10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

Or

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-15759

CLECO CORPORATE HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Louisiana (State or other jurisdiction of incorporation or organization)	72-1445282 (I.R.S. Employer Identification No.)
2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)
Registrant’s telephone number, including area code: (318) 484-7400

Commission file number 1-05663

CLECO POWER LLC

(Exact name of registrant as specified in its charter)

Louisiana (State or other jurisdiction of incorporation or organization)	72-0244480 (I.R.S. Employer Identification No.)
2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)
Registrant’s telephone number, including area code: (318) 484-7400
Securities registered pursuant to Section 12(b) of the Act:
Cleco Corporate Holdings LLC: None	Cleco Power LLC: None
Indicate by check mark whether the Registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes ¨ No x
Indicate by check mark whether the Registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit such files). Yes x  No ¨
Indicate by check mark whether Cleco Corporate Holdings LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one): Large accelerated filer ¨     Accelerated filer ¨     Non-accelerated filer x     Smaller reporting company ¨     Emerging growth company ¨ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one): Large accelerated filer ¨     Accelerated filer ¨     Non-accelerated filer x     Smaller reporting company ¨     Emerging growth company ¨ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act)  Yes ¨    No x

Cleco Corporate Holdings LLC has no common stock outstanding. All of the outstanding equity of Cleco Corporate Holdings LLC is held by Cleco Group LLC, a wholly owned subsidiary of Cleco Partners L.P.

Cleco Power LLC, a wholly owned subsidiary of Cleco Corporate Holdings LLC, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

This Combined Quarterly Report on Form 10-Q (this “Quarterly Report on Form 10-Q”) is separately filed by Cleco Corporate Holdings LLC and Cleco Power LLC. Information in this filing relating to Cleco Power LLC is filed by Cleco Corporate Holdings LLC and separately by Cleco Power LLC on its own behalf. Cleco Power LLC makes no representation as to information relating to Cleco Corporate Holdings LLC (except as it may relate to Cleco Power LLC) or any other affiliate or subsidiary of Cleco Corporate Holdings LLC.

This Quarterly Report on Form 10-Q should be read in its entirety as it pertains to each respective Registrant. The Notes to the Unaudited Condensed Consolidated Financial Statements for the Registrants and certain other sections of this Quarterly Report on Form 10-Q are combined.

TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		5
PART I	Financial Information
ITEM 1.	Cleco — Condensed Consolidated Financial Statements (Unaudited)	7
	Cleco Power — Condensed Consolidated Financial Statements (Unaudited)	17
	Notes to the Unaudited Condensed Consolidated Financial Statements	26
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	65
ITEM 4.	Controls and Procedures	66
PART II	Other Information
ITEM 1.	Legal Proceedings	68
ITEM 1A.	Risk Factors	68
ITEM 6.	Exhibits	68
	Signatures	69

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

GLOSSARY OF TERMS

Abbreviations or acronyms used in this filing, including all items in Parts I and II, are defined below.

ABBREVIATION OR ACRONYM	DEFINITION
2016 Merger	Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016
2016 Merger Commitments	Cleco Partners’, Cleco Group’s, Cleco Holdings’, and Cleco Power’s 77 commitments to the LPSC as defined in Docket No. U-33434 of which a performance report must be filed annually by October 31 for the 12 months ending June 30
401(k) Plan	Cleco Power 401(k) Savings and Investment Plan
ABR	Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or LIBOR plus 1.0%
Acadia	Acadia Power Partners, LLC, previously a wholly owned subsidiary of Midstream. Acadia Power Partners, LLC was dissolved effective August 29, 2014.
Acadia Unit 1	Cleco Power’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2	Entergy Louisiana’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power
ADIT	Accumulated Deferred Income Tax
AFUDC	Allowance for Funds Used During Construction
Amended Lignite Mining Agreement	Amended and restated lignite mining agreement effective December 29, 2009
AMI	Advanced Metering Infrastructure
AOCI	Accumulated Other Comprehensive Income (Loss)
ARO	Asset Retirement Obligation
BCI	British Columbia Investment Management Corporation
CCR	Coal combustion by-products or residual
CEO	Chief Executive Officer
CFO	Chief Financial Officer
CIP	Critical Infrastructure Protection
Cleco	Cleco Holdings and its subsidiaries
Cleco Cajun	Cleco Cajun LLC (formerly Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings) and its subsidiaries
Cleco Cajun Transaction	The transaction between Cleco Cajun and NRG Energy in which Cleco Cajun acquired all the membership interest in South Central Generating, which closed on February 4, 2019, pursuant to the Purchase and Sale Agreement, which includes the Cottonwood Sale Leaseback.
Cleco Corporation	Pre-2016 Merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016
Cleco Group	Cleco Group LLC, a wholly owned subsidiary of Cleco Partners
Cleco Holdings	Cleco Corporate Holdings LLC, a wholly owned subsidiary of Cleco Group
Cleco Katrina/Rita	Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Cleco Partners	Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by MIRA, BCI, John Hancock Financial, and other infrastructure investors
Cleco Power	Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings
Consent Decree	The Consent Decree, entered March 5, 2013, in Civil Action No. 09-100-JJB-DLD, US District Court for the Middle District of Louisiana, by and among the EPA, the LDEQ, and Louisiana Generating relating to Big Cajun II, Unit 1 located in New Roads, Louisiana
Cottonwood Energy	Cottonwood Energy Company LP, a wholly owned subsidiary of Cleco Cajun. Prior to the closing of the Cleco Cajun Transaction on February 4, 2019, Cottonwood Energy was an indirect subsidiary of South Central Generating.
Cottonwood Plant	Cleco Cajun’s 1,263-MW, natural-gas-fired generating station located in Deweyville, Texas
Cottonwood Sale Leaseback	A lease agreement executed and delivered between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the Cottonwood Plant and will operate it no later than May 2025.
Coughlin	Cleco Power’s 775-MW, combined-cycle power plant located in St. Landry, Louisiana
DHLC	Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands	Diversified Lands LLC, a wholly owned subsidiary of Cleco Holdings
Dolet Hills	A facility consisting of Dolet Hills Power Station, the Dolet Hills mine, and the Oxbow mine
Dolet Hills Power Station	A 650-MW generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of Dolet Hills.
EAC	Environmental Adjustment Clause
EBITDA	Earnings before interest, taxes, depreciation, and amortization
Entergy Gulf States	Entergy Gulf States Louisiana, LLC
Entergy Louisiana	Entergy Louisiana, LLC
EPA	U.S. Environmental Protection Agency
ERO	Electric Reliability Organization
Evangeline	Cleco Evangeline LLC, a wholly owned subsidiary of Midstream
FAC	Fuel Adjustment Clause
FASB	Financial Accounting Standards Board

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CLECO POWER	2019 3RD QUARTER FORM 10-Q

