

Note 14 — Intangible Assets

During 2008, Cleco Katrina/Rita acquired a $177.5 million intangible asset which includes $176.0 million for the right to bill and collect storm recovery charges from customers of Cleco Power and $1.5 million of financing costs. The intangible asset’s expected amortization expense is based on the estimated collections from Cleco Power’s customers. At the end of its life, the asset will have no residual value. At the date of the Merger, the gross balance of the Cleco Katrina/Rita intangible asset for Cleco was adjusted to be net of accumulated amortization, as no accumulated amortization existed on the date of the Merger. During the three and six months ended June 30, 2018, Cleco Katrina/Rita recognized amortization expense of $5.5 million and $10.0 million, respectively, based on actual collections. During the three and six months ended June 30, 2017, Cleco Katrina/Rita recognized amortization expense of $4.7 million and $8.2 million, respectively, based on actual collections.

As a result of the Merger, fair value adjustments were recorded on Cleco’s Consolidated Balance Sheet for the valuation of the Cleco trade name and long-term wholesale power supply agreements. At the end of their life, these intangible assets will have no residual value. The trade name intangible asset is being amortized over its estimated economic useful life of 20 years. During the three and six months ended June 30, 2018, Cleco recognized amortization expense of less than $0.1 million and $0.1 million, respectively, on the trade name intangible asset. During the three and six months ended June 30, 2017, Cleco recognized amortization expense of less than $0.1 million and $0.1 million, respectively, on the trade name intangible asset.

The intangible assets related to the power supply agreements are being amortized over the remaining life of each applicable contract ranging between 5 years and 17 years. During the three and six months ended June 30, 2018, Cleco recognized a reduction of revenue of $2.4 million, and $4.8 million, respectively, on the intangible assets for the power supply agreements. During the three and six months ended June 30, 2017, Cleco recognized a reduction of revenue of $2.4 million and $6.0 million, respectively, on the intangible assets for the power supply agreements.

The following tables summarize the balances for intangible assets subject to amortization for Cleco and Cleco Power as of June 30, 2018, and December 31, 2017:



Cleco
(THOUSANDS)	AT JUNE 30, 2018			AT DEC. 31, 2017
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	70,594		$	70,594
Power supply agreements	85,104			85,104
Trade name	5,100			5,100
Gross carrying amount	160,798			160,798
Accumulated amortization	(60,909		)	(45,948		)
Net intangible assets subject to amortization	$	99,889		$	114,850



Cleco Power
(THOUSANDS)	AT JUNE 30, 2018			AT DEC. 31, 2017
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	177,537		$	177,537
Accumulated amortization	(145,830		)	(135,836		)
Net intangible assets subject to amortization	$	31,707		$	41,701