Note 6 — 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 JUNE 30, 2019			AT DEC. 31, 2018
Regulatory assets (liabilities)
Deferred taxes, net	$	(149,461	)	$	(155,537	)
Mining costs	—			1,274
Interest costs	4,083			4,208
AROs	3,380			3,099
Postretirement costs	136,356			140,245
Tree trimming costs	10,365			9,069
Training costs	6,319			6,396
Surcredits, net ⁽¹⁾	289			289
AMI deferred revenue requirement	3,409			3,681
Emergency declarations	2,152			2,980
Production operations and maintenance expenses	10,670			12,245
AFUDC equity gross-up ⁽¹⁾	73,827			71,952
Acadia Unit 1 acquisition costs	2,178			2,230
Financing costs	7,738			7,923
Coughlin transaction costs	923			938
Corporate franchise tax, net	1,700			1,416
Non-service cost of postretirement benefits	6,268			4,629
Energy efficiency	(1,463		)	2,585
Accumulated deferred fuel	38,619			20,112
Other, net	(11,060		)	(4,979		)
Total regulatory assets, net	$	146,292		$	134,755
⁽¹⁾Represents regulatory assets for past expenditures that were not earning a return on investment at June 30, 2019, and December 31, 2018, respectively. All other assets are earning a return on investment.

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



(THOUSANDS)	AT JUNE 30, 2019		AT DEC. 31, 2018
Total Cleco Power regulatory assets, net	$	146,292	$	134,755
Cleco 2016 Merger adjustments ⁽¹⁾
Fair value of long-term debt	133,718		138,701
Postretirement costs	18,393		19,387
Financing costs	8,107		8,279
Debt issuance costs	5,987		6,252
Total Cleco regulatory assets, net	$	312,497	$	307,374

⁽¹⁾Cleco regulatory assets include acquisition accounting adjustments as a result of the 2016 Merger.

In December 2018, Cleco Power filed a letter of intent with the LPSC to recover the accumulated decrease in revenues, also known as the Lost Contribution to Fixed Cost (LCFC), associated with the energy efficiency programs. On March 28, 2019, Cleco Power received communication from the LPSC indicating denial of the request. As a result, Cleco Power reversed the $2.6 million regulatory asset that was accrued at December 31, 2018. At June 30, 2019, Cleco Power had $1.5 million accrued as a regulatory liability for the LCFC revenue recovered in Cleco Power’s energy efficiency rates effective March 1, 2019.

In January 2019, the LPSC approved the Cleco Cajun Transaction. Approval of the Cleco Cajun Transaction was conditioned upon certain commitments, including a $4.0 million annual reduction to Cleco Power’s retail customer rates. At June 30, 2019, Cleco Power had $1.7 million accrued for the period from February 4, 2019, to June 30, 2019. This regulatory liability is being amortized over 12 months beginning July 1, 2019.