AES (AES) 10-K risk factor changes: FY2021 vs FY2020

Additional risks and uncertainties also may adversely affect our business and [added: operations.]

The categories of risk we have identified in Item 1A.—*[Risk [removed: Factors](#ib8a9d8a86e19404b8f4f50535106f937_55)*] [added: Factors](#if7b552d0c82e4d75af26724d7276acc2_58)*] include risks associated with our operations, governmental regulation and laws, our indebtedness and financial condition.

These risk factors should be read in conjunction with Item 7*.—[Management's [removed: Discussion](#ib8a9d8a86e19404b8f4f50535106f937_94) [and Anal](#ib8a9d8a86e19404b8f4f50535106f937_94)[ysis] [added: Discussion and Analysis] of [removed: F](#ib8a9d8a86e19404b8f4f50535106f937_94)[inancial] [added: Financial] Condition [removed: and](#ib8a9d8a86e19404b8f4f50535106f937_94) [Results] [added: and Results] of [removed: Operations](#ib8a9d8a86e19404b8f4f50535106f937_94)*] [added: Operations](#if7b552d0c82e4d75af26724d7276acc2_97)*] in this Form 10-K and the Consolidated Financial Statements and related notes included elsewhere in this Form 10-K.

The equipment at our plants requires periodic upgrading, improvement or [removed: repair,] [added: repair] and replacement equipment or parts may be difficult to obtain in circumstances where we rely on a single supplier or a small number of suppliers.

The inability to obtain replacement equipment or [removed: parts] [added: parts, due to disruption of the supply chain or other factors,] may impact the ability of our plants to perform.

The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance [removed: plans] [added: plans,] and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks.

See Item 3.— *[Legal [removed: Proceedings](#ib8a9d8a86e19404b8f4f50535106f937_64)*] [added: Proceedings](#if7b552d0c82e4d75af26724d7276acc2_67)*] below.

A significant amount of our revenue is generated in developing countries and we intend to expand our business in certain developing countries in which AES [removed: has] [added: or its customers have] an existing presence.

Wholesale power prices [removed: are declining] [added: may experience significant volatility] in [removed: many] [added: our] markets which could impact our operations and opportunities for future growth.

The wholesale prices offered for electricity have [removed: declined significantly in recent years] [added: been volatile] in [removed: many] [added: the] markets in which we operate due to a variety of factors, including the increased penetration of renewable generation resources, low-priced natural gas and demand side management.

These renewable resources have no fuel costs and very low operational [removed: costs.][added: costs, while only operating during certain periods of time (daylight) or weather conditions (higher winds).]

This trend of [removed: declining] [added: volatility in] wholesale prices could continue and could have a material adverse impact on the financial performance of our existing generation assets to the extent they currently sell [added: or buy] power into the spot market [added: to serve our contracts] or will seek to sell power into the spot market once [removed: their PPAs] [added: our contracts] expire.

- delays or inability to access equipment or the availability of personnel to perform planned and unplanned [removed: maintenance,] [added: maintenance or disruptions in supply chain,] which can, in turn, lead to disruption in operations;

We cannot provide assurance that insurance coverage will continue to be [added: available in the amounts or on terms similar to our current policies.]

[removed: The evolution of competitive] electricity markets and the development of highly efficient gas-fired power plants and renewables such as wind and solar have also caused, and could continue to cause, price pressure in certain power markets where we sell or intend to sell power.

Such an attack, by hacking, malware or other means, may interrupt our operations, cause property damage, affect our ability to control [removed: our infrastructure assets, cause the release of sensitive customer information or limit communications with third parties.]

We cannot guarantee the extent to which our security measures will prevent future cyber-attacks and security breaches or that our insurance coverage will adequately [added: cover any losses we may experience.]

We are in various stages of developing and constructing power [removed: plants.][added: plants and renewables projects.]

Certain of these [removed: power plant] projects have signed long-term contracts or made similar arrangements for the sale of electricity.

Successful completion of the development of these projects depends upon overcoming substantial risks, including risks relating to siting, financing, engineering and construction, permitting, governmental approvals, commissioning delays, [added: supply chain related disruptions to our access to materials,] or the potential for termination of the power sales contract as a result of a failure to meet certain milestones.

If these policies and incentives are changed or eliminated, or AES is unable to use them, there could be a material adverse impact on AES’ U.S. renewable growth opportunities, including fewer future PPAs or lower prices in future [added: PPAs, decreased revenues, reduced economic returns on certain project company investments, increased financing costs, and/or difficulty obtaining financing.]

Customer growth and customer usage in our utilities businesses are affected by external factors, including mandated energy efficiency measures, demand side management requirements, and economic and demographic [added: conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.]

We have [removed: 28] [added: 32] defined benefit plans, five at U.S. subsidiaries and the remaining plans at foreign subsidiaries, which cover substantially all of the employees at these subsidiaries.

See Item 7.—*[Management's Discussion and [removed: Analysis](#ib8a9d8a86e19404b8f4f50535106f937_235)[—Critical] [added: Analysis—Critical] Accounting Policies and Estimates—Pension and Other Postretirement [removed: Plans](#ib8a9d8a86e19404b8f4f50535106f937_235)*] [added: Plans](#if7b552d0c82e4d75af26724d7276acc2_238)*] and Note 15—*[Benefit [removed: Plans](#ib8a9d8a86e19404b8f4f50535106f937_337)*] [added: Plans](#if7b552d0c82e4d75af26724d7276acc2_310)*] included in Item 8.—*[Financial Statements and Supplementary [removed: Data](#ib8a9d8a86e19404b8f4f50535106f937_244)*.][added: Data](#if7b552d0c82e4d75af26724d7276acc2_247)*.]

As of December 31, [removed: 2020,] [added: 2021,] the Company had approximately [removed: $1.1] [added: $1.2] billion of goodwill, which represented approximately [removed: 3%] [added: 4%] of our total assets.

[removed: Historically, acquisitions] [added: Acquisitions] have been a significant part of our growth strategy [added: historically] and [added: more recently as] we [removed: may continue to make acquisitions.][added: grow our renewables business.]

Although acquired businesses may have significant operating histories, we [removed: will] [added: may] have [removed: a] limited or no history of owning and operating [removed: many] [added: certain] of these [removed: businesses] [added: businesses,] and possibly limited or no experience operating in the country or region where these businesses are located.

[removed: Some] [added: In addition, some] of these businesses may have been government owned and some may be operated as part of a larger integrated utility prior to their acquisition.

Similarly, FERC is encouraging the construction of new transmission [removed: infrastructure in accordance with provisions of EPAct 2005.]

See Item 1.*—[Business—US and Utilities [removed: SBU](#ib8a9d8a86e19404b8f4f50535106f937_28)*.][added: SBU](#if7b552d0c82e4d75af26724d7276acc2_28)*.]

See Item 1.—*[Business—Environmental and Land-Use [removed: Regulations](#ib8a9d8a86e19404b8f4f50535106f937_43)*.][added: Regulations](#if7b552d0c82e4d75af26724d7276acc2_43)*.]

In [removed: 2020,] [added: 2021,] the Company's subsidiaries operated businesses that had total CO2 emissions of approximately 47 million metric tonnes, approximately 16 million of which were emitted by our U.S. businesses (both figures are ownership adjusted).

For further discussion of the regulation of GHG emissions, see Item 1.*—[Business—Environmental and Land-Use [removed: Regulations—](#ib8a9d8a86e19404b8f4f50535106f937_43)[U](#ib8a9d8a86e19404b8f4f50535106f937_43)[.](#ib8a9d8a86e19404b8f4f50535106f937_43)[S](#ib8a9d8a86e19404b8f4f50535106f937_43)[.](#ib8a9d8a86e19404b8f4f50535106f937_43) [](#ib8a9d8a86e19404b8f4f50535106f937_43)[Environmental] [added: Regulations—U.S. Environmental] and Land-Use Legislation and Regulations—Greenhouse Gas [removed: Emissions](#ib8a9d8a86e19404b8f4f50535106f937_43)*] [added: Emissions](#if7b552d0c82e4d75af26724d7276acc2_43)*] above.

[added: The impact of GHG regulation on our operations will depend on a number of factors, including the degree and timing of GHG emissions] reductions required under any such legislation or regulation, the cost of emissions reduction equipment and the price and availability of offsets, the extent to which market based compliance options are available, the extent to which our subsidiaries would be entitled to receive GHG emissions allowances without having to purchase them in an auction or on the open market and the impact of such legislation or regulation on the ability of our subsidiaries to recover costs incurred through rate increases or otherwise.

See Item 7.*—[Management's Discussion and [removed: Analysis](#ib8a9d8a86e19404b8f4f50535106f937_190)[—Key] [added: Analysis—Key] Trends and Uncertainties—Decarbonization [removed: Initiatives](#ib8a9d8a86e19404b8f4f50535106f937_190).*] [added: Initiatives](#if7b552d0c82e4d75af26724d7276acc2_196).*] Responding to these decarbonization initiatives, including developments in our strategy in line with these initiatives may present challenges to our business.

In the ordinary course of business, we collect and retain sensitive information, including personal [removed: identification] [added: identifiable] information about [removed: customers and] [added: customers,] employees, customer energy usage and other [added: information as well as information regarding business partners and other third parties, some of which may constitute confidential] information.

Tax legislation initiatives or challenges to our tax positions could adversely affect [removed: us][added: us.]

From time to time, legislative measures may be enacted that could adversely [removed: affect] our overall tax positions regarding income or other taxes, our effective tax rate or tax payments.

As of December 31, [removed: 2020,] [added: 2021,] we had approximately [removed: $20] [added: $19] billion of outstanding indebtedness on a consolidated basis.

See Note [removed: 11*—[Debt](#ib8a9d8a86e19404b8f4f50535106f937_319)*] [added: 11*—[Debt](#if7b552d0c82e4d75af26724d7276acc2_298)*] included in Item 8.*—[Financial Statements and Supplementary [removed: Data](#ib8a9d8a86e19404b8f4f50535106f937_244)*] [added: Data](#if7b552d0c82e4d75af26724d7276acc2_247)*] for a schedule of our debt maturities.

This, combined with changes in oil, gas, and coal pricing, has led to increasingly volatile electricity markets across our

markets.

We also may encounter challenges in integrating and realizing the expected benefits of these acquisitions as well as integration or other one-time costs that are greater than expected.

The evolution of competitive

our infrastructure assets, cause the release of sensitive customer information or limit communications with third parties.

Further, we have a significant equity method investment in Fluence.

As a publicly listed company, Fluence is governed by its own Board of Directors, whose members have fiduciary duties to the Fluence shareholders.

While we have certain rights to appoint representatives to the Fluence Board of Directors, the interests of the Fluence

shareholders, as represented by the Fluence Board of Directors, may not align with our interests or the interests of our securityholders.

infrastructure in accordance with provisions of EPAct 2005.

Furthermore, according to the Intergovernmental Panel on Climate Change, physical risks from climate change could include, but are not limited to, increased runoff and earlier spring peak discharge in many glacier and snow-fed rivers, warming of lakes and rivers, an increase in sea level, and changes and variability in precipitation and in the intensity and frequency of extreme weather events.

