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CORRESP
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      Unassociated Document

              Richard
                A. Krantz

              Financial
                Centre

              695
                East Main Street

              P.O.
                Box 10305

              Stamford,
                CT 06904-2305

              Main
                (203) 462-7500

              Fax
                (203) 462-7599

              rkrantz@rc.com

              Direct
                (203) 462-7505

              Also
                admitted in New York

              and
                Massachusetts

    August
      31, 2006

    Ms.
      Kate
      Tillan

    Assistant
      Chief Accountant

    United
      States Securities and Exchange Commission

    450
      Fifth
      Street, N.W.

    Washington,
      D.C. 20549

              Re:

            FuelCell Energy
              Inc.

            Form 10-K for the year ended
              October
              31, 2005

            Filed January 17,
              2006

            File No.
              001-14204

    Dear
      Ms.
      Tillan:

    This
      correspondence is in response to the Staff’s request to receive in writing the
      prepared remarks of FuelCel Energy, Inc.(“FuelCell”) on the August 30, 2006
      conference call between FuelCell and the Staff.

    Those
      remarks included discussion of the following:

            1.

              A
                review of the history of the Enbridge, Inc. Preferred stock (from
                issuance
                by Global Thermoelectric Inc. in 2000 to
                present).

            2.

              Discussion
                of the answers to the factual questions posed by the SEC Staff on
                August
                16th&
                18th
                2006 conference calls.

            3.

              A
                review of the following Preferred stock and guarantee accounting
                considerations:

            §

              Consolidation
                of Global and FuelCell Energy, Ltd.

            §

              Presentation
                of Series 1 Preferred as equity vs. minority
                interest

            §

              Equity
                vs. debt characteristics of Series 1 Preferred

            §

              Analysis
                of the guarantee under FAS 133

            §

              Temporary
                vs. permanent equity classification of the Series 1
                Preferred

      Ms.
        Kate
        Tillan

      Securities
        and Exchange Commission

      August
        31, 2006

      Page
        2

1. History
      of the Enbridge, Inc. Preferred Stock

    In
      July 2000,
      Global
      Thermoelectric Inc. (“Global”) entered
      into a Joint Development Agreement (“JDA”) with Enbridge Inc. (“Enbridge”) to
      develop solid oxide fuel cell products (“SOFC”) suitable
      for the on-site supply of electric power and heating to homes. Under the terms
      of the JDA, Enbridge had exclusive distribution rights in Canada of the
      residential fuel cell products if developed. Also, under the terms of this
      alliance with Enbridge, Global issued Cumulative Redeemable Convertible
      Preferred Shares, Series 2 ( “Series 2 Preferred Shares”) for gross proceeds of
      Cdn$25.0 million which were used to fund technology, design and product
      development work. Global accounted for the Preferred issuance as permanent
      equity with Face Value of Cdn. $25 million. In periods subsequent to July 2000,
      Global saw significant declines in its market cap and began considering
      strategic alternatives for the company.

    In
      the Summer of 2003,
      FuelCell
      made a formal offer to the Board of Global to acquire Global. FuelCell,
      in a letter agreement and discussions with Enbridge, offered to guarantee the
      minimum dividend of Cdn.$500 thousand per year under the terms of the Series
      2
      Preferred should FuelCell acquire Global.

    In
      November 2003,
      FuelCell
      acquired Global. The consideration in this transaction was calculated at
      approximately U.S.$94.8 million which included assumption of the Global Series
      2
      Preferred shares (held by Enbridge) and the related guarantee provided to
      Enbridge by FuelCell. The discounted fair value, based on future projected
      cash
      flows, of the Series 2 Preferred shares held by Enbridge was estimated to be
      $9.1 million with the assistance of an independent expert in accordance with
      FAS
      141. Upon acquisition, FuelCell classified the Series 2 Preferred shares as
      permanent equity at their discounted fair value. The fair value discount of
      the
      Preferred shares is periodically accreted to APIC.

    In
      May of 2004,
      FuelCell
      sold Global and its generator business which was not core to FuelCell’s
      business. FuelCell retained the operations and assets of Global’s SOFC division
      and transferred them into a newly-formed wholly-owned Canadian subsidiary,
      FuelCell Energy, Ltd. (FCE Ltd.). FuelCell issued Series 1 Preferred shares
      to
      Enbridge out of the Canadian subsidiary in order to maintain Enbridge’s economic
      position for a tax advantaged dividend. The terms of the Series 1 Preferred
      shares mirror the terms of the Global Series 2 Preferred shares. Global canceled
      the Series 2 Preferred shares. FuelCell also signed a guarantee for the existing
      obligations of FCE, Ltd. to Enbridge, which were the Series 1 Preferred stock
      and the JDA. This guarantee did not impact FuelCell’s accounting at the time, as
      it was viewed as a legal transaction which did not change the original
      underlying obligations of the consolidated FuelCell entity.

