XML 36 R11.htm IDEA: XBRL DOCUMENT v3.26.1
Fair Value
 6 Months Ended
Jun. 30, 2026
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 2025 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, 2026December 31, 2025
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
DEBT SECURITIES:
Available-for-sale:
Certificates of deposit
$— $2 $— $2 $— $3 $— $3 
Government debt securities— 2 — 2 — — — — 
Total debt securities— 4 — 4 — 3 — 3 
EQUITY SECURITIES:
Mutual funds60 — — 60 57 — — 57 
Common stock
— — — — 1 — — 1 
Total equity securities60 — — 60 58 — — 58 
DERIVATIVES:
Interest rate derivatives— 277 — 277 — 279 — 279 
Foreign currency derivatives— 7 — 7 — 24 — 24 
Commodity derivatives100 70 13 183 109 72 5 186 
Total derivatives — assets
100 354 13 467 109 375 5 489 
TOTAL ASSETS$160 $358 $13 $531 $167 $378 $5 $550 
Liabilities
Contingent consideration (1)
$— $— $205 $205 $— $— $205 $205 
DERIVATIVES:
Interest rate derivatives— 39 — 39 — 59 — 59 
Foreign currency derivatives— 36 — 36 — 28 — 28 
Commodity derivatives84 24 38 146 110 42 45 197 
Total derivatives — liabilities
84 99 38 221 110 129 45 284 
TOTAL LIABILITIES (1)
$84 $99 $243 $426 $110 $129 $250 $489 
_____________________________
(1)Includes $6 million of contingent consideration reported in Current held-for-sale liabilities on the Condensed Consolidated Balance Sheets related to the JK Projects as of June 30, 2026.
As of June 30, 2026, all available-for-sale debt securities had stated maturities within one year. For the three and six months ended June 30, 2026, no impairments of marketable securities were recognized in earnings or other comprehensive income (loss). Credit-related impairments are recognized as an allowance with a corresponding impact recognized as a credit loss in Other expense. Gains and losses on sale of investments are determined using the specific-identification method. The following table presents gross proceeds from the sale of available-for-sale securities for the periods indicated (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Gross proceeds from sale of available-for-sale securities$1 $1 $2 $4 
The Company accounts for equity securities without readily determinable fair values using the measurement alternative in accordance with ASC 321. These securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. Upward adjustments resulting from observable price changes are recorded in Other income and impairments and downward adjustments are recorded in Other expense. As of both December 31, 2025 and June 30, 2026, the carrying amount of equity securities accounted for using the measurement alternative was $19 million, inclusive of $22 million of cumulative upward adjustments recorded in Other income in prior years and a $48 million downward adjustment recorded in Other expense in June 2025 to reflect observable price changes for our investment in 5B Holdings Ptd. Ltd. ("5B").
The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2026 and 2025 (derivative balances are presented net), in millions. Transfers between Level 3 and Level 2 principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.
Derivative Assets and Liabilities
Three Months Ended June 30, 2026Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at April 1, 2026$— $— $(27)$(209)$(236)
Total realized and unrealized gains (losses):
Included in earnings— — — 4 4 
Included in regulatory liabilities— — 7 — 7 
Acquisitions— — — (16)(16)
Settlements— — (5)16 11 
Balance at June 30, 2026$— $— $(25)$(205)$(230)
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
$— $— $— $4 $4 
Derivative Assets and Liabilities
Three Months Ended June 30, 2025Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at April 1, 2025$(2)$43 $2 $(173)$(130)
Total realized and unrealized gains (losses):
Included in earnings— 1 1 20 22 
Included in other comprehensive income (loss) — derivative activity— 1 (29)— (28)
Included in regulatory liabilities— — 5 — 5 
Acquisitions— — — (11)(11)
Settlements— (10)(1)20 9 
Transfers of assets (liabilities), net out of Level 32 — — — 2 
Balance at June 30, 2025$— $35 $(22)$(144)$(131)
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
$— $(6)$— $20 $14 
Derivative Assets and Liabilities
Six Months Ended June 30, 2026Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at January 1, 2026
$— $— $(40)$(205)$(245)
Total realized and unrealized gains (losses):
Included in earnings— — — (2)(2)
Included in other comprehensive income — derivative activity— — 14 — 14 
Included in regulatory liabilities— — 7 — 7 
Acquisitions— — — (16)(16)
Settlements— — (6)18 12 
Balance at June 30, 2026$— $— $(25)$(205)$(230)
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
$— $— $— $(2)$(2)
Derivative Assets and Liabilities
Six Months Ended June 30, 2025Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at January 1, 2025
$(1)$52 $(21)$(145)$(115)
Total realized and unrealized gains (losses):
Included in earnings— 2 — (18)(16)
Included in other comprehensive income (loss) — derivative activity— 1 (3)— (2)
Included in regulatory liabilities— — 5 — 5 
Acquisitions— — — (11)(11)
Settlements— (20)(2)30 8 
Transfers of assets (liabilities), net into Level 3
— — (1)— (1)
Transfers of assets (liabilities), net out of Level 31 — — — 1 
Balance at June 30, 2025$— $35 $(22)$(144)$(131)
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
$— $(12)$— $(18)$(30)
The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of June 30, 2026 (in millions, except range amounts):
Type of DerivativeFair ValueUnobservable Input
Amount or Range (Average)
Commodity:
CAISO energy swap$(28)
Forward CAISO energy prices per MWH from 2032 through 2038
$4.21 to $132.82 ($51.18)
MISO energy swap
(3)
Forward MISO energy prices per MWH from 2032 through 2040
$23.54 to $95.62 ($48.42)
Other6 
Total$(25)
For the CAISO and MISO energy swaps, increases (decreases) in the estimates above would decrease (increase) the value of the derivatives.
