AES Corporation | June 30, 2022 Form 10-Q
Consolidated Revenue and Operating Margin
q32017form_chart-27791.jpgThree Months Ended June 30, 2022
Three months ended September 30, 2017Revenue
(in millions)
aes-20220630_g3.jpg
Consolidated Revenue— Revenue increased $90$378 million, or 3%14%, for the three months ended SeptemberJune 30, 2017, as2022, compared to the three months ended SeptemberJune 30, 2016. This2021, driven by:
•$225 million in US and Utilities mainly driven by higher prices at AES Indiana and AES Ohio due to increases in riders to collect fuel and purchased power costs from customers, as well as increased demand and favorable weather; higher pass-through energy prices in El Salvador; an increase was driven by:at Southland due to unrealized losses in the prior year under the commercial hedging strategy; higher sales at AES Clean Energy due to the supply agreement with Google, the prior year acquisition of New York Wind, and the commencement of renewables projects; and an increase in unrealized commodity derivative gains at AES Clean Energy;
The favorable FX impact of $37 million, primarily in Brazil of $31 million.
Excluding the FX impact mentioned above:
•$81196 million in MCAC primarily due todriven by higher LNG prices and contract energy sales resulting from the commencement of the combined cycle operations at Los Mina in June 2017, higher rates in the Dominican Republic as well asand Panama; and by higher pass through costsfuel prices in El Salvador;Mexico; and
•$2841 million in Brazil primarily due to the acquisition of the Alto Sertão II wind farmEurasia mainly driven by higher energy prices and generation in Tietê, and the one time recognition of revenue associated with a favorable opinion on the basis calculation for PIS and COFINS taxes from prior years as well as higher tariffs,Bulgaria; partially offset by unfavorable FX impact and by lower demandcontract sales at Eletropaulo.Mong Duong due to a forced outage.
These positivefavorable impacts were partially offset by a decrease of $64$84 million in South America primarily driven by revenue recognized at Angamos in the U.S. mainly due to lower wholesaleprior year for the early termination of contracts with Minera Escondida and Minera Spence; partially offset by higher generation and prices (Resolution 238/2022) in Argentina; higher spot sales and energy prices in Chile; and higher volume and price, lower tariffs, and the unfavorable impact of mild weathergeneration at DPL.AES Brasil.
Operating Margin
(in millions)
aes-20220630_g4.jpg
Consolidated Operating Margin— Operating margin increased $23decreased $165 million, or 3%23%, for the three months ended SeptemberJune 30, 2017, as2022, compared to the three months ended SeptemberJune 30, 2016. This increase was2021, driven by:
The favorable FX impact of $10 million, primarily in Andes and in Brazil.
Excluding the FX impact mentioned above:
•$52153 million in BrazilSouth America primarily due todriven by revenue recognized at Angamos in the one time recognitionprior year for the early termination of revenue associatedcontracts with a favorable opinion on the basis calculation for PISMinera Escondida and COFINS taxes from prior years, lower fixed cost,Minera Spence; and higher tariffs,by unfavorable FX impact; partially offset by lower demandspot purchases in Chile; and by business interruption insurance proceeds received at Eletropaulo, as well asTermoAndes; and
•$41 million in US and Utilities mainly driven by impact of outages at AES Indiana and Southland Energy;

38 | The AES Corporation | June 30, 2022 Form 10-Q
and by an increase in costs associated with growing and accelerating the acquisition ofdevelopment pipeline at AES Clean Energy; partially offset at AES Clean Energy due to unrealized commodity derivative gains and higher sales due to the Alto Sertão II wind farm,supply agreement with Google.
These unfavorable impacts were partially offset by net unfavorable impactan increase of volume and prices at Tietê; and
$25$29 million in MCAC primarily driven by higher contract and spot sales due to higher prices in Panama and the commencement of the combined cycle operations at Los MinaDominican Republic; and by an increase in June 2017, and higher availabilityunrealized commodity derivative gains in the Dominican Republic.
Six Months Ended June 30, 2022
Revenue
(in millions)
aes-20220630_g5.jpg
Consolidated Revenue— Revenue increased $595 million, or 11%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, driven by:
•$393 million in US and Utilities mainly driven by higher prices at AES Indiana and AES Ohio due to increases in riders to collect fuel and purchased power costs from customers, as well as increased demand and favorable weather; higher pass-through energy prices in El Salvador; an increase at Southland due to unrealized losses in the prior year under the commercial hedging strategy; and higher sales at AES Clean Energy due to the supply agreement with Google, the prior year acquisition of New York Wind, and the commencement of renewables projects; partially offset by an increase in unrealized commodity derivative losses at AES Clean Energy;
•$227 million in MCAC driven by higher LNG prices and sales in the Dominican Republic, higher fuel prices in Mexico, and higher spot sales and increased demand in Panama; partially offset by the impact from the sale of Itabo in April 2021; and
•$139 million in Eurasia mainly driven by higher energy prices and generation in Bulgaria and recognition of construction revenue at Mong Duong due to a reduction in expected completion costs for ash pond 2; partially offset by unfavorable FX impact and by lower contract sales at Mong Duong due to a forced outage.
These positivefavorable impacts were partially offset by a decrease of $56$158 million in Andes,South America primarily at Gener, driven by lower availabilityrevenue recognized at Angamos in the prior year for the early termination of contracts with Minera Escondida and Minera Spence; partially offset by higher generation and prices (Resolution 238/2022) in Argentina; higher energy prices in Chile and Colombia; and higher volume and generation at AES Brasil.

39 | The AES Corporation | June 30, 2022 Form 10-Q
Operating Margin
(in millions)
aes-20220630_g6.jpg
Consolidated Operating Margin— Operating margin decreased $299 million, or 21%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, driven by:
•$301 million in South America primarily driven by revenue recognized at Angamos in the prior year for the early termination of contracts with Minera Escondida and Minera Spence; a prior period GSF settlement and higher fixed costs due to major maintenance at Ventanas, theTietê; and unfavorable impact of new regulation on emissions, and lower contract margin in the SING market,FX impact; partially offset by starthigher energy prices in Colombia; business interruption insurance proceeds received at TermoAndes; and lower depreciation of operations of Cochrane Units Icoal assets in Chile;
•$18 million in US and IIUtilities mainly driven by unrealized commodity derivative losses and an increase in Julycosts associated with growing and October 2016, respectively.



(in millions)
q32017form_chart-29495.jpg
Nine months ended September 30, 2017
Consolidated Revenue— Revenue increased $552 million, or 5%, foraccelerating the nine months ended September 30, 2017, as compared todevelopment pipeline at AES Clean Energy; and by the nine months ended September 30, 2016. This increase was driven by:
The favorable FX impact of $293 million, primarily in Brazil of $312 million,from outages at AES Indiana, AES Hawaii, and Southland Energy; partially offset by an increase at Southland due to unrealized losses in the unfavorable FX impact of $19 million in Eurasia.prior year under the commercial hedging strategy; higher volume at AES Indiana due to increased demand and favorable weather; and higher sales at AES Clean Energy due to the supply agreement with Google; and
Excluding the FX impact mentioned above:
•$26211 million in MCAC primarily driven by higher net energy spot purchases due to drier hydrology in Panama and the Dominican Republic; and by the impact from the sale of Itabo in April 2021; partially offset by higher contract sales in Panama and the Dominican Republic, primarily due to higher LNG sales, higher contract rates,prices and higher contract energy sales resulting fromincreased demand; and by an increase in unrealized commodity derivative gains in the commencement of the combined cycle operations at Los Mina in June 2017, as well as higher pass through costs in El Salvador; and
$109 million in Andes primarily due to the start of commercial operations at Cochrane as well as higher availability in Argentina, partially offset by lower spot sales at Chivor.Dominican Republic.
These positiveunfavorable impacts were partially offset by a decreasean increase of $137 million in the U.S. mainly due to lower tariffs, lower wholesale volume and price, and the unfavorable impact of mild weather at DPL.
Consolidated Operating Margin— Operating margin increased $203 million, or 11%, for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016. This increase was driven by:
The favorable impact of FX of $42 million, primarily in Brazil of $29 million and in Andes of $15 million.
Excluding the FX impact mentioned above:
$108 million in Brazil primarily due to higher tariffs, lower fixed costs, and the one time recognition of revenue associated with a favorable opinion on the basis calculation for PIS and COFINS taxes from prior years, partially offset by lower demand at Eletropaulo;
$59 million in MCAC due to higher contract capacity and the commencement of the Los Mina combined cycle operations in June 2017 in the Dominican Republic as well as higher availability and lower maintenance in Mexico; and
$39$30 million in Eurasia primarily driven by recognition of construction revenue at Mong Duong due to a reduction in expected completion costs for ash pond 2; and by higher derivative valuation adjustments and higher capacity incomeelectricity prices at Kavarna in Northern Ireland.Bulgaria.
These positive impacts were partially offset by a decrease of $28 million in Andes, primarily at Gener, driven by the impact of new regulation on emissions, lower availability and higher fixed costs due to maintenance activities, and lower contract margin in the SING market, partially offset by start of operations of Cochrane Units I and II in July and October 2016, respectively, as well as higher availability at Argentina.
See Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-Q for additional discussion and analysis of operating results for each SBU.
Consolidated Results of Operations — Other
General and administrative expenses
General and administrative expenses increased $12$1 million, or 30%2%, to $52$46 million for the three months ended SeptemberJune 30, 2017, as2022, compared to $40$45 million for the three months ended SeptemberJune 30, 2016, primarily due to


business development activity and increased people costs.2021, with no material drivers.
General and administrative expenses increased $20$7 million, or 15%8%, to $155$98 million for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to $135$91 million for the ninesix months ended SeptemberJune 30, 2016,2021, primarily due to increased professional fees and business development activity.activity and people costs.
Interest expense
Interest expense decreased $1increased $42 million, or 18%, to $353$279 million for the three months ended SeptemberJune 30, 2017, as2022, compared to $354$237 million for the three months ended SeptemberJune 30, 2016, with no significant drivers.
Interest expense decreased $52 million, or 5%, to $1,034 million for the nine months ended September 30, 2017, as compared to $1,086 million for the nine months ended September 30, 2016.2021. This decrease was primarily due to a $61 million decrease at Eletropaulo attributable to lower debt balances, interest rates and regulatory liabilities, and a $23 million decrease at the Parent Company due to lower average debt balances. These decreases were partially offset by a $28 million increase at Cochraneis primarily due to lower capitalized interest in 2017 as a resultconstruction projects in Chile, and increased borrowings at AES Brasil.
Interest expense increased $110 million, or 26%, to $537 million for the six months ended June 30, 2022, compared to $427 million for the six months ended June 30, 2021. This increase is primarily due to the prior year impact of the plant starting commercial operationsrealized gains on de-designated interest rate swaps, lower capitalized interest in the second half of 2016.construction projects in Chile, and increased borrowings at AES Brasil.

40 | The AES Corporation | June 30, 2022 Form 10-Q
Interest income
Interest income decreased $9increased $22 million, or 8%30%, to $101$95 million for the three months ended SeptemberJune 30, 2017, as2022, compared to $110$73 million for the three months ended SeptemberJune 30, 2016. This decrease was2021, primarily due to lower regulatory assetsan increase in short-term investments at AES Brasil and interest ratessales-type lease receivables at Eletropaulo.the Alamitos Energy Center.
Interest income decreased $74increased $29 million, or 20%21%, to $291$170 million for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to $365$141 million for the ninesix months ended SeptemberJune 30, 2016. This decrease was2021, primarily due to lower regulatory assets and interest rates at Eletropaulo.the drivers above.
Loss on extinguishment of debt
Loss on extinguishment of debt increased $33decreased $17 million, or 94%, to $49$1 million for the three months ended SeptemberJune 30, 2017, as2022, compared to $16$18 million for the three months ended SeptemberJune 30, 2016. This increase was2021, primarily due to a $36 millionthe prior year loss at Andres due to the Parent Company resulting from the redemption and repurchase of senior notesrefinancing in 2017.May 2021.
Loss on extinguishment of debt increased $32decreased $12 million, or 63%, to $44$7 million for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to $12$19 million for the ninesix months ended SeptemberJune 30, 2016. This increase was2021, primarily due to losses of $92 million at the Parent Company, as a result of the redemption and repurchase of senior notes, partially offset by a gain of $65 million at Alicura, as a result of the prepayment of non-recourse debt related to the construction of the San Nicolas Plant, in the current period.driver above.
See Note 7—Debt included in Item 1.—Financial Statements of this Form 10-Q for further information.
Other income and expense
Other income remained flat at $18decreased $113 million, or 62%, to $70 million for the three months ended SeptemberJune 30, 2017, as2022, compared to the three months ended September 30, 2016.
Other income increased $62 million to $105 million for the nine months ended September 30, 2017, as compared to $43 million for the nine months ended September 30, 2016. This increase was primarily due to the favorable settlement of legal proceeding at Uruguaiana related to YPF's breach of the parties’ gas supply agreement.
Other expense increased $34 million to $47$183 million for the three months ended SeptemberJune 30, 2017,2021, primarily due to the prior year gain on remeasurement of our equity interest in the sPower development platform to its acquisition-date fair value, recognized as part of the merger to form AES Clean Energy Development; partially offset by the current year gain on remeasurement of our existing investment in 5B, which is accounted for using the measurement alternative, and insurance proceeds primarily associated with property damage at TermoAndes.
Other income decreased $150 million, or 66%, to $76 million for the six months ended June 30, 2022, compared to $13$226 million for the six months ended June 30, 2021, primarily due to the drivers above.
Other expense increased $25 million to $29 million for the three months ended SeptemberJune 30, 2016,2022, compared to $4 million for the three months ended June 30, 2021, primarily due to the write-off of water rights in the Andes SBU for projects that are no longer being pursued, and the recognition of a fullan allowance on a non-tradesales-type lease receivable at AES Gilbert due to a fire incident in Andes SBU.April 2022.
Other expense increased $53$21 million to $95$41 million for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to $42$20 million for the ninesix months ended SeptemberJune 30, 2016. This increase was2021, primarily due to the loss on disposal of assets at DPL as a result of the decision made in 2017 to close the coal-fired and diesel-fired generating units at Stuart and Killen on or before June 1, 2018, higher assets write-off at Brazil SBU, the write-off of water rights in the Andes SBU for projects that are no longer being pursued, and the recognition of a full allowance on a non-trade receivable in Andes SBU.driver above.
See Note 13—14—Other Income and Expense, Note 6—Investments in and Advances to Affiliates, and Note 18—Acquisitions included in Item 1.—Financial Statements of this Form 10-Q for further information.


Gain (loss) on disposal and sale of businessesbusiness interests
Loss on disposal and sale of businessesbusiness interests was $1 million for the three months ended September 30, 2017, with no loss in the comparative three months ended September 30, 2016.
Loss on disposal and sale of businesses was $49 million for the nine months ended September 30, 2017, as compared to a gain of $30 million for the nine months ended September 30, 2016. The 2017 negative impact was due to a $49 million loss on sale of Kazakhstan CHPs in 2017. The 2016 positive impact was primarily due to the $49 million gain on sale of DPLER, partially offset by the $20 million loss on deconsolidation of UK Wind in 2016.
See Note 16—Held-for-Sale Businesses and Dispositions included in Item 1.—Financial Statements of this Form 10-Q for further information.
Asset impairment expense
Asset impairment expense decreased $77 million, or 97%, to $2 million for the three months ended SeptemberJune 30, 2017, as compared to $792022 and $1 million for the six months ended June 30, 2022, with no material drivers.
Gain on disposal and sale of business interests was $64 million for the three months ended SeptemberJune 30, 2016. This was2021 and $59 million for the six months ended June 30, 2021, primarily due to the prior yearissuance of new shares by Fluence, our equity method investment, to a new investor, which AES has accounted for as a gain on the partial disposition of its investment in Fluence.
Asset impairment at Buffalo Gap I, resulting from lower forecasted revenues due to decreases in wind production.expense
Asset impairment expense decreased $213$390 million, or 45%, to $260$482 million for the ninethree months ended SeptemberJune 30, 2017, as2022, compared to $473$872 million for the ninethree months ended SeptemberJune 30, 2016.2021. This decrease was primarily due to two prior year impairments at AES Andes totaling $804 million associated with a commitment to accelerate the retirement of certain coal-fired plants in Chile and a $67 million impairment at the Mountain View I & II wind facilities related to a repowering project that will result in decommissioning the majority of the existing wind turbines in advance of their depreciable lives, partially offset by the $475 million current year impairment at Maritza due to the commitment to cease electricity generation using coal as a fuel source in Bulgaria beyond 2038.
Asset impairment expense decreased $862 million, or 64%, to $483 million for the six months ended June 30, 2022, compared to $1,345 million for the six months ended June 30, 2021. This decrease was primarily due to the prior year impairments$804 million impairment at Buffalo Gap I, resulting from lower forecasted revenues due to decreases in wind production, DPL, resulting from lower forecasted revenues fromAES Andes, as well as a $475 million impairment at Puerto Rico associated with the PJM capacity auction and higher anticipated environmental complianceeconomic costs and Buffalo Gapreputational risks of disposal of coal combustion residuals off island, and the $67 million impairment at the Mountain View I & II due to a decline in forward power curves. These werewind facilities, partially offset by impairments in the $475 million current year

41 | The AES Corporation | June 30, 2022 Form 10-Q
impairment at Kazakhstan, resulting from the sale of the CHPs and the expiration of the HPPs concession agreement on October 2017 and their classification as held-for-sale, and at DPL as a result of the decision to close the coal-fired and diesel-fired generating units at Stuart and Killen on or before June 1, 2018.Maritza discussed above.
See Note 14—15—Asset Impairment Expense included in Item 1.—Financial Statements of this Form 10-Q for further information.
Foreign currency transaction gains (losses)losses
Three Months Ended June 30,Six Months Ended June 30,
(in millions)(in millions)2022202120222021
ArgentinaArgentina$(42)$1 $(55)$(40)
ChileChile(1)1 (11)9 
BrazilBrazil(12)(7)(7)(4)
Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017 2016 2017 2016
Corporate$4
 $(23) $(1) $(29)
Argentina9
 8
 4
 9
Colombia(15) (3) (26) (4)
United Kingdom—
 1
 (3) 10
Chile9
 (2) 4
 (4)
Bulgaria5
—
1
 12
 (3)
Philippines4
 —
 10
 8
Other5
 (2) 13
 (3)Other6 3 5 (2)
Total (1)
$21
 $(20) $13
 $(16)
Total (1)
$(49)$(2)$(68)$(37)

(1)
Foreign currency derivative contracts gains and losses had no net impact for the 3 months ended September 30, 2017. Includes $15
(1)Includes gains of $7 million and losses of $27 million of losses on foreign currency derivative contracts for the 3 months ended September 30, 2016, and $37 million of losses and $8 million of gains on foreign currency derivative contracts for the nine months ended September 30, 2017 and 2016, respectively.
The Company recognized net foreign currency transaction gains of $21 million for the three months ended SeptemberJune 30, 2017, primarily due to appreciation2022 and 2021, respectively, and losses of the peso at Chile,$49 million and $46 million on foreign currency derivatives related to government receivables at Argentina, partially offset foreign currency derivatives losses at Colombia due to a change in functional currency.derivative contracts for the six months ended June 30, 2022 and 2021, respectively.
The Company recognized net foreign currency transaction losses of $20$49 million for the three months ended SeptemberJune 30, 2016, primarily at the Parent company due to foreign currency swaps and options, partially offset by remeasurement gains on intercompany notes.
The Company recognized net foreign currency transaction gains of $13 million for the nine months ended September 30, 2017,2022 primarily due to the amortization of frozen embedded derivatives at Philippines, and appreciation of the euro at Bulgaria, partially offset byunrealized losses on foreign currency derivatives related to government receivables in Argentina, unrealized losses at Columbia due to change adepreciating receivables denominated in functional currency.the Argentine peso, and unrealized losses on debt denominated in the Brazilian real.
The Company recognized net foreign currency transaction losses of $16$68 million for the ninesix months ended SeptemberJune 30, 2016,2022, primarily at the Parent company due to unrealized losses on foreign currency swapsderivatives related to government receivables in Argentina, unrealized losses due to depreciating receivables denominated in the Argentine peso, and options, partially offset by remeasurement gainsunrealized derivative losses on intercompany notes and remeasurement gains on intercompany debt at United Kingdom.

foreign currency derivatives in South America due to the depreciating Colombian peso.

Income tax expense
Income tax expense increased $35 million, or 47%, to $110The Company recognized net foreign currency transaction losses of $2 million for the three months ended SeptemberJune 30, 2017, compared2021, with no material drivers.
The Company recognized net foreign currency transaction losses of $37 million for the six months ended June 30, 2021, primarily due to $75to unrealized losses on foreign currency derivatives related to government receivables in Argentina, partially offset by unrealized derivative gains on foreign currency derivatives in South America due to the depreciating Colombian peso.
Income tax benefit (expense)
Income tax benefit was $19 million for the three months ended SeptemberJune 30, 2016.2022, compared to income tax benefit of $59 million for the three months ended June 30, 2021. The Company’s effective tax rates were 32%12% and 26%45% for the three months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. This net increasechange in the effective tax rate was due, in part,primarily due to the impact of the current year asset impairment of the Maritza coal-fired plant, partially offset by the current year impact of inflationary adjustments on net operating losses at certain Argentine renewables businesses. The prior year resolution of an audit settlement at certain of our operating subsidiaries ineffective tax rate was impacted by the Dominican Republic as well as the prior year devaluationimpairment of the Peso impacting certain of our Mexican subsidiaries.coal-fired plants in Chile.
Income tax expense increased $105 million, or 64%, to $270was $41 million for the ninesix months ended SeptemberJune 30, 2017,2022, compared to $165income tax benefit of $51 million for the ninesix months ended SeptemberJune 30, 2016.2021. The Company’s effective tax rates were 36%39% and 37%42% for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. This net decrease in the effective tax rate was principallyprimarily due to the unfavorable impact of Chilean income tax law reform enacted during the first quartercurrent year asset impairment of 2016 and the 2016 asset impairments recorded at Buffalo Gap I, Buffalo Gap II, and DPLMaritza coal-fired plant, partially offset by the current year impact of inflationary adjustments on net operating losses at certain Argentine renewables businesses. The prior year effective tax impactsrate was impacted by the aforementioned asset impairment of the 2017 appreciationcoal-fired plants in Chile, as well as the asset impairment at Puerto Rico.
See Note 15—Asset Impairment Expense included in Item 1.—Financial Statements of this Form 10-Q for details of the Mexican Peso compared to the 2016 depreciation of the Peso.Maritza, Chile, and Puerto Rico asset impairments.
Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at lower rates different than the U.S. statutory rate of 35%21%. Furthermore, our foreign earnings may be subjected to incremental U.S. taxation under the GILTI rules. A future proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate. In certain periods, however, our effective tax rate may be higher than 35% due to various discrete tax expense impacts.
Net equity in earnings (losses) of affiliates
Net equity in earnings of affiliates increased $13$15 million, to $24$5 million for the three months ended SeptemberJune 30, 2017,2022, compared to $11losses of $10 million for the three months ended SeptemberJune 30, 2016.2021. This increase was primarily due toa result of a reduction in the purchaseAES share of the sPowerlosses at our equity method investment in July 2017.affiliates.

42 | The AES Corporation | June 30, 2022 Form 10-Q
Net equity in earningslosses of affiliates increased $8decreased $12 million, or 32%30%, to $33$28 million for the ninesix months ended SeptemberJune 30, 2017,2022, compared to $25$40 million for the ninesix months ended SeptemberJune 30, 2016.2021. This increasedecrease was primarily driven by an increase in earnings at sPower due to the purchasehigher allocation of the sPower equity method investment,earnings driven by renewable projects that came online in 2021, partially offset by a fixed asset impairmentan increase in losses at Distributed EnergyFluence due to shipping issues, cost overruns and delays at projects under construction, and an increase in 2017.costs, including share-based compensation, associated with the growing business.
See Note 6—Investments in and Advances to Affiliates included in Item 1.—Financial Statements of this Form 10-Q for further information.
Net income attributable to noncontrolling interests and redeemable stock of subsidiaries
Net income attributable to NCInoncontrolling interests and redeemable stock of subsidiaries increased $55$148 million to $109$43 million for the three months ended SeptemberJune 30, 2017, as2022, compared to $54a loss of $105 million for the three months ended SeptemberJune 30, 2016.2021. This increase was primarily due toto:
•Prior year long-lived asset impairment expensein Chile; and
•Lower allocation of losses to tax equity partners at Buffalo Gap I in 2016 and higher operating margin at EletropauloAES Renewable Holdings.
These increases were partially offset by:
•Lower earnings from AES Andes due to increased ownership from 67% to 99% in the one time recognitionfirst quarter of revenue associated with a favorable opinion on the basis calculation for PIS and COFINS taxes from prior years, lower fixed cost, and higher tariffs, partially offset by lower demand, partially offset by lower operating margin at Tietê.2022.
Net income attributable to NCInoncontrolling interests and redeemable stock of subsidiaries increased $231$85 million to $328$99 million for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to $97$14 million for the ninesix months ended SeptemberJune 30, 2016.2021. This increase was primarily due to:
•Prior year long-lived asset impairments in Chile; and
•Lower allocation of losses to asset impairmenttax equity partners at Buffalo Gap IAES Renewable Holdings.
These increases were partially offset by:
•Prior year net gains from early contract terminations at Angamos;
•Increased costs associated with growing and II in 2016, higher operating marginaccelerating the development pipeline at Eletropaulo primarilyAES Clean Energy Development; and
•Lower earnings from AES Andes due to higher tariffs, lower fixed costs, and the one time recognition of revenue associated with a favorable opinion on the basis calculation for PIS and COFINS taxesincreased ownership from prior years, partially offset by lower demand, and favorable YPF legal settlement at AES Uruguaiana.
Discontinued operations
Net loss from discontinued operations was $1 million and $389 million for the three and nine months ended September 30, 2016, respectively, due67% to the operations from Sul being classified as discontinued operations starting99% in the secondfirst quarter of 2016. The sale of Sul closed in the fourth quarter of 2016. See Note 15—Discontinued Operations included in Item 1.—Financial Statements of this Form 10-Q for further information regarding the Sul discontinued operations.2022.
Net income (loss) attributable to The AES Corporation
Net incomeloss attributable to The AES Corporation decreased $23$207 million, to $152$179 million for the three months ended SeptemberJune 30, 2017, as2022, compared to $175income of $28 million for the three months ended SeptemberJune 30, 2016. Key drivers2021. This decrease was primarily due to:
•Prior year gain on remeasurement of our equity interest in the decrease were:sPower development platform to acquisition-date fair value;
•Lower marginmargins at our Andes SBU;
Higher loss on extinguishment debt;
Higher income tax expense;


Unfavorable impact at AndesSouth America SBU from the full recognition of a non-trade receivable allowance and the write-off of water rights to a business development project that is no longer pursued; and
Losses due to damages causedprior year net gains from early contract terminations at Angamos;
•Prior year gain due to the issuance of new shares by hurricanes IrmaFluence, which was accounted for as a partial disposition; and Maria.
•Lower capitalized interest on construction projects in Chile.
These decreases were partially offset by:
Prior year•Lower long-lived asset impairments at Buffalo Gap I;
Unrealized foreign currency transaction gains; and
Higher margin at our MCAC SBU.in the current year.
Net income attributable to The AES Corporation was $181 million for the nine months ended September 30, 2017, compared to a net loss attributable to The AES Corporation of $181decreased $56 million, to $64 million for the ninesix months ended SeptemberJune 30, 2016. The $3622022, compared to $120 million positive impactfor the six months ended June 30, 2021. This decrease was primarily driven bydue to:
•Lower long-lived asset impairments in the following increases:current year.

