v3.26.1
Derivative Instruments and Hedging Activities (Tables)
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities [Abstract]  
Schedule of Derivative Instruments [Table Text Block]
Details about AOCI components
Affected line item in the Condensed Consolidated Statements of OperationsThree Months Ended March 31,
20262025
Net gains on cash flow hedges Interest expense$(578)$(578)
Income tax effect144 144 
Total reclassifications for the period, net of income taxes$(434)$(434)
Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location
The following table summarizes the fair value, balance sheet classification and hedging designation of IPALCO’s derivative instruments (in thousands):

CommodityHedging DesignationBalance sheet classification
March 31, 2026
December 31, 2025
FTRs
Not a Cash Flow Hedge
Derivative assets, current
$551 $1,584 
Derivative Instruments, Gain (Loss) 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 6, “Derivative Instruments and Hedging Activities” to IPALCO’s 2025 Form 10-K.

At March 31, 2026, AES Indiana’s outstanding derivative instruments were as follows:
Commodity
Accounting Treatment
UnitNotional
(in thousands)		Sales
(in thousands)		Net Notional
(in thousands)
FTRsNot DesignatedMWh972 — 972 

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. IPALCO previously used derivative financial instruments primarily to manage the interest rate risk associated with our long-term debt. These interest rate derivative contracts were settled in previous periods, and we continue to amortize amounts out of AOCI into interest expense.

The amounts reclassified out of AOCI by component during the three months ended March 31, 2026 and 2025 are as follows (in Thousands):

Details about AOCI components
Affected line item in the Condensed Consolidated Statements of OperationsThree Months Ended March 31,
20262025
Net gains on cash flow hedges Interest expense$(578)$(578)
Income tax effect144 144 
Total reclassifications for the period, net of income taxes$(434)$(434)
During the next twelve months, the Company expects to reclassify $1.7 million of net gains from accumulated other comprehensive income into earnings.

Derivatives Not Designated as Hedge

AES Indiana’s FTRs 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. 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 March 31, 2026 and December 31, 2025, 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):

CommodityHedging DesignationBalance sheet classification
March 31, 2026
December 31, 2025
FTRs
Not a Cash Flow Hedge
Derivative assets, current
$551 $1,584 
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
At March 31, 2026, AES Indiana’s outstanding derivative instruments were as follows:
Commodity
Accounting Treatment
UnitNotional
(in thousands)		Sales
(in thousands)		Net Notional
(in thousands)
FTRsNot DesignatedMWh972 — 972