SecProbe.io

November 23, 2011
Via E-mail

Mr. Michael Bishop Senior Vice President, Chief Financial Officer,
  Treasurer and Corporate Secretary   FuelCell Energy, Inc.  3 Great Pasture Road Danbury, CT  06813
Re: FuelCell Energy, Inc.
 Form 10-K for the Fiscal Year Ended October 31, 2010
Filed January 14, 2011 File No. 001-14204

Dear Mr. Bishop:
 We have reviewed your filing and your re sponse dated October 28, 2011 and we have the
following comments.  We have li mited our review to only your fi nancial statements and related
disclosures and do not intend to expand our review to other portions of your document.  In some
of our comments, we may ask you to provide us  with information so we may better understand
your disclosure.
 Please respond to this letter within te n business days by providing the requested
information or by advising us when you will provide the requested response.  If you do not
believe our comments apply to your facts and circum stances, please tell us w hy in your response.
 After reviewing the information you provide in response to these comments, we may
have additional comments.  Form 10-K for the fiscal year ended October 31, 2010

 Revenue Recognition, pages 68 and 81

 1. We acknowledge your response to prior commen t 7; however, it remains unclear how your
application of percentage of completion acc ounting for DFC power plants and modules is
appropriate under the specific guidance from FASB Codification Topic 605-35.  In that
regard, your response suggests th at you segmented revenues a nd costs incurred for certain
installation and commissioning activities under the contractual arrangements under a theory
analogizing to the accounting for research and de velopment activities.  Pl ease help us further

Mr. Michael Bishop
FuelCell Energy, Inc. November 23, 2011 Page 2
 understand how your application of the percen tage of completion method complied with
GAAP.  Accordingly, please respond to the following:
 Tell us the specific basis in Topic 605-35 fo r segmenting and separately accounting for
revenues and costs associated with instal lation and commissioning in excess of the
estimated amount included in what  you refer to as “hard costs.”
 Tell us how your practices considered the guidance from FA SB ASC 605-35-25-10
through 25-13, with respect to segmenting of a contract.
 Tell us how your method considers the guida nce from FASB ASC 605-35-25-37a, which
requires that contract costs used in the application of  percentage of completion
accounting include all direct co sts.  It is unclear how your  method of segmenting certain
installation and commissioning cost s considers this guidance.
 Tell us how your method considers the guida nce from FASB ASC 605-35-25-37f, which
indicates that in estimating pr ofit or loss on a contract, the estimate to complete should
include all contract costs.

2. As a related matter, we refer to your response to  prior comment 10.  Plea se further explain to
us why percentage of completion is an appr opriate accounting method fo r revenues and costs
from DFC power plants and modules.  In th at regard, please respond to the following:
 Clarify how your determinat ion considers the guidance from FASB ASC 605-35-15-6a,
which indicates that percentage of completi on accounting is not applicable to sales of
goods produced in a standard manufacturi ng operation, even if produced to buyer
specifications.  In that regard, it is not cl ear how the two main components of the power
plant are not manufactured goods as c ontemplated in the cited guidance.
 You indicate that it normally takes between tw elve and eighteen months to complete a
customer arrangement and that lead time is between six and twelve months.   Without
regard to lead time, please clarify for us the amount of time required to manufacture the
components and clarify for us the period a nd pattern of costs incurred under the
arrangements.
 Further clarify why you believe that the arrangements are substantively long-term

contracts as contemplated in the guidance from FASB ASC 605-35.
 Warranty and Services Expense Recognition, pages 69 and 82

 3. We refer to your response to prior comment 13.  Based on your disclosure and response it
appears that the LTSA arrangements would fall under guidance applicable to Separately
Priced Extended Warranty and Product Maintenance Contract s as described in FASB
Codification Topic 605-20-25.  Accordingly, pl ease help us better understand how your
accounting for the LTSA contracts complies with  the cited guidance.  In that regard:
 We see that the arrangements run between five  and twenty years.  Please tell us the
typical life and describe the significance of  arrangements running past your standard
agreement of five years.
 Describe to us the basis fo r your expectation that your “ power plants will produce the
minimum output during the term of the LTSA.”

Mr. Michael Bishop
FuelCell Energy, Inc. November 23, 2011 Page 3
  Tell us how your accounting practices consider  the guidance regarding contract losses
from FASB ASC 605-20-25-6.  In  that regard, it is not cl ear whether you are estimating
the costs of providing the services over  the entire life of  the contract.

If you believe different GAAP governs the accoun ting for these arrangements, please fully
explain in response to this comment.

You may contact Gary Todd at (202) 551- 3605 or me at (202) 551-3637 if you have
questions regarding these comments .  In this regard, do not hesita te to contact Martin James,
Senior Assistant Chief Accountant at ( 202) 551-3671 with any other questions.

Sincerely,
   /s/ Gary Todd  for
Brian Cascio Accounting Branch Chief

cc: Richard Krantz