43 | The AES Corporation | June 30, 2022 Form 10-Q
This decrease was partially offset by:
•Prior year loss from discontinued operationsgain on remeasurement of $389 million as a result ofour equity interest in the sale of Sul (See Note 15. Discontinued Operations included in Item 1.— Financial Statements of this Form 10-Q for further information.)
sPower development platform to acquisition-date fair value;
Prior year impairments at DPL and Buffalo Gap I and II;
Higher•Lower margins at our MCAC, Eurasia and Brazil SBUs in the current year; andSouth America SBU due to prior year net gains from early contract terminations at Angamos;
The favorable impact of the YPF legal settlement at AES Uruguaiana.
These increases were partially offset by:
Current year impairments at Kazakhstan CHPs and hydroelectric plants, and DPL;
•Higher income tax expense;
•Prior year gain due to the issuance of new shares by Fluence, which was accounted for as a partial disposition; and
Current year loss•Lower capitalized interest on sale of Kazakhstan CHPs.construction projects in Chile.
SBU Performance Analysis
Non-GAAP Measures
Adjusted Operating Margin, Adjusted PTC, and Adjusted EPS and Consolidated Free Cash Flow (“Free Cash Flow”) are non-GAAP supplemental measures that are used by management and external users of our condensed consolidated financial statements such as investors, industry analysts, and lenders. The
For the year ended December 31, 2021, the Company updated the definition of Adjusted EPS item (g) tax benefit or expense related to the enactment effects of 2017 U.S. tax law reform and related regulations and any subsequent period adjustments related to enactment effects to include the 2021 tax benefit on reversal of uncertain tax positions effectively settled upon the closure of the Company's 2017 U.S. tax return exam.
Effective January 1, 2021, the Company changed the definitions of Adjusted Operating Margin, Adjusted PTC, and Consolidated Free Cash Flow by SBU for the three and nine months ended September 30, 2017 and September 30, 2016, are shown below. The percentages represent the contribution by each SBU to the gross metric, excluding Corporate.
For the year beginning January 1, 2017, the Company changed the definition of Adjusted PTC and Adjusted EPS to excluderemove the adjustment for costs directly associated benefitswith a major restructuring program, including, but not limited to, workforce reduction efforts, relocations, and costs dueoffice consolidation. As this adjustment was specific to acquisitions, dispositions,the major restructuring program announced by the Company in 2018, we believe removing this adjustment from our non-GAAP definitions provides simplification and early plant closures; including the tax impact of decisions made at the time of sale to repatriate sales proceeds. We believe excluding these benefits and costs better reflect the business performance by removing the variability caused by strategic decisions to dispose of or acquire business interests or close plants early. The Company has also reflected these changes in the comparative periods ending September 30, 2016.

clarity for our investors.
Adjusted Operating Margin
Operating Margin is defined as revenue less cost of sales. We define Adjusted Operating Margin as Operating Margin, adjusted for the impact of NCI, excluding (a) unrealized gains or losses related to derivative transactions.transactions; (b) benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures; and (c) net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence. The allocation of HLBV earnings to noncontrolling interests is not adjusted out of Adjusted Operating Margin. See Review of Consolidated Results of Operations for the definition of Operating Margin.
The GAAP measure most comparable to Adjusted Operating Margin is Operating Margin.Margin. We believe that Adjusted Operating Margin better reflects the underlying business performance of the Company. Factors in this determination include the impact of NCI, where AES consolidates the results of a subsidiary that is not wholly owned by the Company, as well as the variability due to unrealized derivatives gains or losses.losses related to derivative transactions and strategic decisions to dispose of or acquire business interests. Adjusted Operating Margin should not be construed as an alternative to Operating Margin, which is determined in accordance with GAAP.

Three Months Ended June 30,Six Months Ended June 30,
Reconciliation of Adjusted Operating Margin (in millions)2022202120222021
Operating Margin$563 $728 $1,093 $1,392 
Noncontrolling interests adjustment (1)
(98)(198)(190)(407)
Unrealized derivative (gains) losses(31)(13)(34)31 
Disposition/acquisition losses1 4 — 6 
Net gains from early contract terminations at Angamos— (110)— (220)
Total Adjusted Operating Margin$435 $411 $869 $802 

_______________________
(1)The allocation of HLBV earnings to noncontrolling interests is not adjusted out of Adjusted Operating Margin.

Reconciliation of Adjusted Operating Margin (in millions)Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Operating Margin$711
 $688
 $1,974
 $1,771
Noncontrolling interests adjustment(222) (187) (630) (502)
Derivatives adjustment(6) (10) (16) 4
Total Adjusted Operating Margin$483
 $491
 $1,328
 $1,273

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44 | The AES Corporation | June 30, 2022 Form 10-Q
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Adjusted PTC
We define Adjusted PTC as pretaxpre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses related to derivative transactions;transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, or losses, and associated benefits and costs due toassociated with dispositions and acquisitions of business interests, including early plant closures, and the tax impact from the repatriationgains and losses recognized at commencement of sales proceeds;sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt.debt; and (f) net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence. Adjusted PTC also includes net equity in earnings of affiliates on an after-tax basis adjusted for the same gains or losses excluded from consolidated entities.
Adjusted PTC reflects the impact of NCI and excludes the items specified in the definition above. In addition to the revenue and cost of sales reflected in Operating Margin, Adjusted PTC includes the other components of our income statement, such as general and administrative expenses in the corporate segment,Corporate and Other, as well as business development costs, interest expense and interest income,other expense and other income,realized foreign currency transaction gains and losses, and net equity in earnings of affiliates.
The GAAP measure most comparable to Adjusted PTC is income from continuing operations attributable to The AES Corporation. We believe that Adjusted PTC better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments. Factors in this determination include the variability due to unrealized gains or losses

45 | The AES Corporation | June 30, 2022 Form 10-Q
related to derivative transactions or equity securities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests or retire debt, and the non-recurring nature of the impact of the early contract terminations at Angamos, which affect results in a given period or periods. In addition, earnings before tax represents the business performance of the Company before the application of statutory income tax rates and tax adjustments, including the effects of tax planning, corresponding to the various jurisdictions in which the Company operates. Given its large number of businesses and complexity, the Company concluded that Adjusted PTC is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company’s results.
Adjusted PTC should not be construed as an alternative to income from continuing operations attributable to The AES Corporation, which is determined in accordance with GAAP.
Three Months Ended June 30,Six Months Ended June 30,
Reconciliation of Adjusted PTC (in millions)2022202120222021
Income (loss) from continuing operations, net of tax, attributable to The AES Corporation$(179)$24 $(64)$(124)
Income tax expense (benefit) from continuing operations attributable to The AES Corporation(29)(24)21 (60)
Pre-tax contribution(208)— (43)(184)
Unrealized derivative and equity securities losses (gains)(35)8 6 77 
Unrealized foreign currency losses (gains)39 (12)20 (6)
Disposition/acquisition losses23 (229)32 (244)
Impairment losses479 628 480 1,103 
Loss on extinguishment of debt6 18 16 24 
Net gains from early contract terminations at Angamos— (110)— (220)
Total Adjusted PTC$304 $303 $511 $550 

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46 | The AES Corporation | June 30, 2022 Form 10-Q
Reconciliation of Adjusted PTC (in millions)Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Income from continuing operations, net of tax, attributable to The AES Corporation$152
 $176
 $181
 $208
Income tax expense attributable to The AES Corporation71
 47
 144
 66
Pretax contribution223
 223
 325
 274
Unrealized derivative losses (gains)(8) 5
 (7) 1
Unrealized foreign currency transaction losses (gains)(21) 3
 (54) 12
Disposition/acquisition losses (gains)1
 (3) 107
 (5)
Impairment expense2
 24
 264
 309
Losses on extinguishment of debt48
 20
 43
 26
Total Adjusted PTC$245
 $272
 $678
 $617
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Adjusted EPS
We define Adjusted EPS as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses related to derivative transactions;transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, or losses, and associated benefits and costs due toassociated with dispositions and acquisitions of business interests, including early plant closures, and the tax impact from the repatriation of sales proceeds;proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt.debt; (f) net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence; and (g) tax benefit or expense related to the enactment effects of 2017 U.S. tax law reform and related regulations and any subsequent period adjustments related to enactment effects, including the 2021 tax benefit on reversal of uncertain tax positions effectively settled upon the closure of the Company's U.S. tax return exam.
The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing operations.operations. We believe that Adjusted EPS better reflects the underlying business performance of the Company and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability due to unrealized gains or losses related to derivative transactions or equity securities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests or retire debt, the one-time impact of the 2017 U.S. tax law reform and subsequent period adjustments related to enactment effects, and the non-recurring nature of the impact of the early contract terminations at Angamos, which affect results in a given period or periods.
Adjusted EPS should not be construed as an alternative to diluted earnings per share from continuing operations, which is determined in accordance with GAAP.


The Company reported a loss from continuing operations of $0.27 and $0.10 for the three and six months ended June 30, 2022, respectively. For purposes of measuring diluted loss per share under GAAP, common stock equivalents were excluded from weighted average shares as their inclusion would be anti-dilutive. However, for purposes of computing Adjusted EPS, the Company has included the impact of dilutive common stock equivalents. The table below reconciles the weighted average shares used in GAAP diluted loss per share to the weighted average shares used in calculating the non-GAAP measure of Adjusted EPS.

47 | The AES Corporation | June 30, 2022 Form 10-Q
Reconciliation of Adjusted EPSThree Months Ended September 30, Nine Months Ended September 30, 
 2017 2016 2017 2016 
Diluted earnings per share from continuing operations$0.23
 $0.26
 $0.27
 $0.31
 
Unrealized derivative gains(0.01) —
 (0.01) —
 
Unrealized foreign currency transaction losses (gains)(0.03) 0.01
 (0.07) 0.01
 
Disposition/acquisition losses (gains)—
 —
 0.16
(1) 
—
(2) 
Impairment expense—
 0.03
(3) 
0.40
(4) 
0.47
(5) 
Losses on extinguishment of debt0.07
(6) 
0.04
(7) 
0.06
(8) 
0.05
(9) 
Less: Net income tax benefit(0.02)
(10) 
(0.02) (0.15)
(11) 
(0.20)
(11) 
Adjusted EPS$0.24
 $0.32
 $0.66
 $0.64
 
Reconciliation of Denominator Used For Adjusted EPSThree Months Ended June 30, 2022Six Months Ended June 30, 2022
(in millions, except per share data)LossShares$ per ShareLossShares$ per Share
GAAP DILUTED LOSS PER SHARE
Loss from continuing operations attributable to The AES Corporation common stockholders$(179)668 $(0.27)$(64)668 $(0.10)
EFFECT OF DILUTIVE SECURITIES
Stock options— 1 — — 1 — 
Restricted stock units— 2 — — 2 — 
Equity units— 40 0.02 1 40 0.01 
NON-GAAP DILUTED LOSS PER SHARE$(179)711 $(0.25)$(63)711 $(0.09)
Three Months Ended June 30,Six Months Ended June 30,
Reconciliation of Adjusted EPS2022202120222021
Diluted earnings (loss) per share from continuing operations$(0.25)$0.03 $(0.09)$(0.19)
Unrealized derivative and equity securities losses (gains)(0.05)(1)0.01 0.01 0.12 (2)
Unrealized foreign currency losses (gains)0.05 (3)(0.02)0.03 (0.01)
Disposition/acquisition losses (gains)0.03 (4)(0.34)(5)0.04 (4)(0.37)(6)
Impairment losses0.68 (7)0.94 (8)0.68 (7)1.65 (9)
Loss on extinguishment of debt0.01 0.03 (10)0.02 0.04 (10)
Net gains from early contract terminations at Angamos— (0.16)(11)— (0.33)(11)
Less: Net income tax benefit(0.13)(12)(0.18)(13)(0.14)(12)(0.32)(14)
Adjusted EPS$0.34 $0.31 $0.55 $0.59 
_____________________________

(1)
Amount primarily relates to loss on sale of Kazakhstan CHPs of $48 million, or $0.07 per share, realized derivative losses associated with the sale of Sul of $38 million, or $0.06 per share; costs associated with early plant closure of DPL of $20 million, or $0.03 per share.
(2)
Net impact of zero relates to the gain on sale of DPLER of $22 million, or $0.03 per share; offset by the loss on deconsolidation of UK Wind of $20 million, or $0.03 per share.
(3)
Amount primarily relates to the asset impairment at Buffalo Gap I of $78 million ($23 million, or $0.03 per share, net of NCI).
(4)
Amount primarily relates to asset impairment at Kazakhstan hydroelectric plants of $92 million, or $0.14 per share, at Kazakhstan CHPs of $94 million, or $0.14 per share, and DPL of $66 million, or $0.10 per share.
(5)
Amount primarily relates to asset impairments at DPL of $235 million, or $0.36 per share; $159 million at Buffalo Gap II ($49 million, or $0.07 per share, net of NCI); and $78 million at Buffalo Gap I ($23 million, or $0.03 per share, net of NCI).
(6)
Amount primarily relates to the losses on early retirement of debt at the Parent Company of $38 million, or $0.06 per share
(7)
Amount primarily relates to losses on early retirement of debt at the Parent Company of $17 million, or $0.02 per share; and an adjustment of $5 million, or $0.01 per share to record the DP&L redeemable preferred stock at its redemption value.
(8)
Amount primarily relates to losses on early retirement of debt at the Parent Company of $92 million, or $0.14 per share, partially offset by the the gain on early retirement of debt at Alicura of $65 million, or $0.10 per share.
(9)
Amount primarily relates to losses on early retirement of debt at the Parent Company of $19 million, or $0.03 per share; and an adjustment of $5 million, or $0.01 per share, to record the DP&L redeemable preferred stock at its redemption value.
(10)
Amount primarily relates to the income tax benefit associated with losses on early retirement of debt of $16 million, or $0.02 per share in the three months ended September 30, 2017.
(11)
Amount primarily relates to the income tax benefit associated with asset impairment losses of $82 million, or $0.12 per share and $123 million, or $0.19 per share in the nine months ended September 30, 2017 and 2016, respectively.


Free Cash Flow
We define Free Cash Flow as net cash from operating activities (adjusted for service concession asset capital expenditures) less maintenance capital expenditures (including non-recoverable environmental capital expenditures), net(1)Amount primarily relates to the unrealized gain on remeasurement of reinsurance proceeds from third parties. 
We also exclude environmental capital expenditures that are expected to be recovered through regulatory, contractual or other mechanisms. An example of recoverable environmental capital expenditures is IPL'sour existing investment in MATS-related environmental upgrades that are recovered through5B, accounted for using the measurement alternative, of $26 million, or $0.04 per share.
(2)Amount primarily relates to unrealized derivative losses in Argentina mainly associated with foreign currency derivatives on government receivables of $41 million, or $0.06 per share, and net unrealized derivative losses on power and commodities swaps at Southland of $32 million, or $0.05 per share.
(3)Amount primarily relates to unrealized FX losses in Brazil of $12 million, or $0.02 per share, mainly associated with debt denominated in Brazilian reais, and unrealized FX losses of $9 million, or $0.01 per share, mainly associated with the devaluation of long-term receivables denominated in Argentine pesos.
(4)Amount primarily relates to the recognition of an allowance on the AES Gilbert sales-type lease receivable as a tracker. See Item 1.—US SBU—IPL—Environmental Matters includedcost of disposition of a business interest of $20 million, or $0.03 per share, for the three and six months ended June 30, 2022.
(5)Amount primarily relates to an adjustment on the gain on remeasurement of our equity interest in sPower to acquisition-date fair value of $176 million, or $0.26, and gain on Fluence issuance of shares of $61 million, or $0.09 per share.
(6)Amount primarily relates to the gain on remeasurement of our 2016 Form 10-Kequity interest in sPower to acquisition-date fair value of $212 million, or $0.32, and gain on Fluence issuance of shares of $61 million, or $0.09 per share, partially offset by day-one loss recognized at commencement of a sales-type lease at AES Renewable Holdings of $13 million, or $0.02 per share.
(7)Amount primarily relates to asset impairment at Maritza of $475 million, or $0.67 per share, for detailsthe three and six months ended June 30, 2022.
(8)Amount primarily relates to asset impairments at AES Andes of these investments.$540 million, or $0.81 per share, at Mountain View of $67 million, or $0.10 per share, and at sPower of $20 million, or $0.03 per share.
The GAAP measure most comparable(9)Amount primarily relates to Free Cash Flow is net cash provided by operating activities. We believe that Free Cash Flow is a useful measureasset impairments at AES Andes of $540 million, or $0.81 per share, at Puerto Rico of $475 million, or $0.71 per share, at Mountain View of $67 million, or $0.10 per share, and at sPower of $21 million, or $0.03 per share.
(10)Amount primarily relates to loss on early retirement of debt at Andres and Los Mina of $15 million, or $0.02 per share, for evaluating our financial condition because it represents the amount of cash generated by the business after the funding of maintenance capital expenditures that may be available for investing in growth opportunities or for repaying debt.three and six months ended June 30, 2021.
The presentation of Free Cash Flow has material limitations. Free Cash Flow should not be construed as an alternative(11)Amount relates to net cash from operating activities, which is determinedgains at Angamos associated with the early contract terminations with Minera Escondida and Minera Spence of $110 million, or $0.16 per share and $220 million, or $0.33 per share, for the three and six months ended June 30, 2021, respectively.
(12)Amount primarily relates to income tax benefits associated with the impairment at Maritza of $110 million, or $0.15 per share, partially offset by income tax expense associated with the unrealized gain on remeasurement of our existing investment in accordance5B of $6 million, or $0.01 per share for the three and six months ended June 30, 2022.
(13)Amount primarily relates to income tax benefits associated with GAAP. Free Cash Flow does not representthe impairments at AES Andes of $195 million, or $0.29 per share and at Mountain View of $21 million, or $0.03 per share, partially offset by income tax expense related to net gains at Angamos associated with the early contract terminations with Minera Escondida and Minera Spence of $51 million, or $0.08 per share, income tax expense related to the gain on remeasurement of our cash flow available for discretionary payments because it excludes certain payments that are requiredequity interest in sPower to acquisition-date fair value of $39 million, or $0.06 per share, and income tax expense related to which we have committed, such as debt service requirementsthe gain on Fluence issuance of shares of $13 million, or $0.02 per share.
(14)Amount primarily relates to income tax benefits associated with the impairments at AES Andes of $195 million, or $0.29 per share, at at Puerto Rico of $114 million, or $0.17 per share, and dividend payments. Our definitionat Mountain View of Free Cash Flow may not be comparable$21 million, or $0.03 per share, partially offset by income tax expense related to similarly titled measures presented by other companies.net gains at Angamos associated with the early contract terminations with Minera Escondida and Minera Spence of $79 million, or $0.12 per share, income tax expense related to the gain on remeasurement of our equity interest in sPower to acquisition-date fair value of $46 million, or $0.07 per share, and income tax expense related to the gain on Fluence issuance of shares of $13 million, or $0.02 per share.

Calculation of Free Cash Flow (in millions) Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net Cash provided by operating activities $735
 $819
 $1,689
 $2,182
Add: capital expenditures related to service concession assets (1)
 3
 1
 5
 27
Less: maintenance capital expenditures, net of reinsurance proceeds (129) (144) (423) (464)
Less: non-recoverable environmental capital expenditures (2)
 (8) (11) (18) (36)
Free Cash Flow $601
 $665
 $1,253
 $1,709
_____________________________
48 | The AES Corporation | June 30, 2022 Form 10-Q
(1)
Service concession asset expenditures are included in net cash provided by operating activities, but are excluded from the free cash flow non-GAAP metric.
(2)
Excludes IPL's recoverable environmental capital expenditures of $10 million and $32 million for the three months ended September 30, 2017 and 2016, as well as, $39 million and $162 million for the nine months ended September 30, 2017 and 2016, respectively.



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US and Utilities SBU
The following table summarizes Operating Margin, Adjusted Operating Margin and Adjusted PTC and Free Cash Flow (in millions) for the periods indicated:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Operating Margin$184
 $189
 $(5) -3 % $421
 $436
 $(15) -3 %
Noncontrolling Interests Adjustment (1)
(23) (26)     (56) (59)    
Derivatives Adjustment(3) 1
     —
 5
    
Adjusted Operating Margin$158
 $164
 $(6) -4 % $365
 $382
 $(17) -4 %
Adjusted PTC$129
 $114
 $15
 13 % $240
 $257
 $(17) -7 %
Free Cash Flow$211
 $246
 $(35) -14 % $407
 $512
 $(105) -21 %
Free Cash Flow Attributable to NCI$18
 $27
 $(9) -33 % $32
 $43
 $(11) -26 %
Three Months Ended June 30,Six Months Ended June 30,
20222021$ Change% Change20222021$ Change% Change
Operating Margin$124 $165 $(41)-25 %$254 $272 $(18)-7 %
Adjusted Operating Margin (1)
79 122 (43)-35 %187 248 (61)-25 %
Adjusted PTC (1)
70 128 (58)-45 %127 172 (45)-26 %
_____________________________
(1)
(1)    A non-GAAP financial measure, adjusted for the impact of NCI. See SBU Performance Analysis—Non-GAAP Measures for definition and Item 1.—Business included in our 2021 Form 10-K for the respective ownership interest for key businesses.
See Item 1.—Business included in our 2016 Form 10-K for the respective ownership interest for key businesses.
Operating Margin for the three months ended SeptemberJune 30, 2017,2022 decreased by $5$41 million, or 3%25%, which was driven primarily by the following (in millions):
IPL 
Lower retail margin primarily due to weather$(10)
Other(3)
Total IPL Decrease(13)
US Generation 
Warrior Run primarily due to higher availability and lower maintenance cost due to major outages in 20166
Other4
Total US Generation Increase10
Other Business Drivers(2)
Total US SBU Operating Margin Decrease$(5)
Decrease at Southland Energy primarily due to the impact of forced outages at the CCGT units$(27)
Decrease at AES Indiana driven by higher maintenance expenses due to timing of planned outages and plant-related projects and higher storm costs(22)
Increase at AES Clean Energy driven by unrealized commodity derivative gains and higher revenue due to the Company’s agreement to supply Google’s data centers with 24/7 carbon-free energy, partially offset by increased costs associated with growing and accelerating the development pipeline12 
Other(4)
Total US and Utilities SBU Operating Margin Decrease$(41)
Adjusted Operating Margin decreased by $6$43 million for the US SBUprimarily due to the drivers above, adjusted for NCI and excluding unrealized gains and losses on derivatives.
Adjusted PTC increased by $15decreased $58 million, driven by earnings from equity affiliates due toprimarily associated with the 2017 acquisition of sPower and an increase in insurance recoveries at DPL, partially offset by the $6 million decrease in Adjusted Operating Margin described above.
Free Cash Flow decreased by $35 million, of which $9 million was attributable to NCI. The decrease in Free Cash Flow was primarily driven by:
Additional inventory purchases of $20 million primarilyabove and lower contributions at our U.S. renewables businesses due to inventory optimization efforts at DPL and IPL that occurred in 2016;
Higher paymentstiming of $13 million for general accounts payable at DPL due to timing;
Higher interest payments of $13 million primarily at DPL and IPL due to timing; and
$9 million decrease in Operating Margin (net of lower depreciation of $4 million).
These negative impacts were partially offset by an increase of $12 million in insurance proceeds at DPL.renewable projects coming online.
Operating Margin for the ninesix months ended SeptemberJune 30, 2017,2022 decreased by $15$18 million, or 3%7%, which was driven primarily by the following (in millions):
IPL 
Decrease due to implementation of new base rates in Q2 2016 which resulted in a favorable change in accrual$(18)
Other(1)
Total IPL Decrease(19)
DPL 
Lower retail margin due to lower regulated rates(26)
Lower depreciation expense driven by lower PP&E carrying values from impairments in 2016 and 201719
Total DPL Decrease(7)
US Generation 
Warrior Run primarily due to higher availability and lower maintenance cost due to major outages in 2016, partially offset by a decrease in energy price under the PPA4
Other7
Total US Generation Increase11
Total US SBU Operating Margin Decrease$(15)
Decrease at AES Clean Energy driven by unrealized commodity derivative losses and increased costs associated with growing and accelerating the development pipeline, partially offset by higher revenue due to the Company’s agreement to supply Google’s data centers with 24/7 carbon-free energy$(20)
Decrease at Southland Energy primarily due to the impact of forced outages at the CCGT units(20)
Decrease at AES Indiana driven by higher maintenance expenses due to timing of planned outages and plant-related projects and higher storm costs, partially offset by higher volumes from increased demand and favorable weather(11)
Decrease in Puerto Rico mainly driven by higher coal and chemical consumption due to higher heat rate(9)
Decrease at AES Hawaii primarily due to increased outages in the current year(9)
Increase at Southland primarily driven by lower unrealized losses from commodity derivatives under the commercial hedging strategy and higher energy sales driven by energy price adjustments from market re-settlements in the prior year53 
Other(2)
Total US and Utilities SBU Operating Margin Decrease$(18)
Adjusted Operating Margin decreased by $17$61 million for the US SBUprimarily due to the drivers above, adjusted for NCI and excludingprior year unrealized gains and losses on derivatives.