ABBREVIATION OR ACRONYM	DEFINITION
FERC	Federal Energy Regulatory Commission
Fitch	Fitch Ratings, a credit rating agency
FTR	Financial Transmission Right
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the U.S.
GO Zone	Gulf Opportunity Zone Act of 2005 (Public Law 109-135)
kWh	Kilowatt-hour(s)
LCFC	Lost Contribution to Fixed Cost
LDEQ	Louisiana Department of Environmental Quality
LIBOR	London Interbank Offered Rate
LMP	Locational Marginal Price
Louisiana Generating	Louisiana Generating, LLC, a wholly owned subsidiary of South Central Generating
LPSC	Louisiana Public Service Commission
LTSA	Long-Term Parts and Service Agreement between Cottonwood Energy and a third party, dated January 19, 2001, that Cleco Cajun assumed as a result of the Cleco Cajun Transaction to provide maintenance services related to the Cottonwood Plant
Madison Unit 3	A 641-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana
Merger Agreement	Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation relating to the 2016 Merger
Merger Sub	Cleco MergerSub Inc., previously an indirect wholly owned subsidiary of Cleco Partners that was merged with and into Cleco Corporation, with Cleco Corporation surviving the 2016 Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings
Midstream	Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Holdings
MIRA	Macquarie Infrastructure and Real Assets Inc.
MISO	Midcontinent Independent System Operator, Inc.
MMBtu	One million British thermal units
Moody’s	Moody’s Investors Service, a credit rating agency
MW	Megawatt(s)
MWh	Megawatt-hour(s)
NERC	North American Electric Reliability Corporation
NRG Energy	NRG Energy, Inc.
Other Benefits	Includes medical, dental, vision, and life insurance for Cleco’s retirees
Oxbow	Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Holdings
Purchase and Sale Agreement	Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, South Central Generating, and Cleco Cajun
Registrant(s)	Cleco Holdings and/or Cleco Power
ROE	Return on Equity
ROU	Right of Use
RTO	Regional Transmission Organization
S&P	Standard & Poor’s Ratings Services, a credit rating agency
SEC	U.S. Securities and Exchange Commission
SERP	Supplemental Executive Retirement Plan
South Central Generating	South Central Generating LLC, formerly NRG South Central Generating LLC
SSR	System Support Resource
START	Strategic Alignment and Real-Time Transformation
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO	Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
TCJA	Federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
Teche Unit 3	A 359-MW generating unit at Cleco Power’s plant site in Baldwin, Louisiana

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” about future events, circumstances, and results. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements, including, without limitation, future capital expenditures; business strategies; goals, beliefs, plans and objectives; competitive strengths; market developments; development and operation of facilities; growth in sales volume; meeting capacity requirements; expansion of service to existing customers and service to new customers; future environmental regulations and remediation liabilities; electric customer credits; and the anticipated outcome of various regulatory and legal proceedings. Although the Registrants believe that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties that could cause the actual results to differ materially from the Registrants’ expectations. In addition to any assumptions and other factors referred to specifically in connection with these forward-looking statements, the following list identifies some of the factors that could cause the Registrants’ actual results to differ materially from those contemplated in any of the Registrants’ forward-looking statements:

• the effects of the Cleco Cajun Transaction and the 2016 Merger on Cleco’s business relationships, operating results, and business generally,

• regulatory factors, such as changes in rate-setting practices or policies; political actions of governmental regulatory bodies; adverse regulatory ratemaking actions; recovery of investments made under traditional regulation; recovery of storm restoration costs; the frequency, timing, and amount of rate increases or decreases; the impact that rate cases or requests for FRP extensions may have on operating decisions of Cleco Power; the results of periodic NERC, LPSC, and FERC audits; participation in MISO and the related operating challenges and uncertainties, including increased wholesale competition relative to additional suppliers; and compliance with the ERO reliability standards for bulk power systems by Cleco Power,

• Cleco Power’s ability to recover fuel costs through the FAC,

• the ability to successfully integrate the assets acquired in the Cleco Cajun Transaction into Cleco’s operations,

• factors affecting utility operations, such as unusual weather conditions or other natural phenomena; catastrophic weather-related damage caused by hurricanes and other storms or severe drought conditions; unscheduled generation outages; unanticipated maintenance or repairs; unanticipated changes to fuel costs or fuel supply costs, shortages, solid fuel and natural gas transportation problems, or other developments; decreased customer load; environmental incidents and compliance costs; and power transmission system constraints,

• reliance on third parties for determination of Cleco’s commitments and obligations to markets for generation

resources and reliance on third-party fuel transportation and transmission services,

• global and domestic economic conditions, including the ability of customers to continue paying their utility bills, related growth and/or down-sizing of businesses in Cleco’s service area, monetary fluctuations, and inflation rates,

• political uncertainty in the U.S., including the ongoing debates related to the U.S. federal government budget and debt ceiling, and volatility and disruption in global capital and credit markets,

• the ability of the lignite reserves at Dolet Hills to provide sufficient fuel to the Dolet Hills Power Station for seasonal operations until at least 2036,

• Cleco’s ability to maintain its right to sell wholesale power at market-based rates within its control area, 

• Cleco’s dependence on energy from sources other than its facilities and future sources of such additional energy,

• reliability of Cleco’s generating facilities,

• the imposition of energy efficiency requirements or increased conservation efforts of customers,

• the impact of current or future environmental laws and regulations, including those related to CCRs, greenhouse gases, and energy efficiency that could limit or terminate the operation of Cleco’s generating units, increase costs, or reduce customer demand for electricity,

• the ability to recover costs of compliance with environmental laws and regulations, including those through Cleco Power’s EAC,

• financial or regulatory accounting principles or policies imposed by FASB, the SEC, FERC, the LPSC, or similar entities with regulatory or accounting oversight, 

• changing market conditions and a variety of other factors associated with physical energy, financial transactions, and energy service activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rates, and warranty risks,

• changes in commodity prices and transportation costs,

• legal, environmental, and regulatory delays and other obstacles associated with acquisitions, reorganizations, investments in joint ventures, or other capital projects,

• costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters,

• the availability and use of alternative sources of energy and technologies, such as wind, solar, battery storage, and distributed generation,

• changes in federal, state, or local laws (including the TCJA and other tax laws), changes in tax rates, disallowances of tax positions, or changes in other regulatory policies that may result in a change to tax benefits or expenses,

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

• the restriction on the ability of Cleco Power to make distributions to Cleco Holdings in certain instances, as a result of the 2016 Merger Commitments,

• Cleco’s ability to remain in compliance with the commitments made to the LPSC in connection with the Cleco Cajun Transaction,

• Cleco Holdings’ dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations,

• acts of terrorism, cyber attacks, data security breaches or other attempts to disrupt Cleco’s business or the business of third parties, or other man-made disasters,

• the ability to successfully modify, implement, or transition Cleco’s legacy enterprise business applications into new systems,

• credit ratings of Cleco Holdings and Cleco Power,

• Cleco Holdings’ and Cleco Power’s ability to remain in compliance with their respective debt covenants,

• the availability or cost of capital resulting from changes in global markets, Cleco’s business or financial condition, interest rates, or market perceptions of the electric utility industry and energy-related industries, and

• workforce factors, including aging workforce, changes in management, and unavailability of skilled employees.

For more discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, see Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, and this Quarterly Report on Form 10-Q.

All subsequent written and oral forward-looking statements attributable to the Registrants, or persons acting on their behalf, are expressly qualified in their entirety by the factors identified above.

Any forward-looking statement is considered only as of the date of this Quarterly Report on Form 10-Q and, except as required by law, the Registrants undertake no obligation to update any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements.

