Operating Leases

12 Months Ended

Dec. 31, 2013



Note 13 — Operating Leases

The following is a schedule of operating leases that Cleco maintains in the ordinary course of business activities. The majority of Cleco’s operating leases are for line construction and operating vehicles, railcars for coal deliveries, and towboats which push the barges that deliver solid fuels to the plant site. The remaining leases provide for office and operating facilities and office equipment for both Cleco and Cleco Power. These leases have various terms and expiration dates. The following table is a summary of expected operating lease payments for Cleco and Cleco Power for the years indicated.



			YEAR ENDING DEC. 31,
(THOUSANDS)	CLECO CORPORATION		CLECO POWER		TOTAL
2014	$	11	$	10,560	$	10,571
2015	—		10,713		10,713
2016	—		10,784		10,784
2017	—		8,789		8,789
2018	—		3,009		3,009
Thereafter	—		9,669		9,669
Total operating lease payments	$	11	$	53,524	$	53,535

Cleco Power has vehicle leases with two vendors. The leases with the first vendor have terms that vary from five to ten years. The leases can be extended on a month-by-month basis at the end of the term. The lease payments are fixed amounts for the term of the lease. These leases include distribution line construction and maintenance vehicles. Most of these leases are considered operating leases, whereby Cleco returns the vehicle to the vendor at the end of the lease with no further obligation (assuming certain turn-in provisions are met). However, five of the leases are TRAC (terminal rent adjustment clause) leases whereby the vendor is guaranteed a certain residual value at lease-end. For the year ended December 31, 2013, lease expense of $0.6 million was recognized. For each of the years ended December 31, 2012 and 2011, lease expense of $1.0 million was recognized.

The leases with the second vendor vary in term from five to seven years. The lease payments are fixed amounts for the term of the lease, based on a percentage of acquisition cost. These leases include distribution line construction and maintenance vehicles, as well as vehicles used throughout the company in generation, distribution, and transmission. These leases are TRAC leases, with a specific residual value guaranteed to the vendor. For each of the years ended December 31, 2013, 2012, and 2011, operating lease expense of $0.4 million was recognized.

The operating leases for office and operating facilities and office equipment have lease terms from one to five years. For each of the years ended December 31, 2013, 2012, and 2011, operating lease expense of less than $0.1 million was recognized for Cleco. For each of the years ended December 31, 2013, 2012, and 2011, operating lease expense of $0.3 million was recognized for Cleco Power.

The railcar leases are divided into two groups. The first group has 115 railcars and the lease expires on March 31, 2021. The second group has 116 railcars and the lease expires on March 31, 2017. Cleco Power pays a monthly rental fee per car. For the year ended December 31, 2013, operating lease expense of $1.0 million was recognized. For each of the years ended December 31, 2012 and 2011, operating lease expense of $1.1 million was recognized. The railcar leases do not contain contingent rent payments.

The towboat lease expires on August 31, 2017. Cleco Power pays a fixed amount for the towboats that is escalated by 3% each year. For the year ended December 31, 2013, operating lease expense of $4.7 million was recognized. For each of the years ended December 31, 2012 and 2011, operating lease expense of $5.6 million was recognized.

- Definition

The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.

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