Adjusted PTC decreased by $17$45 million, driven byprimarily associated with the $17 million decrease in Adjusted Operating Margin described above as well as a 2016 gain on contract terminationand lower contributions at DP&L, offset by the Company's share of earnings under the HLBV allocation of noncontrolling interest at Distributed Energyour U.S. renewables businesses due to new project growth, earnings from equity affiliates due to the 2017 acquisitiontiming of sPower, and an increase in insurance recoveries at DPL.renewable projects coming online.
Free Cash Flow decreased by $105 million, of which $11 million was attributable to NCI.

49 | The decrease in Free Cash Flow was primarily driven by:AES Corporation | June 30, 2022 Form 10-Q
Additional inventory purchases of $66 million primarily due to inventory optimization efforts in 2016 at DPL and IPL;
Timing of payments for purchased power and general accounts payable of $42 million at DPL;
$41 million decrease in Operating Margin (net of lower depreciation of $26 million);
Higher interest payments of $19 million primarily at DPL and IPL due to timing; and
Lower collections at DPL of $11 million primarily due to the settlement of DPLER’s receivable balances resulting from its sale in 2016.
These negative impacts were partially offset by:
Higher collections at IPL of $32 million due to higher receivable balances in December 2016 resulting from favorable weather and the impacts from the 2016 rate order;
$30 million of lower maintenance and non-recoverable environmental capital expenditures; and
Increase of $12 million in insurance proceeds at DPL.
ANDESSouth America SBU
The following table summarizes Operating Margin, Adjusted Operating Margin and Adjusted PTC and Free Cash Flow (in millions) for the periods indicated:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Operating Margin$151
 $203
 $(52) -26 % $452
 $466
 $(14) -3 %
Noncontrolling Interests Adjustment (1)
(46) (59)     (144) (140)    
Derivatives Adjustment1
 —
     —
 —
    
Adjusted Operating Margin$106
 $144
 $(38) -26 % $308
 $326
 $(18) -6 %
Adjusted PTC$62
 $134
 $(72) -54 % $232
 $279
 $(47) -17 %
Free Cash Flow$91
 $137
 $(46) -34 % $277
 $234
 $43
 18 %
Free Cash Flow Attributable to NCI$33
 $45
 $(12) -27 % $98
 $82
 $16
 20 %
Three Months Ended June 30,Six Months Ended June 30,
20222021$ Change% Change20222021$ Change% Change
Operating Margin$192 $345 $(153)-44 %$396 $697 $(301)-43 %
Adjusted Operating Margin (1)
159 113 46 41 %329 225 104 46 %
Adjusted PTC (1)
145 96 49 51 %273 184 89 48 %
_____________________________
(1)
See Item 1.—Business included in our 2016 Form 10-K for the respective ownership interest for key businesses.
Including favorable FX(1)    A non-GAAP financial measure, adjusted for the impact of NCI. See SBU Performance Analysis—Non-GAAP Measures for definition and remeasurement impactsItem 1.—Business included in our 2021 Form 10-K for the respective ownership interest for key businesses. In the first quarter of $5 million, 2022, AES’ indirect beneficial interest in AES Andes increased from 67% to 99%. See Note 11—Equity included in Item 1.—Financial Statements of this Form 10-Q for further information.
Operating Margin for the three months ended SeptemberJune 30, 2017,2022 decreased by $52$153 million, or 26%44%, which was driven primarily by the following (in millions):
Lower revenue recognized on contract terminations at Angamos in Chile$(164)
Higher contract margin primarily associated with new generation and lower depreciation of coal assets, partially offset by lower availability of Ventanas and higher fixed costs in Chile7 
Other4 
Total South America SBU Operating Margin Decrease$(153)
Gener 
Lower availability of efficient generation resulting in higher replacement energy and fixed costs mainly associated with major maintenance at Ventanas Complex$(29)
Negative impact of new regulation on emissions (green taxes)(13)
Lower margin at the SING market primarily associated with lower contract sales and increase in coal prices at Norgener(8)
Start of operations at Cochrane Units I and II in July and October 2016, respectively17
Other(3)
Total Gener Decrease(36)
Chivor 
Lower spot sales mainly associated to lower generation and lower prices(16)
Other1
Total Chivor Decrease(15)
Other Business Drivers(1)
Total Andes SBU Operating Margin Decrease$(52)
After adjusting for the net gains on early contract terminations at Angamos in the prior year, Adjusted Operating Margin decreased by $38increased $46 million due to the drivers above, adjusted forincrease in ownership in AES Andes from 67% to 99% in the impactfirst quarter of NCI and excluding unrealized gains and losses on derivatives.2022.
Adjusted PTC decreased by $72increased $49 million, mainly driven by the full allowance of a non-trade receivable in Argentina due to collection uncertainties, higher interest expense primarily associated with the issuance of debtincrease in February 2017 at Argentina, and the write-off of water rights at Gener resulting from a business development project that is no longer pursued.


Free Cash Flow decreased by $46 million, of which $12 million was attributable to NCI. The decrease in Free Cash Flow was primarily driven by:
Higher working capital requirements of $59 million primarily due to delay in collections at Gener; and
$32 million decrease inAdjusted Operating Margin (net of higher depreciation of $7 milliondescribed above and $13 million of environmental tax accruals in Chile impacting margin but not free cash flow).
These negative impacts werean insurance recovery at TermoAndes, partially offset by higher collections of $44 million from account receivables in Argentina due to the impact of major maintenance performed in Q2 2016 and from financing receivables due to the commencement of operations of the Guillermo Brown Plant in October 2016.lower capitalized interest at construction projects.
Including favorable FX and remeasurement impacts of $15 million, Operating Margin for the ninesix months ended SeptemberJune 30, 2017,2022 decreased by $14$301 million, or 3%43%, which was driven primarily by the following (in millions):
Lower revenue recognized on contract terminations at Angamos in Chile$(327)
Decrease in Brazil primarily driven by prior year GSF gain and higher fixed costs(13)
Higher contract margin primarily associated with new generation and lower depreciation of coal assets, partially offset by lower availability of Ventanas and higher fixed costs in Chile26 
Increase in Colombia mainly related to increase in contract prices, partially offset by depreciation of the Colombian peso9 
Other4 
Total South America SBU Operating Margin Decrease$(301)
Gener 
Negative impact of new regulation on Emissions (Green Taxes)$(37)
Lower availability of efficient generation resulting in higher replacement energy and fixed costs mainly associated with major maintenance at Ventanas Complex(50)
Lower margin at the SING market primarily associated with lower contract sales and increase in coal prices at Norgener partially offset by higher spot sales(25)
Start of operations at Cochrane Units I and II in July and October 2016, respectively64
Other(6)
Total Gener Decrease(54)
Argentina 
Higher capacity payments primarily associated to changes in regulation in 201732
Higher fixed costs mainly associated with higher people costs driven by inflation(9)
Other3
Total Argentina Increase26
Chivor 
Higher contract sales primarily associated to an increase in contracted capacity20
Lower spot sales mainly associated to lower generation(12)
Favorable FX impact7
Other(1)
Total Chivor Increase14
Total Andes SBU Operating Margin Decrease$(14)
After adjusting for the net gains on early contract terminations at Angamos in the prior year, Adjusted Operating Margin decreased by $18increased $104 million due to the drivers above, adjusted forincrease in ownership in AES Andes from 67% to 99% in the impactfirst quarter of NCI.2022.
Adjusted PTC decreased by $47increased $89 million, driven byprimarily associated with the decrease of $18 millionincrease in Adjusted Operating Margin plus the full allowance of a non-trade receivable in Argentina due to collection uncertainties, higher interest expenses mainly associated to lower interest capitalization on construction projectsdescribed above and the issuance of debtan insurance recovery at Argentina, and the write-off of water rights at Gener resulting from a business development project that is no longer pursued. These negative impacts wereTermoAndes, partially offset by foreign currency gains in Argentina associated with collections of financing receivables and lower foreign currency losses associated with the sale of Argentina’s sovereign bonds at Termoandes and prepayment of financial debt denominated in U.S. dollars in 2017 at Argentina.
Free Cash Flow increased by $43 million, of which $16 million was attributable to NCI. The increase in Free Cash Flow was primarily driven by:
Lower tax payments of $57 million primarily at Chivor and Argentina;
$55 million increase in Operating Margin (net of higher depreciation of $32 million and $37 million of environmental tax accruals in Chile impacting margin but not free cash flow);
Higher collections of $50 million from financing receivables in Argentina due to the commencement of operations of the Guillermo Brown Plant in October 2016; and
$5 million of lower maintenance and non-recoverable environmental capital expenditures.
These positive impacts were partially offset by:
Higher working capital requirements of $60 million primarily due to delay in collections at Gener and Argentina;
Lower collections of prior period sales of $35 million at Chivor primarily due to higher receivables in Q1 2016 related to higher sales in Q4 2015;
Higher interest payments of $14 million primarily associated withcapitalized interest at Cochrane which is no longer capitalized; andconstruction projects.
Lower VAT refunds of $14 million at Alto Maipo and Cochrane due to the timing of construction activities.


BRAZIL SBU
The following table summarizes Operating Margin, Adjusted Operating Margin, Adjusted PTC, and Free Cash Flow (in millions) for the periods indicated:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Operating Margin$107
 $53
 $54
 NM
 $311
 $174
 $137
 79 %
Noncontrolling Interests Adjustment (1)
(87) (41)     (254) (137)    
Adjusted Operating Margin$20
 $12
 $8
 67% $57
 $37
 $20
 54 %
Adjusted PTC$12
 $6
 $6
 100% $64
 $18
 $46
 NM
Free Cash Flow$142
 $125
 $17
 14% $307
 $446
 $(139) -31 %
Free Cash Flow Attributable to NCI$116
 $101
 $15
 15% $233
 $340
 $(107) -31 %
_____________________________
(1)
See Item 1.—Business included in our 2016 Form 10-K for the respective ownership interest for key businesses.
Including favorable FX impacts of $3 million, Operating Margin for the three months ended September 30, 2017, increased by $54 million, which was driven primarily by the following (in millions):
Eletropaulo 
Revenue associated with a favorable opinion on the basis calculation for PIS and COFINS taxes from prior years$50
Lower fixed costs mainly due to lower bad debt and regulatory penalties34
Higher tariffs due to annual tariff reset20
Lower volume mainly due to lower demand resulting from economic decline and migration to free market(30)
Other(2)
Total Eletropaulo Increase72
Tietê 
Net impact of volume and prices of bilateral contracts due to higher energy purchased(45)
Net impact of volume and prices of lower energy purchased in spot market13
Higher volume due to acquisition of new wind entities - Alto Sertão II12
Other2
Total Tietê Decrease(18)
Total Brazil SBU Operating Margin Increase$54
Adjusted Operating Margin increased by $8 million, primarily due to the drivers discussed above, adjusted for the impact of noncontrolling interests.
Adjusted PTC increased by $6 million, mainly driven by the increase of $8 million in Adjusted Operating Margin as described above, partially offset by $2 million due to higher interest expense from debt issued to acquire new wind entities at Tietê.
Free Cash Flow increased by $17 million, of which $15 million was attributable to NCI. The increase in Free Cash Flow was primarily driven by:
•$166 million of lower payments for energy purchases at Eletropaulo due to lower energy costs and lower regulatory charges;
$65 million increase in Operating Margin (net of increased depreciation of $11 million); and
Favorable timing of $24 million in higher energy purchased for resale at Tietê.
These positive impacts were partially offset by:
$181 million in lower collections of costs deferred in net regulatory assets at Eletropaulo due to higher energy costs in Q3 2017;
$22 million in lower collections of energy sales at Eletropaulo due primarily to higher tariffs in 2017;
$15 million of higher maintenance capital expenditures at Eletropaulo;
$7 million in lower collections on energy sales at Tietê; and
$6 million of higher interest payments resulting from the assumption of debt for the acquisition of Alto Sertão II.


Including favorable FX impacts of $29 million, Operating Margin for the nine months ended September 30, 2017, increased by $137 million, which was driven primarily by the following (in millions):
Eletropaulo 
Higher tariffs due to annual tariff reset$84
Lower volume mainly due to lower demand resulting from slow economic growth and migration to free market(61)
Lower fixed costs mainly due to lower bad debt and lower regulatory penalties54
Revenue associated with a favorable opinion on the basis calculation for PIS and COFINS taxes from prior years50
Total Eletropaulo Increase127
Tietê 
Net impact of volume and prices of bilateral contracts due to higher energy purchased(70)
Net impact of volume and prices of lower energy purchased in spot market57
Favorable FX impacts20
Higher volume due to acquisition of new wind entities - Alto Sertão II12
Other(3)
Total Tietê Increase16
Other Business Drivers(6)
Total Brazil SBU Operating Margin Increase$137
Adjusted Operating Margin increased by $20 million, primarily due to the drivers discussed above, adjusted for the impact of noncontrolling interests.
Adjusted PTC increased by $46 million, driven by the increase of $20 million in Adjusted Operating Margin as described above, as well as a $28 million increase from the settlement of a legal dispute with YPF at Uruguaiana.
Free Cash Flow decreased by $139 million, of which $107 million was attributable to NCI. The decrease in Free Cash Flow was primarily driven by:
$556 million of higher collections in 2016 of costs deferred in net regulatory assets at Eletropaulo, as a result of unfavorable hydrology in prior periods;
$193 million in lower collections on energy sales at Eletropaulo due primarily to higher tariff flags in 2016;
$55 million higher maintenance capital expenditures at Eletropaulo;
$32 million decrease due to the sale of Sul in October 2016;
$20 million in lower collections on energy sales at Tietê;
$13 million of higher pension payments in 2017 driven by the debt renegotiation in prior year at Eletropaulo; and
$6 million of higher interest payments at Alto Sertão II.
These negative impacts were partially offset by:
Favorable timing of $401 million in payments for energy purchases at Eletropaulo due to lower energy costs and lower regulatory charges;
$167 million increase in Operating Margin (net of increased depreciation of $30 million);
$60 million collected from a legal dispute settlement with YPF at Uruguaiana;
$58 million of lower tax payments at Tietê ;
Favorable timing of $32 million in higher energy purchased for resale at Tietê; and
$11 million of lower interest payments at Tietê.
MCAC SBU
The following table summarizes Operating Margin, Adjusted Operating Margin and Adjusted PTC and Free Cash Flow (in millions) for the periods indicated:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Operating Margin$165
 $140
 $25
 18 % $430
 $370
 $60
 16 %
Noncontrolling Interests Adjustment (1)
(35) (31)     (82) (77)    
Derivatives Adjustment(1) (2)     (1) (3)    
Adjusted Operating Margin$129
 $107
 $22
 21 % $347
 $290
 $57
 20 %
Adjusted PTC$98
 $74
 $24
 32 % $256
 $197
 $59
 30 %
Free Cash Flow$118
 $118
 $—
 — % $211
 $131
 $80
 61 %
Free Cash Flow Attributable to NCI$14
 $27
 $(13) -48 % $20
 $33
 $(13) -39 %
Three Months Ended June 30,Six Months Ended June 30,
20222021$ Change% Change20222021$ Change% Change
Operating Margin$150 $121 $29 24 %$232 $243 $(11)-5 %
Adjusted Operating Margin (1)
116 94 22 23 %182 178 4 2 %
Adjusted PTC (1)
87 71 16 23 %124 132 (8)-6 %
_____________________________
(1)
See Item 1.—Business included in our 2016 Form 10-K for the respective ownership interest for key businesses.

(1)    A non-GAAP financial measure, adjusted for the impact of NCI. See SBU Performance Analysis—Non-GAAP Measures for definition and Item 1.—Business included in our 2021 Form 10-K for the respective ownership interest for key businesses.


50 | The AES Corporation | June 30, 2022 Form 10-Q
Operating Margin for the three months ended SeptemberJune 30, 2017,2022 increased by $25$29 million, or 18%24%, which was driven primarily by the following (in millions):
Dominican Republic 
Higher contracted energy sales mainly driven by Los Mina combined cycle commencement of operations in June 2017$14
Higher availability driven by Los Mina combined cycle interconnection in 20165
Other6
Total Dominican Republic Increase25
Total MCAC SBU Operating Margin Increase$25
Increase in Panama driven by higher prices due to an increase in the NYMEX Henry Hub index, and lower cost of sales resulting from favorable hydrology during Q2 2022$19 
Increase in the Dominican Republic mainly driven by higher contract sales due to higher prices and unrealized gains on LNG derivatives, partially offset by higher fixed costs11 
Other(1)
Total MCAC SBU Operating Margin Increase$29
Adjusted Operating Margin increased by $22 million due to the drivers above, adjusted for the impact of NCI and excluding unrealized gains and losses on LNG derivatives.
Adjusted PTC increased by $24$16 million, mainly driven by the increase of $22 million in Adjusted Operating Margin as described above.
Free Cash Flow is aligned in both periods, driven by $28 million increase in Operating Margin (net of increased depreciation of $3 million),above, partially offset by a higher working capital requirements dueallocation of interest expense attributable to unfavorable timing of collections, mainlyAES after Colon’s noncontrolling interest buyout in the Dominican Republic.September 2021.
Including favorable FX impacts of $1 million, Operating Margin for the ninesix months ended SeptemberJune 30, 2017, increased by $602022 decreased $11 million, or 16%5%, which was driven primarily by the following (in millions):
Dominican Republic 
Higher energy sales mainly driven by higher contracted capacity$32
Higher availability driven by greater major maintenance scope in 201613
Other(7)
Total Dominican Republic Increase38
Mexico 
Lower maintenance and higher availability17
Other4
Total Mexico Increase21
Other Business Drivers1
Total MCAC SBU Operating Margin Increase$60
Decrease in the Dominican Republic mainly driven by the sale of Itabo on April 8, 2021$(19)
Decrease in Mexico driven by lower availability in 2022(5)
Decrease in Panama mainly driven by higher energy spot purchases due to drier hydrology during Q1 2022, partially offset by higher contract and spot sales at Colon mainly during Q2 2022(3)
Increase in the Dominican Republic due to unrealized gains on LNG derivatives and higher contract sales due to higher demand and higher prices, partially offset by higher spot purchases and higher fixed costs20 
Other(4)
Total MCAC SBU Operating Margin Decrease$(11)
Adjusted Operating Margin increased by $57$4 million due to the drivers above, adjusted for the impact of NCI and excluding unrealized gains and losses on LNG derivatives.
Adjusted PTC increased by $59decreased $8 million, mainly driven by higher allocation of interest expense attributable to AES after Colon’s noncontrolling interest buyout in September 2021, partially offset by the increase of $57 million in Adjusted Operating Margin as described above.
Free Cash Flow increased by $80 million, of which a $13 million decrease was attributable to NCI. The increase in Free Cash Flow was driven by:
$68 million increase in Operating Margin (net of increased depreciation of $8 million);
Lower working capital requirements of $36 million in AES Puerto Rico primarily due to higher collections of energy sales;
Lower tax payments of $10 million in the Dominican Republic primarily due to lower withholding taxes on dividends paid in 2016 to AES Affiliates;
Lower tax payments of $16 million in El Salvador; and
$7 million of lower maintenance and non-recoverable environmental capital expenditures.
These positive impacts were partially offset by:
Higher working capital requirements of $42 million in the Dominican Republic primarily due to lower collections of energy sales at Itabo; and
$13 million of higher interest payments in the Dominican Republic primarily due to an increase in net debt and average interest rates.


EURASIAEurasia SBU
The following table summarizes Operating Margin, Adjusted Operating Margin and Adjusted PTC and Free Cash Flow (in millions) for the periods indicated:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Operating Margin$102
 $95
 $7
 7 % $343
 $308
 $35
 11 %
Noncontrolling Interests Adjustment (1)
(30) (30)     (94) (89)    
Derivatives Adjustment(4) (10)     (13) (5)    
Adjusted Operating Margin$68
 $55
 $13
 24 % $236
 $214
 $22
 10 %
Adjusted PTC$61
 $46
 $15
 33 % $218
 $197
 $21
 11 %
Free Cash Flow$180
 $156
 $24
 15 % $459
 $714
 $(255) -36 %
Free Cash Flow Attributable to NCI$56
 $65
 $(9) -14 % $145
 $142
 $3
 2 %
Three Months Ended June 30,Six Months Ended June 30,
20222021$ Change% Change20222021$ Change% Change
Operating Margin$55 $53 $2 4 %$142 $112 $30 27 %
Adjusted Operating Margin (1)
39 39 — — %101 83 18 22 %
Adjusted PTC (1)
42 48 (6)-13 %107 99 8 8 %
_____________________________
(1)
See Item 1.—Business included in our 2016 Form 10-K for the respective ownership interest for key businesses.
Including favorable FX impacts(1)    A non-GAAP financial measure, adjusted for the impact of $2 million, NCI. See SBU Performance Analysis—Non-GAAP Measures for definition andItem 1.—Business included in our 2021 Form 10-K for the respective ownership interest for key businesses.
Operating Margin for the three months ended SeptemberJune 30, 2017,2022 increased by $7$2 million, or 7%4%, with no material drivers.
Adjusted Operating Margin remained flat.
Adjusted PTC decreased $6 million, mainly driven by higher interest expense.
Operating Margin for the six months ended June 30, 2022 increased $30 million, or 27%, which was driven primarily by the following (in millions):
Ballylumford 
Higher energy and capacity prices$4
Other4
Total Ballylumford Increase8
Other Business Drivers(1)
Total Eurasia SBU Operating Margin Increase$7
Construction revenue for Mong Duong driven by a reduction in expected completion costs for ash pond 2$19 
Higher merchant prices captured by Kavarna10 
Other1 
Total Eurasia SBU Operating Margin Increase$30
Adjusted Operating Margin increased by $13$18 million due to the drivers above, adjusted for NCI and excluding unrealized gains and losses on derivatives.NCI.

51 | The AES Corporation | June 30, 2022 Form 10-Q
Adjusted PTC increased by $15$8 million, mainly driven by the increase of $13 million in Adjusted Operating Margin described above.
Free Cash Flow increased by $24 million, of which a $9 million decrease was attributable to NCI. The increase in Free Cash Flow was primarily driven by:
•
Increase in CO2 allowances of $9 million at Maritza due to decreased prices in 2016;
Lower working capital requirements of $8 million at Kilroot primarily due to a decrease in rates and VAT received in 2017; and
$5 million of lower maintenance and non-recoverable environmental capital expenditures.
Including unfavorable FX impacts of $3 million, Operating Margin for the nine months ended September 30, 2017 increased by $35 million, or 11%, which was driven primarily by the following (in millions):
Kilroot 
Higher fair value adjustments of commodity swaps$10
Favorable capacity prices due to fixed EUR/GBP rate set by the Regulator9
Unfavorable clean-dark spread leading to lower dispatch(6)
Other(3)
Total Kilroot Increase10
Ballylumford 
Higher energy and capacity prices7
Settlement with offtaker on previous gas transportation charges billed in April 20174
Lower maintenance costs due to outages in 20163
Other6
Total Ballylumford Increase20
Other Business Drivers5
Total Eurasia SBU Operating Margin Increase$35
Adjusted Operating Margin increased by $22 million due to the drivers above, adjusted for NCI and excluding unrealized gains and losses on derivatives.
Adjusted PTC increased by $21 million, mainly driven by the increase of $22 million in Adjusted Operating Margin described above.


