During the second quarter of 2016, AES Corp. (NYSE: AES) tested the recoverability of its long-lived generation assets at subsidiary Dayton Power & Light (DPL), said AES in its Aug. 5 quarterly Form 10-Q report.
Uncertainty created by the Supreme Court of Ohio’s June 20, 2016, opinion that reversed a Public Utilities Commission of Ohio decision on DPL rates, lower expectations of future revenue resulting from the most recent PJM Interconnection capacity auction, and higher anticipated environmental compliance costs resulting from third-party studies were collectively determined to be an impairment indicator for these assets.
The Form 10-Q said: “The Company performed a long-lived asset impairment analysis and determined that the carrying amount of Killen, a coal-fired generation facility, and certain DPL peaking generation facilities were not recoverable. The Killen and DPL peaking generation asset groups were determined to have a fair value of $84 million and $5 million, respectively, using the income approach. As a result, the Company recognized a total asset impairment expense of $235 million.”
Killen, located at Wrightsville, Ohio, has one coal-fired unit and one oil-fired combustion turbine. It has a summer generating capacity of 618 MW. DPL owns 67% of the plant and operates it.