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Operating revenue
Electric operations	$	451,902		$	341,062
Other operations	49,780			20,186
Gross operating revenue	501,682			361,248
Electric customer credits	(13,711		)	(2,992		)
Operating revenue, net	487,971			358,256
Operating expenses
Fuel used for electric generation	141,722			130,987
Purchased power	85,176			29,608
Other operations and maintenance	82,913			49,321
Depreciation and amortization	57,004			43,763
Taxes other than income taxes	17,611			12,091
Merger transaction and commitment costs	2,006			6,376
Total operating expenses	386,432			272,146
Operating income	101,539			86,110
Interest income	1,690			1,832
Allowance for equity funds used during construction	3,619			3,829
Other expense, net	(1,363		)	(1,164		)
Interest charges
Interest charges, net	37,412			33,072
Allowance for borrowed funds used during construction	(1,580		)	(1,244		)
Total interest charges	35,832			31,828
Income before income taxes	69,653			58,779
Federal and state income tax expense	14,088			11,419
Net income	$	55,565		$	47,360
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Net income	$	55,565		$	47,360
Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $13 in 2019 and tax expense of $26 in 2018)	(37		)	261
Total other comprehensive (loss) income, net of tax	(37		)	261
Comprehensive income, net of tax	$	55,528		$	47,621
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Operating revenue
Electric operations	$	1,130,318		$	897,486
Other operations	131,544			61,067
Gross operating revenue	1,261,862			958,553
Electric customer credits	(31,832		)	(24,276		)
Operating revenue, net	1,230,030			934,277
Operating expenses
Fuel used for electric generation	354,921			275,565
Purchased power	213,912			132,921
Other operations and maintenance	208,608			154,043
Depreciation and amortization	158,395			128,076
Taxes other than income taxes	47,081			35,674
Merger transaction and commitment costs	7,792			13,445
Total operating expenses	990,709			739,724
Operating income	239,321			194,553
Interest income	4,456			4,043
Allowance for equity funds used during construction	14,825			9,416
Other income (expense), net	292			(7,111		)
Interest charges
Interest charges, net	111,426			98,059
Allowance for borrowed funds used during construction	(5,755		)	(3,165		)
Total interest charges	105,671			94,894
Income before income taxes	153,223			106,007
Federal and state income tax expense	32,355			21,947
Net income	$	120,868		$	84,060
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Net income	$	120,868		$	84,060
Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $112 in 2019 and tax expense of $128 in 2018)	(319		)	551
Total other comprehensive (loss) income, net of tax	(319		)	551
Comprehensive income, net of tax	$	120,549		$	84,611
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Assets
Current assets
Cash and cash equivalents	$	101,392		$	110,175
Restricted cash and cash equivalents	5,356			11,241
Customer accounts receivable (less allowance for doubtful accounts of $3,895 in 2019 and $814 in 2018)	125,125			50,043
Other accounts receivable	31,089			27,196
Unbilled revenue	46,080			35,314
Fuel inventory, at average cost	66,441			82,836
Materials and supplies, at average cost	121,380			92,671
Energy risk management assets	10,671			23,355
Accumulated deferred fuel	56,056			20,112
Cash surrender value of company-/trust-owned life insurance policies	84,122			80,391
Prepayments	6,826			7,911
Regulatory assets	19,398			22,461
Other current assets	11,714			1,256
Total current assets	685,650			564,962
Property, plant, and equipment
Property, plant, and equipment	4,813,017			3,728,477
Accumulated depreciation	(411,485		)	(303,727		)
Net property, plant, and equipment	4,401,532			3,424,750
Construction work in progress	221,386			354,045
Total property, plant, and equipment, net	4,622,918			3,778,795
Equity investment in investee	17,672			18,172
Goodwill	1,490,797			1,490,797
Prepayments	24,312			2,251
Operating lease right of use assets	29,719			—
Restricted cash and cash equivalents	15,113			18,670
Note receivable	15,362			15,829
Regulatory assets	408,557			425,330
Intangible assets	149,440			84,307
Other deferred charges	38,833			37,701
Total assets	$	7,498,373		$	6,436,814
The accompanying notes are an integral part of the condensed consolidated financial statements.
(Continued on next page)

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CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Liabilities and member’s equity
Liabilities
Current liabilities
Long-term debt and finance leases due within one year	$	63,684	$	21,128
Accounts payable	160,240		156,589
Accounts payable - affiliate	3,175		—
Customer deposits	57,542		61,736
Provision for rate refund	50,777		35,842
Taxes payable, net	73,875		43,674
Interest accrued	43,829		15,828
Energy risk management liabilities	1,298		468
Regulatory liabilities - other	11,350		2,496
Deferred compensation	11,548		10,753
Other current liabilities	53,408		30,536
Total current liabilities	530,726		379,050
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	653,529		608,030
Postretirement benefit obligations	238,392		249,264
Regulatory liabilities - other	—		2,496
Regulatory liabilities - deferred taxes, net	144,124		155,537
Restricted storm reserve	12,185		15,485
Deferred lease revenue	52,163		—
Intangible liabilities	33,625		—
Asset retirement obligations	23,026		6,881
Operating lease liabilities	25,828		—
Other deferred credits	25,209		20,846
Total long-term liabilities and deferred credits	1,208,081		1,058,539
Long-term debt and finance leases, net	3,129,377		2,874,485
Total liabilities	4,868,184		4,312,074
Commitments and contingencies (Note 14)
Member’s equity	2,630,189		2,124,740
Total liabilities and member’s equity	$	7,498,373	$	6,436,814
The accompanying notes are an integral part of the condensed consolidated financial statements.

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CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019				2018
Operating activities
Net income	$	120,868			$	84,060
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	180,240				140,887
Provision for doubtful accounts	3,800				323
Unearned compensation expense	4,015				4,112
Allowance for equity funds used during construction	(14,825		)		(9,416		)
Loss on risk management assets and liabilities, net	4,092				—
Deferred lease revenue	(6,137		)		—
Deferred income taxes	27,033				5,876
Deferred fuel costs	(21,207		)		(32,903		)
Cash surrender value of company-/trust-owned life insurance	(3,731		)		(2,635		)
Changes in assets and liabilities
Accounts receivable	(44,070		)		(25,487		)
Unbilled revenue	(10,767		)		(5,968		)
Fuel inventory and materials and supplies	35,488				27,951
Prepayments	(10,680		)		2,446
Accounts payable	20,315				(139		)
Accounts payable - affiliate	3,175				—
Customer deposits	3,113				10,272
Provision for merger commitments	(1,623		)		(2,684		)
Postretirement benefit obligations	(11,301		)		3,355
Regulatory assets and liabilities, net	8,196				11,439
Other deferred accounts	(5,690		)		(582		)
Taxes accrued	29,268				43,308
Interest accrued	28,001				26,223
Other operating	3,202				4,728
Net cash provided by operating activities	340,775				285,166
Investing activities
Additions to property, plant, and equipment	(251,845		)		(194,619		)
Allowance for equity funds used during construction	14,825				9,416
Reimbursement for property loss	105				1,258
Issuance of note receivable	—				(16,800		)
Return of investment in company-owned life insurance	1,891				—
Return of equity investment in tax credit fund	1,625				2,775
Payment to acquire business, net of cash acquired	(814,969		)		—
Other investing	1,402				934
Net cash used in investing activities	(1,046,966		)		(197,036		)
Financing activities
Draws on credit facilities	108,000				—
Payments on credit facilities	(108,000		)		—
Issuances of long-term debt	700,000				50,000
Repayment of long-term debt	(390,571		)		(19,193		)
Payment of financing costs	(5,951		)		(734		)
Contributions from member	384,900				—
Distributions to member	—				(60,500		)
Other financing	(412		)		(251		)
Net cash provided by (used in) financing activities	687,966				(30,678		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(18,225		)		57,452
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	140,086			(1)	152,202
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	121,861		(2)	$	209,654
(1) Includes cash and cash equivalents of $110,175, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,670. (2) Includes cash and cash equivalents of $101,392, current restricted cash and cash equivalents of $5,356, and non-current restricted cash and cash equivalents of $15,113. The accompanying notes are an integral part of the condensed consolidated financial statements.
(Continued on next page)

14

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Supplementary cash flow information
Interest paid, net of amount capitalized	$	74,055		$	67,158
Income taxes (refunded) paid, net	$	(19	)	$	272
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	15,982		$	54,294
Incurrence of finance lease obligation - barges	$	—		$	16,800
The accompanying notes are an integral part of the condensed consolidated financial statements.