Free Cash Flow decreased by $255 million, of which a $3 million increase was attributable to NCI. The decrease in Free Cash Flow was primarily driven by:
Lower collections of $376 million at Maritza, primarily due to the collection of overdue receivables from NEK in April 2016;
$9 million of higher non-cash mark-to-market valuation adjustments to commodity swaps at Kilroot impacting margin but not free cash flow; and
Lower coal purchases of $9 million at Mong Duong due to the reserve shutdown in 2017.
These negative impacts were partially offset by:by higher interest expense.
The settlement of $73 million in payables to Maritza’s fuel supplier;
$21 million of lower maintenance and non-recoverable environmental capital expenditures;
$19 million increase in operating margin (net of $16 million of lower depreciation);
Lower working capital requirements of $19 million at Masinloc due to the timing of payments for coal purchases; and
•
Increase in CO2 allowances of $17 million at Maritza due to decreased prices in 2016.
Key Trends and Uncertainties
During the remainder of 20172022 and beyond, we expect to face the following challenges at certain of our businesses. Management expects that improved operating performance at certain businesses, growth from new businesses, and global cost reduction initiatives may lessen or offset their impact. If these favorable effects do not occur, or if the challenges described below and elsewhere in this section impact us more significantly than we currently anticipate, or if volatile foreign currencies and commodities move more unfavorably, then these adverse factors (or other adverse factors unknown to us) may have a material impact on our operating margin, net income attributable to The AES Corporation, and cash flows. We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.—Business and Item 1A.—Risk Factors of our 2021 Form 10-K.
Hurricanes IrmaOperational
COVID-19 Pandemic — The COVID-19 pandemic has impacted global economic activity, including electricity and Mariaenergy consumption, and caused significant volatility in financial markets. Throughout the COVID-19 pandemic we have conducted our essential operations without significant disruption. We derive approximately 85% of our total revenues from our regulated utilities and long-term sales and supply contracts or PPAs at our generation businesses, which contributes to a relatively stable revenue and cost structure at most of our businesses. In 2022, our operational locations continued to experience the impact of, and recovery from, the COVID-19 pandemic. Across our global portfolio, our utilities businesses have generally performed in line with our expectations consistent with a recovery from the COVID-19 pandemic. While we cannot predict the length and magnitude of the pandemic, including the impact of current or future variants, or how it could impact global economic conditions, a delayed recovery with respect to demand may adversely impact our financial results for 2022. Also see Item 1A.—Risk Factors of our 2021 Form 10-K.
In September 2017, Puerto RicoWe continue to monitor and manage our credit exposures in a prudent manner. Our credit exposures have continued in-line with historical levels and within the customary 45-60 day grace period. We have not experienced any material credit-related impacts from our PPA offtakers due to the COVID-19 pandemic.
Our supply chain management has remained robust during this challenging time and we continue to closely manage and monitor developments. We continue to experience certain minor delays in some of our development projects, primarily in permitting processes and the U.S. Virgin Islands were severely impacted by Hurricanes Irmaimplementation of interconnections, due to governments and Maria, disrupting the operations of AES Puerto Rico, AES Ilumina,other authorities having limited capacity to perform their functions.
Trade Restrictions and certain Distributed Energy assets. Puerto Rico’s infrastructure was severely damaged, including electric infrastructure and transmission lines. The extensive structural damage caused by hurricane winds and flooding is expected to take significant time to repair.
Supply Chain — On October 24, 2017,March 29, 2022, the U.S. Congress approvedDepartment of Commerce (“Commerce”) announced the initiation of an investigation into whether imports into the U.S. of solar cells and panels imported from Cambodia, Malaysia, Thailand, and Vietnam are circumventing antidumping and countervailing duty orders on solar cells and panels from China. This investigation resulted in significant systemic disruptions to the import of solar cells and panels from Southeast Asia. On July 6, 2022, President Biden issued a $37 billion emergency disaster relief bill which will allowProclamation waiving any tariffs that result from this investigation for a 24-month period. Following President Biden’s proclamation, suppliers in Southeast Asia have begun importing cells and panels again to the US GovernmentU.S. We have contracted and substantially secured our expected requirements for solar panels for U.S. projects targeted to help victimsachieve commercial operations in 2022 and are working to secure our requirements for future years.
Additionally, certain suppliers could be blocked from importing solar cells and panels to the hurricanes and assistU.S. under the Uyghur Forced Labor Prevention Act (“UFLPA”). UFLPA seeks to block the import of products made with forced labor in certain areas of China. We are monitoring the infrastructure rebuild in the affected areas through the Federal Emergency Management Agency. This supplemental appropriation includes an allocation of $5 billion for the Disaster Assistance Direct Loan Program to assist local governments, like Puerto Rico, in providing essential services, such as reestablishing electricity.
Although a more detailed assessmentimpacts of the damageUFLPA on our solar cells and panels suppliers.
Further disruptions may impact our suppliers’ ability or willingness to its facilities is still ongoing, the Company sustained modest damagemeet their contractual agreements or to its 24 MW AES Ilumina solar plant, resulting in an estimated $6 million loss, and minor damagecontinue to its 524 MW AES Puerto Rico thermal plants, both located in Puerto Rico. The Company’s 5 MW solar plant insupply cells or panels into the U.S. Virgin Islands has been materially damaged, resulting in an estimated $9 million loss, and is not available to generate electricity.market on terms that we deem satisfactory.
As a resultThe impact of any adverse Commerce determination, the impact of the Hurricanes, PREPA has declared an event of Force Majeure. However, both units of AES Puerto RicoUFLPA, future disruptions to the solar panel supply chain and approximately 75% of AES Ilumina are available to generate electricity which, in accordance with the PPAs, will allow AES Puerto Rico to invoice capacity, even under Force Majeure.
The Company maintains an insurance program, subject to an annual cap, which provides coverage for property damage, business interruption, and costs associated with clean-up and recovery. However, it is possible that any losses not covered by insurance could have a material adversetheir effect on AES’ U.S. solar project development and construction activities are uncertain. AES will continue to monitor developments and take prudent steps towards maintaining a robust supply chain for our financial condition, results of operations, or cash flows.renewables projects.

52 | The AES Corporation | June 30, 2022 Form 10-Q
Macroeconomic and Political
During the past few years, economic conditions in some countries where our subsidiaries conduct business have destabilized. Changes in global economic conditionsexperienced macroeconomic and political changes. In the event these trends continue, there could havebe an adverse impact on our businesses in the event these recent trends continue.businesses.
Puerto Rico— As discussed in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties of the 20162021 Form 10-K, our subsidiaries in Puerto Rico have

long- term PPAs a long-term PPA with state-owned PREPA, which has been facing economic challenges that could impact the Company.
In order to address these challenges,result in a material adverse effect on June 30, 2016, the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was signed into law. PROMESA created a structure for exercising federal oversight over the fiscal affairs of U.S. territories and allowed for the establishment of an Oversight Board with broad powers of budgetary and financial control over Puerto Rico. PROMESA also created procedures for adjusting debts accumulated by the Puerto Rico government and, potentially, other territories (“Title III”). Finally, PROMESA expedites the approval of key energy projects and other critical projectsour business in Puerto Rico.
Despite the Title III protection, PREPA entered into preliminary Restructuring Support Agreements (“RSAs”) with their lenders. Under PROMESEA, PREPA submitted the RSAhas been making substantially all of its payments to the Oversight Board for approval on April 28, 2017, which the board denied on June 28, 2017. As a consequence, on July 2, 2017, the Oversight Board filed for bankruptcy on behalf of PREPA under Title III.generators in line with historical payment patterns.
As a result of the bankruptcy filing, AES Puerto Rico and AES Ilumina’s non-recourse debt of $365$177 million and $36$28 million, respectively, arecontinue to be in technical default and have beenare classified as current as of SeptemberJune 30, 2017. In addition, the Company's receivable balances in Puerto Rico as of September 30, 2017 totaled $63 million, of which $30 million was overdue. After the filing of Title III protection, and up until the disruption caused by the hurricanes, AES in Puerto Rico was collecting the overdue amounts from PREPA in line with historic payment patterns.
Additionally, on July 18, 2017, Moody's downgraded AES Puerto Rico to Caa1 from B3 due to the heightened default risk for AES Puerto Rico2022 as a result of PREPA'sPREPA’s bankruptcy protection. This protection givesfiling in July 2017. The Company is in compliance with its debt payment obligations as of June 30, 2022.
On April 12, 2022, a mediation team was appointed to prepare the plan to resolve the PREPA the abilityTitle III case and related proceedings, which is expected to renegotiate contracts, which could impact the value of our assets in Puerto Rico or otherwise have a material impact on the Company. In this regard, PREPA had requested the Company to renegotiate its 24 MW AES Ilumina’s PPA. After the event of the hurricanes Maria and Irma, these negotiations were put on hold.conclude by August 15, 2022.
Considering the information available as of the filing date, Managementmanagement believes the carrying amount of our long-lived assets in Puerto Rico of $622$85 million is recoverable as of SeptemberJune 30, 2017.2022.
Brazil 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 the 2021 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. The ICE Benchmark Association ("IBA") has determined that it will cease publication of the one-month, three-month, six-month, and 12-month USD LIBOR rates by June 30, 2023. AES holds a substantial amount of debt and derivative contracts referencing LIBOR as an interest rate benchmark. In order to facilitate an organized transition from LIBOR to alternative benchmark rate(s), AES has established a process to measure and mitigate risks associated with the cessation of LIBOR. As part of this initiative, alternative benchmark rates have been, and continue to be, assessed, and implemented for newly executed agreements. Many of AES’ existing agreements include provisions designed to facilitate an orderly transition from LIBOR, and interest rate derivatives address the LIBOR transition through the adoption of the ISDA 2020 IBOR Fallbacks Protocol and subsequent amendments. To the extent that the terms of the credit agreements and derivative instruments do not align following the cessation of LIBOR rates, AES will seek to negotiate contract amendments with counterparties or additional derivatives contracts.
Global Tax — The macroeconomic and political landscape in Brazil remains uncertain.  As disclosedenvironments in the Company’s Form 10-K forU.S. and in some countries where our subsidiaries conduct business have changed during 2021 and 2022. This could result in significant impacts to tax law. For example, on July 1, 2022, the Chilean government proposed to reduce the corporate tax rate from 27% to 25%, limit net operating loss utilization per year, ended December 31, 2016, Brazilian President Michael Temer was seekingand introduce a disintegrated system whereby dividends may be subject to implement economic reformsa 22% withholding tax, among other changes. The potential impact to the Company may be material.
Additionally, in Brazilthe first quarter of 2022, the Biden Administration released its fiscal year 2023 budget, which includes proposed U.S. corporate and international tax reform proposals that would improveincrease the economic outlookU.S. corporate income tax rate and GILTI tax rate, replace BEAT with rules in Brazil, which may benefit our businessesline with OECD Pillar 2 Model Rules, eliminate tax preferences for fossil fuels, among others. Also in the country. During 2017, corruption investigations were formally started against President Temer. These investigationsfirst quarter of 2022, the European Commission published an amended draft Directive on Pillar 2 which includes numerous amendments compared to the version published in the fourth quarter of 2021. The potential timing for possible enactment and impact to the Company remains unknown, but may be material.
Inflation — In the markets in which we operate, there have been higher rates of inflation in recent months. While most of our contracts in our international businesses are indexed to inflation, in general, our U.S.-based generation contracts are not indexed to inflation. If inflation continues to increase in our markets, it may increase our expenses that we may not be able to pass through to customers. It may also increase the costs of some of our development projects that could delaynegatively impact their competitiveness. Our utility businesses do allow for recovering of operations and maintenance costs through the reform plansregulatory process, which may have benefited our businesses in Brazil.timing impacts on recovery.

Regulatory
53 | The AES Corporation | June 30, 2022 Form 10-Q
DP&L ESP Rate Case — On October 20, 2017, PUCO issuedAlto Maipo
Alto Maipo is currently constructing a final decision approving the DP&L ESP rate case. The ESP establishes DP&L’s framework for providing retail service on a go forward basis including rate structures, non-bypassable charges and other specific rate recovery true-up mechanisms. The agreement establishes a six-year settlement that provides a framework for energy rates and defines components which include, but are not limited to, the following:
Bypassable standard offer energy rates for DP&L’s customers based on competitive bid auctions;
The establishment of a three-year non-bypassable Distribution Modernization Rider designed to collect $105 million in revenue per year which could be extended by PUCO for an additional two years. The Distribution Modernization Rider will be used for debt repayments as well as modernization and maintenance of transmission and distribution infrastructure;
The establishment of a non-bypassable Distribution Investment Rider to recover incremental distribution capital investments, the amount ofhydroelectric facility near Santiago, Chile which is to be establishedapproximately 99% complete and started generating energy in a separate DP&L distribution rate case;
A non-bypassable Reconciliation Rider permitting DP&L to defer, recover, or credit the net proceeds from selling energy and capacity receivedfourth quarter of 2021 as part of DP&L’s investment in the Ohio Valley Electric Corporation;
Implementation by DP&L of a Smart Grid Rider, Economic Development Rider, Economic Development Fund, Regulatory Compliance Rider and certain other new or modified rates, riders and competitive retail market enhancements, with tariffs consistent with the order to be effective November 1, 2017;
A commitment to commence the sale process of the Company’s ownership interests in the Zimmer, Miami Fort and Conesville coal-fired generation plants with all sales proceeds used to pay debt of DPL and DP&L; and
Restrictions on DPL making dividend or tax sharing payments.

In connection with the sale or closure of our generation plants as contemplated by the ESP settlement or otherwise, DPL and DP&L may incur certain cash and non-cash charges, which could be material to the Company.
Proposed U.S. Market Reforms —commissioning process. The U.S. Department of Energy (“DOE”) issued a Notice of Proposed Rule Making (“NOPR”) on September 29, 2017, which directed the FERC to exercise its authority to set just and reasonable rates that recognize the “resiliency” value provided by generation plants with certain characteristics, including having 90-days or more of on-site fuel and operating in markets where they do not receive rate base treatment through state ratemaking.  Nuclear and coal-fired generation plants are most likely to be able to meet the requirements.  As proposed, the DOE would value resiliency through rates that recover “compensable costs” that are defined to include the recovery of operating and fuel expenses, debt service and a fair return on equity.  The FERC is proceeding on an expedited basis, as requested by the DOE, but the timing and outcome of the proposed rule, including effects on wholesale energy markets, remains uncertain.
International Trade Commission — In April 2017, Suniva, a bankrupt solar photovoltaic panel manufacturer with a factory in Georgia filed a petition with the U.S. International Trade Commission (“ITC”) asserting that solar panels imported into the U.S. were causing substantial injury to domestic manufacturers. Subsequent to filing, SolarWorld Americas, a large U.S. manufacturer of solar panels, joined as a co-petitioner. The ITC accepted the petition and on September 22, 2107 determined that serious injury has been caused by foreign solar photovoltaic panels. On October 31, 2017, the ITC announced its proposed recommendations for remedies. These proposed recommendations include tariffs at various levels, a quota system and licensing fees. The ITC's final recommendations will be provided to the U.S. President by November 13, 2017. A final decision, either to accept, revise or reject some or all of the ITC's recommendations, will be made by the U.S. President in late 2017 or early 2018. AES is still evaluating the impact these recommended remedies will have, but they will likely increase the cost of solar photovoltaic panels and may impact the value of future solar development projects in the U.S., including those of our solar businesses. In the absence of the U.S. President's final decision, it is difficult to predict the outcome of the recommended remedies, but the impact on our solar businesses and AES could be material.
Alto Maipo
As disclosed in the Company’s Form 10-Q for the period ended March 31, 2017, Alto Maipo project (the “Project”) has experienced significant construction difficulties, which have resulted in ana substantial increase in projected cost for the project of up to 22% ofcosts over the original $2 billion budget. These overagesbudget and led to a series of negotiations that resulted in securing additional funding from creditors and additional equity injections from AES Andes. See Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties of the 2021 Form 10-K for further information.
On November 17, 2021, Alto Maipo SpA commenced a reorganization proceeding in accordance with Chapter 11 of the U.S. Bankruptcy Code, through a voluntary petition. Consequently, through Chapter 11 proceedings, The AES Corporation was no longer considered to have control over Alto Maipo and, therefore, derecognized Alto Maipo from its Consolidated Balance Sheets and recognized an after-tax loss of approximately $1.2 billion, net of noncontrolling interests, in the Consolidated Statement of Operations in the fourth quarter of 2021, associated with the loss of control attributable to the former controlling interest.
On May 26, 2022, Alto Maipo emerged from bankruptcy in accordance with Chapter 11 of the U.S. Bankruptcy Code. Alto Maipo, as restructured, is considered a VIE. As the Company lacks the power to make significant decisions, it does not meet the criteria to be considered the primary beneficiary of Alto Maipo and therefore will not consolidate the entity. The Company has elected the fair value option to account for its investment in Alto Maipo.
Decarbonization Initiatives
Our strategy involves shifting towards clean energy platforms, including renewable energy, energy storage, LNG, and modernized grids. It is designed to position us for continued growth while reducing our carbon intensity and in support of our mission of accelerating the future of energy, together. In February 2022, we announced our intent to exit coal generation by year-end 2025, subject to necessary approvals.
In addition, initiatives have been announced by regulators, including in Chile, Puerto Rico, and Hawaii, and offtakers in recent years, with the intention of restructuringreducing GHG emissions generated by the project’s existingenergy industry. In parallel, the shift towards renewables has caused certain customers to migrate to other low-carbon energy solutions and this trend may continue.
Although we cannot currently estimate the financial structure and obtaining additional funding. On March 17, 2017, AES Gener completedimpact of these decarbonization initiatives, new legislative or regulatory programs further restricting carbon emissions or other initiatives to voluntarily exit coal generation could require material capital expenditures, result in a legal and financial restructuring of Alto Maipo. As a part of this restructuring, AES Gener simultaneously acquired a 40% ownership interest from Minera Los Pelambres (“MLP”), a noncontrolling shareholder, for a nominal consideration, and sold a 6.7% interest to onereduction of the construction contractors. Through its 67% ownership interest in AES Gener,estimated useful life of certain coal facilities, or have other material adverse effects on our financial results.
For further information about the Company now has an effective 62% indirect economic interest in Alto Maipo. Additionally, certain construction milestones were amended and if Alto Maipo is unable to meet these milestones, there could be a material impact to the financing and value of the project. For additional information on risks regarding construction and development, refer toassociated with decarbonization initiatives, see Item 1A.—Risk Factors—Our Business is SubjectFactors—Concerns about GHG emissions and the potential risks associated with climate change have led to Substantial Development Uncertainties ofincreased regulation and other actions that could impact our businesses included in the 20162021 Form 10-K.
Following
Regulatory
AES Maritza PPA Review — DG Comp is conducting a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the restructuring described above,European Union's State Aid rules. No formal investigation has been launched by DG Comp to date. However, AES Maritza has been engaging in discussions with the project continuedDG Comp case team and the Government of Bulgaria (“GoB”) to face construction difficulties including greater than expected costs and slower than anticipated productivity by construction contractors towards agreed-upon milestones. Furthermore, during the second quarterattempt to reach a negotiated resolution of 2017, as a result of the failure to perform by one of its construction contractors, Constructora Nuevo Maipo S.A.DG Comp’s review (“CNM”), Alto Maipo terminated CNM’s contract. Alto Maipo has hired a temporary replacement contractor to complete a portion of CNM’s work while the search for a permanent replacement contractor continues. Alto Maipo is currently a party to legal proceedings concerning the termination of CNM and related matters, including, but not limited to, Alto Maipo’s draws on letters of credit securing CNM’s performance under the parties’ construction contract totaling $73 million (the “LC Funds”PPA Discussions”). The LC Funds were collected by Alto MaipoPPA Discussions are ongoing and are available to be utilized for on-going construction costs, but CNM may require Alto Maipo to escrow the LC Funds. The Company cannot anticipate the outcome of the legal proceedings. As a result of the termination of CNM, Alto Maipo’s construction debt of $623 million and derivative liabilities of $139 million are in technical default and presented as current in the balance sheet as of September 30, 2017.
Construction at the project is continuing and Alto Maipo is working to resolve the challenges described above. Alto Maipo is seeking a permanent replacement contractor to complete CNM’s work, andPPA continues to maintain negotiations with lenders and other parties.remain in place. However, there can be no assurance that, Alto Maipoin the context of the PPA Discussions, the other parties will succeednot seek a prompt termination of the PPA.
We do not believe termination of the PPA is justified. Nevertheless, the PPA Discussions will involve a range of potential outcomes, including but not limited to the termination of the PPA and payment of some level of compensation to AES Maritza. Any negotiated resolution would be subject to mutually acceptable terms, lender consent, and DG Comp approval. At this time, we cannot predict the outcome of the PPA Discussions or when those discussions will conclude. Nor can we predict how DG Comp might resolve its review if the PPA Discussions fail to result in these efforts and if there are further delays or cost overruns, or if Alto Maipo is unable to reach an agreement concerning the agency’s review. AES Maritza believes that its PPA is legal and in compliance with the non-recourse lenders or other parties, there is a risk these lenders may seek to exercise remedies available as a result of the default noted above, or Alto Maipo may not be able to meet its contractual or

other obligations and may be unable to continue with the project. If any of the above occur, there could be a material impairment for the Company.
The carrying value of long-lived assets and deferred tax assets of Alto Maipo as of September 30, 2017 was approximately $1.4 billion and $60 million, respectively. Through its 67% ownership interest in AES Gener, the Parent Company has invested approximately $360 million in Alto Maipo and has an additional equity funding commitment of $55 million required as part of the March 2017 restructuring described above. Even though certain construction difficulties have not been formally resolved, construction costs continue to be capitalized as management believes the project is probable of completion. Management believes the carrying value of the long-lived asset group is recoverable and was not impaired as of September 30, 2017. In addition, management believes it is more likely than not the deferred tax assets will be realized; however, they could be reduced if estimates of future taxable income are decreased.
Eletropaulo
AES is continuing to pursue strategic options for Eletropaulo to reduce the Company’s exposure to the Brazilian distribution market. In preparation for this strategic shift, the Company is pursuing the transfer of Eletropaulo’s shares to the Novo Mercado, a listing segment of the Brazilian stock exchange with the highest governance standards, including the requirement for the company to trade exclusively in ordinary shares. On September 12, 2017, the required majority of Eletropaulo’s shareholders approved the conversion of the current preferred shares into ordinary shares and the transfer to the Novo Mercado. However, shareholders holding approximately 3 million shares, representing 2.7% of the total preferred shares, have indicated their preference to exercise withdrawal rights, which allows them to redeem their shares and receive a cash payment at book value for tendering their shares to Eletropaulo. Eletropaulo has now received all third party approvals to migrate to the Novo Mercado. The migration will be submitted to the Eletropaulo Board for confirmation that the costs associated with the exercise of the withdrawal rights are not significant enough to prevent migration. Once confirmed, and the preferred shares are converted into ordinary shares, AES will no longer control Eletropaulo. Losing control will result in deconsolidation of Eletropaulo and the recording of an equity method investment for the remaining interest held in Eletropaulo. As of September 30, 2017, Eletropaulo had cumulative translation losses attributable to AES of $452 million and pension losses attributable to AES in other comprehensive income of $243 million, both of which will be recognized in earnings if Eletropaulo is deconsolidated.
Changuinola Tunnel Leak
Increased water levels were noted in a creek near the Changuinola power plant, a 223 MW hydroelectric power facility in Panama. After the completion of an assessment, the Company has confirmed loss of water in specific sections of the tunnel. The plant is in operation and can generate up to its maximum capacity. Repairs will be needed to ensure the long term performance of the facility, during which time the affected units of the plant will be out of service. Subject to final inspection, the repairs may take up to 10 months to completeapplicable laws, and it is expectedwill take all actions necessary to commence during the first quarter of 2019. The Company has notifiedprotect its insurers of a potential claim and is asserting claims against its construction contractor.interests, whether through negotiated agreement or otherwise. However, there can be no assurance that this matter will be resolved favorably; if it is not,