Physical impacts may have the potential to significantly affect our business and operations.

For example, extreme weather events could result in increased downtime and operation and maintenance costs at our electric power transmission and distribution assets and facilities.

Variations in weather conditions, primarily temperature and humidity, would also be expected to affect the energy needs of customers.

A decrease in energy consumption could decrease our revenues.

In addition, while revenues would be

expected to increase if the energy consumption of customers increased, such increase could prompt the need for additional investment in generation capacity.

Although we maintain technical and organizational measures to protect personal identifiable information and other confidential information, breaches of, or disruptions to, our information technology systems could result in legal claims, liability or penalties under privacy laws or damage to operations or to the company's reputation, which could adversely affect our business.

We are also subject to various data privacy and security laws and regulations globally, as well as contractual requirements, as a result of having access to and processing confidential and personal identifiable information in the course of business.

If we are unable to comply with applicable laws and regulations or with our contractual commitments, as well as maintain reliable information technology systems and appropriate controls with respect to privacy and security requirements, we may suffer regulatory consequences that could be costly or otherwise adversely affect our business.

For example, in the third quarter of 2021, both the United States Senate and the United States House of Representatives passed $3.5 trillion budget resolutions as a first step to the budget reconciliation process that could include U.S. corporate and international tax reforms.

As part of the reconciliation process, the House Ways and Means Committee marked up a version of the “Build Back Better Act”.

The Build Back Better Act included U.S. corporate and international tax reform proposals that would increase the U.S. corporate income tax rate, modify the Global Intangible Low Taxed Income rules, create additional interest deduction limitations and provide clean energy incentives, among others.

The Company believes it would benefit

from the clean energy initiatives, though the tax implications may be unfavorable in the short term.

As of the filing date, the Build Back Better Act had not been voted on in the United States Senate.

With respect to international tax reform, in the third quarter of 2021,132 member countries of the OECD “Inclusive Framework” group released a statement announcing a coordinated framework that would reallocate taxing rights over the profits of multinational corporations and establish a global minimum tax at a 15% rate.

On December 20, 2021 the OECD released a set of Model Rules related to the so-called Pillar 2 global minimum tax known as the Global Anti-Base Erosion (GloBE).

On December 22, 2021, the European Commission proposed a draft Directive establishing a global minimum level of taxation.

The proposal, if approved by all 27 EU Member States, would require each Member State to transpose the Directive into their respective national laws by December 31, 2022 for the Income Inclusion Rule to come into effect as of January 1, 2023 and the Under Taxed Payments Rule to come into effect January 1, 2024.

The Subject to Tax Rule was excluded from the draft Directive.

These Rules, collectively, comprise the main facets of the GloBE.

The potential impact to the Company is not known, but may be material.

Implementation of the framework would require multilateral agreement and/or country specific legislative action, including in the U.S.

result of foreign governments restricting the repatriation of funds or the conversion of currencies.

operations.

In many instances, energy from these facilities are bid into the wholesale spot market at a price of zero or close to zero during certain times of the day, driving down the clearing price for all generators selling power in the relevant spot market.

This trend can also make it more difficult for us to obtain attractive prices under new long-term PPAs for any new generation facilities we may seek to develop and have an adverse impact on our opportunities for new investments.

available in the amounts or on terms similar to our current policies.

cover any losses we may experience.

PPAs, decreased revenues, reduced economic returns on certain project company investments, increased financing costs, and/or difficulty obtaining financing.

conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.

For example, Gener's $868 million goodwill balance was considered to be "at risk" for impairment in 2020, largely due to the Chilean Government's announcement to phase out coal generation by 2040, and a decline in long-term energy prices.

As a result of the long-lived asset impairments at Gener during the third quarter of 2020, the Company determined there was a triggering event requiring a reassessment of goodwill impairment at September 1, 2020.

The Company determined the fair value of its Gener reporting unit exceeded its carrying value by 13%, and is not currently considered "at risk".

We continue to monitor the Gener reporting unit for potential interim goodwill impairment triggering events.

See Item 7.—*[Management's Discussion and Analysis](#ib8a9d8a86e19404b8f4f50535106f937_202)*[—](#ib8a9d8a86e19404b8f4f50535106f937_202)*[Key Trends and Uncertainties—Impairments](#ib8a9d8a86e19404b8f4f50535106f937_202)*.

Further, we may incur integration or

other one-time costs that are greater than expected.

The impact of GHG regulation on our operations will depend on a number of factors, including the degree and timing of GHG emissions

Any actual or perceived failure to comply with the EU General Data Protection Regulation, the California Privacy Rights Act, the California Consumer Privacy Act, the General Data Privacy Law in Brazil or other data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.

The TCJA introduced significant changes to current U.S. federal tax law.

These changes are complex, and the reaction to the federal tax changes by the individual states is still evolving.

Our interpretations and assumptions around U.S. tax reform may evolve in future periods, which may materially affect our effective tax rate or tax payments.

Additionally, President Biden proposed in his campaign platform changes to the corporate and U.S. individual tax system, including a possible increase in the corporate tax rate and the rate of

tax non-U.S. earnings are subject to, that may introduce additional complexity or materially affect our effective tax rate or tax payments.

See Item 7.—*[Management's Discussion and Analysis](#ib8a9d8a86e19404b8f4f50535106f937_169)[—Key Trends and Uncertainties](#ib8a9d8a86e19404b8f4f50535106f937_169)*.

Additionally, longstanding international tax norms that determine how and where cross-border international trade is subjected to tax are evolving.

The OECD, in coordination with the G8 and G20, through its initial Base Erosion and Profit Shifting project introduced a series of recommendations that many tax jurisdictions have adopted, or may adopt in the future, as law.

In 2019, the OECD announced an expansion of these efforts in the form of a two-pillar approach that would create new nexus rules without reference to physical presence (Pillar One) and introduce a global minimum tax (Pillar Two).

Blueprints for Pillar One and Pillar Two were released in the fourth quarter of 2020, with a stated goal of bringing the project to a conclusion by mid-2021.

As these and other tax laws, related regulations and double-tax conventions change, our financial results could be materially impacted.

Given the unpredictability of these possible changes and their potential interdependency, it is difficult to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow.

Such changes could have a material adverse impact our results of operations.

Our subsidiaries

flows.

In [removed: 2020,] [added: 2021,] AES delivered on [removed: or exceeded all] [added: its] strategic and financial objectives.

We completed construction [added: or the acquisition] of [removed: 2.3] [added: 2.1] GW of [removed: new projects] [added: renewables generation] and signed long-term PPAs for [removed: 3] [added: an additional 5] GW of [removed: renewable capacity.][added: new renewables.]

See *Overview of our Strategy* included in Item [removed: 1.—*[Business](#ib8a9d8a86e19404b8f4f50535106f937_19)*] [added: 1.—*[Business](#if7b552d0c82e4d75af26724d7276acc2_19)*] of this Form 10-K for further information.

Compared with last year, diluted earnings per share from continuing operations decreased [removed: $0.39,] [added: $0.68,] from [removed: $0.45] [added: $0.06] to [removed: $0.06.][added: a loss of $0.62.]

Adjusted EPS, a non-GAAP measure, increased $0.08, from [removed: $1.36] [added: $1.44] to [removed: $1.44,] [added: $1.52,] mainly [removed: due to] [added: reflecting] higher [removed: availability] [added: contributions from our US] and [removed: improved hydrology in Panama, commencement of operations of the Southland Energy CCGTs] [added: Utilities SBU, including new renewables] and [removed: a gain on sale of land in the U.S., a favorable revision] [added: Southland Energy, higher generation at Chivor due] to the [removed: GSF liability] [added: life extension project completed] in [removed: Brazil, a lower adjusted tax rate,] [added: the prior year] and [removed: a positive impact in Chile] [added: better hydrology, and lower Parent Company interest expense] due to [removed: incremental capitalized interest;] [added: realized gains on de-designated interest rate swaps and lower interest rates;] partially offset by [added: a higher adjusted tax rate,] lower contributions from [removed: our utilities in] [added: Brazil due to] the [removed: U.S. primarily driven by lower regulated rates as] [added: prior year revision of the GSF liability and drier hydrology, the prior year impacts of] a [removed: result] [added: gain on sale] of [added: land in] the [removed: changes] [added: U.S., incremental capitalized interest] in [removed: DP&L's ESP] [added: Chile,] and [removed: lower demand due to milder weather, lower contributions] [added: recovery of previously expensed payments] from [removed: Colombia due to drier hydrology and lower generation due to a life extension project at Chivor,] [added: customers in Chile;] and [removed: prior year net insurance recoveries.][added: the impact of the inclusion of shares underlying the purchase contract component of our March 2021 equity units issuance.]

| Years Ended December 31, | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | | | | | % Change [removed: 2020] [added: 2021] vs. [removed: 2019] [added: 2020] | | | | | | % Change [removed: 2019] [added: 2020] vs. [removed: 2018] [added: 2019] | | |

| US and Utilities SBU | | | $ | [removed: 3,918] [added: 4,335] | | | | | $ | [removed: 4,058] [added: 3,918] | | | | | $ | [removed: 4,230] [added: 4,058] | | | | | [removed: \-3] [added: 11] | | % | | | | [removed: \-4] [added: \-3] | | % |

| South America SBU | | | [removed: 3,159] [added: 3,541] | | | | | | [removed: 3,208] [added: 3,159] | | | | | | [removed: 3,533] [added: 3,208] | | | | | | [removed: \-2] [added: 12] | | % | | | | [removed: \-9] [added: \-2] | | % |

| MCAC SBU | | | [removed: 1,766] [added: 2,157] | | | | | | [removed: 1,882] [added: 1,766] | | | | | | [removed: 1,728] [added: 1,882] | | | | | | [removed: \-6] [added: 22] | | % | | | | [removed: 9] [added: \-6] | | % |

| Eurasia SBU | | | [removed: 828] [added: 1,123] | | | | | | [removed: 1,047] [added: 828] | | | | | | [removed: 1,255] [added: 1,047] | | | | | | [removed: \-21] [added: 36] | | % | | | | [removed: \-17] [added: \-21] | | % |

| Corporate and Other | | | [removed: 231] [added: 116] | | | | | | [removed: 46] [added: 231] | | | | | | [removed: 41] [added: 46] | | | | | | [removed: NM] [added: \-50] | | [added: %] | | | | [removed: 12] [added: NM] | | [removed: %] |

| Eliminations | | | [removed: (242)] [added: (131)] | | | | | | [removed: (52)] [added: (242)] | | | | | | [removed: (51)] [added: (52)] | | | | | | [removed: NM] [added: \-46] | | [added: %] | | | | [removed: 2] [added: NM] | | [removed: %] |

| Total Revenue | | | [removed: 9,660] [added: 11,141] | | | | | | [removed: 10,189] [added: 9,660] | | | | | | [removed: 10,736] [added: 10,189] | | | | | | [removed: \-5] [added: 15] | | % | | | | \-5 | | % |

| US and Utilities SBU | | | [removed: 638] [added: 792] | | | | | | [removed: 754] [added: 638] | | | | | | [removed: 733] [added: 754] | | | | | | [removed: \-15] [added: 24] | | % | | | | [removed: 3] [added: \-15] | | % |

