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Income Taxes
6 Months Ended
Jun. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Note 10 — Income Taxes

Effective Tax Rates
The following tables summarize the effective income tax rates for Cleco and Cleco Power for the three and six months ended June 30, 2019, and 2018:
Cleco
 
 
 
 
 
 
 
 
FOR THE THREE MONTHS
 ENDED JUNE 30,
 
 
FOR THE SIX MONTHS
ENDED JUNE 30,
 
 
2019

 
2018

 
2019

 
2018

Effective tax rate
21.5
%
 
22.9
%
 
21.9
%
 
22.3
%

Cleco Power
 
 
 
 
 
 
 
 
FOR THE THREE MONTHS
 ENDED JUNE 30,
 
 
FOR THE SIX MONTHS
ENDED JUNE 30,
 
 
2019

 
2018

 
2019

 
2018

Effective tax rate
22.1
%
 
24.2
%
 
22.4
%
 
23.9
%


For the three and six months ended June 30, 2019, and 2018, the effective income tax rates for both Cleco and Cleco Power were different than the federal statutory rate primarily due to permanent tax differences; the flowthrough of tax benefits, including AFUDC equity; and state tax expense.

Net Operating Loss
For the 2019 tax year, Cleco is expected to create approximately $587.3 million and $144.1 million of federal and state net operating losses, respectively, primarily due to the Cleco Cajun Transaction.
The federal net operating loss may be carried forward indefinitely, and the state net operating loss carryforwards will begin to expire in 2039.
Cleco considers it more likely than not that these income tax losses will be utilized to reduce future income tax payments, and the entire net operating loss carryforward will be utilized within the statutory deadlines.

Uncertain Tax Positions
Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. At June 30, 2019, and December 31, 2018, Cleco and Cleco Power had no interest payable related to uncertain tax positions. For the three and six months ended June 30, 2019, and 2018, Cleco and Cleco Power had no interest expense related to uncertain tax positions.
At June 30, 2019, Cleco had no liability for uncertain tax positions. Cleco estimates that it is reasonably possible that the balance of unrecognized tax benefits as of June 30, 2019, for Cleco and Cleco Power would be unchanged in the next 12 months. The settlement of open tax years could involve the payment of additional taxes, and/or the recognition of tax benefits, which may have an effect on Cleco’s effective tax rate.
The federal income tax years that remain subject to examination by the Internal Revenue Service are 2015, 2016, and 2017.
Cleco participates in the IRS’s Compliance Assurance Process in which financial results are examined and agreed upon prior to filing the federal consolidated tax return.
The state income tax years that remain subject to examination by the Louisiana Department of Revenue are 2015, 2016, and 2017.
Cleco classifies income tax penalties as a component of other expense. For the three and six months ended June 30, 2019, and 2018, no penalties were recognized.