Asset impairment expense for the three and nine months ended September 30, 2011 and 2010 consisted of:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010

	(in millions)
Wind turbines & deposits	$	116	$	-	$	116	$	-
Carbon reduction projects		33		-		33		-
Kelanitissa		4		-		37		-
Southland (Huntington Beach)		-		200		-		200
Tisza II		-		85		-		85
Other		10		11		10		12
Total asset impairment expense	$	163	$	296	$	196	$	297

During the third quarter of 2011, the Company evaluated the future use of certain wind turbines held in storage pending their installation. Due to reduced wind turbine market pricing and advances in turbine technology, the Company determined it was more likely than not that the turbines would be sold significantly before the end of their previously estimated useful lives. In addition, the Company has concluded that more likely than not non-refundable deposits it had made in prior years to a turbine manufacturer for the purchase of wind turbines are not recoverable. The Company determined it was more likely than not that it would not proceed with the purchase of turbines due to the availability of more advanced and lower cost turbines in the market. These developments were more likely than not as of September 30, 2011 and as a result were considered impairment indicators. In October 2011, the Company determined that an impairment had occurred as of September 30, 2011 as the aggregate carrying amount of $161 million of these assets was not recoverable and was reduced to their estimated fair value of $45 million determined under the market approach. This resulted in asset impairment expense of $116 million for the three and nine months ended September 30, 2011. Wind Generation is reported in the Corporate and Other segment.

During the third quarter of 2011, the markets for emission reduction offsets, including Certified Emission Reductions (CERs) and European Allowance Units (EUAs), experienced a significant adverse change, as the global economic conditions contributed to unforeseen deterioration in the market prices of CERs and EUAs. This decline in the market prices of emission reduction offsets adversely impacted the Company's Carbon Reduction Projects in Asia and Latin America. The Latin American project also incurred current period operating losses and is projecting continuing operating and cash flow losses for future periods. Consequently, we determined that indicators of impairment existed as of September 30, 2011 and the carrying amounts of these projects were not recoverable based on undiscounted cash flows. The fair value of the projects was then determined using discounted cash flow analysis. The aggregate carrying amount of $49 million of these projects was written down as their estimated fair value was $11 million, resulting in asset impairment expense of $33 million, which was limited to the carrying amounts of long-lived assets. Carbon Reduction Projects are reported in the Corporate and Other segment.

During the second quarter of 2011, the Company recognized asset impairment expense of $33 million for the long-lived assets of Kelanitissa, our diesel-fired generation plant in Sri Lanka. We have continued to evaluate the recoverability of our long-lived assets at Kelanitissa as a result of both the existing government regulation which may require the government to acquire an ownership interest and the current expectation of future losses. Our evaluation during the quarter indicated that the long-lived assets were no longer recoverable and accordingly they were written down to their estimated fair value of $33 million based on a discounted cash flow analysis. The long-lived assets had a carrying amount of $66 million prior to the recognition of asset impairment expense. An additional impairment of $4 million was recognized in the three months ended September 30, 2011. Kelanitissa is a Build-operate-transfer (BOT) generation facility and payments under its PPA are scheduled to decline over the PPA term. It is possible that further impairment charges may be required in the future as Kelanitissa gets closer to the BOT date. Kelanitissa is reported in the Asia Generation reportable segment.

During the third quarter of 2011, the Company concluded it was more likely than not that it would sell its interest in two distribution companies and a small generation plant in Argentina. This was considered an impairment indicator. An evaluation of the recoverability of their carrying amount concluded that using probability-weighted undiscounted cash flows, the carrying amounts of the asset groups were recoverable and no impairment charge was recognized for the three months ended September 30, 2011. However, it is reasonably possible that the estimate of undiscounted cash flows at September 30, 2011 could change in the near term. For example, sales negotiations may be finalized in the near term resulting in the need to recognize an impairment charge, which may be material. The aggregate carrying amount of the entities at September 30, 2011 was approximately $317 million, which includes cumulative translation losses of $208 million currently classified as accumulated other comprehensive loss in equity. As the proceeds from a possible sale are likely to be minimal, we would be required to write down substantially all of the carrying amount of these entities.

During the third quarter of 2010, the Company entered into annual negotiations with the offtaker of its Tisza II generation plant in Hungary. As a result of these preliminary negotiations, as well as the further deterioration of the economic environment in Hungary, the Company determined that an indicator of impairment existed at September 30, 2010. Thus, the Company performed an asset impairment test in accordance with the accounting guidance on property, plant and equipment and determined that based on the undiscounted cash flow analysis, the carrying amount of the Tisza II asset group was not recoverable. The fair value of the asset group was then determined using a discounted cash flow analysis. The carrying value of the Tisza II asset group of $160 million exceeded the fair value of $75 million resulting in the recognition of asset impairment expense of $85 million during the three and nine months ended September 30, 2010. Tisza II is reported in the Europe Generation reportable segment.

In September 2010, the Office of Administrative Law in California approved the policy that will require the Company to change the process through which it uses ocean water to cool the generation turbines at its Alamitos, Huntington Beach and Redondo Beach (collectively “Southland”) gas-fired generation facilities in California. The policy requires compliance with the new regulations by December 31, 2020. The change in the water cooling process will result in significant future capital expenditures to ensure compliance with the new regulations or a shut down of the plants and the Company determined that an indicator of impairment existed at September 30, 2010. The Company performed an asset impairment test and the asset group was determined to be at the individual plant level and based on the undiscounted cash flow analysis, the Company determined that the Huntington Beach asset group was not recoverable. The fair value of the Huntington Beach asset group was then determined using a discounted cash flow analysis. The carrying value of the Huntington Beach plant of $288 million exceeded the fair value of $88 million resulting in the recognition of asset impairment expense of $200 million for the three and nine months ended September 30, 2010. The undiscounted cash flows of the Alamitos and Redondo Beach asset groups exceeded their respective carrying values and resulted in no impairment. Huntington Beach is reported in the North America Generation reportable segment.

Goodwill impairment was $17 million for the three and nine months ended September 30, 2011. During the third quarter of 2011, the Company identified higher coal prices and the resulting reduced operating margins in China as an impairment indicator for the goodwill at Chigen, our holding company that holds equity interests in Chinese ventures. A significant downward revision of cash flow forecasts indicated that the fair value of Chigen reporting unit was lower than its carrying amount. See Note 15―Other Non-operating Expense for further information. As of September 30, 2011, Chigen had goodwill of $17 million. The Company performed an interim impairment evaluation of Chigen's goodwill and determined that goodwill had no implied fair value. As a result, the entire carrying amount of $17 million was recognized as goodwill impairment.

Goodwill impairment was $18 million for the three and nine months ended September 30, 2010. During the third quarter of 2010, the Company determined that there was an indicator that the carrying value of goodwill related to Deepwater, our pet coke-fired merchant generation facility in Texas, was not recoverable. This determination was based primarily on the fact that Deepwater did not operate for more than 30 days in the three months ended September 30, 2010, had incurred operating and cash flow losses and was forecasting operating and cash flow losses for the remainder of 2010 through 2014 as a result of decreases in future power price expectations and an increase in pet coke prices affecting the market. Deepwater is reported in the North America Generation segment.