FINANCING RECEIVABLES

Financing receivables are defined as receivables that have contractual maturities of greater than one year. The Company has financing receivables pursuant to amended agreements or government resolutions that are due from certain Latin American governmental bodies, primarily in Argentina. The table below sets forth the breakdown of financing receivables by country as of the periods indicated:



	December 31,
	2014		2013
	(in millions)
Argentina⁽¹⁾	$	278	$	164
Dominican Republic	—		2
Brazil	15		18
Total long-term financing receivables	$	293	$	184

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⁽¹⁾

As of December 31, 2014 all amounts had contractual maturities of greater than one year. As of December 31, 2013, total receivables with the Argentine government were $286 million, and the amount presented in the table above excluded noncurrent receivables of $122 million which had not yet been converted into financing receivables and did not have contractual maturities of greater than one year at the time.

Argentina—Collection of the principal and interest on these receivables is subject to various business risks and uncertainties including, but not limited to, the completion and operation of power plants which generate cash for payments of these receivables, regulatory changes that could impact the timing and amount of collections, and economic conditions in Argentina. The Company monitors these risks including the credit ratings of the Argentine government on a quarterly basis to assess the collectability of these receivables. The Company accrues interest on these receivables once the recognition criteria have been met. The Company’s collection estimates are based on assumptions that it believes to be reasonable, but are inherently uncertain. Actual future cash flows could differ from these estimates.

FONINVEMEM Agreements

As a result of energy market reforms in 2004 and 2010, AES Argentina entered into three agreements with the Argentine government, referred to as the FONINVEMEM Agreements, to contribute a portion of their accounts receivable into a fund for financing the construction of combined cycle and gas-fired plants. These receivables accrue interest and are collected in monthly installments over 10 years once the related plant begins operations. In addition, AES Argentina receives an ownership interest in these newly built plants once the receivables have been fully repaid.

FONINVEMEM I and II - The receivables under the first two FONINVEMEM Agreements have been actively collected since the related plants commenced operations in 2010. In assessing the collectability of the receivables under these agreements, the Company also considers how timely the collections have historically been made in accordance with the agreements.

FONINVEMEM III - The receivables related to the third FONINVEMEM Agreement will not be repaid until commercial operation of the related gas-fired plant has been achieved. In assessing the collectability of the receivables under this agreement, the Company also considers the extent to which significant milestones necessary to complete the plants have been achieved or are still probable. In November 2014, the Company received a letter from CAMMESA confirming the contribution of certain receivables into the FONIVEMEM III Agreement and establishing the methodology for the interest to be recognized on the outstanding receivables. CAMMESA is the Argentine wholesale electricity market regulator responsible for dispatch coordination and determination of short-term prices. Based on this new information, additional receivables of $120 million were considered formally contributed into FONIVEMEM III trust in the fourth quarter of 2014. Additionally, upon receipt of the letter, the Company determined that the recognition criteria was met related to the interest on all the FONIVEMEM III receivables and accordingly, recognized $59 million of interest income in the fourth quarter of 2014.

The FONINVEMEM receivables are denominated in Argentine pesos, but indexed to U.S. Dollars, which represents a foreign currency derivative. During the fourth quarter of 2014, the value of the foreign currency derivative experienced a significant increase due to CAMMESA confirming that additional receivables would be included in the FONINVEMEM III project as well as the recognition of interest on all the FONINVEMEM III receivables. As a result, an unrealized foreign currency gain of $106 million was recognized in earnings. As of December 31, 2014 and 2013, the amount of the foreign currency-related derivative assets associated with the FONINVEMEM financing receivables that were excluded from the table above had a fair value of $208 million and $97 million, respectively.

Other Agreements

In 2013, Resolution No. 95/2013 ("Resolution 95") which developed a new energy regulatory framework that applies to all generation companies with certain exceptions became effective. The new regulatory framework remunerates fixed and variable costs plus a margin that will depend on the technology and fuel used to generate the electricity and the installed capacity of each plant.

In the fourth quarter of 2014, the Argentine government passed a resolution to contribute outstanding Resolution 95 receivables into a trust whereby AES Argentina has committed to install 93 MW of capacity into the system. CAMMESA will finance the investment utilizing the outstanding receivables as a guarantee.