Jan. 23 (Bloomberg) — Ormat Technologies Inc., a U.S.
developer of geothermal energy, will record a charge of as much
as $230 million because its North Brawley plant is producing
about half as much power as expected.
The impairment charge will be in the fourth quarter of
2012, resulting in a loss during the period and for the full
year, the Reno, Nevada-based company said today in a statement.
The plant in southern California has been operating at
capacities between 20 megawatts and 33 megawatts, which compares
with its design capacity of 50 megawatts, Ormat said.
Southern California Edison Co., the utility that buys the
power produced by North Brawley, has refused to give Ormat
permission to explore a replacement power purchase agreement
with higher electricity prices, Ormat said. As a result, Ormat
said it doesn’t plan to invest to boost capacity at the plant
and will continue to operate it at the current level of about 27
megawatts.
“Additional investment to increase generation is not
economically justified,” Ormat Chief Executive Officer Dita Bronicki said in the statement.
The impairment charge won’t affect the company’s ability to
repay debts and won’t “materially adversely impact” its future
results, according to the statement.
Separately, Ormat said its Israel-based parent company
Ormat Industries Ltd. also expects to record a $30 million to
$40 million impairment charge during the fourth quarter related
to its Jersey Valley power plant in Nevada, according to the
statement.
“Jersey is operating at lower levels than its 12 megawatt
contract capacity due to injections constraints,” Bronicki said
today on a conference call. “The power plant is operating now
at an annual average of 7 megawatts.”
To contact the reporter on this story:
Andrew Herndon in San Francisco at
aherndon2@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