15

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS			AOCI			TOTAL MEMBER’S EQUITY
Balances, June 30, 2018	$	2,069,376	$	26,702		$	(2,631	)	$	2,093,447
Distributions to member	—		(20,600		)	—			(20,600		)
Net income	—		47,360			—			47,360
Other comprehensive income, net of tax	—		—			261			261
Balances, Sept. 30, 2018	$	2,069,376	$	53,462		$	(2,370	)	$	2,120,468
Balances, June 30, 2019	$	2,069,376	$	503,781		$	1,504		$	2,574,661
Net income	—		55,565			—			55,565
Other comprehensive loss, net of tax	—		—			(37		)	(37		)
Balances, Sept. 30, 2019	$	2,069,376	$	559,346		$	1,467		$	2,630,189
Balances, Dec. 31, 2017	$	2,069,376	$	29,902		$	(2,921	)	$	2,096,357
Distributions to member	—		(60,500		)	—			(60,500		)
Net income	—		84,060			—			84,060
Other comprehensive income, net of tax	—		—			551			551
Balances, Sept. 30, 2018	$	2,069,376	$	53,462		$	(2,370	)	$	2,120,468
Balances, Dec. 31, 2018	$	2,069,376	$	53,578		$	1,786		$	2,124,740
Contribution from member	—		384,900			—			384,900
Net income	—		120,868			—			120,868
Other comprehensive loss, net of tax	—		—			(319		)	(319		)
Balances, Sept. 30, 2019	$	2,069,376	$	559,346		$	1,467		$	2,630,189
The accompanying notes are an integral part of the condensed consolidated financial statements.

16

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CLECO POWER	2019 3RD QUARTER FORM 10-Q

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco Power

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Power’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”

17

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Operating revenue
Electric operations	$	339,869		$	343,482
Other operations	18,485			20,186
Affiliate revenue	334			223
Gross operating revenue	358,688			363,891
Electric customer credits	(13,711		)	(2,992		)
Operating revenue, net	344,977			360,899
Operating expenses
Fuel used for electric generation	116,831			130,987
Purchased power	34,908			29,608
Other operations and maintenance	57,718			50,837
Depreciation and amortization	44,903			41,687
Taxes other than income taxes	12,485			11,717
Total operating expenses	266,845			264,836
Operating income	78,132			96,063
Interest income	1,421			1,606
Allowance for equity funds used during construction	3,619			3,829
Other expense, net	(1,231		)	(2,251		)
Interest charges
Interest charges, net	19,563			19,139
Allowance for borrowed funds used during construction	(1,580		)	(1,244		)
Total interest charges	17,983			17,895
Income before income taxes	63,958			81,352
Federal and state income tax expense	12,431			18,016
Net income	$	51,527		$	63,336
The accompanying notes are an integral part of the condensed consolidated financial statements.

18

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018
Net income	$	51,527	$	63,336
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $81 in 2019 and $110 in 2018)	230		312
Amortization of interest rate derivatives to earnings (net of tax expense of $22 in 2019 and tax benefit of $26 in 2018)	63		112
Total other comprehensive income, net of tax	293		424
Comprehensive income, net of tax	$	51,820	$	63,760
The accompanying notes are an integral part of the condensed consolidated financial statements.

19

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018
Operating revenue
Electric operations	$	862,969		$	904,746
Other operations	53,318			61,066
Affiliate revenue	971			651
Gross operating revenue	917,258			966,463
Electric customer credits	(30,565		)	(24,276		)
Operating revenue, net	886,693			942,187
Operating expenses
Fuel used for electric generation	297,197			275,565
Purchased power	83,048			132,921
Other operations and maintenance	148,330			158,170
Depreciation and amortization	126,610			121,796
Taxes other than income taxes	33,023			34,548
Total operating expenses	688,208			723,000
Operating income	198,485			219,187
Interest income	3,281			3,560
Allowance for equity funds used during construction	14,825			9,416
Other expense, net	(2,091		)	(6,422		)
Interest charges
Interest charges, net	58,253			56,823
Allowance for borrowed funds used during construction	(5,755		)	(3,165		)
Total interest charges	52,498			53,658
Income before income taxes	162,002			172,083
Federal and state income tax expense	34,407			39,724
Net income	$	127,595		$	132,359
The accompanying notes are an integral part of the condensed consolidated financial statements.

20

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018
Net income	$	127,595	$	132,359
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $182 in 2019 and $287 in 2018)	515		812
Amortization of interest rate derivatives to earnings (net of tax expense of $67 in 2019 and $19 in 2018)	191		240
Total other comprehensive income, net of tax	706		1,052
Comprehensive income, net of tax	$	128,301	$	133,411
The accompanying notes are an integral part of the condensed consolidated financial statements.

21

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Assets
Utility plant and equipment
Property, plant, and equipment	$	5,325,641		$	5,015,004
Accumulated depreciation	(1,873,752		)	(1,804,563		)
Net property, plant, and equipment	3,451,889			3,210,441
Construction work in progress	216,959			351,828
Total utility plant and equipment, net	3,668,848			3,562,269
Current assets
Cash and cash equivalents	64,237			31,987
Restricted cash and cash equivalents	5,356			11,241
Customer accounts receivable (less allowance for doubtful accounts of $3,895 in 2019 and $814 in 2018)	72,897			50,043
Accounts receivable - affiliate	2,074			3,318
Other accounts receivable	26,864			24,523
Unbilled revenue	46,080			35,314
Fuel inventory, at average cost	41,343			82,836
Materials and supplies, at average cost	95,157			92,671
Energy risk management assets	8,601			23,355
Accumulated deferred fuel	56,056			20,112
Cash surrender value of company-owned life insurance policies	17,534			20,497
Prepayments	3,020			6,143
Regulatory assets	9,466			13,603
Other current assets	616			1,162
Total current assets	449,301			416,805
Equity investment in investee	17,672			18,172
Prepayments	4,213			2,251
Operating lease right of use assets	29,375			—
Restricted cash and cash equivalents	14,274			18,649
Note receivable	15,362			15,829
Regulatory assets	255,899			261,569
Intangible assets	5,391			21,093
Other deferred charges	37,312			32,419
Total assets	$	4,497,647		$	4,349,056
The accompanying notes are an integral part of the condensed consolidated financial statements.
(Continued on next page)

22

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Liabilities and member’s equity
Member’s equity	$	1,722,834	$	1,594,533
Long-term debt and finance leases, net	1,327,301		1,387,774
Total capitalization	3,050,135		2,982,307
Current liabilities
Long-term debt and finance leases due within one year	61,488		21,128
Accounts payable	113,615		146,314
Accounts payable - affiliate	8,722		7,843
Customer deposits	57,542		61,736
Provision for rate refund	49,403		35,842
Taxes payable, net	43,133		48,177
Interest accrued	24,549		8,252
Energy risk management liabilities	577		468
Regulatory liabilities - other	11,350		2,496
Other current liabilities	27,507		22,263
Total current liabilities	397,886		354,519
Commitments and contingencies (Note 14)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	666,489		630,765
Postretirement benefit obligations	172,576		182,721
Regulatory liabilities - other	—		2,496
Regulatory liabilities - deferred taxes, net	144,124		155,537
Restricted storm reserve	12,185		15,485
Asset retirement obligations	7,212		6,881
Operating lease liabilities	25,682		—
Other deferred credits	21,358		18,345
Total long-term liabilities and deferred credits	1,049,626		1,012,230
Total liabilities and member’s equity	$	4,497,647	$	4,349,056
The accompanying notes are an integral part of the condensed consolidated financial statements.

