Summary
Dominion Resources, Inc. (Dominion) announced an expected pre-tax non-cash impairment charge of approximately $390 million to $420 million for its Dresden Energy electric generation facility. This charge, to be recognized for the quarter ended June 30, 2007, relates to a partially completed 580-megawatt combined-cycle gas-powered plant in Ohio, which has a current carrying amount of $472 million before the impairment. The impairment stems from Dominion's strategic review of its assets and exploration of potential sales, prompted by a desire to improve return on invested capital and in light of new electric re-regulation legislation in Virginia. After receiving non-binding bids in late June 2007, Dominion concluded that selling the Dresden facility, rather than completing and operating it, is the likely path forward. This change in intended use triggered an impairment analysis, indicating that the carrying amount of the investment will not be recovered, leading to the decision to write down the asset to its estimated fair value.
Key Highlights
- 1Dominion Resources, Inc. will record a significant pre-tax non-cash impairment charge estimated between $390 million and $420 million.
- 2The impairment pertains to the Dresden Energy electric generation facility, a partially completed 580 MW combined-cycle gas-powered plant in Ohio.
- 3The facility's current carrying amount before impairment is $472 million.
- 4The decision to impair the asset is a result of exploring the sale of the Dresden facility, initiated in May 2007.
- 5Dominion anticipates selling Dresden rather than completing and operating it, based on received non-binding bids.
- 6The impairment charge will be recognized for the quarter ending June 30, 2007.
- 7The final sale, if it occurs, is expected to close in the third quarter of 2007.