Note 4 — Regulatory Assets and Liabilities

Cleco capitalizes or defers certain costs for recovery from customers and recognizes 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 believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco’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 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 could require discontinuance of the application of the authoritative guidance on regulated operations.

The following table summarizes Cleco Power’s regulatory assets and liabilities:



(THOUSANDS)	AT SEPT. 30, 2018			AT DEC. 31, 2017
Regulatory liabilities - deferred taxes, net	$	(135,911	)	$	(140,426	)
Regulatory liabilities - other	$	(2,718	)	$	—
Regulatory assets
Mining costs	$	1,912		$	3,823
Interest costs	4,271			4,499
AROs	2,961			2,762
Postretirement costs	133,584			142,764
Tree trimming costs	8,535			7,193
Training costs	6,435			6,552
Surcredits, net	289			2,173
AMI deferred revenue requirement	3,817			4,227
Emergency declarations	3,378			4,131
Production operations and maintenance expenses	5,039			8,625
AFUDC equity gross-up	71,530			71,205
Acadia Unit 1 acquisition costs	2,257			2,336
Financing costs	8,015			8,293
MISO integration costs	—			468
Coughlin transaction costs	945			968
Corporate franchise tax, net	1,001			153
MATS costs	—			2,564
Non-service cost of postretirement benefits	3,484			—
Other	20			484
Total regulatory assets	257,473			273,220
Accumulated deferred fuel	39,898			13,980
Total regulatory assets, net	$	158,742		$	146,774

The following table summarizes Cleco’s net regulatory assets and liabilities:



(THOUSANDS)	AT SEPT. 30, 2018		AT DEC. 31, 2017
Total Cleco Power regulatory assets, net	$	158,742	$	146,774
Cleco Merger adjustments ⁽¹⁾
Fair value of long-term debt	140,812		147,145
Postretirement costs	19,884		21,375
Financing costs	8,365		8,623
Debt issuance costs	6,356		6,665
Total Cleco regulatory assets, net	$	334,159	$	330,582

⁽¹⁾Cleco regulatory assets include acquisition accounting adjustments as a result of the Merger.

Regulatory Liabilities - Other

On July 1, 2018, Cleco Power began collecting the revenue requirement related to the St. Mary Clean Energy Center project based on an expected commercial operation date in the third quarter of 2018. The project is now expected to be commercially operational in the first quarter of 2019. Cleco Power recorded a regulatory liability for the over collections and will continue to increase the regulatory liability until the project is in service. Cleco Power expects to return the total over collection as part of the July 1, 2019, FRP rate adjustment.

Non-service Cost of Postretirement Benefits

On January 1, 2018, FASB’s amended guidance related to defined benefit pension and other postretirement plans became effective. The amendment allows only the service cost component of net benefit cost to be eligible for capitalization within property, plant, and equipment. The non-service costs will continue to be capitalized and recovered from ratepayers as approved by FERC. Beginning January 1, 2018, the non-service cost previously eligible for capitalization into property, plant, and equipment are being deferred to a regulatory asset and will be amortized over the estimated lives of the respective assets. For more information on FASB’s guidance related to defined benefit pension and other postretirement plans, see Note 3 — “Recent Authoritative Guidance.”