23

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019				2018
Operating activities
Net income	$	127,595			$	132,359
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	130,927				126,515
Provision for doubtful accounts	3,800				323
Unearned compensation expense	635				1,172
Allowance for equity funds used during construction	(14,825		)		(9,416		)
Deferred income taxes	24,063				5,950
Deferred fuel costs	(21,207		)		(32,903		)
Cash surrender value of company-owned life insurance	2,963				(167		)
Changes in assets and liabilities
Accounts receivable	(38,373		)		(25,141		)
Accounts receivable - affiliate	2,606				1,456
Unbilled revenue	(10,767		)		(5,968		)
Fuel inventory and materials and supplies	39,090				27,951
Prepayments	747				1,929
Accounts payable	22,362				1,982
Accounts payable - affiliate	757				(2,005		)
Customer deposits	3,113				10,272
Provision for merger commitments	(1,623		)		(2,684		)
Postretirement benefit obligations	(10,809		)		3,054
Regulatory assets and liabilities, net	6,706				9,948
Other deferred accounts	(5,630		)		(155		)
Taxes accrued	(7,743		)		6,544
Interest accrued	16,297				15,572
Other operating	2,075				4,359
Net cash provided by operating activities	272,759				270,947
Investing activities
Additions to property, plant, and equipment	(247,987		)		(193,708		)
Allowance for equity funds used during construction	14,825				9,416
Reimbursement of property loss	105				1,258
Issuance of note receivable	—				(16,800		)
Return of investment in company-owned life insurance	1,891				—
Other investing	1,402				934
Net cash used in investing activities	(229,764		)		(198,900		)
Financing activities
Draws on credit facility	33,000				—
Payments on credit facility	(33,000		)		—
Issuances of long-term debt	—				50,000
Repayment of long-term debt	(20,571		)		(19,193		)
Distributions to member	—				(121,400		)
Other financing	(434		)		(960		)
Net cash used in financing activities	(21,005		)		(91,553		)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	21,990				(19,506		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	61,877			(1)	102,957
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	83,867		(2)	$	83,451
Supplementary cash flow information
Interest paid, net of amount capitalized	$	34,893			$	37,764
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	15,668			$	54,166
Incurrence of finance lease obligation - barges	$	—			$	16,800
(1) Includes cash and cash equivalents of $31,987, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,649. (2) Includes cash and cash equivalents of $64,237, current restricted cash and cash equivalents of $5,356, and non-current restricted cash and cash equivalents of $14,274. The accompanying notes are an integral part of the condensed consolidated financial statements.

24

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBER’S EQUITY			AOCI			TOTAL MEMBER’S EQUITY
Balances, June 30, 2018	$	1,562,386		$	(13,055	)	$	1,549,331
Distributions to member	(50,400		)	—			(50,400		)
Net income	63,336			—			63,336
Other comprehensive income, net of tax	—			424			424
Balances, Sept. 30, 2018	$	1,575,321		$	(12,631	)	$	1,562,690
Balances, June 30, 2019	$	1,683,783		$	(12,769	)	$	1,671,014
Net income	51,527			—			51,527
Other comprehensive income, net of tax	—			293			293
Balances, Sept. 30, 2019	$	1,735,310		$	(12,476	)	$	1,722,834
Balances, Dec. 31, 2017	$	1,564,362		$	(13,683	)	$	1,550,679
Distributions to member	(121,400		)	—			(121,400		)
Net income	132,359			—			132,359
Other comprehensive income, net of tax	—			1,052			1,052
Balances, Sept. 30, 2018	$	1,575,321		$	(12,631	)	$	1,562,690
Balances, Dec. 31, 2018	$	1,607,715		$	(13,182	)	$	1,594,533
Net income	127,595			—			127,595
Other comprehensive income, net of tax	—			706			706
Balances, Sept. 30, 2019	$	1,735,310		$	(12,476	)	$	1,722,834
The accompanying notes are an integral part of the condensed consolidated financial statements.

25

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants
Note 1	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 2	Business Combination	Cleco
Note 3	Recent Authoritative Guidance	Cleco and Cleco Power
Note 4	Leases	Cleco and Cleco Power
Note 5	Revenue Recognition	Cleco and Cleco Power
Note 6	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 7	Fair Value Accounting	Cleco and Cleco Power
Note 8	Debt	Cleco and Cleco Power
Note 9	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 10	Income Taxes	Cleco and Cleco Power
Note 11	Disclosures about Segments	Cleco
Note 12	Regulation and Rates	Cleco and Cleco Power
Note 13	Variable Interest Entities	Cleco and Cleco Power
Note 14	Litigation, Other Commitments and Contingencies, andDisclosures about Guarantees	Cleco and Cleco Power
Note 15	Affiliate Transactions	Cleco and Cleco Power
Note 16	Intangible Assets and Liabilities	Cleco and Cleco Power
Note 17	Accumulated Other Comprehensive Loss	Cleco and Cleco Power

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco Holdings and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.

Cleco’s condensed consolidated financial statements include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, through September 30, 2019. For more information about the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Basis of Presentation

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to the Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to fairly state the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal

temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 3 — “Recent Authoritative Guidance.”

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.

26

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CLECO POWER	2019 3RD QUARTER FORM 10-Q

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of the following:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current
Cleco Katrina/Rita’s storm recovery bonds	$	3,612	$	9,505
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	544		536
Total current	5,356		11,241
Non-current
Diversified Lands’ mitigation escrow	22		21
Cleco Cajun’s defense fund	717		—
Cleco Cajun’s margin deposits	100		—
Cleco Power’s future storm restoration costs	12,089		15,391
Cleco Power’s charitable contributions	2,185		2,753
Cleco Power’s rate credit escrow	—		505
Total non-current	15,113		18,670
Total restricted cash and cash equivalents	$	20,469	$	29,911

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current
Cleco Katrina/Rita’s storm recovery bonds	$	3,612	$	9,505
Charitable contributions	1,200		1,200
Rate credit escrow	544		536
Total current	5,356		11,241
Non-current
Future storm restoration costs	12,089		15,391
Charitable contributions	2,185		2,753
Rate credit escrow	—		505
Total non-current	14,274		18,649
Total restricted cash and cash equivalents	$	19,630	$	29,890

Cleco Katrina/Rita has the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of administration fees, interest, and principal on storm recovery bonds. The change from December 31, 2018, to September 30, 2019, was due to Cleco Katrina/Rita using $20.6 million for scheduled storm recovery bond principal payments and $1.5 million for related interest payments, partially offset by collections of $16.2 million net of administration fees.

As part of the Cleco Cajun Transaction, Cleco acquired restricted cash of $0.7 million to be used by Cleco Cajun’s cooperative customers for defense funds in the event of potential takeovers. There is no further obligation of Cleco with respect to such expenses, including the replenishment of the fund.

Leases

Cleco accounts for leases in accordance with accounting guidance effective January 1, 2019. For more information on this guidance, see Note 3 — “Recent Authoritative Guidance.”

Cleco determines if a contract is a lease at its inception. If a contract is determined to be a lease, Cleco recognizes a ROU asset and lease liability at the commencement date based on the present value of lease payments over the lease term. The present value of the lease payments is determined by using the implicit interest rate if readily determinable. Cleco’s incremental borrowing rate for a term similar to the duration of the lease based on information available at the

commencement date is used if the implicit interest rate is not readily determinable.

Cleco recognizes ROU assets and lease liabilities for leasing arrangements with terms greater than one year. Except for the marine transportation asset class, Cleco accounts for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco’s marine transportation contracts, which include barges and towboats, contain non-lease components, such as maintenance and labor. Cleco allocates the consideration in these contracts between lease and non-lease components based on estimates of fair value from third parties that typically execute leases for this class of assets.

Expense for a lessee operating lease is recognized as a single lease cost on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the leased asset’s function. Income for a lessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function.

