Redeemable Stocks of Subsidiaries (Notes)

3 Months Ended

Mar. 31, 2025

Redeemable Stock of Subsidiaries [Abstract]

REDEEMABLE STOCK OF SUBSIDIARIES

Noncontrolling interests with redemption features that are not solely within the control of the issuer are classified as temporary equity and are included 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 varies 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 Retained earnings or Additional paid-in capital in the absence of retained earnings. When the instrument is not probable of becoming redeemable, no adjustment to the carrying value is recognized.

The following table is a reconciliation of changes in redeemable stock of subsidiaries for the periods indicated (in millions):


	Three Months Ended March 31,
	2025		2024
Balance at the beginning of the period	$	938	$	1,464
Net income (loss)	30		(89)
Other comprehensive income	—		35
Adjustments to redemption value of redeemable stock of subsidiaries	—		6
Reclassification of redeemable stock of subsidiaries to noncontrolling interests	(38)		—

Distributions to holders of redeemable stock of subsidiaries	(31)		(14)

Contributions from holders of redeemable stock of subsidiaries	—		26
Sales of redeemable stock of subsidiaries	—		74
Balance at the end of the period	$	899	$	1,502

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


	March 31, 2025		December 31, 2024
IPALCO common stock	$	836	$	835
AES Clean Energy tax equity partnerships	63		65


AES Indiana Pike County BESS tax equity partnership	—		38
Total redeemable stock of subsidiaries	$	899	$	938

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. The substance of such arrangements is that of a preferred structure, whereby tax equity investors are granted preferential returns in the form of significant earnings and tax allocations from the partnership, until a specified internal rate of return is achieved.

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. Some of these tax equity partnership agreements have redemption features dependent upon the passage of time, therefore the noncontrolling ownership interests are probable of becoming redeemable. As of March 31, 2025, the carrying values of these noncontrolling ownership interests exceeded the redemption values, therefore no adjustments to the carrying values were necessary. Certain other tax equity partnership agreements have redemption features contingent upon the underlying assets achieving agreed-upon project milestones. The Company has concluded it is probable that these projects will reach the specified milestones, therefore the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required.

During the three months ended March 31, 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 $74 million, net of transaction costs. AES Clean Energy is reported in the Renewables SBU reportable segment.

AES Indiana Pike County BESS — The redemption feature of the tax equity partnership agreement was contingent upon the underlying assets being placed in service by a guaranteed date. In March 2025, the Pike County BESS project was placed in service, resulting in the expiration of the redemption feature. As a result, the noncontrolling ownership interest of $38 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Indiana is reported in the Utilities SBU reportable segment.