Other Income and Expense

3 Months Ended

Sep. 30, 2011

OTHER INCOME AND EXPENSE

13. OTHER INCOME (EXPENSE)

The components of other income for the three and nine months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
	(in millions)
Tax credit settlement	$	31	$	-	$	31	$	-
Tax dispute settlement		14		-		14		-
Extinguishment of liability		-		-		-		62
Gain on sale of assets		9		5		25		7
Other		4		12		38		25
Total other income	$	58	$	17	$	108	$	94

Other income generally includes gains on asset sales and extinguishments of liabilities, favorable judgments on contingencies and income from miscellaneous transactions.

Other income of $58million for the three months ended September 30, 2011was primarily due to an additional tax credit settlement from a favorable court decision in 2011 concerning reimbursement of excess non-income taxes paid from 1989 to 1992 at Eletropaulo and the reimbursement of income tax expense recognized during the quarter related to anindemnity agreement between Los Mina and the Dominican Republic government.Other income of $17 million for the three months ended September 30, 2010 was primarily related to the gain on sale of assets at Eletropaulo.

Other income of $108million for the nine months ended September 30, 2011 was primarily related to the items described above, in addition to the gain on sale of mineral rights and land at IPL.Other income of $94 million for the nine months ended September 30, 2010 was primarily related to the extinguishment of a swap liability owed by two of our Brazilian subsidiaries, resulting in the recognition of a $62 million gain. The net impact to the Company after taxes and non-controlling interest was $9 million.

The components of other expense for the three and nine months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
	(in millions)
Loss on sale and disposal of assets	$	31	$	17	$	60	$	36
Loss on extinguishment of debt		36		-		52		9
Wind Generation transaction costs		-		-		-		22
Other		9		6		19		16
Total other expense	$	76	$	23	$	131	$	83

Other expense generally includes losses on asset sales, losses on the extinguishment of debt, contingencies and losses from miscellaneous transactions.

Other expense of $76million for the three months ended September 30, 2011 was primarily due to the premium paid on the early retirement of debt at Gener andlosses on the disposal of assets at TermoAndes and Eletropaulo.Other expense of $23 million for the three months ended September 30, 2010 was primarily comprised of losses on the disposal of assets at Eletropaulo and Gener.

Other expense of $131 million for the nine months ended September 30, 2011 was primarily due to the premium paid on early retirement of debt at Gener, a loss related to the early retirement of senior notes due in 2011 at IPL, and loss on disposal of assets at Eletropaulo and TermoAndes.Other expense of $83 million for the nine months ended September 30, 2010 included the previously capitalized transaction costs of $22 million that were incurred in connection with the preparation for the sale of a noncontrolling interest in our Wind Generation business. These costs were written off upon the expiration of the letter of intent (“LOI”) on June 30, 2010. Also, there was a $9 million loss on debt extinguishment at the Parent Company from the retirement of senior notes, and losses on disposal of assets at Eletropaulo and Gener.