Redeemable Stock of Subsidiaries

12 Months Ended

Dec. 31, 2023

REDEEMABLE STOCK OF SUBSIDIARIES

The following table is a reconciliation of changes in redeemable stock of subsidiaries (in millions):


December 31,	2023		2022
Balance at the beginning of the period	$	1,321	$	1,257
Net loss	(59)		(87)
Other comprehensive income	1		40

Distributions to holders of redeemable stock of subsidiaries	(62)		(64)
Acquisitions of redeemable stock of subsidiaries	—		(60)
Contributions from holders of redeemable stock of subsidiaries	163		67
Sales of redeemable stock of subsidiaries	100		168
Balance at the end of the period	$	1,464	$	1,321

The following table summarizes the Company's redeemable stock of subsidiaries balances as of the periods indicated (in millions):


December 31,	2023		2022
IPALCO common stock	$	773	$	782
AES Clean Energy Development common stock	544		436
AES Clean Energy Development tax equity partnerships	129		86
Potengi common and preferred stock	18		17



Total redeemable stock of subsidiaries	$	1,464	$	1,321

AES Clean Energy Development Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. In some cases, these agreements contain certain partnership rights, though not currently in effect, that would enable the tax equity investor to exit in the future. As a result, the noncontrolling ownership interest is considered temporary equity. The redemption features of these tax equity partnership agreements are typically contingent upon the underlying assets being placed in service by a guaranteed date. The Company has concluded it is probable that these projects will be placed in service by the guaranteed dates. Therefore, the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required.

In 2023 and 2022, AES Clean Energy Development, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in increases to Redeemable stock of subsidiaries of $100 million and $157 million, respectively. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

IPALCO — In December 2022, CDPQ made equity capital contributions of $77 million as part of a capital call to raise proceeds for AES Indiana's TDSIC and replacement generation project. The Company and CDPQ made capital contributions on a proportional share basis; therefore, the capital calls did not change either party's ownership interests in IPALCO. The Company has concluded that the likelihood of an event that would allow CDPQ to redeem its interest under the terms of the shareholder agreement is remote. Therefore, the noncontrolling ownership interest is not probable of becoming redeemable and subsequent adjustments to the carrying value were not required. IPALCO is reported in the Utilities SBU reportable segment.

AES Indiana — In December 2022, AES Indiana redeemed all of its outstanding preferred shares for $60 million. The preferred shares were retired upon redemption as there is no intention for the shares to be reissued. AES Indiana is reported in the Utilities SBU reportable segment.

Potengi — In March 2022, Tucano Holding I (“Tucano”), a subsidiary of AES Brasil, issued new shares in the Potengi wind development project. BRF S.A. (“BRF”) acquired shares representing 24% of the equity in the project for $12 million, reducing the Company’s indirect ownership interest in Potengi to 35.5%. As the Company maintained control after the transaction, Potengi continues to be consolidated by the Company. As part of the transaction, BRF was given an option to sell its entire ownership interest at the conclusion of the PPA term and therefore the noncontrolling ownership interest is considered temporary equity. Any subsequent changes in the redemption value of the exit rights will be recognized against permanent equity in accordance with ASC 480-10-S99, as it is probable that the shares will become redeemable. Potengi is reported in the Renewables SBU reportable segment.