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 SEPT. 30, 2015			AT DEC. 31, 2014
Regulatory assets – deferred taxes, net	$	236,341		$	234,370
Mining costs	9,559			11,470
Interest costs	5,311			5,582
AROs	1,381			1,029
Postretirement costs	150,586			160,903
Tree trimming costs	6,996			8,066
Training costs	6,902			7,019
Surcredits, net	10,546			13,587
Amended lignite mining agreement contingency	3,781			3,781
AMI deferred revenue requirement	5,454			5,863
Production operations and maintenance expenses	12,003			14,761
AFUDC equity gross-up	71,798			72,859
Acadia Unit 1 acquisition costs	2,574			2,653
Financing costs	9,125			9,402
Biomass costs	58			82
MISO integration costs	2,573			3,275
Coughlin transaction costs	1,037			1,060
Corporate franchise tax	849			1,223
Acadia FRP true-up	566			754
Energy efficiency	11			114
Other	418			596
Total regulatory assets	301,528			324,079
PPA true-up	(468		)	(624		)
Fuel and purchased power	18,662			21,554
Total regulatory assets, net	$	556,063		$	579,379

Fuel and Purchased Power

The costs of fuel used for electric generation and power purchased for utility customers are recovered through the LPSC-established FAC or related wholesale contract provisions, which enable Cleco Power to pass on to its customers substantially all such charges. For the three and nine months ended September 30, 2015, approximately 73% and 74%, respectively, of Cleco Power’s total fuel cost was regulated by the LPSC.

Fuel and purchased power decreased $2.9 million from December 31, 2014. Under-recovered fuel costs were impacted by a decrease in the mark-to-market value of the FTRs partially offset by an increase in the volume of open FTR positions, which netted a $3.7 million decrease. Fuel costs and purchased power were also impacted by a net $0.8 million increase as a result of higher volumes and the timing and collection of fuel expenses, partially offset by the loss of a wholesale customer.