Discontinued Operations and Held for sale businesses (Notes)

9 Months Ended

Sep. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISCONTINUED OPERATIONS

Brazil Distribution — Due to a portfolio evaluation in the first half of 2016, management decided to pursue a strategic shift of its distribution companies in Brazil, Sul and Eletropaulo. In June 2016, the Company executed an agreement for the sale of Sul and reported its results of operations and financial position as discontinued operations. The disposal of Sul was completed in October 2016. Prior to its classification as discontinued operations, Sul was reported in the Brazil SBU reportable segment. In December 2016, Eletropaulo underwent a corporate restructuring which is expected to, among other things, provide more liquidity of its shares. AES is continuing to pursue strategic options for Eletropaulo in order to complete its strategic shift to reduce AES’ exposure to the Brazilian distribution businesses, including preparation for listing its shares into the Novo Mercado, which is a listing segment of the Brazilian stock exchange with the highest standards of corporate governance.

As the sale of Sul was completed during 2016, there were no assets or liabilities of discontinued operations at September 30, 2017 or December 31, 2016. There were no significant losses from discontinued operations or cash flows used in operating or investing activities of discontinued operations for the three and nine months ended September 30, 2017.

The following table summarizes the major line items constituting the loss from discontinued operations for the three and nine months ended September 30, 2016 (in millions):

	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
Loss from discontinued operations, net of tax
Revenue — regulated	$	213		$	632
Cost of sales	(200		)	(608		)
Asset impairment expense	—			(783		)
Other income and expense items that are not major, net	(14		)	(35		)
Pretax loss from discontinued operations	$	(1	)	$	(794	)
Income tax benefit	—			405
Loss from discontinued operations, net of tax	$	(1	)	$	(389	)

The following table summarizes the operating and investing cash flows from discontinued operations for the nine months ended September 30, 2016 (in millions):

	Nine Months Ended September 30, 2016
Cash flows provided by operating activities of discontinued operations	$	68
Cash flows used in investing activities of discontinued operations	(63		)

DISPOSITIONS

Held-for-Sale Businesses

Kazakhstan Hydroelectric— Affiliates of the Company (the “Affiliates”) previously operated Shulbinsk HPP and Ust-Kamenogorsk HPP (the “HPPs”), two hydroelectric plants in Kazakhstan, under a concession agreement with the Republic of Kazakhstan (“RoK”). In April 2017, the RoK initiated the process to transfer these plants back to the RoK. Management considered it probable that the transfer would occur, and these plants met the held-for-sale criteria in the second quarter of 2017. For the nine months ended September 30, 2017, impairment charges of $92 million were recorded and were limited to the carrying value of the long lived assets. As of September 30, 2017, the remaining carrying value of the asset group, which was classified as held-for-sale, totaled $114 million, which included cumulative translation losses of $103 million.

On September 29, 2017, rather than paying the Affiliates, the RoK deposited $77 million into an escrow account that was not established in accordance with the requirements of the concession agreement. The amount deposited by the RoK equaled the Affiliates’ calculation of the transfer payment. In return, the RoK asserted that the Affiliates would be required to transfer the HPPs and that arbitration would be necessary to determine the correct transfer payment. On October 2, 2017, the Affiliates transferred 100% of the shares in the plants to the RoK, under protest and with a reservation of rights. As such, the HPPs remained classified as held-for-sale as of September 30, 2017. The Company expects to record a loss on disposal of at least $37 million in the fourth quarter of 2017. The Affiliates will proceed with arbitration to recover the $77 million that was placed in escrow, unless the parties can resolve the dispute prior to the initiation of arbitration. Additional losses may be incurred if some or all of the disputed consideration is not subsequently paid by the RoK. The transfer does not meet the criteria to be reported as discontinued operations. The Kazakhstan HPPs are reported in the Eurasia SBU reportable segment. Excluding the impairment charge, pretax income attributable to AES was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2017		2016		2017		2016
Kazakhstan Hydroelectric	$	12	$	10	$	33	$	28

Zimmer and Miami Fort — In April 2017, DP&L and AES Ohio Generation entered into an agreement for the sale of DP&L’s undivided interest in Zimmer and Miami Fort for $50 million in cash and the assumption of certain liabilities, including environmental, subject to predefined closing adjustments. The sale is subject to approval by the Federal Energy Regulatory Commission and is expected to close in the fourth quarter of 2017. Accordingly, Zimmer and Miami Fort remained classified as held-for-sale as of September 30, 2017, but did not meet the criteria to be reported as discontinued operations. Zimmer and Miami Fort are reported in the US SBU reportable segment. Their combined pretax income (loss) attributable to AES was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2017		2016		2017		2016
Zimmer and Miami Fort	$	11	$	1	$	19	$	(10	)

Dispositions

Kazakhstan CHPs— In April 2017, the Company completed the sale of Ust-Kamenogorsk CHP and Sogrinsk CHP, its combined heating and power coal plants in Kazakhstan, for net proceeds of $24 million. The carrying value of the asset group of $171 million was greater than its fair value less costs to sell of $29 million. The Company recognized an impairment charge of $94 million, which was limited to the carrying value of the long lived assets, and recognized a pretax loss on sale of $49 million, primarily related to cumulative translation losses. The sale did not meet the criteria to be reported as discontinued operations. Prior to their sale, the Kazakhstan CHP plants were reported in the Eurasia SBU reportable segment. Excluding the impairment charge and loss on sale, pretax income (loss) attributable to AES was as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(in millions)	2017		2016			2017		2016
Kazakhstan CHPs	$	—	$	(2	)	$	13	$	5

DPLER— On January 1, 2016, the Company completed the sale of its interest in DPLER, a competitive retail marketer selling electricity to customers in Ohio. Upon completion, proceeds of $76 million were received and a gain on sale of $49 million was recognized. The sale of DPLER did not meet the criteria to be reported as a discontinued operation. Prior to its sale, DPLER was reported in the US SBU reportable segment.

Kelanitissa— On January 27, 2016, the Company completed the sale of its interest in Kelanitissa, a diesel-fired generation station in Sri Lanka. Upon completion, proceeds of $18 million were received and a loss on sale of $5 million was recognized. The sale of Kelanitissa did not meet the criteria to be reported as a discontinued operation. Prior to its sale, Kelanitissa was reported in the Eurasia SBU reportable segment.

UK Wind — During the second quarter of 2016, the Company deconsolidated UK Wind and recorded a loss on deconsolidation of $20 million to Gain (loss) on disposal and sale of businesses in the Condensed Consolidated Statement of Operations. Prior to deconsolidation, UK Wind was reported in the Eurasia SBU reportable segment.