| South America SBU | | | [removed: 1,243] [added: 1,069] | | | | | | [removed: 873] [added: 1,243] | | | | | | [removed: 1,017] [added: 873] | | | | | | [removed: 42] [added: \-14] | | % | | | | [removed: \-14] [added: 42] | | % |

| MCAC SBU | | | [removed: 559] [added: 521] | | | | | | [removed: 487] [added: 559] | | | | | | [removed: 534] [added: 487] | | | | | | [removed: 15] [added: \-7] | | % | | | | [removed: \-9] [added: 15] | | % |

| Eurasia SBU | | | [removed: 186] [added: 216] | | | | | | [removed: 188] [added: 186] | | | | | | [removed: 227] [added: 188] | | | | | | [removed: \-1] [added: 16] | | % | | | | [removed: \-17] [added: \-1] | | % |

| Corporate and Other | | | [removed: 120] [added: 158] | | | | | | [removed: 39] [added: 120] | | | | | | [removed: 58] [added: 39] | | | | | | [removed: NM] [added: 32] | | [added: %] | | | | [removed: \-33] [added: NM] | | [removed: %] |

| Eliminations | | | [removed: (53)] [added: (45)] | | | | | | [removed: 8] [added: (53)] | | | | | | [removed: 4] [added: 8] | | | | | | [removed: NM] [added: \-15] | | [added: %] | | | | [removed: 100] [added: NM] | | [removed: %] |

| Total Operating Margin | | | [removed: 2,693] [added: 2,711] | | | | | | [removed: 2,349] [added: 2,693] | | | | | | [removed: 2,573] [added: 2,349] | | | | | | [removed: 15] [added: 1] | | % | | | | [removed: \-9] [added: 15] | | % |

| General and administrative expenses | | | [removed: (165)] [added: (166)] | | | | | | [removed: (196)] [added: (165)] | | | | | | [removed: (192)] [added: (196)] | | | | | | [removed: \-16] [added: 1] | | % | | | | [removed: 2] [added: \-16] | | % |

| Interest expense | | | [removed: (1,038)] [added: (911)] | | | | | | [removed: (1,050)] [added: (1,038)] | | | | | | [removed: (1,056)] [added: (1,050)] | | | | | | [removed: \-1] [added: \-12] | | % | | | | \-1 | | % |

| Interest income | | | [removed: 268] [added: 298] | | | | | | [removed: 318] [added: 268] | | | | | | [removed: 310] [added: 318] | | | | | | [removed: \-16] [added: 11] | | % | | | | [removed: 3] [added: \-16] | | % |

| Loss on extinguishment of debt | | | [removed: (186)] [added: (78)] | | | | | | [removed: (169)] [added: (186)] | | | | | | [removed: (188)] [added: (169)] | | | | | | [removed: 10] [added: \-58] | | % | | | | [removed: \-10] [added: 10] | | % |

| Other expense | | | [removed: (53)] [added: (60)] | | | | | | [removed: (80)] [added: (53)] | | | | | | [removed: (58)] [added: (80)] | | | | | | [removed: \-34] [added: 13] | | % | | | | [removed: 38] [added: \-34] | | % |

| Other income | | | [removed: 75] [added: 410] | | | | | | [removed: 145] [added: 75] | | | | | | [removed: 72] [added: 145] | | | | | | [removed: \-48] [added: NM] | | [removed: %] | | | | [removed: NM] [added: \-48] | | [added: %] |

| Gain (loss) on disposal and sale of business interests | | | [removed: (95)] [added: (1,683)] | | | | | | [removed: 28] [added: (95)] | | | | | | [removed: 984] [added: 28] | | | | | | NM | | | | | | [removed: \-97] [added: NM] | | [removed: %] |

| Asset impairment expense | | | [removed: (864)] [added: (1,575)] | | | | | | [removed: (185)] [added: (864)] | | | | | | [removed: (208)] [added: (185)] | | | | | | [removed: NM] [added: 82] | | [added: %] | | | | [removed: \-11] [added: NM] | | [removed: %] |

| Foreign currency transaction gains (losses) | | | [removed: 55] [added: (10)] | | | | | | [removed: (67)] [added: 55] | | | | | | [removed: (72)] [added: (67)] | | | | | | NM | | | | | | [removed: \-7] [added: NM] | | [removed: %] |

| Other non-operating expense | | | [removed: (202)] [added: —] | | | | | | [removed: (92)] [added: (202)] | | | | | | [removed: (147)] [added: (92)] | | | | | | [removed: NM] [added: \-100] | | [added: %] | | | | [removed: \-37] [added: NM] | | [removed: %] |

| Income tax [removed: expense] [added: benefit (expense)] | | | [removed: (216)] [added: 133] | | | | | | [removed: (352)] [added: (216)] | | | | | | [removed: (708)] [added: (352)] | | | | | | [removed: \-39] [added: NM] | | [removed: %] | | | | [removed: \-50] [added: \-39] | | % |

| Net equity in [removed: earnings (losses)] [added: losses] of affiliates | | | [removed: (123)] [added: (24)] | | | | | | [removed: (172)] [added: (123)] | | | | | | [removed: 39] [added: (172)] | | | | | | [removed: \-28] [added: \-80] | | % | | | | [removed: NM] [added: \-28] | | [added: %] |

| INCOME [added: (LOSS)] FROM CONTINUING OPERATIONS | | | [removed: 149] [added: (955)] | | | | | | [removed: 477] [added: 149] | | | | | | [removed: 1,349] [added: 477] | | | | | | [removed: \-69] [added: NM] | | [removed: %] | | | | [removed: \-65] [added: \-69] | | % |

| [removed: Loss] [added: Gain] from [removed: operations] [added: disposal] of discontinued businesses, net of income tax expense of [removed: $0,] [added: $1,] $0, and [removed: $2,] [added: $0,] respectively | | | [removed: —] [added: 4] | | | | | | [removed: —] [added: 3] | | | | | | [removed: (9)] [added: 1] | | | | | | [removed: —] [added: 33] | | % | | | | [removed: \-100] [added: NM] | | [removed: %] |

| NET INCOME [added: (LOSS)] | | | [removed: 152] [added: (951)] | | | | | | [removed: 478] [added: 152] | | | | | | [removed: 1,565] [added: 478] | | | | | | [removed: \-68] [added: NM] | | [removed: %] | | | | [removed: \-69] [added: \-68] | | % |

| Less: [removed: Income] [added: Loss (income)] from continuing operations attributable to noncontrolling interests and redeemable stock of subsidiaries | | | [removed: (106)] [added: 542] | | | | | | [removed: (175)] [added: (106)] | | | | | | [removed: (364)] [added: (175)] | | | | | | [removed: \-39] [added: NM] | | [removed: %] | | | | [removed: \-52] [added: \-39] | | % |

| NET INCOME [added: (LOSS)] ATTRIBUTABLE TO THE AES CORPORATION | | | $ | [removed: 46] [added: (409)] | | | | | $ | [removed: 303] [added: 46] | | | | | $ | [removed: 1,203] [added: 303] | | | | | [removed: \-85] [added: NM] | | [removed: %] | | | | [removed: \-75] [added: \-85] | | % |

| Income [added: (loss)] from continuing operations, net of tax | | | $ | [removed: 43] [added: (413)] | | | | | $ | [removed: 302] [added: 43] | | | | | $ | [removed: 985] [added: 302] | | | | | [removed: \-86] [added: NM] | | [removed: %] | | | | [removed: \-69] [added: \-86] | | % |

| Income from discontinued operations, net of tax | | | [removed: 3] [added: 4] | | | | | | [removed: 1] [added: 3] | | | | | | [removed: 218] [added: 1] | | | | | | [removed: NM] [added: 33] | | [added: %] | | | | [removed: \-100] [added: NM] | | [removed: %] |

| NET INCOME [added: (LOSS)] ATTRIBUTABLE TO THE AES CORPORATION | | | $ | [removed: 46] [added: (409)] | | | | | $ | [removed: 303] [added: 46] | | | | | $ | [removed: 1,203] [added: 303] | | | | | [removed: \-85] [added: NM] | | [removed: %] | | | | [removed: \-75] [added: \-85] | | % |

Fluence completed its IPO and began trading in November 2021.

This decrease reflects the loss on deconsolidation of Alto Maipo in the current period, higher current year impairments, and lower contributions from Brazil due to the prior year revision of the GSF liability and drier hydrology; partially offset by higher margins at our US and Utilities SBU including new renewables, Southland Energy, and Southland, lower Parent Company interest expense due to realized gains on de-designated interest rate swaps and lower interest rates, gains on Fluence capital raisings, a gain on remeasurement of our interest in sPower's development platform, and lower income tax expense.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

*Consolidated Revenue* *—* Revenue increased $1.5 billion, or 15%, in 2021 compared to 2020, driven by:

- $417 million in US and Utilities driven by higher sales at Southland Energy primarily due to the CCGT units operating under active PPAs during the full 2021 period; higher demand in El Salvador due to the economic recovery from the COVID-19 impact; higher fuel revenues and higher demand from favorable weather at AES Indiana; increases in capacity sales and in realized gains resulting from the commercial hedging strategy at Southland; and higher sales at AES Clean Energy due to the supply agreement with Google; partially offset by decreased capacity at DPL due to its exit from the generation business;

- $391 million in MCAC driven by higher contract sales, fuel prices, and LNG sales, driven by the Eastern Pipeline COD in 2020, in the Dominican Republic; higher pass-through fuel prices in Mexico; and higher energy prices and contract sales due to increased demand in Panama; partially offset by the impact from the sale of Itabo in April 2021;

- $382 million in South America primarily driven by the revenue recognized at Angamos for the early termination of contracts with Minera Escondida and Minera Spence; higher generation and prices (Resolution 440/2021) in Argentina; higher availability, from higher reservoir levels, in Colombia; and higher volume and generation at AES Brasil, partially due to the acquisition of the Ventus and Cubico wind complexes; partially offset by unfavorable FX impact and by the prior period recovery of previously expensed payments from customers in Chile; and

- $295 million in Eurasia mainly driven by higher energy prices and generation in Bulgaria and higher generation in Vietnam.

*Consolidated Operating Margin* *—* Operating margin increased $18 million, or 1%, in 2021 compared to 2020, driven by:

*•*$154 million in US and Utilities primarily from higher sales at Southland Energy due to the CCGT units operating under active PPAs during the full 2021 period; increases in capacity sales and in realized gains resulting from the commercial hedging strategy at Southland; and higher demand in El Salvador due to the economic recovery from the COVID-19 impact; partially offset by increased costs associated with growing and accelerating the development pipeline at AES Clean Energy and by higher maintenance expenses at AES Indiana;

- $46 million at Corporate and Other, mainly eliminated at consolidated level, driven by increases in IT costs reallocated to the operating segments and premiums earned by the AES self-insurance company; and

*•*$30 million in Eurasia mainly driven by higher energy prices and generation in Bulgaria and improved operational performance in Vietnam.