      Ms.
        Kate
        Tillan

      Securities
        and Exchange Commission

      August
        31, 2006

      Page
        3

    In
      November of 2004,
      FuelCell
      sold the operations and assets of the SOFC division to Versa Power, Inc. (also
      a
      developer of SOFC technology). FCE Ltd. retained the Series 1 preferred. The
      JDA
      was assigned to Versa, eliminating any remaining obligation of FuelCell or
      FCE
      Ltd. Enbridge consented to this assignment. As of April 30, 2006, the accreted
      value of the Series 1 Preferred shares on the consolidated financial statements
      totaled $12.2M and was classified as permanent equity. FCE Ltd. has assets
      totaling approximately $1.0 million included in the consolidated financial
      statements. FCE Ltd. continues to make minimum dividend payments to Enbridge
      under the terms of the Series 1 Preferred shares.

    2.
      Answers
      to Factual Questions Asked by the SEC Staff on August
      16th&
      18th
      2006 Conference Calls

    Question
      # 1

    Does
      FuelCell have the sole discretion and power to liquidate FCE, Ltd.? If so,
      why
      are there liquidation provisions in the terms of the Preferred
      Stock?

    FuelCell,
      as owner of all of the common stock of FCE, Ltd., has the sole power and
      discretion to voluntarily liquidate FCE, Ltd. Although it is true that FCE,
      Ltd.
      could be liquidated as a result of an involuntary bankruptcy, FCE
      Ltd. has no operations or creditors and bankruptcy is not a realistic
      possibility.
      The
      liquidation provisions in the terms of the Preferred Stock provide priority
      for
      the preferred holders over the common holders in the event of a
      liquidation.

    Ms.
      Kate
      Tillan

    Securities
      and Exchange Commission

    August
      31, 2006

    Page
      4

    Question
      # 2

    In FuelCell's
      response letter of May 5, 2006 (in the first bullet on page 10), it was asserted
      that if Enbridge converted its Preferred Stock, FuelCell could satisfy this
      obligation either in cash or shares of FuelCell. This seems contrary to Section
      5.2 of the terms of the Preferred Stock.

    Section
      5.2 refers to the “Final Exchange Price” which is the price after July 31, 2020.
      Section, 5.2 provides that after July 31, 2020, FCE, Ltd. may, at
      its option,
      satisfy
      the exchange obligation with cash in lieu of stock of FuelCell. Until July
      31,
      2020, the holder of Series 1 Preferred Stock may exchange the stock for common
      stock of FuelCell pursuant to the “Current Exchange Price” defined in Section
      1.6 of the terms of the preferred stock.

    Question
      # 3

    The
      SEC
      has reviewed the interplay among Sections 2.1, 2.2 and 2.5 of the Preferred
      Stock. Specifically, is FCE, Ltd. required to pay a dividend? Is the failure
      to
      pay quarterly dividends a default? What are the consequences of its failure
      to
      pay on the guarantee of FuelCell?

    FCE,
      Ltd.
      must pay dividends, as and when declared by the Board of Directors, at the
      stated rate in Section 2.1. If the dividends are not currently paid, they will
      accrue and be subsequently payable when declared by FCE, Ltd. FCE Ltd. is not
      required to actually declare and pay the dividend if it is not permitted to
      do
      so by the Canadian Income Tax Act without incurring special taxes. This
      effectively sets a minimum payment obligation of Cdn.$500,000 annually. The
      instrument provides the board discretion on when during the year and how much
      is
      paid on a quarterly basis (unpaid amounts are accrued). If FCE Ltd. fails to
      pay
      at least Cdn.$500,000 annually, it would be in violation of these provisions.
      Any failure by FCE Ltd. to meet its obligations would be covered by FuelCell’s
      guarantee and FuelCell would be required to meet such obligations.

    Ms.
      Kate
      Tillan

    Securities
      and Exchange Commission

    August
      31, 2006

    Page
      5

    Question
      # 4

    The
      Guarantee of FuelCell to Enbridge seems to be a guarantee of all obligations
      of
      FCE, Ltd. Elsewhere, FuelCell seems only to have an obligation to pay Enbridge
      dividends of Cdn.$500,000 per year. How do these reconcile? Are the obligations
      of FCE, Ltd. broader than those guaranteed by FuelCell?

    Pursuant
      to the terms of the Guarantee, so long as Enbridge holds the Preferred Shares,
      FuelCell has guaranteed all of its obligations pursuant to the terms of the
      Preferred Shares. Currently, FCE, Ltd. only has an obligation to pay dividends
      of Cdn.$500,000 annually (under the terms of Section 2.5 of the Preferred Share
      agreement), which is the extent of paragraph (c) of the FuelCell Guarantee.
      Ultimately, the accrued dividends will have to be paid pursuant to the terms
      of
      the preferred stock, and FuelCell has guaranteed this obligation as well
      pursuant to paragraph (d) of the Guarantee.

