Variable Interest Entities

9 Months Ended

Sep. 30, 2016

Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract]

Variable Interest Entities

Note 11 — Variable Interest Entities

Cleco and Cleco Power apply the equity method of accounting to report the investment in Oxbow. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in investee on Cleco and Cleco Power’s Condensed 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 Condensed Consolidated Statements of Income.

Equity investment in investee at September 30, 2016, represents Cleco Power’s $19.3 million investment in Oxbow. Oxbow is owned 50% by Cleco Power and 50% by SWEPCO. 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 September 30, 2016, consisted of its equity investment of $19.3 million. During the nine months ended September 30, 2016, Cleco Power made $2.5 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 by May 2017.

The following table presents the components of Cleco Power’s equity investment in Oxbow:

INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2016		AT DEC. 31, 2015
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		3,949
Total equity investment in investee	$	19,272	$	16,822

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:

(THOUSANDS)	AT SEPT. 30, 2016		AT DEC. 31, 2015
Oxbow’s net assets/liabilities	$	38,544	$	33,645
Cleco Power’s 50% equity	$	19,272	$	16,822
Cleco Power’s maximum exposure to loss	$	19,272	$	16,822

The following table contains summarized financial information for Oxbow:

	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2016		2015		2016		2015
Operating revenue	$	1,034	$	942	$	4,661	$	2,656
Operating expenses	1,034		942		4,661		2,656
Income before taxes	$	—	$	—	$	—	$	—

Dolet Hills Power Station mines lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station.

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