Fair Value Measurements and Disclosures

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes. For more information about fair value levels, see Note 7 — “Fair Value Accounting.”

Derivatives and Other Risk Management Activity

Cleco’s Energy Market Risk Management Policy authorizes hedging of commodity price risk with physical or financially settled derivative instruments. Some of these contracts may qualify for the normal purchase, normal sale (NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. The majority of these FTRs are purchased in annual auctions during the second quarter, but additional FTRs may be purchased in monthly auctions. FTRs represent economic hedges of future congestion charges that will be incurred in serving customer load. FTRs are derivatives not designated as hedging instruments for accounting purposes.

Cleco Power’s FTRs are marked-to-market with the resulting unrealized gains or losses deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. At settlement, realized gains or losses are included in the FAC and reflected on customers’ bills as a component of the fuel charge.

Cleco Cajun’s FTRs are marked-to-market with the resulting unrealized gains and losses recorded on the income statement as a component of purchased power expense. At settlement, realized gains or losses are also recorded on the income statement as a component of purchased power expense.

Cleco Cajun entered into other commodity derivative contracts during the nine months ended September 30, 2019,

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that did not qualify for hedge accounting under applicable accounting standards. When these contracts are marked-to-market, the resulting unrealized gain or loss is recorded on the income statement as a component of fuel expense. At settlement, realized gains or losses will also be recorded on the income statement as a component of fuel expense.

For more information on FTRs and other commodity derivatives, see Note 7 — “Fair Value Accounting — Commodity Contracts.”

Cleco may also enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For each reporting period presented, the Registrants did not enter into any contracts to mitigate the volatility in interest rate risk.

Note 2 — Business Combination

On February 4, 2019, Cleco Cajun acquired from NRG Energy all of the outstanding membership interests in South Central Generating. This acquisition will enable Cleco to significantly increase the scale of its operations in Louisiana. As a result, Cleco Cajun owns:

• a 176-MW natural-gas-fired generating station located in Sterlington, Louisiana,

• a 220-MW natural-gas-fired facility and a 210-MW natural-gas-fired peaking facility, both located in Jarreau, Louisiana,

• a 580-MW coal-fired generating facility, a 540-MW natural-gas-fired generating station, and 58% of a 588-MW coal-fired generating station all located in New Roads, Louisiana,

• 225 MW of a 300-MW natural-gas-fired peaking facility located in Jennings, Louisiana,

• a 1,263-MW natural-gas-fired generating station located in Deweyville, Texas (the Cottonwood Plant),

• wholesale contracts to provide electricity and capacity to nine Louisiana cooperatives, three municipalities across Arkansas, Louisiana, and Texas, and one investor-owned utility,

• transmission assets, which consist of equipment and land required to connect the generation stations and the wholesale customers to the transmission grid, and

• current assets consisting of cash, inventory, receivables and other miscellaneous assets.

Cleco Cajun, NRG Energy, and South Central Generating each made customary representations, warranties and covenants in the Cleco Cajun Transaction, which include customary indemnification provisions. Cleco Holdings has agreed to guarantee the obligations of Cleco Cajun, subject to certain limitations. In addition, upon closing, a lease agreement was executed and delivered between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the Cottonwood Plant and will operate it no later than May 2025. Upon closing, Cottonwood Energy became a subsidiary of Cleco Cajun.

Regulatory Matters

In January 2019, the LPSC approved the Cleco Cajun Transaction. Approval of the transaction was conditioned upon certain commitments, including holding Cleco Power ratepayers harmless for any adverse impacts, increased costs of debt or equity, and credit rating downgrades attributable to the Cleco Cajun Transaction; the repayment of $400.0 million of Cleco Holdings’ debt by 2024, of which $66.7 million in

required payments for 2019 was satisfied as of September 30, 2019; and a $4.0 million annual reduction to Cleco Power’s retail customer rates. For more information about the debt and rate reduction commitments, see Note 8 — “Debt” and Note 6 — “Regulatory Assets and Liabilities,” respectively.

South Central Generating

In 2017, Louisiana Generating received insurance settlement proceeds for costs incurred to resolve a lawsuit which was brought by the EPA and the LDEQ against Louisiana Generating related to Big Cajun II, Unit 3. Entergy Gulf States, as co-owner of Big Cajun II, Unit 3, is expected to be allocated a portion of the insurance settlement proceeds. Any amount allocated to Entergy Gulf States will be determined by ongoing litigation and negotiations. South Central Generating estimated this amount to be $10.0 million. As part of the Cleco Cajun Transaction, Cleco Cajun assumed the $10.0 million contingent liability and NRG Energy indemnified Cleco for losses associated with this litigation matter. As a result, Cleco also recorded a $10.0 million indemnification asset, which was included in the preliminary purchase price allocation.

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts regarding matters arising out of the ordinary course of business. Management is unable to estimate any potential losses that Cleco Cajun may ultimately be responsible for with respect to any one of these matters in the event of a negative outcome. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with matters that existed as of the closing date, including pending litigation.

Accounting for the Cleco Cajun Transaction

As consideration for all of the outstanding membership interest in South Central Generating, Cleco paid cash of approximately $962.2 million, which represents the $1.0 billion acquisition price net of working capital and other adjustments of $37.8 million.

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings borrowed $300.0 million under a bridge loan agreement and $100.0 million under a term loan agreement. Both loan agreements are variable rate debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to Cleco’s senior debt rating (as defined in the applicable agreement). On September 11, 2019, Cleco Holdings refinanced the remaining amounts due under the $300.0 million bridge loan agreement and a portion of the $100.0 million term loan agreement with the proceeds from a private placement of senior notes. For more information, see Note 8 — “Debt.” Also, in connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total capacity of $175.0 million. All other terms remained the same. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

The remaining cash required to finance the transaction consisted of an equity contribution from Cleco Group of $384.9 million and $102.3 million from cash on hand at Cleco Holdings.

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In connection with the Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a capacity agreement customer and a gas transport company. These letters of credit automatically renew each year and have no impact on Cleco Holdings’ credit facility.

Cleco Cajun accounted for the Cleco Cajun Transaction as a business combination, and accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the date of the acquisition. Cleco made certain measurement period adjustments at June 30, 2019. The following chart presents Cleco’s current preliminary purchase price allocation:

Preliminary Purchase Price Allocation
(THOUSANDS)	AT FEB. 4, 2019
Current assets
Cash and cash equivalents	$	146,494
Customer and other accounts receivable	49,809
Fuel inventory	22,060
Materials and supplies	25,659
Energy risk management assets	4,193
Other current assets	10,056
Non-current assets
Property, plant, and equipment, net	741,203
Prepayments	36,166
Restricted cash and cash equivalents	707
Intangible assets	98,900
Other deferred charges	133
Total assets acquired	1,135,380
Current liabilities
Accounts payable	38,478
Taxes payable	723
Energy risk management liabilities	241
Other current liabilities	14,570
Non-current liabilities
Accumulated deferred federal and state income taxes, net	7,165
Deferred lease revenue	58,300
Intangible liabilities	38,300
Asset retirement obligations	15,323
Operating lease liabilities	110
Total liabilities assumed	173,210
Total purchase price consideration	$	962,170

The fair values of Cleco Cajun’s acquired assets and assumed liabilities were determined based on significant estimates and assumptions, including projected future cash flows and discount rates reflecting risk inherent in those future cash flows. There were also estimates made to determine the expected useful lives of each class of assets acquired.

