株探米国株
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2023
-OR-
☐ TRANSITION REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12291
aeslogo16.jpg
THE AES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
54-1163725
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
4300 Wilson Boulevard
Arlington,
Virginia
22203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(703)
522-1315
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
AES
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☒    No  ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐    No  ☒
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  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).   Yes  ☒    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 filer
 ☒ Accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ Non-accelerated filer ☐
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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐    
Indicate by check mark whether any of those error corrections are restatement that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐     No  ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, 2023, the last business day of the Registrant's most recently completed second fiscal quarter (based on the closing sale price of $20.73 of the Registrant's Common Stock, as reported by the New York Stock Exchange on such date) was approximately $13.88 billion.
The number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, on February 22, 2024 was 710,287,083.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement for its 2024 annual meeting of stockholders are incorporated by reference in Parts II and III


The AES Corporation Fiscal Year 2023 Form 10-K
Table of Contents
ITEM 6. [RESERVED]
PART IV - ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

1 | 2023 Annual Report

Glossary of Terms
The following is a list of frequently used terms and abbreviations that appear in the text of this report and have the definitions indicated below:
ACED AES Clean Energy Development, LLC
Adjusted EBITDA Adjusted earnings before interest income and expense, taxes, depreciation and amortization, a non-GAAP measure of operating performance
Adjusted EBITDA with Tax Attributes Adjusted earnings before interest income and expense, taxes, depreciation and amortization, adding back the pre-tax effect of Production Tax Credits, Investment Tax Credits and depreciation tax expense allocated to tax equity investors, a non-GAAP measure
Adjusted EPS Adjusted Earnings Per Share, a non-GAAP measure
Adjusted PTC Adjusted Pre-tax Contribution, a non-GAAP measure of operating performance
AES The Parent Company and its subsidiaries and affiliates
AES Andes AES Andes S.A., formerly AES Gener
AES Brasil AES Brasil Operações S.A., formerly branded as AES Tietê
AES Indiana Indianapolis Power & Light Company, formerly branded as IPL. AES Indiana is wholly-owned by IPALCO
AES Ohio The Dayton Power & Light Company, formerly branded as DP&L. AES Ohio is wholly-owned by DPL
AES Renewable Holdings AES Renewable Holdings, LLC, formerly branded as AES Distributed Energy
AFUDC Allowance for Funds Used During Construction
AIMCo Alberta Investment Management Corporation
ANEEL Brazilian National Electric Energy Agency
AOCL Accumulated Other Comprehensive Loss
ARO Asset Retirement Obligations
ASC Accounting Standards Codification
BACT Best Available Control Technology
BESS Battery energy storage system
BOT Build, Operate and Transfer
CAA U.S. Clean Air Act
CAMMESA Wholesale Electric Market Administrator in Argentina
CCEE Brazilian Chamber of Electric Energy Commercialization
CCGT Combined Cycle Gas Turbine
CCR Coal Combustion Residuals, which includes bottom ash, fly ash and air pollution control wastes generated at coal-fired generation plant sites
CDPQ La Caisse de dépôt et placement du Quebéc
CECL Current Expected Credit Loss
CEO Chief Executive Officer
CFE Federal Electricity Commission in Mexico
CFO Chief Financial Officer
CO2
 Carbon Dioxide
COD Commercial Operation Date
CPI
U.S. Consumer Price Index
CSAPR U.S. Cross-State Air Pollution Rule
CWA U.S. Clean Water Act
DG Comp Directorate-General for Competition of the European Commission
DOJ
U.S. Department of Justice
DPL DPL Inc.
DPP Dominican Power Partners
EBITDA Earnings before interest income and expense, taxes, depreciation and amortization, a non-GAAP measure of operating performance
EPA U.S. Environmental Protection Agency
EPC Engineering, Procurement, and Construction
ERCOT Electric Reliability Council of Texas
ESP Electric Security Plan
EU European Union
EURIBOR Euro Inter Bank Offered Rate
EVN Electricity of Vietnam
FERC U.S. Federal Energy Regulatory Commission
Fluence
Fluence Energy, Inc and its subsidiaries, including Fluence Energy, LLC, which was previously our joint venture with Siemens AG (Nasdaq: FLNC)
FONINVEMEM Fund for the Investment Needed to Increase the Supply of Electricity in the Wholesale Market in Argentina

2 | 2023 Annual Report

FPA U.S. Federal Power Act
GAAP Generally Accepted Accounting Principles in the United States
GHG Greenhouse Gas
GILTI Global Intangible Low Taxed Income
GSF Generation Scaling Factor
GW Gigawatts
GWh Gigawatt Hours
HLBV Hypothetical Liquidation Book Value
IPALCO IPALCO Enterprises, Inc.
IPP Independent Power Producers
ISO Independent System Operator
ITC Investment Tax Credit
IURC Indiana Utility Regulatory Commission
LIBOR London Inter Bank Offered Rate
LNG Liquefied Natural Gas
MISO Midcontinent Independent System Operator, Inc.
MMBtu Million British Thermal Units
MRE Energy Reallocation Mechanism
MW Megawatts
MWh Megawatt Hours
NAAQS U.S. National Ambient Air Quality Standards
NCI Noncontrolling Interest
NEK Natsionalna Elektricheska Kompania (state-owned electricity public supplier in Bulgaria)
NERC North American Electric Reliability Corporation
NM Not Meaningful
NOV Notice of Violation
NOX
 Nitrogen Dioxide
NPDES National Pollutant Discharge Elimination System
NSPS New Source Performance Standards
O&M Operations and Maintenance
ONS National System Operator in Brazil
OTC Policy Statewide Water Quality Control Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling
OVEC Ohio Valley Electric Corporation, an electric generating company in which AES Ohio has a 4.9% interest
Parent Company The AES Corporation
PCU Performance Cash Units
Pet Coke Petroleum Coke
PJM PJM Interconnection, LLC
PM Particulate Matter
PPA Power Purchase Agreement
PREPA Puerto Rico Electric Power Authority
PSU Performance Stock Unit
PUCO The Public Utilities Commission of Ohio
PURPA U.S. Public Utility Regulatory Policies Act
QF Qualifying Facility
RSU Restricted Stock Unit
RTO Regional Transmission Organization
SADI Argentine Interconnected System
SBU Strategic Business Unit
SEC U.S. Securities and Exchange Commission
SEN Sistema Electrico Nacional in Chile
SIN National Interconnected System in Colombia
SIP State Implementation Plan
SO2
 Sulfur Dioxide
SWRCB California State Water Resources Board
TCJA Tax Cuts and Jobs Act
TDSIC Transmission, Distribution, and Storage System Improvement Charge
U.S. United States
USD United States Dollar
VAT Value Added Tax
VIE Variable Interest Entity
Vinacomin Vietnam National Coal-Mineral Industries Holding Corporation Ltd.

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PART I
In this Annual Report the terms “AES,” “the Company,” “us,” or “we” refer to The AES Corporation and all of its subsidiaries and affiliates, collectively. The terms “The AES Corporation” and “Parent Company” refer only to the parent, publicly held holding company, The AES Corporation, excluding its subsidiaries and affiliates.
Forward-Looking Information and Risk Factor Summary
In this filing we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that these forward-looking statements and the underlying assumptions are reasonable, we cannot assure you that they will prove to be correct.
Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Some of those factors (in addition to others described elsewhere in this report and in subsequent securities filings) include:
•the economic climate, particularly the state of the economy in the areas in which we operate, which impacts demand for electricity in many of our key markets, including the fact that the global economy faces considerable uncertainty for the foreseeable future, which further increases many of the risks discussed in this Form 10-K;
•changes in the price of electricity at which our generation businesses sell into the wholesale market and our utility businesses purchase to distribute to their customers, and the success of our risk management practices, such as our ability to hedge our exposure to such market price risk;
•changes in the prices and availability of coal, gas and other fuels (including our ability to have fuel transported to our facilities) and the success of our risk management practices, such as our ability to hedge our exposure to such market price risk, and our ability to meet credit support requirements for fuel and power supply contracts;
•changes in and access to the financial markets, particularly changes affecting the availability and cost of capital in order to refinance existing debt and finance capital expenditures, acquisitions, investments and other corporate purposes;
•changes in inflation, demand for power, interest rates and foreign currency exchange rates, including our ability to hedge our interest rate and foreign currency risk;
•our ability to fulfill our obligations, manage liquidity and comply with covenants under our recourse and non-recourse debt, including our ability to manage our significant liquidity needs and to comply with covenants under our revolving credit facility and other existing financing obligations;
•our ability to receive funds from our subsidiaries by way of dividends, fees, interest, loans or otherwise;
•changes in our or any of our subsidiaries' corporate credit ratings or the ratings of our or any of our subsidiaries' debt securities or preferred stock, and changes in the rating agencies' ratings criteria;
•our ability to purchase and sell assets at attractive prices and on other attractive terms;
•our ability to compete in markets where we do business;
•our ability to operate power generation, distribution and transmission facilities, including managing availability, outages and equipment failures;
•our ability to manage our operational and maintenance costs and the performance and reliability of our generating plants, including our ability to reduce unscheduled down times;
•our ability to enter into long-term contracts, which limit volatility in our results of operations and cash flow, such as PPAs, fuel supply, and other agreements and to manage counterparty credit risks in these agreements;
•variations in weather, especially mild winters and cooler summers in the areas in which we operate, the occurrence of difficult hydrological conditions for our hydropower plants, as well as hurricanes and other storms and disasters, wildfires and low levels of wind or sunlight for our wind and solar facilities;
•pandemics, or the future outbreak of any other highly infectious or contagious disease;
•the performance of our contracts by our contract counterparties, including suppliers or customers;
•severe weather and natural disasters;

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•our ability to manage global supply chain disruptions;
•our ability to raise sufficient capital to fund development projects or to successfully execute our development projects;
•the success of our initiatives in renewable energy projects and energy storage projects;
•the availability of government incentives or policies that support the development of renewable energy generation projects;
•our ability to execute on our strategies or achieve expectations related to environmental, social, and governance matters;
•our ability to keep up with advances in technology;
•changes in number of customers or in customer usage;
•the operations of our joint ventures and equity method investments that we do not control;
•our ability to achieve reasonable rate treatment in our utility businesses;
•changes in laws, rules and regulations affecting our international businesses, particularly in developing countries;
•changes in laws, rules and regulations affecting our utilities businesses, including, but not limited to, regulations which may affect competition, the ability to recover net utility assets and other potential stranded costs by our utilities;
•changes in law resulting from new local, state, federal or international energy legislation and changes in political or regulatory oversight or incentives affecting our wind business and solar projects, our other renewables projects and our initiatives in GHG reductions and energy storage, including government policies or tax incentives;
•changes in environmental laws, including requirements for reduced emissions, GHG legislation, regulation, and/or treaties and CCR regulation and remediation;
•changes in tax laws, including U.S. tax reform, and challenges to our tax positions;
•the effects of litigation and government and regulatory investigations;
•the performance of our acquisitions;
•our ability to maintain adequate insurance;
•decreases in the value of pension plan assets, increases in pension plan expenses, and our ability to fund defined benefit pension and other postretirement plans at our subsidiaries;
•losses on the sale or write-down of assets due to impairment events or changes in management intent with regard to either holding or selling certain assets;
•changes in accounting standards, corporate governance and securities law requirements;
•our ability to maintain effective internal controls over financial reporting;
•our ability to attract and retain talented directors, management and other personnel;
•cyber-attacks and information security breaches; and
•data privacy.
These factors, in addition to others described elsewhere in this Form 10-K, including those described under Item 1A.—Risk Factors and in subsequent securities filings, should not be construed as a comprehensive listing of factors that could cause results to vary from our forward-looking information.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.
ITEM 1. BUSINESS
Item 1.—Business is an outline of our strategy and our businesses by SBU, including key financial drivers. Additional items that may have an impact on our businesses are discussed in Item 1A.—Risk Factors and Item 3.—Legal Proceedings.

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Executive Summary
Incorporated in 1981, AES is a global energy company accelerating the future of energy. Together with our many stakeholders, we are improving lives by delivering the greener, smarter energy solutions the world needs. Our diverse workforce is committed to continuous innovation and operational excellence, while partnering with our customers on their strategic energy transitions and continuing to meet their energy needs today.
a2023formaesinfographic4001_ES.jpg
Our Strategy
AES remains an industry leader in developing and operating the innovative solutions that enable the transition to zero and low-carbon sources of energy. We continue to see an enormous opportunity from the once-in-a-lifetime transformation of the electricity sector driven by decarbonization, electrification, and digitalization.
The focus of our strategy is to partner with large corporations that are transitioning to carbon-free sources of electricity. One example of our successful execution is our collaboration with large technology companies. Specifically, demand from data centers in the U.S. is expected to nearly double in the next three years. Our well-established relationships with these customers, combined with our proven track record of delivering our projects, positions us well to take advantage of this opportunity.
In 2023, we signed long-term contracts for 5.6 GW of renewables, bringing our backlog of projects — those with signed contracts, but which are not yet in operation — to 12.3 GW. Our backlog serves as the core component of future growth. As a result, we have been consistently rated by Bloomberg New Energy Finance as one of the top two largest sellers globally of renewable power to corporate customers, with a focus on large technology/data center providers.
We are a leader in developing green hydrogen. We are partnering with Air Products to develop, build, own, and operate the largest green hydrogen production facility in the United States. We are also participating in two green hydrogen hubs in the United States, which were awarded up to $2.4 billion of grant funding from the U.S. Department of Energy.
With our utilities, we are working with a broad range of stakeholders to transition to lower carbon forms of energy. At AES Indiana, for example, we are working to retire its remaining coal generation by the end of 2025, while adding new renewables and natural gas to the grid.
We are also developing and incubating new technologies that add value today and will drive our business in the future.

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We understand that the energy industry is changing rapidly, and aim to proactively seek solutions that will give us a continued competitive advantage. At the core of our innovation strategy is AES Next, our business and technology incubator. AES Next works to identify new and innovative technologies and business opportunities that provide or support leading-edge greener energy solutions.
2023 Strategic Highlights
•We signed 5.6 GW of renewables and energy storage under long-term PPAs.
•We completed the construction of 3.5 GW.
•Our backlog, which includes projects with signed contracts, but which are not yet operational, is now 12.3 GW, consisting of:
◦5.1 GW under construction; and
◦7.2 GW with signed PPAs, but that are not yet under construction.
•AES Indiana reached a unanimous settlement agreement for its first rate case since 2018, and expects to receive approval from the IURC by the middle of 2024.
•AES Ohio received approval from the PUCO for its Electric Security Plan (ESP4), providing the regulatory foundation necessary to enable future investments.
•We exited or announced the sale or closure of 2.1 GW of coal generation in Vietnam, the U.S., and Chile.
•We signed agreements for three-year extensions of 1.4 GW of gas generation at the Southland legacy units in Southern California. These extensions will help meet the State of California's grid reliability needs while supporting its decarbonization goals.
•Awarded up to $2.4 billion of grant funding by the U.S. Department of Energy for two green hydrogen hubs with AES participation.
•We secured $1.1 billion in asset sale proceeds, to accelerate our portfolio transformation, outpacing our target of $400 to $600 million.
Overview
Generation
We currently own and/or operate a generation portfolio of 34,596 MW, including generation from our integrated utility, AES Indiana. Our generation fleet is diversified by technologies and fuel type. See discussion below under Fuel Costs.
Performance drivers of our generation businesses include types of electricity sales agreements, plant reliability and flexibility, availability of generation capacity to meet contracted sales, fuel costs, seasonality, weather variations, economic activity, fixed-cost management, and competition. The financial performance of our renewables business is also impacted by our ability to complete construction projects and earn U.S. renewable tax credits.
Contract Sales — Most of our generation businesses sell electricity under medium- or long-term contracts in either regulated or competitive markets ("contract sales") or under short-term agreements in competitive markets ("short-term sales"). Our medium-term contract sales have terms of two to five years, while our long-term contracts have terms of more than five years.
Contracts requiring fuel to generate energy, such as natural gas or coal, are structured to recover variable costs, including fuel and variable O&M costs, either through direct or indexation-based contractual pass-throughs or tolling arrangements. When the contract does not include a fuel pass-through, we typically hedge fuel costs or enter into fuel or energy supply agreements for a similar contract period (see discussion below under Fuel Costs). These contracts also help us to fund a significant portion of the total capital cost of the project through long-term non-recourse project-level financing.
Certain contracts include capacity payments that cover projected fixed costs of the plant, including fixed O&M expenses, debt service, and a return on capital invested. In addition, most of our contracts require that the majority of the capacity payments be denominated in the currency matching our fixed costs. In some U.S. markets, the capacity payment is only for the resource adequacy or reliability benefits from the generating facility, allowing us to separately monetize the electricity produced by the facility through either contract sales or short-term sales.

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Contracts that do not have significant fuel cost or do not contain a capacity payment are structured based on long-term prices and may also include negotiated pass-through costs, allowing us to recover expected fixed and variable costs as well as provide a return on investment.
Many of these contracts are intended to reduce exposure to the volatility of fuel and electricity prices by linking the business's revenues and costs. We generally structure our business to eliminate or reduce foreign exchange risk by matching the currency of revenue and expenses, including fixed costs and debt. Our project debt may consist of both fixed and floating rate debt for which we typically hedge a significant portion of our exposure. Some of our contracted businesses also receive a regulated market-based capacity payment, which is discussed in more detail in the Short-Term Sales section below.
Thus, these contracts, or other related commercial arrangements, significantly mitigate our exposure to changes in electricity and, as applicable, fuel prices, currency fluctuations and changes in interest rates. In addition, these contracts generally provide or account for a recovery of our fixed operating expenses and a return on our investment, as long as we operate the plant to the reliability, availability, and efficiency standards required in the contract or otherwise.
Short-Term Sales — Our generation businesses also sell power and ancillary services under short-term contracts with average terms of less than two years, including spot sales, directly in the short-term market or at regulated prices. The short-term markets are typically administered by a system operator to coordinate dispatch. Short-term markets generally operate on merit order dispatch, where the least expensive generation facilities, based upon variable cost or bid price, are dispatched first and the most expensive facilities are dispatched last. The short-term price is typically set at the marginal cost of energy or bid price (the cost of the last plant required to meet system demand). As a result, the cash flows and earnings associated with these businesses are more sensitive to fluctuations in the market price for electricity. In addition, many of these wholesale markets include markets for ancillary services to support the reliable operation of the transmission system. Across our portfolio, we provide a wide array of ancillary services, including voltage support, frequency regulation and spinning reserves.
Many of the short-term markets in which we operate include regulated capacity markets. These capacity markets are intended to provide additional revenue based upon availability without reliance on the energy margin from the merit order dispatch. Capacity markets are typically priced based on the cost of a new entrant and the system capacity relative to the desired level of reserve margin (generation available in excess of peak demand). Our generating facilities selling in the short-term markets typically receive capacity payments based on their availability in the market.
Plant Reliability and Flexibility — Our contract and short-term sales provide incentives to our generation plants to optimally manage availability, operating efficiency and flexibility. Capacity payments under contract sales are frequently tied to meeting minimum standards. In short-term sales and in certain contract sales, our plants must be reliable and flexible to capture peak market prices and to maximize market-based revenues. In addition, our flexibility allows us to capture ancillary service revenue while meeting local market needs.
Fuel Costs — For our thermal generation plants, fuel is a significant component of our total cost of generation. For contract sales, we often enter into fuel supply agreements to match the contract period, or we may financially hedge our fuel costs. Some of our contracts include indexation for fuels. In those cases, we seek to match our fuel supply agreements to the indexation. For certain projects, we have tolling arrangements where the power offtaker is responsible for the supply and cost of fuel to our plants.
In short-term sales, we sell power at market prices that are generally reflective of the market cost of fuel at the time, and thus procure fuel supply on a short-term basis, generally designed to match up with our market sales profile. Since fuel price is often the primary determinant for power prices, the economics of projects with short-term sales are often subject to volatility of relative fuel prices. For further information regarding commodity price risk please see Item 7A.—Quantitative and Qualitative Disclosures about Market Risk in this Form 10-K.
53% of the capacity of our generation plants are renewables, including hydro, solar, wind, energy storage, biomass and landfill gas, which do not have significant fuel costs.
27% of the capacity of our generation plants are fueled by natural gas. With the exception of our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market, we use gas from local suppliers in each market.
18% of the capacity of our generation fleet is coal-fired. In the U.S., most of our coal-fired plants are supplied from domestic coal. At our non-U.S. generation plants, and at our plant in Puerto Rico, we source coal from a mix of sources from the international market and in the local jurisdictions.

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To the extent possible, we utilize our global sourcing program to maximize the purchasing power of our fuel procurement.
2% of the capacity of our generation fleet utilizes pet coke or oil for fuel. We source oil and diesel locally at prices linked to international markets. We largely source pet coke from Mexico and the U.S.
Seasonality, Weather Variations and Economic Activity — Our generation businesses are affected by seasonal weather patterns and, therefore, operating margin is not generated evenly throughout the year. Additionally, weather variations, including temperature, solar and wind resources, and hydrological conditions, may also have an impact on generation output at our renewable generation facilities. In competitive markets for power, local economic activity can also have an impact on power demand and short-term prices for power.
Fixed-Cost Management — In our businesses with long-term contracts, the majority of the fixed O&M costs are recovered through the capacity payment or were otherwise factored in as a component of the long-term contract price. However, for all generation businesses, managing fixed costs and reducing them over time is a driver of business performance.
Competition — For our businesses with medium- or long-term contracts, there is limited market competition impacting prices during the term of the contract. For short-term sales, plant dispatch and the price of electricity are determined by market competition and local dispatch and reliability rules.
Utilities
Our utility businesses consist of AES Indiana and AES Ohio in the U.S., and four utilities in El Salvador. AES' six utility businesses distribute power to 2.6 million customers and AES' two utilities in the U.S. also include generation capacity totaling 3,500 MW.
AES Indiana, our fully integrated regulated utility, and AES Ohio, our transmission and distribution regulated utility, each operate as the sole distributors of electricity within their respective jurisdictions. AES Indiana owns and operates all of the facilities necessary to generate, transmit and distribute electricity. AES Ohio owns and operates all of the facilities necessary to transmit and distribute electricity. Our distribution business in El Salvador faces limited competition due to significant barriers to enter the market. According to El Salvador's regulation, large regulated customers have the option of becoming unregulated users and requesting service directly from generation or commercialization agents.
In general, our utilities sell electricity directly to end-users, such as homes and businesses, and bill customers directly. Key performance drivers for utilities include the regulated rate of return and tariff, seasonality, weather variations, economic activity and reliability of service. Revenue from utilities is classified as regulated on the Consolidated Statements of Operations.
Regulated Rate of Return and Tariff — In exchange for the right to sell or distribute electricity in a service territory, our utility businesses are subject to government regulation. This regulation sets the framework for the prices ("tariffs") that our utilities are allowed to charge customers for electricity and establishes service standards that we are required to meet.
Our utilities are generally permitted to earn a regulated rate of return on assets, determined by the regulator based on the utility's allowed regulatory asset base, capital structure and cost of capital. The asset base on which the utility is permitted a return is determined by the regulator, within the framework of applicable local laws, and is based on the amount of assets that are considered used and useful in serving customers. Both the allowed return and the asset base are important components of the utility's earning power. The allowed rate of return and operating expenses deemed reasonable by the regulator are recovered through the regulated tariff that the utility charges to its customers.
The tariff may be reviewed and reset by the regulator from time to time depending on local regulations, or the utility may seek a change in its tariffs. The tariff is generally based upon usage level and may include a pass-through of costs that are not controlled by the utility, such as the costs of fuel (in the case of integrated utilities) and/or the costs of purchased energy, to the customer. Components of the tariff that are directly passed through to the customer are usually adjusted through a summary regulatory process or an existing formula-based mechanism. In some regulatory regimes, customers with demand above an established level are unregulated and can choose to contract directly with the utility or with other retail energy suppliers and pay non-bypassable fees, which are fees to the distribution company for use of its distribution system.

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The regulated tariff generally recognizes that our utility businesses should recover certain operating and fixed costs, as well as manage uncollectible amounts, quality of service and technical and non-technical losses. Utilities, therefore, need to manage costs to the levels reflected in the tariff, or risk non-recovery of costs or diminished returns.
Seasonality, Weather Variations, and Economic Activity — Our utility businesses are generally affected by seasonal weather patterns and, therefore, operating margin is not generated evenly throughout the year. Additionally, weather variations may also have an impact based on the number of customers, temperature variances from normal conditions, and customers' historic usage levels and patterns. Retail sales, after adjustments for weather variations, are also affected by changes in local economic activity, energy efficiency and distributed generation initiatives, as well as the number of retail customers.
Reliability of Service — Our utility businesses must meet certain reliability standards, such as duration and frequency of outages. Those standards may be explicit, with defined performance incentives or penalties, or implicit, where the utility must operate to meet customer and/or regulator expectations.
Development and Construction
We develop and construct new generation facilities. For our utility business, new plants may be built or existing plants retrofitted in response to customer needs or to comply with regulatory developments. The projects are developed subject to regulatory approval that permits recovery of our capital cost and a return on our investment. For our generation businesses, our priority for development is in key growth markets, where we can leverage our global scale and synergies with our existing businesses by adding renewable energy. We make the decision to invest in new projects by evaluating the strategic fit, financial profile, projected returns and risk for the investment and against alternative uses of capital, including corporate debt repayment.
In most cases, we enter into long-term contracts for output from new facilities prior to commencing construction. To limit required equity contributions from The AES Corporation, we also seek non-recourse project debt financing and other sources of capital, including partners, when it is commercially attractive. We typically contract with a third party to manage construction, although our construction management team supervises the construction work and tracks progress against the project's budget, schedule, and the required safety, efficiency and productivity standards.
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 technology.
We are organized into four technology-oriented SBUs: Renewables (solar, wind, energy storage, and hydro generation facilities); Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities); Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities, and our businesses in Chile); and New Energy Technologies (green hydrogen initiatives and investments in Fluence, Uplight, and 5B) — which are led by our SBU Presidents.
We have two lines of business: generation and utilities. Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our first business line, generation, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. Our Utilities SBU participates in our second business line, utilities, in 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. Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions.
We measure the operating performance of our SBUs using Adjusted EBITDA, a non-GAAP measure. The Adjusted EBITDA by SBU for the year ended December 31, 2023 is shown below. The percentages for Adjusted EBITDA are the contribution by each SBU to the gross metric, i.e., the total Adjusted EBITDA by SBU, before deductions for Corporate. Our New Energy Technologies SBU generated losses for the year ended December 31, 2023. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-K for reconciliation and definitions of Adjusted EBITDA.

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1696816969
For financial reporting purposes, the Company's corporate activities are reported within "Corporate and Other" because they do not require separate disclosure. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 18—Segment and Geographic Information included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further discussion of the Company's segment structure.



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a2023formsbuinfographics001 (10)_RNW.jpg
(1) Non-GAAP measure. See Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition.
Renewables

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Our Renewables SBU is the highest growth segment for AES, adding 4.9 GW to our contracted backlog during 2023, including 1.2 GW with large technology companies.
Specifically, demand from data centers in the U.S. is expected to nearly double in the next three years as generative artificial intelligence use-cases expand. Our well-established relationships with these customers, combined with our proven track record of delivering our projects, positions us well to take advantage of this opportunity.
The Renewables SBU has generation facilities in ten countries — the United States, Brazil, Argentina, Colombia, Mexico, Panama, Bulgaria, the Dominican Republic, Jordan, and the Netherlands.
Generation — Total operating installed capacity of the Renewables SBU is 16,211 MW. The following table lists our Renewables SBU generation facilities:
Business Location Fuel Gross MW AES Equity Interest Year Acquired or Began Operation Contract Expiration Date Customer(s)
AES Brasil Operacoes (AES Tietê) (1)
 Brazil Hydro 2,658  47  % 1999 2032 Various
Alicura (9)
 Argentina Hydro 1,050  100  % 2000
Chivor Colombia Hydro 1,000  99  % 2000 2024-2039 Various
OpCo A (2)
 US-Various Solar 967  26  % 2017-2019 2028-2046 Various
Wind 140 
New York Wind (OpCo D) (3)
 US-NY Wind 612  75  % 2021 NYISO
AES Renewable Holdings (3)
 US-Various Solar 414  100  % 2015-2023 2029-2042 Utility, Municipality, Education, Non-Profit
Energy Storage 90 
Spotsylvania Solar Energy Center (OpCo B) (2)
 US-VA Solar 485  26  % 2020-2021 2035 Apple, Akami, Etsy, Microsoft
Ventos do Araripe, Caetes & Cassino (Cubico II) Brazil Wind 456  47  % 2022 2034-2035 Various, CCEE
Alto Sertão II Brazil Wind 386  36  % 2017 2033-2035 Various, CCEE
Cajuina 1 Brazil Wind 314  36%-47% 2023 2035-2043 Various
Mesa La Paz (2)
 Mexico Wind 306  50  % 2019 2045 Fuentes de Energia Peñoles
McFarland A (4)
 US-AZ Solar 200  75  % 2023 2038 BP
Energy Storage 100 
Cajuina 2 Brazil Wind 296  36%-47% 2023 2044 Various
OpCo B (2)
 US-Various Solar 260  26  % 2019 2039-2044 Various
Bayano Panama Hydro 260  49  % 1999 2030 ENSA, Edemet, Edechi, Other
Chevelon Butte (OpCo D) (3)
 US-AZ Wind 238  75  % 2023 2043 APS
Buffalo Gap II (3)
 US-TX Wind 233  100  % 2007
Baldy Mesa (4)
 US-CA Solar 150  75  % 2023 2043 Amazon
Energy Storage 75 
Changuinola Panama Hydro 223  90  % 2011 2030 AES Panama
Great Cove 1&2 (4)
 US-PA Solar 220  75  % 2023 2043 University of Pennsylvania
Raceway 1 US-CA Solar 125  50  % 2023 2043 Microsoft
Energy Storage 80 
Prevailing Winds (OpCo B) (2)
 US-SD Wind 200  26  % 2020 2050 Prevailing Winds
Oak Ridge (4)
 US-LA Solar 200  75  % 2023 2043 Amazon
Ventus Brazil Wind 187  36  % 2020 2034 CCEE
Skipjack (OpCo D) (3)(4)
 US-VA Solar 175  75  % 2022 2036 Exelon Generation Company
Buffalo Gap III (3)
 US-TX Wind 170  100  % 2008
Tucano Phase 2 Brazil Wind 161  47  % 2023 2036 Anglo American
Mandacaru and Salinas Brazil Wind 159  47  % 2021 2033-2034 CCEE
St. Nikola Bulgaria Wind 156  89  % 2010 2025 Electricity Security Fund
Tucano Phase 1 Brazil Wind 155  24  % 2022-2023 2042 Unipar
Guaimbê Brazil Solar 150  36  % 2018 2037 CCEE

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Lancaster Area Battery (LAB) (3)(4)
 US-CA Energy Storage 127  75  % 2022 2037 PG&E
Buffalo Gap I (3)
 US-TX Wind 121  100  % 2006
Chiriqui-Esti Panama Hydro 120  49  % 2003 2030 ENSA, Edemet, Edechi, Other
Cavalier (4)
 US-VA Solar 116  75  % 2023 2043 Dominion Energy
Delta (4)
 US-MS Wind 104  75  % 2023 2043 Amazon
Cabra Corral Argentina Hydro 102  100  % 1995 Various
Southland Energy—Alamitos Energy Center (5)
 US-CA Energy Storage 100  50  % 2021 2041 Southern California Edison
East Line Solar (OpCo B) (2)
 US-AZ Solar 100  26  % 2020 2045 Salt River Project
Central Line (OpCo B) (2)
 US-AZ Solar 100  26  % 2022 2039 Salt River Project Agricultural Improvement & Power District
West Line (OpCo B) (2)
 US-AZ Solar 100  26  % 2022 2047 Salt River Project Agricultural Improvement & Power District
Luna (3)
 US-CA Energy Storage 100  75  % 2022 2037 Clean Power Alliance of Southern California
Vientos Bonaerenses Argentina Wind 100  100  % 2020 2024-2040 Various
Vientos Neuquinos Argentina Wind 100  100  % 2020 2024-2040 Various
Laurel Mountain Repowering (OpCo D) (4)
 US-WV Wind 99  75  % 2022 2037 AES Solutions Management, LLC
McFarland B (4)
 US-AZ Solar 60  75  % 2023 2043 Amazon
Energy Storage 30 
Estrella US-CA Solar 56  50  % 2023 2038 Southern California Edison
Energy Storage 28 
Platteview (4)
 US-NE Solar 81  75  % 2023 2043 Omaha Public Power District
Clover Creek (OpCo B) (2)
 US-UT Solar 80  50  % 2021 2046 UMPA
Westwing 1 (4)
 US-AZ Energy Storage 77  75  % 2023 2043 APS
AGV Solar Brazil Solar 76  36  % 2019 2040 Various, CCEE
OpCo C (3)
 US-Various Solar 73  50  % 2021-2022 2041-2042 Various
Boa Hora Brazil Solar 69  47  % 2019 2038 CCEE
Mountain View Repowering (OpCo D) (3)(4)
 US-CA Wind 67  75  % 2022 2042 Southern California Edison
San Fernando Colombia Solar 61  99  % 2021 2036 Ecopetrol
Big Island Waikoloa (OpCo E) (3)(6)
 US-HI Solar 30  100  % 2022-2023 2047 HECO
Energy Storage 30 
Penonome I Panama Wind 55  49  % 2020 2030 ENSA, Edemet, Edechi
Chiriqui-Los Valles Panama Hydro 54  49  % 1999 2030 ENSA, Edemet, Edechi, Other
Bayasol Dominican Republic Solar 50  65  % 2021 2036 Ede Sur
Agua Clara Dominican Republic Wind 50  65  % 2022 2039 Ede Norte
Santanasol Dominican Republic Solar 50  65  % 2022 2038 Ede Sur
Mountain View IV (OpCo E) (6)
 US-CA Wind 49  100  % 2012 2032 Southern California Edison
Chiriqui-La Estrella Panama Hydro 48  49  % 1999 2030 ENSA, Edemet, Edechi, Other
AM Solar (7)
 Jordan Solar 48  36  % 2019 2039 National Electric Power Company
Ullum Argentina Hydro 45  100  % 1996 Various
Lawa'i (3)(6)
 US-HI Solar 20  100  % 2018 2043 Kaua'i Island Utility Cooperative
Energy Storage 20 
OpCo D (2)
 US-Various Solar 38  75  % 2022-2023 2042-2043 Various
Energy Storage 2 

14 | 2023 Annual Report

Kuihelni (4)
 US-HI Solar 14.5  100  % 2023 2048 HECO
Energy Storage 14.5 
Kekaha (3)(6)
 US-HI Solar 14  100  % 2019 2045 Kaua'i Island Utility Cooperative
Energy Storage 14 
Brisas Colombia Solar 27  99  % 2022 2037 Ecopetrol
West Oahu Solar (6)
 US-HI Solar 12.5  100  % 2023 2048 HECO
Energy Storage 12.5 
Na Pua Makani (6)
 US-HI Wind 24  100  % 2020 2040 HECO
Ilumina US-PR Solar 24  100  % 2012 2037 LUMA Energy
Castilla Colombia Solar 21  99  % 2019 2034 Ecopetrol
Tunjita Colombia Hydro 20  99  % 2016 2024-2039 Various
Laurel Mountain ES US-WV Energy Storage 16  100  % 2011
Community Energy (4)
 US-Various Solar 14  75  % 2022 2024-2043 Various
Southland Energy—AES Gilbert (Salt River (5) (8)
 US-AZ Energy Storage 10  50  % 2019 2039 Salt River Project Agricultural Improvement & Power District
El Tunal Argentina Hydro 10  100  % 1995 Various
Andres ES Dominican Republic Energy Storage 10  65  % 2017
Los Mina DPP ES Dominican Republic Energy Storage 10  65  % 2017
Pesé Solar Panama Solar 10  49  % 2021 2030 ENSA, Edemet, Edechi, Other
Mayorca Solar Panama Solar 10  49  % 2021 2030 ENSA, Edemet, Edechi, Other
Cedro Panama Solar 10  49  % 2021 2030 ENSA, Edemet, Edechi, Other
Caoba Panama Solar 10  49  % 2021 2030 ENSA, Edemet, Edechi, Other
Netherlands ES Netherlands Energy Storage 10  100  % 2015
Warrior Run ES US-MD Energy Storage 5  100  % 2016
5B Costa Norte Panama Solar 1  100  % 2021 2051 Costa Norte LNG Terminal
16,211 
_____________________________
(1)AES Tietê hydro plants: Água Vermelha (1,396 MW), Bariri (143 MW), Barra Bonita (141 MW), Caconde (80 MW), Euclides da Cunha (109 MW), Ibitinga (132 MW), Limoeiro (32 MW), Mog-Guaçu (7 MW), Nova Avanhandava (347 MW), Promissão (264 MW), Sao Joaquim (3 MW) and Sao Jose (4 MW).
(2)Unconsolidated entity, accounted for as an equity affiliate.
(3)AES owns these assets together with third-party tax equity investors with variable ownership interests. The 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 proceeds from the issuance of tax equity are recorded as Noncontrolling interest or Redeemable stock of subsidiaries in the Company's Consolidated Balance Sheets, depending on the partnership rights of the specific project.
(4)Owned by ACED.
(5)On December 1, 2022, Southland Energy sold an additional 14.9% ownership interest in the Southland Energy assets. Following the sale, AES holds 50.1% of Southland Energy's interest and this business continues to be consolidated by AES.
(6)Owned by AES Renewable Holdings.
(7)Announced the sale of 26% of our interest in this business in November 2020.
(8)Facility experienced a fire event in April 2022 which rendered the asset currently inoperable.
(9)Operated by AES under a concession contract granted for a term of 30 years, which was set to expire on August 11, 2023. In accordance with the contract, the concession could be extended with a transitional period up to a maximum of 12 months. The Energy Secretariat has enacted several resolutions since the contractual expiration date extending it until March 18, 2024. Once its term expires, the ownership and possession of the power plant equipment will be transferred by full right to the National State in its capacity as grantor.


15 | 2023 Annual Report

Under construction — The majority of projects under construction have executed long-term PPAs or, as applicable, have been assigned tariffs through a regulatory process. The following table lists our plants under construction in the Renewables SBU: 
Business Location Fuel Gross MW AES Equity Interest Expected Date of Commercial Operations
High Mesa (1)
 US-CO Solar 10  75  % 1H 2024
Energy Storage 10 
Westwing 1 (1)
 US-AZ Energy Storage 3  75  %
Delta (1)
 US-MS Wind 81  75  % 1H 2024
Chevelon Butte Phase II (1)
 US-AZ Wind 216  75  % 1H 2024
Kuihelni (2)
 US-HI Solar 45  100  % 1H 2024
Energy Storage 45 
Cajuína 2 Brazil Wind 74  47  % 1H 2024
Tucano Phase 2 Brazil Wind 6  47  % 1H 2024
Mirasol 1&2 Dominican Republic Solar 100  65  % 1H 2024
AES Clean Energy Development US-Various Solar 69  75  % 1H-2H 2024
Energy Storage 7 
McFarland B (1)
 US-AZ Solar 240  75  % 2H 2024
Energy Storage 120 
Cavalier (1)
 US-VA Solar 40  75  % 2H 2024
Alamitos 2 US-CA Energy Storage 82  100  % 2H 2024
Cavalier Solar A2 (1)
 US-VA Solar 84  75  % 2H 2024
Waiwa Phase 2 (1)
 US-HI Solar 30  75  % 2H 2024
Energy Storage 30 
Peravia I Dominican Republic Solar 70  65  % 2H 2024
Calhoun US-MI Solar 125  75  % 2H 2024
Mamm Creek US-CO Solar 10  75  % 2H 2024
Energy Storage 10 
AGV VII Brazil Solar 33  47  % 2H 2024
Los Santos Solar Panama Solar 8  49  % 2H 2024
Corotu Solar Panama Solar 10  49  % 2H 2024
Esti Solar II Panama Solar 18  49  % 2H 2024
Rexford US-CA Solar 300  100  % 2H 2024-1H 2025
Energy Storage 240 
Morris Solar US-MO Solar 250  1H 2025
Bellefield Phase 1 (1)
 US-CA Solar 500  75  % 2H 2025
Energy Storage 500 
3,366 
_____________________________
(1)Owned by ACED.
(2)Owned by AES Renewable Holdings.

AES Clean Energy
Business Description — AES' U.S. renewables portfolio, referred to as AES Clean Energy, is the leading U.S. renewables growth platform in serving large corporations with its 51 GW development pipeline. AES Clean Energy aims to solve customers' energy challenges by offering an expanded portfolio of innovative solutions based on cutting-edge technologies that are designed to accelerate customers' transitions to carbon-free energy. The generation capacity of the systems owned and/or operated under AES Clean Energy is 6,964 MW across the U.S., with another 3,121 MW under construction, including 1,725 MW of solar, 297 MW of wind, and 1,099 MW of energy storage. AES Clean Energy has a 6.1 GW backlog of projects, the majority of which are expected to come online through 2025. The adoption of the Inflation Reduction Act ("IRA") in 2022 and the expansion of data center needs related to the growing use of generative artificial intelligence are expected to be a significant accelerant to the growth of the U.S. renewables market and AES seeks to capture a significant portion of this market expansion.

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AES Clean Energy comprises AES Renewable Holdings, sPower, ACED, and other renewable assets, as part of its broader investments in the U.S. ACED was formed on February 1, 2021, as specifically identified projects in the sPower and AES Renewable Holdings development platforms were merged. ACED serves as the development vehicle for all future renewables projects in the U.S. Following the merger, ACED expanded through the acquisitions of the Valcour Intermediate Holdings wind platform and Community Energy, a U.S. solar developer, as well as the acquisition of a small wind team and multiple development projects, most notably Bellefield in 2023. AES Clean Energy has also grown organically at a rapid pace and now has more than 1,300 employees, in contrast to less than 500 employees at the time of its formation in 2021 as it has expanded its capabilities and geographic reach to better serve the needs of the growing U.S. market. During the same time period, the development pipeline has also more than doubled.
In line with AES' strategy of using partnerships to promote the effective deployment of capital, in February 2023, the Company sold 49% of its indirect interest in a 1.3 GW portfolio of sPower's operating assets ("OpCo B") that includes 17 solar projects and one wind project, located across six states, to Hannon Armstrong Sustainable Infrastructure Capital, Inc. ("HASI"). Further, in December 2023, AES Renewable Holdings issued preferred shares in a portfolio of approximately 605 MW across 200 solar and solar plus storage assets ("OpCo 1") operating across eleven states to HASI.
Key Financial Drivers — The financial results of AES Clean Energy are primarily driven by the efficient construction and operation of renewable energy facilities across the U.S. under long-term PPAs, through which the energy price on the entire production of these facilities is determined. Tax credits associated with the development of U.S. renewables projects can be substantial and have increased with the adoption of the IRA. In 2023, AES recognized $611 million of pre-tax contribution related to the monetization of tax attributes to tax equity investors and transferability tax credit buyers relating to U.S. renewables projects,$18 million of which relates to a solar project owned by our utility at AES Indiana. The financial results of U.S. renewable assets are primarily driven by the amount of wind or solar resource at the facilities, availability of facilities, growth in projects, and by tax credit recognition once placed in service.
A majority of solar projects under AES Clean Energy have been financed with tax equity structures. Under these tax equity structures, the tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. Based on certain liquidation provisions of the tax equity structures, this could result in variability to earnings attributable to AES compared to the earnings reported at the facilities. In 2023, AES Clean Energy largely generated investment tax credits ("ITCs") from its renewable assets. We expect that the extension of the current ITCs and production tax credits ("PTCs"), as well as higher credits available for projects that satisfy wage and apprenticeship requirements under the IRA, will increase demand for our renewable products. Also in 2023, AES Clean Energy monetized tax credits under the transferability provisions of the IRA for the first time. These tax credit sales reduce our tax rate under U.S. GAAP.
Buffalo Gap I, Buffalo Gap II, and Buffalo Gap III are exposed to the volatility of energy prices and their revenue may change materially as energy prices fluctuate in their respective markets of operations. For these projects, ERCOT power prices impact financial results. The Alamitos Energy Storage Facility is a 100 MW interconnected battery-based energy storage facility located in California that operates under 20-year tolling agreements with Southern California Edison.
Development Strategy — As states, communities, and organizations of all types make commitments and plan to reduce their carbon footprints, renewables are the fastest-growing source of electricity generation in the U.S. AES Clean Energy works with its customers to co-create and deliver the smarter, greener energy solutions that meet their needs, including 24/7 carbon-free energy. For example, AES has worked with several major technology companies to provide clean energy solutions to power their network of data centers and we see these relationships growing as utilization of generative artificial intelligence drives the expansion of data center use.
In 2023, AES Clean Energy signed or was awarded 4,770 MW of PPAs. As of December 31, 2023, AES Clean Energy's renewables project backlog includes 6.1 GW of projects for which long-term PPAs have been signed or, as applicable, tariffs have been assigned through a regulatory process. The budget for construction of the projects currently under construction and the contracted projects is over $5 billion. The IRA includes increases, extensions, and/or new tax credits for onshore wind, solar, storage, and hydrogen projects. These changes in tax policy are supportive of our strategy to grow the AES Clean Energy business through development of our 51 GW U.S. pipeline.
AES Brasil

17 | 2023 Annual Report

Business Description — AES Brasil is a publicly traded company in Brazil. AES controls and consolidates AES Brasil through its 47% economic interest. With an exclusive focus on renewable energy, AES Brasil has strategically positioned plants across the country to supply energy to customers and the regulated market. Leveraging hydro, solar, and wind generation, AES Brasil has been a key player in the Brazilian energy sector for nearly 25 years.
As a 100% renewable energy generator, AES Brasil holds a diversified portfolio and has expanded from an installed capacity of 2.7 GW in 2016 to 5.2 GW in 2023, which is composed by hydroelectric plants (2,658 MW) operating under a 33-year concession expiring in 2032, wind complexes (2,194 MW) and solar complexes (328 MW), equivalent to 52%, 42% and 6%, respectively. Among these, 5.1 GW are already operational and 113 MW are under construction.
AES Brasil aims to contract most of its physical guarantee requirements and sell the remaining portion in the spot market. The commercial strategy is reassessed periodically according to changes in market conditions, hydrology, and other factors. AES Brasil generally sells available energy through medium-term bilateral contracts.
Key Financial Drivers — The electricity market in Brazil is highly dependent on hydroelectric generation, therefore electricity pricing is driven by hydrology. AES Brasil owns 12 hydroelectric power plants in the state of São Paulo, which represents approximately 2% of the hydropower physical guarantee of the hydrological risk sharing system (Energy Reallocation Mechanism or "MRE", as described below in the topic International Energy Markets and Regulatory Environment). Plant availability is also a significant financial driver as in times of high hydrology, AES is more exposed to the spot market. AES Brasil's financial results are driven by many factors, including, but not limited to:
•hydrology, impacting quantity of energy generated in the MRE;
•expansion in the demand for energy, especially considering the market opening in the years ahead;
•market price risk when re-contracting;
•effective asset management;
•efficient cost management; and
•successful execution on its growth strategy.
Development Strategy — AES Brasil's strategy is to grow by adding renewable capacity to its generation platform through acquisition or greenfield projects, to focus on client satisfaction and innovation to offer new products and energy solutions, and to be recognized for excellence in asset management.
Under the current terms of the 2018 legal agreement in connection with AES Brasil's concession with the state government, AES Brasil is required to increase its capacity in the state of São Paulo by an additional 28 MW by October 2024. On November 30, 2021, AES Brasil acquired AGV VII Solar project with an under construction installable capacity of 33 MW of solar generation, that is expected to be concluded in 2024.
AES Argentina
Business Description — AES operates plants in Argentina within the Renewables SBU totaling 1,407 MW, representing 3% of the country's total installed capacity, and AES Argentina's plants are placed in strategic locations within the country in order to provide energy to the spot market and customers.
AES primarily sells its energy in the wholesale electricity market where prices are largely regulated. In 2023, approximately 76% of the energy sold in the wholesale electricity market was produced by the hydropower plants, and 24% generated by the wind power plants.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•forced outages;
•exposure to fluctuations of the Argentine peso;
•timely collection of FONINVEMEM installments and outstanding receivables (see International Energy Markets and Regulatory Environment below);
•changes in hydrology and wind resources; and
•domestic energy demand and exports.
Development Strategy — AES Argentina has a pipeline of 753 MW of wind and solar greenfield projects in different stages of development. These projects are adjacent or nearby to AES Argentina's current operating assets and will be used to participate in future private auctions for renewable PPAs.

18 | 2023 Annual Report

AES Colombia
Business Description — We operate in Colombia through AES Colombia, a subsidiary of AES Andes, which owns Chivor, a hydroelectric plant with an installed capacity of 1,000 MW and Tunjita, a 20 MW run-of-river hydroelectric plant, both located approximately 100 miles east of Bogota, as well as the solar facilities of Castilla, Brisas, and San Fernando, 21 MW, 27 MW, and 61 MW respectively. AES Colombia’s installed capacity accounted for approximately 6% of system capacity at the end of 2023. AES Colombia is dependent on hydrological conditions, which influence generation and spot prices of non-contracted generation in Colombia.
AES Colombia's commercial strategy aims to execute contracts with commercial and industrial customers and bid in public tenders, mainly with distribution companies, in order to reduce margin volatility with proper portfolio risk management. The remaining energy generated by our portfolio is sold to the spot market, including ancillary services. Additionally, AES Colombia receives reliability payments for maintaining the plant's availability and generating firm energy during periods of power scarcity, such as adverse hydrological conditions, in order to prevent power shortages.
Key Financial Drivers — Hydrological conditions largely influence Chivor's power generation. Maintaining the appropriate contract level, while maximizing revenue through the sale of excess generation, is key to AES Colombia's results of operations. In addition to hydrology, financial results are driven by many factors, including, but not limited to:
•forced outages;
•fluctuations of the Colombian peso; and
•spot market prices.
Development Strategy — AES Colombia is committed to supporting its customers to diversify their energy supply and become more competitive. As part of this commitment, AES Colombia is developing a pipeline of 1.3 GW of solar and wind projects. Six wind projects totaling 1,149 MW are located in La Guajira, one of the windiest spots in the world. Of the 1,149 MW, 255 MW were awarded a 15-year PPAs in the renewable auction in 2019.
AES Panama
Business Description — AES owns and operates five hydroelectric plants totaling 705 MW of generation capacity, a wind farm of 55 MW and four solar plants of 10 MW each, which collectively represent 20% of the total installed capacity in Panama.
The majority of our hydroelectric plants in Panama are based on run-of-the-river technology, with the exception of 223 MW Changuinola plant with regulation reservoirs and the 260 MW Bayano plant. Hydrological conditions have an important influence on profitability. Variations in hydrology can result in an excess or a shortfall in energy production relative to our contractual obligations. Hydro generation is generally in a shortfall position during the dry season from January through May, which is offset by thermal and wind generation since its behavior is opposite and complementary to hydro generation.
Our hydro assets are mainly contracted through medium to long-term PPAs with distribution companies, while a small volume of our hydro plants are contracted with unregulated users. Our hydro assets in Panama have PPAs with distribution companies expiring up to December 2030 for a total contracted capacity of 350 MW.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•changes in hydrology, which impacts spot prices and exposes the business to variability in the cost of replacement power;
•fluctuations in commodity prices, mainly fuel oil and natural gas, which affect the cost of thermal generation and spot prices;
•constraints imposed by the capacity of transmission lines connecting the west side of the country with the load, keeping surplus power trapped during the rainy season; and
•country demand as GDP growth is expected to remain stable over the short and medium term.
Development Strategy — AES is investing in renewables projects within the region. This will increase complementary non-hydro renewable assets in the system and contribute to the reduction of hydrological risk in Panama.
AES Mexico
Business Description — Mesa La Paz is a 306 MW wind project developed under a joint venture with Grupo Bal, located in Llera, Tamaulipas.

19 | 2023 Annual Report

Mesa La Paz sells 72% of its power under long-term PPAs expiring up to 2045.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales;
•changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales;
•improved operational performance and plant availability; and
•changes in wind resources.
Development Strategy — AES has partnered with Grupo Bal in a joint venture to co-invest in power and related infrastructure projects in Mexico, focusing on renewable generation.
AES Bulgaria
Business Description — AES owns an 89% economic interest in the St. Nikola wind farm ("Kavarna") with 156 MW of installed capacity. The power output of St. Nikola is sold to customers operating on the liberalized electricity market and the plant may receive additional revenue per the terms of an October 2018 Contract for Premium with the state-owned Electricity System Security Fund.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•regulatory changes in the Bulgarian power market;
•availability and load factor of the operating units;
•the level of wind resources; and
•spot market price volatility beyond the level of compensation through the Contract for Premium.
In December 2022, Bulgaria implemented Regulation 2022/1854, approved by the European Council in October 2022 as an emergency intervention aiming at limiting energy prices in Europe. The main measure of interest to AES in Bulgaria is the limitation of revenues for "infra-marginal" producers, a category that includes renewables and other technologies which are providing electricity to the grid at a cost below the price level set by the more expensive “marginal” producers. For renewable plants such as Kavarna which are operating under a Contract for Premium, the regulation essentially captures 90% of the incremental margin of the wind farm when wholesale prices are above their original Feed in Tariff of €96.27/MWh. This regulation has been extended until the end of 2024 by the Bulgarian Parliament.
AES Dominicana
Business Description — AES Dominicana has three operating subsidiaries within the Renewables SBU, each of which are owned 65% by AES. Bayasol owns and operates a 50 MW solar farm, Santanasol operates a 50 MW solar farm, and Agua Clara operates a 50 MW wind farm.
AES has a strategic partnership with the Estrella and Linda Groups ("Estrella-Linda"), a consortium of two leading Dominican industrial groups that manage a diversified business portfolio. In December 2023, AES completed the sale of an additional 10% ownership interest in AES Dominicana to the existing partners and a 10% interest to Grupo Popular's subsidiary, AFI Popular, selling 20% ownership interest in total. After this transaction, AES' ownership interest in AES Dominicana is 65%.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•change in wind and solar resources due to heavy rains, hurricanes and other natural events that may affect the country;
•constraints imposed by the capacity of transmission lines and potential delays on the transmission expansion projects; and
•related to projects under construction, changes in execution cost and scope of work that may delay the operation of the new renewable plants.
AES Puerto Rico
Business Description — AES Puerto Rico owns and operates Ilumina, a 24 MW solar facility in Puerto Rico. The plant is fully contracted through a long-term PPA with PREPA expiring in 2037. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties— Key Financial Drivers — Financial results are driven by many factors, including, but not limited to, operational performance and plant availability.

20 | 2023 Annual Report

Macroeconomic and Political—Puerto Rico for further discussion of the long-term PPAs with PREPA.
Development Strategy — Puerto Rico has clear goals of supplying its system from renewable resources, with targets of 40% from renewables by 2025 and 100% by 2050. To achieve the established target of 40%, PREPA intends to launch six tender processes for renewable generation in the coming years. Clean Flexible Energy LLC, the legal entity that AES is utilizing to develop renewables in Puerto Rico, expects to have a portfolio of solar and energy storage projects participating. On November 30, 2023, for the first tender process, Clean Flexible Energy, LLC and PREPA closed solar plus storage agreements for a total of 400 MW, which must reach COD within 24 months.
AES Jordan
Business Description — In Jordan, AES has a 36% controlling interest in a 48 MW solar plant fully contracted with the national utility under a 20-year PPA expiring in 2039. We consolidate the results in our operations as we have a controlling interest in this business.

21 | 2023 Annual Report

a2023formsbuinfographics002_UTIL.jpg
(1) Non-GAAP measure. See Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition.


22 | 2023 Annual Report

Utilities
Our Utilities SBU is the second largest contributor to our future growth, particularly in the U.S., where we are targeting a combined 10% annual growth in rate base at our two utilities: AES Indiana and AES Ohio. In this segment, we also have four utilities in El Salvador and a portfolio of generation facilities, including at our integrated utility in Indiana, with installed operating capacity of 3,500 MW. IPALCO (AES Indiana's parent), AES Ohio, and DPL Inc. (AES Ohio's parent) are all SEC registrants, and as such, follow the public filing requirements of the Securities Exchange Act of 1934.
Utilities — The following table lists our utilities and their generation facilities:
Business Location Type AES Equity Interest
Approximate Number of Customers Served as of 12/31/2023
Approximate GWh Sold in 2023
 Fuel Gross MW Year Acquired or Began Operation
CAESS El Salvador Distribution 75  % 659,000  2,214  2000
CLESA El Salvador Distribution 80  % 475,000  1,143  1998
DEUSEM El Salvador Distribution 74  % 95,000  174  2000
EEO El Salvador Distribution 89  % 357,000  762  2000
El Salvador Subtotal 1,586,000  4,293 
AES Ohio (1)
 US-OH Transmission & Distribution 100  % 539,000  13,305  2011
AES Indiana (2)
 US-IN Integrated 70  % 523,000  14,127  Coal/Gas/Oil/Solar/Energy Storage 3,357  2001
United States Subtotal 1,062,000  27,432  3,357 
2,648,000  31,725 
_____________________________
(1)AES Ohio's GWh sold in 2023 represent total transmission and distribution sales. AES Ohio's wholesale sales and SSO utility sales, which are sales to utility customers who use AES Ohio to source their electricity through a competitive bid process, were 3,183 GWh in 2023. AES Ohio owns a 4.9% equity ownership in OVEC, an electric generating company. OVEC has two plants in Cheshire, Ohio and Madison, Indiana with a combined generation capacity of approximately 2,109 MW. AES Ohio’s share of this generation is approximately 103 MW.
(2)CDPQ owns direct and indirect interests in IPALCO (AES Indiana's parent) which total approximately 30%. AES owns 85% of AES US Investments and AES US Investments owns 82.35% of IPALCO. AES Indiana plants: Georgetown, Harding Street, Petersburg and Eagle Valley. 20 MW of AES Indiana total is considered a transmission asset. In December 2023, the first stage of construction for the 195 MW Hardy Hills solar project was completed and initial operations for over half of the project commenced. The remaining MW are expected to be placed in service in 2024.
Generation — The following table lists our Utilities SBU generation facilities. The energy produced by these generation facilities is fully contracted by AES’ utilities in El Salvador.
Business Location Fuel Gross MW AES Equity Interest Year Acquired or Began Operation Contract Expiration Date Customer(s)
Bosforo (1)
 El Salvador Solar 100  50  % 2018-2019 2043-2044 CAESS, EEO, CLESA, DEUSEM
Metapan El Salvador Solar 15  100  % 2043-2048 2033 CLESA, Cemento Holcim de El Salvador
Cuscatlan Solar (1)
 El Salvador Solar 10  50  % 2021 2046 CLESA
AES Nejapa El Salvador Landfill Gas 6  100  % 2011 2035 CAESS
Meangura del Gofo El Salvador Solar 1  100  % 2023 2048 EEO
Energy Storage 4 
Opico El Salvador Solar 4  100  % 2020 2040 CLESA
Moncagua El Salvador Solar 3  100  % 2015 2035 EEO
143 
_____________________________
(1)Unconsolidated entity, accounted for as an equity affiliate.


23 | 2023 Annual Report

Under construction — The following table lists our plants under construction in the Utilities SBU:
Business Location Fuel Gross MW AES Equity Interest Expected Date of Commercial Operations
Hardy Hills Solar (AES Indiana) (1)
 US-IN Solar 80  70  % 1H 2024
Pike County (AES Indiana) US-IN Energy Storage 200  70  % 2024
Petersburg Energy Center (AES Indiana) US-IN Solar 250  70  % 2H 2025
Energy Storage 45 
575 
_____________________________
(1)In December 2023, the first stage of construction of this project was completed and initial operations for over half of the project commenced. The final stage of construction is expected to be completed during the first half of 2024.
AES Indiana
Business Description — IPALCO is a holding company whose principal subsidiary is AES Indiana. AES Indiana is an integrated utility that is engaged primarily in generating, transmitting, distributing, and selling electric energy to retail customers in the city of Indianapolis and neighboring areas within the state of Indiana and is subject to regulatory authority—see Regulatory Framework and Market Structure below. AES Indiana has an exclusive right to provide electric service to the customers in its service area, covering about 528 square miles with an estimated population of approximately 969,000 people.
AES Indiana owns and operates four generating stations, all within the state of Indiana. The first station, Petersburg, is coal-fired, and consists of four units. AES Indiana retired 230 MW Petersburg Unit 1 in May 2021 and 415 MW Petersburg Unit 2 in June 2023, which resulted in 630 MW of total retired economic capacity at this station. AES Indiana plans to convert the remaining two coal units at Petersburg to natural gas (see Integrated Resource Plan below). The second station, Harding Street, consists of three natural gas-fired boilers and steam turbines and uses natural gas and fuel oil to power five combustion turbines. In addition, AES Indiana operates a 20 MW battery-based energy storage unit at this location, which provides frequency response. The third station, Eagle Valley, is a CCGT natural gas plant. The fourth station, Georgetown, is a small peaking station that uses natural gas to power combustion turbines. In addition, AES Indiana helps meet its customers' energy needs with long-term contracts for the purchase of 300 MW of wind-generated electricity and 94 MW of solar-generated electricity.
In December 2021, AES Indiana completed the acquisition of Hardy Hills Solar Energy LLC, including the development of a 195 MW solar project (the "Hardy Hills solar project"). In December 2023, the first stage of construction for the Hardy Hills solar project was completed and initial operations for over half of the project commenced. The final stage of construction of the project is expected to be completed during the first half of 2024.
In August 2023, AES Indiana completed the acquisition of Petersburg Energy Center, LLC, including the development of a 250 MW solar and 45 MW (180 MWh) energy storage facility (the "Petersburg Energy Center project"). The Petersburg Energy Center project is expected to be completed in 2025.
In June 2023, AES Indiana executed an agreement for the construction of the 200 MW (800 MWh) Pike County BESS project to be developed at the AES Indiana Petersburg Plant site in Pike County, Indiana, subject to IURC approval, which was received in January 2024. The Pike County BESS project is expected to be completed in 2024.
In July 2023, AES Indiana executed a purchase agreement for the acquisition of the Hoosier Wind Project, which is an existing 106 MW wind facility located in Benton County, Indiana, subject to IURC approval, which was received in January 2024. The acquisition of the Hoosier Wind Project is expected to be completed in the first quarter of 2024.
Key Financial Drivers — AES Indiana's financial results are driven primarily by retail demand, weather, and maintenance costs. In addition, AES Indiana's financial results are likely to be driven by many other factors including, but not limited to:
•regulatory outcomes and impacts;
•the passage of new legislation, implementation of regulations, or other changes in regulation; and
•timely recovery of capital expenditures and operation and maintenance costs.
Regulatory Framework and Market Structure — AES Indiana is subject to comprehensive regulation by the IURC with respect to its services and facilities, retail rates and charges, the issuance of long-term securities, and certain other matters. The regulatory authority of the IURC over AES Indiana's business is typical of regulation generally imposed by state public utility commissions.

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The IURC sets tariff rates for electric service provided by AES Indiana. The IURC considers all allowable costs for ratemaking purposes, including a fair return on assets used and useful to providing service to customers.
AES Indiana's tariff rates for electric service to retail customers consist of basic rates and approved charges. In addition, AES Indiana's rates include various adjustment mechanisms, including, but not limited to: (i) a rider to reflect changes in fuel and purchased power costs to meet AES Indiana's retail load requirements, referred to as the Fuel Adjustment Charge, (ii) a rider for the timely recovery of costs incurred to comply with environmental laws and regulations, including a return, (iii) a rider to reflect changes in ongoing RTO costs, (iv) riders for passing through to customers wholesale sales margins and capacity sales above and below established annual benchmarks, (v) a rider for a return on, and of, investments for eligible TDSIC improvements, and (vi) a rider for cost recovery, lost margin recoveries and performance incentives from AES Indiana's demand side management energy efficiency programs. Each of these tariff rate components function somewhat independently of one another, but the overall structure of AES Indiana's rates is subject to review at the time of any review of AES Indiana's basic rates and charges. Additionally, AES Indiana's rider recoveries are reviewed through recurring filings.
AES Indiana filed a petition with the IURC on June 28, 2023, for authority to increase its basic rates and charges to cover the rising operational costs and needs associated with continuing to serve its customers safely and reliably. The factors leading to AES Indiana's first base rate increase request in five years include inflationary impacts on operations and maintenance expenses, investments in the transmission and distribution systems, and modernization of its customer systems. AES Indiana is also seeking recovery of increased costs to support its vegetation management plan, which covers the removal of overhang and tree trimming in its service territory. AES Indiana also seeks to better align depreciation expense with the period in which the generation plants provide service to customers and remove operational costs of the retired Petersburg units from rates. On November 22, 2023, AES Indiana entered into a unanimous stipulation and settlement agreement (the "settlement") with the OUCC and the intervening parties which, if approved by the IURC, would increase its annual revenue requirement by $73 million. AES Indiana expects to receive an order from the IURC and place new rates into effect by the end of the second quarter of 2024.
On October 31, 2018, the IURC issued an order approving an uncontested settlement agreement to increase AES Indiana's annual revenues by $44 million, or 3% (the "2018 Base Rate Order"), which are the base rates under which AES Indiana is currently operating. This revenue increase primarily includes recovery through rates of costs associated with the CCGT at Eagle Valley, completed in the first half of 2018, and other construction projects. New base rates and charges became effective on December 5, 2018.
AES Indiana is one of many transmission system owner members in MISO, an RTO which maintains functional control over the combined transmission systems of its members and manages one of the largest energy and ancillary services markets in the U.S. MISO dispatches generation assets in economic order considering transmission constraints and other reliability issues to meet the total demand in the MISO region. AES Indiana offers electricity in the MISO day-ahead and real-time markets.
Development Strategy — AES Indiana's construction program is composed of capital expenditures necessary for prudent utility operations and compliance with environmental regulations, along with discretionary investments designed to replace aging equipment or improve overall performance.
Senate Enrolled Act 560, the Transmission, Distribution, and Storage System Improvement Charge ("TDSIC") statute, provides for cost recovery outside of a base rate proceeding for new or replacement electric and gas transmission, distribution, and storage projects that a public utility undertakes for the purposes of safety, reliability, system modernization, or economic development. Provisions of the TDSIC statute require that requests for recovery include a plan of at least five years and not more than seven for eligible investments. Once a plan is approved by the IURC, eighty percent of eligible costs can be recovered using a periodic rate adjustment mechanism, referred to as a TDSIC mechanism. Recoverable costs include a return on, and of, the investment, including AFUDC, post-in-service carrying charges, operation and maintenance expenses, depreciation, and property taxes. The remaining twenty percent of recoverable costs are deferred for future recovery in the public utility’s next base rate case. The TDSIC mechanism is capped at an annual increase of two percent of total retail revenues.
On March 4, 2020, the IURC issued an order approving the projects in AES Indiana's seven-year TDSIC Plan for eligible transmission, distribution, and storage system improvements totaling $1.2 billion from 2020 through 2026. Beginning in June 2020, AES Indiana files an annual TDSIC rate adjustment for a return on, and of, investments through March 31 with rates requested to be effective each November.

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Annual TDSIC plan update filings are required to be staggered by six months as ordered by the IURC and are filed each December. The total amount of AES Indiana’s equipment net of depreciation, including carrying cost, approved for TDSIC recovery as of December 31, 2023 was $400 million.
Integrated Resource Plan — In December 2022, AES Indiana filed its Integrated Resource Plan ("IRP"), which describes AES Indiana's Preferred Resource Portfolio for meeting generation capacity needs for serving AES Indiana's retail customers over the next several years. The Preferred Resource Portfolio is AES Indiana's reasonable least cost option and provides a cleaner and more diverse generation mix for customers. The 2022 IRP short-term action plan includes converting the two remaining coal units at Petersburg to natural gas. AES Indiana has not yet filed for the regulatory approvals from the IURC to convert Petersburg units 3 and 4, however, AES Indiana expects to do so at the appropriate time. Additionally, AES Indiana plans to add up to 1,300 MW of wind, solar, and battery energy storage by 2027. As new technologies, such as green hydrogen, small modular reactors, and carbon capture are developed and cost effective, we will evaluate them in the future planning processes.
AES Indiana expects to spend an estimated $3.2 billion on capital projects from 2024 through 2026, which includes AES Indiana's power generation and renewable energy projects discussed above, spending under AES Indiana's TDSIC Plan, as well as other new transmission and distribution projects.
In December 2021 and 2022, AES Indiana received equity capital contributions of $275 million and $253 million, respectively, from AES and CDPQ on a proportional share basis to be used for funding needs related to AES Indiana’s TDSIC and replacement generation projects.
AES Ohio
Business Description — DPL is a holding company whose principal subsidiary is AES Ohio. AES Ohio is a utility company that transmits and distributes electricity to approximately 539,000 retail customers in a 6,000 square mile area of West Central Ohio and is subject to regulatory authority—see Regulatory Framework and Market Structure below. AES Ohio has the exclusive right to provide transmission and distribution services to its customers, and procures retail standard service offer ("SSO") electric service on behalf of residential, commercial, industrial, and governmental customers through a competitive bid auction process.
Key Financial Drivers — AES Ohio's financial results are driven primarily by retail demand and weather. AES Ohio's financial results are likely to be driven by other factors as well, including, but not limited to:
•regulatory outcomes and impacts;
•the passage of new legislation, implementation of regulations, or other changes in regulations; and
•timely recovery of transmission and distribution expenditures.
Regulatory Framework and Market Structure — AES Ohio is regulated by the PUCO for its distribution services and facilities, retail rates and charges, reliability of service, compliance with renewable energy portfolio requirements, energy efficiency program requirements, and certain other matters. The PUCO maintains jurisdiction over the delivery of electricity, SSO, and other retail electric services.
Electric customers within Ohio are permitted to purchase power under contract from a Competitive Retail Electric Service ("CRES") provider or from their local utility under SSO rates. The SSO generation supply is provided by third parties through a competitive bid process. Ohio utilities have the exclusive right to provide transmission and distribution services in their state-certified territories. While Ohio allows customers to choose retail generation providers, AES Ohio is required to provide retail generation service at SSO rates to any customer that has not signed a contract with a CRES provider or as a provider of last resort in the event of a CRES provider default. SSO rates are subject to rules and regulations of the PUCO and are established through a competitive bid process for the supply of power to SSO customers.
AES Ohio's distribution rates are regulated by the PUCO and are established through a traditional cost-based rate-setting process. AES Ohio is permitted to recover its costs of providing distribution service as well as earn a regulated rate of return on assets, determined by the regulator, based on the utility's allowed regulated asset base, capital structure, and cost of capital. AES Ohio's retail rates include various adjustment mechanisms including, but not limited to, the timely recovery of costs incurred related to power purchased through the competitive bid process, participation in the PJM RTO, severe storm damage, and energy efficiency.

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The costs associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction. AES Ohio implemented a formula-based rate for its transmission service, effective May 3, 2020.
AES Ohio is a member of PJM, an RTO that operates the transmission systems owned by utilities operating in all or parts of a multi-state region, including Ohio. PJM also administers the day-ahead and real-time energy markets, ancillary services market and forward capacity market for its members.
Ohio law requires utilities to file either an Electric Security Plan ("ESP") or MRO plan to establish SSO rates. AES Ohio is currently operating pursuant to ESP 4, described in the paragraph below. From November 1, 2017 through December 18, 2019, AES Ohio operated pursuant to an approved ESP plan, which was initially approved in October, 2017 (ESP 3). On December 18, 2019, the PUCO approved AES Ohio's Notice of Withdrawal and reversion to its prior rate plan (ESP 1). Among other items, the PUCO Order approving the ESP 1 rate plan includes reinstating the non-bypassable RSC Rider, which provides annual revenues of approximately $79 million. The Office of the Ohio Consumers’ Council (“OCC”) has appealed to the Ohio Supreme Court, the Commission’s decision approving the reversion to ESP 1 as well as argued for a refund of the Rate Stabilization Charge ("RSC") revenues dating back to August 2021. A decision is pending regarding this appeal, which has been consolidated with the appeal regarding the Smart Grid Comprehensive Settlement described in the paragraph below. We are unable to predict the outcome of this appeal, but if this results in terms that are more adverse than AES Ohio's current ESP rate plan, it could have a material adverse effect on our results of operations, financial condition and cash flows.
Smart Grid Comprehensive Settlement — In October 2020, AES Ohio entered into a Stipulation and Recommendation (settlement) with the staff of the PUCO and various customers, and organizations representing customers of AES Ohio and certain other parties with respect to, among other matters, AES Ohio's applications pending at the PUCO for (i) approval of AES Ohio's plan to modernize its distribution grid ("Smart Grid Phase 1"), (ii) findings that AES Ohio passed the Significantly Excessive Earnings Test ("SEET") for 2018 and 2019, and (iii) findings that AES Ohio's current ESP 1 satisfies the SEET and the more favorable in the aggregate ("MFA") regulatory test. In June 2021, the PUCO issued their opinion and order accepting the stipulation as filed. With the PUCO’s issuance of their opinion and order, AES made cash contributions of $150 million in 2021 to improve AES Ohio's infrastructure and modernize its grid while maintaining liquidity. The OCC appealed this final PUCO Order to the Ohio Supreme Court in December 2021; this appeal remains pending.
In February 2024, AES Ohio filed a Smart Grid Phase 2 with the PUCO proposing to invest approximately $683 million in capital projects over a 10-year period following the Smart Grid Phase 1, which ends June 2025. There are three principal components of AES Ohio’s Smart Grid Phase 2: 1) Distribution Operations, 2) Advanced Intelligence 3) Telecommunications and Cybersecurity. These initiatives will also allow AES Ohio to be ready to leverage and integrate Distributed Energy Resources into its grid. If approved, AES Ohio will implement a comprehensive grid modernization project that will deliver benefits to customers, society as a whole and to AES Ohio. A procedural schedule is expected that will provide for an Order by the second quarter of 2025 prior to the end of Smart Grid Phase 1.
On September 26, 2022, AES Ohio filed its latest ESP ("ESP 4") with the PUCO. ESP 4 is a comprehensive plan to enhance and upgrade its network and improve service reliability, provide greater safeguards for price stability and continue investments in local economic development. In April 2023, AES Ohio entered into a Stipulation and Recommendation with the PUCO Staff and seventeen parties (the “Settlement”) with respect to AES Ohio’s ESP 4 application, and, in August, 2023, the PUCO approved the Settlement without modification. The Settlement provides for a three-year ESP without a rate stability charge, and, in addition to other items, provides for (i) a Distribution Investment Rider for the term of the ESP allowing for the timely recovery of distribution investments by AES Ohio based on a 9.999% return on equity, subject to revenue caps, (ii) recovery of approximately $66 million related to past expenditures by AES Ohio plus future carrying costs and the recovery of incremental vegetation management expenses up to certain annual limits during the term of ESP 4; and (iii) funding of programs for assistance to low-income customers and for economic development. With approval of this Settlement, the distribution rates that were approved by the PUCO in December 2022, and are described in the paragraph below, became effective on September 1, 2023.
In November, 2020, AES Ohio filed a new distribution rate case application with the PUCO to increase AES Ohio’s base rates for electric distribution service to address, in part, increased costs of materials and labor and substantial investments to improve distribution structures. In December, 2022, the PUCO issued an order on the application. Among other matters, the order (i) establishes a revenue increase of $76 million for AES Ohio’s base rates for electric distribution service and (ii) provides for a return on equity of 9.999% and a cost of long-term debt of 4.4% on a rate base of $783 million and based on a capital structure of 53.87% equity and 46.13% long-term debt.

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These rates went into effect on September 1, 2023 with the approval of AES Ohio’s ESP 4.
Development Strategy — Planned construction projects primarily relate to new investments in and upgrades to AES Ohio's transmission and distribution system. Capital projects are subject to continuing review and are revised in light of changes in financial and economic conditions, load forecasts, legislative and regulatory developments, and changing environmental standards, among other factors.
AES Ohio is projecting to spend an estimated $1.2 billion on capital projects from 2024 through 2026, which includes expected spending under AES Ohio's Smart Grid Phase 1 included in the Stipulation and Recommendation entered into in October 2020 (see Regulatory Framework and Market Structure above) as well as other new transmission and distribution projects.
AES El Salvador

Business Description — AES El Salvador is the majority owner of four of the five distribution companies operating in El Salvador (CAESS, CLESA, EEO and DEUSEM). AES El Salvador's territory covers 77% of the country and accounted for 4,293 GWh of the market energy sales during 2023. AES El Salvador owns and operates four solar farms, Opico Power, Moncagua, and Metapan with 4 MW, 3 MW and 15 MW of capacity, respectively; Meanguera del Golfo, a solar and battery storage facility with 0.6 MW capacity; AES Nejapa, a biomass power plant with 6 MW capacity; and 50% of Bosforo and Cuscatlan Solar, solar farms with 100 MW and 10 MW capacity, respectively. The energy produced by these solar farms is fully contracted by AES' utilities in El Salvador.
In addition, AES El Salvador offers customers non-regulated services such as energy trading, electromechanical construction, O&M of electrical assets, EPC, pole rental, and tax collection for municipalities.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•operational performance;
•regulatory outcomes and impacts;
•variability in energy demand driven by weather; and
•the impact of fuel oil prices on energy tariff prices, which affect cash flow due to a three-month delay in the pass-through of energy costs to the tariffs charged to customers.
Development Strategy — In order to explore new business opportunities, AES El Salvador created AES Soluciones, an LED public lighting service provider and the main commercial and industrial solar photovoltaic EPC provider in the country. Electromobilty is also being promoted by AES Soluciones through a partnership with Blink Charger in order to design and deploy a private network of electric chargers throughout the country. AES Next, Ltda de. C.V. is the O&M services provider for the Bosforo project, as well as a developer of solar MW in El Salvador. Furthermore, the four distribution companies operated by AES El Salvador started a digitization and modernization initiative as part of the development, sustainability, and growth strategy of the business.


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a2023formsbuinfographics001_INFRA.jpg
(1) Non-GAAP measure. See Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition.
(2) Through asset sales, fuel conversions and retirements, while maintaining reliability and affordability, and subject to necessary approvals. AES may delay the exit of a few select plants through 2027 to support continued electricity reliability.

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Energy Infrastructure
Our Energy Infrastructure SBU aims to provide energy security to enable the integration of new renewables, maximize the value of our gas generation and LNG business through flexible operations that support the energy transition, and exit coal generation to achieve our decarbonization targets. This segment comprises generation facilities, using natural gas, LNG, coal, pet coke, diesel, and/or oil, in nine countries — Vietnam, the United States, Argentina, Chile, Bulgaria, Mexico, Jordan, Panama and the Dominican Republic. Although our businesses in Chile have a mix of generation sources, including renewables, the generation from all sources is pooled to service our existing PPAs. Consequently all of Chile’s generation is included within the Energy Infrastructure SBU.
Generation — Operating installed capacity of our Energy Infrastructure segment totals 14,885 MW. The following table lists our Energy Infrastructure segment generation facilities:
Business Location Fuel Gross MW AES Equity Interest Year Acquired or Began Operation Contract Expiration Date Customer(s)
Mong Duong 2 (1)
 Vietnam Coal 1,242  51  % 2015 2040 EVN
Southland—Alamitos US-CA Gas 1,200  100  % 1998 2026 California Department of Water Resources
Paraná-GT Argentina Gas/Diesel 870  100  % 2001
Southland Energy—Huntington Beach (3)
 US-CA Gas 694  50  % 2020 2040 Southern California Edison
Southland Energy—Alamitos (3)
 US-CA Gas 693  50  % 2020 2040 Southern California Edison
San Nicolás Argentina Coal/Gas/Oil/Energy Storage 691  100  % 1993
Maritza Bulgaria Coal 690  100  % 2011 2026 National Electric Company (NEK)
TermoAndes (4)
 Argentina Gas/Diesel 643  99  % 2000 2024-2025 Various
Guillermo Brown (5)
 Argentina Gas/Diesel 576  —  % 2016
Angamos Chile Coal 558  99  % 2011 Various
Cochrane Chile Coal 550  57  % 2016 2030-2037 SQM, Sierra Gorda, Quebrada Blanca
Ventanas
 Chile Coal 537  99  % 2010, 2013
Alto Maipo (2)
 Chile Hydro 531  99  % 2021 2040 Minera Los Pelambres
AES Puerto Rico US-PR Coal 524  100  % 2002 2027 LUMA Energy
Merida III Mexico Gas/Diesel 505  75  % 2000 2025 Comision Federal de Electricidad
Amman East (6)
 Jordan Gas 472  37  % 2009 2033 National Electric Power Company
Colon (7)
 Panama Gas 381  65  % 2018 2028 ENSA, Edemet, Edechi
DPP (Los Mina) Dominican Republic Gas 358  65  % 1996 2025 Ede Este, Ede Norte, Ede Sur, Non-Regulated Users
Andres (8)
 Dominican Republic Gas/Diesel 319  65  % 2003 2025 Ede Este, Ede Norte, Ede Sur, Non-Regulated Users
Andes 2b Chile Solar 180  99  % 2023 Various
Energy Storage 112 
Norgener Chile Coal 276  99  % 2000 2028 Codelco
Termoelectrica del Golfo (TEG) Mexico Pet Coke 275  99  % 2007 2027 CEMEX
Termoelectrica del Penoles (TEP) Mexico Pet Coke 275  99  % 2007 2027 Peñoles
IPP4 (6)
 Jordan Gas 250  36  % 2014 2039 National Electric Power Company
Cordillera Hydro Complex (9)
 Chile Hydro 240  99  % 2000 2042 Various
Southland—Huntington Beach US-CA Gas 236  100  % 1998 2026 California Department of Water Resources
Warrior Run (10)
 US-MD Coal 205  100  % 2000 2024 Potomac Edison
Bolero Chile Solar 146  99  % 2023 2030 Various
Los Olmos Chile Wind 110  51  % 2022 2032 Google, Various
Los Cururos Chile Wind 109  51  % 2019 Various
Andes Solar 2a Chile Solar 81  51  % 2021 Google, Various

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Mesamávida Chile Wind 68  51  % 2022 2038 Google, Various
Campo Lindo Chile Wind 65  51  % 2023 Various
Virtual Reservoir 2 Chile Energy Storage 50  99  % 2023
Sarmiento Argentina Gas/Diesel 33  100  % 1996
Andes Solar 4 Chile Solar 13  99  % 2023 Google, Various
Energy Storage 13 
Andes Solar 1 Chile Solar 22  99  % 2016 2036 Quebrada Blanca
Cochrane ES Chile Energy Storage 20  57  % 2016
Angamos ES Chile Energy Storage 20  99  % 2011
San Matias Chile Wind 17  99  % 2023 2038 Microsoft
Laja Chile Biomass 13  99  % 2000 2023 CMPC
Andes
 Chile Energy Storage 12  99  % 2009
Alfalfal Virtual Reservoir Chile Energy Storage 10  99  % 2020
PFV Kaufmann Chile Solar 1  99  % 2021 2040 Kaufmann
14,885 
_____________________________
(1)In November 2023, agreed to sell this business to Sev.en Global Investments Pty Ltd. Following approvals by the Government of Vietnam and the Ministry of Industry and Trade, the anticipated close for this transaction is in line with AES' intent to exit the majority of its coal assets by the end of 2025.
(2)In November 2021, Alto Maipo SpA filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. After Chapter 11 filing, the Company no longer has control over Alto Maipo and therefore deconsolidated the business. In May 2022, Alto Maipo emerged from bankruptcy. The restructured business is considered a VIE and the Company continues to account for the business as a deconsolidated entity.
(3)On December 1, 2022, Southland Energy sold an additional 14.9% ownership interest in the Southland Energy assets. Following the sale, AES holds 50.1% of Southland Energy's interest and this business continues to be consolidated by AES.
(4)TermoAndes is located in Argentina, but is connected to both the SING in Chile and the SADI in Argentina.
(5)AES operates this facility through management or O&M agreements and to date owns no equity interest in the business.
(6)Entered into an agreement to sell 26% interest in these businesses in November 2020.
(7)Plant also includes an adjacent regasification facility, as well as an 80 TBTU LNG storage tank, or an operating capacity of 180,000 m3.
(8)Plant also includes an adjacent regasification facility, as well as two LNG storage tanks: Andres with 70 TBTU, or an operating capacity of 160,000 m3 and Enadom with 50 TBTU, or an operating capacity of 120,000 m3.
(9)Includes: Alfalfal, Queltehues and Volcan.
(10)On June 29, 2023, Warrior Run terminated its PPA with Potomac Edison. As part of the agreement, Warrior Run stopped selling its electricity to Potomac Edison, but will continue to provide capacity to Potomac Edison through May 31, 2024. The previous expiration for the PPA was 2030.
Under construction — The majority of projects under construction have executed mid- to long-term PPAs. The following table lists our plants under construction in the Energy Infrastructure SBU1: 
Business Location Fuel Gross MW AES Equity Interest Expected Date of Commercial Operations
San Matias Chile Wind 65  99  % 1H 2024
Andes Solar 4 Chile Solar 225  99  % 2H 2024
Energy Storage 135 
Gatun Panama Gas 670  24  % 2H 2024
Andes Solar 2a Chile Energy Storage 80  51  % 1H 2025
1,175 
AES Chile
Business Description — In Chile, through AES Andes, we are engaged in the generation and supply of electricity (energy and capacity) in the SEN—see International Energy Markets and Regulatory Environment below. AES Andes is a publicly traded company in Chile and has applied to be de-listed. AES Andes owns all of our assets in Chile. AES has a 99.5% ownership interest in AES Andes, the third largest generation operator in Chile in terms of installed capacity with 3,516 MW, excluding energy storage, and has a market share of approximately 11% as of December 31, 2023. In addition, AES Andes has 237 MW of energy storage systems in operation.
AES Andes owns a diversified generation portfolio in Chile in terms of geography, technology, customers, and energy resources. AES Andes' generation plants are located near the principal electricity consumption centers, including Santiago, Valparaiso, and Antofagasta. AES Andes' diverse generation portfolio provides flexibility for the management of contractual obligations with regulated and unregulated customers, provides backup energy to the spot market and facilitates operations under a variety of market and hydrological conditions.

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AES Andes' Green Blend strategy aims to reduce carbon intensity and incorporate renewable energy to extend our existing conventional PPAs. This strategy de-links company's PPAs from legacy fossil resources, grows its renewable energy portfolio, and delivers a competitive, reliable energy solution. In line with the Green Blend strategy, AES Andes has committed to not build additional coal-based power plants and to advance the development of new renewables projects, including the implementation of BESS and other technological innovations that will provide greater flexibility and reliability to the system.
AES Andes currently has long-term contracts with an average remaining term of approximately 12 years with unregulated customers, such as mining and industrial companies, mainly with pricing indexed to CPI. AES Andes also has contracts with regulated companies with a maximum remaining term of one year, which include pass-through mechanisms for fuel costs along with pricing indexed to CPI.
In addition to energy payments, AES Andes also receives capacity payments to compensate for availability during periods of peak demand. The grid operator, Coordinador Electrico Nacional ("CEN"), annually determines the capacity requirements for each power plant. The capacity price is fixed semiannually by the National Energy Commission and indexed to CPI and other relevant indices.
Key Financial Drivers — Hedging strategies at AES Andes limit volatility to the underlying financial drivers. In addition, financial results are likely to be driven by many factors, including, but not limited to:
•spot market prices (largely impacted by dry hydrology scenarios, forced outages and international fuel prices);
•changes in current regulatory rulings altering the ability to pass through or recover certain costs;
•fluctuations of the Chilean peso;
•tax policy changes; and
•legislation promoting renewable energy and/or more restrictive regulations on thermal generation assets.
Decarbonization Strategy — The Chilean government’s decarbonization plan includes the complete retirement of the SEN coal fleet by the end of 2040 and carbon neutrality by 2050. Following the issuance of Supreme Decree Number 42 on December 26, 2020 by the Ministry of Energy and per the disconnection and termination agreement signed with the Chilean government in June 2019, AES Andes accelerated the retirement plans of its Ventanas 1 and Ventanas 2 coal-fired units, disconnecting them from the SEN as of June 30, 2022 and December 31, 2023, respectively.
In July 2021, AES Andes committed to allow the shutdown of coal-fired operations at its Ventanas 3, Ventanas 4, Angamos 1, and Angamos 2 units as early as January 1, 2025, once the safety, sufficiency, and competitiveness of the system allows it. These four units together have an installed capacity of 1,097 MW and each unit has publicly announced phase-out plans in line with the Company’s decarbonization strategy. In July 2021, the Company also sold its entire ownership interest in Guacolda, a 764 MW coal-fired plant located in Chile.
On February 8, 2024, AES Andes was authorized by the CEN to definitively disconnect the coal-fired generation units Norgener 1 and Norgener 2, with an installed capacity of 276 MW, from the SEN on March 31, 2024.
Ventanas, Angamos, Guacolda, and Norgener represent an aggregate of 2.5 GW of coal-fired capacity, or 82% of AES Andes’ legacy coal fleet. AES Andes continues to work under the Green Blend strategy to accelerate the phase-out of the remaining coal-fired units.
Development Strategy — AES Andes is committed to reducing the carbon intensity of the Chilean power grid and plans to increase the renewable energy capacity in its portfolio. As part of this commitment, AES Andes is building wind, solar, and battery projects to supply agreements with its main mining customers.
In total, the pipeline in Chile currently includes 5.4 GW under development at different stages and geographical locations. Within this portfolio, the Company has made significant progress in the development of non-conventional renewable energy ("NCRE") projects that are already contracted. The Rinconada wind project (258 MW) is being developed in the Biobío region. Several projects are being developed in the Antofagasta region: a new expansion of the Andes Solar power plant which will include a battery system to optimize solar generation (186 MW + 266 MW-3hr), the Cristales solar power plant (187 MW + 267 MW-3hr), the Bolero battery system (136 MW-3hr), and the Pampas hybrid project (120 MW wind, 160 MW solar + 229 MW-3hr).
In addition, Empresa Eléctrica Angamos, a subsidiary of AES Andes, received environmental approval for an innovative initiative on November 29,2023 to revolutionize the conversion of thermoelectric plants using molten salts.

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This project explores the possibility of replacing the current coal-fired generation of units 1 and 2 of the Angamos thermoelectric power plant, located in Mejillones, Antofagasta region, with a molten salt system. With this technology, renewable energy is stored as heat to later be used to provide energy and emission-free capacity to the electrical system.
Empresa Eléctrica Angamos is also promoting the advancement of green hydrogen technology for mass production through the Adelaida project, which contemplates the installation of a small-scale green hydrogen production plant with a capacity of 1,000 kg/day of green hydrogen, equivalent to 2.5 MW of power.
U.S. Conventional Generation
Business Description — In the U.S., we own a conventional generation portfolio. The principal markets and locations where we are engaged in the generation and supply of electricity (energy and capacity) are the California Independent System Operator ("CAISO"), PJM, and Puerto Rico. AES Southland, operating in the CAISO, is our most significant generation business. In June 2023, the Company closed on an agreement to terminate the PPA for the Warrior Run coal-fired power plant and to continue providing capacity through May 2024.
Many of our non-renewable U.S. generation plants provide baseload operations and are required to maintain a guaranteed level of availability. Any change in availability has a direct impact on financial performance. Some plants are eligible for availability bonuses if they meet certain requirements. Coal and natural gas are used as the primary fuels. Coal prices are set by market factors internationally, while natural gas prices are generally set domestically. Price variations for these fuels can change the composition of generation costs and energy prices in our generation businesses.
Before the termination of its PPA in June 2023, Warrior Run operated as a QF, as defined under the PURPA, under a long-term contract with an electric utility that had a mandatory obligation to purchase power from QFs at the utility's avoided cost (i.e. the likely costs for both energy and capital investment that would have been incurred by the purchasing utility if that utility had to provide its own generating capacity or purchase it from another source). Warrior Run no longer operates as a QF.
Our non-QF generation businesses in the U.S. currently operate as Exempt Wholesale Generators as defined under the Energy Policy Act of 1992, amending the Public Utility Holding Company Act (“PUHCA”). These businesses, subject to approval of FERC, have the right to sell power at market-based rates, either directly to the wholesale market or to a third-party offtaker such as a power marketer or utility/industrial customer. Under the Energy Policy Act and FERC's regulations, approval from FERC to sell wholesale power at market-based rates is generally dependent upon a showing to FERC that the seller lacks market power in generation and transmission, that the seller and its affiliates cannot erect other barriers to market entry, and that there is no opportunity for abusive transactions involving regulated affiliates of the seller.
The U.S. wholesale electricity market consists of multiple distinct regional markets that are subject to both federal regulation, as implemented by FERC, and regional regulation as defined by rules designed and implemented by the RTOs, non-profit corporations that operate the regional transmission grid and maintain organized markets for electricity. These rules, for the most part, govern such items as the determination of the market mechanism for setting the system marginal price for energy and the establishment of guidelines and incentives for the addition of new capacity. See Item 1A.—Risk Factors for additional discussion on U.S. regulatory matters.
AES Southland
Business Description — AES Southland is one of the largest generation operators in California by aggregate installed capacity, with an installed gross capacity of 3,699 MW at the end of 2023. The five coastal power plants comprising AES Southland are in areas that are critical for local reliability and play an important role in integrating the increasing amounts of renewable generation resources in California. The AES Southland Energy Infrastructure assets are composed of three once-through cooling ("OTC") power plants and two combined cycle gas-fired generation facilities.
Southland — Southland comprises AES Huntington Beach, LLC, AES Alamitos, LLC, and AES Redondo Beach ("Southland OTC units"). Until December 31, 2023, the Southland OTC units were contracted through Resource Adequacy Purchase Agreements (“RAPAs”). Under the RAPAs, as approved by the California Public Utilities Commission, these generating stations provided resource adequacy capacity, and had no obligation to produce or sell any energy to the RAPA counterparty.

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However, the generating stations were required to bid energy into the California ISO markets. Southland OTC units entered into commodity swap contracts to economically hedge price variability inherent in electricity sales arrangements. Compensation under these RAPAs was dependent on the availability of the Southland OTC units in the California ISO market. Failure to achieve the minimum availability target would result in an assessed penalty.
Commencing on January 1, 2024, AES Huntington Beach, LLC and AES Alamitos, LLC, are contracted through Standby Capacity Purchase Agreements with the California Department of Water Resources (“California DWR”), an agency of the State of California, as part of the Electricity Supply Strategic Reliability Reserve Program (‘Strategic Reserve”) established under California Assembly Bill 205. Under these agreements, California DWR is purchasing each facility’s available capacity for a three-year term.
The Southland OTC units are subject to a variety of rules governing water use and discharge. The units are required to comply with the more stringent of state or federal requirements. AES Southland's current plan is to comply with the SWRCB OTC Policy by shutting down and permanently retiring all remaining generating units that utilize OTC by the compliance dates included in the OTC Policy. See United States Environmental and Land-Use Legislation and Regulations—Cooling Water Intake for further discussion of AES Southland’s plans regarding the OTC Policy.
Southland Energy — AES Huntington Beach Energy, LLC and AES Alamitos Energy, LLC, (collectively "Southland Energy") each operate under 20-year tolling agreements with Southern California Edison ("SCE") to provide 1,387 MW of combined cycle gas-fired generation (through 2040),
The contracts are RAPAs with annual energy tolling put options. If Southland Energy exercises the annual put option, all capacity, energy and ancillary services will be sold to SCE in exchange for a monthly energy and fixed capacity payment that covers fixed operating cost, debt service, and return on capital. In addition, SCE will reimburse variable costs and provide the natural gas. Southland Energy may exercise the annual put option for any contract year by delivering notice of such exercise to SCE at least one year before the start of such contract year, and no more than two years before the start of any contract year. If the annual put options are not exercised, Southland Energy is required to sell the physical output of the combined cycle gas-fired generation units to AES Integrated Energy. AES Integrated Energy is required to bid energy into the California ISO market. AES Integrated Energy enters into commodity swap contracts to economically hedge price variability inherent in electricity sales arrangements. Southland Energy continues to receive the monthly fixed capacity payments for periods when the put option is not exercised.
Key Financial Drivers — AES Southland's availability is one of the most important drivers of operations, along with market demand and prices for gas and electricity.
AES Puerto Rico
Business Description — AES Puerto Rico owns and operates a 524 MW coal-fired cogeneration plant representing approximately 10% of the installed capacity in Puerto Rico. This plant is fully contracted through a long-term PPA with PREPA expiring in 2027. AES Puerto Rico receives a capacity payment based on the plants' twelve month rolling average availability, receiving the full payment when the availability is 90% or higher. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Macroeconomic and Political—Puerto Rico for further discussion of the long-term PPAs with PREPA.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to, improved operational performance and plant availability.
AES Argentina and TermoAndes
Business Description — AES operates plants in Argentina within the Energy Infrastructure SBU totaling 2,814 MW, representing 6% of the country's total installed capacity. AES owns a diversified generation portfolio in Argentina in terms of geography, technology, and fuel source, and AES Argentina's plants are placed in strategic locations within the country in order to provide energy to the spot market and contracted customers.
AES primarily sells its energy in the wholesale electricity market where prices are largely regulated. In 2023, approximately 79% of the energy was sold in the wholesale electricity market and 21% was sold under contract by TermoAndes power plant.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:

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•forced outages;
•exposure to fluctuations of the Argentine peso;
•timely collection of FONINVEMEM installments and outstanding receivables (see International Energy Markets and Regulatory Environment below);
•natural gas prices and availability for contracted generation at TermoAndes; and
•domestic energy demand and exports.
AES Vietnam
Business Description — Mong Duong 2 is a 1,242 MW gross coal-fired plant located in the Quang Ninh Province of Vietnam and was constructed under a BOT service concession agreement expiring in 2040. This is the first coal-fired BOT plant using pulverized coal-fired boiler technology in Vietnam. The BOT company has a PPA with EVN and a Coal Supply Agreement with Vinacomin, both expiring in 2040.
On November 29, 2023, AES executed an agreement to sell its entire 51% interest in the Mong Duong 2 plant. The sale is expected to close by the end of 2025, subject to customary approvals, including from the Government of Vietnam and the minority partners in Mong Duong 2.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to, the operating performance and availability of the facility.
Development Strategy — In Vietnam, we continue to advance the development of our Son My LNG terminal project, which has a design capacity of up to 9.6 million metric tonnes per annum, and the Son My 2 CCGT project, which has a capacity of about 2,250 MW.
In September 2019 we received a formal approval as the government-mandated investor with 100% equity ownership in the Son My 2 CCGT project and executed a statutory memorandum of understanding with Vietnam’s Ministry of Industry and Trade to continue developing the Son My 2 CCGT project under Vietnam’s Build-Operate-Transfer legal framework. In October 2019, we received formal approval as a government-mandated investor in the Son My LNG terminal project in partnership with PetroVietnam Gas. In September 2021, we signed the joint venture agreement with PetroVietnam Gas and established Son My LNG Terminal LLC in April 2022. In July 2023, Son My LNG Terminal LLC received approval of investment policy and as the government-approved investor from the Binh Thuan Provincial People’s Committee. The Son My 2 CCGT project will utilize the Son My LNG terminal project and will be its anchor customer.
AES Mexico
Business Description — The TEG and TEP pet coke-fired plants, located in Tamuin, San Luis Potosi, supply power to their offtakers under long-term PPAs expiring in 2027 with a 90% availability guarantee. TEG and TEP secure their fuel under a long-term contract. TEG and TEP are in the migration process from the Legacy market to the New Electric Industry law. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Macroeconomic and Political—Mexico Migration and Wheeling Tariffs for further discussion of the migration process.
Merida is a CCGT located on Mexico's Yucatan Peninsula. Merida sells power to the CFE under a capacity and energy based long-term PPA through 2025. Additionally, the plant purchases natural gas and diesel fuel under a long-term contract with one of the CFE’s subsidiaries, the cost of which is then passed through to the CFE under the terms of the PPA.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales;
•changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales to the CFE (see International Energy Markets and Regulatory Environment below) in TEG and TEP under self-supply scheme; and
•improved operational performance and plant availability.

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AES Dominicana
Business Description — AES Dominicana has two operating subsidiaries within the Energy Infrastructure SBU, Andres and Los Mina, both of which are owned 65% by AES. With a total of 697 MW of installed capacity, AES provides 12% of the country's capacity and supplies approximately 16% of the country's energy demand via these generation facilities. 668 MW was predominantly contracted until 2022 with government-owned distribution companies and large customers, and have been contracted back with the distribution companies in January 2023.
Andres owns and operates a combined cycle natural gas turbine and an energy storage facility with combined generation capacity of 329 MW, as well as the only LNG import terminal in the country, with 160,000 cubic meters of storage capacity. Los Mina owns and operates a combined cycle facility with two natural gas turbines and an energy storage facility with combined generation capacity of 368 MW.
AES has a strategic partnership with the Estrella and Linda Groups ("Estrella-Linda"), two leading Dominican industrial groups that manage a diversified business portfolio. In December 2023, AES completed the sale of an additional 10% ownership interest in AES Dominicana to the existing partners and a 10% interest to Grupo Popular's subsidiary, AFI Popular, selling 20% ownership interest in total. After this transaction, AES' ownership interest in AES Dominicana is 65%.
AES Dominicana has entered into a new long-term LNG purchase contract through the second half of 2034 to cover the expected dispatch for Andres and Los Mina. Andres has long-term contracts to sell regasified LNG to industrial users and third party power plants within the Dominican Republic, thereby capturing demand from industrial and commercial customers and for other power generation companies that had switched their operations to natural gas.
AES partnered with Energas in a joint venture to operate the 50 km Eastern Pipeline from February 2020. The joint venture also developed an expanded LNG facility of 120,000 cubic meters, including additional storage, regasification, and truck loading capacity, which reached COD in the fourth quarter of 2023.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•changes in spot prices due to fluctuations in commodity prices (since fuel is a pass-through cost under the PPAs, any variation in oil prices will impact spot sales for Andres and Los Mina);
•expiring PPAs, lower contracting levels and the extent of capacity awarded; and
•growth in domestic natural gas demand, supported by new infrastructure such as the Eastern Pipeline and second LNG tank.
Development Strategy — AES will continue to develop the commercialization of natural gas and incorporate partners directly in gas infrastructure projects.
AES Bulgaria
Business Description — Our AES Maritza plant is a 690 MW lignite fuel thermal power plant. AES Maritza's entire power output is contracted with NEK, the state-owned public electricity supplier, independent energy producer, and trading company. Maritza is contracted under a 15-year PPA that expires in May 2026. AES Maritza is collecting receivables from NEK in a timely manner. However, NEK's liquidity position is subject to political conditions and regulatory changes in Bulgaria.
The DG Comp is reviewing NEK’s PPA with AES Maritza pursuant to the European Union’s state aid rules. AES Maritza believes that its PPA is legal and in compliance with all applicable laws. For additional details see Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Regulatory of this Form 10-K.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•regulatory changes in the Bulgarian power market;
•results of the DG Comp review;
•availability and load factor of the operating units; and
•NEK's ability to meet the payment terms of the PPA contract with Maritza.
AES Panama
Business Description — AES owns and operates a natural gas-fired power plant with 381 MW of generation capacity.

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Furthermore, AES operates an LNG regasification facility, a 180,000 cubic meter storage tank, and a truck loading facility. In December 2023, AES completed the sale of 35% ownership interest in Colon to Grupo Linda and Grupo Estrella, our current minority partners in AES Dominicana. After this transaction, AES' ownership interest is 65% in both assets.
Our thermal asset in Panama has PPAs with distribution companies for a total contracted capacity of 350 MW expiring in August 2028, which matches the term of the LNG supply agreement of such thermal assets. The LNG supply contract has enough flexibility to divert volumes to the Dominican Republic, which increases the connectivity of our two onshore terminals and allows to optimize the LNG position of the portfolio. Colon LNG Marketing continues developing the LNG market in Latin America, with clients already established in Panama and Colombia. Additional efforts are being undertaken in Costa Rica, other Central America regions, and Caribbean islands, mainly focusing on small scale LNG logistics.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to:
•changes in hydrology, which impacts the spot prices and exposes the business to variability in the cost of replacement power;
•fluctuations in commodity prices, mainly fuel oil and natural gas, which affect the cost of thermal generation and spot prices;
•constraints imposed by the capacity of transmission lines connecting the west side of the country with the load, keeping surplus power trapped during the rainy season; and
•country demand as GDP growth is expected to remain strong over the short and medium term.
Development Strategy — Given our LNG facility’s excess capacity in Panama, the company is developing natural gas supply solutions for third parties such as power generators and industrial and commercial customers. This strategy will support a growing demand for natural gas in the region and will contribute to AES' mission by reducing CO2 emissions as a result of using LNG.
AES Jordan
Business Description — In Jordan, AES has a 37% controlling interest in Amman East, a 472 MW oil/gas-fired plant fully contracted with the national utility under a 25-year PPA expiring in 2033, and a 36% controlling interest in the IPP4 plant, a 250 MW oil/gas-fired peaker plant fully contracted with the national utility until 2039. We consolidate the results in our operations as we have a controlling interest in these businesses.
On November 10, 2020, AES executed a sale and purchase agreement to sell approximately 26% effective ownership interest in both the Amman East and IPP4 plants. The sale is expected to close in the first half of 2024 subject to customary closing conditions, including lender consents and regulatory approvals.