Contingent consideration is primarily related to future milestone payments associated with acquisitions of renewables 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. Gains and losses on the remeasurement of contingent consideration are recognized in Other income and Other expense, respectively, on the Condensed Consolidated Statements of Operations.
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 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
Six Months Ended June 30, 2025Level 1Level 2Level 3Pre-tax Loss
Held-for-sale businesses: (2)
Mong Duong (3)
3/31/2025383 — 371 — 17 
_____________________________
(1)Represents the carrying values of the asset groups at the dates of measurement, before fair value adjustment.
(2)See Note 18—Held-for-Sale and Dispositions for further information.
(3)The pre-tax loss recognized was calculated using the fair value of the Mong Duong disposal group less costs to sell of $5 million.
AES Clean Energy Development Projects — On a quarterly basis, the Company reviews the status of development projects to identify projects that are no longer viable and will be abandoned. The fair value of each abandoned project with no salvage value is determined to be zero as there are no future projected cash flows, resulting in a full write-off of the carrying value of project development intangibles and capitalized development costs incurred.
The Company recognized $38 million and $117 million of pre-tax asset impairment expense related to AES Clean Energy Development Projects during the six months ended June 30, 2026 and 2025, respectively. See Note 16—Asset Impairment Expense for further information.
Mong Duong — In November 2023, the Company entered into an agreement to sell its entire 51% ownership interest in Mong Duong 2, a coal-fired plant in Vietnam, and 51% equity interest in Mong Duong Finance Holdings B.V., an SPV accounted for as an equity affiliate (collectively "Mong Duong"). As of May 31, 2025, due to delays in closing the transaction and the pending expiration of the agreement in November 2025, the Company determined Mong Duong no longer met the held-for-sale criteria and the asset group was reclassified as held and used.
During the six months ended June 30, 2025, the Company recognized a $243 million increase in the carrying value of the Mong Duong asset group due to the derecognition of a $239 million valuation allowance on the loan receivable accounted for under ASC 310, which had been recognized in Asset impairment expense between December 31, 2023 and March 31, 2025 while Mong Duong was classified as held-for-sale, and the elimination of $4 million in net estimated costs to sell from the measurement of the asset group. Upon reclassification out of held-for-sale, the loan receivable was remeasured at amortized cost and individual non-loan assets were remeasured at the lower of (i) carrying value before Mong Duong was classified as held for sale, adjusted for any depreciation
expense or impairment losses that would have been recognized had the asset been continuously classified as held and used, or (ii) fair value at the date of the subsequent determination that held-for-sale criteria was no longer met. See Note 16—Asset Impairment Expense for further information.
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, 2026
Carrying
Amount
Fair Value
TotalLevel 1Level 2Level 3
Assets:
Financing receivables (1)
$807 $807 $— $— $807 
Liabilities:Non-recourse debt25,222 26,335 — 23,294 3,041 
Recourse debt6,100 5,087 — 5,087 — 
December 31, 2025
Carrying
Amount
Fair Value
TotalLevel 1Level 2Level 3
Assets:
Financing receivables (1)
$855 $955 $— $— $955 
Liabilities:Non-recourse debt23,178 23,749 — 20,448 3,301 
Recourse debt5,984 5,003 — 5,003 — 
_____________________________
(1)For both periods presented, amounts primarily relate to the Mong Duong loan receivable, payment deferrals granted to mining customers as part of our green blend agreements in Chile, and the sale of the Redondo Beach land. These are included in Loan receivable and Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. See Note 5—Financing Receivables for further information.