On the date of the acquisition, preliminary fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the difference between the contract and market price of acquired long-term wholesale power agreements. The preliminary fair value of intangible assets of $98.9 million and intangible liabilities of $14.2 million was reflected in the preliminary purchase price allocation. The valuation of the acquired intangible assets and liabilities was estimated by applying the income method, which is based upon discounted projected future cash flows associated with the underlying contracts. The power supply agreement intangible assets and liabilities are being amortized to Electric

operations on Cleco’s Condensed Consolidated Statement of Income over the remaining term of the applicable agreements.

As part of the Cleco Cajun Transaction, Cleco assumed an LTSA for maintenance services related to the Cottonwood Plant. The preliminary fair value of the LTSA was estimated by applying the income method. An intangible liability of $24.1 million was reflected in the preliminary purchase price allocation and is being amortized using the straight-line method over the estimated remaining life of the LTSA of seven years. The amortization is included as a reduction to the LTSA prepayments on Cleco’s Condensed Consolidated Balance Sheet.

On the date of the acquisition, the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy was estimated by applying the income method. Deferred lease revenue of $58.3 million was reflected in the preliminary purchase price allocation and is being amortized over the term of the lease agreement. The amortization is included in Other operations revenue on Cleco’s Condensed Consolidated Statement of Income.

Valuations were performed to assess the fair value of certain assets acquired and liabilities assumed and were considered preliminary as a result of the short time period between the closing of the acquisition and the end of the first quarter of 2019. Accounting guidance provides that the allocation of the purchase price may be modified up to one year from the date of the acquisition as more information becomes available. Cleco expects these final valuations and assessments will be completed by the end of 2019, which may affect the purchase price allocation.

During the second quarter of 2019, certain modifications were made to the preliminary valuations as of February 4, 2019, due to the refinement of valuation models, assumptions, and inputs. The measurement period adjustments were based upon information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of the amounts recognized at that date.

Measurement Period Adjustments
(THOUSANDS)	AT JUNE 30, 2019
Current assets
Customer and other accounts receivable	$	1,408
Other current assets	$	56
Non-current assets
Property, plant, and equipment, net	$	13,297
Prepayments	$	(56	)
Intangible assets	$	(3,600	)
Other deferred charges	$	1
Current liabilities
Accounts payable	$	3,022
Energy risk management liabilities	$	(1	)
Other current liabilities	$	327
Non-current liabilities
Accumulated deferred federal and state income taxes, net	$	421
Deferred lease revenue	$	(3,600	)
Intangible liabilities	$	6,400
Asset retirement obligations	$	4,534
Operating lease liabilities	$	3

The measurement period adjustments resulted in an increase in electric operations revenue of $0.5 million, a

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decrease in other operations revenue of $0.1 million, and an increase in depreciation expense of $0.2 million recorded for the three months ended June 30, 2019.

During the third quarter of 2019, no additional modifications were made to the preliminary valuation as of February 4, 2019. Consequently, no measurement period adjustments were made.

Pro forma Impact of the Cleco Cajun Transaction

The following table includes the unaudited pro forma financial information reflecting the consolidated results of operations of Cleco as if the Cleco Cajun Transaction had taken place on January 1, 2018. The pro forma net income for the three and nine months ended September 30, 2019, was adjusted to exclude nonrecurring transaction-related expenses of $0.6 million and $4.5 million, respectively. The pro forma net income for the three and nine months ended September 30, 2018, includes nonrecurring transaction-related expenses.

The unaudited pro forma financial information presented in the following table is not necessarily indicative of the consolidated results of operations that would have been achieved had the transaction taken place on the dates indicated, or the future consolidated results of operations of the combined companies.

Unaudited Pro Forma Financial Information
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Operating revenue, net	$	487,971	$	469,419	$	1,250,787	$	1,263,182
Net income	$	56,004	$	71,076	$	122,771	$	140,255

Note 3 — Recent Authoritative Guidance

In February 2016, FASB amended the guidance to account for leases. Effective January 1, 2019, Cleco adopted the amended guidance using the optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption, apply the new disclosure requirements beginning in the period of adoption, and continue to present comparative period information as required under previous guidance.

In addition, Cleco elected the transition practical expedient that permits an entity to not reassess prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits entities to not assess existing land easements under the new standard.

Adoption of this standard resulted in the recognition of ROU assets and lease liabilities for Cleco and Cleco Power’s operating leases of $16.1 million and $15.9 million, respectively. There was no impact to retained earnings as a result of adopting this standard. Adoption of this standard did not materially impact the Registrants’ results of operations or liquidity, and their accounting for finance leases is substantially unchanged. For more information on Cleco’s lease obligations, see Note 4 — “Leases.”

In June 2016, FASB amended the guidance for the measurement of credit losses on receivables and certain other assets. The guidance requires use of a current expected loss model, which may result in earlier recognition of credit losses. The adoption of this guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Management is evaluating the impact that the adoption of this guidance will have on the results of

operations, financial condition, or cash flows of the Registrants.

Note 4 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Effective January 1, 2019, Cleco adopted new guidance which requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. A lease is deemed to exist when the right to control the use of identified property, plant, or equipment is conveyed through a contract for a certain period of time and consideration is paid. For more information on the new guidance, see Note 3 — “Recent Authoritative Guidance.” For more information on how leases are identified, see Note 1 — “Summary of Significant Accounting Policies — Leases.”

Operating Leases

Cleco Power leases utility systems from two municipalities and one non-municipal public body. The first municipal lease has a term of 10 years and expires on August 11, 2021. On July 9, 2019, this municipal lease was renewed for an additional term of 10 years and expires on August 11, 2031. The second municipal lease has a term of 10 years and expires on May 13, 2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains fixed and variable components, as well as provisions for extensions.

Cleco Power has leases for 200 railcars for coal transportation. One lease for 115 railcars expires on March 31, 2021, and the other lease for 85 railcars expires on March 31, 2020. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 and is a short-term lease with an initial term of 12 months. This short-term lease renews for additional one-month terms unless Cleco Cajun chooses to terminate. Cleco reassesses its need for the railcars upon the expiration of each term. Cleco pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

Cleco Power has leases for three towboats in order to transport petroleum coke to Madison Unit 3. Each of the towboat leases has a term of 10 years and expires on March 31, 2028. Under these agreements, the rates are adjusted annually per the Producer Price Index. Each lease contains provisions for a five-year extension.

Cleco and Cleco Power’s remaining operating leases provide for office and operating facilities, office equipment, and tower rentals.

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The following is a schedule by year of future minimum lease payments due under Cleco and Cleco Power’s long-term operating leases together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)	CLECO POWER		CLECO
Three months ending Dec. 31, 2019	$	1,014	$	1,065
Years ending Dec. 31,
2020	3,960		3,994
2021	3,410		3,443
2022	3,256		3,287
2023	3,220		3,249
Thereafter	21,833		21,853
Total minimum lease payments	36,693		36,891
Less: amount representing interest	7,395		7,358
Present value of net minimum operating lease payments	$	29,298	$	29,533
Current liabilities	$	3,616	$	3,705
Non-current liabilities	$	25,682	$	25,828

The following table is a summary of expected operating lease payments for Cleco and Cleco Power at December 31, 2018:

(THOUSANDS)	CLECO HOLDINGS		CLECO POWER		CLECO
Year ending Dec. 31,
2019	$	120	$	4,030	$	4,150
2020	—		3,890		3,890
2021	—		2,789		2,789
2022	—		1,239		1,239
2023	—		1,214		1,214
Thereafter	—		7,235		7,235
Total operating lease payments	$	120	$	20,397	$	20,517

Finance Lease

In April 2018, Cleco Power entered into an agreement with Savage Inland Marine for 42 barges used to transport petroleum coke through March 2033. The agreement meets the accounting definition of a finance lease.