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New Energy Technologies
Our New Energy Technologies SBU includes investments in new and innovative technologies, designed to both strengthen the competitive advantage of AES' core businesses and enable the growth of new green businesses. This segment includes ownership stakes in third-party platforms, as well as new initiatives developed internally. It includes investments in Fluence, Uplight, and 5B, as well as our green hydrogen initiatives. We are a leader in developing green hydrogen and we are pursuing multiple projects across our geographies with total potential installed electrolyzer capacity of up to 1,200 metric tons/day by 2030.
Fluence and Uplight are unconsolidated entities and their results are reported in Net equity in losses of affiliates on our Consolidated Statements of Operations. 5B is accounted for using the measurement alternative and AES will record income or loss only when it receives dividends from 5B or when there is a change in the observable price or an impairment of the investment.
Fluence
Business Description — Fluence, created in 2018 as a joint venture by AES and Siemens AG, is a global energy storage technology and services company aligned with the AES strategy to drive decarbonization of the electric sector. Fluence is a leading global provider of energy storage products and services and artificial intelligence (AI)-enabled digital applications for renewables and storage.
On November 1, 2021, Fluence Energy, Inc. completed its IPO, generating primary proceeds of approximately $936 million, after expenses, and is listed on Nasdaq under the symbol "FLNC". AES owns Class B-1 common stock, entitling AES to five votes per share held, and continues to hold its economic interest in the operating subsidiary of Fluence Energy, Inc. AES' economic interest in Fluence is currently 29%. The Company continues to account for Fluence as an equity method investment.
Key Financial Drivers — Fluence's financial results are driven by the growth in its product revenue, an efficient cost structure that is expected to benefit from increased scale, and profit margins on customer contracts. Fluence’s pipeline of potential projects is global.

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Development Strategy — The grid-connected energy storage sector is expanding rapidly. By incorporating energy storage across the electric power network, utilities and communities around the world will optimize their infrastructure investments, increase network flexibility and resiliency, and accelerate cost-effective integration of renewable electricity generation. According to the 2H 2023 Energy Storage Market Outlook published by BloombergNEF in October 2023, the global energy storage market is growing at a 27% compound annual growth rate to 2030, with annual additions reaching 110 GW/372 GWh, or 2.6x expected 2023 gigawatt installations. Additional growth opportunities exist in the provision of operational and maintenance services associated with energy storage products, as well as the provision of digital applications and solutions to improve performance and economic output. Fluence is positioned to be a leading participant in this growth, with 3.6 GW of energy storage assets deployed and 5.1 GW of contracted backlog, with a gross global pipeline of 13.2 GW as of December 31, 2023.
Uplight
Business Description — The Company holds an equity interest in Uplight as part of its digitization and growth strategy. Uplight offers a comprehensive digital platform for utility customer engagement. Uplight provides software and services to approximately 70 of the leading electric and gas utilities, principally in the U.S., with the mission of motivating and enabling energy users and providers to transition to a clean energy ecosystem. Uplight's solutions form a unified, end-to-end customer energy experience system that delivers innovative energy efficiency, demand response, and clean energy solutions quickly. Utility and energy company leaders rely on Uplight and its customer-focused digital energy experiences to improve customer satisfaction, reduce service costs, increase revenue, and reduce carbon emissions.
At December 31, 2023 the Company held a 29.4% ownership interest in Uplight. On February 9, 2024, another shareholder was issued additional shares in Uplight as a result of contributing a business and $40 million in cash to Uplight. The business contributed is AutoGrid, a market leader in the fast-growing Virtual Power Plant ("VPP") space. As a result of the additional shares issued to the other shareholder, AES' interest was diluted to approximately 25%. Uplight continues to be accounted for as an equity method investment.
Key Financial Drivers — Uplight's financial results are driven by the rate of growth of new customers and the extension of additional services to existing customers. Revenue growth primarily drives its financial results, given the relative significance of fixed operating costs.
Development Strategy — AES' collaboration with Uplight is designed to create value for Uplight, AES, and their respective customers. AES Indiana and AES Ohio have implemented Uplight's consumer engagement solutions in support of energy efficiency and demand response programs, as well as piloted new solutions with Uplight.
5B
Business Description — The Company has a strategic investment in 5B, a solar technology innovator with the mission to accelerate the transformation of the world to a clean energy future. 5B's technology design enables solar projects to be installed up to three times faster, while allowing for up to two times more energy within the same footprint and can sustain higher wind speeds than traditional solar plants.
Key Financial Drivers — 5B is accounted for under the measurement alternative and AES will record income or loss only when it receives dividends from 5B or when there is a change in the observable price or an impairment of the investment.
Development Strategy — In addition to a large global market for third party projects, we believe there is an addressable market of nearly 5 GW across our development pipeline. As of December 31, 2023, 5B has achieved sales orders of over 250 MW. AES expects to utilize this technology in conjunction with ongoing automation and digital initiatives to speed up delivery time and lower costs. 5B technology has been deployed at multiple locations in AES for a total of 23 MW across five projects in Panama, Chile, El Salvador, and the U.S., with future deployments expected across markets in the AES portfolio.



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International Energy Markets and Regulatory Environment
Chile
The Chilean electricity industry is divided into three business segments: generation, transmission, and distribution. Private companies operate in all three segments, and generators can enter into PPAs to sell energy to regulated and unregulated customers, as well as to other generators in the spot market.
Chile operates in a single power market, referred to as the SEN, which is managed by the grid operator CEN. The SEN has an installed capacity of 31,466 MW, and represents 99% of the installed generation capacity of the country.
CEN coordinates all generation and transmission companies in the SEN. CEN minimizes the operating costs of the electricity system, while maximizing service quality and reliability requirements. CEN dispatches plants in merit order based on their variable cost of production, allowing for electricity to be supplied at the lowest available cost. In the south-central region of the SEN, thermoelectric generation is required to fulfill demand not satisfied by hydroelectric, solar, and wind output and is critical to provide reliable and dependable electricity supply under dry hydrological conditions in the highest demand area of the SEN. In the northern region of the SEN, which includes the Atacama Desert, thermoelectric capacity represents the majority of installed capacity. The fuels used for thermoelectric generation, mainly coal, diesel, and LNG, are indexed to international prices. In 2023, the installed generation capacity in the Chilean market was composed of 42% thermoelectric, 23% hydroelectric, 21% solar, 13% wind, and 1% other fuel sources.
Hydroelectric plants represent a significant portion of the system's installed capacity. Precipitation and snow melt impact hydrological conditions in Chile. Rain occurs principally from June to August and snow melt occurs from September to December. These factors affect dispatch of the system's hydroelectric and thermoelectric generation plants, thereby influencing spot market prices.
The Ministry of Energy has primary responsibility for the Chilean electricity system directly or through the National Energy Commission and the Superintendency of Electricity and Fuels.
All generators can sell energy through contracts with regulated distribution companies or directly to unregulated customers. Customers whose connected demand capacity is higher than 5 MW are excluded from the regulated market and are referred to as unregulated customers. Customers with connected capacity between 0.5 MW and 5 MW can opt for regulated or unregulated contracts for a minimum period of four years. By law, both regulated and unregulated customers are required to purchase all electricity under contracts. Generators may also sell energy to other power generation companies on a short-term basis at negotiated prices outside the spot market. Electricity prices in Chile are denominated in USD, although payments are made in Chilean pesos.
Dominican Republic
The Dominican Republic energy market is a decentralized industry consisting of generation, transmission, and distribution businesses. Generation companies can earn revenue through short- and long-term PPAs, ancillary services, and a competitive wholesale generation market. All generation, transmission, and distribution companies are subject to and regulated by the General Electricity Law.
Two main agencies are responsible for monitoring compliance with the General Electricity Law:
•The National Energy Commission drafts and coordinates the legal framework and regulatory legislation. They propose and adopt policies and procedures to implement best practices, support the proper functioning and development of the energy sector, and promote investment.
•The Superintendence of Electricity's main responsibilities include monitoring compliance with legal provisions, rules, and technical procedures governing generation, transmission, distribution, and commercialization of electricity. They monitor behavior in the electricity market in order to prevent monopolistic practices.
In addition to the two agencies responsible for monitoring compliance with the General Electricity Law, the Ministry of Industry and Commerce supervises commercial and industrial activities in the Dominican Republic as well as the fuels and natural gas commercialization to end users.
The Dominican Republic has one main interconnected system with 5,640 MW of installed capacity, composed of thermal (70%), hydroelectric (11%), wind (7%), and solar (12%).

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El Salvador
El Salvador's national electric market is composed of generation, distribution, transmission, and marketing businesses, a market and system operator, and regulatory agencies. The operation of the transmission system and the wholesale market is based on production costs with a marginal economic model that rewards efficiency and allows investors to have guaranteed profits, while end users receive affordable rates. The energy sector is governed by the General Electricity Law, which establishes two regulatory entities responsible for monitoring its compliance:
•The National Energy and Hydrocarbons Direction is the highest authority on energy policy and strategy, and the coordinating body for the different energy sectors. One of its main objectives is to promote investment in non-conventional renewable sources to diversify the energy matrix.
•The General Superintendence of Electricity and Telecommunications regulates the market and sets consumer prices, and, jointly with the distribution companies in El Salvador, developed the tariff calculation applicable from 2023 until 2027.
AES El Salvador distribution rates are regulated by SIGET and are established through a traditional cost-based rate-setting process. AES El Salvador is permitted to recover its costs of providing distribution service as well as earn a regulated rate of return on assets, determined by the regulator, based on the utility's allowed regulated asset base, capital structure, and cost of capital. El Salvador has a national electric grid that interconnects directly with Guatemala and Honduras, allowing transactions with all Central American countries. The sector has approximately 2,459 MW of installed capacity, composed of thermal (55%), hydroelectric (22%), solar (9%), biomass (12%), and wind (2%) generation plants.
Bulgaria
The electricity sector in Bulgaria is regulated by the Bulgarian Energy Act, which has been amended in November 2023 in order to fulfill a commitment by Bulgaria to the European Commission to fully liberalize its electricity market by the end of 2025. The Bulgarian electricity market allows both regulated and competitive segments until the end of 2025. From 2026 onwards, the regulated segment is expected to cease to exist. NEK will retain its capacity as the public provider of electricity until the end of June 2024, under which NEK acts as a single buyer and seller for all regulated transactions on the market. From July 2024 onwards, Bulgarian distribution companies serving the regulated market will source their electricity needs exclusively from the competitive segment of the market. Electricity outside the regulated market trades on one of the platforms of the Independent Bulgarian Electricity Exchange day-ahead market, intra-day market, or bilateral contracts market.
Bulgaria’s power sector is supported by a diverse generation mix, universal access to the grid, and numerous cross-border connections with neighboring countries. In addition, it plays an important role in the energy balance in the southeast European region.
Bulgaria has 13 GW of installed capacity enabling the country to meet and exceed domestic demand and export energy. Installed capacity is primarily thermal (45%), hydro (25%), and nuclear (16%).
Panama
The Panamanian power sector is composed of three distinct operating business units: generation, distribution, and transmission. Generators can enter into short-term and long-term PPAs with distributors or unregulated consumers. In addition, generators can enter into backup supply contracts with each other. Outside of PPAs, generators may buy and sell energy in the short-term market. Generators can only contract up to their firm capacity.
Three main agencies are responsible for monitoring compliance with the General Electricity Law:
•The National Secretary of Energy in Panama ("SNE") has the responsibilities of planning, supervising, and controlling policies of the energy sector within Panama. The SNE proposes laws and regulations to the executive agencies that regulate the procurement of energy and hydrocarbons for the country.
•The National Authority of Public Services ("ASEP") is an autonomous agency of the government. ASEP is responsible for the regulations, control and oversight of public services in Panama, including electricity, the transmission and distribution of natural gas utilities, and the companies that provide such services.
•The National Dispatch Center ("CND") is in charge of the operation of the system and the management of the electricity market. They are responsible for implementing the economic dispatch of electricity in the wholesale market. The National Dispatch Center's objectives are to minimize the total cost of generation and maintain the reliability and security of the electric power system. Short-term power prices are determined on an hourly basis by the last dispatched generating unit. Physical generation of energy is determined as a result of the optimization of the economic dispatch regardless of contractual arrangements.

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Panama's current total installed capacity is 4,134 MW, composed of hydroelectric (45%), thermal (32%), solar (15%), and wind (8%) generation.
Mexico
Mexico's main electrical system is called the National Interconnected System ("SIN"), which geographically covers an area from Puerto Peñasco, Sonora to Cozumel, Quintana Roo. Mexico also has three isolated electrical systems: (1) the Baja California Interconnected System, which is interconnected with the western interconnection; (2) the Baja California Sur Interconnected System; and (3) the Mulegé Interconnected System, a very small electrical system. All three are isolated from the SIN and from each other. The Mexican power industry comprises the activities of generation, transmission, distribution, and commercialization segments, considering transmission and distribution to be exclusive state services.
In addition to the Ministry of Energy, three main agencies are responsible for regulating the market agents and their activities, monitoring compliance with the laws and regulations, and the surveillance of operational compliance and management of the wholesale electricity market:
•The Energy Regulatory Commission is responsible for the establishment of directives, orders, methodologies, and standards to regulate the electric and fuel markets, as well as granting permits.
•The National Center for Energy Control, as an ISO, is responsible for managing the wholesale electricity market, transmission and distribution infrastructure, planning network developments, guaranteeing open access to network infrastructure, executing competitive mechanisms to cover regulated demand, and setting transmission charges.
•The Electricity Federal Commission ("CFE") owns the transmission and distribution grids and is also the country's basic supplier. CFE is the offtaker for IPP generators, and together with its own power units has more than 50% of the current generation market share.
Mexico has an installed capacity totaling 87 GW with a generation mix composed of thermal (65%), hydroelectric (14%), wind (8%), solar (8%), and other fuel sources (5%).
Brazil
In Brazil, electricity production is predominantly renewable, with emphasis on hydroelectric plants, although there has been a significant advancement in intermittent renewable sources. The National Interconnected System (SIN) consists of four subsystems: South, Southeast/Midwest, Northeast and North regions. The interconnection of the systems through the transmission grid provides for the transfer of energy between subsystems, gaining synergies from the diversity of hydrological regimes of the basins, and allowing the market to be served safely and economically.
In Brazil, the Ministry of Mines and Energy determines the maximum amount of energy a generation plant can sell, called physical guarantee, representing the long-term average expected energy production of the plant. Under current rules, physical guarantee energy can be sold to distribution companies through long-term regulated auctions or under unregulated bilateral contracts with large consumers or energy trading companies.
Brazil has installed capacity of 201 GW, composed of hydroelectric (55%), thermoelectric (23%), renewable (21%), other sources (1%). Operation is centralized and controlled by the national operator, ONS, and regulated by the Brazilian National Electric Energy Agency ("ANEEL"). The ONS dispatches generators based on their marginal cost of production and on the risk of system rationing. Key variables for the dispatch decision are forecasted hydrological conditions, reservoir levels, electricity demand, fuel prices, and thermal generation availability.
In case of unfavorable hydrology, the ONS will reduce hydroelectric dispatch to preserve reservoir levels and increase dispatch of thermal plants to meet demand. The consequences of unfavorable hydrology are (i) higher energy spot prices due to higher energy production costs at thermal plants and (ii) the need for hydro plants to purchase energy in the spot market to fulfill their contractual obligations.
A mechanism known as the MRE (Energy Reallocation Mechanism) was created under ONS to share hydrological risk across MRE hydro generators by using a generation scaling factor ("GSF") to adjust generators' physical guarantee during periods of hydrological scarcity. If the hydro plants generate less than the total MRE physical guarantee, the hydro generators may need to purchase energy in the short-term market. When total hydro generation is higher than the total MRE physical guarantee, the surplus is proportionally shared among its participants and they may sell the excess energy on the spot market.
Brazil Indirect Tax Reform — On December 20, 2023, Constitutional Amendment 132 was enacted and overhauls the federal, state, and local indirect taxes on consumption and transactions in Brazil. This amendment is the fundamental pillar of the broad Tax Reform which also requires a Complementary Law to the Constitution (LC), to be proposed in 2024.

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Based on the amendment, the new tax model will eliminate all indirect taxes and create a dual VAT (federal and state/municipal), plus a federal excise tax (no impact is expected in AES Brasil businesses). The combined rate of the dual VAT is expected to be between 25% and 27% and aligns VAT input credits to amounts charged by suppliers and the tax-on-tax cascading effect for the collection at the location of the final consumer. Additionally, the indirect taxes incentive regime for infrastructure development ("REIDI") will be extinguished in 2027, but a new form of exemption for capital goods will be addressed in a Complementary Law.
The transition period to the new tax model will last 7 years (starting in 2026 and ending in 2032), during which two tax systems will coexist, with old and new taxes collected in parallel. Furthermore, the proposal requires the Executive Branch to send to the National Congress the Income Tax Reform bill of law within 90 days after the constitutional amendment takes effect. If this second phase of the tax reform is approved in 2024, it will take effect in 2025.
Argentina
Argentina has one main power system, the SADI, which serves 91% of the country. As of December 31, 2023, the installed capacity of the SADI totaled 43,774 MW. The SADI's installed capacity is composed primarily of thermoelectric generation (59%) and hydroelectric generation (26%), as well as wind (8%), nuclear (4%), and solar (3%).
Thermoelectric generation in the SADI is fueled primarily by natural gas. However, scarcity of natural gas during winter periods (June to August) due to transport constraints results in the use of alternative fuels, such as oil and coal. The SADI is also highly reliant on hydroelectric plants. Hydrological conditions impact reservoir water levels and largely influence the dispatch of the system's hydroelectric and thermoelectric generation plants and, therefore, influence market costs. Precipitation in Argentina occurs principally from May to October.
The Argentine regulatory framework divides the electricity sector into generation, transmission, and distribution. The wholesale electric market is comprised of generation companies, transmission companies, distribution companies, and large customers who are permitted to trade electricity. Generation companies can sell their output in the spot market or under PPAs. CAMMESA manages the electricity market and is responsible for dispatch coordination. The Electricity National Regulatory Agency is in charge of regulating public service activities and the Secretariat of Energy regulates system framework and grants concessions or authorizations for sector activities. In Argentina, there is a tolling scheme in which the regulator establishes prices for electricity and defines fuel reference prices. For the energy sold in the spot market, generators are compensated for fixed costs and non-fuel variable costs, under prices mainly denominated in Argentine pesos and CAMMESA is in charge of providing the natural gas and liquid fuels required by the generation companies, except for coal. For the energy sold under PPAs (as Energía PLUS from TermoAndes) the generators buy their required fuel at a reference price established by the regulator. As a result, our businesses are particularly sensitive to changes in regulation.
The expansion of renewable capacity in the system is promoted by allowing the new power plants to sign contracts either with CAMMESA through the RenovAr program or directly by trading energy in the private market.
During 2023, although the government increased prices to the end user, subsidies and the system deficit also increased. By December 2023, distribution companies recovered an average 47% of the total cost of the system.
In past years, AES Argentina contributed certain accounts receivable to fund the construction of three power plants under FONINVEMEM agreements. These receivables accrue interest and are collected in monthly installments over 10 years after commercial operation date of the related plant takes place. In 2020, FONINVEMEM I and II installments were fully repaid and in 2021 the ownership interests in Termoeléctrica San Martín and Termoeléctrica Manuel Belgrano were defined after the incorporation of the National Government as majority shareholder. The transfer of the power plants to these companies has not yet occurred. FONINVEMEM III is related to Termoeléctrica Guillermo Brown, which began operations in April 2016, and the installments are still being collected. AES Argentina will receive a pro rata ownership interest in this plant, which shall not be greater than 30%, once the accounts receivables have been fully repaid. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Long-Term Receivables and Note 7.—Financing Receivables in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further discussion of receivables in Argentina.
In 2022 and 2023, the Argentine peso devalued against the USD by approximately 42% and 78%, respectively, and Argentina’s economy continued to be highly inflationary. Since September 2019, currency controls have been established to govern the devaluation of the Argentine peso and keep Argentine central bank reserves at acceptable levels.

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Colombia
Electricity supply in Colombia is concentrated in one main system, the SIN, which encompasses one-third of Colombia's territory, providing electricity to 97% of the country's population. The SIN's installed capacity, primarily hydroelectric (66%), thermal (30%) and other renewables (4%), totaled 19,942 MW as of December 31, 2023. The marked seasonal variations in Colombia's hydrology result in price volatility in the short-term market. In 2023, 74% of total energy demand was supplied by hydroelectric plants.
The electricity sector in Colombia operates under a competitive market framework for the generation and sale of electricity, and a regulated framework for transmission and distribution of electricity. The distinct activities of the electricity sector are governed by Colombian laws and CREG, the Colombian regulating entity for energy and gas. Other government entities have a role in the electricity industry, including the Ministry of Mines and Energy, which defines the government's policy for the energy sector; the Public Utility Superintendency of Colombia, which is in charge of overseeing utility companies; and the Mining and Energy Planning Unit, which is in charge of expansion planning of the generation and transmission network.
The generation sector is organized on a competitive basis with companies selling their generation in the wholesale market at the short-term price or under bilateral contracts with other participants, including distribution companies, generators and traders, and unregulated customers at freely negotiated prices. The National Dispatch Center dispatches generators in merit order based on bid offers in order to ensure that demand will be satisfied by the lowest cost combination of available generating units.
The expansion of the system is supported by two schemes: i) reliability charge auctions where firm energy commitments are focused on conventional technology power plants, and ii) auctions of long-term energy contracts assigned for periods of 15 years aimed at non-conventional renewable resources.
Vietnam
The Ministry of Industry and Trade in Vietnam is primarily responsible for formulating a program to restructure the power industry, developing the electricity market, and promulgating electricity market regulations. The fuel supply is owned by the government through Vinacomin, a state-owned entity, and PetroVietnam.
The Vietnam power market is divided into three regions (North, Central, and South), with total installed capacity of approximately 80 GW. The fuel mix in Vietnam is composed primarily of coal (33%), hydropower (28%) and renewables, including solar, wind, and biomass (27%). EVN, the national utility, owns 37% of installed generation capacity.
The government is in the process of realigning EVN-owned companies into three different independent operations in order to create a competitive power market. The first stage of this realignment was the implementation of the Competitive Electricity Market, which has been in operation since 2012. The second stage was the introduction of the Electricity Wholesale Market, which has been in operation since the beginning of 2019. The third and final stage impacts the Electricity Retail Market. The reforms are currently in development. BOT power plants will not directly participate in the power market; alternatively, a single buyer will bid the tariff on the power pool on their behalf.
Puerto Rico
Puerto Rico has a single electric grid managed by PREPA, a state-owned entity that provides virtually all of the electric power consumed in Puerto Rico and generates, transmits, and distributes electricity to 1.5 million customers. Since June 2021, PREPA has contracted LUMA Energy to manage the transmission, distribution and commercialization activities. The Puerto Rico Energy Bureau is the main regulatory body. The bureau approves wholesale and retail rates, sets efficiency and interconnection standards, and oversees PREPA's compliance with Puerto Rico's renewable portfolio standard.
Puerto Rico's electricity is 93% produced by thermal plants (51% from petroleum, 33% from natural gas, and 9% from coal), while the remaining 7% is supplied by renewable resources (wind and solar).
Jordan
The Jordan electricity transmission market is a single-buyer model with the state-owned National Electric Power Company ("NEPCO") responsible for transmission. NEPCO generally enters into long-term PPAs with IPPs to fulfill energy procurement requests from distribution utilities.

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Environmental and Land-Use Regulations
The Company faces certain risks and uncertainties related to numerous 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 residuals), and certain air emissions, such as SO2, NOX, particulate matter, mercury, and 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; and Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our businesses in this Form 10-K. For a discussion of the laws and regulations of individual countries within each SBU where our subsidiaries operate, see discussion within Item 1.—Business of this Form 10-K under the applicable SBUs.
Many of the countries in which the Company does business have laws and regulations relating to the siting, construction, permitting, ownership, operation, modification, repair and decommissioning of, and power sales from electric power generation or distribution assets. In addition, international projects funded by the International Finance Corporation, the private sector lending arm of the World Bank, or many other international lenders are subject to World Bank environmental standards or similar standards, which tend to be more stringent than local country standards. The Company often has used advanced generation technologies in order to minimize environmental impacts, such as combined fluidized bed boilers and advanced gas turbines, and environmental control devices such as flue gas desulphurization for SO2 emissions and selective catalytic reduction for NOx emissions.
Environmental laws and regulations affecting electric power generation and distribution facilities are complex, change frequently, and have become more stringent over time. The Company has incurred and will continue to incur capital costs and other expenditures to comply with these environmental laws and regulations. The Company may be required to make significant capital or other expenditures to comply with these regulations. There can be no assurance that the businesses operated by the subsidiaries of the Company will be able to recover any of these compliance costs from their counterparties or customers such that the Company's consolidated results of operations, financial condition, and cash flows would not be materially affected.
Various licenses, permits, and approvals are required for our operations. Failure to comply with permits or approvals, or with environmental laws, can result in fines, penalties, capital expenditures, interruptions, or changes to our operations. Certain subsidiaries of the Company are subject to litigation or regulatory action relating to environmental permits or approvals. See Item 3.—Legal Proceedings in this Form 10-K for more detail with respect to environmental litigation and regulatory action.
United States Environmental and Land-Use Legislation and Regulations
In the United States, the CAA and various state laws and regulations regulate emissions of SO2, NOX, particulate matter, GHGs, mercury, and other hazardous air pollutants. Certain applicable rules are discussed in further detail below.
CSAPR — CSAPR addresses the "good neighbor" provision of the CAA, which prohibits sources within each state from emitting any air pollutant in an amount which will contribute significantly to any other state’s nonattainment of, or interference with maintenance of, any NAAQS. The CSAPR required significant reductions in SO2 and NOX emissions from power plants in many states in which subsidiaries of the Company operate. The Company is currently required to comply with the CSAPR in certain states, including in Indiana and Maryland. The CSAPR is implemented in part through a market-based program under which compliance may be achievable through the acquisition and use of emissions allowances created by the EPA. The Company complies with CSAPR through operation of existing controls and purchases of allowances on the open market, as needed.
In October 2016, the EPA published a final rule to update the CSAPR to address the 2008 ozone NAAQS ("CSAPR Update Rule"). Following legal challenges related to the CSAPR Update Rule, on April 30, 2021, the EPA issued the Revised CSAPR Update Rule. The Revised CSAPR Update Rule required affected electric generating units ("EGUs") within certain states (including Indiana and Maryland) to participate in a new trading program, the CSAPR NOx Ozone Season Group 3 trading program.

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These affected EGUs received fewer NOx Ozone Season allowances beginning in 2021.
On June 5, 2023, the EPA published a final Federal Implementation Plan ("FIP") to address air quality impacts with respect to the 2015 Ozone NAAQS. The rule establishes a revised CSAPR NOx Ozone Season Group 3 trading program for 22 states, including Indiana and Maryland and became effective during 2023. The FIP also includes enhancements to the revised Group 3 trading program, which include a dynamic budget setting process beginning in 2026, annual recalibration of the allowance bank to reflect changes to affected sources, a daily backstop emissions rate limit for certain coal-fired electric generating units beginning in 2024, and a secondary emissions limit prohibiting certain emissions associated with state assurance levels. It is too early to determine the impact of this final rule, but it may result in the need to purchase additional allowances or make operational adjustments.
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.
New Source Review ("NSR") — The NSR requirements under the CAA impose certain requirements on major emission sources, such as electric generating stations, if changes are made to the sources that result in a significant increase in air emissions. Certain projects, including power plant modifications, are excluded from these NSR requirements if they meet the routine maintenance, repair, and replacement ("RMRR") exclusion of the CAA. There is ongoing uncertainty and significant litigation regarding which projects fall within the RMRR exclusion. Over the past several years, the EPA has filed suits against coal-fired power plant owners and issued NOVs to a number of power plant owners alleging NSR violations. See Item 3.—Legal Proceedings in this Form 10-K for more detail with respect to environmental litigation and regulatory action, including an NOV issued by the EPA against AES Indiana concerning NSR and prevention of significant deterioration issues under the CAA. If NSR requirements are imposed on any of the power plants owned by the Company's subsidiaries, the results could have a material adverse impact on the Company's business, financial condition, and results of operations.
Regional Haze Rule — The EPA's "Regional Haze Rule" established timelines for states to improve visibility in national parks and wilderness areas throughout the United States by establishing reasonable progress goals toward meeting a national goal of natural visibility conditions in Class I areas by the year 2064 through a series of state implementation plans (SIPs), which may result in additional emissions control requirements for electric generating units. SIPs for the first planning period (through 2018) did not result in material impact to AES facilities. For all future SIP planning periods, states must evaluate whether additional emissions reduction measures may be needed to continue making reasonable progress toward natural visibility conditions. The deadline for submittal of the SIP covering the second planning period was July 31, 2021. To date, none of the states in which we operate have submitted plans identifying potential impacts to Company facilities. However, we cannot predict the possible outcome or potential impacts of this matter at this time.
NAAQS — Under the CAA, the EPA sets NAAQS for six principal pollutants considered harmful to public health and the environment, including ozone, particulate matter, NOX, and SO2, which result from fossil-fuel combustion. Areas meeting the NAAQS are designated "attainment areas" while those that do not meet the NAAQS are considered "nonattainment areas." Each state must develop a plan to bring nonattainment areas into compliance with the NAAQS, which may include imposing operating limits on individual plants. The EPA is required to review NAAQS at five-year intervals.
Based on the current and potential future ambient air standards, certain of the states in which the Company's subsidiaries operate have determined or will be required to determine whether certain areas within such states meet the NAAQS. Some of these states may be required to modify their SIPs to detail how the states will attain or maintain their attainment status. As part of this process, it is possible that the applicable state environmental regulatory agency or the EPA may require reductions of emissions from our generating stations to reach attainment status for ozone, fine particulate matter, NOX, or SO2. The compliance costs of the Company's U.S. subsidiaries could be material.
Mercury and Air Toxics Standard — In April 2012, the EPA’s rule to establish maximum achievable control technology standards for hazardous air pollutants regulated under the CAA emitted from coal and oil-fired electric utilities, known as “MATS”, became effective and AES facilities implemented measures to comply, as applicable.
In June 2015, the U.S. Supreme Court remanded MATS to the D.C. Circuit due to the EPA’s failure to consider costs before deciding to regulate power plants under Section 112 of the CAA and subsequently remanded MATS to the EPA without vacatur.

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On March 6, 2023, the EPA published a final rule reaffirming its 2016 finding that it is appropriate and necessary to regulate emissions under MATS. On April 24, 2023, the EPA published the proposed MATS Residual Risk and Technology Review rule which would lower certain emissions limits and revise certain other aspects of MATS. It is too early to determine the potential impacts of this proposal rule.
Further rulemakings and/or proceedings are possible; however, in the meantime, MATS remains in effect. We currently cannot predict the outcome of the regulatory or judicial process, or its impact, if any, on our MATS compliance planning or ultimate costs.
Greenhouse Gas Emissions — In January 2011, the EPA began regulating GHG emissions from certain stationary sources, including a pre-construction permitting program for certain new construction or major modifications, known as the Prevention of Significant Deterioration ("PSD"). If future modifications to our U.S.-based businesses' sources become subject to PSD for other pollutants, it may trigger GHG BACT requirements and the cost of compliance with such requirements may be material.
On October 23, 2015, the EPA's rule establishing NSPS for new electric generating units ("EGUs") became effective, establishing CO2 emissions standards for newly constructed coal-fueled electric generating plants, which reflects the partial capture and storage of CO2 emissions from the plants. The EPA also promulgated NSPS applicable to modified and reconstructed electric generating units, which will serve as a floor for future BACT determinations for such units. The NSPS could have an impact on the Company's plans to construct and/or modify or reconstruct electric generating units in some locations. On December 20, 2018, the EPA published proposed revisions to the final NSPS for new, modified, and reconstructed coal-fired electric utility steam generating units proposing that the best system of emissions reduction for these units is highly efficient generation that would be equivalent to supercritical steam conditions for larger units and sub-critical steam conditions for smaller units, and not partial carbon capture and sequestration, as was finalized in the 2015 final NSPS. The EPA did not include revisions for natural-gas combined cycle or simple cycle units in the December 20, 2018 proposal. Legal challenges to the GHG NSPS are being held in abeyance at this time. On May 23, 2023, the EPA published a proposed rule that would establish CO2 emissions limits for certain new fossil-fuel fired stationary combustion turbines that commence construction or are modified after May 23, 2023.
On July 8, 2019, the EPA published the final Affordable Clean Energy ("ACE") Rule which would have established CO2 emission rules for existing power plants under CAA Section 111(d) and would have replaced the EPA's 2015 Clean Power Plan Rule ("CPP"). However, on January 19, 2021, the D.C. Circuit vacated and remanded the ACE Rule. Subsequently, on June 30, 2022, the Supreme Court reversed the judgment of the D.C. Circuit Court and remanded for further proceedings consistent with its opinion, holding that the “generation shifting” approach in the CPP exceeded the authority granted to the EPA by Congress under Section 111(d) of the CAA. As a result of the June 30, 2022 Supreme Court decision, on October 27, 2022, the D.C. Circuit issued a partial mandate, holding pending challenges to the ACE Rule in abeyance. On May 23, 2023, the EPA published a proposed rule that would vacate the ACE Rule, establish emissions guidelines in the form of CO2 emissions limitations for certain existing EGUs and would require states to develop State Plans that establish standards of performance for such EGUs that are at least as stringent as the EPA’s emissions guidelines. Depending on various EGU-specific factors, the bases of proposed emissions guidelines range from routine methods of operation to carbon capture and sequestration or co-firing low-GHG hydrogen starting in the 2030s. It is too early to determine the potential impact of the proposed rule and the results of further proceedings and potential future greenhouse gas emissions regulations remain uncertain, but could be material.
On January 20, 2021, President Biden signed and submitted an instrument for the U.S. to rejoin the Paris Agreement effective February 19, 2021. In addition, in November 2023, the international community gathered at the 28th Conference to the Parties on the UN Framework Convention on Climate Change ("COP28"). The Parties agreed to non-binding language calling on countries to transition away from fossil fuels in energy systems to achieve net zero emissions by 2050.
As such, there is some uncertainty with respect to the impact of GHG rules. The GHG BACT requirements will not apply at least until we construct a new major source or make a major modification of an existing major source, and the NSPS for new EGUs will not require us to comply with an emissions standard until we construct a new electric generating unit. We do not have any planned major modifications of an existing source or plans to construct a new major source at this time which are expected to be subject to these regulations. Furthermore, the EPA, states, and other utilities are still evaluating potential impacts of the GHG regulations in our industry. In light of these uncertainties, we cannot predict the impact of the EPA’s current and future GHG regulations on our consolidated results of operations, cash flows, and financial condition.

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Due to the future uncertainty of these regulations and associated litigation, we cannot at this time determine the impact on our operations or consolidated financial results, but we believe the cost to comply with a new Section 111(d) Rule, should it be implemented in a prior or a substantially similar form, could be material. The GHG NSPS for new EGUs remains in effect at this time, and, absent further action from 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.
Cooling Water Intake — The Company's facilities are subject to a variety of rules governing water use and discharge. In particular, the Company's U.S. facilities are subject to the CWA Section 316(b) rule issued by the EPA effective in 2014 that seeks to protect fish and other aquatic organisms drawn into cooling water systems at power plants and other facilities. These standards require affected facilities to choose among seven best technology available ("BTA") options to reduce fish impingement. In addition, certain facilities must conduct studies to assist permitting authorities to determine whether and what site-specific controls, if any, would be required to reduce entrainment of aquatic organisms. It is possible that this process, which includes permitting and public input, could result in the need to install closed-cycle cooling systems (closed-cycle cooling towers), or other technology. Finally, the standards require that new units added to an existing facility to increase generation capacity are required to reduce both impingement and entrainment. It is not yet possible to predict the total impacts of this final rule at this time, including any challenges to such final rule and the outcome of any such challenges. However, if additional capital expenditures are necessary, they could be material.
Power plants are required to comply with the more stringent of state or federal requirements. At present, the California state requirements are more stringent and have earlier compliance dates than the federal EPA requirements, and are therefore applicable to the Company's California assets. Certain OTC units were required to be retired in 2019 to provide interconnection capacity and/or emissions credits prior to startup of the new generating units at AES Alamitos and AES Huntington Beach. AES Southland's current plan is to comply with the SWRCB OTC Policy by shutting down and permanently retiring all remaining generating units that utilize OTC by the compliance dates included in the OTC Policy. Following earlier extensions, in 2021, the AES Redondo Beach compliance date was extended to December 31, 2023 and there is currently no plan to replace the OTC generating units at AES Redondo Beach following their retirement effective January 1, 2024. Following earlier extensions, on August 15, 2023, the State Water Board considered the SACCWIS recommendation and adopted an amendment to the OTC Policy that established a final compliance date of December 31, 2026 for AES Alamitos and AES Huntington Beach. These extensions are contingent upon the facilities participating in the Strategic Reserve established by California Assembly Bill, AB 205, which addresses grid reliability risks from extreme events.
Water Discharges — In June 2015, the EPA and the U.S. Army Corps of Engineers ("the Agencies") published a rule defining federal jurisdiction over waters of the U.S., known as the "Waters of the U.S." (“WOTUS”) rule. WOTUS defines the geographic reach and authority of the Agencies to regulate streams, wetlands, and other water bodies under the CWA. There have been multiple Supreme Court decisions and dueling regulatory definitions over the past several years concerning the appropriate standard for how to properly determine whether a wetland or stream that is not navigable is considered a WOTUS. On May 25, 2023, the U.S. Supreme Court rendered a decision (“Decision”) in the case of Sackett v. Environmental Protection Agency, addressing the definition of WOTUS with regards to the CWA. This decision provides a standard that substantially restricts the Agencies' ability to regulate certain types of wetlands and streams. Specifically, under this decision, wetlands that do not have a continuous surface connection with traditional interstate navigable water are not federally jurisdictional.
On September 8, 2023, the Agencies published final rule amendments in the Federal Register to amend the final “Revised Definition of ‘Waters of the United States’” rule. This final rule amendment conforms the definition to the definition adopted in the Decision. The Agencies have amended key aspects of the regulatory text to conform the rule to the Decision. It is too early to determine whether the outcome of litigation or current or future revisions to rules interpreting federal jurisdiction over WOTUS may have a material impact on our business, financial condition, or results of operations.
In November 2015, the EPA published its final ELG rule to reduce toxic pollutants discharged into waters of the U.S. by steam-electric power plants through technology applications. 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. Operational practices and/or wastewater treatment technologies already installed and operated at U.S. businesses met the requirements of these rules. Following the 2019 U.S. Court of Appeals vacatur and remand of portions of the 2015 ELG rule related to leachate and legacy water, on March 29, 2023, the EPA published a proposed rule revising the 2020 Reconsideration Rule.

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The proposed rule would establish new best available technology economically achievable effluent limits for flue gas desulfurization wastewater, bottom ash treatment water, and combustion residual leachate. It is too early to determine whether any outcome of litigation or current or future revisions to the ELG rule might have a material impact on our business, financial condition, and results of operations.
On April 23, 2020, the U.S. Supreme Court issued a decision in the Hawaii Wildlife Fund v. County of Maui case related to whether a CWA permit is required when pollutants originate from a point source but are conveyed to navigable waters through a nonpoint source, such as groundwater. The Court held that discharges to groundwater require a permit if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters. A number of legal cases relevant to determination of "functional equivalent" are ongoing in various jurisdictions. On November 27, 2023, the EPA issued a draft guidance addressing how the Supreme Court decision would be applied to the NPDES permit program as it relates to functional equivalent discharge. It is too early to determine whether the Supreme Court decision or the result of litigation to "functional equivalent" may have a material impact on our business, financial condition, or results of operations.
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 CCR landfills and CCR surface impoundments, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements, and post-closure care. 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 federal permit program. On February 20, 2020, the EPA published a proposed rule to establish a federal CCR permit program that would operate in states without approved CCR permit programs. 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 January 11, 2022, the EPA released the first in a series of proposed and final determinations regarding CCR Part A Rule demonstrations and compliance-related letters notifying certain facilities of their compliance obligations under the federal CCR regulations. The determinations and letters include interpretations regarding implementation of the 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. It is too early to determine the direct or indirect impact of these letters or any determinations that may be made.
On May 18, 2023, the EPA published a proposed rule that would expand the scope of CCR units regulated by the CCR Rule to include inactive surface impoundments at inactive generating facilities as well as additional inactive and closed landfills and certain other accumulations of CCR. It is too early to determine the outcome of this proposed rule and any potential impact.
The CCR rule, current or proposed amendments to the federal CCR rule or state/territory CCR regulations, the results of groundwater monitoring data, or the outcome of CCR-related litigation could have a material impact on our business, financial condition, and results of operations. AES Indiana would seek recovery of any resulting expenditures; however, there is no guarantee we would be successful in this regard.
International Environmental Regulations
Chile
Chilean law requires all electricity generators to supply a certain portion of their total contractual obligations with NCRE. Generation companies are able to meet this requirement by building NCRE generation capacity (wind, solar, biomass, geothermal, and small hydroelectric technology) or purchasing NCREs from qualified generators. Non-compliance with the NCRE requirements will result in fines. AES Andes currently fulfills the NCRE requirements by utilizing AES Andes' solar, wind, and biomass power plants.
Since 2017, emissions of particulate matter, SO2, NOX, and CO2 are monitored for plants with an installed capacity over 50 MW; these emissions are taxed. In the case of CO2, the tax is equivalent to $5 per ton emitted. Certain PPAs have clauses allowing the Company to pass the green tax costs to unregulated customers, while some distribution PPAs do not allow for the pass through of these costs. During 2021, the Chilean General Water Direction, as part of the Ministry of Public Works, established the obligation to install and maintain effective monitoring systems for water withdrawal.

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The Company is currently implementing these systems in the power plants for which they are required.
During 2022, new regulations associated with enviromental monitoring requirements were published, including Law 21,455, which is the framework on climate change; the Ventanas power plant new Operational Plan; emission standards for back up generators; and recently enacted Law 21,505, which promotes electric energy storage and electromobility.
During 2023, increasingly demanding environmental regulations have been issued, which will require adjustments in controls throughout the life cycle of any investment project, that is, in the development, construction and operation phase. Environmental prevention and management models must be adjusted to prevent behaviors that could be considered environmental crimes, as well as investments performed to comply with new regulatory standards.
In this context, the following regulations were enacted:
•Law No 21.595: Economic and Environmental Crimes Law, which includes the regulation of crimes of attacks against the environment, establishing effective prison sentences in addition to the financial responsibility of companies.
•Law No. 21,600 creates the Biodiversity and Protected Areas Service; and
•Decree No. 1/2022 Establishes the Emission Standard for Artificial Lighting generated by outdoor lighting, which changes the level of applicability of its requirements, expanding its scope of application at the national level and contemplating some stricter limits for protected areas.
In the coming months the following regulations are expected to be published:
•New emission standards for thermoelectric power plants (standard under review since 2020);
•New noise emission standard for fixed sources (under review since 2019); and
•A modification to the System Regulations.
AES Andes and its subsidiaries are undergoing administrative environmental sanctions processes. The compliance program associated with the Ventanas power plant is being executed. The Angamos power plant is currently undergoing an environmental review process of its Environmental permit (RCA in Chile). See Item 3.—Legal Proceedings in this Form 10-K for further discussion.
Bulgaria
In July 2020, the EU approved the Next Generation EU ("NGEU") recovery instrument, which aims at mitigating the economic and social impact of the COVID-19 pandemic and making European economies and societies more sustainable. The main funding component of NGEU is the EU’s Recovery and Resilience Facility ("RRF"). In November 2023, the European Commission approved an amended version of Bulgaria's Recovery and Resilience Plan ("RRP") that describes the reforms and investments which Bulgaria wishes to make with the support of the RRF. In its RRP, Bulgaria commits to designing a coal phase-out plan aiming at retiring coal-fired power plants by 2038.
The plan includes a 40% reduction in carbon emissions by the end of 2025 and a ceiling on carbon emissions from 2026 onwards. The mechanism to achieve the target is undefined and the potential impact to Maritza's revenues is expected to be limited.
Brazil
In Brazil, the National Environmental Council ("CONAMA") is responsible for environmental licensing procedures. Inspections are performed by authorities at federal, state and municipal levels. The programs developed by AES Brasil are designed to restore and preserve biodiversity and are in compliance with local procedures and the obligations assumed in AES Brasil's concession with the state government. AES Brasil's main environmental projects include a flora management program which guarantees the production of 1 million seedlings of native tree species, a reservoir repopulation program that aims to maintain the ichthyofauna biodiversity and guarantee continuity of fishing activity by riverside communities, a land fauna monitoring and conservation program, and a water quality monitoring program designed to further understand the structure and functioning of aquatic ecosystems.

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In addition, the monitoring and control of reservoir edges is carried out through continuous inspections by the technical team of the Center of Monitoring of Reservoirs ("CMR") through a system of detection of changes, satellite images, aerophotogrammetric surveys, and field inspections.
Argentina
Argentina has agreed to commitments made by the international community ratified in the Paris Agreement and in Law 27,270 passed in September 2016.
In October 2015, Law 27,191 was passed, seeking to create a successful framework for the development of renewable energy. This law set an objective of 8% renewable energy by 2017 and 20% by 2025 and also introduced tax exemptions for importing equipment used in the construction of renewable energy projects in addition to other tax benefits. This framework fostered AES Argentina's construction of Vientos Bonaerenses and Vientos Neuquinos power plants, which are fully contracted with public and private customers in the long term.
In December 2019, Law 27,520 established a minimum budget to grant adequate actions, instruments, and strategies to mitigate and adapt to global climate change effects in all national territories and created the National Office of Climate Change to designate private and public actors to design policies aiming to reduce greenhouse gases and to provide coordinated responses in sectors that are vulnerable to climate change impacts.
All AES Argentina plants are certified under international standards of Quality (ISO 9001), Safety and Health (ISO 45.001) and Environment (ISO 14001).
Colombia
Decree 1076 of 2015 established the current Environmental Licensing Scheme that defines the scope of the National Environmental Licensing Authority ("ANLA") for granting environmental licenses. In recent years, the Ministry of the Environment has generated regulations in connection with licenses, such as the biotic compensation methodology and guidance for presentation of environmental studies in 2018, and the regulation of minor changes to environmental licenses in 2022.
In 2023, the ANLA begun the review of the reference terms for environmental impact studies and is working on a reform to the procedure for licensing process for non-conventional renewable energy projects. The following is highlighted in the regulatory proposal, which is expected to be processed during the first half of 2024:
•All renewable energy projects would be licensed by ANLA.
•The implementation of a new instrument called the Environmental Baseline, which would be used for decision-making regarding the development of Renewable Energy Projects.
•Photovoltaic electricity generation projects that are developed on land classified as suburban, according to municipal planning plans, would not request an environmental license.
At the end of 2023, AES Colombia obtained the environmental license, issued by the ANLA, for the 500 kV line to connect the Guajira pipeline projects. Currently, AES Colombia has obtained environmental licenses for 406 MW of wind projects in Guajira.
Customers
We sell to a wide variety of customers. No individual customer accounted for 10% or more of our 2023 total revenue. In our generation business, we own and/or operate power plants to generate and sell power to wholesale customers such as utilities and other intermediaries. Our utilities sell to end-user customers in the residential, commercial, industrial, and governmental sectors in a defined service area.
Human Capital Management
At AES, our people are instrumental to helping us meet the world’s energy needs. Supporting our people is a foundational value for AES. Our actions are grounded in the shared values that shape AES’ culture: Safety First, Highest Standards, and All Together. The AES Corporation is led and managed by our Chief Executive Officer and the Executive Leadership Team with the guidance and oversight of our Board of Directors.
As of December 31, 2023, the Company and its subsidiaries had approximately 9,600 full time/permanent employees.

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571
As of December 31, 2023, approximately 30% of our U.S. employees were subject to collective bargaining agreements. Collective bargaining agreements between us and these labor unions expire at various dates ranging from 2024 to 2026. In addition, certain employees in non-U.S. locations were subject to collective bargaining agreements, representing approximately 50% of the non-U.S. workforce. Management believes that the Company's employee relations are favorable.
Safety
At AES, safety is one of our core values. Conducting safe operations at our facilities around the world, so that each person can return home safely, is the cornerstone of our daily activities and decisions. Safety efforts are led by our Chief Operating Officer and supported by safety committees that operate at the local site level. Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety.
AES has established a Safety Management System (“SMS”) Global Safety Standard that applies to all AES employees, as well as contractors working in AES facilities and construction projects. The SMS requires continuous safety performance monitoring, risk assessment, and performance of periodic integrated environmental, health, and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance, and drive continuous improvements. The SMS standard is consistent with the OHSAS 18001/ISO 45001 standard, and during 2023 approximately 58% of our locations have elected to formally certify their SMS to the OHSAS 18001/ISO 45001 international standard. AES calculates lost time incident (“LTI”) rates for our employees and contractors based on OSHA standards, based on 200,000 labor hours, which equates to 100 workers who work 40 hours per week and 50 weeks per year. In 2023, there was an 82% increase in LTI cases. In 2023, AES’ LTI Rate was 0.120 for AES People, 0.118 for operational contractors, and 0.076 for construction contractors. In 2023, the Company had one contractor work-related fatality.
Talent
We believe AES’ success depends on its ability to attract, develop, and retain key personnel. The skills, experience, and industry knowledge of key employees significantly benefit our operations and performance. We have a comprehensive approach to managing our talent and developing our leaders in order to ensure our people have the right skills for today and tomorrow, whether that requires us to build new business models or leverage leading technologies.
We emphasize employee development and training. To empower employees, we provide a range of development programs and opportunities, skills, and resources they need to be successful by focusing on experience and exposure, as well as formal programs including our Trainee Program.
At AES, we believe that our individual differences make us stronger. Our Diversity and Inclusion Program is led by our Diversity and Inclusion Officer. Governance and standards are guided by the Chief Human Resources Officer, with input from members of the Executive Leadership Team.
Compensation

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AES’ executive compensation philosophy emphasizes pay-for-performance. Our incentive plans are designed to reward strong performance, with greater compensation paid when performance exceeds expectations and less compensation paid when performance falls below expectations. We invest significant time and resources to ensure our compensation programs are competitive and reward the performance of our people. Every year, AES people who are not part of a collective bargaining agreement are eligible for an annual merit-based salary increase. In addition, individuals are eligible for a salary increase if they receive a significant promotion. For non-collectively bargained employees at certain levels in the organization, we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between AES' employees and AES.
Executive Officers
The following individuals are our executive officers:
Stephen Coughlin, 52 years old, has served as Executive Vice President and Chief Financial Officer since October 2021. Prior to assuming his current position, he led AES’ Corporate Strategy and Financial Planning teams, and served as the Chair of the Company’s Investment Committee. Prior to that role, he served as the Chief Executive Officer of Fluence. Mr. Coughlin joined AES in 2007 and spent his early years with the company leading Financial Planning & Analysis for AES’s renewables portfolio. Mr. Coughlin is a member of the boards of AES Clean Energy Development Holdings, LLC, AES U.S. Investments, Inc., AES U.S. Generation, LLC, and IPALCO. Mr. Coughlin received a bachelor's degree in commerce and finance from the University of Virginia and a Master of Business Administration degree from the University of California at Berkeley.
Bernerd Da Santos, 60 years old, has served as Executive Vice President and President of the Renewables SBU since June 2023. Previously, Mr. Da Santos held several positions at AES, including Chief Operating Officer and Executive Vice President from December 2017 to July 2023, Chief Operating Officer and Senior Vice President from 2014 to 2017, Chief Financial Officer, Global Finance Operations from 2012 to 2014, Chief Financial Officer of Global Utilities from 2011 to 2012, Chief Financial Officer of Latin America and Africa from 2009 to 2011, Chief Financial Officer of Latin America from 2007 to 2009, Managing Director of Finance for Latin America from 2005 to 2007, and VP and Controller of La Electricidad de Caracas (“EDC”) (Venezuela). Prior to joining AES in 2000, Mr. Da Santos held a number of financial leadership positions at EDC. Mr. Da Santos is a member of the boards of AES Brasil Energia S.A., AES Mong Duong Power Co. Ltd., IPALCO, and Son My LNG Terminal LLC. Mr. Da Santos holds a bachelor’s degree with Cum Laude distinction in Business Administration and Public Administration from Universidad José Maria Vargas, a bachelor’s degree with Cum Laude distinction in Business Management and Finance, and an MBA with Cum Laude distinction from Universidad José Maria Vargas.
Ricardo Manuel Falú, 44 years old, has served as Executive Vice President and Chief Operating Officer since February 2024. Prior to assuming his current position, Mr. Falú was Senior Vice President and Chief Operating Officer since July 2023 and Senior Vice President and Chief Strategy and Commercial Officer since August 2022. Since March 2023, Mr. Falú has also served as President of the New Energy Technologies SBU. Mr. Falú joined AES in 2003 and, prior to his current roles, served as President of the Andes region from January 2022 to August 2022 and Chief Executive Officer of AES Andes from April 2018 to August 2022, which includes AES Chile, AES Colombia, and AES Argentina. Before that, Mr. Falú served as the Chief Financial Officer for the Company's businesses in the Andes region from 2014 to April 2018 and as Chief Financial Officer for the Company's businesses in the Mexico, Central American, and Caribbean region from 2012 to 2014. He is a member of the boards of Fluence Energy, Inc., AES Andes, IPALCO, AES Ohio, and AES Colombia. Prior to joining AES, Mr. Falú worked as an external auditor, accounting analyst, and financial consultant in Argentina. He holds a Certified Public Accountant degree from the Universidad Nacional de Salta in Argentina and an Executive MBA, graduating Summa Cum Laude from the IAE Business School. He also holds a diploma from the Wharton Advanced Management Program, a Certificate in Management from Darden, and has completed other executive financial and management studies at Darden, Wharton, and Harvard.
Paul L. Freedman, 53 years old, has served as Executive Vice President, General Counsel, and Corporate Secretary since February 2021. Prior to assuming his current position, Mr. Freedman was Senior Vice President and General Counsel from February 2018, Corporate Secretary from October 2018, Chief of Staff to the Chief Executive Officer from April 2016 to February 2018, Assistant General Counsel from 2014 to 2016, and from 2007 to 2014 he held a variety of other positions in the AES legal group. Mr. Freedman is a member of the Boards of, AES U.S. Investments, Inc., IPALCO, AES Ohio, and AES Southland Energy Holdings, LLC. Additionally, Mr Freedman is a member of the Boards of the Business Council for International Understanding and the Coalition for Integrity. Prior to joining AES, Mr. Freedman was Chief Counsel for credit programs at the U.S. Agency for International Development and he previously worked as an associate at the law firms of White & Case and Freshfields.

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Mr. Freedman received a B.A. from Columbia University and a J.D. from the Georgetown University Law Center.
Andrés R. Gluski, 66 years old, has been President, Chief Executive Officer and a member of our Board of Directors since September 2011 and is a member of the Innovation and Technology Committee. Under his leadership, AES has become a world leader in implementing clean technologies, including energy storage and renewable power. Prior to assuming his current position, Mr. Gluski served as Executive Vice President and Chief Operating Officer of the Company from 2007 to 2011. Prior to that role, he served in a number of senior roles at AES, including as Regional President of Latin America and was Senior Vice President for the Caribbean and Central America. He is a member of the Board of Waste Management and serves as Chairman of the Americas Society/Council of the Americas. Mr. Gluski is a magna cum laude graduate of Wake Forest University and holds an M.A. and a Ph.D. in Economics from the University of Virginia.
Tish Mendoza, 48 years old, has served as Executive Vice President and Chief Human Resources Officer since February 2021. Prior to assuming her current position, Ms. Mendoza was Senior Vice President, Global Human Resources and Internal Communications and Chief Human Resources Officer from 2012, Vice President of Human Resources, Global Utilities from 2011 to 2012, Vice President of Global Compensation, Benefits and HRIS, including Executive Compensation, from 2008 to 2011, and acted in the same capacity as the Director of the function from 2006 to 2008. Ms. Mendoza is a member of the boards of IPALCO, Fluence Energy, Inc. and AES Ohio, and sits on AES’ compensation and benefits committees. Prior to joining AES, Ms. Mendoza was Vice President of Human Resources for a product company in the Treasury Services division of JP Morgan Chase and Vice President of Human Resources and Compensation and Benefits at Vastera, Inc, a former technology and managed services company. Ms. Mendoza earned certificates in Leadership and Human Resource Management, and a bachelor’s degree in Business Administration and Human Resources.
Juan Ignacio Rubiolo, 47 years old, has served as Executive Vice President and President of the Energy Infrastructure SBU since March 2023. Prior to assuming his current position, Mr. Rubiolo served as Executive Vice President and President of International Businesses from January 2022 to March 2023, Senior Vice President and President of the MCAC SBU from March 2018 to January 2022, as the Chief Executive Officer of AES Mexico from 2014 to March 2018, and as a Vice President of the Commercial team of the MCAC SBU from 2013 to 2014. Mr. Rubiolo joined AES in 2001 and has worked in AES businesses in the Philippines, Argentina, Mexico, Panama, and the Dominican Republic. Mr. Rubiolo serves on the boards of AES Andes, AES Brasil Energia, and AES Colombia & Cia S.C.A. E.S.P. Mr. Rubiolo has a Science Degree in Business from the Universidad Austral of Argentina, a Master of Project Management from the Quebec University in Canada and has completed the executive business and leadership program at the University of Virginia.
How to Contact AES and Sources of Other Information
Our principal offices are located at 4300 Wilson Boulevard, Arlington, Virginia 22203. Our telephone number is (703) 522-1315. Our website address is http://www.aes.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and any amendments to such reports filed pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") are posted on our website. After the reports are filed with, or furnished to the SEC, they are available from us free of charge. Material contained on our website is not part of and is not incorporated by reference in this Form 10-K. The SEC maintains an internet website that contains the reports, proxy and information statements and other information that we file electronically with the SEC at www.sec.gov.
Our CEO and our CFO have provided certifications to the SEC as required by Section 302 of the Sarbanes-Oxley Act of 2002. These certifications are included as exhibits to this Annual Report on Form 10-K.
Our CEO provided a certification pursuant to Section 303A of the New York Stock Exchange Listed Company Manual on April 27, 2023.
Our Code of Business Conduct ("Code of Conduct") and Corporate Governance Guidelines have been adopted by our Board of Directors. The Code of Conduct is intended to govern, as a requirement of employment, the actions of everyone who works at AES, including employees of our subsidiaries and affiliates. Our Ethics and Compliance Department provides training, information, and certification programs for AES employees related to the Code of Conduct. The Ethics and Compliance Department also has programs in place to prevent and detect criminal conduct, promote an organizational culture that encourages ethical behavior and a commitment to compliance with the law, and to monitor and enforce AES policies on corruption, bribery, money laundering and associations with terrorists groups.

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The Code of Conduct and the Corporate Governance Guidelines are located in their entirety on our website. Any person may obtain a copy of the Code of Conduct or the Corporate Governance Guidelines without charge by making a written request to: Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, VA 22203. If any amendments to, or waivers from, the Code of Conduct or the Corporate Governance Guidelines are made, we will disclose such amendments or waivers on our website.
ITEM 1A. RISK FACTORS
You should consider carefully the following risks, along with the other information contained in or incorporated by reference in this Form 10-K. Additional risks and uncertainties also may adversely affect our business and operations. We routinely encounter and address risks, some of which may cause our future results to be materially different than we presently anticipate. The categories of risk we have identified in Item 1A.—Risk Factors include risks associated with our operations, governmental regulation and laws, our indebtedness and financial condition. These risk factors should be read in conjunction with Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K and the Consolidated Financial Statements and related notes included elsewhere in this Form 10-K. If any of the following events actually occur, our business, financial results and financial condition could be materially adversely affected.
Risks Associated with our Operations
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, vandalism, 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 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.

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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 3.— Legal Proceedings below. There can be no assurance that the outcomes of such matters will not have a material adverse effect on our consolidated financial position.
We do a significant amount of business outside the U.S., including in developing countries.
A significant amount of our revenue is generated in developing countries and we intend to expand our business in certain developing countries in which AES or its customers have an existing presence. International operations, particularly in developing countries, entail significant risks and uncertainties, including:
•economic, social and political instability in any particular country or region;
•adverse changes in currency exchange rates;
•government restrictions on converting currencies or repatriating funds;
•unexpected changes in foreign laws and regulations or in trade, monetary, fiscal or environmental policies;
•high inflation and monetary fluctuations;
•restrictions on imports of solar panels, wind turbines, coal, oil, gas or other raw materials;
•threatened or consummated expropriation or nationalization of our assets by foreign governments;
•unexpected delays in permitting and governmental approvals;
•unexpected changes or instability affecting our strategic partners in developing countries;
•failure to comply with the U.S. Foreign Corrupt Practices Act, or other applicable anti-bribery regulations;
•unwillingness of governments, agencies, similar organizations or other counterparties to honor contracts;
•unwillingness of governments, government agencies, courts or similar bodies to enforce contracts that are economically advantageous to AES and less beneficial to government or private party counterparties, against those counterparties;
•inability to obtain access to fair and equitable political, regulatory, administrative and legal systems;
•adverse changes in government tax policy and tax consequences of operating in multiple jurisdictions;
•difficulties in enforcing our contractual rights or enforcing judgments or obtaining a favorable result in local jurisdictions; and
•inability to attract and retain qualified personnel.
Developing projects in less developed economies also entails greater financing risks and such financing may only be available from multilateral or bilateral international financial institutions or agencies that require governmental guarantees for certain project and sovereign-related risks. There can be no assurance that project financing will be available or that, once secured, will provide similar terms or flexibility as would be expected from a commercial lender.
Further, our operations may experience volatility in revenues and operating margin caused by regulatory and economic difficulties, political instability and currency devaluations, which may increase the uncertainty of cash flows from these businesses.
Any of these factors could have a material, adverse effect on our business, results of operations and financial condition.

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Our businesses may incur substantial costs and liabilities and be exposed to price volatility as a result of risks associated with the wholesale electricity markets.
Some of our businesses sell or buy electricity in the spot markets when they operate at levels that differ from their power sales agreements or retail load obligations or when they do not have any powers sales agreements. Our businesses may also buy electricity in the wholesale spot markets. As a result, we are exposed to the risks of rising and falling prices in those markets. The open market wholesale prices for electricity can be volatile and generally reflect the variable cost of the source generation which could include renewable sources at near zero pricing or thermal sources subject to fluctuating cost of fuels such as coal, natural gas or oil derivative fuels in addition to other factors described below. Consequently, any changes in the generation supply stack and cost of coal, natural gas, or oil derivative fuels may impact the open market wholesale price of electricity.
Volatility in market prices for fuel and electricity may result from, among other things:
•plant availability in the markets generally;
•availability and effectiveness of transmission facilities owned and operated by third parties;
•competition and new entrants;
•seasonality, hydrology and other weather conditions;
•illiquid markets;
•transmission, transportation constraints, inefficiencies and/or availability;
•renewables source contribution to the supply stack;
•increased adoption of distributed generation;
•energy efficiency and demand side resources;
•available supplies of coal, natural gas, and crude oil and refined products;
•generating unit performance;
•natural disasters, terrorism, wars, embargoes, pandemics and other catastrophic events;
•energy, market and environmental regulation, legislation and policies;
•general economic conditions that impact demand and energy consumption; and
•bidding behavior and market bidding rules.
Wholesale power prices may experience significant volatility in our markets which could impact our operations and opportunities for future growth.
The wholesale prices offered for electricity have been volatile in the markets in which we operate due to a variety of factors, including the increased penetration of renewable generation and energy storage resources, low-priced natural gas, demand side management, new regulations and market rules. The levelized cost of electricity from new solar and wind generation sources has decreased substantially over the past decade as solar panel costs and wind turbine costs have declined, while wind and solar capacity factors have increased. These renewable resources have no fuel costs and very low operational costs, while only operating during certain periods of time (daylight) or weather conditions (higher winds). This, combined with changes in oil, gas, and coal pricing, has led to increasingly volatile electricity markets across our markets. Changing weather conditions can also directly impact electricity supply, demand, and generations sources, leading to price volatility.
This trend of volatility in wholesale prices could continue and could have a material adverse impact on the financial performance of our existing generation assets to the extent they currently sell or buy power into the spot market to serve our contracts or will seek to sell power into the spot market once our contracts expire.

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Adverse economic developments in China could have a negative impact on demand for electricity in many of our markets.
The Chinese market has been driving global materials demand and pricing for commodities over the past decade. Many of these commodities are produced in our key electricity markets. After experiencing rapid growth for more than a decade, China’s economy has experienced decreasing foreign and domestic demand, weak investment, factory overcapacity and oversupply in the property market, and has experienced a significant slowdown in recent years. U.S. tariffs have also had a negative impact on China's economic growth. Further, China's Zero COVID strategy contributed to a significant decrease in GDP growth in 2022 and its GDP growth in 2023 was below growth rates in the years preceding the pandemic. Continued slowing in China’s economic growth, demand for commodities and/or material changes in policy could result in lower economic growth and lower demand for electricity in our key markets, which could have a material adverse effect on our results of operations, financial condition and prospects.
We may not have adequate risk mitigation or insurance coverage for liabilities.
Power generation, distribution and transmission involves hazardous activities. We may become exposed to significant liabilities for which we may not have adequate risk mitigation and/or insurance coverage. Furthermore, through AGIC, AES’ captive insurance company, we take certain insurance risk on our businesses. We maintain an amount of insurance protection that we believe is customary, but there can be no assurance it will be sufficient or effective in light of all circumstances, hazards or liabilities to which we may be subject. Our insurance does not cover every potential risk associated with our operations. Adequate coverage at reasonable rates is not always obtainable. In particular, the availability of insurance for coal-fired generation assets has decreased as certain insurers have opted to discontinue or limit offering insurance for such assets. Certain insurers have also withdrawn from insuring hydroelectric assets. We cannot provide assurance that insurance coverage will continue to be available in the amounts or on terms similar to our current policies. In addition, insurance may not fully cover the liability or the consequences of any business interruptions such as natural catastrophes, equipment failure or labor dispute. The occurrence of a significant adverse event not adequately covered by insurance could have a material adverse effect on our business, results or operations, financial condition, and prospects.
We may not be able to enter into long-term contracts that reduce volatility in our results.
Many of our generation plants conduct business under long-term sales and supply contracts, which helps these businesses to manage risks by reducing the volatility associated with power and input costs and providing a stable revenue and cost structure. In these instances, we rely on power sales contracts with one or a limited number of customers for the majority of, and in some cases all of, the relevant plant's output and revenues over the term of the power sales contract. The remaining terms of the power sales contracts of our generation plants range from one to more than 20 years. In many cases, we also limit our exposure to fluctuations in fuel prices by entering into long-term contracts for fuel with a limited number of suppliers. In these instances, the cash flows and results of operations are dependent on the continued ability of customers and suppliers to meet their obligations under the relevant power sales contract or fuel supply contract, respectively. Some of our long-term power sales agreements are at prices above current spot market prices and some of our long-term fuel supply contracts are at prices below current market prices. The loss of significant power sales contracts or fuel supply contracts, or the failure by any of the parties to such contracts that prevents us from fulfilling our obligations thereunder, could adversely impact our strategy by resulting in costs that exceed revenue, which could have a material adverse impact on our business, results of operations and financial condition. In addition, depending on market conditions and regulatory regimes, it may be difficult for us to secure long-term contracts, either where our current contracts are expiring or for new development projects. The inability to enter into long-term contracts could require many of our businesses to purchase inputs at market prices and sell electricity into spot markets, which may not be favorable.
We have sought to reduce counterparty credit risk under our long-term contracts by entering into power sales contracts with utilities or other customers of strong credit quality and by obtaining guarantees from certain sovereign governments of the customer's obligations; however, many of our customers do not have or have not maintained, investment-grade credit ratings. Our generation businesses cannot always obtain government guarantees and if they do, the government may not have an investment grade credit rating. We have also located our plants in different geographic areas in order to mitigate the effects of regional economic downturns; however, there can be no assurance that our efforts will be effective.

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Our renewable energy projects and other initiatives face considerable uncertainties.
Wind, solar, hydrogen, 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,new tariffs, duties or other assessments could be imposed on the imports of solar cells, modules, batteries or other equipment utilized in our renewable energy projects.
Any 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, 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.
Further, in the U.S., the tax credits associated with certain renewables projects are earned when the project is placed in service. Delays in executing our renewables projects can result in delays in recognizing those tax credits and adversely impact our short-term financial results.
Any of the above factors could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our development projects are subject to substantial uncertainties.
We are in various stages of developing and constructing renewables projects and power plants. Certain of these projects have signed long-term contracts or made similar arrangements for the sale of electricity. Successful completion of the development of these projects depends upon overcoming substantial risks, including risks relating to siting, financing, engineering and construction, permitting, interconnection and transmission, governmental approvals, commissioning delays, supply chain related disruptions to our access to materials, or the potential for termination of the power sales contract as a result of a failure to meet certain milestones. Objections of or challenges by local communities or interest groups may delay or impede permitting for our development projects.
Additionally, in the U.S., there is a significant backlog of interconnection requests for renewables projects and the average time for receiving interconnection approvals is over four years, with significant variations across projects. There are also severe bottlenecks in the transmission system and the build-out of renewables to meet policy goals for renewable deployment will require substantial upgrades to the transmission network.
In certain cases, our subsidiaries may enter into obligations in the development process even though they have not yet secured financing, PPAs, or other important elements for a successful project. For example, our subsidiaries may instruct contractors to begin the construction process or seek to procure equipment without having financing, a PPA or critical permits in place (or enter into a PPA, procurement agreement or other agreement without agreed financing).

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If the project does not proceed, our subsidiaries may retain certain liabilities. Furthermore, we may undertake significant development costs and subsequently not proceed with a particular project. We believe that capitalized costs for projects under development are recoverable; however, there can be no assurance that any individual project will reach commercial operation. If development efforts are not successful, we may abandon certain projects, resulting in, writing off the costs incurred, expensing related capitalized development costs incurred and incurring additional losses associated with any related contingent liabilities.
Our acquisitions may not perform as expected.
Acquisitions have been a significant part of our growth strategy historically and more recently as we grow our renewables business. Although acquired businesses may have significant operating histories, we may have limited or no history of owning and operating certain of these businesses, and possibly limited or no experience operating in the country or region where these businesses are located. We also may encounter challenges in integrating and realizing the expected benefits of these acquisitions as well as integration or other one-time costs that are greater than expected. Such businesses may not generate sufficient cash flow to support the indebtedness incurred to acquire them or the capital expenditures needed to develop them; and the rate of return from such businesses may not justify our investment of capital to acquire them. In addition, some of these businesses may have been government owned and some may be operated as part of a larger integrated utility prior to their acquisition. If we were to acquire any of these types of businesses, there can be no assurance that we will be successful in transitioning them to private ownership or that we will not incur unforeseen obligations or liabilities.
The COVID-19 pandemic, or the future outbreak of any other highly infectious or contagious diseases, could impact our business and operations.
The COVID-19 pandemic has severely impacted global economic activity in recent years, including electricity and energy consumption. COVID-19 or another pandemic could have material and adverse effects on our results of operations, financial condition and cash flows due to, among other factors:
•further decline in customer demand as a result of general decline in business activity;
•further destabilization of the markets and decline in business activity negatively impacting customers’ ability to pay for our services when due or at all, including downstream impacts, whereby the utilities’ customers are unable to pay monthly bills or receiving a moratorium from payment obligations, resulting in inability on the part of utilities to make payments for power supplied by our generation companies;
•decline in business activity causing our commercial and industrial customers to experience declining revenues and liquidity difficulties that impede their ability to pay for power that we supply;
•government moratoriums or other regulatory or legislative actions that limit changes in pricing, delay or suspend customers’ payment obligations or permit extended payment terms applicable to customers of our utilities or to our offtakers under power purchase agreements, in particular, to the extent that such measures are not mitigated by associated government subsidies or other support to address any shortfall or deficiencies in payments;
•claims by our PPA counterparties for delay or relief from payment obligations or other adjustments, including claims based on force majeure or other legal grounds;
•further decline in spot electricity prices;
•the destabilization of the markets and decline in business activity negatively impacting our customer growth in our service territories at our utilities;
•negative impacts on the health of our essential personnel and on our operations as a result of implementing stay-at-home, quarantine, curfew and other social distancing measures;
•delays or inability to access, transport and deliver fuel to our generation facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers;
•delays or inability to access equipment or the availability of personnel to perform planned and unplanned maintenance or disruptions in supply chain, which can, in turn, lead to disruption in operations;
•a deterioration in our ability to ensure business continuity, including increased cybersecurity attacks related to the work-from-home environment;

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•further delays to our construction projects, including at our renewables projects, and the timing of the completion of renewables projects;
•delay or inability to receive the necessary permits for our development projects due to delays or shutdowns of government operations;
•delays in achieving our financial goals, strategy and digital transformation;
•deterioration of the credit profile of The AES Corporation and/or its subsidiaries and difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deterioration in credit and financing conditions, which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis;
•delays or inability to complete asset sales on anticipated terms or to redeploy capital as set forth in our capital allocation plans;
•increased volatility in foreign exchange and commodity markets;
•deterioration of economic conditions, demand and other related factors resulting in impairments to long-lived assets; and
•delay or inability in obtaining regulatory actions and outcomes that could be material to our business, including for recovery of COVID-19 related losses and the review and approval of our rates at our U.S. regulated utilities.
The impact of the COVID-19 pandemic also depends on factors, including the effectiveness and timing of updated vaccines to address new variants, the development of more virulent COVID-19 variants as well as third-party actions taken to contain its spread and mitigate its public health effects. A resurgence or material worsening of the COVID-19 pandemic could present material uncertainty that could adversely affect our generation facilities, transmission and distribution systems, development projects, energy storage sales by Fluence, and results of operations, financial condition and cash flows. The COVID-19 pandemic may also heighten many of the other risks described in this section.
Competition is increasing and could adversely affect us.
The power production markets in which we operate are characterized by numerous strong and capable competitors, many of whom may have extensive and diversified developmental or operating experience (including both domestic and international) and financial resources similar to, or greater than, ours. Further, in recent years, the power production industry has been characterized by strong and increasing competition with respect to both obtaining power sales agreements and acquiring existing power generation assets. In certain markets, these factors have caused reductions in prices contained in new power sales agreements and, in many cases, have caused higher acquisition prices for existing assets through competitive bidding practices. The evolution of competitive electricity markets and the development of highly efficient gas-fired power plants and renewables such as wind and solar have also caused, and could continue to cause, price pressure in certain power markets where we sell or intend to sell power. In addition, the introduction of low-cost disruptive technologies or the entry of non-traditional competitors into our sector and markets could adversely affect our ability to compete, which could have a material adverse effect on our businesses, operating results and financial condition.
Supplier and/or customer concentration may expose us to significant financial credit or performance risks.
We often rely on a single contracted supplier or a small number of suppliers for the provision of fuel, transportation of fuel and other services required for the operation of some of our facilities. If these suppliers cannot perform, we would seek to meet our fuel requirements by purchasing fuel at market prices, exposing us to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price, which could adversely impact the profitability of the affected business and our results of operations, and could result in a breach of agreements with other counterparties, including, without limitation, offtakers or lenders. Further, our suppliers may source certain materials from areas impacted by the COVID-19 pandemic, which may cause delays and/or disruptions to our development projects or operations.
The financial performance of our facilities is dependent on the credit quality of, and continued performance by, suppliers and customers. At times, we rely on a single customer or a few customers to purchase all or a significant portion of a facility's output, in some cases under long-term agreements that account for a substantial percentage of the anticipated revenue from a given facility. Counterparties to these agreements may breach or may be unable to perform their obligations, due to bankruptcy, insolvency, financial distress or other factors.

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Furthermore, in the event of a bankruptcy or similar insolvency-type proceeding, our counterparty can seek to reject our existing PPA under the U.S. Bankruptcy Code or similar bankruptcy laws, including those in Puerto Rico. We may not be able to enter into replacement agreements on terms as favorable as our existing agreements, and may have to sell power at market prices. A counterparty's breach by of a PPA or other agreement could also result in the breach of other agreements, including the affected businesses debt agreements. Any failure of a supplier or customer to fulfill its contractual obligations could have a material adverse effect on our financial results.
We may incur significant expenditures to adapt our businesses to technological changes.
Emerging technologies may be superior to, or may not be compatible with, some of our existing technologies, investments and infrastructure, and may require us to make significant expenditures to remain competitive, or may result in the obsolescence of certain of our operating assets. Our future success will depend, in part, on our ability to anticipate and successfully adapt to technological changes, to offer services and products that meet customer demands and evolving industry standards. Technological changes that could impact our businesses include:
•technologies that change the utilization of electric generation, transmission and distribution assets, including the expanded cost-effective utilization of distributed generation (e.g., rooftop solar and community solar projects), and energy storage technology;
•advances in distributed and local power generation and energy storage that reduce demand for large-scale renewable electricity generation or impact our customers’ performance of long-term agreements; and
•more cost-effective batteries for energy storage, advances in solar or wind technology, and advances in alternative fuels and other alternative energy sources.
Emerging technologies may also allow new competitors to more effectively compete in our markets or disintermediate the services we provide our customers, including traditional utility and centralized generation services. If we incur significant expenditures in adapting to technological changes, fail to adapt to significant technological changes, fail to obtain access to important new technologies, fail to recover a significant portion of any remaining investment in obsolete assets, or if implemented technology fails to operate as intended, our businesses, operating results and financial condition could be materially adversely affected.
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.

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Certain of our businesses are sensitive to variations in weather and hydrology.
Our businesses are affected by variations in general weather patterns and unusually severe weather. Our businesses forecast electric sales based on best available information and expectations for weather, which represents a long-term historical average. While we also consider possible variations in normal weather patterns and potential impacts on our facilities and our businesses, there can be no assurance that such planning can prevent these impacts, which can adversely affect our business. Generally, demand for electricity peaks in winter and summer. Typically, when winters are warmer than expected and summers are cooler than expected, demand for energy is lower, resulting in less demand for electricity than forecasted. Significant variations from normal weather where our businesses are located could have a material impact on our results of operations.
Changes in weather can also affect the production of electricity at power generation facilities, including, but not limited to, our wind and solar facilities. For example, the level of wind resource affects the revenue produced by wind generation facilities. Because the levels of wind and solar resources are variable and difficult to predict, our results of operations for individual wind and solar facilities specifically, and our results of operations generally, may vary significantly from period to period, depending on the level of available resources. To the extent that resources are not available at planned levels, the financial results from these facilities may be less than expected. In addition, we are dependent upon hydrological conditions prevailing from time to time in the broad geographic regions in which our hydroelectric generation facilities are located. Changes in temperature, precipitation and snow pack conditions also could affect the amount and timing of hydroelectric generation.
To the extent that hydrological conditions result in droughts or other conditions negatively affect our hydroelectric generation business, such as has happened in Panama in 2019 and Brazil in 2021, our results of operations can be materially adversely affected. Additionally, our contracts in certain markets where hydroelectric facilities are prevalent may require us to purchase power in the spot markets when our facilities are unable to operate at anticipated levels and the price of such spot power may increase substantially in times of low hydrology.
Severe weather and natural disasters may present significant risks to our business.
Weather conditions directly influence the demand for electricity and natural gas and other fuels and affect the price of energy and energy-related commodities. In addition, severe weather and natural disasters, such as hurricanes, floods, tornadoes, icing events, earthquakes, dam failures and tsunamis can be destructive and could prevent us from operating our business in the normal course by causing power outages and property damage, reducing revenue, affecting the availability of fuel and water, causing injuries and loss of life, and requiring us to incur additional costs, for example, to restore service and repair damaged facilities, to obtain replacement power and to access available financing sources. Our power plants could be placed at greater risk of damage should changes in the global climate produce unusual variations in temperature and weather patterns, resulting in more intense, frequent and extreme weather events, including heatwaves, fewer cold temperature extremes, abnormal levels of precipitation resulting in river and coastal urban floods in North America or reduced water availability and increased flooding across Central and South America, and changes in coast lines due to sea level change.
Depending on the nature and location of the facilities and infrastructure affected, any such incident also could cause catastrophic fires; releases of natural gas, natural gas odorant, or other greenhouse gases; explosions, spills or other significant damage to natural resources or property belonging to third parties; personal injuries, health impacts or fatalities; or present a nuisance to impacted communities. Such incidents may also impact our business partners, supply chains and transportation, which could negatively impact construction projects and our ability to provide electricity and natural gas to our customers.
A disruption or failure of electric generation, transmission or distribution systems or natural gas production, transmission, storage or distribution systems in the event of a hurricane, tornado or other severe weather event, or otherwise, could prevent us from operating our business in the normal course and could result in any of the adverse consequences described above. At our businesses where cost recovery is available, recovery of costs to restore service and repair damaged facilities is or may be subject to regulatory approval, and any determination by the regulator not to permit timely and full recovery of the costs incurred. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.

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We do not control certain aspects of our joint ventures or our equity method investments.
We have invested in some joint ventures in which our subsidiaries share operational, management, investment and/or other control rights with our joint venture partners. In many cases, we may exert influence over the joint venture pursuant to a management contract, by holding positions on the board of the joint venture company or on management committees and/or through certain limited governance rights, such as rights to veto significant actions. However, we do not always have this type of influence over the project or business and we may be dependent on our joint venture partners or the management team of the joint venture to operate, manage, invest or otherwise control such projects or businesses. Our joint venture partners or the management team of our joint ventures may not have the level of experience, technical expertise, human resources, management and other attributes necessary to operate these projects or businesses optimally, and they may not share our business priorities. In some joint venture agreements in which we do have majority control of the voting securities, we have entered into shareholder agreements granting minority rights to the other shareholders.
The approval of joint venture partners also may be required for us to receive distributions of funds from jointly owned entities or to transfer our interest in projects or businesses. The control or influence exerted by our joint venture partners may result in operational management and/or investment decisions that are different from the decisions we would make and could impact the profitability and value of these joint ventures. In addition, if a joint venture partner becomes insolvent or bankrupt or is otherwise unable to meet its obligations to or share of liabilities for the joint venture, we may be responsible for meeting certain obligations of the joint ventures to the extent provided for in our governing documents or applicable law.
Further, we have a significant equity method investment in Fluence. As a publicly listed company, Fluence is governed by its own Board of Directors, whose members have fiduciary duties to the Fluence shareholders. While we have certain rights to appoint representatives to the Fluence Board of Directors, the interests of the Fluence shareholders, as represented by the Fluence Board of Directors, may not align with our interests or the interests of our securityholders. As of December 31, 2023, Fluence continues to report that a material weakness in its internal control over revenue recognition and related inventory has not yet been remediated. Such material weakness can impact the reliability of the Fluence financial information that we may include as part of our financial information.
In addition, we are generally dependent on the management team of our equity method investments to operate and control such projects or businesses. While we may exert influence pursuant to having positions on the boards of such investments and/or through certain limited governance rights, such as rights to veto significant actions, we do not always have this type of influence and the scope and impact of such influence may be limited. The management teams of our equity method investments may not have the level of experience, technical expertise, human resources, management and other attributes necessary to operate these projects or businesses optimally, and they may not share our business priorities, which could have a material adverse effect on value of such investments as well as our growth, business, financial condition, results of operations and prospects.
Fluctuations in currency exchange rates may impact our financial results and position.
Our exposure to currency exchange rate fluctuations results primarily from the translation exposure associated with the preparation of the Consolidated Financial Statements, as well as from transaction exposure associated with transactions in currencies other than an entity's functional currency. While the Consolidated Financial Statements are reported in U.S. dollars, the financial statements of several of our subsidiaries outside the U.S. are prepared using the local currency as the functional currency and translated into U.S. dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the local currencies where our foreign subsidiaries report could cause significant fluctuations in our results. In addition, while our foreign operations expenses are generally denominated in the same currency as corresponding sales, we have transaction exposure to the extent receipts and expenditures are not denominated in the subsidiary's functional currency. Moreover, the costs of doing business abroad may increase as a result of adverse exchange rate fluctuations.
We may not be adequately hedged against our exposure to changes in commodity prices or interest rates.
We routinely enter into contracts to hedge a portion of our purchase and sale commitments for electricity, fuel requirements and other commodities to lower our financial exposure related to commodity price fluctuations. As part of this strategy, we routinely utilize fixed price or indexed forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. We also enter into contracts which help us manage our interest rate exposure. However, we may not cover the entire exposure of our assets or positions to market price or interest rate volatility, and the coverage will vary over time.

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Furthermore, the risk management practices we have in place may not always perform as planned. In particular, if prices of commodities or interest rates significantly deviate from historical prices or interest rates or if the price or interest rate volatility or distribution of these changes deviates from historical norms, our risk management practices may not protect us from significant losses. As a result, fluctuating commodity prices or interest rates may negatively impact our financial results to the extent we have unhedged or inadequately hedged positions. In addition, certain types of economic hedging activities may not qualify for hedge accounting under U.S. GAAP, resulting in increased volatility in our net income. The Company may also suffer losses associated with "basis risk," which is the difference in performance between the hedge instrument and the underlying exposure (usually the pricing node of the generation facility). Furthermore, there is a risk that the current counterparties to these arrangements may fail or are unable to perform part or all of their obligations under these arrangements, while we seek to protect against that by utilizing strong credit requirements and exchange trades, these protections may not fully cover the exposure in the event of a counterparty default. For our businesses with PPA pricing that does not completely pass through our fuel costs, the businesses attempt to manage the exposure through flexible fuel purchasing and timing of entry and terms of our fuel supply agreements; however, these risk management efforts may not be successful and the resulting commodity exposure could have a material impact on these businesses and/or our results of operations.
Our utilities businesses may experience slower growth in customers or in customer usage.
Customer growth and customer usage in our utilities businesses are affected by external factors, including mandated energy efficiency measures, demand side management requirements, and economic and demographic conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. A lack of growth, or a decline, in the number of customers or in customer demand for electricity may cause us to not realize the anticipated benefits from significant investments and expenditures and have a material adverse effect on our business, financial condition, results of operations and prospects.
Some of our subsidiaries participate in defined benefit pension plans and their net pension plan obligations may require additional significant contributions.
We have 28 defined benefit plans, five at U.S. subsidiaries and the remaining plans at foreign subsidiaries, which cover substantially all of the employees at these subsidiaries. Pension costs are based upon a number of actuarial assumptions, including an expected long-term rate of return on pension plan assets, the expected life span of pension plan beneficiaries and the discount rate used to determine the present value of future pension obligations. Any of these assumptions could prove to be incorrect, resulting in a shortfall of pension plan assets compared to pension obligations under the pension plan. We periodically evaluate the value of the pension plan assets to ensure that they will be sufficient to fund the respective pension obligations. Downturns in the debt and/or equity markets, or the inaccuracy of any of our significant assumptions underlying the estimates of our subsidiaries' pension plan obligations, could result in a material increase in pension expense and future funding requirements. Our subsidiaries that participate in these plans are responsible for satisfying the funding requirements required by law in their respective jurisdictions for any shortfall of pension plan assets as compared to pension obligations under the pension plan, which may necessitate additional cash contributions to the pension plans that could adversely affect our and our subsidiaries' liquidity. See Item 7.—Management's Discussion and Analysis—Critical Accounting Policies and Estimates—Pension and Other Postretirement Plans and Note 15—Benefit Plans included in Item 8.—Financial Statements and Supplementary Data.
Impairment of long-lived assets would negatively impact our consolidated results of operations and net worth.
Long-lived assets are initially recorded at cost or fair value, are depreciated over their estimated useful lives, and are evaluated for impairment only when impairment indicators are present, such as deterioration in general economic conditions or our operating or regulatory environment; increased competitive environment; lower forecasted revenue; increase in fuel costs, particularly costs that we are unable to pass through to customers; increase in environmental compliance costs; negative or declining cash flows; loss of a key contract or customer, particularly when we are unable to replace it on equally favorable terms; developments in our strategy; divestiture of a significant component of our business; or adverse actions or assessments by a regulator. Any impairment of long-lived assets could have a material adverse effect on our business, financial condition, results of operations, and prospects.

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Risks associated with Governmental Regulation and Laws
Our operations are subject to significant government regulation and could be adversely affected by changes in the law or regulatory schemes.
Our ability to predict, influence or respond appropriately to changes in law or regulatory schemes, including obtaining expected or contracted increases in electricity tariff or contract rates or tariff adjustments for increased expenses, could adversely impact our results of operations. Furthermore, changes in laws or regulations or changes in the application or interpretation of regulatory provisions in jurisdictions where we operate, particularly at our utilities where electricity tariffs are subject to regulatory review or approval, could adversely affect our business, including:
•changes in the determination, definition or classification of costs to be included as reimbursable or pass-through costs to be included in the rates we charge our customers, including but not limited to costs incurred to upgrade our power plants to comply with more stringent environmental regulations;
•changes in the determination of an appropriate rate of return on invested capital or that a utility's operating income or the rates it charges customers are too high, resulting in a rate reduction or consumer rebates;
•changes in the definition or determination of controllable or non-controllable costs;
•changes in tax law;
•changes in law or regulation that limit or otherwise affect the ability of our counterparties (including sovereign or private parties) to fulfill their obligations (including payment obligations) to us;
•changes in environmental law that impose additional costs or limit the dispatch of our generating facilities;
•changes in the definition of events that qualify as changes in economic equilibrium;
•changes in the timing of tariff increases;
•other changes in the regulatory determinations under the relevant concessions;
•other changes related to licensing or permitting which affect our ability to conduct business; or
•other changes that impact the short- or long-term price-setting mechanism in the our markets.
Furthermore, in many countries where we conduct business, the regulatory environment is constantly changing and it may be difficult to predict the impact of the regulations on our businesses. The impacts described above could also result from our efforts to comply with European Market Infrastructure Regulation, which includes regulations related to the trading, reporting and clearing of derivatives and similar regulations may be passed in other jurisdictions where we conduct business. Any of the above events may result in lower operating margins and financial results for the affected businesses.
Several of our businesses are subject to potentially significant remediation expenses, enforcement initiatives, private party lawsuits and reputational risk associated with CCR.
CCR generated at our current and former coal-fired generation plant sites, is currently handled and/or has been handled by: placement in onsite CCR ponds; disposal and beneficial use in onsite and offsite permitted, engineered landfills; use in various beneficial use applications, including encapsulated uses and structural fill; and used in permitted offsite mine reclamation. CCR currently remains onsite at several of our facilities, including in CCR ponds. The EPA's final CCR rule provides that enforcement actions can be commenced by the EPA, states, or territories, and private lawsuits. Compliance with the U.S. federal CCR rule; amendments to the federal CCR rule; or federal, state, territory, or foreign rules or programs addressing CCR may require us to incur substantial costs. In addition, the Company and our businesses may face CCR-related lawsuits in the United States and/or internationally that may expose us to unexpected potential liabilities. Furthermore, CCR-related litigation may also expose us to unexpected costs. In addition, CCR, and its production at several of our facilities, have been the subject of significant interest from environmental non-governmental organizations and have received national and local media attention. The direct and indirect effects of such media attention, and the demands of responding to and addressing it, may divert management time and attention. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.

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Some of our U.S. businesses are subject to the provisions of various laws and regulations administered by FERC, NERC and by state utility commissions that can have a material effect on our operations.
The AES Corporation is a registered electric utility holding company under the PUHCA 2005 as enacted as part of the EPAct 2005. PUHCA 2005 eliminated many of the restrictions that had been in place under the U.S. Public Utility Holding Company Act of 1935, while continuing to provide FERC and state utility commissions with enhanced access to the books and records of certain utility holding companies. PUHCA 2005 also creates additional potential challenges and opportunities. By removing some barriers to mergers and other potential combinations, the creation of large, geographically dispersed utility holding companies is more likely. These entities may have enhanced financial strength and therefore an increased ability to compete with us in the U.S.
FERC strongly encourages competition in wholesale electric markets. Increased market participation may have the effect of lowering our operating margins. Among other steps, FERC has encouraged RTOs and ISOs to develop demand response bidding programs as a mechanism for responding to peak electric demand and has also encouraged the integration of distributed energy resources. These programs may reduce the value of generation assets, particularly utility-scale projects. FERC is also encouraging the construction of new transmission infrastructure in accordance with provisions of EPAct 2005. Although new transmission lines may increase market opportunities, they may also increase the competition in our existing markets. Additionally, the market rules in the wholesale electric markets in which we operate continue to evolve in response to, among other things, increasing penetration by renewable energy resources and energy storage systems. For example, some wholesale electric market regions have either implemented or are considering changes to how resource adequacy or capacity attributes are allocated to intermittent generating resources. These changes could result in lower resource adequacy or capacity attribute revenues for our renewable generating facilities in these regions.
FERC has civil penalty authority over violations of any provision of Part II of the FPA, which concerns wholesale generation or transmission, as well as any rule or order issued thereunder. The FPA also provides for the assessment of criminal fines and imprisonment for violations under the FPA. This penalty authority was enhanced in EPAct 2005. As a result, FERC is authorized to assess a maximum penalty authority established by statute and such penalty authority has been and will continue to be adjusted periodically to account for inflation. With this expanded enforcement authority, violations of the FPA and FERC's regulations could potentially have more serious consequences than in the past.
Pursuant to EPAct 2005, the NERC has been certified by FERC as the Electric Reliability Organization ("ERO") to develop mandatory and enforceable electric system reliability standards applicable throughout the U.S. to improve the overall reliability of the electric grid. These standards are subject to FERC review and approval. Once approved, the reliability standards may be enforced by FERC independently, or, alternatively, by the ERO and regional reliability organizations with responsibility for auditing, investigating and otherwise ensuring compliance with reliability standards, subject to FERC oversight. Violations of NERC reliability standards are subject to FERC's penalty authority under the FPA and EPAct 2005.
Our U.S. utility businesses face significant regulation by their respective state utility commissions. The regulatory discretion is reasonably broad in both Indiana and Ohio and includes regulation as to services and facilities, the valuation of property, the construction, purchase, or lease of electric generating facilities, the classification of accounts, rates of depreciation, the increase or decrease in retail rates and charges, the issuance of certain securities, the acquisition and sale of some public utility properties or securities and certain other matters. These businesses face the risk of unexpected or adverse regulatory action which could have a material adverse effect on our results of operations, financial condition, and cash flows. See Item 1.—Business—Utilities SBU.
Our businesses are subject to stringent environmental laws, rules and regulations.
Our businesses are subject to stringent environmental laws and regulations by many federal, regional, state and local authorities, international treaties and foreign governmental authorities. These laws and regulations generally concern emissions into the air, effluents into the water, use of water, wetlands preservation, remediation of contamination, waste disposal, endangered species and noise regulation. Failure to comply with such laws and regulations or to obtain or comply with any associated environmental permits could result in fines or other sanctions. For example, in recent years, the EPA has issued NOVs to a number of coal-fired generating plants alleging wide-spread violations of the new source review and prevention of significant deterioration provisions of the CAA. The EPA has brought suit against and obtained settlements with many companies for allegedly making major modifications to a coal-fired generating units without proper permit approvals and without installing best available control technology.

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The primary focus of these NOVs has been emissions of SO2 and NOx and the EPA has imposed fines and required companies to install improved pollution control technologies to reduce such emissions. In addition, state regulatory agencies and non-governmental environmental organizations have pursued civil lawsuits against power plants in situations that have resulted in judgments and/or settlements requiring the installation of expensive pollution controls or the accelerated retirement of certain electric generating units.
Furthermore, Congress and other domestic and foreign governmental authorities have either considered or implemented various laws and regulations to restrict or tax certain emissions, particularly those involving air emissions and water discharges. These laws and regulations have imposed, and proposed laws and regulations could impose in the future, additional costs on the operation of our power plants. See Item 1.—Business—Environmental and Land-Use Regulations.
We have incurred and will continue to incur significant capital and other expenditures to comply with these and other environmental laws and regulations. Changes in, or new development of, environmental restrictions may force us to incur significant expenses or expenses that may exceed our estimates. There can be no assurance that we would be able to recover all or any increased environmental costs from our customers or that our business, financial condition, including recorded asset values or results of operations, would not be materially and adversely affected.
Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our businesses.
International, federal and various regional and state authorities regulate GHG emissions and have created financial incentives to reduce them. In 2023, the Company's subsidiaries operated businesses that had total CO2 emissions of approximately 34 million metric tonnes, approximately 11 million of which were emitted by our U.S. businesses (both figures are ownership adjusted). The Company uses CO2 emission estimation methodologies supported by "The Greenhouse Gas Protocol" reporting standard on GHG emissions. For existing power generation plants, CO2 emissions data are either obtained directly from plant continuous emission monitoring systems or calculated from actual fuel heat inputs and fuel type CO2 emission factors. This estimate is based on a number of projections and assumptions that may prove to be incorrect, such as the forecasted dispatch, anticipated plant efficiency, fuel type, CO2 emissions rates and our subsidiaries' achieving completion of such construction and development projects. While actual emissions may vary substantially; certain projects under construction or development when completed will increase emissions of our portfolio and therefore could increase the risks associated with regulation of GHG emissions.
There currently is no U.S. federal legislation imposing mandatory GHG emission reductions (including for CO2) that affects our electric power generation facilities; however, in 2015, the EPA promulgated a rule establishing New Source Performance Standards for CO2 emissions for newly constructed and modified/reconstructed fossil-fueled electric utility steam generating units larger than 25 MW and in 2018 proposed revisions to the rule. On May 23, 2023, the EPA published a proposed rule that would establish CO2 emissions limits for certain new fossil-fuel fired stationary combustion turbines that commence construction or are modified after May 23, 2023. In 2019, the EPA promulgated the Affordable Clean Energy (ACE) Rule which would have replaced the EPA's 2015 Clean Power Plan Rule ("CPP"). However, on January 19, 2021, the D.C. Circuit vacated and remanded the ACE Rule. Subsequently, on June 30, 2022, the Supreme Court reversed the judgment of the D.C. Circuit Court and remanded for further proceedings consistent with its opinion, holding that the “generation shifting” approach in the CPP exceeded the authority granted to the EPA by Congress under Section 111(d) of the CAA. As a result of the June 30, 2022 Supreme Court decision, on October 27, 2022, the D.C. Circuit issued a partial mandate, holding pending challenges to the ACE Rule in abeyance. On May 23, 2023, the EPA published a proposed rule that would vacate the ACE Rule, establish emissions guidelines in the form of CO2 emissions limitations for certain existing EGUs and would require states to develop State Plans that establish standards of performance for such EGUs that are at least as stringent as the EPA’s emissions guidelines. Depending on various EGU-specific factors, the bases of proposed emissions guidelines range from routine methods of operation to carbon capture and sequestration or co-firing low-GHG hydrogen starting in the 2030s. The impact of the results of further proceedings and potential future greenhouse gas emissions regulations remains uncertain, but it could be material.
In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification. In 2016, the U.S. Supreme Court ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants. For further discussion of the regulation of GHG emissions, see Item 1.—Business—Environmental and Land-Use Regulations—U.S.

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Environmental and Land-Use Legislation and Regulations—Greenhouse Gas Emissions above. The Parties to the United Nations Framework Convention on Climate Change's Paris Agreement established a long-term goal of keeping the increase in global average temperature well below 2°C above pre-industrial levels. We anticipate that the Paris Agreement will continue the trend toward efforts to decarbonize the global economy and to further limit GHG emissions. The impact of GHG regulation on our operations will depend on a number of factors, including the degree and timing of GHG emissions reductions required under any such legislation or regulation, the cost of emissions reduction equipment and the price and availability of offsets, the extent to which market based compliance options are available, the extent to which our subsidiaries would be entitled to receive GHG emissions allowances without having to purchase them in an auction or on the open market and the impact of such legislation or regulation on the ability of our subsidiaries to recover costs incurred through rate increases or otherwise. The costs of compliance could be substantial.
Our non-utility, generation subsidiaries seek to pass on any costs arising from CO2 emissions to contract counterparties. Likewise, our utility subsidiaries seek to pass on any costs arising from CO2 emissions to customers. However, there can be no assurance that we will effectively pass such costs onto the contract counterparties or customers, respectively, or that the cost and burden associated with any dispute over which party bears such costs would not be burdensome and costly.
Furthermore, according to the Intergovernmental Panel on Climate Change, physical risks from climate change could include, but are not limited to, increased runoff and earlier spring peak discharge in many glacier and snow-fed rivers, warming of lakes and rivers, an increase in sea level, and changes and variability in precipitation and in the intensity and frequency of extreme weather events. Physical impacts may have the potential to significantly affect our business and operations. For example, extreme weather events could result in increased downtime and operation and maintenance costs at our electric power transmission and distribution assets and facilities. Variations in weather conditions, primarily temperature and humidity, would also be expected to affect the energy needs of customers. A decrease in energy consumption could decrease our revenues. In addition, while revenues would be expected to increase if the energy consumption of customers increased, such increase could prompt the need for additional investment in generation capacity.
In addition to government regulators, many groups, including politicians, environmentalists, the investor community and other private parties have expressed increasing concern about GHG emissions. New regulation, such as the initiatives in Chile and the Puerto Rico Energy Public Policy Act, may adversely affect our operations. See Item 7.—Management's Discussion and Analysis—Key Trends and Uncertainties—Decarbonization Initiatives. Responding to these decarbonization initiatives, including developments in our strategy in line with these initiatives may present challenges to our business. We may be unable to develop our renewables platform as quickly as anticipated. Further, we may be unable to dispose of coal-fired generation assets at anticipated prices, the estimated useful lives of these assets may decrease, and the value of such assets may be impaired. These initiatives could also result in the early retirement of coal-fired generation facilities, which could result in stranded costs if regulators disallow full recovery of investments.
Negative public perception of our GHG emissions could have an adverse effect on our relationships with third parties, our ability to attract additional customers, our business development opportunities, and our ability to access finance and insurance for our coal-fired generation assets.
In addition, plaintiffs previously brought tort lawsuits that were dismissed against the Company because of its subsidiaries' GHG emissions. Future similar lawsuits may prevail or result in damages awards or other relief. We may also be subject to risks associated with the impact on weather conditions. See Certain of our businesses are sensitive to variations in weather and hydrology and Severe weather and natural disasters may present significant risks to our business and adversely affect our financial results within this section for more information. If any of the foregoing risks materialize, costs may increase or revenues may decrease and there could be a material adverse effect on our results of operations, financial condition,cash flows and reputation.
Concerns about data privacy have led to increased regulation and other actions that could impact our businesses.
In the ordinary course of business, we collect and retain sensitive information, including personal identifiable information about customers, employees, customer energy usage and other information as well as information regarding business partners and other third parties, some of which may constitute confidential information. The theft, damage or improper disclosure of sensitive electronic data collected by us can subject us to penalties for violation of applicable privacy laws, subject us to claims from third parties, require compliance with notification and monitoring regulations, and harm our reputation.

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Although we maintain technical and organizational measures to protect personal identifiable information and other confidential information, breaches of, or disruptions to, our information technology systems could result in legal claims, liability or penalties under privacy laws or damage to operations or to the company's reputation, which could adversely affect our business.
We are also subject to various data privacy and security laws and regulations globally, as well as contractual requirements, as a result of having access to and processing confidential and personal identifiable information in the course of business. If we are unable to comply with applicable laws and regulations or with our contractual commitments, as well as maintain reliable information technology systems and appropriate controls with respect to privacy and security requirements, we may suffer regulatory consequences that could be costly or otherwise adversely affect our business. In addition, any actual or perceived failure on the part of one of our equity affiliates could have a material adverse impact on our results of operations and prospects.
Tax legislation initiatives or challenges to our tax positions could adversely affect us.
We operate in the U.S. and various non-U.S. jurisdictions and are subject to the tax laws and regulations of the U.S. federal, state and local governments and of many non-U.S. jurisdictions. From time to time, legislative measures may be enacted that could adversely impact our overall tax positions regarding income or other taxes, our effective tax rate or tax payments. For example, in the third quarter of 2022, the Inflation Reduction Act (the “IRA”) was signed into law in the United States. The IRA includes provisions that are expected to benefit the U.S. clean energy industry, including increases, extensions and/or new tax credits for onshore and offshore wind, solar, storage and hydrogen projects. We expect that the extension of the current solar investment tax credits ("ITCs"), as well as higher credits available for projects that satisfy wage and apprenticeship requirements, will increase demand for our renewables products. In the U.S., the IRA includes a 15% corporate alternative minimum tax based on adjusted financial statement income.
In the fourth quarter of 2022, the European Commission adopted an amended Directive on Pillar 2 establishing a global minimum tax at a 15% rate. The adoption requires EU Member States to transpose the Directive into their respective national laws by December 31, 2023 for the rules to come into effect as of January 1, 2024. During 2023, the Netherlands, Bulgaria, and Vietnam adopted legislation to implement Pillar 2 effective as of January 1, 2024. We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments. The impact to the Company remains unknown but may be material.
Risks Related to our Indebtedness and Financial Condition
We have a significant amount of debt.
As of December 31, 2023, we had approximately $27 billion of outstanding indebtedness on a consolidated basis. All outstanding borrowings under The AES Corporation's revolving credit facility are unsecured. Most of the debt of The AES Corporation's subsidiaries, however, is secured by substantially all of the assets of those subsidiaries. A substantial portion of cash flow from operations must be used to make payments on our debt. Furthermore, since a significant percentage of our assets are used to secure this debt, this reduces the amount of collateral available for future secured debt or credit support and reduces our flexibility in operating these secured assets. This level of indebtedness and related security could have other consequences, including:
•making it more difficult to satisfy debt service and other obligations;
•increasing our vulnerability to general adverse industry and economic conditions, including adverse changes in foreign exchange rates, interest rates and commodity prices;
•reducing available cash flow to fund other corporate purposes and grow our business;
•limiting our flexibility in planning for, or reacting to, changes in our business and the industry;
•placing us at a competitive disadvantage to our competitors that are not as highly leveraged; and
•limiting, along with financial and other restrictive covenants relating to such indebtedness, our ability to borrow additional funds, pay cash dividends or repurchase common stock.
The agreements governing our indebtedness, including the indebtedness of our subsidiaries, limit, but do not prohibit the incurrence of additional indebtedness. If we were to become more leveraged, the risks described above would increase. Further, our actual cash requirements may be greater than expected and our cash flows may not be sufficient to repay all of the outstanding debt as it becomes due. In that event, we may not be able to borrow money, sell assets, raise equity or otherwise raise funds on acceptable terms to refinance our debt as it becomes due.