    The
      obligations guaranteed by FuelCell under the terms of the Preferred Shares
      are
      not broader than those of FCE, Ltd.

    Question
      # 5

    Please
      tell us whether or not FuelCell has any obligations remaining for the JDA under
      the May 27, 2004 Guarantee.

    FCE
      Ltd,
      assigned, with Enbridge’s consent, all of the responsibilities of the JDA to
      Versa Power Systems, Ltd. Included in this assignment document, Enbridge
      released FCE, Ltd. from all obligations and liabilities related to the JDA.
      As a
      result of this assignment and release, FCE, Ltd. no longer has an obligation
      related to the JDA under the May 27, 2004 Guarantee Agreement.

    Question
      # 6

    What
      is
      the proper designation for the Preferred Shares of FCE, Ltd? In the Articles
      of
      Amendment of FCE, Ltd., they are referred to “Class A Cumulative Redeemable
      Exchangeable Preferred Shares”. In FuelCell’s public filings, they are referred
      to as “Series 1 Preferred Shares”. Please clarify.

    In
      public
      disclosure documents FuelCell has referred to the Preferred Shares of FCE,
      Ltd.
      as Series 1 in order to make it clear that this series was issued by an entity
      different from the issuer of FuelCell’s Series B preferred shares. The proper
      legal designation for the shares is; Class A Cumulative Redeemable Exchangeable
      Preferred Shares.

      Ms.
        Kate
        Tillan

      Securities
        and Exchange Commission

      August
        31, 2006

      Page
        6

    3.
      Review of Preferred Stock and Guarantee Accounting
      Considerations

    Consolidation
      of Global and FuelCell, Ltd.

    The
      only
      ownership interests in FuelCell Energy, Ltd. are FuelCell Energy, Inc. (common
      shares) and Enbridge, Inc. (preferred shares). The Preferred shares held by
      Enbridge have no voting rights, all voting rights are held by FuelCell Energy,
      Inc. Therefore, under the majority voting control provisions of ARB 51, FuelCell
      Energy, Inc. is required to consolidate FuelCell Energy, Ltd. The same
      conclusions apply with respect to FuelCell Energy, Inc.’s previous ownership
      interest in Global.

    FuelCell
      Energy, Inc. also analyzed the provisions of FIN 46R to determine whether it
      would be the primary beneficiary of FuelCell Energy, Ltd. if FuelCell Energy,
      Ltd. is a variable interest entity (referred to as a VIE). (Under paragraph
      23
      of FIN 46R there is no requirement for FuelCell to conclusively determine
      whether FuelCell Energy, Ltd. is a VIE if FuelCell Energy, Inc. has majority
      voting control of FuelCell Energy, Ltd. and would also be its primary
      beneficiary if it were a VIE.) The primary consideration that led FuelCell
      Energy, Inc. to conclude that if FuelCell Energy, Ltd. were considered a VIE
      the
      primary beneficiary would be FuelCell Energy, Inc. and not Enbridge, is that
      the
      Preferred shares do not participate significantly in profits and losses of
      FuelCell Energy, Ltd. and therefore cannot be considered at risk per paragraph
      5(a)(1) of FIN 46R. Given FuelCell Energy, Inc’s guarantee of both the Preferred
      share dividends and the par value of those shares in the event of liquidation
      of
      FuelCell Energy, Ltd. and also the right of FuelCell Energy, Inc. to remove
      assets out of FuelCell Energy, Ltd. without requiring approval from the
      Preferred shareholders, the Series 1 Preferred Shares clearly do not participate
      significantly in the losses of FuelCell Energy, Ltd. and do not meet the FIN
      46R
      paragraph 2(c) definition of a variable interest in FuelCell Energy, Ltd. Thus,
      FuelCell Energy, Inc. believes that it is the only variable interest holder
      of
      FuelCell Energy, Ltd. and would clearly be its primary beneficiary if it is
      a
      VIE.

    FuelCell
      Energy, Inc. also concluded that the Series 1 Preferred Shares represent a
      variable interest in FuelCell Energy, Inc. under the provisions of FSP FIN
      46R-5, providing additional support for its conclusions with respect to the
      classification as equity of those shares in the consolidated financial
      statements of FuelCell Energy, Inc.

      Ms.
        Kate
        Tillan

      Securities
        and Exchange Commission

      August
        31, 2006

      Page
        7

    Presentation
      of Preferred stock as equity vs. minority interest

    FuelCell
      Energy, Inc. believes the substance of the underlying economics dictates that
      the Series 1 Preferred shares do not represent a minority ownership interest
      in