Redeemable Stocks of Subsidiaries (Notes)

9 Months Ended

Sep. 30, 2024

Redeemable Stock of Subsidiaries [Abstract]

REDEEMABLE STOCK OF SUBSIDIARIES

Equity securities with redemption features that are not solely within the control of the issuer are classified as temporary equity and recorded in Redeemable stock of subsidiaries on the Condensed Consolidated Balance Sheets. Generally, these instruments are initially measured at fair value and are subsequently adjusted for income and dividends allocated to the noncontrolling interest. Subsequent measurement may vary depending on whether the instrument is probable of becoming redeemable. For those securities that are currently redeemable or where it is probable that the instrument will become redeemable, any changes from the carrying value to redemption value are recognized in temporary equity against Additional paid-in capital. When the instrument is not probable of becoming redeemable, no adjustment to the carrying value is recognized.

The following table summarizes the Company’s redeemable stock of subsidiaries balances as of the dates indicated (in millions):


	September 30, 2024		December 31, 2023
IPALCO common stock	$	820	$	773
AES Clean Energy tax equity partnerships	68		129
Potengi common and preferred stock	17		18

AES Clean Energy Development common stock	—		544

Total redeemable stock of subsidiaries	$	905	$	1,464

AES Clean Energy Development — As part of the formation of AES Clean Energy Development in February 2021, the noncontrolling interest partner received certain partnership rights that would enable them to exit in the future. As a result, the noncontrolling ownership interest was considered temporary equity. In May 2024, these redemption features expired without being exercised and the noncontrolling ownership interest of $577 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

AES Clean Energy Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. In some cases, these agreements contain certain partnership rights, though not currently in effect, that may enable the tax equity investor to exit in the future. As a result, the noncontrolling ownership interest is considered temporary equity. During the nine months ended September 30, 2024, AES Clean Energy, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in increases to Redeemable stock of subsidiaries of $172 million.

During the second and third quarters of 2024, the Chevelon Butte Phase II, Kuihelani, and Silver Peak renewables projects reached commercial operations. The redemption features of these partnerships expired upon the projects being placed in service. As a result, noncontrolling ownership interests of $155 million were reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Clean Energy is reported in the Renewables SBU reportable segment.

IPALCO — In May 2024, CDPQ made equity capital contributions of $45 million to IPALCO as part of a capital call primarily for funding needs related to AES Indiana’s capital expenditure program. The Company and CDPQ made capital contributions on a proportional share basis, therefore the contributions did not change the Company’s ownership interest in IPALCO. IPALCO is reported in the Utilities SBU reportable segment.