NOTE 8. SUPPLEMENTARY INFORMATION

Operating Costs

Pass through costs

Pass through costs are costs for which we receive a direct contractually committed reimbursement from the municipal client which sponsors an energy-from-waste project. These costs generally include utility charges, insurance premiums, ash residue transportation and disposal and certain chemical costs. These costs are recorded net of municipal client reimbursements in our condensed consolidated financial statements. Total pass through costs were $22 million and $23 million for the three months ended March 31, 2012 and 2011, respectively.

Other operating expenses

The components of other operating expenses are as follows (in millions):


	For the Three Months Ended March 31,
	2012			2011
Construction costs	$	38		$	26
Insurance subsidiary operating expenses ⁽¹⁾		3			4
Other		(2	)		(2	)

Total other operating expenses	$	39		$	28

(1)	Insurance subsidiary operating expenses are primarily comprised of incurred but not reported loss reserves, loss adjustment expenses and policy acquisition costs.

Amortization of waste, service and energy contracts

Our waste, service and energy contracts are intangible assets and liabilities relating to long-term operating contracts at acquired facilities and are recorded upon acquisition at their estimated fair market values based upon discounted cash flows. Intangible assets and liabilities are amortized using the straight line method over their remaining useful lives.

The following table details the amount of the actual/estimated amortization expense and contra-expense associated with these intangible assets and liabilities as of March 31, 2012 included or expected to be included in our condensed consolidated statement of operations for each of the years indicated (in millions):


	Waste, Service and Energy Contracts (Amortization Expense)		Waste and Service Contracts (Contra-Expense)
Three Months ended March 31, 2012	$	9	$	(3	)

Remainder of 2012	$	26	$	(9	)
2013		32		(12	)
2014		29		(13	)
2015		26		(8	)
2016		23		(8	)
Thereafter		289		(23	)

Total	$	425	$	(73	)

Stanislaus EfW Facility

On January 14, 2012, our Stanislaus, California energy-from-waste facility experienced a turbine generator failure. Damage to the turbine generator was extensive and operations at the facility were suspended promptly to assess the cause and extent of damage. The facility is capable of processing waste without utilizing the turbine generator to generate electricity, and we resumed waste processing operations during the first quarter of 2012. We expect the facility will not be able to generate electricity for a substantial portion of 2012. The cost of repair or replacement, and business interruption losses, are insured under the terms of applicable insurance policies, subject to deductibles. We believe this event will not have a material adverse impact on our results of operations, financial position or cash flows.

Non-Cash Convertible Debt Related Expense

The components of non-cash convertible debt related expense are as follows (in millions):


	Three Months Ended March 31,
	2012			2011
Debt discount accretion related to the 3.25% Notes	$	6		$	6
Debt discount accretion related to the Debentures		—			1
Fair value changes related to the cash convertible note hedge		(27	)		9
Fair value changes related to the cash conversion option derivative		27			(11	)

Total non-cash convertible debt related expense	$	6		$	5

Other Income, Net

For the three months ended March 31, 2012, other income, net included a $3 million foreign currency gain related to intercompany loans.