Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2023

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

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(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.