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Fair Value | 6 Months Ended
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Jun. 30, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE | 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. Because these amounts are estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 5—Fair Value in Item 8.—Financial Statements and Supplementary Data of our 2022 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 securities, the security classes presented were determined based on the nature and risk of the security and are consistent with how the Company manages, monitors, and measures its marketable securities:
| June 30, 2023 |  | December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
DEBT SECURITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit | $ | — |  |  | $ | 677 |  |  | $ | — |  |  | $ | 677 |  |  | $ | — |  |  | $ | 698 |  |  | $ | — |  |  | $ | 698 |
Government debt securities | — |  |  | 3 |  |  | — |  |  | 3 |  |  | — |  |  | 3 |  |  | — |  |  | 3 |
Total debt securities | — |  |  | 680 |  |  | — |  |  | 680 |  |  | — |  |  | 701 |  |  | — |  |  | 701 |
EQUITY SECURITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds | 44 |  |  | — |  |  | — |  |  | 44 |  |  | 38 |  |  | — |  |  | — |  |  | 38 |
Total equity securities | 44 |  |  | 6 |  |  | — |  |  | 50 |  |  | 38 |  |  | — |  |  | — |  |  | 38 |
DERIVATIVES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | — |  |  | 273 |  |  | — |  |  | 273 |  |  | — |  |  | 314 |  |  | — |  |  | 314 |
Foreign currency derivatives | — |  |  | 23 |  |  | 63 |  |  | 86 |  |  | — |  |  | 22 |  |  | 64 |  |  | 86 |
Commodity derivatives | — |  |  | 233 |  |  | 7 |  |  | 240 |  |  | — |  |  | 232 |  |  | 13 |  |  | 245 |
Total derivatives — assets | — |  |  | 529 |  |  | 70 |  |  | 599 |  |  | — |  |  | 568 |  |  | 77 |  |  | 645 |
TOTAL ASSETS | $ | 44 |  |  | $ | 1,215 |  |  | $ | 70 |  |  | $ | 1,329 |  |  | $ | 38 |  |  | $ | 1,269 |  |  | $ | 77 |  |  | $ | 1,384 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 274 |  |  | $ | 274 |  |  | $ | — |  |  | $ | — |  |  | $ | 48 |  |  | $ | 48 |
DERIVATIVES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | — |  |  | 15 |  |  | 1 |  |  | 16 |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
Cross-currency derivatives | — |  |  | 76 |  |  | — |  |  | 76 |  |  | — |  |  | 42 |  |  | — |  |  | 42 |
Foreign currency derivatives | — |  |  | 22 |  |  | — |  |  | 22 |  |  | — |  |  | 20 |  |  | — |  |  | 20 |
Commodity derivatives | — |  |  | 212 |  |  | 85 |  |  | 297 |  |  | — |  |  | 346 |  |  | 60 |  |  | 406 |
Total derivatives — liabilities | — |  |  | 325 |  |  | 86 |  |  | 411 |  |  | — |  |  | 414 |  |  | 60 |  |  | 474 |
TOTAL LIABILITIES | $ | — |  |  | $ | 325 |  |  | $ | 360 |  |  | $ | 685 |  |  | $ | — |  |  | $ | 414 |  |  | $ | 108 |  |  | $ | 522 |
As of June 30, 2023, all available-for-sale debt securities had stated maturities within one year. There were no other-than-temporary impairments of marketable securities during the three and six months ended June 30, 2023. The level 3 contingent consideration relates mainly to the acquisition of Bellefield on June 5, 2023. For further information on the acquisition, see Note 17—Acquisitions. Credit-related impairments are recognized in earnings 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 available-for-sale securities during the periods indicated (in millions):
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Gross proceeds from sale of available-for-sale securities |  | $ | 370 |  |  | $ | 150 |  |  | $ | 739 |  |  | $ | 347 |
The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2023 and 2022 (presented net by type of derivative in millions). Transfers between Level 3 and Level 2 principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.