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In addition, our ability to refinance existing or future indebtedness will depend on the capital markets and our financial condition at that time. Any refinancing of our debt could result in higher interest rates or more onerous covenants that restrict our business operations. See Note 11—Debt included in Item 8.—Financial Statements and Supplementary Data for a schedule of our debt maturities.
The AES Corporation's ability to make payments on its outstanding indebtedness is dependent upon the receipt of funds from our subsidiaries.
The AES Corporation is a holding company with no material assets other than the stock of its subsidiaries. Almost all of The AES Corporation's cash flow is generated by the operating activities of its subsidiaries. Therefore, The AES Corporation's ability to make payments on its indebtedness and to fund its other obligations is dependent not only on the ability of its subsidiaries to generate cash, but also on the ability of the subsidiaries to distribute cash to it in the form of dividends, fees, interest, tax sharing payments, loans or otherwise.Our subsidiaries face various restrictions in their ability to distribute cash. Most of the subsidiaries are obligated, pursuant to loan agreements, indentures or non-recourse financing arrangements, to satisfy certain restricted payment covenants or other conditions before they may make distributions. Business performance and local accounting and tax rules may also limit dividend distributions. Subsidiaries in foreign countries may also be prevented from distributing funds as a result of foreign governments restricting the repatriation of funds or the conversion of currencies. Our subsidiaries are separate and distinct legal entities and, unless they have expressly guaranteed The AES Corporation's indebtedness, have no obligation, contingent or otherwise, to pay any amounts due pursuant to such debt or to make any funds available whether by dividends, fees, loans or other payments.
Existing and potential future defaults by subsidiaries or affiliates could adversely affect us.
We attempt to finance our domestic and foreign projects through non-recourse debt or "non-recourse financing" that requires the loans to be repaid solely from the project's revenues and provide that the repayment of the loans (and interest thereon) is secured solely by the capital stock, physical assets, contracts and cash flow of that project subsidiary or affiliate. As of December 31, 2023, we had approximately $27 billion of outstanding indebtedness on a consolidated basis, of which approximately $4.5 billion was recourse debt of the Parent Company and approximately $22.1 billion was non-recourse debt. In some non-recourse financings, the Parent Company has explicitly agreed, in the form of guarantees, indemnities, letters of credit, letter of credit reimbursement agreements and agreements to pay, to undertake certain limited obligations and contingent liabilities, most of which will only be effective or will be terminated upon the occurrence of future events. In the case of our U.S. renewables projects involving tax equity investors or purchasers of tax credits, we provide customary Parent Company or subsidiary guarantees to the tax equity investors or tax credit purchasers that require the Parent Company or subsidiary to bear the risk of any IRS recapture or disallowance of certain tax benefits they receive in connection with the transaction.
Certain of our subsidiaries are in default with respect to all or a portion of their outstanding indebtedness. The total debt classified as current in our Consolidated Balance Sheets related to such defaults was $325 million as of December 31, 2023. While the lenders under our non-recourse financings generally do not have direct recourse to the Parent Company, such defaults under non-recourse financings can:
•reduce the Parent Company's receipt of subsidiary dividends, fees, interest payments, loans and other sources of cash because a subsidiary will typically be prohibited from distributing cash to the Parent Company during the pendency of any default;
•trigger The AES Corporation's obligation to make payments under any financial guarantee, letter of credit or other credit support provided to or on behalf of such subsidiary;
•trigger defaults in the Parent Company's outstanding debt. For example, The AES Corporation's revolving credit facility and outstanding senior notes include events of default for certain bankruptcy related events involving material subsidiaries and relating to accelerations of outstanding material debt of material subsidiaries or any subsidiaries that in the aggregate constitute a material subsidiary; or
•result in foreclosure on the assets that are pledged under the non-recourse financings, resulting in write-downs of assets and eliminating any and all potential future benefits derived from those assets.
None of the projects that are in default are owned by subsidiaries that, individually or in the aggregate, meet the applicable standard of materiality in The AES Corporation's revolving credit facility or other debt agreements to trigger an event of default or permit acceleration under such indebtedness.

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However, as a result of future mix of distributions, write-down of assets, dispositions and other changes to our financial position and results of operations, one or more of these subsidiaries, individually or in the aggregate, could fall within the applicable standard of materiality and thereby upon an acceleration of such subsidiary's debt, trigger an event of default and possible acceleration of Parent Company indebtedness.
The AES Corporation has significant cash requirements and limited sources of liquidity.
The AES Corporation requires cash primarily to fund: principal repayments of debt, interest, dividends on our common stock, acquisitions, construction and other project commitments, other equity commitments (including business development investments); equity repurchases; taxes and Parent Company overhead costs. Our principal sources of liquidity are: dividends and other distributions from our subsidiaries, proceeds from financings at the Parent Company, and proceeds from asset sales. See Item 7.—Management's Discussion and Analysis —Capital Resources and Liquidity. We believe that these sources will be adequate to meet our obligations for the foreseeable future, based on a number of material assumptions about access the capital or commercial lending markets, the operating and financial performance of our subsidiaries, exchange rates, our ability to sell assets, and the ability of our subsidiaries to pay dividends and other distributions; however, there can be no assurance that these sources will be available when needed or that our actual cash requirements will not be greater than expected. In addition, our cash flow may not be sufficient to repay our debt obligations at maturity and we may have to refinance such obligations. There can be no assurance that we will be successful in obtaining such refinancing on acceptable terms.
Our ability to grow our business depends on our ability to raise capital on favorable terms.
We rely on the capital markets as a source of liquidity for capital requirements not satisfied by operating cash flows. Our ability to arrange for financing on either a recourse or non-recourse basis and the costs of such capital are dependent on numerous factors, some of which are beyond our control, including: general economic and capital market conditions; the availability of bank credit; the availability of tax equity investors; the financial condition, performance and prospects of AES as well as our competitors; and changes in tax and securities laws. Should access to capital not be available to us, we may have to sell assets or cease further investments, including the expansion or improvement of existing facilities, any of which would affect our future growth.
A downgrade in the credit ratings of The AES Corporation or its subsidiaries could adversely affect our access to the capital markets, interest expense, liquidity or cash flow.
If any of the credit ratings of the The AES Corporation and its subsidiaries were to be downgraded, our ability to raise capital on favorable terms could be impaired and our borrowing costs could increase. Furthermore, counterparties may no longer be willing to accept general unsecured commitments by The AES Corporation to provide credit support. Accordingly, we may be required to provide some other form of assurance, such as a letter of credit and/or collateral, to backstop or replace any credit support by The AES Corporation, which reduces our available credit. There can be no assurance that counterparties will accept such guarantees or other assurances.
The market price of our common stock may be volatile.
The market price and trading volumes of our common stock could fluctuate substantially due to factors including general economic conditions, conditions in our industry and our markets, environmental and economic developments, and general credit and capital markets conditions, as well as developments specific to us, including risks described in this section, failing to meet our publicly announced guidance or key trends and other matters described in Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
We recognize the importance of maintaining the safety and security of our people, systems, and data and have a holistic process, supported by our management and Board of Directors, for overseeing and managing cybersecurity and related risks.
AES’ Chief Information Security Officer (“CISO”) reports to our General Counsel and is the head of the Company’s cybersecurity team. The CISO is responsible for assessing and managing our cyber risk management program.

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In this role, the CISO informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our CISO has extensive experience assessing and managing cybersecurity programs and cybersecurity risk. Our CISO has served in that position since 2020.
The CISO manages a global team of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, cloud security, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats and regulatory compliance. We rely on threat intelligence as well as other information obtained from governmental, public, or private sources, including contracted external consultants.
The Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The CISO briefs the Board of Directors on the effectiveness of our cyber risk management program, typically on a semi-annual basis, and provides off-cycle updates as needed.
We consider cybersecurity as part of the enterprise risk process, including organized and structured reporting protocols. The prioritization of cybersecurity risk is aligned with overall risk management processes.
In addition, the Company’s management team considers risks relating to cybersecurity, among other significant risks, and applicable mitigation plans to address such risks, at monthly performance review meetings. The Executive Leadership Team, as well as the Chief Accounting Officer, Chief Risk Officer, Vice President Global Financial Planning and Analytics, Treasurer, and Vice President Internal Audit, among others, participate in such meetings.
We have also established an Incident Response Team and associated protocol led by our CISO that governs our assessment, response, and notifications internally and externally upon the occurrence of a cybersecurity incident. Depending on the nature and severity of an incident, this protocol provides for escalating notification to our CEO and the Board (including the Chair of the Board and the Chair of the Financial Audit Committee). We regularly practice our incident response through executive tabletop exercises.
Our policies, standards, processes, and practices for assessing, identifying, and managing material risks from cybersecurity threats are integrated into our overall risk management program and are informed by frameworks established by the National Institute of Standards and Technology (“NIST”) and other applicable industry standards. Our cybersecurity program addresses threats in a prioritized manner and, in particular, focuses on the following key areas:
•gap analysis to identify programmatic opportunities for improvement that can be incorporated into the cyber strategy;
•policies and standards that are annually reviewed and communicated;
•exceptions management and internal audits that support cybersecurity requirements through assessing control implementation risks; and
•monitoring and regular reporting of cyber resilience and posture at operational and strategic levels.
We engage assessors, consultants, auditors, or other third parties in connection with any such processes, including:
•external vulnerability assessments, including penetration tests;
•internal audit reviews;
•threat intelligence;
•incident management;
•audits of NERC-Critical Infrastructure Protection regulated environments by the NERC Registered Regional Entity; and
•program development support, as needed.
Our risk management program for third-party service providers includes risk-based assessments of their interactions with AES data and systems. We implement monitoring and response processes for key third-party service providers.
We provide awareness training to our employees to help identify, avoid, and mitigate cybersecurity threats. Our employees participate in training, including phishing exercises, monthly safety meetings, and an annual cybersecurity awareness update. We also periodically host tabletop exercises with management and other employees to practice rapid cyber incident response.

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We face cybersecurity risks in connection with our business. Although such risks have not materially affected us to date, we have, from time to time, experienced threats to and breaches of our data and systems. For more information about the cybersecurity risks we face, see Item 1A.—Risk Factors—Cyber-attacks and data security breaches could harm our business included in this Form 10-K.
ITEM 2. PROPERTIES
We maintain offices in many places around the world, generally pursuant to the provisions of long- and short-term leases, none of which we believe are material. With a few exceptions, our facilities, which are described in Item 1—Business of this Form 10-K, are subject to mortgages or other liens or encumbrances as part of the project's related finance facility. In addition, the majority of our facilities are located on land that is leased. However, in a few instances, no accompanying project financing exists for the facility, and in a few of these cases, the land interest may not be subject to any encumbrance and is owned outright by the subsidiary or affiliate.
ITEM 3. 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 when 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 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 December 31, 2023. Pursuant to SEC amendments Item 103 of SEC Regulation S-K, AES’ policy is to disclose environmental legal proceedings to which a governmental authority is a party if such proceedings are reasonably expected to result in monetary sanctions of greater than or equal to $1 million.
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 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.
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 mitigate the contaminated area located on the grounds of the pole factory and an indemnity payment of approximately R$6 million ($1 million). In October 2011, the State Attorney 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 that only CEEE was required to perform 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$15 million to R$60 million ($3 million to $12 million), and there could be additional costs which cannot be estimated at this time. In June 2016, the Company sold AES Sul to CPFL Energia S.A. and as part of the sale, AES Guaiba, a holding company of AES Sul, retained the potential liability relating to this matter.

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The Company believes that there 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 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 ("LCP"). Potential outcomes of the CCC determination could include an order requiring AES Redondo Beach to perform a restoration and/or pay fines or penalties. AES Redondo Beach believes that it has meritorious arguments 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 discontinue any operation of the water pumps in the alleged wetlands and to submit a Coastal Development Permit (“CDP”) application for the removal of the water pumps within the alleged wetlands. The NOV also directed AES to submit technical analysis regarding additional water pumps located within onsite electrical vaults and, if necessary, a CDP application for their continued operation. With respect to the vault pumps, AES provided the CCC with the requested analysis, and the CCC has not required further action. With respect to the pumps in the alleged wetlands, AES locked out those pumps to prevent further operation and 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. On October 14, 2020, the City deemed the CDP application to be complete and indicated a public hearing will be required. AES submitted all required information and waited for the City to continue processing the application. In December 2023, the City indicated it would continue processing the CDP application. AES will vigorously defend its interests with regard to the NOV, but we cannot predict the outcome of the matter at this time. However, settlements and litigated outcomes of Coastal Act and LCP claims alleged against other companies have required them to pay significant civil penalties and undertake remedial measures.
In October 2015, AES Indiana received an NOV alleging violations of the Clean Air Act (“CAA”), the Indiana State Implementation Plan (“SIP”), and 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 (“IDEM”), resolving these purported violations of the CAA at Petersburg Station. The settlement agreement, in the form of a 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 Indiana's current Title V air permit; payment of civil penalties totaling $1.5 million; a $5 million environmental mitigation project consisting of the construction 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.
In December 2018, a lawsuit was filed in Dominican Republic civil court against the Company, 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. Subsequently, the claimants withdrew the lawsuit with respect to AES Puerto Rico. The lawsuit remains pending against the other AES defendants (“AES Defendants”) and the unaffiliated defendants. 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.

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In August 2020, at the request of the relevant AES companies, the case was transferred to a different civil court ("Civil Court"). Preliminary hearings have taken place. The parties are awaiting the Civil Court's ruling on the AES Defendants' motions to dismiss the lawsuit. The AES Defendants 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 Compliance Program. On January 6, 2022, AES Andes filed a reposition with the SMA seeking modification of the means for compliance with the ex officio action. On January 17, 2023, the SMA approved street paving measures, or alternatively a program providing heaters for community members, as the means to satisfy the air emissions offsets in the approved Compliance Plan. The cost of proposed Compliance Program is approximately $10.8 million USD. On April 21, 2023, the SMA notified AES Andes of a resolution alleging an additional “serious” non-compliance of the Ventanas Complex failing to reduce emissions during episodes of poor air quality. On May 24, 2023, AES Andes submitted disclaimers to the SMA in response to this resolution. AES Andes plans to vigorously defend itself through the administrative process, but there are no guarantees that it will be successful. Fines are possible if AES Andes is unsuccessful in its defense of the April 2023 resolution and/or if the SMA determines there is an unsatisfactory execution of the Compliance Program approved in connection with the October 2019 sanctioning process.
In March 2020, Mexico’s Comisión Federal de Electricidad (“CFE”) served an arbitration demand upon AES Mérida III. CFE made allegations that AES Mérida III was 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 sought 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 filed an answer denying liability to CFE and asserted a counterclaim for damages due to CFE’s breach of its obligations. The evidentiary hearing took place in November 2021. Closing arguments were heard in May 2022. In November 2022, the arbitration Tribunal issued its decision in the case, rejecting CFE’s claims for damages and granting AES Mérida a net amount of damages on AES Mérida’s counterclaims ("Award"). There are ongoing proceedings in the Mexican courts concerning AES Mérida's attempt to enforce the Award and CFE's attempt to challenge the Award. AES Mérida believes that it has meritorious claims and defenses and will assert them vigorously in this dispute; however, there can be no assurances that it will be successful in its efforts.
On May 12, 2021, the Mexican Federal Attorney for Environmental Protection (the “Authority”) initiated an environmental audit at the TEP thermal generating facility. On January 20, 2023 TEP was notified of the resolution issued by the Authority, which alleges breaches of air emission regulations, including the failure to submit reports. The resolution imposes a fine of $27,615,140 pesos (approximately USD $1.6 million). On March 3, 2023, the facility filed a nullity judgment to challenge such resolution, which has been admitted by the local judge with an injunction granted against execution of the proposed fine during the course of the underlying proceedings. However, the local tax authority rejected receiving the bond that is required to guarantee the injunction, and as a result, on September 18, 2023 TEP filed a complaint seeking to compel the tax authority to accept the bond and recognize the validity of the injunction. The Specialized Chamber has not issued a response to the complaint, and therefore on January 12, 2024, TEP filed a request for the Specialized Chamber to rule on the admission of the complaint. On February 2, 2024, TEP filed an amparo lawsuit on the basis that no resolution has been issued regarding TEP's May 2023 filing with the Chamber to inform if the Authority had submitted its response to the nullity lawsuit, and if not, to declare that the Authority's right precluded. 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 February 2022, a lawsuit was filed in Dominican Republic civil court against the Company. The lawsuit purports 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 Dominican Republic in 2003 and 2004.

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The lawsuit generally alleges that the CCRs 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 claimants individually. Nor does the lawsuit provide 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 will defend itself vigorously in this proceeding; however, there can be no assurances that it will be successful in its 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 is engaging in discussions with the EPA about the NOV. 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.
In April 2022, the Superintendency of the Environment (the "SMA") notified AES Andes of certain alleged breaches associated with the construction of the Mesamávida wind project, initiating a sanctioning process. The alleged charges include untimely implementation of road improvement measures and road use schedules and the failure to identify all noise receptors closest to the first construction phases of the project. On June 23, 2022, the SMA addressed the charges to Energía Eólica Mesamávida SpA. On June 28, 2022, Energía Eólica Mesamávida SpA submitted a proposed compliance program, with an estimated cost of $4.3 million, which was subsequently approved by the SMA. On November 9, 2022, opponents to the project submitted before the Third Environmental Court a judicial action challenging the approval of this compliance program. On March 7, 2023, the Third Environmental Court rejected the third-party judicial action against the Compliance Program. The deadline to appeal the decision has passed and no appeals were submitted. The Company has fulfilled the required actions of the Compliance Program; however, opponents to project have submitted claims before the SMA challenging the fulfillment of the Compliance Program. If the SMA determines there is an unsatisfactory execution of the compliance program, fines are possible.
In June 2020, the Energy Regulatory Commission of Mexico passed resolution RES/894/2020 ("Resolution 894"), which attempts to increase the wheeling tariffs that are paid by TEG and TEP to CFE. The increase for the relevant period (July 2020 through March 2024) would have been over $90 million according to current estimates. In October 2022, TEG and TEP initiated a challenge of the constitutionality of the resolution. In February 2024, the relevant First Collegiate Court of Mexico ruled in favor of TEG and TEP and determined that they do not need to pay increased wheeling tariffs under Resolution 894. If TEG and TEP are ever required to pay increased wheeling tariffs in the future, they will seek to enforce their respective contractual rights to pass-through the tariff increases to their respective offtakers.
On January 26, 2023, the SMA notified Alto Maipo SpA of four alleged charges relating to the Alto Maipo facility, all which are categorized by the SMA as “serious.” The alleged charges include untimely completion of intake works and insufficient capture by the provisional works, irrigation water outlet and canal contemplated by an agreement with local communities; non-compliance with the details of the forest management plans and intervention in unauthorized areas; construction of a road in a restricted paleontological area; and unlawful moving of fauna. On February 16, 2023, the Alto Maipo project submitted a compliance program to which the SMA provided observations. On June 6, 2023, Alto Maipo responded to the SMA's observations by submitting a revised compliance program, which is currently under consideration by the SMA. In late June and early July 2023, third-party opponents submitted observations to the compliance program, claiming that the proposal to address the intake works charges is inadequate. Alto Maipo completed its submission of responses to these third-party observations in August 2023, and subsequently, new, additional observations were submitted by opponents to the project. In December 2023, Alto Maipo submitted responses to the opponents' latest observations. Review by the SMA is still pending. The costs of any such compliance program are uncertain. If a compliance program is not approved by or executed to the satisfaction of the SMA, fines, revocation of the facility’s RCA environmental permit approved by the SMA, or closure are possible outcomes for such alleged serious violations under applicable regulations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Stock Repurchase Program — The Board authorization permits the Parent Company to repurchase stock through a variety of methods, including open market repurchases 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 Stock Repurchase Program does not have an expiration date and can be modified or terminated by the Board of Directors at any time. The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2023 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of commissions). As of December 31, 2023, $264 million remained available for repurchase under the Stock Repurchase Program. No repurchases were made by The AES Corporation of its common stock in 2023, 2022, and 2021.
Market Information
Our common stock is traded on the New York Stock Exchange under the symbol "AES."
Dividends
The Parent Company commenced a quarterly cash dividend in the fourth quarter of 2012. The Parent Company has increased this dividend annually and the quarterly per-share cash dividends for the last three years are displayed below.
Commencing the fourth quarter of 2023 2022 2021
Cash dividend $0.1725 $0.1659 $0.1580
The fourth quarter 2023 cash dividend is to be paid in the first quarter of 2024. There can be no assurance the AES Board will declare a dividend in the future or, if declared, the amount of any dividend. Our ability to pay dividends will also depend on receipt of dividends from our various subsidiaries across our portfolio.
Under the terms of our revolving credit facility, which we entered into with a commercial bank syndicate, we have limitations on our ability to pay cash dividends and/or repurchase stock. Our subsidiaries' ability to declare and pay cash dividends to us is also subject to certain limitations contained in the project loans, governmental provisions and other agreements to which our subsidiaries are subject. See the information contained under Item 12.—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized for Issuance under Equity Compensation Plans of this Form 10-K.
Holders
As of February 22, 2024, there were approximately 3,395 record holders of our common stock.


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Performance Graph
THE AES CORPORATION
PEER GROUP INDEX/STOCK PRICE PERFORMANCE

84
Source: Bloomberg
We have selected the Standard and Poor's ("S&P") 500 Utilities Index as our peer group index. The S&P 500 Utilities Index is a published sector index comprising the 30 electric and gas utilities included in the S&P 500.
The five year total return chart assumes $100 invested on December 31, 2018 in AES Common Stock, the S&P 500 Index and the S&P 500 Utilities Index. The information included under the heading Performance Graph shall not be considered "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For discussion of the Company's year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations in Exhibit 99.1 of the Form 8-K filed with the SEC on May 8, 2023.
Executive Summary
In 2023, AES delivered on its strategic and financial objectives. We completed construction or the acquisition of 3.5 GW of renewables and energy storage, and signed long-term PPAs for an additional 5.6 GW of new renewable energy. See Overview of our Strategy included in Item 1.—Business of this Form 10-K for further information.
Compared with last year, net loss decreased $323 million, from $505 million to $182 million primarily as a result of favorable contributions at the Utilities, New Energy Technologies, and Renewables SBUs, partially offset by lower contributions from LNG transactions versus 2022 at the Energy Infrastructure SBU.
Adjusted EBITDA, a non-GAAP measure, decreased $119 million, from $2,931 million to $2,812 million, mainly driven by favorable LNG transactions in the prior year, lower contract prices, and higher fixed costs at the Energy Infrastructure SBU; partially offset by favorable weather conditions and new businesses at the Renewables SBU, higher contributions at the Utilities SBU due to the deferral of purchased power costs, higher revenues under a PPA termination agreement at the Energy Infrastructure SBU, and lower losses from affiliates at the New Energy Technologies SBU due to improved margins on a new product line.
Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $225 million, from $3,198 million to $3,423 million, primarily due to higher realized tax attributes driven by more renewables projects placed in service, as well as impact from the drivers above.
Compared with last year, diluted earnings per share from continuing operations increased $1.16, from a loss of $0.82 in 2022 to earnings of $0.34 in 2023. This increase is mainly driven by lower goodwill impairments in the current year, higher contributions from renewables projects placed in service in the current year, the current year gain on sale of shares in Fluence, and higher contributions at the Utilities SBU due to the deferral of purchased power costs; partially offset by lower contributions from LNG transactions versus 2022, and higher unrealized foreign currency losses at the Energy Infrastructure SBU.
Adjusted EPS, a non-GAAP measure, increased $0.09 from $1.67 to $1.76, mainly driven by higher contributions from renewables projects placed in service in the current year, higher contributions at the Utilities SBU, and lower losses of affiliates at the New Energy Technologies SBU; partially offset by lower contributions from the Energy Infrastructure SBU and higher Parent Company interest.

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Review of Consolidated Results of Operations
Years Ended December 31, 2023 2022
$ Change
% Change
(in millions, except per share amounts)
Revenue:
Renewables SBU $ 2,339  $ 1,893  $ 446  24  %
Utilities SBU 3,495  3,617  (122) -3  %
Energy Infrastructure SBU 6,836  7,204  (368) -5  %
New Energy Technologies SBU 76  3  73  NM
Corporate and Other 138  116  22  19  %
Eliminations (216) (216) —  —  %
Total Revenue 12,668  12,617  51  —  %
Operating Margin:
Renewables SBU 492  528  (36) -7  %
Utilities SBU 433  379  54  14  %
Energy Infrastructure SBU 1,418  1,535  (117) -8  %
New Energy Technologies SBU (9) (7) (2) 29  %
Corporate and Other 239  182  57  31  %
Eliminations (69) (69) —  —  %
Total Operating Margin 2,504  2,548  (44) -2  %
General and administrative expenses (255) (207) (48) 23  %
Interest expense (1,319) (1,117) (202) 18  %
Interest income 551  389  162  42  %
Loss on extinguishment of debt (63) (15) (48) NM
Other expense (99) (68) (31) 46  %
Other income 89  102  (13) -13  %
Gain (loss) on disposal and sale of business interests 134  (9) 143  NM
Goodwill impairment expense (12) (777) 765  -98  %
Asset impairment expense (1,067) (763) (304) 40  %
Foreign currency transaction losses (359) (77) (282) NM
Other non-operating expense —  (175) 175  -100  %
Income tax benefit (expense) (261) (265) 4  -2  %
Net equity in losses of affiliates (32) (71) 39  -55  %
LOSS FROM CONTINUING OPERATIONS (189) (505) 316  -63  %
Gain from disposal of discontinued businesses, net of income tax benefit (expense) of $7, $0, and $-1, respectively 7  —  7  NM
NET LOSS (182) (505) 323  -64  %
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries 431  (41) 472  NM
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION $ 249  $ (546) $ 795  NM
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: —  %
Income (loss) from continuing operations, net of tax $ 242  $ (546) $ 788  NM
Income from discontinued operations, net of tax 7  —  7  NM
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION $ 249  $ (546) $ 795  NM
Net cash provided by operating activities $ 3,034  $ 2,715  $ 319  12  %
Components of Revenue, Cost of Sales and Operating Margin — 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 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 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.

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Consolidated Revenue and Operating Margin
Year Ended December 31, 2023
Revenue
(in millions)1174    
Consolidated Revenue — Revenue increased $51 million in 2023 compared to 2022, driven by:
•$446 million at Renewables driven by higher spot sales at higher prices, and new projects placed in service; partially offset by unrealized derivative losses; and
•$73 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023.
These favorable impacts were partially offset by decreases of:
•$368 million at Energy Infrastructure driven by prior year favorable LNG transactions, lower contract energy sales due to lower prices, lower CO2 purchases passed through due to lower production, lower generation, and the impact of the devaluation of the Argentine peso; partially offset by unrealized gains resulting mainly from derivatives as part of our commercial hedging strategy, and higher revenues due to a PPA termination agreement; and
•$122 million at Utilities mainly driven by lower demand due to milder weather in Indiana and Ohio; partially offset by higher TDSIC rider and transmission revenues, and higher demand due to extreme heat in El Salvador.
Operating Margin
(in millions)
2548
Consolidated Operating Margin — Operating margin decreased $44 million, or 2%, in 2023 compared to 2022, driven by:
•$117 million at Energy Infrastructure primarily driven by prior year favorable LNG transactions, lower contract energy sales due to lower prices, lower dispatch driven by lower demand, higher fixed costs, and a prior year one-time revenue recognition driven by a reduction in a project's expected completion costs; partially offset by unrealized gains resulting mainly from derivatives as part of our commercial hedging strategy, and higher revenues due to a PPA termination agreement; and

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•$36 million at Renewables mainly driven by higher fixed costs due to an accelerated growth plan and unrealized derivative losses; partially offset by new projects placed in service, better hydrology, and higher wind availability, resulting in higher renewable energy generation.
These unfavorable impacts were partially offset by increases of:
•$57 million at Corporate and Other primarily driven by a decrease in reserve for losses and higher premiums earned by the AES self-insurance company; and
•$54 million at Utilities primarily driven by the deferral of purchased power costs in the current year, which were recognized in the prior year, associated with the ESP 4 approval, an increase in transmission and TDSIC rider revenues, higher demand due to extreme heat in El Salvador, and a regulatory settlement in the prior year; partially offset by the impact of milder weather in Indiana and Ohio, and higher fixed costs.
See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-K for additional discussion and analysis of operating results for each SBU.
Consolidated Results of Operations — Other
General and administrative expenses
General and administrative expenses include expenses related to corporate staff functions and initiatives, executive management, finance, legal, human resources, and information systems, as well as global development costs.
General and administrative expenses increased $48 million, or 23%, to $255 million in 2023 compared to $207 million in 2022, primarily due to increased business development activity.
Interest expense
Interest expense increased $202 million, or 18%, to $1.3 billion in 2023, compared to $1.1 billion in 2022, primarily due to new debt issued at the Renewables, Energy Infrastructure, and Utilities SBUs, and a higher weighted average interest rate and debt balance at the Parent Company; partially offset by higher capitalized interest at the Renewables SBU.
Interest income
Interest income increased $162 million, or 42%, to $551 million in 2023, compared to $389 million in 2022 primarily due to higher average interest rates and short-term investments at the Energy Infrastructure and Renewables SBUs and the Parent Company; partially offset by the prior year sales-type lease receivable adjustment at the Alamitos Energy Center.
Loss on extinguishment of debt
Loss on extinguishment of debt increased $48 million to $63 million in 2023, compared to $15 million in 2022. This increase was primarily due to losses of $47 million and $10 million due to prepayments at AES Andes and AES Hispanola Holdings BV, respectively, partially offset by a prior year refinancing at AES Renewable Holdings, resulting in a loss of $12 million.
See Note 11—Debt included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Other income
Other income decreased $13 million, or 13%, to $89 million in 2023, compared to $102 million in 2022 primarily due to the prior year gain on remeasurement of our existing investment in 5B, which is accounted for using the measurement alternative, and the prior year insurance proceeds primarily associated with property damage at TermoAndes; partially offset by the current year gain on remeasurement of contingent consideration at AES Clean Energy.

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Other expense
Other expense increased $31 million, or 46%, to $99 million in 2023, compared to $68 million in 2022 primarily driven by impairments of inventory due to planned early plant closures at Ventanas 2, Norgener, and Warrior Run, as well as higher losses on commencement of sales-type leases at AES Renewable Holdings; partially offset by the prior year costs related to the disposition of AES Gilbert, including the recognition of an allowance on the sales-type lease receivable.
See Note 21—Other Income and Expense included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Gain (loss) on disposal and sale of business interests
Gain on disposal and sale of business interests was $134 million in 2023, primarily due to the gain on sale of shares of Fluence, our equity method investment, compared to a loss of $9 million in 2022.
See Note 8—Investments in and Advances to Affiliates included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Goodwill impairment expense
Goodwill impairment expense was $12 million in 2023 due to a $12 million impairment at the TEG TEP reporting unit primarily driven by an increase in the discount rate due to increasing risk of non-renewal of operating permits required after March 31, 2024.
Goodwill impairment expense was $777 million in 2022 due to a $644 million impairment at AES Andes and a $133 million impairment at AES El Salvador. This was due to the Company seeing increases in inputs utilized to derive the discount rate applied in our goodwill impairment analysis, such as higher interest rates and country risk premiums in certain markets. These changes to the inputs of our discount rate negatively impacted our annual goodwill impairment test as of October 1, 2022.
See Note 9—Goodwill and Other Intangible Assets included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Asset impairment expense
Asset impairment expense increased $304 million, or 40%, to $1.1 billion in 2023, compared to $763 million in 2022. This increase was primarily due to a $198 million impairment associated with PJM's approval to retire the Warrior Run coal-fired facility, a $186 million impairment at New York Wind related to a repowering project that will result in decommissioning the existing turbines and reducing their depreciable lives, a $167 million impairment at Mong Duong upon meeting the held-for-sale criteria, $151 million of impairments at AES Clean Energy Development primarily related to the write-off of project development intangibles for projects that were determined to be no longer viable, and a $137 million impairment associated with the commitment to accelerate the retirement of the Norgener coal-fired plant in Chile. This increase was partially offset by the $468 million impairment of Maritza's coal-fired plant in 2022 due to Bulgaria's commitment to cease electricity generation using coal as a fuel-source beyond 2038 and lower impairments at TEG and TEP in Mexico.
See Note 22—Asset Impairment Expense included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Foreign currency transaction losses
Foreign currency transaction gains (losses) in millions were as follows:
Years Ended December 31, 2023 2022
Argentina (1)
 $ (312) $ (88)
Chile (40) 13 
Corporate (19) — 
Other 12  (2)
Total (2)
 $ (359) $ (77)
_____________________________
(1)    Includes peso-denominated energy receivable indexed to the USD through the FONINVEMEM agreement which is considered a foreign currency derivative. See Note 7—Financing Receivables included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
(2)    Includes losses of $28 million and $20 million on foreign currency derivative contracts for the years ended December 31, 2023 and 2022, respectively.

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The Company recognized net foreign currency transaction losses of $359 million in 2023, primarily driven by the depreciation of the Argentine peso, unrealized losses related to an intercompany loan denominated in the Colombian peso, and realized and unrealized foreign currency derivative losses in South America due to the depreciating Colombian peso.
The Company recognized net foreign currency transaction losses of $77 million in 2022, primarily driven by the depreciation of the Argentine peso, partially offset by realized foreign currency derivative gains in South America due to the depreciating Colombian peso.
Other non-operating expense
There was no other non-operating expense in 2023. Other non-operating expense was $175 million in 2022 due to the other-than-temporary impairment of the sPower equity method investment. The impairment analysis was triggered by the signing of a purchase and sale agreement which, at the time, implied an expected loss upon sale of the Company's indirect interest in a portfolio of sPower's operating assets ("OpCo B"). The transaction closed on February 28, 2023. sPower primarily holds operating assets where the tax credits associated with underlying projects have already been allocated to tax equity investors. The application of HLBV accounting increases the carrying value of these investments, as earnings are initially disproportionately allocated to the sponsor entity. Since sPower does not have any ongoing development or other value creation activities following the transfer of these activities to AES Clean Energy Development, the impairment adjusts the carrying value to the fair market value of the operating assets. See Note 25—Acquisitions included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information regarding the formation of AES Clean Energy Development.
See Note 8—Investments In and Advances to Affiliates included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Income tax benefit (expense)
Income tax expense was $261 million in 2023 compared to $265 million in 2022. The Company's effective tax rates were 251% and (157)% for the years ended December 31, 2023 and 2022, respectively.
The 2023 effective tax rate was impacted by noncontrolling interest in U.S. tax-equity partnerships and pretax impairments at certain Mexican subsidiaries and at the Mong Duong coal-fired plant in Vietnam. These impacts were partially offset by inflationary and foreign currency impacts at certain Argentine businesses, net of valuation allowances, as well as the recognition of U.S. investment tax credits for renewables projects placed in service this year. See Note 22—Asset Impairment Expense included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for details of the asset impairments.
The 2022 effective tax rate was impacted by the nondeductible goodwill impairments at AES Andes and AES El Salvador, as well as the asset impairment of the Maritza coal-fired plant. These impacts were partially offset by favorable LNG transactions at the Energy Infrastructure SBU and inflationary and foreign currency impacts at certain Argentine businesses recognized in 2022. See Note 9—Goodwill and Other Intangible Assets included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for details of the goodwill impairments. See Note 22—Asset Impairment Expense included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for details of the asset impairments.
Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate. Foreign earnings may be taxed at rates higher than the U.S. corporate rate of 21% and are also subject to current U.S. taxation under the GILTI rule. 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. The Company also benefits from reduced tax rates in certain countries as a result of satisfying specific commitments regarding employment and capital investment. See Note 23—Income Taxes included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for additional information regarding these reduced rates.
Net equity in losses of affiliates
Net equity in losses of affiliates decreased $39 million, or 55%, to $32 million in 2023, compared to $71 million in 2022. This decrease was primarily driven by an increase in earnings from Mesa La Paz, primarily due the termination of unrealized derivatives due to a contract amendment, and by a decrease in losses from Fluence, mainly attributable to improved margins on a new product line and reduced shipping constraints and transportation costs.

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This decrease in losses was partially offset by lower earnings from sPower, mainly due to lower earnings from renewables projects that came online.
See Note 8—Investments In and Advances to Affiliates included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Net income (loss) attributable to noncontrolling interests and redeemable stock of subsidiaries
Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $472 million to a $431 million loss in 2023, compared to income of $41 million in 2022. This decrease was primarily due to:
•Increased costs associated with the growth of our business and higher allocation of losses to tax equity investors on projects placed in service at the Renewables SBU;
•Impairment at Mong Duong upon meeting the held-for-sale criteria in the current year;
•Prior year one-time revenue recognition driven by a reduction in a project's expected completion costs at the Energy Infrastructure SBU; and
•Lower earnings from the Utilities SBU due to unfavorable weather conditions.
These drivers were partially offset by:
•Higher earnings from the Renewables SBU due to favorable weather conditions; and
•Higher allocation of earnings at Southland Energy to noncontrolling interests.
Net income (loss) attributable to The AES Corporation
Net income attributable to The AES Corporation increased $795 million to $249 million in 2023, compared to a loss of $546 million in 2022. This increase was primarily due to:
•Lower goodwill impairments in the current year;
•Higher contributions from renewables projects placed in service in the current year;
•Prior year other-than-temporary impairment of our investment in sPower;
•Gain on sale of shares in Fluence in the current year;
•Increase in interest income due to higher average interest rates and short term investments at the Energy Infrastructure and Renewables SBUs;
•Higher earnings from the Utilities SBU due to the deferral of previously recognized purchased power costs and a prior year charge resulting from a regulatory settlement; and
•Lower losses from affiliates at the New Energy Technologies SBU.
These increases were partially offset by:
•Higher unrealized foreign currency losses at the Energy Infrastructure SBU;
•Higher long-lived asset impairments in the current year;
•Lower earnings from the Energy Infrastructure SBU due to prior year favorable LNG transactions, lower contract energy sales due to lower prices, lower thermal dispatch, and higher fixed costs; and
•Increase in interest expense due to higher interest rates and new debt issued at the Renewables and Energy Infrastructure SBUs, and a higher Parent Company weighted average interest rate.

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SBU Performance Analysis
Segments
We are organized into four technology-based SBUs: Renewables (solar, wind, energy storage, and hydro generation facilities); Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities); Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities, and our businesses in Chile); and New Energy Technologies (green hydrogen initiatives and investments in Fluence, Uplight, and 5B). Our businesses in Chile, which have a mix of generation sources, including renewables, are also included within the Energy Infrastructure SBU, as the generation from all sources is pooled to service our existing PPAs. In our 2022 Form 10-K, the management reporting structure and the Company’s reportable segments were mainly organized by geographic regions. In March 2023, we announced internal management changes as a part of our ongoing strategy to align our business to meet our customers’ needs and deliver on our major strategic objectives. The results of our operations are now reported along our four newly formed technology-based SBUs.
Non-GAAP Measures
EBITDA, Adjusted EBITDA, Adjusted EBITDA with Tax Attributes, Adjusted PTC, and Adjusted EPS are non-GAAP supplemental measures that are used by management and external users of our Consolidated Financial Statements such as investors, industry analysts, and lenders.
During the first quarter of 2023, management began assessing operational performance and making resource allocation decisions using Adjusted EBITDA. Therefore, the Company uses Adjusted EBITDA as its primary segment performance measure. EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes are new non-GAAP supplemental measures reported beginning in the first quarter of 2023.
For the year ended December 31, 2023, the Company changed the definition of Adjusted EPS to remove the adjustment for 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. As this adjustment was specific to the impacts of tax law reform enacted in 2017, we believe removing this adjustment from our non-GAAP definition provides simplification and clarity for our investors. There were no such impacts in 2022 or 2023.
EBITDA, Adjusted EBITDA and Adjusted EBITDA with Tax Attributes
We define EBITDA as earnings before interest income and expense, taxes, depreciation, and amortization. We define Adjusted EBITDA as EBITDA adjusted for the impact of NCI and interest, taxes, depreciation, and amortization of our equity affiliates, adding back interest income recognized under service concession arrangements, and 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 and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence.
In addition to the revenue and cost of sales reflected in Operating Margin, Adjusted EBITDA includes the other components of our Consolidated Statement of Operations, such as general and administrative expenses in Corporate and Other as well as business development costs, other expense and other income, realized foreign currency transaction gains and losses, and net equity in earnings of affiliates.
We further define Adjusted EBITDA with Tax Attributes as Adjusted EBITDA, adding back the pre-tax effect of Production Tax Credits (“PTCs”), Investment Tax Credits (“ITCs”), and depreciation tax deductions allocated to tax equity investors, as well as the tax benefit recorded from tax credits retained or transferred to third parties.
The GAAP measure most comparable to EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes is Net income. We believe that EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes better reflect the underlying business performance of the Company. Adjusted EBITDA is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments.

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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, strategic decisions to dispose of or acquire business interests or retire debt, the non-recurring nature of the impact of the early contract terminations at Angamos, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods. In addition, each of these metrics represent 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 overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure than Net income that better assists investors in determining which businesses have the greatest impact on the Company’s results.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes should not be construed as alternatives to Net income, which is determined in accordance with GAAP.

 Years Ended December 31,
Reconciliation of Adjusted EBITDA and Adjusted EBITDA with Tax Attributes (in millions)
 2023 2022
Net loss
 $ (182) $ (505)
Income tax expense
 261  265 
Interest expense 1,319  1,117 
Interest income (551) (389)
Depreciation and amortization 1,128  1,053 
EBITDA $ 1,975  $ 1,541 
Less: Income from discontinued operations (7) — 
Less: Adjustment for noncontrolling interests and redeemable stock of subsidiaries (1)
 (552) (704)
Less: Income tax expense (benefit), interest expense (income) and depreciation and amortization from equity affiliates 130  126 
Interest income recognized under service concession arrangements 71  77 
Unrealized derivative and equity securities losses
 34  131 
Unrealized foreign currency losses 301  42 
Disposition/acquisition losses (gains)
 (79) 40 
Impairment losses 877  1,658 
Loss on extinguishment of debt 62  20 
Adjusted EBITDA (1)
 $ 2,812  $ 2,931 
Tax attributes
 611  267 
Adjusted EBITDA with Tax Attributes (2)
 $ 3,423  $ 3,198 
_____________________________
(1)The allocation of earnings and losses to tax equity investors from both consolidated entities and equity affiliates is removed from Adjusted EBITDA.
(2)         Adjusted EBITDA with Tax Attributes includes the impact of the share of the ITCs, PTCs, and depreciation deductions allocated to tax equity investors under the HLBV accounting method and recognized as Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries on the Consolidated Statements of Operations. It also includes the tax benefit recorded from tax credits retained or transferred to third parties. The tax attributes are related to the Renewables and Utilities SBUs.

4448

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Adjusted PTC
We define Adjusted PTC as pre-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 and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure 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 Consolidated Statement of Operations, such as general and administrative expenses in the Corporate segment, 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 related to derivative transactions or equity securities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, 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, Adjusted PTC 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.
Reconciliation of Adjusted PTC (in millions) Years Ended December 31,
2023 2022
Income (loss) from continuing operations, net of tax, attributable to The AES Corporation $ 242  $ (546)
Income tax expense attributable to The AES Corporation
 206  210 
Pre-tax contribution 448  (336)
Unrealized derivative and equity securities losses
 41  128 
Unrealized foreign currency losses 301  42 
Disposition/acquisition losses (gains)
 (79) 40 
Impairment losses 877  1,658 
Loss on extinguishment of debt 70  35 
Total Adjusted PTC $ 1,658  $ 1,567 

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6514
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 and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, the tax impact from the repatriation of sales proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence.
The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing 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, 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. 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 $0.82 for the year ended December 31, 2022. 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.
Reconciliation of Denominator Used for Adjusted EPS Year Ended December 31, 2022
(in millions, except per share data) Loss Shares $ per Share
GAAP DILUTED LOSS PER SHARE
Loss from continuing operations attributable to The AES Corporation common stockholders $ (546) 668  $ (0.82)
EFFECT OF DILUTIVE SECURITIES
Stock options —  1  — 
Restricted stock units —  2  — 
Equity units —  40  0.05 
NON-GAAP DILUTED LOSS PER SHARE $ (546) 711  $ (0.77)

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Reconciliation of Adjusted EPS Years Ended December 31,
2023 2022
Diluted earnings (loss) per share from continuing operations $ 0.34  $ (0.77)
Unrealized derivative and equity securities losses 0.06 
(1)
 0.18 
(2)
Unrealized foreign currency losses
 0.42 
(3)
 0.07 
(4)
Disposition/acquisition losses (gains)
 (0.11)
(5)
 0.06 
(6)
Impairment losses 1.23 
(7)
 2.33 
(8)
Loss on extinguishment of debt 0.10 
(9)
 0.05 
(10)
Less: Net income tax benefit (0.28)
(11)
 (0.25)
(12)
Adjusted EPS $ 1.76  $ 1.67 
_____________________________
(1)Amount primarily relates to unrealized derivative losses due to the termination of a PPA of $72 million, or $0.10 per share and net unrealized derivative losses at AES Clean Energy of $20 million, or $0.03 per share, offset by net unrealized derivative gains at the Energy Infrastructure SBU of $46 million, or $0.06 per share.
(2)Amount primarily relates to unrealized losses on power swaps at Southland Energy of $109 million, or $0.15 per share.
(3)Amount primarily relates to unrealized foreign currency losses in Argentina of $262 million, or $0.37 per share, mainly associated with the devaluation of long-term receivables denominated in Argentine pesos, and unrealized foreign currency losses at AES Andes of $25 million, or $0.03 per share.
(4)Amount primarily relates to unrealized foreign currency losses in Argentina of $39 million, or $0.05 per share, mainly associated with the devaluation of long-term receivables denominated in Argentine pesos.
(5)Amount primarily relates to the gain on sale of Fluence shares of $136 million, or $0.19 per share, partially offset by costs due to early plant closure at the Ventanas 2 and Norgener coal-fired plants in Chile of $37 million, or $0.05 per share and at Warrior Run of $6 million, or $0.01 per share, and day-one losses recognized at commencement of sales-type leases at AES Renewable Holdings of $20 million, or $0.03 per share.
(6)Amount primarily relates to costs on disposition of AES Gilbert, including the recognition of an allowance on the sales-type lease receivable, of $13 million, or $0.02 per share, and a day-one loss recognized at commencement of a sales-type lease at AES Waikoloa Solar of $5 million, or $0.01 per share.
(7)Amount primarily relates to asset impairments at Warrior Run of $198 million, or $0.28 per share, at New York Wind of $139 million, or $0.20 per share, the Norgener coal-fired plant in Chile of $136 million, or $0.19 per share, at TEG and TEP of $76 million and $58 million, respectively, or $0.19 per share, AES Clean Energy development projects of $114 million, or $0.16 per share, at Mong Duong of $88 million, or $0.12 per share, at Jordan of $21 million, or $0.03 per share, and at the GAF Projects at AES Renewable Holdings of $18 million, or $0.03 per share, and a goodwill impairment at the TEG TEP reporting unit of $12 million, or $0.02 per share.
(8)Amount primarily relates to goodwill impairments at AES Andes of $644 million, or $0.91 per share, and at AES El Salvador of $133 million, or $0.19 per share, other-than-temporary impairment at sPower of $175 million, or $0.25, as well as long-lived asset impairments at Maritza of $468 million, or $0.66 per share, at TEG TEP of $191 million, or $0.27 per share, and in Jordan of $28 million, or $0.04 per share.
(9)Amount primarily relates to losses incurred at AES Andes due to early retirement of debt of $46 million, or $0.07 per share, and loss on early retirement of debt at AES Hispanola Holdings BV of $10 million, or $0.01 per share.
(10)Amount primarily relates to losses on early retirement of debt due to refinancing at AES Renewable Holdings of $12 million, or $0.02 per share, at AES Clean Energy of $5 million, or $0.01 per share, at Mong Duong of $4 million, or $0.01 per share, and at TEG TEP of $4 million, or $0.01 per share.
(11)Amount primarily relates to income tax benefits associated with the asset impairments at Warrior Run of $46 million, or $0.06 per share, at the Norgener coal-fired plant in Chile of $37 million, or $0.05 per share, at New York Wind of $32 million, or $0.05 per share, at TEG and TEP of $27 million, or $0.04 per share, and at AES Clean Energy development projects of $26 million, or $0.04 per share; income tax benefits associated with the recognition of unrealized losses due to the termination of a PPA of $17 million, or $0.02 per share; and income tax benefits associated with losses incurred at AES Andes due to early retirement of debt of $13 million, or $0.02 per share; partially offset by income tax expense associated with the gain on sale of Fluence shares of $31 million, or $0.04 per share.
(12)Amount primarily relates to income tax benefits associated with the impairment at Maritza of $48 million, or $0.07 per share, income tax benefits associated with the other-than-temporary impairment at sPower of $39 million, or $0.06 per share, income tax benefits associated with the impairment at TEG TEP of $34 million, or $0.05 per share, and income tax benefits associated with unrealized losses on power swaps at Southland Energy of $24 million, or $0.03 per share.
Renewables SBU
The following table summarizes Operating Margin, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes (in millions) for the periods indicated:
For the Years Ended December 31, 2023 2022 $ Change % Change
Operating Margin $ 492  $ 528  $ (36) -7  %
Adjusted EBITDA (1)
 645  605  40  7  %
Adjusted EBITDA with Tax Attributes (1)
 1,238  872  366  42  %
_____________________________
(1)    A non-GAAP financial measure. See SBU Performance Analysis—Non-GAAP Measures for definition and Item 1.—Business for the respective ownership interest for key businesses.
Operating Margin decreased $36 million driven primarily by higher fixed costs due to an accelerated growth plan and unrealized derivative losses. This decrease was partially offset by better hydrology, new businesses operating in our portfolio, and higher wind availability, resulting in higher renewable energy generation.
Adjusted EBITDA increased $40 million primarily due to the drivers mentioned above, adjusted for NCI, unrealized derivatives, and depreciation expense.
Adjusted EBITDA with Tax Attributes increased $366 million, primarily due to higher realized tax attributes driven by more projects being placed in service, as well as impact from the increase in Adjusted EBITDA. For the year ended December 31, 2023 and 2022, we realized $593 million and $267 million, respectively, from tax attributes earned by AES Clean Energy businesses.

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Utilities SBU
The following table summarizes Operating Margin, Adjusted EBITDA, Adjusted EBITDA with Tax Attributes, and Adjusted PTC (in millions) for the periods indicated:
For the Years Ended December 31, 2023 2022 $ Change % Change
Operating Margin $ 433  $ 379  $ 54  14  %
Adjusted EBITDA (1)
 678  612  66  11  %
Adjusted EBITDA with Tax Attributes (1)
 696  612  84  14  %
Adjusted PTC (1) (2)
 196  131  65  50  %
_____________________________
(1)    A non-GAAP financial measure. See SBU Performance Analysis—Non-GAAP Measures for definition and Item 1.—Business for the respective ownership interest for key businesses.
(2)    Adjusted PTC remains a key metric used by management for analyzing our businesses in the utilities industry.
Operating Margin increased $54 million mainly driven by the deferral of purchased power costs in the current year, which were recognized in the prior year, associated with the ESP 4 approval, an increase in transmission and TDSIC rider revenues, higher demand due to extreme heat in El Salvador, and a regulatory settlement in the prior year, partially offset by the impact of milder weather in Indiana and Ohio, higher fixed costs, and increased depreciation expense.
Adjusted EBITDA increased $66 million primarily due to the drivers above, adjusted for NCI and depreciation expense, partially offset by an increase in defined benefit plan costs.
Adjusted EBITDA with Tax Attributes increased $84 million due to the drivers above, as well as $18 million of realized tax attributes related to the Hardy Hills solar project in the current year.
Adjusted PTC increased $65 million primarily due to the drivers above, partially offset by higher depreciation expense.
Energy Infrastructure SBU
The following table summarizes Operating Margin and Adjusted EBITDA (in millions) for the periods indicated:
For the Years Ended December 31, 2023 2022 $ Change % Change
Operating Margin $ 1,418  $ 1,535  $ (117) -8  %
Adjusted EBITDA (1)
 1,531  1,836  (305) -17  %
_____________________________
(1)    A non-GAAP financial measure. See SBU Performance Analysis—Non-GAAP Measures for definition and Item 1.—Business for the respective ownership interest for key businesses.
Operating Margin decreased $117 million, driven primarily by lower LNG transactions, lower contract energy sales due to lower prices, lower dispatch driven by lower demand, higher fixed costs, and a prior year one-time revenue recognition driven by a reduction in a project's expected completion costs.
The decrease in Operating Margin is partially offset by unrealized gains resulting mainly from derivatives as part of our commercial hedging strategy, higher revenues due to a PPA termination agreement, lower outages, and lower depreciation expense due to impairments recognized in the current and prior year.
Adjusted EBITDA decreased $305 million, primarily due to the drivers above adjusted for NCI, unrealized derivative gains, and depreciation, as well as higher realized foreign currency losses and lower insurance recovery.

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New Energy Technologies SBU
The following table summarizes Operating Margin and Adjusted EBITDA (in millions) for the periods indicated:
For the Years Ended December 31, 2023 2022 $ Change % Change
Operating Margin $ (9) $ (7) $ (2) -29  %
Adjusted EBITDA (1)
 (62) (116) 54  47  %
_____________________________
(1)    A non-GAAP financial measure. See SBU Performance Analysis—Non-GAAP Measures for definition and Item 1.—Business for the respective ownership interest for key businesses.
Operating Margin decreased $2 million, with no material drivers.
Adjusted EBITDA increased $54 million, primarily driven by lower losses at Fluence due to improved margins on a new product line, the settlement of contractual claims with a battery module vendor, and incremental shipping and transportation costs incurred in the prior year as a result of COVID-19. These increases were partly offset by higher costs for research and development, sales and marketing, and general and administrative expenses.
Key Trends and Uncertainties
During 2024 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 this Form 10-K.
Operational
Trade Restrictions and Supply Chain — On March 29, 2022, the U.S. Department 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 (“Southeast Asia”) are circumventing antidumping and countervailing duty (“AD/CVD”) 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 June 6, 2022, President Biden issued a Proclamation waiving any circumvention duties on imported solar cells and panels from Southeast Asia that result from this investigation for a 24-month period ending June 6, 2024. Suppliers resumed importing cells and panels from Southeast Asia into the U.S. pursuant to a Commerce certification regime implementing the Proclamation.
On December 2, 2022, Commerce issued country-wide affirmative preliminary determinations that circumvention had occurred in each of the four Southeast Asian countries. Commerce also evaluated numerous individual companies and issued preliminary determinations that circumvention had occurred with respect to many but not all of these companies. Additionally, Commerce issued a preliminary determination that circumvention would not be deemed to occur for any solar cells and panels imported from the four countries if the wafers were manufactured outside of China or if no more than two out of six specifically identified components were produced in China. On August 18, 2023, Commerce issued its final determinations on the matter and affirmed its preliminary findings in most respects. Additionally, Commerce found that three of the specific companies it investigated were not circumventing.
On December 29, 2023, Auxin Solar and Concept Clean Energy filed a lawsuit with the U.S. Court of International Trade, challenging certain aspects of the final rule promulgated by Commerce to implement the Proclamation. The lawsuit specifically challenges Commerce’s decisions not to suspend the final disposition of certain entries of imported solar cells and panels from Southeast Asia made prior to June 6, 2024, and not to collect AD/CVD deposits with respect to those entries. The Department of Justice has responded by filing a motion to dismiss the lawsuit.
Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) seeks to block the import of products made with forced labor in certain areas of China and may lead to certain suppliers being blocked from importing solar cells and panels to the U.S. While this has impacted the U.S. market, AES has managed this issue without significant impact to our projects. Further disruptions may impact our suppliers’ ability or willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.

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The impact of any additional adverse Commerce determinations or other tariff disputes or litigation, the impact of the UFLPA, potential future disruptions to the solar panel supply chain and their effect on AES’ U.S. solar project development and construction activities remain uncertain. AES will continue to monitor developments and take prudent steps towards maintaining a robust supply chain for our renewables projects.
We have contracted and secured our expected requirements for solar panels for U.S. projects targeted to achieve commercial operations in 2024.
Operational Sensitivity to Dry Hydrological Conditions — Our hydroelectric generation facilities are sensitive to changes in the weather, particularly the level of water inflows into generation facilities. In the past, dry hydrological conditions in Panama, Brazil, Colombia and Chile have presented challenges for our businesses in these markets. Low rainfall and water inflows have caused reservoir levels to be below historical levels, reduced generation output, and increased prices for electricity. If our hydroelectric generation facilities cannot generate sufficient energy to meet contractual arrangements, we may need to purchase energy to fulfill our obligations, which could have a material adverse impact on our results of operations. As a mitigation measure, AES has invested in thermal, wind, and solar generation assets, which have a complementary profile to hydroelectric plants. These plants are expected to have a higher generation in low hydrology scenarios, which allows them to generate additional revenues from the spot that offset purchases on the hydroelectric side.
According to the National Oceanic and Atmospheric Administration ("NOAA"), El Niño conditions are observed and forecasted through the beginning of Q2 of 2024. Hydrological conditions thereafter are uncertain, but indications suggest either a return to normalized patterns or an emergence of La Niña for the remainder of 2024. In Panama, consistent with expected El Niño impacts, local hydrological forecasts indicate below historical average inflows persisting into Q2 of 2024, which could impact our results of operations. AES reduced its total generation exposure in Panama to dry hydrological conditions through investments in such complementary assets as the Colon LNG power facility, which commenced operations in 2018, the Penonome Wind Farm, and solar projects, providing a stable and independent diversified energy supply during periods of drought or when hydroelectric generation is limited. In Panama, the La Niña phenomenon in contrast to El Niño typically means wetter conditions than average, although local system impacts may vary due to other factors. Higher hydrology may result in energy surpluses after covering the contracted hydro positions, available to be sold in the spot market after fulfilling contract obligations.
In Brazil, El Niño generally means more rainfall in the South and higher temperatures in the central region of the country, as seen in the last quarter of 2023, while La Niña results in more rainfall in the North, drier conditions in the South and milder temperatures in the central region, which could result in lower demand. Current system reservoir levels are high which supports continued lower spot prices through 2024 mitigating hydrological risk – lower prices limit external thermal generation which, if dispatched, could impact demand for the AES hydro generation. In Colombia, El Niño is characterized by drought and may result in higher spot prices. Lower overall AES Chivor hydrology may result in increased spot price energy exposure to cover contracted positions. The basin where AES Chivor is located typically experiences wet conditions from June through September in contrast with the broader system, which can result in additional energy available to sell in the spot market after fulfilling contract obligations as experienced earlier in 2023. La Niña in Colombia is characterized by more rainfall possibly leading to a decrease in spot prices. However, during La Niña impacts vary and the basin where Chivor is located may experience drier conditions than the system, notably between June and September. In Chile, the primary driver for AES’ hydro assets is snowpack volumes. Lower snowpack, together with reduced rainfall in the system, could increase both spot prices and energy purchase volumes required to meet contracted positions.
The exact behavior pattern and strength of El Niño and the potential evolution towards La Niña cannot be definitively known at this time and therefore the impacts could vary from those described above, and may include impacts to our businesses beyond hydrology, including with respect to power generation from other renewable sources of energy and demand. Even if rainfall and water inflows return to or exceed historical averages, in some cases high market prices and low generation could persist until reservoir levels are fully recovered. Further, investments made in thermal, wind, and solar power generation may benefit from uncontracted spot sales at higher market prices. Our thermal assets in Panama may alternatively be impacted by low dispatch due to low market prices in the event of a La Niña. Impacts may be material to our results of operations.

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Macroeconomic and Political
The macroeconomic and political environments in some countries where our subsidiaries conduct business have changed during 2023. This could result in significant impacts to tax laws and environmental and energy policies. Additionally, we operate in multiple countries and as such are subject to volatility in exchange rates at the subsidiary level. See Item 7A.—Quantitative and Qualitative Disclosures About Market Risk for further information.
Argentina — The recent election of President Javier Milei on December 10, 2023, marks a pivotal moment in Argentina's economic landscape. The entering administration issued Decree No. 55/23, signaling a commitment to total economic deregulation. This decree declares a state of emergency in the power sector, tariff revisions for electric power and natural gas transport and distribution, and a broader proposal for sector-wide reform.
President Milei also proposed a new bill, currently under review by Congress, that seeks to overhaul the energy regulatory framework. Emphasizing deregulation, the bill opens avenues for privatization of state-owned energy companies. These proposed changes may have a profound impact on the sector, influencing our operations and financial results. It is not yet possible to predict the impact of these regulations in our consolidated results of operations, cash flows, and financial condition.
Inflation Reduction Act and U.S. Renewable Energy Tax Credits — The Inflation Reduction Act (the “IRA”) was signed into law in the United States. The IRA includes provisions that are expected to benefit the U.S. clean energy industry, including increases, extensions, direct transfers and/or new tax credits for onshore and offshore wind, solar, storage and hydrogen projects. We expect that the extension of the current solar investment tax credits ("ITCs"), as well as higher credits available for projects that satisfy wage and apprenticeship requirements, will increase demand for our renewables products.
Our U.S. renewables business has a 51 GW pipeline that we intend to utilize to continue to grow our business, and these changes in tax policy are supportive of this strategy. We account for U.S. renewables projects according to U.S. GAAP, which, when partnering with tax-equity investors to monetize tax benefits, utilizes the HLBV method. This method recognizes the tax-credit value that is transferred to tax equity investors at the time of its creation, which for projects utilizing the investment tax credit begins in the quarter the project is placed in service. For projects utilizing the production tax credit, this value is recognized over 10 years as the facility produces energy.
The IRA also allows us to directly transfer investment tax credits to unrelated tax credit buyers. We account for the transfer proceeds as tax benefit throughout the year the renewables project is placed in service.
In 2023, we realized $611 million of earnings from Tax Attributes, comprised of $593 million from the Renewables SBU and $18 million from the Utilities SBU. In 2024, we expect an increase in Tax Attributes earned by our U.S. renewables business in line with the growth in that business. Based on construction schedules, a significant portion of these earnings will be realized in the fourth quarter.
The implementation of the IRA requires substantial guidance from the U.S. Department of Treasury and other government agencies. While some of that guidance remains pending, there will be uncertainty with respect to the implementation of certain provisions of the IRA.
Global Tax — The macroeconomic and political environments in the U.S. and in some countries where our subsidiaries conduct business have changed during 2022 and 2023. This could result in significant impacts to future tax law. In the U.S., the IRA includes a 15% corporate alternative minimum tax based on adjusted financial statement income. Additional guidance is expected to be issued in 2024.
In the fourth quarter of 2022, the European Commission adopted an amended Directive on Pillar 2 establishing a global minimum tax at a 15% rate. The adoption requires EU Member States to transpose the Directive into their respective national laws by December 31, 2023 for the rules to come into effect as of January 1, 2024. During 2023, the Netherlands, Bulgaria and Vietnam adopted legislation to implement Pillar 2 effective as of January 1, 2024. We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments. The 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 recently. 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 negatively impact their competitiveness.

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Our utility businesses do allow for recovering of operations and maintenance costs through the regulatory process, which may have timing impacts on recovery.
Interest Rates — In the U.S. and other markets in which we operate, there has been a rise in interest rates during 2021 through 2023, and interest rates are expected to remain volatile in the near term. As discussed in Item 7A.—Quantitative and Qualitative Disclosures about Market Risk, although most of our existing corporate and subsidiary debt is at fixed rates, an increase in interest rates can have several impacts on our business. For any existing debt under floating rate structures and any future debt refinancings, rising interest rates will increase future financing costs. In most cases in which we have floating rate debt, our revenues serving this debt are indexed to inflation which helps mitigate the impact of rising rates. For future debt refinancings, AES actively manages a hedging program to reduce uncertainty and exposure to future interest rates. For new business, higher interest rates increase the financing costs for new projects under development and which have not yet secured financing.
AES typically seeks to incorporate expected financing costs into our new PPA pricing such that we maintain our target investment returns, but higher financing costs may negatively impact our returns or the competitiveness of some of our development projects. Additionally, we typically seek to enter into interest rate hedges shortly after signing PPAs to mitigate the risk of rising interest rates prior to securing long-term financing.
Puerto Rico — Our subsidiaries in Puerto Rico have long-term PPAs with state-owned PREPA, which has been facing economic challenges that could result in a material adverse effect on our business in Puerto Rico. Despite the Title III protection, PREPA has been making substantially all of its payments to the generators in line with historical payment patterns.
The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted to create a structure for exercising federal oversight over the fiscal affairs of U.S. territories and created procedures for adjusting debt accumulated by the Puerto Rico government and, potentially, other territories (“Title III”). PROMESA also expedites the approval of key energy projects and other critical projects in Puerto Rico.
PROMESA allowed for the establishment of an Oversight Board with broad powers of budgetary and financial control over Puerto Rico. The Oversight Board filed for bankruptcy on behalf of PREPA under Title III in July 2017. As a result of the bankruptcy filing, AES Puerto Rico and AES Ilumina’s non-recourse debt of $143 million and $25 million, respectively, continue to be in technical default and are classified as current as of December 31, 2023. The non-recourse debt at AES Puerto Rico is also in payment default.
On April 12, 2022, a mediation team was appointed to prepare the plan to resolve the PREPA Title III case and related proceedings. A disclosure statement hearing was held on April 28, 2023. The mediation was extended through August 4, 2023. On November 14, 2023, the Judge presiding over the case approved the supplemental disclosure statement for PREPA’s Fourth Modified Third Amended Title III Plan of Adjustment. The
confirmation trial is still scheduled to begin March 4, 2024.
Earlier this year, AES Puerto Rico took certain measures to address identified liquidity challenges. On July 6, 2023, PREPA agreed to the release of funds in the escrow account guaranteeing AES Puerto Rico’s obligations under the Power Purchase and Operating Agreement (“PPOA”) in order to provide additional liquidity for the business. AES Puerto Rico continues to work with PREPA and its noteholders on these liquidity challenges. During Q4 2023, a restructuring support agreement was executed by AES Puerto Rico and its noteholders and a PPOA amendment was approved by PREPA. These agreements require Puerto Rico Energy Bureau ("PREB") approval to become effective. On February 2, 2024 a resolution was issued by PREB approving the PPOA amendment subject to the incorporation of certain additional terms and conditions. The Company expects the PPOA amendment and restructuring support agreement to become effective during the first quarter of 2024.
Despite these challenges and considering the information available as of the filing date, management believes the carrying amount of our long-lived assets at AES Puerto Rico of $76 million is recoverable as of December 31, 2023.
Mexico Migration and Wheeling Tariffs — The interconnection agreements for TEP and TEG under the self-supply energy regime in Mexico expire in March and April 2024, respectively. Consequently, TEG and TEP are required to migrate into the new energy regime established by the Electricity Industry Law of 2021 (“LIE”) and to execute new interconnection agreements prior to the expiration of the current interconnection agreements. In February and September 2022, respectively, TEG and TEP made formal requests to the Mexican Comision Reguladora de Energia (“CRE”) to update the projects’ permits and allow them to migrate into the LIE (“Migration Requests”).

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In discussions with TEG and TEP, CRE has stated that it will not allow migration into the LIE unless the projects withdraw their respective legal challenges to certain laws, including RES/894/2020 (“Resolution 894”), which attempts to increase the wheeling tariffs paid by TEG and TEP to CFE. The increase is currently estimated to be over $90 million for the relevant period (July 2020 through March 2024). TEG and TEP have informed CRE that the agency is not entitled to reject the Migration Requests because of the legal challenges. In February 2024, the Collegiate Court ruled in favor of TEG and TEP on their challenge to Resolution 894. Nevertheless, later in February 2024, CRE denied TEG's Migration Request. TEG has formally requested that CRE issue a new permit. If CRE does not issue a new permit and if TEG cannot enter into a new interconnection agreement, TEG will not be allowed to operate after its current interconnection agreement expires. CRE is expected to determine TEP's Migration Request in the near future, but we cannot predict the outcome of that determination.
TEG and TEP will take all necessary regulatory and legal steps to protect their interests. Furthermore, if TEG and TEP are ever required to pay increased wheeling tariffs, TEG and TEP will seek to enforce their respective contractual rights to pass-through the increases to their respective offtakers. However, there are no assurances that TEG and TEP will be successful in these efforts. The inability to migrate into the LIE and/or the inability to pass-through wheeling tariff increases could have a material adverse impact on our results of operations.
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. We have made significant progress on our exit of coal generation, and we intend to exit the substantial majority of our remaining coal facilities by year-end 2025 and intend to exit all of the coal facilities by year-end 2027, subject to necessary approvals.
In addition, initiatives have been announced by regulators, including in Chile, Puerto Rico, and Bulgaria, and offtakers in recent years, with the intention of reducing GHG emissions generated by the energy 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 impact 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, resulting in a reduction of the estimated useful life of certain coal facilities, or have other material adverse effects on our financial results.
For further information about the risks associated with decarbonization initiatives, see Item 1A.—Risk Factors—Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our businesses included in this Form 10-K.
Regulatory
AES Maritza PPA Review — DG Comp is conducting a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. No formal investigation has been launched by DG Comp to date. AES Maritza has previously engaged in discussions with the DG Comp case team and the Government of Bulgaria ("GoB") to attempt to reach a negotiated resolution of the DG Comp’s review ("PPA Discussions"). There are no active PPA Discussions at present but those discussions could resume at any time. The PPA continues to remain in place. However, there can be no assurance that, in the context of DG Comp's preliminary review or any future PPA Discussions, the other parties will not seek a prompt termination of the PPA.
We do not believe termination of the PPA is justified. Nevertheless, the PPA Discussions involved 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 whether and when the PPA Discussions might resume or the outcome of any such discussions. Nor can we predict how DG Comp might resolve its review if the PPA Discussions do not resume or if any such discussions fail to result in an agreement concerning the agency's review. AES Maritza believes that its PPA is legal and in compliance with all applicable laws, and it will take all actions necessary to protect its interests, whether through negotiated agreement or otherwise. However, there can be no assurance that this matter will be resolved favorably; if it is not, there could be a material adverse effect on the Company’s financial condition, results of operation, and cash flows. As of December 31, 2023, the carrying value of our long-lived assets at Maritza is $345 million.

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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 the countries in which we operate.
The overall economic climate in Argentina has deteriorated, resulting in volatility and increased the risk that a further significant devaluation of the Argentine peso against the USD, similar to the devaluations experienced by the country in 2018, 2019, and 2023, may occur. A continued trend of peso devaluation could result in increased inflation, a deterioration of the country’s risk profile, and other adverse macroeconomic effects that could significantly impact our results of operations. For additional information, refer to Item 7A.—Quantitative and Qualitative Disclosures About Market Risk.
Impairments
Long-lived Assets and Current Assets Held-for-Sale — During the year ended December 31, 2023, the Company recognized asset impairment expense of $1.1 billion. See Note 8—Investments and Advances to Affiliates and Note 22—Asset Impairment Expense included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information. After recognizing these impairment expenses, the carrying value of our investments in long-lived assets and current assets held-for-sale that were assessed for impairment following a triggering event in 2023 totaled $1.3 billion at December 31, 2023.
Events or changes in circumstances that may necessitate recoverability tests and potential impairments of long-lived assets 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.
Goodwill — An increase in the discount rate at TEG TEP has negatively impacted our annual goodwill impairment test as of October 1, 2022, and thus, an impairment of goodwill of $12 million has been recognized as of December 31, 2023, reducing the goodwill balance of TEG TEP to zero. See Note 9—Goodwill and Other Intangibles Assets included in Item 8.—Financial Statements and Supplementary Data for further information.
The Company had no other reporting units considered to be “at risk,” as the fair value of all other reporting units exceeded their carrying amounts by more than 10%. Should the fair value of any of the Company’s reporting units fall below its carrying amount as a result of these inputs or other changes such as reduced operating performance, market declines, changes in the discount rate, regulatory changes, or other adverse conditions, goodwill impairment charges may be necessary in future periods.
Capital Resources and Liquidity
Overview
As of December 31, 2023, the Company had unrestricted cash and cash equivalents of $1.4 billion, of which $33 million was held at the Parent Company and qualified holding companies. The Company had $395 million in short-term investments, held primarily at subsidiaries, and restricted cash and debt service reserves of $564 million. The Company also had non-recourse and recourse aggregate principal amounts of debt outstanding of $22.1 billion and $4.5 billion, respectively. Of the $3.9 billion of our current non-recourse debt, $3.6 billion was presented as such because it is due in the next twelve months and $325 million relates to debt considered in default. Defaults at AES Puerto Rico are covenant and payment defaults. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Macroeconomic and Political—Puerto Rico for additional detail. All other defaults are not payment defaults but are instead technical defaults triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents. As of December 31, 2023, the Company also had $974 million outstanding related to supplier financing arrangements.

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We expect current maturities of non-recourse debt, recourse debt, and amounts due under supplier financing arrangements to be repaid from net cash provided by operating activities of the subsidiary to which the liability relates, through opportunistic refinancing activity, or some combination thereof. We have $200 million in recourse debt which matures within the next twelve months, as well as amounts due under supplier financing arrangements, of which $814 million has a Parent Company guarantee. 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 $200 million in senior unsecured term loans. Additionally, commercial paper issuances are short term in nature and subject the Parent Company to interest rate risk at the time of refinancing the paper. On a consolidated basis, of the Company's $27 billion of total gross debt outstanding as of December 31, 2023, approximately $9.9 billion accrues interest at variable rates. Brazil holds $2.3 billion of our floating rate non-recourse exposure as variable rate instruments act as a natural hedge against inflation in Brazil. The Company actively hedges its current and expected variable rate exposure through a combination of currently effective and forward starting interest rate swaps. As of December 31, 2023, the total maximum outstanding amount of hedges protecting the company against variable rate exposure was $6.6 billion. These hedges generally provide economic protection through the entire expected life of the projects, regardless of the type of debt issued to finance construction or refinance the projects in the future.
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 in support of tax equity partnerships or 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. As of December 31, 2023, 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 $4 billion in aggregate (excluding those collateralized by letters of credit and other obligations discussed below).
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. As of December 31, 2023, we had $235 million in letters of credit under bilateral agreements, $188 million in letters of credit outstanding provided under our unsecured credit facilities, and $124 million in letters of credit outstanding provided under our revolving credit facility. These letters of credit operate to guarantee performance relating to certain project development and construction activities and business operations.

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During the year ended December 31, 2023, the Parent Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts.
Additionally, in connection with certain project financings, some of the Company's subsidiaries have expressly undertaken limited obligations and commitments. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company. As of December 31, 2023, the maximum undiscounted potential exposure to guarantees issued by our subsidiaries was $2.8 billion, including $1.8 billion of customary payment guarantees under EPC contracts and other agreements, and $1 billion of tax equity financing related guarantees. In addition, as of December 31, 2023, our subsidiaries had $359 million of letters of credit outstanding.
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 December 31, 2023, the Company had approximately $193 million of gross accounts receivable classified as Other noncurrent assets. These noncurrent receivables mostly consist of accounts receivable in the U.S. and Chile that, pursuant to amended agreements or government resolutions, have collection periods that extend beyond December 31, 2024, or one year from the latest balance sheet date. Noncurrent receivables in the U.S. pertain to the Warrior Run PPA termination agreement and the sale of the Redondo Beach land. The receivables in Chile pertain primarily to revenues recognized on regulated energy contracts that were impacted by the Stabilization Fund created by the Chilean government. See Note 7—Financing Receivables included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
As of December 31, 2023, the Company had approximately $1.1 billion of loans receivable related to the Mong Duong facility in Vietnam, which was constructed under a BOT contract. 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. As of December 31, 2023, Mong Duong met the held-for-sale criteria and the loan receivable balance, net of CECL reserve, was classified in held-for-sale assets. Of the loan receivable balance, $108 million was classified as Current held-for-sale assets, and $962 million was classified as Noncurrent held-for-sale assets. See Note 20—Revenue included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Cash Sources and Uses
The primary sources of cash for the Company in the year ended December 31, 2023 were debt financings, cash flows from operating activities, sales to noncontrolling interests, purchases under supplier financing arrangements, and sales of short-term investments. The primary uses of cash in the year ended December 31, 2023 were repayments of debt, capital expenditures, repayments of obligations under supplier financing arrangements, purchases of short-term investments, and acquisitions of business interests.
The primary sources of cash for the Company in the year ended December 31, 2022 were debt financings, cash flows from operating activities, sales of short-term investments, purchases under supplier financing arrangements, and sales to noncontrolling interests.

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The primary uses of cash in the year ended December 31, 2022 were repayments of debt, capital expenditures, purchases of short-term investments, acquisitions of noncontrolling interests, and purchases of emissions allowances in Bulgaria.
A summary of cash-based activities are as follows (in millions):
Year Ended December 31,
Cash Sources: 2023 2022
Borrowings under the revolving credit facilities $ 7,103  $ 5,424 
Issuance of non-recourse debt 4,521  5,788 
Net cash provided by operating activities 3,034  2,715 
Sales to noncontrolling interests 1,938  742 
Purchases under supplier financing arrangements 1,858  1,042 
Issuance of recourse debt 1,400  200 
Sale of short-term investments 1,318  1,049 
Issuance of preferred shares in subsidiaries 421  60 
Proceeds from the sale of business interests, net of cash and restricted cash sold 254  1 
Contributions from noncontrolling interests 102  233 
Affiliate repayments and returns of capital 5  149 
Other —  25 
Total Cash Sources $ 21,954  $ 17,428 
Cash Uses:
Capital expenditures $ (7,724) $ (4,551)
Repayments under the revolving credit facilities (6,285) (4,687)
Repayments of non-recourse debt (2,495) (3,144)
Repayments of obligations under supplier financing arrangements (1,491) (432)
Purchase of short-term investments (937) (1,492)
Acquisitions of business interests, net of cash and restricted cash acquired (542) (243)
Repayments of recourse debt (500) (29)
Dividends paid on AES common stock (444) (422)
Distributions to noncontrolling interests (323) (265)
Purchase of emissions allowances (268) (488)
Contributions and loans to equity affiliates (178) (232)
Payments for financing fees (142) (120)
Acquisitions of noncontrolling interests (127) (602)
Other (1)
 (595) (118)
Total Cash Uses $ (22,051) $ (16,825)
Net increase (decrease) in Cash, Cash Equivalents, and Restricted Cash $ (97) $ 603 
_____________________________
(1)Includes the $270 million and $56 million effect of exchange rate changes on cash, cash equivalents and restricted cash for the years ended December 31, 2023 and 2022, respectively. These impacts are primarily related to the devaluation of the Argentine peso as Argentina's economy continued to be highly inflationary. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Foreign Exchange Rates for further information.

Consolidated Cash Flows
The following table reflects the changes in operating, investing, and financing cash flows for the comparative twelve month periods (in millions):
December 31,
Cash flows provided by (used in): 2023 2022
$ Change
Operating activities $ 3,034  $ 2,715  $ 319 
Investing activities (8,188) (5,836) (2,352)
Financing activities 5,405  3,758  1,647 

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Operating Activities
Fiscal Year 2023 versus 2022
Net cash provided by operating activities increased $319 million for the year ended December 31, 2023, compared to December 31, 2022.
Operating Cash Flows
(in millions)
162
(1)The change in adjusted net income is defined as the variance in net income, net of the total adjustments to net income as shown on the Consolidated Statements of Cash Flows in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
(2)The change in working capital is defined as the variance in total changes in operating assets and liabilities as shown on the Consolidated Statements of Cash Flows in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
•Adjusted net income decreased $280 million, primarily due to lower margins at our Energy Infrastructure and Renewables SBUs and an increase in interest expense; partially offset by higher margins at our Utilities SBU and an increase in interest income.
•Working capital requirements decreased $599 million, primarily due to a decrease in accounts receivable resulting from higher collections, and decreases in inventory and accounts payable due to lower inventory purchases at lower prices; partially offset by an increase in other assets due to the receivables under the Warrior Run PPA termination agreement and the deferral of purchased power costs in the current year.
Investing Activities
Fiscal Year 2023 versus 2022
Net cash used in investing activities increased $2.4 billion for the year ended December 31, 2023 compared to December 31, 2022.
Investing Cash Flows
(in millions)
194

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•Acquisitions of business interests increased $299 million, primarily due to the acquisitions of Bellefield and Rexford at AES Clean Energy and Bolero Solar Park at AES Andes; partially offset by the prior year acquisitions of the Cubico II Wind Complex at AES Brasil and Agua Clara in the Dominican Republic.
•Cash from short-term investing activities increased $824 million, primarily as a result of higher short-term investment sales in 2023 to fund the capital expenditures of our renewables projects.
•Proceeds from sales of business interests increased $253 million due to proceeds from the partial sale of our ownership interests in Fluence and sPower OpCo B.
•Purchases of emissions allowances decreased $220 million, primarily in Bulgaria as a result of lower CO2 purchases due to lower production.
•Capital expenditures increased $3.2 billion, discussed further below.
Capital Expenditures
(in millions)
898
(1)Growth expenditures generally include expenditures related to development projects in construction, expenditures that increase capacity of a facility beyond the original design, and investments in general load growth or system modernization.
(2)Maintenance expenditures generally include expenditures that are necessary to maintain regular operations or net maximum capacity of a facility.
(3)Environmental expenditures generally include expenditures to comply with environmental laws and regulations, expenditures for safety programs and other expenditures to ensure a facility continues to operate in an environmentally responsible manner.
•Growth expenditures increased $3 billion, primarily driven by an increase in U.S. renewables projects.
•Maintenance expenditures increased $212 million, primarily due to higher transmission and distribution and renewables project investments at our Utilities SBU and increased expenditures for hydro and wind plants at our Renewables SBU.
•Environmental expenditures increased $1 million, with no material drivers.

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Financing Activities
Fiscal Year 2023 versus 2022
Net cash provided by financing activities increased $1.6 billion for the year ended December 31, 2023 compared to December 31, 2022.
Financing Cash Flows
(in millions)
198
See Notes 11—Debt and 17—Equity in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for more information regarding significant debt and equity transactions, respectively.
•The $1.2 billion impact from sales to noncontrolling interests is primarily due to proceeds received at AES Clean Energy from the sales of ownership in project companies to tax equity investors, the sale of a 20% interest in AES Dominicana and a 35% interest in Colon, and from an increase in sales under the Chile Renovables renewable partnership with GIP; partially offset by the prior year sale of a 14.9% ownership interest in Southland Energy.
•The $729 million impact from recourse debt is primarily due to the issuance of senior notes due in 2028 by the Parent Company.
•The $475 million impact from acquisitions of noncontrolling interests is mainly due to the prior year acquisition of an additional 32% ownership interest in AES Andes; partially offset by the final installment payment for the 2021 acquisition of the remaining 49.9% noncontrolling ownership interest in Colon.
•The $366 million impact from non-recourse revolving credit facilities is primarily due to an increase in borrowings at our Energy Infrastructure SBU.
•The $361 million impact from issuance of preferred shares in subsidiaries is due to the proceeds received from the issuance of preferred shares to GIP, as part of the Chile Renovables renewable partnership, and the issuance of preferred shares to HASI at AES Renewable Holdings for OpCo 1; partially offset by proceeds received in the prior year for issuances of preferred shares at AES Brasil.
•The $618 million impact from non-recourse debt transactions is mainly due to lower net borrowings at the Energy Infrastructure SBU and higher net repayments at Corporate; partially offset by higher net borrowings at the Renewables SBU.
•The $285 million impact from the Parent Company revolver is primarily due to higher net repayments in the current year.
•The $243 million impact from supplier financing arrangements is primarily due to higher net repayments at the Renewables and Energy Infrastructure SBUs.

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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 Cash and cash equivalents, which is determined in accordance with 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 commercial paper program; and proceeds from asset sales. The Parent Company credit facility and commercial paper program are generally used for short-term cash needs to bridge the timing of distributions from subsidiaries. Cash requirements at the Parent Company level are primarily to fund interest and principal repayments of debt, construction commitments, other equity commitments, 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 and commercial paper program. 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, Cash and cash equivalents, at the periods indicated as follows (in millions):
December 31, 2023 December 31, 2022
Consolidated cash and cash equivalents $ 1,426  $ 1,374 
Less: Cash and cash equivalents at subsidiaries (1,393) (1,350)
Parent Company and qualified holding companies' cash and cash equivalents 33  24 
Commitments under the Parent Company credit facility 1,500  1,500 
Less: Letters of credit under the credit facility (124) (34)
Less: Borrowings under the credit facility —  (325)
Borrowings available under the Parent Company credit facility 1,376  1,141 
Total Parent Company Liquidity $ 1,409  $ 1,165 
The Parent Company paid dividends of $0.66 per outstanding share to its common stockholders during the year ended December 31, 2023. 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 $4.5 billion and $3.9 billion as of December 31, 2023 and 2022, respectively. See Note 11—Debt in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for additional detail.
We believe that our sources of liquidity will be adequate to meet our needs for the foreseeable future. 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 revolving credit facility and commercial paper program. See Item 1A.—Risk Factors—The AES Corporation's ability to make payments on its outstanding indebtedness is dependent upon the receipt of funds from our subsidiaries, of this Form 10-K.
Various debt instruments at the Parent Company level, including our revolving credit facility and commercial paper program, contain certain restrictive covenants. The covenants provide for, among other items, limitations on other indebtedness, liens, investments and guarantees; limitations on dividends, stock repurchases and other equity transactions; restrictions 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 December 31, 2023, we were in compliance with these covenants at the Parent Company level.

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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 revolving 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 Consolidated Balance Sheets amounts to $3.9 billion. The portion of current debt related to such defaults was $325 million at December 31, 2023, all of which was non-recourse debt related to four subsidiaries — AES Mexico Generation Holdings, AES Puerto Rico, AES Ilumina, and AES Jordan Solar. Defaults at AES Puerto Rico are covenant and payment defaults. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Macroeconomic and Political—Puerto Rico for additional detail. All other defaults are not 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. See Note 11—Debt in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for additional detail.
None of the subsidiaries that are currently in default are subsidiaries that met the applicable definition of materiality under the Parent Company's debt agreements as of December 31, 2023, in order for such defaults to trigger an event of default or permit acceleration under 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 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 revolving credit agreement as any business that contributed 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters. As of December 31, 2023, none of the defaults listed above resulted in a cross-default under the recourse debt of the Parent Company. Furthermore, none of the non-recourse debt in default listed above is guaranteed by the Parent Company.
Contractual Obligations and Contingent Contractual Obligations
A summary of our contractual obligations, commitments and other liabilities as of December 31, 2023 is presented below (in millions):
Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Other
Footnote Reference(5)
Debt obligations (1) (2)
 $ 26,977  $ 4,135  $ 7,447  $ 4,398  $ 10,997  $ —  11 
Interest payments on long-term debt (3)
 12,650  1,419  2,278  1,521  7,432  —  n/a
Finance lease obligations (2)
 618  14  29  30  545  —  14 
Operating lease obligations (2)
 1,209  56  88  79  986  —  14 
Electricity obligations 10,099  1,222  1,662  1,342  5,873  —  12 
Fuel obligations 11,065  2,069  2,844  2,278  3,874  —  12 
Other purchase obligations 9,549  4,698  1,784  1,347  1,720  —  12 
Other long-term liabilities reflected on AES' consolidated balance sheet under GAAP (2) (4)
 1,022  —  492  61  459  10  n/a
Total $ 73,189  $ 13,613  $ 16,624  $ 11,056  $ 31,886  $ 10 
_____________________________

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(1)Includes recourse and non-recourse debt presented on the Consolidated Balance Sheets. These amounts exclude finance lease liabilities which are included in the finance lease category.
(2)Excludes any businesses classified as held-for-sale. See Note 24—Held-for-Sale and Dispositions in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for additional information related to held-for-sale businesses.
(3)Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2023 and do not reflect anticipated future refinancing, early redemptions or new debt issuances. Variable rate interest obligations are estimated based on rates as of December 31, 2023.
(4)These amounts do not include current liabilities on the Consolidated Balance Sheets except for the current portion of uncertain tax obligations. Noncurrent uncertain tax obligations are reflected in the "Other" column of the table above as the Company is not able to reasonably estimate the timing of the future payments. In addition, these amounts do not include: (1) regulatory liabilities (See Note 10—Regulatory Assets and Liabilities), (2) contingencies (See Note 13—Contingencies), (3) pension and other postretirement employee benefit liabilities (see Note 15—Benefit Plans), (4) derivatives and incentive compensation (See Note 6—Derivative Instruments and Hedging Activities) or (5) any taxes (See Note 23—Income Taxes) except for uncertain tax obligations, as the Company is not able to reasonably estimate the timing of future payments. See the indicated notes to the Consolidated Financial Statements included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for additional information on the items excluded.
(5)For further information see the note referenced below in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
The following table presents our Parent Company's contingent contractual obligations as of December 31, 2023:
Contingent Contractual Obligations
Maximum Exposure (in millions)
 Number of Agreements Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments $ 3,978  90
< $1 — 970
Letters of credit under bilateral agreements 235  4
$54— 64
Letters of credit under the unsecured credit facilities 188  31
< $1 — 70
Letters of credit under the revolving credit facility 124  17
< $1 — 40
Surety bonds 2  2
< $1 — $1
Total $ 4,527  144
Additionally, some of the Company's subsidiaries have contingent contractual obligations that are non-recourse to the Parent Company. As of December 31, 2023, the maximum undiscounted potential exposure to guarantees issued by our subsidiaries was $2.8 billion, including $1.8 billion of customary payment guarantees under EPC contracts and other agreements, and $1 billion of tax equity financing related guarantees. In addition, as of December 31, 2023, our subsidiaries had $359 million of letters of credit outstanding.
We have a diverse portfolio of performance-related contingent contractual obligations. These obligations are designed to cover potential risks and only require payment if certain targets are not met or certain contingencies occur. The risks associated with these obligations include change of control, construction cost overruns, subsidiary default, political risk, tax indemnities, spot market power prices, sponsor support, and liquidated damages under power sales agreements for projects in development, in operation and under construction. While we do not expect that we will be required to fund any material amounts under these contingent contractual obligations beyond 2023, many of the events which would give rise to such obligations are beyond our control. We can provide no assurance that we will be able to fund our obligations under these contingent contractual obligations if we are required to make substantial payments thereunder.
Critical Accounting Policies and Estimates
The 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. AES' significant accounting policies are described in Note 1—General and Summary of Significant Accounting Policies to the Consolidated Financial Statements included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
An accounting estimate is considered critical if the estimate requires management to make assumptions about matters that were highly uncertain at the time the estimate was made, different estimates reasonably could have been used, or the impact of the estimates and assumptions on financial condition or operating performance is material.
Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, actual results could materially differ from the original estimates, requiring adjustments to these balances in future periods. Management has discussed these critical accounting policies with the Audit Committee, as appropriate. Listed below are the Company's most significant critical accounting estimates and assumptions used in the preparation of the Consolidated Financial Statements.
Income Taxes — We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Our worldwide income tax provision requires significant judgment and is based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other taxing authorities.

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Certain of the Company's subsidiaries are under examination by relevant taxing authorities for various tax years. The Company regularly assesses the potential outcome of these examinations in each tax jurisdiction when determining the adequacy of the provision for income taxes. Accounting guidance for uncertainty in income taxes prescribes a more likely than not recognition threshold. Tax reserves have been established, which the Company believes to be adequate in relation to the potential for additional assessments. Once established, reserves are adjusted only when there is more information available or when an event occurs necessitating a change to the reserves. While the Company believes that the amounts of the tax estimates are reasonable, it is possible that the ultimate outcome of current or future examinations may be materially different than the reserve amounts.
Because we have a wide range of statutory tax rates in the multiple jurisdictions in which we operate, any changes in our geographical earnings mix could materially impact our effective tax rate. Furthermore, our tax position could be adversely impacted by changes in tax laws, tax treaties or tax regulations, or the interpretation or enforcement thereof and such changes may be more likely or become more likely in view of recent economic trends in certain of the jurisdictions in which we operate.
In addition, no taxes have been recorded on undistributed earnings for certain of our non-U.S. subsidiaries to the extent such earnings are considered to be indefinitely reinvested in the operations of those subsidiaries. Should the earnings be remitted as dividends, the Company may be subject to additional foreign withholding and state income taxes.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities, and their respective income tax bases. The Company establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company has elected to treat GILTI as an expense in the period in which the tax is accrued. Accordingly, no deferred tax assets or liabilities are recorded related to GILTI.
In addition, the Company has elected an accounting policy not to consider the effects of being subject to the corporate alternative minimum tax in future periods when assessing the realizability of our deferred tax assets, carryforwards, and tax credits. Any effect on the realization of deferred tax assets will be recognized in the period they arise.
The Company accounts for tax credits that it will retain or transfer as a reduction in income tax expense by either including the expected amount of the tax credit to be claimed or the cash to be received when transferred, respectively, in the calculation of its annual effective tax rate. The estimated tax credits are updated on a quarterly basis, with the year-end calculation including only the tax credits that are associated with projects placed in service, comprising credits claimed or transferred during the year. In assessing realizability for credits to be transferred, the Company includes cash it anticipates receiving in establishing any valuation allowance and establishes a valuation allowance equal to its best estimate of any discount on the transfer. The receipt of cash from the transfer of tax credits is treated as an operating cash inflow.
Impairments — Our accounting policies on goodwill and long-lived assets, including events that lead to possible impairment, are described in detail in Note 1—General and Summary of Significant Accounting Policies, included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K. The Company makes considerable judgments in its impairment evaluations of goodwill and long-lived assets, starting with determining if an impairment indicator exists. The Company exercises judgment in determining if these indicators or events represent an impairment indicator requiring the computation of the fair value of goodwill and/or the recoverability of long-lived assets. The fair value determination is typically the most judgmental part in an impairment evaluation. Please see Fair Value below for further detail.
As part of the impairment evaluation process, management analyzes the sensitivity of fair value to various underlying assumptions. The level of scrutiny increases as the surplus of fair value above carrying amount decreases or becomes negative. Changes in any of these assumptions could result in management reaching a different conclusion regarding the potential impairment, which could be material. Our impairment evaluations inherently involve uncertainties from uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.
Further discussion of the impairment charges recognized by the Company can be found within Note 9—Goodwill and Other Intangible Assets and Note 22—Asset Impairment Expense to the Consolidated Financial Statements included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.

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Depreciation — Depreciation, after consideration of salvage value and asset retirement obligations, is computed using the straight-line method over the estimated useful lives of the assets, which are determined on a composite or component basis. The Company considers many factors in its estimate of useful lives, including expected usage, physical deterioration, technological changes, existence and length of off-taker agreements, and laws and regulations, among others. In certain circumstances, these estimates involve significant judgment and require management to forecast the impact of relevant factors over an extended time horizon.
Useful life estimates are continually evaluated for appropriateness as changes in the relevant factors arise, including when a long-lived asset group is tested for recoverability. Depreciation studies are performed periodically for assets subject to composite depreciation. Any change to useful lives is considered a change in accounting estimate and is made on a prospective basis.
Fair Value — For information regarding the fair value hierarchy, see Note 1—General and Summary of Significant Accounting Policies included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
Fair Value of Financial Instruments — A significant number of the Company's financial instruments are carried at fair value with changes in fair value recognized in earnings or other comprehensive income each period. Investments are generally fair valued based on quoted market prices or other observable market data such as interest rate indices. The Company's investments are primarily certificates of deposit and mutual funds. Derivatives are valued using observable data as inputs into internal valuation models. The Company's derivatives primarily consist of interest rate swaps, foreign currency instruments, and commodity and embedded derivatives. Additional discussion regarding the nature of these financial instruments and valuation techniques can be found in Note 5—Fair Value included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
Fair Value of Nonfinancial Assets and Liabilities — Significant estimates are made in determining the fair value of long-lived tangible and intangible assets (i.e., property, plant and equipment, intangible assets and goodwill) during the impairment evaluation process. In addition, the relevant accounting guidance requires the Company to recognize the majority of assets acquired and liabilities assumed in a business combination and asset acquisitions by VIEs at fair value.
The Company may engage an independent valuation firm to assist management with the valuation. The Company generally utilizes the income approach to value nonfinancial assets and liabilities, specifically a Discounted Cash Flow ("DCF") model to estimate fair value by discounting cash flow forecasts, adjusted to reflect market participant assumptions, to the extent necessary, at an appropriate discount rate.
Management applies considerable judgment in selecting several input assumptions during the development of our cash flow forecasts. Examples of the input assumptions that our forecasts are sensitive to include macroeconomic factors such as growth rates, industry demand, inflation, exchange rates, power prices, changes in interest rates, and commodity prices. Whenever appropriate, management obtains these input assumptions from observable market data sources (e.g., Economic Intelligence Unit) and extrapolates the market information if an input assumption is not observable for the entire forecast period. Many of these input assumptions are dependent on other economic assumptions, which are often derived from statistical economic models with inherent limitations such as estimation differences. Further, several input assumptions are based on historical trends which often do not recur. It is not uncommon that different market data sources have different views of the macroeconomic factor expectations and related assumptions. As a result, macroeconomic factors and related assumptions are often available in a narrow range; however, in some situations these ranges become wide and the use of a different set of input assumptions could produce significantly different budgets and cash flow forecasts.
A considerable amount of judgment is also applied in the estimation of the discount rate used in the DCF model. To the extent practical, inputs to the discount rate are obtained from market data sources (e.g., Bloomberg). The Company selects and uses a set of publicly traded companies from the relevant industry to estimate the discount rate inputs. Management applies judgment in the selection of such companies based on its view of the most likely market participants. It is reasonably possible that the selection of a different set of likely market participants could produce different input assumptions and result in the use of a different discount rate.
Accounting for Derivative Instruments and Hedging Activities — We enter into various derivative transactions in order to hedge our exposure to certain market risks. We primarily use derivative instruments to manage our interest rate, commodity, and foreign currency exposures. We do not enter into derivative transactions for trading purposes.

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See Note 6—Derivative Instruments and Hedging Activities included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information on the classification.
The fair value measurement standard requires the Company to consider and reflect the assumptions of market participants in the fair value calculation. These factors include nonperformance risk (the risk that the obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets). Credit risk for AES is evaluated at the level of the entity that is party to the contract. Nonperformance risk on the Company's derivative instruments is an adjustment to the fair value position that is derived from internally developed valuation models that utilize market inputs that may or may not be observable.
As a result of uncertainty, complexity, and judgment, accounting estimates related to derivative accounting could result in material changes to our financial statements under different conditions or utilizing different assumptions. As a part of accounting for these derivatives, we make estimates concerning nonperformance, volatilities, market liquidity, future commodity prices, interest rates, credit ratings, and future foreign exchange rates. Refer to Note 5—Fair Value included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for additional details.
The fair value of our derivative portfolio is generally determined using internal and third party valuation models, most of which are based on observable market inputs, including interest rate curves and forward and spot prices for currencies and commodities. The Company derives most of its financial instrument market assumptions from market efficient data sources (e.g., Bloomberg, Reuters, and Platt's). In some cases, where market data is not readily available, management uses comparable market sources and empirical evidence to derive market assumptions to determine a financial instrument's fair value. In certain instances, published pricing may not extend through the remaining term of the contract, and management must make assumptions to extrapolate the curve. Specifically, where there is limited forward curve data with respect to foreign exchange contracts beyond the traded points, the Company utilizes the interest rate differential approach to construct the remaining portion of the forward curve. For individual contracts, the use of different valuation models or assumptions could have a material effect on the calculated fair value.
Regulatory Assets — Management continually assesses whether regulatory assets are probable of future recovery by considering factors such as applicable regulatory changes, recent rate orders applicable to other regulated entities, and the status of any pending or potential deregulation legislation. If future recovery of costs ceases to be probable, any asset write-offs would be required to be recognized in operating income.
Consolidation — The Company enters into transactions impacting the Company's equity interests in its affiliates. In connection with each transaction, the Company must determine whether the transaction impacts the Company's consolidation conclusion by first determining whether the transaction should be evaluated under the variable interest model or the voting model. In determining which consolidation model applies to the transaction, the Company is required to make judgments about how the entity operates, the most significant of which are whether (i) the entity has sufficient equity to finance its activities, (ii) the equity holders, as a group, have the characteristics of a controlling financial interest, and (iii) whether the entity has non-substantive voting rights.
If the entity is determined to be a variable interest entity, the most significant judgment in determining whether the Company must consolidate the entity is whether the Company, including its related parties and de facto agents, collectively have power and benefits. If AES is determined to have power and benefits, the entity will be consolidated by AES.
Alternatively, if the entity is determined to be a voting model entity, the most significant judgments involve determining whether the non-AES shareholders have substantive participating rights. The assessment of shareholder rights and whether they are substantive participating rights requires significant judgment since the rights provided under shareholders' agreements may include selecting, terminating, and setting the compensation of management responsible for implementing the subsidiary's policies and procedures, and establishing operating and capital decisions of the entity, including budgets, in the ordinary course of business. On the other hand, if shareholder rights are only protective in nature (referred to as protective rights), then such rights would not overcome the presumption that the owner of a majority voting interest shall consolidate its investee. Significant judgment is required to determine whether minority rights represent substantive participating rights or protective rights that do not affect the evaluation of control. While both represent an approval or veto right, a distinguishing factor is the underlying activity or action to which the right relates.

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Pension and Other Postretirement Plans — The Company recognizes a net asset or liability reflecting the funded status of pension and other postretirement plans with current-year changes in actuarial gains or losses recognized in AOCL, except for those plans at certain of the Company's regulated utilities that can recover portions of their pension and postretirement obligations through future rates. The valuation of the Company's benefit obligation, fair value of plan assets, and net periodic benefit costs requires various estimates and assumptions, the most significant of which include the discount rate and expected return on plan assets. These assumptions are reviewed by the Company on an annual basis. Refer to Note 1—General and Summary of Significant Accounting Policies included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information.
Revenue Recognition — The Company recognizes revenue to depict the transfer of energy, capacity, and other services to customers in an amount that reflects the consideration to which we expect to be entitled. In applying the revenue model, we determine whether the sale of energy, capacity, and other services represent a single performance obligation based on the individual market and terms of the contract. Generally, the promise to transfer energy and capacity represent a performance obligation that is satisfied over time and meets the criteria to be accounted for as a series of distinct goods or services. Progress toward satisfaction of a performance obligation is measured using output methods, such as MWhs delivered or MWs made available, and when we are entitled to consideration in an amount that corresponds directly to the value of our performance completed to date, we recognize revenue in the amount to which we have the right to invoice. For further information regarding the nature of our revenue streams and our critical accounting policies affecting revenue recognition, see Note 1—General and Summary of Significant Accounting Policies included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
Leases — The Company recognizes operating and finance right-of-use assets and lease liabilities on the Consolidated Balance Sheets for most leases with an initial term of greater than 12 months. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. Our subsidiaries’ incremental borrowing rates are used in determining the present value of lease payments when the implicit rate is not readily determinable. Certain adjustments to the right-of-use asset may be required for items such as prepayments, lease incentives, or initial direct costs. For further information regarding the nature of our leases and our critical accounting policies affecting leases, see Note 1—General and Summary of Significant Accounting Policies included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
Credit Losses — The Company uses a forward-looking "expected loss" model to recognize allowances for credit losses on trade and other receivables, held-to-maturity debt securities, loans, and other instruments. For available-for-sale debt securities with unrealized losses, the Company continues to measure impairments of available-for-sale securities as was done under previous GAAP, except that unrealized losses due to credit-related factors are now recognized as an allowance on the Consolidated Balance Sheet with a corresponding adjustment to earnings in the Consolidated Statements of Operations. For further information regarding credit losses, see Note 1—General and Summary of Significant Accounting Policies included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K.
New Accounting Pronouncements
    See Note 1—General and Summary of Significant Accounting Policies included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further information about new accounting pronouncements adopted during 2023 and accounting pronouncements issued, but not yet effective.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Overview Regarding Market Risks
Our businesses are exposed to, and proactively manage market risk. Market risk is the potential loss that may result from market changes associated with AES power generation or with existing or forecasted financial or commodity transactions. Our primary market risk exposure is to the price of commodities, particularly electricity, natural gas, coal, and environmental credits. AES is also exposed to fluctuations in interest rates and foreign currency exchange rates associated primarily with outstanding and expected future issuances and borrowing, and from investments in foreign subsidiaries and affiliates. We enter into various transactions, including derivatives, in order to hedge our exposure to these market risks.

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The disclosures presented in this Item 7A 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 Exchange Act shall apply to the disclosures contained in this Item 7A. For further information regarding market risk, see Item 1A.—Risk Factors, Fluctuations in currency exchange rates may impact our financial results and position; Wholesale power prices may experience significant volatility in our markets which could impact our operations and opportunities for future growth; We may not be adequately hedged against our exposure to changes in commodity prices or interest rates; and Certain of our businesses are sensitive to variations in weather and hydrology of this 2023 Form 10-K.
Commodity Price Risk
Although we prefer to hedge our exposure to the impact of market fluctuations in the price of commodities, some of our generation businesses operate under short-term sales, have contracted electricity obligations greater than supply, or operate under contract sales that leave an unhedged exposure on some of our capacity or through imperfect fuel pass-throughs. These businesses subject our operational results to the volatility of prices for electricity, fuels, and environmental credits in competitive markets. In addition, our businesses are exposed to lower electricity prices due to increased competition, including from renewable sources such as wind and solar, because of lower costs of entry and lower variable costs. We employ risk management strategies to hedge our financial performance against these effects. The implementation of these strategies can involve the use of physical and financial commodity contracts, futures, swaps, and options. 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. 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.
As of December 31, 2023, we project pre-tax earnings exposure on a 10% increase in commodity prices to be less than a $30 million gain for power, less than $15 million loss for gas, and less than $10 million loss for coal. The sensitivities are calculated using industry-standard valuation techniques to revalue all transactions (physical and financial commodity transactions) in the portfolio for a change in the underlying prices the transactions are exposed to and excludes correlation effects, including those due to renewable resource availability. The models reference market prices of commodities across future periods and associated volatility of these market prices. Prices and volatilities are predominantly based on observable market 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.
In the Energy Infrastructure SBU, the generation businesses are largely contracted, but may have residual risk to the extent contracts are not perfectly indexed to the business drivers. In California, our Southland once-through cooling generation units (“Legacy Assets”) in Long Beach and Huntington Beach have been extended to operate through 2026 under capacity contracts with the State as part of the Strategic Reserve program. Our facility in Redondo Beach has been retired effective January 1, 2024. Our ability to operate the Long Beach facility at full capacity through 2025 was approved under Tentative Time Schedule Order coverage in November 2023. Approval to operate Long Beach through 2026 will be subject to review with State Agencies. Our Southland combined cycle gas turbine (Southland Energy) units benefit from higher power and lower gas prices, depending on the contracted or hedge position. The AES Andes business in Chile owns assets in the central and northern regions of the country and has a portfolio of contract sales in both. A significant portion of our PPAs through 2024 include mechanisms of indexation that adjust the price of energy based on fluctuations in the price of coal, with an index defined by the National Energy Commission based on the physical coal imports for the energy system. This mechanism mitigates exposures to changes in the price of fuel. The increasing share of renewable energy in Chile's power market may reduce reliance on thermal units and impact power price volatility, which could impact our cost to serve certain unregulated PPAs. In the Dominican Republic, we own natural gas plants contracted under a portfolio of contract sales, and both contract and spot prices may move with commodity prices through 2024. Our thermal asset in Panama has PPAs with distribution companies which matches the term of the LNG supply agreement of such thermal assets. New entrants into the Panama thermal generation market could impact the dispatch of existing generation, requiring purchases in the spot market to satisfy the PPA obligations. Contract levels do not always match our generation availability or needs, and our assets may be sellers of spot prices in excess of contract levels or a net buyer in the spot market to satisfy contract obligations, which could impact existing fuel supply commitments.