54 | The AES Corporation | June 30, 2022 Form 10-Q
there could be a material adverse effect on the Company’s financial condition, results of collection. The Company has not identified any indicatorsoperations, and cash flows. As of impairment and believesJune 30, 2022, the carrying value of our long-lived assets at Maritza is $452 million.
AES Ohio Distribution Rate Case — On November 30, 2020, AES Ohio filed a new distribution rate case with the long-lived asset groupThe Public Utilities Commission of Ohio (“PUCO”) that proposes a revenue increase of $120.8 million per year and incorporates the DIR investments that were planned and approved in the last rate case, but not yet included in distribution rates, other distribution investments since September 2015, and other investments and expenses. Certain parties that have intervened in the distribution rate case have argued that ESP 1 incorporates a distribution rate freeze. The rate case is recoverablepending a commission order and we are unable to predict the outcome at this time.
AES Indiana Integrated Resource Plan (“IRP”) — AES Indiana has begun holding public advisory meetings for its 2022 IRP. Changes to its generation portfolio are evaluated and decided through the IRP. AES Indiana issued an all-source Request for Proposal on April 14, 2022, in order to competitively procure replacement capacity; such need is being evaluated in AES Indiana's 2022 IRP.
Foreign Exchange Rates
We operate in multiple countries and as such are subject to volatility in exchange rates at varying degrees at the subsidiary level and between our functional currency, the USD, and currencies of September 30, 2017.the countries in which we operate. For additional information, refer to Item 3.—Quantitative and Qualitative Disclosures About Market Risk.
Impairments
Long-lived Assets—During the ninesix months ended SeptemberJune 30, 2017,2022, the Company recognized asset impairment expense of $186 million at the Kazakhstan CHP and Hydroelectric plants, $66 million at the Stuart and Killen Stations at DPL, and $8 million at Tait Energy Storage in the PJM market.$483 million. See Note 14—15—Asset Impairment Expenseincluded in Item 1.—Financial Statements of this Form 10-Q for further information. After recognizing these assetthis impairment expenses,expense, the carrying value of the long-lived asset groups, including thoseassets that were assessed and not impaired, excluding Alto Maipo,for impairment totaled $809$454 million at SeptemberJune 30, 2017.2022.
Events or changes in circumstances that may necessitate further recoverability tests and potential impairments of long-lived assets or goodwill may include, but are not limited to, adverse changes in the regulatory environment, unfavorable changes in power prices or fuel costs, increased competition due to additional capacity in the grid, technological advancements, declining trends in demand, evolving industry expectations to transition away from fossil fuel sources for generation, or an expectation it is more likely than not the asset will be disposed of before the end of its estimated useful life.
Functional Currency
Argentina — In February 2017, the Argentina Ministry of Energy issued Resolution 19/2017, which established changes to the energy price framework. As a result of this resolution, tariffs are priced in USD rather than Argentine Pesos, and the retention of unpaid amounts and accumulation of receivables with CAMMESA was eliminated. Concurrent with the establishment of the new price framework, AES Argentina issued $300 million of bonds denominated in USD. Given these significant changes in economic facts and circumstances, the Company changed

the functional currency of the Argentina businesses from the Argentine Peso to the USD effective February 2017. Changes to the energy framework could have a material impact on the Company.
Chivor — In May 2017, the Company repaid its outstanding USD denominated debt held at Chivor. In addition, the Company updated Chivor’s future financing strategy to align with Colombian Peso denominated operational cash flows of the business. Given these changes, the Colombian Peso is now regarded as the currency of the economic environment in which Chivor primarily operates. Therefore, the Company changed the functional currency of the Chivor business from USD to the Columbian Peso effective May 2017.
Foreign Exchange and Commodities
Our businesses are exposed to and proactively manage market risk. Our primary market risk exposure is to the price of commodities, particularly electricity, oil, natural gas, coal, and environmental credits, and FX rates. Volatility in these prices and FX rates could have a material impact on our results. For additional information, refer to Item 3.—Quantitative and Qualitative Disclosures About Market Risk.
Environmental
The Company is subject to numerous environmental laws and regulations in the jurisdictions in which it operates. The Company faces 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 of coal combustion byproducts)residuals) and certain air emissions, such as SO2, NOx, particulate matter, mercury, and mercury.other hazardous air pollutants. Such risks and uncertainties could result in increased capital expenditures or other compliance costs which could have a material adverse effect on certain of our U.S. or international subsidiaries and our consolidated results of operations. For further information about these risks, see Item 1A.—Risk Factors—Our operations are subject to significant government regulation and could be adversely affected by changes in the law or regulatory schemes; Several of our businesses are subject to potentially significant remediation expenses, enforcement initiatives, private party lawsuits and reputational risk associated with CCR; Our businesses are subject to stringent environmental laws, rules and regulations; Our businesses are subject to enforcement initiatives from environmental regulatory agencies; and Regulators, politicians, non-governmental organizations and other private parties have expressed concern Concerns about greenhouse gas, or GHG emissions and the potential risks associated with climate change have led to increased regulation and are takingother actions whichthat could have a material adverse impact on our consolidated results of operations, financial condition and cash flowsbusinesses included in the 20162021 Form 10-K. The following discussion
CSAPR—CSAPR addresses the “good neighbor” provision of the impactCAA, 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, environmental lawsany NAAQS. The CSAPR required significant reductions in SO2 and regulations onNOx emissions from power plants in many states in which subsidiaries of the Company updates the discussion provided in Item 1.—Business—Environmental and Land Use Regulations of the 2016 Form 10-K.
Update to Greenhouse Gas Emissions Discussion — We refer to the discussion in Item 1.—Business—United States Environmental and Land-Use Regulations—Greenhouse Gas Emissions in the Company’s 2016 Form 10-K for a discussion of certain recent developments, including the EPA’s CO2 emissions rules for new electric generating units, or GHG NSPS, as well as the CO2 emissions rules for existing power plants, called the CPP. Both the GHG NSPS and the CPP are being challenged by several states and industry groups in the D.C. Circuit.operate. The challenges to the CPP have been fully briefed and argued, but oral arguments have not yet taken place on the GHG NSPS. On March 28, 2017, the EPA filed a motion in the D.C. Circuit to hold the challenges to both the CPP and the GHG NSPS in abeyance in light of an Executive Order signed the same day. On April 28, 2017, the D.C. Circuit issued orders holding the challenges to both rules in abeyance for 60 days, with subsequent extensions granted by the court. The most recent extension was set to expire on October 10, 2017. EPA filed a status report and requested that the court continue to hold the case in abeyance in light of EPA’s announcement that it would propose to repeal the CPP in accordance with an Executive Order that instructed the EPA Administrator to review the GHG NSPS and CPP and “if appropriate...as soon as practicable...publish for notice and comment proposed rules suspending, revising, or rescinding those rules.” On October 16, 2017, the EPA published in the Federal Register a proposed rule that would rescind the CPP. Some states and environmental groups have opposed EPA’s most recent request to continue to hold the CPP appeals in abeyance and the D.C. Circuit has not yet acted upon EPA’s request.
By order of the U.S. Supreme Court, the CPP has been stayed pending resolution of the challenges to the rule. Due to the future uncertainty of the CPP, we cannot at this time determine the impact on our operations or consolidated financial results, but we believe the costCompany is required to comply with the CPP, should it be upheldCSAPR in certain states, including Indiana and Maryland. The CSAPR is implemented, in its current orpart, through a substantially similar form, couldmarket-based program under which compliance may be material.achievable through the acquisition and use of emissions allowances created by the EPA. The GHG NSPS remains in effect at this time,Company complies with CSAPR through operation of existing controls and absent further action frompurchases of allowances on the EPA that rescinds or substantively revises the NSPS, it could impact any Company plans to construct and/or modify or reconstruct electric generating units in some locations, which may have a material impact on our business, financial condition or results of operations.open market, as needed.
Updates to Water Discharges Regulations Discussion — As further discussed in Item 1.—Business—United States Environmental and Land-Use Regulations—Water Discharges in the Company’sIn October 2016, Form 10-K, the EPA published its final effluent limitations guideline (“ELG”) rule in November 2015 to reduce toxic pollutants discharged

into waters of the United States by power plants. These effluent limitations for existing and new sources include dry handling of fly ash, closed-loop or dry handling of bottom ash, and more stringent effluent limitations for flue gas desulfurization wastewater. The required compliance time lines for existing sources was to be established between November 1, 2018 and December 31, 2023. On September 18, 2017, the EPA published a final rule delaying certain compliance datesto update the CSAPR to address the 2008 ozone NAAQS

55 | The AES Corporation | June 30, 2022 Form 10-Q
(“CSAPR Update Rule”). The CSAPR Update Rule found that NOx ozone season emissions in 22 states (including Indiana, Maryland, Ohio, and Pennsylvania) affected the ability of downwind states to attain and maintain the ELG rule2008 ozone NAAQS, and, accordingly, the EPA issued federal implementation plans that both updated existing CSAPR NOx ozone season emission budgets for two years while it administratively reconsiderselectric generating units within these states and implemented these budgets through modifications to the rule. While we are still evaluating the effects of the rule, we anticipate that the implementation of its current requirements could have a material adverse effect on our results of operations, financial condition and cash flows, and a postponement or reconsideration of the rule that leads to less stringent requirements would likely offset some or all of the adverse effects of the rule.
As further discussed in Item 1.—Business—United States Environmental and Land-Use Regulations—Water DischargesCSAPR NOx ozone season allowance trading program. Implementation started in the Company’s 2016 Form 10-K2017 ozone season (May-September 2017). Affected facilities receive fewer ozone season NOx allowances in 2017 and in Item 1.—Management’s Discussion and Analysis—Key Trends and Uncertainties—Updates to Water Discharges Discussionlater, possibly resulting in the Company’s Form 10-Q forneed to purchase additional allowances. Additionally, on September 13, 2019, the fiscal quarter ended March 31, 2017,D.C. Circuit remanded a portion of October 2016 CSAPR Update Rule to the EPA. On April 30, 2021, the EPA published a final rule to address the 2020 D.C. Circuit decision. The EPA is issuing new or amended federal implementation plans for 12 states, including Indiana, Maryland, Ohio, and Pennsylvania, 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 began during the 2021 ozone season (May-September 2021) with an effective date of June 29, 2021. AES Indiana facilities and AES Warrior Run in JuneMaryland 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. In addition, subject sources in these states were required to surrender an equivalent number of previously allocated 2021-2024 Group 2 allowances by deadlines in 2021. This requirement applies inclusive of assets and allowances that have since been sold and/or retired, including former AES assets in Ohio and Pennsylvania. While AES no longer operates electric generating units subject to the revised CSAPR Update Rule in Ohio or Pennsylvania, certain prior AES sources in these states were required to surrender an equivalent number of previously allocated 2021-2024 Group 2 allowances and on July 14, 2021 the required allowances were recalled by the EPA, fulfilling this obligation.
On April 6, 2022, the EPA published a proposed Federal Implementation Plan to address air quality impacts with respect to the 2015 defining federal jurisdiction over watersOzone NAAQS. The rule would establish a revised CSAPR NOx Ozone Season Group 3 trading program of 25 states, including Indiana and Maryland. In addition to other requirements, if finalized, electric generating units (“EGUs”) in these states would begin receiving fewer allowances as soon as 2023, possibly resulting in the need to purchase additional allowances.
While the Company's additional CSAPR compliance costs to date have been immaterial, the future availability of and cost to purchase allowances to meet the emission reduction requirements is uncertain at this time, but it could be material.
Climate Change Regulation—On July 8, 2019, the EPA published the final Affordable Clean Energy (“ACE”) Rule, along with associated revisions to implementing regulations, in addition to final revocation of the CPP. The ACE Rule determines that heat rate improvement measures are the Best System of Emissions Reductions for existing coal-fired electric generating units. The final ACE Rule established CO2 emission rules for existing power plants under CAA Section 111(d) and replaced the EPA's 2015 Clean Power Plan Rule (“CPP”), which among other things, had called on states to mandate that power companies shift electricity generation to lower or zero carbon fuel sources. In the final ACE rule, the EPA determined that heat rate improvement measures are the Best System of Emissions Reductions for existing coal-fired electric generating units. AES Indiana Petersburg and AES Warrior Run have coal-fired electric generating units that could have been impacted by this regulation. On January 19, 2021, the D.C. Circuit vacated and remanded to the EPA the ACE Rule, although the parties had an opportunity to request a rehearing at the D.C. Circuit or seek a review of the decision by the U.S. ThisSupreme Court. On March 5, 2021, the D.C. Circuit issued the partial mandate effectuating the vacatur of the ACE Rule. In effect, the CPP did not take effect while the EPA is addressing the remand of the ACE rule which became effective on August 28, 2015, may expand or otherwise change the number and types of waters or features subjectby promulgating a new Section 111(d) rule to federal permitting.regulate greenhouse gases from existing electric generating units. On October 9, 2015, the U.S. Court of Appeals for the Sixth Circuit (the “Sixth Circuit”) issued an order to temporarily stay the “Waters of the U.S.” rule nationwide. The Sixth Circuit’s stay remains in place pending the outcome of various legal challenges, including a challenge to29, 2021, the U.S. Supreme Court that will determine whethergranted petitions to review the Sixthdecision by the D.C. Circuit has jurisdiction overto vacate the rule.ACE Rule. On June 27, 2017,30, 2022, the Supreme Court reversed the judgment of the D.C. Circuit Court and remanded for further proceedings consistent with its opinion. The opinion held that the “generation shifting” approach in the CPP exceeded the authority granted to EPA by Congress under Section 111(d) of the CAA. The impact of the results of further proceedings and potential future greenhouse gas emissions regulations remains uncertain.
Waste Management — On October 19, 2015, an EPA rule regulating CCR under the Resource Conservation and Recovery Act as nonhazardous solid waste became effective. The rule established nationally applicable minimum criteria for the disposal of CCR in new and currently operating landfills and surface impoundments, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements, and post-closure care. The primary enforcement mechanisms under this regulation would be actions commenced by the states and private lawsuits. On December 16, 2016, the Water Infrastructure Improvements for the Nation Act ("WIN Act") was signed into law. This includes provisions to implement the CCR rule through a state permitting program, or if the state chooses not to participate, a possible

56 | The AES Corporation | June 30, 2022 Form 10-Q
federal permit program. If this rule is finalized before Indiana or Puerto Rico establishes a state-level CCR permit program, AES CCR units in those locations could eventually be required to apply for a federal CCR permit from the EPA. The EPA has indicated that it will implement a phased approach to amending the CCR Rule, which is ongoing. On August 28, 2020, the EPA proposed a rulepublished final amendments to the CCR Rule titled "A Holistic Approach to Closure Part A: Deadline to Initiate Closure," that, would rescind the “Watersamong other amendments, required certain CCR units to cease waste receipt and initiate closure by April 11, 2021. The CCR Part A Rule also allowed for extensions of the U.S.” ruleApril 11, 2021 deadline if the EPA determines certain criteria are met. Facilities seeking such an extension were required to submit a demonstration to the EPA by November 30, 2020. On January 25, 2022, the EPA released proposed determinations regarding nine CCR Part A Rule demonstrations. On the same day, the EPA issued four compliance-related letters notifying certain other facilities of their compliance obligations under the federal CCR regulations. The determinations and re-codify the definition of “Watersletters include interpretations regarding implementation of the United States”CCR Rule. On April 8, 2022, petitions for review were filed challenging these EPA actions. The petitions are consolidated in Electric Energy, Inc. v. EPA. On July 12, 2022, EPA released prepublication determinations regarding two CCR Part A Rule demonstrations.It is too early to determine the direct or indirect impact of these letters or any determinations that existed priormay be made.
The CCR rule, current or proposed amendments to the 2015 rule. We cannot predictCCR rule, the results of groundwater monitoring data, or the outcome of this judicial or regulatory process, but if the “Waters of the United States” rule is ultimately implemented in its current or substantially similar form and survives the legal challenges, itCCR-related litigation could have a material impact on our business, financial condition, orand results of operations. AES Indiana would seek recovery of any resulting expenditures; however, there is no guarantee we would be successful in this regard.
Capital Resources and Liquidity
Overview—
As of SeptemberJune 30, 2017,2022, the Company had unrestricted cash and cash equivalents of $1.4$1.1 billion, of which $81$29 million was held at the Parent Company and qualified holding companies. The Company also had $563$595 million in short-term investments, held primarily at subsidiaries. In addition, we hadsubsidiaries, and restricted cash and debt service reserves of $1.2 billion.$576 million. The Company also had non-recourse and recourse aggregate principal amounts of debt outstanding of $17.1$17 billion and $5.0$4.2 billion, respectively. Of the $2.2 billion of our current non-recourse debt, $2 billion was presented as such because it is due in the next twelve months and $212 million relates to debt considered in default due to covenant violations. None of the defaults are payment defaults but are instead technical defaults triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents, of which $205 million is due to the bankruptcy of the offtaker.
We expect current maturities of non-recourse debt to be repaid from net cash provided by operating activities of the subsidiary to which the debt relates, through opportunistic refinancing activity, or some combination thereof. We have $4 million ofno recourse debt which matures within the next twelve months. From time to time, we may elect to repurchase our outstanding debt through cash purchases, privately negotiated transactions, or otherwise when management believes that such securities are attractively priced. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, and other factors. The amounts involved in any such repurchases may be material.
We rely mainly on long-term debt obligations to fund our construction activities. We have, to the extent available at acceptable terms, utilized non-recourse debt to fund a significant portion of the capital expenditures and investments required to construct and acquire our electric power plants, distribution companies, and related assets. Our non-recourse financing is designed to limit cross-default risk to the Parent Company or other subsidiaries and affiliates. Our non-recourse long-term debt is a combination of fixed and variable interest rate instruments. Debt is typically denominated in the currency that matches the currency of the revenue expected to be generated from the benefiting project, thereby reducing currency risk. In certain cases, the currency is matched through the use of derivative instruments. The majority of our non-recourse debt is funded by international commercial banks, with debt capacity supplemented by multilaterals and local regional banks.
Given our long-term debt obligations, the Company is subject to interest rate risk on debt balances that accrue interest at variable rates. When possible, the Company will borrow funds at fixed interest rates or hedge its variable rate debt to fix its interest costs on such obligations. In addition, the Company has historically tried to maintain at least 70% of its consolidated long-term obligations at fixed interest rates, including fixing the interest rate through the use of interest rate swaps. These efforts apply to the notional amount of the swaps compared to the amount of related underlying debt. Presently, the Parent Company’s only material unhedged exposure to variable interest rate debt relates to indebtedness under its $522 million outstanding secured term loan due 2022 and drawings of $540$810 million under its senior securedrevolving credit facility. On a consolidated basis, of the Company’s $22.0

57 | The AES Corporation | June 30, 2022 Form 10-Q
$21.5 billion of total gross debt outstanding as of SeptemberJune 30, 2017,2022, approximately $4.1$3.1 billion bore interest at variable rates that were not


subject to a derivative instrument which fixed the interest rate. Brazil holds $1.9$1.5 billion of our floating rate non-recourse exposure as we have no ability to fix local debt interest rates efficiently.variable rate instruments act as a natural hedge against inflation in Brazil.
In addition to utilizing non-recourse debt at a subsidiary level when available, the Parent Company provides a portion, or in certain instances all, of the remaining long-term financing or credit required to fund development, construction, or acquisition of a particular project. These investments have generally taken the form of equity investments or intercompany loans, which are subordinated to the project’s non-recourse loans. We generally obtain the funds for these investments from our cash flows from operations, proceeds from the sales of assets and/or the proceeds from our issuances of debt, common stock and other securities. Similarly, in certain of our businesses, the Parent Company may provide financial guarantees or other credit support for the benefit of counterparties who have entered into contracts for the purchase or sale of electricity, equipment, or other services with our subsidiaries or lenders. In such circumstances, if a business defaults on its payment or supply obligation, the Parent Company will be responsible for the business’ obligations up to the amount provided for in the relevant guarantee or other credit support. At SeptemberAs of June 30, 2017,2022, the Parent Company had provided outstanding financial and performance-related guarantees or other credit support commitments to or for the benefit of our businesses, which were limited by the terms of the agreements, of approximately $833 million$2.3 billion in aggregate (excluding those collateralized by letters of credit and other obligations discussed below).
As a result of the Parent Company’s belowCompany has only recently been upgraded to investment grade by all three rating agencies, some counterparties may be unwilling to accept our general unsecured commitments to provide credit support. Accordingly, with respect to both new and existing commitments, the Parent Company may be required to provide some other form of assurance, such as a letter of credit, to backstop or replace our credit support. The Parent Company may not be able to provide adequate assurances to such counterparties. To the extent we are required and able to provide letters of credit or other collateral to such counterparties, this will reduce the amount of credit available to us to meet our other liquidity needs. At SeptemberAs of June 30, 2017,2022, we had $125$155 million in letters of credit outstanding provided under our unsecured credit facility and $9$26 million in letters of credit outstanding provided under our senior securedrevolving credit facility. These letters of credit operate to guarantee performance relating to certain project development and construction activities and business operations. During the quarter ended SeptemberJune 30, 2017,2022, the Company paid letter of credit fees ranging from 0.25%1% to 2.25%3% per annum on the outstanding amounts.
We expect to continue to seek, where possible, non-recourse debt financing in connection with the assets or businesses that we or our affiliates may develop, construct, or acquire. However, depending on local and global market conditions and the unique characteristics of individual businesses, non-recourse debt may not be available on economically attractive terms or at all. If we decide not to provide any additional funding or credit support to a subsidiary project that is under construction or has near-term debt payment obligations and that subsidiary is unable to obtain additional non-recourse debt, such subsidiary may become insolvent, and we may lose our investment in that subsidiary. Additionally, if any of our subsidiaries lose a significant customer, the subsidiary may need to withdraw from a project or restructure the non-recourse debt financing. If we or the subsidiary choose not to proceed with a project or are unable to successfully complete a restructuring of the non-recourse debt, we may lose our investment in that subsidiary.
Many of our subsidiaries depend on timely and continued access to capital markets to manage their liquidity needs. The inability to raise capital on favorable terms, to refinance existing indebtedness, or to fund operations and other commitments during times of political or economic uncertainty may have material adverse effects on the financial condition and results of operations of those subsidiaries. In addition, changes in the timing of tariff increases or delays in the regulatory determinations under the relevant concessions could affect the cash flows and results of operations of our businesses.
Long-Term Receivables—
As of SeptemberJune 30, 2017,2022, the Company had approximately $238$47 million of gross accounts receivable classified as Noncurrent assets—other, primarily related to certain of its generation businesses in Argentina and the United States, and its utility business in Brazil.Other noncurrent assets. These noncurrent receivables mostly consist of accounts receivable in Argentina and Chile that, pursuant to amended agreements or government resolutions, have collection periods that extend beyond SeptemberJune 30, 2018,2023, or one year from the latest balance sheet date. The majority of ArgentinianArgentine receivables have been converted into long-term financing for the construction of power plants. Noncurrent receivables in Chile pertain primarily to revenues recognized on regulated energy contracts that were impacted by the Stabilization Fund created by the Chilean government. A portion relates to the extension of existing PPAs with the addition of renewable energy. See Note 5—Financing Receivables included in Part I—Item 1.—Financial Statements of this Form 10-Q and Item 1.—Business—South America SBU—Argentina—Regulatory Frameworkand Market Structure included in our 20162021 Form 10-K for further information.



58 | The AES Corporation | June 30, 2022 Form 10-Q
As of June 30, 2022, the Company had approximately $1.2 billion of loans receivable primarily related to a facility constructed under a build, operate, and transfer contract in Vietnam. This loan receivable represents contract consideration related to the construction of the facility, which was substantially completed in 2015, and will be collected over the 25-year term of the plant’s PPA. In December 2020, Mong Duong met the held-for-sale criteria and the loan receivable balance, net of CECL reserve, was reclassified to held-for-sale assets. As of June 30, 2022, $95 million of the loan receivable balance was classified as Current held-for-sale assets and $1.1 billion was classified as Noncurrent held-for-sale assets on the Condensed Consolidated Balance Sheets. See Note 13—Revenue in Item 1.—Financial Statements of this Form 10-Q for further information.
Cash Sources and Uses
The primary sources of cash for the Company in the six months ended June 30, 2022 were debt financings, cash flows from operating activities, and sales of short-term investments. The primary uses of cash in the six months ended June 30, 2022 were repayments of debt, capital expenditures, purchases of short-term investments, and acquisitions of noncontrolling interests.
The primary sources of cash for the Company in the six months ended June 30, 2021 were were debt financings, proceeds from the issuance of Equity Units, cash flows from operating activities, and sales of short-term investments. The primary uses of cash in the six months ended June 30, 2021 were repayments of debt, capital expenditures, and purchases of short-term investments.
A summary of cash-based activities are as follows (in millions):
Six Months Ended June 30,
Cash Sources:20222021
Issuance of non-recourse debt$3,132 $700 
Borrowings under the revolving credit facilities3,100 998 
Net cash provided by operating activities865 604 
Sale of short-term investments345 316 
Sales to noncontrolling interests229 20 
Issuance of preferred shares in subsidiaries60 151 
Contributions from noncontrolling interests28 95 
Issuance of preferred stock— 1,015 
Other34 207 
Total Cash Sources$7,793 $4,106 
Cash Uses:
Repayments under the revolving credit facilities$(2,269)$(932)
Capital expenditures(1,659)(999)
Repayments of non-recourse debt(1,469)(939)
Purchase of short-term investments(694)(258)
Acquisitions of noncontrolling interests(540)(17)
Purchase of emissions allowances(293)(88)
Dividends paid on AES common stock(211)(200)
Contributions and loans to equity affiliates(169)(173)
Acquisitions of business interests, net of cash and restricted cash sold(107)(81)
Distributions to noncontrolling interests(93)(129)
Other(122)(91)
Total Cash Uses$(7,626)$(3,907)
Net increase in Cash, Cash Equivalents, and Restricted Cash$167 $199 
Consolidated Cash Flows
The following table reflects the changes in operating, investing, and financing cash flows for the comparative three and ninesix month periodsperiod (in millions):
Six Months Ended June 30,
Cash flows provided by (used in):20222021$ Change
Operating activities$865 $604 $261 
Investing activities(2,583)(1,145)(1,438)
Financing activities1,924 682 1,242 

  Three Months Ended September 30, Nine Months Ended September 30,
Cash flows provided by (used in): 2017 2016 $ Change 2017 2016 $ Change
Operating activities $735
 $819
 $(84) $1,689
 $2,182
 $(493)
Investing activities (1,174) (543) (631) (2,282) (1,869) (413)
Financing activities 614
 (215) 829
 678
 (258) 936
59 | The AES Corporation | June 30, 2022 Form 10-Q
Operating Activities
Net cash provided by operating activities increased $261 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.
Operating Cash Flows (1)
(in millions)
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(1)Amounts included in the chart above include the results of discontinued operations, where applicable.
(2)The following table summarizeschange in adjusted net income is defined as the key componentsvariance in net income, net of our consolidated operating cash flows (in millions):the total adjustments to net income as shown on the Condensed Consolidated Statements of Cash Flows in Item 1—Financial Statements of this Form 10-Q.
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 $ Change 2017 2016 $ Change
Net income (loss) $261
 $229
 $32
 $509
 $(84) $593
Depreciation and amortization 303
 291
 12
 884
 877
 7
Impairment expenses 2
 79
 (77) 260
 475
 (215)
Loss on extinguishment of debt 49
 16
 33
 44
 12
 32
Other adjustments to net income 5
 14
 (9) 171
 438
 (267)
Non-cash adjustments to net income (loss) 359
 400
 (41) 1,359
 1,802
 (443)
Net income, adjusted for non-cash items $620
 $629
 $(9) $1,868
 $1,718
 $150
Net change in operating assets and liabilities (1)
 $115
 $190
 $(75) $(179) $464
 $(643)
Net cash provided by operating activities (2)
 $735
 $819
 $(84) $1,689
 $2,182
 $(493)
_____________________________
(1)
Refer to the table below for explanations of the variance in operating assets and liabilities (also generally referred to as “working capital” in the Segment Operating Cash Flow Analysis).
(2)
Amounts included in the table above include the results of discontinued operations, where applicable.
Net(3)The change in working capital is defined as the variance in total changes in operating assets and liabilities as shown on the Condensed Consolidated Statements of Cash Flows in Item 1—Financial Statements of this Form 10-Q.
•Adjusted net income decreased $425 million primarily due to lower margins at our South America SBU and an increase in interest expense, partially offset by $75higher margins at our Eurasia SBU.
•Working capital requirements decreased $686 million, primarily due to the GSF liability payment at Tietê in the prior year, deferred income at Angamos in the prior year due to revenue recognized for the three months ended September 30, 2017, compared toearly contract terminations with Minera Escondida and Minera Spence, and the three months ended September 30, 2016, which was primarily driven by (in millions):
Increases in: 
Accounts receivable, primarily at Gener and Itabo$(128)
Prepaid expenses and other current assets, primarily short-term regulatory assets at Eletropaulo and Sul(213)
Inventory, primarily at IPL, Eletropaulo, Itabo and Gener(47)
Accounts payable and other current liabilities, primarily at Eletropaulo306
Other7
Total decrease in cash from changes in operating assets and liabilities$(75)
Net change in operating assetsincome tax liabilities, partially offset by an increase in inventory, primarily fuel and liabilities decreased by $643 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, which was primarily driven by (in millions):other raw materials, at AES Andes.
Increases in: 
Accounts receivable, primarily at Maritza and Eletropaulo$(614)
Prepaid expenses and other current assets, primarily short-term regulatory assets at Eletropaulo and Sul(530)
Inventory, primarily at Gener, IPL and DPL(102)
Accounts payable and other current liabilities, primarily at Eletropaulo, Maritza and Gener729
Income taxes payable, net, and other taxes payable, primarily at Gener,Tietê and Eletropaulo266
Decreases in: 
Other liabilities, primarily due to higher deferrals into regulatory liabilities related to energy costs in 2016 compared to 2017 at Eletropaulo(363)
Other(29)
Total decrease in cash from changes in operating assets and liabilities$(643)


Investing Activities
Net cash used in investing activities increased by $631 million$1.4 billion for the threesix months ended SeptemberJune 30, 2017,2022, compared to the threesix months ended SeptemberJune 30, 2016, which was2021.
Investing Cash Flows
(in millions)
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•Cash used for short-term investing activities increased $407 million, primarily at AES Brasil as a result of higher net short-term investment purchases in 2022.
•Purchases of emissions allowances increased $205 million, primarily in Bulgaria as a result of increased demand and higher CO2 prices.
•Capital expenditures increased $660 million, discussed further below.

