Mail Stop 3561
July 28, 2005
Mr. Barry J. Sharp
Executive Vice President and Chief Financial Officer
The AES Corporation
4300 Wilson Boulevard
Arlington, VA 22203
Re: AES Ironwood, LLC
Form 10-K for Fiscal Year Ended December 31, 2004
Filed March 30, 2005
Form 10-Q for Fiscal Quarter Ended March 31, 2005
File No. 333-91391
AES Red Oak, LLC
Form 10-K for Fiscal Year Ended December 31, 2004
Filed March 30, 2005
Form 10-Q for Fiscal Quarter Ended March 31, 2005
File No. 333-40478
IPALCO Enterprises, Inc.
Form 10-K for Fiscal Year Ended December 31, 2004
Filed March 24, 2005
Form 10-Q for Fiscal Quarter Ended March 31, 2005
File No. 1-8644
AES Eastern Energy, LP
Form 10-K for Fiscal Year Ended December 31, 2004
Filed March 31, 2005
Form 10-Q for Fiscal Quarter Ended March 31, 2005
File No. 333-89725
Dear Mr. Sharp:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. Unless otherwise noted, where a comment below requests
additional
disclosures or other revisions to be made, these revisions should
be
included in your future filings, as applicable. Although each
comment has been issued only once, the comments below may be
applicable to each registrant reviewed.
AES Ironwood, LLC
Form 10-K for Fiscal Year Ended December 31, 2004
Report of Independent Registered Public Accounting Firm, page 42
2. The "Report of Independent Registered Public Accounting Firm"
appears unsigned on the EDGAR version of your Form 10-K for AES
Ironwood, LLC and IPALCO Enterprises, Inc. Please provide us with
a
copy of the original signed reports.
Statements of Changes in Member`s Capital, page 45
3. Please explain your basis under GAAP for charging dividends
paid
against accumulated deficit rather than additional paid-in capital
for both AES Ironwood, LLC and AES Red Oak, LLC.
Note 3. Significant Accounting Policies, page 48
4. It appears your allowance for doubtful accounts decreased from
approximately $1.3 million at December 31, 2003 to zero at
December
31, 2004. Please explain the reason for this change. Further,
please either revise to include Schedule II, Valuation and
Qualifying
Accounts, or tell us why you believe this schedule is properly
omitted. We would expect your allowance for doubtful accounts to
be
reported on this schedule. Refer to Rules 5-04(c) and 12-09 of
Regulation S-X.
Item 9A. Controls and Procedures, page 57
5. We note your disclosure that your principal executive officer
and
principal financial officer, "concluded that as of December 31,
2004,
[your] disclosure controls and procedures were effective to
provide
reasonable assurance that material information relating to [you]
and
[your] consolidated subsidiaries is recorded, processed,
summarized
and reported within the time periods specified in the Securities
and
Exchange Commission`s rules and forms." Revise to clarify, if
true,
that your officers concluded that your disclosure controls and
procedures are also effective to ensure that information required
to
be disclosed in the reports that you file or submit under the
Exchange Act is accumulated and communicated to your management,
including your chief executive officer and chief financial
officer,
to allow timely decisions regarding required disclosure. See
Exchange Act Rule 13a-15(e). Please also revise your Item 9A
disclosure for AES Red Oak, LLC, IPALCO Enterprises, Inc., and AES
Eastern Energy, LP.
AES Red Oak, LLC
Form 10-K for Fiscal Year Ended December 31, 2004
Item 1. Business - Employees, page 5
6. We note your disclosure that you have no employees other than 6
officers and that such officers receive no compensation for the
services they provide. We assume The AES Corporation compensates
these officers and we would expect these costs to be allocated to
you. Please tell us whether or not you record compensation
expense
related to these officers. If not, please justify in detail and
tell
us the estimated amount of compensation expense had the costs been
allocated to you. See SAB Topic 1:B.
IPALCO Enterprises, Inc.