112 | 2023 Annual Report

Our assets operating in Vietnam and Bulgaria have minimal exposure to commodity price risk as they have no or minor merchant exposure and fuel is subject to a pass-through mechanism.
In the Renewables SBU, our businesses have commodity exposure on unhedged volumes and resource volatility and benefit from higher power prices, where generation exceeds contracted levels. In Colombia, we operate under a shorter-term sales strategy with spot market exposure for uncontracted volumes. Because we own hydroelectric assets there, contracts are not indexed to fuel. In Brazil, the majority of the hydroelectric and other renewable generating facility volumes are 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. Our Renewables businesses in Panama are highly contracted under financial and load-following PPA type structures, exposing the business to hydrology-based variance. To the extent hydrological inflows are greater than or less than the contract 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.
Foreign Exchange Rate Risk
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 the countries in which we operate.
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 USD. Additionally, certain of our foreign subsidiaries and affiliates have entered into monetary obligations in 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, Brazilian real, Chilean peso, Colombian peso, Dominican peso, Euro, and Mexican peso. Our exposure to certain of these currencies may be material. These subsidiaries and affiliates attempt 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 foreign currency hedges to protect economic value of the business and minimize the impact of foreign exchange rate fluctuations to AES' portfolio. While protecting cash flows, the hedging strategy is also designed to reduce forward-looking earnings foreign exchange volatility. Due to variation of timing and amount between cash distributions 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.
AES has unhedged forward-looking earnings foreign exchange deterioration risk from the Argentine peso that could be material. Additionally, as of December 31, 2023, assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries in the Brazilian real, Colombian peso, and Euro, individually, may be exposed to exchange rate movement of less than a $5 million gain. These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for 2024 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 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 Risks
We are exposed to risk resulting from changes in interest rates primarily because of our current and expected future issuance of debt and borrowing.
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.

113 | 2023 Annual Report

Most of our interest rate risk is related to non-recourse financings at our businesses.
As of December 31, 2023, the portfolio’s pre-tax earnings exposure to a one-time 100-basis-point increase in interest rates for our Argentine peso, Brazilian real, Chilean peso, Colombian peso, Euro, and USD denominated debt would be less than $35 million on interest expense for the debt denominated in these currencies. These amounts represent 2024 full year exposure and do not take into account the historical correlation between these interest rates.

114 | 2023 Annual Report

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Part A — Report of Independent Registered Public Accounting Firm
Our auditors are Ernst & Young LLP, located in Tysons, Virginia. Their PCAOB ID number is 42.


115 | 2023 Annual Report




Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of The AES Corporation

Opinion on the Financial Statements

Part B — Financial Statements and Supplementary Data We have audited the accompanying consolidated balance sheets of The AES Corporation (the Company) as of December 31, 2023, and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.







116 | 2023 Annual Report

Long-lived Asset Impairments of Coal and Pet Coke-fired Generation Assets
Description of the Matter
At December 31, 2023, the Company's net property, plant and equipment was $29,958 million. As discussed in Note 1 to the consolidated financial statements, when circumstances indicate that the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, the Company evaluates the assets for potential impairment. Events or changes in circumstances that may necessitate a recoverability evaluation 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, or an expectation it is more likely than not that the asset will be disposed of before the end of its previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. As discussed in Note 22 to the consolidated financial statements, the Company recognized a total asset impairment expense of $471 million related to the Norgener, TEG, TEP, and Warrior Run asset groups, consisting of coal and pet coke generation plants included in the Energy Infrastructure SBU reportable segment in 2023.

Auditing the Company's identification of impairment indicators was complex and highly judgmental because of the many geographic, regulatory, and economic environments in which the Company operates. Also, due to the wide variety of events or changes in circumstances that may indicate that an asset group is not recoverable, auditing the Company’s identification of impairment indicators involved a high degree of subjectivity, particularly given the Company’s decarbonization initiatives and shift towards clean energy platforms. In addition, auditing the Company’s impairment analyses for Norgener, TEG, TEP, and Warrior Run asset groups was complex due to the judgmental nature of the significant assumptions used to determine the fair value of the asset groups (e.g., the Company’s projections of revenue growth, discount rates, and consideration of the industry outlook and market conditions).


How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the identification of impairment indicators and the fair value analysis of the Norgener, TEG, TEP, and Warrior Run asset groups. For example, we tested management’s monitoring controls over the evaluation of events or changes in circumstances that would require an asset to be tested for recoverability. We also tested management’s review controls of the valuation models used in the impairment analyses, the significant assumptions used to develop the estimates, and the completeness and accuracy of the data used in the valuations.

To test the Company's identification of impairment indicators, our audit procedures included, among others, making inquiries of management, including personnel in operations, to understand changes in the businesses and management’s strategic plans, and evaluate whether management has considered any identified changes in their analysis. We evaluated the results of earnings and the projected cash flows for significant coal generation assets and assessed whether there has been a deterioration in earnings or projected losses that would represent an impairment indicator. We also evaluated conditions and trends in the industry for the underlying economies, including any sale or disposition activities, and evaluated any adverse changes in the regulatory environment or the geographic areas to test the completeness and accuracy of the company's evaluation of potential impairment indicators. We also evaluated the Company’s useful life estimates, in particular for the coal and pet coke-fired generation assets with impairment indicators, considering the existing Power Purchase Agreements (PPAs) and the market for the use of these assets subsequent to the expiration of existing PPAs, based on the regulatory and market conditions.

117 | 2023 Annual Report
To test the impairment analyses for the Norgener, TEG, TEP, and Warrior Run asset groups, our audit procedures included, among others, assessing the appropriateness of valuation methodologies, testing the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends as well as historical results. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the asset groups that would result from changes in the assumptions. We also involved valuation specialists to assist in our evaluation of the overall valuation methodology and the discount rates used in the fair value estimates, as necessary.
Accounting for the Bellefield and Rexford Renewable Acquisitions
Description of the Matter
During 2023, the Company completed its acquisitions of the Bellefield solar and battery energy storage system (BESS) projects and the Rexford solar and BESS project for consideration of $358 million and $253 million, respectively, as disclosed in Note 25 to the consolidated financial statements. These transactions were accounted for as acquisitions of variable interest entities that did not meet the definition of a business.

Auditing the Company's accounting for its significant renewables acquisitions was complex due to the significant judgment made by management to determine the fair values of significant assets acquired, including project development intangible assets and construction in progress assets. The significant assumptions used included the discount rates and revenue pricing curves used in the Company’s forecasted cash flows to determine the fair value of the acquired assets. In particular, the fair value estimate was sensitive to these significant assumptions, which are affected by expectations about future market conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the accounting for these acquisitions. For example, we tested controls over the recognition and measurement of the consideration transferred and valuation of assets acquired, including management’s review of the valuation models, the significant assumptions used to develop the estimates, and the completeness and accuracy of the data used in the valuations.
To test the estimated fair value of the project development intangible assets and construction in progress, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions used by management to third-party industry and market data and to the Company’s budgets and forecasts. We also involved our internal valuation specialists to assist in our evaluation of the reasonableness of the Company’s valuation methodology, forecasted revenue assumptions, and the discount rates used in the valuations.
Allocation of Earnings to Noncontrolling Interests in Tax Equity Partnerships
Description of the Matter
A significant number of renewable projects at AES Clean Energy have been financed with tax equity structures, where the tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. When the allocation of earnings and losses, cash distributions, and tax benefits are not based on fixed ownership percentages, the Company uses the hypothetical liquidation at book value (HLBV) method to calculate the earnings attributable to noncontrolling interest for consolidated partnerships, when it is a reasonable approximation of the profit-sharing arrangement. As discussed in Note 17 to the consolidated financial statements, AES Clean Energy Development and AES Renewable Holdings sold noncontrolling interest to tax equity investors resulting in an increase of $1,163 million to noncontrolling interest in 2023.

118 | 2023 Annual Report

Auditing the allocation of earnings to noncontrolling interest holders for tax equity partnerships was complex due to the evaluation of whether a newly established HLBV model used to allocate earnings appropriately reflects the unique substantive profit-sharing terms and features within each arrangement. A greater extent of audit effort and specialized skill and knowledge was required to evaluate compliance with the contractual provisions in each partnership agreement as well as the appropriateness of the investors’ capital account balances used in the HLBV models.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s process for developing the HLBV model for new tax equity arrangements. For example, we tested management’s review of substantive profit-sharing terms and features to evaluate whether they are properly reflected in the HLBV model for new arrangements.

To test the allocation of earnings to noncontrolling interest holders for new significant tax equity partnerships, we read the related partnership agreements to understand the substantive profit-sharing provisions. We evaluated the HLBV models for consistency with the contractual provisions in the related partnership agreements and tested the capital contributions made by the tax equity investors. We involved tax subject matter professionals to assist in evaluating the calculation of the investors’ capital accounts used in the HLBV models, including the proceeds attributable to the tax equity investor due to the recognition of investment tax credits and other adjustments as required by the U.S. Internal Revenue Code. Additionally, we tested the allocation of earnings by recalculating the hypothetical liquidation in the HLBV models based on the liquidation provisions of the related partnership agreements.

/s/ Ernst & Young LLP
We have served as the Company's auditor since 2008.
Tysons, Virginia
February 26, 2024

119    

Consolidated Balance Sheets
December 31, 2023 and 2022
2023 2022
(in millions, except share and per share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,426  $ 1,374 
Restricted cash 370  536 
Short-term investments 395  730 
Accounts receivable, net of allowance of $15 and $5, respectively
 1,420  1,799 
Inventory 712  1,055 
Prepaid expenses 177  98 
Other current assets, net of allowance of $14 and $2, respectively
 1,387  1,533 
Current held-for-sale assets 762  518 
Total current assets 6,649  7,643 
NONCURRENT ASSETS
Property, Plant and Equipment:
Land 522  470 
Electric generation, distribution assets and other 30,190  26,599 
Accumulated depreciation (8,602) (8,651)
Construction in progress 7,848  4,621 
Property, plant and equipment, net 29,958  23,039 
Other Assets:
Investments in and advances to affiliates 941  952 
Debt service reserves and other deposits 194  177 
Goodwill 348  362 
Other intangible assets, net of accumulated amortization of $498 and $434, respectively
 2,243  1,841 
Deferred income taxes 396  319 
Other noncurrent assets, net of allowance of $9 and $77, respectively
 3,259  4,030 
Noncurrent held-for-sale assets 811  — 
Total other assets 8,192  7,681 
TOTAL ASSETS $ 44,799  $ 38,363 
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,199  $ 1,730 
Accrued interest 315  249 
Accrued non-income taxes 278  249 
Supplier financing arrangements
 974  662 
Accrued and other liabilities 1,334  1,489 
Recourse debt 200  — 
Non-recourse debt, including $1,080 and $416, respectively, related to variable interest entities
 3,932  1,758 
Current held-for-sale liabilities 499  354 
Total current liabilities 9,731  6,491 
NONCURRENT LIABILITIES
Recourse debt 4,264  3,894 
Non-recourse debt, including $1,715 and $2,295, respectively, related to variable interest entities
 18,482  17,846 
Deferred income taxes 1,245  1,139 
Other noncurrent liabilities 3,114  3,168 
Noncurrent held-for-sale liabilities 514  — 
Total noncurrent liabilities 27,619  26,047 
Commitments and Contingencies (see Notes 12 and 13)
Redeemable stock of subsidiaries 1,464  1,321 
EQUITY
THE AES CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and outstanding at December 31, 2023 and December 31, 2022)
 838  838 
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 819,051,591 issued and 669,693,234 outstanding at December 31, 2023 and 818,790,001 issued and 668,743,464 outstanding at December 31, 2022)
 8  8 
Additional paid-in capital 6,355  6,688 
Accumulated deficit (1,386) (1,635)
Accumulated other comprehensive loss (1,514) (1,640)
Treasury stock, at cost (149,358,357 and 150,046,537 shares, respectively)
 (1,813) (1,822)
Total AES Corporation stockholders’ equity 2,488  2,437 
NONCONTROLLING INTERESTS 3,497  2,067 
Total equity 5,985  4,504 
TOTAL LIABILITIES AND EQUITY $ 44,799  $ 38,363 
See Accompanying Notes to Consolidated Financial Statements.

120    

Consolidated Statements of Operations
Years ended December 31, 2023, 2022, and 2021
2023 2022 2021
(in millions, except per share amounts)
Revenue:
Non-Regulated $ 9,245  $ 9,079  $ 8,273 
Regulated 3,423  3,538  2,868 
Total revenue 12,668  12,617  11,141 
Cost of Sales:
Non-Regulated (7,173) (6,907) (5,982)
Regulated (2,991) (3,162) (2,448)
Total cost of sales (10,164) (10,069) (8,430)
Operating margin 2,504  2,548  2,711 
General and administrative expenses (255) (207) (166)
Interest expense (1,319) (1,117) (911)
Interest income 551  389  298 
Loss on extinguishment of debt (63) (15) (78)
Other expense (99) (68) (60)
Other income 89  102  410 
Gain (loss) on disposal and sale of business interests 134  (9) (1,683)
Goodwill impairment expense (12) (777) — 
Asset impairment expense (1,067) (763) (1,575)
Foreign currency transaction losses (359) (77) (10)
Other non-operating expense —  (175) — 
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES 104  (169) (1,064)
Income tax benefit (expense) (261) (265) 133 
Net equity in losses of affiliates (32) (71) (24)
LOSS FROM CONTINUING OPERATIONS (189) (505) (955)
Gain from disposal of discontinued businesses, net of income tax benefit (expense) of $7, $0, and $(1), respectively
 7  —  4 
NET LOSS (182) (505) (951)
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries 431  (41) 542 
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION $ 249  $ (546) $ (409)
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:
Income (loss) from continuing operations, net of tax $ 242  $ (546) $ (413)
Income from discontinued operations, net of tax 7  —  4 
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION $ 249  $ (546) $ (409)
BASIC EARNINGS PER SHARE:
Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax $ 0.36  $ (0.82) $ (0.62)
Income 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 $ 0.37  $ (0.82) $ (0.61)
DILUTED EARNINGS PER SHARE:
Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax $ 0.34  $ (0.82) $ (0.62)
Income 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 $ 0.35  $ (0.82) $ (0.61)

See Accompanying Notes to Consolidated Financial Statements.

121    

Consolidated Statements of Comprehensive Income (Loss)
Years ended December 31, 2023, 2022, and 2021
2023 2022 2021
(in millions)
NET LOSS
 $ (182) $ (505) $ (951)
Foreign currency translation activity:
Foreign currency translation adjustments, net of $0 income tax for all periods
 146  (36) (130)
Reclassification to earnings, net of $0 income tax for all periods
 —  —  3 
Total foreign currency translation adjustments 146  (36) (127)
Derivative activity:
Change in derivative fair value, net of income tax benefit (expense) of $3, $(191), and $1, respectively
 (1) 711  5 
Reclassification to earnings, net of income tax expense of $9, $9, and $105, respectively
 (73) 59  387 
Total change in fair value of derivatives (74) 770  392 
Pension activity:
Change in pension adjustments due to prior service cost, net of $0 income tax for all periods
 1  —  — 
Change in pension adjustments due to net actuarial gain (loss) for the period, net of income tax expense of $0, $5, and $10, respectively
 (4) 13  26 
Reclassification to earnings, net of income tax expense of $0, $1, and $3, respectively
 —  1  1 
Total pension adjustments (3) 14  27 
OTHER COMPREHENSIVE INCOME 69  748  292 
COMPREHENSIVE INCOME (LOSS) (113) 243  (659)
Less: Comprehensive loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries 498  (127) 438 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION $ 385  $ 116  $ (221)

See Accompanying Notes to Consolidated Financial Statements.

122    

Consolidated Statements of Changes in Equity
Years ended December 31, 2023, 2022, and 2021
THE AES CORPORATION STOCKHOLDERS
Preferred Stock Common Stock Treasury Stock Additional
Paid-In
Capital		 Accumulated
Deficit		 Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests (1)
(in millions) Shares Amount Shares Amount Shares Amount
Balance at December 31, 2020 —  $ —  818.4  $ 8  153.0  $ (1,858) $ 7,561  $ (680) $ (2,397) $ 2,086 
Net loss —  —  —  —  —  —  —  (409) —  (536)
Total foreign currency translation adjustment, net of income tax —  —  —  —  —  —  —  —  (83) (44)
Total change in derivative fair value, net of income tax —  —  —  —  —  —  —  —  247  126 
Total pension adjustments, net of income tax —  —  —  —  —  —  —  —  24  3 
Total other comprehensive income —  —  —  —  —  —  —  —  188  85 
Adjustments to redemption value of redeemable stock of subsidiaries (2)
 —  —  —  —  —  —  (4) —  —  — 
Disposition of business interests
 —  —  —  —  —  —  —  —  —  (132)
Distributions to noncontrolling interests —  —  —  —  —  —  —  —  —  (281)
Acquisitions of noncontrolling interests —  —  —  —  —  —  (9) —  (11) (4)
Contributions from noncontrolling interests —  —  —  —  —  —  —  —  —  220 
Sales to noncontrolling interests —  —  —  —  (7) —  —  180 
Issuance of preferred shares in subsidiaries —  —  —  —  —  —  —  —  —  151 
Issuance of preferred stock (3)
 1.0  838  —  —  —  —  (29) —  —  — 
Dividends declared on common stock ($0.6095/share) —  —  —  —  —  —  (406) —  —  — 
Issuance and exercise of stock-based compensation benefit plans, net of income tax —  —  0.3  —  (1.0) 13  —  —  —  — 
Balance at December 31, 2021 (3)
 1.0  $ 838  818.7  $ 8  152.0  $ (1,845) $ 7,106  $ (1,089) $ (2,220) $ 1,769 
Net income (loss) —  —  —  —  —  —  —  (546) —  128 
Total foreign currency translation adjustment, net of income tax —  —  —  —  —  —  —  —  (37) 1 
Total change in derivative fair value, net of income tax —  —  —  —  —  —  —  —  689  41 
Total pension adjustments, net of income tax —  —  —  —  —  —  —  —  10  4 
Total other comprehensive income —  —  —  —  —  —  —  —  662  46 
Distributions to noncontrolling interests —  —  —  —  —  —  —  —  —  (200)
Acquisitions of noncontrolling interests —  —  —  —  —  —  (78) —  (80) (387)
Contributions from noncontrolling interests —  —  —  —  —  —  —  —  —  178 
Sales to noncontrolling interests —  —  —  —  —  —  78  —  (2) 473 
Issuance of preferred shares in subsidiaries —  —  —  —  —  —  —  —  —  60 
Dividends declared on AES common stock ($0.6399/share)
 —  —  —  —  —  —  (428) —  —  — 
Issuance and exercise of stock-based compensation benefit plans, net of income tax —  —  0.1  —  (2.0) 23  10  —  —  — 
Balance at December 31, 2022
 1.0  $ 838  818.8  $ 8  150.0  $ (1,822) $ 6,688  $ (1,635) $ (1,640) $ 2,067 
Net income (loss) —  —  —  —  —  —  —  249  —  (372)
Total foreign currency translation adjustment, net of income tax —  —  —  —  —  —  —  —  136  9 
Total change in derivative fair value, net of income tax —  —  —  —  —  —  —  —  3  (77)
Total pension adjustments, net of income tax —  —  —  —  —  —  —  —  (3) — 
Total other comprehensive income (loss) —  —  —  —  —  —  —  —  136  (68)
Distributions to noncontrolling interests —  —  —  —  —  —  —  —  —  (261)
Acquisitions of noncontrolling interests —  —  —  —  —  —  24  —  —  (44)
Sales to noncontrolling interests —  —  —  —  —  —  85  —  (10) 1,754 
Issuance of preferred shares in subsidiaries —  —  —  —  —  —  —  —  —  421 
Dividends declared on AES common stock ($0.6702/share)
 —  —  —  —  —  —  (449) —  —  — 
Issuance and exercise of stock-based compensation benefit plans, net of income tax —  —  0.3  —  (0.6) 9  7  —  —  — 
Balance at December 31, 2023 1.0  $ 838  819.1  $ 8  149.4  $ (1,813) $ 6,355  $ (1,386) $ (1,514) $ 3,497 
(1) Excludes redeemable stock of subsidiaries. See Note 16—Redeemable Stock of Subsidiaries.
(2) Adjustment to record the redeemable stock of Colon at redemption value.
(3) Includes a $13 million reclass from Additional paid-in capital to Preferred stock to reflect the retrospective adoption of ASU 2020-06.

See Accompanying Notes to Consolidated Financial Statements.

123    

Consolidated Statements of Cash Flows
Years ended December 31, 2023, 2022, and 2021
2023 2022 2021
OPERATING ACTIVITIES: (in millions)
Net loss $ (182) $ (505) $ (951)
Adjustments to net loss:
Depreciation and amortization 1,128  1,053  1,056 
Emissions allowance expense 264  425  337 
Loss (gain) on realized/unrealized derivatives 143  127  (1)
Gain on remeasurement to acquisition date fair value —  (5) (254)
Loss (gain) on disposal and sale of business interests (134) 9  1,683 
Impairment expense 1,079  1,715  1,575 
Loss on realized/unrealized foreign currency 331  58  23 
Deferred income taxes (54) 4  (406)
Other 149  123  202 
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 161  (532) (170)
(Increase) decrease in inventory 306  (417) (93)
(Increase) decrease in prepaid expenses and other current assets 38  (40) (168)
(Increase) decrease in other assets 5  433  (285)
Increase (decrease) in accounts payable and other current liabilities (132) 470  (251)
Increase (decrease) in income tax payables, net and other tax payables (109) (51) (271)
Increase (decrease) in deferred income (2) 33  (314)
Increase (decrease) in other liabilities 43  (185) 190 
Net cash provided by operating activities 3,034  2,715  1,902 
INVESTING ACTIVITIES:
Capital expenditures (7,724) (4,551) (2,116)
Acquisitions of business interests, net of cash and restricted cash acquired (542) (243) (658)
Proceeds from the sale of business interests, net of cash and restricted cash sold 254  1  95 
Sale of short-term investments 1,318  1,049  616 
Purchase of short-term investments (937) (1,492) (519)
Contributions and loans to equity affiliates (178) (232) (427)
Affiliate repayments and returns of capital 5  149  320 
Purchase of emissions allowances (268) (488) (265)
Other investing (116) (29) (97)
Net cash used in investing activities (8,188) (5,836) (3,051)
FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities 7,103  5,424  2,802 
Repayments under the revolving credit facilities (6,285) (4,687) (2,420)
Issuance of recourse debt 1,400  200  7 
Repayments of recourse debt (500) (29) (26)
Issuance of non-recourse debt 4,521  5,788  1,644 
Repayments of non-recourse debt (2,495) (3,144) (2,012)
Payments for financing fees (142) (120) (32)
Purchases under supplier financing arrangements 1,858  1,042  91 
Repayments of obligations under supplier financing arrangements (1,491) (432) (35)
Distributions to noncontrolling interests (323) (265) (284)
Acquisitions of noncontrolling interests (127) (602) (117)
Contributions from noncontrolling interests 102  233  365 
Sales to noncontrolling interests 1,938  742  173 
Issuance of preferred shares in subsidiaries 421  60  153 
Issuance of preferred stock —  —  1,014 
Dividends paid on AES common stock (444) (422) (401)
Payments for financed capital expenditures (10) (33) (24)
Other financing (121) 3  (101)
Net cash provided by financing activities 5,405  3,758  797 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (270) (56) (46)
(Increase) decrease in cash, cash equivalents and restricted cash of held-for-sale businesses (78) 22  55 
Total increase (decrease) in cash, cash equivalents and restricted cash (97) 603  (343)
Cash, cash equivalents and restricted cash, beginning 2,087  1,484  1,827 
Cash, cash equivalents and restricted cash, ending $ 1,990  $ 2,087  $ 1,484 


124    

Consolidated Statements of Cash Flows (continued)
Years ended December 31, 2023, 2022, and 2021
2023 2022 2021
(in millions)
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of amounts capitalized $ 1,317  $ 928  $ 815 
Cash payments for income taxes, net of refunds 301  271  459 
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Initial recognition of contingent consideration for acquisitions (see Note 25) 239  24  9 
Noncash recognition of new operating and financing leases (see Note 14) 225  134  56 
Dividends declared but not yet paid 116  111  105 
Noncash contributions from noncontrolling interests 60  —  — 
Noncash contributions to equity affiliates from transfers of tax credits 52  —  — 
Notes payable issued for the acquisition of business interests (see Notes 17 and 25) —  —  258 
Noncash consideration transferred for AES Clean Energy acquisitions (see Note 25) —  —  118 
See Accompanying Notes to Consolidated Financial Statements.

125 | Notes to Consolidated Financial Statements | December 31, 2021, 2020 and 2019

Notes to Consolidated Financial Statements
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The AES Corporation is a holding company (the "Parent Company") that, through its subsidiaries and affiliates, (collectively, "AES" or "the Company") operates a geographically diversified portfolio of electricity generation and distribution businesses. Generally, the liabilities of individual operating entities are non-recourse to the Parent Company and are isolated to the operating entities. Most of our operating entities are structured as limited liability entities, which limit the liability of shareholders. The structure is generally the same regardless of whether a subsidiary is consolidated under a voting or variable interest model. The preparation of these consolidated financial statements is in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP").
PRINCIPLES OF CONSOLIDATION — The consolidated financial statements of the Company include the accounts of The AES Corporation and its controlled subsidiaries. Furthermore, VIEs in which the Company has an ownership interest and is the primary beneficiary, thus controlling the VIE, have been consolidated. Intercompany transactions and balances are eliminated in consolidation. Investments in entities where the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting.
NONCONTROLLING INTERESTS — Noncontrolling interests are classified as a separate component of equity in the Consolidated Balance Sheets and Consolidated Statements of Changes in Equity. Additionally, net income and comprehensive income attributable to noncontrolling interests are reflected separately from consolidated net income and comprehensive income on the Consolidated Statements of Operations and Consolidated Statements of Changes in Equity. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and noncontrolling interests. Losses continue to be attributed to the noncontrolling interests, even when the noncontrolling interests' basis has been reduced to zero.
Equity securities 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 Consolidated Balance Sheets. Generally, initial measurement will be at fair value. The subsequent allocation of income and dividends is classified in temporary equity. Subsequent measurement and classification 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, AES recognizes any changes from the carrying value to redemption value at each reporting period against retained earnings or additional paid-in capital in the absence of retained earnings; such adjustments are classified in temporary equity. When the equity instrument is not probable of becoming redeemable, no adjustment to the carrying value is recognized. Instruments that are mandatorily redeemable are classified as a liability.
EQUITY METHOD INVESTMENTS — Investments in entities over which the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting and reported in Investments in and advances to affiliates on the Consolidated Balance Sheets. The Company’s proportionate share of the net income or loss of these companies is included in Net equity in losses of affiliates on the Consolidated Statements of Operations.
The Company utilizes the cumulative earnings approach to determine whether distributions received from equity method investees are returns on investment or returns of investment. The Company discontinues the application of the equity method when an investment is reduced to zero and the Company is not otherwise committed to provide further financial support to the investee. The Company resumes the application of the equity method accounting to the extent that net income is greater than the share of net losses not previously recorded.
Upon acquiring the investment, we determine the fair value of the identifiable assets and assumed liabilities and the basis difference between the fair value and the carrying amount of each corresponding asset or liability in the financial statements of the investee. The AES share of the amortization of the basis difference is recognized in Net equity in losses of affiliates in the Consolidated Statements of Operations over the life of the asset or liability.
The Company periodically assesses if impairment indicators exist at our equity method investments. When an impairment is observed, any excess of the carrying amount over its estimated fair value is recognized as impairment expense when the loss in value is deemed other-than-temporary and included in Other non-operating expense in the Consolidated Statements of Operations.

126 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

BUSINESS INTERESTS — Acquisitions and disposals of business interests are generally transactions pertaining to operational legal entities, which may be accounted for as a consolidated business, an asset acquisition, or an equity method investment. Any gains or losses upon the completion of disposals, which include reclassification of cumulative translation adjustments, are recognized in Gain (loss) on disposal and sale of business interests in the Consolidated Statements of Operations upon completion of the sale.
ALLOCATION OF EARNINGS — Certain of the Company's businesses are subject to profit-sharing arrangements where the allocation of earnings and losses, cash distributions, and tax benefits are not based on fixed ownership percentages. These arrangements exist for certain U.S. renewable generation partnerships to designate different allocations of value among investors, where the allocations change in form or percentage over the life of the partnership. For these businesses, the Company uses the HLBV method when it is a reasonable approximation of the profit-sharing arrangement. The HLBV method calculates the proceeds that would be attributable to each partner based on the liquidation provisions of the respective operating partnership agreement if the partnership was to be liquidated at book value at the balance sheet date. Each partner’s share of income in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions.
The HLBV method is used both to allocate the equity earnings attributable to AES when the Company accounts for the renewable business as an equity method investment and to calculate the earnings attributable to noncontrolling interest when the business is consolidated by AES. In the early months of operations of a renewable generation facility where HLBV results in a significant decrease in the hypothetical liquidation proceeds attributable to the tax equity investor due to the recognition of ITCs or other adjustments as required by the U.S. Internal Revenue Code, the Company records the impact (sometimes referred to as the ‘Day one gain’) to income in the same period.
USE OF ESTIMATES — U.S. GAAP requires the Company to make estimates and assumptions that affect the asset and liability balances reported as of the date of the consolidated financial statements, as well as the revenues and expenses recognized during the reporting period. Actual results could differ from those estimates. Items subject to such estimates and assumptions include: estimated useful lives of long-lived assets; asset retirement obligations; impairment of goodwill, long-lived assets and equity method investments; valuation allowances for receivables and deferred tax assets; the recoverability of regulatory assets; regulatory liabilities; the fair value of financial instruments; the fair value of assets and liabilities acquired as business combinations or as asset acquisitions by variable interest entities; contingent consideration arising from business combinations or asset acquisitions by variable interest entities; the measurement of equity method investments or noncontrolling interest using the HLBV method for certain renewable generation partnerships; pension liabilities; the incremental borrowing rates used in the determination of lease liabilities; the determination of lease and non-lease components in certain generation contracts; environmental liabilities; temporary equity; and potential litigation claims and settlements.
HELD-FOR-SALE DISPOSAL GROUPS — A disposal group classified as held-for-sale is reflected on the balance sheet at the lower of its carrying amount or estimated fair value less costs to sell. A loss is recognized if the carrying amount of the disposal group exceeds its estimated fair value less costs to sell. If the fair value of the disposal group subsequently exceeds the carrying amount while the disposal group is still held-for-sale, any impairment expense previously recognized will be reversed up to the lesser of the previously recognized expense or the subsequent excess.
Assets and liabilities related to a disposal group classified as held-for-sale are segregated in the balance sheet in the period in which the disposal group is classified as held-for-sale. Assets and liabilities of held-for-sale disposal groups are classified as current when they are expected to be settled or disposed of within twelve months and as noncurrent when they are not expected to be settled or disposed of within the next twelve months. Transactions between the held-for-sale disposal group and businesses that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held-for-sale. See Note 24—Held-for-Sale and Dispositions for further information.
DISCONTINUED OPERATIONS — Discontinued operations reporting occurs only when the disposal of a business or a group of businesses represents a strategic shift that has (or will have) a major effect on the Company's operations and financial results.

127 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The Company reports financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Prior period amounts in the Consolidated Statements of Operations and Consolidated Balance Sheets are retrospectively revised to reflect the businesses determined to be discontinued operations. The cash flows of businesses that are determined to be discontinued operations are included within the relevant categories within operating, investing and financing activities on the face of the Consolidated Statements of Cash Flows.
Transactions between the businesses determined to be discontinued operations and businesses that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held-for-sale. The results of discontinued operations include any gain or loss recognized on closing or adjustment of the carrying amount to fair value less costs to sell, including gains or losses associated with noncontrolling interests upon completion of the disposal transaction. Adjustments related to components previously reported as discontinued operations under prior accounting guidance are presented as discontinued operations in the current period even if the disposed-of component to which the adjustments are related would not meet the criteria for presentation as a discontinued operation under current guidance.
FAIR VALUE — Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly, hypothetical transaction between market participants at the measurement date, or exit price. The Company applies the fair value measurement accounting guidance to financial assets and liabilities in determining the fair value of investments in marketable debt and equity securities, included in the Consolidated Balance Sheet line items Short-term investments and Other noncurrent assets; derivative assets, included in Other current assets and Other noncurrent assets; and, derivative liabilities, included in Accrued and other liabilities (current) and Other noncurrent liabilities. The Company applies the fair value measurement guidance to nonfinancial assets and liabilities upon the acquisition of a business or assets, or in conjunction with the measurement of an asset retirement obligation or a potential impairment loss on an asset group, equity method investments, or goodwill.
When determining the fair value measurements for assets and liabilities required to be reflected at their fair values, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance. The Company is prohibited from including transaction costs and any adjustments for blockage factors in determining fair value.
In determining fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. Assets and liabilities are categorized within a fair value hierarchy based upon the lowest level of input that is significant to the fair value measurement:
•Level 1: Quoted prices in active markets for identical assets or liabilities;
•Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.
Any transfers between all levels within the fair value hierarchy levels are recognized at the end of the reporting period.
CASH AND CASH EQUIVALENTS — The Company considers unrestricted cash on hand, cash balances not restricted as to withdrawal or usage, deposits in banks, certificates of deposit and short-term marketable securities with original maturities of three months or less to be cash and cash equivalents.
RESTRICTED CASH AND DEBT SERVICE RESERVES — Cash balances restricted as to withdrawal or usage, primarily via contract, are considered restricted cash.

128 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table provides a summary of cash, cash equivalents, and restricted cash amounts reported on the Consolidated Balance Sheets that reconcile to the total of such amounts as shown on the Consolidated Statements of Cash Flows (in millions):
December 31, 2023 December 31, 2022
Cash and cash equivalents $ 1,426  $ 1,374 
Restricted cash 370  536 
Debt service reserves and other deposits 194  177 
Cash, Cash Equivalents and Restricted Cash $ 1,990  $ 2,087 
INVESTMENTS IN MARKETABLE SECURITIES — The Company's marketable investments are primarily unsecured debentures, certificates of deposit, government debt securities and money market funds.
Short-term investments consist of marketable equity securities and debt securities with original maturities in excess of three months with remaining maturities of less than one year. Marketable debt securities where the Company has both the positive intent and ability to hold to maturity are classified as held-to-maturity and are carried at amortized cost, net of any allowance for credit losses in accordance with ASC 326. Remaining marketable debt securities are classified as available-for-sale or trading and are carried at fair value.
Unrealized gains or losses on available-for-sale debt securities that are not credit-related are reflected in AOCL, a separate component of equity, and the Consolidated Statements of Comprehensive Income (Loss). Any credit-related impairments are recognized as an allowance with a corresponding impact recognized as a credit loss in Other expense. Unrealized gains or losses on equity investments are reported in Other income. Interest and dividends on investments are reported in Interest income and Other income, respectively. Gains and losses on sales of investments are determined using the specific identification method.
ACCOUNTS AND NOTES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES — Accounts and notes receivable are carried at amortized cost. The Company periodically assesses the collectability of accounts receivable, considering factors such as historical collection experience, the age of accounts receivable and other currently available evidence supporting collectability, and records an allowance for credit losses for the estimated uncollectible amount as appropriate. Credit losses on accounts and notes receivable are generally recognized in Cost of Sales. Certain of our businesses charge interest on accounts receivable. Interest income is recognized on an accrual basis. When collection of such interest is not reasonably assured, interest income is recognized as cash is received. Individual accounts and notes receivable are written off when they are no longer deemed collectible.
INVENTORY — Inventory primarily consists of fuel and other raw materials used to generate power, and operational spare parts and supplies used to maintain power generation and distribution facilities. Inventory is carried at lower of cost or net realizable value. Cost is the sum of the purchase price and expenditures incurred to bring the inventory to its existing location. Inventory is primarily valued using the average cost method. Generally, if it is expected fuel inventory will not be recovered through revenue earned from power generation, an impairment is recognized to reflect the fuel at net realizable value. The carrying amount of spare parts and supplies is typically reduced only in instances where the items are considered obsolete.
LONG-LIVED ASSETS — Long-lived assets include property, plant and equipment, assets under finance leases and intangible assets subject to amortization (i.e., finite-lived intangible assets).
Property, plant and equipment — Property, plant and equipment are stated at cost, net of accumulated depreciation. The cost of renewals and improvements that extend the useful life of property, plant and equipment are capitalized.
Construction progress payments, engineering costs, insurance costs, salaries, interest and other costs directly relating to construction in progress are capitalized during the construction period, provided the completion of the construction project is deemed probable, or expensed at the time construction completion is determined to no longer be probable. The continued capitalization of such costs is subject to risks related to successful completion, including those related to government approvals, site identification, financing, construction permitting and contract compliance. Construction-in-progress balances are transferred to electric generation and distribution assets when an asset group is ready for its intended use. Government subsidies, refundable income tax credits that are accounted for as government grants, and liquidated damages recovered for construction delays are recorded as a reduction to property, plant and equipment and reflected in cash flows from investing activities. Maintenance and repairs are charged to expense as incurred.

129 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Depreciation, after consideration of salvage value and asset retirement obligations, is computed using the straight-line method over the estimated useful lives of the assets, which are determined on a composite or component basis. Capital spare parts, including rotable spare parts, are included in electric generation and distribution assets. If the spare part is considered a component, it is depreciated over its useful life after the part is placed in service. If the spare part is deemed part of a composite asset, the part is depreciated over the composite useful life even when being held as a spare part.
Certain of the Company's subsidiaries operate under concession contracts. Certain estimates are utilized to determine depreciation expense for the subsidiaries, including the useful lives of the property, plant and equipment and the amounts to be recovered at the end of the concession contract. The amounts to be recovered under these concession contracts are based on estimates that are inherently uncertain and actual amounts recovered may differ from those estimates. These concession contracts are not within the scope of ASC 853—Service Concession Arrangements.
Intangible Assets Subject to Amortization — Finite-lived intangible assets are amortized over their useful lives which range from 1 – 50 years and are included in the Consolidated Balance Sheet line item Other intangible assets. The Company accounts for purchased emission allowances as intangible assets and records an expense when they are utilized or sold. Granted emission allowances are valued at zero.
Impairment of Long-lived Assets — When circumstances indicate the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, the Company evaluates the assets for potential impairment using internal projections of undiscounted cash flows resulting from the use and eventual disposal of the assets. Events or changes in circumstances that may necessitate a recoverability evaluation 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, or an expectation it is more likely than not that the asset will be disposed of before the end of its previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment expense is recognized for the amount by which the carrying amount of the asset group exceeds its fair value (subject to the carrying amount not being reduced below fair value for any individual long-lived asset that is determinable without undue cost and effort). An impairment expense for certain assets may be reduced by the establishment of a regulatory asset if recovery through approved rates is probable.
DEBT ISSUANCE COSTS — Costs incurred in connection with the issuance of long-term debt are deferred and presented as a direct reduction from the face amount of that debt and amortized over the related financing period using the effective interest method. Debt issuance costs related to a line-of-credit or revolving credit facility are deferred and presented as an asset and amortized over the related financing period. Make-whole payments in connection with early debt retirements are classified as cash flows used in financing activities.
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS — The Company evaluates goodwill and indefinite-lived intangible assets for impairment on an annual basis and whenever events or changes in circumstances necessitate an evaluation for impairment. The Company's annual impairment testing date is October 1st.
Goodwill — Goodwill represents the excess of the purchase price of the business acquisition over the fair value of identifiable net assets acquired. Goodwill resulting from an acquisition is assigned to the reporting units that are expected to benefit from the synergies of the acquisition. Generally, each AES business with a goodwill balance constitutes a reporting unit as they are not similar to other businesses in a segment nor are they reported to segment management together with other businesses.
Goodwill is evaluated for impairment either under the qualitative assessment option or the quantitative test option to determine the fair value of the reporting unit. If goodwill is determined to be impaired, an impairment loss measured at the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill, is recorded.
Indefinite-Lived Intangible Assets — The Company's indefinite-lived intangible assets primarily include land-use rights and transmission rights. Indefinite-lived intangible assets are evaluated for impairment either under the qualitative assessment option or by performing the quantitative impairment test. If the carrying amount of an intangible asset being tested for impairment exceeds its fair value, the excess is recognized as impairment expense.

130 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES — Accounts payable consists of amounts due to trade creditors related to the Company's core business operations. These payables include amounts owed to vendors and suppliers for items such as energy purchased for resale, fuel, maintenance, inventory and other raw materials. The remaining balance of other accrued liabilities includes items such as income taxes, regulatory liabilities, legal contingencies, and employee-related costs, including payroll, and benefits.
SUPPLIER FINANCE PROGRAMS — With some purchases, the Company enters into supplier financing arrangements with the goal of securing improved payment terms. The Company confirms supplier invoices to an intermediary financial institution who will pay the supplier directly or reimburse the Company for payments made to the supplier. These arrangements are included in Supplier financing arrangements on the Consolidated Balance Sheets in Current liabilities as the amounts are all due in less than a year; the related interest expense is recorded on the Consolidated Statements of Operations within Interest expense. The company had 28 supplier financing arrangements with a total outstanding balance of $974 million as of December 31, 2023, and 46 supplier financing arrangements with a total outstanding balance of $662 million as of December 31, 2022. The agreements ranged from less than $1 million to $69 million with a weighted average interest rate of 7.51% as of December 31, 2023; as of December 31, 2022, the agreements ranged from less than $1 million to $88 million with a weighted average interest rate of 4.32%. Of the amounts outstanding under supplier financing arrangements, $814 million and $296 million were guaranteed by the Company as of December 31, 2023 and 2022, respectively.
REGULATORY ASSETS AND LIABILITIES — The Company recognizes assets and liabilities that result from regulated ratemaking processes. Regulatory assets generally represent incurred costs which have been deferred due to the probable future recovery via customer rates. Generally, returns earned on regulatory assets are reflected in the Consolidated Statements of Operations within Interest income. Regulatory liabilities generally represent obligations to refund customers. Management continually assesses whether regulatory assets are probable of future recovery and regulatory liabilities are probable of future payment by considering factors such as applicable regulatory changes, recent rate orders applicable to other regulated entities, and the status of any pending or potential deregulation legislation. If future recovery of costs previously deferred ceases to be probable, the related regulatory assets are written off and recognized in income from continuing operations.
PENSION AND OTHER POSTRETIREMENT PLANS — The Company recognizes in its Consolidated Balance Sheets an asset or liability reflecting the funded status of pension and other postretirement plans with current-year changes in actuarial gains or losses recognized in AOCL, except for those plans at certain of the Company's regulated utilities that can recover portions of their pension and postretirement obligations through future rates. All plan assets are recorded at fair value. AES follows the measurement date provisions of the accounting guidance, which require a year-end measurement date of plan assets and obligations for all defined benefit plans.
INCOME TAXES — Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities, and their respective income tax basis. The Company establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company's tax positions are evaluated under a more likely than not recognition threshold and measurement analysis before they are recognized for financial statement reporting.
Uncertain tax positions have been classified as noncurrent income tax liabilities unless expected to be paid within one year. The Company's policy for interest and penalties related to income tax exposures is to recognize interest and penalties as a component of the provision for income taxes in the Consolidated Statements of Operations.
The Company has elected to treat GILTI as an expense in the period in which the tax is accrued. Accordingly, no deferred tax assets or liabilities are recorded related to GILTI.
The Company applies the flow-through method to account for its investment tax credits.
The Company's accounting policy for releasing the income tax effects from AOCL occurs on a portfolio basis.
The Company has elected an accounting policy not to consider the effects of being subject to the corporate alternative minimum tax in future periods when assessing the realizability of our deferred tax assets, carryforwards, and tax credits. Any effect on the realization of deferred tax assets will be recognized in the period they arise.


131 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Historically, the Company has financed renewables projects with investments from tax equity investors who are allocated certain tax benefits associated with renewable energy projects (e.g. investment tax credits) through partnership agreements. The Inflation Reduction Act allows the owners of renewable energy projects to transfer tax credits directly to third parties. This provides the Company with the flexibility to obtain financing on any particular project with (i) the transfer of tax credits or (ii) investments from tax equity investors who are allocated tax benefits. The Company may also elect to retain the tax credit and use it to reduce its tax liability.
The Company accounts for tax credits that it will retain or transfer as a reduction in income tax expense by either including the expected amount of the tax credit to be claimed or the cash to be received when transferred, respectively, in the calculation of its annual effective tax rate. The estimated tax credits are updated on a quarterly basis, with the year-end calculation including only the tax credits that are associated with projects placed in service, comprising credits claimed or transferred during the year. In assessing realizability for credits to be transferred, the Company includes cash it anticipates receiving in establishing any valuation allowance and establishes a valuation allowance equal to its best estimate of any discount on the transfer. The receipt of cash from the transfer of tax credits is treated as an operating cash inflow.
ASSET RETIREMENT OBLIGATIONS — The Company records the fair value of a liability for a legal obligation to retire an asset in the period in which the obligation is incurred. When a new liability is recognized, the Company capitalizes the costs of the liability by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the obligation, the Company eliminates the liability and, based on the actual cost to retire, may incur a gain or loss.
FOREIGN CURRENCY TRANSLATION — A business's functional currency is the currency of the primary economic environment in which the business operates and is generally the currency in which the business generates and expends cash. Subsidiaries and affiliates whose functional currency is a currency other than the U.S. dollar translate their assets and liabilities into U.S. dollars at the current exchange rates in effect at the end of the fiscal period. Adjustments arising from the translation of the balance sheet of such subsidiaries are included in AOCL. The revenue and expense accounts of such subsidiaries and affiliates are translated into U.S. dollars at the average exchange rates for the period. Gains and losses on intercompany foreign currency transactions that are long-term in nature and which the Company does not intend to settle in the foreseeable future, are also recognized in AOCL. Gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in determining net income. Accumulated foreign currency translation adjustments are reclassified from AOCL to net income only when realized upon sale or upon complete or substantially complete liquidation of the investment in a foreign entity. The accumulated adjustments are included in carrying amounts in impairment assessments where the Company has committed to a plan that will cause the accumulated adjustments to be reclassified to earnings.
REVENUE RECOGNITION — Revenue is earned from the sale of electricity from our utilities, the production and sale of electricity and capacity from our generation facilities, and development and construction of generation facilities. Revenue is recognized upon the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities.
Utilities — Our utilities sell electricity directly to end-users, such as homes and businesses, and bill customers directly. The majority of our utility contracts have a single performance obligation, as the promises to transfer energy, capacity, and other distribution and/or transmission services are not distinct. Additionally, as the performance obligation is satisfied over time as energy is delivered, and the same method is used to measure progress, the performance obligation meets the criteria to be considered a series. Utility revenue is classified as regulated on the Consolidated Statements of Operations.
In exchange for the right to sell or distribute electricity in a service territory, our utility businesses are subject to government regulation. This regulation sets the framework for the prices (“tariffs”) that our utilities are allowed to charge customers for electricity. Since tariffs are determined by the regulator, the price that our utilities have the right to bill corresponds directly with the value to the customer of the utility's performance completed in each period. The Company also has some month-to-month contracts. Revenue under these contracts is recognized using an output method measured by the MWh delivered each month, which best depicts the transfer of goods or services to the customer, at the approved tariff.

132 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The Company has businesses where it sells and purchases power to and from ISOs and RTOs. Our utility businesses generally purchase power to satisfy the demand of customers that is not contracted through separate PPAs. In these instances, the Company accounts for these transactions on a net hourly basis because the transactions are settled on a net hourly basis. In limited situations, a utility customer may choose to receive generation services from a third-party provider, in which case the Company may serve as a billing agent for the provider and recognize revenue on a net basis.
Generation — Most of our generation fleet sells electricity under contracts to customers such as utilities, industrial users, and corporate clients. Our generation contracts, based on specific facts and circumstances, can have one or more performance obligations as the promise to transfer energy, capacity, and other services may or may not be distinct depending on the nature of the market and terms of the contract.
For contracts determined to have multiple performance obligations, we allocate revenue to each performance obligation based on its relative standalone selling price using a market or expected cost plus margin approach. Additionally, the Company allocates variable consideration to one or more, but not all, distinct goods or services that form part of a single performance obligation when (1) the variable consideration relates specifically to the efforts to transfer the distinct good or service and (2) the variable consideration depicts the amount to which the Company expects to be entitled in exchange for transferring the promised good or service to the customer.
If the contract is determined to contain a performance obligation related to capacity, the performance obligation is generally satisfied over time, and if we use the same method to measure progress, the performance obligations meet the criteria to be considered a series. In measuring progress toward satisfaction of a performance obligation, the Company applies the "right to invoice" practical expedient when available and recognizes revenue in the amount to which the Company has a right to consideration from a customer that corresponds directly with the value of the performance completed to date. Revenue from generation businesses is classified as non-regulated on the Consolidated Statements of Operations.
Energy performance obligations are recognized using an output method, as energy delivered best depicts the transfer of goods or services to the customer. Performance obligations to deliver energy are generally satisfied when the MW is generated. In certain contracts, if plant availability exceeds a contractual target, the Company may receive a performance bonus payment, or if the plant availability falls below a guaranteed minimum target, we may incur a non-availability penalty. Such bonuses or penalties represent a form of variable consideration and are estimated and recognized when it is probable that there will not be a significant reversal.
Certain generation contracts contain operating and sales-type leases where capacity payments are generally considered lease elements. In such cases, the allocation between the lease and non-lease elements is made at the inception of the lease following the guidance in ASC 842.
In assessing whether variable quantities are considered variable consideration or an option to acquire additional goods and services, the Company evaluates the nature of the promise and the legally enforceable rights in the contract. In some contracts, such as requirement contracts, the legally enforceable rights merely give the customer a right to purchase additional goods and services which are distinct. In these contracts, the customer's action results in a new obligation, and the variable quantities are considered an option.
When energy or capacity is sold or purchased in the spot market or to ISOs, the Company assesses the facts and circumstances to determine gross versus net presentation of spot revenues and purchases. Generally, the nature of the performance obligation is to sell surplus energy or capacity above contractual commitments, or to purchase energy or capacity to satisfy deficits. Generally, on an hourly basis, a generator is either a net seller or a net buyer in terms of the amount of energy or capacity transacted with the ISO. In these situations, the Company recognizes revenue for the hours where the generator is a net seller and cost of sales for the hours where the generator is a net buyer.
The transaction price allocated to a construction performance obligation is recognized as revenue over time as construction activity occurs, with revenue being fully recognized upon completion of construction. These contracts may include a difference in timing between revenue recognition and the collection of cash receipts, which may be collected over the term of the entire arrangement. The timing difference could result in a significant financing component for the construction performance obligation if determined to be a material component of the transaction price. The Company accounts for a significant financing component under the effective interest rate method, recognizing a long-term receivable for the expected future payments related to the construction performance obligation in the Other noncurrent assets line item on the Consolidated Balance Sheets.

133 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

As payments are collected from the customer over the term of the contract, consideration related to the construction performance obligation is bifurcated between the principal repayment of the long-term receivable and the related interest income, recognized in the Consolidated Statements of Operations.
Contract Balances — The timing of revenue recognition, billings, and cash collections results in accounts receivable and contract liabilities. Accounts receivable represent unconditional rights to consideration and consist of both billed amounts and unbilled amounts typically resulting from sales under long-term contracts when revenue recognized exceeds the amount billed to the customer. We bill both generation and utilities customers on a contractually agreed-upon schedule, typically at periodic intervals (e.g., monthly). The calculation of revenue earned but not yet billed is based on the number of days not billed in the month, the estimated amount of energy delivered during those days and the estimated average price per customer class for that month.
Our contract liabilities consist of deferred revenue which is classified as current or noncurrent based on the timing of when we expect to recognize revenue. The current portion of our contract liabilities is reported in Accrued and other liabilities and the noncurrent portion is reported in Other noncurrent liabilities on the Consolidated Balance Sheets.
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. The Company has elected to apply the optional disclosure exemptions under ASC 606. Therefore, the amount disclosed in Note 20—Revenue excludes contracts with an original length of one year or less, contracts for which we recognize revenue based on the amount we have the right to invoice for services performed, and variable consideration allocated entirely to a wholly unsatisfied performance obligation when the consideration relates specifically to our efforts to satisfy the performance obligation and depicts the amount to which we expect to be entitled. As such, consideration for energy is excluded from the amount disclosed as the variable consideration relates to the amount of energy delivered and reflects the value the Company expects to receive for the energy transferred. Estimates of revenue expected to be recognized in future periods also exclude unexercised customer options to purchase additional goods or services that do not represent material rights to the customer.
LEASES — The Company has operating and finance leases for energy production facilities, land, office space, transmission lines, vehicles and other operating equipment in which the Company is the lessee. Operating leases with an initial term of 12 months or less are not recorded on the balance sheet, but are expensed on a straight-line basis over the lease term. The Company’s leases do not contain any material residual value guarantees, restrictive covenants or subleases.
Right-of-use assets represent our right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized on commencement of the lease based on the present value of lease payments over the lease term. Generally, the rate implicit in the lease is not readily determinable; as such, we use the subsidiaries’ incremental borrowing rate based on the information available at commencement in determining the present value of lease payments. The right-of-use asset also includes any lease payments made and excludes lease incentives that are paid or payable to the lessee at commencement. The lease term includes the option to extend or terminate the lease if it is reasonably certain that the option will be exercised.
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 in which the Company is the lessor. Capacity payments 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 non-lease elements is made at the inception of the lease. Fixed lease payments from such contracts are recognized as lease revenue on a straight-line basis over the lease term, whereas variable lease payments are recognized when earned.
The Company has sales-type leases for BESS in which the Company is the lessor. These arrangements allow customers the ability to determine when to charge and discharge the BESS, representing the transfer of control and constitutes the arrangement as a sales-type lease. Upon commencement of the lease, the book value of the leased asset is removed from the balance sheet and a net investment in sales-type lease is recognized based on the present value of fixed payments under the contract and the residual value of the underlying asset.
SHARE-BASED COMPENSATION — The Company grants share-based compensation in the form of restricted stock units, performance stock units, performance cash units, and stock options. The expense is based on the grant-date fair value of the equity or liability instrument issued and is recognized on a straight-line basis over the requisite service period, net of estimated forfeitures.

134 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The Company uses a Black-Scholes option pricing model to estimate the fair value of stock options granted to its employees.
GENERAL AND ADMINISTRATIVE EXPENSES — General and administrative expenses include corporate and other expenses related to corporate staff functions and initiatives, primarily executive management, finance, legal, human resources, and information systems, which are not directly allocable to our business segments. Additionally, all costs associated with corporate business development efforts are classified as general and administrative expenses.
DERIVATIVES AND HEDGING ACTIVITIES — Under the accounting standards for derivatives and hedging, the Company recognizes all contracts that meet the definition of a derivative, except those designated as normal purchase or normal sale at inception, as either assets or liabilities in the Consolidated Balance Sheets and measures those instruments at fair value. See Note 5—Fair Value and Fair value in this section for additional discussion regarding the determination of fair value.
PPAs and fuel supply agreements are evaluated to assess if they either meet the definition of a derivative or contain an embedded derivative requiring separate valuation and accounting. When available, the Company elects the normal purchase normal sale scope exception for these contracts.
The Company typically designates its derivative instruments as cash flow hedges if they meet the criteria specified in ASC 815, Derivatives and Hedging. The Company enters into interest rate swap agreements in order to hedge the variability of expected future cash interest payments. Foreign currency derivative contracts are primarily used to reduce risks arising from variability in forecasted cash flows denominated in non-functional currencies. The objective of these contracts is to minimize the impact of foreign currency fluctuations on operating results. The Company also enters into commodity futures, swaps and options to hedge price variability inherent in forecasted purchases and sales of electricity, fuels, and other commodities. The objectives of the commodity contracts are to minimize the impact of variability in spot commodity prices and stabilize estimated revenue and expense streams. The Company does not use derivative instruments for speculative purposes.
For our cash flow hedges, changes in fair value are deferred in AOCL and are recognized into earnings as the hedged transactions affect earnings. If a derivative is no longer highly effective, hedge accounting will be discontinued prospectively. For cash flow hedges of forecasted transactions, AES estimates the future cash flows of the forecasted transactions and evaluates the probability of the occurrence and timing of such transactions.
Changes in the fair value of derivatives not designated and qualifying as accounting hedges are immediately recognized in earnings. Regardless of when gains or losses on derivatives are recognized in earnings, they are generally classified as interest expense for interest rate and cross-currency derivatives, foreign currency transaction gains or losses for foreign currency derivatives, and non-regulated revenue or non-regulated cost of sales for commodity and other derivatives. Cash flows arising from derivatives are included in the Consolidated Statements of Cash Flows as an operating activity given the nature of the underlying risk being economically hedged and the lack of significant financing elements, except that cash flows on designated and qualifying hedges of variable-rate interest during construction are classified as an investing activity. Cash payments and receipts to terminate interest rate derivatives prior to the end of their effective date are classified as an operating activity however they are excluded from the Cash payments for interest, net of amounts capitalized supplementary disclosure on the Consolidated Statements of Cash Flows. These cash receipts (payments) totaled $181 million, $239 million, and $(6) million for the years ended December 31, 2023, 2022, and 2021, respectively. The Company has elected not to offset net derivative positions in the financial statements.
CREDIT LOSSES — In accordance with ASC 326, the Company records an allowance for CECL for accounts and notes receivable, financing receivables, contract assets, net investments in leases recognized as a lessor, held-to-maturity debt securities, financial guarantees related to the non-payment of a financial obligation, and off-balance sheet credit exposures not accounted for as insurance. The CECL allowance is based on the asset's amortized cost and reflects management's expected risk of credit losses over the remaining contractual life of the asset. CECL allowances are estimated using relevant information about the collectibility of cash flows and consider information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions.
The following table represents the rollforward of the allowance for credit losses for the periods indicated (in millions):

135 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Twelve Months Ended December 31, 2023
Accounts Receivable
 Mong Duong Loan Receivable
Argentina Receivables(2)
Lease Receivable (3)
 Other Total
CECL reserve balance at beginning of period $ 3  $ 28  $ 30  $ 20  $ 2  $ 83 
Current period provision 23  —  —  —  17  40 
Write-offs charged against allowance (15) —  —  (20) —  (35)
Recoveries collected 2  (3) —  —  —  (1)
Foreign exchange 2  —  (23) —  (2) (23)
CECL reserve balance at end of period $ 15  $ 25  $ 7  $ —  $ 17  $ 64 

Twelve Months Ended December 31, 2022
Accounts Receivable (1)
 Mong Duong Loan Receivable Argentina Receivables
Lease Receivable
 Other Total
CECL reserve balance at beginning of period $ 9  $ 30  $ 23  $ —  $ 1  $ 63 
Current period provision 10  —  22  20  1  53 
Write-offs charged against allowance (19) —  —  —  —  (19)
Recoveries collected 3  (2) (1) —  —  — 
Foreign exchange —  —  (14) —  —  (14)
CECL reserve balance at end of period $ 3  $ 28  $ 30  $ 20  $ 2  $ 83 
_____________________________
(1)Excludes operating lease receivable allowances and contractual dispute allowances of $1 million as of December 31, 2022. Those reserves are not in scope under ASC 326.
(2)Increase in CECL reserve balance for regulatory receivables in Argentina.
(3)Lease receivable credit losses allowance at Southland Energy (AES Gilbert).
NEW ACCOUNTING PRONOUNCEMENTS — 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 did not have a material impact on the Company’s consolidated financial statements.
New Accounting Standards Adopted
ASU Number and Name Description Date of Adoption Effect on the financial statements upon adoption
2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers This update is to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the following: (1) recognition of an acquired contract liability, and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. Early adoption of the amendments is 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. January 1, 2023
The Company adopted this standard on a prospective basis, which is being applied to any business combinations that occur in 2023 or after. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.
2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
ASU 2022-02 amends ASC 326-20-50-6 to require public business entities to disclose gross write-offs recorded in the current period, on a year-to-date basis, by year of origination in the vintage disclosures. This disclosure should cover each of the previous five annual periods starting with the date of the financial statements and, for the annual periods before that, an aggregate total. However, upon adoption of the ASU, an entity would not provide the previous five annual periods of gross write-offs. The FASB decided that disclosure of gross write-offs would instead be applied on a prospective transition basis so that preparers can “build” the five-annual-period disclosure over time.
 January 1, 2023
The Company adopted this standard on a prospective basis and it did not have a material impact on the Company’s consolidated financial statements.

136 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

2022-04,Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations This update is to provide additional information and disclosures about an entity’s use of supplier finance programs to see how these programs will affect an entity’s working capital, liquidity, and cash flows. Entities that use supplier finance programs as the buyer party should disclose (1) the key terms of the payment terms and assets pledged as security or other forms of guarantees provided and (2) the unpaid amount outstanding, a description of where those obligations are presented on the balance sheet, and a rollforward of those obligations during the annual period. January 1, 2023, except for the rollforward information, which is effective for fiscal years beginning after December 15, 2023. The ASU only requires disclosures related to the Company's supplier finance programs and does not affect the recognition, measurement, or presentation of supplier finance program obligations on the balance sheet or cash flow statement. The Company adopted the new disclosure requirements in the first quarter of 2023, except for the annual requirement to disclose rollforward information, which the Company expects to adopt and present prospectively beginning in the 2024 annual financial statements.
2023-03, Presentation of Financial Statements (Topic 205),
Income Statement - Reporting Comprehensive Income (Topic 220),
Distinguishing Liabilities from Equity (Topic 480),
Equity (Topic 505),
and Compensation - Stock Compensation (Topic 718)		 This Accounting Standards Update amends various SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. The amendments in this Update are effective for all entities upon issuance of this Update. June 30, 2023 The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

137 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 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 Issued But Not Yet Effective
ASU Number and Name Description Date of Adoption Effect on the financial statements upon adoption
2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative
In U.S. Securities and Exchange Commission (SEC) Release No. 33-10532, Disclosure Update and Simplification, issued August 17, 2018, the SEC referred certain of its disclosure requirements that overlap with, but require incremental information to, generally accepted accounting principles (GAAP) to the FASB for potential incorporation into the Codification. The amendments in this Update are the result of the Board’s decision to incorporate into the Codification 14 of the 27 disclosures referred by the SEC.

The amendments in this Update represent changes to clarify or improve disclosure and presentation requirements of a variety of Topics. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations.
The effective date for each amendment will be the date on which the SEC's removal of that related disclosure becomes effective, with early adoption prohibited. The amendments in this Update should be applied prospectively.
The Company will provide the required disclosures on a prospective basis on the date each amendment becomes effective. The Company does not expect ASU 2023-06 will have any impact to our consolidated financial statements.
2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
The amendments in this section are designed to improve the disclosures related to Segment reporting on an interim and annual basis. Public companies must disclose significant segment expenses and an amount for other segment items. This will also require that a company disclose its annual disclosures under Topic 280 in each interim period. Furthermore, companies will need to disclose the Chief Operating Decision Maker (CODM) and how the CODM assesses the performance of a segment. Lastly, public companies that have a single reportable segment must report the required disclosures under topic 280.
The amendments in this Update are effective for fiscal years beginning after
December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024. Early adoption is permitted.
The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures
The amendments in this Update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. Furthermore, companies are required to disclose a disaggregated amount of income taxes paid at a federal, state, and foreign level as well as a break down of income taxes paid in an jurisdiction that comprises 5% of a company's total income taxes paid. Lastly, this ASU requires that companies disclose income (loss) from continuing operations before income tax at a domestic and foreign level and that companies disclose income tax expense from continuing operations on a federal, state, and foreign level.
The amendments in this Update are effective for fiscal years beginning after December 15, 2024
The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2. INVENTORY
Inventory is valued primarily using the average-cost method. The following table summarizes the Company's inventory balances as of the dates indicated (in millions):
December 31, 2023 2022
Fuel and other raw materials $ 424  $ 733 
Spare parts and supplies 288  322 
Total $ 712  $ 1,055 
3. PROPERTY, PLANT AND EQUIPMENT
The following table summarizes the components of the electric generation, distribution, and other property, plant and equipment (in millions) with their estimated useful lives (in years). The amounts are stated net of all prior asset impairment losses recognized.

138 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Estimated Useful Life December 31,
(in years) 2023 2022
Electric generation and distribution facilities
5-40
 $ 27,517  $ 24,135 
Other buildings
3-51
 1,239  1,197 
Furniture, fixtures and equipment
3-30
 397  348 
Other
1-39
 1,037  919 
Total electric generation, distribution assets and other
 30,190  26,599 
Accumulated depreciation (8,602) (8,651)
Net electric generation, distribution assets and other
 $ 21,588  $ 17,948 
The following table summarizes depreciation expense (including the amortization of assets recorded under finance leases and the amortization of asset retirement obligations) and interest capitalized during development and construction on qualifying assets for the periods indicated (in millions):
Years Ended December 31, 2023 2022 2021
Depreciation expense $ 1,045  $ 982  $ 972 
Interest capitalized during development and construction 563  224  226 
Property, plant and equipment, net of accumulated depreciation, of $9.5 billion and $8.9 billion was mortgaged, pledged or subject to liens as of December 31, 2023 and 2022, respectively, including assets classified as held-for-sale.
The following table summarizes non-regulated and regulated electric generation, distribution, and other property, plant and equipment and accumulated depreciation as of the dates indicated (in millions):
December 31, 2023 2022
Non-regulated electric generation assets and other, gross $ 20,195  $ 16,890 
Non-regulated accumulated depreciation (4,777) (4,584)
Non-regulated electric generation assets and other, net 15,418  12,306 
Regulated electric generation, distribution assets and other, gross 9,995  9,709 
Regulated accumulated depreciation (3,825) (4,067)
Regulated electric generation, distribution assets and other, net 6,170  5,642 
Net electric generation, distribution assets and other $ 21,588  $ 17,948 
4. ASSET RETIREMENT OBLIGATIONS
The following table presents amounts recognized related to asset retirement obligations for the periods indicated (in millions):
2023 2022
Balance at January 1 $ 757  $ 606 
Additional liabilities incurred 40  97 
Liabilities assumed in acquisition —  15 
Liabilities settled (14) (29)
Accretion expense 31  30 
Change in estimated cash flows (35) 35 
Other (1) 3 
Balance at December 31 $ 778  $ 757 
The Company's asset retirement obligations include active ash landfills, water treatment basins, and the removal or dismantlement of certain plants and equipment. The Company uses the cost approach to determine the initial value of ARO liabilities, which is estimated by discounting expected cash outflows to their present value using market-based rates at the initial recording of the liabilities. Cash outflows are based on the approximate future disposal costs as determined by market information, historical information or other management estimates. Subsequent downward revisions of ARO liabilities are discounted using the market-based rates that existed when the liability was initially recognized. These inputs to the fair value of the ARO liabilities are considered Level 3 inputs under the fair value hierarchy.
During the year ended December 31, 2023, the Company increased the asset retirement obligations and corresponding assets at AES Clean Energy and AES Indiana by $43 million and $34 million, respectively. This was offset by decreases at Southland Energy and AES Brasil of $51 million and $20 million, respectively. The increase at AES Clean Energy is mostly due to an upward revision of estimated cash flows as a result of a decommissioning study done in the fourth quarter of 2023, which mostly impacted the estimated cash flows related to solar assets.

139 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The increase at AES Indiana is mostly due to additional liabilities incurred due to revised remediation plans for ash ponds at Eagle Valley and AES Indiana's solar projects. The decrease at Southland Energy is mostly due to a downward revision of estimated cash flows as a result of revised quotes from vendors for the demolition of the Southland legacy units. The decrease at AES Brasil is mostly due to a downward revision of estimated cash flows at the Mandacaru, Salinas, and Cubico II wind complexes and AES Brasil solar facilities.
During the year ended December 31, 2022, the Company increased the asset retirement obligations and corresponding assets at Southland Energy, AES Clean Energy, AES Indiana, and AES Brasil by $75 million, $27 million, $27 million, and $16 million, respectively. The increase at Southland Energy is mostly due to additional liabilities incurred related to a demolition obligation at Alamitos. The increase at AES Clean Energy is mostly due to additional liabilities incurred as a result of new development projects. The increase at AES Indiana is primarily due to an upward revision of estimated cash flows at the Petersburg, Eagle Valley, and Harding Street plants. The increase at AES Brasil is primarily due to the initial recognition of asset retirement obligations as a result of the Cubico II acquisition.
5. 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.
Valuation Techniques — The fair value measurement accounting guidance describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach, (2) income approach, and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on current market expectations of the return on those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Company measures its investments and derivatives at fair value on a recurring basis. Additionally, in connection with annual or event-driven impairment evaluations, certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis. These include long-lived tangible assets (i.e., property, plant and equipment), goodwill, and intangible assets (e.g., sales concessions, land use rights and water rights, etc.). In general, the Company determines the fair value of investments and derivatives using the market approach and the income approach, respectively. In the nonrecurring measurements of nonfinancial assets and liabilities, all three approaches are considered; however, the value estimated under the income approach is often the most representative of fair value.
Investments — The Company's investments measured at fair value generally consist of marketable debt and equity securities. Equity securities are either measured at fair value using quoted market prices or based on comparisons to market data obtained for similar assets. Debt securities primarily consist of unsecured debentures and certificates of deposit held by our Brazilian subsidiaries. Returns and pricing on these instruments are generally indexed to the market interest rates in Brazil. Debt securities are measured at fair value based on comparisons to market data obtained for similar assets.
Derivatives — Derivatives are measured at fair value using quoted market prices or the income approach utilizing spot and forward benchmark interest rates, foreign exchange rates, commodity prices, volatilities and credit data, as applicable. When significant inputs are not observable, the Company uses relevant techniques to determine the inputs, such as regression analysis or prices for similarly traded instruments available in the market.
The Company's methodology to fair value its derivatives is to start with any observable inputs; however, in certain instances the published forward rates or prices may not extend through the remaining term of the contract, and management must make assumptions to extrapolate the curve, which necessitates the use of unobservable inputs, such as proxy commodity prices or historical settlements to forecast forward prices. With respect to credit inputs, in certain instances the spread that reflects the credit or nonperformance risk is unobservable, requiring the use of proxy yield curves of similar credit quality.
To determine the fair value of a derivative, cash flows are discounted using the relevant spot benchmark interest rate. The Company then makes a credit valuation adjustment ("CVA"), as applicable, by further discounting the cash flows for nonperformance or credit risk based on the observable or estimated debt spread of the Company's subsidiary or its counterparty and the tenor of the respective derivative instrument.

140 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The CVA for potential future scenarios in which the derivative is in an asset position is based on the counterparty's credit ratings, credit default swap spreads, and debt spreads, as available. The CVA for potential future scenarios in which the derivative is in a liability position is based on the Parent Company's or the subsidiary's current debt spread. In the absence of readily obtainable credit information, the Parent Company's or the subsidiary's estimated credit rating and spreads of comparably rated entities or the respective country's debt spreads are used as a proxy. All derivative instruments are analyzed individually and are subject to unique risk exposures.
The fair value hierarchy of an asset or a liability is based on the level of significance of the input assumptions. An input assumption is considered significant if it affects the fair value by at least 10%. Assets and liabilities are classified as Level 3 when the use of unobservable inputs is significant. When the use of unobservable inputs is insignificant, assets and liabilities are classified as Level 2. Transfers between Level 3 and Level 2 result from changes in significance of unobservable inputs used to calculate the CVA.
Debt — Recourse and non-recourse debt are carried at amortized cost. The fair value of recourse debt is estimated based on quoted market prices. The fair value of non-recourse debt is estimated based upon interest rates and other features of the loan. In general, the carrying amount of variable rate debt is a close approximation of its fair value. For fixed rate loans, the fair value is estimated using quoted market prices or discounted cash flow ("DCF") analyses. The fair value of recourse and non-recourse debt excludes accrued interest at the valuation date. The fair value was determined using available market information as of December 31, 2023. The Company is not aware of any factors that would significantly affect the fair value amounts subsequent to December 31, 2023.
Nonrecurring measurements — For nonrecurring measurements derived using the income approach, fair value is generally determined using valuation models based on the principles of DCF. The income approach is most often used in the impairment evaluation of long-lived tangible assets, equity method investments, goodwill, and intangible assets. Where the use of market observable data is limited or not available for certain input assumptions, the Company develops its own estimates using a variety of techniques such as regression analysis and extrapolations. Depending on the complexity of a valuation, an independent valuation firm may be engaged to assist management in the valuation process.
For nonrecurring measurements derived using the market approach, recent market transactions involving the sale of identical or similar assets are considered. The use of this approach is limited because it is often difficult to identify sale transactions of identical or similar assets. This approach is used in impairment evaluations of certain intangible assets. Otherwise, it is used to corroborate the fair value determined under the income approach.
For nonrecurring measurements derived using the cost approach, fair value is typically based upon a replacement cost approach. This approach involves a considerable amount of judgment, which is why its use is limited to the measurement of long-lived tangible assets. Like the market approach, this approach is also used to corroborate the fair value determined under the income approach.
Fair Value Considerations — In determining fair value, the Company considers the source of observable market data inputs, liquidity of the instrument, the credit risk of the counterparty, and the risk of the Company's or its counterparty's nonperformance. The conditions and criteria used to assess these factors are:
Sources of market assumptions — The Company derives most of its market assumptions from market efficient data sources (e.g., Bloomberg and Reuters). To determine fair value where market data is not readily available, management uses comparable market sources and empirical evidence to develop its own estimates of market assumptions.
Market liquidity — The Company evaluates market liquidity based on whether the financial or physical instrument, or the underlying asset, is traded in an active or inactive market. An active market exists if the prices are fully transparent to market participants, can be measured by market bid and ask quotes, the market has a relatively large proportion of trading volume as compared to the Company's current trading volume, and the market has a significant number of market participants that will allow the market to rapidly absorb the quantity of assets traded without significantly affecting the market price. Another factor the Company considers when determining whether a market is active or inactive is the presence of government or regulatory controls over pricing that could make it difficult to establish a market-based price when entering into a transaction.
Nonperformance risk — Nonperformance risk refers to the risk that an obligation will not be fulfilled and affects the value at which a liability is transferred or an asset is sold.

141 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Nonperformance risk includes, but may not be limited to, the Company's or its counterparty's credit and settlement risk. Nonperformance risk adjustments are dependent on credit spreads, letters of credit, collateral, other arrangements available, and the nature of master netting arrangements. The Company is party to various interest rate swaps and options, foreign currency options and forwards, and derivatives and embedded derivatives, which subject the Company to nonperformance risk. The financial and physical instruments held at the subsidiary level are generally non-recourse to the Parent Company.
Nonperformance risk on the investments held by the Company is incorporated in the fair value derived from quoted market data to mark the investments to fair value.
Recurring Measurements — The following table presents, by level within the fair value hierarchy as described in Note 1—General and Summary of Significant Accounting Policies, 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:
  December 31, 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 $ —  $ 360  $ —  $ 360  $ —  $ 698  $ —  $ 698 
Government debt securities —  —  —  —  —  3  —  3 
Total debt securities —  360  —  360  —  701  —  701 
EQUITY SECURITIES:
Mutual funds 46  —  —  46  38  —  —  38 
Total equity securities 46  —  —  46  38  —  —  38 
DERIVATIVES:
Interest rate derivatives —  182  2  184  —  314  —  314 
Foreign currency derivatives —  15  59  74  —  22  64  86 
Commodity derivatives —  127  1  128  —  232  13  245 
Total derivatives — assets —  324  62  386  —  568  77  645 
TOTAL ASSETS $ 46  $ 684  $ 62  $ 792  $ 38  $ 1,269  $ 77  $ 1,384 
Liabilities
Contingent consideration
 $ —  $ —  $ 165  $ 165  $ —  $ —  $ 48  $ 48 
DERIVATIVES:
Interest rate derivatives —  102  6  108  —  6  —  6 
Cross-currency derivatives —  63  —  63  —  42  —  42 
Foreign currency derivatives —  19  —  19  —  20  —  20 
Commodity derivatives —  145  111  256  —  346  60  406 
Total derivatives — liabilities —  329  117  446  —  414  60  474 
TOTAL LIABILITIES $ —  $ 329  $ 282  $ 611  $ —  $ 414  $ 108  $ 522 
As of December 31, 2023, all available-for-sale debt securities had stated maturities within one year. For the years ended December 31, 2023 and 2022, no impairments of marketable securities were recognized in earnings or other comprehensive income (loss). Gains and losses on the sale of investments are determined using the specific-identification method. The following table presents gross proceeds from sale of available-for-sale securities for the periods indicated (in millions):
Year Ended December 31, 2023 2022 2021
Gross proceeds from sale of available-for-sale securities
 $ 1,377  $ 1,065  $ 578 
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 years ended December 31, 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.

142 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Derivative Assets and Liabilities
Year Ended December 31, 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 —  16  (10) 14  20 
Included in other comprehensive income — derivative activity 1  6  (48) —  (41)
Included in regulatory (assets) liabilities —  —  (1) —  (1)
Acquisitions
 —  —  —  (239) (239)
Settlements (1) (27) (5) 108  75 
Transfers of assets/(liabilities), net into Level 3 (4) —  —  —  (4)
Transfers of (assets)/liabilities, net out of Level 3 —  —  1  —  1 
Balance at December 31 $ (4) $ 59  $ (110) $ (165) $ (220)
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) $ (13) $ 14  $ (3)
Derivative Assets and Liabilities
Year Ended December 31, 2022 Interest Rate Foreign Currency Commodity Contingent Consideration Total
Balance at January 1 $ (6) $ 108  $ (1) $ (67) $ 34 
Total realized and unrealized gains (losses):
Included in earnings 4  (26) —  3  (19)
Included in other comprehensive income — derivative activity 15  (6) (54) —  (45)
Included in other comprehensive income — foreign currency translation activity —  —  —  (2) (2)
Included in regulatory (assets) liabilities —  —  8  —  8 
Acquisitions
 —  —  —  (24) (24)
Settlements (2) (12) 2  42  30 
Transfers of assets/(liabilities), net into Level 3 (1) —  —  —  (1)
Transfers of (assets)/liabilities, net out of Level 3 (10) —  (2) —  (12)
Balance at December 31 $ —  $ 64  $ (47) $ (48) $ (31)
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  $ (34) $ 5  $ 3  $ (23)
The following table summarizes the significant unobservable inputs used for the Level 3 derivative assets (liabilities) as of December 31, 2023 (in millions, except range amounts):
Type of Derivative Fair Value Unobservable Input
Amount or Range
(Weighted Average)
Interest rate $ (4) Subsidiary credit spread
0.4% - 3.3% (1.9%)
Foreign currency:
Argentine peso 59  Argentine peso to USD currency exchange rate after one year
1,421 - 2,226 (1,879)
Commodity:
CAISO Energy Swap (107) Forward energy prices per MWh after 2030
$13.13 - $121.53 ($63.51)
Other (3)
Total $ (55)
For the Argentine peso foreign currency derivatives, increases (decreases) in the estimate of the above exchange rate would increase (decrease) the value of the derivative. For the CAISO Energy Swap, increases (decreases) in the estimate above would decrease (increase) 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.

143 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

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. 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):
Year Ended December 31, 2023 Measurement Date
Carrying Amount (1)
 Fair Value
Pre-tax
Loss
Assets Level 1 Level 2 Level 3
Long-lived asset groups held and used: (2)
Norgener (3)
 5/1/2023 $ 196  $ —  $ —  $ 24  $ 137 
GAF Projects (AES Renewable Holdings) 5/31/2023 29  —  —  11  18 
TEG 7/31/2023 170  —  —  93  77 
TEP 7/31/2023 153  —  —  94  59 
New York Wind 11/30/2023 310  —  —  124  186 
Warrior Run (4)
 11/30/2023 250  —  —  25  198 
Held-for-sale businesses: (5)
Jordan (6)
 3/31/2023 $ 179  $ —  $ 170  $ —  $ 14 
Jordan (6)
 6/30/2023 179  —  170  —  15 
Jordan (6)
 9/30/2023 178  —  170  —  14 
Jordan (6)
 12/31/2023 180  —  170  —  16 
Mong Duong (7)
12/31/2023 575  —  413  —  167 
Goodwill: (8)
TEG TEP 10/1/2023 $ 12  $ —  $ —  $ —  $ 12 
Year Ended December 31, 2022 Measurement Date
Carrying Amount (1)
 Fair Value
Pre-tax
Loss
Assets Level 1 Level 2 Level 3
Long-lived asset groups held and used: (2)
Maritza 4/30/2022 $ 920  $ —  $ —  $ 452  $ 468 
TEG 10/1/2022 268  —  —  164  104 
TEP 10/1/2022 236  —  —  147  89 
Held-for-sale businesses: (5)
Jordan (6)
 9/30/2022 $ 216  $ —  $ 170  $ —  $ 51 
Jordan (6)
 12/31/2022 190  170  25 
Goodwill: (8)
AES Andes 10/1/2022 $ 644  $ —  $ —  $ —  $ 644 
AES El Salvador 10/1/2022 133  —  —  —  133 
Equity method investments: (9)
sPower 12/31/2022 $ 607  $ —  $ —  $ 432  $ 175 
_____________________________
(1)Represents the carrying values at the dates of initial measurement, before fair value adjustment.
(2)See Note 22—Asset Impairment Expense for further information. Per ASC 360-10, the pre-tax impairment expense for long-lived asset groups held and used is limited to the carrying amount of the long-lived assets.
(3)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. 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.
(4)The Warrior Run asset group includes long-lived assets, inventory, 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. The Company evaluated the carrying amount of the assets outside the scope of ASC 360-10 and recognized an inventory impairment of $6 million in Other expense. See Note 21—Other Income and Expense for further information.
(5)See Note 24—Held-for-Sale and Dispositions for further information.
(6)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 for the September 30, 2022, December 31, 2022, and March 31, 2023 measurement dates and $6 million for the June 30, 2023, September 30, 2023 and December 31, 2023 measurement dates.
(7)The pre-tax loss recognized was calculated using the $413 million fair value of the Mong Duong disposal group less costs to sell of $5 million.
(8)See Note 9—Goodwill and Other Intangible Assets for further information.
(9)See Note 8—Investments in and Advances to Affiliates for further information.
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 presumed 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 $151 million of pre-tax asset impairment expense in 2023, including $137 million during the fourth quarter, primarily related to the write-off of project development intangibles which were recognized at fair value when the Company acquired sPower's development platform as part of the formation of AES Clean Energy Development. See Note 22—Asset Impairment Expense for further information.

144 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table summarizes the significant unobservable inputs used in the Level 3 measurement of long-lived asset groups held and used measured on a nonrecurring basis during the year ended December 31, 2023 (in millions, except range amounts):
December 31, 2023 Fair Value Valuation Technique Unobservable Input Range (Weighted Average)
Long-lived asset groups held and used:
New York Wind $ 124  Discounted cash flow Annual revenue growth
(1)% to 5% (2%)
Annual variable margin
2% to 17% (9%)
TEP 94  Discounted cash flow Annual revenue growth
(31)% to 6% (-2%)
Annual variable margin
22% to 37% (26%)
Discount rate
14% to 25% (14%)
TEG 93  Discounted cash flow Annual revenue growth
(7)% to 9% (0%)
Annual variable margin
14% to 33% (20%)
Discount rate
14% to 25% (14%)
Warrior Run (1)
 25  Discounted cash flow Annual variable margin
(931)% to 74% (-506%)
Norgener (2)
 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%)
Discount rate
9%
Total $ 371 
_____________________________
(1)The fair value of the Warrior Run asset group is mainly related to cash on hand and existing coal inventory not subject to impairment under ASC 360-10, and is partially reduced by expected decommissioning and demolition costs.
(2)The fair value of the Norgener asset group subsequent to the impairment analysis performed on May 1, 2023 was mainly related to existing coal inventory not subject to impairment under ASC 360-10. In December 2023, the Company recognized an inventory impairment of $23 million in Other expense. See Note 21—Other Income and Expense for further information.
Financial Instruments not Measured at Fair Value in the 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 Consolidated Balance Sheets as of the periods indicated, but for which fair value is disclosed:
December 31, 2023
Carrying
Amount
 Fair Value
Total Level 1 Level 2 Level 3
Assets:
Accounts receivable — noncurrent
 $ 193  $ 239  $ —  $ —  $ 239 
Liabilities: Non-recourse debt 22,144  22,174  —  20,676  1,498 
Recourse debt 4,464  4,210  —  4,210  — 
December 31, 2022
Carrying
Amount
 Fair Value
Total Level 1 Level 2 Level 3
Assets:
Accounts receivable — noncurrent (1)
 $ 301  $ 340  $ —  $ —  $ 340 
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 Fund enacted by the Chilean government. These amounts are included in Other noncurrent assets in the accompanying Consolidated Balance Sheets. See Note 7—Financing Receivables for further information.

145 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Volume of Activity — The following table presents the Company's maximum notional (in millions) over the remaining contractual period by type of derivative as of December 31, 2023, and the dates through which the maturities for each type of derivative range:
Interest Rate and Foreign Currency Derivatives Maximum Notional Translated to USD Latest Maturity
Interest rate
 $ 7,738  2059
Cross-currency swaps (Brazilian Reais) 404  2026
Foreign currency:
Chilean peso 216  2026
Euro 110  2026
Mexican peso 75  2024
Brazilian real 32  2026
Colombian peso 25  2025
Argentine peso 1  2026
Commodity Derivatives Maximum Notional Latest Maturity
Natural Gas (in MMBtu) 177  2029
Power (in MWhs) 23  2040
Coal (in Metric Tonnes)
 4  2027
Accounting and Reporting — Assets and Liabilities — The following tables present the fair value of the Company's derivative assets and liabilities as of the periods indicated (in millions):
Fair Value December 31, 2023 December 31, 2022
Assets Designated Not Designated Total Designated Not Designated Total
Interest rate derivatives $ 184  $ —  $ 184  $ 313  $ 1  $ 314 
Foreign currency derivatives 23  51  74  27  59  86 
Commodity derivatives —  128  128  —  245  245 
Total assets $ 207  $ 179  $ 386  $ 340  $ 305  $ 645 
Liabilities
Interest rate derivatives $ 108  $ —  $ 108  $ 6  $ —  $ 6 
Cross-currency derivatives 63  —  63  42  —  42 
Foreign currency derivatives 5  14  19  9  11  20 
Commodity derivatives 107  149  256  59  347  406 
Total liabilities $ 283  $ 163  $ 446  $ 116  $ 358  $ 474 

December 31, 2023 December 31, 2022
Fair Value Assets Liabilities Assets Liabilities
Current $ 216  $ 152  $ 271  $ 168 
Noncurrent 170  294  374  306 
Total $ 386  $ 446  $ 645  $ 474 

Credit Risk-Related Contingent Features December 31, 2023 December 31, 2022
Net position of derivatives subject to collateralization
 $ (4) $ 104 
Cash collateral held by third parties or in escrow 104  42 

146 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Earnings and Other Comprehensive Income (Loss) — The following table presents the pre-tax gains (losses) recognized in AOCL and earnings related to all derivative instruments for the periods indicated (in millions):
Years Ended December 31,
2023 2022 2021
Cash flow hedges
Gains (losses) recognized in AOCL
Interest rate derivatives $ 42  $ 869  $ 51 
Cross-currency derivatives —  —  (11)
Foreign currency derivatives 2  17  (34)
Commodity derivatives (48) 16  (1)
Total $ (4) $ 902  $ 5 
Gains (losses) reclassified from AOCL to earnings
Interest rate derivatives $ 51  $ (72) $ (419)
Cross-currency derivatives —  —  (15)
Foreign currency derivatives (4) 2  (62)
Commodity derivatives 17  2  4 
Total $ 64  $ (68) $ (492)
Gains (losses) on fair value hedging relationships
Cross-currency derivatives
Derivatives designated as hedging instruments $ (72) $ (35) $ (6)
Hedged items 58  26  4 
Total $ (14) $ (9) $ (2)
Loss reclassified from AOCL to earnings due to impairment of assets $ —  $ (16) $ — 
Gains reclassified from AOCL to earnings due to change in forecast
 $ 14  $ 26  $ — 
Gain (losses) recognized in earnings related to
Not designated as hedging instruments:
Interest rate derivatives $ (7) $ 4  $ 105 
Foreign currency derivatives 19  21  29 
Commodity derivatives and other 261  (43) (28)
Total $ 273  $ (18) $ 106 
Reclassifications from AOCL to earnings are forecasted to increase pre-tax income from continuing operations by $36 million for the twelve months ended December 31, 2024, primarily related to interest rate derivatives.
7. FINANCING RECEIVABLES
Receivables with contractual maturities of greater than one year are considered financing receivables. The following table presents financing receivables by country as of the dates indicated (in millions).
December 31, 2023 December 31, 2022
Gross Receivable Allowance Net Receivable Gross Receivable Allowance Net Receivable
U.S.
 $ 149  $ —  $ 149  $ 46  $ —  $ 46 
Chile 33  —  33  239  —  239 
Other
 11  —  11  18  —  18 
Total $ 193  $ —  $ 193  $ 303  $ —  $ 303 
U.S. — During this period, AES has recorded non-current receivables pertaining to the sale of the Redondo Beach land and the Warrior Run PPA termination agreement. The anticipated collection period extends beyond December 31, 2024. See Note 20—Revenue for further details regarding the Warrior Run PPA termination agreement.
Chile — AES Andes has recorded receivables pertaining to revenues recognized on regulated energy contracts that were impacted by the Stabilization Funds created by the Chilean government in October 2019 and August 2022, in conjunction with the Tariff Stabilization Laws. Historically, the government updated the prices for these contracts every six months to reflect the contracts' indexation to exchange rates and commodities prices. The Tariff Stabilization Laws do 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 to supply regulated contracts. Consequently, costs incurred in excess of the July 1, 2019 price are accumulated and borne by generators. Through different programs, AES Andes aims to reduce its exposure and has already sold a significant portion of the receivables accumulated as of December 31, 2023.


147 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

On August 14, 2023, AES Andes executed an agreement aiming for the sale of up to $227 million of receivables pursuant to the Stabilization Funds, of which $131 million was sold and collected as of December 31, 2023. Through different agreements and programs, as of December 31, 2023, $17 million of current receivables and $8 million of noncurrent receivables were recorded in Accounts receivable and Other noncurrent assets, respectively. Additionally, $25 million of payment deferrals granted to mining customers as part of our green blend agreements were recorded as financing receivables included in Other noncurrent assets at December 31, 2023.
8. INVESTMENTS IN AND ADVANCES TO AFFILIATES
The following table summarizes the relevant effective equity ownership interest and carrying values for the Company's investments accounted for under the equity method as of the periods indicated:
December 31, 2023 2022 2023 2022
Affiliate Country Carrying Value (in millions) Ownership Interest %
sPower (1)
 United States $ 423  $ 432  50  % 50  %
Fluence United States 148  205  29  % 34  %
Grupo Energía Gas Panamá (2)
 Panama 114  82  24  % 49  %
Uplight (3)
 United States 86  81  29  % 29  %
Energía Natural Dominicana Enadom (4)
 Dominican Republic 77  64  33  % 43  %
Mesa La Paz Mexico 42  32  50  % 50  %
Other affiliates (5)
 Various 51  56 
Total $ 941  $ 952 
_____________________________
(1)The Company owns 50% of sPower, LLC and accounts for its investment as an equity method investment. Furthermore, there are two specific portfolios of operating solar and wind assets, OpCo A and OpCo B, in which sPower, LLC owns 51%, resulting in an AES effective ownership of approximately 26% in these portfolios.
(2)The Company's ownership in Grupo Energía Gas Panamá is held through AES Panama, a 49%-owned consolidated subsidiary. AES Panama owns 49% of Grupo Energía Gas Panamá, resulting in an AES effective ownership of 24%.
(3)On February 9, 2024, the Company's equity interest was diluted to approximately 25% as a result of Uplight's acquisition of AutoGrid, a market leader in the fast-growing Virtual Power Plant ("VPP") space.
(4)The Company's ownership in Energía Natural Dominicana Enadom is held through Andres, a 65%-owned consolidated subsidiary. Andres owns 50% of Energía Natural Dominicana Enadom, resulting in an AES effective ownership of 33%. See Note 17—Equity for further information regarding the selldown of AES Dominicana in December 2023.
(5)Includes Bosforo, Tucano, Barry, Alto Maipo, and various other equity method investments. Barry and Alto Maipo represent VIEs in which the Company holds a variable interest but is not the primary beneficiary.
Fluence — In December 2023, the Company redeemed 7,087,500 common units of Fluence Energy, LLC. Fluence Energy, Inc. settled this redemption through the issuance of an equivalent number of shares of its Class A common stock. In conjunction with this redemption, the Company executed a public sale of the Class A shares, resulting in proceeds received of $156 million, after expenses, and a pre-tax gain on sale of $136 million, recorded in Gain (loss) on disposal and sale of business interests. As a result of this transaction, AES' ownership interest decreased from 33% to 29%. As the Company still does not control but has significant influence over Fluence after the transaction, it continues to be accounted for as an equity method investment. Fluence is reported in the New Energy Technologies SBU reportable segment.
Grupo Energía Gas Panamá — In September 2023, AES Latin America completed the sale of its interest in Grupo Energía Gas Panamá, a joint venture formed for the Gatun combined cycle natural gas development project, to AES Panama, a 49%-owned consolidated subsidiary. As a result of the transaction, the Company’s effective ownership in Grupo Energía Gas Panamá decreased from 49% to approximately 24%. As the Company still does not control the investment after this transaction, it continues to be accounted for as an equity method investment and is reported in the Energy Infrastructure SBU reportable segment.
sPower — In December 2022, the Company agreed to sell 49% of its indirect interest in a portfolio of sPower's operating assets ("OpCo B"). At the time the purchase and sale agreement was signed, a loss was expected upon closing the transaction. The expected loss on sale was identified as a triggering event and the Company evaluated whether its investment in sPower was other-than-temporarily impaired. Based on management’s estimate of fair value of $432 million, the Company recognized an other-than-temporary impairment of $175 million in Other non-operating expense in December 2022.
sPower primarily holds operating assets where the tax credits associated with underlying projects have already been allocated to tax equity investors. The application of HLBV accounting increases the carrying value of these investments, as earnings are initially disproportionately allocated to the sponsor entity. Since sPower does not have any ongoing development or other value creation activities following the transfer of these activities to AES Clean Energy Development, the impairment adjusts the carrying value to the fair market value of the operating assets.

148 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

On February 28, 2023, sPower closed on the sale for $196 million. As a result of the transaction, the Company received $98 million in sales proceeds and recorded a pre-tax gain on sale of $5 million, recorded in Gain (loss) on disposal and sale of business interests. After the sale, the Company's ownership interest in OpCo B decreased from 50% to approximately 26%. As the Company still does not control but has significant influence over sPower after the transaction, it continues to be accounted for as an equity method investment. sPower is reported in the Renewables SBU reportable segment.
Alto Maipo — In May 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 as management believes this approach will better reflect the economics of its equity interest. As of December 31, 2023, the fair value is insignificant. Alto Maipo is reported in the Energy Infrastructure SBU reportable segment.
Barry — The Company holds a 100% ownership interest in AES Barry Ltd. ("Barry"), a dormant entity in the U.K. that disposed of its generation and other operating assets. Due to a debt agreement, no material financial or operating decisions can be made without the banks' consent, and the Company does not control Barry. As of December 31, 2023 and 2022, other long-term liabilities included $41 million and $39 million, respectively, related to this debt agreement. Barry is reported in the Energy Infrastructure SBU reportable segment.
Summarized Financial Information — The following tables summarize 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
Majority-Owned Unconsolidated Subsidiaries(1)
Years ended December 31, 2023 2022 2021 2023 2022 2021
Revenue $ 2,905  $ 1,780  $ 1,316  $ 1  $ 1  $ 1 
Operating loss
 (28) (361) (53) (1) (1) (1)
Net loss
 (182) (527) (242) (1) —  (3)
Net loss attributable to affiliates
 (157) (405) (40) (1) —  (3)
December 31, 2023 2022   2023 2022  
Current assets $ 1,759  $ 2,223  $ 117  $ 125 
Noncurrent assets 7,569  7,522  533  643 
Current liabilities 1,638  1,931  114  118 
Noncurrent liabilities 4,085  4,040  572  677 
Stockholders' equity 2,318  2,978  (30) (26)
Noncontrolling interests 1,287  796  (6) (1)
_____________________________
(1)The summarized financial information of Alto Maipo is not included in the table above as the Company is not the primary beneficiary, the fair value of the investment is insignificant, and the investment in Alto Maipo is not material to the financial results of the Company.
At December 31, 2023, retained earnings included $325 million related to the undistributed losses of the Company's 50%-or-less owned affiliates. Dividends received from these affiliates were $5 million, $47 million, and $25 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, the aggregate carrying amount of our investments in equity affiliates exceeded the underlying equity in the net assets of our equity affiliates by $118 million.

149 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill — The following table summarizes the carrying amount of goodwill by reportable segment for the years ended December 31, 2023 and 2022 (in millions):
Renewables SBU
Utilities SBU
Energy Infrastructure SBU
New Energy Technologies SBU
 Total
Balance as of December 31, 2022
Goodwill $ 355  $ 2,709  $ 683  $ 3  $ 3,750 
Accumulated impairment losses (35) (2,709) (644) —  (3,388)
Net balance 320  —  39  3  362 
Impairment losses —  —  (12) —  (12)
Goodwill derecognized during the year (2) —  —  —  (2)
Balance as of December 31, 2023
Goodwill 353  2,709  683  3  3,748 
Accumulated impairment losses (35) (2,709) (656) —  (3,400)
Net balance $ 318  $ —  $ 27  $ 3  $ 348 
TEG TEP — During the fourth quarter of 2023, the Company performed the goodwill impairment test for the TEG TEP reporting unit. The fair value of the reporting unit was determined under the income approach using a discounted cash flow valuation model. The estimated fair value was less than its carrying amount and as a result the Company recognized impairment expense of $12 million, reducing the goodwill balance of TEG TEP to zero. The decrease in fair value since the date of our last impairment test on July 31, 2023 was primarily driven by an increase in the discount rate due to increasing risk of non-renewal of operating permits required to operate after March 31, 2024. In February 2024, the Mexican Comision Reguladora de Energia (“CRE”) rejected TEG's request to transition to the new energy regime and renew its operating permits. This request was denied on the basis of a lawsuit concerning the electricity law that has been withdrawn. TEG has subsequently reiterated with the agency the lawsuit has been withdrawn and has formally requested that CRE issue a new permit. TEG and TEP are reported in the Energy Infrastructure SBU reportable segment.
AES Andes — During the fourth quarter of 2022, the Company performed the annual goodwill impairment test for the AES Andes reporting unit. The fair value of the reporting unit was determined under the income approach using a discounted cash flow valuation model. The estimated fair value was less than its carrying amount and as a result the Company recognized impairment expense of $644 million, reducing the goodwill balance of AES Andes to zero. The decrease in fair value since the date of our last impairment test was primarily driven by a higher discount rate resulting from increased interest rates and country risk premiums, as well as a decrease in forecasted energy prices and other unfavorable macroeconomic assumptions in Colombia. AES Andes is reported in the Energy Infrastructure SBU reportable segment.
AES El Salvador — During the fourth quarter of 2022, the Company performed the annual goodwill impairment test for the El Salvador reporting unit. The Company performed a quantitative impairment test and utilized the income approach. The estimated fair value was less than its carrying amount and as a result the Company recognized goodwill impairment expense of $133 million, reducing the goodwill balance of AES El Salvador to zero. Since the date of our last impairment test in 2021, the Company has seen market participants substantially increase return expectations for the perceived country risk for El Salvador. The impact of the increase has substantially increased our discount rate, resulting in a full impairment. AES El Salvador is reported in the Utilities SBU reportable segment.

Other Intangible Assets — The following table summarizes the balances comprising Other intangible assets in the accompanying Consolidated Balance Sheets (in millions) as of the periods indicated:

150 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

December 31, 2023 December 31, 2022
Gross Balance Accumulated Amortization Net Balance Gross Balance Accumulated Amortization Net Balance
Subject to Amortization
Internal-use software $ 696  $ (324) $ 372  $ 582  $ (307) $ 275 
Contracts 337  (37) 300  342  (40) 302 
Project development rights (1)
 1,222  (43) 1,179  991  (17) 974 
Emissions allowances (2)
50  —  50  37  —  37 
Concession rights 222  (71) 151  207  (50) 157 
Land use rights 119  (3) 116  20  (1) 19 
Other (3)
45  (20) 25  37  (19) 18 
Subtotal 2,691  (498) 2,193  2,216  (434) 1,782 
Indefinite-Lived Intangible Assets
Land use rights 22  —  22  42  —  42 
Transmission rights 20  —  20  16  —  16 
Other 8  —  8  1  —  1 
Subtotal 50  —  50  59  —  59 
Total $ 2,741  $ (498) $ 2,243  $ 2,275  $ (434) $ 1,841 
_____________________________
(1)Includes emission offset fee to the Air Quality Management District ("AQMD") in order to transfer emission offsets from retired legacy Southland units to the new CCGT.
(2)Acquired or purchased emissions allowances are finite-lived intangible assets that are expensed when utilized and included in net income for the year.
(3)Includes management rights, renewable energy credits and incentives, and other individually insignificant intangible assets.
The following tables summarize other intangible assets acquired during the periods indicated (in millions):
December 31, 2023 Amount Subject to Amortization/Indefinite-Lived Weighted Average Amortization Period (in years) Amortization Method
Internal-use software $ 159  Subject to Amortization 15 Straight-line
Contracts 12  Subject to Amortization 21 Straight-line
Project development rights 242  Subject to Amortization 39 Straight-line
Emissions allowances 23  Subject to Amortization Various As utilized
Land use rights 91  Various N/A Various
Other 9  Various N/A N/A
Total $ 536 
December 31, 2022 Amount Subject to Amortization/Indefinite-Lived Weighted Average Amortization Period (in years) Amortization Method
Internal-use software $ 136  Subject to Amortization 14 Straight-line
Contracts 196  Subject to Amortization 23 Straight-line
Project development rights 67  Subject to Amortization 4 Straight-line
Emissions allowances 35  Subject to Amortization Various As utilized
Land use rights 13  Indefinite-Lived N/A N/A
Other 1  Subject to Amortization N/A N/A
Total $ 448 
The following table summarizes the estimated amortization expense by intangible asset category for 2024 through 2028:
(in millions) 2024 2025 2026 2027 2028
Internal-use software $ 42  $ 39  $ 37  $ 34  $ 34 
Contracts 21  17  17  17  17 
Concession rights 17  17  17  17  17 
Project development rights 10  10  12  12  12 
Other 2  6  6  4  5 
Total $ 92  $ 89  $ 89  $ 84  $ 85 
Intangible asset amortization expense was $82 million, $71 million and $69 million for the years ended December 31, 2023, 2022 and 2021, respectively.

151 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

10. REGULATORY ASSETS AND LIABILITIES
The Company has recorded regulatory assets and liabilities (in millions) that it expects to pass through to its customers in accordance with, and subject to, regulatory provisions as follows:
December 31, 2023 2022 Recovery/Refund Period
Regulatory assets
Current regulatory assets:
Undercollection of rate riders $ 127  $ 65  1 year
El Salvador energy pass through costs recovery 119  78  Quarterly
AES Indiana deferred fuel and purchased power costs —  80  1 year
Other 19  14  1 year
Total current regulatory assets 265  237 
Noncurrent regulatory assets:
AES Indiana Petersburg Units 1 and 2 retirement costs 260  287  10 years
AES Indiana and AES Ohio defined benefit pension obligations (1)
 179  194  Various
AES Indiana environmental costs 70  73  Various
AES Ohio regulatory compliance costs 45  6  5 years
AES Indiana deferred Midcontinent ISO costs
 21  34  3 years
Other 123  130  Various
Total noncurrent regulatory assets 698  724 
Total regulatory assets $ 963  $ 961 
Regulatory liabilities
Current regulatory liabilities:
Overcollection of costs to be passed back to customers $ 34  $ 46  1 year
Other 7  18  1 year
Total current regulatory liabilities 41  64 
Noncurrent regulatory liabilities:
AES Indiana and AES Ohio accrued costs of removal and AROs 586  657  Over life of assets
AES Indiana and AES Ohio income taxes payable to customers through rates 117  134  Various
Other 6  22  Various
Total noncurrent regulatory liabilities 709  813 
Total regulatory liabilities $ 750  $ 877 
_____________________________
(1)Past expenditures on which the Company earns a rate of return.
Our regulatory assets and current regulatory liabilities primarily consist of under or overcollection of costs that are generally non-controllable, such as purchased electricity, energy transmission, fuel costs, and other sector costs. These costs are recoverable or refundable as defined by the laws and regulations in our markets. Our regulatory assets also include defined pension and postretirement benefit obligations equal to the previously unrecognized actuarial gains and losses and prior service costs that are expected to be recovered through future rates. Additionally, our regulatory assets include the carrying value of AES Indiana's Petersburg Unit 1 and Petersburg Unit 2 at their retirement dates, which are amortized over the life of the assets beginning on the dates of retirement. Other current and noncurrent regulatory assets primarily consist of:
•Deferred Midcontinent ISO costs at AES Indiana;
•Deferred TDSIC costs and unamortized premiums reacquired or redeemed on long-term debt, which are amortized over the lives of the original issuances, at AES Indiana; and
•Vegetation management costs and proactive reliability optimization at AES Ohio.
Our noncurrent regulatory liabilities primarily consist of obligations for removal costs which do not have an associated legal retirement obligation. Our noncurrent regulatory liabilities also include deferred income taxes related to differences in income recognition between tax laws and accounting methods, which will be passed through to our regulated customers via a decrease in future retail rates.
In the accompanying Consolidated Balance Sheets, current regulatory assets and liabilities are reflected in Other current assets and Accrued and other liabilities, respectively, and noncurrent regulatory assets and liabilities are reflected in Other noncurrent assets and Other noncurrent liabilities, respectively. All of the regulatory assets and liabilities as of December 31, 2023 and December 31, 2022 are related to the Utilities SBU reportable segment.