60 | The AES Corporation | June 30, 2022 Form 10-Q
Capital Expenditures
(in millions)
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•Growth expenditures increased $612 million, primarily driven by (in millions):
Decreases In: 
Capital expenditures (1)
$51
Short-term investments221
Increases in: 
Acquisitions of businesses, net of cash acquired, and equity method investees (related to the acquisitions of sPower and Alto Sertão II in 2017, partially offset by the acquisition of Distributed Energy in 2016)(554)
Restricted cash, debt service and other assets(318)
Other investing activities(31)
Total increase in net cash used in investing activities$(631)
_____________________________
(1)
Refer to the tables below for a breakout of capital expenditures by type and primary business driver.
Net cash usedan increase in investing activities increasedrenewable projects at AES Clean Energy and AES Brasil, and by $413 millionhigher TDSIC plan and renewable project investments at AES Indiana, partially offset by the timing of payments for the nine months ended September 30, 2017, comparedconstruction of the Alamitos Energy Center at Southland Energy in the prior year.
•Maintenance expenditures increased $49 million, primarily due to the nine months ended September 30, 2016, which was primarily driven by (in millions):timing of payments and increased expenditures at AES Indiana and AES Ohio.
Decreases in: 
Capital expenditures (1)
$183
Proceeds from the sales of businesses, net of cash sold, and equity method investments (primarily related to the sales of DPLER, Kelanitissa and Jordan in 2016 and the receipt of contingent sales proceeds in 2016 from the sale of Cameroon, partially offset by the sale of Kazakhstan CHPs in 2017)(118)
Short-term investments319
Increases in: 
Acquisitions of businesses, net of cash acquired, and equity method investees (related to the acquisitions of sPower and Alto Sertão II in 2017, partially offset by the acquisition of Distributed Energy in 2016)(545)
Restricted cash, debt service and other assets(188)
Other investing activities(64)
Total increase in net cash used in investing activities$(413)
_____________________________
(1)
Refer to the tables below for a breakout of capital expenditures by type and primary business driver.
Capital Expenditures
The following table summarizes the Company's capital expenditures for growth investments, maintenance, and environmental reported in investing cash activities for the periods indicated (in millions):
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 $ Change 2017 2016 $ Change
Growth Investments $(310) $(339) $29
 $(1,109) $(1,126) $17
Maintenance (137) (141) 4
 (423) (458) 35
Environmental (1)
 (17) (35) 18
 (55) (186) 131
Total capital expenditures $(464) $(515) $51
 $(1,587) $(1,770) $183
_____________________________
(1)
Includes both recoverable and non-recoverable environmental capital expenditures. See Non-GAAP Measures—Free Cash Flow for more information.
Cash used for capital•Environmental expenditures decreased by $51$1 million, for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, which was primarily driven by (in millions):with no material drivers.
Decreases in: 
Growth expenditures at the Andes SBU, primarily due to slower than anticipated productivity by construction contractors at Alto Maipo$137
Maintenance and environmental expenditures at the US SBU, primarily due to lower spending at IPALCO on the NPDES compliance and Harding Street refueling projects and decreased spending on CCR compliance19
Growth expenditures at the Eurasia SBU, primarily due to timing of payments to contractors for Unit 3 expansion at Masinloc18
Increases in: 
Growth expenditures at the US SBU, primarily due to increased spending at Southland repowering(130)
Other capital expenditures7
Total decrease in net cash used for capital expenditures$51


Cash used for capital expenditures decreased by $183 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, which was primarily driven by (in millions):
Decreases in: 
Growth expenditures at the Andes SBU, primarily due to the completion of the Cochrane project$85
Maintenance and environmental expenditures at the US SBU, primarily due to lower spending at IPALCO on the NPDES and MATS compliance and Harding Street refueling projects, decreased spending on CCR compliance and also, decreased spending at DPL on Stuart and Killen facilities due to planned plant closures152
Increases in: 
Growth expenditures at the US SBU, primarily due to increased spending at Southland repowering and various Distributed Energy projects, offset by lower spending related to CCGT at IPALCO(18)
Growth, maintenance and environmental expenditures at the Brazil SBU, primarily due to the quality indicator recovery plan and increase in productivity commitments at Eletropaulo, offset by absence of spending at Sul due to its sale in 2016(43)
Other capital expenditures7
Total decrease in net cash used for capital expenditures$183
Financing Activities
Net cash provided by financing activities increased $829 million$1.2 billion for the threesix months ended SeptemberJune 30, 2017,2022, compared to the threesix months ended SeptemberJune 30, 2016, which was2021.
Financing Cash Flows
(in millions)
aes-20220630_g14.jpg
See Notes 7—Debt and 11—Equityin Item 1—Financial Statements of this Form 10-Q for more information regarding significant debt and equity transactions.
•The $1.9 billion impact from non-recourse debt transactions is primarily drivendue to an increase in net borrowings in the Netherlands and Panama, the United Kingdom, AES Clean Energy, IPALCO, AES Ohio, AES Brasil, and AES Andes, and by (in millions):a decrease in net repayments in the Dominican Republic.
•The $515 million impact from Parent Company revolver transactions is primarily due to higher net borrowings in the current year.
•The $250 million impact from from non-recourse revolver transactions is primarily due to higher net borrowings in the Dominican Republic and at AES Clean Energy, partially offset by higher net repayments at AES Ohio.
•The $209 million impact from sales to noncontrolling interests is primarily due to proceeds received from the sales of ownership interests in Andes Solar 2a and Los Olmos as part of the Chile Renovables renewable partnership, and at AES Clean Energy from the sales of ownership in project companies to tax equity partners.

61 | The AES Corporation | June 30, 2022 Form 10-Q
Increases in: 
Borrowings under the revolving credit facilities, at the Parent Company$384
Issuance of recourse debt at the Parent Company (1)
204
Issuance of non-recourse debt, primarily at the US, MCAC, and Brazil SBUs (1)
204
Proceeds from sale of noncontrolling interests related to the sell down of Dominican Republic business in 201760
Other financing activities(23)
Total increase in net cash provided by financing activities$829
_____________________________
(1)
See Note 7—Debtin Item 1—Financial Statements of this Form 10-Q for more information regarding significant non-recourse debt transactions.
Net cash provided by financing activities increased $936 million for the nine months ended September 30, 2017, compared•The $1 billion impact from issuance of preferred stock is due to the nine months ended September 30, 2016, which was primarily driven by (in millions):issuance of Equity Units at the Parent Company in the prior year.
•The $523 million impact from acquisitions of noncontrolling interests is mainly due to the acquisition of an additional 32% ownership interest in AES Andes.
Decreases in: 
Proceeds from the sale of redeemable stock of subsidiaries at IPALCO$(134)
Increases in: 
Borrowings under the revolving credit facilities, primarily at the Parent Company and net decrease in repayment at the US SBU415
Issuance of non-recourse debt, primarily at the Brazil, MCAC, and US SBUs (1)
574
Proceeds from sale of noncontrolling interests related to the sell down of Dominican Republic business in 201760
Other financing activities21
Total increase in net cash provided by financing activities$936
_____________________________
(1)
See Note 7—Debtin Item 1—Financial Statements of this Form 10-Q for more information regarding significant non-recourse debt transactions.
Segment Operating Cash Flow Analysis
Operating Cash Flow by SBU (1)
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 $ Change 2017 2016 $ Change
US SBU $241
 $291
 $(50) $544
 $691
 $(147)
Andes SBU 110
 157
 (47) 338
 300
 38
Brazil SBU 194
 173
 21
 463
 582
 (119)
MCAC SBU 141
 142
 (1) 275
 202
 73
Eurasia SBU 188
 171
 17
 475
 729
 (254)
Corporate and Other (139) (115) (24) (406) (322) (84)
Total SBUs $735
 $819
 $(84) $1,689
 $2,182
 $(493)
_____________________________
(1)
Operating cash flow as presented above include the effects of intercompany transactions with other segments except for interest, tax sharing, charges for management fees and transfer pricing.



US SBU
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The decrease in Operating Cash Flow of $50 million was driven primarily by the following (in millions):
US SBU Q3 2017 vs. Q3 2016 (QTD)  
Lower operating margin, net of lower depreciation of $4 million $(9)
Higher payments for inventory purchases primarily due to inventory optimization efforts at DPL and IPL that occurred in 2016 (20)
Timing of payments for general accounts payable at DPL (13)
Timing of interest payments primarily at DPL and IPL (13)
Other 5
Total US SBU Operating Cash Decrease $(50)

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The decrease in Operating Cash Flow of $147 million was driven primarily by the following (in millions):
US SBU Q3 2017 vs. Q3 2016 (YTD)  
Lower operating margin, net of lower depreciation of $26 $(41)
Higher payments for inventory purchases primarily due to inventory optimization efforts at DPL and IPL that occurred in 2016 (66)
Timing of payments for purchased power and general accounts payable at DPL (42)
Timing of interest payments primarily at DPL and IPL (19)
Lower collections at DPL, primarily due to the settlement of receivable balances at DPLER upon its sale in Q1 2016 (11)
Higher collections at IPL, primarily due to higher A/R balances in December 2016 resulting from favorable weather and the 2016 rate order 32
Total US SBU Operating Cash Decrease $(147)


ANDES SBU
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The decrease in Operating Cash Flow of $47 million was driven primarily by the following (in millions):
Andes SBU Q3 2017 vs. Q3 2016 (QTD)  
Lower operating margin, net of increased depreciation of $7 $(45)
Increase in other working capital requirements primarily due to delay in collections at Gener (59)
Increase in collections of financing receivables in Argentina, resulting primarily from the commencement of commercial operations at the Guillermo Brown plant and the impact of major maintenance in 2016 44
Environmental tax accruals in Chile impacting margin but not operating cash flow 13
Total Andes SBU Operating Cash Decrease $(47)
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The increase in Operating Cash Flow of $38 million was driven primarily by the following (in millions):
Andes SBU Q3 2017 vs. Q3 2016 (YTD)  
Higher operating margin, net of increased depreciation of $32 $18
Lower tax payments at Chivor and Argentina 57
Increase in collections of financing receivables in Argentina, resulting primarily from the commencement of commercial operations at the Guillermo Brown plant 50
Environmental tax accruals in Chile impacting margin but not operating cash flow 37
Increase in other working capital requirements primarily due to delay in collections at Gener (60)
Lower collections at Chivor, primarily due higher receivables in Q1 2016 resulting from higher sales in Q4 2015 (35)
Increase in interest payments to reflect the cessation of capitalization of interest for the Cochrane project (14)
Lower VAT refunds, primarily at Alto Maipo and Cochrane (14)
Other (1)
Total Andes SBU Operating Cash Increase $38



BRAZIL SBU
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The increase in Operating Cash Flow of $21 million was driven primarily by the following (in millions):
Brazil SBU Q3 2017 vs. Q3 2016 (QTD)  
Higher operating margin, net of increased depreciation of $11 $65
Lower payments for energy purchases at Eletropaulo due to lower energy costs and lower regulatory charges 166
Timing of payments at Tietê for energy to be resold 24
Lower collections of costs deferred in net regulatory assets at Eletropaulo due to higher energy costs (181)
Higher accounts receivable balances at Eletropaulo due primarily to higher tariffs in 2017 (22)
Lack of AES Sul’s operating cash flow, which was sold in 2016 (13)
Lower collections at Tietê, due to higher energy sales under bilateral contracts (7)
Higher interest payments resulting from the assumption of debt for the acquisition of Alto Sertão II (6)
Other (5)
Total Brazil SBU Operating Cash Increase $21

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The decrease in Operating Cash Flow of $119 million was driven primarily by the following (in millions):
Brazil SBU Q3 2017 vs. Q3 2016 (YTD)  
Higher operating margin, net of increased depreciation of $30 $167
Higher collections in 2016 of costs deferred in net regulatory assets at Eletropaulo as a result of unfavorable hydrology in prior periods (556)
Lower collections of accounts receivable at Eletropaulo due primarily to higher tariff flags in 2016 (193)
Lack of AES Sul’s operating cash flow, which was sold in 2016 (68)
Lower collections at Tietê, due to higher energy sales under bilateral contracts (20)
Increase in pension contributions at Eletropaulo (13)
Timing of payments for energy purchases at Eletropaulo due to lower energy costs and lower regulatory charges 401
Receipt of YPF legal settlement at Uruguaiana 60
Lower tax payments at Tietê 58
Timing of payments at Tietê for energy to be resold 32
Lower interest payments at Tietê 11
Other 2
Total Brazil SBU Operating Cash Decrease $(119)


MCAC SBU
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The decrease in Operating Cash Flow of $1 million was driven primarily by the following (in millions):
MCAC SBU Q3 2017 vs. Q3 2016 (QTD)  
Higher operating margin, net of increased depreciation of $3 $28
Higher working capital requirements in the Dominican Republic, primarily due to an increase in days outstanding of accounts receivable (68)
Lower working capital requirements in El Salvador, primarily due to lower energy pricing reducing overall accounts receivable balances and an increase in Accounts Payable days outstanding related to energy purchases 25
Lower working capital requirements in Puerto Rico, primarily due to higher collections and lower sales in September 2017 due to Hurricane Maria 19
Other (5)
Total MCAC SBU Operating Cash Decrease $(1)

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The increase in Operating Cash Flow of $73 million was driven primarily by the following (in millions):
MCAC SBU Q3 2017 vs. Q3 2016 (YTD)  
Higher operating margin, net of increased depreciation of $8 $68
Lower working capital requirements in AES Puerto Rico, primarily due to higher collections 36
Lower tax payments in El Salvador 16
Lower tax payments in the Dominican Republic, primarily due to lower withholding taxes on dividends paid in 2016 to AES affiliates 10
Higher working capital requirements in the Dominican Republic, primarily due to an increase in accounts receivable days outstanding at Itabo (42)
Higher interest payments in the Dominican Republic, primarily due to an increase in net debt and higher average interest rates (13)
Other (2)
Total MCAC SBU Operating Cash Increase $73


EURASIA SBU
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The increase in Operating Cash Flow of $17 million was driven primarily by the following (in millions):
Eurasia SBU Q3 2017 vs. Q3 2016 (QTD)  
Increase in C02 allowances at Maritza due to decreased prices in 2016
 $9
Lower working capital requirements at Kilroot primarily due to a decrease in rates and net VAT payments received in 2017 8
Total Eurasia SBU Operating Cash Increase $17

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The decrease in Operating Cash Flow of $254 million was driven primarily by the following (in millions):
Eurasia SBU Q3 2017 vs. Q3 2016 (YTD)  
Higher operating margin, net of lower depreciation of $16 $19
Lower collections at Maritza, primarily due to the collection of overdue receivables from NEK in 2016 (376)
Lower payments to fuel suppliers at Maritza, due primarily to the settlement of overdue invoices in 2016 pursuant to the tripartite agreement with NEK and MMI 73
Decrease in service concession asset expenditures at Mong Duong 22
Lower working capital requirements at Masinloc due to the timing of payments for coal purchases 19
Increase in C02 allowances at Maritza due to decreased prices in 2016
 17
Higher mark-to-market valuation of commodity swaps at Kilroot impacting margin but not operating cash flow (9)
Lower coal purchases at Mong Duong due to the reserve shutdown in 2017 (9)
Other (10)
Total Eurasia SBU Operating Cash Decrease $(254)





CORPORATE AND OTHER

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The decrease in Operating Cash Flow of $24 million was driven primarily by the following (in millions):
Corporate and Other Q3 2017 vs. Q3 2016 (QTD)  
Timing of insurance recoveries $(15)
Lower payments for interest expense, primarily due to timing of refinancings and draws on Revolver debt 10
Other (19)
Total Corporate and Other Operating Cash Decrease $(24)

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The decrease in Operating Cash Flow of $84 million was driven primarily by the following (in millions):
Corporate and Other Q3 2017 vs. Q3 2016 (YTD)  
Timing of intercompany settlements with SBUs $(39)
Higher realized losses on oil derivatives (22)
Higher payments for people-related costs and associated payroll taxes (14)
Other (9)
Total Corporate and Other Operating Cash Decrease $(84)



Parent Company Liquidity
The following discussion is included as a useful measure of the liquidity available to The AES Corporation, or the Parent Company, given the non-recourse nature of most of our indebtedness. Parent Company Liquidity, as outlined below, is a non-GAAP measure and should not be construed as an alternative to cashCash and cash equivalents, which is determined in accordance with GAAP as a measure of liquidity. Cash and cash equivalents is disclosed in the Condensed Consolidated Statements of Cash Flows.GAAP. Parent Company Liquidity may differ from similarly titled measures used by other companies. The principal sources of liquidity at the Parent Company level are dividends and other distributions from our subsidiaries, including refinancing proceeds, proceeds from debt and equity financings at the Parent Company level, including availability under our revolving credit facility, and proceeds from asset sales. Cash requirements at the Parent Company level are primarily to fund interest and principal repayments of debt, construction commitments, other equity commitments, common stock repurchases, acquisitions, taxes, Parent Company overhead and development costs, and dividends on common stock.
The Company defines Parent Company Liquidity as cash available to the Parent Company, including cash at qualified holding companies, plus available borrowings under our existing credit facility. The cash held at qualified holding companies represents cash sent to subsidiaries of the Company domiciled outside of the U.S. Such subsidiaries have no contractual restrictions on their ability to send cash to the Parent Company. Parent Company Liquidity is reconciled to its most directly comparable GAAP financial measure, cashCash and cash equivalents, at the periods indicated as follows (in millions):
September 30, 2017 December 31, 2016June 30, 2022December 31, 2021
Consolidated cash and cash equivalents$1,398
 $1,305
Consolidated cash and cash equivalents$1,075 $943 
Less: Cash and cash equivalents at subsidiaries(1,317) (1,205)Less: Cash and cash equivalents at subsidiaries(1,046)(902)
Parent Company and qualified holding companies’ cash and cash equivalents81
 100
Parent Company and qualified holding companies’ cash and cash equivalents29 41 
Commitments under Parent Company credit facilities1,100
 800
Less: Letters of credit under the credit facilities(9) (6)
Less: Borrowings under the credit facilities(540) —
Borrowings available under Parent Company credit facilities551
 794
Commitments under the Parent Company credit facilityCommitments under the Parent Company credit facility1,250 1,250 
Less: Letters of credit under the credit facilityLess: Letters of credit under the credit facility(26)(48)
Less: Borrowings under the credit facilityLess: Borrowings under the credit facility(810)(365)
Borrowings available under the Parent Company credit facilityBorrowings available under the Parent Company credit facility414 837 
Total Parent Company Liquidity$632
 $894
Total Parent Company Liquidity$443 $878 
The Company utilizes its Parent Company credit facility for short term cash needs to bridge the timing of distributions from its subsidiaries throughout the year.
The Parent Company paid dividends of $0.12$0.1580 per outstanding share to its common stockholders during each of the first second and thirdsecond quarters of 20172022 for dividends declared in December 2016,2021 and February 2017, and July 2017,2022, respectively. While we intend to continue payment of dividends, and believe we will have sufficient liquidity to do so, we can provide no assurance that we will continue to pay dividends, or if continued, the amount of such dividends.
Recourse Debt
Our total recourse debt was $5.0$4.2 billion and $4.7$3.8 billion as of SeptemberJune 30, 20172022 and December 31, 2016,2021, respectively. See Note 7—Debt in Item 1.—Financial Statements of this Form 10-Q and Note 11—Debt in Item 8.—Financial Statements and Supplementary Data of our 20162021 Form 10-K for additional detail.
While weWe believe that our sources of liquidity will be adequate to meet our needs for the foreseeable future, thisfuture. This belief is based on a number of material assumptions, including, without limitation, assumptions about our ability to access the capital markets, the operating and financial performance of our subsidiaries, currency exchange rates, power market pool prices, and the ability of our subsidiaries to pay dividends. In addition, our subsidiaries’ ability to declare and pay cash dividends to us (at the Parent Company level) is subject to certain limitations contained in loans, governmental provisions and other agreements. We can provide no assurance that these sources will be available when needed or that the actual cash requirements will not be greater than anticipated. We have met our interim needs for shorter-term and working capital financing at the Parent Company level with our senior securedrevolving credit facility. See Item 1A.—Risk Factors—The AES Corporation is a holding company and itsCorporation’s ability to make payments on its outstanding indebtedness including its public debt securities, is dependent upon the receipt of funds from itsour subsidiaries by way of dividends, fees, interest, loans or otherwise of the Company’s 20162021 Form 10-K for additional information.
Various debt instruments at the Parent Company level, including our senior securedrevolving credit facility, contain certain restrictive covenants. The covenants provide for, — among other items, — limitations on other indebtedness;indebtedness, liens, investments and guarantees; limitations on dividends, stock repurchases and other equity transactions; restrictions

62 | The AES Corporation | June 30, 2022 Form 10-Q
and limitations on mergers and acquisitions, sales of assets, leases, transactions with affiliates and off-balance sheet and derivative arrangements; maintenance of certain financial ratios; and financial and other reporting requirements. As of SeptemberJune 30, 2017,2022, we were in compliance with these covenants at the Parent Company level.
Non-Recourse Debt
While the lenders under our non-recourse debt financings generally do not have direct recourse to the Parent


Company, defaults thereunder can still have important consequences for our results of operations and liquidity, including, without limitation:
•reducing our cash flows as the subsidiary will typically be prohibited from distributing cash to the Parent Company during the time period of any default;
•triggering our obligation to make payments under any financial guarantee, letter of credit, or other credit support we have provided to or on behalf of such subsidiary;
•causing us to record a loss in the event the lender forecloses on the assets; and
•triggering defaults in our outstanding debt at the Parent Company.
For example, our senior securedrevolving credit facility and outstanding debt securities at the Parent Company include events of default for certain bankruptcy-related events involving material subsidiaries. In addition, our revolving credit agreement at the Parent Company includes events of default related to payment defaults and accelerations of outstanding debt of material subsidiaries.
Some of our subsidiaries are currently in default with respect to all or a portion of their outstanding indebtedness. The total non-recourse debt classified as current in the accompanying Condensed Consolidated Balance Sheets amounts to $2.3$2.2 billion. The portion of current debt related to such defaults was $1.0 billion$212 million at SeptemberJune 30, 2017,2022, all of which was non-recourse debt related to three subsidiaries — Alto Maipo, AES Puerto Rico, AES Ilumina, and AES Ilumina.Jordan Solar. An additional $75 million of debt in default exists at the subsidiary AES Jordan PSC which was classified as a current held-for-sale liability at June 30, 2022. None of the defaults are payment defaults, but are instead technical defaults triggered by failure to comply with other covenants or other conditions contained in the non-recourse debt documents, of which $205 million is due to the bankruptcy of the offtaker. See Note 7—Debt in Item 1.—Financial Statementsof this Form 10-Q for additional detail.
None of the subsidiaries that are currently in default are subsidiaries that met the applicable definition of materiality under AES’ corporatethe Parent Company’s debt agreements as of SeptemberJune 30, 2017,2022, in order for such defaults to trigger an event of default or permit acceleration under AES’the Parent Company’s indebtedness. However, as a result of additional dispositions of assets, other significant reductions in asset carrying values or other matters in the future that may impact our financial position and results of operations or the financial position of the individual subsidiary, it is possible that one or more of these subsidiaries could fall within the definition of a “material subsidiary” and thereby upon an acceleration trigger an event of default and possible acceleration of the indebtedness under the Parent Company’s outstanding debt securities. A material subsidiary is defined in the Parent Company’s senior securedrevolving credit facility as any business that contributed 20% or more of the Parent Company’s total cash distributions from businesses for the four most recently ended fiscal quarters. As of SeptemberJune 30, 2017,2022, none of the defaults listed above, individually or in the aggregate, results in or is at risk of triggering a cross-default under the recourse debt of the Parent Company.
Critical Accounting Policies and Estimates
The condensed consolidated financial statements of AES are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented.
The Company’s significant accounting policies are described in Note 1—1 — General and Summary of Significant Accounting Policies of our 20162021 Form 10-K. The Company’s critical accounting estimates are described in Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 20162021 Form 10-K. An accounting estimate is considered critical if the estimate requires management to make an assumption about matters that were highly uncertain at the time the estimate was made, different estimates reasonably could have been used, or if changes in the estimate that would have a material impact on the Company’s financial condition or results of operations are reasonably likely to occur from period to period. Management believes that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The Company has reviewed and determined that these remain as critical accounting policies as of and for the ninesix months ended SeptemberJune 30, 2017.2022.

63 | The AES Corporation | June 30, 2022 Form 10-Q
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Overview Regarding Market Risks —
Our businesses are exposed to and proactively manage market risk. Our primary market risk exposure is to the price of commodities, particularly electricity, oil, natural gas, coal, and environmental credits. In addition, our businesses are exposed to lower electricity prices due to increased competition, including from renewable sources such as wind and solar, as a result of lower costs of entry and lower variable costs. We operate in multiple countries and as such, are subject to volatility in exchange rates at varying degrees at the subsidiary level and between our functional currency, the U.S. Dollar,USD, and currencies of the countries in which we operate. We are also exposed to interest rate fluctuations due to our issuance of debt and related financial instruments.


