Note 3 — Regulatory Assets and Liabilities

Cleco Power follows the authoritative guidance on regulated operations, which allows utilities to capitalize or defer certain costs for recovery from customers and to recognize a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

Under the current regulatory environment, Cleco Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. In addition, potential deregulation of the industry or possible future changes in the method of rate regulation of Cleco Power could require discontinuance of the application of these authoritative guidelines.

The following table summarizes Cleco Power’s regulatory assets and liabilities:



(THOUSANDS)	AT MAR. 31, 2015			AT DEC. 31, 2014
Regulatory assets – deferred taxes, net	$	235,889		$	234,370
Mining costs	10,833			11,470
Interest costs	5,492			5,582
AROs	1,145			1,029
Postretirement costs	157,576			160,903
Tree trimming costs	8,354			8,066
Training costs	6,980			7,019
Surcredits, net	12,588			13,587
Amended lignite mining agreement contingency	3,781			3,781
AMI deferred revenue requirement	5,727			5,863
Production operations and maintenance expenses	14,056			14,761
AFUDC equity gross-up	72,611			72,859
Acadia Unit 1 acquisition costs	2,627			2,653
Financing costs	9,310			9,402
Biomass costs	74			82
MISO integration costs	3,041			3,275
Coughlin transaction costs	1,053			1,060
Corporate franchise tax	317			1,223
Acadia FRP true-up	754			754
Energy efficiency	80			114
Other	534			596
Total regulatory assets	316,933			324,079
PPA true-up	(624		)	(624		)
Fuel and purchased power	12,901			21,554
Total regulatory assets, net	$	565,099		$	579,379

Fuel and Purchased Power

The cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such charges. For the three months ended March 31, 2015, approximately 74% of Cleco Power’s total fuel cost was regulated by the LPSC.

The $8.7 million decrease in the under-recovered costs was primarily due to a $9.6 million decrease in fuel costs and power purchases as a result of the timing of collections of fuel expenses and the loss of a wholesale customer, partially offset by a $0.9 million increase due to the settlement of previously open FTR positions and a mark-to-market loss on current open FTR positions.