152 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

11. DEBT
NON-RECOURSE DEBT — The following table summarizes the carrying amount and terms of non-recourse debt at our subsidiaries as of the periods indicated (in millions):
NON-RECOURSE DEBT Weighted Average Interest Rate Maturity December 31,
2023 2022
Variable Rate:
Bank loans 7.39% 2024 - 2045 $ 5,568  $ 3,306 
Notes and bonds 4.62% 2024 - 2047 1,768  2,137 
Revolver borrowings
 7.18% 2024 - 2027 2,356  1,832 
Other 11.85% 2024 - 2030 31  71 
Fixed Rate:
Bank loans 7.20% 2024 - 2064 1,473  461 
Notes and bonds 5.09% 2024 - 2079 11,228  11,130 
Other (1)
 5.90% 2024 - 2061 53  801 
Unamortized (discount) premium & debt issuance (costs), net (333) (309)
Subtotal $ 22,144  $ 19,429 
Less: Current maturities (2)
 (3,924) (1,752)
Noncurrent maturities (2)
 $ 18,220  $ 17,677 
_____________________________
(1)    Other fixed rate debt as of December 31, 2022 includes $756 million at Mong Duong, which was classified as held and used as of December 31, 2022, but is classified as held-for-sale as of December 31, 2023. See Note 24—Held-for-Sale and Dispositions for further information.
(2)    Excludes $8 million and $6 million (current) and $262 million and $169 million (noncurrent) finance lease liabilities included in the respective non-recourse debt line items on the Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively. See Note 14—Leases for further information.
The interest rate on variable rate debt represents the total of a variable component that is based on changes in an interest rate index and a fixed component. The Company has interest rate swap agreements that economically fix the variable component of the interest rates on the portion of the variable rate debt being hedged in an aggregate notional principal amount of approximately $2.7 billion on non-recourse debt outstanding at December 31, 2023.
The following table summarizes the amounts due under our non-recourse debt agreements for the next five years and thereafter, as of December 31, 2023 (in millions):
December 31, Annual Maturities
2024 $ 3,935 
2025 2,232 
2026 3,515 
2027 2,566 
2028 932 
Thereafter 9,297 
Unamortized (discount) premium & debt issuance (costs), net (333)
Total $ 22,144 
As of December 31, 2023, AES subsidiaries with facilities under construction had a total of approximately $1.3 billion of committed but unused credit facilities available to fund construction and other related costs. Excluding these facilities under construction, AES subsidiaries had approximately $1.7 billion in various unused committed credit lines to support their working capital, debt service reserves and other business needs. These credit lines can be used for borrowings, letters of credit, or a combination of these uses.
Significant transactions — During the year ended December 31, 2023, the Company’s following subsidiaries had significant debt issuances (in millions):
Subsidiary
Issuances (1)
AES Clean Energy
 $ 2,654 
Netherlands and Colon
 350 
AES Indiana
 300 
AES Ohio 300 
_____________________________
(1)These amounts do not include revolving credit facility activity at the Company's subsidiaries.

153 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

AES Ohio — The $300 million of debt issued at AES Ohio is primarily related to $200 million of First Mortgage Bonds issued in December 2023 in a private placement offering, in which AES Ohio issued $92 million aggregate principal of 5.49% bonds and $108 million aggregate principal of 5.70% bonds due in 2028 and 2033, respectively. The net proceeds from the issuances were used primarily to repay existing indebtedness and for general corporate purposes.
AES Indiana — In November 2023, AES Indiana executed a $300 million term loan due in 2024. The net proceeds from this issuance were used for general corporate purposes.
Netherlands and Colon — In March 2022, AES Hispanola Holdings BV, a Netherlands based company, and Colon, as co-borrowers, executed a $500 million bridge loan due in 2023. The Company allocated $450 million and $50 million of the proceeds from the agreement to AES Hispanola Holdings BV and Colon, respectively.
In January 2023, AES Hispanola Holdings BV and Colon, as co-borrowers, executed a $350 million credit agreement at 8.85%, due in 2028. The Company allocated $300 million and $50 million of the proceeds from the agreement to AES Hispanola Holdings BV and Colon, respectively. The net proceeds from the agreement were used to partially repay the $500 million bridge loan executed in 2022. The remaining principal outstanding of the bridge loan was repaid with proceeds from operating cash flows as well as cash from the Parent Company. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $1 million.
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 Andes through intermediate holding companies (see Note 17—Equity for further information). On January 24, 2022, Mercury Chile issued $360 million aggregate principal of 6.5% senior secured notes due in 2027 and used the proceeds from the issuance to fully prepay the $350 million bridge loan.
AES Clean Energy — In December 2023, Bellefield Portfolio Seller, LLC and Bellefield 1 Finco, LLC, subsidiaries of AES Clean Energy Development, executed a construction, tax equity bridge, and letter of credit financing agreement for commitments of up to $2.4 billion due in 2026. As of December 31, 2023, there was $998 million in outstanding borrowings under the facilities, and the net proceeds were used primarily to repay existing indebtedness and to fund development of renewables projects.
In October 2023, Rexford I Holdings, LLC, a subsidiary of AES Renewable Holdings, executed a $300 million bridge loan due in 2024. The net proceeds from this issuance were used primarily to fund development of renewables projects.
In December 2022, AES Renewable Holdings OpCo 1, LLC executed a term loan in the amount of $632 million due in 2027. The proceeds were used to prepay the outstanding principal of $692 million of its six credit facilities. As a result of this transaction, the Company recognized a loss on extinguishment of debt of $12 million.
In December 2022, AES Clean Energy Development, AES Renewable Holdings, and sPower, an equity method investment, collectively referred to as the Issuers, entered into a Master Indenture agreement whereby long-term notes will be issued from time to time to finance or refinance operating wind, solar, and storage projects that are owned by the Issuers. On December 13, 2022, the Issuers entered into the Note Purchase Agreement for the issuance of up to $647 million of 6.55% Senior Notes due in 2047. The Notes were sold on December 14, 2022, at par for $647 million. In 2023, the Issuers sold an additional $246 million in 6.37% notes. As a result of the additional issuance and repayments, the aggregate principal amount of Notes outstanding was $884 million as of December 31, 2023. Each of the Issuers is considered a “Co-Issuer” and will be jointly and severally liable with each other Co-Issuer for all obligations under the facility. As a result of the 2023 issuance, AES Clean Energy Development recorded an increase in liabilities of $215 million, resulting in an aggregate carrying amount of the Notes attributable to AES Clean Energy Development and AES Renewable Holdings of $252 million as of December 31, 2023.

154 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

In 2021, AES Clean Energy Development, AES Renewable Holdings, and sPower, collectively referred to as the Borrowers, executed two Credit Agreements with aggregate commitments of $1.2 billion and maturity dates in December 2024 and September 2025. The Borrowers executed amendments to the revolving credit facilities, which have resulted in an aggregate increase in the commitments of $2.6 billion, bringing the total commitments under the new agreements to $3.8 billion. Under a 2023 amendment, the maturity date of one of the Credit Agreements was extended from December 2024 to May 2026. Each of the Borrowers is considered a “Co-Borrower” and will be jointly and severally liable with each other Co-Borrower for all obligations under the facilities. As a result of increases in commitments used, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, an increase in liabilities of $1 billion in 2023, resulting in total commitments used under the revolving credit facilities, as of December 31, 2023, of $2.3 billion. As of December 31, 2023, the aggregate commitments used under the revolving credit facilities for the Co-Borrowers was $2.8 billion.
Non-Recourse Debt Covenants, Restrictions and Defaults — The terms of the Company's non-recourse debt include certain financial and nonfinancial covenants. These covenants are limited to subsidiary activity and vary among the subsidiaries. These covenants may include, but are not limited to, maintenance of certain reserves and financial ratios, minimum levels of working capital and limitations on incurring additional indebtedness.
As of December 31, 2023 and 2022, approximately $341 million and $424 million, respectively, of restricted cash was maintained in accordance with certain covenants of the non-recourse debt agreements. Of these amounts, $158 million and $285 million, respectively, were included within Restricted cash and $183 million and $139 million, respectively, were included within Debt service reserves and other deposits in the accompanying Consolidated Balance Sheets. As of December 31, 2023 and 2022, approximately $90 million and $56 million, respectively, of the restricted cash balances were for collateral held to cover potential liability for current and future insurance claims being assumed by AGIC, AES' captive insurance company.
Various lender and governmental provisions restrict the ability of certain of the Company's subsidiaries to transfer their net assets to the Parent Company. Such restricted net assets of subsidiaries amounted to approximately $901 million at December 31, 2023.
The following table summarizes the Company's subsidiary non-recourse debt in default (in millions) as of December 31, 2023. Due to the defaults, these amounts are included in the current portion of non-recourse debt:
Primary Nature
of Default		 December 31, 2023
Subsidiary Debt in Default Net Assets
AES Mexico Generation Holdings (TEG and TEP) Covenant $ 150  $ 24 
AES Puerto Rico Covenant/Payment 143  (170)
AES Ilumina (Puerto Rico) Covenant 25  29 
AES Jordan Solar Covenant 7  11 
Total $ 325 
The amounts in default related to AES Puerto Rico are covenant and payment defaults. In July 2023, AES Puerto Rico signed forbearance and standstill agreements with its noteholders because of the insufficiency of funds to meet the principal and interest obligations on its Series A Bond Loans due and payable on June 1, 2023, and going forward. These agreements expired on December 31, 2023 and were extended until January 17, 2024. Although there is no forbearance in place after January 17, 2024, AES Puerto Rico continues to work with PREPA and its noteholders on these liquidity challenges.
All other defaults listed are not payment defaults. All other subsidiary non-recourse defaults were triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents of the applicable subsidiary.
The AES Corporation's recourse debt agreements include cross-default clauses that will trigger if a subsidiary provides 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters and has an outstanding principal in excess of $200 million in default. As of December 31, 2023, the Company's subsidiaries had no defaults which resulted in 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 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.

155 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

RECOURSE DEBT — The following table summarizes the carrying amount and terms of recourse debt of the Company as of the periods indicated (in millions):
Interest Rate Final Maturity December 31, 2023 December 31, 2022
Senior Variable Rate Term Loan SOFR + 1.125% 2024 $ 200  $ 200 
Senior Unsecured Note 3.30% 2025 900  900 
Senior Unsecured Note 1.375% 2026 800  800 
Drawings on revolving credit facility SOFR + 1.75% 2027 —  325 
Senior Unsecured Note 5.45% 2028 900  — 
Senior Unsecured Note 3.95% 2030 700  700 
Senior Unsecured Note 2.45% 2031 1,000  1,000 
Unamortized (discount) premium & debt issuance (costs), net (36) (31)
Subtotal $ 4,464  $ 3,894 
Less: Current maturities (200) — 
Noncurrent maturities $ 4,264  $ 3,894 
The following table summarizes the principal amounts due under our recourse debt for the next five years and thereafter (in millions):
December 31,
Annual Maturities
2024 $ 200 
2025 900 
2026 800 
2027 — 
2028 900 
Thereafter 1,700 
Unamortized (discount) premium & debt issuance (costs), net (36)
Total recourse debt $ 4,464 
Senior Notes due 2028 — In May 2023, the Company issued $900 million aggregate principal of 5.45% senior notes due in 2028. The Company used the proceeds from this issuance for general corporate purposes and to fund investments in the Company’s Renewables and Utilities SBUs.
AES Clean Energy Development — In March 2023, AES Clean Energy Development Holdings, LLC executed a $500 million bridge loan due in December 2023 and used the proceeds for general corporate purposes. The obligations under the bridge loan were unsecured and fully guaranteed by the Parent Company. The bridge loan was repaid in December 2023.
Commercial Paper Program — In March 2023, the Company established a commercial paper program under which the Company may issue unsecured commercial paper notes (the “Notes”) up to a maximum aggregate face amount of $750 million outstanding at any time. The maturities of the Notes may vary but will not exceed 397 days from the date of issuance. The proceeds of the Notes will be used for general corporate purposes. The Notes will be sold on customary terms in the U.S. commercial paper market on a private placement basis. The commercial paper program is backed by the Company's $1.5 billion revolving credit facility, and the Company cannot issue commercial paper in an aggregate amount exceeding the then available capacity under its revolving credit facilities. During 2023, the Company borrowed and repaid approximately $45.8 billion under the commercial paper program, with average daily outstanding borrowings of $449 million. As of December 31, 2023, the Company had no outstanding borrowings under the commercial paper program.
Revolving Credit Facility — In September 2022, AES executed an amendment to its revolving credit facility. The aggregate commitment under the new agreement is $1.5 billion and matures in August 2027. The existing credit agreement had an aggregate commitment of $1.25 billion and matured in September 2026. As of December 31, 2023, AES had no outstanding drawings under its revolving credit facility.
Term Loan due 2024 — In September 2022, the AES Corporation entered into a term loan agreement, under which AES can obtain term loans in an aggregate principal amount of up to $200 million, with all term loans to mature no later than September 30, 2024. On September 30, 2022 the AES Corporation borrowed $200 million under this agreement with a maturity date of September 30, 2024.
Recourse Debt Covenants and Guarantees — The Company's obligations under the revolving credit facility and indentures governing the senior notes due 2025 and 2030 are currently unsecured following the achievement of two investment grade ratings and the release of security in accordance with the terms of the facility and the notes.

156 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

If the Company’s credit rating falls below "Investment Grade" from at least two of Fitch Investors Service Inc., Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc., as determined in accordance with the terms of the revolving credit facility and indenture dated May 15, 2020 (BBB-, or in the case of Moody’s Investor Services, Inc. Baa3), then the obligations under the revolving credit facility and the indentures governing the senior notes due 2025 and 2030 become, subject to certain exceptions, secured by (i) all of the capital stock of domestic subsidiaries owned directly by the Company or certain subsidiaries and 65% of the capital stock of certain foreign subsidiaries owned directly by the Company and certain subsidiaries, and (ii) certain intercompany receivables, certain intercompany notes and certain intercompany tax sharing agreements.
The revolving credit facility contains customary covenants and restrictions on the Company's ability to engage in certain activities, including, but not limited to, limitations on liens; restrictions on mergers and acquisitions and the disposition of assets; and other financial reporting requirements.
The revolving credit facility also contains one financial covenant, evaluated quarterly, requiring the Company to maintain a maximum ratio of recourse debt to adjusted operating cash flow of 5.75 times.
The terms of the Company's senior notes contain certain customary covenants, including limitations on the Company's ability to incur liens or enter into sale and leaseback transactions.
12. COMMITMENTS
The Company enters into long-term contracts for construction projects, maintenance and service, transmission of electricity, operations services and purchases of electricity and fuel. In general, these contracts are subject to variable quantities or prices and are terminable only in limited circumstances. The following table shows the future minimum commitments for continuing operations under these contracts as of December 31, 2023 for 2024 through 2028 and thereafter as well as actual purchases under these contracts for the years ended December 31, 2023, 2022, and 2021 (in millions):
Actual purchases during the year ended December 31, Electricity Purchase Contracts Fuel Purchase Contracts Other Purchase Contracts
2021 $ 709  $ 2,070  $ 1,261 
2022 1,156  3,375  3,602 
2023 1,134  1,982  3,181 
Future commitments for the year ending December 31,
2024 $ 1,222  $ 2,069  $ 4,698 
2025 962  1,678  1,047 
2026 700  1,166  737 
2027 686  1,222  718 
2028 656  1,056  629 
Thereafter 5,873  3,874  1,720 
Total $ 10,099  $ 11,065  $ 9,549 
13. CONTINGENCIES
Parent Guarantees and Letters of Credit — In connection with certain project financings (including tax equity transactions), acquisitions and dispositions, power purchases, EPC contracts, 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 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 33 years.
The following table summarizes the Parent Company's contingent contractual obligations as of December 31, 2023. Amounts presented in the following table represent the Parent Company's current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure per individual agreement. The maximum exposure is not reduced by the amounts, if any, that could be recovered under the recourse or collateralization provisions in the guarantees.

157 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Contingent Contractual Obligations
Maximum Exposure (in millions)
 Number of Agreements Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments $ 3,978  90
< $1 — 970
Letters of credit under bilateral agreements 235  4
$54 — 64
Letters of credit under the unsecured credit facilities 188  31
< $1 — 70
Letters of credit under the revolving credit facility 124  17
< $1 — 40
Surety bonds 2  2
< $1 — 1
Total $ 4,527  144
During the year ended December 31, 2023, the Parent Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts of letters of credit.
Subsidiary Guarantees and Letters of Credit — In connection with certain project financings (including tax equity transactions), acquisitions and dispositions, power purchases, EPC contracts, and other agreements, certain of the Company's subsidiaries have expressly undertaken limited obligations and commitments, most of which will only be effective or will be terminated upon the occurrence of future events, or are customary payment guarantees for amounts due under existing contracts in the normal course of business. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company. As of December 31, 2023, the maximum undiscounted potential exposure to guarantees issued by our subsidiaries was $2.8 billion, including $1.8 billion of customary payment guarantees under EPC contracts and other agreements, and $1 billion of tax equity financing related guarantees. In addition, as of December 31, 2023, our subsidiaries had $359 million of letters of credit outstanding.
Environmental — The Company periodically reviews its obligations as they relate to compliance with environmental laws, including site restoration and remediation. For the periods ended December 31, 2023 and 2022, the Company recognized liabilities of $9 million and $10 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 December 31, 2023. In aggregate, the Company estimates the range of potential losses related to environmental matters, where estimable, to be up to $13 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 $17 million and $22 million as of December 31, 2023 and 2022, respectively. These amounts are reported on the Consolidated Balance Sheets within Accrued and other liabilities and Other noncurrent liabilities. A significant portion of these accrued liabilities relate to regulatory matters and commercial disputes in international jurisdictions. 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 December 31, 2023. The material contingencies where a loss is reasonably possible primarily include disputes with offtakers, suppliers and EPC contractors; alleged breaches of contract; alleged violation of laws and regulations; income tax and non-income tax matters with tax authorities; and regulatory matters. In aggregate, the Company estimates the range of potential losses, where estimable, related to these reasonably possible material contingencies to be between $146 million and $185 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. See Note 23—Income Taxes for further information.
14. LEASES
LESSEE — Right-of-use assets are long-term by nature. The following table summarizes the amounts recognized on the Consolidated Balance Sheets related to lease asset and liability balances as of the periods indicated (in millions):

158 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Consolidated Balance Sheet Classification December 31, 2023 December 31, 2022
Assets
Right-of-use assets — finance leases Electric generation, distribution assets and other $ 250  $ 160 
Right-of-use assets — operating leases Other noncurrent assets 380  356 
Total right-of-use assets $ 630  $ 516 
Liabilities
Finance lease liabilities (current) Non-recourse debt (current liabilities) $ 8  $ 6 
Finance lease liabilities (noncurrent) Non-recourse debt (noncurrent liabilities) 262  169 
Total finance lease liabilities 270  175 
Operating lease liabilities (current) Accrued and other liabilities 37  26 
Operating lease liabilities (noncurrent) Other noncurrent liabilities 387  374 
Total operating lease liabilities 424  400 
Total lease liabilities $ 694  $ 575 
The following table summarizes supplemental balance sheet information related to leases as of the periods indicated:
Lease Term and Discount Rate December 31, 2023 December 31, 2022
Weighted-average remaining lease term — finance leases 34 years 33 years
Weighted-average remaining lease term — operating leases 27 years 25 years
Weighted-average discount rate — finance leases 5.36  % 4.59  %
Weighted-average discount rate — operating leases 7.70  % 6.22  %
The following table summarizes the components of lease cost recognized in Cost of Sales on the Consolidated Statements of Operations for the periods indicated (in millions):
Years Ended December 31,
Components of Lease Cost
 2023 2022
Operating lease cost $ 52  $ 46 
Finance lease cost:
Amortization of right-of-use assets 7  8 
Interest on lease liabilities 10  8 
Short-term lease costs 16  28 
Variable lease cost —  1 
Total lease cost $ 85  $ 91 
Operating cash outflows from operating leases included in the measurement of lease liabilities were $54 million and $54 million for the years ended December 31, 2023 and 2022, respectively, and operating cash outflows from finance leases were $5 million and $22 million for the years ended December 31, 2023 and 2022, respectively. Right-of-use assets obtained in exchange for new operating and finance lease liabilities were $129 million and $96 million, respectively, for the years ended December 31, 2023.
The following table shows the future lease payments under operating and finance leases for continuing operations together with the present value of the net lease payments as of December 31, 2023 for 2024 through 2028 and thereafter (in millions):
Maturity of Lease Liabilities
Finance Leases Operating Leases
2024 $ 14  $ 56 
2025 14  45 
2026 15  43 
2027 15  41 
2028 15  38 
Thereafter 545  986 
Total 618  1,209 
Less: Imputed interest (348) (785)
Present value of lease payments $ 270  $ 424 
LESSOR — 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 payments 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 non-lease elements is made at the inception of the lease. Lease payments from such contracts are recognized as lease revenue on a straight-line basis over the lease term, whereas variable lease payments are recognized when earned.

159 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table presents lease revenue from operating leases in which the Company is the lessor, recognized in Revenue on the Consolidated Statements of Operations for the periods indicated (in millions):
Years Ended December 31,
Lease Income 2023 2022
Total lease revenue $ 490  $ 527 
Less: Variable lease revenue (65) (49)
Total non-variable lease revenue $ 425  $ 478 
The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, Plant and Equipment on the Consolidated Balance Sheets as of the periods indicated (in millions):
Lease Assets December 31, 2023 December 31, 2022
Gross assets $ 1,227  $ 1,319 
Less: Accumulated depreciation (182) (139)
Net assets $ 1,045  $ 1,180 
The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, or lack of performance on energy delivery. The Company has not recognized any early terminations as of December 31, 2023. 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 December 31, 2023 for 2024 through 2028 and thereafter (in millions):
Future Cash Receipts for
Sales-Type Leases Operating Leases
2024 $ 34  $ 393 
2025 32  394 
2026 32  280 
2027 32  183 
2028 32  60 
Thereafter 441  484 
Total 603  $ 1,794 
Less: Imputed interest (296)
Present value of total lease receipts $ 307 
Battery Storage Lease Arrangements — The Company constructs and operates projects consisting only of a stand-alone 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 revenue on sales-type leases through variable payments of $3 million and $2 million and interest income of $13 million and $23 million for the years ended December 31, 2023 and 2022, 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 21—Other Income and Expense for further information. During the second quarter of 2023, the sales-type lease receivable and the associated allowance were written-off.
The Company recorded a loss at commencement of sales-type leases of $20 million and $5 million for the years ended December 31, 2023 and 2022, respectively. These amounts are recognized in Other expense in the Consolidated Statement of Operations. See Note 21—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—General and Summary of Significant Accounting Policies for further information.
15. BENEFIT PLANS
Defined Contribution Plans — The Company sponsors four defined contribution plans ("the DC Plans"). Two plans cover U.S. non-union employees; one for Parent Company and certain U.S. business employees, and one for AES Ohio employees. The remaining two plans include union and non-union employees at AES Indiana and union employees at AES Ohio. The DC Plans are qualified under section 401 of the Internal Revenue Code. Most U.S. employees of the Company are eligible to participate in the appropriate plan except for those employees who are covered by a collective bargaining agreement, unless such agreement specifically provides that the employee is considered an eligible employee under a plan.

160 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Within the DC Plans, the Company provides matching contributions in addition to other non-matching contributions. Participants are fully vested in their own contributions. The Company's contributions vest over various time periods ranging from immediate up to five years. For the years ended December 31, 2023, 2022 and 2021, costs for defined contribution plans were approximately $40 million, $31 million and $26 million, respectively.
Defined Benefit Plans — Certain of the Company's subsidiaries have defined benefit pension plans covering substantially all of their respective employees ("the DB Plans"). Pension benefits are based on years of credited service, age of the participant, and average earnings. Of the 27 active DB Plans as of December 31, 2023, five are at U.S. subsidiaries and the remaining plans are at foreign subsidiaries.
The following table reconciles the Company's funded status, both domestic and foreign, as of the periods indicated (in millions):
2023 2022
U.S. Foreign U.S. Foreign
Change in projected benefit obligation:
Benefit obligation as of January 1 $ 914  $ 177  $ 1,225  $ 173 
Service cost 8  4  14  4 
Interest cost 47  21  28  17 
Plan amendments 2  —  —  — 
Plan settlements —  (1) —  — 
Benefits paid (115) (15) (65) (13)
Divestitures —  —  —  (1)
Actuarial loss (gain)
 19  (2) (288) (11)
Effect of foreign currency exchange rate changes —  6  —  8 
Benefit obligation as of December 31 $ 875  $ 190  $ 914  $ 177 
Change in plan assets:
Fair value of plan assets as of January 1 $ 911  $ 114  $ 1,218  $ 106 
Actual return on plan assets 80  10  (250) 7 
Employer contributions 8  9  8  5 
Plan settlements —  (1) —  — 
Benefits paid (116) (15) (65) (13)
Effect of foreign currency exchange rate changes —  10  —  9 
Fair value of plan assets as of December 31 $ 883  $ 127  $ 911  $ 114 
Reconciliation of funded status:
Funded status as of December 31 $ 8  $ (63) $ (3) $ (63)
The following table summarizes the amounts recognized on the Consolidated Balance Sheets related to the funded status of the DB Plans, both domestic and foreign, as of the periods indicated (in millions):
December 31, 2023 2022
Amounts Recognized on the Consolidated Balance Sheets U.S. Foreign U.S. Foreign
Noncurrent assets $ 41  $ 10  $ 34  $ 7 
Accrued benefit liability—current —  (9) —  (8)
Accrued benefit liability—noncurrent (33) (64) (37) (62)
Net amount recognized at end of year $ 8  $ (63) $ (3) $ (63)
The following table summarizes the Company's U.S. and foreign accumulated benefit obligation as of the periods indicated (in millions):
December 31, 2023 2022
U.S. Foreign U.S. Foreign
Accumulated benefit obligation $ 860  $ 182  $ 900  $ 170 
Information for pension plans with an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation $ 325  $ 180  $ 340  $ 169 
Accumulated benefit obligation 316  174  333  163 
Fair value of plan assets 292  107  304  98 
Information for pension plans with a projected benefit obligation in excess of plan assets:
Projected benefit obligation $ 325  $ 180  $ 340  $ 169 
Fair value of plan assets 292  107  304  98 

161 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table summarizes the significant weighted average assumptions used in the calculation of benefit obligation and net periodic benefit cost, both domestic and foreign, as of the periods indicated:
December 31, 2023 2022
U.S. Foreign U.S. Foreign
Benefit Obligation: Discount rate 5.17  % 11.14  % 5.41  % 13.23  %
Rate of compensation increase 2.75  % 8.01  % 2.75  % 11.06  %
Periodic Benefit Cost: Discount rate 5.41  % 13.23  %
(1)
 2.82  % 10.45  %
(1)
Expected long-term rate of return on plan assets 5.55  % 9.44  % 4.50  % 6.36  %
Rate of compensation increase 2.75  % 11.06  % 2.75  % 7.76  %
_____________________________
(1)Includes an inflation factor that is used to calculate future periodic benefit cost, but is not used to calculate the benefit obligation.
The Company establishes its estimated long-term return on plan assets considering various factors, which include the targeted asset allocation percentages, historic returns, and expected future returns.
The measurement of pension obligations, costs, and liabilities is dependent on a variety of assumptions. These assumptions include estimates of the present value of projected future pension payments to all plan participants, taking into consideration the likelihood of potential future events such as salary increases and demographic experience. These assumptions may have an effect on the amount and timing of future contributions.
The assumptions used in developing the required estimates include the following key factors: discount rates, salary growth, retirement rates, inflation, expected return on plan assets, and mortality rates. The effects of actual results differing from the Company's assumptions are accumulated and amortized over future periods and, therefore, generally affect the Company's recognized expense in such future periods. Unrecognized gains or losses are amortized using the “corridor approach,” under which the net gain or loss in excess of 10% of the greater of the projected benefit obligation or the market-related value of the assets, if applicable, is amortized.
Sensitivity of the Company's pension funded status to the indicated increase or decrease in the discount rate and long-term rate of return on plan assets assumptions is shown below. Note that these sensitivities may be asymmetric and are specific to the base conditions at year-end 2023. They also may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown. The funded status as of December 31, 2023 is affected by the assumptions as of that date. Pension expense for 2023 is affected by the December 31, 2022 assumptions. The impact on pension expense from a one percentage point change in these assumptions is shown in the following table (in millions):
Increase of 1% in the discount rate $ (7)
Decrease of 1% in the discount rate 8 
Increase of 1% in the long-term rate of return on plan assets (11)
Decrease of 1% in the long-term rate of return on plan assets 11 
The following table summarizes the components of the net periodic benefit cost, both domestic and foreign, for the years indicated (in millions):
December 31, 2023 2022 2021
Components of Net Periodic Benefit Cost: U.S. Foreign U.S. Foreign U.S. Foreign
Service cost $ 8  $ 4  $ 14  $ 4  $ 14  $ 6 
Interest cost 47  21  28  17  24  15 
Expected return on plan assets (52) (11) (53) (7) (59) (8)
Amortization of prior service cost 3  —  4  —  4  — 
Amortization of net loss 7  —  8  1  15  3 
Curtailment gain recognized
 —  —  —  —  —  (17)
Total Net Periodic Benefit Cost
 $ 13  $ 14  $ 1  $ 15  $ (2) $ (1)
The following table summarizes the amounts reflected in AOCL, including AOCL attributable to noncontrolling interests, on the Consolidated Balance Sheet as of December 31, 2023, that have not yet been recognized as components of net periodic benefit cost (in millions):
December 31, 2023 Accumulated Other Comprehensive Income (Loss)
U.S. Foreign
Prior service cost $ (3) $ 1 
Unrecognized net actuarial loss (21) (14)
Total $ (24) $ (13)

162 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table summarizes the Company's target allocation for 2023 and pension plan asset allocation, both domestic and foreign, as of the periods indicated:
Percentage of Plan Assets as of December 31,
Target Allocations 2023 2022
Asset Category U.S. Foreign U.S. Foreign U.S. Foreign
Mutual Funds

Equity securities
 22% 6% 21.80  % 5.30  % 22.17  % 3.53  %

Debt securities
 78% 88% 77.60  % 89.30  % 77.28  % 92.14  %
Real estate —% 1% —  % 0.80  % —  % 1.09  %
Other —% 5% 0.60  % 4.60  % 0.55  % 3.24  %
Total pension assets 100.00  % 100.00  % 100.00  % 100.00  %
The U.S. DB Plans seek to achieve the following long-term investment objectives:
•maintenance of sufficient income and liquidity to pay retirement benefits and other lump sum payments;
•long-term rate of return in excess of the annualized inflation rate;
•long-term rate of return, net of relevant fees, that meets or exceeds the assumed actuarial rate; and
•long-term competitive rate of return on investments, net of expenses, that equals or exceeds various benchmark rates.
The asset allocation is reviewed periodically to determine a suitable asset allocation which seeks to manage risk through portfolio diversification and takes into account the above-stated objectives, in conjunction with current funding levels, cash flow conditions, and economic and industry trends. The following table summarizes the Company's U.S. DB Plan assets by category of investment and level within the fair value hierarchy as of the periods indicated (in millions):
December 31, 2023 December 31, 2022
U.S. Plans Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Mutual Funds
Equity securities: (1)
 $ —  $ 193  $ —  $ 193  $ —  $ 202  $ —  $ 202 

Debt securities: (1)
 —  685  —  685  —  704  —  704 
Cash and cash equivalents 5  —  —  5  5  —  —  5 
Total plan assets $ 5  $ 878  $ —  $ 883  $ 5  $ 906  $ —  $ 911 
_____________________________
(1)For the U.S. plans, the balances under the equity securities and debt securities categories represent investments through common collective trusts, for which the underlying investments are equity and debt securities.
The investment strategy of the foreign DB Plans seeks to maximize return on investment while minimizing risk. The assumed asset allocation has less exposure to equities in order to closely match market conditions and near term forecasts. The following table summarizes the Company's foreign DB plan assets by category of investment and level within the fair value hierarchy as of the periods indicated (in millions):
December 31, 2023 December 31, 2022
Foreign Plans Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Equity Securities
 Private equity $ —  $ —  $ 2  $ 2  $ —  $ —  $ 1  $ 1 
Mutual Funds
Equity securities: (1)
 —  5  —  5  —  3  —  3 
Debt securities: (1)
 40  73  —  113  35  70  —  105 
Real estate
 Real estate —  —  1  1  —  —  1  1 
Other
 Other assets 1  3  2  6  1  2  1  4 
Total plan assets $ 41  $ 81  $ 5  $ 127  $ 36  $ 75  $ 3  $ 114 
_____________________________
(1)Mutual funds categorized as debt securities and equity securities consist of mutual funds for which debt securities and equity securities are the primary underlying investment.

163 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table summarizes the estimated cash flows for U.S. and foreign expected employer contributions and expected future benefit payments, both domestic and foreign (in millions):
U.S. Foreign
Expected employer contribution in 2024 $ 8  $ 11 
Expected benefit payments for fiscal year ending:
2024 63  19 
2025 63  17 
2026 64  18 
2027 64  20 
2028 66  21 
2029 - 2033 318  125 
16. REDEEMABLE STOCK OF SUBSIDIARIES
The following table is a reconciliation of changes in redeemable stock of subsidiaries (in millions):
December 31, 2023 2022
Balance at the beginning of the period $ 1,321  $ 1,257 
Net loss (59) (87)
Other comprehensive income 1  40 
Distributions to holders of redeemable stock of subsidiaries (62) (64)
Acquisitions of redeemable stock of subsidiaries —  (60)
Contributions from holders of redeemable stock of subsidiaries 163  67 
Sales of redeemable stock of subsidiaries 100  168 
Balance at the end of the period $ 1,464  $ 1,321 
The following table summarizes the Company's redeemable stock of subsidiaries balances as of the periods indicated (in millions):
December 31, 2023 2022
IPALCO common stock $ 773  $ 782 
AES Clean Energy Development common stock 544  436 
AES Clean Energy Development tax equity partnerships 129  86 
Potengi common and preferred stock 18  17 
Total redeemable stock of subsidiaries $ 1,464  $ 1,321 
AES Clean Energy Development 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 would enable the tax equity investor to exit in the future. As a result, the noncontrolling ownership interest is considered temporary equity. The redemption features of these tax equity partnership agreements are typically contingent upon the underlying assets being placed in service by a guaranteed date. The Company has concluded it is probable that these projects will be placed in service by the guaranteed dates. Therefore, the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required.
In 2023 and 2022, AES Clean Energy Development, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in increases to Redeemable stock of subsidiaries of $100 million and $157 million, respectively. AES Clean Energy Development is reported in the Renewables SBU reportable segment.
IPALCO — In December 2022, CDPQ made equity capital contributions of $77 million as part of a capital call to raise proceeds for AES Indiana's TDSIC and replacement generation project. The Company and CDPQ made capital contributions on a proportional share basis; therefore, the capital calls did not change either party's ownership interests in IPALCO. The Company has concluded that the likelihood of an event that would allow CDPQ to redeem its interest under the terms of the shareholder agreement is remote. Therefore, the noncontrolling ownership interest is not probable of becoming redeemable and subsequent adjustments to the carrying value were not required. IPALCO is reported in the Utilities SBU reportable segment.
AES Indiana — In December 2022, AES Indiana redeemed all of its outstanding preferred shares for $60 million. The preferred shares were retired upon redemption as there is no intention for the shares to be reissued. AES Indiana is reported in the Utilities SBU reportable segment.

164 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Potengi — In March 2022, Tucano Holding I (“Tucano”), a subsidiary of AES Brasil, issued new shares in the Potengi wind development project. BRF S.A. (“BRF”) acquired shares representing 24% of the equity in the project for $12 million, reducing the Company’s indirect ownership interest in Potengi to 35.5%. As the Company maintained control after the transaction, Potengi continues to be consolidated by the Company. As part of the transaction, BRF was given an option to sell its entire ownership interest at the conclusion of the PPA term and therefore the noncontrolling ownership interest is considered temporary equity. Any subsequent changes in the redemption value of the exit rights will be recognized against permanent equity in accordance with ASC 480-10-S99, as it is probable that the shares will become redeemable. Potengi is reported in the Renewables SBU reportable segment.
17. 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”).
The Company 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 conjunction with the issuance of the Equity Units, the Company received approximately $1 billion in proceeds, net of underwriting costs and commissions, before offering expenses. The proceeds for the issuance of 1,043,050 shares were attributed to the Series A Preferred Stock for $838 million and $205 million for the present value of the quarterly payments due to holders of the 2024 Purchase Contracts ("Contract Adjustment Payments"). The proceeds were 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 does not bear any dividends and the liquidation preference of the convertible preferred stock does 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 preferred shares have limited voting rights. The Series A Preferred Stock was pledged as collateral to support holders’ purchase obligations under the 2024 Purchase Contracts. The 2024 Purchase Contracts obligated the holders to purchase, on February 15, 2024, for a price of $100 in cash, a maximum number of 57,467,883 shares of the Company’s common stock (subject to customary anti-dilution adjustments). The initial settlement rate determining the number of shares that each holder must purchase cannot exceed the maximum settlement rate and was determined over a market value averaging period preceding February 15, 2024. If the applicable market value of the Company’s common stock was less than or equal to the reference price, the settlement rate would be the maximum settlement rate; and if the applicable market value of common stock was greater than the reference price, the settlement rate would be a number of shares of the Company’s common stock equal to $100 divided by the applicable market value.
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 December 31, 2023, due to the customary anti-dilution provisions, the maximum settlement rate was 3.8809, equivalent to a reference price of $25.77. On February 15, 2024, the Series A Preferred Stock was tendered to satisfy the Purchase Contract's settlement price and the Corporate Units were converted into shares of the Company's common stock at a settlement rate of 3.8859, equivalent to a reference price of $25.73. The Series A Preferred Stock was cancelled upon conversion.

165 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The Company paid 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 was made, the related liability was reduced and the difference between the cash payment and the present value accreted to interest expense, approximately $5 million over the three-year term. As of December 31, 2023, the present value of the Contract Adjustment Payments was $18 million. The final Contract Adjustment Payments were made on February 15, 2024.
Equity Transactions with Noncontrolling Interests
U.S. Renewable 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 2023, 2022, and 2021, AES Clean Energy Development and AES Renewable Holdings, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in the following increases to NCI (in millions):
Business 2023 2022 2021
AES Clean Energy Development
 $ 1,039  $ 230  $ — 
AES Renewable Holdings
 124  88  127 
In the third quarter of 2023, AES Renewable Holdings completed buyouts of tax equity partners at Buffalo Gap I, Buffalo Gap II and six other project companies, resulting in a decrease to NCI of $45 million and an increase to additional paid-in capital of $34 million. AES Clean Energy Development and AES Renewable Holdings are reported in the Renewables SBU reportable segment.
In December 2023, AES Indiana sold a noncontrolling interest in the Hardy Hills solar project to a tax equity investor, resulting in a $79 million increase to NCI. AES Indiana is reported in the Utilities SBU reportable segment.
Chile Renovables — In July 2021, AES Andes completed the sale of a 49% ownership interest in Chile Renovables SpA (“Chile Renovables”), a subsidiary which owns the Los Cururos wind facility, to Global Infrastructure Management, LLC (“GIP”) for $53 million. AES Andes retained a 51% ownership interest in Chile Renovables and the transaction decreased the Company’s indirect ownership in the subsidiary to 34%.
Under its renewable partnership agreement with GIP, AES Andes will contribute a specified pipeline of renewable development projects to Chile Renovables as the projects reach commercial operations, and GIP may make additional contributions to maintain its 49% ownership interest. During 2022 and 2023, AES Andes completed sales of the following projects to Chile Renovables (in millions):
Business
 Transaction Period
Sale Price
Increase to Noncontrolling Interests
Increase (Decrease) to Additional Paid-In Capital
Andes Solar 2a
 January 2022 $ 37  $ 28  $ 9 
Los Olmos
 June 2022 80  68  12 
Campo Lindo
 September 2023 50  59  (9)
Bolero
 November 2023 58  57  1 
Andes Solar 2b
 December 2023 156  145  11 
In December 2023, Chile Renovables issued $275 million of preferred shares to GIP, the proceeds of which will be used to fund the development of a additional pipeline of renewables projects. As each project reaches commercial operations, the preferred shares will convert to common stock and GIP may make additional contributions to maintain its 49% ownership interest.
As the Company maintained control after these transactions, Chile Renovables continues to be consolidated by the Company within the Energy Infrastructure SBU reportable segment.

166 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

AES Dominicana — In December 2023, the Company completed the sale of a 20% ownership interest in AES Dominicana for $192 million. AES Dominicana consists of five operating subsidiaries: Andres, Los Mina, Bayasol, Santanasol, and Agua Clara. This transaction decreased the Company's economic interest to 65% and resulted in a $74 million increase in Parent Company Stockholder's Equity due to an increase in additional paid-in-capital of $73 million and the reclassification of accumulated other comprehensive losses from AOCL to NCI of $1 million. As the Company maintained control after the sale, AES Dominicana continues to be consolidated by the Company. Andres and Los Mina are included within the Energy Infrastructure SBU reportable segment and Bayasol, Santanasol, and Aqua Clara are included within the Renewables SBU reportable segment.
Colon — In September 2021, the Company acquired the remaining 49.9% minority ownership interest in Colon to become its sole owner. The purchase price was paid over two installments in November 2021 and December 2023. This transaction resulted in a $12 million decrease in Parent Company Stockholders’ Equity due to a decrease in additional paid-in-capital of $8 million and the reclassification of accumulated other comprehensive losses from Redeemable stock of subsidiaries to AOCL of $4 million.
In December 2023, the Company completed the sale a 35% ownership interest in Colon for $146 million, which decreased the Company's economic interest to 65%. This transaction resulted in a $43 million increase in Parent Company Stockholder's Equity due to an increase in additional paid-in-capital of $31 million and the reclassification of accumulated other comprehensive losses from AOCL to NCI of $12 million. As the Company maintained control after the sale, Colon continues to be consolidated by the Company within the Energy Infrastructure SBU reportable segment.
AES Renewable Holdings — In December 2023, AES Renewable Holdings issued preferred shares in a portfolio of operating assets ("OpCo 1") to HASI for total proceeds of $143 million. As the Company maintained control after the transaction, AES Renewable Holdings continues to be consolidated by the Company within the Renewables SBU reportable segment.
AES Panama — In September 2023, AES Latin America completed the sale of its interest in the Grupo Energía Gas Panamá joint venture to AES Panama, a 49%-owned consolidated subsidiary. See Note 8—Investments in and Advances to Affiliates for further information. As a result of the transaction, AES Panama received $42 million from noncontrolling interest holders and the Company reclassified accumulated other comprehensive income from AOCL to NCI of $23 million. AES Panama is reported in the Renewables SBU reportable segment however the investment in Grupo Energía Gas Panamá is reported in the Energy Infrastructure SBU reportable segment.
Southland Energy — In December 2022, the Company completed the sale of a 14.9% ownership interest in the Southland Energy assets for $157 million, which decreased the Company's economic interest to 50.1%. This transaction resulted in a $91 million increase in Parent Company Stockholder's Equity due to an increase in additional paid-in-capital of $94 million, net of tax and transaction costs, partially offset by the reclassification of accumulated other comprehensive income from AOCL to NCI of $3 million. As the Company maintained control after the sale, Southland Energy continues to be consolidated by the Company. The CCGT units and interconnected battery-based energy storage facilities are included within the Energy Infrastructure SBU and Renewables SBU reportable segments, respectively.
AES Brasil — In August 2020, AES Holdings Brasil Ltda. ("AHB") committed to migrate AES Tietê to the Novo Mercado, which is a listing segment of the Brazilian stock exchange that requires equity capital to be composed only of common shares. 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 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.
Through multiple transactions in 2021, AHB acquired an additional 1.6% ownership in AES Brasil for $17 million. These transactions increased the Company’s economic 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.
In October 2021, AES Brasil concluded a follow-on offering for the issuance of 93 million newly issued shares, which further increased the Company's indirect beneficial interest in AES Brasil to 46.7% and resulted in a $7 million increase in Parent Company Stockholder's Equity due to an increase in additional paid-in capital.

167 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

In September 2022, AES Brasil commenced a private placement offering for its existing shareholders to subscribe for up to 116 million newly issued shares, of which 107 million were subscribed. AHB and noncontrolling interest holders subscribed for 54 million and 53 million shares, respectively, thereby increasing AES’ indirect beneficial interest in AES Brasil to 47.4% and resulting in additional capital contributions from noncontrolling interest holders of $98 million, an increase in additional paid-in capital of $10 million, and the reclassification of accumulated other comprehensive losses from NCI to AOCL of $3 million. AES Brasil is reported in the Renewables SBU reportable segment.
Guaimbê Holding — In April 2021, Guaimbê Solar Holding S.A (“Guaimbê Holding”), a subsidiary of AES Brasil which wholly owned the Guaimbê solar complex and the Alto Sertão II wind facility, issued preferred shares representing 19.9% ownership in the subsidiary for total proceeds of $158 million. The transaction decreased the Company’s indirect ownership interest in the operational entities from 45.3% to 36.3%.
In January 2022, the Ventus wind complex and AGV solar complex were incorporated by Guaimbê Holding. Guaimbê Holding issued additional preferred shares representing 3.5% ownership in the subsidiary for total proceeds of $63 million. The transaction further decreased the Company’s indirect ownership interest to 35.8%. As the Company maintained control after these transactions, Guaimbê Holding continues to be consolidated by the Company within the Renewables SBU reportable segment.
AES Andes — On December 29, 2020, AES Andes 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 Inversiones Cachagua SpA, an AES subsidiary, subscribed for 1.35 billion shares at a cost of $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 shares 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 98.1%. Through multiple transactions in 2022 following the tender offer, Cachagua acquired an additional 1.3% ownership in AES Andes for $22 million, further increasing AES’ indirect beneficial interest to 99.4% The tender offer and these follow-on transactions resulted in a $172 million decrease to Parent Company Stockholder’s Equity due to a decrease in additional paid-in capital of $96 million and the reclassification of accumulated other comprehensive losses from NCI to AOCL of $76 million. AES Andes is reported in the Energy Infrastructure SBU reportable segment.
The following table summarizes the net income (loss) attributable to The AES Corporation and all transfers (to) from noncontrolling interests for the periods indicated (in millions):
December 31, 2023 2022 2021
Net income (loss) attributable to The AES Corporation $ 249  $ (546) $ (409)
Transfers from noncontrolling interest:
Increase (decrease) in The AES Corporation's paid-in capital for sale of subsidiary shares 85  78  (7)
Increase (decrease) in The AES Corporation's paid-in-capital for purchase of subsidiary shares 24  (78) (9)
Net transfers (to) from noncontrolling interest 109  —  (16)
Change from net income (loss) attributable to The AES Corporation and transfers (to) from noncontrolling interests $ 358  $ (546) $ (425)

168 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Deconsolidations
Alto Maipo — In November 2021, Alto Maipo SpA filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. The Company determined it no longer had control over Alto Maipo and deconsolidated the business, which increased Parent Company Stockholder's Equity by $182 million due to the disposition of $177 million of accumulated other comprehensive losses and $5 million of accumulated deficit. See Note 24—Held-for-Sale and Dispositions for further information.
Accumulated Other Comprehensive Loss — The changes in AOCL by component, net of tax and noncontrolling interests, for the periods indicated were as follows (in millions):
Foreign currency translation adjustment, net Derivative gains (losses), net Unfunded pension obligations, net Total
Balance at December 31, 2021 $ (1,734) $ (456) $ (30) $ (2,220)
Other comprehensive income (loss) before reclassifications (37) 645  10  618 
Amount reclassified to earnings —  44  —  44 
Other comprehensive income (loss) (37) 689  10  662 
Reclassification from NCI due to share sales and repurchases (57) (22) (3) (82)
Balance at December 31, 2022 $ (1,828) $ 211  $ (23) $ (1,640)
Other comprehensive income (loss) before reclassifications 136  55  (3) 188 
Amount reclassified to earnings —  (52) —  (52)
Other comprehensive income (loss) 136  3  (3) 136 
Reclassification from NCI due to share sales —  (10) —  (10)
Balance at December 31, 2023 $ (1,692) $ 204  $ (26) $ (1,514)
Reclassifications out of AOCL are presented in the following table. Amounts for the periods indicated are in millions and those in parenthesis indicate debits to the Consolidated Statements of Operations.
Details About December 31,
AOCL Components Affected Line Item in the Consolidated Statements of Operations 2023 2022 2021
Foreign currency translation adjustments, net
Gain on disposal and sale of business interests $ —  $ —  $ (3)
Net income attributable to The AES Corporation $ —  $ —  $ (3)
Derivative gains (losses), net
Non-regulated revenue $ (8) $ (1) $ (1)
Non-regulated cost of sales (3) (1) 1 
Interest expense 17  (58) (85)
Gain (loss) on disposal and sale of business interests 33  —  (362)
Asset impairment expense —  (16) (13)
Foreign currency transaction losses (3) 2  (15)
Income from continuing operations before taxes and equity in earnings of affiliates 36  (74) (475)
Income tax benefit (expense) 9  9  105 
Net equity in losses of affiliates 28  6  (17)
Net income (loss) 73  (59) (387)
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries (21) 15  133 
Net income (loss) attributable to The AES Corporation $ 52  $ (44) $ (254)
Amortization of defined benefit pension actuarial losses, net
Non-regulated cost of sales $ —  $ (1) $ (1)
Other expense —  (1) (3)
Income from continuing operations before taxes and equity in earnings of affiliates —  (2) (4)
Income tax benefit (expense) —  1  3 
Net income (loss) —  (1) (1)
Less: Net income attributable to noncontrolling interests and redeemable stock of subsidiaries —  1  — 
Net income (loss) attributable to The AES Corporation $ —  $ —  $ (1)
Total reclassifications for the period, net of income tax and noncontrolling interests $ 52  $ (44) $ (258)
Common Stock Dividends — The Parent Company paid dividends of $0.1659 per outstanding share to its common stockholders during the first, second, third, and fourth quarters of 2023 for dividends declared in December 2022, February 2023, July 2023, and October 2023, respectively.
On December 8, 2023, the Board of Directors declared a quarterly common stock dividend of $0.1725 per share payable on February 15, 2024 to shareholders of record at the close of business on February 1, 2024.

169 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Stock Repurchase Program — No shares were repurchased in 2023. The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2023 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of commissions). As of December 31, 2023, $264 million remained available for repurchase under the Stock Repurchase Program.
The common stock repurchased has been classified as treasury stock and accounted for using the cost method. A total of 149,358,357 and 150,046,537 shares were held as treasury stock at December 31, 2023 and December 31, 2022, respectively. Restricted stock units under the Company's employee benefit plans are issued from treasury stock. The Company has not retired any common stock repurchased since it began the Stock Repurchase Program in July 2010.
18. SEGMENTS AND GEOGRAPHIC INFORMATION
The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally. In our 2022 Form 10-K, the management reporting structure and the Company’s reportable segments were mainly organized by geographic regions. In March 2023, we announced internal management changes as a part of our ongoing strategy to align our business to meet our customers’ needs and deliver on our major strategic objectives. The management reporting structure is now composed of four SBUs, mainly organized by technology, led by our President and Chief Executive Officer. Using the accounting guidance on segment reporting, the Company determined that its four operating segments are aligned with its four reportable segments corresponding to its SBUs. All prior period results have been retrospectively revised to reflect the new segment reporting structure.
•Renewables — Solar, wind, energy storage, and hydro generation facilities;
•Utilities — AES Indiana, AES Ohio and AES El Salvador regulated utilities and their generation facilities;
•Energy Infrastructure — Natural gas, LNG, coal, pet coke, diesel and oil generation facilities, and our businesses in Chile, which have a mix of generation sources, including renewables, that are pooled to service our existing PPAs; and
•New Energy Technologies — Green hydrogen initiatives and investments in Fluence, Uplight, 5B, and other new and innovative energy technology businesses.
Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our generation business line, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. Our Utilities SBU participates in our utilities business line, in 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. Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions.
Included in "Corporate and Other" are the results of the AES self-insurance company, corporate overhead costs which are not directly associated with the operations of our four reportable segments, and certain intercompany charges such as self-insurance premiums which are fully eliminated in consolidation.
During the first quarter of 2023, management began assessing operational performance and making resource allocation decisions using Adjusted EBITDA. Therefore, the Company uses Adjusted EBITDA as its primary segment performance measure. Adjusted EBITDA, a non-GAAP measure, is defined by the Company as earnings before interest income and expense, taxes, depreciation and amortization, adjusted for the impact of NCI and interest, taxes, depreciation and amortization of our equity affiliates, and adding back interest income recognized under service concession arrangements; 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 and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence.
The Company has concluded Adjusted EBITDA 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.

170 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Additionally, given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA 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 EBITDA are presented before inter-segment eliminations, which includes the effect of intercompany transactions with other segments except for 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):
Total Revenue
Year Ended December 31, 2023 2022 2021
Renewables SBU $ 2,339  $ 1,893  $ 1,562 
Utilities SBU 3,495  3,617  2,944 
Energy Infrastructure SBU 6,836  7,204  6,702 
New Energy Technologies SBU 76  3  7 
Corporate and Other 138  116  108 
Eliminations (216) (216) (182)
Total Revenue $ 12,668  $ 12,617  $ 11,141 
Reconciliation from Net Income (Loss): Adjusted EBITDA
Year Ended December 31,
2023 2022 2021
Net loss
 $ (182) $ (505) $ (951)
Income tax expense (benefit) 261  265  (133)
Interest expense 1,319  1,117  911 
Interest income (551) (389) (298)
Depreciation and amortization 1,128  1,053  1,056 
EBITDA $ 1,975  $ 1,541  $ 585 
Less: Income from discontinued operations (7) —  (4)
Less: Adjustment for noncontrolling interests and redeemable stock of subsidiaries (1)
 (552) (704) (47)
Less: Income tax expense (benefit), interest expense (income) and depreciation and amortization from equity affiliates 130  126  123 
Interest income recognized under service concession arrangements 71  77  82 
Unrealized derivative and equity securities losses (gains) 34  131  (4)
Unrealized foreign currency losses
 301  42  14 
Disposition/acquisition losses (gains)
 (79) 40  863 
Impairment losses 877  1,658  1,153 
Loss on extinguishment of debt 62  20  71 
Net gains from early contract terminations at Angamos —  —  (256)
Adjusted EBITDA $ 2,812  $ 2,931  $ 2,580 
_____________________________
(1)The allocation of earnings and losses to tax equity investors from both consolidated entities and equity affiliates is removed from Adjusted EBITDA.

Adjusted EBITDA
Year Ended December 31, 2023 2022 2021
Renewables SBU $ 645  $ 605  $ 545 
Utilities SBU 678  612  633 
Energy Infrastructure SBU 1,531  1,836  1,494 
New Energy Technologies SBU (62) (116) (77)
Corporate and Other 22  (19) (20)
Eliminations (2) 13  5 
Total Adjusted EBITDA
 $ 2,812  $ 2,931  $ 2,580 
The Company uses long-lived assets as its measure of segment assets. Long-lived assets includes amounts recorded in Property, plant and equipment, net and right-of-use assets for operating leases recorded in Other noncurrent assets on the Consolidated Balance Sheets.

171 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Long-Lived Assets
Year Ended December 31, 2023 2022 2021
Renewables SBU $ 15,735  $ 9,533  $ 6,353 
Utilities SBU 7,166  6,311  6,027 
Energy Infrastructure SBU 7,414  7,532  7,778 
New Energy Technologies SBU 14  2  4 
Corporate and Other 9  17  21 
Long-Lived Assets 30,338  23,395  20,183 
Current assets 6,649  7,643  5,356 
Investments in and advances to affiliates 941  952  1,080 
Debt service reserves and other deposits 194  177  237 
Goodwill 348  362  1,177 
Other intangible assets 2,243  1,841  1,450 
Deferred income taxes 396  319  409 
Other noncurrent assets, excluding right-of-use assets for operating leases 2,879  3,674  1,911 
Noncurrent held-for-sale assets 811  —  1,160 
Total Assets $ 44,799  $ 38,363  $ 32,963 
Depreciation and Amortization Capital Expenditures
Year Ended December 31, 2023 2022 2021 2023 2022 2021
Renewables SBU $ 338  $ 260  $ 222  $ 5,759  $ 2,972  $ 721 
Utilities SBU 400  376  361  1,374  859  544 
Energy Infrastructure SBU 381  404  458  585  742  847 
New Energy Technologies SBU 1  2  1  5  —  — 
Corporate and Other 8  11  14  10  11  28 
Total $ 1,128  $ 1,053  $ 1,056  $ 7,733  $ 4,584  $ 2,140 
Interest Income Interest Expense Net Equity in Earnings (Losses) of Affiliates
Year Ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 2021
Renewables SBU $ 181  $ 131  $ 55  $ 326  $ 236  $ 200  $ 41  $ 28  $ 63 
Utilities SBU 12  8  5  243  234  218  5  6  3 
Energy Infrastructure SBU 337  246  236  534  488  422  6  9  (4)
New Energy Technologies SBU 2  —  —  —  —  —  (84) (114) (86)
Corporate and Other 19  4  2  216  159  71  —  —  — 
Total $ 551  $ 389  $ 298  $ 1,319  $ 1,117  $ 911  $ (32) $ (71) $ (24)

The following table presents information, by country, about the Company's consolidated operations for each of the three years ended December 31, 2023, 2022, and 2021, and as of December 31, 2023 and 2022 (in millions). Revenue is recorded in the country in which it is earned and assets are recorded in the country in which they are located.
Total Revenue
Long-Lived Assets
Year Ended December 31, 2023 2022 2021 2023 2022
United States (1)
 $ 4,439  $ 4,093  $ 3,531  $ 19,750  $ 13,833 
Non-U.S.:
Chile 1,932  2,064  2,297  3,018  2,730 
Dominican Republic 1,400  1,591  1,087  1,098  1,013 
El Salvador 935  902  792  442  395 
Colombia 706  417  383  390  308 
Brazil 697  560  471  2,482  1,811 
Panama 644  678  595  1,910  1,880 
Mexico 536  595  471  271  409 
Bulgaria 528  790  700  483  487 
Argentina
 407  501  390  431  461 
Vietnam (2)
 344  323  320  —  1 
Jordan 97  102  98  39  41 
Other Non-U.S. 3  1  6  24  26 
Total Non-U.S. 8,229  8,524  7,610  10,588  9,562 
Total $ 12,668  $ 12,617  $ 11,141  $ 30,338  $ 23,395 
_____________________________
(1)     Includes Puerto Rico revenues of $269 million, $293 million, and $311 million for the years ended December 31, 2023, 2022, and 2021, respectively, and long-lived assets of $145 million and $96 million as of December 31, 2023 and 2022, respectively.
(2)     The Mong Duong 2 power project is operated under a BOT contract. Future expected payments for the construction performance obligation were recognized in Other noncurrent assets on the Consolidated Balance Sheets as of December 31, 2022. The Mong Duong assets were classified as held-for-sale as of December 31, 2023. See Note 20—Revenue and Note 24—Held-for-Sale and Dispositions for further information.

172 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

19. SHARE-BASED COMPENSATION
RESTRICTED STOCK
Restricted Stock Units — The Company issues RSUs under its long-term compensation plan. The RSUs are generally granted based upon a percentage of the participant's base salary. Most RSUs have a three-year vesting period and vest evenly in annual increments over that period. In all circumstances, RSUs granted by AES do not entitle the holder the right, or obligate AES, to settle the RSU in cash or other assets of AES.
For the years ended December 31, 2023, 2022, and 2021, RSUs issued had a grant date fair value equal to the closing price of the Company's stock on the grant date. The Company does not discount the grant date fair values to reflect any post-vesting restrictions. RSUs granted to employees during the years ended December 31, 2023, 2022, and 2021 had grant date weighted average fair values per RSU of $22.33, $20.92, and $26.46, respectively.
The 2021, 2022, and 2023 RSUs awarded to certain executives have a performance condition related to the achievement of environmental and social goals for the three-year periods ending December 31, 2023, December 31, 2024, and December 31, 2025, respectively. This performance condition can adjust the final number of units that vest to increase or decrease by up to 15% of the total units for all three years. The adjustment will be reflected in the number of units that vest at the end of the three-year performance period.
The following table summarizes the components of the Company's stock-based compensation related to its employee RSUs recognized in the Company's consolidated financial statements (in millions):
December 31, 2023 2022 2021
RSU expense before income tax $ 16  $ 16  $ 12 
Tax benefit (3) (2) (2)
RSU expense, net of tax $ 13  $ 14  $ 10 
Total value of RSUs converted (1)
 $ 10  $ 8  $ 13 
Total fair value of RSUs vested $ 15  $ 13  $ 10 
_____________________________
(1)Amount represents fair market value on the date of conversion.

Cash was not used to settle RSUs for the years ended December 31, 2023, 2022, and 2021. In the year ended December 31, 2023, $1 million of compensation cost was capitalized as part of the cost of an asset. In the years ended December 31, 2022 and 2021, no compensation cost was capitalized as part of the cost of an asset. As of December 31, 2023, total unrecognized compensation cost related to RSUs of $29 million is expected to be recognized over a weighted average period of approximately 1.9 years. There were no modifications to RSU awards during the year ended December 31, 2023.
A summary of the activity of RSUs for the year ended December 31, 2023 follows (RSUs in thousands):
RSUs Weighted Average Grant Date Fair Values Weighted Average Remaining Vesting Term
Nonvested at December 31, 2022 1,701  $ 23.22 
Vested (632) 23.04 
Forfeited and expired (255) 24.32 
Granted 1,229  22.33 
Nonvested at December 31, 2023 2,043  $ 22.60  1.75
Expected to vest at December 31, 2023 1,894  $ 22.68 
The Company initially recognizes compensation cost on the estimated number of instruments for which the requisite service is expected to be rendered. In 2023, AES has estimated a weighted average forfeiture rate of 6.14% for RSUs granted in 2023. This estimate will be revised if subsequent information indicates that the actual number of instruments forfeited is likely to differ from previous estimates. Based on the estimated forfeiture rate, the Company expects to expense $26 million on a straight-line basis over a weighted average period of three years.
The following table summarizes the RSUs that vested and were converted during the periods indicated (RSUs in thousands):

173 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Year Ended December 31, 2023 2022 2021
RSUs vested during the year 632  576  634 
RSUs converted during the year, net of shares withheld for taxes 407  380  452 
Shares withheld for taxes 225  196  182 
OTHER SHARE BASED COMPENSATION
The Company has three other share-based award programs. The Company has recorded expense of $2 million, $23 million, and $14 million for 2023, 2022, and 2021, respectively, related to these programs.
Performance Stock Units — In 2021, 2022, and 2023, the Company issued PSUs to officers under its long-term compensation plan. PSUs are stock units which include performance conditions. For 2021, 2022, and 2023, performance conditions are based on the Company’s Parent Free Cash Flow target. The performance conditions determine the vesting and final share equivalent per PSU and can result in earning an award payout range of 0% to 200%, depending on the achievement. The Company believes it is probable that the performance condition will be met and will continue to be evaluated throughout the performance period. In all circumstances, PSUs granted by AES do not entitle the holder the right, or obligate AES, to settle the stock units in cash or other assets of AES.
Performance Cash Units — In 2021, 2022, and 2023, the Company issued PCUs to its officers under its long-term compensation plan. The value for the 2021, 2022, and 2023 units is dependent on the market condition of total stockholder return on AES common stock as compared to the total stockholder return of the Standard and Poor's 500 Utilities Sector Index, Standard and Poor's 500 Index, and MSCI Emerging Markets Latin America Index over a three-year measurement period. Since PCUs are settled in cash, they qualify for liability accounting and periodic measurement is required.
Stock options — In the past, AES granted options to non-employee directors to purchase shares of common stock at a price equal to 100% of the market price at the date the option was granted. AES has not granted options since 2021. All stock options are fully vested and have a contractual term of 10 years. In all circumstances, stock options granted by AES do not entitle the holder the right, or oblige AES, to settle the stock options in cash or other assets of AES.
20. REVENUE
The following table presents our revenue from contracts with customers and other revenue for the periods indicated (in millions):
Year Ended December 31, 2023
Renewables SBU Utilities SBU Energy Infrastructure SBU
New Energy Technologies SBU
 Corporate, Other and Eliminations Total
Non-Regulated Revenue
Revenue from contracts with customers $ 2,198  $ 68  $ 6,181  $ 75  $ (77) $ 8,445 
Other non-regulated revenue (1)
 141  4  655  1  (1) 800 
Total non-regulated revenue 2,339  72  6,836  76  (78) 9,245 
Regulated Revenue
Revenue from contracts with customers —  3,391  —  —  —  3,391 
Other regulated revenue —  32  —  —  —  32 
Total regulated revenue —  3,423  —  —  —  3,423 
Total revenue $ 2,339  $ 3,495  $ 6,836  $ 76  $ (78) $ 12,668 
Year Ended December 31, 2022
Renewables SBU Utilities SBU Energy Infrastructure SBU
New Energy Technologies SBU
 Corporate, Other and Eliminations Total
Non-Regulated Revenue
Revenue from contracts with customers $ 1,791  $ 75  $ 6,871  $ 1  $ (100) $ 8,638 
Other non-regulated revenue (1)
 102  4  333  2  —  441 
Total non-regulated revenue 1,893  79  7,204  3  (100) 9,079 
Regulated Revenue
Revenue from contracts with customers —  3,507  —  —  —  3,507 
Other regulated revenue —  31  —  —  —  31 
Total regulated revenue —  3,538  —  —  —  3,538 
Total revenue $ 1,893  $ 3,617  $ 7,204  $ 3  $ (100) $ 12,617 

174 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Year Ended December 31, 2021
Renewables SBU Utilities SBU Energy Infrastructure SBU
New Energy Technologies SBU
 Corporate, Other and Eliminations Total
Non-Regulated Revenue
Revenue from contracts with customers $ 1,438  $ 73  $ 6,143  $ 6  $ (74) $ 7,586 
Other non-regulated revenue (1)
 124  3  559  1  —  687 
Total non-regulated revenue 1,562  76  6,702  7  (74) 8,273 
Regulated Revenue
Revenue from contracts with customers —  2,831  —  —  —  2,831 
Other regulated revenue —  37  —  —  —  37 
Total regulated revenue —  2,868  —  —  —  2,868 
Total revenue $ 1,562  $ 2,944  $ 6,702  $ 7  $ (74) $ 11,141 
_____________________________
(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 $328 million and $337 million as of December 31, 2023 and December 31, 2022, respectively.
During the years ended December 31, 2023 and 2022, we recognized revenue of $70 million and $36 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.
In June 2023, the Company closed on an agreement to terminate the PPA for the Warrior Run coal-fired power plant for total consideration of $357 million, to be paid by the offtaker through the end of the previous contract term in January 2030. Under the termination agreement, the plant will continue providing capacity through May 2024. The termination represents a contract modification under which the discounted termination payments, as well as a pre-existing contract liability, will be recognized as revenue on a straight-line basis over the remaining performance obligation period for approximately $32 million per month. As of December 31, 2023, the corresponding receivable balance was $148 million, of which $40 million and $108 million was recorded in Other current assets and Other noncurrent assets, respectively, on the Consolidated Balance Sheet. A significant financing component of $57 million is being recognized over the life of the payment term as interest income using the effective interest method.
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 BOT 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 Consolidated Balance Sheet. As of December 31, 2022, the Mong Duong loan receivable balance was $1.1 billion, net of CECL reserve of $28 million. Of the loan receivable balance, $97 million was classified as Other current assets, and $1 billion as Other noncurrent assets on the Consolidated Balance Sheet as of December 31, 2022. As of December 31, 2023, Mong Duong met the held-for-sale criteria and the loan receivable balance of $1.1 billion, net of CECL reserve of $26 million was classified as held-for-sale assets. Of the loan receivable balance, $108 million was classified as Current held-for-sale assets, and $962 million was classified as Noncurrent held-for-sale assets, respectively. See Note 24—Held-for-Sale and Dispositions for further information.
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 December 31, 2023, the aggregate amount of transaction price allocated to remaining performance obligations was $7 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 of approximately $1 million per year between 2024 and 2028, and the remainder thereafter.
21. 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, allowance for funds used during construction, and other income from miscellaneous transactions.

175 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Other expense generally includes losses on asset sales and dispositions, losses on legal contingencies, and losses from other miscellaneous transactions. The components are summarized as follows (in millions):
Year Ended December 31, 2023 2022 2021
Other Income
Gain on sale and disposal of assets
 $ 19  $ —  $ 24 
Gain on remeasurement of contingent consideration (1)
 16  3  28 
AFUDC (US Utilities) 14  10  8 
Insurance proceeds (2)
 6  12  — 
Dividend income on investments 6  3  1 
Legal settlements (3)
 4  6  53 
Gain on remeasurement of investment (4)
 —  22  — 
Liquidated damages under a power sales agreement —  10  — 
Gain on remeasurement to acquisition-date fair value (5)
 —  5  254 
Non-service pension income —  5  10 
Gain on acquired customer contracts —  5  — 
Gain on pension curtailment —  —  11 
Other 24  21  21 
Total other income $ 89  $ 102  $ 410 
Other Expense
Loss on sale and disposal of assets (6)
 $ 49  $ 13  $ 14 
Loss on commencement of sales-type leases (7)
 20  5  13 
Non-service pension and other postretirement costs 12  —  — 
Legal contingencies and settlements 2  8  2 
Cost of disposition of business interests (8)
 —  15  — 
Loss on sale of receivables (9)
 —  —  9 
Other 16  27  22 
Total other expense $ 99  $ 68  $ 60 
_____________________________
(1)Related to certain remeasurements of contingent consideration on projects acquired at AES Clean Energy. See Note 25—Acquisitions for further information.
(2)For the year ended December 31, 2022, primarily related to insurance recoveries associated with property damage at TermoAndes.
(3)For the year ended December 31, 2021, primarily related to settlement of legal arbitration at Alto Maipo.
(4)For the year ended December 31, 2022, related to the remeasurement of our existing investment in 5B, accounted for using the measurement alternative.
(5)For the year ended December 31, 2021, 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 25—Acquisitions for further information.
(6)For the year ended December 31, 2023, primarily related to impairments of inventory due to planned early plant closures at Ventanas 2, Norgener, and Warrior Run.
(7)Related to losses recognized at commencement of sales-type leases at AES Renewable Holdings. See Note 14—Leases for further information.
(8)Cost of disposition of a business interest at AES Gilbert due to a fire incident in April 2022, including the recognition of an allowance on the sales-type lease receivable.
(9)Associated with loss on sale of Stabilization Fund receivables at AES Andes. See Note 7—Financing Receivables for further information.

22. ASSET IMPAIRMENT EXPENSE
Year ended December 31, (in millions) 2023 2022 2021
Warrior Run $ 198  $ —  $ — 
New York Wind 186  —  — 
Mong Duong 167  —  — 
AES Clean Energy Development Projects 151  18  18 
Norgener 137  —  — 
TEG 77  104  — 
TEP 59  89  — 
Jordan 59  76  — 
GAF Projects (AES Renewable Holdings) 18  —  — 
Buffalo Gap III 6  —  91 
Buffalo Gap I 4  —  29 
Maritza —  468  — 
Ventanas 3 & 4 —  —  649 
Puerto Rico —  —  475 
Angamos —  —  155 
Buffalo Gap II —  —  73 
Mountain View I & II —  —  67 
Estrella del Mar I —  —  11 
Other 5  8  7 
Total $ 1,067  $ 763  $ 1,575 

176 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Warrior Run — On September 30, 2023, the Company filed a Generator Deactivation Notice with PJM stating its intention to either retire or mothball the Warrior Run coal-fired facility on June 1, 2024. On November 30, 2023, PJM approved the potential deactivation, therefore management reassessed the economic useful life of the generation facility. Due to the approval from PJM and the absence of other economically viable options, an impairment indicator was identified. The Company performed an impairment analysis as of November 30, 2023, and determined that the fair value of the asset group was $25 million, using the income approach. As a result, and since pre-tax losses are limited to the carrying value of the long-lived assets, the Company recognized pre-tax asset impairment expense of $198 million. Warrior Run is reported in the Energy Infrastructure SBU reportable segment.
New York Wind — In November 2023, AES Clean Energy Development, LLC ("ACED") was awarded ten projects from NYSERDA, six of which were related to the repowering of existing wind assets in New York that were acquired in November 2021. On November 28, 2023, the Company approved plans to execute the repowering project and sign a PPA with NYSERDA for the energy and capacity related to the repowered assets. As the repowering will result in decommissioning the existing turbines and reducing their depreciable lives, the approval to move forward with the repowering project was identified as an impairment indicator. The Company performed an impairment analysis as of November 30, 2023, and determined that the fair value of the asset group was $124 million, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $186 million. New York Wind is reported in the Renewables SBU reportable segment.
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 December 31, 2023, Mong Duong was classified as held-for-sale. The carrying amount of Mong Duong exceeded the agreed-upon sales price and as a result, the Company recognized pre-tax impairment expense of $167 million. See Note 24—Held-for-Sale and Dispositions for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.
AES Clean Energy Development Projects — AES Clean Energy Development has a pipeline of U.S. renewable projects that are in various stages of development and construction. In some cases, if development efforts are not successful, the Company may abandon a particular project, writing off all the intangible assets and capitalized development costs incurred. The fair value of each abandoned project with no salvage value is presumed to be zero as there are no future projected cash flows.
In 2023, 2022, and 2021, the Company recognized pre-tax asset impairment expense related to the write-off of projects that were determined to be no longer viable totaling $151 million, $18 million, and $18 million, respectively. The impairment expense recognized in 2023 primarily relates to the write-off of project development intangibles which were recognized at fair value when the Company acquired sPower's development platform as part of the formation of AES Clean Energy Development. See Note 25—Acquisitions for further information. The write-off of capitalized development costs incurred remained consistent with prior years. AES Clean Energy Development is reported in the Renewables SBU reportable segment.
TEG and TEP — On October 1, 2022, the Company performed the annual goodwill impairment test for the TEG TEP reporting unit. The quantitative impairment test resulted in an estimated fair value of the reporting unit which was less than its carrying amount. The failure of the goodwill impairment test was identified as an impairment indicator for the long-lived assets of the TEG and TEP asset groups. The Company performed an impairment analysis as of October 1, 2022, and determined that the carrying amounts of the asset groups were not recoverable. The TEG and TEP asset groups were determined to have fair values of $164 million and $147 million, respectively, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $104 million and $89 million, respectively. Subsequent to the asset impairment being recorded, the Company re-performed the goodwill test and no impairment was noted.
During the third quarter of 2023, management identified an impairment indicator at the TEG and TEP asset groups due to a reduction in expected capacity cash flows after expiration of the current PPA. The Company performed an impairment analysis as of July 31, 2023, and determined that the carrying amounts of the asset groups were not recoverable. The TEG and TEP asset groups were determined to have fair values of $93 million and $94 million, respectively, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $77 million and $59 million, respectively.

177 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

TEG and TEP are reported in the Energy Infrastructure SBU reportable segment.
Norgener — In May 2023, AES Andes announced its intention to accelerate the retirement of the Norgener coal-fired plant in Chile in order to further advance its decarbonization strategy. Due to this strategic development and the resulting decrease in useful life of the generation facility, the Company performed an impairment analysis as of May 1, 2023, and determined that the carrying amount of the asset group was not recoverable. The Norgener asset group was determined to have a fair value of $24 million, using the income approach. As a result, and since pre-tax losses are limited to the carrying amount of the long-lived assets, the Company recognized pre-tax asset impairment expense of $137 million. Norgener is reported in the Energy Infrastructure SBU reportable segment.
Jordan — In November 2020, the Company signed an agreement to sell 26% ownership interest in Amman East and IPP4 for $58 million and as of December 31, 2023, the generation plants continued to be classified as held-for-sale. Due to the delay in closing the transaction, the carrying amount of the asset group in subsequent periods exceeded the agreed-upon sales price and total pre-tax impairment expense of $59 million and $76 million was recorded during 2023 and 2022, respectively. See Note 24—Held-for-Sale and Dispositions for further information. Amman East and IPP4 are reported in the Energy Infrastructure SBU reportable segment.
GAF Projects — During the second quarter of 2023, management concluded that the carrying value of six project companies at AES Renewable Holdings (the “GAF Projects”) may not be recoverable as the expected purchase price on the buyout of tax equity investors implied a loss on the transaction. The buyout was completed in July 2023. Management performed a recoverability test as of May 31, 2023 and concluded that the undiscounted cash flows of the GAF Projects did not exceed the carrying values of the asset groups for five of the six projects. The asset groups for the GAF Projects were determined to have a fair value of $11 million, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $18 million. AES Renewable Holdings is reported in the Renewables SBU reportable segment.
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 30, 2022, in which it was determined that the carrying amount of the asset group was not recoverable. The Maritza asset group was determined to have a fair value of $452 million using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $468 million. Maritza is reported in the Energy Infrastructure SBU reportable segment.
Buffalo Gap — During the fourth quarter of 2021, due to an expired PPA and volatile spot prices in the ERCOT market, management concluded that the carrying value of the long-lived assets of Buffalo Gap I, II, and III wind generation facilities may not be recoverable. As such, the Company performed an impairment analysis and determined that the fair value of each asset group, using the income approach, was zero. As a result, the Company recognized pre-tax asset impairment expense of $29 million, $73 million, and $91 million at Buffalo Gap I, II, and III, respectively. During the fourth quarter of 2023, the Company recorded and subsequently impaired asset retirement costs of $4 million and $6 million related to Buffalo Gap I and III, respectively. The Buffalo Gap wind generation facilities are reported in the Renewables SBU reportable segment.
Ventanas and Angamos — In July 2021, AES Andes entered into an agreement committing to accelerate the retirement of the Ventanas 3, Ventanas 4, Angamos 1, and Angamos 2 coal-fired plants in Chile. Due to these strategic developments, the Company performed impairment analyses as of June 30, 2021, and determined that the carrying amounts of the asset groups were not recoverable. The Ventanas 3 & 4 and Angamos asset groups were determined to have fair values of $12 million and $86 million, respectively, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $649 million and $155 million, respectively. Ventanas and Angamos are reported in the Energy Infrastructure SBU reportable segment.
Mountain View I & II — In April 2021, the Company approved plans to execute a repowering project for the Mountain 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 the existing wind turbines in advance of their depreciable lives, the execution of the new PPAs was identified as an impairment indicator. The asset group was determined to have a fair value of $11 million using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $67 million.

178 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Mountain View I & II is reported in the Renewables SBU reportable segment.
Puerto Rico — New factors arose in the first quarter of 2021 associated with the economic costs and operational and reputational risks of disposal of coal combustion residuals off island. In addition, new legislative initiatives surrounding the prohibition of coal generation assets in Puerto Rico were introduced. Collectively, these factors along with management’s decision on how to best achieve our stated decarbonization goals resulted in an indicator of impairment at our asset group in Puerto Rico. As such, management performed a recoverability test in accordance with ASC 360 and concluded that Puerto Rico’s undiscounted cash flows did not exceed the carrying value of the asset group. The fair value of the asset group was determined to be $73 million, resulting in pre-tax impairment expense of $475 million. Puerto Rico is reported in the Energy Infrastructure SBU reportable segment.
Estrella del Mar I — In September 2021, the Company recognized asset impairment expense of $11 million due to a change in the estimated market value of the Estrella del Mar I power barge. The Company completed the sale of the power barge in November 2021. See Note 24—Held-for-Sale and Dispositions for further information. Prior to its sale, Estrella del Mar I was reported in the Renewables SBU reportable segment.
23. INCOME TAXES
Income Tax Provision — The following table summarizes the expense for income taxes on continuing operations for the periods indicated (in millions):
December 31, 2023 2022 2021
Federal: Current $ 9  $ 3  $ (2)
Deferred 15  (18) 42 
State: Current 16  2  1 
Deferred 30  1  18 
Foreign: Current 289  256  273 
Deferred (98) 21  (465)
Total $ 261  $ 265  $ (133)
Effective and Statutory Rate Reconciliation — The following table summarizes a reconciliation of the U.S. statutory federal income tax rate to the Company's effective tax rate as a percentage of income from continuing operations before taxes for the periods indicated:
December 31, 2023 2022 2021
Statutory Federal tax rate 21  % 21  % 21  %
State taxes, net of Federal tax benefit 87  % (1) % (6) %
Taxes on foreign earnings 14  % (42) % (2) %
Valuation allowance 83  % (10) % 7  %
Uncertain tax positions —  % 7  % 16  %
Change in tax law —  % —  % (1) %
U.S. Investment Tax Credit (70) % —  % —  %
Noncontrolling interest in U.S. subsidiaries 115  % —  % —  %
Alto Maipo deconsolidation —  % —  % (17) %
Noncontrolling interest on Buffalo Gap impairments —  % —  % (3) %
Nondeductible goodwill impairments 3  % (127) % —  %
Other—net (2) % (5) % (2) %
Effective tax rate 251  % (157) % 13  %
For 2023, included in the 14% taxes on foreign earnings are inflationary and foreign currency benefits at our Argentine businesses. Further, the Company recorded tax expense associated with the change in realizability of deferred tax assets at certain of those Argentine businesses, which is included in the 83% valuation allowance item. The (70)% U.S. Investment Tax Credit relates to investment tax credits for renewables projects placed in service this year. Not included in the 2023 effective tax rate is $28 million of income tax expense recorded to additional paid-in capital resulting from the Company's sales of a 20% ownership interest in AES Dominicana and a 35% ownership interest in Colon. See Note 17—Equity for details of the sales.
For 2022, included in the (42)% taxes on foreign earnings is the impact of favorable LNG transactions at the Energy Infrastructure SBU and inflation and foreign currency impacts at certain Argentine businesses. The (127)% nondeductible goodwill impairments relates to the impairments at AES Andes and AES El Salvador. Not included in the 2022 effective tax rate is $27 million of income tax expense recorded to additional paid-in capital related to the Company's sale of a 14.9% ownership interest in the Southland Energy assets.

179 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

See Note 17—Equity for details of the sale.
For 2021, included in the 7% for valuation allowance is approximately $93 million related to the release of valuation allowance at one of our Brazilian subsidiaries. Included in the 16% uncertain tax positions is approximately $176 million of income tax benefit related to effective settlement resulting from the exam closure of the Company’s U.S. 2017 tax return, the focus of which was on the TCJA one-time transition tax. The (17)% included in the Alto Maipo deconsolidation item above primarily reflects the lack of tax benefit for approximately $775 million of the $2,074 million pretax Alto Maipo deconsolidation loss. Also included in this item is approximately $41 million of tax benefit related to resulting tax over book outside basis difference in Alto Maipo, which is offset by $41 million of tax expense in the valuation allowance line item. The (3)% Buffalo Gap impairments item relates to the amounts of impairment allocated to tax equity noncontrolling interest which are nondeductible.
Income Tax Receivables and Payables — The current income taxes receivable and payable are included in Other current assets and Accrued and other liabilities, respectively, on the accompanying Consolidated Balance Sheets. The noncurrent income taxes receivable and payable are included in Other noncurrent assets and Other noncurrent liabilities, respectively, on the accompanying Consolidated Balance Sheets. The following table summarizes the income taxes receivable and payable as of the periods indicated (in millions):
December 31, 2023 2022
Income taxes receivable—current $ 95  $ 107 
Income taxes receivable—noncurrent 41  69 
Total income taxes receivable $ 136  $ 176 
Income taxes payable—current $ 103  $ 104 
Income taxes payable—noncurrent —  — 
Total income taxes payable $ 103  $ 104 
Deferred Income Taxes — Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating loss and tax credit carryforwards. These items are stated at the enacted tax rates that are expected to be in effect when taxes are actually paid or recovered.
As of December 31, 2023, the Company had federal net operating loss carryforwards for tax return purposes of approximately $769 million, which carry forward indefinitely. The Company also had federal general business tax credit carryforwards of approximately $79 million, which expire in 2040 and beyond. Additionally, the Company had state net operating loss carryforwards as of December 31, 2023 of approximately $4.8 billion expiring primarily in years 2024 to 2042. As of December 31, 2023, the Company had foreign net operating loss carryforwards of approximately $2.9 billion that expire at various times beginning in 2024 and some of which carry forward without expiration.
Valuation allowances increased $95 million during 2023 to $672 million at December 31, 2023. This net increase was primarily due to valuation allowance established at acquisition of a Chilean subsidiary, as well as changes in realizability of deferred tax assets at certain Argentine subsidiaries.
Valuation allowances increased $49 million during 2022 to $577 million at December 31, 2022. This net increase was primarily the result of valuation allowance established at acquisition of a Brazilian subsidiary.
The Company believes that it is more likely than not that the net deferred tax assets as shown below will be realized when future taxable income is generated through the reversal of existing taxable temporary differences and income that is expected to be generated by businesses that have long-term contracts or a history of generating taxable income.

180 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

The following table summarizes deferred tax assets and liabilities, as of the periods indicated (in millions):
December 31, 2023 2022
Differences between book and tax basis of property $ (966) $ (903)
Investment in U.S. tax partnerships (578) (582)
Other taxable temporary differences (403) (350)
Total deferred tax liability (1,947) (1,835)
Operating loss carryforwards 1,132  1,129 
Capital loss carryforwards 65  62 
Bad debt and other book provisions 92  57 
Tax credit carryforwards 72  62 
Other deductible temporary differences 409  282 
Total gross deferred tax asset 1,770  1,592 
Less: Valuation allowance (672) (577)
Total net deferred tax asset 1,098  1,015 
Net deferred tax liability $ (849) $ (820)
The Company considers undistributed earnings of certain foreign subsidiaries to be indefinitely reinvested outside of the U.S. Except for the one-time transition tax in the U.S., no taxes have been recorded with respect to our indefinitely reinvested earnings in accordance with the relevant accounting guidance for income taxes. Should the earnings be remitted as dividends, the Company may be subject to additional foreign withholding and state income taxes. Under the TCJA, future distributions from foreign subsidiaries will generally be subject to a federal dividends received deduction in the U.S. As of December 31, 2023, the cumulative amount of U.S. GAAP foreign un-remitted earnings upon which additional income taxes have not been provided is approximately $4 billion. It is not practicable to estimate the amount of any additional taxes which may be payable on the undistributed earnings.
Income from operations in certain countries is subject to reduced tax rates as a result of satisfying specific commitments regarding employment and capital investment. The Company's income tax benefits related to the tax status of these operations are estimated to be $19 million, $27 million and $27 million for the years ended December 31, 2023, 2022 and 2021, respectively. The per share effect of these benefits after noncontrolling interests was $0.02 for each of the years ended December 31, 2023, 2022 and 2021. Included in the Company's income tax benefits is the benefit related to our operations in Vietnam, which is estimated to be $16 million, $18 million and $16 million for the years ended December 31, 2023, 2022 and 2021, respectively. The per share effect of these benefits related to our operations in Vietnam after noncontrolling interest was $0.01 for each of the years ended December 31, 2023, 2022 and 2021.
The following table shows the income (loss) from continuing operations, before income taxes, net equity in earnings of affiliates and noncontrolling interests, for the periods indicated (in millions):
December 31, 2023 2022 2021
U.S. $ (238) $ 22  $ 622 
Non-U.S. 342  (191) (1,686)
Total $ 104  $ (169) $ (1,064)
Uncertain Tax Positions — Uncertain tax positions have been classified as noncurrent income tax liabilities unless they are expected to be paid within one year. The Company's policy for interest and penalties related to income tax exposures is to recognize interest and penalties as a component of the provision for income taxes in the Consolidated Statements of Operations. The following table shows the total amount of gross accrued income taxes related to interest and penalties included in the Consolidated Balance Sheets for the periods indicated (in millions):
December 31, 2023 2022
Interest related $ 2  $ 2 
Penalties related —  — 
The following table shows the expense/(benefit) related to interest and penalties on unrecognized tax benefits for the periods indicated (in millions):
December 31, 2023 2022 2021
Total benefit for interest related to unrecognized tax benefits $ —  $ —  $ 1 
Total expense for penalties related to unrecognized tax benefits —  —  1 
We are potentially subject to income tax audits in numerous jurisdictions in the U.S. and internationally until the applicable statute of limitations expires. Tax audits by their nature are often complex and can require several years to complete. The following is a summary of tax years potentially subject to examination in the significant tax and business jurisdictions in which we operate:

181 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Jurisdiction Tax Years Subject to Examination
Argentina
2017-2023
Brazil
2017-2023
Chile
2020-2023
Colombia
2017-2023
Dominican Republic
2020-2023
El Salvador
2020-2023
Netherlands
2017-2023
Panama
2020-2023
United Kingdom
2020-2023
United States (Federal)
2017-2023
As of December 31, 2023, 2022 and 2021, the total amount of unrecognized tax benefits was $107 million, $107 million and $122 million, respectively. The total amount of unrecognized tax benefits that would benefit the effective tax rate as of December 31, 2023, 2022 and 2021 is $107 million, $107 million and $122 million, respectively, of which $1 million, $2 million, and $4 million, respectively, would be in the form of tax attributes that would warrant a full valuation allowance. Further, the total amount of unrecognized tax benefit that would benefit the effective tax rate as of 2023 would be reduced by approximately $34 million of tax expense related to remeasurement from 35% to 21%.
The total amount of unrecognized tax benefits anticipated to result in a net increase to unrecognized tax benefits within 12 months of December 31, 2023 is estimated to be between zero and $10 million, primarily as a result of ongoing audits, including potential tax exam resolutions.
The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for the periods indicated (in millions):
2023 2022 2021
Balance at January 1 $ 107  $ 122  $ 458 
Additions for current year tax positions 1  4  28 
Additions for tax positions of prior years —  —  14 
Reductions for tax positions of prior years (1) (16) — 
Settlements —  (3) (377)
Lapse of statute of limitations —  —  (1)
Balance at December 31 $ 107  $ 107  $ 122 
The 2021 settlement amount of $377 million above primarily relates to effective settlement of historic unrecognized tax benefits as a result of the exam closure of the Company’s U.S. 2017 tax return, the focus of which was on the TCJA one-time transition tax assessed on cumulative foreign earnings and profits. This amount is based on the pre-TCJA income tax rate of 35% though the actual impact to the Company’s income tax expense is an income tax benefit computed at 21%.
The Company and certain of its subsidiaries are currently under examination by the relevant taxing authorities for various tax years. The Company regularly assesses the potential outcome of these examinations in each of the taxing jurisdictions when determining the adequacy of the amount of unrecognized tax benefit recorded. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe we have appropriately accrued for our uncertain tax benefits. However, audit outcomes and the timing of audit settlements and future events that would impact our previously recorded unrecognized tax benefits and the range of anticipated increases or decreases in unrecognized tax benefits are subject to significant uncertainty. It is possible that the ultimate outcome of current or future examinations may exceed our provision for current unrecognized tax benefits in amounts that could be material, but cannot be estimated as of December 31, 2023. Our effective tax rate and net income in any given future period could therefore be materially impacted.

182 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

24. HELD-FOR-SALE AND DISPOSITIONS
Held-for-Sale
Jordan — In November 2020, the Company signed an agreement to sell 26% ownership interest in Amman East and IPP4 for $58 million. The sale is expected to close in the first quarter of 2024. 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 December 31, 2023, the generation plants continued to be 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 net assets after impairment of the plants held-for-sale as of December 31, 2023 was $164 million. Amman East and IPP4 are reported in the Energy Infrastructure SBU reportable segment.
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"). The sale is subject to regulatory approval and is expected to close in mid-2025. As a result, Mong Duong was 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 net assets after impairment of the plant held-for-sale as of December 31, 2023 was $396 million. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.
Excluding any impairment charges, pre-tax income (loss) attributable to AES of businesses held-for-sale as of December 31, 2023 was as follows (in millions):
Year Ended December 31, 2023 2022 2021
Mong Duong
 $ 40  $ 50  $ 56 
Jordan 21  (6) 21 
Total $ 61  $ 44  $ 77 
Management has recorded pre-tax asset impairment expense of $167 million at Mong Duong. See Note 22—Asset Impairment Expense for further information. As of December 31, 2023, the significant assets and liabilities of Mong Duong are a long term financing receivable of $1.1 billion and debt of $639 million, respectively. As of December 31, 2023, the significant assets and liabilities of Jordan are property, plant and equipment and debt of $300 million and $176 million, respectively.
Dispositions
Colon transmission line — In December 2021, Gas Natural Atlántico II S. de. R.L., completed the sale of its transmission line to Empresa de Transmision Electrica, S.A., a government entity in charge of transmission of energy in Panama, for $51 million, resulting in a pre-tax gain on sale of $6 million, reported in Other income on the Consolidated Statement of Operations. The sale did not meet the criteria to be reported as discontinued operations. Prior to its sale, the Colon transmission line was reported in the Energy Infrastructure SBU reportable segment.
Alto Maipo — In November 2021, Alto Maipo SpA filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Therefore, the Company determined it no longer had control over Alto Maipo, resulting in its deconsolidation. The Company recorded a pre-tax loss on deconsolidation of $2.1 billion in Loss on disposal and sale of business interests on the Consolidated Statement of Operations. As Alto Maipo represents a component of AES Andes’ single reporting unit, the carrying value of the net assets of Alto Maipo included an allocation of $224 million of AES Andes’ consolidated goodwill balance of $868 million prior to deconsolidation. The Company allocated AES Andes’ goodwill based on the relative fair value of the component, which was determined based on the relative fair values of the business to be disposed and the portion of the reporting unit to be retained. Subsequent to the deconsolidation of Alto Maipo, the company evaluated the remaining Andes Reporting Unit goodwill and determined the goodwill was not at-risk.
The deconsolidation did not meet the criteria to be reported as discontinued operations. After deconsolidation, the Company's retained investment in Alto Maipo was recognized as a financial asset with zero fair value, utilizing a restructuring model of cash flows and a cost of equity of 21%. Prior to deconsolidation, Alto Maipo was reported in the Energy Infrastructure SBU reportable segment. See Note 5—Fair Value, Note 8—Investments In and Advances to Affiliates, Note 9—Goodwill and Other Intangible Assets, and Note 17—Equity for further information.

183 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Estrella del Mar I — In November 2021, the Company completed the sale of the Estrella del Mar I power barge for $6 million. The sale did not meet the criteria to be reported as discontinued operations. Prior to its sale, Estrella del Mar I was reported in the Renewables SBU reportable segment. See Note 22—Asset Impairment Expense for further information.
AES Tietê Inova Soluções — In June 2021, the Company completed the sale of its ownership in AES Inova Soluções, an investment platform in distributed solar generation, for $20 million, resulting in a pre-tax loss on sale of $1 million. The sale did not meet the criteria to be reported as discontinued operations. Prior to its sale, AES Tietê Inova Soluções was reported in the Renewables SBU reportable segment.
Itabo — In April 2021, the Company completed the sale of its 43% ownership interest in Itabo, a coal-fired plant and gas turbine in Dominican Republic, for $88 million, resulting in a pre-tax gain on sale of $4 million. The sale did not meet the criteria to be reported as discontinued operations. Prior to its sale, Itabo was reported in the Energy Infrastructure SBU reportable segment.
The following table summarizes, excluding any impairment charge or gain/loss on sale, the pre-tax income attributable to AES of disposed businesses for the periods indicated (in millions):
Year Ended December 31, 2023 2022 2021
Alto Maipo $ —  $ —  $ 35 
Itabo —  —  5 
Total $ —  $ —  $ 40 
25. ACQUISITIONS
Rexford — On October 2, 2023, the Company, through its subsidiary Rexford 1 Holdings, LLC., entered into an agreement for the purchase of 100% of the membership interests in 20SD 8me LLC., a 300 MW solar and 240 MW BESS 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 $253 million, including contingent consideration of $4 million. The nature of the assets acquired is largely tangible as they relate to construction in progress, along with typical working capital items and certain equipment.
We estimated the fair value of the construction in progress at approximately $282 million, using a discounted cash flow valuation methodology. The cash flow assumptions align with executed contracts, and incorporate forward energy pricing curves after the expiration date of such contracts. The cash flow and discount rates assumptions are considered Level 3 inputs. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. Rexford is reported in the Renewables SBU reportable segment.
Petersburg Solar Project — On August 31, 2023, the Company entered into agreements for project development and for the purchase of 100% of the membership in Petersburg Energy Center, LLC, a 250 MW solar and BESS 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 $49 million. Petersburg Solar Project is reported in the Utilities SBU reportable segment.
Calhoun — On July 18, 2023, the Company entered into an agreement for the purchase of 100% of the membership interests in Calhoun County Solar Project, LLC., which holds a late development-stage 125 MW 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 $64 million, including contingent consideration of $42 million. The estimated fair value of the contingent consideration for Calhoun was determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. The probability of achieving the milestone payment used to calculate the acquisition date fair value of the contingent consideration was 99%. Payments under the contingent consideration arrangement are largely binary and thus, a single probability of achieving the milestone was applied in the calculation of fair value. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. Calhoun is reported in the Renewables SBU reportable segment.

184 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Bellefield — On June 5, 2023, the Company entered into an agreement for the purchase of 100% of the membership interests in the Bellefield projects, consisting of two late development-stage solar and BESS projects of 1 GW each. The transaction was accounted for as an asset acquisition of variable interest entities that did not meet the definition of a business. The Company agreed to make total cash payments including reimbursement of development and equipment costs of up to approximately $449 million, a portion of which is contingent upon future milestones and price adjustments. This contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings.
The assets acquired and liabilities assumed were recorded at their fair values, which equaled the fair value of the consideration to be paid of approximately $358 million, including cash paid of $165 million, contingent consideration of $165 million, and deferred payments of $28 million. The significant assets acquired include project development intangibles, land option intangibles, deposits made towards integral equipment purchases, and typical working capital items.
We estimated the fair value of the project development intangibles at approximately $200 million, using a discounted cash flow valuation methodology. The cash flow assumptions align with executed contracts, and incorporate forward energy pricing curves after the expiration date of such contracts. The cash flow assumptions and discount rates are considered Level 3 inputs.
We estimated the fair value of the land option intangibles at approximately $82 million, by comparing the intrinsic value (estimated using a sales comparison approach for purchase options and an income capitalization method for lease options) and the strike price of each option.
The estimated fair value of the contingent consideration of Bellefield was determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. The weighted average probability of achieving the development milestones used to calculate the acquisition date fair value of the contingent consideration was 91.9%. Payments under the contingent consideration arrangements are largely binary and thus, a single probability of achieving the milestone was applied in the calculation of fair value. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. Bellefield is reported in the Renewables SBU reportable segment.
Bolero Solar Park — On June 9, 2023, the Company, through its subsidiary AES Andes S.A., acquired 100% of the equity interests in Helio Atacama Tres SpA, owner of the Bolero photovoltaic power plant for consideration of $114 million. The transaction was accounted for as an asset acquisition that did not meet the definition of a business. As Helio Atacama Tres is not a VIE, any difference between the fair value of the assets and consideration transferred will be allocated to PP&E on a relative fair value basis. Helio Atacama Tres is reported in the Energy Infrastructure SBU reportable segment.
Cubico II — On November 30, 2022, the Company, through its subsidiary AES Brasil Energia S.A ("AES Brasil") acquired 100% of shares of an operational wind complex comprised of (i) Ventos de São Tomé Holding S.A., (ii) Ventos de São Tito Holdings S.A., and (iii) REB Empreendimentos e Administradora de Bens S.A. The transaction was accounted for as an asset acquisition that did not meet the definition of a business. The assets acquired and liabilities assumed were recorded at their relative fair values. The total purchase price for the acquisition was $185 million. The Cubico II wind complex is recorded in the Renewables SBU reportable segment.
Agua Clara — On June 17, 2022, the Company, through its subsidiaries AES Dominicana Renewable Energy and AES Andres DR, S.A., acquired 100% of the equity interests in Agua Clara, S.A.S., a wind project, for consideration of $98 million. The transaction was accounted for as an asset acquisition that did not meet the definition of a business. As Agua Clara is not a VIE, any difference between the fair value of the assets and consideration transferred was allocated to PP&E on a relative fair value basis. Agua Clara is reported in the Renewables SBU reportable segment.
Tunica 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 Renewables SBU reportable segment.

185 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 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 Renewables SBU reportable segment.
New York Wind — In November 2021, AES Clean Energy Development, LLC completed the acquisition of Cogentrix Valcour Intermediate Holdings, LLC for $352 million cash consideration, including customary purchase price adjustments, plus the assumption of $126 million of non-recourse debt. The transaction includes operating wind assets spread across six sites and will complement AES Clean Energy’s existing operating and development solar and energy storage assets in the state of New York. The transaction was accounted for as a business combination, therefore, the assets acquired and liabilities assumed at acquisition date were recorded at their fair values, which resulted in the recognition of $199 million of goodwill. This goodwill represents the potential opportunity to repower the acquired assets and thus obtain additional cash flows upon repowering. The Company recorded preliminary amounts for the purchase price allocation in 2021.
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 Renewables SBU reportable segment.
Hardy Hills Solar — In December 2021, AES Indiana completed the acquisition of Hardy Hills solar project, which included assets of $52 million primarily consisting of project development intangibles. The transaction was accounted for as an asset acquisition of a variable interest entity that did not meet the definition of a business; therefore, the individual assets and liabilities were recorded at their fair values. A $6 million gain was recorded in Other income on the Consolidated Statement of Operations for the difference between the consideration transferred and the assets and liabilities recognized. The total consideration included $3 million of contingent consideration dependent on the amount of certain future costs incurred by the project. Hardy Hills Solar is reported in the Utilities SBU reportable segment.
Community Energy — In December 2021, AES Clean Energy Development, LLC completed the acquisition of Community Energy, LLC for $217 million cash consideration, including customary purchase price adjustments, plus the assumption of $38 million of non-recourse debt. At closing, the Company made a cash payment of $232 million, which included $15 million of the assumed non-recourse debt. The transaction was accounted for as a business combination; therefore, the assets acquired and liabilities assumed at the acquisition date were recorded at their fair values, which resulted in the recognition of $90 million of goodwill.
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 Renewables SBU reportable segment.
sPower Projects — In December 2021, AES Clean Energy Development Holdings, LLC entered into an agreement with AIMCo, our minority partner in AES Clean Energy Development, LLC and our partner in the sPower equity method investment. As part of this transaction, AES acquired an additional 25% ownership interest in specifically identified projects of sPower from AIMCo, in exchange for a 25% ownership interest in the Mountain View and Laurel Mountain wind operating projects, plus $28 million cash.
The transaction was accounted for as an asset acquisition. The sPower projects received were remeasured at their acquisition-date fair values, resulting in the recognition of a $35 million gain, recorded in Other Income on the Consolidated Statement of Operations. See Note 8—Investments in and Advances to Affiliates for further information. The Company recorded $3 million in additional paid-in-capital, representing the difference between the fair value of the consideration transferred and the recognition of the noncontrolling interest.

186 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Subsequent to the closing of the transaction, AES holds a 75% ownership interest in the Mountain View and Laurel Mountain wind operating projects and a 75% ownership interest in specifically identified projects of sPower through its ownership of AES Clean Energy Development, LLC, and 50% ownership interest in the sPower equity method investment. AIMCo holds the remaining 25% minority interest in AES Clean Energy Development, LLC and 50% ownership interest in sPower. sPower is reported in the Renewables SBU reportable segment.
Serra Verde Wind Project — In July 2021, AES Brasil completed the acquisition of the Serra Verde Wind Project for $18 million, including contingent consideration and working capital adjustment, with the last annual installment ended on July 19, 2023. The transaction was accounted for as an asset acquisition of variable interest entities that did not meet the definition of a business; therefore, the consideration transferred, plus transaction costs were allocated to the individual assets acquired and liabilities assumed based on their relative fair values. Serra Verde is reported in the Renewables SBU reportable segment.
Cajuína Wind Project — In May 2021, AES Brasil completed the acquisition of the Cajuína Wind Project phase I for $22 million, and in July 2021, AES Brasil completed the acquisition of the Cajuína Wind Project phase II for $24 million plus $3 million of contingent consideration paid in October, 2022. The cash payments were negotiated in four annual installments and the last payments will occur on March 31, 2024 and on July 29, 2024, respectively. These transactions were accounted for as asset acquisitions of variable interest entities that did not meet the definition of a business; therefore, the consideration transferred, plus transaction costs were allocated to the individual assets acquired and liabilities assumed based on their relative fair values. Cajuína is reported in the Renewables SBU reportable segment.
Cubico I — In April 2021, AES Brasil completed the acquisition of the Cubico I wind complex, which includes the Mandacaru and Salinas facilities, 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 I is reported in the Renewables SBU reportable segment.
AES Clean Energy Development — In February 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 renewables 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 $102 million, and the contribution to AES Clean Energy Development resulted in a corresponding decrease in the carrying value of the sPower investment.
During the first quarter of 2021, the sPower development assets transferred were remeasured at their acquisition-date preliminary fair values, resulting in the recognition of a $36 million gain, recorded in Other income on the Consolidated Statement of Operations. The 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 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.
During the second quarter of 2021, the Company recorded measurement period adjustments as result of additional facts and circumstances that existed as of the date of the acquisition but were not yet known as of the time of the valuation performed in the first quarter of 2021. As a result, the estimated acquisition-date carrying value and fair values of the sPower development assets transferred were increased, which resulted in the recognition of an additional $178 million gain, for an updated gain of $214 million. Furthermore, the estimated goodwill as of the acquisition date was reduced to $45 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 in the third quarter of 2021, which did not result in any material measurement period adjustments.