| Derivative Assets and Liabilities |  |  |  |  |  |  |
Three Months Ended June 30, 2023 | Interest Rate |  |  |  | Foreign Currency |  | Commodity |  | Contingent Consideration |  | Total |  |  |
Balance at April 1 | $ | (5) |  |  |  |  | $ | 62 |  |  | $ | (69) |  |  | $ | (55) |  |  | $ | (67) |  |  |  |
Total realized and unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings | — |  |  |  |  | 7 |  |  | (1) |  |  | (1) |  |  | 5 |  |  |  |
Included in other comprehensive income (loss) — derivative activity | 16 |  |  |  |  | 3 |  |  | (10) |  |  | — |  |  | 9 |  |  |  |
Included in other comprehensive income (loss) — foreign currency translation activity | — |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |
Included in regulatory (assets) liabilities | — |  |  |  |  | — |  |  | 3 |  |  | — |  |  | 3 |  |  |  |
Acquisitions | — |  |  |  |  | — |  |  | — |  |  | (218) |  |  | (218) |  |  |  |
Settlements | (2) |  |  |  |  | (9) |  |  | (2) |  |  | — |  |  | (13) |  |  |  |
Transfers of assets (liabilities), net into Level 3 | — |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |
Transfers of (assets) liabilities, net out of Level 3 | (10) |  |  |  |  | — |  |  | 1 |  |  | — |  |  | (9) |  |  |  |
Balance at June 30, 2023 | $ | (1) |  |  |  |  | $ | 63 |  |  | $ | (78) |  |  | $ | (274) |  |  | $ | (290) |  |  |  |
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 | $ | — |  |  |  |  | $ | — |  |  | $ | (2) |  |  | $ | (1) |  |  | $ | (3) |  |  |  |
| Derivative Assets and Liabilities |  |  |  |  |  |  |
Three Months Ended June 30, 2022 | Interest Rate |  |  |  | Foreign Currency |  | Commodity |  | Contingent Consideration |  | Total |  |  |
Balance at April 1 | $ | 1 |  |  |  |  | $ | 93 |  |  | $ | (13) |  |  | $ | (69) |  |  | $ | 12 |  |  |  |
Total realized and unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings | 1 |  |  |  |  | (32) |  |  | (4) |  |  | — |  |  | (35) |  |  |  |
Included in other comprehensive income (loss) — derivative activity | 5 |  |  |  |  | (11) |  |  | 6 |  |  | — |  |  | — |  |  |  |
Included in other comprehensive income (loss) — foreign currency translation activity | — |  |  |  |  | — |  |  | — |  |  | 2 |  |  | 2 |  |  |  |
Included in regulatory (assets) liabilities | — |  |  |  |  | — |  |  | 15 |  |  | — |  |  | 15 |  |  |  |
Acquisitions | — |  |  |  |  | — |  |  | — |  |  | (15) |  |  | (15) |  |  |  |
Settlements | — |  |  |  |  | — |  |  | 2 |  |  | 5 |  |  | 7 |  |  |  |
Transfers of assets (liabilities), net into Level 3 | — |  |  |  |  | — |  |  | 31 |  |  | — |  |  | 31 |  |  |  |
Transfers of (assets) liabilities, net out of Level 3 | (6) |  |  |  |  | — |  |  | — |  |  | — |  |  | (6) |  |  |  |
Balance at June 30, 2022 | $ | 1 |  |  |  |  | $ | 50 |  |  | $ | 37 |  |  | $ | (77) |  |  | $ | 11 |  |  |  |
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) |  |  | $ | — |  |  | $ | 2 |  |  | $ | (29) |  |  |  |
| Derivative Assets and Liabilities |  |  |  |  |  |  |
Six Months Ended June 30, 2023 | Interest Rate |  |  |  | Foreign Currency |  | Commodity |  | Contingent Consideration |  | Total |  |  |
Balance at January 1 | $ | — |  |  |  |  | $ | 64 |  |  | $ | (47) |  |  | $ | (48) |  |  | $ | (31) |  |  |  |
Total realized and unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings | — |  |  |  |  | 6 |  |  | (1) |  |  | (7) |  |  | (2) |  |  |  |
Included in other comprehensive income (loss) — derivative activity | — |  |  |  |  | 2 |  |  | (27) |  |  | — |  |  | (25) |  |  |  |
Included in other comprehensive income (loss) — foreign currency translation activity | — |  |  |  |  | — |  |  | — |  |  | (1) |  |  | (1) |  |  |  |
