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Risks and Uncertainties (Notes)
6 Months Ended
Jun. 30, 2017
Unusual Risk or Uncertainty [Line Items]  
Unusual Risks and Uncertainties [Table Text Block]
As disclosed in Note 26—Risks and Uncertainties in Item 8.— Financial Statements and Supplementary Data of the 2016 Form 10-K, as of December 31, 2016, the Company has 531 MW under construction at Alto Maipo. Increased project costs, or delays in construction, could have an adverse impact on the Company. As disclosed in the Company’s Form 10-Q for the period ended March 31, 2017, Alto Maipo has experienced construction difficulties, which have resulted in an increase in projected cost for the project of up to 22% of the original $2 billion budget. These overages led to a series of negotiations with the intention of restructuring the project’s existing financial structure and obtaining additional funding. On March 17, 2017, the Company completed the legal and financial restructuring of Alto Maipo, and through its 67% ownership interest in AES Gener, the Company now has an effective 62% indirect economic interest in Alto Maipo. See Note 11—Equity for additional information regarding the restructuring.
Following the restructuring described above, the project continued to face construction difficulties including greater than expected costs and slower than anticipated productivity by construction contractors towards agreed-upon milestones. Furthermore, during the second quarter of 2017, as a result of the failure to perform by one of its construction contractors, Constructora Nuevo Maipo S.A. (“CNM”), Alto Maipo terminated CNM’s contract and is seeking a replacement contractor to complete CNM’s work. As a result of the termination of CNM, Alto Maipo’s construction debt of $613 million and derivative liabilities of $139 million are in technical default and presented as current in the balance sheet as of June 30, 2017.
Alto Maipo is working to resolve the challenges described above. Alto Maipo is seeking a replacement contractor to complete CNM’s work, and continues to maintain a dialogue with lenders and other parties. However, there can be no assurance that Alto Maipo will succeed in these efforts and if there are further delays or cost overruns, or if Alto Maipo is unable to reach an agreement with the non-recourse lenders, there is a risk that these lenders would seek to exercise remedies available as a result of the default noted above, or that Alto Maipo would not be able to meet its contractual or other obligations and would be unable to continue with the project. If any of the above occur, there could be a material impairment for the Company.
The carrying value of the long-lived assets and deferred tax assets of Alto Maipo as of June 30, 2017 was approximately $1.3 billion and $60 million, respectively. The Parent Company has invested approximately $360 million in Alto Maipo and has an additional equity commitment of $55 million to be funded as part of the March restructuring described above. As a result of the construction difficulties, management assessed the recoverability of the carrying value of the long-lived asset group, noting they were not impaired as of June 30, 2017.