Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2021

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,	2021		2020		Recovery/Refund Period
Regulatory assets
Current regulatory assets:
El Salvador energy pass through costs recovery	$	80	$	40	Quarterly
Other	88		73		1 year
Total current regulatory assets	168		113
Noncurrent regulatory assets:
AES Indiana and AES Ohio defined benefit pension obligations (1)	191		244		Various
AES Indiana deferred fuel and purchased power costs	84		—		To be determined
AES Indiana environmental costs	76		81		Various
AES Indiana Petersburg Units 1 and 2 retirement costs	300		75		Over life of assets
AES Indiana deferred Midwest ISO costs	48		61		5 years
Other	135		126		Various
Total noncurrent regulatory assets	834		587
Total regulatory assets	$	1,002	$	700
Regulatory liabilities
Current regulatory liabilities:
Overcollection of costs to be passed back to customers	$	18	$	47	1 year

Other	1		1		Various
Total current regulatory liabilities	19		48
Noncurrent regulatory liabilities:
AES Indiana and AES Ohio accrued costs of removal and AROs	868		863		Over life of assets
AES Indiana and AES Ohio income taxes payable to customers through rates	158		174		Various
Other	30		21		Various
Total noncurrent regulatory liabilities	1,056		1,058
Total regulatory liabilities	$	1,075	$	1,106

_____________________________

(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 at its retirement date and the expected carrying value of Petersburg Unit 2 at its anticipated retirement date, which are amortized over the life of the assets beginning on the dates of retirement. Other current and noncurrent regulatory assets primarily consist of:

•Undercollections on rate riders such as wholesale margin sharing and demand side management costs at AES Indiana and energy efficiency and transmission costs at AES Ohio;

•Unamortized premiums reacquired or redeemed on long-term debt at AES Indiana, which are amortized over the lives of the original issuances; and

•OVEC costs, vegetation management costs, and storm costs 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, 2021 and December 31, 2020 are related to the US and Utilities SBU.