187 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 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 Consolidated Balance Sheets. See Note 16—Redeemable Stock of Subsidiaries for further information. AES Clean Energy Development is reported in the Renewables SBU reportable segment.
Great Cove Solar— In January 2021 and May 2021, AES Clean Energy Development, LLC 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 were recorded at their fair values, which equaled the fair value of the consideration. During the third quarter of 2021, the contingent liabilities which related primarily to certain price adjustment features were remeasured, resulting in contingent consideration assets of $2 million and $12 million for Great Cove I and Great Cove II, respectively. This remeasurement resulted in a gain of $32 million recorded in Other income in the Consolidated Statement of Operations during the third quarter of 2021. In October 2021, the Company amended the agreement, resulting in the reclassification of the previously contingent consideration assets to Prepaid expenses. In December 2021, the Company acquired Community Energy, LLC (as further described above), and such remaining prepaid amounts were written off to Other income in the Consolidated Statement of Operations. Great Cove Solar is reported in the Renewables SBU reportable segment.
26. 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 equity units. The effect of such potential common stock is computed using the treasury stock method for RSUs and stock options, and is computed using the if-converted method 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 years ended December 31, 2023, 2022 and 2021, where income represents the numerator and weighted-average shares represent the denominator.
Year Ended December 31, 2023 2022 2021
(in millions, except per share data) Income Shares $ per Share Loss Shares $ per Share Loss Shares $ per Share
BASIC EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders $ 242  669  $ 0.36  $ (546) 668  $ (0.82) $ (413) 666  $ (0.62)
EFFECT OF DILUTIVE SECURITIES
Stock options —  1  —  —  —  —  —  —  — 
Restricted stock units —  2  —  —  —  —  —  —  — 
Equity units 1  40  (0.02) —  —  —  —  —  — 
DILUTED EARNINGS (LOSS) PER SHARE $ 243  712  $ 0.34  $ (546) 668  $ (0.82) $ (413) 666  $ (0.62)
The calculation of diluted earnings per share excluded 2 million outstanding stock awards for the year ended December 31, 2023, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.
For the years ended December 31, 2022 and December 31, 2021, the calculation of diluted earnings per share excluded 5 million outstanding stock awards and 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, potential shares of common stock of 3 million and 4 million related to the stock awards and 40 million and 33 million related to the Equity Units, would have been included in diluted weighted-average shares outstanding for the years ended December 31, 2022 and December 31, 2021, respectively.

188 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

As described in Note 17—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. 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 December 31, 2023, due to customary anti-dilution provisions, the conversion rate was 31.6795, equivalent to a conversion price of approximately $31.57 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. On February 15, 2024, the Series A Preferred Stock was tendered to satisfy the Purchase Contract's settlement price and the Corporate Units were converted into shares of the Company's common stock at a settlement rate of 3.8859, equivalent to a reference price of $25.73. The Series A Preferred Stock was cancelled upon conversion.
27. RISKS AND UNCERTAINTIES
AES is a diversified power generation and utility company organized into four technology-based SBUs. See additional discussion of the Company's principal markets in Note 18—Segments and Geographic Information. Within our four SBUs, we have two primary lines of business: generation and utilities. The generation line of business uses a wide range of fuels and technologies to generate electricity such as coal, gas, hydro, wind, solar, and biomass. Our utilities business comprises businesses that transmit, distribute, and in certain circumstances, generate power. In addition, the Company has operations in the renewables area. These efforts include projects primarily in wind, solar, and energy storage.
Operating and Economic Risks — The Company operates in several developing economies where macroeconomic conditions are typically more volatile than developed economies. Deteriorating market conditions and evolving industry expectations to transition away from fossil fuel sources for generation expose the Company to the risk of decreased earnings and cash flows due to, among other factors, adverse fluctuations in the commodities and foreign currency spot markets, and potential changes in the estimated useful lives of our thermal plants. Additionally, credit markets around the globe continue to tighten their standards, which could impact our ability to finance growth projects through access to capital markets. Currently, the Company has an investment grade rating from both Standard & Poor's and Fitch of BBB- and an investment grade rating from Moody's of Baa3. A downgrade in our current investment grade ratings could affect the Company's ability to finance new and/or existing development projects at competitive interest rates. As of December 31, 2023, the Company had $1.4 billion of unrestricted cash and cash equivalents.
During 2023, 65% of our revenue was generated outside the U.S. and a significant portion of our international operations is conducted in developing countries. We continue to invest in several developing countries to expand our existing platform and operations. International operations, particularly the operation, financing, and development of projects in developing countries, entail significant risks and uncertainties, including, without limitation:
•economic, social, and political instability in any particular country or region;
•inability to economically hedge energy prices;
•volatility in commodity prices;
•adverse changes in currency exchange rates;
•government restrictions on converting currencies or repatriating funds;
•unexpected changes in foreign laws, regulatory framework, or in trade, monetary or fiscal policies;
•high inflation and monetary fluctuations;
•restrictions on imports of solar panels, wind turbines, coal, oil, gas, or other raw materials required by our generation businesses to operate;
•threatened or consummated expropriation or nationalization of our assets by foreign governments;
•unwillingness of governments, government agencies, similar organizations, or other counterparties to honor their commitments;
•unwillingness of governments, government agencies, courts, or similar bodies to enforce contracts that are economically advantageous to subsidiaries of the Company and economically unfavorable to counterparties, against such counterparties, whether such counterparties are governments or private parties;

189 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

•inability to obtain access to fair and equitable political, regulatory, administrative, and legal systems;
•adverse changes in government tax policy;
•potentially adverse tax consequences of operating in multiple jurisdictions;
•difficulties in enforcing our contractual rights, enforcing judgments, or obtaining a just result in local jurisdictions; and
•inability to obtain financing on expected terms.
Any of these factors, individually or in combination with others, could materially and adversely affect our business, results of operations, and financial condition. In addition, our Latin American operations experience volatility in revenue and earnings which have caused and are expected to cause significant volatility in our results of operations and cash flows. The volatility is caused by regulatory and economic difficulties, political instability, indexation of certain PPAs to fuel prices, and currency fluctuations being experienced in many of these countries. This volatility reduces the predictability and enhances the uncertainty associated with cash flows from these businesses.
Our inability to predict, influence or respond appropriately to changes in law or regulatory schemes, including any inability to obtain reasonable increases in tariffs or tariff adjustments for increased expenses, could adversely impact our results of operations or our ability to meet publicly announced projections or analysts' expectations. Furthermore, changes in laws or regulations or changes in the application or interpretation of regulatory provisions in jurisdictions where we operate, particularly our utility businesses where electricity tariffs are subject to regulatory review or approval, could adversely affect our business, including, but not limited to:
•changes in the determination, definition, or classification of costs to be included as reimbursable or pass-through costs;
•changes in the definition or determination of controllable or noncontrollable costs;
•adverse changes in tax law;
•changes in the definition of events which may or may not qualify as changes in economic equilibrium;
•changes in the timing of tariff increases;
•other changes in the regulatory determinations under the relevant concessions; or
•changes in environmental regulations, including regulations relating to GHG emissions in any of our businesses.
Any of the above events may result in lower margins for the affected businesses, which can adversely affect our results of operations.
Puerto Rico — Earlier this year, AES Puerto Rico took certain measures to address identified liquidity challenges. On July 6, 2023, PREPA agreed to the release of funds in the escrow account guaranteeing AES Puerto Rico’s obligations under the Power Purchase and Operating Agreement (“PPOA”) in order to provide additional liquidity for the business. AES Puerto Rico continues to work with PREPA and its noteholders on these liquidity challenges. During Q4 2023, a restructuring support agreement was executed by AES Puerto Rico and its noteholders and a PPOA amendment was approved by PREPA. These agreements require Puerto Rico Energy Bureau ("PREB") approval to become effective. On February 2, 2024 a resolution was issued by PREB approving the PPOA amendment subject to the incorporation of certain additional terms and conditions. The Company expects the PPOA amendment and restructuring support agreement to become effective during the first quarter of 2024.
Despite these challenges and considering the information available as of the filing date, management believes the carrying amount of our long-lived assets at AES Puerto Rico of $76 million is recoverable as of December 31, 2023. However, it is reasonably possible that the estimate of undiscounted cash flows may change in the near term resulting in the need to write down our long-lived assets in Puerto Rico to fair value.
Foreign Currency Risks — AES operates businesses in many foreign countries and such operations could be impacted by significant fluctuations in foreign currency exchange rates. Fluctuations in currency exchange rate between the USD and the following currencies could create significant fluctuations in earnings and cash flows: the Argentine peso, the Brazilian real, the Chilean peso, the Colombian peso, the Dominican peso, the Euro, the Indian rupee, and the Mexican peso.

190 | Notes to Consolidated Financial Statements—(Continued) | December 31, 2023, 2022 and 2021

Concentrations — Due to the geographical diversity of its operations, the Company does not have any significant concentration of customers or sources of fuel supply. Several of the Company's generation businesses rely on PPAs with one or a limited number of customers for the majority of, and in some cases all of, the relevant businesses' output over the term of the PPAs. However, no single customer accounted for 10% or more of total revenue in 2023, 2022 or 2021.
The cash flows and results of operations of our businesses depend on the credit quality of our customers and the continued ability of our customers and suppliers to meet their obligations under PPAs and fuel supply agreements. If a substantial portion of the Company's long-term PPAs and/or fuel supply were modified or terminated, the Company would be adversely affected to the extent that it would be unable to replace such contracts at equally favorable terms.
28. RELATED PARTY TRANSACTIONS
Certain of our businesses in Panama and the Dominican Republic are partially owned by governments either directly or through state-owned institutions. In the ordinary course of business, these businesses enter into energy purchase and sale transactions, and transmission agreements with other state-owned institutions which are controlled by such governments. At two of our generation businesses in Mexico, the offtakers exercise significant influence, but not control, through representation on these businesses' Boards of Directors. These offtakers are also required to hold a nominal ownership interest in such businesses. Furthermore, in 2021, the Company began construction projects with Fluence relating to energy storage. These related party transactions primarily present themselves as construction in progress, as seen below. Additionally, the Company provides certain support and management services to several of its affiliates under various agreements.
The Company's Consolidated Statements of Operations included the following transactions with related parties for the periods indicated (in millions):
Years Ended December 31, 2023 2022 2021
Revenue—Non-Regulated $ 1,055  $ 1,093  $ 1,159 
Cost of Sales—Non-Regulated 576  352  324 
Interest income 9  10  12 
Interest expense 36  95  88 
The following table summarizes the balances that relate to related party transactions for balance sheet accounts included in the Company's Consolidated Balance Sheets as of the periods indicated (in millions):
December 31, 2023 2022
Receivables from related parties $ 584  $ 484 
Accounts and notes payable to related parties (1)
 1,411  1,264 
Construction in progress 464  714 
_____________________________
(1)Includes $639 million and $756 million of debt to Mong Duong Finance Holdings B.V., as of December 31, 2023 and 2022, respectively. Mong Duong was classified as held-for-sale in December 2023 (see Note 11—Debt).
29. SUBSEQUENT EVENTS
Warrior Run — On February 1, 2024, Warrior Run closed on a Sale and Assignment Agreement, in which the remaining future cash flows from the Warrior Run PPA termination agreement (see Note 20—Revenue) were assigned to a third party. In return, Warrior Run received approximately $273 million in proceeds, which were used primarily to repay existing indebtedness and for general corporate purposes. The net proceeds from this transaction will be included in Non-recourse debt on the Consolidated Balance Sheets until June 2024.

191 | 2023 Annual Report

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.
The Company carried out the evaluation required by Rules 13a-15(b) and 15d-15(b), under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon this evaluation, the CEO and CFO concluded that as of December 31, 2023, our disclosure controls and procedures were effective.
Management's Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
•pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
•provide reasonable assurance that unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements are prevented or detected timely.
Management, including our CEO and CFO, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future periods because of changes in business conditions, or that the degree of compliance with the policies or procedures deteriorates.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in 2013. Based on this assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2023.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2023, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which appears herein.
Changes in Internal Control Over Financial Reporting:
There were no changes that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


192 | 2023 Annual Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of The AES Corporation
Opinion on Internal Control over Financial Reporting
We have audited The AES Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, The AES Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(c) and our report dated February 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP
Tysons, Virginia
February 26, 2024


193 | 2023 Annual Report 194 | 2023 Annual Report
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.


PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following information is incorporated by reference from the Registrant's Proxy Statement for the Registrant's 2024 Annual Meeting of Stockholders which the Registrant expects will be filed on or around March 14, 2024 (the "2024 Proxy Statement"):
•information regarding the directors required by this item found under the heading Board of Directors - Biographies;
•information regarding AES' Code of Ethics found under the heading Corporate Governance at AES - Additional Governance Information; and
•information regarding AES' Financial Audit Committee found under the heading Board and Committee Governance - Board Committees - Financial Audit Committee (the “Audit Committee”).
Certain information regarding executive officers required by this Item is presented as a supplementary item in Part I hereof (pursuant to Instruction 3 to Item 401(b) of Regulation S-K). The other information required by this Item, to the extent not included above, will be contained in our 2024 Proxy Statement and is herein incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402 of Regulation S-K will be contained in the 2024 Proxy Statement under "Director Compensation" and "Executive Compensation" (excluding the information under the caption “Compensation Committee Report”) and is incorporated herein by reference.
The information required by Item 407(e)(5) of Regulation S-K will be contained under the caption “Compensation Committee Report” of the Proxy Statement. Such information shall not be deemed to be “filed.”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
(a)Security Ownership of Certain Beneficial Owners and Management.
See the information contained under the heading Security Ownership of Certain Beneficial Owners, Directors, and Executive Officers of the 2024 Proxy Statement, which information is incorporated herein by reference.
(b)Securities Authorized for Issuance under Equity Compensation Plans.
The following table provides information about shares of AES common stock that may be issued under AES' equity compensation plans, as of December 31, 2023:
Securities Authorized for Issuance under Equity Compensation Plans (As of December 31, 2023)
(a) (b) (c)
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders (1)
 5,633,037 
(2)
 $ 13.60  11,153,030 
Equity compensation plans not approved by security holders —  —  — 
Total 5,633,037  $ 13.70  11,153,030 
_____________________________
(1)The following equity compensation plans have been approved by The AES Corporation's Stockholders:
(a)The AES Corporation 2003 Long Term Compensation Plan was adopted in 2003 and provided for 17,000,000 shares authorized for issuance thereunder. In 2008, an amendment to the Plan to provide an additional 12,000,000 shares was approved by AES' stockholders, bringing the total authorized shares to 29,000,000. In 2010, an additional amendment to the Plan to provide an additional 9,000,000 shares was approved by AES' stockholders, bringing the total authorized shares to 38,000,000. In 2015, an additional amendment to the Plan to provide an additional 7,750,000 shares was approved by AES' stockholders, bringing the total authorized shares to 45,750,000. The weighted average exercise price of Options outstanding under this plan included in Column (b) is $13.60 (excluding performance stock units, restricted stock units and director stock units), with 11,153,030 shares available for future issuance.
(b)The AES Corporation Second Amended and Restated Deferred Compensation Plan for directors provided for 2,000,000 shares authorized for issuance. Column (b) excludes the Director stock units granted thereunder. In conjunction with the 2010 amendment to the 2003 Long Term Compensation Plan, ongoing award issuance from this plan was discontinued in 2010 as Director stock units will be issued from the 2003 Long Term Compensation Plan. Any remaining shares under this plan, which are not reserved for


195 | 2023 Annual Report
issuance under outstanding awards, are not available for future issuance and thus the amount of 105,341 shares is not included in Column (c) above.
(2)Includes 3,435,116 (of which 330,522 are vested and 3,104,594 are unvested) shares underlying PSU and RSU awards (assuming 2021, 2022 and 2023 PSUs maximum performance), 1,477,308 shares underlying Director stock unit awards, and 720,613 shares issuable upon the exercise of Stock Option grants, for an aggregate number of 5,633,037 shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information regarding related party transactions required by this item will be included in the 2024 Proxy Statement found under the headings Related Person Policies and Procedures and Board and Committee Governance and are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item 14 will be included in the 2024 Proxy Statement under the headings Information Regarding The Independent Registered Public Accounting Firm, Audit Fees, Audit Related Fees, and Pre-Approval Policies and Procedures and is incorporated herein by reference.


196 | 2023 Annual Report
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)Financial Statements.
Financial Statements and Schedules: Page
S-2-S-7
(b)Exhibits.
3.1
3.2
4
There are numerous instruments defining the rights of holders of long-term indebtedness of the Registrant and its consolidated subsidiaries, none of which exceeds ten percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant hereby agrees to furnish a copy of any of such agreements to the Commission upon request. Since these documents are not required filings under Item 601 of Regulation S-K, the Company has elected to file certain of these documents as Exhibits 4.(a)—4.(i).
4.(a)
4.(b)
4.(c)
4.(d)
4.(e)
4.(f)
4.(g)
4.(h)
4.(i)
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8


197 | 2023 Annual Report
10.9
10.10
10.11
10.12
10.13
10.13A
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
21.1
23.1
24
31.1
31.2
32.1
32.2
97
101 The AES Corporation Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) the Cover Page, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Operations, (iv) Consolidated Statements of Comprehensive Income (Loss), (v) Consolidated Statements of Changes in Equity, (vi) Consolidated Statements of Cash Flows, and (vii) Notes to 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.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(c)Schedule
Schedule I—Financial Information of Registrant 198 | 2023 Annual Report


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE AES CORPORATION
(Company)
Date: February 26, 2024 By:
/s/   ANDRÉS GLUSKI        
Name: Andrés Gluski
President, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Name Title Date
* President, Chief Executive Officer (Principal Executive Officer) and Director
Andrés Gluski February 26, 2024
* Director
Gerard M. Anderson
 February 26, 2024
*
 Director
Inderpal S. Bhandari
 February 26, 2024
* Director
Janet G. Davidson February 26, 2024
* Director
Tarun Khanna February 26, 2024
* Director
Holly K. Koeppel February 26, 2024
* Director
Julia M. Laulis February 26, 2024
* Director
Alain Monié February 26, 2024
*
Chairman of the Board and Lead Independent Director
John B. Morse February 26, 2024
*
Director
Moisés Naím
 February 26, 2024
*
Director
Teresa M. Sebastian February 26, 2024
* Director
Maura Shaughnessy February 26, 2024
/s/ STEPHEN COUGHLIN Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Stephen Coughlin February 26, 2024
/s/ SHERRY L. KOHAN Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
Sherry L. Kohan February 26, 2024
*By: /s/ PAUL L. FREEDMAN February 26, 2024
Attorney-in-fact


S-1 | 2023 Annual Report
THE AES CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENT SCHEDULES
S-2
Schedules other than that listed above are omitted as the information is either not applicable, not required, or has been furnished in the consolidated financial statements or notes thereto included in Item 8 hereof.

























See Notes to Schedule I S-2 | 2023 Annual Report




THE AES CORPORATION
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT
BALANCE SHEETS
DECEMBER 31, 2023 AND 2022
December 31,
2023 2022
(in millions)
ASSETS
Current Assets:
Cash and cash equivalents $ 33  $ 24 
Accounts and notes receivable from subsidiaries 1,248  169 
Prepaid expenses and other current assets 51  47 
Total current assets 1,332  240 
Investment in and advances to subsidiaries and affiliates 6,735  7,204 
Office Equipment:
Cost 14  16 
Accumulated depreciation (12) (10)
Office equipment, net 2  6 
Other Assets:
Deferred financing costs, net of accumulated amortization of $11 and $9, respectively
 6  8 
Other assets 44  117 
Total other assets 50  125 
Total assets $ 8,119  $ 7,575 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 44  $ 33 
Accounts and notes payable to subsidiaries 273  609 
Accrued and other liabilities 284  319 
Senior notes payable—current portion 200  — 
Total current liabilities 801  961 
Long-term Liabilities:
Debt 4,264  3,894 
Accounts and notes payable to subsidiaries 158  — 
Other long-term liabilities 408  283 
Total long-term liabilities 4,830  4,177 
Stockholders' equity:
Preferred stock 838  838 
Common stock 8  8 
Additional paid-in capital 6,355  6,688 
Accumulated deficit (1,386) (1,635)
Accumulated other comprehensive loss (1,514) (1,640)
Treasury stock (1,813) (1,822)
Total stockholders' equity 2,488  2,437 
Total liabilities and equity $ 8,119  $ 7,575 

See Notes to Schedule I.



S-3 | 2023 Annual Report
THE AES CORPORATION
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021
For the Years Ended December 31, 2023 2022 2021
(in millions)
Revenue from subsidiaries and affiliates $ 31  $ 30  $ 28 
Equity in earnings of subsidiaries and affiliates 598  (280) (47)
Interest income 44  28  20 
General and administrative expenses (129) (140) (121)
Other income 11  14  51 
Other expense —  —  (65)
Interest expense (230) (163) (74)
Income (loss) before income taxes 325  (511) (208)
Income tax expense (76) (35) (201)
Net income (loss) $ 249  $ (546) $ (409)
See Notes to Schedule I.


S-4 | 2023 Annual Report
THE AES CORPORATION
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021
2023 2022 2021
(in millions)
NET INCOME (LOSS) $ 249  $ (546) $ (409)
Foreign currency translation activity:
Foreign currency translation adjustments, net of $0 income tax for all periods
 136  (37) (86)
Reclassification to earnings, net of $0 income tax for all periods
 —  —  3 
Total foreign currency translation adjustments, net of tax 136  (37) (83)
Derivative activity:
Change in derivative fair value, net of income tax benefit (expense) of $(7), $(198) and $8, respectively
 55  645  (7)
Reclassification to earnings, net of income tax benefit (expense) of $9, $0 and $(73), respectively
 (52) 44  254 
Total change in fair value of derivatives, net of tax 3  689  247 
Pension activity:
Prior service cost for the period, net of $0 income tax for all periods
 1  —  — 
Change in pension adjustments due to net actuarial gain (loss) for the period, net of income tax (expense) benefit of $1, $(2) and $(9), respectively
 (4) 10  23 
Reclassification of earnings, net of income tax expense of $0, $1 and $3, respectively
 —  —  1 
Total change in unfunded pension obligation (3) 10  24 
OTHER COMPREHENSIVE INCOME 136  662  188 
COMPREHENSIVE INCOME (LOSS) $ 385  $ 116  $ (221)
See Notes to Schedule I.


S-5 | 2023 Annual Report
THE AES CORPORATION
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021
For the Years Ended December 31,
 2023 2022 2021
(in millions)
Net cash provided by operating activities $ 608  $ 434  $ 570 
Investing Activities:
Proceeds from the sale of business interests, net of expenses 474  157  64 
Investment in and net advances to subsidiaries (2,187) (1,716) (2,260)
Return of capital 1,185  907  698 
Additions to property, plant and equipment (9) (10) (14)
Net cash used in investing activities (537) (662) (1,512)
Financing Activities:
(Repayments) borrowings under the revolver, net (325) (40) 295 
Borrowings of notes payable and other coupon bearing securities 900  200  — 
Loans from (repayments to) subsidiaries (177) 465  — 
Issuance of preferred stock —  —  1,014 
Proceeds from issuance of common stock 1  15  8 
Common stock dividends paid (444) (422) (401)
Payments for deferred financing costs (14) (4) (4)
Sales to noncontrolling interests —  —  (1)
Other financing (3) (2) 1 
Net cash provided by (used in) financing activities (62) 212  912 
Increase (decrease) in cash and cash equivalents 9  (16) (30)
Cash and cash equivalents, beginning 24  40  70 
Cash and cash equivalents, ending $ 33  $ 24  $ 40 
Supplemental Disclosures:
Cash payments for interest, net of amounts capitalized $ 178  $ 125  $ 79 
Cash payments for income taxes, net of refunds 9  1  — 
See Notes to Schedule I.


S-6 | 2023 Annual Report
THE AES CORPORATION
SCHEDULE I
NOTES TO SCHEDULE I
1. Application of Significant Accounting Principles
The Schedule I Condensed Financial Information of the Parent includes the accounts of The AES Corporation (the “Parent Company”) and certain holding companies.
ACCOUNTING FOR SUBSIDIARIES AND AFFILIATES — The Parent Company has accounted for the earnings of its subsidiaries on the equity method in the financial information.
INCOME TAXES — Positions taken on the Parent Company's income tax return which satisfy a more-likely-than-not threshold will be recognized in the financial statements. The income tax expense or benefit computed for the Parent Company reflects the tax assets and liabilities on a stand-alone basis and the effect of filing a consolidated U.S. income tax return with certain other affiliated companies.
ACCOUNTS AND NOTES RECEIVABLE FROM SUBSIDIARIES — Amounts have been shown in current or long-term assets based on terms in agreements with subsidiaries, but payment is dependent upon meeting conditions precedent in the subsidiary loan agreements.
2. Debt
Senior and Unsecured Notes and Loans Payable ($ in millions)
December 31,
Interest Rate Maturity 2023 2022
Senior Variable Rate Term Loan SOFR + 1.125% 2024 $ 200  $ 200 
Senior Unsecured Note 3.30% 2025 900  900 
Senior Unsecured Note 1.375% 2026 800  800 
Drawings on revolving credit facility SOFR + 1.75% 2027 —  325 
Senior Unsecured Note 5.45% 2028 900  — 
Senior Unsecured Note 3.95% 2030 700  700 
Senior Unsecured Note 2.45% 2031 1,000  1,000 
Unamortized (discounts)/premiums & debt issuance (costs) (36) (31)
Subtotal $ 4,464  $ 3,894 
Less: Current maturities (200) — 
Noncurrent maturities
 $ 4,264  $ 3,894 

FUTURE MATURITIES OF RECOURSE DEBT — As of December 31, 2023 scheduled maturities are presented in the following table (in millions):
December 31, Annual Maturities
2024 $ 200 
2025 900 
2026 800 
2027 — 
2028 900 
Thereafter 1,700 
Unamortized (discount)/premium & debt issuance (costs), net (36)
Total debt $ 4,464 
3. Dividends from Subsidiaries and Affiliates
Cash dividends received from consolidated subsidiaries were $1.4 billion, $832 million, and $894 million for the years ended December 31, 2023, 2022, and 2021, respectively. For the years ended December 31, 2023, 2022, and 2021, $474 million, $157 million, and $65 million, respectively, of the dividends paid to the Parent Company are derived from the sale of business interests and are classified as an investing activity for cash flow purposes. All other dividends are classified as operating activities. There were no cash dividends received from affiliates accounted for by the equity method for the years ended December 31, 2023, 2022, and 2021.


S-7 | 2023 Annual Report
4. Guarantees and Letters of Credit
GUARANTEES — In connection with certain project financing, 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. These obligations and commitments, excluding those collateralized by letter of credit and other obligations discussed below, were limited as of December 31, 2023 by the terms of the agreements, to an aggregate of approximately $4 billion, representing 90 agreements with individual exposures ranging up to $970 million. These amounts exclude 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.
LETTERS OF CREDIT — At December 31, 2023, the Parent Company had $124 million in letters of credit outstanding under the revolving credit facility, representing 17 agreements with individual exposures up to $40 million; $188 million in letters of credit outstanding under the unsecured credit facilities, representing 31 agreements with individual exposures ranging up to $70 million; and $235 million in letters of credit outstanding under bilateral agreements, representing 4 agreements with individual exposures ranging up to $64 million. During the year ended December 31, 2023, the Parent Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts.

EX-10.5 2 aes1231202310-kexhibit105.htm EX-10.5 Document

THE AES CORPORATION
2003 LONG TERM COMPENSATION PLAN
As Amended and Restated on October 10, 2023
(Original Effective Date: 2/12/03)
1. PURPOSE. The 2003 Long Term Compensation Plan, as amended and restated,
(the “Plan”) has been established by The AES Corporation (the “Company”) to (a) reward
Employees and Directors by means of appropriate incentives for achieving long-range Company
goals; (b) provide incentive compensation opportunities that are competitive with those of other
similar companies, (c) further match Employees’ and Directors’ financial interests with those of
the Company’s other Stockholders through compensation that is based on the Company’s common
stock and thereby enhance the long-term financial interest of the Company and its Affiliates,
including through the growth in the value of the Company’s equity and enhancement of long-term
Stockholder return and (d) facilitate recruitment and retention of outstanding personnel eligible to
participate in the Plan. The Plan as amended and restated is intended to comply with Section
409A.
2. DEFINITIONS. Except as otherwise specified by the Committee in an Agreement,
capitalized terms used in this Plan have the meanings set forth below. Except when otherwise
indicated by the context, reference to the masculine gender shall include, when used, the feminine
gender and any term used in the singular shall also include the plural.
(a) “Affiliate” means (i) any Subsidiary of the Company, (ii) any entity or Person or
group of Persons that, directly or through one or more intermediaries, is controlled
by the Company and (iii) any entity or Person or group of Persons in which the
Company has a significant equity interest, as determined by the Committee,
including any Affiliates which become such after adoption of this Plan.
(b)
“Agreement” means any written agreement, contract, policy, program or other
instrument or document evidencing any Award granted under the Plan, which may,
but need not, be executed or acknowledged by a Participant.
“Award” means any Option, award of Restricted Stock or Restricted Stock Units,
Other Stock-Based Award or Performance Award granted under the Plan.
“Board” or “Board of Directors” means the Board of Directors of the Company.
“Cause” means the Employee’s dishonesty; insubordination; continued and
(c)
(d)
(e)
repeated failure to perform assigned duties or willful misconduct in the performance of such duties; intentionally engaging in unsatisfactory performance; failing to make a good faith effort to bring unsatisfactory performance to an acceptable level; violation of the Company’s policies, procedures, rules or recognized standards of behavior; misconduct related to Employee’s employment; or a charge, indictment or conviction of, or a plea of guilty or nolo contendere to, a felony, whether or not in connection with the performance by the Employee of his or her duties or obligations to the Company.


2 (f) “Change in Control” means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d) (3) of the Exchange Act) of Persons, (ii) a Person or group (as so defined) of Persons (other than Management of the Company on the date of the adoption of this Plan or their Affiliates) shall have become the beneficial owner of more than 35% of the outstanding voting stock of the Company,(iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) a merger, consolidation, business combination or similar transaction as provided in the applicable Agreement. Notwithstanding the foregoing or any provision of this Plan to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change of Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in manner necessary to ensure that the occurrence of any such event shall result in a Change of Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5). (g) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor statute. (h) “Committee” means the Compensation Committee of the Board, or any successor committee thereto, and/or such other committee of the Board as is appointed or designated by the Board to administer the Plan (or any part hereof) or is otherwise identified in the Company’s corporate governance documents as being responsible for determining the compensatory arrangements of certain Participants. For awards subject to Section 162(m) of the Code, the Committee shall be comprised solely of two or more “outside directors”(as defined under Section 162(m) of the Code and the regulations promulgated thereunder). (i) “Covered Person” means an individual who is expected by the Committee to be both (i) a “covered employee” as defined in Section 162(m) of the Code for the tax year of the Company with regard to which a deduction in respect of such person’s Award would be allowed and (ii) the recipient of compensation (other than “qualified performance based compensation” as defined in Section 162(m)) in excess of $1,000,000 for such tax year. 3 (j) “Director” means a member of the Board of Directors of the Company. (k) “Disability” means the disability of a Participant (i) such that the Participant is considered disabled under any long term disability plan of the Company, or (ii) as otherwise determined by the Committee. If an Award is subject to Section 409A (and not excepted therefrom) and Disability is a distribution event for purposes of an Award, then Disability shall have the meaning provided in Treas. Reg. § 1.409A- 3(i)(4)(i). (l) “Employee” means any full-time or part-time employee (including an Officer or Director who is also an employee) of the Company or an Affiliate. “Employee” shall also include any individual or individuals to whom an offer of employment has been extended. References in this Plan to “employment” and related terms shall include the provision of services in any such capacity. (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.


(n) “Fair Market Value” means the closing sale price of the Shares, as reported on the New York Stock Exchange, or any other reporting system selected by the Committee on the relevant dates, or, if no sale of Shares is reported for that date, on the date or dates that the Committee determines, in its sole discretion, to be appropriate for purposes of the valuation. (o) “Incentive Stock Option” means an Option granted under Section 6 that meets the requirements of Section 422 of the Code, or any successor provision thereto. (p) “Involuntary Termination” means (i) Participant’s involuntary Separation from Service, excluding termination for Cause, by action of the Company or (ii) the Employee declines to accept a new job offer that requires the Employee to relocate to a work location that is greater than 50 miles from the Employee’s then assigned work location. (q) “Non-Qualified Stock Option” means an Option granted under Section 6 that is not an Incentive Stock Option. (r) “Option” means an Incentive Stock Option or a Non-Qualified Stock Option. (s) “Other Stock-Based Award” means any right granted under Section 8. (t) “Participant” means an Employee or non-employee Director to whom an Award has been made. (u) “Performance Award” means an Award to a Participant under Section 9. (v) “Person” means any individual, corporation, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 4 (w) “Plan” means this 2003 Long Term Compensation Plan, as amended and in effect from time to time. (x) “Qualified Retirement” means an Employee’s retirement when such Employee is at least 60 years of age and has provided at least seven years of service as an Employee of the Company and/or one or more of its Affiliates. (y) “Restricted Stock” means any Share underlying an Award granted under Section 7. (z) “Restricted Stock Unit” means a contractual right underlying an Award granted under Section 7 that is denominated in Shares, which Unit represents a right to receive the value of a Share (or a percentage of such value, which percentage may be higher than 100%) upon the terms and conditions set forth in the Plan and the applicable Agreement. (aa) “Section 409A” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder. (bb) “Separation from Service” and “Separate from Service” shall mean the Participant’s death, retirement or other termination of employment with the Company (including all persons treated as a single employer under Section 414(b) and 414(c) of the Code) that constitutes a “separation from service”(within the meaning of Section 409A). For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A- 1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. (cc) “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company as determined in accordance with Section 409A and the procedures established by the Company. (dd) “Share” means a share of Stock. (ee) “Stock” means the common stock, $.01 par value per share (as such par value may be adjusted from time to time), of the Company.


(ff) “Subsidiary” means any entity in which the Company owns or otherwise controls, directly or indirectly, stock or other ownership interests having the voting power to elect a majority of the Board, or other governing group having functions similar to a board of directors, as determined by the Committee. 5
(gg)
“Substitute Award” means an Award granted in assumption of, or in substitution
for, an outstanding award previously granted by a company acquired by the
Company or with which the Company combines.
“Successor” with respect to a Participant means the legal representative of an
(hh)
incompetent Participant and, if the Participant is deceased, the legal representative
of the estate of the Participant or the person or persons who may, by bequest or
inheritance, or under the terms of an Award or of forms submitted by the Participant
to the Committee, acquire the right to receive cash and/or Shares issuable in
satisfaction of an Award.
3. ADMINISTRATION. Subject to the provisions of the plan, the authority to control
and manage the operation and administration of the Plan shall be vested in the Committee;
provided, however, that the Board (and/or such other committee designated by the Board) shall
approve and/or ratify any Awards to the Company’s non-employee Directors.
(a) The Committee shall have power to make Awards, to determine when and to whom
Awards will be granted, the types of Awards and the number of Shares covered by
the Awards, to establish the terms, conditions, performance criteria, restrictions,
and other provisions of such Awards and, subject to the terms of the Plan, to cancel
or suspend Awards. In making such Award determinations, the Committee may
take into account the nature of services rendered by the Participant, the Participant’s
present and potential contribution to the Company’s success and such other factors
as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have the authority and
discretion to determine the extent to which Awards under the Plan will be structured
to conform to the requirements applicable to performance-based compensation as
described in Section 162(m) of the Code, and to take such action, establish such
procedures, and impose such restrictions at the time such Awards are granted as the
Committee determines to be necessary or appropriate to conform to such
requirements.
(c) The Committee shall have the authority and discretion to establish terms and
conditions of Awards as the Committee determines to be necessary or appropriate
to conform to applicable requirements or practices of jurisdictions outside of the
United States.
(d) The Committee may determine whether, to what extent and under what
circumstances Awards may be settled, paid or exercised in cash, Shares or other
Awards or other property, or canceled, forfeited or suspended.
The Committee shall have the authority to interpret the Plan and any Award or
(e)
Agreement made under the Plan, to establish, amend, waive and rescind any rules and regulations relating to the administration of the Plan, to determine the terms and provisions of any Agreements entered into hereunder (not inconsistent with the 6 Plan), and to make all other determinations necessary or advisable for the administration of the Plan.


(f) The Committee shall determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically, or at the election of the holder thereof or of the Committee. (g) The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it shall deem desirable. The determinations of the Committee in the administration of the Plan, as described herein, shall be final, binding and conclusive. (h) In controlling and managing the operation and administration of the Plan, the Committee shall act by a majority of its then members, by meeting or by writing filed without a meeting. The Committee shall maintain and keep adequate records concerning the Plan and concerning its proceedings and acts in such form and detail as the Committee may decide. (i) Except to the extent prohibited by applicable law or regulation, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. The Committee may revoke any such allocation or delegation at any time. (j) The Company and any Affiliate shall furnish the Committee with such data and information as may be required for it to discharge its duties. The records of the Company and any Affiliate as to an Employee’s or Participant’s employment, or other provision of services, termination of employment, or cessation of the provision of services, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefit under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan. (k) To the fullest extent permitted by law, each member and former member of the Board and the Committee and each person to whom the Board and the Committee delegates or has delegated authority under this Plan shall be entitled to indemnification by the Company against and from any loss, liability, judgment, damage, cost and reasonable expense incurred by such member, former member or other person by reason of any action taken, failure to act or determination made in good faith under or with respect to this Plan. 4. SHARES AVAILABLE FOR AWARDS. (a) Subject to adjustment as provided in Section 4(e), the maximum number of Shares that may be delivered pursuant to Awards granted under the Plan is 45,750,000. Notwithstanding the foregoing and subject to adjustment as provided in Section 7 4(e), no Participant may receive Options and stock appreciation rights under this Plan in any calendar year that relate to more than 1,000,000 Shares. (b) Shares to be issued under the Plan may be made available from authorized but unissued Stock, Stock held by the Company in its treasury, or Stock purchased by the Company on the open market or otherwise. During the term of the Plan, the Company will at all times reserve and keep available the number of shares of Stock that shall be sufficient to satisfy the requirements of the Plan. (c) If any Shares covered by an Award other than a Substitute Award, or to which such an Award relates, terminate, lapse or are forfeited or cancelled, then the Shares covered by such Award, or to which such Award relates, to the extent of any such forfeiture, termination, lapse or cancellation, shall again be, or shall become available for issuance under the Plan.


Shares (i) delivered in payment of the exercise price of an Option, (ii) not issued upon the net settlement or net exercise of an Option or stock appreciation right, or (iii) delivered to or withheld by the Company to pay withholding taxes, shall not become available again for issuance under this Plan.
(d) Shares underlying Substitute Awards shall not reduce the number of Shares
available for delivery under this Plan.
In the event that the Committee shall determine that any dividend or other
(e)
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, share split, reverse share split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or
other securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate transaction or
event affects the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the number
and type of Shares (or other securities or property) which thereafter may be made
the subject of Awards, including without limitation the individual limit set forth in
Section 4(a), (ii) the number and type of Shares (or other securities or property)
subject to outstanding Awards, and (iii) the grant, purchase, or exercise price with
respect to any Award or, if deemed appropriate, make provision for a cash payment
to the holder of an outstanding Award; provided, however, that the number of
Shares subject to any Award shall always be a whole number; and provided, further,
with respect to any Award intended to qualify as performance-based compensation
under Section 162(m) of the Code or any Award intended to comply with, or qualify
for an exception to, Section 409A, any such adjustment shall be authorized only to
the extent that such adjustment would not cause the Award to fail to comply with
Section 162(m) or Section 409A, or an exception thereto.
5. ELIGIBILITY. All Employees and non-employee Directors are eligible to
participate in this Plan and receive Awards hereunder. Holders of equity-based awards issued by
8
a company acquired by the Company or with which the Company combines are eligible to receive
Substitute Awards hereunder.
6. OPTIONS. The Committee is hereby authorized to grant Options to Participants
with the following terms and conditions and with such additional terms and conditions, in either
case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) The purchase price per Share under an Option shall be determined by the
Committee; provided, however , that, except in the case of Substitute Awards, such
purchase price shall not be less than the Fair Market Value of a Share on the date
of grant of such Option.


(b) The term of each Option shall be fixed by the Committee and the effect thereon, if
any, of the termination of employment of the Participant shall be determined by the
Committee and set forth in the applicable Agreement. Notwithstanding, the term
of an Option shall not exceed ten (10) years.
(c) Any Option may be exercised at any time during the period commencing with either
the date that Option is granted or the first date permitted under a vesting schedule
established by the Committee and ending with the expiration date of the Option. A
Participant may exercise his or her Option for all or part of the number of Shares
which he or she is eligible to exercise under terms of the Option. The Committee
shall determine the method or methods by which, and the form or forms in which,
including, without limitation, cash, Shares, other Awards, or other property, or any
combination thereof, having a Fair Market Value on the exercise date equal to the
relevant exercise price, payment of the exercise price with respect thereto may be
made or deemed to have been made.
(d) The terms of any Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code, or any successor provision
thereto, and any regulations promulgated thereunder.
Options shall be granted to non-employee Directors in accordance with the policies
(e)
established from time to time by the Committee, including the terms and conditions
of any such award, number of shares (if any) to be subject to each such Option and
the time(s) at which such Options shall be granted.
7. RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS. The
Committee is hereby authorized to grant Awards of Restricted Stock and/or Restricted Stock Units
to Participants.
(a)		 The Awards granted under this Section 7 shall be subject to such restrictions as the
Committee may impose (including, without limitation, any limitation on the right to vote Shares underlying Restricted Stock Awards or the right to receive any dividend, other right or property), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. If the vesting conditions applicable to an Award of Restricted Stock or Restricted Stock Units relate exclusively to the passage of 9 time and continued employment or provision of services, or refraining therefrom, the last vesting date of all or a portion of such Award shall occur no less than 36 months following the date of such Award, except that the foregoing restriction shall not apply to such Awards if they (i) are made in satisfaction of Company obligations to Participants that would otherwise be paid in cash, (ii) are issued in connection with the exercise of an Option or other Award hereunder, or (iii) are Substitute Awards.


(b) Any Award of Restricted Stock or Restricted Stock Units may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares underlying a Restricted Stock Award, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Shares. 8. OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to Participants such other Awards (including, without limitation, stock units, stock appreciation rights and rights to dividends and dividend equivalents) that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares) as are deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan, the Committee shall determine the terms and conditions of such Awards provided, however, that rights to dividends or dividend equivalents awarded in connection with an Award shall be subject to the same performance criteria, if applicable, and vesting schedule that apply to the underlying Award. Notwithstanding, the term of a stock appreciation right shall not exceed ten (10) years. Shares or other securities delivered pursuant to a purchase right granted under this Section 8 shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, the deferral of compensation, other Awards, or other property, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, shall, except in the case of Substitute Awards or the deferral of compensation, not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is granted. Full-value awards granted hereunder to Employees will have a standard vesting schedule, in one or more increments, over a service period of no less than (3) three years; provided, however, that (i) up to five (5%) percent of the shares authorized for issuance under the Plan may be granted without this restriction, and (ii) this limitation will not adversely affect a participant’s rights under another plan or agreement with AES or its subsidiaries.
9.
(a)		 PERFORMANCE AWARDS.
The Committee is hereby authorized to grant Performance Awards to Participants,
including Covered Persons, with a minimum performance period of at least one (1) year to be applicable to awards granted hereunder, if the Committee intends that such Awards shall qualify as “qualified performance based compensation” under Section 162(m) of the Code. Unless otherwise determined by the Committee, any such Performance Award shall be evidenced by an Agreement containing the terms 10 of the Performance Award, including but not limited to, the performance criteria and such terms and conditions as may be determined, from time to time, by the Committee, in each case, not inconsistent with this Plan.


(b) Performance Awards shall become earned and payable if performance goals relating to, or based on, one or more of the following performance measures , either individually, alternatively or in any combination, and subject to such modifications or variations as specified by the Committee, applied to either the Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and measured over a period of time including any portion of a year, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee: cash flow (including, without limitation, proportional cash flow); cash flow from operations; earnings (including, but not limited to, earnings before interest, taxes, depreciation, and amortization or some variation thereof); earnings per share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; capital expenditures; debt; debt reduction; working capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; productivity; delivery performance; safety record and/or performance; stock price; return on equity; total stockholder return; return on capital; return on assets or net assets; revenue; income or net income; operating income or net operating income; operating income adjusted for management fees and depreciation, and amortization; operating profit or net operating profit; gross margin, operating margin or profit margin; and completion of acquisitions, business expansion, product diversification, new or expanded market penetration and other nonfinancial operating and management performance objectives. To the extent consistent with Section 162(m) of the Code, the Committee may determine, at the time the performance goals are established, that certain adjustments shall apply, in whole or in part, in such manner as determined by the Committee, to exclude the effect of any of the following events that occur during a performance period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, business combinations, reorganizations and/or restructuring programs, including, but not limited to, reductions in force and early retirement incentives; currency fluctuations; and any extraordinary, unusual, infrequent or non-recurring items, including, but not limited to, such items described in Management’s Discussion and Analysis of Financial Condition and Results of Operations or the financial statements and notes thereto appearing in the Company’s annual report for the applicable period. (c) Performance goals relating to the performance measures set forth above shall be pre-established in writing by the Committee, and achievement thereof certified in writing prior to payment of the Award, as required by Section 162(m) and regulations promulgated thereunder, and such performance goals may be measured over such periods, as the Committee shall determine. For Awards intended to be 11 “qualified performance based compensation” under Section 162(m) of the Code, all such performance goals shall be established in writing no later than ninety (90) days after the beginning of the applicable performance period. In addition to establishing minimum performance goals below which no compensation shall be payable pursuant to a Performance Award, the Committee, in its sole discretion, may create a performance schedule under which an amount less than or more than the target award may be paid so long as the performance goals have been achieved. The Committee, in its sole discretion, may also establish such additional restrictions or conditions that must be satisfied as a condition precedent to the payment of all or a portion of any Performance Awards. Such additional restrictions or conditions need not be performance-based and may include, among other things, the receipt by a Participant of a specified annual performance rating, the continued employment by the Participant and/or the achievement of specified performance goals by the Company, business unit or Participant.


Furthermore and notwithstanding any provision of this Plan to the contrary, the Committee, in its sole discretion, may reduce the amount of any award to a Participant if it concludes that such reduction is necessary or appropriate based upon: (i) an evaluation of such Participant’s performance; (ii) comparison with compensation received by other similarly situated individuals working within the Company’s industry; (iii) the Company’s financial results and conditions; or (iv) such other factors or conditions that the Committee deems relevant. Notwithstanding any provision of this Plan to the contrary, the Committee shall not use its discretionary authority to increase any Performance Award that is intended to be performance-based compensation under Section 162(m) of the Code. (d) The maximum value of (i) Performance Awards (denominated in cash) which may be awarded to a Participant under the Plan in any one calendar year of the Company is $10,000,000, and (ii) Performance Awards (denominated in Stock) which may be awarded to a participant under the Plan in any one calendar year of the Company is 1,000,000 Shares. 10. TERMINATION OF EMPLOYMENT OR SERVICE. Except as otherwise determined by the Committee or provided by the Committee in an applicable Agreement and to the extent not inconsistent with Section 14(k) hereof, in case of termination of employment or service, the following provisions shall apply:
(a) Upon termination of employment or cessation of provision of services by the
Participant for reason of death or Disability:
(i) any Award (other than Options) then held by such Participant shall be
immediately accelerated and become fully vested, exercisable and payable
with Performance Awards vesting at target performance levels, and
any Option then held by such Participant shall be immediately accelerated
(ii)
and become fully vested, exercisable and payable and shall expire on the
earlier of (1) the date the Option would have expired had the Participant
12
continued in such employment or service, and (2) one year after the date
such Participant’s employment or service ceases.
(b) Upon termination of employment by the Company for Cause (as determined by the
Committee in its sole discretion), or under other circumstances provided by the
Committee in its discretion in the applicable Agreement:
(i) any Award then held by such Participant whose restrictions have not lapsed,
which is not exercisable or which is not payable will automatically be
forfeited in full and canceled by the Company upon such termination of
employment or service, and
(ii) any Option then held by such Participant, to the extent exercisable, shall
automatically expire on the earlier of (1) the date the Option would have
expired had the Participant continued in such employment or service, and (2) three months after the date that such Participant’s service ceases. (c) Upon termination of employment or cessation of provision of services by the Participant for reasons of Qualified Retirement or Involuntary Termination: (i) any Award (other than Performance Awards) then held by such Participant whose restrictions have not lapsed, which is not exercisable or which is not payable will automatically be forfeited in full and canceled by the Company upon such termination of employment or service, (ii) any Option then held by such Participant shall automatically expire on the earlier of (1) the date the Option would have expired had the Participant continued in such employment or service, and (2) one hundred and eighty days after the date such Participant’s employment or service ceases, except that any Incentive Stock Option shall automatically expire on the earlier of the date set forth in clause (1) above and three months after the date that such Participant’s employment or service ceases.


(iii) any Performance Award then held by such Participant may become partially
vested based on the length of time worked during the performance period
with such vested units becoming payable upon the originally scheduled
distribution date, subject to performance certification and adjustment.
(d) Upon termination of employment or cessation of provision of services by the
Participant for any reason other than death, Disability, Qualified Retirement,
Involuntary Termination or termination of employment or service by the Company
for Cause (as determined by the Committee in its sole discretion), or under other
circumstances provided by the Committee in its discretion in the applicable
Agreement:
(i) any Award (other than Performance Awards) then held by such Participant
whose restrictions have not lapsed, which is not exercisable or which is not

13
payable will automatically be forfeited in full and canceled by the Company
upon such termination of employment or service,
(ii) any Option then held by such Participant, to the extent exercisable, shall
automatically expire on the earlier of (1) the date the Option would have
expired had the Participant continued in such employment or service, and
(2) one hundred and eighty days after the date the such Participant’s service
ceases, except that any Incentive Stock Option shall automatically expire
on the earlier of clause (1) above and three months after the date that such
Participant’s service ceases, and
(iii) any Performance Award then held by such Participant which is not then
payable will automatically be forfeited in full and canceled by the Company
upon such termination of employment or service.
11. DURATION. The Plan shall be effective as of February 1, 2003, subject to its
approval by the stockholders of the Company. No Award shall be granted under the Plan after the
tenth anniversary of the last date upon which the Company obtained stockholder approval of the
Plan. However, unless otherwise expressly provided in the Plan or in an applicable Agreement,
any Award theretofore granted may extend beyond such date, and the authority of the Committee
to administer the Plan and to amend, alter, adjust, suspend, discontinue, or terminate any such
Award, or to waive any conditions or rights under any such Award, and the authority of the Board
to amend the Plan, shall extend beyond such date.
12.
(a)		 AMENDMENT, MODIFICATION AND TERMINATION.
Except to the extent prohibited by applicable law and unless otherwise expressly


provided in an Agreement or in the Plan, the Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i) stockholder approval if such approval is necessary to comply with any tax or regulatory requirement for which or with which the Board deems it necessary or desirable to qualify or comply or (ii) the consent of the affected Participant, if such action would materially adversely affect the rights of such Participant under any outstanding Award. Notwithstanding anything to the contrary herein, the Committee may amend the Plan in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction outside the United States in a tax-efficient manner and in compliance with local rules and regulations. Notwithstanding the foregoing or any provision of the Plan or an Award to the contrary, (i) the Committee may at any time (without the consent of any Participant) modify or amend any or all of the provisions of the Plan or an Award to the extent necessary to conform the provisions of the Plan or an Award with Section 162(m), Section 409A, the regulations issued thereunder or an exception thereto, or other applicable law, regardless of whether such modification or amendment of the Award shall adversely affect the rights of a Participant, and (ii) the Committee may not, without stockholder approval, reduce the exercise price of any Option or stock appreciation right, exchange any underwater Option or stock 14 appreciation right for a cash payment or for the new grant of an Option or stock appreciation right with a lower exercise price, or take any other action with respect to outstanding Options or stock appreciation rights that is treated as a repricing of such Options or stock appreciation rights under generally accepted accounting principles. (b) The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retroactively, without the consent of any Participant or holder or beneficiary of an Award, provided, however, that no such action shall materially impair the rights of a Participant or holder or beneficiary under any Award theretofore granted under the Plan. (c) With respect to Participants who reside or work outside the United States of America, the Committee may, in its sole discretion, amend, or otherwise modify, without Board or stockholder approval, the terms of the Plan or Awards with respect to such Participant in order to conform such terms with the provisions of local law; provided that such amendment or other modification shall not increase the total number of Shares reserved for purposes of the Plan without the approval of the stockholders of the Company. (d) The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, an event affecting the Company, or the financial statements of the Company, or of changes in applicable laws, regulations or accounting principles), whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. (e) To the extent not inconsistent with Section 14(k) hereof, in connection with a Change in Control or an event described in Section 4(e), the Committee may, in its discretion (i) cancel any or all outstanding Awards under the Plan in consideration for payment to the holder of each such canceled Award of an amount equal to the portion of the consideration that would have been payable to such holder pursuant to such transaction if such Award had been fully vested and exercisable, and had been fully exercised, immediately prior to such transaction, less the exercise price if any that would have been payable therefore, or (ii) if the net amount referred to in clause (i) would be negative, cancel such Award for no consideration or payment of any kind. Payment of any amount payable pursuant to the preceding sentence may be made in cash and/or securities or other property in the Committee’s discretion.


13. CHANGE IN CONTROL. Except as otherwise expressly provided in the applicable Agreement and to the extent not inconsistent with Section 14(k) hereof, upon the consummation of a Change in Control, the Committee may, but shall not be obligated to, (i) accelerate, vest or cause the restrictions to lapse with respect to all or any portion of an Award, (ii) cancel such Awards for cash payment of fair value (as determined in the sole discretion of the 15 Committee) which, in the case of Options and stock appreciation rights, may equal the excess, if any, of value of the consideration to be paid in the Change in Control transaction to holders of the same number of Shares subject to such Options or stock appreciation rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or stock appreciation rights) over the aggregate exercise price of such Options or stock appreciation rights (and otherwise, the Committee may cancel Awards for no consideration if the aggregate Fair Market Value of the Shares subject to such Awards is less than or equal to the aggregate exercise price of such Options or stock appreciation rights), or (iii) provide for the issuance of substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted hereunder as determined by the Committee in its sole discretion. 14. CLAWBACK. Any Agreement (or any part thereof) may provide for the cancellation or forfeiture of an Award or the forfeiture and repayment to the Company of any gain or earnings related to an Award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee in accordance with (a) any Company clawback or recoupment policy, including The AES Corporation Amended and Restated Compensation Recoupment Policy (as may be further amended and restated from time to time, the “Clawback Policy”), and any other policies that are adopted to comply with the requirements of any applicable laws, rules, regulations, stock exchange listing standards or otherwise, or (b) any applicable laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations, or stock exchange listing standards, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to Awards and the recovery of amounts relating thereto. By accepting Awards under the Plan, the Participants consent to be bound by the terms of the Clawback Policy, if applicable, and agree and acknowledge that they are obligated to cooperate with, and provide any and all assistance necessary to, the Company in its efforts to recover or recoup any Award, any gains or earnings related to any Award, or any other amount paid under the Plan or otherwise subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company from the Participants of any such amounts, including from the Participants’ accounts or from any other compensation, to the extent permissible under Section 409A.


15.
(a)		 MISCELLANEOUS.
Nothing in the Plan or in any Agreement shall confer upon any Participant the right
to continue in the service or employment of the Company or any Affiliate or affect
any right which the Company or any Affiliate may have to terminate or modify the
employment or provision of service of the Participant with or without Cause.
The Company shall have a right to withhold from any payment of cash or Stock to
(b)
a Participant or other person under the Plan an amount sufficient to cover any required withholding taxes, including the Participant’s social security and Medicare taxes (FICA) and federal, state, local income tax or such other applicable taxes (“Taxes”) with respect to income arising from payment of the Award. The 16 Company shall have the right to require the payment of any Taxes before issuing any Stock pursuant to the Award. The Committee may, if it deems appropriate in the case of a Participant, withhold such Taxes through a reduction of the number of Shares delivered to such individual, or allow the Participant to elect to cover all or any part of the required withholdings, and to cover any additional withholdings up to the amount needed to cover the Taxes with respect to income arising from payment of the Award, through a reduction of the number of Shares delivered to such individual or a subsequent return to the Company of Shares held by the Participant or other person, in each case valued in the same manner as used in computing the withholding taxes under the applicable laws. Notwithstanding the foregoing or any provisions of the Plan to the contrary, any broker-assisted cashless exercise shall comply with the requirements for equity classification of Accounting Standards Codification (ASC) 718 and any withholding satisfied through a netsettlement shall be limited to the minimum statutory withholding requirements. (c) Awards received by a Participant under this Plan shall not be deemed a part of a Participant’s regular, recurring compensation for purposes of any termination, indemnity or severance pay laws and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or an Affiliate, unless expressly so provided by such other plan, contract or arrangement, or unless the Committee so determines. No provision of the Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements, including incentive arrangements providing for the issuance of options and stock, and awards that do not qualify under Section 162(m) of the Code, and such arrangements may be generally applicable or applicable only in specific cases.


(d) Subject to the provisions of the Plan, (i) no Award and no right under any Award shall be assignable, alienable, saleable or transferable by a Participant otherwise than by will or by the laws of descent and distribution; provided , however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any property distributable, with respect to any Award upon the death of the Participant; (ii) each Award, and each right under any Award, shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative; and (iii) no Award and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company. The provisions of this paragraph shall not apply to any Award which has been fully exercised, earned or paid, as the case may be, and shall not preclude forfeiture of an Award in accordance with the terms thereof. (e) This Plan shall be unfunded and the Company shall not be required to segregate any assets that may at any time be represented by Awards under this Plan. Neither the Company, its Affiliates, the Committee, nor the Board shall be deemed to be a trustee of any amounts to be paid under this Plan nor shall anything contained in 17 this Plan or any action taken pursuant to its provisions create or be construed to create a fiduciary relationship between the Company and/or its Affiliates, and a Participant or Successor. To the extent any person acquires a right to receive an Award under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. (f) Any liability of the Company to any Participant with respect to an Award shall be based solely upon contractual obligations created by this Plan and the applicable Agreement. Except as may be required by law, neither the Company nor any member or former member of the Board or of the Committee, nor any other person participating (including participation pursuant to a delegation of authority under Section 3(i) hereof) in any determination of any question under this Plan, or in the interpretation, administration or application of this Plan, shall have any liability to any party for any action taken, or not taken, under this Plan. (g) No certificate for Shares distributable pursuant to this Plan shall be issued and delivered unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the Securities Act of 1933, as amended and in effect from time to time or any successor statute, the Exchange Act and the requirements of the exchanges on which the Company’s Shares may, at such time be listed. (h) To the extent that federal laws do not otherwise control, this Plan and all determinations made and actions taken pursuant to this Plan shall be governed by the laws of Delaware and construed accordingly. (i) In the event that any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included. (j) No fractional shares shall be issued or delivered pursuant to this Plan or any Agreement, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.


(k) Notwithstanding any provision of the Plan or an Agreement to the contrary, if any Award or benefit provided under this Plan is subject to the provisions of Section 409A, the provisions of the Plan and any applicable Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A or an exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted or construed). The following provisions shall apply, as applicable: (l) If a Participant is a Specified Employee and a payment subject to Section 409A (and not excepted therefrom) to the Participant is due upon Separation from 18 Service, such payment shall be delayed for a period of six (6) months after the date the Participant Separates from Service (or, if earlier, the death of the Participant). Any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period in the month following the month containing the 6-month anniversary of the date of termination unless another compliant date is specified in the applicable Agreement. (i) For purposes of Section 409A, and to the extent applicable to any Award or benefit under the Plan, it is intended that distribution events qualify as permissible distribution events for purposes of Section 409A and shall be interpreted and construed accordingly. With respect to payments subject to Section 409A, the Company reserves the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A. Whether a Participant has Separated from Service or employment will be determined based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A. For this purpose, a Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level equal to or less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A. (ii) The Committee, in its discretion, may specify the conditions under which the payment of all or any portion of any Award may be deferred until a later date. Deferrals shall be for such periods or until the occurrence of such events, and upon such terms and conditions, as the Committee shall determine in its discretion, in accordance with the provisions of Section 409A, the regulations and other binding guidance promulgated thereunder; provided, however, that no deferral shall be permitted with respect to Options and other stock appreciation rights subject to Section 409A. An election shall be made by filing an election with the Company (on a form provided by the Company) on or prior to December 31st of the calendar year immediately preceding the beginning of the calendar year (or other applicable service period) to which such election relates (or at such other date as may be specified by the Board to the extent consistent with Section 409A) and shall be irrevocable for such applicable calendar year (or other applicable service period).


(iii) The grant of Non-Qualified Stock Options and other stock rights subject to Section 409A shall be granted under terms and conditions consistent with Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not constitute a deferral of compensation under Section 409A. Accordingly, any such Award may be granted to Participants of the Company and its subsidiaries and affiliates in which the Company has a controlling interest. In determining whether the Company has a controlling interest, the rules of Treas. Reg. § 1.414(c)-2(b)(2)(i) shall apply; provided that the language “at 19 least 50 percent” shall be used instead of “at least 80 percent” in each place it appears; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(b)(5)(iii)(E)(i)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. The rules of Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 shall apply for purposes of determining ownership interests. (iv) Notwithstanding anything to the contrary contained herein and with respect to Options that were earned and vested under the Plan prior to January 1, 2005 (as determined under Section 409A, “Grandfather Options”), such Grandfathered Options are intended to be exempt from Section 409A and shall be administered and interpreted in a manner intended to ensure that any such Grandfathered Option remains exempt from Section 409A. No amendments or other modifications shall be made to such Grandfathered Options except as specifically set forth in a separate writing thereto, and no amendment or modification to the Plan shall be interpreted or construed in a manner that would cause a material modification (within the meaning of Section 409A, including Treas. Reg. § 1.409A-6(a)(4)) to any such Grandfathered Options. (v) In no event shall any member of the Board, the Committee or the Company (or its employees, Officers or Directors) have any liability to any Participant (or any other Person) due to the failure of an Award to satisfy the requirements of Section 409A. The AES Corporation Tish Mendoza, EVP & Chief Human Resources Officer

EX-10.7 3 aes1231202310-kexhibit107.htm EX-10.7 Document



PERFORMANCE STOCK UNIT AWARD AGREEMENT
PURSUANT TO
THE AES CORPORATION 2003 LONG TERM COMPENSATION PLAN
The AES Corporation, a Delaware corporation (the “Company”), grants to the Employee named below, pursuant to The AES Corporation 2003 Long Term Compensation Plan, as amended (the “Plan”), and this Performance Stock Unit Award Agreement (this “Agreement”), this Award of Performance Stock Units (“PSUs”) upon the terms and conditions set forth herein. Capitalized terms not otherwise defined herein will each have the meaning assigned to them in the Plan.

1. This Award of PSUs is subject to all terms and conditions of this Agreement and the Plan, the terms of which are incorporated herein by reference:
Name of Employee:
Fidelity System ID:
Grant Date:
Grant Price:
Target Number of PSUs Granted:

2. Each PSU represents a right to receive one Share on the Payment Date (as defined below) in accordance with the terms of this Agreement.

3. Unless otherwise determined by the Committee, each PSU shall also represent a right to receive an additional amount, payable in cash, equal to the accumulated cash dividends paid by the Company on the PSU between the Grant Date and payout of the PSU (if any). The additional dividend amounts that are accumulated subject to a PSU will be subject to the same terms and conditions (including, without limitation, any applicable vesting requirements and forfeiture provisions) as the PSU to which they relate under the Award. Any payment due to the Employee under this Agreement shall be made promptly following the date vested PSUs become earned and payable under paragraph 5(a), paragraph 5(b), paragraph 6 or paragraph 7 of this Agreement, as applicable (the “Payment Date”), but in no event later than March 15th of the calendar year following the calendar year containing the Payment Date.

4. A PSU carries no voting rights and the holder of a PSU will not have an equity interest in the Company or any shareholder rights, unless the vesting and performance conditions of the PSU are met and the PSU is paid out.

5. This Award of PSUs will vest, in accordance with and subject to the terms of this Agreement, in three equal installments on December 31st in each year during the Performance Period (each a “Vesting Date”), provided, however, that if:



(a) the Employee Separates from Service prior to the end of the Performance Period by reason of the Employee’s death or a Separation from Service on account of Disability, all PSUs that have not previously vested shall vest and the Employee’s PSUs referenced in the chart above shall be paid to the Employee at the rate of one Share for each PSU;
(b) if the Employee Separates from Service prior to the applicable Vesting Date by reason of voluntary Separation from Service due to a Qualified Retirement (as defined below) or an Early Retirement (as defined below), all PSUs that have not previously vested shall vest on the applicable Vesting Date(s) as if the Employee’s employment had continued until the final Vesting Date;
(c) if (i) the Employee Separates from Service prior to the Payment Date by reason of a Separation from Service by the Company for Cause (as defined in the Plan and as may otherwise be determined by the Committee in its sole discretion) or (ii) the Employee Separates from Service prior to the final Vesting Date by reason of a voluntary Separation from Service by the Employee (including any retirement other than a Qualified Retirement (as defined below) or an Early Retirement (as defined below)), this Award of PSUs (including any time-vested portion) shall immediately upon such termination be cancelled and forfeited without payment or further obligation by the Company; and

(d) if the Employee Separates from Service for any other reason, including, but not limited to, on account of a Qualified Retirement, Early Retirement, by reason of a death or Disability subsequent to the end of the Performance Period, or by reason of a Separation from Service by the Company other than for Cause (other than for Cause, voluntarily by the Employee not as part of a Qualified Retirement, Early Retirement or due to death or Disability as provided in paragraphs 5(a) and 5(b)), the Employee will be eligible to receive the value of his or her vested PSUs, as of the date of the Separation from Service, on the Payment Date in accordance with and subject to the terms set forth in paragraph 6 below.
For purposes of this Agreement, “Qualified Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who is: (i) at least 60 years of age; and (ii) has at least seven years of service as an Employee.
For purposes of this Agreement, “Early Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who is: (i) at least 57 years of age; and (ii) has at least 10 years of service as an Employee.

Any PSUs that have not vested prior to the date that an Employee Separates from Service for any reason (other than by reason of death or Disability as provided in paragraph 5(a) or by Qualified Retirement or Early Retirement as provided in paragraph 5(b)), (i) will not subsequently vest; and (ii) will be immediately cancelled and forfeited without payment or further obligation by the Company or any Affiliate.

In addition, the Employee’s right to receive Shares in respect of vested PSUs that have not been forfeited will be paid on the Payment Date if, and only if, all relevant performance conditions are met, in accordance with the terms and conditions of this Agreement and the Plan.

6. The Company will issue and deliver Shares in satisfaction of vested PSUs subject to and conditioned upon the attainment of the performance conditions set forth below, as approved by the Committee at the time of grant; provided, however, notwithstanding the performance level achieved, the Committee may reduce the number of PSUs earned or terminate this Award of PSUs altogether, but in no event may the Committee increase the value of a PSU underlying this Award beyond the performance levels achieved.


For purposes of this Agreement, the “Performance Period” is the three calendar year period beginning on January 1st in the year of grant and ending on and through December 31st in the second year following the year of the grant date.

The value of each vested PSU will depend upon the Company’s actual Parent Free Cash Flow (“PFCF”) as defined below[1], over the Performance Period as compared to the performance target approved by the Committee and as follows:
Actual PFCF Over the Performance Period Shares Earned
Below 90% of Performance Target = None (0%)
Equal to 90% of Performance Target = 50%
(0.5 x number of vested PSUs)
Equal to 100% of Performance Target = 100%
(1 x number of vested PSUs)
Equal to or greater than 110% of Performance Target = 200%
(2 x number of vested PSUs)
Between the PFCF levels listed above straight-line interpolation is used to determine the vesting percentage for the award. The maximum value of a PSU is 2.00.
7. In the event of a (i) Change in Control and (ii) a Qualifying Event (as defined below) prior to the end of the Performance Period, if the PSUs described herein have not already been previously forfeited or cancelled, such PSUs will become fully vested (for the total amount of PSUs set forth in paragraph 1) and the Payment Date will occur contemporaneous with the Qualifying Event; provided, however, that in connection with a Change in Control, payment of any obligation payable pursuant to the preceding sentence may be made in cash of equivalent value and/or securities or other property in the Committee’s discretion.
(a) Change in Control means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d) (3) of the Exchange Act) of Persons, (ii) a Person or group (as so defined in the Plan) of Persons (other than Management of the Company on the date of the most recent adoption of the Plan by the Company's stockholders or their Affiliates) shall have become the beneficial owner (as defined below) of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the beneficial owners of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction. Notwithstanding the foregoing or any provision to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas.


Reg. § 1.409A-3(i)(5). For purposes of this Agreement, “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act.
(b) Qualifying Event means the occurrence of one or more of the following events: (i) immediately upon the consummation of a Change in Control Event, failure of the successor company in a Change in Control event to provide Substitute Awards that are substantially similar in both nature and terms (including having an equivalent realizable pre-tax value to outstanding awards assuming vesting and delivery at the consummation of the Change in Control); (ii) within two years of the consummation of a Change in Control event, an involuntary termination without Cause of the Employee; or (iii) within two years of the consummation of a Change in Control event, a Good Reason Termination (as defined below) by the Employee.
(c) Good Reason Termination means, without an Employee’s written consent, the Separation From Service (for reasons other than death, Disability or Cause) by an Employee due to any of the following events occurring within two years of the consummation of a Change in Control: (i) the relocation of an Employee’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (ii) a material diminution in the duties or responsibilities of an Employee from those in place immediately prior to such Change in Control; and (iii) a material reduction in the base salary or annual incentive opportunity of an Employee from what was in place immediately prior to such Change in Control.

In order for Employee to terminate for Good Reason, (i) Employee must notify the successor entity in writing, within ninety (90) days of the event constituting Good Reason, of the Employee’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that Employee notifies the successor entity in writing of Employee’s intent to terminate employment for Good Reason (the “Notice Period”), or (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period.

8. It is intended that under current U.S. federal income tax laws, the Employee will not be subject to income tax unless and until Shares are delivered to the Employee on the Payment Date, at which time the Fair Market Value of the Shares will be reportable as ordinary income, and subject to income tax withholding as well as social security and Medicare (FICA) taxes. The Employee must pay all applicable Federal and state income and employment withholding taxes when due in such manner as approved by the Committee or the Plan Administrator. The Employee should consult his or her personal advisor to determine the effect of this Award of PSUs on his or her own tax situation.

9. Notices hereunder and under the Plan, if to the Company, will be delivered to the Plan Administrator (as so designated by the Company) or mailed to the Company’s principal office, 4300 Wilson Boulevard, Arlington, VA 22203, attention of the Plan Administrator, or, if to the Employee, will be delivered to the Employee, which may include electronic delivery, or mailed to his or her address as the same appears on the records of the Company.
10. All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the Plan will be binding and conclusive on all persons.


Unless otherwise specifically provided herein, in the event of any inconsistency between the terms of this Agreement and the Plan, the Plan will govern.
11. By accepting this Award of PSUs, the Employee acknowledges receipt of a copy of the Plan and the prospectus relating to this Award of PSUs, and agrees to be bound by the terms and conditions set forth in this Agreement and the Plan, as in effect and/or amended from time to time. The Employee further acknowledges that the Plan and related documents, which may include the Plan prospectus, may be delivered electronically. Such means of delivery may include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or such other delivery determined at the Plan Administrator’s discretion. The Employee acknowledges that the Employee may receive from the Company a paper copy of any documents delivered electronically at no cost if the Employee contacts the Human Resources department of the Company by telephone at (703) 682-6553 or by mail to 4300 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203. The Employee further acknowledges that the Employee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.

12. This Award is intended to be excepted from coverage under Section 409A of the Code and shall be administered, interpreted and construed accordingly. The Employee shall have no right to designate the date of any payment under this Agreement. Each payment under this Agreement is intended to be excepted under the short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4). The Company may, in its sole discretion and without the Employee’s consent, modify or amend the terms and conditions of this Award, impose conditions on the timing and effectiveness of the issuance of the Shares, or take any other action it deems necessary or advisable, to cause this Award to comply with Section 409A of the Code (or an exception thereto). Notwithstanding, the Employee recognizes and acknowledges that Section 409A of the Code may impose upon the Employee certain taxes or interest charges for which the Employee is and shall remain solely responsible.
13. Notwithstanding any other provisions in this Agreement, any PSUs or other compensation (equity or cash) subject to recovery under any law, government regulation, stock exchange listing requirement, or Company policy, shall be subject to such deductions, recoupment and claw back as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this Award and any other compensation paid or payable by the Company and recovery of such amounts relating thereto. By accepting this Award, Employee agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover, recoup or recapture this Award or any other applicable compensatory amounts pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or such other compensatory amounts from Employee’s accounts, or pending or future compensation or other grants.

14. Pursuant to regulations on personal data protection, the Company or persons engaged by the Company will process Employee’s personal information for the purposes of processing and administering this Agreement and PSUs, and more generally to comply with legal obligations. The categories of personal information include the information provided by the Employee to the Company in connection with the award of a PSU, if applicable, and that the Company has about the Employee in the ordinary course of business.


In accordance with applicable law, the Employee may have the right to access, correct, amend and remove this personal information upon request to the Company. Questions concerning this notice or to exercise your personal data protection rights may be made by sending a request to the Legal Department of the Company at: 4300 Wilson Boulevard, Suite 1100, Arlington, VA 22203.
15. This Agreement will be governed by the laws of the State of Delaware without giving effect to its choice of law provisions.

The AES CORPORATION
Tish Mendoza
Executive Vice President and Chief Human Resources Officer



[1] Parent Free Cash Flow is defined as Subsidiary Distributions less cash used for interest costs, development, general and administrative activities, and tax payments by the parent company.

EX-10.8 4 aes1231202310-kexhibit108.htm EX-10.8 Document



RESTRICTED STOCK UNIT AWARD AGREEMENT PURSUANT TO THE AES CORPORATION 2003 LONG TERM COMPENSATION PLAN
The AES Corporation, a Delaware corporation (the “Company”), grants to the Employee named below, pursuant to The AES Corporation 2003 Long Term Compensation Plan, as amended (the “Plan”), and this Restricted Stock Unit Award Agreement (this “Agreement”), this Award of Restricted Stock Units (“RSUs”) upon the terms and conditions set forth herein. Capitalized terms not otherwise defined herein will each have the meaning assigned to them in the Plan.
1. This Award of RSUs is subject to all terms and conditions of this Agreement and the Plan, the terms of which are incorporated herein by reference:
Name of Employee:
Fidelity System ID:
Grant Date:
Grant Price:
Target Number of RSUs Granted:

2. Each RSU represents a right to receive one Share at the time specified in Section 7 and in accordance with the terms of this Agreement.
3. Unless otherwise determined by the Committee, each RSU shall also represent a right to receive an additional dividend equivalent amount, payable in cash, equal to the accumulated amount per Share of cash dividends paid by the Company on outstanding Shares between the Grant Date and the Anniversary Date (as defined below) for the RSU. The additional dividend equivalent amounts that are accumulated subject to an RSU will be subject to the same terms and conditions (including, without limitation, any applicable vesting requirements and forfeiture provisions) as the RSU to which they relate under the Award. The RSUs will become payable if Employee’s right to receive payment for the RSUs becomes nonforfeitable (“Vesting,” “Vest,” or “Vested”) in accordance with Sections 5 and 6 of this Agreement or as otherwise provided for in this Agreement.
4. An RSU carries no voting rights and the holder will not have an equity interest in the Company or any stockholder rights, unless the RSU is paid out with Shares.
5. (i) This Award of RSUs will become non-forfeitable and will Vest, in accordance with and subject to the terms of this Agreement, in three installments on each of the first three anniversaries of the grant date (each the applicable “Anniversary Date”) if the Employee remains in the continuous employ of the Company or a Subsidiary until the applicable Anniversary Date, with each installment payable on the first and second Anniversary Dates being an amount equal to the target number of RSUs granted divided by three (in each case, rounded down to the nearest Share) and with the third installment payable on the third Anniversary Date being an amount equal to the target number of RSUs divided by three (rounded up to the nearest whole Share) but subject to the adjustment set forth in Schedule A attached hereto. Notwithstanding the preceding sentence:


(ii) If the Employee dies or experiences a Disability prior to the applicable Anniversary Date, all RSUs that have not previously Vested shall become nonforfeitable and Vest (such that the total target number of RSUs will have become vested without regard to Schedule A).
(iii) If the Employee Separates from Service on account of Qualified Retirement or Early Retirement, the RSUs that have not previously been paid or forfeited shall continue to Vest on the applicable Anniversary Date as provided in Section 5(i) after application of any adjustment as if the Employee’s employment had continued until the last of the Anniversary Dates to occur. For purposes of this Agreement, “Qualified Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who (A) is at least 60 years of age and (B) has at least seven years of service as an employee of the Company and/or one or more of its Affiliates and “Early Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who (A) is at least 57 years of age and (B) has at least ten years of service as an employee of the Company and/or one or more of its Affiliates.
(iv) If the Employee Separates from Service prior to the applicable Anniversary Date for any reason other than the Employee’s death or Disability or Qualified Retirement or Early Retirement, including, but not limited to, voluntarily by the Employee on account of retirement or by a Separation from Service by the Company with or without Cause (as defined in the Plan and as may otherwise be determined by the Committee in its discretion), all RSUs that have not previously Vested shall be immediately cancelled and forfeited without payment or further obligation by the Company or any Affiliate.
6. In the event of a (i) Change in Control and (ii) a Qualifying Event (as defined below) prior to the applicable Anniversary Date, if the RSUs described herein have not already been previously forfeited or cancelled, such RSUs will become Vested (such that the total target RSUs will have become Vested without regard to Schedule A) contemporaneous with the Qualifying Event; provided, however, that in connection with a Change in Control, payment of any obligation payable pursuant to the preceding sentence may be made in cash of equivalent value and/or securities or other property in the Committee’s discretion.
(A) Change in Control means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d)(3) of the Exchange Act) of Persons, (ii) a Person or group (as so defined in the Plan) of Persons (other than Management of the Company on the date of the most recent adoption of the Plan by the Company's stockholders or their Affiliates) shall have become the beneficial owner (as defined below) of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the beneficial owners of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction. Notwithstanding the foregoing or any provision to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5) (a “409A Change in Control”). For purposes of this Agreement, “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act.


(B) Qualifying Event means the occurrence of one or more of the following events: (i) immediately upon the consummation of a Change in Control Event, failure of the successor company in a Change in Control event to provide Substitute Awards that are substantially similar in both nature and terms (including having an equivalent realizable pre-tax value to outstanding Awards assuming vesting and delivery at the consummation of the Change in Control); (ii) within two years after the consummation of a Change in Control event, an involuntary termination without Cause of the Employee; or (iii) within two years after the consummation of a Change in Control event, a Good Reason Termination (as defined below) by the Employee.
(C) Good Reason Termination means, without an Employee’s written consent, the Separation from Service (for reasons other than death, Disability or Cause) by an Employee due to any of the following events occurring within two years after the consummation of a Change in Control: (i) the relocation of an Employee’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (ii) a material diminution in the duties or responsibilities of an Employee from those in place immediately prior to such Change in Control; or (iii) a material reduction in the base salary or annual incentive opportunity of an Employee from what was in place immediately prior to such Change in Control.
In order for Employee to terminate for Good Reason, (i) Employee must notify the successor entity in writing, within ninety (90) days of the event constituting Good Reason, of the Employee’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that Employee notifies the successor entity in writing of Employee’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period..
7. (i) Subject to Section 7(ii), payment for Vested RSUs will be made in Shares within thirty (30) days following the applicable Anniversary Dates specified in Section 5(i).
(ii) Notwithstanding Section 7(i), to the extent that the RSUs are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code), the RSUs shall be paid on an accelerated basis within thirty (30) days after any of the following events in a manner and to the extent necessary to comply with Section 409A of the Code):
(A) The occurrence of a Change in Control that is a 409A Change in Control,
(B) An Employee’s Separation from Service that occurs within 2 years after a Change in Control that is a 409A Change in Control, or
(C) An Employee’s death or Disability.
8. It is intended that under current U.S. federal income tax laws, the Employee will not be subject to income tax unless and until Shares and/or cash are delivered to the Employee, at which time the Fair Market Value of the Shares and/or cash will be reportable as ordinary income, and subject to income tax withholding as well as social security and Medicare (FICA) taxes. The Employee must pay all applicable federal and state income and employment withholding taxes when due in such manner as approved by the Committee or Plan Administrator. The Employee should consult his or her personal advisor to determine the effect of this Award of RSUs on his or her own tax situation.


9. Notices hereunder and under the Plan, if to the Company, will be delivered to the Plan Administrator (as so designated by the Company) or mailed to the Company’s principal office, 4300 Wilson Boulevard, Arlington, VA 22203, attention of the Plan Administrator, or, if to the Employee, will be delivered to the Employee, which may include electronic delivery, or mailed to his or her address as the same appears on the records of the Company.
10. All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the Plan will be binding and conclusive on all persons. Unless otherwise specifically provided herein, in the event of any inconsistency between the terms of this Agreement and the Plan, the Plan will govern.
11. By accepting this Award of RSUs, the Employee acknowledges receipt of a copy of the Plan and the prospectus relating to this Award of RSUs, and agrees to be bound by the terms and conditions set forth in this Agreement and the Plan, as in effect and/or amended from time to time. The Employee further acknowledges that the Plan and related documents, which may include the Plan prospectus, may be delivered electronically. Such means of delivery may include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or CD-ROM or such other delivery determined at the Plan Administrator’s discretion. The Employee acknowledges that the Employee may receive from the Company a paper copy of any documents delivered electronically at no cost if the Employee contacts the Human Resources department of the Company by telephone at (703) 682-6553 or by mail to 4300 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203. The Employee further acknowledges that the Employee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.
12. This Award is intended to satisfy the requirements of Section 409A of the Code (or an exception thereto) and shall be administered, interpreted and construed accordingly. The Employee shall have no right to designate the date of any payment under this Agreement. If the Employee is a Specified Employee and a payment subject to Section 409A of the Code (and not excepted therefrom) to the Employee is due upon Separation from Service, such payment shall be delayed for a period of six (6) months after the date the Employee Separates from Service (or, if earlier, the death of the Employee), and any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period in the month following the month containing the 6-month anniversary of the date of termination. The Company may, in its sole discretion and without the Employee’s consent, modify or amend the terms and conditions of this Award, impose conditions on the timing and effectiveness of the issuance of the Shares, or take any other action it deems necessary or advisable, to cause this Award to comply with Section 409A of the Code (or an exception thereto). Notwithstanding, the Employee recognizes and acknowledges that Section 409A of the Code may impose upon the Employee certain taxes or interest charges for which the Employee is and shall remain solely responsible.


13. Notwithstanding any other provisions in this Agreement, any RSUs or other compensation (equity or cash) subject to recovery under any law, government regulation, stock exchange listing requirement, or Company policy, shall be subject to such deductions, recoupment and claw back as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this Award and any other compensation paid or payable by the Company and recovery of such amounts relating thereto. By accepting this Award, Employee agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover, recoup or recapture this Award or any other applicable compensatory amounts pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or such other compensatory amounts from Employee’s accounts, or pending or future compensation or other grants.
14. Pursuant to regulations on personal data protection, the Company or persons engaged by the Company will process Employee’s personal information for the purposes of processing and administering this Agreement and RSUs, and more generally to comply with legal obligations. The categories of personal information include the information provided by the Employee to the Company in connection with the award of an RSU, if applicable, and that the Company has about the Employee in the ordinary course of business. In accordance with applicable law, the Employee may have the right to access, correct, amend and remove this personal information upon request to the Company. Questions concerning this notice or to exercise your personal data protection rights may be made by sending a request to the Legal Department of the Company at: 4300 Wilson Boulevard, Suite 1100, Arlington, VA 22203.
15. This Agreement will be governed by the laws of the State of Delaware without giving effect to its choice of law provisions.
The AES CORPORATION

By: Tish Mendoza Executive Vice President and Chief Human Resources Officer

Schedule A

Subject to the other terms and conditions of the Agreement applicable to Employee’s restricted stock units (“RSUs”) granted under the Plan on February 24, 2023 (the “Grant Date”), this schedule sets forth the terms and conditions for the calculation of the RSUs that will vest based on the Company’s achievement of environmental and social goals and only have an effect on the number of RSUs that will vest and be deemed earned in the third and final year of the three-year vesting period (the “Third Tranche”). For purposes of clarity, the first two tranches of the RSUs will vest based on the passage of time on each anniversary of the Grant Date, subject to an Employee’s continued employment with the Company and the other terms and conditions set forth in the Agreement and the Plan, and vesting of such tranches will not be affected by the achievement of the goals set forth herein. Capitalized terms not otherwise defined herein will each have the meaning assigned to them in the Agreement or the Plan. All determinations and calculations hereunder shall be made by the Committee, in its discretion.

The number of the RSUs eligible to vest on the third anniversary will be (A) - the Third Tranche adjusted (positively, negatively, or not at all, as applicable) by (B) – the achievement of the environmental and social goals adjustment factor of plus or minus 15% of the total target number of RSUs granted on the Grant Date to the Employee (the “Adjustment Factor”) as follows:
(A) – Third Tranche;
(B) – Adjustment Factor will be determined by the Committee as follows based on the Company’s achievement of two equally-weighted goals – (C) and (D) – as follows:


(C) – Environmental Performance Goal: The achievement of this goal will be calculated based on the Company’s performance measured against its reduction of Gigawatt hours (GWh), as described below, from coal generation across the Company’s portfolio of fuel sources by the fiscal year ending December 31, 2025. The Committee will determine the percentage of GWh generated by the Company from coal generation relative to the GWh generated by the Company from all fuel types (including renewables, gas/LNG and other fuel types) by including pro forma adjustments, which are aligned to external guidance, and removing coal assets once a sale or shutdown has been announced.

The adjustment percentage achievement of this metric will be determined pursuant to the following table.
Percentage of GWh from Coal Generation by end of 2025 Fiscal Year
Adjustment Percentage*
Less than 8%
(maximum positive adjustment)
+15%
11-13%
(target range)
0%
16+%
(maximum negative adjustment)
-15%
* Straight-line interpolation will be used to determine the adjustment percentage.
· (D) - Social Performance Goal: The achievement of this goal will be based on the Committee’s assessment of the Company’s performance by December 31, 2025 (as compared to December 31, 2022) in (1) improving diversity measured by the increase of the representation of women within leadership roles and increasing the representation of historically underrepresented groups in the Company’s employee population in the United States and (2) creating a culture of inclusion measured by the reduction of the voluntary attrition of underrepresented groups. Based on such assessment, the Committee will assign an adjustment percentage, which percentage will range from +15% to 0 to -15%.


EX-10.9 5 aes1231202310-kexhibit109.htm EX-10.9 Document



PERFORMANCE CASH UNIT AWARD AGREEMENT PURSUANT TO THE AES CORPORATION 2003 LONG TERM COMPENSATION PLAN
The AES Corporation, a Delaware Corporation (the “Company”), grants to the Employee named below, pursuant to The AES Corporation 2003 Long Term Compensation Plan, as amended (the “Plan”), and this Performance Cash Unit Award Agreement (this “Agreement”), this Award of Performance Cash Units (“PCUs”), the value of which is related to and contingent upon the achievement of predetermined performance target (as set forth herein). Capitalized terms not otherwise defined herein shall each have the meaning assigned to them in the Plan.
1.This Award of PCUs is subject to all terms and conditions of this Agreement and the Plan, the terms of which are incorporated herein by reference:
Name of Employee:
Fidelity System ID:
Grant Date:
Target Number of PCUs:
Target Value:

1.The Employee is hereby granted an Award of the Target number of PCUs set forth above. The PCUs will be reflected in a book account by the Company during the Performance Period (as defined below). Contingent upon achieving required performance levels, the value of vested PCUs, will be paid in cash in the calendar year following the completion of the Performance Period (the “Payment Date”), as soon as administratively practicable following the end of the Performance Period.
2.The “Performance Period” is the three-calendar year period beginning on January 1st in the year of grant and ending on and through December 31st in the second year following the year of the grant date.
3.Except as otherwise provided in this Agreement, this Award of PCUs will vest, in accordance with and subject to the terms of this Agreement, in three equal installments on December 31st in each year during the Performance Period (each a “Vesting Date”); provided, however, that if:
a.the Employee Separates from Service prior to the end of the Performance Period by reason of the Employee’s death or a Separation from Service on account of Disability, all PCUs referenced in the chart above shall vest on such termination date and a cash amount equal to $1 for each PCU shall be paid to the Employee on the date of Separation from Service (or as soon as practicable thereafter); provided, however, any payment due to the Employee by reason of a Separation from Service on account of Disability shall be delayed to the extent required by Section 14(k)(i) of the Plan;
b.if the Employee Separates from Service prior to the applicable Vesting Date by reason of voluntary Separation from Service due to a Qualified Retirement (as defined below) or an Early Retirement (as defined below), all PCUs that have not previously vested shall continue to vest on the applicable Vesting Date(s) as if the Employee’s employment had continued until the final Vesting Dates; and


c.(i) the Employee Separates from Service prior to the Payment Date by reason of a Separation from Service by the Company for Cause (as defined in the Plan and as may otherwise be determined by the Committee in its sole discretion for all purposes of this Agreement) or (ii) the Employee Separates from Service prior to the final Vesting Date by reason of a voluntary Separation from Service by the Employee (including any retirement other than a Qualified Retirement (as defined below) or an Early Retirement (as defined below)), this Award of PCUs (including any vested portion) will be forfeited in full and cancelled by the Company, and shall cease to be outstanding, upon such termination date; and
d.the Employee Separates from Service for any other reason, including on account of a Qualified Retirement, Early Retirement, by reason of death or Disability subsequent to the end of the Performance Period, or by reason of a Separation from Service by the Company (other than for Cause, voluntarily by the Employee not as part of a Qualified Retirement, Early Retirement or due to death or Disability as provided in paragraphs 4(A) and 4(B)), the Employee will be eligible to receive the value of his or her vested PCUs, as of the date of Separation from Service, on the Payment Date in accordance with and subject to the terms set forth in paragraph 5 below. Any PCUs that have not vested on or before the date that an Employee Separates from Service for any reason (other than by reason of death or Disability as provided in paragraph 4(A), or Qualified Retirement or Early Retirement as provided in paragraph 4(B)), (i) will not subsequently vest; and (ii) will be immediately cancelled and forfeited without payment or further obligation by the Company or any Affiliate. In addition, the Employee’s right to receive the applicable PCU value in respect of vested PCUs that have not been forfeited will be paid on the Payment Date, if, and only if, all relevant performance conditions are met, in accordance with the terms and conditions of this Agreement and the Plan.
For purposes of this Agreement, “Qualified Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who is: (i) at least 60 years of age; and (ii) has at least seven years of service as an Employee.
For purposes of this Agreement, “Early Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who is: (i) at least 57 years of age; and (ii) has at least 10 years of service as an Employee.
1.Each PCU represents a right to receive the applicable PCU value in the chart below, in cash on the Payment Date, if and only if, such PCU (i) has not been forfeited prior to its Vesting Date and (ii) has vested in accordance with the terms of this Agreement.
The value of each PCU will depend upon the performance of the Total Shareholder Return of AES common stock (“AES TSR”) as compared to the Total Shareholder Return of companies in the peer groups listed below over the Performance Period:
Peer Group Index Proportional Weighting
S&P Utilities Index 50%
S&P 500 Index 25%
MSCI Emerging Markets Latin America Index 25%



Between the AES TSR levels listed below straight-line interpolation is used to determine the vesting percentage for the award. The maximum Index Score is 200%.
Actual AES-TSR Compared to Each Peer Group Index for the Performance Period Index Score
Below 30th Percentile 0%
Equal to the 30th Percentile 50%
Equal to the 50th Percentile 100%
Equal to or the 70th Percentile 150%
Equal to or greater than 90th Percentile 200%

The AES TSR will be evaluated against each of the separate peer group indices separately to determine the three index scores. The overall performance value for a PCU will be equal to:
The number of vested PCUs x $1.00 x [(S&P 500 Utilities Index Score x 50%) + (S&P 500 Index Score x 25%) + (MSCI Emerging Markets Latin America Index Score x 25%)] = Total Earned PCU Value
Notwithstanding the performance level achieved, the Committee may reduce or terminate the PCUs altogether, but in no event may the Committee increase the value of a PCU underlying this Award beyond the performance levels achieved.
1.Notwithstanding the foregoing, in the event of a (i) Change in Control (as defined below) and (ii) a Qualifying Event (as defined below) prior to the end of the Performance Period, if the PCUs described herein have not already been previously forfeited or cancelled, such PCUs shall become fully vested (for the Target number of PCUs set forth in paragraph 1) and payable in a cash amount equal to $1.00 for each PCU, and the Payment Date will occur contemporaneous with the Qualifying Event; provided, however, that in connection with a Change in Control, payment of any obligation payable pursuant to the preceding sentence may be made in cash of equivalent value and/or securities or other property in the Committee’s discretion.
a.Change in Control means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d) (3) of the Exchange Act) of Persons, (ii) a Person or group (as defined in the Plan) of Persons (other than Management of the Company on the date of the most recent adoption of the Plan by the Company's stockholders or their Affiliates) shall have become the beneficial owner (as defined below) of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the beneficial owners of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction. Notwithstanding the foregoing or any provision to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5). For purposes of this Agreement, “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act.


b.Qualifying Event means the occurrence of one or more of the following events: (i) immediately upon the consummation of a Change in Control event, failure of the successor company in a Change in Control event to provide Substitute Awards that are substantially similar in both nature and terms (including having an equivalent realizable pre-tax value to outstanding Awards assuming vesting and delivery at the consummation of the Change in Control); (ii) within two years of the consummation of a Change in Control event, an involuntary termination without Cause of the Employee; or (iii) within two years of the consummation of a Change in Control event, a Good Reason Termination (as defined in Section 6(C) below) by the Employee.
c.Good Reason Termination means, without an Employee’s written consent, the Separation from Service (for reasons other than death, Disability or Cause) by an Employee due to any of the following events occurring within two years of the consummation of a Change in Control: (i) the relocation of an Employee’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (ii) a material diminution in the duties or responsibilities of an Employee from those in place immediately prior to such Change in Control; or (iii) a material reduction in the base salary or annual incentive opportunity of an Employee from what was in place immediately prior to such Change in Control.
In order for an Employee to have a Good Reason Termination, (i) an Employee must notify the successor entity in writing, within ninety (90) days of the event constituting Good Reason of the Employee’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that an Employee notifies the successor entity in writing of the Employee’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period.
1.Notices hereunder and under the Plan, if to the Company, shall be delivered to the Plan Administrator (as so designated by the Company) or mailed to the Company’s principal office, 4300 Wilson Boulevard, Arlington, VA 22203 (or as subsequently designated by the Company), attention of the Plan Administrator, or, if to the Employee, shall be delivered to the Employee, which may include electronic delivery, or mailed to his or her address as the same appears on the records of the Company.


2.All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive on all persons. Unless otherwise specifically provided herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan will govern.
3.By accepting this Award of PCUs, the Employee acknowledges receipt of a copy of the Plan and the prospectus relating to this Award of PCUs, and agrees to be bound by the terms and conditions set forth in the Plan and this Agreement, as in effect and/or amended from time to time. The Employee further acknowledges that the Plan and related documents, which may include the Plan prospectus, may be delivered electronically. Such means of delivery may include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or such other delivery determined at the Plan Administrator’s discretion. The Employee acknowledges that the Employee may receive from the Company a paper copy of any documents delivered electronically at no cost if the Employee contacts the Human Resources department of the Company by telephone at (703) 682-6553 or by mail to 4300 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203. The Employee further acknowledges that the Employee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.
4.This Award is intended to satisfy the requirements of Section 409A of the Code (or an exception thereto) and shall be administered, interpreted and construed accordingly. A payment shall be treated as made on the specified date of payment if such payment is made at such date or a later date in the same calendar year or, if later, by the 15th day of the third calendar month following the specified date of payment, as provided and in accordance with Treas. Reg. § 1.409A-3(d). The Company may, in its sole discretion and without the Employee’s consent, modify or amend the terms and conditions of this Award, impose conditions on the timings and effectiveness of the payment of the PCUs, or take any other action it deems necessary or advisable, to cause this Award to comply with Section 409A of the Code (or an exception thereto). Notwithstanding, the Employee recognizes and acknowledges that Section 409A of the Code may impose upon the Employee certain taxes or interest charges for which the Employee is and shall remain solely responsible.
5.The Employee acknowledges that any income for federal, state or local income tax purposes that the Employee is required to recognize on account of the vesting of the PCUs and/or payment in settlement of the PCUs to the Employee shall be subject to withholding of tax by the Company. In accordance with administrative procedures established by the Company, the Company shall mandatorily satisfy the Employee’s withholding tax obligations, if any, by withholding from the payment in settlement of the PCUs to be made to the Employee a sufficient amount to satisfy any withholding tax obligation.


6.Notwithstanding any other provisions in this Agreement, any PCUs or other compensation (equity or cash) subject to recovery under any law, government regulation, stock exchange listing requirement, or Company policy, shall be subject to such deductions, recoupment and claw back as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this Award and any other compensation paid or payable by the Company and recovery of such amounts relating thereto. By accepting this Award, Employee agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover, recoup or recapture this Award or any other applicable compensatory amounts pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or such other compensatory amounts from Employee’s accounts, or pending or future compensation or other grants.
7.Pursuant to regulations on personal data protection, the Company or persons engaged by the Company will process Employee’s personal information for the purposes of processing and administering this Agreement and PCUs, and more generally to comply with legal obligations. The categories of personal information include the information provided by the Employee to the Company in connection with the award of a PCU, if applicable, and that the Company has about the Employee in the ordinary course of business. In accordance with applicable law, the Employee may have the right to access, correct, amend and remove this personal information upon request to the Company. Questions concerning this notice or to exercise your personal data protection rights may be made by sending a request to the Legal Department of the Company at: 4300 Wilson Boulevard, Suite 1100, Arlington, VA 22203.

1.This Agreement will be governed by the laws of the State of Delaware without giving effect to its choice of law provisions.


The AES CORPORATION


Tish Mendoza
Executive Vice President and Chief Human Resources Officer

EX-10.11 6 aes1231202310-kexhibit1011.htm EX-10.11 Document



PERFORMANCE UNIT AWARD AGREEMENT PURSUANT TO THE AES CORPORATION 2003 LONG TERM COMPENSATION PLAN
The AES Corporation, a Delaware Corporation (the “Company”), grants to the Employee named below, pursuant to The AES Corporation 2003 Long Term Compensation Plan, as amended (the “Plan”), and this Performance Unit Award Agreement (this “Agreement”), this Award of Performance Units (“Performance Units”), the value of which is related to and contingent upon the achievement of a predetermined performance targets (as set forth herein). Capitalized terms not otherwise defined herein shall each have the meaning assigned to them in the Plan.
1.This Award of Performance Units is subject to all terms and conditions of this Agreement and the Plan, the terms of which are incorporated herein by reference:
Name of Employee:
Fidelity System ID:
Grant Date:
Target Number of Performance Units:
Target Value:

1.The Employee is hereby granted an Award of the total number of Performance Units (at target) set forth above. The Performance Units will be reflected in a book account by the Company during the Performance Period (as defined below). Contingent upon achieving or exceeding 90% or more of the Performance Target, the value of vested Performance Units, will be paid in cash in the calendar year following the completion of the Performance Period (the “Payment Date”), as soon as administratively practicable following the end of the Performance Period.
2.The “Performance Period” is the three-calendar year period beginning on January 1st in the year of grant and ending on and through December 31st in the second year following the year of the grant date.
3.Except as otherwise provided in this Agreement, this Award of Performance Units will vest, in accordance with and subject to the terms of this Agreement, in three equal installments on December 31st in each year during the Performance Period (each a “Vesting Date”); provided, however, that if:
a.the Employee Separates from Service prior to the end of the Performance Period by reason of the Employee’s death or a Separation from Service on account of Disability, all Performance Units referenced in the chart above shall vest on such termination date and a cash amount equal to $1 for each Performance Unit shall be paid to the Employee on the date of Separation from Service (or as soon as practicable thereafter); provided, however, any payment due to the Employee by reason of a Separation from Service on account of Disability shall be delayed to the extent required by Section 14(k)(i) of the Plan;
b.if the Employee Separates from Service prior to the applicable Vesting Date by reason of Voluntary Separation from Service due to a Qualified Retirement (as defined below) or an Early Retirement (as defined below), all Performance Units that have not previously vested shall vest on the applicable Vesting Date(s) as if the Employee’s employment had continued until the final Vesting Date; and


c.(i) the Employee Separates from Service prior to the Payment Date by reason of a Separation from Service by the Company for Cause (as defined in the Plan and as may otherwise be determined by the Committee in its sole discretion for all purposes of this Agreement) or (ii) the Employee Separates from Service prior to the final Vesting Date by reason of a voluntary Separation from Service by the Employee (including any retirement other than a Qualified Retirement (as defined below) or an Early Retirement (as defined below), this Award of Performance Units (including any vested portion) will be forfeited in full and cancelled by the Company, and shall cease to be outstanding, upon such termination date; and
d.the Employee Separates from Service for any other reason, including on account of a Qualified Retirement, Early Retirement, by reason of death or Disability subsequent to the end of the Performance Period, or by reason of a Separation from Service by the Company (other than for cause, voluntarily by the Employee not as part of a Qualified Retirement, Early Retirement or due to death or Disability as provided in paragraphs 4(A) and 4(B)), the Employee will be eligible to receive the value of his or her vested Performance Units, as of the date of the Separation from Service, on the Payment Date in accordance with and subject to the terms set forth in paragraph 5 below.
For purposes of this Agreement, “Qualified Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who is: (i) at least 60 years of age; and (ii) has at least seven years of service as an Employee.
For purposes of this Agreement, “Early Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who is: (i) at least 57 years of age; and (ii) has at least 10 years of service as an Employee.
Any Performance Units that have not vested on or before the date that an Employee Separates from Service for any reason (other than by reason of death or Disability as provided in Paragraph 4(A) or Qualified Retirement or Early Retirement as provided in Paragraph 4(B)), (i) will not subsequently vest; and (ii) will be immediately cancelled and forfeited without payment or further obligation by the Company or any Affiliate. In addition, the Employee’s right to receive the applicable Performance Unit value in respect of vested Performance Units that have not been forfeited will be paid on the Payment Date, if, and only if, all relevant performance conditions are met, in accordance with the terms and conditions of this Agreement and the Plan.
1.Each Performance Unit represents a right to receive the applicable Performance Unit value in the chart below, in cash on the Payment Date, if and only if, such Performance Unit (i) has not been forfeited prior to its Vesting Date and (ii) has vested in accordance with the terms of this Agreement.

The value of each Performance Unit will depend upon the Company’s actual Parent Free Cash Flow (“PFCF”) as defined below[1], over the Performance Period as compared to the performance target approved by the Committee and as follows:
Actual PFCF Over the Performance Period Performance Unit Value
Below 90% of Performance Target = USD $0.00
Equal to 90% of Performance Target = USD $0.50


Equal to 100% of Performance Target = USD $1.00
Equal to or greater than 110% of Performance Target = USD $2.00

Between the PFCF levels listed above straight-line interpolation is used to determine the vesting percentage for the award. The maximum value of a Performance Unit is $2.00.
Notwithstanding the performance level achieved, the Committee may reduce or terminate the Performance Units altogether, but in no event may the Committee increase the value of a Performance Unit underlying this Award of Performance Units beyond the performance levels achieved.
1.Notwithstanding the foregoing, in the event of a (i) Change in Control (as defined below) and (ii) a Qualifying Event (as defined below) prior to the end of the Performance Period, if the Performance Units described herein have not already been previously forfeited or cancelled, such Performance Units shall become fully vested (for the total number of Performance Units set forth in paragraph 1) and payable in a cash amount equal to $1.00 for each Performance Unit and the Payment Date will occur contemporaneous with the Qualifying Event; provided, however, that in connection with a Change in Control, payment of any obligation payable pursuant to the preceding sentence may be made in cash of equivalent value and/or securities or other property in the Committee’s discretion.
a.Change in Control means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d) (3) of the Exchange Act) of Persons, (ii) a Person or group (as so defined in the Plan) of Persons (other than Management of the Company on the date of the most recent adoption of the Plan by the Company's stockholders or their Affiliates) shall have become the beneficial owner (as defined below) of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the beneficial owners of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction. Notwithstanding the foregoing or any provision to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5). For purposes of this Agreement, “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act.


b.Qualifying Event means the occurrence of one or more of the following events: (i) immediately upon the consummation of a Change in Control event, failure of the successor company in a Change in Control event to provide Substitute Awards that are substantially similar in both nature and terms (including having an equivalent realizable pre-tax value to the outstanding Awards assuming vesting and delivery at the consummation of the Change in Control); (ii) within two years of the consummation of a Change in Control event, an involuntary termination without Cause of the Employee; or (iii) within two years of the consummation of a Change in Control event, a Good Reason Termination (as defined in Section 6(C) below) by the Employee.
c.Good Reason Termination means, without an Employee’s written consent, the Separation from Service (for reasons other than death, Disability or Cause) by an Employee due to any of the following events occurring within two years of the consummation of a Change in Control: (i) the relocation of an Employee’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (ii) a material diminution in the duties or responsibilities of an Employee from those in place immediately prior to such Change in Control; or (iii) a material reduction in the base salary or annual incentive opportunity of an Employee from what was in place immediately prior to such Change in Control.
In order for an Employee to have a Good Reason Termination, (i) an Employee must notify the successor entity in writing, within ninety (90) days of the event constituting Good Reason of the Employee’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that an Employee notifies the successor entity in writing of the Employee’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period.
1.Notices hereunder and under the Plan, if to the Company, shall be delivered to the Plan Administrator (as so designated by the Company) or mailed to the Company’s principal office, 4300 Wilson Boulevard, Arlington, VA 22203 (or as subsequently designated by the Company), attention of the Plan Administrator, or, if to the Employee, shall be delivered to the Employee, which may include electronic delivery, or mailed to his or her address as the same appears on the records of the Company.
2.All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive on all persons. Unless otherwise specifically provided herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan will govern.