Form 10-K for Fiscal Year Ended December 31, 2004
Note 2. Summary of Significant Accounting Policies
7. As you disclose that most of IPL`s non-union employees receive
options to purchase shares of AES common stock under the AES Long
Term Compensation Plan and that employees of AES Eastern Energy,
LP
participate in the AES Stock Option Plan, we assume you apply the
guidance in paragraph 14 of FIN 44 to account for such options.
If
so, tell us why you did not provide all disclosures required by
paragraphs 46-48 of SFAS 123. If you agree that such disclosures
are
necessary, please also provide the disclosures required by
paragraph
45 of SFAS 123, as amended by paragraph 2.e of SFAS 148 under
"Summary of Significant Accounting Policies" in Note 1. See
paragraph 15 of SFAS 123.
Note 5. Regulatory Assets
8. If any portion of your regulatory asset balance includes
amounts
on which you do not earn a current return, disclose the nature and
amount of each asset and its remaining recovery period. We
believe
the best practices approach regarding regulatory assets is to
affirmatively indicate whether a particular regulatory asset is
earning a rate of return and the anticipated recovery period. For
regulatory assets that are not currently being recovered, explain
to
us why you believe they are probable of recovery in the future.
Refer to the requirements of paragraph 20 of SFAS 71.
Form 10-Q for Fiscal Quarter Ended March 31, 2005
Note 6. Commitments and Contingencies
9. With regard to being named as a defendant in 113 pending
asbestos
related lawsuits, you indicate that you do not believe that any of
the pending asbestos suits in which IPL is a defendant will have a
material adverse effect on IPALCO`s business or operations. A
statement that these contingencies are not expected to be material
does not satisfy the requirements of SFAS 5 if there is a least a
reasonable possibility that a loss exceeding amounts already
recognized may have been incurred and the amount of that
additional
loss would be material to a decision to buy or sell your
securities.
In that case, you must either (a) disclose the estimated
additional
loss, or range of loss, that is reasonably possible or (b) state
that
such an estimate cannot be made. Refer to SFAS 5 and SAB Topic
5:Y.
Tell us whether you believe that there are reasonably possible
material additional losses with regard to the asbestos lawsuits.
Tell us what consideration you have given to the detailed
disclosure
requirements of Interpretive Responses to Questions 2 and 3 of SAB
Topic 5:Y. Please amend your filing to address our concerns or
tell
us why no amendment is necessary.
AES Eastern Energy, LP
Form 10-K for Fiscal Year Ended December 31, 2004
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Contractual Obligations, page 29
10. Please revise your table of contractual cash obligations to
include the following:
(a) Estimated interest payments on your debt;
(b) Estimated payments under interest rate swap agreements; and
(c) Required funding of pension and other postretirement benefit
obligations.
Because the table is aimed at increasing transparency of cash
flow,
we believe these payments should be included in the table. If you
choose not to include these payments, a footnote to the table
should
clearly identify the excluded items and provide any additional
information that is material to an understanding of your cash
requirements. See Section IV.A and footnote 46 to the
Commission`s
MD&A Guidance issued December 19, 2003, available at www.sec.gov.
Note 2. Significant Accounting Policies, page 46
11. We note that AES Eastern Energy LP accounts for spare parts as
inventory on the balance sheet while AES Red Oak, LLC classifies
spare parts as property, plant and equipment. Please explain the
reason for this disparate treatment. In doing so, please ensure
you
tell us in more detail the nature of the spare parts inventory.
Note 9. Benefit Plans
12. Please explain to us how you calculate the market related
value
of plan assets as that term is defined in SFAS 87. Since there is
an
alternative to how you can calculate this item, and it has a
direct
effect on pension expense, we believe you should disclose how you
determine this amount.
* * * *
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. Please furnish a letter that keys your responses
to
our comments and provides any requested supplemental information.
Detailed response letters greatly facilitate our review. Please
file
your response letter on EDGAR. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Sarah Goldberg, Staff Accountant, at (202)
551-
3340 or me at (202) 551-3843 if you have questions regarding
comments
on the financial statements and related matters.
Sincerely,
George Ohsiek
Branch Chief
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Mr. Sharp
The AES Corporation
July 28, 2005
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