Included in regulatory (assets) liabilities | — |  |  |  |  | — |  |  | (2) |  |  | — |  |  | (2) |  |  |  |
Acquisitions | — |  |  |  |  | — |  |  | — |  |  | (218) |  |  | (218) |  |  |  |
Settlements | — |  |  |  |  | (9) |  |  | (2) |  |  | — |  |  | (11) |  |  |  |
Transfers of assets (liabilities), net into Level 3 | (1) |  |  |  |  | — |  |  | — |  |  | — |  |  | (1) |  |  |  |
Transfers of (assets) liabilities, net out of Level 3 | — |  |  |  |  | — |  |  | 1 |  |  | — |  |  | 1 |  |  |  |
Balance at June 30, 2023 | $ | (1) |  |  |  |  | $ | 63 |  |  | $ | (78) |  |  | $ | (274) |  |  | $ | (290) |  |  |  |
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) |  |  | $ | (1) |  |  | $ | (8) |  |  | $ | (10) |  |  |  |
| Derivative Assets and Liabilities |  |  |  |  |  |  |
Six Months Ended June 30, 2022 | Interest Rate |  |  |  | Foreign Currency |  | Commodity |  | Contingent Consideration |  | Total |  |  |
Balance at January 1 | $ | (6) |  |  |  |  | $ | 108 |  |  | $ | (1) |  |  | $ | (64) |  |  | $ | 37 |  |  |  |
Total realized and unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings | 3 |  |  |  |  | (44) |  |  | (4) |  |  | (1) |  |  | (46) |  |  |  |
Included in other comprehensive income (loss) — derivative activity | 10 |  |  |  |  | (14) |  |  | (8) |  |  | — |  |  | (12) |  |  |  |
Included in other comprehensive income (loss) — foreign currency translation activity | — |  |  |  |  | — |  |  | — |  |  | (2) |  |  | (2) |  |  |  |
Included in regulatory (assets) liabilities | — |  |  |  |  | — |  |  | 15 |  |  | — |  |  | 15 |  |  |  |
Acquisitions | — |  |  |  |  | — |  |  | — |  |  | (15) |  |  | (15) |  |  |  |
Settlements | — |  |  |  |  | — |  |  | 2 |  |  | 5 |  |  | 7 |  |  |  |
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, 2022 | $ | 1 |  |  |  |  | $ | 50 |  |  | $ | 37 |  |  | $ | (77) |  |  | $ | 11 |  |  |  |
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 |  |  | $ | (2) |  |  | $ | (42) |  |  |  |
The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of June 30, 2023 (in millions, except range amounts):
Type of Derivative |  | Fair Value |  | Unobservable Input |  |  | Amount or Range (Weighted Average)
Interest rate |  | $ | (1) |  |  | Subsidiary credit spread |  |  | 0.4% to 2.5% (1.7%)
Foreign currency: |  |  |  |  |  |  |
Argentine peso |  | 63 |  |  | Argentine peso to U.S. dollar currency exchange rate after one year |  |  | 576 to 957 (854)
Commodity: |  |  |  |  |  |  |
CAISO Energy Swap |  | (86) |  |  | Forward energy prices per MWh after 2030 |  |  | $12 to $97 ($52)
Other |  | 8 |  |  |  |  |  |
Total |  | $ | (16) |  |  |  |  |  |
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. Contingent consideration is primarily related to future milestone payments associated with acquisitions of renewable development projects. The estimated fair value of contingent consideration is determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. Changes in Level 3 inputs, particularly changes in the probability of achieving development milestones, could result in material changes to the fair value of the contingent consideration and could materially impact the amount of expense or income recorded each reporting period. Contingent consideration is updated quarterly with any prospective changes in fair value recorded through earnings. Nonrecurring Measurements The 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 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 asset groups measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions).