These favorable impacts were partially offset by a decrease of:

*•*$174 million in South America primarily due to unfavorable FX impact; higher energy purchases due to drier hydrology and a prior period GSF settlement at Tietê; and higher spot prices on energy prices and prior period recovery of previously expensed payments from customers in Chile; partially offset by revenue recognized at Angamos for the early termination of contracts with Minera Escondida and Minera Spence; higher generation and prices (Resolution 440/2021) in Argentina; lower fixed costs in Chile; and higher availability, from higher reservoir levels, in Colombia; and

- $38 million in MCAC mainly driven by the impact from the sale of Itabo in April 2021; decreased capacity and higher fixed costs in the Dominican Republic; decreased availability and higher fixed costs in Mexico; and higher fuel costs, drier hydrology, and the disconnection of the Estrella del Mar I power barge in the prior year in Panama; partially offset by higher LNG sales in the Dominican Republic driven by the Eastern Pipeline COD in 2020 and higher demand and positive impact from new renewables businesses in Panama.

spot sales and demand in both the Dominican Republic and at the Colon combined cycle facility in Panama.

Interest expense decreased $127 million, or 12%, to $911 million for 2021, compared to $1,038 million for 2020 primarily due to realized gains on de-designated interest rate swaps, lower interest rates related to refinancing at the Parent Company and lower monetary correction due to the GSF settlement in March 2021.

Interest income increased $30 million, or 11%, to $298 million for 2021, compared to $268 million for 2020 primarily due to the arbitration proceeding in Chile, the commencement of a sales-type lease at the AES Energy Storage Alamitos project in January 2021, and higher CAMMESA interest rates on receivables in Argentina, partially offset by a lower loan receivable balance in Vietnam.

Loss on extinguishment of debt decreased $108 million, or 58%, to $78 million for 2021, compared to $186 million for 2020.

These decreases were partially offset in 2021 by a loss of $27 million due to the prepayment at AES Brasil, losses at Argentina and AES Andes of $17 million and $14 million, respectively, due to repayments, and a refinancing resulting in a loss at Andres of $14 million.

Other income increased $335 million to $410 million for 2021, compared to $75 million for 2020 primarily due to the current year gain on remeasurement of our equity interest in the sPower development platform to its acquisition-date fair value, recognized as part of the merger to form AES Clean Energy Development, legal arbitration at Alto Maipo, and the gain on remeasurement of contingent consideration of the Great Cove Solar acquisition at Clean Energy, partially offset by the prior year gain on sale of Redondo Beach land at Southland.

Other expense increased $7 million, or 13%, to $60 million for 2021, compared to $53 million for 2020 primarily due to a current year loss recognized at commencement of a sales-type lease at AES Renewable Holdings and an increase in loss on sale and disposal of assets, partially offset by lower losses on sales of Stabilization Fund receivables in Chile and compliance with an arbitration decision in 2020.

Loss on disposal and sale of business interests increased $1,588 million to $1,683 million for 2021, compared to $95 million for 2020, primarily due to the $2,074 million loss on the deconsolidation of Alto Maipo, partially offset by the issuance of new shares by Fluence, our equity method investment, to new investors, which AES has accounted for as a gain on the partial disposition of its investment in Fluence, and the gain on the sale of Guacolda.

Asset impairment expense increased $711 million to $1,575 million for 2021, compared to $864 million for 2020.

This increase was primarily due to impairments of $649 million and $155 million related to AES Andes’ commitment to accelerate the retirement of the Ventanas 3 & 4 and Angamos coal-fired plants, respectively, a $475 million impairment at Puerto Rico associated with the economic costs and reputational risks of disposal of coal combustion residuals off island, impairments of $29 million, $73 million, and $91 million at Buffalo Gap I, II, and III wind generation facilities, respectively, due to an expired PPA and volatile spot prices in the ERCOT market, and a $67 million impairment at the Mountain View I & II wind facilities related to a repowering project that will result in decommissioning the majority of the existing wind turbines in advance of their depreciable lives.

The increase was partially offset by the $564 million and $213 million impairments related to the Angamos and Ventanas 1 & 2 coal-fired plants in Chile in the prior year and the $38 million impairment of the generation facility in Hawaii during 2020.

| Dominican Republic | | | (1) | | | | | | 9 | | | | | | 2 | | |

| Chile | | | 20 | | | | | | (5) | | | | | | 2 | | |

There were no other non-operating expenses during the year ended December 31, 2021.

Income tax benefit was $133 million for the twelve months ended December 31, 2021, compared to income tax expense of $216 million for the twelve months ended December 31, 2020.

The net change in the 2021 effective tax rate was primarily due to the 2021 impacts of the deconsolidation of Alto Maipo and the asset impairment at Puerto Rico.

These impacts were partially offset by the income tax benefit related to effective settlement resulting from the exam closure of the Company’s U.S. 2017 tax return.

Additionally offsetting the aforementioned impacts was the benefit associated with the release of valuation allowance due to a change in expected realizability of net operating loss carryforwards at one of our Brazilian subsidiaries.

The net increase in the 2020 effective tax rate was primarily due to the 2020 impacts of the drivers cited above.

A future

Net equity in losses of affiliates decreased $99 million, or 80%, to $24 million in 2021, compared to $123 million in 2020.

This was primarily driven by earnings at sPower in 2021 of $79 million, compared to losses in the prior year, driven by renewable projects that came online and prior year impairments of certain development projects, and $81 million of losses at AES Andes in 2020 mainly due to a long-lived asset impairment and the suspension of equity method accounting at Guacolda.

This decrease in losses was partially offset by an increase in losses at Fluence of $45 million due to shipping issues, cost overruns and delays at projects under construction, and an increase in costs associated with the growing business, as well as an increase in losses at Uplight of $10 million due to higher costs associated with the growing business.

- Loss on deconsolidation of Alto Maipo due to loss of control after Chapter 11 filing;

Fluence, our joint venture with Siemens, maintained its leading global market share with 1 GW of projects delivered or awarded in 2020.

Finally, following our efforts to reduce recourse debt, our Parent Company's credit rating was upgraded to investment grade by S&P.

This decrease reflects higher impairments and losses on sales in the current period, lower contributions from DP&L primarily driven by lower regulated rates as a result of the changes in the ESP, lower demand at IPL and DP&L due to milder weather, lower contributions from Colombia due to drier hydrology and lower generation due to a life extension project at Chivor, and prior year net insurance recoveries; partially offset by lower income tax expense, and higher contributions from Chile due to net gains from early contract terminations at Angamos and a positive impact due to incremental capitalized interest, from Brazil due to a favorable revision to the GSF liability, from Panama due to higher availability and improved hydrology, and in the U.S. due to commencement of operations of the Southland Energy CCGTs and a gain on sale of land.

| Gain from disposal of discontinued businesses, net of income tax expense of $0, $0, and $44, respectively | | | 3 | | | | | | 1 | | | | | | 225 | | | | | | NM | | | | | | \-100 | | % |

| Less: Loss from discontinued operations attributable to noncontrolling interests | | | — | | | | | | — | | | | | | 2 | | | | | | — | | % | | | | \-100 | | % |

Excluding the unfavorable FX impact of $182 million, primarily in South America, this decrease was driven by:

Excluding the unfavorable impact of FX of $50 million, primarily in South America, this increase was driven by:

*Consolidated Revenue* *—* Revenue decreased $547 million, or 5%, in 2019 compared to 2018.

Excluding the unfavorable FX impact of $133 million, primarily in South America, this decrease was driven by:

- $229 million in South America primarily driven by lower generation and prices in Argentina and lower contract sales and generation in Chile;

- $173 million in Eurasia primarily due to the sales of the Masinloc power plant in March 2018 and the Northern Ireland businesses in June 2019; and

- $172 million in US and Utilities primarily driven by the closure of generation facilities at DPL in the first half of 2018 and Shady Point in May 2019, and lower energy prices and sales due to higher temperatures and other favorable market conditions present in 2018 as compared to 2019 at Southland, partially offset by price increases due to the 2018 rate orders at IPL and DPL and an increase in energy pass-through costs in El Salvador.

These unfavorable impacts were partially offset by an increase of $156 million in MCAC driven by the commencement of operations at the Colon combined cycle facility in Panama in September 2018.

*Consolidated Operating Margin* *—* Operating margin decreased $224 million, or 9%, in 2019 compared to 2018.

Excluding the unfavorable impact of FX of $46 million, primarily in South America, this decrease was driven by:

- $107 million in South America primarily due to the drivers discussed above;

- $46 million in MCAC due to the outage at Changuinola as a result of upgrading the tunnel lining and lower hydrology in Panama as compared to the prior year, partially offset by the business interruption insurance recoveries at the Andres facility in Dominican Republic, higher contract sales at Panama, and the commencement of operations at the Colon combined cycle facility in Panama; and

- $31 million in Eurasia primarily due to the drivers discussed above, partially offset by lower depreciation at the Jordan plants due to their classification as held-for-sale.

These unfavorable impacts were partially offset by a $21 million increase in US and Utilities mostly driven by the 2018 rate orders at IPL and DPL, partially offset by the lost margin from the sale and closure of generation facilities at Shady Point and DPL, and increased rock ash disposal at Puerto Rico.

Interest expense decreased $6 million, or 1%, to $1,050 million for 2019, compared to $1,056 million for 2018 primarily due to the debt refinancing at the Parent Company and DPL, and favorable foreign currency translation at AES Brasil, partially offset by lower capitalized interest due to the commencement of operations at Colon in September 2018, a decrease in AFUDC for the Eagle Valley CCGT project at IPL, and the loss of hedge accounting at Alto Maipo in 2018, which resulted in favorable unrealized mark-to-market adjustments recognized within interest expense.

Interest income increased $8 million, or 3%, to $318 million for 2019, compared to $310 million for 2018 primarily in South America driven by a higher average interest rate on CAMMESA receivables.

Loss on extinguishment of debt decreased $19 million, or 10% to $169 million for 2019, compared to $188 million for 2018.

This decrease was primarily due to losses of $171 million at the Parent Company resulting from the redemption of senior notes in 2018 compared to the 2019 losses discussed above.

Other income increased $73 million to $145 million for 2019, compared to $72 million for 2018 primarily due to gains on insurance recoveries associated with property damage at the Andres facility and upgrading the tunnel lining at Changuinola.

These increases were partially offset by a gain on remeasurement of contingent liabilities for projects in Hawaii in 2018.

Other expense increased $22 million, or 38% to $80 million for 2019, compared to $58 million for 2018 primarily due to losses recognized at commencement of sales-type leases at Distributed Energy and the loss on disposal of assets at Changuinola associated with upgrading the tunnel lining in 2019.

This was partially offset by

the loss on disposal of assets resulting from damage associated with a lightning incident at the Andres facility in the Dominican Republic in 2018.

Gain on disposal and sale of business interests decreased to $28 million for 2019 as compared to $984 million for 2018, primarily due to the 2018 gains on sale of Masinloc of $772 million, CTNG of $126 million, and Electrica Santiago of $70 million.

Asset impairment expense decreased $23 million, or 11%, to $185 million for 2019, compared to $208 million for 2018.

This decrease was primarily driven by $115 million as a result of an impairment analysis performed at Kilroot and Ballylumford upon meeting the held-for-sale criteria in 2019 and $60 million at Hawaii due to a decrease in the economic useful life of the coal-fired asset, compared to 2018 impairments of $157 million at Shady Point due to an unfavorable economic outlook creating uncertainty around future cash flows and $37 million at Nejapa due to the landfill owner's failure to perform improvements necessary to continue extracting gas.

Other non-operating expense was $147 million in 2018 primarily due to the $144 million other-than-temporary impairment of the Guacolda equity method investment as a result of increased renewable generation in Chile lowering energy prices and impacting the ability of Guacolda to re-contract its existing PPAs after they expire.

Further, the 2019 rate was impacted by the items described below.

Income tax expense decreased $356 million to $352 million in 2019 as compared to $708 million for 2018.

The 2018 effective tax rate was impacted by the increase in the Staff Accounting Bulletin No.118 ("SAB 118") adjustment with respect to the estimate of the one-time transition tax and deferred tax remeasurement under the TCJA.

This impact was partially offset by the impact of the sale of the Company’s entire 51% equity interest in Masinloc.

Net equity in earnings of affiliates decreased $211 million to losses of $172 million in 2019, compared to earnings of $39 million in 2018.

This was primarily driven by a $158 million decrease in earnings due to a long-lived

asset impairment at Guacolda, a $19 million decrease in earnings at OPGC due to a contract termination charge, and a $20 million decrease in earnings at sPower due to the impairment of certain development projects.

Net income from discontinued operations

For further information regarding market risk, see Item 1A.—*[Risk [removed: Factors](#ib8a9d8a86e19404b8f4f50535106f937_55)*, *Our financial position and results of operations may fluctuate significantly due to fluctuations] [added: Factors](#if7b552d0c82e4d75af26724d7276acc2_58)*, *Fluctuations] in currency exchange rates [removed: experienced at] [added: may impact] our [removed: foreign operations*;] [added: financial results and position*;] *Wholesale power prices [removed: are declining] [added: may experience significant volatility] in [removed: many] [added: our] markets [removed: and this] [added: which] could [removed: have a material adverse effect on] [added: impact] our operations and opportunities for future growth;* *We may not be adequately hedged against our exposure to changes in commodity prices or interest rates; and Certain of our businesses are sensitive to variations in weather and hydrology* of this [removed: 2020] [added: 2021] Form 10-K.

For [removed: 2021,] [added: 2022,] we project pre-tax earnings exposure on a 10% [added: (uncorrelated)] move in commodity prices [removed: would] [added: to] be [removed: less than] [added: approximately a] $5 million [added: gain] for [removed: power,][added: power and oil, a $5 million loss for coal, and a $15 million loss for natural gas.]

[removed: In aggregate, the Company's downside exposure occurs] with lower power, lower oil, higher natural gas, and higher coal prices.

In the Dominican Republic, we own natural [removed: gas- and coal-fired assets] [added: gas plants] contracted under a portfolio of contract sales, and both contract and spot prices may move with commodity prices.

[added: These subsidiaries and affiliates have attempted to] limit potential foreign exchange exposure by entering into revenue contracts that adjust to changes in foreign exchange rates.

As of December 31, [removed: 2020,] [added: 2021,] assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries exposed to movement in the exchange rate are projected to be impacted by less than $(5) million [removed: each] for Brazilian [removed: real, Colombia peso,] [added: real] and [added: less than $5 million each for Colombian peso and] Euro.

These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for [removed: 2021] [added: 2022] coming from the respective subsidiaries exposed to the currencies listed above, net of the impact of outstanding hedges and holding all other variables constant.

As of December 31, [removed: 2020,] [added: 2021,] the portfolio's pre-tax earnings exposure for [removed: 2021] [added: 2022] to a one-time 100-basis-point increase in interest rates for our Argentine peso, Brazilian real, Chilean peso, Colombian peso, Euro, and USD denominated debt would be approximately $20 million on interest expense for the debt denominated in these currencies.

In aggregate, the Company's downside exposure occurs

less than $(5) million for natural gas, $(5) million for coal, and less than $5 million for oil.

These subsidiaries and affiliates have attempted to

Additional items that may have an impact on our businesses are discussed in Item 1A.—*[Risk [removed: Factors](#ib8a9d8a86e19404b8f4f50535106f937_55)*] [added: Factors](#if7b552d0c82e4d75af26724d7276acc2_58)*] and Item 3.—*[Legal [removed: Proceedings](#ib8a9d8a86e19404b8f4f50535106f937_64)*.][added: Proceedings](#if7b552d0c82e4d75af26724d7276acc2_67)*.]

[added: 2021] Strategic Highlights

[removed: ◦1,019] [added: ◦1,129] MW of solar, wind and energy storage [removed: globally][added: in the U.S.;]

- We signed [removed: 3,017] [added: 4,965] MW of renewables and energy storage under long-term PPAs, including:

[removed: ◦1,180] [added: ◦3,677] MW of [added: wind, solar,] energy storage, [removed: solar] and [removed: solar plus storage and] hydro in the [removed: US] [added: U.S.] and El Salvador;

[removed: ◦1,171] [added: ◦334] MW of [removed: wind] [added: wind, energy storage,] and solar [removed: at AES Gener] in Chile and Colombia; [added: and]

[removed: ◦211] [added: ◦91] MW of [removed: wind and] solar in Panama and the Dominican [removed: Republic; and][added: Republic]

- [removed: As of December 31, 2020, our] [added: Our] backlog of [removed: 6,909] [added: 9,239] MW includes:

[removed: ◦1,850] [added: ◦3,497] MW under construction and coming [removed: on-line] [added: online] through [removed: 2022;] [added: 2024;] and

[removed: ◦5,059] [added: ◦5,742] MW of renewables signed under long-term PPAs

We currently own and/or operate a generation portfolio of [removed: 30,308] [added: 31,459] MW, including generation from our integrated utility, [removed: IPL.][added: AES Indiana.]

Performance drivers of our generation businesses include types of electricity sales agreements, plant reliability and flexibility, availability of generation capacity to meet contracted sales, fuel costs, seasonality, weather [removed: variations and] [added: variations,] economic activity, fixed-cost management, and competition.

When the contract does not include a fuel pass-through, we typically hedge fuel costs or enter into fuel [added: or energy] supply agreements for a similar contract period (see discussion below under *Fuel Costs*).

For further information regarding commodity price risk please see Item 7A.—*[Quantitative and Qualitative Disclosures about Market [removed: Risk](#ib8a9d8a86e19404b8f4f50535106f937_241)*] [added: Risk](#if7b552d0c82e4d75af26724d7276acc2_244)*] in this Form 10-K.

[removed: 37%] [added: 43%] of the capacity of our generation plants are fueled by renewables, including hydro, solar, wind, energy storage, biomass and landfill gas, which do not have significant fuel costs.

[removed: 33%] [added: 32%] of the capacity of our generation plants are fueled by natural gas.

A few exceptions to this are AES [removed: Gener] [added: Andes] in Chile, where we purchase imported gas from third parties, and our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market.

[removed: 27%] [added: 23%] of the capacity of our generation fleet is coal-fired.

[removed: 3%] [added: 2%] of the capacity of our generation fleet utilizes pet coke, diesel or oil for fuel.

AES' [added: six utility businesses distribute power to 2.6 million people and AES'] two utilities in the U.S. also include generation capacity totaling [removed: 3,973] [added: 3,720] MW.

Our utility businesses consist of [removed: IPL] [added: AES Indiana] and [removed: DP&L] [added: AES Ohio] in the U.S. and four utilities in El Salvador.

[removed: IPL,] [added: AES Indiana,] our fully integrated utility, and [removed: DP&L,] [added: AES Ohio,] our transmission and distribution regulated utility, operate as the sole distributors of electricity within their respective jurisdictions.

[removed: IPL] [added: AES Indiana] owns and operates all of the facilities necessary to generate, transmit and distribute electricity.

[removed: DP&L] [added: AES Ohio] owns and operates all of the facilities necessary to transmit and distribute electricity.

The asset base on which the utility is permitted a return is determined by the regulator, within the framework of applicable local laws, and is [removed: based on the amount of assets that are considered used and useful in serving customers.]

The segment reporting structure uses the Company's management reporting structure as its foundation to reflect how the Company manages the [removed: business internally.][added: businesses internally and is mainly organized by geographic regions which provides a socio-political-economic understanding of our business.]

The Adjusted PTC by SBU for the year ended December 31, [removed: 2020] [added: 2021] is shown below.

See Item 7.—*[Management's Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance [removed: Analysis](#ib8a9d8a86e19404b8f4f50535106f937_154)*] [added: Analysis](#if7b552d0c82e4d75af26724d7276acc2_157)*] of this Form 10-K for reconciliation and definitions of Adjusted PTC.

[removed: ][added: ]

See Item 7.—*[Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ib8a9d8a86e19404b8f4f50535106f937_94)*] [added: Operations](#if7b552d0c82e4d75af26724d7276acc2_97)*] and Note 18—*[Segment and [removed: Geographic](#ib8a9d8a86e19404b8f4f50535106f937_355) [](#ib8a9d8a86e19404b8f4f50535106f937_355)[Information](#ib8a9d8a86e19404b8f4f50535106f937_355)*] [added: Geographic Information](#if7b552d0c82e4d75af26724d7276acc2_319)*] included in Item 8.—*[Financial Statements and Supplementary [removed: Data](#ib8a9d8a86e19404b8f4f50535106f937_244)*] [added: Data](#if7b552d0c82e4d75af26724d7276acc2_247)*] of this Form 10-K for further discussion of the Company's segment structure.

| (1) Non-GAAP measure. See Item 7.—*[Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ib8a9d8a86e19404b8f4f50535106f937_94)—SBU] [added: Operations](#if7b552d0c82e4d75af26724d7276acc2_97)—SBU] Performance Analysis—Non-GAAP Measures* for reconciliation and definition. | | | | | |

Our US and Utilities SBU has [removed: 37] [added: 41] generation facilities, two utilities in the United States, and four utilities in El Salvador.

*Generation* — Operating installed capacity of our US and Utilities SBU totals [removed: 11,754] [added: 12,932] MW.

IPALCO [removed: (IPL's] [added: (AES Indiana's] parent), [removed: DP&L,] [added: AES Ohio,] and DPL Inc. [removed: (DP&L's] [added: (AES Ohio's] parent) are all SEC registrants, and as such, follow the public filing requirements of the Securities Exchange Act of 1934.

| El Salvador Subtotal | | | | | | | | | | | | | | | | | | [removed: 113] [added: 123] | | | | | | | | | | | | | | | | | | | | | | | | | | |

| AES Clean Energy (sPower OpCo A (1)) | | | | | | US-Various | | | | | | Solar | | | | | | [removed: 1,101] [added: 967] | | | | | | 26 | | % | | | | 2017-2019 | | | | | | 2028-2046 | | | | | | Various | | |

| Southland—Redondo Beach | | | | | | US-CA | | | | | | Gas | | | | | | 876 | | | | | | 100 | | % | | | | 1998 | | | | | | [removed: 2021] [added: 2023] | | | | | | Various | | |

| Southland Energy—Alamitos (2) | | | | | | US-CA | | | | | | Gas | | | | | | [removed: 650] [added: 697] | | | | | | 65 | | % | | | | 2020 | | | | | | 2040 | | | | | | Southern California Edison | | |

| Southland Energy—Huntington Beach(2) | | | | | | US-CA | | | | | | Gas | | | | | | [removed: 649] [added: 694] | | | | | | 65 | | % | | | | 2020 | | | | | | 2040 | | | | | | Southern California Edison | | |

| AES Clean Energy (AES [removed: Distributed Energy)] [added: Renewable Holdings)] (3) | | | | | | US-Various | | | | | | Solar | | | | | | [removed: 283] [added: 415] | | | | | | 100 | | % | | | | [removed: 2015-2020] [added: 2015-2021] | | | | | | 2029-2042 | | | | | | Utility, Municipality, Education, Non-Profit | | |

AES is an industry leader in developing and growing the solutions that will enable the transition to low-carbon sources of energy and achievement of the Paris Agreement's goal of net-zero emissions by 2050.

Today we see an enormous business opportunity from the once-in-a-lifetime transformation of the electricity sector driven by decarbonization, electrification, and digitalization.

There is a substantial need for more renewable energy as well as an opportunity for innovation to develop new products and solutions that help customers accomplish their individual decarbonization goals.

At the core of AES' strategy is a dual focus on: (1) growing our portfolio of low-carbon products and solutions; and (2) working to develop and incubate new solutions and business models which will help drive change in the industry in the future.

In 2021, we signed long-term contracts for approximately 5 GW of renewable power, bringing our backlog of projects — those with signed contracts, but which are not yet in operation — to 9.2 GW.

Our backlog serves as the core component of future growth.

Central to our renewables growth strategy is a focus on customer collaboration and co-creation, which helps us develop unique solutions based on specific customer needs.

This approach not only contributes to customer satisfaction and repeat business, but it also allows AES to work with key customers on a bilateral basis rather than just through participation in bid processes.

This approach has led to the co-creation of several first-of-its-kind industry innovations, including an agreement to supply 24/7 carbon-free energy for Google's data centers in Virginia, ensuring that the energy powering those data centers will be 90% carbon-free when measured on an hourly basis.

In 2021, we signed a total of approximately 2 GW of other innovative structures with various customers on a bilateral basis.

We are also working with some of the world's largest mining companies in their transition to renewable energy in South America, essentially reducing the emissions of major supply chains.

One way in which we are serving the mining industry is through our Green Blend offering, in which we work to integrate renewable energy with thermal power during select hours of the day, reducing overall thermal generation and lowering emissions.

With our utilities, we are working with a broad range of stakeholders to transition to lower carbon forms of energy while promoting a Just Transition for the workers and communities who may be negatively impacted by the closure of fossil fuel facilities.

At AES Indiana, for example, we are working to retire an additional 415 MW of conventional generation by 2023, while adding new solar and energy storage to the grid.

Our renewable growth strategy includes taking steps to ensure and enable growth in future years.

We massively expanded our pipeline of development projects, which grew 70% to more than 55 GW at the end of 2021, both through acquisitions and increased investment in development activities, such as securing land or advancing permitting and interconnection processes.

For our projects in late-stage development, we worked to secure supplier arrangements to avoid any potential delays in relation to industry shortages, aided by our scale, supplier relationships, and advanced planning measures.

We are also developing and incubating new technologies that add value today and will drive our business in the future.

We understand that the energy industry is changing rapidly, and aim to proactively seek solutions that will give us a continued competitive advantage.

At the core of our innovation strategy is AES Next, our business and technology incubator.

AES Next works to identify new and innovative business ventures that provide leading-edge and greener energy solutions.

AES Next identifies upcoming trends in the industry and opportunities for innovation.

From there, we either develop capabilities in house or make strategic investments in third-party ventures, targeting those in which we see benefit to our overall portfolio and where we believe AES can add value.

*•*We completed construction or the acquisition of 2,079 MW of renewables and energy storage, primarily including:

◦859 MW of hydro, wind, energy storage and solar in Chile, Brazil, and Colombia; and

◦799 MW of wind in Brazil;

◦155 MW of solar in Panama and the Dominican Republic

- Fluence completed its Initial Public Offering ("IPO") in November 2021, and following the IPO, our ownership interest is approximately 34%

based on the amount of assets that are considered used and useful in serving customers.

| Wind | | | | | | 140 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| New York Wind | | | | | | US-NY | | | | | | Wind | | | | | | 612 | | | | | | 75 | | % | | | | 2021 | | | | | | | | | | | | NYISO | | |

| | | | | | | | | | | | | | | | | | | 9,212 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | 2,563,000 | | | | | | 31,794 | | | | | | | | | | | | | | | | | | | | | | | | | | |

AES Indiana retired the 230 MW Petersburg Unit 1 on May 31, 2021 and has plans to retire the 415 MW Petersburg Unit 2 in June 2023.

In June 2021, AES Indiana received an order from the IURC approving the acquisition of a 195 MW solar project, which closed in December 2021 and is expected to commence operations in 2023.

In November 2021, AES Indiana received an order from the IURC approving the acquisition of a 250 MW solar and 180 MWh energy storage facility to be developed and expected to commence operations in 2024.

| AES Clean Energy (AES Renewable Holdings) | | | | | | US-Various | | | | | | Solar | | | | | | 247 | | | | | | 100 | | % | | | | 1H 2022 | | |

| Skipjack (AES Clean Energy) | | | | | | US-VA | | | | | | Solar | | | | | | 175 | | | | | | 75 | | % | | | | 1H 2022 | | |

| Lancaster Area Battery (AES Clean Energy) | | | | | | US-CA | | | | | | Energy Storage | | | | | | 100 | | | | | | 75 | | % | | | | 1H 2022 | | |

| Luna (AES Clean Energy) | | | | | | US-CA | | | | | | Energy Storage | | | | | | 100 | | | | | | 75 | | % | | | | 1H 2022 | | |

AES is leading the energy transition by investing in sustainable growth and innovative solutions to deliver superior results.

We are taking advantage of favorable trends in clean power generation, transmission and distribution, and LNG infrastructure.

Through our presence in key growth markets, we are well-positioned to benefit from the global transition toward a more sustainable power generation mix.

Our robust backlog of projects under construction or under signed PPAs continues to increase, driven by our focus on select markets where we can take advantage of our global scale and synergies with our existing businesses.

In 2020, we signed long-term PPAs for 3 GW, representing 10% of our existing capacity, and in line with our expectation of signing 2 to 3 GW of new PPAs annually.

We are enhancing some of our current contracts by extending existing PPAs and adding renewable energy.

We call this approach Green Blend and Extend.

With this strategy, we leverage our existing platforms, contracts and relationships to grow our business, while meeting our customers' energy needs on a reliable and sustainable basis.

We are negotiating new long-term renewable PPAs with existing customers, which preserves the value of thermal contracts and creates incremental value with long-term contracted renewables.

Customers receive carbon-free energy at less than the marginal cost of thermal power, enabling them to meet their sustainability goals and affordable energy needs.

We are executing on this strategy in Chile and Mexico and see significant potential additional opportunities in those markets, as well as in the United States.

We recently merged all of our renewables businesses in the U.S. into one team: AES Clean Energy, representing one of the top renewables growth platforms in the U.S. AES Clean Energy offers its customers an expanded portfolio of innovative solutions based on cutting-edge technologies that are designed to accelerate their energy futures.

We are facilitating access to reliable and affordable cleaner energy through our LNG import terminals, allowing

the displacement of the use of heavy fuel oil and diesel.

We have two LNG regasification terminals in Central America and the Caribbean, with a total of 150 TBTU of LNG storage capacity.

These terminals were built to supply not only the gas for our co-located combined cycle plants, but also to meet the growing demand for natural gas in the region.

In order to meet this demand, we are expanding our capacity in the Dominican Republic by adding a second storage tank with 50 TBTU of additional capacity and we recently completed construction of a pipeline that will transport natural gas from our LNG terminal to several power plants in the country.

We are replicating our success with LNG infrastructure in the Dominican Republic and Panama by developing a similar project, on a larger scale, in Vietnam.

This project will have 480 TBTU of LNG storage capacity co-located with 2.2 GW of combined cycle plants.

The project will have substantial excess LNG capacity to help meet demand for natural gas in Vietnam and the power plants will have 20-year contracts with the Government of Vietnam.

At our utilities, we are accelerating growth through grid modernization and infrastructure investments to replace outdated networks.

In 2020, Indianapolis Power & Light's seven-year $1.2 billion TDSIC plan was approved by the Indiana Utility Regulatory Commission.

We see similar growth opportunities at Dayton Power & Light in Ohio, including DP&L's pending Smart Grid Plan.

We are developing and deploying innovative solutions such as battery-based energy storage, digital customer interfaces and energy management.

These solutions are scalable and capital light, allowing us to work with our customers to deliver results that meet their requirements.

As a result of executing on our strategy, we have reduced our coal-fired generation to 25% of our total generation volume as of year-end 2020 (based on the portfolio as of year-end, adjusted for any announced asset sales and retirements at that time).

We remain on track to further reduce our coal generation to below 10% by year-end 2030.

In 2020, we achieved significant milestones on our strategic objectives, including:

Sustainable Growth

*•*We completed construction of 2,318 MW of new projects, including:

◦1,299 MW Southland Repowering; and

◦346 MW of wind at AES Brasil;

◦109 MW of wind in Mexico

- The Company has reduced its coal-fired generation to 25% of total generation volume (proforma for asset sales and retirements announced in 2020) and is on track to further reduce its coal-fired generation to less than 10% by year-end 2030

Innovative Solutions

- Our joint venture with Siemens, Fluence, is the global leader in the fast-growing energy storage market, which is expected to increase by 15 to 20 GW annually

◦Fluence has been awarded or delivered 2.4 GW of projects, including 785 MW awarded in 2020

◦In December 2020, the Qatar Investment Authority ("QIA") agreed to invest $125 million in Fluence through a private placement transaction, valuing Fluence at more than $1 billion

Superior Results

- Following our efforts to strengthen our balance sheet, our Parent Company credit rating was upgraded to investment grade (BBB-) by S&P

It is reasonably possible, however, that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material, but cannot be estimated as of December 31, [removed: 2020.][added: 2021.]

In June 2007, a 2-to-1 majority of the arbitral tribunal rendered its award rejecting GRIDCO's claims and holding that none of the respondents, the Company, AES ODPL, or Jyoti, had [removed: any liability to GRIDCO.]

GRIDCO's challenge of the costs award has been dismissed by the [added: court, but its challenge of the liability award remains pending.]

The removal and remediation costs are estimated to be approximately R$10 million to R$41 million ($2 million to [removed: $8] [added: $7] million), and there could be additional costs which cannot be estimated at this time.

In October 2015, [removed: IPL] [added: AES Indiana] received a similar NOV alleging violations at Petersburg Station.

In addition, in February 2016, [removed: IPL] [added: AES Indiana] received an NOV from the EPA alleging violations of NSR and other CAA regulations, the Indiana SIP, and the Title V operating permit at Petersburg Station.

On August 31, 2020, [removed: IPL] [added: AES Indiana] reached a settlement with the EPA, the DOJ and IDEM, resolving these purported violations of the CAA at Petersburg Station.

The settlement agreement, in the form of a proposed judicial consent decree, [added: was approved and entered by the U.S. District Court for the Southern District of Indiana on March 23, 2021, and] includes, among other items, the following requirements: annual caps on NOx and SO2 emissions and more stringent emissions limits than [removed: IPL's] [added: AES Indiana's] current Title V air permit; payment of civil penalties totaling $1.5 million; a $5 million environmental mitigation project consisting of the construction and operation of a new, non-emitting source of generation at the site; expenditure of $0.3 million on a state-only environmentally beneficial project to preserve local, ecologically-significant lands; and retirement of Units 1 and 2 prior to July 1, 2023.

If [removed: IPL] [added: AES Indiana] does not meet the retirement obligation, it must install a Selective Non-Catalytic Reduction System on Unit 4.

A number of lawsuits have been filed in relation to the April 2018 [removed: Approval, some of which are still pending.][added: Approval.]

If [removed: Alto Maipo complies with] the [removed: requirements of the] Compliance [removed: Plan,] [added: Plan is ultimately declared to be fulfilled] and [added: closed, and] if the above-referenced [removed: lawsuits are] [added: appeal is] dismissed, the Formulation of Charges will be discharged without penalty.

Otherwise, Alto Maipo could be subject to penalties, and the [removed: construction of the] project could be negatively impacted.

Alto Maipo [removed: is pursuing] [added: initiated] arbitration against CNM to recover excess completion costs and other damages totaling at least $236 million (net of the LC Funds) relating to CNM’s breaches (“First Arbitration”).

CNM [removed: denies] [added: denied] liability and [removed: seeks] [added: sought] a declaration that its termination was wrongful, damages [removed: that it alleges result] [added: allegedly resulting] from that termination, and other relief.

CNM [removed: alleges] [added: alleged] that it [removed: is] [added: was] entitled to damages ranging from $70 million to $170 million (which [removed: include] [added: included] the LC Funds) plus interest and costs, based on various scenarios.

Alto Maipo [removed: has] contested these submissions.

Also, in August 2018, CNM purported to initiate a separate arbitration against AES [removed: Gener] [added: Andes] and the Company (“Second Arbitration”).

In the Second Arbitration, CNM [removed: seeks] [added: sought] to pierce Alto Maipo’s corporate veil and [removed: appears] [added: appeared] to seek an award holding AES [removed: Gener] [added: Andes] and the Company jointly and severally liable to pay any alleged net amounts that are found to be due to CNM in the First Arbitration or otherwise.

The Second Arbitration [removed: has been] [added: was] consolidated into the First Arbitration.

Each of Alto Maipo, AES [removed: Gener,] [added: Andes,] and the Company believes it has meritorious claims and/or defenses and will pursue its interests vigorously; however, there can be no assurances that each will be successful in its efforts.

In October 2017, the Maritime Prosecution Office from Valparaíso issued a ruling alleging responsibility by AES [removed: Gener] [added: Andes] for the presence of coal waste on Ventanas beach, and proposed a fine before the Maritime [removed: Governor, of approximately $380,000.][added: Governor.]

AES [removed: Gener] [added: Andes] submitted its statement of defense, denying the allegations.

An evidentiary stage was concluded and then re-opened by order of the Maritime Governor on February 5, 2019 to allow AES [removed: Gener] [added: Andes] an opportunity to present reports and other evidence to challenge the grounds of the ruling.

AES [removed: Gener] [added: Andes] has completed its presentation of evidence and awaits the Maritime Prosecution Office’s decision of the case.

AES [removed: Gener] [added: Andes] believes that it has meritorious defenses to the allegations; however, there are no assurances that it will be successful in defending this action.

The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands [added: over] $900 million in alleged damages.

In October 2019, the Superintendency of the Environment (the "SMA") notified AES [removed: Gener] [added: Andes] of certain alleged breaches associated with the environmental permit of the Ventanas Complex, initiating a sanctioning process through Exempt Resolution N° 1 / ROL D-129-2019.

AES [removed: Gener] [added: Andes] has submitted [added: a] proposed [removed: "Compliance Programs"] [added: “Compliance Program”] to the SMA for the Ventanas [removed: Complex and the Guacolda Complex, respectively.][added: Complex.]

[removed: In August 2020,] [added: On December 30, 2021,] the Compliance Program [removed: for Guacolda Complex] was approved by the SMA.

After additional briefing, the evidentiary hearing [removed: will take] [added: took] place in November 2021.

any liability to GRIDCO.

These lawsuits were consolidated into one process in the Second Environmental Tribunal of Santiago ("Tribunal").

In October 2021, the Tribunal issued a ruling in favor of Alto Maipo and the SMA, upholding the validity of the Compliance Plan and dismissing all consolidated lawsuits.

This ruling was appealed.

The appeal is now in the Chilean Supreme Court, which is considering whether to accept the appeal.

Further, in January 2022, Alto Maipo received the definitive interpretation of the RCA´s provisions concerning the authorized times to operate certain vehicles.

Accordingly, Alto Maipo intends to request that the Compliance Plan be declared fulfilled and formally closed.

In October 2021, the Tribunal issued a final and enforceable Partial Award in favor of Alto Maipo.

The Tribunal held, among other things, that Alto Maipo properly terminated the relevant tunneling contract and that Alto Maipo’s draw of the LC Funds was proper.

Also, the Tribunal determined that Alto Maipo was entitled to be paid additional damages of nearly $107 million (net after offsets) and that interest would accrue on the total amount of damages awarded until paid by CNM.

The Tribunal also dismissed the Second Arbitration as moot.

The Tribunal reserved for further proceedings, the issues of the interest to be paid by CNM and, as to all parties, the award of legal fees and costs.

To date, CNM has not paid the damages awarded to Alto Maipo.

Instead, CNM has made an application for an immaterial correction to the Partial Award.

CNM has also filed an application to revise the Partial Award seeking to reduce the net damages awarded to AM to approximately $42 million.

Alto Maipo will contest the application for revision.

In the meantime, the Tribunal has established the schedule for the next phase of the proceedings relating to interest, fees, and costs.

In May 2021, AES Andes was notified of an amended Opinion of the Maritime Prosecution Office which extends the alleged liability to a third party and

reduces the proposed fine to AES Andes to approximately $372,000.

AES Andes responded to the new Opinion on May 31.

On August 18, the Maritime Governor issued a resolution affirming the proposed fine, and on September 8, AES Andes filed an administrative action with the Maritime Governor requesting reconsideration of the fine.

On December 28, 2021 the resolution rejecting the reinstatement appeal was notified and on January 17, 2022 AES Andes filed an appeal against that ruling.

Preliminary hearings are ongoing in that court.

The latest version of this Compliance Program was submitted on May 26, 2021.

However an ex officio action was brought by the SMA due to alleged exceedances of generation limits, which would require the Company to reduce SO2, NOx and PM emissions in order to achieve the emissions offset established in the Compliance Program.

On January 6, 2022, AES Andes filed a reposition with the SMA seeking modification of the means for compliance with the ex officio action.

The reposition filing is currently under review by the SMA.

The effects of the ex officio action are suspended until the reposition is resolved, but the SMA ruling is otherwise unaffected.

Fines are possible if the SMA determines there is an unsatisfactory execution of the Compliance Program.

The cost of proposed Compliance Program is approximately $10.8 million.

Closing arguments are scheduled for May 2022.

Subsequently, the arbitration Tribunal will issue its decision in the case.

In February 2022, a lawsuit was filed in Dominican Republic civil court against the Company.

The lawsuit purports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004.

The lawsuit generally alleges

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

that the CCRs caused personal injuries and deaths and demands over $600 million in alleged damages.

The lawsuit does not identify or provide any supporting information concerning the alleged injuries of the claimants individually.

Nor does the lawsuit provide any information supporting the demand for damages or explaining how the quantum was derived.

court, but its challenge of the liability award remains pending.

The proposed Consent Decree is subject to final review and approval by the U.S. District Court for the Southern District of Indiana, following a 30-day public comment period, which began upon publication in the *Federal Register.* On January 14, 2021, the United States and Indiana, on behalf of EPA and IDEM, respectively, filed a motion asking the court to enter the proposed Consent Decree, along with the United States’ response to the adverse public comments on the proposed settlements.

In addition, Alto Maipo must obtain the SEA’s final approval concerning the control, discharge, and treatment of Infiltration Water.

Alto Maipo continues to seek the relevant final approvals from the SEA.

To date, none of the lawsuits have negatively impacted the April 2018 Approval or the construction of the project.

The parties are now awaiting the Tribunal’s decision in the First Arbitration.

The arbitral tribunal has bifurcated the Second Arbitration to determine in the first instance the jurisdictional objections raised by AES Gener and the Company to CNM’s piercing claims.

The hearing on the jurisdictional objections, which was previously scheduled for October 2020, has been postponed to a date to be determined.

As the charges are currently classified, the maximum fine is approximately $6.5 million.

On October 14, 2019, the SMA notified AES Gener of other alleged breaches at the Guacolda Complex under Exempt Resolution N° 1 / ROL D-146-2019.

These allegations include failure to comply with all measures to mitigate atmospheric emissions, failure to comply with mitigation measures to avoid solid fuel discharges to the sea, failure to perform temperature monitoring in intake and water discharge at Unit 3, and a one-day exceedance of the seawater discharge limits.

As the Guacolda charges are currently classified, the maximum fine is approximately $4 million.

For each complex, additional fines are possible if the SMA determines that non-compliance resulted in an economic benefit.

Upon successful execution of the Compliance Program, the process is expected to conclude without sanctions and to not generate further actions.

If the Ventanas Complex submission is approved by the SMA and satisfactorily fulfilled by AES Gener, the process is also expected to conclude without sanctions and to not generate further action.

For the Fiscal Year Ended December 31, [removed: 2020][added: 2021]

The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, [removed: 2020,] [added: 2021,] the last business day of the Registrant's most recently completed second fiscal quarter (based on the [removed: adjusted] closing sale price of [removed: $14.16] [added: $26.07] of the Registrant's Common Stock, as reported by the New York Stock Exchange on such date) was approximately [removed: $9.42] [added: $17.37] billion.

The number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, on February [removed: 22, 2021] [added: 24, 2022] was [removed: 665,479,845.][added: 667,395,142.]

Portions of Registrant's Proxy Statement for its [removed: 2021] [added: 2022] annual meeting of stockholders are incorporated by reference in Parts II and III

The AES Corporation Fiscal Year [removed: 2020] [added: 2021] Form 10-K

| [Glossary of [removed: Terms](#ib8a9d8a86e19404b8f4f50535106f937_7)] [added: Terms](#if7b552d0c82e4d75af26724d7276acc2_7)] | | | [removed: [1](#ib8a9d8a86e19404b8f4f50535106f937_10)] [added: [1](#if7b552d0c82e4d75af26724d7276acc2_10)] | | |

| [ITEM 1. [removed: BUSINESS](#ib8a9d8a86e19404b8f4f50535106f937_19)] [added: BUSINESS](#if7b552d0c82e4d75af26724d7276acc2_19)] | | | [removed: [4](#ib8a9d8a86e19404b8f4f50535106f937_19)] [added: [4](#if7b552d0c82e4d75af26724d7276acc2_19)] | | |

| [ITEM 1A. RISK [removed: FACTORS](#ib8a9d8a86e19404b8f4f50535106f937_55)] [added: FACTORS](#if7b552d0c82e4d75af26724d7276acc2_58)] | | | [removed: [54](#ib8a9d8a86e19404b8f4f50535106f937_55)] [added: [56](#if7b552d0c82e4d75af26724d7276acc2_58)] | | |

| [ITEM 1B. UNRESOLVED STAFF [removed: COMMENTS](#ib8a9d8a86e19404b8f4f50535106f937_58)] [added: COMMENTS](#if7b552d0c82e4d75af26724d7276acc2_61)] | | | [removed: [71](#ib8a9d8a86e19404b8f4f50535106f937_58)] [added: [73](#if7b552d0c82e4d75af26724d7276acc2_61)] | | |

| [ITEM 2. [removed: PROPERTIES](#ib8a9d8a86e19404b8f4f50535106f937_61)] [added: PROPERTIES](#if7b552d0c82e4d75af26724d7276acc2_64)] | | | [removed: [71](#ib8a9d8a86e19404b8f4f50535106f937_61)] [added: [73](#if7b552d0c82e4d75af26724d7276acc2_64)] | | |

| [ITEM 3. LEGAL [removed: PROCEEDINGS](#ib8a9d8a86e19404b8f4f50535106f937_64)] [added: PROCEEDINGS](#if7b552d0c82e4d75af26724d7276acc2_67)] | | | [removed: [71](#ib8a9d8a86e19404b8f4f50535106f937_64)] [added: [73](#if7b552d0c82e4d75af26724d7276acc2_67)] | | |

| [ITEM 4. MINE SAFETY [removed: DISCLOSURES](#ib8a9d8a86e19404b8f4f50535106f937_67)] [added: DISCLOSURES](#if7b552d0c82e4d75af26724d7276acc2_70)] | | | [removed: [74](#ib8a9d8a86e19404b8f4f50535106f937_67)] [added: [77](#if7b552d0c82e4d75af26724d7276acc2_70)] | | |

| [ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#ib8a9d8a86e19404b8f4f50535106f937_73)] [added: SECURITIES](#if7b552d0c82e4d75af26724d7276acc2_76)] | | | [removed: [75](#ib8a9d8a86e19404b8f4f50535106f937_73)] [added: [78](#if7b552d0c82e4d75af26724d7276acc2_76)] | | |

| [ITEM 6. SELECTED FINANCIAL [removed: DATA](#ib8a9d8a86e19404b8f4f50535106f937_91)] [added: DATA](#if7b552d0c82e4d75af26724d7276acc2_94)] | | | [removed: [76](#ib8a9d8a86e19404b8f4f50535106f937_91)] [added: [79](#if7b552d0c82e4d75af26724d7276acc2_94)] | | |

| [ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#ib8a9d8a86e19404b8f4f50535106f937_94)] [added: OPERATIONS](#if7b552d0c82e4d75af26724d7276acc2_97)] | | | [removed: [78](#ib8a9d8a86e19404b8f4f50535106f937_94)] [added: [81](#if7b552d0c82e4d75af26724d7276acc2_97)] | | |

| [Executive [removed: Summary](#ib8a9d8a86e19404b8f4f50535106f937_97)] [added: Summary](#if7b552d0c82e4d75af26724d7276acc2_100)] | | | [removed: [78](#ib8a9d8a86e19404b8f4f50535106f937_97)] [added: [81](#if7b552d0c82e4d75af26724d7276acc2_100)] | | |

| [Review of Consolidated Results of [removed: Operations](#ib8a9d8a86e19404b8f4f50535106f937_103)] [added: Operations](#if7b552d0c82e4d75af26724d7276acc2_103)] | | | [removed: [79](#ib8a9d8a86e19404b8f4f50535106f937_103)] [added: [82](#if7b552d0c82e4d75af26724d7276acc2_103)] | | |

| [SBU Performance [removed: Analysis](#ib8a9d8a86e19404b8f4f50535106f937_154)] [added: Analysis](#if7b552d0c82e4d75af26724d7276acc2_157)] | | | [removed: [87](#ib8a9d8a86e19404b8f4f50535106f937_154)] [added: [90](#if7b552d0c82e4d75af26724d7276acc2_157)] | | |

| [Key Trends and [removed: Uncertainties](#ib8a9d8a86e19404b8f4f50535106f937_169)] [added: Uncertainties](#if7b552d0c82e4d75af26724d7276acc2_172)] | | | [removed: [95](#ib8a9d8a86e19404b8f4f50535106f937_169)] [added: [99](#if7b552d0c82e4d75af26724d7276acc2_172)] | | |

| [Capital Resources and [removed: Liquidity](#ib8a9d8a86e19404b8f4f50535106f937_205)] [added: Liquidity](#if7b552d0c82e4d75af26724d7276acc2_208)] | | | [removed: [101](#ib8a9d8a86e19404b8f4f50535106f937_205)] [added: [104](#if7b552d0c82e4d75af26724d7276acc2_208)] | | |

| [Critical Accounting Policies and [removed: Estimates](#ib8a9d8a86e19404b8f4f50535106f937_235)] [added: Estimates](#if7b552d0c82e4d75af26724d7276acc2_238)] | | | [removed: [111](#ib8a9d8a86e19404b8f4f50535106f937_235)] [added: [115](#if7b552d0c82e4d75af26724d7276acc2_238)] | | |

| [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#ib8a9d8a86e19404b8f4f50535106f937_241)] [added: RISK](#if7b552d0c82e4d75af26724d7276acc2_244)] | | | [removed: [115](#ib8a9d8a86e19404b8f4f50535106f937_241)] [added: [119](#if7b552d0c82e4d75af26724d7276acc2_244)] | | |

| [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#ib8a9d8a86e19404b8f4f50535106f937_244)] [added: DATA](#if7b552d0c82e4d75af26724d7276acc2_247)] | | | [removed: [118](#ib8a9d8a86e19404b8f4f50535106f937_244)] [added: [122](#if7b552d0c82e4d75af26724d7276acc2_247)] | | |

| [Consolidated Statements of [removed: Operations](#ib8a9d8a86e19404b8f4f50535106f937_253)] [added: Operations](#if7b552d0c82e4d75af26724d7276acc2_253)] | | | [removed: [123](#ib8a9d8a86e19404b8f4f50535106f937_253)] [added: [128](#if7b552d0c82e4d75af26724d7276acc2_253)] | | |

| [Consolidated Statements of Comprehensive Income [removed: (Loss)](#ib8a9d8a86e19404b8f4f50535106f937_259)] [added: (Loss)](#if7b552d0c82e4d75af26724d7276acc2_256)] | | | [removed: [124](#ib8a9d8a86e19404b8f4f50535106f937_259)] [added: [129](#if7b552d0c82e4d75af26724d7276acc2_256)] | | |

| [Consolidated Statements of Changes in [removed: Equity](#ib8a9d8a86e19404b8f4f50535106f937_265)] [added: Equity](#if7b552d0c82e4d75af26724d7276acc2_259)] | | | [removed: [125](#ib8a9d8a86e19404b8f4f50535106f937_265)] [added: [130](#if7b552d0c82e4d75af26724d7276acc2_259)] | | |

| [Consolidated Statements of Cash [removed: Flows](#ib8a9d8a86e19404b8f4f50535106f937_271)] [added: Flows](#if7b552d0c82e4d75af26724d7276acc2_262)] | | | [removed: [126](#ib8a9d8a86e19404b8f4f50535106f937_271)] [added: [131](#if7b552d0c82e4d75af26724d7276acc2_262)] | | |

| [Note 1 - General and Summary of Significant Accounting [removed: Policies](#ib8a9d8a86e19404b8f4f50535106f937_277)] [added: Policies](#if7b552d0c82e4d75af26724d7276acc2_268)] | | | [removed: [127](#ib8a9d8a86e19404b8f4f50535106f937_277)] [added: [132](#if7b552d0c82e4d75af26724d7276acc2_268)] | | |

| [Note 3 - Property, Plant and [removed: Equipment](#ib8a9d8a86e19404b8f4f50535106f937_286)] [added: Equipment](#if7b552d0c82e4d75af26724d7276acc2_274)] | | | [removed: [139](#ib8a9d8a86e19404b8f4f50535106f937_286)] [added: [145](#if7b552d0c82e4d75af26724d7276acc2_274)] | | |

| [Note 4 - Asset Retirement [removed: Obligation](#ib8a9d8a86e19404b8f4f50535106f937_292)s] [added: Obligation](#if7b552d0c82e4d75af26724d7276acc2_277)s] | | | [removed: [140](#ib8a9d8a86e19404b8f4f50535106f937_292)] [added: [145](#if7b552d0c82e4d75af26724d7276acc2_277)] | | |

| [Note 6 - Derivative Instruments and Hedging [removed: Activities](#ib8a9d8a86e19404b8f4f50535106f937_301)] [added: Activities](#if7b552d0c82e4d75af26724d7276acc2_283)] | | | [removed: [146](#ib8a9d8a86e19404b8f4f50535106f937_301)] [added: [152](#if7b552d0c82e4d75af26724d7276acc2_283)] | | |

| [Note 8 - Investments in and Advances to [removed: Affiliates](#ib8a9d8a86e19404b8f4f50535106f937_307)] [added: Affiliates](#if7b552d0c82e4d75af26724d7276acc2_289)] | | | [removed: [148](#ib8a9d8a86e19404b8f4f50535106f937_307)] [added: [154](#if7b552d0c82e4d75af26724d7276acc2_289)] | | |

| [Note 9 - Goodwill and Other Intangible [removed: Assets](#ib8a9d8a86e19404b8f4f50535106f937_310)] [added: Assets](#if7b552d0c82e4d75af26724d7276acc2_292)] | | | [removed: [150](#ib8a9d8a86e19404b8f4f50535106f937_310)] [added: [157](#if7b552d0c82e4d75af26724d7276acc2_292)] | | |

| [Note 10 - Regulatory Assets and [removed: Liabilities](#ib8a9d8a86e19404b8f4f50535106f937_316)] [added: Liabilities](#if7b552d0c82e4d75af26724d7276acc2_295)] | | | [removed: [152](#ib8a9d8a86e19404b8f4f50535106f937_316)] [added: [158](#if7b552d0c82e4d75af26724d7276acc2_295)] | | |

| [Note 16 - Redeemable Stock of [removed: Subsidiaries](#ib8a9d8a86e19404b8f4f50535106f937_340)] [added: Subsidiaries](#if7b552d0c82e4d75af26724d7276acc2_313)] | | | [removed: [164](#ib8a9d8a86e19404b8f4f50535106f937_340)] [added: [170](#if7b552d0c82e4d75af26724d7276acc2_313)] | | |

| [Note 18 - Segments and Geographic [removed: Information](#ib8a9d8a86e19404b8f4f50535106f937_355)] [added: Information](#if7b552d0c82e4d75af26724d7276acc2_319)] | | | [removed: [167](#ib8a9d8a86e19404b8f4f50535106f937_355)] [added: [175](#if7b552d0c82e4d75af26724d7276acc2_319)] | | |