

Note 13 — 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 investee 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.

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 December 31, 2017, consisted of its equity investment of $18.2 million. In June 2017, Cleco Power received $0.5 million from Oxbow as a return of investment.

During the first quarter of 2017, the transition from the Dolet Hills mine to the Oxbow mine commenced. This transition was completed in July 2017.

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



	AT DEC. 31,
INCEPTION TO DATE (THOUSANDS)	2017			2016
Purchase price	$	12,873		$	12,873
Cash contributions	6,399			6,399
Dividend received	(1,100		)	(600		)
Total equity investment in investee	$	18,172		$	18,672

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)	2017		2016
Oxbow’s net assets/liabilities	$	36,345	$	37,345
Cleco Power’s 50% equity	$	18,172	$	18,672
Cleco Power’s maximum exposure to loss	$	18,172	$	18,672

The following tables contain summarized financial information for Oxbow:



	AT DEC. 31,
(THOUSANDS)	2017		2016
Current assets	$	2,318	$	886
Property, plant, and equipment, net	25,656		25,864
Other assets	10,186		10,971
Total assets	$	38,160	$	37,721
Current liabilities	$	1,815	$	376
Partners’ capital	36,345		37,345
Total liabilities and partners’ capital	$	38,160	$	37,721



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2017		2016		2015
Operating revenue	$	4,189	$	5,459	$	3,991
Operating expenses	4,189		5,459		3,991
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.