Asset Impairment Expense

12 Months Ended

Dec. 31, 2012

IMPAIRMENTS

21.ASSET IMPAIRMENT EXPENSE

Asset impairment expense for the years ended December 31, 2012, 2011, and 2010 consisted of:

	2012		2011		2010
	(in millions)
Wind turbines and projects	$	41	$	116	$	-
Kelanitissa		19		42		-
St. Patrick		11		-		-
Southland (Huntington Beach)		-		-		200
Deepwater		-		-		79
Other		2		15		25
Total	$	73	$	173	$	304

Wind Turbines and Projects— During the third quarter of 2012, the Company determined that all wind turbines held in storage met the held-for-sale criteria due to the ongoing receipt of offers from potential buyers and less viable internal deployment scenarios. 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. These turbines continue to meet the held-for-sale criteria as of December 31, 2012. The turbines were previously evaluated for impairment in the third quarter of 2011 due to a reduction in wind turbine market pricing and advances in turbine technology. At that time, the Company had also concluded that it was more likely than not that certain non-refundable deposits it had made in prior years to a turbine manufacturer for the purchase of wind turbines were not recoverable due to the availability of more advanced and lower cost turbines in the market. As a result, the Company had recognized asset impairment expense of $116 million related to these turbines and deposits in the third quarter of 2011.

During 2012, the Company also 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. Asset impairment expense of $21 million was recognized during 2012 for these wind development projects. These wind turbines and projects are reported in the US Generation segment.

Kelanitissa—We continue to evaluate the recoverability of our long-lived assets at Kelanitissa, our diesel-fired generation plant in Sri Lanka, as a result of both the requirement to transfer the plant to the government at the end of our PPA and the expectation of lower future operating cash flows. During 2012, the Company recognized asset impairment expense of $19 million for the long-lived assets of Kelanitissa. Our 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 $29 million prior to the recognition of asset impairment expense. Kelanitissa was previously evaluated for impairment in 2011 due to the reasons described above. These evaluations resulted in asset impairment expense of $42 million during the year ended December 31, 2011. Kelanitissa is reported in the Asia Generation 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 FermeEolienne Saint Patrick SAS (“St. Patrick”). Upon meeting the held for sale criteria long-lived assets with a carrying amount of $33 million were written down to their fair value of $22 million and an impairment expense of $11 million was recorded. The sale transaction subsequently closed on June 28, 2012. St. Patrick is reported in the EMEA generation segment.

Southland—In September 2010, anew environmental policy onthe useof ocean water to cool generation facilities was issued in California that requires generation plants to comply with the policy by December 31, 2020 and would require significant capital expenditure or plants' shutdown. The Company's Huntington Beach gas-fired generation facility in California, which is part of AES' Southland business, was impacted by the new policy. The Company performed an asset impairment test and determined the fair value of the asset group using a discounted cash flow analysis. The carrying value of the asset group of $288million exceeded the fair value of $88million resulting in the recognition of asset impairment expense of $200million for the year ended December 31, 2010. Southland is reported in the US Generation segment.

Deepwater—In 2010, Deepwater, our 160 MW petcoke-fired merchant power plant located in Texas, experienced deteriorating market conditions due to increasing petcoke prices and diminishing power prices. As a result, Deepwater incurred operating lossesand was shut down from time to time to avoid negative operating margin. In the fourth quarter of 2010, management concluded that, on an undiscounted cash flow basis, the carrying amount of the asset group was no longer recoverable. The fair value of Deepwater was determined using a discounted cash flow analysis and $79 million of impairment expense was recognized. Deepwater is reported in the US Generation segment.