ASSET IMPAIRMENT EXPENSE



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in millions)
Poland wind projects	$	65	$	—	$	65	$	—
Beaver Valley	—		—		46		—
Itabo (San Lorenzo)	15		—		15		—
Wind turbines and projects	—		36		—		40
Kelanitissa	—		5		—		17
St. Patrick	—		—		—		11
Other	1		2		3		3
Total asset impairment expense	$	81	$	43	$	129	$	71

Poland Wind Projects —During the third quarter of 2013, the Company determined that it was more likely than not that it would dispose of its remaining Poland wind development projects through sale or abandonment which was deemed to be an impairment indicator. The Company had acquired ownership interests ranging between 61% to 89% in the entities holding these wind development projects since 2010. This decision was driven by the continued uncertainty in the tariff regime for renewable energy in Poland. The Company performed long-lived asset impairment tests considering different scenarios and determined that, based on undiscounted cash flows, the carrying amounts of the projects were not recoverable. The fair values of the projects were determined using the market approach based on an indicative offer price for all of the projects and their aggregate carrying amount of $79 million exceeded their aggregate fair value of $14 million. As a result, an asset impairment expense of $65 million was recognized. Poland Wind is reported in the EMEA Generation Segment.

Itabo (San Lorenzo)—During the third quarter of 2013, the Company tested the recoverability of long-lived assets at San Lorenzo, a 35 Megawatt ("MW") LNG fueled plant of Itabo. Itabo was informed by Super-Intendencia de Electridad (“SIE”), the system regulator in the Dominican Republic, that it would not receive capacity revenue going forward. This communication in combination with current adverse market conditions were determined to be an impairment indicator. The Company performed a long-lived asset impairment test considering different scenarios and determined that, based on undiscounted cash flows, the carrying amount of San Lorenzo was not recoverable. The fair value of San Lorenzo was determined using the market approach based on a broker quote and it was determined that its carrying amount of $22 million exceeded the estimated fair value of $7 million. As a result, the Company recognized an asset impairment expense of $15 million. Itabo is reported in the MCAC Generation segment.

Beaver Valley — In January 2013, Beaver Valley, a wholly-owned 125 MW coal-fired plant in Pennsylvania, entered into an agreement to early terminate its PPA with the offtaker in exchange for a lump-sum payment of $60 million which was received on January 9, 2013. The termination was effective January 8, 2013. Beaver Valley also terminated its fuel supply agreement. Under the PPA termination agreement, annual capacity agreements between the offtaker and PJM Interconnection, LLC (“PJM”) (a regional transmission organization) for 2013 - 2016 have been assigned to Beaver Valley. The termination of the PPA resulted in a significant reduction in the future cash flows of the asset group and was considered an impairment indicator. The carrying amount of the asset group was not recoverable. The carrying amount of the asset group exceeded the fair value of the asset group, resulting in an asset impairment expense of $46 million. Beaver Valley is reported in the US Generation segment.

Wind Turbines and Projects— During the third quarter of 2012, the Company determined that all turbines held in storage met the held-for-sale criteria due to less viable internal deployment scenarios and the ongoing receipt of offers from potential buyers. Accordingly, the Company measured the turbines at fair value less cost to sell under the market approach. The turbines with a carrying amount of $45 million were written down to their fair value less cost to sell of $25 million, which resulted in an impairment expense of $20 million. In addition, the Company determined that two early-stage wind development projects that were capitalizing certain project costs were no longer probable because of the Company’s shift in capital allocation for developing these projects. The Company assessed the value of the projects using the market approach and, after consultation with third party valuation firms and internal development staff, the fair value was determined to be zero. A full impairment of $16 million was recognized in the third quarter of 2012. These wind turbines and projects were reported in US Generation segment.

Kelanitissa—During the nine months ended September 30, 2012, the Company recognized asset impairment expense of $17 million for the long-lived assets at Kelanitissa, a diesel-fired generation plant in Sri Lanka. The Company continued to evaluate the recoverability of its long-lived assets at Kelanitissa as a result of both the requirement to transfer the plant to the government at the end of PPA and the expectation of lower future operating cash flows. The evaluations during this period indicated that the long-lived assets were no longer recoverable and, accordingly, were written down to their estimated fair value of $10 million based on a discounted cash flow analysis. The long-lived assets had a carrying amount of $22 million prior to the recognition of asset impairment expense. Kelanitissa is reported in the Asia Generation reportable segment.

St. Patrick—During the second quarter of 2012, the Company received approval from its Board of Directors for the sale of its wholly-owned subsidiary Ferme Eolienne Saint Patrick SAS (“St. Patrick”). Upon meeting the held-for-sale criteria including the Board’s approval, long-lived assets with a carrying amount of $33 million were written down to their fair value of $22 million (i.e., the sale price attributed to St. Patrick) and an impairment expense of $11 million was recorded. The sale transaction subsequently closed on June 28, 2012. St. Patrick was reported in EMEA Generation segment.