3.By accepting this Award of Performance Units, the Employee acknowledges receipt of a copy of the Plan and the prospectus relating to this Award of Performance Units, and agrees to be bound by the terms and conditions set forth in the Plan and this Agreement, as in effect and/or amended from time to time. The Employee further acknowledges that the Plan and related documents, which may include the Plan prospectus, may be delivered electronically. Such means of delivery may include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or such other delivery determined at the Plan Administrator’s discretion. The Employee acknowledges that the Employee may receive from the Company a paper copy of any documents delivered electronically at no cost if the Employee contacts the Human Resources department of the Company by telephone at (703) 682-6553 or by mail to 4300 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203. The Employee further acknowledges that the Employee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.
4.This Award is intended to satisfy the requirements of Section 409A of the Code (or an exception thereto) and shall be administered, interpreted and construed accordingly. A payment shall be treated as made on the specified date of payment if such payment is made at such date or a later date in the same calendar year or, if later, by the 15th day of the third calendar month following the specified date of payment, as provided and in accordance with Treas. Reg. § 1.409A-3(d). The Company may, in its sole discretion and without the Employee’s consent, modify or amend the terms and conditions of this Award, impose conditions on the timings and effectiveness of the payment of the Performance Units, or take any other action it deems necessary or advisable, to cause this Award to comply with Section 409A of the Code (or an exception thereto). Notwithstanding, the Employee recognizes and acknowledges that Section 409A of the Code may impose upon the Employee certain taxes or interest charges for which the Employee is and shall remain solely responsible.
5.The Employee acknowledges that any income for federal, state or local income tax purposes that the Employee is required to recognize on account of the vesting of the Performance Units and/or payment in settlement of the Performance Units to the Employee shall be subject to withholding of tax by the Company. In accordance with administrative procedures established by the Company, the Company shall mandatorily satisfy the Employee’s withholding tax obligations if any, by withholding from the payment in settlement of the Performance Units to be made to the Employee a sufficient amount to satisfy any withholding tax obligation.
6.Notwithstanding any other provisions in this Agreement, any Performance Units or other compensation (equity or cash) subject to recovery under any law, government regulation, stock exchange listing requirement, or Company policy, shall be subject to such deductions, recoupment and claw back as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this Award and any other compensation paid or payable by the Company and recovery of such amounts relating thereto. By accepting this Award, Employee agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover, recoup or recapture this Award or any other applicable compensatory amounts pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or such other compensatory amounts from Employee’s accounts, or pending or future compensation or other grants.


7.Pursuant to regulations on personal data protection, the Company or persons engaged by the Company will process Employee’s personal information for the purposes of processing and administering this Agreement and Performance Units, and more generally to comply with legal obligations. The categories of personal information include the information provided by the Employee to the Company in connection with the award of a Performance Unit, if applicable, and that the Company has about the Employee in the ordinary course of business. In accordance with applicable law, the Employee may have the right to access, correct, amend and remove this personal information upon request to the Company. Questions concerning this notice or to exercise your personal data protection rights may be made by sending a request to the Legal Department of the Company at: 4300 Wilson Boulevard, Suite 1100, Arlington, VA 22203.

1.This Agreement will be governed by the laws of the State of Delaware without giving effect to its choice of law provisions.


The AES CORPORATION

Tish Mendoza
Executive Vice President and Chief Human Resources Officer


[1] Parent Free Cash Flow is defined as Subsidiary Distributions less cash used for interest costs, development, general and administrative activities, and tax payments by the parent company.

EX-10.12 7 aes1231202310-kexhibit1012.htm EX-10.12 Document

The AES Corporation Restoration Supplemental Retirement Plan As Amended and Restated effective October 10, 2023 1 The AES Corporation Restoration Supplemental Retirement Plan As Amended and Restated effective October 10, 2023 Article I. - General Provisions 1.1 Establishment and Purpose The AES Corporation hereby establishes The AES Restoration Supplemental Retirement Plan (the "Plan") on the terms and conditions hereinafter set forth. The Plan is designed primarily for the purpose of providing benefits for a select group of management and highly compensated employees of the Company and its Subsidiaries and is intended to qualify as a "top hat" plan under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan was originally established effective January 1, 2005. The Plan was amended and restated on December 29, 2008 to comply with Section 409A, and subsequently amended effective January 1, 2012 to (i) provide for the default carryover of timely made deferral elections, (ii) increase the compensation deferral opportunity from 50% to 80% (and from 80% to 100% for bonus compensation), and (iii) require that a Participant be an active employee on the date supplemental match contributions and/or supplemental profit sharing contributions are credited for a plan year to be eligible to receive such credits. The Plan was amended and restated effective January 1, 2017 as set forth herein. This amendment and restatement incorporates prior amendments, provides that supplemental profit sharing contributions and supplemental match will no longer be deemed invested in company stock when made to the Plan, and permits supplemental company nonelective contributions as set forth herein. The Plan was further amended effective October 10, 2023. 1.2 Definitions "Bonus Compensation" means the regular annual bonus paid by the Company or Subsidiary, as applicable, and shall exclude all other bonus compensation paid to a Participant, including special and non-recurring bonuses unless timely determined by the Committee, in its sole discretion, prior to the applicable Plan Year (in each instance, as identified and reported on the books and records of Company). Bonus Compensation shall be determined without regard to any pre-tax salary reduction amounts, including but not limited to, amounts voluntarily deferred under the terms of this Plan. "Beneficiary" means the person or persons designated by a Participant as his beneficiary hereunder in accordance with the provisions of Article V. "Board" means the Board of Directors of the Company. "Change in Control" means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any person or group (as that term is used in Section 13(d)(3) of the Exchange Act) of Persons; (ii) a Person or group (as 2 so defined) of Persons (other than management of the Company on the date of the adoption of this Plan or their affiliates) shall have become the beneficial owner of more than 35% of the outstanding voting stock of the Company; or (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new director whose election or nomination was approved by a majority of the directors then in office who were either directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group) cease to constitute a majority of the Board of Directors.


Notwithstanding the foregoing or any provision of this Plan to the contrary, the foregoing definition of Change in Control shall be interpreted, administered and construed in manner necessary to ensure that the occurrence of any such event shall result in a Change of Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg.§ 1.409A- 3(i)(5). "Code" means the Internal Revenue Code of 1986, as amended, and any successor code or law. "Committee" means the Compensation Committee of the Board, or such other committee designated by the Board to discharge the duties of the Committee hereunder. "Company" means The AES Corporation, a Delaware Corporation, or any successor thereto. "Company Match" means the employer matching contributions contributed to the Participant's account under the Qualified Plan for the Plan Year. "Company Nonelective Contributions" means the employer nonelective contributions contributed to the Participant's account under the Qualified Plan for the Plan Year. "Compensation" shall mean total annual regular earnings, retroactive regular earnings that relate to the period for which a Deferral Agreement has been timely made, holiday pay, sick pay and vacation pay and/or such other compensation, in each case as timely determined by the Committee, in its sole discretion, prior the applicable Plan Year (as identified and reported on the books and records of Company). Compensation shall be determined without regard to any pretax salary reduction amounts, including but not limited to amounts voluntarily deferred under the terms of this Plan. Incentive and supplemental compensation, including but not limited to, bonus compensation, assignment related allowances and compensation payable under The AES Corporation 2003 Long Term Compensation Plan, or any successor thereto, are not eligible for benefit purposes under this Plan and shall not be included in the definition of Compensation. "Deferral Account" means the bookkeeping account(s) established on behalf of a Participant to track the Participant's deferred compensation benefits under the Plan. "Deferral Election" means an election by a Participant to defer Compensation or Bonus Compensation in accordance with the provisions of Section 2.2 of the Plan. 3 "Deferrals" shall have the meaning ascribed thereto in Section 2.2(b) hereof. "Disability" means a Participant who: (1) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of not less than 12 months; or (2) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan of the Company or its Subsidiaries or (3) is determined to be totally disabled by the Social Security Administration. "Disability Date" means the date on which a Participant Separates from Service due to Disability. "Distribution Date" means the date on which distributions to a Participant are to commence. Distribution Dates are determined according to each Participant's Deferral Account elections or as otherwise provided under the terms of the Plan. "Distribution Option" means the form in which payments to a Plan Participant are to be paid. Distribution Options are determined according to each Participant's Deferral Account elections or as otherwise provided under the terms of the Plan. "Earnings" shall have the meaning ascribed thereto in Section 2.5(b) of the Plan. "Insolvency" means, with respect to the Company: (1) an adjudication of bankruptcy; (2) the assignment for the benefit of creditors of or by the Company; (3) a material part of all of the property of the Company becomes subject to the control and direction of a receiver, which receivership is not dismissed within sixty (60) days of such receiver's appointment; or (4) the filing by the Company of a petition for relief under any federal or other bankruptcy or other insolvency law or for an arrangement with creditors.


"Key Employee" means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company as determined in accordance with Section 409A and the procedures established by the Company. "Participant" means any employee who has satisfied the eligibility requirements set forth in Section 1.4 of the Plan. "Person" means any individual, corporation, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Plan Year" means the twelve-month period beginning each January 1. "Profit Sharing Contribution" means the annual discretionary employer profit sharing contribution allocated to the accounts of participants under the Qualified Plan for a Plan year. 4 "Qualified Plan" means The AES Corporation Retirement Savings Plan, as amended, or such other plan as designated by the Committee. "Retirement" means a Participant's Separation From Service on or after the date such Participant attains age fifty-nine and a half (59½). "Section 409A" shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder. "Separation From Service" and "Separate from Service" shall mean a Participant's death, retirement or other termination of employment with the Company and all of its controlled group members within the meaning of Section 409A of the Code. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language "at least 50 percent" shall be used instead of "at least 80 percent" in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg.§ 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language "at least 20 percent" shall be used instead of "at least 80 percent" in each place it appears. Whether a Participant has a Separation from Service will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A. For this purpose, a Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A. "Subsidiary" means any entity in which the Company owns or otherwise controls, directly or indirectly, stock or other ownership interests having the voting power to elect a majority of the board of directors, or other governing group having functions similar to a board of directors, as determined by the Committee. "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse, a beneficiary, or a dependent (as determined under Section 152(a) of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)) of the Participant; the need to pay for the funeral expenses of a spouse, beneficiary or dependent (as defined above); loss of the Participant's property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
1.3 Administration.
(a) The Committee shall administer the Plan and have sole and absolute
authority and discretion to decide all matters relating to the administration of the Plan, including, without limitation, determining the rights and status of Participants or their beneficiaries under the Plan. The Committee is authorized to interpret the Plan, to decide questions of fact, to adopt administrative rules, regulations, and guidelines for the Plan, and may correct any defect, supply any omission or reconcile any inconsistency or conflict in the Plan.


The Committee's determinations under the Plan need not be uniform among all Participants, or classes or 5 categories of Participants, and may be applied to such Participants, or classes or categories of Participants, as the Committee, in its sole and absolute discretion, considers necessary, appropriate or desirable. All determinations by the Committee shall be final, conclusive and binding on the Company, the Participant and any and all interested parties. (b) The Committee may delegate such of its powers and authority under the Plan to the Company's officers as it deems necessary or appropriate. In the event of such delegation, all references to the Committee in this Plan shall be deemed references to such officers as it relates to those aspects of the Plan that have been delegated. (c) Any action taken by the Committee with respect to the rights or benefits under the Plan of any Participant shall be revocable by the Committee as to payments not yet made to such person, and acceptance of any deferred compensation benefits under the Plan constitutes acceptance of and agreement to the Committee's or the Company's making any appropriate adjustments in future payments to such person (or to recover from such person) any excess payment or underpayment previously made to him. (d) Notwithstanding any provision of the Plan to the contrary, this Plan is intended to comply with the provisions of Section 409A and shall be administered, interpreted and construed accordingly (or disregarded to the extent such provision cannot be so administered, interpreted or construed). With respect to payments subject to Section 409A: (i) it is intended that distribution events authorized under the Plan qualify as permissible distribution events for purposes of Section 409A; and (ii) the Company reserve the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A. Notwithstanding any provision of this Plan to the contrary, to the extent the timing of any benefit payment due under this Plan was modified pursuant to the transition guidance provided by the Internal Revenue Service concerning the time and form of payment, any such modification shall only apply to amounts that would not otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would not otherwise be paid in 2008. To the extent any such payment cannot be made in 2008 under the transition guidance, such payment will be made in January 2009. Notwithstanding any provision of the Plan to the contrary, in no event shall the Committee, the Company or a Subsidiary (or their employees, officers, directors, members or affiliates) have any liability to any Participant (or any other person) due to the failure of the Plan to satisfy the requirements of Section 409A.
1.4 Eligibility and Participation.
(a) Participation in the Plan is limited to officers and key management
employees of the Company and its Subsidiaries who are designated by the Committee as eligible
to participate in the Plan and who are within the category of a select group of management and
highly compensated employees as referred to in Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). An employee's
participation in the Plan shall be effective upon notification to the employee by the Committee of
eligibility to participate in the Plan.
(b) A Participant shall cease to be a Participant upon receiving payment for
the full amount of benefits to which the Participant is entitled under the Plan. If the Committee
6
determines a Participant is no longer eligible to actively participate in the Plan, he shall not be
entitled to make Deferral Elections or accrue additional supplemental matching contributions or
supplemental profit sharing awards under Article II of the Plan.
Article II. - Supplemental Retirement Benefits
2.1 Supplemental Profit Sharing Contribution.
(a) In the event that the Profit Sharing Contribution for a Participant under the


Qualified Plan is limited by the application of Section 401(a)(17) or Section 415 for any Plan
Year, the Participant shall receive a supplemental profit sharing award under this Plan for such
Plan year equal to the difference between: (i) the Profit Sharing Contribution actually made to
the Qualified Plan on behalf of the Participant; and (ii) the Profit Sharing Contribution that
would have been made to the Qualified Plan on behalf of such Participant for such Plan Year if
the Section 401(a)(17) limitations and the Section 415 limitations were not contained therein.
Supplemental profit sharing awards shall be credited to each eligible Participant's Retirement
Account in accordance with procedures established by the Company, provided that in order to be
eligible to receive a credit of a supplemental profit sharing award, a Participant must be an active
employee on the date such amount is credited.
(b) The award for any Plan year shall be deemed to be made as of the day the
Profit Sharing Contribution is made under the Qualified Plan, and shall be deemed invested in
the Participant's investment designations as in effect on the date such award is credited to the
Plan.
2.2
Supplemental Deferral Elections.
(a) Each Participant shall be eligible to elect to defer Compensation and/or
Bonus Compensation under the Plan with respect to a Plan Year in accordance with the terms of the Plan and the rules and procedures established by the Committee. A Participant's Deferral Election for a Plan Year shall continue in effect from Plan Year to Plan Year unless the Participant completes a new Deferral Election (or cancels his Deferral Election) in a timely manner in accordance with procedures set forth by the Committee. (b) A Participant may make a Deferral Election by filing a written or electronic election with the Committee directing the Company to reduce the Participant's Compensation and/or Bonus Compensation and to credit the amount of any such reduction (the "Deferrals") to the Deferral Accounts established and maintained for such Participant pursuant to Section 2.5 of the Plan. Deferral Elections hereunder shall be made in accordance with the terms of the Plan and the rules established by the Committee, and must be filed not later than December 31 of the calendar year preceding the Plan Year to which the election relates (or at such earlier times as may be established by the Committee) or continue in effect from the prior Plan Year as described in Section 2.2(a). Notwithstanding the provisions of the preceding sentence, if permitted by the Committee, a Deferral Election with respect to a Participant's Bonus Compensation shall be given effect if made by June 30 of the Plan Year for which the Bonus Compensation is to be paid, provided that the Committee determines that the Bonus Compensation satisfies the requirements for "performance-based compensation" within the 7 meaning of Section 409A(a)(4)(B)(iii) of the Code. Additionally, for the Plan Year in which a Participant first becomes eligible to participate in the Plan, a Participant's initial Deferral Election may be made within thirty (30) days after the date the Participant becomes eligible to participate in the Plan and shall apply only to Compensation and Bonus Compensation paid for services performed after the date of such election. Accordingly, if a Deferral Election is made in the first-year of eligibility but after the beginning of the specified performance period (e.g., annual bonus compensation), the Deferral Election shall only apply to the total amount of such Compensation multiplied by the ratio of (i) the number of days remaining in the performance period after the election to (ii) the total number of days in the performance period. Unless otherwise determined by the Committee, a separate Deferral Election must be filed each Plan Year.


(c) Deferrals shall be credited to each Participant's Deferral Accounts as of such time or times determined by the Committee; provided, however, that Deferrals shall be credited to each Participant's Deferral Accounts not later than thirty (30) days after the date on which such Compensation or Bonus Compensation would have otherwise been paid. Deferrals shall be deemed to be invested in accordance with a Participant's investment designations as permitted under Section 2.5(b).
(d) Unless otherwise determined by the Committee, a Participant may elect to
defer up to 80% of Compensation and up to 100% of Bonus Compensation paid to the
Participant.
(e)		 Notwithstanding the foregoing, a Deferral Election shall automatically
terminate if a Participant suffers a disability, receives a distribution on account of Unforeseeable
Emergency or dies. For purposes of this Section, a disability refers to any medically
determinable physical or mental impairment resulting in the Participant's inability to perform the
duties of his or her position or any substantially similar position, where such impairment can be
expected to result in death or can be expected to last for a continuous period of not less than six
months.
2.3 Supplemental Company Matching Awards.
(a) Supplemental matching contribution ("Supplemental Match") shall be
credited annually to each eligible Participant's Deferral Accounts in accordance with procedures
established by the Company, provided that in order to be eligible to receive a credit of a
Supplemental Match, a Participant must be an active employee on the date such amount is
credited.
(b) The amount of the Supplemental Match shall be equal to: (i) the
Company Match that would have been awarded under the Qualified Plan, taking into account the
Participant's Deferral Election and the maximum percentage of Compensation for matching
awards permitted under the Qualified Plan, if the Participant's Compensation and elective
contributions to the Qualified Plan were not subject to the Section 401(a)(17) and 402(g)
limitations under the Qualified Plan; less (ii) the maximum Company Match available for award
to the Participant under the Qualified Plan. For purposes of this Section 2.3, Compensation shall
have the meaning assigned thereto in the Qualified Plan (determined without regard to any pre
8
tax salary reduction amounts, including but not limited to amounts voluntarily deferred under the
terms of this Plan to the extent necessary to carry out the terms and intent of this Plan).


(c) The Supplemental Match will be allocated to the Participant's Deferral
Accounts in the same proportion as the Participant's Deferrals are allocated among the
Participant's Deferral Accounts and shall be deemed invested in the Participant's investment
designations as in effect on the date the award is credited to the Plan.
2.4 Supplemental Company Nonelective Contribution Awards.
(a) In the event that the Company Nonelective Contribution for a Participant
under the Qualified Plan is limited by the application of Section 401(a)(17) or Section 415 for
any Plan Year, the Participant shall receive a supplemental company nonelective contribution
award under this Plan for such Plan year equal to the difference between: (i) the Company
Nonelective Contribution actually made to the Qualified Plan on behalf of such Participant; and
(ii) the Company Nonelective Contribution that would have been made to the Qualified Plan on
behalf of such Participant for such Plan Year if the Section 401(a)(17) limitations and the
Section 415 limitations were not contained therein. Supplemental company nonelective
contribution awards shall be credited to each eligible Participant's Retirement Account in
accordance with procedures established by the Company, provided that in order to be eligible to
receive a credit of a supplemental profit sharing award, a Participant must be an active employee
on the date such amount is credited.
(b) The supplemental company nonelective contribution shall be deemed
invested in the Participant investment designations as in effect on the date such award is credited
to the Plan.
2.5
Deferral Accounts/Earnings
(a) Unless otherwise determined by the Committee, the Company shall
maintain on behalf of each Participant as many as four (4) separate Deferral Accounts which accounts shall be designated Special Purpose Account #1, Special Purpose Account #2, Special Purpose Account #3 and Retirement Account. A Participant may elect to allocate his Deferrals among such Deferral Accounts and may have a different Distribution Date and Distribution Option for such Deferral Accounts as provided under Article III. If a Participant fails to properly and timely allocate Deferrals, such participant shall be deemed to have selected the Retirement Account. (b) The Participant's Deferral Account shall be adjusted by an amount equal to the amount that would have been earned (or lost) if the amounts deferred under this Plan had been invested in hypothetical investments designated by the Participant from time to time, based on a list of hypothetical investments provided by the Committee from time to time (such hypothetical earnings or losses shall be referred to as "Earnings"). The Participant shall designate the investments used to measure Earnings from the list of authorized investments provided by the Committee by completing the appropriate form (or electronically via the Plan's website) or in such other manner as the Committee may designate from time to time.


The Participant may change such designations at such times as are permitted by the Committee, 9 provided that the Participant shall be entitled to change such designations at least quarterly. Earnings shall be credited to the Participant's Deferral Accounts at least annually (or more frequently at the discretion of the Company). Earnings shall be credited to Deferral Accounts until all payments with respect to such account have been made under this Plan. Neither the Company nor the Committee shall act as a guarantor, or be liable or otherwise responsible for the investment performance of the designated investments (including any losses sustained by a Participant) with respect to a Participant's Deferral Accounts.
(c) Each Participant shall at all times be 100% vested in his Deferral Accounts
and the Earnings thereon.
Article III. - Distributions
3.1 Distribution Dates.
(a) Distribution Dates shall be established and determined in accordance with
the Participant's Deferral Account elections. Distributions from Special Purpose Accounts shall
be paid annually commencing on February 1 of the year designated by the Participant as his
Distribution Date. Distributions from Retirement Accounts are payable on February 1 of the
year following a Participant's Retirement. Notwithstanding, a Distribution Date for a Special
Purpose Account must be on or before February 1 of the year following the calendar year in
which the Participant obtains age 70.
(b) Notwithstanding the foregoing or any Plan provision to the contrary,
distributions to Key Employees upon Separation from Service for any reason (other than death)
may not be made before the date that is 6 months after the date of Separation from Service. Any
payment otherwise due prior to the 6-month anniversary of the Participant's date of Separation
from Service will be accumulated and paid on the first business day of the seventh month
following the date of Separation from Service (or, if earlier, the date of death of the Participant),
and subsequent distributions, if any, shall be made on each succeeding February 1.
3.2 Distribution Option/Manner of Payment.
The Distribution Option for Deferral Accounts shall be determined in accordance with
such election procedures as are established by the Committee and distributions shall, at the
Participant's option, be paid in the form of a lump sum or in annual installments over a period of
2-to-15 years; provided, however, that the Distribution Option must be established at the time of
initial deferral. In the event that no valid and timely Distribution Option has been made, benefits
will be paid in a lump sum. All payments under the Plan shall be made in cash. For purposes of
Section 409A and the Plan: (i) the right to installment payments shall be treated as the right to a
single payment; and (ii) a payment shall be treated as made on the scheduled payment date if
such payment is made at such date or a later date in the same calendar year or, if later, by the
15th day of the third calendar month following the scheduled payment date. Except as specified
in Section 3.1(a) and 3.3(a), a Participant shall have no right to designate the date of any
payment under the Plan.
10
3.3 Modification of Distribution Elections.
(a) A Participant has the right to change any Distribution Date or Distribution


Option associated with a Special Purpose Account previously designated by the Participant pursuant to this Article III; provided, however, that: (1) the change will not take effect until twelve (12) months after the election is made; (2) with respect to a payment on a specified distribution date, the change must be made at least twelve (12) months prior to the previously scheduled payment date (or initial scheduled payment date in the case of installment payments); and (3) the payment with respect to which the change is made must be deferred for at least five (5) years from the date the payment would otherwise have been made (or initial scheduled payment date in the case of installment payments); provided, that, the Committee may, in its discretion, authorize a Participant to change a distribution election under any applicable transition rule authorized under Section 409A to the extent consistent therewith. (b) A Participant cannot change the Distribution Option associated with his Retirement Account originally designated pursuant to Section 3.2. The Distribution Date for Retirement Accounts must remain payable on February 1 of the year following a Participant's Retirement, except as otherwise provided under Section 3.1(b).
(c) A Participant cannot postpone the commencement of distributions beyond
February 1 of the year following the calendar year in which the Participant obtains age 70.
3.4 Separation From Service.
Notwithstanding the foregoing provisions, in the event a Participant Separates From
Service for any reason (other than death) prior to the Participant reaching Retirement eligibility,
the Participant will receive a lump sum payment of all amounts credited to the Participant's
Deferral Accounts. Such payments will be made on the date of Separation from Service, subject
to the provisions of Section 3.1(b) of this Plan.
3.5 Unforeseeable Emergency.
The Committee may, upon request of the Participant, cause to be paid to such Participant
an amount equal to all or any part of the amounts credited to such Participant's Deferral
Accounts if the Committee determines, in its absolute discretion based on such reasonable
evidence that it shall require, that such a payment or payments is necessary for the purpose of
alleviating the consequences of an Unforeseeable Emergency occurring with respect to the
Participant. The amounts distributed with respect to an Unforeseeable Emergency may not
exceed the amount necessary to satisfy the emergency plus amounts necessary to pay taxes on
the distribution, after taking into account the extent to which the hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant's assets (to the extent liquidation would not itself cause severe financial hardship).
3.6 Change in Control.
Notwithstanding the foregoing provisions, upon a Change in Control the Participant will
receive a lump sum payment of all of the amounts credited to the Participant's Deferral
11
Accounts. Such payment will be paid in a lump sum within thirty (30) days of the Change in
Control.
3.7 Death.
The Beneficiary or Beneficiaries of a Participant shall be entitled to receive the unpaid
balance of the Participant's Deferral Accounts to which the Participant was entitled at his death,
payable according to the Participant's elections, if the Participant dies on or after age 59½. In the
event of a Participant's death prior to reaching age 59½, the value of the Participant's Deferral
Accounts will be paid to the Participant's beneficiary in a lump sum on the date of death of the
Participant. The Participant shall designate his Beneficiary in accordance with the provisions of
Article V.
Article IV. - Funding By Company
4.1 Unsecured Obligation of Company.
(a) Any benefit payable pursuant to this Plan shall be paid from the general


assets of the Company. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create a trust of any kind or a fiduciary relationship between any Participant (or any other interested person) and the Company or the Committee, or require the Company to maintain or set aside any specific funds for the purpose of paying any benefit hereunder. To the extent that a Participant or any other person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. (b) If the Company maintains a separate fund or makes specific investments, including the purchase of insurance insuring the life of the Participant, to assure its ability to pay any benefits due under this Plan, neither the Participant nor the Participant's beneficiary shall have any legal or equitable ownership interest in, or lien on, such fund, policy, investment or any other asset of the Company. The Company, in its sole discretion, may determine the exact nature and method of informal funding (if any) of the obligations under this Plan. If the Company elects to maintain a separate fund or makes specific investments to fund its obligations under this Plan, the Company reserves the right, in its sole discretion, to terminate such method of funding at any time, in whole or in part. 4.2 Cooperation of Participant. If the Company, in its sole discretion, elects to invest in a life insurance, disability or annuity policy on the life of Participant to assist it with the informal funding of its obligations under this Plan, Participant shall assist the Company, from time to time, promptly upon the request of the Company, in obtaining such insurance policy by supplying any information necessary to obtain such policy as well as submitting to any physical examinations required therefore. The Company shall be responsible for the payment of all premiums with respect to any whole life, variable, or universal life insurance policy purchased in connection with this Plan unless otherwise expressly agreed. 12 Article V. - Beneficiaries 5.1 Beneficiary Designations. A designation of a Beneficiary hereunder may be made only by an instrument (in form acceptable to the Committee) signed by the Participant and filed with the Committee prior to the Participant's death. In the absence of such a designation and at any other time when there is no existing Beneficiary designated hereunder, the unpaid value of the Participant's Deferral Accounts to which the Participant was entitled at his death shall be distributed to the Participant's estate. A Beneficiary who dies or which ceases to exist shall not be entitled to any part of any payment thereafter to be made to the Participant's Beneficiary unless the Participant's designation specifically provides to the contrary. If two or more persons designated as a Participant's Beneficiary are in existence with respect to a single deferred compensation benefit, the amount of any payment to the Beneficiary under this Plan shall be divided equally among such persons, unless the Participant's designation specifically provides to the contrary. The Beneficiary Designations must be the same for all Deferral Accounts under the Plan. 5.2 Change in Beneficiary. A Participant may, at any time and from time to time, change a Beneficiary designation hereunder without the consent of any existing Beneficiary or any other person. Any change in Beneficiary shall be made only by an instrument (in form acceptable to the Committee) signed by the Participant, and any change shall be effective only if received by the Committee prior to the death of the Participant. Article VI. - Claims Procedures 6.1 Claims for Benefits. The Committee shall determine the rights of any Participant to any deferred compensation benefits hereunder. Any Participant who believes that he has not received the deferred compensation benefits to which he is entitled under the Plan may file a claim in writing with the Committee. The Committee shall, no later than 90 days after the receipt of a claim (plus an additional period of 90 days if required for processing, provided that notice of the extension of time is given to the claimant within the first 90-day period), either allow or deny the claim in writing.


If a claimant does not receive written notice of the Committee's decision on his claim within the above-mentioned period, the claim shall be deemed to have been denied in full. A denial of a claim by the Committee, wholly or partially, shall be written in a manner calculated to be understood by the claimant and shall include:
(a)
(b)		 the specific reasons for the denial;
specific reference to pertinent Plan provisions on which the denial is
based;
13
(c) a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or information is
necessary; and
(d)		 an explanation of the claim review procedure and the time limits
applicable to such procedures, including a statement of the claimant's right to bring a civil action under Section 502(a) of ERISA. 6.2 Appeal Provisions. A claimant whose claim is denied (or his duly authorized representative) may within 60 days after receipt of denial of a claim file with the Committee a written request for a review of such claim. If the claimant does not file a request for review of his claim within such 60-day period, the claimant shall be deemed to have acquiesced in the original decision of the Committee on his claim, the decision shall become final and the claimant will not be entitled to bring a civil action under Section 502(a) of ERISA. If such an appeal is so filed within such 60- day period, the Company (or its delegate) shall conduct a full and fair review of such claim. During such review, the claimant (or the claimant's authorized representative) shall be given the opportunity to review all documents that are pertinent to his claim and to submit issues and comments in writing. The Company shall mail or deliver to the claimant a written decision on the matter based on the facts and the pertinent provisions of the Plan within 60 days after the receipt of the request for review (unless special circumstances require an extension of up to 60 additional days, in which case written notice of such extension shall be given to the claimant prior to the commencement of such extension). Such decision shall be written in a manner calculated to be understood by the claimant, shall state the specific reasons for the decision and the specific Plan provisions on which the decision was based and shall, to the extent permitted by law, be final and binding on all interested persons. If the decision on review is not furnished to the claimant within the above-mentioned time period, the claim shall be deemed to have been denied on review. If a claimant's claim for benefits is denied in whole or in part, the claimant may file suit in a state or federal court. Notwithstanding the aforementioned, before the claimant may file suit in a state or federal court, the claimant must exhaust the Plan's administrative claims procedure set forth in this Article VI. If any such state or federal judicial or administrative proceeding is undertaken, the evidence presented will be strictly limited to the evidence timely presented to the Company. In addition, any such state or federal judicial or administrative proceeding must be filed within six (6) months after the Company's final decision.


In addition, any such state or federal judicial or administrative proceeding relating to this Plan shall only be brought in the Circuit Court for Arlington County, Virginia or in the United States District Court for the Eastern District of Virginia, Alexandria Division. If any such action or proceeding is brought in any other location, then the filing party expressly consents to the transfer of such action to the Circuit Court for Arlington County, Virginia or the United States District Court for the Eastern District of Virginia, Alexandria Division. Nothing in this clause shall be deemed to prevent any party from removing an action or proceeding to enforce or interpret this Plan from the Circuit Court for Arlington County, Virginia to the United States District Court for the Eastern District of Virginia, Alexandria Division. 14 Article VII. - Miscellaneous 7.1 Withholding. The Company shall have the right to withhold from any deferred compensation benefits payable under the Plan or other wages payable to a Participant an amount sufficient to satisfy all federal, state and local tax withholding requirements, if any, arising from or in connection with the Participant's receipt or vesting of deferred compensation benefits under the Plan. 7.2 No Guarantee of Employment. Nothing in this Plan shall be construed as guaranteeing future employment to any Participant. Without limiting the generality of the preceding sentence, except as otherwise set forth in a written agreement, a Participant continues to be an employee of the Company solely at the will of the Company subject to discharge at any time, with or without cause. The benefits provided for herein for a Participant shall not be deemed to modify, affect or limit any salary or salary increases, bonuses, profit sharing or any other type of compensation of a Participant in any manner whatsoever. Nothing contained in this Plan shall affect the right of a Participant to participate in or be covered by or under any qualified or nonqualified pension, profit sharing, group, bonus or other supplemental compensation, retirement or fringe benefit Plan constituting any part of the Company's compensation structure whether now or hereinafter existing. 7.3 Payment to Guardian. If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a person incapable of handling the disposition of his property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Committee may require such proof of incompetency, minority, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit. 7.4 Assignment. No right or interest under this Plan of any Participant or Beneficiary shall be assignable or transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or subject to the debts or liabilities of the Participant or Beneficiary. 7.5 Severability. If any provision of this Plan or the application thereof to any circumstance(s) or person(s)



is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the
application of such provision to other circumstances or persons shall not be affected thereby.
15
7.6 Amendment and Termination.
The Company may at any time (without the consent of any Participant) modify, amend or
terminate any or all of the provisions of this Plan; provided, however, that no modification,
amendment or termination of this Plan shall adversely affect the rights of a Participant under the
Plan without the consent of such Participant. Notwithstanding the foregoing or any provision of
the Plan to the contrary, the Company may at any time (in its sole discretion and without the
consent of any Participant) modify, amend or terminate any or all of the provisions of this Plan
or take any other action to the extent necessary to conform the provisions of the Plan with
Section 409A regardless of whether such modification, amendment or termination of this Plan or
other action shall adversely affect the rights of a Participant under the Plan. Termination of this
Plan shall not be a distribution event under the Plan unless otherwise permitted under
Section 409A.
7.7 Clawback.
As a condition to receiving benefits under this Plan, each Participant acknowledges and
agrees that the terms and conditions set forth in The AES Corporation Amended and Restated
Compensation Recoupment Policy (as may be further amended and restated from time to time,
the “Clawback Policy”) are incorporated in the Plan by reference. To the extent the Clawback
Policy is applicable to the Participant, it creates additional rights for the Company with respect to
certain compensation payable hereunder, including Bonus Compensation, and other applicable
compensation, which will be subject to potential mandatory cancellation, forfeiture and/or
repayment by the Participant to the Company to the extent the Participant is, or in the future
becomes, subject to (i) any Company clawback or recoupment policy, including the Clawback
Policy, and any other policies that are adopted to comply with the requirements of any applicable
laws, rules, regulations, stock exchange listing standards or otherwise, or (ii) any applicable laws
that impose mandatory clawback or recoupment requirements under the circumstances set forth
in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall
Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations or stock
exchange listing standards, as may be in effect from time to time, and which may operate to
create additional rights for the Company with respect to certain compensation paid or payable to
the Participant and the recovery of amounts relating thereto. By receiving benefits under the
Plan, the Participant consents to be bound by the terms of the Clawback Policy, if applicable, and
agrees and acknowledges that the Participant is obligated to cooperate with, and provide any and
all assistance necessary to, the Company in its efforts to recover or recoup any compensation
paid or payable pursuant to the Plan (including any gains or earnings related thereto) or any other
applicable compensation that is subject to clawback or recoupment pursuant to such laws, rules,
regulations, stock exchange listing standards or Company policy. Such cooperation and
assistance shall include, but is not limited to, executing, completing and submitting any
documentation necessary to facilitate the recovery or recoupment by the Company from the
Participant of any such amounts, including from the Participant’s accounts or from any other
compensation, to the extent permissible under Section 409A.



16
7.8 Exculpation and Indemnification.
The Company shall indemnify and hold harmless the members of the Committee from
and against any and all liabilities, costs and expenses incurred by such persons as a result of any
act, or omission to act, in connection with the performance of such person's duties,
responsibilities and obligations under the Plan, other than such liabilities, costs and expenses as
may result from the gross negligence, willful misconduct, and/or criminal acts of such persons.
7.9 Confidentiality.
In further consideration of the benefits available to each Participant under this Plan, each
Participant shall agree that, except as such may be disclosed in financial statements and tax
returns, or in connection with estate planning, all terms and provisions of this Plan, and any
agreement between the Company and the Participant entered into pursuant this Plan, are and
shall forever remain confidential until the death of Participant; and the Participant shall not
reveal the terms and conditions contained in this Plan or any such agreement at any time to any
person or entity, other than his respective financial and professional advisors unless required to
do so by a court of competent jurisdiction or as otherwise may be required by law.
7.10 Leave of Absence.
The Company may, in its sole discretion, permit a Participant to take a leave of absence
for a period not to exceed six months, or if longer, so long as the Participant retains a right to
reemployment under any applicable statute or by contract. Any such leave of absence must be
approved by the Company. During this time, the Participant will still be considered to be in the
employ of the Company for purposes of this Plan.
7.11 Gender and Number.
For purposes of interpreting the provisions of this Plan, the masculine gender shall be
deemed to include the feminine, the feminine gender shall be deemed to include the masculine,
and the singular shall include the plural unless otherwise clearly required by the context.
7.12 Governing Law.
Except as otherwise preempted by the laws of the United States, this Plan shall be
governed by and construed in accordance with the laws of the State of Delaware, without giving
effect to its conflict of law provisions.
7.13 Effective Date.
The effective date of the Plan is generally January 1, 2005; provided, however, that the
effective date of the Plan for purposes of determining contributions under Section 2.1 of the Plan
shall be January 1, 2004.
The latest amendment to The AES Corporation Restoration Supplemental Retirement
Plan has been duly executed by the undersigned and is effective this 10th day of October 2023.
17
The AES Corporation
Tish Mendoza,
EVP & Chief Human Resources Officer

EX-10.14 8 aes1231202310-kexhibit1014.htm EX-10.14 Document

THE AES CORPORATION
AMENDED AND RESTATED OCTOBER 10, 2023
EXECUTIVE SEVERANCE PLAN AND
SUMMARY PLAN DESCRIPTION
ARTICLE I
GENERAL PROVISIONS
1.1 Establishment and Purpose.
The purpose of The AES Corporation Amended and Restated Executive Severance
Plan (as may be further amended from time to time, the “Plan”) is to provide certain severance and
welfare benefits, as set forth herein, to the Chief Executive Officer and other Eligible Executives
of The AES Corporation (the “Company”) who (i) are designated from time to time to participate
in the Plan by the Board of Directors of the Company (the “Board”) and/or Administrator, (ii)
agree to the terms and conditions of the Plan as set forth herein, and (iii) are involuntarily
terminated from employment in certain limited circumstances as provided herein. Please review
Article 8 entitled “Plan Amendments” regarding the Company’s reservation of rights to amend
and terminate the Plan.
This document is designed to serve as both the Plan document and the summary
plan description for the Plan. The legal rights and obligations of any person having an interest in
the Plan are determined solely by the provisions of the Plan, as interpreted by the Administrator.
The Plan is not intended to be an “employee pension benefit plan” or “pension plan”
within the meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). Rather, this Plan is intended to be a “welfare benefit plan” within the
meaning of Section 3(1) of ERISA and to meet the descriptive requirements of a plan constituting
a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at
Title 29, Code of Federal Regulations, Section 2510.3-2(b). Accordingly, the benefits paid by the
Plan are not deferred compensation, and no employee shall have a vested right to such benefits.
1.2 Term.
The Plan shall generally be effective on the Effective Date. This Plan supersedes
any prior severance plans, policies, guidelines, arrangements, agreements, letters and/or other
communication, whether formal or informal, written or oral sponsored by the Employer and/or
entered into by any representative of the Employer. This Plan represents exclusive severance
benefits provided to certain Eligible Executives, which individuals shall not be eligible for other
benefits provided in other severance plans, policies, programs, guidelines, arrangements, letters,
etc. of the Company.
1.3 Definitions.
Except as may otherwise be specified or as the context may otherwise require, for
purposes of the Plan, the following terms shall have the respective meanings ascribed thereto, or
as set forth on a Benefit Schedule to the Plan.
“Administrator” means the Compensation Committee of the Board or such other
committee or persons designated by the Board and/or Compensation Committee to assume duties
of the Administrator.
2
“Affiliated Employer” means any corporation which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) which includes the Company;
any trade or business (whether or not incorporated) which is under common control (as defined in
Section 414(c) of the Code) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section 414(m) of the Code)


which includes the Company; and any other entity required to be aggregated with the Company pursuant to regulations under Section 414(o) of the Code. “Annual Compensation” means a Participant’s annualized base salary as in effect as of the Participant’s Termination Date. Unless otherwise provided on a Benefit Schedule, Annual Compensation shall: (i) include: pre-tax employee contributions under any qualified defined contribution retirement plan, salary deferrals under any unfunded nonqualified deferred compensation plan, amounts deferred under a flexible spending account established pursuant to Section 125 of the Code, and deductions from base salary to pay premiums for any health, welfare, or insurance plans; and (ii) exclude: any amounts contributed by the Employer to any plan established pursuant to Section 125 of the Code, bonuses, annual incentive payments, long-term incentive awards (including, but not limited to, stock options, restricted stock and performance unit awards), and any other form of supplemental compensation. “Benefit Schedule” means any schedule attached to the Plan which sets forth the benefits of specified Participants, as approved by the Board and updated by the Administrator from time to time. “Bonus” means a Participant’s annual target bonus compensation as established by the Employer and in effect on the Participant’s Termination Date. “Cause” means, except as otherwise provided in a Benefit Schedule, Separation From Service by action of the Employer, or resignation in lieu of such Separation From Service, on account of the Participant’s dishonesty; insubordination; continued and repeated failure to perform the Participant’s assigned duties or willful misconduct in the performance of such duties; intentionally engaging in unsatisfactory job performance; failing to make a good faith effort to bring unsatisfactory job performance to an acceptable level; violation of the Employer’s policies, procedures, work rules or recognized standards of behavior; misconduct related to the Participant’s employment; or a charge, indictment or conviction of, or a plea of guilty or nolo contendere to, a felony, whether or not in connection with the performance by the Participant of his or her duties or obligations to the Employer. “Change in Control” means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Persons, (ii) a Person or group (as so defined) of Persons (other than Management of the Company on the date of the most recent adoption of the 2003 Long Term Compensation Plan (or successor plan) by the Company’s stockholders or their “affiliates” (as defined below)) shall have become the “beneficial owner” of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the 3 Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the “beneficial owners” (as defined below) of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction.


Notwithstanding the foregoing or any provision to the contrary, if a payment under this Plan is subject to Section 409A (and not excepted therefrom) and a Change in Control affects the time or schedule for such payment, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5). For purposes of this definition, (i) “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act and (ii) “affiliate” means: (A) any Subsidiary of the Company; (B) any entity or Person or group of Persons that, directly or through one or more intermediaries, is controlled by the Company; and (C) any entity or Person or group of Persons in which the Company has a significant equity interest, as determined by the Compensation Committee, including any “affiliates” which become such after the adoption of this Plan. “Chief Executive Officer” means the Chief Executive Officer of the Company who also is an Eligible Executive. “COBRA Coverage” means medical, dental and vision coverage which is required to be offered to terminated employees under Section 4980B of the Code and Section 606 of ERISA; provided, however, that no provision of this Plan shall be construed to require the Employer to contribute on behalf of a Participant towards continuation coverage for a health spending account. “Code” means the Internal Revenue Code of 1986, as amended. “Company” or “AES” means The AES Corporation, a Delaware corporation, or any successor thereto. “Compensation Committee” means the Compensation Committee of the Board. “Director” means a member of the Board. “Disability” or “Disability Termination” means, except as otherwise provided in a Benefit Schedule, a Separation From Service: (a) on account of the Participant’s failure to return to full-time employment following exhaustion of short-term disability benefits provided by the Employer; (b) following the date the Participant is determined to be eligible for: (i) long-term 4 disability benefits under any long-term disability insurance policy or plan maintained by the Employer; or (ii) disability pension or retirement benefits under any qualified retirement plan maintained by the Employer; or (c) due to a physical or mental condition that substantially restricts the Participant’s ability to perform his or her usual duties, as determined by the Employer. “Effective Date” means as originally effective on October 6, 2011, and as last amended on October 10, 2023. “Eligible Executive” means any Employee of the Employer who: (i) is not an Ineligible Executive (within the meaning of Section 2.2); (ii) has completed one Year-of-Service as a full-time Employee (except as otherwise approved by the Administrator or the Board); (iii) has been designated by the Administrator or the Board as a Participant in the Plan; and (iv) has executed the document set forth on Exhibit A, thereby understanding and agreeing to be bound by all of the terms and conditions set forth in the Plan and Benefit Schedule.


An “Eligible Executive” may include Executive Officers and the Chief Executive Officer. “Employee” means any person who is employed by the Company or a Subsidiary as a common law employee and is listed as an employee on the U.S. payroll records of the Employer as a full-time employee. Any person hired by the Employer as a consultant or independent contractor and any other individual whom the Employer does not treat as its employee for federal income tax purposes shall not be an Employee for purposes of this Plan, even if it is subsequently determined by a court or administrative agency that such individual should be, or should have been, properly classified as a common law employee of the Employer. “Employer” means the Company and any Affiliated Employer that participates in the Plan with the consent of the Company. The Administrator shall maintain a list of participating Employers. “Executive” or “Executive Officer” means an executive officer of the Company, as defined under Rule 3b-7 of the Exchange Act, or was otherwise approved as an officer by the Board and/or Compensation Committee. “Good Reason” or “Good Reason Termination” has the meaning set forth in the applicable Benefit Schedule. “Ineligible Termination” means, except as otherwise provided in a Benefit Schedule, a Participant’s Separation From Service on account of: • The Participant’s voluntary resignation, including, but not limited to, the Participant’s unilateral Separation From Service at any time prior to the Termination Date established by the Employer, other than for Good Reason; • Any Separation From Service that the Employer determines (either before or after the Separation From Service and whether or not any notice is given to the Participant) the payment of benefits under the Plan in connection with such Separation From Service would be inconsistent with the intent and purposes of the Plan; 5 • A Separation From Service in connection with a Participant’s failure to return to work immediately following the conclusion of an approved leaveof-absence; • A Separation From Service for, or on account of, Cause; • A Disability Termination; • The Participant’s death; • The Participant declines to accept a New Job Position offered by the Employer that is located equal to or less than 50 miles of the Participant’s then-assigned work site of the Employer; • The Sale of Business Rule set forth in Section 2.3 herein; or • The voluntary transfer of employment from the Participant’s Employer to another AES related entity, irrespective of whether the Participant is required to relocate or whether the AES related entity qualifies as an Affiliated Employer. “Involuntary Termination” means a Participant’s involuntary Separation From Service that is (i) not an Ineligible Termination and (ii) by action of the Employer on account of: • Reduction-in-force that eliminates the Participant’s existing job position; • Permanent job elimination of the Participant; • The restructuring or reorganization of a business unit, division, department or other segment, which directly affects the Participant; • Termination by Mutual Consent; or • The Participant declines to accept a New Job Position offered by the Employer that requires the Participant to relocate to a work site location that is located greater than 50 miles from the Participant’s then-assigned work site of the Employer; provided, however, that except as provided in Section 2.3 or in connection with a Separation From Service following a Change in Control, a Participant who is an Executive shall not incur an Involuntary Termination if such Participant declines a New Job Position (regardless of its location) at a time when the Participant’s existing job position is being eliminated.


“New Job Position” means: (i) with respect to a Participant who has demonstrated inadequate or unsatisfactory performance, as determined by the Employer, any job position offered by the Employer; or (ii) with respect to all other Participants, a full-time job position offered by the Employer that does not result in a reduction of the Participant’s Annual Compensation. 6 “Participant” means an Eligible Executive who: (i) is designated to participate in the Plan by the Administrator and/or the Board and (ii) satisfies all of the terms and conditions specified in this Plan. “Person” means any individual, corporation, joint venture, association joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. “Plan” means The AES Corporation Amended and Restated Executive Severance Plan as set forth herein, and as the same may from time to time be amended. “Section 409A” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder. “Separation From Service” shall mean a Participant’s termination of employment with the Company and all of its controlled group members within the meaning of Section 409A of the Code. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1), (2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether a Participant has a Separation From Service will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A. “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company as determined in accordance with the regulations issued under Code Section 409A and the procedures established by the Company. “Subsidiary” means any entity in which the Company owns or otherwise controls, directly or indirectly, stock or other ownership interests having the voting power to elect a majority of the board of directors, or other governing group having functions similar to a board of directors, as determined by the Company. “Termination by Mutual Consent” means an involuntary Separation From Service pursuant to which the Company agrees, in its sole discretion, that benefits are payable under this Plan. “Termination Date” means the date of the Eligible Executive’s Separation From Service (or scheduled date of Separation From Service, as applicable). “Year-of-Service” means each twelve-month period measured from the Participant’s first day of employment with an Employer, as reduced to reflect breaks in service and/or services performed during such period the Participant was otherwise ineligible to participate in the Plan, as determined under the rules promulgated by the Administrator.


Service with a predecessor employer (that was not an Affiliated Employer) shall be recognized to the extent such service is recognized under The AES Corporation Retirement Savings Plan. Service shall also include services performed prior to the effective date of the Plan. In the event a Participant’s 7 Separation From Service and the Participant is subsequently reemployed by the Employer, the Participant’s service for calculation of any severance benefits under Article IV of the Plan shall be based only upon the Participant’s service credited since the most recent starting date of employment with the Employer. ARTICLE II PARTICIPATION AND ELIGIBILITY
2.1 Eligibility.
A Participant shall, upon execution of the release in the form specified in Article
III of this Plan in the time and manner set forth in Section 3.1 of the Plan, be eligible for the
severance benefits provided under Article IV of this Plan if such Participant’s Separation From
Service is by reason of an Involuntary Termination or Good Reason Termination, as applicable.
A Participant who fails to execute the release in the time and manner set forth in Section 3.1 or
who subsequently revokes execution of the release in accordance with its terms shall not be entitled
to receive benefits under this Plan.
2.2 Ineligible Executives.
Notwithstanding any provision of this Plan to the contrary, no individual shall be
eligible or have any legally binding right to participate in the Plan unless designated as a Participant by the Board and/or the Administrator as of the date of his or her termination. 2.3 Sale of Business Rule. A Participant shall not be eligible for benefits under the Plan if the Participant’s Separation From Service is in connection with the sale of the stock or other ownership interests of the Employer or other related entity, or the sale, lease, or other transfer of the assets, products, services or operations of the Employer or other related entity to another organization if either of the following occurs: • The Participant is employed by the new organization immediately following the sale, transfer or lease or is so employed within a time period specified in an agreement between the Employer and the new organizations; or • The Employer terminates the employment of a Participant who did not accept an offer of employment from the new organization when the new organization offered a compensation and benefits package that was, in the aggregate, generally comparable to the compensation and benefits provided by the Employer; provided that such Participant was not required to relocate to a work site location that is located greater than 50 miles from the Participant’s then-assigned work site of the Employer. Notwithstanding the foregoing, this Section 2.3 shall not apply if a Participant’s Separation From Service occurs in connection with a Change of Control and, as such, any such Separation From Service will not be an Ineligible Termination solely on the basis of the Sale of Business Rule. 8 nature (other than as provided in Section 3.3) shall be due or paid under this Plan to any Participant unless the Participant executes a written release and covenant not to sue, in form and substance satisfactory to the Employer, in its sole discretion, within the time stated in the release; provided, however, that in all cases such release must become final, binding and irrevocable within sixty (60) days following the Participant’s Termination Date.



ARTICLE III
RELEASES
3.1 Release.
Notwithstanding anything in this Plan to the contrary, no benefits of any sort or
The written release shall waive any and all claims against the Employer and all related parties including, but not limited to, claims arising out of the Participant’s employment by the Employer, the Participant’s Separation From Service and claims relating to the benefits paid under this Plan. At the sole discretion of the Employer, the release also may include such noncompetition, non solicitation and nondisclosure provisions as the Employer considers necessary or appropriate, in addition to the provisions set forth in Article V of this Plan.
3.2 Revocation.
The release described in Section 3.1 must be executed and binding on the
Participant within the timeframe specified by the Company before benefits are due or paid. A
Participant who revokes execution of the release in accordance with the terms of the release shall
not be entitled to receive benefits under the Plan.
3.3 Outplacement Services.
Notwithstanding the foregoing provisions of this Article III, the Outplacement
Services set forth under Section 4.3 herein may or may not be provided, at the discretion of the Employer, to a Participant prior to the execution of a release under this Plan. ARTICLE IV SEVERANCE BENEFITS 4.1 Separation Payment. 4.1.1 A Participant shall be entitled to receive a separation payment as set forth on the applicable Benefit Schedule. Except as otherwise provided in a Benefit Schedule, the separation payment shall be paid at least monthly in substantially equal installments as salary continuation in accordance with the Employer’s established payroll policies and practices over the same time period upon which the separation payment is based, which shall be set forth in the Benefit Schedule. The separation payments will commence on the Employer’s next normal pay date occurring after the date the Participant’s release becomes final, binding and irrevocable. 4.1.2 For purposes of Section 409A: (i) the right to salary continuation installment payments under Section 4.1.1 shall be treated as the right to a series of separate payments; and (ii) a payment shall be treated as made on the scheduled payment date if such payment is made at such date or a later date in the same calendar year or, if later, by the 15th day 9 of the third calendar month following the scheduled payment date. A Participant shall have no right to designate the date of any payment under the Plan. For purposes of the Plan, each salary continuation installment payment in Section 4.1.1 is intended to be excepted from Section 409A to the maximum extent provided under Section 409A as follows: (i) each salary continuation installment payment that is scheduled to be made on or before March 15th of the calendar year following the calendar year containing the Termination Date is intended to be excepted under the short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4); and (ii) each salary continuation installment payment that is not otherwise excepted under the short-term deferral exception is intended to be excepted under the involuntary pay exception as specified in Treas.


Reg. § 1.409A-l(b)(9)(iii). 4.2 Continuation of Certain Welfare Benefits. 4.2.1 Medical/Dental/Vision. For the period set forth below in Section 4.2.3 and beginning in the calendar month following the calendar month in which the Termination Date occurs, the Participant shall be eligible to participate in the Employer’s medical, dental and vision employee welfare benefit plans applicable to the Participant on his or her Termination Date. To receive such benefits, the Participant must properly enroll in COBRA coverage, and must also pay such premiums and other costs for such coverage as generally applicable to the Employer’s active employees. The Employer will continue to pay its share of the applicable premiums under the medical, dental and vision plans for the same level and type of coverage in which the Participant is enrolled as of the Termination Date. Except as provided in a Benefit Schedule to the Plan, if a Participant has elected the “no benefit coverage” option under the medical, dental or vision plans as of his or her actual Termination Date, the Participant shall not be entitled to continuation coverage or cash in lieu thereof. Following expiration of coverage under this Section 4.2.1, a Participant may, to the extent eligible, continue to participate in such plans for the remainder of the COBRA continuation period, if any. 4.2.2 Concurrent COBRA Period. The continuation period for medical, dental and vision coverage under this Plan shall be deemed to run concurrent with the continuation period federally mandated by COBRA (generally 18 months), or any other legally mandated and applicable federal, state, or local coverage period for benefits provided to terminated employees under the health care plan. The continuation period will be deemed to commence on the first day of the calendar month following the month in which the Termination Date falls. Notwithstanding the foregoing, COBRA Coverage will only be available if the Participant is eligible for and timely elects COBRA Coverage, and timely remits payment of the premiums for COBRA Coverage. 4.2.3 Length of Benefits. Except as provided in a Benefit Schedule, benefits under this Section 4.2 shall be for the same time period upon which the separation payment was based; provided, however that in no event will the time period exceed 18 months. 4.2.4 Implications of Section 409A. Post-termination medical benefits are intended to be excepted from Section 409A under the medical benefits exceptions as specified in Treas. Reg. § 1.409A-l(b)(9)(v)(B). 10
4.3 Outplacement Services.
As set forth on the applicable Benefit Schedule, a Participant shall be eligible for
such outplacement services typically provided to employees of the same job classification or level. Outplacement services may be provided by an independent agency or by the Employer. Notwithstanding the foregoing, the availability, duration, and appropriateness of outplacement services shall be determined by the Administrator in its sole discretion; provided, however, that outplacement expenses must be reasonable, must be actually incurred by the Participant and may not extend beyond the December 31 of the second calendar year following the calendar year in which the Termination Date occurred (or such shorter period as specified by the Employer). Any such reimbursement shall be as soon as administratively feasible, but in no event later than December 31st of the third calendar year following the calendar year in which the Termination Date occurred.


Post-termination outplacement benefits are intended to be excepted from Section 409A under the separation payment benefits exceptions as specified in Treas. Reg. § 1.409Al(b)(9)(v)(A). 4.4 Bonus Compensation. As set forth on the applicable Benefit Schedule and subject to any deferral election that the Participant has made with respect to such amounts, a Participant will be eligible for (i) a prorated Bonus; and (ii) any accrued but unpaid bonus compensation for completed performance periods. The prorated Bonus specified in Section 4.4(i) will be prorated based on the amount of time the Participant was actively at work on a full-time basis in the calendar year in which the Participant’s Termination Date falls, and will be paid within the applicable 2’A month period specified in Treas. Reg. § 1.409A-l(b)(4). The bonus compensation specified in Section 4.4(ii) shall be paid no later than the time that such amounts are paid to similarly situated employees in accordance with the applicable plan terms. Notwithstanding the foregoing, with respect to bonuses paid in accordance with the terms of The AES Corporation Performance Incentive Plan (or any successor plan, the “Performance Incentive Plan”), any such bonus compensation shall be paid only to the extent earned in accordance with the terms of the Performance Incentive Plan and on the payment date specified therein.
4.5 Enhanced Benefits.
In the event a Participant is Involuntarily Terminated or terminates for Good
Reason within two years following a Change in Control, a Participant shall receive a separation
payment under Section 4.1 and medical/dental/vision benefits under Section 4.2 as set forth in a
Benefit Schedule. Notwithstanding the foregoing, unless otherwise specifically provided in the
Benefit Schedule, the time period for medical/dental/vision benefits set forth in Section 4.2 will
never exceed eighteen (18) months, as described in Section 4.2.3.
4.6 Delay in Payment.
Notwithstanding any provision of this Plan to the contrary, to the extent that a
payment hereunder is subject to Section 409A (and not excepted therefrom), such payment shall
be delayed for a period of six (6) months after the Termination Date (or, if earlier, the death of the
Participant) for any Participant that is a Specified Employee. Any payment that would otherwise
11
have been due or owing during such six (6)-month period will be paid on the first business day of
the seventh month following the Separation From Service.
ARTICLE V
CONFIDENTIALITY, COVENANT NOT TO COMPETE, NON-SOLICITATION AND
NON-DISPARAGEMENT PROVISIONS
5.1 General Provisions.
As a condition of participation in the Plan, the Participant agrees that restrictions
on his or her activities during and after employment are necessary to protect the goodwill,
Confidential Information (as defined below) and other legitimate interests of the Company and its
Subsidiaries, and that the agreed restrictions set forth below will not deprive the Participant of the
ability to earn a livelihood.
5.2 Confidential Information.
(a) The Participant acknowledges that the Company and its Subsidiaries
continually develop Confidential Information (as defined in Section 5.5(d), below), that Participant may develop Confidential Information for the Company or its Subsidiaries, and that the Participant may learn of Confidential Information during the course of his or her employment.


Subject to Section 5.2(b) hereof, the Participant will comply with the policies and procedures of the Company and its Subsidiaries for protecting Confidential Information and shall not disclose to any person (except as required by applicable law or legal process or for the proper performance of his or her duties and responsibilities to the Company and its Subsidiaries, or in connection with any litigation between the Company and the Participant (provided that the Company shall be afforded a reasonable opportunity in each case to obtain a protective order)), or use for his or her own benefit or gain, any Confidential Information obtained by the Participant incident to his or her employment or other association with the Company or any of its Subsidiaries. The Participant understands that this restriction shall continue to apply after his or her employment terminates, regardless of the reason for such termination. All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Subsidiaries and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by the Participant, shall be the sole and exclusive property of the Company and its Subsidiaries. The Participant shall safeguard all Documents and shall surrender to the Company at the time employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in Participant’s possession or control. (b) Nothing in the Plan, including this Article V, is intended to preclude or limit a Participant from communicating with, responding to inquiries from, volunteering information to, or providing testimony before any federal, state or local government legislature, agency, or commission, or any self-regulatory organization, with respect to suspected violations of law, including the Securities and Exchange Commission, Financial Industry Regulatory Authority or New York Stock Exchange (or any other national exchange on which the shares of the Company’s common stock are listed). Participant understands and agrees that he or she is not required to contact or receive consent from the Company and/or its Subsidiaries before engaging in such communications with any such authorities; provided, however, that Participant (x) must inform 12 such authority that the information provided is confidential and (y) may not provide Confidential Information that is protected from disclosure by the attorney-client privilege or attorney workproduct doctrine, except as is expressly permitted by law. 5.3 Noncompete/Nonsolicit Provisions. Except in the event of a Change in Control, while Participant is in the employment of the Company and for a period of twelve months thereafter, or during such other period specified in the Benefit Schedule for the Participant, after a termination of Participant’s employment with the Company (the “Non-Competition Period”), Participant shall not, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, engage in Competitive Activity (as defined below). For purposes of this Plan, “Competitive Activity” means any activity that is (i) directly or indirectly competitive with the business of the Company or any of its Subsidiaries, as conducted or which has been proposed by management to be conducted within six (6) months prior to termination of Participant’s employment and (ii) conducted in the geographic areas in which the Company or any of its Subsidiaries operate upon Participant’s Separation From Service date. Competitive Activity also includes, without limitation, accepting employment or a consulting position with any person who is, or at any time within twelve (12) months prior to termination of Participant’s employment has been, a licensee of the Company or any of its Subsidiaries.


For the purposes of this Article V, the business of the Company and its Subsidiaries, as currently conducted, consists of the generation, sale, supply, storage or distribution of electricity. Participant agrees that during the Non-Competition Period, Participant will not, either directly or through any agent or employee, Solicit (as defined in Section 5.5(d), below) any employee of the Company or any of its Subsidiaries to terminate his or her relationship with the Company or any of its Subsidiaries or to apply for or accept employment with any enterprise engaged in Competitive Activity with the Company, or Solicit any customer, supplier, licensee or vendor of the Company or any of its Subsidiaries to terminate or materially modify its relationship with them, or, in the case of a customer, to conduct with any Person any business or activity which such customer conducts or could conduct with the Company or any of its Subsidiaries. 5.4 Nondisparagement. Following any termination of the Participant’s employment, (i) the Participant shall not make statements or representations, otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Company or any if its Subsidiaries or affiliates or their respective former or current officers, directors, employees, advisors, businesses or reputations, (ii) the Company shall instruct its Board members and senior management to not make statements or representations, otherwise communicate, directly or indirectly, in writing, orally or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Participant or his or her reputation. Nothing in this paragraph is intended to undermine any obligations the Participant or the Company may have to comply with applicable law, or prohibit the Participant or the Company from providing truthful testimony or information pursuant to subpoena, court order, discovery demand or similar legal process, or truthfully responding to lawful inquiries by any governmental or regulatory entity. 13
5.5 Miscellaneous.
(a) Nothing in this Article V shall prevent Participant, during the Non
competition Period and following Separation From Service, from acquiring or holding, solely as an investment, publicly traded securities of any competitor corporation so long as such securities do not, in the aggregate, constitute more than 3% of the outstanding voting securities of such corporation. (b) The Participant agrees that all inventions, improvements, discoveries, patents, trade concepts and copyrightable materials made, conceived or developed by the Participant, in respect of the business of the Company and/or its Subsidiaries, either singly or in collaboration with others, shall be the sole and exclusive property of the Company and/or its Subsidiaries.


(c) Without limiting the foregoing, it is understood that the Company shall not be obligated to make any of the payments or to provide for any of the benefits specified in Article IV or on a Benefit Schedule hereof in connection with the termination of a Participant’s employment, and shall be entitled to recoup the pro rata portion of any such payments and of the value of any such benefits previously provided to Participant in the event of a material breach by the Participant of the provisions of this Article V (such pro ration to be determined as a fraction, the numerator of which is the number of days from such breach to the first anniversary of the date on which the Participant terminates employment and the denominator of which is 365), which breach continues without having been cured within fifteen (15) days after written notice to the Participant specifying the breach in reasonable detail.
(d) Definitions. For purposes of this Article V, the following definitions shall
apply: (i) “Confidential Information” means any and all information of the
Company and its Subsidiaries that is not generally known by others with whom they compete or do business, or with whom they plan to compete or do business and any and all information not readily available to the public, which, if disclosed by the Company or its Subsidiaries could reasonably be of benefit to such person or business in competing with or doing business with the Company. Confidential Information includes, without limitation, such information relating to (A) the development, research, testing, manufacturing, operational processes, marketing and financial activities, including costs, profits and sales, of the Company and its Subsidiaries, (B) the costs, sources of supply, financial performance and strategic plans of the Company and its Subsidiaries, (C) the identity and special needs of the customers and suppliers of the Company and its Subsidiaries and (D) the people and organizations with whom the Company and its Subsidiaries have business relationships and those relationships. Confidential Information also includes comparable information that the Company or any of its Subsidiaries have received belonging to others or which was received by the Company or any of its Subsidiaries with an agreement by the Company that it would not be disclosed. Confidential Information does not include information which (1) is or becomes available to the public generally (other than as a result of a disclosure by the Participant), (2) was within the Participant’s possession prior to it being furnished to the Participant by or on behalf of the Company, provided that the source of such information was not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of 14 confidentiality to the Company or any other party with respect to such information, (3) becomes available to the Participant on a nonconfidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or any other party with respect to such information, or (4) was independently developed the Participant without reference to the Confidential Information. (ii) “Solicit” means any direct or indirect communication of any kind whatsoever, regardless of by whom initiated, inviting, advising, encouraging or requesting any person or entity, in any manner, with respect to any action. ARTICLE VI PLAN ADMINISTRATION 6.1 Operation of the Plan. The Administrator shall be the named fiduciary responsible for carrying out the provisions of the Plan and for purposes of ERISA. The Administrator may delegate any and all of its powers and responsibilities hereunder or appoint agents to carry out such responsibilities, and any such delegation or appointment may be rescinded at any time. The Administrator shall establish the terms and conditions under which any such agents serve. The Administrator shall have the full and absolute authority to employ and rely on such legal counsel, actuaries and accountants (which may also be those of the Employer) as it may deem advisable to assist in the administration of the Plan.


6.2 Administration of the Plan. To the extent that the Administrator, in its sole discretion, deems necessary or desirable, the Administrator may establish rules for the administration of the Plan, prescribe appropriate forms, and adopt procedures for handling claims and the denial of claims. The Administrator shall have the exclusive authority and discretion to interpret, construe, and administer the provisions of the Plan and to decide all questions concerning the Plan and its administration. Without limiting the foregoing, the Administrator shall have the authority to determine eligibility for, and the amount of any benefits due to, a Participant in accordance with this Plan and the applicable Benefit Schedule, and, in connection with the foregoing, to make factual determinations, correct deficiencies, and supply omissions, including resolving any ambiguity or uncertainty arising under or existing in the terms and provisions of the Plan or any Benefit Schedule. Any and all such determinations of the Administrator shall be final, conclusive, and binding on the Employer, the Participant, and any and all interested parties. A termination of a Participant’s employment with the Company and any Affiliated Employer, except as expressly provided herein, shall automatically, with no further act of the Company or any Affiliated Employer, terminate any right of such Participant to participate in, or receive any benefits under, the Plan. 15 6.3 Funding. The Plan shall be unfunded and all payments hereunder and expenses incurred in connection with this Plan shall be paid from the general assets of the Employer. Benefits will be paid directly by the Employer employing the Participant, and no other Employer or Affiliated Employer will be responsible for any benefits hereunder.
6.4 Code Section 409A.
Notwithstanding any provision of the Plan to the contrary, if any benefit provided
under this Plan is subject to the provisions of Section 409A of the Code and the regulations issued
thereunder, the provisions of the Plan will be administered, interpreted and construed in a manner
necessary to comply with Section 409A or an exception thereto (or disregarded to the extent such
provision cannot be so administered, interpreted, or construed). With respect to payments subject
to Section 409A of the Code: (i) it is intended that distribution events authorized under the Plan
qualify as permissible distribution events for purposes of Section 409A of the Code; and (ii) the
Company and each Employer reserve the right to accelerate and/or defer any payment to the extent
permitted and consistent with Section 409A. Notwithstanding any provision of the Plan to the
contrary, in no event shall the Administrator, the Company, an Affiliated Employer or Subsidiary
(or their employees, officers, directors or affiliates) have any liability to any Participant (or any
other person) due to the failure of the Plan to satisfy the requirements of Section 409A or any other
applicable law. For purposes of Code Section 409A, a Participant’s right to receive any installment
payments shall be treated as a right to receive a series of separate and distinct payments. In no
event may a Participant, directly or indirectly, designate the calendar year of any payment to be
made under this Plan, to the extent such payment is subject to Section 409A of the Code.
ARTICLE VII
CLAIMS
7.1 General.
Except as otherwise provided in a Benefit Schedule relating to notice periods, if a


Participant believes that he or she is eligible for benefits under the Plan and has not been so
notified, a Participant should submit a written request for benefits to the Administrator. Any claim
for benefits must be made within six months of the Participant’s Termination Date, or the
Participant will be forever barred from pursuing a claim. For purposes of this Article VI, a
Participant making a claim for benefits under the Plan shall be referred to as a “claimant.” The
claimant shall file the claim with and in the manner prescribed by the Administrator. The
Administrator shall make the initial determination concerning rights to and amount of benefits
payable under this Plan.
7.2 Claim Evaluation.
A properly filed claim will be evaluated and the claimant will be notified of the
approval or the denial of the claim within ninety (90) days after the receipt of the claim, unless
special circumstances require an extension of time for processing. Written notice of the extension
will be furnished to the claimant prior to the expiration of the initial ninety-day (90- day) period,
and will specify the special circumstances requiring an extension and the date by which a decision
16
will be reached (provided the claim evaluation will be completed within one hundred and twenty
(120) days after the date the claim was filed).
7.3 Notice of Disposition.
A claimant will be given a written notice in which the claimant will be advised as
to whether the claim is granted or denied, in whole or in part. If a claim is denied, in whole or in
part the notice will contain: (i) the specific reasons for the denial; (ii) references to pertinent Plan
provisions upon which the denial is based; (iii) a description of any additional material or
information necessary to perfect the claim and an explanation of why such material or information
is necessary; and (iv) the claimant’s rights to seek review of the denial.
7.4 Appeals.
If a claim is denied, in whole or in part, the claimant, or his duly authorized
representative, has the right to (i) request that the Administrator review the denial, (ii) review pertinent documents, and (iii) submit issues and comments in writing, provided that the claimant files a written appeal with the Administrator within sixty (60) days after the date the claimant received written notice of the denial. Within sixty (60) days after an appeal is received, the review will be made and the claimant will be advised in writing of the decision, unless special circumstances require an extension of time for reviewing the appeal, in which case the claimant will be given written notice within the initial sixty-day (60-day) period specifying the reasons for the extension and when the review will be completed (provided the review will be completed within one hundred and twenty (120) days after the date the appeal was filed). The decision on appeal will be forwarded to the claimant in writing and will include specific reasons for the decision and references to the Plan provisions upon which the decision is based. A decision on appeal will be final and binding on all persons for all purposes. If a claimant’s claim for benefits is denied in whole or in part, the claimant may file suit in a state or federal court. Notwithstanding the aforementioned, before the claimant may file suit in a state or federal court, the claimant must exhaust the Plan’s administrative claims procedure set forth in this Article VI. If any such state or federal judicial or administrative proceeding is undertaken, the evidence presented will be strictly limited to the evidence timely presented to the Administrator. In addition, any such state or federal judicial or administrative proceeding must be filed within six (6) months after the Administrator’s final decision.


Any such state or federal judicial or administrative proceeding relating to this Plan shall only be brought in the Circuit Court for Arlington County, Virginia or in the United States District Court for the Eastern District of Virginia, Alexandria Division. If any such action or proceeding is brought in any other location, then the filing party expressly consents to the transfer of such action to the Circuit Court for Arlington County, Virginia or the United States District Court for the Eastern District of Virginia, Alexandria Division. Nothing in this clause shall be deemed to prevent any party from removing an action or proceeding to enforce or interpret this Plan from the Circuit Court for Arlington County, Virginia to the United States District Court for the Eastern District of Virginia, Alexandria Division. 17 ARTICLE VIII PLAN AMENDMENTS 8.1 Amendment Authority. The Board may, at any time and in its sole discretion, amend, modify or terminate the Plan, including any Benefit Schedule, as the Board, in its judgment shall deem necessary or advisable; provided, however, that except as provided in Section 8.2, no such amendment, modification or termination shall be effective until twelve (12) months (the “12-Month Period”) following the adoption of such amendment, modification or termination of the Plan, without the express written consent of the affected Participant(s). The Board may delegate its amendment authority to the Administrator or such other persons as the Board considers appropriate. Notwithstanding the foregoing or any provision of the Plan to the contrary, the Board (or its designee) may at any time (in its sole discretion and without the consent of any Participant) modify, amend or terminate any or all of the provisions of this Plan or take any other action, to the extent necessary or advisable, to conform the provisions of the Plan with Section 409A of the Code, the regulations issued thereunder or an exception thereto, regardless of whether such modification, amendment or termination of this Plan or other action shall adversely affect the rights of a Participant under the Plan. Termination of this Plan shall not be a distribution event under the Plan unless otherwise permitted under Section 409A. 8.2 Change in Control. Notwithstanding any other provision of the Plan to the contrary, any amendment, modification or termination of the Plan (including, without limitation, this Section 8.2) as applied to any particular Participant, following a Change in Control, shall not be effective for twenty- four (24) months after the adoption of such amendment, modification or termination of the Plan; provided, further that, if a Change in Control occurs within the 12-Month Period, such amendment, modification or termination of the Plan shall not be effective for twenty-four (24) months after the Change in Control without the express written consent of such affected Participant(s), except in the event the Board or its designee determines to amend the Plan in order to conform the provisions of the Plan with Section 409A, the regulations issued thereunder or an exception thereto, regardless of whether such modification, amendment, or termination of the Plan shall adversely affect the rights of a Participant under the Plan. ARTICLE IX MISCELLANEOUS 9.1 Plan Document. To the extent any other written communication to a Participant conflicts with this Plan, the Plan document shall control.


18 9.2 Impact on Other Benefits. Except as otherwise provided herein, any amounts paid to a Participant under this Plan shall have no effect on the Participant’s rights or benefits under any other employee benefit plan sponsored by the Employer; provided, however, that in no event shall any Participant be entitled to any payment or benefit under the Plan which duplicates a payment or benefit received or receivable by the Participant under any severance plan, policy, guideline, arrangement, agreement, letter and/or other communication, whether formal or informal, written or oral sponsored by the Employer or an affiliate thereof and/or entered into by any representative of the Employer and/or any affiliate thereof. Further, any such amounts shall not be used to determine eligibility for or the amount of any benefit under any employee benefit plan, policy, or arrangement sponsored by the Employer or any affiliate thereof. 9.3 Tax Withholding. The Employer shall have the right to withhold from any benefits payable under the Plan or any other wages payable to a Participant an amount sufficient to satisfy federal, state and local tax withholding requirements, if any, arising from or in connection with the Participant’s receipt of benefits under the Plan. 9.4 No Employment or Service Rights. Nothing contained in the Plan shall confer upon any Employee any right with respect to continued employment with the Employer, nor shall the Plan interfere in any way with the right of the Employer to at any time reassign an Employee to a different job, change the compensation of the Employee or terminate the Employee’s employment for any reason. 9.5 Clawback. As a condition to receiving benefits under this Plan, each Participant acknowledges and agrees that the terms and conditions set forth in The AES Corporation Amended and Restated Compensation Recoupment Policy (as may be further amended and restated from time to time, the “Clawback Policy”) are incorporated in the Plan by reference. To the extent the Clawback Policy is applicable to the Participant, it creates additional rights for the Company with respect to certain compensation payable hereunder, including bonus compensation, and other applicable compensation, which will be subject to potential mandatory cancellation, forfeiture and/or repayment by the Participant to the Company to the extent the Participant is, or in the future becomes, subject to (i) any Company clawback or recoupment policy, including the Clawback Policy, and any other policies that are adopted to comply with the requirements of any applicable laws, rules, regulations, stock exchange listing standards or otherwise, or (ii) any applicable laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations, or stock exchange listing standards, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to certain compensation paid or payable to the Participant and the recovery of amounts relating thereto. By receiving benefits under the Plan, the Participant consents to be bound by the terms of the Clawback Policy, if applicable, and agrees 19 and acknowledges that the Participant is obligated to cooperate with, and provide any and all assistance necessary to, the Company in its efforts to recover or recoup any compensation paid or payable pursuant to the Plan (including any gains or earnings related thereto) or any other applicable compensation that is subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company policy.


Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company from the Participant of any such amounts, including from the Participant’s accounts or from any other compensation, to the extent permissible under Section 409A.
9.6 Nontransferability.
Notwithstanding any other provision of this Plan to the contrary, the benefits
payable under the Plan may not be subject to voluntary or involuntary anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the
Participant or such other person, other than pursuant to the laws of descent and distribution,
without the consent of the Company.
9.7 Successors.
The Company and its affiliates shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company and its affiliates (taken as a whole) expressly to assume and agree to
perform under the terms of the Plan in the same manner and to the same extent that the Company
and its affiliates would be required to perform if no such succession had taken place (provided that
such a requirement to perform which arises by operation of law shall be deemed to satisfy the
requirements for such an express assumption and agreement), and in such event the Company and
its affiliates (as constituted prior to such succession) shall have no further obligation under or with
respect to the Plan.
9.8 Headings and Captions.
The headings and captions herein are provided for reference and convenience only.
They shall not be considered as part of the Plan and shall not be employed in the construction of
the Plan.
9.9 Gender and Number.
Where the context admits, words in any gender shall include any other gender, and,
except where clearly indicated by the context, the singular shall include the plural and vice- versa.
9.10 Nonalienation of Benefits.
None of the payments, benefits or rights of any Participant shall be subject to any
claim of any creditor of any Participant and, in particular, to the fullest extent permitted by law,
all such payments, benefits and rights shall be free from attachment, garnishment (if permitted
under applicable law), trustee’s process, or any other legal or equitable process available to any
creditor of such Participant. No Participant shall have the right to alienate, anticipate, commute,
20
plead, encumber or assign any of the benefits or payments that he or she may expect to receive
under this Plan.
9.11 Governing Law.
Except as otherwise preempted by the laws of the United States, this Plan shall be
governed by and construed in accordance with the laws of the State of Delaware, without giving
effect to its conflict of law provisions. If any provision of this Plan shall be held illegal or invalid
for any reason, such determination shall not affect the remaining provisions of this Plan.


ARTICLE X STATEMENT OF ERISA RIGHTS As a Participant in the Plan, each Participant is entitled to certain rights and protections under ERISA. ERISA provides that all Participants shall be entitled to: 10.1 Receive Information About the Plan and Benefits. Examine, without charge, at the Administrator’s office, all documents governing the Plan. Obtain, upon written request to the Administrator, copies of documents governing the operation of the Plan and an updated summary plan description. The Administrator may make a reasonable charge for the copies. 10.2 Prudent Actions b\ Plan Fiduciaries. In addition to creating rights for Participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of Participants and beneficiaries. No one, including a Participant’s Employer or any other person, may fire such Participant or otherwise discriminate against a Participant in any way to prevent such Participant from obtaining a welfare benefit or exercising such Participant’s rights under ERISA. However, this rule neither guarantees continued employment, nor affects the Company’s right to terminate a Participant’s employment for other reasons. 10.3 Enforce Participant Rights. If a Participant’s claim for a benefit is denied or ignored, in whole or in part, a Participant has a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps a Participant can take to enforce the above rights. For instance, if a Participant requests a copy of Plan documents and does not receive them within 30 days, such Participant may file suit in a Federal court. In such a case, the court may require the Administrator to provide the materials and pay such Participant up to $110 a day until Participant receives the materials, unless the materials were not sent because of reasons beyond the control of the Administrator. If a Participant has a claim for benefits which is denied or ignored, in whole or 21 in part, such Participant may file suit in a state or Federal court. If a Participant is discriminated against for asserting such Participant’s rights, such Participant may seek assistance from the U.S. Department of Labor, or may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If a Participant is successful the court may order the person such Participant has sued to pay these costs and fees. If a Participant loses, the court may order such Participant to pay these costs and fees, for example, if it finds such Participant’s claim is frivolous. 10.4 Assistance with Participant Question. If a Participant has any questions about the Plan, such Participant should contact the Administrator. If a Participant has any questions about this statement or about such Participant’s rights under ERISA, or if a Participant needs assistance in obtaining documents from the Administrator, such Participant should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in such Participant’s telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. A Participant may also obtain certain publications about such Participant’s rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.


ARTICLE XI SUMMARY INFORMATION Name of Plan: The name of the plan under which benefits are provided is The AES Corporation Amended and Restated Executive Severance Plan. Plan Number: 503 Plan Sponsor: The Sponsor of the Plan is: The AES Corporation 4300 Wilson Boulevard, Suite 1100 Arlington, Virginia 22203 Plan Administrator: The Administrator of the Plan is: The Compensation Committee of the Board of Directors of The AES Corporation 4300 Wilson Boulevard, Suite 1100 Arlington, Virginia 22203 Employ er Identification Number: The Employer Identification Number (EIN) assigned to the Plan Sponsor by the Internal Revenue Service is 54-1163725. Type of Plan: Severance Pay Employee Welfare Benefit Plan. Type of Administration: The Plan is self-administered. 22 Funding; Benefits payable under the Plan are provided from the general assets of the Company. Agent for Service of Legal Process: For disputes arising under the Plan, service of legal process may be made upon the Executive Vice President, General Counsel and Corporate Secretary of the Company. Plan Year: The Plan’s fiscal records are kept on a calendar year basis (January 1 to December 31). 23 The AES Corporation Amended and Restated Executive Severance Plan has been duly executed by the undersigned on this 10th day of October, 2023. The AES Corporation Tish Mendoza, EVP & Chief Human Resources Officer APPENDIX A CHIEF EXECUTIVE OFFICER BENEFIT SCHEDULE The Chief Executive Officer shall receive the severance benefits outlined in the Plan document, except as otherwise modified or provided in this Benefit Schedule. A. Definitions. The following definitions apply to this Benefit Schedule and shall override any contrary (or duplicative) terms of the Plan as they relate solely to the Chief Executive Officer. “Cause” means: (a) the willful and continued failure by the Chief Executive Officer to substantially perform his duties with the Company (other than any such failure resulting from the Chief Executive Officer’s incapability due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by the Chief Executive Officer for Good Reason), after demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes that the Chief Executive Officer has not substantially performed his duties; or (b) the willful engaging by the Chief Executive Officer in misconduct which is demonstrably and materially injurious to the Company, monetarily or otherwise (including, but not limited to, conduct that constitutes a violation of Article V of the Plan).


No act, or failure to act, on the Chief Executive Officer’s part shall be considered “willful” unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Chief Executive Officer shall not be deemed to have been terminated for Cause without: (1) reasonable notice from the Board to the Chief Executive Officer setting forth the reasons for the Company’s intention to terminate for Cause; and (2) delivery to the Chief Executive Officer of a Notice of Termination, which shall include a resolution duly adopted by the affirmative vote of two-thirds or more of the Board then in office (excluding the Chief Executive Officer) at a meeting of the Board called and held for such purpose, and at which the Chief Executive Officer, together with his counsel, is given an opportunity to be heard, finding that in the good faith opinion of the Board, the Chief Executive Officer was guilty of the conduct and specifying the particulars thereof in detail. “Notice of Termination” shall mean a notice which shall indicate the specific termination provision relied upon in the Plan and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Chief Executive Officer’s employment. “Disability” means that the Chief Executive Officer is unable^ due to physical or mental incapacity, to substantially perform his full time duties and responsibilities for a period of six (6) consecutive months (as determined by a medical doctor selected by the Company and the Chief Executive Officer). If the parties cannot agree on a medical doctor for purposes of such determination, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved doctor for this purpose. “Good Reason” or “Good Reason Termination” means, without the Chief Executive Officer’s written consent, the voluntary Separation From Service of the Chief Executive Officer due to any of the following events: (a) the failure of the Company to have any successor to all or substantially all of the business and/or assets of the Company expressly assume and agree to perform the Plan in accordance with Section 9.7 of the Plan; (b) following a Change in Control, the relocation of the Chief Executive Officer’s principal place of employment to a site outside of the metropolitan area of the Chief Executive Officer’s principal place of employment; (c) following a Change in Control, any material adverse change in the Chief Executive Officer’s overall responsibilities, duties and authorities from those then in place immediately prior to such Change in Control; and (d) following a Change in Control, the failure by the Company to continue the Chief Executive Officer’s participation in a long-term cash or equity award or equity-based grant program (or in a comparable substitute program) on a basis not materially less favorable than that provided to the Chief Executive Officer immediately prior to such Change in Control. For purposes of any determination regarding the existence of Good Reason following a Change in Control, any good faith claim by the Chief Executive Officer that Good Reason exists shall be presumed to be correct unless the Company establishes by clear and convincing evidence that Good Reason does not exist. In order for the Chief Executive Officer to terminate for Good Reason, (i) the Chief Executive Officer must notify the Board, in writing, within ninety (90) days of the event constituting Good Reason of the Chief Executive Officer’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that the Chief Executive Officer notifies the Board in writing of the Chief Executive Officer’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period.


B. Separation Payments. (1) Termination by Chief Executive Officer for Good Reason or bv the Company (Other than due to Death or Disability, or for Cause). If the Chief Executive Officer Separates From Service on account of an involuntary termination by the Company (other than due to death or Disability or for Cause), or the Chief Executive Officer Separates From Service for Good Reason, the Chief Executive Officer shall be entitled to (a) Annual Compensation through the Termination Date, (b) a Pro Rata Bonus (as defined below), and (c) a severance payment (subject to the Chief Executive Officer having executed (and not revoked) a release in accordance with Section 3.1 of the Plan), consisting of a cash lump sum payment equal to the product of (i) two (2) and (ii) the sum of (A) the Chief Executive Officer’s Annual Compensation, and (B) the Chief Executive Officer’s Bonus, payable in equal installments over the Non-Competition Period in accordance with the Company’s payroll practices during such period, with the first payment commencing on the first payroll date next following the sixty-fifth (65th) day following the date of the Termination Date (but with the first payment being a lump sum payment covering all payment periods from the date of termination through the date of such first payment). (2) Upon Termination due to Disability. If the Chief Executive Officer Separates From Service on account of Disability, and subject to the execution of a release in accordance with Section 3.1 of the Plan, the Chief Executive Officer shall receive the following: (a) disability benefits in accordance with the terms of the long-term disability program then in effect for senior Executive Officers of the Company, (b) Annual Compensation through the Termination Date or, if earlier, the end of the month immediately preceding the month in which such disability benefits commence, and (c) to the extent earned and at the time bonuses are customarily paid to senior Executive Officers in accordance with the terms of the Performance Incentive Plan (or any successor plan), a bonus for the year in which the Separation From Service occurs in an amount equal to the Chief Executive Officer’s annual bonus for such year, multiplied by a fraction, the numerator of which is the number of days during such year that the Chief Executive Officer was employed by the Company and the denominator which is 365 (the “Pro Rata Bonus”). (3) Upon Termination due to Death. If the Chief Executive Officer Separates From Service on account of death, the Chief Executive Officer’s designated beneficiary shall receive (a) Annual Compensation through the Termination Date and (b) the Pro Rata Bonus. If the Chief Executive Officer has not made a valid beneficiary designation at the time of his or her death, such payments will be paid to the Chief Executive Officer’s surviving spouse, or if none, to the Chief Executive Officer’s estate. C. Continuation of Certain Welfare Benefits. (1) If the Chief Executive Officer Separates From Service on account of an involuntary termination by the Company (other than due to death or Disability or for Cause), or the Chief Executive Officer Separates From Service for Good Reason, the Chief Executive Officer shall be entitled to participate in the following welfare and other benefits for the twenty- four (24) month period immediately following the Chief Executive Officer’s Termination Date as follows: (a) Medical/Dental/Vision Benefits. If the Chief Executive Officer elects COBRA Continuation Coverage, he shall continue to participate in all medical, dental and vision insurance plans he was participating in on his Termination Date. If, however, any such plan does not permit his continued participation following the end of the COBRA Continuation Period (as defined below), then the Company will reimburse the Chief Executive Officer for the actual cost to the Chief Executive Officer of any individual health insurance policy obtained by the Chief Executive Officer.


To the extent such benefits are available under the above-referenced plans and the Chief Executive Officer had coverage immediately prior to the Separation From Service, such continuation of benefits for the Chief Executive Officer shall also cover the Executive’s dependents for so long as the Chief Executive Officer is receiving benefits under this subsection (a). The provisions of Section 4.2.2 and 4.2.4 of the Plan shall also apply. “COBRA Continuation Period” means the continuation period for medical, dental and vision insurance to be provided under the terms of the Plan and herein which shall commence on the first day of the calendar month following the month in which the Termination Date falls and generally shall continue for an 18- month period. (b) Out placement Services. The Chief Executive Officer shall be eligible to receive outplacement services, as set forth in Section 4.3 of the Plan. (c) Reimbursement Limitations. Reimbursement under subsections (a) and (b) above will be available only to the extent that (i) such expense is actually incurred for any particular calendar year and is reasonably substantiated; (ii) reimbursement shall be made no later than the end of the calendar year following the year in which such expense is incurred by the Chief Executive Officer; and (iii) no reimbursement will be provided for any expense incurred following the twenty-four (24) month anniversary of the Separation From Service or for any expense which relates to insurance coverage after such date. (d) Offset. Benefits or payments otherwise received under Sections B or C hereof shall be reduced to the extent benefits of the same type are received or made available to the Chief Executive Officer by a subsequent employer during the twenty-four (24) month period following the Termination Date (and any such benefits received or made available to the Chief Executive Officer shall be reported to the Company by the Chief Executive Officer). D. Change in Control Payments. If the Chief Executive Officer has a Separation From Service on account of an involuntary termination by the Company (other than for Cause or Disability or due to death), or if the Chief Executive Officer has a Separation From Service for Good Reason, in either case within two (2) years following a Change in Control, then (ii) the severance payments set forth in Section B(l)(c) above shall be paid in a lump sum as soon as practicable following the sixty-fifth (65th) day following the Chief Executive Officer’s Termination Date, provided the Chief Executive Officer has executed (and not revoked) a release in accordance with Section 3.1 of the Plan, (ii) the Chief Executive Officer shall receive the payments set forth in Section B(l) above, except that the two (2) times multiplier shall be increased to three (3) and (iii) the Chief Executive Officer shall receive the benefits set forth in Section C above except the twenty-four (24) month benefit continuation period set forth in Section C(l)(a) and C(l)(c) above shall be increased to thirty-six (36) months. E. Tax Provision.


(1) Notwithstanding anything in the Plan to the contrary, in the event that it shall be determined that any compensation, payment or benefit (including any accelerated vesting of options or other equity awards) made or provided, or to be made or provided, by the Company (or any successor thereto or affiliate thereof) to or for the benefit of the Chief Executive Officer, whether pursuant to the terms of this Plan, any other agreement, plan, program or arrangement of or with the Company (or any successor thereto or affiliate thereof) or otherwise (a “Payment”), will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed by any replacement or successor provision of United States tax law, then the Company will apply a limitation on the Payment amount as set forth in clause (a) below (a “Parachute Can”), unless the provisions of clause (b) below apply. (a) If clause (b) does not apply, the aggregate present value of the Payments under this Plan (“Plan Payments”) shall be reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Plan Payments without causing any Payment to be subject to the limitation of deduction under Section 280G of the Code or the imposition of any excise tax under Section 4999 of the Code. For purposes of this clause (a), “present value” shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is determined that the amount of the Plan Payments will be reduced in accordance with this clause (a), the Plan Payments shall be reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic value deliverable to the Chief Executive Officer. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where more than one payment has the same value for this purpose and they are payable at different times, they will be reduced on a pro-rata basis. (b) It is the intention of the parties that the Parachute Cap apply only if application of the Parachute Cap is beneficial to the Chief Executive Officer. Therefore, if the net amount that would be retained by the Chief Executive Officer under this Agreement without the Parachute Cap, after payment of any excise tax under Section 4999 of the Code or any other applicable taxes by the Chief Executive Officer, exceeds the net amount that would be retained by the Chief Executive Officer with the Parachute Cap, then the Company shall not apply the Parachute Cap to the Chief Executive Officer’s payments. (2) All determinations to be made under this Section E shall be made by a nationally recognized independent public accounting firm selected by the Company (“Accounting Firm”), which Accounting Firm shall provide its determinations and any supporting calculations to the Company and the Chief Executive Officer within ten days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Chief Executive Officer. (3) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this Section E shall be borne solely by the Company. F. Miscellaneous. (1) The Chief Executive Officer shall not be entitled to any benefits and payments associated with an Involuntary Termination (as defined and provided for in the Plan) and the definition of Ineligible Termination shall not apply. (2) Section 2.3 of the Plan shall not apply to the Chief Executive Officer.
(3)
Executive Officer.		 Section 4.2.1 and Section 4.2.3 of the Plan shall not apply to the Chief


(4) For the Chief Executive Officer, the Non-Competition Period under Article V of the Plan applies while the Chief Executive Officer is employed with the Company and for a period of twenty-four months after the Termination Date. (5) The number “365” in Section 5.5(c) of the Plan, in the case of the Chief Executive Officer, shall be replaced with “730” and the reference to “first anniversary” shall be replaced with “second anniversary.” APPENDIX B EXECUTIVE BENEFIT SCHEDULE The Board and/or Administer shall designate and approve from time to time those Eligible Executives, other than the Chief Executive Officer, who shall receive the severance benefits outlined in this Plan and under this Benefit Schedule (collectively, the “Appendix B Executives” and individually, an “Appendix B Executive”). A. Definitions. The following definitions apply to this Benefit Schedule and override any contrary (or duplicative) terms of the Plan as they relate to the Appendix B Executives. If not otherwise stated in this Benefit Schedule, the terms of the Plan apply. “Good Reason” or “Good Reason Termination” means, without an Appendix B Executive’s written consent, the voluntary Separation From Service (other than due to death or Disability, or for Cause) of an Appendix B Executive due to any of the following events following a Change in Control: (a) the relocation of an Appendix B Executive’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (b) a material diminution in the duties or responsibilities of an Appendix B Executive from those in place immediately prior to such Change in Control; (c) a material reduction in the base salary or annual incentive opportunity of an Appendix B Executive from what was in place immediately prior to such Change in Control; and (d) the failure of any successor entity to the Company following a Change in Control to assume the Plan, as in effect immediately prior to such Change in Control. In order for an Appendix B Executive to terminate for Good Reason, (i) an Appendix B Executive must notify the Board, in writing, within ninety (90) days of the event constituting Good Reason of the Appendix B Executive’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that an Appendix B Executive notifies the Board in writing of the Appendix B Executive’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period. B. Separation Payments. If an Appendix B Executive Separates From Service on account of an Involuntary Termination, an Appendix B Executive shall be entitled to (i) Annual Compensation through the Termination Date, (ii) Pro Rata Bonus (as defined below), and (iii) a severance payment (subject to the Appendix B Executive having executed (and not revoked) a release in accordance with Section 3.1 of the Plan), consisting of a cash lump sum payment equal to the product of (A) one (1) and (B) the sum of (1) the Appendix B Executive’s Annual Compensation, and (2) the Appendix B Executive’s Bonus, payable in equal installments over the Non-Competition Period in accordance with the Company’s payroll practices during the such period, with the first payment commencing on the first payroll date next following the sixty-fifth (65th) day following the Termination Date (but with the first payment being a lump sum payment covering all payment periods from the date of termination through the date of such first payment). The term “Pro Rata Bonus” means, to the extent earned and at the time bonuses are customarily paid to senior executive officers in accordance with the terms of the Performance Incentive Plan (or any successor plan), a bonus for the year in which the Separation From Service occurs equal to the respective Appendix B Executive’s annual bonus for such year, multiplied by a fraction, the numerator of which is the number of days during such year that the Appendix B Executive was employed by the Company and the denominator which is 365.


C.
Continuation of Certain Welfare Benefits.
(a) If an Appendix B Executive Separates From Service on account of an
Involuntary Termination, the Appendix B Executive shall be entitled to participate in the health
and welfare benefits described in Section 4.2.1 of the Plan for the twelve (12) month period
immediately following an Appendix B Executive’s Termination Date.
(b) An Appendix B Executive shall be eligible to receive outplacement
services, as set forth in Section 4.3 of the Plan.
(c) Reimbursement under subsections (a) and (b) above, if applicable, will be
available only to the extent that (1) such expense is actually incurred for any particular calendar
year and is reasonably substantiated; (2) reimbursement, if applicable, shall be made no later than
the end of the calendar year following the year in which such expense is incurred by an Appendix
B Executive; and (3) no reimbursement, if applicable, will be provided for any expense incurred
following the twelve (12) month anniversary of the Separation From Service or for any expense
which relates to insurance coverage after such date.
D. Change in Control Payments.
If an Appendix B Executive has a Separation From Service (i) on account of an
Involuntary Termination or (ii) for Good Reason, in either case within two (2) years following a
Change in Control, then (a) the severance payments set forth in Section B(iii) above shall be paid
in a lump sum as soon as practicable following the sixty-fifth (65th) day following the Appendix
B Executive’s Termination Date provided the Appendix B Executive has executed (and not
revoked) a release in accordance with Section 3.1 of the Plan), (b) such Appendix B Executive
shall receive the payments set forth in Section B above, except that the one (1) times multiplier
shall be increased to two (2) and (c) such Appendix B Executive shall receive the benefits set forth
in Section C above, except the twelve (12) month benefit continuation period set forth in Section
C(a) and C(c) above shall be increased to eighteen (18) months.
E.
Tax Provisions.
(a) Notwithstanding anything in the Plan to the contrary, in the event that it
shall be determined that any compensation, payment or benefit (including any accelerated vesting of options or other equity awards) made or provided, or to be made or provided, by the Company (or any successor thereto or affiliate thereof) to or for the benefit of an Appendix B Executive, whether pursuant to the terms of this Plan, any other agreement, plan, program or arrangement of or with the Company (or any successor thereto or affiliate thereof) or otherwise (a ‘‘Payment”), will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed by any replacement or successor provision of United States tax law, then the Company will apply a limitation on the Payment amount as set forth in clause (i) below (a “Parachute Cap”), unless the provisions of clause (ii) below apply.


(i) If clause (ii) does not apply, the aggregate present value of the Payments under this Plan (“Plan Payments”) shall be reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Plan Payments without causing any Payment to be subject to the limitation of deduction under Section 280G of the Code or the imposition of any excise tax under Section 4999 of the Code. For purposes of this clause (i), “present value” shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is determined that the amount of the Plan Payments will be reduced in accordance with this clause (i), the Plan Payments shall be reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic value deliverable to the Appendix B Executive. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where more than one payment has the same value for this purpose and they are payable at different times, they will be reduced on a pro-rata basis. (ii) It is the intention of the parties that the Parachute Cap apply only if application of the Parachute Cap is beneficial to an Appendix B Executive. Therefore, if the net amount that would be retained by an Appendix B Executive under this Agreement without the Parachute Cap, after payment of any excise tax under Section 4999 of the Code or any other applicable taxes by an Appendix B Executive, exceeds the net amount that would be retained by an Appendix B Executive with the Parachute Cap, then the Company shall not apply the Parachute Cap to the Appendix B Executive’s payments. (b) All determinations to be made under this Section E shall be made by a nationally recognized independent public accounting firm selected by the Company (“Accounting Firm”), which Accounting Firm shall provide its determinations and any supporting calculations to the Company and the Appendix B Executive within ten days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Appendix B Executive. (c) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this Section E shall be borne solely by the Company. Exhibit A THE AES CORPORATION AMENDED AND RESTATED EXECUTIVE SEVERANCE PLAN Executive Acknowledgment and Agreement I hereby agree to the terms and conditions of The AES Corporation Amended and Restated Executive Severance Plan, as in effect on the date set forth below and as may be further amended from time to time (“Plan”), including but not limited to the post-termination restrictive covenants described in Article V of the Plan. I understand that pursuant to my agreement to be covered under the Plan, as indicated by my signature below, the terms of the Plan will exclusively govern all subject matter addressed by the Plan and I understand that the Plan supersedes and replaces, as applicable, any and all agreements, plans, policies, guidelines or other arrangements with respect to the subject matter covered under the Plan. Dated: _____________________________ THE AES CORPORATION AMENDED AND RESTATED EXECUTIVE SEVERANCE PLAN LIST OF PARTICIPATING EMPLOYERS [The Administrator maintains a list of Participating Employers]


EXECUTIVE
Name:

EX-10.15 9 aes1231202310-kexhibit1015.htm EX-10.15 Document

1
THE AES CORPORATION
PERFORMANCE INCENTIVE PLAN
(As Amended and Restated October 10, 2023)
1. Purpose of the Plan
The purpose of The AES Corporation Performance Incentive Plan (the “Plan”) is to
advance the interests of the Company and its stockholders by providing incentives to key
employees with significant responsibility for achieving performance goals critical to the
success and growth of the Company. The Plan is designed to: (i) promote the attainment
of the Company’s significant business objectives; (ii) encourage and reward management
teamwork across the entire Company; and (iii) assist in the attraction and retention of
employees vital to the Company’s long-term success. The Plan has been amended to
comply with Section 409A.
2. Definitions
For the purpose of the Plan, the following definitions shall apply:
(a)
(b)		 “Board” means the Board of Directors of the Company.
“Code” means the Internal Revenue Code of 1986, as amended, including any
successor law thereto.
“Committee” means the Compensation Committee of the Board, or such other
committee as is appointed or designated by the Board to administer the Plan, in
each case which shall be comprised solely of two or more “outside directors”(as
(c)
defined under Section 162(m) of the Code and the regulations promulgated
thereunder).
(d) “Company” means The AES Corporation and any subsidiary entity or affiliate
thereof, including subsidiaries or affiliates which become such after adoption of the
Plan.
“Forfeit,” “Forfeiture,” “Forfeited” means the loss by a Participant of any and all
(e)
rights to an award granted under the Plan, including the loss to any payment of
compensation by the Company under the Plan or any award granted thereunder.
(f) “Participant” means any person: (1) who satisfies the eligibility requirements set
forth in Paragraph 4; (2) to whom an award has been made by the Committee; and
(3) whose award remains outstanding under the Plan.
“Performance Goal” means, in relation to any Performance Period, the level of
performance that must be achieved with respect to a Performance Measure.
“Performance Measures” means any one or more of the following performance
(g)
(h)


criteria, either individually, alternatively or in any combination, and subject to such modifications or variations as specified by the Committee, applied to either the 2 Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and measured over a period of time including any portion of a year, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee: cash flow (including, without limitation, proportional cash flow); cash flow from operations; earnings (including, but not limited to, earnings before interest, taxes, depreciation, and amortization or some variation thereof); earnings per share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; capital expenditures; debt; debt reduction; working capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; productivity; delivery performance; safety record and/or performance; stock price; return on equity; total stockholder return; return on capital; return on assets or net assets; revenue; income or net income; operating income or net operating income; operating income adjusted for management fees and depreciation, and amortization; operating profit or net operating profit; gross margin, operating margin or profit margin; and completion of acquisitions, business expansion, product diversification, new or expanded market penetration and other nonfinancial operating and management performance objectives. To the extent consistent with Section 162(m) of the Code and the regulations promulgated thereunder, the Committee may determine at the time the performance goals are established that certain adjustments shall apply, in whole or in part, in such manner as specified by the Committee, to exclude the effect of any of the following events that occur during a Performance Period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; changes in tax law, accounting principles or other such laws or provisions affecting reported results; business combinations, reorganizations and/or restructuring programs, including but not limited to reductions in force and early retirement incentives; currency fluctuations; and any extraordinary, unusual, infrequent or non-recurring items, including, but not limited to, such items separately identified in the financial statements and/or notes thereto in accordance with generally accepted accounting principles. (i) “Performance Period” means, in relation to any award, the calendar year or other period of 12 months or less for which a Participant’s performance is being calculated, with each such period constituting a separate Performance Period. (j) “Section 409A” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder. (k) “Retirement” means retirement of an employee as determined and authorized by the Committee. (l) “Total and Permanent Disability” means: (1) if the Participant is insured under a long-term disability insurance policy or plan which is paid for by the Company, the 3 Participant is totally disabled under the terms of that policy or plan; or (2) if no such policy or plan exists, the Participant shall be considered to be totally disabled as determined by the Committee.


