AES Kil­root Power Ltd

Belfast Telegraph - Business Telegraph - - News -

At the end of its last trad­ing year of 2017, AES Kil­root Power had two large elec­tric­ity gen­er­at­ing units with a ca­pac­ity of 560mw, from burn­ing ei­ther coal or oil, as well as 142mw of ca­pac­ity from four open cy­cle gas tur­bines.

The lat­est ac­counts were pre­pared with the knowl­edge that the large coal/oil units had failed to be awarded con­tracts to gen­er­ate elec­tric­ity as part of the new I-SEM sys­tem, which started on Oc­to­ber 1.

The ac­counts re­flect both the re­sults of com­mer­cial trad­ing in 2017 as well as the fi­nan­cial con­se­quences of the ma­jor pro­posed con­tract change. As this re­port was writ­ten, no firm de­ci­sions were pub­licly avail­able on talks to al­le­vi­ate the dra­matic im­pact of I-SEM on the Kil­root plant.

The crit­i­cal fea­ture of the most re­cent ac­counts is the in­clu­sion of im­pair­ment charges, af­fect­ing the value of the plant, if the large gen­er­at­ing units cease to sup­ply elec­tric­ity as ex­pected in the I-SEM.

Im­pair­ment charges of £118.6m are shown in the op­er­at­ing ac­counts, lead­ing to an over­all trad­ing loss of £110.4m. These im­pair­ment charges are also ma­te­rial to the pre-tax profit, which be­comes a loss of £92.0m. The Kil­root plant is a sub­sidiary of the Amer­i­can-owned par­ent com­pany AES (NI). The long-term fu­ture of the Kil­root plant has been uncertain since the ac­cep­tance of agreed Eu-wide rules to ob­serve tighter emis­sions con­trols.

How­ever, the I-SEM, now in­tro­duced, has brought for­ward the pos­si­ble ear­lier demise of the coal/oil units. Em­ploy­ment at Kil­root has been stable in re­cent years and av­er­aged 121 peo­ple in 2017. The share- hold­ing par­ent com­pany has re­ceived no div­i­dend payment in the past three years af­ter a div­i­dend of over £36m in 2014. As this re­view is writ­ten, there has been no con­fir­ma­tion from SONI or the reg­u­la­tor that, to re­duce risk to elec­tric­ity sup­plies in the near fu­ture, spe­cial con­tracts will be agreed with AES to bet­ter man­age the gen­er­at­ing ca­pac­ity at Kil­root and Bal­ly­lum­ford. The com­pany re­port for AES Kil­root Power is reprinted fol­low­ing er­rors in last week’s table. We apol­o­gise for fail­ing to in­di­cate that op­er­at­ing prof­its and pre-tax prof­its in 2015 and 2017 were losses.

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