Summary
Southern Company (SO) announced through its subsidiary, Southern Power Company, the mutual termination of the construction of the gasifier component of an Integrated Gasification Combined Cycle (IGCC) project in Orlando, Florida. This project was a joint venture with Orlando Utilities Commission (OUC) at OUC's Stanton Energy site. While the gasifier construction is halted, Southern Power will proceed with building the gas-fired combined cycle generating facility at the same location. The company anticipates recording a pre-tax impairment loss of approximately $50 million ( $30 million after-tax) in the fourth quarter of 2007 related to this cancellation. The exact contract cancellation costs and their allocation with third parties are still being finalized.
Key Highlights
- 1Southern Power and OUC mutually agreed to terminate construction of the gasifier portion of the IGCC project.
- 2The gas-fired combined cycle generating facility at the Stanton Energy site will still be constructed by Southern Power.
- 3An estimated pre-tax impairment loss of approximately $50 million ($30 million after-tax) is expected in Q4 2007 due to the gasifier cancellation.
- 4The company is still working to determine and allocate contract cancellation costs with third parties.
- 5The decision is reportedly related to potential impacts of proposed federal and state legislation and regulation on the gasifier portion of the IGCC project.