Regulatory Assets and Liabilities

6 Months Ended

Jun. 30, 2011

Regulatory Assets and Liabilities [Abstract]

Note 3 — Regulatory Assets and Liabilities

Cleco Power follows the authoritative guidance on regulated operations, which allows utilities to capitalize or defer certain costs based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered through the ratemaking process.

The following chart summarizes Cleco Power’s regulatory assets and liabilities at June 30, 2011, and December 31, 2010:

	AT JUNE 30,			AT DECEMBER 31,
(THOUSANDS)	2011			2010
Regulatory assets and liabilities – deferred taxes, net	$	208,247		$	203,696
Deferred mining costs	$	20,392		$	21,666
Deferred interest costs		6,850			7,033
Deferred asset removal costs		799			768
Deferred postretirement plan costs		114,909			117,651
Deferred tree trimming costs		9,729			11,086
Deferred training costs		7,564			7,642
Deferred storm surcredits, net		11,138			10,633
Deferred construction carrying costs		14,202			18,830
Lignite mining agreement contingency		3,781			3,781
AFUDC equity gross-up		74,753			74,859
Deferred rate case costs		1,385			1,654
Deferred Acadia Unit 1 acquisition costs		3,024			3,076
Deferred IRP/RFP costs		742			977
Deferred AMI pilot costs		218			283
Total regulatory assets – other	$	269,486		$	279,939
Deferred construction carrying costs		(65,405	)		(87,875	)
Deferred fuel and purchased power		20,986			10,348
Total regulatory assets and liabilities, net	$	433,314		$	406,108

Deferred Construction Carrying Costs

In February 2006, the LPSC approved Cleco Power’s plans to build Madison Unit 3. Terms of the approval included authorization for Cleco Power to collect from customers an amount equal to 75% of the LPSC-jurisdictional portion of the carrying costs of capital during the construction phase of the unit. In any calendar year during the construction period, the amount collected from customers was not to exceed 6.5% of Cleco Power’s projected retail revenues. Cleco Power began collection of the carrying costs and established a regulatory liability in May 2006. In October 2009, the LPSC voted unanimously to approve Cleco Power’s retail rate plan. The retail rate plan established that Cleco Power return $183.2 million of carrying costs to customers over a five-year period and record a regulatory asset for all carrying costs incurred by Cleco Power above the actual amount collected from customers. On February 12, 2010, Madison Unit 3 commenced commercial operation and the new rates became effective. At that time, Cleco Power began returning the construction carrying costs to customers and amortizing the regulatory asset over a five-year period. In March 2010, the LPSC issued an order changing the period of return from five years to four years and established that Cleco Power return approximately $167.0 million over the four-year period. At June 30, 2011, the regulatory liability and the related regulatory asset were $65.4 million and $14.2 million, respectively. As of June 30, 2011, Cleco Power had returned $101.2 million to customers. At June 30, 2011, $38.8 million was due to be returned to customers within one year.

Deferred Fuel and Purchased Power Costs

The cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through the LPSC-established fuel adjustment clause, which enables Cleco Power to pass on to its customers substantially all such charges. For the three months ended June 30, 2011, approximately 95% of Cleco Power’s total fuel cost was regulated by the LPSC, while the remainder was regulated by FERC.

The $10.6 million increase in the under-recovered costs was primarily due to the deferral of $17.6 million in additional fuel and purchased power costs and a $0.5 million increase in deferred losses related to closed natural gas positions. Partially offsetting these increases was a $7.4 million decrease in mark-to-market losses on natural gas positions, which was primarily due to the contractual expiration of certain positions.