

Note 12 — Variable Interest Entities

Cleco and Cleco Power apply the equity method of accounting to report the investment in Oxbow in the consolidated financial statements. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in investees on Cleco and Cleco Power’s Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Consolidated Statements of Income.

Equity investment in investees at December 31, 2015, represents Cleco Power’s $16.8 million investment in Oxbow.

Equity investment in investees at December 31, 2014, primarily represented Cleco Power’s $14.5 million investment in Oxbow. Equity investments that were less than 100% owned by Diversified Lands represented less than $0.1 million of the total balance.

Oxbow is owned 50% by Cleco Power and 50% by SWEPCO and is accounted for as an equity method investment. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco Power’s current assessment of its maximum exposure to loss related to Oxbow at December 31, 2015, consisted of its equity investment of $16.8 million. During 2015, Cleco Power made $2.3 million of cash contributions to its equity investment in Oxbow as a result of the expected transition from the Dolet Hills mine to the Oxbow mine. The following table presents the components of Cleco Power’s equity investment in Oxbow:



	AT DEC. 31,
INCEPTION TO DATE (THOUSANDS)	2015		2014
Purchase price	$	12,873	$	12,873
Cash contributions	3,949		1,659
Total equity investment in investee	$	16,822	$	14,532

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco Power’s maximum exposure to loss related to its investment in Oxbow:



	AT DEC. 31,
(THOUSANDS)	2015		2014
Oxbow’s net assets/liabilities	$	33,645	$	29,065
Cleco Power’s 50% equity	$	16,822	$	14,532
Cleco Power’s maximum exposure to loss	$	16,822	$	14,532

The following tables contain summarized financial information for Oxbow:



	AT DEC. 31,
(THOUSANDS)	2015		2014
Current assets	$	2,794	$	2,792
Property, plant, and equipment, net	23,749		22,457
Other assets	7,220		3,847
Total assets	$	33,763	$	29,096
Current liabilities	$	118	$	31
Partners’ capital	33,645		29,065
Total liabilities and partners’ capital	$	33,763	$	29,096



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015		2014		2013
Operating revenue	$	3,991	$	2,248	$	2,558
Operating expenses	3,991		2,248		2,558
Income before taxes	$	—	$	—	$	—

Oxbow’s property, plant, and equipment, net consists of land and lignite reserves. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station. DHLC mines the lignite reserves at Oxbow through the Amended Lignite Mining Agreement.

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.