The disclosures presented in this Item 3 are based upon a number of assumptions; actual effects may differ. The safe harbor provided in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 shall apply to the disclosures contained in this Item 3. For further information regarding market risk, see Item 1A.—Risk Factors, Our financial position and results of operations may fluctuate significantly due to fluctuationsFluctuations in currency exchange rates experienced atmay impact our foreign operations;Our businessesfinancial results and position;Wholesale power prices may incur substantial costs and liabilities and be exposed to priceexperience significant volatility as a result of risks associated with the electricityin our markets which could have a material adverse effect onimpact our financial performance;operations and opportunities for future growth;We may not be adequately hedged against our exposure to changes in commodity prices or interest ratesrates; and Certain of our businesses are sensitive to variations in weather and hydrology of the 20162021 Form 10-K.
Commodity Price Risk —
Although we prefer to hedge our exposure to the impact of market fluctuations in the price of electricity, fuels, and environmental credits, some of our generation businesses operate under short-term sales or under contract sales that leave an unhedged exposure on some of our capacity or through imperfect fuel pass-throughs. In our utility businesses, we may be exposed to commodity price movements depending on our excess or shortfall of generation relative to load obligations and sharing or pass-through mechanisms. These businesses subject our operational results to the volatility of prices for electricity, fuels, and environmental credits in competitive markets. We employ risk management strategies to hedge our financial performance against the effects of fluctuations in energy commodity prices. The implementation of these strategies can involve the use of physical and financial commodity contracts, futures, swaps, and options. At our generation businesses for 2017-2019, 75% to 80% of our variable margin is hedged against changes in commodity prices. At our utility businesses for 2017-2019, 85% to 90% of our variable margin is insulated from changes in commodity prices.
The portion of our sales and purchases that are not subject to such agreements or contracted businesses where indexation is not perfectly matched to business drivers will be exposed to commodity price risk. When hedging the output of our generation assets, we utilize contract sales that lock in the spread per MWh between variable costs and the price at which the electricity can be sold.
AES businesses will see changes in variable margin performance as global commodity prices shift. For 2017,As of June 30, 2022, we project pretaxpre-tax earnings exposure on a 10% (uncorrelated) move in commodity prices would be approximately a $10 million gain for power, a $5 million gain for U.S. power (DPL), and less thancoal, a $5 million loss for oil, and a $10 million loss for natural gas, oil, and coal, respectively.gas. Our estimates exclude correlation of oil with coal or natural gas. For example, a decline in oil or natural gas prices can be accompanied by a decline in coal price if commodity prices are correlated. In aggregate, the Company’s downside exposure occurs with lower power, higher oil, lowerhigher natural gas, and higher coal prices. Exposures at individual businesses will change as new contracts or financial hedges are executed, and our sensitivity to changes in commodity prices generally increases in later years with reduced hedge levels at some of our businesses.
Commodity prices affect our businesses differently depending on the local market characteristics and risk management strategies. Spot power prices, contract indexation provisions, and generation costs can be directly or indirectly affected by movements in the price of natural gas, oil, and coal. We have some natural offsets across our businesses such that low commodity prices may benefit certain businesses and be a cost to others. Exposures are not perfectly linear or symmetric. The sensitivities are affected by a number of local or indirect market factors. Examples of these factors include hydrology, local energy market supply/demand balances, regional fuel supply issues, regional competition, bidding strategies, and regulatory interventions such as price caps. Operational flexibility changes the shape of our sensitivities. For instance, certain power plants may limit downside exposure by reducing dispatch in low market environments. Volume variation also affects our commodity exposure. The volume sold under contracts or retail concessions can vary based on weather and economic conditions, resulting in a higher or lower volume of sales in spot markets. Thermal unit availability and hydrology can affect the generation output available for sale and can affect the marginal unit setting power prices.
In the US and Utilities SBU, the generation businesses are largely contracted, but may have residual risk to the extent contracts are not perfectly indexed to the business drivers. IPL primarily generatesAt Southland, our existing once-through cooling generation units (“Legacy Assets”) have been requested to continue operating beyond their current retirement date

64 | The AES Corporation | June 30, 2022 Form 10-Q
and the OTC policy establishing retirement deadlines has been extended for between one and three years. These assets have contracts in capacity and have seen incremental value in energy to meet its retail customer demand however it opportunistically sells surplus economic energy into wholesale markets at market prices. Additionally, at DPL, competitive retail markets permit our customers to select alternative energy suppliers or elect to remain in aggregated customer pools for which energy is supplied by third party suppliers through a competitive auction process. DPL participates in these auctions held by other utilities and sells the remainder of its economic energy into the wholesale market. Given that natural gas-fired generators generally get energy prices for many markets, higher natural gas prices tend to expand our coal fixed margins. Our non-contracted generation margins are impacted by many factors, including the growth in natural gas-fired generation plants, new energy supply from renewable sources, and increasing energy efficiency.revenues.
In the AndesSouth America SBU, our business in Chile owns assets in the central and northern regions of the country and has a portfolio of contract sales in both. In the central region, the contract sales generally cover the efficient generation fromThe majority of our coal-fired and hydroelectric assets. Any residual spot price risk will primarily be driven by the


amountPPAs include mechanisms of hydrological inflows. In the case of low hydroelectric generation, spot price exposure is capped by the ability to dispatch our natural gas/diesel assetsindexation that adjust the price of which dependsenergy based on fuel pricing atfluctuations in the time required. There is a small amountprice of coal, generationwith the specific indices and timing varying by contract, in order to mitigate changes in the northern region that isprice of fuel. For the portion of our contracts not covered byindexed to the portfolioprice of contract sales and therefore subjectcoal, we have implemented a hedging strategy based on international coal financial instruments for up to spot price risk. In both regions, generators with oil or oil-linked fuel generally set power prices.three years. In Colombia, we operate under a short-termshorter-term sales strategy and have commoditywith spot market exposure to unhedgedfor uncontracted volumes. Because we own hydroelectric assets there, contracts are not indexed to fuel.
In the Additionally, in Brazil, SBU, the hydroelectric generating facility is covered by contract sales. Under normal hydrological volatility, spot price risk is mitigated through a regulated sharing mechanism across all hydroelectric generators in the country. Under drier conditions, the sharing mechanism may not be sufficient to cover the business' contract position, and therefore it may have to purchase power at spot prices driven by the cost of thermal generation.
In the MCAC SBU, our businesses have commodity exposure on unhedged volumes. Panama is highly contracted under a portfolio of fixed volume contract sales.financial and load-following PPA type structures, exposing the business to hydrology-based variation. To the extent hydrological inflows are greater than or less than the contract sales volume,volumes, the business will be sensitive to changes in spot power prices which may be driven by oil and natural gas prices in some time periods. In the Dominican Republic, we own natural gas-fired assets contracted under a portfolio of contract sales, and a coal-fired asset contracted with a single contract, and both contract and spot prices may move with commodity prices. Additionally, the contract levels do not always match our generation availability andavailability; as such, our assets may be sellers ofselling the excess above contract levels at spot prices in excess of contract levels or a net buyerbuy the deficit in the spot market to satisfy contractcontractual obligations.
In the Eurasia SBU, our Kilroot facility operates on a short-term sales strategy. To the extent that sales are unhedged, the commodity risk at our Kilroot business is to the clean dark spread, which is the difference between electricity priceassets operating in Vietnam and our coal-based variable dispatch cost, including emissions. Natural gas-fired generators set power prices for many periods, so higher natural gas prices generally expand margins and higher coal or emissions prices reduce them. Similarly, increased wind generators displaces higher cost generation, reducing Kilroot's margins, and vice versa. Our Masinloc business is a coal-fired generation facility which hedges its output under a portfolio of contract sales that are indexed to fuel prices, with generation in excess of contract volume or shortfalls of generation relative to contract volumes settled in the spot market. Low oil prices may be a driver of margin compression since oil affects spot power sale prices sold in the spot market. Our Mong Duong business hasBulgaria have minimal exposure to commodity price risk as it has no or minor merchant exposure and fuel is subject to a pass-through mechanism.
Foreign Exchange Rate Risk —
In the normal course of business, we are exposed to foreign currency risk and other foreign operations risks that arise from investments in foreign subsidiaries and affiliates. A key component of these risks stems from the fact that some of our foreign subsidiaries and affiliates utilize currencies other than our consolidated reporting currency, the U.S. Dollar ("USD").USD. Additionally, certain of our foreign subsidiaries and affiliates have entered into monetary obligations in the USD or currencies other than their own functional currencies. Certain of our foreign subsidiaries calculate and pay taxes in currencies other than their own functional currency.We have varying degrees of exposure to changes in the exchange rate between the USD and the following currencies: Argentine Peso, British Pound,peso, Brazilian Real,real, Chilean Peso,peso, Colombian Peso,peso, Dominican Peso,peso, Euro, Indian Rupee,and Mexican Peso and Philippine Peso.peso. These subsidiaries and affiliates have attempted to limit potential foreign exchange exposure by entering into revenue contracts that adjust to changes in foreign exchange rates. We also use foreign currency forwards, swaps, and options, where possible, to manage our risk related to certain foreign currency fluctuations.
AES enters into cash flowforeign currency hedges to protect economic value of the business and minimize the impact of foreign exchange rate fluctuations to AESAES’ portfolio. While protecting cash flows, the hedging strategy is also designed to reduce forward lookingforward-looking earnings foreign exchange volatility. Due to variation of timing and amount between cash distributiondistributions and earnings exposure, the hedge impact may not fully cover the earnings exposure on a realized basis, which could result in greater volatility in earnings. The largest foreign exchange risks over a 12-month forward- lookingthe remaining period of 2022 stem from the following currencies: Brazilian Real, Euro,real, Colombian Peso, British Pound,peso, and Kazakhstani Tenge.Euro. As of SeptemberJune 30, 2017,2022, assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries exposed to movement in the exchange rate of the Euro, Brazilian Real, British Pound, Colombian Peso,real, and EuroColombia peso each are projected to be reducedimpacted by less than a $5 million for 2017.loss. These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for 20172022 coming from the respective subsidiaries exposed to the currencies listed above, net of the impact of outstanding hedges and holding all other variables constant. The numbers presented above are net of any transactional gains/gains or losses. These sensitivities may change in the future as new hedges are executed or existing hedges are unwound. Additionally, updates to the forecasted cash distributions exposed to foreign exchange risk may result in further


modification. The sensitivities presented do not capture the impacts of any administrative market restrictions or currency inconvertibility.
Interest Rate Risk — Risks
We are exposed to risk resulting from changes in interest rates as a result of our issuance of variable and fixed-rate debt, as well as interest rate swap, cap, floor, and option agreements.

65 | The AES Corporation | June 30, 2022 Form 10-Q
Decisions on the fixed-floating debt mix are made to be consistent with the risk factors faced by individual businesses or plants. Depending on whether a plant’s capacity payments or revenue stream is fixed or varies with inflation, we partially hedge against interest rate fluctuations by arranging fixed-rate or variable-rate financing. In certain cases, particularly for non-recourse financing, we execute interest rate swap, cap, and floor agreements to effectively fix or limit the interest rate exposure on the underlying financing. Most of our interest rate risk is related to non-recourse financings at our businesses.
As of SeptemberJune 30, 2017,2022, the portfolio’s pretaxpre-tax earnings exposure for 20172022 to a one-time 100-basis-point increase in interest rates for our Argentine Peso,peso, Brazilian Real,real, Chilean peso, Colombian Peso,peso, Euro, and USD denominated debt would be approximately $10less than $15 million on interest expense for the debt denominated in these currencies. These amounts do not take into account the historical correlation between these interest rates.
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 SecuritiesExchange Act, of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2017,2022, 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.



66 | The AES Corporation | June 30, 2022 Form 10-Q
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in certain claims, suits and legal proceedings in the normal course of business. The Company has accrued for litigation and claims wherewhen it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company believes, based upon information it currently possesses and taking into account established reserves for estimated liabilities and its insurance coverage, that the ultimate outcome of these proceedings and actions is unlikely to have a material adverse effect on the Company's condensed consolidated financial statements. It is reasonably possible, however, that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material, but cannot be estimated as of SeptemberJune 30, 2017.
In 1989, Centrais Elétricas Brasileiras S.A. (“Eletrobrás”) filed suit in the Fifth District Court in the state of Rio de Janeiro (“FDC”) against Eletropaulo Eletricidade de São Paulo S.A. (“EEDSP”) relating to the methodology for calculating monetary adjustments under the parties' financing agreement. In April 1999, the FDC found in favor of Eletrobrás and in September 2001, Eletrobrás initiated an execution suit in the FDC to collect approximately R$2.03 billion ($641 million) from Eletropaulo as estimated by Eletropaulo (or approximately R$2.76 billion ($872 million) as of June 2017, as estimated by Eletrobrás, and possibly legal costs) and a lesser amount from an unrelated company, Companhia de Transmissão de Energia Elétrica Paulista (“CTEEP”) (Eletropaulo and CTEEP were spun off of EEDSP pursuant to its privatization in 1998). In November 2002, the FDC rejected Eletropaulo's defenses in the execution suit. On appeal, the case was remanded to the FDC for further proceedings to determine whether Eletropaulo is liable for the debt. In December 2012, the FDC issued a decision that Eletropaulo is liable for the debt. However, that decision was annulled on appeal and the case was remanded to the FDC for further proceedings. On remand at the FDC, the FDC appointed an accounting expert to analyze the issues in the case. In September 2015, the expert issued a preliminary report concluding that Eletropaulo is liable for the debt, without quantifying the debt. Eletropaulo thereafter submitted questions to the expert and reports rebutting the expert's preliminary report (“Rebuttal Reports”). In April 2016, Eletrobrás requested that the expert determine both the criteria to calculate the debt and the amount of the debt. In April 2017, the FDC ordered the expert to comment on Eletropaulo’s Rebuttal Reports and to analyze the questions presented by the parties. It is unclear when the expert will issue his comments. Pursuant to a memorandum of understanding, in October 2017, Eletropaulo and Eletrobrás requested that the FDC suspend the case for 60 days to allow Eletropaulo and Eletrobrás to engage in settlement discussions. If settlement is achieved, it will be subject to the approval of the Eletropaulo Board of Directors and the majority of non-AES board members of Eletropaulo. If settlement is not achieved, the case will proceed and, ultimately, a decision will be issued by the FDC, which will be free to reject or adopt in whole or in part the expert's report. If the FDC again determines that Eletropaulo is liable for the debt, Eletrobrás will be entitled to resume the execution suit in the FDC. If Eletrobrás does so, Eletropaulo will be required to provide security for its alleged liability. In addition, in February 2008, CTEEP filed a lawsuit in the FDC against Eletrobrás and Eletropaulo seeking a declaration that CTEEP is not liable for any debt under the financing agreement. In June 2016, the FDC dismissed CTEEP’s lawsuit, on the ground that CTEEP’s claim would be decided in the FDC lawsuit initiated by Eletrobrás. Eletropaulo believes it has meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts. If Eletrobrás requests the seizure of the security noted above and the FDC grants such request (or if a court determines that Eletropaulo is liable for the debt), Eletropaulo's results of operations may be materially adversely affected and, in turn, the Company's results of operations may also be materially adversely affected. Eletropaulo and the Company could face a loss of earnings and/or cash flows and may have to provide loans or equity to support affected businesses or projects, restructure them, write down their value, and/or face the possibility that Eletropaulo cannot continue operations or provide returns consistent with our expectations, any of which could have a material impact on the Company.
In September 1996, a public civil action was asserted against Eletropaulo and Associação Desportiva Cultural Eletropaulo (the “Associação”) relating to alleged environmental damage caused by construction of the Associação near Guarapiranga Reservoir. The initial decision that was upheld by the Appellate Court of the state of São Paulo in 2006 found that Eletropaulo should repair the alleged environmental damage by demolishing certain construction and reforesting the area, and either sponsor an environmental project which would cost approximately R$2 million ($632 thousand) as of December 31, 2015, or pay an indemnification amount of approximately R$15 million ($5 million). Eletropaulo has appealed this decision to the Supreme Court and the Supreme Court affirmed the decision of the Appellate Court. Following the Supreme Court's decision, the case has been remanded to the court of first instance for further proceedings and to monitor compliance by the defendants with the terms of the decision. In January 2014, Eletropaulo informed the court that it intended to comply with the court's decision by donating a green area inside a protection zone and restore watersheds, the aggregate cost of which is expected to be


approximately R$2 million ($632 thousand). Eletropaulo also requested that the court add the current owner of the land where the Associação facilities are located, Empresa Metropolitana de Águas e Energia S.A. (“EMAE”), as a party to the lawsuit and order EMAE to perform the demolition and reforestation aspects of the court's decision. In July 2014, the court requested the Secretary of the Environment for the State of São Paulo to notify the court of its opinion regarding the acceptability of the green areas to be donated by Eletropaulo to the State of São Paulo. In January 2015, the Secretary of the Environment for the State of São Paulo notified Eletropaulo and the court that it would not accept Eletropaulo's proposed green areas donation. Instead of such green areas donation, the Secretary of the Environment proposed in March 2015 that Eletropaulo undertake an environmental project to offset the alleged environmental damage. Since March 2015, Eletropaulo and the Secretary of Environment have been working together to define an environmental project, which will be submitted for approval by the Public Prosecutor. The cost of such project is currently estimated to be R$3 million ($1 million).2022.
In December 2001, Grid Corporation of Odisha (“GRIDCO”) served a notice to arbitrate pursuant to the Indian Arbitration and Conciliation Act of 1996 on the Company, AES Orissa Distribution Private Limited (“AES ODPL”), and Jyoti Structures (“Jyoti”) pursuant to the terms of the shareholders agreement between GRIDCO, the Company, AES ODPL, Jyoti and the Central Electricity Supply Company of Orissa Ltd. (“CESCO”), an affiliate of the Company. In the arbitration, GRIDCO asserted that a comfort letter issued by the Company in connection with the Company's indirect investment in CESCO obligates the Company to provide additional financial support to cover all of CESCO's financial obligations to GRIDCO. GRIDCO appeared to be seeking approximately $189 million in damages, plus undisclosed penalties and interest, but a detailed alleged damage analysis was not filed by GRIDCO. The Company counterclaimed against GRIDCO for damages. In June 2007, a 2-to-1 majority of the arbitral tribunal rendered its award rejecting GRIDCO's claims and holding that none of the respondents, the Company, AES ODPL, or Jyoti, had any liability to GRIDCO. The respondents' counterclaims were also rejected. A majority of the tribunal later awarded the respondents, including the Company, some of their costs relating to the arbitration. GRIDCO filed challenges of the tribunal's awards with the local Indian court. GRIDCO's challenge of the costs award has been dismissed by the court, but its challenge of the liability award remains pending. A hearing on the liability award is scheduled for November 2, 2017.has not taken place to date. The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
In March 2003, the office of the Federal Public Prosecutor for the State of São Paulo, Brazil (“MPF”) notified Eletropaulo that it had commenced an inquiry into the BNDES financings provided to AES Elpa and AES Transgás, the rationing loan provided to Eletropaulo, changes in the control of Eletropaulo, sales of assets by Eletropaulo, and the quality of service provided by Eletropaulo to its customers. The MPF requested various documents from Eletropaulo relating to these matters. In July 2004, the MPF filed a public civil lawsuit in the Federal Court of São Paulo (“FCSP”) alleging that BNDES violated Law 8429/92 (the Administrative Misconduct Act) and BNDES's internal rules by (1) approving the AES Elpa and AES Transgás loans; (2) extending the payment terms on the AES Elpa and AES Transgás loans; (3) authorizing the sale of Eletropaulo's preferred shares at a stock-market auction; (4) accepting Eletropaulo's preferred shares to secure the loan provided to Eletropaulo; and (5) allowing the restructurings of Light Serviços de Eletricidade S.A. and Eletropaulo. The MPF also named AES Elpa and AES Transgás as defendants in the lawsuit because they allegedly benefited from BNDES's alleged violations. In May 2006, the FCSP ruled that the MPF could pursue its claims based on the first, second, and fourth alleged violations noted above. The MPF subsequently filed an interlocutory appeal with the Federal Court of Appeals (“FCA”) seeking to require the FCSP to consider all five alleged violations. In April 2015, the FCA issued a decision holding that the FCSP should consider all five alleged violations. AES Elpa and AES Brasiliana (the successor of AES Transgás) have appealed the April 2015 decision to the Superior Court of Justice. The lawsuit remains pending before the FCSP. AES Elpa and AES Brasiliana believe they have meritorious defenses to the allegations asserted against them and will defend themselves vigorously in these proceedings; however, there can be no assurances that they will be successful in their efforts.
Pursuant to their environmental audit, AES Sul and AES Florestal discovered 200 barrels of solid creosote waste and other contaminants at a pole factory that AES Florestal had been operating. The conclusion of the audit was that a prior operator of the pole factory, Companhia Estadual de Energia (“CEEE”), had been using those contaminants to treat the poles that were manufactured at the factory. On their initiative, AES Sul and AES Florestal communicated with Brazilian authorities and CEEE about the adoption of containment and remediation measures. In March 2008, the State Attorney of the state of Rio Grande do Sul, Brazil filed a public civil action against AES Sul, AES Florestal and CEEE seeking an order requiring the companies to recovermitigate the contaminated area located on the grounds of the pole factory and an indemnity payment of approximately R$6 million ($21 million) to the state's Environmental Fund.. In October 2011, the State Attorney Office filed a request for an injunction ordering the defendant companies to contain and remove the contamination immediately. The court granted injunctive relief on


October 18, 2011, but determined only that defendantonly CEEE was required to proceed withperform the removal work. In May 2012, CEEE began the removal work in compliance with the injunction. The case is now awaiting judgment. The removal and remediation costs are estimated to be approximately R$6010 million to R$41 million ($192 million to $8 million), and there could be additional costs which cannot be estimated at this time. In June 2016, the work was completed in February 2014. In parallel with the removal activities, a court-appointed expert investigation took place, which was concluded in May 2014. The court-appointed expert final report was presented to the State Attorneys in October 2014, and in January 2015 to the defendant companies. In March 2015,Company sold AES Sul to CPFL Energia S.A. and as part of the sale, AES Florestal submitted comments and supplementary questions regardingGuaiba, a holding company of AES Sul, retained the expert report.potential liability relating to this matter. The Company believes that it hasthere are meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
In May 2008, the Tax Authority initiated a collection suit against Eletropaulo, seeking to collect approximately R$230 million ($73 million) in PIS taxes (as estimated by Eletropaulo) for the period of March 1996 to December 1998. Unfavorable decisions on the merits were issued by the First Instance Court (“FIC”) and the Second Instance Court (“SIC”) in January 2011 and April 2015, respectively. Subsequently, Eletropaulo requested that the SIC remit the case to the Superior Court of Justice (“STJ”) and the Supreme Federal Court (“STF”). In March 2017, the SIC rejected Eletropaulo’s request. Eletropaulo has requested that an SIC panel review the March 2017 decision. In addition, Eletropaulo has appealed that decision to the STJ and STF. Also, in April 2017, in a related execution proceeding, the FIC asked the Tax Authority to advise on whether it intends to pursue collection. In August 2017, the Tax Authority requested that Eletropaulo replace its bank guarantee with a cash deposit of the amount in dispute into a judicial account (currently, the bank guarantee is in place as security for Eletropaulo’s alleged obligation). Eletropaulo contested the Tax Authority’s request. In September 2017, the FIC denied the Tax Authority’s request. The Tax Authority is expected to appeal. Eletropaulo believes it has meritorious defenses and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
In October 2009, IPL received an NOV and Finding of Violation from the EPA pursuant to the CAA Section 113(a). The NOV alleges violations of the CAA at IPL's three primarily coal-fired electric generating facilities dating back to 1986. The alleged violations primarily pertain to the Prevention of Significant Deterioration and nonattainment New Source Review requirements under the CAA. IPL management previously met with EPA staff regarding possible resolutions of the NOV. At this time, we cannot predict the ultimate resolution of this matter. However, settlements and litigated outcomes of similar cases have required companies to pay civil penalties, install additional pollution control technology on coal-fired electric generating units, retire existing generating units, and invest in additional environmental projects. A similar outcome in this case could have a material impact to IPL and could, in turn, have a material impact on the Company. IPL would seek recovery of any operating or capital expenditures related to air pollution control technology to reduce regulated air emissions; however, there can be no assurances that it would be successful in that regard.
In June 2011, the São Paulo Municipal Tax Authority (the “Tax Authority”) filed 60 tax assessments in São Paulo administrative court against Eletropaulo, seeking to collect services tax (“ISS”) on revenues for services rendered by Eletropaulo. Eletropaulo challenged the assessments on the grounds that the revenues at issue were not subject to ISS. In October 2013, the First Instance Administrative Court (“FIAC”) determined that Eletropaulo was liable for ISS, interest, and related penalties totaling approximately R$3.3 billion ($1 billion) as estimated by Eletropaulo. Eletropaulo thereafter appealed to the Second Instance Administrative Court (“SIAC”). In January 2016, the Tax Authority nullified most of the ISS sought from Eletropaulo. In January 2017, the SIAC issued a decision confirming the reduction and rejecting certain other amounts of ISS as time-barred, but finding that Eletropaulo was liable for the remainder of ISS totaling approximately R$200 million ($63 million). The Tax Authority appealed the SIAC’s decision on the time-barred amounts, totaling approximately R$16 million ($5 million) (“Time-Barred Amounts”), to the Municipal Council of Taxes (“MCT Proceeding”). With respect to the R$200 million, in March 2017, the Tax Authority canceled most of that amount (“March 2017 Cancelation”), and initiated an execution lawsuit to collect the remainder of approximately R$70 million ($22 million) (“Execution Lawsuit”). The Time-Barred Amounts and the March 2017 Cancelation will be reviewed in the ongoing MCT Proceeding. The Execution Lawsuit is also ongoing. Eletropaulo believes it has meritorious defenses and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
In January 2012, the Brazil Federal Tax Authority issued an assessment alleging that AES Tietê had paid PIS and COFINS taxes from 2007 to 2010 at a lower rate than the tax authority believed was applicable. AES Tietê challenged the assessment on the grounds that the tax rate was set in the applicable legislation. In April 2013, the FIAC determined that AES Tietê should have calculated the taxes at the higher rate and that AES Tietê was liable for unpaid taxes, interest, and penalties totaling approximately R$1.16 billion ($366 million) as estimated by AES Tietê. AES Tietê appealed to the SIAC. In January 2015, the SIAC issued a decision in AES Tietê's favor, finding that AES Tietê was not liable for unpaid taxes. The public prosecutor subsequently filed an appeal, which was denied as untimely. The Tax Authority thereafter filed a motion for clarification of the SIAC's decision, which was


denied in September 2016. The Tax Authority later filed a special appeal (“Special Appeal”), which was rejected as untimely in October 2016. The Tax Authority thereafter filed an interlocutory appeal with the Superior Administrative Court (“SAC”). In March 2017, the President of the SAC determined that the SAC would analyze the Special Appeal on timeliness and, if required, the merits. AES Tietê has challenged the Special Appeal. AES Tietê believes it has meritorious defenses to the claim and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
In January 2015, DPL received NOVs from the EPA alleging violations of opacity at Stuart and Killen Stations, and in October 2015, IPL received a similar NOV alleging violations at Petersburg Station. In February 2017, EPA issued a second NOV for DPL Stuart Station, alleging violations of opacity in 2016. Moreover, in February 2016, IPL received an NOV from the EPA alleging violations of New Source Review (“NSR”) and other CAA regulations, the Indiana SIP, and the Title V operating permit at Petersburg Station. It is too early to determine whether the NOVs could have a material impact on our business, financial condition or results of our operations. IPL 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 this regard.
In September 2015, AES Southland Development, LLC and AES Redondo Beach, LLC filed a lawsuit against the California Coastal Commission (the “CCC”) over the CCC's determination that the site of AES Redondo Beach included approximately 5.93 acres of CCC-jurisdictional wetlands. The CCC has asserted that AES Redondo Beach has improperly installed and operated water pumps affecting the alleged wetlands in violation of the California Coastal Act and Redondo Beach Local Coastal Program and has ordered AES Redondo Beach to restore the site. Additional potentialProgram. Potential outcomes of the CCC determination could include an order requiring AES Redondo Beach to fundperform a wetland mitigation projectrestoration and/or pay fines or penalties. AES Redondo Beach believes that it has meritorious arguments and intends to vigorously prosecute such lawsuit,concerning the underlying CCC determination, but there can be no assurances that it will be successful. On March 27, 2020, AES Redondo Beach, LLC sold the site to an unaffiliated third-party purchaser that assumed the obligations contained within these proceedings. On May 26, 2020, CCC staff sent AES a NOV directing AES to submit a Coastal Development Permit (“CDP”) application for the removal of the water pumps within the alleged wetlands. AES has submitted the CDP to the permitting authority, the City of Redondo Beach (“the City”), with respect to AES’ plans to disable or remove the pumps. The NOV also directed AES to submit technical analysis regarding additional water pumps located within onsite electrical vaults