3. Administration of the Plan (a) The management of the Plan shall be vested in the Committee; provided, however, that all acts and authority of the Committee pursuant to this Plan shall be subject to the provisions of the Committee’s Charter, as amended from time to time, and such other authority as may be delegated to the Committee by the Board. The Committee may, with respect to Participants whom the Committee determines are not likely to be subject to Section 162(m) of the Code, delegate such of its powers and authority under the Plan to the Company’s officers as it deems necessary or appropriate. In the event of such delegation, all references to the Committee in this Plan shall be deemed references to such officers as it relates to those aspects of the Plan that have been delegated. (b) Subject to the terms of the Plan, the Committee shall, among other things, have full authority and discretion to determine eligibility for participation in the Plan, make awards under the Plan, establish the terms and conditions of such awards (including the Performance Goal(s) and Performance Measure(s) to be utilized) and determine whether the Performance Goals applicable to any Performance Measures for any awards have been achieved. The Committee’s determinations under the Plan need not be uniform among all Participants, or classes or categories of Participants, and may be applied to such Participants, or classes or categories of Participants, as the Committee, in its sole and absolute discretion, considers necessary, appropriate or desirable. The Committee is authorized to interpret the Plan, to adopt administrative rules, regulations, and guidelines for the Plan, and may correct any defect, supply any omission or reconcile any inconsistency or conflict in the Plan or in any award. All determinations by the Committee shall be final, conclusive and binding on the Company, the Participant and any and all interested parties. (c) Subject to the provisions of the Plan, the Committee will have the authority and discretion to determine the extent to which awards under the Plan will be structured to conform to the requirements applicable to performance-based compensation as described in Section 162(m) of the Code, and to take such action, establish such procedures, and impose such restrictions at the time such awards are granted as the Committee determines to be necessary or appropriate to conform to such requirements. Notwithstanding any provision of the Plan to the contrary, if an award under this Plan is intended to qualify as performance-based compensation under Section 162(m) of the Code and the regulations issued thereunder and a provision of this Plan would prevent such award from so qualifying, such provision shall be administered, interpreted and construed to carry out such intention (or disregarded to the extent such provision cannot be so administered, interpreted or construed). 4 (d) The benefits provided under the Plan are intended to comply with Section 409A or an exception thereunder and shall be construed accordingly.


Notwithstanding any provision of the Plan to the contrary, if any benefit provided under this Plan is subject to the provisions of Section 409A and the regulations issued thereunder (and not excepted therefrom), the provisions of the Plan shall be administered, interpreted and construed in a manner necessary to comply with Section 409A and the regulations issued thereunder (or disregarded to the extent such provision cannot be so administered, interpreted, or construed). 4. Participation in the Plan Officers and key employees of the Company shall be eligible to participate in the Plan. No employee shall have the right to participate in the Plan, and participation in the Plan in any one Performance Period does not entitle an individual to participate in future Performance Periods. 5. Incentive Compensation Awards (a) The Committee may, in its discretion, from time to time make awards to persons eligible for participation in the Plan pursuant to which the Participant will earn cash compensation. The amount of a Participant’s award may be based on a percentage of such Participant’s salary or such other methods as may be established by the Committee. Each award shall be communicated to the Participant, and shall specify, among other things, the terms and conditions of the award and the Performance Goals to be achieved. The maximum amount of an award that may be earned under the Plan by any Participant for any Performance Period shall not exceed USD $5,000,000. (b) With respect to awards that are intended to be performance-based compensation under Section 162(m) of the Code, each award shall be conditioned upon the Company’s achievement of one or more Performance Goal(s) with respect to the Performance Measure(s) established by the Committee. No later than ninety (90) days after the beginning of the applicable Performance Period, the Committee shall establish in writing the Performance Goals, Performance Measures and the method(s) for computing the amount of compensation which will be payable under the Plan to each Participant if the Performance Goals established by the Committee are attained; provided however, that for a Performance Period of less than one year, the Committee shall take any such actions prior to the lapse of 25% of the Performance Period. In addition to establishing minimum Performance Goals below which no compensation shall be payable pursuant to an award, the Committee, in its discretion, may create a performance schedule under which an amount less than or more than the target award may be paid so long as the Performance Goals have been achieved. (c) The Committee, in its sole discretion, may also establish such additional restrictions or conditions that must be satisfied as a condition precedent to the payment of all or a portion of any awards. Such additional restrictions or conditions need not be 5 performance-based and may include, among other things, the receipt by a Participant of a specified annual performance rating, the continued employment by the Participant and/or the achievement of specified performance goals by the Company, business unit or Participant.


Furthermore and notwithstanding any provision of this Plan to the contrary, the Committee, in its sole discretion, may reduce the amount of any award to a Participant if it concludes that such reduction is necessary or appropriate based upon: (i) an evaluation of such Participant’s performance; (ii) comparisons with compensation received by other similarly situated individuals working within the Company’s industry; (iii) the Company’s financial results and conditions; or (iv) such other factors or conditions that the Committee deems relevant. Notwithstanding any provision of this Plan to the contrary, the Committee shall not use its discretionary authority to increase any award that is intended to be performance-based compensation under Section 162(m) of the Code. 6. Payment of Individual Incentive Awards (a) After the end of the Performance Period, the Committee shall certify in writing the extent to which the applicable Performance Goals and any other material terms have been achieved. Subject to the provisions of the Plan, earned Awards shall be paid in the first calendar year immediately following the end of the Performance Period and within the applicable 2-½ month period specified in Treas. Reg. § 1.409A-1(b)(4) (“Payment Date”). For purposes of this provision, and for so long as the Code permits, the approved minutes of the Committee meeting in which the certification is made may be treated as written certification. (b) Unless otherwise determined by the Committee, Participants who have terminated employment with the Company prior to the actual payment date of any award for any reason other than death, Retirement or Total and Permanent Disability, shall Forfeit any and all rights to payment under any awards then outstanding under the terms of the Plan and shall not be entitled to any cash payment for such period. If a Participant’s employment with the Company should terminate during a Performance Period by reason of death, Retirement or Total and Permanent Disability or the Committee determines that an award is not Forfeited, the Participant’s award shall be prorated to reflect the period of service prior to his/her termination, death, Retirement or Total and Permanent Disability, and shall be paid either to the Participant or, as appropriate, the Participant’s estate, subject to the Committee’s certification that the applicable Performance Goals and other material terms have been met. (c) The Committee shall determine whether, to what extent, and under what additional circumstances amounts payable with respect to an award under the Plan shall be deferred either automatically, at the election of the Participant, or by the Committee. All deferrals under The AES Corporation Restoration Supplemental Retirement Plan shall be made in accordance with terms and procedures of such plan. 6 7. Amendment or Termination of the Plan While the Company intends that the Plan shall continue in force from year to year, the Company reserves the right to amend, modify or terminate the Plan, at any time; provided, however, that no such modification, amendment or termination shall, without the consent of the Participant, materially adversely affect the rights of such Participant to any payment that has been determined by the Committee to be due and owing to the Participant under the Plan but not yet paid.


Any and all actions permitted under this Section 7 may be authorized and performed by the Committee in its sole and absolute discretion. Notwithstanding the foregoing or any provision of the Plan to the contrary, the Committee may at any time (without the consent of the Participant) modify, amend or terminate any or all of the provisions of this Plan to the extent necessary to conform the provisions of the Plan with Section 409A or Section 162(m) of the Code, the regulations promulgated thereunder or an exception thereto regardless of whether such modification, amendment, or termination of the Plan shall adversely affect the rights of a Participant under the Plan. Notwithstanding, (i) Section 409A may impose upon the Participant certain taxes or other charges for which the Participant is and shall remain solely responsible, and nothing contained in this Plan shall be construed to obligate the Company for any such taxes or other charges, and (ii) in no event shall the Committee or Board (or any member thereof), or the Company (or its employees, officers, directors or affiliates) have any liability to any Participant (or any other person) due to the failure of the Plan to satisfy the requirements of Section 409A or any other applicable law. 8. Rights Not Transferable A Participant’s rights under the Plan may not be assigned, pledged, or otherwise transferred except, in the event of a Participant’s death, to the Participant’s designated beneficiary, or in the absence of such a designation, by will or by the laws of descent and distribution. 9. Funding/Payment The Plan is not funded and all awards payable hereunder shall be paid from the general assets of the Company. No provision contained in this Plan and no action taken pursuant to the provisions of this Plan shall create a trust of any kind or require the Company to maintain or set aside any specific funds to pay benefits hereunder. To the extent a Participant acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. If any earned Award is not paid by the Payment Date due to administrative impracticability, such earned Award will be paid, without earnings, as soon as administratively practicable thereafter. 10. Withholdings The Company shall have the right to withhold from any awards payable under the Plan or other wages payable to a Participant such amounts sufficient to satisfy federal, state and local tax withholding obligations arising from or in connection with the Participant’s 7 participation in the Plan and such other deductions as may be authorized by the Participant or as required by applicable law. 11. Clawback By accepting an award under the Plan, each Participant acknowledges and agrees that the terms and conditions set forth in The AES Corporation Amended and Restated Compensation Recoupment Policy (as may be further amended and restated from time to time, the “Clawback Policy”), to the extent it is applicable to the Participant, creates additional rights for the Company with respect to certain awards and other applicable compensation.


Notwithstanding any provisions in the Plan to the contrary, any award granted under the Plan and such other applicable compensation, including, without limitation, annual cash incentive compensation, will be subject to potential mandatory cancellation, forfeiture and/or repayment by the Participant to the Company to the extent the Participant is, or in the future becomes, subject to (i) any Company clawback or recoupment policy, including the Clawback Policy, and any other policies that are adopted to comply with the requirements of any applicable laws, rules, regulations, stock exchange listing standards or otherwise, or (ii) any applicable laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations, or stock exchange listing standards, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to awards and the recovery of amounts relating thereto. By accepting an award under the Plan, the Participant consents to be bound by the terms of the Clawback Policy, if applicable, and agrees and acknowledges that the Participant is obligated to cooperate with, and provide any and all assistance necessary to, the Company in its efforts to recover or recoup an award, any gains or earnings related to an award, or any other applicable compensation, including, without limitation, annual cash incentive compensation, that is subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company from the Participant of any such amounts, including from the Participant’s accounts or from any other compensation, to the extent permissible under Section 409A. 12. No Employment or Service Rights Nothing contained in the Plan shall confer upon any Participant any right with respect to continued employment with the Company (or any of its affiliates) nor shall the Plan interfere in any way with the right of the Company (or any of its affiliates) to at any time reassign the Participant to a different job, change the compensation of the Participant or terminate the Participant’s employment for any reason. 8 13. Other Compensation Plans Nothing contained in this Plan shall prevent the Corporation from adopting other or additional compensation arrangements for employees of the Corporation, including arrangements that are not intended to comply with Section 162(m) of the Code. 14. Governing Law The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its conflict of law provisions. 15. Effective Date The Plan’s material terms have been approved by the Company’s stockholders. This amendment and restatement of The AES Corporation Performance Incentive Plan has been duly executed by the undersigned and is effective this 10th day of October 2023.


The AES Corporation Tish Mendoza, EVP & Chief Human Resources Officer

EX-10.23 10 aes1231202310-kexhibit1023.htm EX-10.23 Document


RESTRICTED STOCK UNIT AWARD AGREEMENT PURSUANT TO THE AES CORPORATION 2003 LONG TERM COMPENSATION PLAN
The AES Corporation, a Delaware corporation (the “Company”), grants to the Employee named below, pursuant to The AES Corporation 2003 Long Term Compensation Plan, as amended (the “Plan”), and this Restricted Stock Unit Award Agreement (this “Agreement”), this Award of Restricted Stock Units (“RSUs”) upon the terms and conditions set forth herein. Capitalized terms not otherwise defined herein will each have the meaning assigned to them in the Plan.
1. This Award of RSUs is subject to all terms and conditions of this Agreement and the Plan, the terms of which are incorporated herein by reference:
Name of Employee:
Fidelity System ID:
Grant Date:
Grant Price:
Total Number of RSUs Granted:

2. Each RSU represents a right to receive one Share at the time specified in Section 7 and in accordance with the terms of this Agreement.
3. Unless otherwise determined by the Committee, each RSU shall also represent a right to receive an additional dividend equivalent amount, payable in cash, equal to the accumulated amount per Share of cash dividends paid by the Company on outstanding Shares between the Grant Date and the Anniversary Date (as defined below) for the RSU. The additional dividend equivalent amounts that are accumulated subject to an RSU will be subject to the same terms and conditions (including, without limitation, any applicable vesting requirements and forfeiture provisions) as the RSU to which they relate under the Award. The RSUs will become payable if Employee’s right to receive payment for the RSUs becomes nonforfeitable (“Vesting,” “Vest,” or “Vested”) in accordance with Sections 5 and 6 of this Agreement or as otherwise provided for in this Agreement.
4. An RSU carries no voting rights and the holder will not have an equity interest in the Company or any stockholder rights, unless the RSU is paid out with Shares.
5. (i) This Award of RSUs will become non-forfeitable and will Vest, in accordance with and subject to the terms of this Agreement, in three equal installments on each of the first three anniversaries of the grant date (each the applicable “Anniversary Date”) if the Employee remains in the continuous employ of the Company or a Subsidiary until the applicable Anniversary Date. Notwithstanding the preceding sentence:
(ii) If the Employee dies or experiences a Disability prior to the applicable Anniversary Date, all RSUs that have not previously Vested shall become nonforfeitable and Vest.
(iii) If the Employee Separates from Service on account of Qualified Retirement or Early Retirement, the RSUs that have not previously been paid or forfeited shall continue to Vest on the applicable Anniversary Date as provided in Section 5(i) as if the Employee’s employment had continued until the last of the Anniversary Dates to occur.


For purposes of this Agreement, “Qualified Retirement” means a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who (A) is at least 60 years of age and (B) has at least seven years of service as an employee of the Company and/or one or more of its Affiliates and “Early Retirement” means is a retirement approved in accordance with Company policy, in effect at the time of such retirement, of an Employee who (A) is at least 57 years of age and (B) has at least ten years of service as an employee of the Company and/or one or more of its Affiliates.
(iv) If the Employee Separates from Service prior to the applicable Anniversary Date for any reason other than the Employee’s death or Disability or Qualified Retirement or Early Retirement, including, but not limited to, voluntarily by the Employee on account of retirement or by a Separation from Service by the Company with or without Cause (as defined in the Plan and as may otherwise be determined by the Committee in its discretion), all RSUs that have not previously Vested shall be immediately cancelled and forfeited without payment or further obligation by the Company or any Affiliate.
6. In the event of a (i) Change in Control and (ii) a Qualifying Event (as defined below) prior to the applicable Anniversary Date, if the RSUs described herein have not already been previously forfeited or cancelled, such RSUs will become fully Vested contemporaneous with the Qualifying Event; provided, however, that in connection with a Change in Control, payment of any obligation payable pursuant to the preceding sentence may be made in cash of equivalent value and/or securities or other property in the Committee’s discretion.
(A) Change in Control means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d)(3) of the Exchange Act) of Persons, (ii) a Person or group (as so defined in the Plan) of Persons (other than Management of the Company on the date of the most recent adoption of the Plan by the Company's stockholders or their Affiliates) shall have become the beneficial owner (as defined below) of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or (iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the beneficial owners of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction. Notwithstanding the foregoing or any provision to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5) (a “409A Change in Control”). For purposes of this Agreement, “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act.


(B) Qualifying Event means the occurrence of one or more of the following events: (i) immediately upon the consummation of a Change in Control Event, failure of the successor company in a Change in Control event to provide Substitute Awards that are substantially similar in both nature and terms (including having an equivalent realizable pre-tax value to outstanding Awards assuming vesting and delivery at the consummation of the Change in Control); (ii) within two years after the consummation of a Change in Control event, an involuntary termination without Cause of the Employee; or (iii) within two years after the consummation of a Change in Control event, a Good Reason Termination (as defined below) by the Employee.
(C) Good Reason Termination means, without an Employee’s written consent, the Separation from Service (for reasons other than death, Disability or Cause) by an Employee due to any of the following events occurring within two years after the consummation of a Change in Control: (i) the relocation of an Employee’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (ii) a material diminution in the duties or responsibilities of an Employee from those in place immediately prior to such Change in Control; or (iii) a material reduction in the base salary or annual incentive opportunity of an Employee from what was in place immediately prior to such Change in Control.
In order for Employee to terminate for Good Reason, (i) Employee must notify the successor entity in writing, within ninety (90) days of the event constituting Good Reason, of the Employee’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that Employee notifies the successor entity in writing of Employee’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period..
7. (i) Subject to Section 7(ii), payment for Vested RSUs will be made in Shares within thirty (30) days following the applicable Anniversary Dates specified in Section 5(i).
(ii) Notwithstanding Section 7(i), to the extent that the RSUs are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code), the RSUs shall be paid on an accelerated basis within thirty (30) days after any of the following events in a manner and to the extent necessary to comply with Section 409A of the Code):
(A) The occurrence of a Change in Control that is a 409A Change in Control,
(B) An Employee’s Separation from Service that occurs within 2 years after a Change in Control that is a 409A Change in Control, or
(C) An Employee’s death or Disability.
8. It is intended that under current U.S. federal income tax laws, the Employee will not be subject to income tax unless and until Shares and/or cash are delivered to the Employee, at which time the Fair Market Value of the Shares and/or cash will be reportable as ordinary income, and subject to income tax withholding as well as social security and Medicare (FICA) taxes. The Employee must pay all applicable federal and state income and employment withholding taxes when due in such manner as approved by the Committee or Plan Administrator. The Employee should consult his or her personal advisor to determine the effect of this Award of RSUs on his or her own tax situation.
9. Notices hereunder and under the Plan, if to the Company, will be delivered to the Plan Administrator (as so designated by the Company) or mailed to the Company’s principal office, 4300 Wilson Boulevard, Arlington, VA 22203, attention of the Plan Administrator, or, if to the Employee, will be delivered to the Employee, which may include electronic delivery, or mailed to his or her address as the same appears on the records of the Company.


10. All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the Plan will be binding and conclusive on all persons. Unless otherwise specifically provided herein, in the event of any inconsistency between the terms of this Agreement and the Plan, the Plan will govern.
11. By accepting this Award of RSUs, the Employee acknowledges receipt of a copy of the Plan and the prospectus relating to this Award of RSUs, and agrees to be bound by the terms and conditions set forth in this Agreement and the Plan, as in effect and/or amended from time to time. The Employee further acknowledges that the Plan and related documents, which may include the Plan prospectus, may be delivered electronically. Such means of delivery may include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or CD-ROM or such other delivery determined at the Plan Administrator’s discretion. The Employee acknowledges that the Employee may receive from the Company a paper copy of any documents delivered electronically at no cost if the Employee contacts the Human Resources department of the Company by telephone at (703) 682-6553 or by mail to 4300 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203. The Employee further acknowledges that the Employee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.
12. This Award is intended to satisfy the requirements of Section 409A of the Code (or an exception thereto) and shall be administered, interpreted and construed accordingly. The Employee shall have no right to designate the date of any payment under this Agreement. If the Employee is a Specified Employee and a payment subject to Section 409A of the Code (and not excepted therefrom) to the Employee is due upon Separation from Service, such payment shall be delayed for a period of six (6) months after the date the Employee Separates from Service (or, if earlier, the death of the Employee), and any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period in the month following the month containing the 6-month anniversary of the date of termination. The Company may, in its sole discretion and without the Employee’s consent, modify or amend the terms and conditions of this Award, impose conditions on the timing and effectiveness of the issuance of the Shares, or take any other action it deems necessary or advisable, to cause this Award to comply with Section 409A of the Code (or an exception thereto). Notwithstanding, the Employee recognizes and acknowledges that Section 409A of the Code may impose upon the Employee certain taxes or interest charges for which the Employee is and shall remain solely responsible.
13. Notwithstanding any other provisions in this Agreement, any RSUs or other compensation (equity or cash) subject to recovery under any law, government regulation, stock exchange listing requirement, or Company policy, shall be subject to such deductions, recoupment and claw back as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this Award and any other compensation paid or payable by the Company and recovery of such amounts relating thereto. By accepting this Award, Employee agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover, recoup or recapture this Award or any other applicable compensatory amounts pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or such other compensatory amounts from Employee’s accounts, or pending or future compensation or other grants.


14. Pursuant to regulations on personal data protection, the Company or persons engaged by the Company will process Employee’s personal information for the purposes of processing and administering this Agreement and RSUs, and more generally to comply with legal obligations. The categories of personal information include the information provided by the Employee to the Company in connection with the award of an RSU, if applicable, and that the Company has about the Employee in the ordinary course of business. In accordance with applicable law, the Employee may have the right to access, correct, amend and remove this personal information upon request to the Company. Questions concerning this notice or to exercise your personal data protection rights may be made by sending a request to the Legal Department of the Company at: 4300 Wilson Boulevard, Suite 1100, Arlington, VA 22203.
15. This Agreement will be governed by the laws of the State of Delaware without giving effect to its choice of law provisions.

The AES CORPORATION

By: Tish Mendoza Executive Vice President and Chief Human Resources Officer

EX-21.1 11 aes1231202310-kexhibit211.htm EX-21.1 Document

The AES Corporation
Q4 2023 Form 10-Q Exhibit 21.1
Name Jurisdiction of Formation/Organization
Name Jurisdiction
12963 Main Solar 1, LLC Delaware
20SD 8me LLC Delaware
241 Knapp Road Solar, LLC Delaware
241 Knapp Solar 2, LLC Delaware
25 Ashdown Road Solar, LLC Delaware
26SB 8me LLC Delaware
50LW 8me LLC Delaware
52RS 8me LLC Delaware
59TC 8me LLC Delaware
61LK 8me, LLC Delaware
65HK 8me LLC Delaware
67RK 8me LLC Delaware
87RL 8ME LLC Delaware
Aberdeen Solar LLC Delaware
AC Criminal Courts Complex SPE2 Limited Liability Company New Jersey
ACE BF1 HoldCo, LLC Delaware
ACE BF2 HoldCo, LLC Delaware
ACE DevCo NC, LLC Delaware
ACE Development Company II, LLC Delaware
ACE Development Company, LLC Delaware
ACE Transmission, LLC Delaware
ACED CES OpCo Holdings, LLC Delaware
ACED CES OpCo, LLC Delaware
ACED DevCo Warehouse Borrower, LLC Delaware
ACED DevCo Warehouse Pledgor, LLC Delaware
ACED Finance 3 HoldCo, LLC Delaware
ACED Finance 3, LLC Delaware
ACED Land Master Borrower, LLC Delaware
ACED Land Master Tenant, LLC Delaware
ACED Mountain View FinCo, LLC Delaware
ACED MSL Pledge, LLC Delaware
ACED OpCo D, LLC Delaware
ACED OpCo F, LLC Delaware
ACED OpCo Holdings Pledgor, LLC Delaware
ACED OpCo Holdings, LLC Delaware
ACED OpCo Warehouse Borrower, LLC Delaware
ACED OpCo Warehouse Pledgor, LLC Delaware
ACED Procurement Holdings, LLC Delaware


ACED Procurement, LLC Delaware
ACED US Wind Holdings I, LLC Delaware
ACED Warehouse Tax Equity SellCo, LLC Delaware
Adera Solar, LLC Delaware
AES (India) Private Limited India
AES (NI) Limited Northern Ireland
AES Accabonac Solar, LLC Delaware
AES Adler Creek Solar, LLC Delaware
AES AgriVerde Holdings, B.V. The Netherlands
AES AgriVerde Services (Ukraine) Limited Liability Company Ukraine
AES Agua Fria ES, LLC Delaware
AES Alamitos Energy, LLC Delaware
AES Alamitos, L.L.C. Delaware
AES Alicura Holdings S.C.A. Argentina
AES Americas International Holdings, Limited Bermuda
AES Andes S.A. Chile
AES Andres DR, S.A. Dominican Republic
AES Argentina Generación S.A. Argentina
AES Argentina Operations, Ltd. Cayman Islands
AES Arinos Solar Holding S.A. Brazil
AES Arinos Solar I S.A. Brazil
AES Arinos Solar II S.A. Brazil
AES Arinos Solar III S.A. Brazil
AES Arinos Solar IV S.A. Brazil
AES Arinos Solar V S.A. Brazil
AES Arinos Solar VI S.A. Brazil
AES Arinos Solar VII S.A. Brazil
AES Arinos Solar VIII S.A. Brazil
AES Arlington Services, LLC Delaware
AES Aurora Holdings, Inc. Delaware
AES Aurora, Inc. Delaware
AES Bainbridge Holdings, LLC Delaware
AES Bainbridge, LLC Delaware
AES Baird Solar, LLC Delaware
AES Ballylumford Holdings Limited England & Wales
AES Baltic Holdings BV The Netherlands
AES Barry Limited United Kingdom
AES Barry Operations Ltd. United Kingdom
AES Beaver Creek Ranch Solar, LLC Delaware
AES Beaver Valley, L.L.C. Delaware
AES Belfast West Power Limited Northern Ireland
AES Belleville Solar, LLC Delaware
AES Bend Solar I, LLC Delaware


AES Bend Solar II, LLC Delaware
AES Big Sky, L.L.C. Virginia
AES Black River Solar, LLC Delaware
AES Botswana Holdings B.V. The Netherlands
AES Brasil Energia S.A. Brazil
AES Brasil Ltda Brazil
AES Brasil Operações S.A. Brazil
AES Brazil International Holdings, Limited Bermuda
AES Brazil, Inc. Delaware
AES Broadalbin Solar, LLC Delaware
AES Bulgaria B.V. The Netherlands
AES Bulgaria Holdings BV The Netherlands
AES Cajuína AB1 Holdings S.A. Brazil
AES Cajuína AB2 Holdings S.A. Brazil
AES Cajuína AB3 Holdings S.A. Brazil
AES Calaca Pte. Ltd. Singapore
AES Calaca Pte. Ltd. - Philippine Branch Philippines
AES Caracoles SRL Argentina
AES Carbon Exchange, Ltd. Bermuda
AES Carbon Holdings, LLC Virginia
AES Caribbean Finance Holdings, Inc. Delaware
AES Caribbean Investment Holdings, Ltd. Cayman Islands
AES Cayman Guaiba, Ltd. Cayman Islands
AES CC&T International, Ltd. British Virgin Islands
AES CE PNC I Managing Member, LLC Delaware
AES CE PNC I, LLC Delaware
AES CE PNC II Managing Member, LLC Delaware
AES CE PNC II, LLC Delaware
AES CE PNC III Managing Member, LLC Delaware
AES CE PNC III, LLC Delaware
AES CE RS XVI Managing Member, LLC Delaware
AES CE RS XVI, LLC Delaware
AES CE RS XX Managing Member, LLC Delaware
AES CE RS XX, LLC Delaware
AES CE RS XXII Managing Member, LLC Delaware
AES CE RS XXII, LLC Delaware
AES CE Solutions OH, LLC Delaware
AES CE Solutions TX, LLC Texas
AES CE Solutions, LLC Delaware
AES CE SVB 1 Managing Member, LLC Delaware
AES CE SVB 1, LLC Delaware
AES Central America Electric Light, LLC Virginia
AES Central American Holdings, Inc. Delaware


AES Central American Investment Holdings, Ltd. Cayman Islands
AES Central Line 2022 Class B, LLC Delaware
AES Ceprano Energia SRL Italy
AES CFE Holding II LLC Delaware
AES CFE Holding III LLC Delaware
AES CFE Holding LLC Delaware
AES Changuinola, S.R.L. Panama
AES Chhattisgarh Energy Private Limited India
AES Chile Inversiones Renovables SpA Chile
AES Chivor S.A. Colombia
AES Clean Energy Class A Holdings, LLC Delaware
AES Clean Energy Development Holdings, LLC Delaware
AES Clean Energy Development, LLC Delaware
AES Clean Energy Operations & Maintenance, LLC Delaware
AES Clean Energy Services, LLC Delaware
AES CLESA Y Compania, Sociedad en Comandita de Capital Variable San Salvador
AES Climate Solutions Holdings I, LLC Delaware
AES Climate Solutions Holdings II, LLC Delaware
AES Climate Solutions Holdings, L.P. Bermuda
AES Climate Solutions Holdings, LLC Delaware
AES Colombia & Cia S.C.A. E.S.P. Colombia
AES Colon Development, S. de R.L. Panama
AES Colon Holding, S. de R.L. Panama
AES Columbia Power, LLC Delaware
AES Comercializadora de Energia Ltda. Brazil
AES Communications Latin America, Inc. Delaware
AES Communications, LLC Virginia
AES Costa Rica Energy SRL Costa Rica
AES Costa Rica Holdings, Ltd. Cayman Islands
AES Daigle Solar, LLC Delaware
AES DE AssetCo VI, LLC Delaware
AES DE AssetCo VII, LLC Delaware
AES DE Class B I, LLC Delaware
AES DE Class B II, LLC Delaware
AES DE Class B III, LLC Delaware
AES DE Class B IV, LLC Delaware
AES DE Class B V, LLC Delaware
AES DE Class B VI, LLC Delaware
AES DE Class B VII, LLC Delaware
AES DE Class B VIII, LLC Delaware
AES DE Class B XIV, LLC Delaware
AES DE Construction, LLC Delaware
AES DE DevCo I, LLC Delaware


AES DE Holdings I, LLC Delaware
AES DE Holdings III, LLC Delaware
AES DE Holdings Omnibus Pledgor, LLC Delaware
AES DE Holdings V Pledgor, LLC Delaware
AES DE Holdings V, LLC Delaware
AES DE Holdings VI, LLC Delaware
AES DE Holdings VII Pledgor, LLC Delaware
AES DE Holdings VII, LLC Delaware
AES DE Holdings VIII Pledgor, LLC Delaware
AES DE Holdings VIII, LLC Delaware
AES DE Manager, LLC Colorado
AES DE REC Co VI, LLC Delaware
AES DE REC Co VII, LLC Delaware
AES DE RS I, LLC Delaware
AES DE RS II, LLC Delaware
AES DE RS III, LLC Delaware
AES DE RS IV, LLC Delaware
AES DE RS IX, LLC Delaware
AES DE RS V, LLC Delaware
AES DE RS VI, LLC Delaware
AES DE RS VII, LLC Delaware
AES DE RS VIII, LLC Delaware
AES DE RS X, LLC Delaware
AES DE RS XI, LLC Delaware
AES DE RS XII, LLC Delaware
AES DE RS XIV, LLC Delaware
AES DE RS XV, LLC Delaware
AES DE Solar Access Holdings I, LLC Colorado
AES Deepwater, LLC Delaware
AES DE-GIE, LLC Delaware
AES DevCo Warehouse Borrower, LLC Delaware
AES DevCo Warehouse Pledgor, LLC Delaware
AES Digital Experience, LLC Delaware
AES Distribuidores Salvadoreños Limitada de Capital Variable San Salvador
AES Distribuidores Salvadorenos Y Compania S en C de C.V. San Salvador
AES Distributed Holdings, LLC Delaware
AES Dominicana Renewable Energy, S.A. Dominican Republic
AES DPL Holdings, LLC Delaware
AES DPP Holdings, Ltd. Cayman Islands
AES DR RENEWABLES HOLDINGS, S.L. Spain
AES Drax Financing, Inc. Delaware
AES EDC Holding, L.L.C. Delaware
AES El Salvador Electric Light, LLC Virginia


AES El Salvador Trust Panama
AES El Salvador, LLC Virginia
AES El Salvador, S.A. de C.V. El Salvador
AES Electric Ltd. United Kingdom
AES Electroinversora B.V. The Netherlands
AES Elpa S.A. Brazil
AES Empresa Eléctrica de El Salvador, Ltda. de C.V. El Salvador
AES Energia SRL Italy
AES Energy Services Inc. Ontario
AES Energy Solutions Ltda. Brazil
AES Energy Solutions, LLC Delaware
AES Energy Storage Holdings Mauritius
AES Energy Storage Holdings, LLC Delaware
AES Energy Storage Zeeland B.V. The Netherlands
AES Energy Storage, LLC Delaware
AES Energy, Ltd. Bermuda
AES Energy, Ltd. (Argentina Branch) Argentina
AES Engineering, LLC Delaware
AES ES Alamitos 2, LLC Delaware
AES ES Alamitos, LLC Delaware
AES ES Antelope Expansion 2, LLC Delaware
AES ES Deepwater, LLC Delaware
AES ES Gilbert, LLC Delaware
AES ES Holdings, LLC Delaware
AES ES Tait, LLC Delaware
AES ES Westwing, LLC Delaware
AES España B.V. Netherlands
AES Europe Services EOOD Bulgaria
AES Fahnestock Solar, LLC Delaware
AES Finance 3 HoldCo, LLC Delaware
AES Finance 3, LLC Delaware
AES Finance and Development, Inc. Delaware
AES FleetLine, LLC Delaware
AES Florestal Ltda. Brazil
AES Fonseca Energia Limitada de C.V. El Salvador
AES Foreign Energy Holdings, LLC Delaware
AES Gabreski Solar, LLC Delaware
AES Gas Supply & Distribution Ltd. Cayman Islands
AES GEI US Finance, Inc. Delaware
AES GEO Energy OOD Bulgaria
AES GF1 Holdings S.A. Brazil
AES GF2 Holdings S.A. Brazil
AES Glengarry Farms Solar, LLC Delaware


AES Global Insurance Company Vermont
AES Global Mobility Services, LLC Delaware
AES Global Power Holdings B.V. The Netherlands
AES Global Procurement Company, LLC Delaware
AES Globales B.V. The Netherlands
AES Government, LLC Delaware
AES GPH Holdings, Inc. Delaware
AES Great Cove Holdings, LLC Delaware
AES Greece Solar, LLC Delaware
AES Grid Stability, LLC Delaware
AES Griggs Solar, LLC Delaware
AES Guaiba II Empreendimentos Ltda Brazil
AES Guatemala Servicios Comerciales y Compañía Limitada Guatemala
AES Guayama Holdings BV The Netherlands
AES Hawaii Foundation Hawaii
AES Hawaii Management Company, LLC Delaware
AES Hawaii, LLC Delaware
AES Heckscher Solar, LLC Delaware
AES HECO 2022 Class B, LLC Delaware
AES HECO 2023 Class B, LLC Delaware
AES HECO Mountain View Class B, LLC Delaware
AES HECO Waiawa Class B, LLC Delaware
AES High Mesa Solar, LLC Delaware
AES Highgrove Holdings, L.L.C. Delaware
AES Highgrove, L.L.C. Delaware
AES Hispanola Holdings BV The Netherlands
AES Hispanola Holdings II BV The Netherlands
AES Holdings B.V. The Netherlands
AES Holdings B.V. - Vietnam Rep Office Vietnam
AES Holdings Brasil II Ltda. Brazil
AES Holdings Brasil Ltda. Brazil
AES Holland Solar, LLC Delaware
AES Honduras Servicios Comerciales, S. de R.L. de C.V. Honduras
AES Horizons Holdings BV The Netherlands
AES Horizons Investments Limited United Kingdom
AES Huntington Beach Development, L.L.C. Delaware
AES Huntington Beach Energy, LLC Delaware
AES Huntington Beach, L.L.C. Delaware
AES IB Valley Corporation India
AES Ilumina Holdings, LLC Delaware
AES Ilumina Member, LLC Delaware
AES Ilumina, LLC Puerto Rico
AES India Energy Solutions Private Limited India


AES India Holdings (Mauritius) Mauritius
AES India, L.L.C. Delaware
AES Indiana Devco Holdings 1, LLC Indiana
AES Indiana Devco Holdings 2, LLC Indiana
AES Indiana Devco Holdings 3, LLC Indiana
AES Indiana Holdings, L.L.C. Delaware
AES Indiana Partner Sub, LLC Delaware
AES Indiana Sponsor Delaware
AES Integrated Energy, LLC Delaware
AES Intercon II, Ltd. Cayman Islands
AES International Holdings II, Ltd. British Virgin Islands
AES International Holdings, Ltd. British Virgin Islands
AES Investment Chile SpA Chile
AES Italia S.r.l Italy
AES James Baird Solar, LLC Delaware
AES Johnsville Solar, LLC Delaware
AES Jordan Holdco, Ltd. Cayman Islands
AES Jordan PSC Jordan
AES Jordan Solar B.V. Netherlands
AES Juniper Point Holdings, LLC Delaware
AES Kalaeloa Venture, L.L.C. Delaware
AES Kekaha Solar, LLC Delaware
AES Keystone, L.L.C. Delaware
AES Khanya - Kwazulu Natal (Proprietary) Limited South Africa
AES Kieser Solar, LLC Delaware
AES King Harbor, Inc. Delaware
AES Kuihelani Solar, LLC Delaware
AES LA FIT Dedeaux, LLC Delaware
AES LA FIT Francisco, LLC Delaware
AES LA FIT Sun Valley, LLC Delaware
AES Landfill Carbon, LLC Virginia
AES Latin America S. de R.L. Panama
AES Laubacher Solar, LLC Delaware
AES Laurel Mountain Repower Development Company, LLC Delaware
AES Laurel Mountain, LLC Delaware
AES Lawai Solar, LLC Delaware
AES Levant Holdings B.V. Netherlands
AES Levant Holdings BV Jordan PSC Jordan
AES Lumos Holdings, LLC Delaware
AES Mamm Creek Solar, LLC Delaware
AES Maritza East I EOOD Bulgaria
AES Maritza East I Services EOOD Bulgaria
AES Marketing and Trading, LLC Delaware


AES Mayan Holdings, S. de R.L. de C.V. Mexico
AES Merida B.V. The Netherlands
AES Merida III, S. de R.L. de C.V. Mexico
AES Merida Management Services, S. de R.L. de C.V. Mexico
AES Mexico Farms, L.L.C. Delaware
AES Mexico Generation Holdings, S. de R.L. de C.V. Mexico
AES MicroPlanet, Ltd. British Virgin Islands
AES Mid East Holdings 2, Ltd. Cayman Islands
AES Mong Duong Holdings B.V. The Netherlands
AES Mong Duong Power Co. Ltd. Vietnam
AES Mong Duong Project Holdings B.V. The Netherlands
AES Monroe Holdings B.V. The Netherlands
AES Monroe Solar A, LLC Delaware
AES Monroe Solar B, LLC Delaware
AES Monroe Solar C, LLC Delaware
AES Monroe Solar D, LLC Delaware
AES Monroe Solar E, LLC Delaware
AES Mount Vernon B.V. The Netherlands
AES Mountain View Solar, LLC Delaware
AES NA Central, L.L.C. Delaware
AES Nejapa Gas, Ltda. de C.V. El Salvador
AES Nejapa Services, Ltda. de C.V. El Salvador
AES Next B.V. Netherlands
AES Next Operations, LLC Delaware
AES Next Solar, LLC Delaware
AES Next Solutions, S.R.L. Panama
AES Next, LLC Delaware
AES NEXT, Ltda. de C.V. El Salvador
AES North America Development, LLC Delaware
AES Oahu Wind Holdings, LLC Delaware
AES Oahu, LLC Delaware
AES Oasis Holdco, Inc. Delaware
AES Oasis Ltd. Cayman Islands
AES Odyssey, L.L.C. Delaware
AES Ohio Generation, LLC Ohio
AES OpCo E, LLC Delaware
AES OpCo G, LLC Delaware
AES OpCo Holdings Pledgor, LLC Delaware
AES OpCo Holdings, LLC Delaware
AES OpCo Warehouse Borrower, LLC Delaware
AES OpCo Warehouse Pledgor, LLC Delaware
AES OPGC Holding Mauritius
AES Orissa Distribution Private Limited India


AES Orphan Farm Solar, LLC Delaware
AES Overseas Holdings Limited United Kingdom
AES Pacific Ocean Holdings B.V. The Netherlands
AES Pacific, Inc. Delaware
AES Pakistan (Pvt) Ltd. Pakistan
AES Pakistan Operations, Ltd. Delaware
AES Panama Generation Holdings, S.R.L. Panama
AES Panamá, S.R.L. Panama
AES Parana Gas S.A. Argentina
AES Parana Operations S.R.L. Argentina
AES Pasadena, Inc. Delaware
AES Peace Bear Ranch Solar, LLC Delaware
AES Pelletier Solar, LLC Delaware
AES Phil Investment Pte. Ltd. Singapore
AES Pike County Energy Storage, LLC Delaware
AES Puerto Rico Services, Inc. Delaware
AES Puerto Rico, Inc. Cayman Islands
AES Puerto Rico, L.P. Delaware
AES Ravich North Solar, LLC Delaware
AES Redondo Beach, L.L.C. Delaware
AES Renewable Development Holdings, LLC Delaware
AES Renewable Holdings DevCo NC, LLC Delaware
AES Renewable Holdings OpCo 1 Pledgor, LLC Delaware
AES Renewable Holdings OpCo 1, LLC Delaware
AES Renewable Holdings, LLC Delaware
AES Renewable Power Group, S.R.L. Dominican Republic
AES RH Mountain View, LLC Delaware
AES RH RS Waiawa, LLC Delaware
AES RH RS XIX, LLC Delaware
AES RH RS XVII, LLC Delaware
AES RH RS XVIII, LLC Delaware
AES RH RS XXI Managing Member, LLC Delaware
AES RH RS XXI, LLC Delaware
AES Riverside Holdings, LLC Delaware
AES Rochester Solar, LLC Delaware
AES Rt 5 Storage Solar, LLC Delaware
AES SACEF Investment, LLC Delaware
AES San Nicolas B.V. The Netherlands
AES SC Holdings, LLC Delaware
AES Services Philippines Inc. Philippines
AES Services, Inc. Delaware
AES Servicios America S.R. L. Argentina
AES Servicios Electricos, S. de R.L. de C.V. Mexico


AES Serviços TC Ltda. Brazil
AES Shady Point, LLC Delaware
AES Silk Road Energy LLC Russia
AES Silk Road, LLC Delaware
AES Solar Energy, LLC Delaware
AES Solar Galabovo EOOD Bulgaria
AES Solar Holdings, LLC Delaware
AES Solar Power PR, LLC Delaware
AES Sole Italia S.r.L. Italy
AES Soluciones, Limitada de Capital Variable El Salvador
AES Solutions Management, LLC Delaware
AES Solutions, LLC Virginia
AES South Africa Peakers Holdings (Proprietary) Limited South Africa
AES South American Holdings, Ltd. Cayman Islands
AES Southland Development, LLC Delaware
AES Southland Energy Company Holdings I, LLC Delaware
AES Southland Energy Holdings II, LLC Delaware
AES Southland Energy Holdings, LLC Delaware
AES Southland Energy, LLC Delaware
AES Stendts Solar, LLC Delaware
AES Stony Creek Solar, LLC Delaware
AES Strategic Equipment Holdings Corporation Delaware
AES Sul, L.L.C. Delaware
AES Sunken Meadow Solar, LLC Delaware
AES Tamuin Development Services S. de R.L. de C.V. Mexico
AES TEG II Operations, S. de R.L. de C.V. Mexico
AES TEG Operations, S. de R.L. de C.V. Mexico
AES TEGTEP Holdings B.V. The Netherlands
AES TEP Power II Investments Limited United Kingdom
AES Texas Funding III, L.L.C. Delaware
AES Tietê Eólica S.A. Brazil
AES Tietê Integra Soluções em Energia Ltda Brazil
AES Tonawanda Solar, LLC Delaware
AES Transpower Pte Ltd -- Hong Kong Branch Hong Kong
AES Trust III Delaware
AES Tucano Holding I S.A. Brazil
AES Tucano Holding II S.A. Brazil
AES U.S. Holdings, LLC Delaware
AES U.S. Investments, Inc. Indiana
AES U.S. Solar, LLC Delaware
AES UK Datacenter Services Limited United Kingdom
AES UK Holdings Limited United Kingdom
AES Union de Negocios, S.A. de C.V. El Salvador


AES US BESS Holdings, LLC Delaware
AES US Generation Holdings, LLC Delaware
AES US Generation, LLC Delaware
AES US Services, LLC Delaware
AES US Wind Development II, LLC Delaware
AES US Wind Development, L.L.C. Delaware
AES US Wind Generation Holdings, LLC Delaware
AES US Wind Holdings, LLC Delaware
AES Venezuela Finance United Kingdom
AES Volcan Holdings B.V. Netherlands
AES Waikoloa Solar, LLC Delaware
AES Warehouse Tax Equity SellCo, LLC Delaware
AES Warrior Run, L.L.C. Delaware
AES Wawarsing Solar, LLC Delaware
AES West Kauai Energy Project, LLC Delaware
AES West Oahu Solar, LLC Delaware
AES Western Power Holdings, L.L.C. Delaware
AES Western Power, L.L.C. Delaware
AES Western Wind MV Acquisition, LLC Delaware
AES Western Wind, L.L.C. Delaware
AES Westwing II ES, LLC Delaware
AES Wind Generation Limited England & Wales
AES Wind Generation, LLC Delaware
AES Wind Investments I B.V. The Netherlands
AES Wind Investments II B.V. The Netherlands
AES Wind Operations Bulgaria EOOD Bulgaria
AES WR Limited Partnership Delaware
AES Yucatan, S. de R.L. de C.V. Mexico
AES Zephyr 2, LLC Delaware
AES Zephyr 3, L.L.C. Delaware
AES Zephyr, LLC Delaware
AES-3C Maritza East I EOOD Bulgaria
AESCom Sul Ltda. Brazil
AES-RS Spanish Holdings, LLC Delaware
AES-RS Sunshine Cooperatief U.A. Netherlands
AES-RS Sunshine Holdings, LLC Delaware
AgCert Canada Holding, Limited Ireland
AgCert Chile Servicios Ambientales Limitada Chile
AgCert International, Limited Ireland
Agilion Energy Private Limited India
Agua Clara, S.A.S. Dominican Republic
AGV Solar IV Geradora de Energia S.A. Brazil
AGV Solar V Geradora de Energia S.A. Brazil


AGV Solar VI Geradora de Energia S.A. Brazil
AGV Solar VII Geradora de Energia S.A. Brazil
Ahern Pipestone Solar LLC Delaware
Alamosa BESS East, LLC Delaware
Alamosa BESS West, LLC Delaware
Alamosa East Holdings, LLC Delaware
Alamosa Solar East, LLC Delaware
Alamosa Solar West, LLC Delaware
Alamosa Solar, LLC Delaware
Alamosa West Holdings, LLC Delaware
Allamakee Wind, LLC Delaware
Allis Medina Solar, LLC Delaware
Alto Maipo Delaware LLC Delaware
Alto Maipo SpA Chile
AM Solar B.V. Netherlands
AM Solar BV Jordan PSC Jordan
Amaterasu LLC Massachusetts
Anawio Solar, LLC Delaware
Andes Solar II SpA Chile
Andes Solar IV SpA Chile
Andes Solar SpA Chile
Antelope Big Sky Ranch LLC Delaware
Antelope DSR 1, LLC Delaware
Antelope DSR 2, LLC Delaware
Antelope DSR 3, LLC Delaware
Antelope Expansion 1B Solar Land Borrower, LLC Delaware
Antelope Expansion 1B, LLC Delaware
Antelope Expansion 2 Holdings, LLC Delaware
Antelope Expansion 2 MM, LLC Delaware
Antelope Expansion 2, LLC Delaware
Antelope Expansion 3A, LLC Delaware
Antelope Expansion 3B, LLC Delaware
Antonito Solar Holding LLC Delaware
Antonito Solar LLC Delaware
Apple Valley Solar Farm LLC Delaware
APR Walden Solar 1, LLC Delaware
Arizona B&GC Solar, LLC Colorado
ARNIKA Beteiligungsverwaltungs GmbH Austria
Arnold Corner Energy Storage 1 LLC Delaware
Aspiration Solar G LLC Delaware
Assonet Solar 1, LLC Delaware
Atkinson County S1, LLC Delaware
Atlantic Basin Services, Ltd. Cayman Islands


Augusta Solar LLC Delaware
AZ Solar I, LLC Colorado
AZ Solar II, LLC Colorado
AZ Solar Phase Zero, LLC Colorado
AZ Wind III, LLC Arizona
Bakersfield Industrial PV 1, LLC California
Bakersfield PV I, LLC California
Baldy Mesa C, LLC Delaware
Baldy Mesa Solar Land Borrower, LLC Delaware
Baldy Mesa Solar, LLC Delaware
Barber’s Point BESS, LLC Delaware
Barlow Solar LLC Delaware
Barre Solar Holding, LLC Delaware
Barre Solar I LLC Delaware
Barre Solar II LLC Delaware
Barre Solar III LLC Delaware
Baseline Solar Holding LLC Delaware
Battle Mountain Solar LLC Delaware
Battleground Solar I, LLC North Carolina
Bay Breeze Solar, LLC Delaware
Bayshore Solar A, LLC Delaware
Bayshore Solar B, LLC Delaware
Bayshore Solar C, LLC Delaware
Beacon Solar 1, LLC Delaware
Beacon Solar 3, LLC Delaware
Beacon Solar 4, LLC Delaware
Beals Medina Solar, LLC Delaware
Bellefield 1 Class B Member, LLC Delaware
Bellefield 1 FinCo Holdings, LLC Delaware
Bellefield 1 FinCo, LLC Delaware
Bellefield 1 Land Borrower, LLC Delaware
Bellefield 1 Tax Equity Holdings, LLC Delaware
Bellefield 1 Tax Equity Investor, LLC Delaware
Bellefield 2 Class B Member, LLC Delaware
Bellefield HoldCo, LLC Delaware
Bellefield Portfolio Seller Holdings, LLC Delaware
Bellefield Portfolio Seller, LLC Delaware
Beulaville Solar, LLC Delaware
Big River Wind Farm, LLC Delaware
Big Sky North, LLC Delaware
Big Spring Solar LLC Delaware
Birch Coulee Solar LLC Delaware
Biscoe Owner, LLC North Carolina


Biscoe Solar, LLC North Carolina
Black Creek Solar LLC Delaware
Black Iron Solar, LLC Delaware
Blackbird Solar-Storage, LLC North Carolina
Blackhorse Farm Solar, LLC Rhode Island
Blanca Peak Solar CSG LLC Delaware
Blue Sky Endeavors, LLC Delaware
Blue Stone Solar Energy, LLC Delaware
Blues City Solar LLC Delaware
Bluff Bench Solar LLC Delaware
Boa Hora 1 Geradora De Energia Solar S.A. Brazil
Boa Hora 2 Geradora de Energia Solar S.A. Brazil
Boa Hora 3 Geradora De Energia Solar S.A. Brazil
Bolero SpA Chile
Bolton Solar I, LLC Delaware
Boone Hill Solar, LLC Delaware
Boreas Energy, LLC Delaware
Bósforo de Responsabilidad Limitada de Capital Variable El Salvador
Box Elder Solar, LLC Delaware
Brasiliana Participações S.A. Brazil
Brasventos Eolo Geradora de Energia S.A. Brazil
Brasventos Miassaba 3 Geradora de Energia S.A. Brazil
Bremen Falls Solar, LLC Delaware
Bridgeport Solar, LLC Colorado
Brooks Solar, LLC Delaware
Brookside Solar, LLC Delaware
Brookwood Drive Solar 1, LLC Delaware
BSE PV Maui County II, LLC Delaware
BSE PV Maui County, LLC Delaware
Buffalo Gap 1 Repower LLC Delaware
Buffalo Gap 2 Repower LLC Delaware
Buffalo Gap 3 Repower LLC Delaware
Buffalo Gap Holdings 2, LLC Delaware
Buffalo Gap Holdings 3, L.L.C. Delaware
Buffalo Gap Holdings, LLC Delaware
Buffalo Gap Repower, LLC Delaware
Buffalo Gap Wind Farm 2, LLC Delaware
Buffalo Gap Wind Farm 3, L.L.C. Delaware
Buffalo Gap Wind Farm 4, L.L.C. Delaware
Buffalo Gap Wind Farm, LLC Delaware
Bullock Freetown Solar 1, LLC Delaware
BWC Lake Lashaway, LLC Delaware
BWC Lake Ripple, LLC Delaware


BWC Muddy Brook, LLC Delaware
BWC Stony Brook, LLC Delaware
Cabin Creek Solar LLC Delaware
Cajun Prairie Wind, LLC Delaware
Calhoun County Solar LLC Delaware
Calhoun County Solar Project, LLC Delaware
Calhoun Solar Land Borrower, LLC Delaware
Calverton Solar LLC Delaware
Camille, Ltd. Cayman Islands
Cannonball Solar LLC Delaware
Capital Wind, LLC Delaware
Cat Canyon Solar LLC Delaware
Caterpillar Hill Road Solar 1, LLC Delaware
Cavalier IA, LLC Delaware
Cavalier Solar A Land Borrower, LLC Delaware
Cavalier Solar A, LLC Delaware
Cavalier Solar A2 Land Borrower, LLC Delaware
Cavalier Solar A2, LLC Delaware
Cavanal Minerals, LLC Delaware
Cayuga Lake Solar, LLC Delaware
CCP-PI Fund, LLC Delaware
CCP-PI Lessor, LLC Idaho
CCP-PI Managing Member, LLC Delaware
CDEC-SING Ltda Chile
CE BCS 1 Managing Member, LLC Delaware
CE BCS Holdings 1, LLC Delaware
CE CTR 1 Managing Member, LLC Delaware
CE CTR Holdings 1, LLC Delaware
CE FinCo 1 Pledgor, LLC Delaware
CE FinCo 1, LLC Delaware
CE GP 1 Managing Member, LLC Delaware
CE GP 2 Managing Member, LLC Delaware
CE GP Holdings 1, LLC Delaware
CE GP Holdings 2, LLC Delaware
CE TB 1 Managing Member, LLC Delaware
CE TB Holdings 1, LLC Delaware
CE WFS 3 Managing Member, LLC Delaware
CE WFS 4 Managing Member, LLC Delaware
CE WFS Holdings 3, LLC Delaware
CE WFS Holdings 4, LLC Delaware
Cedar Flats Solar LLC Delaware
Cement City Solar, LLC Delaware
Centrais Eólicas Ametista S.A. Brazil


Centrais Eólicas Borgo S.A. Brazil
Centrais Eólicas Caetité S.A. Brazil
Centrais Eólicas da Prata S.A. Brazil
Centrais Eólicas dos Araças S.A. Brazil
Centrais Eólicas Dourados S.A. Brazil
Centrais Eólicas Espigão S.A. Brazil
Centrais Eólicas Maron S.A. Brazil
Centrais Eólicas Morrão S.A. Brazil
Centrais Eólicas Pelourinho S.A. Brazil
Centrais Eólicas Pilões S.A. Brazil
Centrais Eólicas Seraima S.A. Brazil
Centrais Eólicas Serra do Espinhaço S.A. Brazil
Centrais Eólicas Tanque S.A. Brazil
Centrais Eólicas Ventos do Nordeste S.A. Brazil
Central Antelope Dry Ranch C LLC Delaware
Central Electricity Supply Company of Orissa Limited India
Central Eólica Santo Antônio de Pádua S.A. Brazil
Central Eólica São Cristóvão S.A. Brazil
Central Eólica São Jorge S.A. Brazil
Central Line Solar, LLC Delaware
Central Serrana S.A. Argentina
Central Termoelectrica Guillermo Brown S.A. Argentina
Cerro los Dorados SpA Chile
CES - Temple Solar LLC Delaware
CES Colorado Solar Gardens LLC Delaware
CES Community Solar Gardens, LLC Delaware
Chagual Energía SpA Chile
Charger Storage, LLC Delaware
Chase City Energy Storage 1 LLC Delaware
Chase Solar LLC Delaware
Chemehuevi Solar Ranch, LLC Delaware
Chevelon Butte FinCo, LLC Delaware
Chevelon Butte II Holdings, LLC Delaware
Chevelon Butte II Managing Member, LLC Delaware
Chevelon Butte RE II LLC Delaware
Chevelon Butte RE III LLC Delaware
Chevelon Butte RE IV LLC Delaware
Chevelon Butte RE LLC Arizona
Chevelon Butte RE V LLC Delaware
Cheyenne Mountain Solar, LLC Delaware
Chile Renovables II SpA Chile
Chile Renovables SpA Chile
Citizen Solar B LLC Delaware


Clarkson Solar Holding, LLC Delaware
Clarkson Solar LLC Delaware
Clean Flexible Energy II, LLC Puerto Rico
Clean Flexible Energy III, LLC Puerto Rico
Clean Flexible Energy, LLC Puerto Rico
Clean Wind Energy Ltd. Israel
Cleghorn Ridge Wind CA, LLC Delaware
Clover Creek Solar, LLC Delaware
Clover Creek Storage, LLC Delaware
CMG Energy Resources LLC Delaware
CO-CA Wholly Owned, LLC Delaware
Cogentrix Valcour Intermediate Holdings, LLC Delaware
Cogentrix Valcour Wind Energy Holdings II, LLC Delaware
Colon LNG Marketing S. de R.L. Panama
Community Energy Minnesota Solar Gardens LLC Delaware
Community Energy Solar Development LLC Delaware
Community Energy Solar, LLC Delaware
Compania de Alumbrado Eletrico de San Salvador, S.A. DE C.V. El Salvador
Compañía Transmisora Angamos SpA Chile
Compañía Transmisora La Cebada S.A. Chile
Compañía Transmisora Sur SpA Chile
Compass Circle Solar, LLC Rhode Island
Cordilheira dos Ventos Centrais Eólicas Ltda. Brazil
Costa Norte LNG Terminal S. de R.L. Panama
County Highway Solar 1, LLC Delaware
County Highway Solar 2, LLC Delaware
Cramer Creek Solar, LLC Delaware
Crescent Solar LLC Delaware
Cricket Mountain Solar LLC Delaware
Cristales SpA Chile
Cronin Road Solar 1, LLC Delaware
Crooked River Solar LLC Delaware
Croom Solar LLC Delaware
Cross Lake Solar LLC Delaware
CRPD Solar 1, LLC Delaware
Crumley Energy LLC Delaware
Cumberland Solar LLC Delaware
Cuscatlan Solar, Ltda. de C.V. El Salvador
Daggett Ridge Wind Farm, LLC Delaware
Daviess County Solar LLC Delaware
Delano PV 1, LLC California
Delta Equity Holdings, LLC Delaware
Delta FinCo, LLC Delaware


Delta Managing Member, LLC Delaware
Delta Sponsor Class A Holdings, LLC Delaware
Deming Solar LLC Delaware
Derwood Solar LLC Delaware
Desert Jewel Storage, LLC Delaware
Desert Sage II Solar, LLC Delaware
Desert Sage Solar, LLC Delaware
Devillez Solar LLC Delaware
Diamond Development, Inc. Ohio
Distribuidora Electrica de Usulutan, Sociedad Anonima de Capital Variable El Salvador
Domi Trading S.L. Spain
Dominican Power Partners Cayman Islands
Dominican Power Partners (DPP Branch) Dominican Republic
Double Butte Storage, LLC Delaware
Downsville Solar II LLC Delaware
Downsville Solar LLC Delaware
DPL Capital Trust II Delaware
DPL Inc. Ohio
Dublin Solar I, LLC Indiana
Dunstable Solar 1, LLC Delaware
Dusenberry Lane Solar 1, LLC Delaware
Early Solar, LLC Delaware
East Bloomfield Solar LLC Delaware
East Brookfield Main Street Solar LLC Delaware
East Line BESS, LLC Delaware
East Line Solar, LLC Delaware
Eaton Solar LLC Delaware
Echo Storage, LLC Delaware
Eden Solar, LLC North Carolina
El Trebol SpA Chile
Elevation Solar C LLC Delaware
Elizabethtown Solar Holding LLC Delaware
Elizabethtown Solar LLC Delaware
Eloy ESD Solar Holdings, LLC Delaware
Embuaca Geração e Comercialização de Energia S.A. Brazil
Empire Solar, LLC Delaware
Empresa Electrica Angamos SpA Chile
Empresa Electrica Cochrane SpA Chile
Empresa Electrica de Oriente, S.A. de C.V. El Salvador
Empresa Eléctrica Lagunas SpA Chile
Empresa Electrica Ventanas SpA Chile
EnerAB Cogeneracion I Laguna del Rey, S. de R.L. de C.V. Mexico
EnerAB Durango, S. de R.L. de C.V. Mexico


EnerAB Suministro Calificado, S. de R.L. de C.V. Mexico
EnerAB Tenedora, S. de R.L. de C.V. Mexico
ENERAB, S. de R.L. de C.V. Mexico
ENERGEN S.A. Argentina
Energetica Argentina S.A. Argentina
Energía Eólica Curauma SpA Chile
Energía Eólica Don Alvaro SpA Chile
Energia Eolica Los Olmos SpA Chile
Energia Eolica Mesamavida SpA Chile
Energía Eólica Pampas SpA Chile
Energía Eólica Paposo SpA Chile
Energía Eólica Rinconada SpA Chile
Energía Eólica San Matías SpA Chile
Energía Natural Dominicana Enadom, S.R.L. Dominican Republic
EOL Brisa Energias Renováveis S.A. Brazil
EOL Vento Energias Renováveis S.A. Brazil
EOL Wind Energias Renováveis S.A. Brazil
Eólica Bela Vista Geração e Comercialização de Energia S.A. Brazil
Eólica Icarai Geração e Comercialização de Energia S.A. Brazil
Eólica Mar e Terra Geração e Comercialização de Energia S.A. Brazil
Eólica Mesa La Paz, S. de R.L. de C.V. Mexico
Estrella Solar Land Borrower, LLC Delaware
Estrella Solar, LLC Delaware
Evangeline Solar LLC Delaware
Exeter Renewables 1, LLC Rhode Island
Felix 1, LLC Delaware
Felix 2, LLC Delaware
Felix 3, LLC Delaware
Felix DevCo Holdings, LLC Delaware
Felix DevCo, LLC Delaware
Fenwick Creek Solar, LLC Delaware
Field of Dreams Solar Farm, LLC Delaware
Finch Solar, LLC North Carolina
Finchville Solar, LLC Delaware
Fitch Solar, LLC Delaware
Flint Creek Solar LLC Delaware
FLS 2013 Owner A MM, LLC North Carolina
FLS 2013 Owner A, LLC North Carolina
FLS 2013 Owner B MM, LLC North Carolina
FLS 2013 Owner B, LLC North Carolina
FLS 2013 Solar A, LLC North Carolina
FLS 2013 Solar B, LLC North Carolina
FLS 2014 Group A MM, LLC North Carolina


FLS 2014 Group A, LLC North Carolina
FLS 2014 Solar A MM, LLC North Carolina
FLS 2014 Solar A, LLC North Carolina
FLS Operations PV 2013, LLC North Carolina
FLS Owner 170, LLC North Carolina
FLS Owner 200, LLC North Carolina
FLS Solar 100, LLC North Carolina
FLS Solar 110, LLC North Carolina
FLS Solar 170, LLC North Carolina
FLS Solar 200, LLC North Carolina
Fluence Energy, LLC Delaware
Forebay Wind, LLC California
Founder's Homestead Farm Solar, LLC Rhode Island
Four Horizons Wind Farm, LLC Delaware
Franklin Solar, LLC Delaware
FTP-Maui PV Projects, LLC Delaware
FTS Beacon Solar Holdings, LLC Delaware
FTS Beacon Solar Managing Member, LLC Delaware
FTS Eden Managing Member, LLC Delaware
FTS MA Managing Member, LLC Delaware
FTS MA Owner, LLC Delaware
FTS Managing Member 1, LLC Delaware
FTS Managing Member 2, LLC Delaware
FTS Master Tenant 1, LLC Delaware
FTS Master Tenant 2, LLC Delaware
FTS Project Owner 1, LLC Delaware
FTS Project Owner 2, LLC Delaware
FTS Solar Holdings 4, LLC Delaware
FTS Solar Managing Member 4, LLC Delaware
Fundación AES Chile Chile
Fundacion AES Dominicana, Inc. Dominican Republic
Fundación AES en Panamá Panama
Gas Natural Atlantico II S. de R.L. Panama
Gas Natural Atlantico S. de R.L. Panama
Gasoducto GasAndes Argentina S.A. Argentina
Gasoducto GasAndes S.A. Chile
Geer Rd Solar 1 LLC New York
Geer Rd Solar 2 LLC New York
Geer Rd Solar 3 LLC New York
Gener Argentina S.A. Argentina
Geneva Solar LLC Delaware
Geode Solar LLC Delaware
Georgia Solar Holdings, LLC Delaware


Georgia Solar Parent, LLC Delaware
Gibson County Wind, LLC Delaware
Gladwin Solar LLC Delaware
Glen Canyon Solar A, LLC Delaware
Glen Canyon Solar B, LLC Delaware
Glen Canyon Solar C, LLC Delaware
Glenmere Lake Solar LLC Delaware
Global Energy Holdings B.V. The Netherlands
Golden Compass Managing Member, LLC Delaware
Golden Compass Seller, LLC Delaware
Goller Enerji Uretim Ltd. Sti. Turkey
Grange Grove Wind, LLC Delaware
Great Cove Holdings Pledgor, LLC Delaware
Great Cove Seller Pledgor, LLC Delaware
Great Cove Seller, LLC Delaware
Great Cove Solar II LLC Delaware
Great Cove Solar III LLC Delaware
Great Cove Solar LLC Delaware
Great Gully Solar Farm, LLC Delaware
Green Beanworks B, LLC Delaware
Green Beanworks C, LLC Delaware
Green Beanworks D, LLC Delaware
GreenAnt do Brasil Sistemas de Informação S.A. Brazil
Greenwich Solar 1, LLC Delaware
Group Energy Gas Panama, S.R.L. Panama
GS Chevelon Butte I Holdings, LLC Delaware
GS Chevelon Butte I Managing Member, LLC Delaware
Guaimbê I Parque Solar Ltda. Brazil
Guaimbê II Parque Solar Ltda. Brazil
Guaimbê III Parque Solar Ltda. Brazil
Guaimbê IV Parque Solar Ltda. Brazil
Guaimbê Solar Holding S.A. Brazil
Guaimbê V Parque Solar Ltda. Brazil
Guajillo Wind, LLC Delaware
Guelphwood RD Solar 1, LLC Delaware
Hainesport Solar LLC Delaware
Halcon Wind, LLC Delaware
Halifax County Solar LLC Delaware
Hardin Solar LLC Delaware
Hardy Hills JV, LLC Delaware
Hardy Hills Solar Energy LLC Delaware
Harmony 2 BESS, LLC Delaware
Hart Solar, LLC Delaware


Haynesville Energy Storage 1 LLC Delaware
Health and Welfare Benefit Plans LLC Delaware
Heart Pine Solar, LLC Delaware
HECO Seller Pledgor, LLC Delaware
HECO Seller, LLC Delaware
Hemlock Ridge Solar LLC Delaware
Henderson County Solar LLC Delaware
Heron Solar-Storage, LLC North Carolina
High Prairie Solar, LLC Delaware
High Valley Solar, LLC Delaware
Highlander IA, LLC Delaware
Highlander Seller Managing Member, LLC Delaware
Highlander Seller, LLC Delaware
Highlander Solar Energy Station 1, LLC Delaware
Hilo Solar, LLC Delaware
Hipotecaria San Miguel Limitada de Capital Variable San Salvador
Hipotecaria Santa Ana Limitada de Capital Variable El Salvador
Hobart Solar LLC Indiana
Honeybee Solar, LLC North Carolina
Hopi Solar Ranch, LLC Delaware
Huron Solis Power LLC Colorado
I.E. DR Projects I, S.R.L. Dominican Republic
ID Solar 1, LLC Delaware
Indianapolis Power & Light Company Indiana
Indimento Inversiones, S.L. Spain
Industry Solar Power Generation Station 1 LLC Delaware
Innovative Owner 14, LLC North Carolina
Innovative Owner 15, LLC North Carolina
Innovative Solar 14, LLC North Carolina
Innovative Solar 15, LLC North Carolina
InterAndes, S.A. Argentina
Inversiones Cachagua SpA Chile
Inversiones Cochrane SpA Chile
Inversiones Energia Renovable Limitada Chile
Inversiones LK SpA Chile
Inversora de San Nicolas S.A. Argentina
IPALCO Enterprises, Inc. Indiana
Iris Wind, LLC Delaware
Isabelle Creek Solar LLC Delaware
Jewelflower Battery Storage, LLC Delaware
Jobstown Solar LLC Delaware
Johnstown Solar 1, LLC Delaware
Kahana Solar, LLC Delaware


Kalahanai Solar LLC Delaware
Kazincbarcikai Iparteruletfejleszt Kft. Hungary
Keamuku Solar, LLC Delaware
Kenansville Solar LLC Delaware
Keydet Solar Center, LLC Delaware
Kings Rooftop PV, LLC California
Konavle SpA Chile
Kuihelani Solar Phase 2, LLC Delaware
La Baluma SpA Chile
LAB FinCo, LLC Delaware
Lafayette Horizon Solar CSG LLC Delaware
Lafayette Solar 1, LLC Delaware
Lafayette Solar LLC Delaware
Lake Village Solar LLC Indiana
Lancaster Area Battery Storage, LLC Delaware
Lancaster Energy Center, LLC Delaware
Lancaster Little Rock C LLC Delaware
Lancaster WAD B LLC Delaware
Lane Ave Solar LLC Delaware
Laramie River Solar LLC Delaware
Latigo Wind Managing Member, LLC Delaware
Latigo Wind Park, LLC Delaware
Laurel Lake Solar LLC Delaware
Laurel Mountain BESS, LLC Delaware
Laurel Mountain FinCo Holdings, LLC Delaware
Laurel Mountain FinCo, LLC Delaware
Laurel Mountain Holdings, LLC Delaware
Laurel Mountain Interconnection, LLC Delaware
Laurel Mountain Managing Member, LLC Delaware
Laurel Mountain Procurement, LLC Delaware
Legends Solar, LLC Delaware
Lemoore PV 1 LLC California
Letts Creek Solar, LLC Delaware
Lewiston Solar 1, LLC Delaware
Linkville Solar, LLC Delaware
Llanos del Sol SpA Chile
Locust Ridge Solar LLC Delaware
Lowndes Solar 2 LLC Delaware
Lowndes Solar LLC Delaware
Lucknow Solar, LLC Delaware
Luna HoldCo, LLC Delaware
Luna Storage, LLC Delaware
MacGregor Park, Inc. Ohio


Magnolia Wind Farm, LLC Delaware
Mamalahoa PV BESS, LLC Delaware
Mannys Corners Solar 1 LLC Delaware
Manteca PV 1, LLC California
Maple Solar, LLC New York
Marahu Solar, LLC Puerto Rico
Mass Community Solar LLC Delaware
Maui 17-2 LLC Hawaii
Mauka FIT Twenty LLC Hawaii
Mayson Solar LLC Delaware
Mazon Solar II LLC Delaware
McCracken County Solar LLC Delaware
MCE Solar One, LLC Delaware
McFarland Solar A Land Borrower, LLC Delaware
McFarland Solar A, LLC Delaware
McFarland Solar B Land Borrower, LLC Delaware
McFarland Solar B, LLC Delaware
McFarland Solar D, LLC Delaware
McFarland Storage C Land Borrower, LLC Delaware
McFarland Storage C, LLC Delaware
Mercury Chile Co. II, LLC Delaware
Mercury Chile Holdco LLC Delaware
MFP CO I, LLC Delaware
MFP CO II, LLC Colorado
MFP CO III, LLC Colorado
Miami Valley Insurance Company Vermont
Miami Valley Lighting, LLC Ohio
Mid-America Capital Resources, Inc. Indiana
Middletown Solar 1, LLC Delaware
Mill Creek Solar LLC Delaware
Missile Site Solar LLC Delaware
Mitchell County Solar, LLC Delaware
MM Solar Parent, LLC Delaware
Monarch Solar PV LLC Delaware
Mong Duong Finance Holdings B.V. Netherlands
Morgan Valley Wind Farm, LLC Delaware
Morris Solar Land Borrower, LLC Delaware
Morris Solar, LLC Delaware
Motor EV, Inc. Delaware
Mount Olive Solar Holding LLC Delaware
Mount Olive Solar LLC Delaware
Mountain Minerals, LLC Delaware
Mountain View Power Partners IV, LLC Delaware


Mountain View Power Partners, LLC Delaware
MS Participações Societárias S.A. Brazil
MSP Master Tenant I, LLC Colorado
MSP Master Tenant II, LLC Colorado
Mt. Zion Solar, LLC Delaware
Murphy Lake Solar, LLC Texas
Na Pua Makani Power Partners, LLC Delaware
National Grassland Solar, LLC Delaware
Navajo Solar Power Generation Station 1 LLC Delaware
Naylor Solar LLC Delaware
NC 2014 Fund A MM, LLC North Carolina
NC 2014 Fund A, LLC North Carolina
New Bremen Solar, LLC Delaware
New Sustainable Property Holdings II, LLC Delaware
New Sustainable Property Holdings, LLC Delaware
Next Brasil Investimentos Ltda. Brazil
Nick Owner, LLC North Carolina
Nick Solar, LLC North Carolina
Norgener Foreign Investment SpA Chile
North Bay Solar 1, LLC Delaware
North Branch Solar LLC Delaware
North Lancaster Ranch LLC Delaware
Northline Solar, LLC Delaware
Nova Energia Holding S.A. Brazil
Novus Barre Town Solar, LLC Delaware
Nucla Solar LLC Delaware
NY RNM Project1, LLC Delaware
NY RNM Project1A, LLC Delaware
NY RNM Project2, LLC Delaware
NY RNM Project3, LLC Delaware
NY RNM Project4, LLC Delaware
Oahu SPE 101-14 LLC Hawaii
Oahu SPE 101-19 LLC Hawaii
Oahu SPE 101-2 LLC Hawaii
Oahu SPE 101-33 LLC Hawaii
Oahu SPE 101-4 LLC Hawaii
Oahu SPE 101-9 LLC Hawaii
Oak Ridge Solar, LLC Delaware
Oakdale Storage, LLC Delaware
Old Gold Wind Farm, LLC Delaware
Omega SpA Chile
Otoe Solar Power Generation Station 1 LLC Delaware
Owl Solar, LLC North Carolina


Painted Desert Power, LLC Delaware
Parque Eólico Campo Lindo SpA Chile
Parque Eólico Los Cururos SpA Chile
Parque Solar Durango, S. de R.L. de C.V. Mexico
Particle Wave LLC Massachusetts
Pathfinder BESS, LLC Delaware
Pawnee Solar 2 LLC Delaware
Pawnee Solar LLC Delaware
Perennial Solar LLC Delaware
Pershing Solar, LLC Delaware
Persistence Solar LLC Delaware
Petersburg Energy Center, LLC Delaware
Pine Bluff Solar I LLC Delaware
Pine Bluff Solar II LLC Delaware
Pine Grove Solar, LLC Delaware
Pioneer Wind Managing Member, LLC Delaware
Pioneer Wind Park I, LLC Delaware
Pioneer Wind Park II, LLC Delaware
Platteview Solar LLC Delaware
Pleinmont Solar 1, LLC Delaware
Pleinmont Solar 2, LLC Delaware
Plus Energy Services, LLC Delaware
Plymouth Solar 1, LLC Delaware
Polecat Creek Solar I LLC Delaware
Polecat Creek Solar II LLC Delaware
Pony Express Solar, LLC Delaware
Poopoomino BESS, LLC Delaware
Poopoomino Solar, LLC Delaware
Poplar Energy Storage 1 LLC Delaware
Portville Solar 1, LLC Delaware
Potengi Holdings S.A. Brazil
Powhatan Solar Power Generation Station 1 LLC Delaware
Prevailing Wind Park Holdings, LLC Delaware
Prevailing Wind Park MM, LLC Delaware
Prevailing Wind Park, LLC South Dakota
Princetown Solar 1, LLC Delaware
Providence Solar LLC Delaware
Pullman Solar Land Borrower, LLC Delaware
Pullman Solar, LLC Delaware
Punta del Sol SpA Chile
Puu Hao Solar, LLC Delaware
Raceway Estrella Equity Holding Company, LLC Delaware
Raceway Estrella Equity Holdings, LLC Delaware


Raceway Estrella Equity SellCo, LLC Delaware
Raceway Estrella Holdings, LLC Delaware
Raceway Estrella Managing Member, LLC Delaware
Raceway Estrella Sponsor Equity Holdings, LLC Delaware
Raceway Solar 1 Land Borrower, LLC Delaware
Raceway Solar 1, LLC Delaware
Raceway Solar 2, LLC Delaware
Rancho Viejo Community Solar LLC Delaware
Rancho Viejo Solar LLC Delaware
Randolph Solar 1, LLC Delaware
Rangeland Solar, LLC Delaware
Ransomville Solar 1, LLC Delaware
Rawhide Solar LLC Delaware
REB Empreendimentos e Administradora de Bens S.A. Brazil
Red Lion Solar LLC Delaware
Red Rocks Solar LLC Delaware
Reddy Branch Solar LLC Delaware
Redman Solar 2, LLC Delaware
Redman Solar, LLC Delaware
Rei dos Ventos 3 Geradora de Energia S.A. Brazil
Rep Office of AES Silk Road in Tajikstan Republic Tajikistan
Rexford I Class B Member, LLC Delaware
Rexford I Holdings, LLC Delaware
Rexford I Partnership, LLC Delaware
RH Procurement, LLC Delaware
Richmond Green Hydrogen One, LLC Delaware
Richmond Solar Power 1, LLC Rhode Island
Richmond Spider Solar, LLC Delaware
Rincon Solar I, LLC Georgia
Rineyville Solar LLC Delaware
Rising Solar, LLC Delaware
River Street Solar 1, LLC Delaware
Riverhead Solar 2, LLC New York
Riverhead Solar Farm, LLC Delaware
Riverside Canal Power Company California
Riverside Solar, LLC Delaware
Riviera Solar, LLC Delaware
RMS150, LLC Delaware
RMS200 LLC Delaware
RMS325 LLC Delaware
RMS335 LLC Delaware
RMS500 LLC Delaware
Robeson Solar I, LLC Delaware


Rocky Bluff Solar LLC Delaware
Rocky Mountain Solar PV LLC Delaware
Rodemacher Solar LLC Delaware
Rosamond Project Holdings, LLC Delaware
Rosamond Solar, LLC Colorado
RT52 Walden Solar 1, LLC Delaware
Rutland Community Solar Holding LLC Delaware
Rutland Solar LLC Delaware
Ryan Road Solar LLC Delaware
Sage Solar LLC Delaware
San Bernardino Solar, LLC Delaware
San Carlos SpA Chile
San Luis Solar Garden LLC Delaware
San Luis Solar Holding LLC Delaware
San Pablo Raceway, LLC Delaware
Sand Lake Solar PV LLC Delaware
Sandstone Solar LLC Delaware
Sangamon Solar LLC Delaware
Santa Clara Solar LLC Delaware
Santos Energia Participações S.A. Brazil
Scituate Solar I LLC Delaware
Scottsdale Solar Holdings, LLC Delaware
SD Solar I, LLC Colorado
SeaWest Asset Management Services, LLC California
SeaWest Properties, LLC California
Seguro Storage, LLC Delaware
Selma Owner, LLC North Carolina
Selma Solar, LLC North Carolina
Seneca Wind 2 LLC Delaware
Seneca Wind LLC Delaware
SEPV Imperial, LLC Delaware
SEPV Mojave West, LLC Delaware
SEPV Palmdale East, LLC Delaware
Serena Storage, LLC Delaware
Serra Verde I Energética S.A. Brazil
Serra Verde II Energética S.A. Brazil
Serra Verde III Energética S.A. Brazil
Serra Verde IV Energética S.A. Brazil
Serra Verde V Energética S.A. Brazil
Serra Verde VI Energética S.A. Brazil
Serra Verde VII Energética S.A. Brazil
Settler Wind, LLC Delaware
SFDK FinCo Holdings, LLC Delaware


SFDK FinCo, LLC Delaware
SFDK Solar Holding, LLC Delaware
SFDK Solar Managing Member, LLC Delaware
SFDK Solar, LLC Delaware
SFMM Solar, LLC Delaware
Shazia S.R.L. Argentina
Sheepherder Solar One LLC Delaware
Sierra Solar Greenworks LLC Delaware
Sierras del Buendia S.A. Argentina
Silver Lake Solar, LLC Delaware
Silver Peak Energy Land Borrower, LLC Delaware
Silver Peak Energy, LLC Delaware
Skipjack IA, LLC Delaware
Skipjack Seller Managing Member, LLC Delaware
Skipjack Seller, LLC Delaware
Skipjack Solar Center, LLC Delaware
Soda Flats Solar LLC Delaware
Solar Access America, LLC Delaware
Solar Access CA, LLC Delaware
Solar Access California, LLC Colorado
Solar Oriente SpA Chile
Solverde 1, LLC Delaware
Somers Road Solar 1, LLC Delaware
Somerset Solar, LLC Delaware
Son My LNG Terminal Holding B.V The Netherlands
Son My LNG Terminal Limited Liability Company Vietnam
Sooner Solar LLC Delaware
South Barre Solar 1, LLC Delaware
South Deming Solar LLC Delaware
South Goshen Solar LLC Delaware
South Wayne Solar LLC Delaware
Southern Hills Wind LLC Delaware
Southern Valley Solar LLC Delaware
SP Antelope DSR LLC Delaware
Spirit Mound Solar LLC Delaware
SPN Solar Holdings 1, LLC Delaware
SPN Solar Holdings 2, LLC Delaware
SPN Solar Holdings 3, LLC Delaware
SPN Solar Holdings 4, LLC Delaware
SPN Solar Holdings 5, LLC Delaware
SPN Solar Managing Member 1, LLC Delaware
SPN Solar Managing Member 2, LLC Delaware
SPN Solar Managing Member 3, LLC Delaware


SPN Solar Managing Member 4, LLC Delaware
SPN Solar Managing Member 5, LLC Delaware
Spotsylvania Solar Energy Center, LLC Delaware
sPower Antex 1B FinCo, LLC Delaware
sPower Beacon Solar FinCo, LLC Delaware
sPower Cardinal HoldCo, LLC Delaware
sPower DevCo NC, LLC Delaware
sPower DevCo Warehouse Borrower, LLC Delaware
sPower DevCo Warehouse Pledgor, LLC Delaware
sPower Development Company, LLC Delaware
sPower Energy Marketing, LLC Delaware
sPower Finance 1 HoldCo, LLC Delaware
sPower Finance 1, LLC Delaware
sPower Finance 2 HoldCo, LLC Delaware
sPower Finance 2, LLC Delaware
sPower Finance 3 HoldCo, LLC Delaware
sPower Finance 3, LLC Delaware
sPower Finance 3A HoldCo, LLC Delaware
sPower Finance 3A, LLC Delaware
sPower FinCo 1 LLC Delaware
sPower FinCo 2 LLC Delaware
sPower FinCo 3 LLC Delaware
sPower FinCo 4 LLC Delaware
sPower FinCo 5 LLC Delaware
sPower FinCo 6 LLC Delaware
sPower FinCo 7 LLC Delaware
sPower FinCo 8 LLC Delaware
sPower FinCo 9 LLC Delaware
sPower Highlander FinCo, LLC Delaware
sPower MSL Pledge, LLC Delaware
sPower MSL, LLC Delaware
sPower NorthPeak FinCo, LLC Delaware
sPower OpCo A Blocker, LLC Delaware
sPower OpCo A, LLC Delaware
sPower OpCo B, LLC Delaware
sPower OpCo C, LLC Delaware
sPower OpCo H, LLC Delaware
sPower OpCo Warehouse Borrower, LLC Delaware
sPower OpCo Warehouse Pledgor, LLC Delaware
sPower Prevailing FinCo, LLC Delaware
sPower Procurement, LLC Delaware
sPower Project Holdings, LLC Delaware
sPower Skipjack FinCo, LLC Delaware


sPower Skipjack Holdings, LLC Delaware
sPower SLB HoldCo, LLC Delaware
sPower Texas DevCo, LLC Texas
sPower Warehouse Tax Equity SellCo, LLC Delaware
sPower Wind Holdings 1, LLC Delaware
sPower Winterfell Holdings, LLC Delaware
sPower, LLC Delaware
Spring Hill Rd Solar 1, LLC Delaware
SPW Solar Holdings 1, LLC Delaware
SPW Solar Holdings 2, LLC Delaware
SPW Solar Holdings 3, LLC Delaware
SPW Solar Holdings 4, LLC Delaware
SPW Solar Managing Member 1, LLC Delaware
SPW Solar Managing Member 2, LLC Delaware
SPW Solar Managing Member 3, LLC Delaware
SPW Solar Managing Member 4, LLC Delaware
St. Martin Solar LLC Delaware
Standalone Battery Seller, LLC Delaware
Stony Lake Solar, LLC Delaware
Store Heat and Produce Energy, Inc. Indiana
Stow Solar I, LLC Delaware
Sudbury Ervin GMC Solar, LLC Delaware
Sugar Maple Solar, LLC Delaware
Summer Solar LLC Delaware
Sundog Solar LLC Delaware
SunE Solar XVII Project5, LLC Delaware
SunE SunHoldings4, LLC Delaware
Sustainable Power Group Pledgor, LLC Delaware
Sustainable Power Group, LLC Delaware
Sustainable Property Holdings, LLC Delaware
Sycamore Cross Solar, LLC Delaware
Tau Power BV The Netherlands
Teele Solar, LLC Delaware
Tendril Holdings, LLC Delaware
Tendril Intermediate Holdings, LLC Delaware
Tendril Midco, LLC Delaware
TermoAndes S.A. Argentina
Termoelectrica del Golfo, S. de R.L. de C.V. Mexico
Termoelectrica Penoles, S. de R.L. de C.V. Mexico
The AES Corporation Delaware
The Dayton Power and Light Company Ohio
Thorn Lake Solar, LLC Delaware
Tioga HoldCo I, LLC Delaware


Tioga HoldCo II, LLC Delaware
Tioga Solar Blairstown, LLC Delaware
Tioga Solar Dinuba LLC Delaware
Tioga Solar Gila, LLC Delaware
Tioga Solar Gridley, LLC Delaware
Tioga Solar Hemet DLL1, LLC Delaware
Tioga Solar Hemet WF1, LLC Delaware
Tioga Solar I, LLC Delaware
Tioga Solar II, LLC Delaware
Tioga Solar IV, LLC Delaware
Tioga Solar Kona, LLC Delaware
Tioga Solar Melville, LLC Delaware
Tioga Solar Middlesex, LLC Delaware
Tioga Solar Mililani, LLC Delaware
Tioga Solar Phoenix I, LLC Delaware
Tioga Solar West Hartford, LLC Delaware
Tioga Solar Westborough, LLC Delaware
Townline Batavia Solar 1, LLC Delaware
Townsend Solar LLC Delaware
Tozer Road Solar, LLC Massachusetts
Trailside Solar Holding LLC Delaware
Trailside Solar LLC Delaware
TRANSFORMAES CREACIÓN SOSTENIBLE, S. DE R.L. DE C.V. Mexico
Transmisora Tal Tal SpA Chile
Travertine Solar LLC Delaware
Treasure Lane Solar 1, LLC Delaware
Triple S Solar I LLC Delaware
Triple S Solar II LLC Delaware
Tucano F1 Geração de Energias SPE S.A. Brazil
Tucano F11 Geração de Energias SPE S.A. Brazil
Tucano F13 Geração de Energias SPE S.A. Brazil
Tucano F2 Geração de Energias SPE S.A. Brazil
Tucano F3 Geração de Energias SPE S.A. Brazil
Tucano F4 Geração de Energias SPE S.A. Brazil
Tucano F5 Geração de Energias Ltda. Brazil
Tucano F6 Geração de Energias SPE S.A. Brazil
Tucano F7 Geração de Energias SPE S.A. Brazil
Tucano F8 Geração de Energias SPE S.A. Brazil
Tucano F9 Geração de Energias SPE S.A. Brazil
Tucano Holdings III S.A. Brazil
Tulip Solar LLC Delaware
Tuliptree Wind Farm, LLC Delaware
Tunica Windpower LLC Delaware


Turkey Branch Owner, LLC North Carolina
Turkey Branch Solar, LLC North Carolina
Twin Palms Solar, LLC Delaware
University Solar, LLC Delaware
UofU Solar 1, LLC Delaware
UofU Solar II, LLC Delaware
Uplight Inc. Delaware
Upper Freehold Solar LLC Delaware
Valcour Altona NewCo, LLC Delaware
Valcour Altona Windpark, LLC Delaware
Valcour Bliss NewCo, LLC Delaware
Valcour Bliss Windpark, LLC Delaware
Valcour Chateaugay NewCo, LLC Delaware
Valcour Chateaugay Windpark, LLC Delaware
Valcour Clinton NewCo, LLC Delaware
Valcour Clinton Windpark, LLC Delaware
Valcour Ellenburg NewCo, LLC Delaware
Valcour Ellenburg Windpark, LLC Delaware
Valcour Intermediate Holdings Pledgor, LLC Delaware
Valcour Power 2006 Holdco, LLC Delaware
Valcour Power 2008 Holdco, LLC Delaware
Valcour Repower DevCo, LLC Delaware
Valcour Wethersfield NewCo, LLC Delaware
Valcour Wethersfield Windpark, LLC Delaware
Valcour Wind Energy, LLC Delaware
Valparaiso Solar LLC Indiana
Veleiros Holdings S.A. Brazil
Ventos de Santa Brígida I Energias Renováveis S.A. Brazil
Ventos de Santa Brígida II Energias Renováveis S.A. Brazil
Ventos de Santa Brígida III Energias Renováveis S.A. Brazil
Ventos de Santa Brígida IV Energias Renováveis S.A. Brazil
Ventos de Santa Brígida V Energias Renováveis S.A. Brazil
Ventos de Santa Brígida VI Energias Renováveis S.A. Brazil
Ventos de Santa Brígida VII Energias Renováveis S.A. Brazil
Ventos de Santa Joana II Energias Renováveis S.A. Brazil
Ventos de Santa Joana VI Energias Renováveis S.A. Brazil
Ventos de Santa Joana VIII Energias Renováveis S.A. Brazil
Ventos de Santa Joana XIV Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 01 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 02 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 03 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 04 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 05 Energias Renováveis S.A. Brazil


Ventos de Santa Tereza 06 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 07 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 08 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 09 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 10 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 11 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 12 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 13 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza 14 Energias Renováveis S.A. Brazil
Ventos de Santa Tereza Energias Renováveis S.A. Brazil
Ventos de São Onofre I Energias Renováveis S.A. Brazil
Ventos de São Onofre II Energias Renováveis S.A. Brazil
Ventos de São Onofre III Energias Renováveis S.A. Brazil
Ventos de São Ricardo 01 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 02 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 03 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 04 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 05 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 06 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 07 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 08 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 09 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 10 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 11 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 12 Energias Renováveis S.A. Brazil
Ventos de São Ricardo 13 Energias Renováveis S.A. Brazil
Ventos de São Ricardo Energias Renováveis S.A. Brazil
Ventos de São Tito Holding S.A. Brazil
Ventos de São Tomé Holding S.A. Brazil
Ventus Holding de Energia Eólica Ltda. Brazil
Vermilion Solar I LLC Delaware
Vermilion Solar II LLC Delaware
Victor Dry Farm Ranch A LLC Delaware
Victor Dry Farm Ranch B LLC Delaware
Victor Mesa Linda B2 LLC Delaware
Victor Mesa Linda C2 LLC Delaware
Victor Mesa Linda D2 LLC Delaware
Victor Mesa Linda E2 LLC Delaware
Vientos Neuquinos I S.A. Argentina
Village of Waterbury Solar I, LLC Delaware
W. Orange RD Solar LLC Delaware


Waiawa Phase 2 Solar, LLC Delaware
Wallace Solar, LLC Delaware
Warsaw Solar 2, LLC Delaware
Warsaw Solar, LLC Delaware
Waterford Solar 1, LLC Delaware
Waterloo Solar, LLC Indiana
West Atlantic Solar I LLC Delaware
West Atlantic Solar II LLC Delaware
West Brookfield Boston Post Road Solar LLC Delaware
West Camp Wind Farm II, LLC Delaware
West Camp Wind Farm, LLC Arizona
West Line FinCo, LLC Delaware
West Line Solar Land Borrower, LLC Delaware
West Line Solar, LLC Delaware
West Street Solar 1, LLC Delaware
Western Antelope Blue Sky Ranch A LLC Delaware
Western Antelope Blue Sky Ranch B LLC Delaware
Western Antelope Dry Ranch LLC Delaware
Western Solar Parent, LLC Delaware
Westminster CC Solar 1, LLC Delaware
Westport Stone & Sand Solar, LLC Massachusetts
Westtown Solar LLC Delaware
WFS Highlander Holdings, LLC Delaware
WFS Highlander Managing Member, LLC Delaware
WFS Mountain View Holdings, LLC Delaware
WFS Mountain View Managing Member, LLC Delaware
WFS Solar Holdings 1, LLC Delaware
WFS Solar Holdings 2, LLC Delaware
WFS Solar Managing Member 1, LLC Delaware
WFS Solar Managing Member 2, LLC Delaware
White Creek Solar LLC Delaware
Wibaux Wind, LLC Delaware
Wilbur Woods Solar LLC Delaware
WildRoseWind Holdings, LLC Delaware
WildRoseWind LLC Texas
Williamsburg East Street Solar LLC Delaware
Willow Beach Wind, LLC Delaware
Winchendon Ash Street Solar 1 LLC Delaware
Winchendon Lincoln Avenue Solar 1 LLC Delaware
Winchendon Lincoln Avenue Solar 2 LLC Delaware
Windsor PV1, LLC Virginia


Yakima Solar LLC Delaware
Yampa Valley Solar LLC Delaware
York Chester Solar, LLC Delaware
Your Energy Holdings Limited England & Wales
Zapata Wind, LLC Delaware
ZPD-PT Solar Project 2017-001 LLC Massachusetts
ZPD-PT Solar Project 2017-003 LLC Massachusetts
ZPD-PT Solar Project 2017-006 LLC Massachusetts
ZPD-PT Solar Project 2017-007 LLC Massachusetts
ZPD-PT Solar Project 2017-008 LLC Massachusetts
ZPD-PT Solar Project 2017-011 LLC Massachusetts
ZPD-PT Solar Project 2017-014 LLC Massachusetts
ZPD-PT Solar Project 2017-017 LLC Massachusetts
ZPD-PT Solar Project 2017-021 LLC Massachusetts
ZPD-PT Solar Project 2017-023 LLC Massachusetts
ZPD-PT Solar Project 2017-024 LLC Massachusetts
ZPD-PT Solar Project 2017-038 LLC Massachusetts
ZPD-PT Solar Project 2017-044 LLC Massachusetts


EX-23.1 12 aes1231202310-kexhibit231.htm EX-23.1 Document

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements and in the related Prospectuses of The AES Corporation:
 
  (1) Registration Statements No. 333-203684, 333-156242, 333-26225, 333-28883, 333-30352, 333-38535, 333-57482, 333-66952, 333-66954, 333-82306, 333-83574, 333-84008, 333-97707, 333-108297, 333-112331, 333-115028, 333-150508, 333-135128, 333-158767, 333-166607, 333-179701, and 333-233037 on Form S-8;
 
  (2) Registration Statements No. 333-64572, 333-161913, 333-186888, 333-209671, 333-229896, and 333-263244 on Form S-3;
 
  (3) Registration Statements No. 333-38924, 333-40870, 333-44698, 333-46564, 333-37924, 333-83767, 333-81953, 333-46189, 333-39857; 333-15487, and 333-01286 on Form S-3/A, and
 
  (4) Registration Statements No. 333-45916, 333-49644, 333-43908, 333-44845, 333-147951, 333-33283, 333-22513, 333-180388, and 333-257351 on Form S-4/A;
of our reports dated February 26, 2024, with respect to the consolidated financial statements and schedule of The AES Corporation and the effectiveness of internal control over financial reporting of The AES Corporation included in this Annual Report (Form 10-K) of The AES Corporation for the year ended December 31, 2023.
/s/ Ernst & Young LLP
Tysons, Virginia
February 26, 2024


EX-24 13 aes1231202310-kexhibit24.htm EX-24 Document

The AES Corporation (the “Company”)
Power of Attorney
The undersigned, acting in the capacity or capacities stated opposite their respective names below, hereby constitute and appoint Stephen Coughlin and Paul L. Freedman and each of them severally, the attorneys-in-fact of the undersigned with full power to them and each of them to sign for and in the name of the undersigned in the capacities indicated below the Company’s 2023 Annual Report on Form 10-K and any and all amendments and supplements thereto. This Power of Attorney may be executed in one or more counterparts, each of which together shall constitute one and the same instrument.
Name Title Date
/s/ Andrés Gluski Principal Executive Officer and Director February 23, 2024
Andrés Gluski
/s/ Gerard M. Anderson Director February 23, 2024
Gerard M. Anderson
/s/ Inderpal S. Bhandari Director February 23, 2024
Inderpal S. Bhandari
/s/ Janet G. Davidson Director February 23, 2024
Janet G. Davidson
/s/ Tarun Khanna Director February 23, 2024
Tarun Khanna
/s/ Holly K. Koeppel Director February 23, 2024
Holly K. Koeppel
/s/ Julia M. Laulis Director February 23, 2024
Julia M. Laulis
/s/ Alain Monié Director February 23, 2024
Alain Monié
/s/ John B. Morse, Jr. Chair and Lead Independent Director February 23, 2024
John B. Morse, Jr.
/s/ Moisés Naim Director February 23, 2024
Moisés Naim
/s/ Teresa M. Sebastian Director February 23, 2024
Teresa M. Sebastian
/s/ Maura Shaughnessy Director February 23, 2024
Maura Shaughnessy


EX-31.1 14 aes1231202310-kexhibit311.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATIONS
I, Andrés Gluski, certify that:
1.I have reviewed this Form 10-K of The AES Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2024
 
/s/ ANDRÉS GLUSKI
Name: Andrés Gluski
President and Chief Executive Officer

EX-31.2 15 aes1231202310-kexhibit312.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATIONS
I, Stephen Coughlin, certify that:
1.I have reviewed this Form 10-K of The AES Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2024
 
/s/ STEPHEN COUGHLIN
Name: Stephen Coughlin
Executive Vice President and Chief Financial Officer

EX-32.1 16 aes1231202310-kexhibit321.htm EX-32.1 Document

Exhibit 32.1
CERTIFICATION OF PERIODIC FINANCIAL REPORTS
I, Andrés Gluski, President and Chief Executive Officer of The AES Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Form 10-K for the year ended December 31, 2023, (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of The AES Corporation.
Date: February 26, 2024
 
/S/ ANDRÉS GLUSKI
Name: Andrés Gluski
President and Chief Executive Officer


EX-32.2 17 aes1231202310-kexhibit322.htm EX-32.2 Document

Exhibit 32.2
CERTIFICATION OF PERIODIC FINANCIAL REPORTS
I, Stephen Coughlin, Executive Vice President and Chief Financial Officer of The AES Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Form 10-K for the year ended December 31, 2023, (the “Periodic Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of The AES Corporation.
Date: February 26, 2024
 
/s/ STEPHEN COUGHLIN
Name: Stephen Coughlin
Executive Vice President and Chief Financial Officer


EX-97 18 aes1231202310-kexhibit97.htm EX-97 Document

The AES Corporation
Amended and Restated Compensation Recoupment Policy
Effective October 6, 2023

Purpose

As required pursuant to the listing standards of the New York Stock Exchange (the “Stock Exchange”), Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10D-1 under the Exchange Act, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of The AES Corporation (the “Company”) has adopted this Amended and Restated Compensation Recoupment Policy (the “Policy”) to empower the Company to recover Covered Compensation (as defined below) erroneously awarded to a Covered Officer (as defined below) in the event of an Accounting Restatement (as defined below).

Notwithstanding anything in this Policy to the contrary, at all times, this Policy remains subject to interpretation and operation in accordance with the final rules and regulations promulgated by the U.S. Securities and Exchange Commission (the “SEC”), the final listing standards adopted by the Stock Exchange, and any applicable SEC or Stock Exchange guidance or interpretations issued from time to time regarding such Covered Compensation recovery requirements (collectively, the “Final Guidance”). Questions regarding this Policy should be directed to the Executive Vice President and CHRO.

Policy Statement
Unless a Clawback Exception (as defined below) applies, the Company will recover reasonably promptly from each Covered Officer the Covered Compensation Received (as defined below) by such Covered Officer in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (each, an “Accounting Restatement”). If a Clawback Exception applies with respect to a Covered Officer, the Company may forgo such recovery under this Policy from such Covered Officer.

Covered Officers
For purposes of this Policy, “Covered Officer” is defined as any current or former “Section 16 officer” of the Company within the meaning of Rule 16a-1(f) under the Exchange Act, as determined by the Board or the Committee. Covered Officers include, at a minimum, “executive officers” as defined in Rule 3b-7 under the Exchange Act and identified under Item 401(b) of Regulation S-K.

Covered Compensation
For purposes of this Policy:

· “Covered Compensation” is defined as the amount of Incentive-Based Compensation (as defined below) Received during the applicable Recovery Period (as defined below) that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received during such Recovery Period had it been determined based on the relevant restated amounts, and computed without regard to any taxes paid.

Incentive-Based Compensation Received by a Covered Officer will only qualify as Covered Compensation if: (i) it is Received on or after October 2, 2023; (ii) it is Received after such Covered Officer begins service as a Covered Officer; (iii) such Covered Officer served as a Covered Officer at any time during the performance period for such Incentive-Based Compensation; and (iv) it is Received while the Company has a class of securities listed on a national securities exchange or a national securities association.



For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of erroneously awarded Covered Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, the amount of such Incentive-Based Compensation that is deemed to be Covered Compensation will be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was Received, and the Company will maintain and provide to the Stock Exchange documentation of the determination of such reasonable estimate.

· “Incentive-Based Compensation” is defined as any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure (as defined below). For purposes of clarity, Incentive-Based Compensation includes compensation that is in any plan, other than tax-qualified retirement plans, including long term disability, life insurance, and supplemental executive retirement plans, and any other compensation that is based on such Incentive-Based Compensation, such as earnings accrued on notional amounts of Incentive-Based Compensation contributed to such plans.

· “Financial Reporting Measure” is defined as a measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return are also Financial Reporting Measures.

· Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.

Recovery Period

For purposes of this Policy, the applicable “Recovery Period” is defined as the three completed fiscal years immediately preceding the Trigger Date (as defined below) and, if applicable, any transition period resulting from a change in the Company’s fiscal year within or immediately following those three completed fiscal years (provided, however, that if a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year comprises a period of nine to 12 months, such period would be deemed to be a completed fiscal year).

For purposes of this Policy, the “Trigger Date” as of which the Company is required to prepare an Accounting Restatement is the earlier to occur of: (i) the date that the Board, applicable Board committee, or officers authorized to take action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare the Accounting Restatement or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare the Accounting Restatement.

Clawback Exceptions

The Company is required to recover all Covered Compensation Received by a Covered Officer in the event of an Accounting Restatement unless (i) one of the following conditions are met and (ii) the Committee has made a determination that recovery would be impracticable in accordance with Rule 10D-1 under the Exchange Act (under such circumstances, a “Clawback Exception” applies):

· the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered (and the Company has already made a reasonable attempt to recover such erroneously awarded Covered Compensation from such Covered Officer, has documented such reasonable attempt(s) to recover, and has provided such documentation to the Stock Exchange); · recovery would violate home country law that was adopted prior to November 28, 2022 (and the Company has already obtained an opinion of home country counsel, acceptable to the Stock Exchange, that recovery would result in such a violation, and provided such opinion to the Stock Exchange); or




· recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code and regulations thereunder. For purposes of clarity, this Clawback Exception only applies to tax-qualified retirement plans and does not apply to other plans, including long term disability, life insurance, and supplemental executive retirement plans, or any other compensation that is based on Incentive-Based Compensation in such plans, such as earnings accrued on notional amounts of Incentive-Based Compensation contributed to such plans.

Prohibitions

The Company is prohibited from paying or reimbursing the cost of insurance for, or indemnifying, any Covered Officer against the loss of erroneously awarded Covered Compensation.

Administration and Interpretation

The Committee will administer this Policy in accordance with the Final Guidance, and will have full and exclusive authority and discretion to supplement, amend, repeal, interpret, terminate, construe, modify, replace and/or enforce (in whole or in part) this Policy, including the authority to correct any defect, supply any omission or reconcile any ambiguity, inconsistency or conflict in the Policy, subject to the Final Guidance. This Policy is in addition to and is not intended to change or interpret any federal or state law or regulation, including the Delaware General Corporation Law, the Restated Certificate of Incorporation of the Company, or the Amended and Restated By-Laws of the Company. The Committee will review the Policy from time to time and will have full and exclusive authority to take any action it deems appropriate.

The Committee will have the authority to offset any compensation or benefit amounts that become due to the applicable Covered Officers to the extent permissible under Section 409A of the Internal Revenue Code of 1986, as amended, and as it deems necessary or desirable to recover any Covered Compensation.

Each current Covered Officer and future Covered Officer, upon being so designated or assuming such position, is required to execute and deliver to the Executive Vice President and CHRO an acknowledgment of and consent to this Policy, in a form reasonably acceptable to and provided by the Company from time to time, (i) acknowledging and consenting to be bound by the terms of this Policy, (ii) agreeing to fully cooperate with the Company in connection with any of such Covered Officer’s obligations to the Company pursuant to this Policy, and (iii) agreeing that the Company may enforce its rights under this Policy through any and all reasonable means permitted under applicable law as it deems necessary or desirable under this Policy.

Disclosure

This Policy, and any recovery of Covered Compensation by the Company pursuant to this Policy that is required to be disclosed in the Company’s filings with the SEC, will be disclosed as required by the Securities Act of 1933, as amended, the Exchange Act, and related rules and regulations, including the Final Guidance. The AES Corporation

Compensation Recoupment Policy Acknowledgment and Consent

The undersigned hereby acknowledges that he or she has received and reviewed a copy of the Compensation Recoupment Policy (the “Policy”) of The AES Corporation (the “Company”), effective as of October 6, 2023, as adopted by the Company’s Board of Directors.



Pursuant to such Policy, the undersigned hereby:

· acknowledges that he or she has been designated as (or assumed the position of) a Covered Officer (as defined in the Policy);

· acknowledges and consents to the Policy;

· acknowledges and consents to be bound by the terms of the Policy;

· agrees to fully cooperate with the Company in connection with any of the undersigned’s obligations to the Company pursuant to the Policy, including, without limitation, the repayment by or recovery from the undersigned of Covered Compensation (as defined in the Policy); and

· agrees that the Company may enforce its rights under the Policy through any and all reasonable means permitted under applicable law as the Company deems necessary or desirable under the Policy.


ACKNOWLEDGED AND AGREED:



Name:

Date: