Ipalco Enterprises 10-Q 2024 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________________________________________________________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-8644

IPALCO ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Indiana	35-1575582
(State or other jurisdiction of incorporation or organization)	(I.R.S Employer Identification No.)
One Monument Circle
Indianapolis, Indiana	46204
(Address of principal executive offices)	(Zip code)
Registrant’s telephone number, including area code:	(317)-261-8261

    

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

(The registrant was a voluntary filer during 2024 until its May 28, 2024 Registration Statement on Form S-4 filed with the Securities and Exchange Commission was declared effective on June 6, 2024. The registrant has filed all applicable reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller Reporting company	Emerging growth company
☐	☐	☒	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At October 31, 2024, 108,907,318 shares of IPALCO Enterprises, Inc. common stock were outstanding, of which 89,685,177 shares were owned by AES U.S. Investments, Inc. and 19,222,141 shares were owned by CDP Infrastructures Fund L.P., a wholly-owned subsidiary of La Caisse de dépôt et placement du Québec.

IPALCO ENTERPRISES, INC.

QUARTERLY REPORT ON FORM 10-Q 

For Quarter Ended September 30, 2024

TABLE OF CONTENTS

Item No.		Page No.
	GLOSSARY OF TERMS	4
	FORWARD-LOOKING STATEMENTS	5
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations	7
	Condensed Consolidated Statements of Comprehensive Income	8
	Condensed Consolidated Balance Sheets	9
	Condensed Consolidated Statements of Cash Flows	10
	Condensed Consolidated Statements of Changes in Equity	11
	Notes to Condensed Consolidated Financial Statements	12
	Note 1 - Overview and Summary of Significant Accounting Policies	12
	Note 2 - Regulatory Matters	17
	Note 3 - Fair Value	19
	Note 4 - Derivative Instruments and Hedging Activities	21
	Note 5 - Debt	23
	Note 6 - Income Taxes	24
	Note 7 - Benefit Plans	25
	Note 8 - Equity	25
	Note 9 - Commitments and Contingencies	26
	Note 10 - Business Segments	27
	Note 11 - Revenue	28
	Note 12 - Leases	29
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
	Executive Summary	31
	Results of Operations	32
	Key Trends and Uncertainties	38
	Capital Resources and Liquidity	45
	Critical Accounting Policies and Estimates	48
3.	Quantitative and Qualitative Disclosure About Market Risk	49
4.	Controls and Procedures	49
	PART II - OTHER INFORMATION
1.	Legal Proceedings	50
1A.	Risk Factors	50
2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
3.	Defaults Upon Senior Securities	50
4.	Mine Safety Disclosures	50
5.	Other Information	50
6.	Exhibits	51
	SIGNATURES	52

3

GLOSSARY OF TERMS
The following is a list of frequently used terms, abbreviations or acronyms that are found in this Form 10-Q:
2023 Form 10-K	IPALCO’s Annual Report on Form 10-K for the year ended December 31, 2023, as amended
2024 Base Rate Order	The order issued in April 2024 by the IURC authorizing AES Indiana to, among other things, increase its basic rates and charges by $71 million annually
2024 IPALCO Notes	$405 million of 3.70% IPALCO Enterprises, Inc. Senior Secured Notes due September 1, 2024
2030 IPALCO Notes	$475 million of 4.25% IPALCO Enterprises, Inc. Senior Secured Notes due May 1, 2030
2034 IPALCO Notes	$400 million of 5.75% IPALCO Enterprises, Inc. Senior Secured Notes due April 1, 2034
$300 million Term Loan Agreement	$300 million AES Indiana Term Loan Agreement, dated as of November 21, 2023
$400 million Term Loan Agreement	$400 million AES Indiana Term Loan Agreement, dated as of August 14, 2024
ACE	Affordable Clean Energy
AES	The AES Corporation
AES Indiana	Indianapolis Power & Light Company and its consolidated subsidiaries, which does business as AES Indiana
AES U.S. Investments	AES U.S. Investments, Inc.
AFUDC	Allowance for Funds Used During Construction
AOCI	Accumulated Other Comprehensive Income
ARO	Asset Retirement Obligation
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
BESS	Battery Energy Storage System
CAC	Citizens Action Coalition
CCGT	Combined Cycle Gas Turbine
CCR	Coal Combustion Residuals
CDPQ	CDP Infrastructures Fund L.P., a wholly-owned subsidiary of La Caisse de dépôt et placement du Québec
CO2	Carbon Dioxide
CPCN	Certificate of Public Convenience and Necessity
Credit Agreement	$350 million AES Indiana Revolving Credit Facilities Second Amended and Restated Credit Agreement, dated as of December 22, 2022
CSAPR	Cross-State Air Pollution Rule
CWA	U.S. Clean Water Act
ECCRA	Environmental Compliance Cost Recovery Adjustment
EGUs	Electric Generating Units
EPA	U.S. Environmental Protection Agency
FAC	Fuel Adjustment Clause
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
Financial Statements	Unaudited Condensed Consolidated Financial Statements of IPALCO in “Item 1. Financial Statements” included in Part I – Financial Information of this Form 10-Q
FIP	Federal Implementation Plan
FTRs	Financial Transmission Rights
GAAP	Generally Accepted Accounting Principles in the United States
GHG	Greenhouse Gas
Hardy Hills JV	Hardy Hills JV, LLC
HLBV	Hypothetical Liquidation Book Value
IDEM	Indiana Department of Environmental Management
IPALCO	IPALCO Enterprises, Inc. and its consolidated subsidiaries

4

IPL	Indianapolis Power & Light Company and its consolidated subsidiaries, which does business as AES Indiana
IRA	Inflation Reduction Act of 2022
IRP	Integrated Resource Plan
ITC	Investment Tax Credit
IURC	Indiana Utility Regulatory Commission
kWh	Kilowatt hours
MATS	Mercury and Air Toxics Standards
MISO	Midcontinent Independent System Operator, Inc.
MW	Megawatts
MWh	Megawatt hours
NAAQS	National Ambient Air Quality Standards
NOx	Nitrogen Oxide
NPDES	National Pollutant Discharge Elimination System
NSPS	New Source Performance Standards
OUCC	Indiana Office of Utility Consumer Counselor
Pension Plans	Employees’ Retirement Plan of AES Indiana and Supplemental Retirement Plan of AES Indiana
PTC	Production Tax Credit
SEC	United States Securities and Exchange Commission
SO2	Sulfur Dioxide
TDSIC	Transmission, Distribution, and Storage System Improvement Charge
U.S.	United States of America
VEBA	Voluntary Employees' Beneficiary Association
VIE	Variable Interest Entity

Throughout this document, the terms “IPALCO,” “the Company,” “we,” “us,” and “our” refer to IPALCO Enterprises, Inc. and its consolidated subsidiaries. The term “IPALCO Enterprises, Inc.” refers only to the parent holding company, IPALCO Enterprises, Inc, excluding its subsidiaries.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 including, in particular, the statements about our plans, strategies and prospects under the heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I – Financial Information of this Form 10-Q. Forward-looking statements express an expectation or belief and contain a projection, plan or assumption with regard to, among other things, our future revenue, income, expenses or capital structure. Such statements of future events or performance are not guarantees of future performance and involve estimates, assumptions and uncertainties. The words “could,” “may,” “predict,” “anticipate,” “would,” “believe,” “estimate,” “expect,” “forecast,” “project,” “objective,” “intend,” “continue,” “should,” “plan,” and similar expressions, or the negatives thereof, are intended to identify forward-looking statements unless the context requires otherwise.

Some important factors that could cause our actual results or outcomes to differ materially from those discussed in the forward-looking statements include, but are not limited to:

•impacts of weather on retail sales;

•growth in our service territory and changes in retail demand and demographic patterns;

•weather-related damage to our electrical system;

•commodity and other input costs;

•performance of our suppliers;

•transmission, distribution and generation system reliability and capacity, including natural gas pipeline system and supply constraints;

•regulatory actions and outcomes, including, but not limited to, the review and approval of our rates and charges by the IURC;

5

•federal and state legislation and regulations;

•changes in our credit ratings or the credit ratings of AES;  

•fluctuations in the value of pension plan assets, fluctuations in pension plan expenses and our ability to fund defined benefit pension plans;

•changes in financial or regulatory accounting policies;

•environmental and climate change matters, including costs of compliance with, and liabilities related to, current and future environmental and climate change laws and requirements;

•interest rates and the use of interest rate hedges, inflation rates and other costs of capital;

•the availability of capital;

•the ability of subsidiaries to pay dividends or distributions to IPALCO Enterprises, Inc.;

•level of creditworthiness of counterparties to contracts and transactions;

•labor strikes or other workforce factors, including the ability to attract and retain key personnel;

•facility or equipment maintenance, repairs and capital expenditures;

•significant delays or unanticipated cost increases associated with construction or other projects;

•the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material;

•local economic conditions;

•costs and effects of legal and administrative proceedings, audits, settlements, investigations and claims and the ultimate disposition of litigation;

•industry restructuring, deregulation and competition;

•issues related to our participation in MISO, including the cost associated with membership, our continued ability to recover costs incurred, and the risk of default of other MISO participants;

•changes in tax laws and the effects of our tax strategies;

•the use of derivative contracts;

•product development, technology changes, and changes in prices of products and technologies;

•cyber-attacks, information security breaches or information system failures;

•catastrophic events such as fires, explosions, terrorist acts, acts of war, pandemics, or the future outbreak of any other highly infectious or contagious disease, or natural disasters such as floods, earthquakes, tornadoes, severe winds, ice or snow storms, droughts, or other similar occurrences, including as a result of climate change; and

•the risks and other factors discussed in this report and other IPALCO filings with the SEC.

Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

All of the above factors are difficult to predict, contain uncertainties that may materially affect actual results, and many are beyond our control. See “Item 1A. Risk Factors” in IPALCO’s 2023 Annual Report on Form 10-K and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in IPALCO’s 2023 Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, and June 30, 2024 and this Quarterly Report on Form 10-Q for a more detailed discussion of the foregoing and certain other factors that could cause actual results to differ materially from those reflected in any forward-looking statements. These risks may also be specifically described in our other Quarterly Reports on Form 10-Q in “Part II - Item 1A. Risk Factors”, Current Reports on Form 8-K and other documents that we may file from time to time with the SEC.

SOURCES OF OTHER INFORMATION

We encourage investors, the media, our customers and others interested in the Company to review the information we post at www.aesindiana.com. None of the information on our website is incorporated into, or deemed to be a part of, this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any reference to our website is intended to be an inactive textual reference only.

Our SEC filings are available to the public from the SEC’s website at www.sec.gov.

6

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS 

IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In Thousands)
REVENUE	$	449,171	$	402,887	$	1,254,566	$	1,290,580
OPERATING COSTS AND EXPENSES:
Fuel	96,103		96,698		276,661		411,864
Power purchased	31,100		35,748		113,836		122,410
Operation and maintenance	125,849		120,858		350,309		356,386
Depreciation and amortization	85,493		72,021		248,846		212,292
Taxes other than income taxes	6,130		6,359		20,572		19,779
(Gain) / loss on asset disposals	(115)		—		1,422		—
Total operating costs and expenses	344,560		331,684		1,011,646		1,122,731
OPERATING INCOME	104,611		71,203		242,920		167,849
OTHER (EXPENSE) / INCOME, NET:
Allowance for equity funds used during construction	1,485		3,134		3,585		7,089
Interest expense	(44,198)		(34,471)		(131,681)		(104,510)
Other income / (expense), net	484		(633)		(266)		787
Total other expense, net	(42,229)		(31,970)		(128,362)		(96,634)
INCOME BEFORE INCOME TAX	62,382		39,233		114,558		71,215
Income tax expense	8,314		3,802		24,833		8,663
NET INCOME	54,068		35,431		89,725		62,552
Net loss attributable to noncontrolling interests	(872)		—		(24,171)		—
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	54,940	$	35,431	$	113,896	$	62,552
See Notes to Condensed Consolidated Financial Statements.

7

IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In Thousands)
NET INCOME	$	54,068	$	35,431	$	89,725	$	62,552
Derivative activity:
Change in derivative fair value, net of income tax effect of $0, $(2,477), $(2,193) and $(2,425), for each respective period	—		7,482		6,626		7,325
Reclassification to earnings, net of income tax effect of $144, $(449), $36 and $(1,348), for each respective period	(434)		1,358		(108)		4,073
Net change in fair value of derivatives	(434)		8,840		6,518		11,398
Other comprehensive (loss) / income	(434)		8,840		6,518		11,398
Comprehensive income	53,634		44,271		96,243		73,950
Less: comprehensive loss attributable to noncontrolling interests	(872)		—		(24,171)		—
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK	$	54,506	$	44,271	$	120,414	$	73,950

See Notes to Condensed Consolidated Financial Statements.

8

IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
	September 30,		December 31,
	2024		2023
	(In Thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	48,308	$	28,579
Accounts receivable, net of allowance for credit losses of $17,087 and $2,283, respectively	322,701		233,921
Inventories	125,090		143,590
Regulatory assets, current	126,470		89,419
Taxes receivable	20,723		36,481
Derivative assets, current	2,817		15,682
Prepayments and other current assets	35,936		26,358
Total current assets	682,045		574,030
NON-CURRENT ASSETS:
Property, plant and equipment	7,560,533		7,082,443
Less: Accumulated depreciation	2,995,834		2,954,555
	4,564,699		4,127,888
Construction work in progress	869,363		359,014
Total net property, plant and equipment	5,434,062		4,486,902
OTHER NON-CURRENT ASSETS:
Intangible assets - net	234,136		235,656
Regulatory assets, non-current	474,963		541,784
Pension plan assets	39,502		41,172
Other non-current assets	168,235		301,979
Total other non-current assets	916,836		1,120,591
TOTAL ASSETS	$	7,032,943	$	6,181,523
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of long-term debt (see Notes 5 and 12)	$	430,383	$	899,159
Accounts payable	278,667		292,851
Accrued taxes	29,898		22,580
Accrued interest	83,813		33,639
Customer deposits	21,319		29,308
Regulatory liabilities, current	8,322		23,371
Asset retirement obligations, current	26,384		—
Accrued and other current liabilities	28,548		27,547
Total current liabilities	907,334		1,328,455
NON-CURRENT LIABILITIES:
Long-term debt (see Notes 5 and 12)	3,641,207		2,576,798
Deferred income tax liabilities	387,512		361,488
Regulatory liabilities, non-current	443,691		527,224
Accrued other postretirement benefits	2,946		2,776
Asset retirement obligations, non-current	320,166		249,930
Other non-current liabilities	19,726		5,130
Total non-current liabilities	4,815,248		3,723,346
Total liabilities	5,722,582		5,051,801
COMMITMENTS AND CONTINGENCIES (see Note 9)
EQUITY:
Common shareholders’ equity
Common stock (no par value, 290,000,000 shares authorized; 108,907,318 shares issued and outstanding at September 30, 2024 and December 31, 2023)	—		—
Paid in capital	1,172,058		1,021,992
Accumulated other comprehensive income	35,812		29,294
Retained earnings	28,932		25,182
Total common shareholders’ equity	1,236,802		1,076,468
Noncontrolling interests	73,559		53,254
Total equity	1,310,361		1,129,722
TOTAL LIABILITIES AND EQUITY	$	7,032,943	$	6,181,523
See Notes to Condensed Consolidated Financial Statements.

9

IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Nine Months Ended
	September 30,
	2024		2023
	(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	89,725	$	62,552
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	248,846		212,292
Amortization of deferred financing costs and debt discounts	2,735		2,889
Deferred income taxes and investment tax credit adjustments - net	8,072		32,735
Allowance for equity funds used during construction	(3,585)		(7,089)
Loss on asset disposal	1,422		—
Change in certain assets and liabilities:
Accounts receivable	(69,259)		32,200
Inventories	16,845		(30,264)
Prepayments and other current assets	819		(9,728)
Accounts payable	(52,219)		(28,669)
Accrued and other current liabilities	(11,292)		2,137
Accrued taxes payable/receivable	26,944		(20,103)
Accrued interest	50,174		11,325
Pension and other postretirement benefit assets and liabilities	1,840		1,390
Current and non-current regulatory assets and liabilities	(119,289)		100,822
Other non-current liabilities	5,173		(9,226)
Other - net	(5,707)		(6,176)
Net cash provided by operating activities	191,244		347,087
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(727,152)		(453,671)
Project development costs	(3,164)		(4,589)
Acquisitions	(48,368)		—
Purchase of intangible assets	—		(44,650)
Cost of removal payments	(26,080)		(36,749)
Insurance proceeds	—		4,900
Net cash used in investing activities	(804,764)		(534,759)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities	570,000		75,000
Repayments under revolving credit facilities	(675,000)		—
Short-term borrowings	300,000		—
Short-term borrowings from affiliate	92,000		—
Repayments of short-term borrowings	(392,000)		—
Long-term borrowings	1,050,000		—
Retirement of long-term borrowings	(405,000)		—
Distributions to shareholders	(110,146)		(66,941)
Equity contributions from shareholders	150,000		—
Distributions to noncontrolling interests	(2,459)		—
Sales to noncontrolling interests	46,935		—
Payments for financing fees	(14,173)		(85)
Proceeds received from termination of interest rate swaps	23,114		—
Other	(22)		(313)
Net cash provided by financing activities	633,249		7,661
Net change in cash, cash equivalents and restricted cash	19,729		(180,011)
Cash, cash equivalents and restricted cash at beginning of period	28,584		201,553
Cash, cash equivalents and restricted cash at end of period	$	48,313	$	21,542
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized)	$	78,842	$	82,541
Non-cash investing activities:
Accruals for capital expenditures	$	162,662	$	106,674
Changes to right-of-use assets - finance leases	$	72,066	$	983
Non-cash financing activities:
Changes to financing lease liabilities	$	(69,089)	$	(1,408)
See Notes to Condensed Consolidated Financial Statements.

10

IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Changes in Equity
For the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	Common Shareholders’ Equity
	Common Stock
(in Thousands)	Outstanding Shares	Amount		Paid in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Common Shareholders’ Equity		Noncontrolling Interests
2024
Beginning Balance	108,907	$	—	$	1,021,992	$	29,294	$	25,182	$	1,076,468	$	53,254
Net income / (loss)				—		—		17,162		17,162		(2,552)
Other comprehensive income				—		7,386		—		7,386		—
Distributions to shareholders				—		—		(26,720)		(26,720)		—
Distributions to noncontrolling interests				—		—		—		—		(52)
Other				26		—		—		26		—
Balance at March 31, 2024	108,907	$	—	$	1,022,018	$	36,680	$	15,624	$	1,074,322	$	50,650
Net income / (loss)				—		—		41,794		41,794		(20,747)
Other comprehensive loss				—		(434)		—		(434)		—
Distributions to shareholders				—		—		(30,374)		(30,374)		—
Sales to noncontrolling interests				—		—		—		—		46,935
Distributions to noncontrolling interests				—		—		—		—		(623)
Contributions from shareholders				150,000		—		—		150,000		—
Other				29		—		—		29		—
Balance at June 30, 2024	108,907	$	—	$	1,172,047	$	36,246	$	27,044	$	1,235,337	$	76,215
Net income / (loss)				—		—		54,940		54,940		(872)
Other comprehensive loss				—		(434)		—		(434)		—
Distributions to shareholders				—		—		(53,052)		(53,052)		—
Distributions to noncontrolling interests				—		—		—		—		(1,784)
Other				11		—		—		11		—
Balance at September 30, 2024	108,907	$	—	$	1,172,058	$	35,812	$	28,932	$	1,236,802	$	73,559
2023
Beginning Balance	108,907	$	—	$	1,068,357	$	22,269	$	(108)	$	1,090,518	$	—
Net income				—		—		19,115		19,115		—
Other comprehensive loss				—		(7,174)		—		(7,174)		—
Distributions to shareholders(1)				(12,280)		—		(19,115)		(31,395)		—
Other				31		—		—		31		—
Balance at March 31, 2023	108,907	$	—	$	1,056,108	$	15,095	$	(108)	$	1,071,095	$	—
Net income				—		—		8,006		8,006		—
Other comprehensive income						9,732				9,732		—
Distributions to shareholders(1)				(34,177)		—		(1,369)		(35,546)		—
Other				16		—		—		16		—
Balance at June 30, 2023	108,907	$	—	$	1,021,947	$	24,827	$	6,529	$	1,053,303	$	—
Net income				—		—		35,431		35,431		—
Other comprehensive income				—		8,840		—		8,840		—
Other				21		—		—		21		—
Balance at September 30, 2023	108,907	$	—	$	1,021,968	$	33,667	$	41,960	$	1,097,595	$	—
(1) IPALCO made return of capital payments of $46.5 million during the nine months ended September 30, 2023 for the portion of current year distributions to shareholders in excess of current year net income at the time of distribution.

See Notes to Condensed Consolidated Financial Statements.

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IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

(Unaudited)

1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

IPALCO is a holding company incorporated under the laws of the state of Indiana. IPALCO is owned by AES U.S. Investments (82.35%) and CDPQ (17.65%). AES U.S. Investments is owned by AES U.S. Holdings, LLC (85%) and CDPQ (15%). IPALCO owns all of the outstanding common stock of IPL, which does business as AES Indiana. Substantially all of IPALCO’s business consists of generating, transmitting, distributing and selling of electric energy conducted through its principal subsidiary, AES Indiana. AES Indiana was incorporated under the laws of the state of Indiana in 1926. AES Indiana has approximately 530,000 retail customers in the city of Indianapolis and neighboring cities, towns and communities, and adjacent rural areas all within the state of Indiana. AES Indiana has an exclusive right to provide electric service to those customers.

AES Indiana owns and operates four generating stations, all within the state of Indiana. The first station, Petersburg, is coal-fired, and AES Indiana retired 230 MW Petersburg Unit 1 in May 2021 and 415 MW Petersburg Unit 2 in June 2023, which resulted in 630 MW of total retired economic capacity at this station. AES Indiana plans to convert the remaining two coal units at Petersburg to natural gas (for further discussion, see Note 2, ”Regulatory Matters - IRP Filings and Replacement Generation”). The second station, Harding Street, consists of three natural gas-fired boilers and steam turbines and uses natural gas and fuel oil to power five combustion turbines. In addition, AES Indiana operates a 20 MW battery energy storage unit at this location, which provides frequency response. The third station, Eagle Valley, is a CCGT natural gas plant. The fourth station, Georgetown, is a peaking station that uses natural gas to power combustion turbines. As of September 30, 2024, AES Indiana’s net electric generation capacity at these generating stations for winter is 3,070 MW and net summer capacity is 2,925 MW.

AES Indiana also owns and operates two renewable energy projects, including a 195 MW solar project located in Clinton County, Indiana (the ”Hardy Hills Solar Project”), which achieved full commercial operations in May 2024, and a 106 MW wind facility located in Benton County, Indiana (the ”Hoosier Wind Project”), which was acquired in February 2024. See Note 2, "Regulatory Matters - IRP Filings and Replacement Generation" for further information.

In August 2023, AES Indiana, through a wholly-owned subsidiary, completed the acquisition of Petersburg Energy Center, LLC, including the development of a 250 MW solar and 45 MW (180 MWh) energy storage facility (the ”Petersburg Energy Center Project”). The Petersburg Energy Center Project is expected to be completed in 2025.

In June 2023, AES Indiana, through a wholly-owned subsidiary, executed an agreement for the construction of the 200 MW (800 MWh) Pike County BESS Project to be developed at the AES Indiana Petersburg Plant site in Pike County, Indiana. The Pike County BESS Project is expected to be completed in early 2025.

For further discussion about AES Indiana’s plans for wind, solar, and battery energy storage projects, please see Note 2, ”Regulatory Matters - IRP Filings and Replacement Generation” to IPALCO’s 2023 Form 10-K.

Consolidation

The accompanying Financial Statements include the accounts of IPALCO Enterprises, Inc., AES Indiana and Mid-America Capital Resources, Inc., a non-regulated wholly-owned subsidiary of IPALCO. Furthermore, VIEs in which the Company has an ownership interest and is the primary beneficiary, thus controlling the VIE, have been consolidated. All significant intercompany amounts have been eliminated in consolidation.

Interim Financial Presentation

The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP, as contained in the FASB ASC, for interim financial information and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, comprehensive income, changes in equity, and cash flows. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of expected results for the year ending December

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31, 2024. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2023 audited consolidated financial statements and notes thereto, which are included in IPALCO’s 2023 Form 10-K.

Use of Management Estimates

The preparation of financial statements in conformity with GAAP requires that management make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenue and expenses during the reporting period may also be affected by the estimates and assumptions management is required to make. Actual results may differ from those estimates. Significant items subject to such estimates and assumptions include: recognition of revenue including unbilled revenue; the carrying value of property, plant and equipment; the valuation of insurance and claims liabilities; the valuation of allowances for credit losses and deferred income taxes; regulatory assets and liabilities; liabilities recorded for income tax exposures; litigation; contingencies; and assets and liabilities related to AROs and employee benefits.

Cash, Cash Equivalents and Restricted Cash

The following table provides a summary of cash, cash equivalents and restricted cash amounts reported within the Condensed Consolidated Balance Sheets that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows:

	September 30,		December 31,
	2024		2023
	(In Thousands)
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$	48,308	$	28,579
Restricted cash (included in Prepayments and other current assets)	5		5
Total cash, cash equivalents and restricted cash	$	48,313	$	28,584

Accounts Receivable and Allowance for Credit Losses

The following table summarizes our accounts receivable balances at September 30, 2024 and December 31, 2023:

	September 30,		December 31,
	2024		2023
	(In Thousands)
Accounts receivable, net
Customer receivables	$	196,714	$	125,715
Unbilled revenue	98,194		91,463
Amounts due from related parties	7,005		5,178
Other	37,875		13,848
Allowance for credit losses	(17,087)		(2,283)
Total accounts receivable, net	$	322,701	$	233,921

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The following table is a rollforward of our allowance for credit losses related to the accounts receivable balances for the periods indicated:

	Nine Months Ended September 30,
$ in Thousands	2024		2023
Allowance for credit losses:
Beginning balance	$	2,283	$	1,117
Current period provision	14,018		5,536
Net write-offs charged against allowance	(577)		(6,940)
Recoveries collected	1,363		1,351
Ending Balance	$	17,087	$	1,064

The allowance for credit losses primarily relates to utility customer receivables, including unbilled amounts. Expected credit loss estimates are developed by disaggregating customers into those with similar credit risk characteristics and using historical credit loss experience. In addition, we also consider how current and future economic conditions are expected to impact the collectability, as applicable, of our receivables balance. Amounts are written off when reasonable collections efforts have been exhausted. During 2024, the current period provision and allowance for credit losses has increased due to higher past due customer receivables. AES Indiana temporarily paused customer disconnections and certain collection efforts and write-off processes after the implementation of AES Indiana's customer billing system upgrade in the fourth quarter of 2023. This has resulted in higher past due customer receivables and a higher allowance for credit losses as of September 30, 2024. AES Indiana currently anticipates reinstituting the customer disconnections process and collection efforts and write-off processes in the fourth quarter of 2024.

Inventories

The following table summarizes our inventory balances at September 30, 2024 and December 31, 2023:

	September 30,		December 31,
	2024		2023
	(In Thousands)
Inventories
Fuel	$	55,977	$	77,198
Materials and supplies, net	69,113		66,392
Total inventories	$	125,090	$	143,590

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ARO

AES Indiana’s ARO liabilities relate primarily to environmental issues involving asbestos-containing materials, ash ponds, landfills and miscellaneous contaminants associated with its generating plants, transmission system and distribution system. The following is a roll forward of the ARO legal liabilities for the nine months ended September 30, 2024 and 2023, respectively:

	Nine Months Ended September 30,
	2024		2023
	(In Thousands)
Balance as of January 1	$	249,930	$	218,729
Liabilities incurred	8,864		656
Liabilities settled	(3,202)		(9,946)
Revisions to cash flow and timing estimates	81,714		—
Accretion expense	9,244		7,352
Balance as of September 30	$	346,550	$	216,791
Less: ARO liabilities, current	26,384		—
ARO liabilities, non-current	$	320,166	$	216,791

ARO liabilities incurred in 2024 primarily relate to decommissioning costs for AES Indiana’s renewable projects, including liabilities incurred through acquisition of Hoosier Wind Project, LLC. AES Indiana recorded revisions to its ARO liabilities in 2024 primarily to reflect revisions to cash flow estimates due to increases in closure costs and groundwater treatment measures for ash ponds and landfills. As of September 30, 2024 and December 31, 2023, AES Indiana did not have any assets that are legally restricted for settling its ARO liability. For further information on AES Indiana’s ARO, see Note 3, “Property, Plant and Equipment - ARO” to IPALCO’s 2023 Form 10-K.

AFUDC

AES Indiana capitalizes an allowance for the net cost of funds (interest on borrowed funds and a reasonable rate of return on equity funds) used for construction purposes during the period of construction with a corresponding credit to income. AFUDC equity and AFUDC debt were as follows for the periods indicated:

$ in thousands	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
AFUDC equity	$	1,485	$	3,134	$	3,585	$	7,089
AFUDC debt	$	7,436	$	3,841	$	19,123	$	9,505

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Intangible Assets

Finite-lived intangible assets primarily include capitalized software and project development intangible assets amortized over their useful lives. These capitalized software and project development intangible assets range from 7 to 35 year-weighted average amortization periods, respectively.

The following table presents information related to the Company’s intangible assets, including the gross amount capitalized and related amortization:

	September 30,		December 31,
$ in thousands	2024		2023
Capitalized software	$	279,878	$	261,872
Project development intangible assets	83,430		84,097
Other	797		797
Less: Accumulated amortization	129,969		111,110
Intangible assets - net	$	234,136	$	235,656
	Three Months Ended September 30,
	2024		2023
Amortization expense	$	6,729	$	3,654
	Nine Months Ended September 30,
	2024		2023
Amortization expense	$	20,458	$	9,665

Accumulated Other Comprehensive Income

The amounts reclassified out of AOCI by component during the three and nine months ended September 30, 2024 and 2023 are as follows (in Thousands):

Details about AOCI components	Affected line item in the Condensed Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Net (gains) / losses on cash flow hedges (Note 4):	Interest expense	$	(578)	$	1,807	$	(144)	$	5,421
	Income tax effect	144		(449)		36		(1,348)
Total reclassifications for the period, net of income taxes		$	(434)	$	1,358	$	(108)	$	4,073

See Note 4, “Derivative Instruments and Hedging Activities - Cash Flow Hedges” for further information on the changes in the components of AOCI.

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New Accounting Pronouncements Issued But Not Yet Effective

The following table provides a brief description of recent accounting pronouncements that could have a material impact on the Company’s Financial Statements once adopted. Accounting pronouncements not listed below were assessed and determined to be either not applicable or are expected to have no material impact on the Company’s Financial Statements.

ASU Number and Name	Description	Date of Adoption	Effect on the Financial Statements upon adoption
2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures	The amendments in this section are designed to improve the disclosures related to Segment reporting on an interim and annual basis. Public companies must disclose significant segment expenses and an amount for other segment items. This will also require that a company disclose its annual disclosures under Topic 280 in each interim period. Furthermore, companies will need to disclose the Chief Operating Decision Maker (CODM) and how the CODM assesses the performance of a segment. Lastly, public companies that have a single reportable segment must report the required disclosures under topic 280.	The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted.	This ASU only affects disclosures, which will be provided when the amendment becomes effective.
2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures	The amendments in this Update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. Furthermore, companies are required to disclose a disaggregated amount of income taxes paid at a federal, state, and foreign level as well as a break down of income taxes paid in a jurisdiction that comprises 5% of a company’s total income taxes paid. Lastly, this ASU requires that companies disclose income (loss) from continuing operations before income tax at a domestic and foreign level and that companies disclose income tax expense from continuing operations on a federal, state, and foreign level.	The amendments in this Update are effective for fiscal years beginning after December 15, 2024.	This ASU only affects disclosures, which will be provided when the amendment becomes effective.

2. REGULATORY MATTERS

Regulatory Rate Review

On April 17, 2024, the IURC issued an order (the “2024 Base Rate Order”) approving the Stipulation and Settlement Agreement that AES Indiana entered into on November 22, 2023, with the OUCC and the other intervening parties in AES Indiana’s base rate case filing. Among other matters and consistent with the Stipulation and Settlement Agreement, the 2024 Base Rate Order approves an increase in AES Indiana's total annual operating revenue of $71 million for AES Indiana’s electric service and provides a return on common equity of 9.9% and cost of long-term debt of 4.90% on a rate base of approximately $3.5 billion. Updated customer rates and charges became effective on May 9, 2024.

Storm Outage Restoration Inquiry

On July 11, 2023, the OUCC and the CAC filed a Joint Petition through which they requested the IURC open an investigation into AES Indiana’s practices and procedures regarding storm outage restoration. A technical conference was held on October 2, 2023, to discuss AES Indiana’s response to outages and storm restoration; particularly the storms that occurred between June 29, 2023 and July 2, 2023. In its 2024 Base Rate Order, the IURC stated, "The uncontested evidence established that AES Indiana’s response to the June 29 storm was equal to or better than the response provided by other utilities, as evidenced by a comparison of storm response with the information other utilities provided at a September 28, 2023 technical conference regarding their respective response. The evidence also established that the priorities used to guide each utility’s restoration efforts and overall effort were the same." Contemporaneous with the 2024 Base Rate Order, this Joint Petition was dismissed with prejudice.

DSM

AES Indiana filed a petition with the IURC on May 31, 2024 asking for approval of a two year DSM plan for the 2025-2026 program years. The petition includes requested recovery of program operating costs as well as net lost revenue and financial incentives, depending on the level of success of the programs consistent with prior DSM

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plans. On October 1, 2024, AES Indiana and the OUCC filed settlement testimony with the IURC in support of approval of a Stipulation and Settlement Agreement reached between the settling parties (AES Indiana, OUCC, and CAC). An evidentiary hearing on this matter was held by the IURC on October 22, 2024. We expect the IURC to issue an order on this proceeding by the end of 2024.

IRP Filings and Replacement Generation

2022 IRP

In December 2022, AES Indiana filed its 2022 IRP with the IURC, which describes AES Indiana’s Preferred Resource Portfolio for meeting generation capacity needs for serving AES Indiana’s retail customers over the next several years. The Preferred Resource Portfolio is AES Indiana’s reasonable least cost option and provides a cleaner and more diverse generation mix for customers. The 2022 IRP short-term action plan includes converting the two remaining coal units at Petersburg to natural gas. Additionally, AES Indiana plans to add up to 1,300 MW of wind, solar, and battery energy storage by 2027.

Petersburg Repowering

On March 11, 2024, AES Indiana filed for approval of a CPCN with the IURC to convert Petersburg Units 3 and 4 from coal to natural gas and to recover costs through future rates. The conversion of Unit 3 is expected to begin in February 2026 and be completed by June 2026 and the conversion of Unit 4 is expected to begin in June 2026 and be completed by December 2026. An evidentiary hearing on this matter was held by the IURC on August 6, 2024. We expect the IURC to issue an order on this proceeding in the fourth quarter of 2024.

Hardy Hills Solar Project

In December 2023, the first stage of construction for the Hardy Hills Solar Project was completed and placed in service, with initial operations for over half of the project commencing on December 28, 2023. Construction was completed for the remaining MW and the project achieved full commercial operations in May 2024. Upon the final stage of the project being placed in service, the Company recognized $21.4 million of earnings from tax attributes using the HLBV method.

Hoosier Wind Project

In August 2023, AES Indiana filed for IURC issuance of a CPCN approving the acquisition of 100% of the membership interests in Hoosier Wind Project, LLC (the “Hoosier Wind Project”), which is an existing 106 MW wind facility located in Benton County, Indiana. IURC approval was received on January 24, 2024, and the transaction closed on February 29, 2024. Immediately following the acquisition of the Hoosier Wind Project, the legal entity was dissolved by AES Indiana. The transaction was accounted for as an asset acquisition that did not meet the definition of a business. Of the total consideration transferred of $92.6 million, including transaction costs, approximately $48.8 million was allocated to the identifiable assets acquired on a relative fair value basis, primarily consisting of tangible wind farm assets and typical working capital items. The remaining consideration was allocated to the termination of the pre-existing power purchase agreement between AES Indiana and the Hoosier Wind Project, which was deferred as a long-term regulatory asset.

Crossvine Project

On August 1, 2024, AES Indiana executed an agreement for the acquisition of a development stage solar and BESS project to be developed in Dubois County, Indiana. AES Indiana plans to build 85 MW of solar and 85 MW (340 MWh) of energy storage which is expected to be completed in mid-2027. This transaction is subject to approval from the IURC. AES Indiana filed a petition and case-in-chief with the IURC in August 2024, seeking a CPCN for this project.

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3. FAIR VALUE

The fair value of current financial assets and liabilities approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. Because these amounts are estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 4, “Fair Value” to IPALCO’s 2023 Form 10-K.

Financial Assets

VEBA Assets

IPALCO has VEBA investments that are to be used to fund certain employee postretirement health care benefit plans. These assets are primarily comprised of open-ended mutual funds, which are valued using the net assets value per unit. These investments are recorded at fair value within “Other non-current assets” on the accompanying Condensed Consolidated Balance Sheets and classified as equity securities. All changes to fair value on the VEBA investments are included in income in the period that the changes occur. These changes to fair value were not material for the periods covered by this report. Any unrealized gains or losses are recorded in “Other (expense) / income, net” on the accompanying Condensed Consolidated Statements of Operations.

FTRs

In connection with AES Indiana’s participation in MISO, in the second quarter of each year AES Indiana is granted financial instruments that can be converted into cash or FTRs based on AES Indiana’s forecasted peak load for the period. FTRs are used in the MISO market to hedge AES Indiana’s exposure to congestion charges, which result from constraints on the transmission system. AES Indiana’s FTRs are valued at the cleared auction prices for FTRs in MISO’s annual auction. Because of the infrequent nature of this valuation, the fair value assigned to the FTRs is considered a Level 3 input under the fair value hierarchy required by ASC 820. An offsetting regulatory liability has been recorded as these revenue or costs will be flowed through to customers through the FAC. As such, there is no impact on our Condensed Consolidated Statements of Operations.

Interest Rate Hedges

In March 2024, IPALCO’s interest rate hedges with a combined notional value of $400.0 million were terminated in conjunction with the issuance of the 2034 IPALCO Notes. See also Note 4, “Derivative Instruments and Hedging Activities - Cash Flow Hedges” for further information.

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Recurring Fair Value Measurements

The fair value of assets and liabilities at September 30, 2024 and December 31, 2023 measured on a recurring basis and the respective category within the fair value hierarchy for IPALCO was determined as follows:

	Fair Value as of September 30, 2024								Fair Value as of December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In Thousands)
Financial assets:
VEBA investments:
Money market funds	$	83	$	—	$	—	$	83	$	127	$	—	$	—	$	127
Mutual funds	3,855		—		—		3,855		3,425		—		—		3,425
Total VEBA investments	3,938		—		—		3,938		3,552		—		—		3,552
FTRs	—		—		2,817		2,817		—		—		1,388		1,388
Interest rate hedges	—		—		—		—		—		14,294		—		14,294
Total financial assets measured at fair value	$	3,938	$	—	$	2,817	$	6,755	$	3,552	$	14,294	$	1,388	$	19,234

The following table presents a roll forward of financial instruments, measured at fair value on a recurring basis, classified as Level 3 in the fair value hierarchy (note, amounts in this table indicate carrying values, which approximate fair values):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In Thousands)
Beginning Balance	$	3,968	$	3,294	$	1,388	$	7,545
Issuances	—		—		3,811		3,624
Settlements	(1,151)		(943)		(2,382)		(8,818)
Ending Balance	$	2,817	$	2,351	$	2,817	$	2,351

Financial Instruments not Measured at Fair Value in the Condensed Consolidated Balance Sheets

Debt

The fair value of our outstanding fixed-rate debt has been determined on the basis of the quoted market prices of the specific securities issued and outstanding. In certain circumstances, the market for such securities was inactive and therefore the valuation was adjusted to consider changes in market spreads for similar securities. Accordingly, the purpose of this disclosure is not to approximate the value on the basis of how the debt might be refinanced.

The following table shows the face value and the fair value of fixed-rate and variable-rate indebtedness (Level 2) for the periods ending:  

	September 30, 2024				December 31, 2023
	Face Value		Fair Value		Face Value		Fair Value
	(In Thousands)
Fixed-rate	$	3,678,800	$	3,644,584	$	3,033,800	$	2,860,467
Variable-rate	350,000		350,000		455,000		455,000
Total indebtedness	$	4,028,800	$	3,994,584	$	3,488,800	$	3,315,467

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The difference between the face value and the carrying value of this indebtedness consists of the following:

•unamortized deferred financing costs of $35.3 million and $24.8 million at September 30, 2024 and December 31, 2023, respectively; and

•unamortized discounts of $9.5 million and $6.8 million at September 30, 2024 and December 31, 2023, respectively.

4. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

For further information on the Company’s derivative and hedge accounting policies, see Note 1, “Overview and Summary of Significant Accounting Policies - Financial Derivatives” and Note 5, “Derivative Instruments and Hedging Activities” to IPALCO’s 2023 Form 10-K.

At September 30, 2024, AES Indiana’s outstanding derivative instruments were as follows:

Commodity	Accounting Treatment	Unit	Notional (in thousands)	Sales (in thousands)	Net Notional (in thousands)
FTRs	Not Designated	MWh	6,987	—	6,987

Cash Flow Hedges

As part of our risk management processes, we identify the relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. The fair values of cash flow hedges are determined by current public market prices. IPALCO’s three forward-starting interest rate swaps with a combined notional value of $400 million were terminated for total cash proceeds of $23.1 million, in conjunction with the issuance of the 2034 IPALCO Notes in March 2024. The AOCI associated with the interest rate swaps through the date of the termination will be amortized out of AOCI into interest expense over the 10-year life of the 2034 IPALCO Notes.

The following table provides information on gains or losses recognized in AOCI for the cash flow hedges for the periods indicated:

	Interest Rate Hedges for the Three Months Ended September 30,				Interest Rate Hedges for the Nine Months Ended September 30,
$ in thousands (net of tax)	2024		2023		2024		2023
Beginning accumulated derivative gain	$	36,246	$	24,827	$	29,294	$	22,269
Net gains associated with current period hedging transactions	—		7,482		6,626		7,325
Net (gains) / losses reclassified to interest expense, net of tax	(434)		1,358		(108)		4,073
Ending accumulated derivative gain in AOCI	$	35,812	$	33,667	$	35,812	$	33,667
Net gain expected to be reclassified to earnings in the next twelve months	1,737

Derivatives Not Designated as Hedge

AES Indiana’s FTRs and forward power contracts do not qualify for hedge accounting or the normal purchases and sales exceptions under ASC 815. Accordingly, FTRs are recorded at fair value using the income approach when acquired and subsequently amortized over the annual period as they are used. The forward power contracts are recorded at fair value using the market approach with changes in the fair value charged or credited to the Condensed Consolidated Statements of Operations in the period in which the change occurred. This is commonly referred to as “MTM accounting”. Realized gains and losses on the forward power contracts are included in future FAC filings, therefore any realized and unrealized gains and losses are deferred as regulatory liabilities or regulatory assets.

Certain qualifying derivative instruments have been designated as normal purchases or normal sales contracts, as provided under GAAP. Derivative contracts that have been designated as normal purchases or normal sales under GAAP are not subject to hedge or MTM accounting and are recognized in the Condensed Consolidated Statements of Operations on an accrual basis.

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When applicable, IPALCO has elected not to offset derivative assets and liabilities and not to offset net derivative positions against the right to reclaim cash collateral pledged (an asset) or the obligation to return cash collateral received (a liability) under derivative agreements. As of September 30, 2024 and December 31, 2023, IPALCO did not have any offsetting positions.

The following table summarizes the fair value, balance sheet classification and hedging designation of IPALCO’s derivative instruments (in thousands):

Commodity	Hedging Designation	Balance sheet classification	September 30, 2024		December 31, 2023
FTRs	Not a Cash Flow Hedge	Derivative assets, current	$	2,817	$	1,388
Interest rate hedges	Cash Flow Hedge	Derivative assets, current	$	—	$	14,294

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5. DEBT

Long-Term Debt

The following table presents our long-term debt:

		September 30,		December 31,
Series	Due	2024		2023
		(In Thousands)
AES Indiana first mortgage bonds:
3.125% (1)	December 2024	$	40,000	$	40,000
0.65% (1)	August 2025	40,000		40,000
0.75% (2)	April 2026	30,000		30,000
0.95% (2)	April 2026	60,000		60,000
1.40% (1)	August 2029	55,000		55,000
5.65%	December 2032	350,000		350,000
6.60%	January 2034	100,000		100,000
6.05%	October 2036	158,800		158,800
6.60%	June 2037	165,000		165,000
4.875%	November 2041	140,000		140,000
4.65%	June 2043	170,000		170,000
4.50%	June 2044	130,000		130,000
4.70%	September 2045	260,000		260,000
4.05%	May 2046	350,000		350,000
4.875%	November 2048	105,000		105,000
5.70%	April 2054	650,000		—
Unamortized discount – net		(8,150)		(6,449)
Deferred financing costs		(25,770)		(19,058)
Total AES Indiana first mortgage bonds		2,769,880		2,128,293
Total long-term debt – AES Indiana		2,769,880		2,128,293
Long-term debt – IPALCO:
3.70% Senior Secured Notes	September 2024	—		405,000
4.25% Senior Secured Notes	May 2030	475,000		475,000
5.75% Senior Secured Notes	April 2034	400,000		—
Unamortized discount – net		(1,353)		(319)
Deferred financing costs		(8,490)		(4,554)
Total long-term debt – IPALCO		865,157		875,127
Total consolidated IPALCO long-term debt		3,635,037		3,003,420
Less: current portion of long-term debt		80,000		445,000
Net consolidated IPALCO long-term debt		$	3,555,037	$	2,558,420

(1)First mortgage bonds issued to the Indiana Finance Authority, to secure the loan of proceeds from tax-exempt bonds issued by the Indiana Finance Authority.

(2)First mortgage bonds issued to the Indiana Finance Authority, to secure the loan of proceeds from tax-exempt bonds issued by the Indiana Finance Authority. The notes have a final maturity date of December 31, 2038, but are subject to a mandatory put in April 2026.

Line of Credit

As of September 30, 2024 and December 31, 2023, AES Indiana had $50.0 million and $155.0 million in outstanding borrowings on the committed Credit Agreement, respectively.

Significant Transactions

AES Indiana First Mortgage Bonds and AES Indiana Term Loans

In August 2024, AES Indiana entered into an unsecured $400 million 364-day term loan agreement ("$400 million Term Loan Agreement"), which can be drawn in two tranches. AES Indiana drew $300 million at closing and drew the remaining $100 million in October 2024, with the proceeds being used for general corporate purposes. This agreement matures on August 13, 2025, and bears interest at variable rates as described in the $400 million Term

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Loan Agreement. The $400 million Term Loan Agreement contains customary representations, warranties and covenants, including a leverage covenant consistent with the leverage covenant contained in AES Indiana's Credit Agreement. AES Indiana has classified the $400 million Term Loan Agreement, including the $300 million outstanding as of September 30, 2024, as short-term indebtedness as it matures August 2025. Management plans to repay the $400 million Term Loan Agreement through a combination of funds from debt financings and parent equity capital contributions.

In March 2024, AES Indiana issued $650 million aggregate principal amount of first mortgage bonds, 5.70% Series, due April 2054, pursuant to Rule 144A and Regulation S under the Securities Act. The net proceeds from this offering of approximately $640.5 million, after deducting the initial purchasers’ discounts and fees and expenses for the offering, were used to repay the $300 million Term Loan Agreement, outstanding borrowings on the Credit Agreement and for general corporate purposes.

IPALCO’s Senior Secured Notes

In March 2024, IPALCO completed the sale of the 2034 IPALCO Notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The net proceeds from this offering of $394.0 million, together with cash on hand, were used to redeem the 2024 IPALCO Notes on April 13, 2024, and to pay certain related fees and expenses.

Pursuant to a registration rights agreement dated March 14, 2024, IPALCO agreed to register the 2034 IPALCO Notes under the Securities Act by filing an exchange offer registration statement or, under specified circumstances, a shelf registration statement with the SEC. IPALCO filed a registration statement on Form S-4 with respect to the 2034 IPALCO Notes with the SEC on May 28, 2024 in respect of its obligations under such registration rights agreement, and this registration statement was declared effective on June 6, 2024. The exchange offer closed on July 12, 2024.

Other

In February 2024, AES Indiana received a $92 million short-term loan from AES. This loan was fully repaid in March 2024.

AES Indiana’s mortgage and deed of trust secures first mortgage bonds issued by AES Indiana. Pursuant to the terms of the mortgage and deed of trust, substantially all property owned by AES Indiana is subject to a direct first mortgage lien. In addition, IPALCO’s outstanding debt obligations are secured by its pledge of all of the outstanding common stock of AES Indiana.

6. INCOME TAXES

IPALCO’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective combined state and federal income tax rates were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Effective tax rate	13.3	%	9.7	%	21.7	%	12.2	%

The year-to-date rate is different from the combined federal and state statutory rate of 24.9% primarily due to the impact of taxes on noncontrolling interest in subsidiaries and the net tax expense related to the amortization of allowance for equity funds used during construction, which is partially offset by the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of AES Indiana.

IPALCO’s income tax expense for the nine months ended September 30, 2024, was calculated using the estimated annual effective income tax rate for 2024 of 17.3% on ordinary income. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income or loss.

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AES files federal and state income tax returns which consolidate IPALCO and its subsidiaries. Under a tax sharing agreement with AES, IPALCO is responsible for the income taxes associated with its own taxable income and records the provision for income taxes using a separate return method.

7. BENEFIT PLANS

The following table presents the net periodic benefit cost of the Pension Plans combined:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In Thousands)
Components of net periodic benefit cost:
Service cost	$	1,253	$	1,297	$	3,759	$	3,892
Interest cost	6,739		7,455		20,217		22,365
Expected return on plan assets	(7,443)		(8,277)		(22,329)		(24,830)
Amortization of prior service cost	475		543		1,425		1,629
Amortization of actuarial loss	1,207		1,536		3,621		4,608
Net periodic benefit cost	$	2,231	$	2,554	$	6,693	$	7,664

The components of net periodic benefit cost other than service cost are included in “Other (expense) / income, net” in the Condensed Consolidated Statements of Operations.

In addition, AES Indiana provides postretirement health care benefits to certain active or retired employees and the spouses of certain active or retired employees. These postretirement health care benefits and the related unfunded obligation were not material to the Financial Statements in the periods covered by this report.

8. EQUITY

Paid In Capital

On May 24, 2024, AES U.S. Investments received equity capital contributions totaling $123.5 million, of which $105 million was contributed by AES U.S. Holdings, LLC and $18.5 million was contributed by CDPQ. IPALCO then received equity capital contributions totaling $150.0 million, of which $123.5 million was contributed by AES U.S. Investments and $26.5 million was contributed by CDPQ. IPALCO then made the same investments in AES Indiana. The proceeds from the equity capital contributions are intended primarily for funding needs related to AES Indiana’s capital expenditure program. The equity capital contributions were made on a proportional share basis and, therefore, did not change CDPQ’s or AES’ ownership interests in IPALCO or AES U.S. Investments.

Equity Transactions with Noncontrolling Interests

The Hardy Hills Solar Project has been financed with a tax equity structure, in which a tax equity investor receives a portion of the economic attributes of the facility, including tax attributes, that vary over the life of the project. On December 1, 2023, AES Indiana, through a wholly-owned subsidiary (the "Class B Member"), and a third-party investor (the "Class A Member"), entered into an Equity Capital Contribution Agreement, pursuant to which each member made certain capital contributions to Hardy Hills JV. Through September 30, 2024, the Class A member has made total contributions of $126.2 million under the agreement, including $46.9 million contributed in May 2024 upon final completion of the project. A noncontrolling interest was recorded by AES Indiana at the amount of cash contributed by the Class A Member.

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9. COMMITMENTS AND CONTINGENCIES

Contingencies

Legal Matters

IPALCO and AES Indiana are involved in litigation arising in the normal course of business. We accrue for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. While the ultimate outcome of outstanding litigation cannot be predicted with certainty, management believes that final outcomes will not have a material adverse effect on IPALCO’s results of operations, financial condition and cash flows. Accruals for legal loss contingencies were not material as of September 30, 2024 and December 31, 2023, respectively.

Environmental Matters

We are subject to various federal, state, regional and local environmental protection and health and safety laws and regulations governing, among other things, the generation, storage, handling, use, disposal and transportation of regulated materials, including CCR; the use and discharge of water used in generation boilers and for cooling purposes; the emission and discharge of hazardous and other materials, including GHGs, into the environment; climate change; and the health and safety of our employees. These laws and regulations often require a lengthy and complex process of obtaining and renewing permits and other governmental authorizations from federal, state and local agencies. Violation of these laws, regulations or permits can result in substantial fines, other sanctions, permit revocation and/or facility shutdowns. We cannot assure that we have been or will be at all times in full compliance with such laws, regulations and permits. Accruals for environmental contingencies were not material as of September 30, 2024 and December 31, 2023, respectively.

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10. BUSINESS SEGMENTS

IPALCO manages its business through one reportable operating segment, the Utility segment. The primary segment performance measure is income / (loss) before income tax as management has concluded that this measure best reflects the underlying business performance of IPALCO and is the most relevant measure considered in IPALCO’s internal evaluation of the financial performance of its segment. The Utility segment is comprised of AES Indiana, a vertically integrated electric utility. with all other nonutility business activities aggregated separately. The “Other” nonutility category primarily includes the 2024 IPALCO Notes, 2030 IPALCO Notes, 2034 IPALCO Notes and related interest expense, balances associated with IPALCO’s interest rate hedges, cash and other immaterial balances. See Note 4 "Derivatives Instruments and Hedging Activities" and Note 6 "Debt" for further information on the interest rate swaps related to the 2024 IPALCO Notes. The accounting policies of the identified segment are consistent with those policies and procedures described in the summary of significant accounting policies. See Note 1, "Overview and Summary of Significant Accounting Policies" to IPALCO’s 2023 Form 10-K for further information.

The following table provides information about IPALCO’s business segments (in thousands):

	Three Months Ended						Three Months Ended
	September 30, 2024						September 30, 2023
	Utility		Other		Total		Utility		Other		Total
Revenue	$	449,171	$	—	$	449,171	$	402,887	$	—	$	402,887
Depreciation and amortization	$	85,493	$	—	$	85,493	$	72,021	$	—	$	72,021
Interest expense	$	33,745	$	10,453	$	44,198	$	23,502	$	10,969	$	34,471
Income/(loss) before income tax	$	73,109	$	(10,727)	$	62,382	$	49,887	$	(10,654)	$	39,233
	Nine Months Ended						Nine Months Ended
	September 30, 2024						September 30, 2023
	Utility		Other		Total		Utility		Other		Total
Revenue	$	1,254,566	$	—	$	1,254,566	$	1,290,580	$	—	$	1,290,580
Depreciation and amortization	$	248,846	$	—	$	248,846	$	212,292	$	—	$	212,292
Interest expense	$	99,007	$	32,674	$	131,681	$	71,604	$	32,906	$	104,510
Income/(loss) before income tax	$	146,058	$	(31,500)	$	114,558	$	104,005	$	(32,790)	$	71,215
	As of September 30, 2024						As of December 31, 2023
	Utility		Other		Total		Utility		Other		Total
Total assets	$	6,998,420	$	34,523	$	7,032,943	$	6,129,581	$	51,942	$	6,181,523

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11. REVENUE

Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities. Please see Note 13, “Revenue” to IPALCO’s 2023 Form 10-K for further discussion of our retail, wholesale and miscellaneous revenue.

AES Indiana’s revenue from contracts with customers was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue from contracts with customers	$	441,973	$	393,940	$	1,233,907	$	1,265,010

The following table presents our revenue from contracts with customers and other revenue (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Retail Revenue
Retail revenue from contracts with customers:
Residential	$	183,757	$	162,531	$	523,625	$	515,920
Small commercial and industrial	66,786		58,777		190,531		186,313
Large commercial and industrial	170,657		156,995		464,185		489,190
Public lighting	3,009		2,369		8,032		7,453
Other (1)	3,585		4,253		8,576		13,286
Total retail revenue from contracts with customers	427,794		384,925		1,194,949		1,212,162
Alternative revenue programs	6,482		7,877		18,457		23,153
Wholesale Revenue
Wholesale revenue from contracts with customers:	10,183		7,794		29,503		41,489
Miscellaneous Revenue
Capacity revenue	97		—		97		8,155
Transmission and other revenue	3,898		1,221		9,357		3,204
Total miscellaneous revenue from contracts with customers	3,995		1,221		9,454		11,359
Other miscellaneous revenue (2)	717		1,070		2,203		2,417
Total Revenue	$	449,171	$	402,887	$	1,254,566	$	1,290,580

(1)Other retail revenue from contracts with customers includes miscellaneous charges to customers, including reconnection and late fee charges.

(2)Other miscellaneous revenue includes lease and other miscellaneous revenue not accounted for under ASC 606.

The balances of receivables from contracts with customers were as follows (in thousands):

	September 30, 2024		December 31, 2023
Revenue from contracts with customers	$	300,681	$	218,822

Payment terms for all receivables from contracts with customers typically do not extend beyond 30 days, unless a customer qualifies for payment extension. AES Indiana temporarily paused customer disconnections and certain collection efforts and write-off processes to support the implementation of AES Indiana's customer billing system upgrade in the fourth quarter of 2023. In the third quarter of 2024, AES Indiana began offering extended payment

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plans for customers who may need assistance in paying their past due bills. See Note 1, “Overview and Summary of Significant Accounting Policies – Accounts Receivable and Allowance for Credit Losses” for further information on AES Indiana’s receivable balances.

12. LEASES

LESSEE

The Company is the lessee under financing leases primarily for land. Right-of-use assets are long-term by nature. The following table summarizes the amounts recognized on the Condensed Consolidated Balance Sheets related to lease asset and liability balances as of the periods indicated (in thousands):

	Consolidated Balance Sheet Classification	September 30, 2024		December 31, 2023
Assets
Right-of-use assets — finance leases	Other non-current assets	$	86,934	$	16,357
Liabilities
Finance lease liabilities (current)	Short-term debt and current portion of long-term debt	$	218	$	—
Finance lease liabilities (noncurrent)	Long-term debt	86,640		17,769
Total finance lease liabilities		$	86,858	$	17,769

The following table summarizes supplemental balance sheet information related to leases as of the periods indicated:

Lease Term and Discount Rate	September 30, 2024		December 31, 2023
Weighted-average remaining lease term — finance leases	36 years		35 years
Weighted-average discount rate — finance leases	5.67	%	5.30	%

Operating cash outflows from finance leases were $3.4 million and $0.0 million for the nine months ended September 30, 2024 and 2023, respectively.

The following table shows the future lease payments under finance leases together with the present value of the net lease payments as of September 30, 2024 for 2024 through 2028 and thereafter (in thousands):

	Finance Leases
2024	$	446
2025	4,446
2026	4,535
2027	4,625
2028	4,718
Thereafter	209,278
Total	$	228,048
Less: Imputed interest	(141,190)
Present value of lease payments	$	86,858

LESSOR

The Company is the lessor under operating leases for land, office space and operating equipment. Lease receipts from such contracts are recognized as operating lease revenue on a straight-line basis over the lease term whereas contingent rentals are recognized when earned.

The following table presents lease revenue from operating leases in which the Company is the lessor for the periods indicated (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Total lease revenue	$	358	$	455	$	1,156	$	1,275

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The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant and equipment, net for the periods indicated (in thousands):

Property, Plant and Equipment, Net	September 30, 2024		December 31, 2023
Gross assets	$	4,387	$	4,341
Less: Accumulated depreciation	(1,381)		(1,222)
Net assets	$	3,006	$	3,119

The option to extend or terminate a lease is based on customary early termination provisions in the contract.

The following table shows the future lease receipts as of September 30, 2024 for the remainder of 2024 through 2028 and thereafter (in thousands):

	Operating Leases
2024	$	136
2025	553
2026	554
2027	554
2028	354
Thereafter	891
Total	$	3,042

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Financial Statements and the notes thereto included in “Item 1. Financial Statements” included in Part I – Financial Information of this Form 10-Q.

FORWARD-LOOKING INFORMATION

The following discussion may contain forward-looking statements regarding us, our business, prospects and our results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in IPALCO’s 2023 Form 10-K and subsequent filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise of the risks and uncertainties that may affect our business.

OVERVIEW OF OUR BUSINESS

IPALCO is a holding company incorporated under the laws of the state of Indiana. Our principal subsidiary is AES Indiana, a regulated electric utility operating in the state of Indiana. Substantially all of our business consists of the generation, transmission, distribution and sale of electric energy conducted through AES Indiana. Our business segments are “utility” and “other.” For additional information regarding our business, see “Item 1. Business” of IPALCO’s 2023 Form 10-K.

EXECUTIVE SUMMARY

Compared with the same periods in the prior year, the results for the three months ended September 30, 2024 reflect higher income before income tax of $23.1 million, or 59.0% and the results for the nine months ended September 30, 2024 reflect higher income before income tax of $43.3 million, or 60.9%, primarily due to factors including, but not limited to:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
$ in millions	2024 vs. 2023		2024 vs. 2023
Increase in retail margin due to higher prices (primarily driven by the 2024 Base Rate Order, including the impact of certain riders now included in base rates)	$	35.6	$	50.5
Increase in retail margin due to higher volumes (primarily driven by weather and higher retail demand)	4.1		20.8
Increase in ECCRA rider revenue due to recovery of certain renewable project investments	9.0		19.4
Increase due to lower contracted service expenses and materials and supplies inventory consumption, primarily due to lower generation maintenance and outage costs	6.0		22.2
Decrease due to higher depreciation expense from additional assets placed in service, higher amortization of regulatory assets and changes in depreciation rates as a result of the 2024 Base Rate Order	(13.5)		(36.6)
Decrease due to higher interest expense primarily from increased borrowings	(9.7)		(27.2)
Decrease due to higher expected credit losses	(7.9)		(8.5)
Other	(0.5)		2.7
Net change in income before income tax	$	23.1	$	43.3

See “Results of Operations” below for further discussion.

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RESULTS OF OPERATIONS

The electric utility business is affected by seasonal weather patterns throughout the year and, therefore, operating revenue and associated expenses are not generated evenly by month during the year. 

Statements of Operations Highlights

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
$ in Thousands	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
REVENUE	$	449,171	$	402,887	$	46,284	11.5	%	$	1,254,566	$	1,290,580	$	(36,014)	(2.8)	%
OPERATING COSTS AND EXPENSES:
Fuel	96,103		96,698		(595)		(0.6)	%	276,661		411,864		(135,203)		(32.8)	%
Power purchased	31,100		35,748		(4,648)		(13.0)	%	113,836		122,410		(8,574)		(7.0)	%
Operation and maintenance	125,849		120,858		4,991		4.1	%	350,309		356,386		(6,077)		(1.7)	%
Depreciation and amortization	85,493		72,021		13,472		18.7	%	248,846		212,292		36,554		17.2	%
Taxes other than income taxes	6,130		6,359		(229)		(3.6)	%	20,572		19,779		793		4.0	%
(Gain) / loss on asset disposals	(115)		—		(115)		(100.0)	%	1,422		—		1,422		100.0	%
Total operating costs and expenses	344,560		331,684		12,876		3.9	%	1,011,646		1,122,731		(111,085)		(9.9)	%
OPERATING INCOME	104,611		71,203		33,408		46.9	%	242,920		167,849		75,071		44.7	%
OTHER (EXPENSE) / INCOME, NET:
Allowance for equity funds used during construction	1,485		3,134		(1,649)		(52.6)	%	3,585		7,089		(3,504)		(49.4)	%
Interest expense	(44,198)		(34,471)		(9,727)		28.2	%	(131,681)		(104,510)		(27,171)		26.0	%
Other income / (expense), net	484		(633)		1,117		(176.5)	%	(266)		787		(1,053)		(133.8)	%
Total other expense, net	(42,229)		(31,970)		(10,259)		32.1	%	(128,362)		(96,634)		(31,728)		32.8	%
INCOME BEFORE INCOME TAX	62,382		39,233		23,149		59.0	%	114,558		71,215		43,343		60.9	%
Income tax expense	8,314		3,802		4,512		118.7	%	24,833		8,663		16,170		186.7	%
NET INCOME	54,068		35,431		18,637		52.6	%	89,725		62,552		27,173		43.4	%
Net loss attributable to noncontrolling interests	(872)		—		(872)		(100.0)	%	(24,171)		—		(24,171)		(100.0)	%
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	54,940	$	35,431	$	19,509	55.1	%	$	113,896	$	62,552	$	51,344	82.1	%

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Revenue

Revenue during the three and nine months ended September 30, 2024 increased / (decreased) $46.3 million and $(36.0) million, respectively, compared to the same periods in 2023, which resulted from the following changes (dollars in thousands):

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2024		2023		$ Change		% Change	2024		2023		$ Change		% Change
Revenue:
Retail revenue	$	434,276	$	392,802	$	41,474	10.6%	$	1,213,406	$	1,235,315	$	(21,909)	(1.8)%
Wholesale revenue	10,183		7,794		2,389		30.7%	29,503		41,489		(11,986)		(28.9)%
Miscellaneous revenue	4,712		2,291		2,421		105.7%	11,657		13,776		(2,119)		(15.4)%
Total revenue	$	449,171	$	402,887	$	46,284	11.5%	$	1,254,566	$	1,290,580	$	(36,014)	(2.8)%
Heating degree days:
Actual	18		6		12		200.0%	2,674		2,730		(56)		(2.1)%
30-year average	49		51					3,250		3,285
Cooling degree days:
Actual	835		788		47		6.0%	1,300		1,097		203		18.5%
30-year average	808		802					1,160		1,152

The following table presents additional data on kWh sold:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024	2023	kWh Change	% Change		2024	2023	kWh Change	% Change
kWh Sales (In Millions):
Residential	1,325	1,291	34	2.6	%	3,865	3,657	208	5.7	%
Small commercial and industrial	468	459	9	2.0	%	1,363	1,308	55	4.2	%
Large commercial and industrial	1,683	1,654	29	1.8	%	4,594	4,547	47	1.0	%
Public lighting	8	4	4	100.0	%	29	12	17	141.7	%
Sales – retail customers	3,484	3,408	76	2.2	%	9,851	9,524	327	3.4	%
Wholesale	174	195	(21)	(10.8)	%	652	1,181	(529)	(44.8)	%
Total kWh sold	3,658	3,603	55	1.5	%	10,503	10,705	(202)	(1.9)	%

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The following graph shows the percentage changes in weather-normalized and actual retail electric sales volumes by customer class for the three months ended September 30, 2024 as compared to the same period in the prior year:

The following graph shows the percentage changes in weather-normalized and actual retail electric sales volumes by customer class for the nine months ended September 30, 2024 as compared to the same period in the prior year:

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During the three months ended September 30, 2024, revenue increased $46.3 million compared to the same period of the prior year, and during the nine months ended September 30, 2024, revenue decreased $36.0 million compared to the same period of the prior year. These changes were primarily due to the following:

$ in millions		Three Months Ended September 30, 2024 vs. 2023		Nine Months Ended September 30, 2024 vs. 2023
Retail revenue:
	Volume:
	Net increase in the volume of kWh sold primarily due to weather and demand in our service territory versus the comparable period.	$	11.4	$	52.9
	Price:
	Net increase / (decrease) in the weighted average price of retail kWh sold primarily due to the 2024 Base Rate Order and lower FAC revenue primarily in the first half of 2024.	32.2		(65.4)
	Other:
	Primarily due to decreases in alternative revenue programs and miscellaneous charges to customers (including reconnection and late fee charges)	(2.1)		(9.4)
	Net change in retail revenue	41.5		(21.9)
Wholesale revenue:
	Volume:
	Net decrease in the volume of wholesale kWh sold. The amount of electricity available for wholesale sales is impacted by our retail load requirements, generation capacity and unit availability.	(0.9)		(18.6)
	Price:
	Net increase in the weighted average price of wholesale kWh sold. Our ability to be dispatched in the MISO market is primarily driven by the locational marginal price of electricity and variable generation costs.	3.3		6.6
	Net change in wholesale revenue	2.4		(12.0)
Miscellaneous revenue		2.4		(2.1)
Net change in revenue		$	46.3	$	(36.0)

Operating Costs and Expenses

The following table illustrates our changes in Operating costs and expenses during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 (in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Operating costs and expenses:
Fuel	$	96,103	$	96,698	$	(595)	(0.6)	%	$	276,661	$	411,864	$	(135,203)	(32.8)	%
Power purchased	31,100		35,748		(4,648)		(13.0)	%	113,836		122,410		(8,574)		(7.0)	%
Operation and maintenance	125,849		120,858		4,991		4.1	%	350,309		356,386		(6,077)		(1.7)	%
Depreciation and amortization	85,493		72,021		13,472		18.7	%	248,846		212,292		36,554		17.2	%
Taxes other than income taxes	6,130		6,359		(229)		(3.6)	%	20,572		19,779		793		4.0	%
(Gain) / loss on asset disposals	(115)		—		(115)		100	%	1,422		—		1,422		100.0	%
Total operating costs and expenses	$	344,560	$	331,684	$	12,876	3.9	%	$	1,011,646	$	1,122,731	$	(111,085)	(9.9)	%

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Fuel

The decreases in fuel costs of $0.6 million and $135.2 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year were primarily due to the following changes:

$ in millions		Three Months Ended September 30, 2024 vs. 2023		Nine Months Ended September 30, 2024 vs. 2023
Volume:
	Coal	$	(12.2)	$	(40.4)
	Natural gas	20.0		42.2
	Oil	0.2		—
	Net change in volume	8.0		1.8
Price:
	Coal	1.5		18.6
	Natural gas	(16.6)		(41.7)
	Oil	0.1		(0.6)
	Deferred fuel	6.4		(113.3)
	Net change in price	(8.6)		(137.0)
Net change in fuel expense		$	(0.6)	$	(135.2)

The changes in the volume of coal and natural gas are mostly attributed to the retirement of Petersburg Unit 2 in June 2023. The changes in the price of fuel are reflective of market prices for coal and natural gas. We are generally permitted to recover underestimated fuel and purchased power costs to serve our retail customers in future rates through quarterly FAC proceedings. These variances are deferred when incurred and amortized into expense in the same period that our rates are adjusted to reflect these variances. Additionally, fuel and purchased power costs incurred for wholesale energy sales are considered in the Off System Sales Margin rider.

Power Purchased

The decreases in power purchased of $4.6 million and $8.6 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year were primarily due to the following changes:

$ in millions		Three Months Ended September 30, 2024 vs. 2023		Nine Months Ended September 30, 2024 vs. 2023
Volume:
	Net (decrease) / increase in the volume of power purchased primarily due to AES Indiana's generation units running (more) / less frequently during the respective periods, and the impact of acquiring the Hoosier Wind Project in the first quarter of 2024.	$	(8.1)	$	3.9
Price:
	Market prices	1.9		9.4
	Deferred purchased power	5.5		(24.4)
	Net change in price	7.4		(15.0)
Other, net (mostly due to changes in capacity purchases)		(3.9)		2.5
Net change in power purchased costs		$	(4.6)	$	(8.6)

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The volume of power purchased each period is primarily influenced by retail demand, generating unit capacity and outages, and the relative cost of producing power versus purchasing power in the market. The market price of purchased power is influenced primarily by changes in the market price of delivered fuel (primarily natural gas), the supply of and demand for electricity, and the time of day during which power is purchased.

Operation and Maintenance

The increase / (decrease) in Operation and maintenance of $5.0 million and $(6.1) million during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year were primarily due to the following changes:

$ in millions	Three Months Ended September 30, 2024 vs. 2023		Nine Months Ended September 30, 2024 vs. 2023
Decrease in contracted services expenses, and lower materials and supplies inventory consumption, primarily due to lower generation maintenance and outage costs	$	(6.0)	$	(22.2)
Increase in charges from the Service Company	5.0		10.3
Increase due to higher expected credit losses	7.9		8.5
Other, net	(1.9)		(2.7)
Net change in operation and maintenance costs	$	5.0	$	(6.1)

Depreciation and Amortization

The increases in Depreciation and amortization expense of $13.5 million and $36.6 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year were mostly attributed to the impact of additional assets placed in service, higher amortization of regulatory assets and changes in depreciation rates as a result of the 2024 Base Rate Order.

Other (Expense) / Income, Net

The following table illustrates our changes in Other (expense) / income, net during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 (in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Other (expense) / income, net
Allowance for equity funds used during construction	$	1,485	$	3,134	$	(1,649)	(52.6)	%	$	3,585	$	7,089	$	(3,504)	(49.4)	%
Interest expense	(44,198)		(34,471)		(9,727)		28.2	%	(131,681)		(104,510)		(27,171)		26.0	%
Other income / (expense), net	484		(633)		1,117		(176.5)	%	(266)		787		(1,053)		(133.8)	%
Total other expense, net	$	(42,229)	$	(31,970)	$	(10,259)	32.1	%	$	(128,362)	$	(96,634)	$	(31,728)	32.8	%

Interest Expense

The increases in Interest expense of $9.7 million and $27.2 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year were primarily due to (i) higher interest expense on debt of $13.0 million and $37.3 million, respectively, mostly due to new debt issuances and higher borrowings on the committed Credit Agreement, partially offset by (ii) an increase in the allowance for borrowed funds used during construction of $3.6 million and $9.6 million, respectively.

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Income Tax Expense

The following table illustrates our changes in Income tax expense during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year (in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Income tax expense	$	8,314	$	3,802	$	4,512	118.7	%	$	24,833	$	8,663	$	16,170	186.7	%

The increases in Income tax expense of $4.5 million and $16.2 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year were primarily driven by higher pre-tax income, a decrease in the net tax benefit related to the reversal of excess deferred taxes of AES Indiana resulting from the 2024 Base Rate Order, and the tax effects associated with HLBV in the current period; partially offset by the reversal of certain excess deferred taxes which are not probable to cause a reduction in future base customer rates.

Net Loss Attributable to Noncontrolling Interests

The following table illustrates changes in Net loss attributable to noncontrolling interests during the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year (in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Net loss attributable to noncontrolling interests	$	(872)	$	—	$	(872)	(100.0)	%	$	(24,171)	$	—	$	(24,171)	(100.0)	%

The Net loss attributable to noncontrolling interests of $0.9 million and $24.2 million for the three and nine months ended September 30, 2024, respectively, relates to the allocation of earnings using the HLBV method for the Hardy Hills Solar Project, which began initial operations in December 2023 and achieved full commercial operations in May 2024. See Note 2, “Regulatory Matters - IRP Filings and Replacement Generation - Hardy Hills Solar Project ” to the Financial Statements included in IPALCO’s 2023 Form 10-K for more information.

KEY TRENDS AND UNCERTAINTIES

During the remainder of 2024 and beyond, we expect that our financial results will be driven primarily by retail demand, weather and maintenance costs. In addition, our financial results will likely be driven by many other factors including, but not limited to:

•regulatory outcomes and impacts;

•the passage of new legislation, implementation of regulations or other changes in regulation; and

•timely recovery of capital expenditures and operation and maintenance costs.

If favorable outcomes related to these factors do not occur, or if the challenges described below and elsewhere in this Quarterly Report impact us more significantly than we currently anticipate, then these factors, or other factors unknown to us, may impact our operating margin, net income and cash flows. We continue to monitor our operations and address challenges as they arise. For a discussion of the risks related to our business, see “Item 1. Business” and “Item 1A. Risk Factors” as described in IPALCO’s 2023 Form 10-K.

Operational

Trade Restrictions and Supply Chain

On April 1, 2022, the U.S. Department of Commerce (“Commerce”) initiated an investigation into whether imports into the U.S. of solar cells and panels imported from Cambodia, Malaysia, Thailand and Vietnam (“Southeast Asia”) are circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China.

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This investigation resulted in significant systemic disruptions to the import of solar cells and panels from Southeast Asia. On June 6, 2022, President Biden issued a Proclamation waiving any circumvention duties on imported solar cells and panels from Southeast Asia that result from this investigation for a 24-month period ending June 6, 2024. Suppliers resumed importing cells and panels from Southeast Asia into the U.S. pursuant to a Commerce certification regime implementing the Proclamation.

On December 2, 2022, Commerce issued country-wide affirmative preliminary determinations that circumvention had occurred in each of the four Southeast Asian countries. Commerce also evaluated numerous individual companies and issued preliminary determinations that circumvention had occurred with respect to several but not all of these companies. Additionally, Commerce issued a preliminary determination that circumvention would not be deemed to occur for any solar cells and panels imported from the four countries if the wafers comprising the cells and panels were manufactured outside of China or if no more than two out of six specifically identified panel components were produced in China. On August 23, 2023, Commerce published its final determinations and affirmed its preliminary findings in most respects. Commerce found that three of the specific companies it investigated were not circumventing. Several parties have challenged Commerce’s circumvention final determinations before the U.S. Court of International Trade (“CIT”), arguing that the determinations were not supported by substantial evidence or otherwise rendered in accordance with governing law.

On December 29, 2023, Auxin Solar and Concept Clean Energy filed a lawsuit before CIT, challenging certain aspects of the final rule promulgated by Commerce to implement the Proclamation. The lawsuit specifically challenges Commerce’s decisions not to suspend the final disposition of certain entries of imported solar cells and panels from Southeast Asia made prior to June 6, 2024, and not to collect AD/CVD deposits with respect to those entries. Certain U.S. developers, associations, and foreign solar producers have intervened in the case to support Commerce’s final rule. The CIT denied motions to dismiss filed by the U.S. Department of Justice, and the defendant-intervenors, and on July 22, 2024 plaintiffs filed their opening brief on the merits.

On April 24, 2024, new Commerce regulations with respect to the administration of AD/CVD cases went into effect, including regulations pertaining to transnational subsidization and particular market situations. On the same day, several companies filed a petition requesting that Commerce initiate an investigation into whether new AD/CVD duties should be imposed on cells and modules imported from Thailand, Cambodia, Malaysia and Vietnam. These petitions cover exports of cells and panels from Southeast Asia that are not otherwise subject to the Commerce circumvention determinations. On May 14, 2024, Commerce initiated new AD/CVD investigations with respect to all four countries, and the U.S. International Trade Commission preliminarily voted to continue its investigations on June 7, 2024. On October 4, 2024, Commerce published its CVD preliminary determinations, establishing CVD cash deposit requirements, which may be applied retroactively with respect to Thailand and Vietnam. Commerce is scheduled to announce its AD preliminary determinations in these investigations in late November of 2024. The U.S. International Trade Commission will conduct its final injury investigation with respect to these exports from Southeast Asia in the first half of 2025. If the Commerce and U.S. International Trade Commission investigations result in Commerce issuing AD/CVD orders, the orders are likely to be imposed in the second or third quarter of 2025.

Separately, the U.S. maintains a global tariff (currently 14.25% ad valorem) on solar cells and modules pursuant to the Section 201 Safeguard Action on crystalline silicon photovoltaic products, which became effective in February 2018. On June 21, 2024, President Biden issued Proclamation 10779, revoking the exclusion of bifacial panels from safeguard relief previously proclaimed in Proclamation 10339, and reinstating bifacial panels under the Section 201 Safeguard Action, subject to certain qualifications.

Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) seeks to block the import of products made with forced labor in certain areas of China, at any point in the supply chain, and may lead to certain suppliers being blocked from importing solar cells and panels to the U.S. While this has impacted the U.S. market, we have managed this issue without significant impact to our projects. Further disruptions may impact our suppliers’ ability or willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.

While we have executed agreements for AES Indiana’s existing solar projects that mitigate these risks, further disruptions may impact our suppliers’ ability or willingness to meet their contractual agreements with respect to these projects on terms that we deem satisfactory and these and future disruptions may impact the availability or costs of future projects. The impact of new Commerce investigations or any adverse Commerce determinations or

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other tariff disputes or litigation, the impact of the UFLPA, potential future disruptions to the solar panel supply chain and their effect on AES Indiana’s solar project development and construction activities remain uncertain. AES Indiana will continue to monitor developments and take prudent steps towards managing our renewable projects.

Capital Projects

Our construction projects have experienced some indications of delays and price increases due to supply chain disruptions; however, they are currently proceeding without material delays. For further discussion of our capital requirements, see "Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Capital Resources and Liquidity" of this Form 10-Q.

Macroeconomic and Political

IRA and U.S. Renewable Energy Tax Credits

The IRA includes provisions that benefit the Company’s planned clean energy projects, including increases, extensions, direct transfers and/or new tax credits for wind, solar, and storage. The IRA extends solar ITCs and provides higher credits for projects that satisfy wage and apprenticeship requirements, as well as the “technology neutral” clean electricity PTC and ITC will provide incremental benefits for our current and future planned renewable projects. For further discussion of our renewable projects, see Note 2, “Regulatory Matters - IRP Filings and Replacement Generation” to the Financial Statements of IPALCO’s 2023 Form 10-K.

We account for renewable projects according to GAAP, which, when partnering with tax-equity investors to monetize tax benefits, utilizes the HLBV method. This method recognizes the tax-credit value that is transferred to tax equity investors at the time of its creation, which for projects utilizing the ITC, begins in the quarter the project is placed in service. For projects utilizing the PTC, this value is recognized over 10 years as the facility produces energy. In 2023, we recognized $26.1 million of earnings from tax attributes using the HLBV method upon the first stage of the Hardy Hills Solar Project being placed in service. Upon the final stage of the project being placed in service in May 2024, the Company recognized $21.4 million of earnings from tax attributes using the HLBV method. As we progress in our plan of integrating additional renewable energy projects under our 2022 IRP, as discussed further below, we anticipate additional earnings associated with the tax attributes of these projects.

The implementation of the IRA requires substantial guidance from the U.S. Department of Treasury and other government agencies. While some of that guidance remains pending, there will be uncertainty with respect to the implementation of certain provisions of the IRA.

U.S. Income Tax

The macroeconomic and political environments in the U.S. have changed in recent years. This could result in significant impacts to future tax law.

Inflation

In the markets in which we operate, there have been higher rates of inflation recently. If inflation continues to increase in our markets, it may increase our expenses that we may not be able to pass through to customers. It may also increase the costs of some of our construction projects. AES Indiana may have the ability to recover operations and maintenance costs through the regulatory process, however, timing impacts on recovery may vary. In addition, we expect the cost of fuel, specifically coal and natural gas, to continue to be volatile during 2024. Our exposure to fluctuations in the price of fuel is limited because of our FAC. If we are unable to timely or fully recover our fuel and purchased power costs, however, it could have a material adverse effect on our results of operations, financial condition and cash flows.

Interest Rates

In the U.S. there has been a rise in interest rates since 2021, and interest rates are expected to remain volatile in the near term. Although all of our existing IPALCO and AES Indiana long-term debt is at fixed rates, an increase in interest rates can have several impacts on our business. For our existing short-term debt under floating rate structures and any future debt refinancings or future new money financings, rising interest rates will increase future financing costs. Our floating rate debt is currently limited to short-term borrowings under our Credit Agreement and

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$400 million Term Loan Agreement. For future IPALCO debt financings, IPALCO manages a hedging program and evaluates pre-issuance hedges to reduce uncertainty and exposure to future interest rates.

Regulatory

Regulatory Rate Review

On April 17, 2024, the IURC issued an order (the “2024 Base Rate Order”) approving the Stipulation and Settlement Agreement that AES Indiana entered into on November 22, 2023, with the OUCC and the other intervening parties in AES Indiana’s base rate case filing. Please see Note 2, "Regulatory Matters - Regulatory Rate Review" to the Financial Statements included in this Form 10-Q for further discussion.

2022 IRP

AES Indiana filed its 2022 IRP with the IURC in December 2022. The 2022 IRP short-term action plan includes converting the two remaining coal units at Petersburg to natural gas. Additionally, AES Indiana plans to add up to 1,300 MW of wind, solar, and battery energy storage by 2027. Please see Note 2, "Regulatory Matters" to the Financial Statements included in this Form 10-Q and Note 2, “Regulatory Matters” to the Financial Statements included in IPALCO’s 2023 Form 10-K for further discussion of these and other regulatory matters.

Environmental

We are subject to numerous environmental and climate change laws and regulations in the jurisdictions in which we operate. We face certain risks and uncertainties related to these environmental and climate change laws and regulations, including existing and potential GHG legislation or regulations, and actual or potential laws and regulations pertaining to water discharges, waste management (including disposal or beneficial reuse of CCR) and certain air emissions, such as SO2, NOx, particulate matter and mercury and other hazardous air pollutants, and species and habitat protections. Such risks and uncertainties could result in increased capital expenditures or other compliance costs which could have a material adverse effect on our consolidated results of operations. The following discussion of the impact of environmental laws and regulations on the Company updates the discussion provided in “Item 1. Business - Environmental Matters” in IPALCO’s 2023 Form 10-K.

MATS

In April 2012, the EPA’s rule to establish maximum achievable control technology standards for hazardous air pollutants regulated under the CAA emitted from coal and oil-fired electric utilities, known as “MATS”, became effective. AES Indiana management developed and implemented a plan, which was approved by the IURC, to comply with this rule and all Petersburg units subject to the rule have been and remain in material compliance with the MATS rule since applicable deadlines.

On April 24, 2023, EPA published the proposed MATS Risk and Technology Review (RTR) Rule. On May 7, 2024, EPA published a final rule to revise MATS for coal and oil-fired EGUs. The final rule is effective on July 8, 2024. The final rule lowers certain emissions limits and revises certain other aspects of MATS. It is too early to determine any potential impact. However, the existing requirements of MATS would not apply to AES Indiana upon conversion of the remaining two coal-fired units at Petersburg to natural gas. The MATS RTR Rule is subject to legal challenges. On October 4, 2024, the U.S. Supreme Court denied emergency stay applications.

Further rulemakings and/or proceedings are possible; however, in the meantime, MATS remains in effect. We currently cannot predict the outcome of the regulatory or judicial process, or its impact, if any, on our MATS compliance planning or ultimate costs.

Waste Management and CCR

The EPA's final CCR rule became effective in October 2015 (the "CCR Rule").

The EPA has indicated that they will implement a phased approach to amending the CCR Rule, which is ongoing. On May 18, 2023, EPA published a proposed rule that would expand the scope of CCR units regulated by the CCR Rule. On May 8, 2024, EPA published final revisions to the CCR rule which are effective on November 8, 2024. The final revisions expand the scope of CCR units regulated by the CCR rule to include legacy surface impoundments,

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inactive surface impoundments, and CCR management units. It is too early to determine any potential impact from this rule.

On February 20, 2020, the EPA published a proposed rule to establish a federal CCR permit program that would operate in states without approved CCR permit programs. If this rule is finalized before Indiana establishes a final state-level CCR permit program, AES Indiana could eventually be required to apply for a federal CCR permit from the EPA. On December 21, 2022, IDEM published in the Indiana Register a Second Notice of Comment Period for its proposed CCR rulemaking which would include regulation of CCR through a state permitting program. On August 7, 2024, in response to changes to Indiana statute, as well as comments received during the Second Notice of Comment Period, IDEM published a Continuation of the Second Notice of Comment Period for proposed amendments to the draft rule language for a State CCR Permitting Program.

The CCR Rule, current or future amendments to, or EPA interpretations of, the CCR Rule, Indiana CCR regulations, the results of groundwater monitoring data or the outcome of CCR-related litigation could have a material impact on our business, financial condition and results of operations. We would seek recovery of any resulting expenditures; however, there is no guarantee we would be successful in this regard. See Note 3, "Property, Plant and Equipment - ARO" and Note 10, "Commitments and Contingencies - Contingencies - Legal Matters - Coal Ash Insurance Litigation" to the Financial Statements of IPALCO’s 2023 Form 10-K for further discussion.

Climate Change Legislation and Regulation

One byproduct of burning coal and other fossil fuels is the emission of GHGs, including CO2. We face certain risks related to existing and potential international, federal, state, regional and local GHG legislation and regulations,

including risks related to increased capital expenditures or other compliance costs, as well as increased climate change disclosure obligations, which could have a material adverse effect on our results of operations, financial condition and cash flows.

The final NSPS for CO2 emissions from new, modified and reconstructed fossil-fuel-fired power plants were published in the Federal Register on October 23, 2015. Several states and industry groups challenged the NSPS for CO2 in the D.C. Circuit Court. On December 20, 2018, the EPA published proposed revisions to the final NSPS for new, modified and reconstructed coal-fired electric utility steam generating units. The EPA proposed that the Best System of Emissions Reduction (BSER) for these units is highly efficient generation that would be equivalent to supercritical steam conditions for larger units and sub-critical steam conditions for smaller units, and not partial carbon capture and sequestration (CCS), which had been the BSER for these units in the 2015 final NSPS. The EPA did not include revisions for natural-gas combined cycle or simple cycle units in the December 20, 2018 proposal. Challenges to the GHG NSPS remain held in abeyance at this time. On May 23, 2023, EPA published a proposed rule that would establish CO2 emissions limits for certain new fossil-fuel fired stationary combustion turbines that commence construction or are modified after May 23, 2023. On May 9, 2024, EPA published the final NSPS requiring carbon capture and sequestration for new and reconstructed baseload stationary combustion turbines, among other requirements. EPA did not finalize revisions to the NSPS for newly constructed or reconstructed coal-fired electric utility steam generating units as proposed in 2018.

On July 8, 2019, the EPA published the final ACE Rule which would have established CO2 emission rules for existing coal-fired power plants under CAA Section 111(d) and would have replaced the EPA's 2015 CPP, which among other things, had called on states to mandate that power companies shift electricity generation to lower or zero carbon fuel sources. However, on January 19, 2021, the D.C. Circuit vacated and remanded to EPA the ACE Rule. Subsequently, on June 30, 2022, the U.S. Supreme Court reversed the judgment of the D.C. Circuit Court and remanded for further proceedings consistent with its opinion, holding that the “generation shifting” approach in the CPP exceeded the authority granted to EPA by Congress under Section 111(d) of the CAA. As a result of the June 30, 2022 U.S. Supreme Court decision, on October 27, 2022, the D.C. Circuit issued a partial mandate holding pending challenges to the ACE Rule in abeyance while EPA developed a replacement rule.

On May 23, 2023, EPA published a proposed rule that would vacate the ACE Rule, establish emissions guidelines in the form of CO2 emissions limitations for certain existing EGUs and would require states to develop State Plans that establish standards of performance for such EGUs that are at least as stringent as EPA’s emissions guidelines. On May 9, 2024, EPA published the final rule regulating GHGs from existing EGUs pursuant to Section 111(d) of the Clean Air Act and effective on July 8, 2024. Existing EGUs are those that were constructed prior to January 8, 2014. Depending on various EGU-specific factors, the bases of emissions guidelines for natural gas-fired units include the

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use of uniform fuels and routine methods of operation and maintenance and the bases of emissions guidelines for coal-fired units include 40% natural gas co-firing or carbon capture and sequestration with 90% capture of CO2 depending on the date that coal operations cease. Specific standards for performance for EGUs will be established through a State Plan (or a Federal Plan if the state of Indiana were to not submit an approvable plan). The May 2024 rule is subject to legal challenges. On October 16, 2024, the U.S. Supreme Court denied emergency stay applications.

It is too early to determine any potential impact. GHG regulations, current or future amendments to, resulting state or federal plans, or pending or future litigation associated with such regulations or plans could have a material impact on our business, financial condition and results of operations. We would seek recovery of any resulting capital expenditures; however, there is no guarantee we would be successful in this regard.

Based on the above, there is some uncertainty with respect to the impact of GHG rules on AES Indiana. The EPA, states and other utilities are still evaluating potential impacts of the GHG regulations in our industry. In light of these uncertainties, we cannot predict the impact of the EPA’s current and future GHG regulations, or resulting state or federal plans, on our consolidated results of operations, cash flows, and financial condition, but it could be material.

NAAQS

Under the CAA, the EPA sets NAAQS for six criteria pollutants considered harmful to public health and the

environment, including particulate matter, NOx, ozone and SO2, which result from fossil-fuel combustion. Areas

meeting the NAAQS are designated attainment areas while those that do not meet the NAAQS are considered nonattainment areas. Each state must develop a plan to bring nonattainment areas into compliance with the

NAAQS, which may include imposing operating limits on individual plants. The EPA is required to review NAAQS at

five-year intervals.

Ozone and NOx. On April 15, 2024, EPA published a proposed rule to retain the secondary NOx NAAQS.

Fine Particulate Matter. On April 15, 2024, EPA published a proposed rule to retain the current secondary PM NAAQS.

SO2. On April 15, 2024, EPA published a proposed rule to revise the secondary SO2 NAAQS.

Based on current and potential national ambient air quality standards, the state of Indiana is required to determine whether certain areas within the state meet the NAAQS. With respect to Marion, Morgan and Pike Counties, as well as any other areas determined to be in "nonattainment," the state of Indiana will be required to modify its SIP to detail how the state will regain its attainment status. As part of this process, it is possible that the IDEM or the EPA may require reductions of emissions from our generating stations to reach attainment status for ozone, fine particulate matter or SO2. At this time, we cannot predict what the impact will be to AES Indiana with respect to new ambient standards, but it could be material.

CSAPR and 2015 Ozone NAAQS FIP

CSAPR, which became effective in January 2015, addresses the "good neighbor" provision of the CAA, which prohibits sources within each state from emitting any air pollutant in an amount which will contribute significantly to any other state’s nonattainment, or interference with maintenance of, any NAAQS. CSAPR is implemented, in part, through a market-based program under which compliance may be achievable through the acquisition and use of emissions allowances created by the EPA.

On June 5, 2023, the EPA published a final Federal Implementation Plan ("FIP") to address air quality impacts with respect to the 2015 Ozone NAAQS. The rule established a revised CSAPR NOx Ozone Season Group 3 trading program for 22 states, including Indiana and became effective during 2023 and includes enhancements in the revised Group 3 trading program. On June 27, 2024, the U.S. Supreme Court issued an order granting a stay of EPA’s 2023 FIP pending resolution of legal challenges to the FIP.

At this time, we cannot predict the impact of these rule revisions or potential future legal outcomes, but any such impact could include the need to purchase additional allowances or make operational adjustments or could otherwise be material to our business, financial condition or results of operation.

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CWA – Facility Response Plan

On March 28, 2022, the EPA published a proposed rule to establish Facility Response Plan (“FRP”) requirements for non-transportation onshore facilities that store CWA hazardous substances and meet certain criteria and thresholds. On March 28, 2024, the EPA published the final CWA Hazardous Substance Facility Response Plans rule which became effective on May 27, 2024. It is too early to determine whether this final rule may have a material impact on our business, financial condition or results of operation.

CWA - Environmental Wastewater Requirements and Regulation of Water Discharge

In November 2015, the EPA published its final Steam Electric Power Generating Effluent Limitation Guidelines (ELG) rule to reduce toxic pollutants discharged into waterways by steam-electric power plants through technology applications. In 2020, EPA issued a final rule, known as the 2020 Reconsideration Rule, revising certain aspects of the 2015 ELG rule. Wastewater treatment technologies already installed and operated at Petersburg met the requirements of these rules. Following the 2019 U.S. Court of Appeals vacatur and remand of portions of the 2015 ELG rule related to leachate and legacy water, on March 29, 2023, EPA published a proposed rule revising the 2020 Reconsideration Rule. On May 9, 2024, EPA published the final rule which became effective on July 8, 2024. The final rule establishes more stringent best available technology limits for flue gas desulfurization wastewater, bottom ash transport water and combustion residual leachate and established a new set of definitions and new limits for combustion residual leachate and legacy wastewater. The May 2024 rule is subject to legal challenges. On October 10, 2024, the Eighth Circuit Court denied stay applications. It is too early to determine whether any outcome of this final rule, litigation or future revisions to the ELG rule might have a material impact on our business, financial condition and results of operations.

CWA – NPDES Permits

NPDES permits regulate specific industrial wastewater and storm water discharges to the waters of Indiana under Section 402 of the Federal Water Pollution Control Act. A number of CWA regulations described above are implemented through NPDES permits.

In 2017, IDEM issued to Eagle Valley a NPDES permit regulating water discharges associated with operation of its CCGT. As part of the normal course of business, AES Indiana submitted a timely application for renewal for the Eagle Valley NPDES permit, and on March 31, 2023, IDEM issued the renewed NPDES permit. On April 17, 2023, a third party filed an appeal of Eagle Valley’s renewed NPDES permit. AES Indiana contends that the renewed permit was validly issued, and the permit remains in effect. AES Indiana is unable to predict the outcome of the appeal, but depending on the results, it could have an adverse effect on the Company.

In 2017, IDEM also issued to Harding Street and Petersburg NPDES permits regulating water discharges associated with operation of their power plant operations. As part of the normal course of business, AES Indiana submitted timely applications for renewal for both Harding Street and Petersburg NPDES permits in March 2022. On November 29, 2023, IDEM issued the final NPDES permit renewal for Harding Street with an effective date of January 1, 2024. The permit includes a 316(b) determination requiring the installation of modified traveling screens and fish handling return system and an entrainment study. The permit also includes other new requirements, including new thermal limitations, that could result in the need for AES Indiana to take additional actions to ensure compliance with the final permit. On December 14, 2023, AES Indiana filed a petition for appeal of certain new requirements, including the new thermal limitations, in the final Harding Street NPDES permit. A stay of the appealed requirements was initially granted on January 4, 2024, and is in effect until January 28, 2025 (as extended from October 28, 2024), which could be further extended. The renewal application for the Petersburg NPDES permit remains pending. IDEM published the draft Petersburg NPDES permit for public notice on September 19, 2024, with the comment period closing October 21, 2024. It is too early to determine the potential impact, but final or future permits could have a material impact on our business, financial condition and results of operations. We would seek recovery of any resulting capital expenditures; however, there is no guarantee we would be successful in this regard.

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CAPITAL RESOURCES AND LIQUIDITY

Overview

As of September 30, 2024, we had unrestricted cash and cash equivalents of $48.3 million and available borrowing capacity of $300 million under our unsecured revolving Credit Agreement. All of AES Indiana’s long-term borrowings must first be approved by the IURC and the aggregate amount of AES Indiana’s short-term indebtedness must be approved by the FERC. AES Indiana has approval from the FERC to borrow up to $750 million of short-term indebtedness outstanding at any time through July 29, 2026. In February 2024, AES Indiana received an order from the IURC granting authority through December 31, 2026 to, among other things, issue up to $1 billion in aggregate principal amount of long-term debt, of which $350 million remains available under the order as of September 30, 2024. This order also grants authority to have up to $750 million of long-term credit agreements and liquidity facilities outstanding at any one time, of which $0 million remains available under the order as of September 30, 2024. As an alternative to the sale of all or a portion of $65 million in principal of the long-term debt, AES Indiana has authority to issue up to $65 million of new preferred stock, all of which authority remains available under the order as of September 30, 2024. The amount of new debt that we issue is additionally restricted as a result of contractual obligations of AES and by the covenants included in our existing debt obligations. Under such restrictions, AES Indiana is generally allowed to fully draw the amounts available on its Credit Agreement, refinance existing debt and issue new debt approved by the IURC and issue certain other indebtedness. We do not believe such restrictions will be a limiting factor in our ability to issue debt in the ordinary course of prudent business operations.

Cash Flows

The following table provides a summary of our cash flows (in thousands):

	Nine Months Ended September 30,
	2024		2023		$ Change
Net cash provided by operating activities	$	191,244	$	347,087	$	(155,843)
Net cash used in investing activities	(804,764)		(534,759)		(270,005)
Net cash provided by financing activities	633,249		7,661		625,588
Net change in cash, cash equivalents and restricted cash	19,729		(180,011)		199,740
Cash, cash equivalents and restricted cash at beginning of period	28,584		201,553		(172,969)
Cash, cash equivalents and restricted cash at end of period	$	48,313	$	21,542	$	26,771

Operating Activities

The following table summarizes the key components of our consolidated operating cash flows (in thousands):

	Nine Months Ended September 30,
	2024		2023		$ Change
Net income	$	89,725	$	62,552	$	27,173
Depreciation and amortization	248,846		212,292		36,554
Deferred income taxes and investment tax credit adjustments - net	8,072		32,735		(24,663)
Other adjustments to net income	572		(4,200)		4,772
Net income, adjusted for non-cash items	347,215		303,379		43,836
Net change in operating assets and liabilities(1)	(155,971)		43,708		(199,679)
Net cash provided by operating activities	$	191,244	$	347,087	$	(155,843)
(1) Refer to the table below for explanations of the variance in operating assets and liabilities.

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The net change in operating assets and liabilities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was driven by changes in the following (in thousands):

Decrease from current and non-current regulatory assets and liabilities primarily due to lower FAC collections in the current year and the settlement of a pre-existing power purchase agreement	$	(220,111)
Decrease from accounts receivable driven primarily by the timing of the collections, including billing delays and an increase in revenue mainly due to higher retail volumes	(101,459)
Increase from income tax receivables	47,047
Increase from inventories mainly due to due to lower purchases of fuel inventory in the current year	47,109
Increase from accrued interest due to higher interest expense primarily from increased borrowings	38,849
Other	(11,114)
Net change in operating assets and liabilities	$	(199,679)

Investing Activities

Net cash used in investing activities increased $270.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily driven by (in thousands):

Higher cash outflows for capital expenditures related with renewable energy projects and growth related capital expenditures primarily from TDSIC investments	$	(273,481)
Payments for an acquisition made in the current year	(48,368)
Purchase of intangibles in 2023	44,650
Other	7,194
Net change in investing activities	$	(270,005)

Financing Activities

Net cash provided by financing activities increased $625.6 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily driven by (in thousands):

Increase due to long-term debt issuances at IPALCO and AES Indiana	$	1,050,000
Increase due to short-term borrowings	392,000
Increase due to equity capital contributions from shareholders	150,000
Increase due to sale to noncontrolling interests	46,935
Decrease due to repayment of Senior Secured Notes	(405,000)
Decrease due to repayment of the term loan issued in 2023 and other short-term borrowings	(392,000)
Decrease due to higher net revolver draws on AES Indiana's revolving credit facility	(180,000)
Decrease due to higher distributions to shareholders	(43,205)
Other	6,858
Net change in financing activities	$	625,588

Liquidity

We expect our existing cash balances, cash generated from operating activities and borrowing capacity on our existing Credit Agreement will be adequate to meet our anticipated operating needs, including interest expense on our debt and dividends to our equity owners. Our business is capital intensive, requiring significant resources to fund operating expenses, construction expenditures, scheduled debt maturities and carrying costs, potential margin requirements related to interest rate and commodity hedges, taxes and dividend payments. In 2024 and subsequent years, we expect to satisfy these requirements with a combination of cash from operations, funds from debt financing, funds from tax equity contributions, and parent capital contributions as our internal liquidity needs and market conditions warrant. We also expect that the borrowing capacity under our existing Credit Agreement will continue to be available to manage working capital requirements during those periods. The absence of adequate liquidity could adversely affect our ability to operate our business and have a material adverse effect on our results of operations, financial condition and cash flows.

Indebtedness

For further discussion of our significant debt transactions, please see Note 6, “Debt” to IPALCO’s 2023 Form 10-K and Note 5, “Debt” to the Financial Statements of this Form 10-Q.

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Line of Credit

We had the following amounts available under the revolving Credit Agreement:

$ in millions	Type	Maturity	Commitment		Amounts available at September 30, 2024
AES Indiana	Revolving	December 2027	$	350.0	$	300.0

Capital Requirements

Capital Expenditures

Our capital expenditure program, including development and permitting costs, for the three-year period from 2024 through 2026 (including amounts already expended in the first nine months of 2024) is currently estimated to cost approximately $3.2 billion (excluding environmental compliance), and includes estimates as follows (amounts in millions):

							For the three-year period
	2024		2025		2026		from 2024 through 2026
Power generation related projects	$	786.8	$	654.9	$	430.2	$	1,871.9	(1)
Transmission and distribution related additions, improvements and extensions	202.8		298.8		210.2		711.8		(2)
TDSIC Plan investments	177.6		194.9		156.6		529.1		(3)
Other miscellaneous equipment	37.1		28.5		27.2		92.8
Total estimated costs of capital expenditure program	$	1,204.3	$	1,177.1	$	824.2	$	3,205.6
(1) Includes spending for AES Indiana’s power generation and renewable energy projects.
(2) Additions, improvements and extensions to AES Indiana’s transmission and distribution lines, substations, power factor and voltage regulating equipment, distribution transformers and street lighting facilities.
(3) Includes spending under AES Indiana’s TDSIC plan approved by the IURC on March 4, 2020 for eligible transmission, distribution and storage system improvements totaling $1.2 billion from 2020 through 2026. Total TDSIC costs expended from project inception through September 30, 2024 were $825.7 million.

The amounts described in the capital expenditure program above include estimated spending under AES Indiana’s 2022 IRP filed with the IURC in December 2022. See Note 2, "Regulatory Matters - IRP Filings and Replacement Generation - 2022 IRP" to the Financial Statements of IPALCO’s 2023 Form 10-K for further discussion. Additionally, estimated capital expenditure spending on environmental compliance costs for the three-year period from 2024 through 2026 is approximately $90 million. Please see “Item 1. Business - Environmental Matters" of IPALCO’s 2023 Form 10-K for additional details.

Credit Ratings

Our ability to borrow money or to refinance existing indebtedness and the interest rates at which we can borrow money or refinance existing indebtedness are affected by our credit ratings. In addition, the applicable interest rates on AES Indiana’s Credit Agreement (as well as the amount of certain other fees in the Credit Agreement) are dependent upon the credit ratings of AES Indiana. Downgrades in the credit ratings of AES could result in AES Indiana’s and/or IPALCO’s credit ratings being downgraded. Any reduction in our debt or credit ratings may adversely affect the trading price of our outstanding debt securities.

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The following table presents the debt ratings and credit ratings (issuer/corporate rating) and outlook for IPALCO and AES Indiana.

Debt ratings	IPALCO	AES Indiana	Outlook
Fitch Ratings	BBB (a)	A (b)	Stable
Moody’s Investors Service	Baa3 (a)	A2 (b)	Negative
S&P Global Ratings	BBB- (a)	A- (b)	Stable
Credit ratings	IPALCO	AES Indiana	Outlook
Fitch Ratings	BBB-	BBB+	Stable
Moody’s Investors Service	—	Baa1	Negative
S&P Global Ratings	BBB	BBB	Stable
(a) Ratings relate to IPALCO’s Senior Secured Notes.
(b) Ratings relate to AES Indiana’s first mortgage bonds.

We cannot predict whether our current debt and credit ratings or the debt and credit ratings of AES Indiana will remain in effect for any given period of time or that one or more of these ratings will not be lowered or withdrawn entirely by a rating agency. A security rating is not a recommendation to buy, sell or hold securities. Such ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

Dividend Distributions

All of IPALCO’s outstanding common stock is held by AES U.S. Investments and CDPQ. During the first nine months of 2024 and 2023, IPALCO paid $110.1 million and $66.9 million, respectively, in distributions to its shareholders. Future distributions to our shareholders will be determined at the discretion of our Board of Directors and will depend primarily on dividends received from AES Indiana. Dividends from AES Indiana are affected by AES Indiana’s actual results of operations, financial condition, cash flows, capital requirements, regulatory and legal considerations, and such other factors as AES Indiana’s Board of Directors deems relevant.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The condensed consolidated financial statements of IPALCO are prepared in conformity with GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented.

Credit Losses

We use a forward-looking "expected loss" model to recognize allowances for credit losses on customer and other receivables. The allowance for credit losses primarily relates to utility customer receivables, including unbilled amounts. Expected credit loss estimates are developed by disaggregating customers into those with similar credit risk characteristics and using historical credit loss experience. In addition, we also consider how current and future economic conditions are expected to impact the collectability, as applicable, of our receivables balance. Our determination of the allowance for credit losses requires us to make estimates and judgments regarding our customers' ability to pay amounts due, which have required a higher degree of estimation given the increases seen in past due customer receivables in 2024. We believe such estimates and judgments are reasonable and the related allowance for credit losses is adequate as of September 30, 2024; however, changes in such estimates and judgments could result in a different conclusion, which could be material. See Note 1, “Overview and Summary of Significant Accounting Policies – Accounts Receivable and Allowance for Credit Losses” for further information on AES Indiana’s receivable balances.

The Company’s significant accounting policies are described in Note 1, “Overview and Summary of Significant Accounting Policies” of IPALCO’s 2023 Form 10-K. The Company’s other critical accounting estimates are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in IPALCO’s 2023 Form 10-K. An accounting estimate is considered critical if the estimate requires management to make an assumption about matters that were highly uncertain at the time the estimate was made, different estimates reasonably could have been used, or if changes in the estimate that would have a material impact on the

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Company’s financial condition or results of operations are reasonably likely to occur from period to period. Management believes that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The Company has reviewed and determined that these remain as critical accounting policies as of and for the nine months ended September 30, 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 

There have been no material changes to our quantitative and qualitative disclosure about market risk as previously disclosed in IPALCO’s 2023 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

The Company carried out the evaluation required by Rules 13a-15(b) and 15d-15(b), under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon this evaluation, the CEO and CFO concluded that as of September 30, 2024, our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting described below.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. The Company conducted an assessment of the effectiveness of its internal control over financial reporting as of September 30, 2024 based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). As disclosed in our Form 10-K for the fiscal year ended December 31, 2023, the Company determined that a material weakness in internal control over financial reporting existed as of December 31, 2023 related to the fourth quarter implementation of SAP IS-U, a software solution that SAP developed for businesses operating in the utility industries. We identified control deficiencies that aggregated to a material weakness in the design and operation of information technology general controls (“ITGCs”) which support the Company’s internal control processes for revenue recognition and related accounts and disclosures impacted by revenue recognition. The design deficiencies related to user access and program change-management controls. Business process controls (automated and manual) and management review controls reliant on SAP IS-U were deemed ineffective as they were adversely impacted by the ineffective information technology general controls.

Management has implemented and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated. The remediation actions include: (i) changes to our ITGC attributes in the areas of user access and program change-management for systems supporting the Company’s revenue internal control processes to ensure that internal controls are designed and operating effectively; and (ii) training and educating the control owners on ITGC policies concerning the requirements of each control, with a focus on those related to user access and change-management over IT systems impacting our revenue process. Management has performed a lookback analysis to determine if any unauthorized activity occurred related to the control deficiencies; none was identified.

We believe that these actions will remediate the foregoing material weakness. The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Controls over Financial Reporting

Except as discussed above, there has been no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Management and our Board of Directors are

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committed to the remediation of this material weakness as well as the continued improvement of the Company’s overall system of internal control over financial reporting.

Notwithstanding the existence of the material weaknesses as described above, we believe that the consolidated financial statements in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, we are subject to various lawsuits, actions, claims, and other proceedings. We are also, from time to time, involved in other reviews, investigations and proceedings by governmental and regulatory agencies regarding our business, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. We have accrued in our Financial Statements for litigation and claims where it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We believe the amounts provided in our Financial Statements, as prescribed by GAAP, for these matters are adequate in light of the probable and estimable contingencies. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various legal proceedings, claims and other matters (including those matters noted below), and to comply with applicable laws and regulations will not exceed the amounts reflected in our Financial Statements. As such, costs, if any, that may be incurred in excess of those amounts provided for in our Financial Statements cannot be reasonably determined, but could be material.

Please see Note 2, “Regulatory Matters” and Note 9, “Commitments and Contingencies” to the Financial Statements included in Part I - Financial Information of this Form 10-Q for a summary of certain legal proceedings involving us. In addition, our Form 10-K for the fiscal year ended December 31, 2023 and the Notes to IPALCO’s Consolidated Financial Statements included therein contain descriptions of certain legal proceedings in which we are or were involved. The information in or incorporated by reference into this Item 1 to Part II is limited to certain recent developments concerning our legal proceedings and new legal proceedings, since the filing of such Form 10-K, and should be read in conjunction with such Forms 10-K and our Form 10-Qs.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A.—Risk Factors of IPALCO’s 2023 Form 10-K. Additional risks and uncertainties also may adversely affect our business and operations, including those discussed in Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None. 

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Document
10.1	$400,000,000 Term Loan Agreement, dated August 14, 2024, among Indianapolis Power & Light Company, each lender from time to time party thereto, PNC Bank, National Association, as Administrative Agent, PNC Capital Markets LLC, as Bookrunner and Joint Lead Arranger, and U.S. Bank National Association, as Syndication Agent and Joint Lead Arranger (Incorporated by reference to Exhibit No. 10.1 of IPALCO's Form 8-K filed on August 14, 2024)
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.SCH	XBRL Taxonomy Extension Schema Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith as provided in Rule 406T of Regulation S-T)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		IPALCO ENTERPRISES, INC.
Date:	October 31, 2024	/s/ Gustavo Garavaglia
		Gustavo Garavaglia
		Vice President and Chief Financial Officer
		(Principal Financial Officer)
Date:	October 31, 2024	/s/ Karin M. Mehringer
		Karin M. Mehringer
		Controller
		(Principal Accounting Officer)

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