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and a CDP application for their continued operation. AES has responded to the CCC, providing the requested analysis and seeking further discussion with the agency regarding the CDP. On October 14, 2020, the City deemed the CDP application to be complete and indicated a public hearing will be required, at which time AES must present additional information and analysis on the pumps within the alleged wetlands and the onsite electrical vaults.
In October 2015, Ganadera Guerra, S.A.AES Indiana received an NOV alleging violations of the Clean Air Act (“GG”CAA”), the Indiana State Implementation Plan (“SIP”), and Constructora Tymsa, S.A.the Title V operating permit related to alleged particulate and opacity violations at Petersburg Station Unit 3. In addition, in February 2016, AES Indiana received an NOV from the EPA alleging violations of New Source Review and other CAA regulations, the Indiana SIP, and the Title V operating permit at Petersburg Station. On August 31, 2020, AES Indiana reached a settlement with the EPA, the DOJ and the Indiana Department of Environmental Management (“CT”IDEM”) filed separate lawsuits against AES Panama, resolving these purported violations of the CAA at Petersburg Station. The settlement agreement, in the local courtsform of Panama. The claimants allege thata proposed judicial consent decree, was approved and entered by the U.S. District Court for the Southern District of 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 Panama profited fromIndiana's current Title V air permit; payment of civil penalties totaling $1.5 million; a hydropower facility (La Estrella) being partially located on land owned initially by GG and currently by CT, and that AES Panama must pay compensation for its use$5 million environmental mitigation project consisting of the land. The damages sought fromconstruction and operation of a new, non-emitting source of generation at the site; expenditure of $0.3 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 Panama are approximately $685 million (GG) and $100 million (CT). In October 2016,Indiana does not meet the court dismissed GG's claim because of GG's failure to comply withretirement obligation, it must install a court order requiring GG to disclose certain information. GG has refiled its lawsuit. Also, there are ongoing administrative proceedings concerning whether AES Panama is entitled to acquire an easement over the land and whether AES Panama can continue to occupy the land. AES Panama believes it has meritorious defenses and claims and will assert them vigorously; however, there can be no assurances that it will be successful in its efforts.
In January 2017, the Superintendencia del Medio AmbienteSelective Non-Catalytic Reduction System (“SMA”SNCR”) issued a Formulation of Charges asserting that Alto Maipo is in violation of certain conditions of the Environmental Approval Resolution (“RCA”) governing Alto Maipo’s hydropower project, for, among other things, operating vehicles at unauthorized times and failing to mitigate the impact of water intrusion during tunnel construction. In February 2017, Alto Maipo submitted a compliance plan to the SMA which, if approved by the agency, would resolve the matter without materially impacting construction of the project. In June 2017, the SMA issued a resolution detailing its comments on the compliance plan. Alto Maipo responded to the SMA’s comments in July 2017. The SMA is expected to issue its decision on Alto Maipo’s compliance plan in the near future. The outcome of this matter is uncertain, but an adverse decision by the SMA could have a negative impact on the construction of the project. Alto Maipo will pursue its interests vigorously in this matter; however, there can be no assurance that it will be successful in its efforts.Unit 4.
In June 2017, Alto Maipo terminated one of its contractors, Constructora Nuevo Maipo S.A. (“CNM”), given CNM’s stoppage of tunneling works, its failure to produce a completion plan, and its other breaches of contract. Also, Alto Maipo alsodrew $73 million under letters of credit (“LC Funds”) in connection with its termination of CNM. Alto Maipo initiated arbitration against CNM to recover excess completion costs and other damages totaling at least $236 million (net of the LC Funds) relating to these breaches.CNM’s breaches (“First Arbitration”). CNM subsequently initiated a separate arbitration, seekingdenied liability and sought a declaration that its termination was wrongful, alleged damages relating to that termination, and other relief. CNM has not supported its alleged damages, but it has asserted that it iswas entitled to recover over $20damages ranging from $70 million to $170 million (which included the LC Funds) plus interest and costs, based on various scenarios. Alto Maipo contested those submissions. The evidentiary hearing in damages, legal costs,the First Arbitration took place May 20-31, 2019, and closing arguments were heard June 9-10, 2020. Also, in August 2018, CNM purported to initiate a separate arbitration against AES Andes and the Company (“Second Arbitration”). In the Second Arbitration, CNM sought to pierce Alto Maipo’s corporate veil and appeared to seek an award holding AES Andes and the Company jointly and severally liable to pay any alleged net amounts drawnthat were found to be due to CNM in the First Arbitration or otherwise. The Second Arbitration was consolidated into the First Arbitration. In October 2021, the Tribunal issued a final and enforceable Partial Award in favor of Alto Maipo. The Tribunal held, among other things, that Alto Maipo properly terminated the relevant tunneling contract and that Alto Maipo’s draw of the LC Funds was proper. Also, the Tribunal determined that Alto Maipo was entitled to be paid additional damages of nearly $107 million (net after offsets) and that interest would accrue on the total amount of damages awarded until paid by CNM. The Tribunal also dismissed the Second Arbitration as moot. The Tribunal reserved for further proceedings, the issues of the interest to be paid by CNM and, as to all parties, the award of legal fees and costs. CNM subsequently made an application for an immaterial correction to the Partial Award. That application was granted with the consent of Alto Maipo. CNM also filed an application to revise the Partial Award (“Revision Application”) seeking to reduce the net damages awarded to Alto Maipo to approximately $42 million. The Tribunal later rejected CNM’s Revision Application, upon consideration of Alto Maipo’s objections. Also, in May 2022, CNM initiated a separate proceeding in the Santiago Court of Appeals seeking to annul the Partial Award under Chilean Law (“Annulment Proceeding”). In July 2022, the parties entered into a settlement agreement fully and finally settling this dispute (“Agreement”). Pursuant to the Agreement, settlement payments were received by Alto Maipo, under letters of credit.AES Andes, and the Company. The arbitrationsparties have waived all existing or potential future claims between them. Furthermore, the above-referenced First Arbitration, Second Arbitration, and Annulment Proceeding have been consolidated intodismissed with prejudice.
In October 2017, the Maritime Prosecution Office from Valparaíso issued a singleruling alleging responsibility by AES Andes for the presence of coal waste on Ventanas beach, and proposed a fine before the Maritime Governor, of approximately $395,000. AES Andes submitted its statement of defense, denying the allegations. In May 2021, AES Andes was notified of an amended Opinion of the Maritime Prosecution Office which extends the alleged liability to a third party and reduces the proposed fine to AES Andes to approximately $372,000. On August 18, 2021, the Maritime Governor issued a resolution affirming the proposed fine, and on September 8, AES Andes filed an administrative action which is ongoing. As noted above, Alto Maipo drewwith the Maritime Governor requesting reconsideration of the fine. On December 28, 2021 the resolution rejecting the reinstatement appeal was notified and on lettersJanuary 17, 2022 AES Andes filed an appeal against that ruling. In April 2022, Puerto Ventanas requested that the Maritime Authority join this proceeding with a parallel proceeding; however, the request was rejected. In May 2022, the General Director of credit securing CNM’s obligations, totaling approximately $73 million. Initially, the issuing bank did not pay Alto Maipo because CNM obtained an ex parte injunction from a Chilean court prohibiting the bank from honoring the draws. However, at Alto Maipo’s request,Maritime Territory

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and Merchant Marine of the Chilean Navy rejected AES Andes’ appeal and imposed a fine of $341,363. AES Andes will continue with administrative appeals, but the fine must be payed, as it is not suspended during the pendency of the remaining appeals. AES Andes believes that it has meritorious defenses to the allegations; however, there are no assurances it will be successful.
In December 2018, a lawsuit was filed in Dominican Republic civil court later removedagainst the injunction. Accordingly, in July 2017, the bank paid Alto Maipo in full. CNM is attemptingCompany, AES Puerto Rico, and three other AES affiliates. The lawsuit purports to be brought on behalf of over 100 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the Dominican Republic in 2004. The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands $476 million in alleged damages. The lawsuit does not identify, or provide any supporting information concerning, the alleged injuries of the claimants individually. Nor does the lawsuit provide any information supporting the demand for damages or explaining how the quantum was derived. The relevant AES companies believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
In February 2019, a separate lawsuit was filed in Dominican Republic civil court against the Company, AES Puerto Rico, two other AES affiliates, and an unaffiliated company and its principal. The lawsuit purports to be brought on behalf of over 200 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004. The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands over $900 million in alleged damages. The lawsuit does not identify, or provide any supporting information concerning, the alleged injuries of the claimants individually. Nor does the lawsuit provide any information supporting the demand for damages or explaining how the quantum was derived. In August 2020, at the request of the relevant AES companies, the case was transferred to a different civil court. Preliminary hearings have taken place and are ongoing. The relevant AES companies believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
In October 2019, the Superintendency of the Environment (the "SMA") notified AES Andes of certain alleged breaches associated with the environmental permit of the Ventanas Complex, initiating a sanctioning process through Exempt Resolution N° 1 / ROL D-129-2019. The alleged charges include exceeding generation limits, failing to reduce emissions during episodes of poor air quality, exceeding limits on discharges to the sea, and exceeding noise limits. AES Andes has submitted a proposed “Compliance Program” to the SMA for the Ventanas Complex. The latest version of this Compliance Program was submitted on May 26, 2021. On December 30, 2021, the Compliance Program was approved by the SMA. However an ex officio action was brought by the SMA due to alleged exceedances of generation limits, which would require the Company to reduce SO2, NOx and PM emissions in order to achieve the emissions offset established in the Chilean courtCompliance Program. On January 6, 2022, AES Andes filed a reposition with the SMA seeking modification of appealsthe means for compliance with the ex officio action. The reposition filing is currently under review by the SMA. The effects of the ex officio action are suspended until the reposition is resolved, but the SMA ruling is otherwise unaffected. Fines are possible if the SMA determines there is an unsatisfactory execution of the Compliance Program. The cost of proposed Compliance Program is approximately $10.8 million.
In March 2020, Mexico’s Comisión Federal de Electricidad (“CFE”) served an arbitration demand upon AES Mérida III. CFE makes allegations that AES Mérida III is in breach of its obligations under a power and capacity purchase agreement (“Contract”) between the two parties, which allegations related to CFE’s own failure to provide fuel within the specifications of the Contract. CFE seeks to recover approximately $200 million in payments made to AES Mérida under the Contract as well as approximately $480 million in alleged damages for having to acquire power from alternative sources in the Yucatan Peninsula. AES Mérida has filed an answer denying liability to CFE and asserting a counterclaim for damages due to CFE’s breach of its obligations. The parties submitted their respective initial briefs and supporting evidence in December 2020. After additional briefing, the evidentiary hearing took place in November 2021. Closing arguments were heard in May 2022. The parties are awaiting the decision of the arbitration in relation to the draws on the letters of credit. To date, CNM has been unable to obtain such relief. Alto


MaipoTribunal. AES Mérida believes that it has meritorious claimsdefenses and defensesclaims and will assert them vigorously in the arbitration; however, there can be no assurances that it will be successful in its efforts.
On May 12, 2021, the Federal Attorney for Environmental Protection (the “Authority”) initiated an environmental audit at the Termoelectrica del Golfo (“TEG”) and Termoelectrica del Peñoles (“TEP”) thermal generating facilities. On July 15, 2022, TEG was notified of the resolution issued by the Authority, which alleges breaches of air emission regulations, including failure to submit reports. The resolution imposes a fine of $8,467,360 pesos (approximately USD $400,000). The facility has until September 8, 2022 to file a nullity judgment to challenge the resolution. No resolution for TEP’s audit has been issued. The Company believes that it has meritorious defenses to the claims

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asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
In October 2017, the Ministry of Justice (“MOJ”) of the Republic of Kazakhstan (“ROK”) filedFebruary 2022, a lawsuit was filed in the Economic Court of Kazakhstan against Tau Power BV (an AES affiliate), Altai Power LLP (an AES affiliate), the Company, and two hydropower plants (“HPPs”) previously under concession to Tau Power. In its lawsuit, the MOJ references a 2013 treaty arbitration awardDominican Republic civil court against the ROK concerning the ROK’s energy laws. While itsCompany. The lawsuit is unclear, the MOJpurports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the net income distributed byDominican Republic in 2003 and 2004. The lawsuit generally alleges that the HPPs during certain yearsCCRs caused personal injuries and deaths and demands over $600 million in alleged damages. The lawsuit does not identify or provide any supporting information concerning the alleged injuries of the concession period. There is a hearing on this matter in the Economic Court on November 1, 2017. The AES defendants believe thatclaimants individually. Nor does the lawsuit is without meritprovide any information supporting the demand for damages or explaining how the quantum was derived. The Company believes that it has meritorious defenses to the claims asserted against it and they will assert their defenses vigorously;defend itself vigorously in this proceeding; however, there can be no assurances that theyit will be successful in theirits efforts.
On July 25, 2022, AES Puerto Rico, LP (“AES-PR”) received from the EPA an NOV alleging certain violations of the CAA at AES-PR’s coal-fired power facility in Guayama, Puerto Rico. The NOV alleges AES-PR exceeded an emission limit and did not continuously operate certain monitoring equipment, conduct certain analyses and testing, maintain complete records, and submit certain reports as required by the EPA’s Mercury and Air Toxics Standards. The NOV further alleges AES-PR did not comply fully with the facility’s Title V operating permit. AES-PR expects to engage in discussions with the EPA about the NOV in the near term. AES-PR will defend its interests, but we cannot predict the outcome of this matter at this time. However, settlements and litigated outcomes of CAA claims alleged against other coal-fired power plants have required companies to pay civil penalties and undertake remedial measures.
ITEM 1A. RISK FACTORS
There have been no material changesYou should consider carefully the following updates to risk factors, along with the risk factors disclosed in Part I—Item 1A.—Risk Factors of our 20162021 Form 10-K.10-K and other information contained in or incorporated by reference in this Form 10-Q. Additional risks and uncertainties also may adversely affect our business and operations, including those discussed in Item 2.—Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. The Risk Factors section in our 2021 Form 10-K otherwise remains current in all material respects. If any of the following events actually occur, our business, financial results and financial condition could be materially adversely affected. We routinely encounter and address risks, some of which may cause our future results to be materially different than we presently anticipate.
The operation of power generation, distribution and transmission facilities involves significant risks.
We are in the business of generating and distributing electricity, which involves certain risks that can adversely affect financial and operating performance, including:
•changes in the availability of our generation facilities or distribution systems due to increases in scheduled and unscheduled plant outages, equipment failure, failure of transmission systems, labor disputes, disruptions in fuel supply, poor hydrologic and wind conditions, inability to comply with regulatory or permit requirements, or catastrophic events such as fires, floods, storms, hurricanes, earthquakes, dam failures, tsunamis, explosions, terrorist acts, cyber-attacks or other similar occurrences; and
•changes in our operating cost structure, including, but not limited to, increases in costs relating to gas, coal, oil and other fuel; fuel transportation; purchased electricity; operations, maintenance and repair; environmental compliance, including the cost of purchasing emissions offsets and capital expenditures to install environmental emission equipment; transmission access; and insurance.
Our businesses require reliable transportation sources (including related infrastructure such as roads, ports and rail), power sources and water sources to access and conduct operations. The availability and cost of this infrastructure affects capital and operating costs and levels of production and sales. Limitations, or interruptions in this infrastructure or at the facilities of our subsidiaries, including as a result of third parties intentionally or unintentionally disrupting this infrastructure or the facilities of our subsidiaries, could impede their ability to produce electricity.
In addition, a portion of our generation facilities were constructed many years ago and may require significant capital expenditures for maintenance. The equipment at our plants requires periodic upgrading, improvement or repair and replacement equipment or parts may be difficult to obtain in circumstances where we rely on a single supplier or a small number of suppliers. The inability to obtain replacement equipment or parts, due to disruption of the supply chain or other factors, may impact the ability of our plants to perform. Breakdown or failure of one of our operating facilities may prevent the facility from performing under applicable power sales agreements which, in

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certain situations, could result in termination of a power purchase or other agreement or incurrence of a liability for liquidated damages and/or other penalties.
Power generation involves hazardous activities, including acquiring, transporting and unloading fuel, operating large pieces of rotating equipment and delivering electricity to transmission and distribution systems. In addition to natural risks, such as earthquakes, floods, lightning, hurricanes and wind, hazards, such as fire, explosion, collapse and machinery failure, are inherent risks in our operations which may occur as a result of inadequate internal processes, technological flaws, human error or actions of third parties or other external events. The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks.
In addition, our battery storage operations also involve risks associated with lithium-ion batteries. On rare occasions, lithium-ion batteries can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion batteries. While more recent design developments for our storage projects seek to minimize the impact of such events, these events are inherent risks of our battery storage operations.
The hazards described above, along with other safety hazards associated with our operations, can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, environmental cleanup costs, personal injury and fines, and/or penalties.
Furthermore, we and our affiliates are parties to material litigation and regulatory proceedings. See Item 1.— Legal Proceedings above. There can be no assurance that the outcomes of such matters will not have a material adverse effect on our consolidated financial position.
Our renewable energy projects and other initiatives face considerable uncertainties.
Wind, solar, and energy storage projects are subject to substantial risks. Some of these business lines are dependent upon favorable regulatory incentives to support continued investment, and there is significant uncertainty about the extent to which such favorable regulatory incentives will be available in the future. In particular, in the U.S., AES’ renewable energy generation growth strategy depends in part on federal, state and local government policies and incentives that support the development, financing, ownership and operation of renewable energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs and similar programs, renewable energy credit mechanisms, and tax exemptions. If these policies and incentives are changed or eliminated, or AES is unable to use them, there could be a material adverse impact on AES’ U.S. renewable growth opportunities, including fewer future PPAs or lower prices in future PPAs, decreased revenues, reduced economic returns on certain project company investments, increased financing costs, and/or difficulty obtaining financing.
In addition, the results of the U.S. Department of Commerce’s investigation into the antidumping and countervailing duties circumvention claim on solar cells and panels supplied from Malaysia, Vietnam, Thailand, and Cambodia are uncertain. If the investigation results in additional taxes, tariffs, duties, or other assessments on renewable energy or the equipment necessary to generate or deliver it, such as antidumping and countervailing duty rates, such developments could impede the realization of our U.S. renewables strategy by resulting in, among other items, lack of a satisfactory market for the development and/or financing of our U.S. renewable energy projects, abandoning the development of certain U.S. renewable energy projects, a loss of our investments in the projects, and/or reduced project returns.
Furthermore, production levels for our wind and solar projects may be dependent upon adequate wind or sunlight, resulting in volatility in production levels and profitability. For our wind projects, wind resource estimates are based on historical experience when available and on wind resource studies conducted by an independent engineer. These wind resource estimates are not expected to reflect actual wind energy production in any given year, but long-term averages of a resource.
As a result, these types of projects face considerable risk, including that favorable regulatory regimes expire or are adversely modified. At the development or acquisition stage, our ability to predict actual performance results may be hindered and the projects may not perform as predicted. There are also risks associated with the fact that some of these projects exist in markets where long-term fixed-price contracts for the major cost and revenue components may be unavailable, which in turn may result in these projects having relatively high levels of volatility. These projects can be capital-intensive and generally are designed with a view to obtaining third-party financing,

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which may be difficult to obtain. As a result, these capital constraints may reduce our ability to develop or obtain third-party financing for these projects.
Any of the above factors could have a material adverse effect on our business, financial condition, results of operations and prospects.
Cyber-attacks and data security breaches could harm our business.
Our business relies on electronic systems and network technologies to operate our generation, transmission and distribution infrastructure. We also use various financial, accounting, and other infrastructure systems. Our infrastructure may be targeted by nation states, hacktivists, criminals, insiders, or terrorist groups. In particular, there has been an increased focus on the U.S. energy grid believed to be related to the Russia/Ukraine conflict. Such an attack, by hacking, malware or other means, may interrupt our operations, cause property damage, affect our ability to control our infrastructure assets, cause the release of sensitive customer information, or limit communications with third parties. Any loss or corruption of confidential or proprietary data through a breach may:
•impact our operations, revenue, strategic objectives, customer and vendor relationships;
•expose us to legal claims and/or regulatory investigations and proceedings;
•require extensive repair and restoration costs for additional security measures to avert future attacks;
•impair our reputation and limit our competitiveness for future opportunities; and
•impact our financial and accounting systems and, subsequently, our ability to correctly record, process, and report financial information.
We have implemented measures to help prevent unauthorized access to our systems and facilities, including certain measures to comply with mandatory regulatory reliability standards. To date, cyber-attacks have not had a material impact on our operations or financial results. We continue to assess potential threats and vulnerabilities and make investments to address them, including global monitoring of networks and systems, identifying and implementing new technology, improving user awareness through employee security training, and updating our security policies as well as those for third-party providers. We cannot guarantee the extent to which our security measures will prevent future cyber-attacks and security breaches or that our insurance coverage will adequately cover any losses we may experience. Further, we do not control certain of joint ventures or our equity method investments and cannot guarantee that their efforts will be effective.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
No repurchases were made by the AES Corporation of its common stock during the third quarter of 2017.
The Board has authorized the Company to repurchase stock through a variety of methods, including open market repurchases, purchases by contract (including, without limitation, accelerated stock repurchase programs or 10b5-1 plans) and/or privately negotiated transactions. There can be no assurances as to the amount, timing or prices of repurchases, which may vary based on market conditions and other factors. The Program does not have an expiration date and can be modified or terminated by the Board of Directors at any time. As of SeptemberJune 30, 2017, $2462022, $264 million remained available for repurchase under the Program. No repurchases were made by The AES Corporation of its common stock during the second quarter of 2022.
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
4.131.1
31.1
Rule13a-14(a)/15d-14(a) Certification of Andrés Gluski (filed herewith).
31.2
32.1
32.2
101.INSXBRL Instance Document (filed herewith).
101.SCHXBRL Taxonomy Extension Schema Document (filed herewith).
101.CALXBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEFXBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LABXBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE
101The AES Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).(Inline Extensible Business Reporting Language): (i) the Cover Page, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Operations, (iv) Condensed Consolidated Statements of Comprehensive Income (Loss), (v) Condensed Consolidated Statements of Changes in Equity, (vi) Condensed Consolidated Statements of Cash Flows, and (vii) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



73 | The AES Corporation | June 30, 2022 Form 10-Q
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.
THE AES CORPORATION
(Registrant)
Date:August 4, 2022
THE AES CORPORATION
(Registrant)
By:		/s/ STEPHEN COUGHLIN
Name:Stephen Coughlin
Date:November 1, 2017By:
/s/ THOMAS M. O’FLYNN
Title:Name:Thomas M. O’Flynn
Title:Executive Vice President and Chief Financial Officer (Principal Financial Officer)
By:
 /s/ FABIAN E. SOUZA
SHERRY L. KOHAN
Name:Fabian E. SouzaSherry L. Kohan
Title:Vice President and Controller (Principal Accounting Officer)

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