| Measurement Date |  | Carrying Amount (1) |  | Fair Value |  | Pre-tax Loss
Six Months Ended June 30, 2023 |  | Level 1 |  | Level 2 |  | Level 3 |
Long-lived assets held and used: |  |  |  |  |  |  |  |  |  |  |
Norgener (2) | 5/1/2023 |  | $ | 196 |  |  | $ | — |  |  | $ | — |  |  | $ | 24 |  |  | $ | 137 |
GAF Projects (AES Renewable Holdings) | 5/31/2023 |  | 29 |  |  | — |  |  | — |  |  | 11 |  |  | 18 |
Held-for-sale businesses: (3) |  |  |  |  |  |  |  |  |  |  |
Jordan (4) | 3/31/2023 |  | $ | 179 |  |  | $ | — |  |  | $ | 170 |  |  | $ | — |  |  | $ | 14 |
Jordan (4) | 6/30/2023 |  | 179 |  |  | — |  |  | 170 |  |  | — |  |  | 15 |
| Measurement Date |  | Carrying Amount (1) |  | Fair Value |  |
Six Months Ended June 30, 2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Pre-tax Loss
Long-lived assets held and used: |  |  |  |  |  |  |  |  |  |  |
Maritza | 4/30/2022 |  | $ | 927 |  |  | $ | — |  |  | $ | — |  |  | $ | 452 |  |  | $ | 475 |
_____________________________ (1)Represents the carrying values of the asset groups at the dates of measurement, before fair value adjustment. (2)The Norgener asset group includes long-lived assets, inventory, land, and other working capital, however per ASC 360-10, the pre-tax impairment expense is limited to the carrying amount of the long-lived assets. See Note 15 — Asset Impairment Expense for further information. The Company evaluated the carrying amount of the assets outside the scope of ASC 360-10 and determined that the carrying value of the other assets should not be reduced. (3)See Note 16 — Held-for-Sale for further information. (4)The pre-tax loss recognized was calculated using the $170 million fair value of the Jordan disposal group less costs to sell of $5 million and $6 million for the March 31, 2023 and June 30, 2023 measurement dates, respectively. 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 six months ended June 30, 2023 (in millions, except range amounts):
| Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range (Weighted Average)
Long-lived assets held and used: |  |  |  |  |  |  |
Norgener (1) | $ | 24 |  |  | Discounted cash flow |  | Annual revenue growth |  | (90)% to 994% (85%)
|  |  |  |  | Annual variable margin |  | (75)% to 276% (16%)
GAF Projects (AES Renewable Holdings) | 11 |  |  | Discounted cash flow |  | Annual revenue growth |  | (42)% to 44% (1%)
|  |  |  |  | Annual variable margin |  | (194)% to 77% (66%)
|  |  |  |  | Discount rate |  | 9%
Total | $ | 35 |  |  |  |  |  |  |
_____________________________ (1)The fair value of the Norgener asset group is mainly related to existing coal inventory not subject to impairment under ASC 360-10. 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 the periods indicated, but for which fair value is disclosed:
|  | June 30, 2023
|  | Carrying Amount |  | Fair Value
|  | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: | Accounts receivable — noncurrent (1) | $ | 295 |  |  | $ | 338 |  |  | $ | — |  |  | $ | — |  |  | $ | 338 |
Liabilities: | Non-recourse debt | 20,872 |  |  | 20,540 |  |  | — |  |  | 19,084 |  |  | 1,456 |
| Recourse debt | 5,476 |  |  | 5,093 |  |  | — |  |  | 5,093 |  |  | — |
|  | December 31, 2022
|  | Carrying Amount |  | Fair Value
|  | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: | Accounts receivable — noncurrent (1) | $ | 255 |  |  | $ | 294 |  |  | $ | — |  |  | $ | — |  |  | $ | 294 |
Liabilities: | Non-recourse debt | 19,429 |  |  | 18,527 |  |  | — |  |  | 17,089 |  |  | 1,438 |
| Recourse debt | 3,894 |  |  | 3,505 |  |  | — |  |  | 3,505 |  |  | — |
_____________________________ (1)These amounts primarily relate to amounts impacted by the Stabilization Funds enacted by the Chilean government, and are included in Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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