The barge lease rate contains both a fixed and variable component, of which the latter is adjusted every third anniversary of the agreement for estimated executory costs. If the barges are idle, the lessor is required to attempt to sublease the barges to third parties with the revenue reducing Cleco Power’s lease payment. This agreement contains a provision for early termination upon the occurrence of any one of four cancellation events.

For the three and nine months ended September 30, 2019, Cleco Power paid $0.6 million and $1.7 million, respectively, in lease payments. For the three and nine months ended September 30, 2019, Cleco Power received $0.4 million and $1.3 million, respectively, of revenue from subleases.

The following is an analysis of the leased property under the finance lease:

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Barges	$	16,800		$	16,800
Accumulated amortization	(1,680		)	(840		)
Net finance lease	$	15,120		$	15,960

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	$	16,006
Current liabilities	$	602
Non-current liabilities	$	15,404

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of December 31, 2018:

(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Additional Lessee Disclosures

Cleco and Cleco Power’s total lease cost includes amounts on the income statement, as well as amounts capitalized as part of property, plant, or equipment or inventory. The following tables reflect total lease costs for Cleco and Cleco Power for the three and nine months ended September 30, 2019:

Cleco
(THOUSANDS)	FOR THE THREE  MONTHS ENDED SEPT. 30, 2019		FOR THE NINE  MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,158		3,411
Variable lease cost	116		423
Total lease cost	$	1,964	$	5,914

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Cleco Power
(THOUSANDS)	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,101		3,243
Variable lease cost	116		423
Total lease cost	$	1,907	$	5,746

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Cleco
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	3,387
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,881

Cleco Power
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,034	$	3,189
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,749

	AT SEPT. 30, 2019
(THOUSANDS)	CLECO POWER		CLECO
Other supplemental information
Operating leases
Weighted-average remaining lease term	11.0 years		10.9 years
Weighted-average discount rate	4.31	%	4.31	%
Finance leases
Weighted-average remaining lease term	13.5 years		13.5 years
Weighted-average discount rate	10.18	%	10.18	%

Lessor Agreements

Upon the closing of the Cleco Cajun Transaction, Cleco assumed two lessor contracts leasing land to farmers for a term of one year. Both of these lessor contracts are classified as operating leases. For more information on the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease, NRG Energy will operate the plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

Cleco Cajun is Cleco’s only entity with lessor arrangements. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was as follows:

(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Fixed payments	$	10,000	$	26,667
Variable payments	6,010		14,248
Amortization of deferred lease liability(1)	2,301		6,137
Total lease income	$	18,311	$	47,052

⁽¹⁾ The deferred lease revenue resulting from the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.

The remaining minimum lease payments to be received under the Cottonwood Sale Leaseback are as follows:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$	226,666

Depreciation expense associated with Cleco’s property under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was $6.6 million and $16.1 million, respectively. Cleco calculated depreciation on a straight-line basis over the useful life of the asset. Property associated with the Cottonwood Sale Leaseback was as follows:

(THOUSANDS)	AT SEPT. 30, 2019
Property, plant, and equipment	$	540,409
Accumulated depreciation	(16,140		)
Net property, plant, and equipment	$	524,269

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Note 5 — Revenue Recognition

Revenue from Contracts with Customers

Retail Utility Revenue

Cleco’s retail revenue from contracts with customers is generated primarily from Cleco Power’s regulated revenue from residential, commercial, and industrial customers. Cleco recognizes retail revenue from these contracts as a series, and progress towards satisfaction of the performance obligation is measured using an output method based on kWh delivered. Accordingly, revenue from electricity sales is recognized as energy is delivered to the customer. Cleco bills retail customers, based on rates regulated by the LPSC, on a monthly basis with payments generally due within 20 days of the invoice date.

Included in Cleco’s retail revenue is unbilled electric revenue, which represents the amount customers will be billed for services rendered from the last meter reading to the end of the respective accounting period. Cleco uses actual customer energy consumption data available from AMI to calculate unbilled revenue. Also included in Cleco’s retail revenue is electric customer credits, which primarily represents the accrued estimated refunds to Cleco Power’s retail customers for the tax related benefits of the TCJA.

Wholesale Revenue

Cleco’s wholesale revenue is generated primarily through the sale of energy and capacity to cooperatives, municipalities, and the MISO transmission provider. Cleco also enters into transactions through MISO for spot energy sales which are transacted in the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. The electricity revenue performance obligations, representing both energy and capacity, are satisfied as a series of performance obligations, and progress towards satisfaction of the performance obligations are measured using an output method. The energy performance obligation measure of progress is based on kWh delivered. The capacity performance obligation measure of progress is based on time elapsed and is recognized each month as Cleco’s generating units stand ready to deliver electricity to the customer. Cleco recognizes wholesale revenue, inclusive of both performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice. Cleco charges its

wholesale customers market based rates that are subject to FERC’s triennial market power analysis.

Transmission Revenue

Cleco earns transmission revenues pursuant to MISO’s FERC filed tariff. The performance obligation of transmission service is satisfied as service is provided. Revenue is recognized upon delivery of the transmission service. Cleco Power’s revenue from the transmission of electricity is recorded based on a FERC-approved annual formula rate mechanism. This mechanism provides for an annual filing of revenue requirements with rates effective June 1 of each year. Cleco Cajun charges transmission rates based on its cost to provide transmission services.

Other Revenue

Other revenue from contracts with customers, which is not a significant source of Cleco’s revenue, includes Cleco Power’s Teche Unit 3 SSR revenue and miscellaneous fees. The performance obligation under these contracts is satisfied and revenue is recognized as control of the products is delivered or services are rendered.

Revenue Unrelated to Contracts with Customers

Cleco’s energy-related transactions with the following characteristics, qualify as derivative contracts and are recorded pursuant to derivatives and hedging accounting guidance: a) their value is based on the notional amount or payment provisions of an underlying asset; b) they require no or a diminutive initial net investment; and c) their terms require or permit net settlement.

Cleco Cajun’s other revenue includes fixed lease payments and certain variable payments for costs paid by NRG Energy on behalf of Cleco. For more information on the Cottonwood lease agreement, see Note 4 — “Leases — Lessor Agreements — Cottonwood Sale Leaseback Agreement.”

Disaggregated Revenue

Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a new reportable segment. For more information on the transaction, see Note 2 — “Business Combination.”

Operating revenue, net for the three and nine months ended September 30, 2019, and 2018, was as follows:

33

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

	FOR THE THREE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	CLECO POWER				CLECO CAJUN			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	142,265			$	—		$	—			$	—		$	142,265
Commercial (1)	84,816				—			—				—			84,816
Industrial (1)	36,830				—			—				—			36,830
Other retail (1)	4,234				—			—				—			4,234
Surcharge	170				—			—				—			170
Electric customer credits	(13,711		)		—			—				—			(13,711		)
Total retail revenue	254,604				—			—				—			254,604
Wholesale, net	69,558			(1)	114,426			(2,420		)	(2)	—			181,564
Transmission	14,034				15,435			—				(2,442		)	27,027
Other	4,452			(3)	—			—				—			4,452
Affiliate (4)	334				31			28,252				(28,617		)	—
Total revenue from contracts with customers	342,982				129,892			25,832				(31,059		)	467,647
Revenue unrelated to contracts with customers
Other	1,995			(5)	18,329		(6)	—				—			20,324
Total revenue unrelated to contracts with customers	1,995				18,329			—				—			20,324
Operating revenue, net	$	344,977			$	148,221		$	25,832			$	(31,059	)	$	487,971

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other miscellaneous fee revenue.

⁽⁴⁾ Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾ Includes realized gains associated with FTRs.

⁽⁶⁾ Includes $16.0 million in lease revenue related to the Cottonwood Sale Leaseback and $2.3 million of deferred lease revenue amortization.

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	139,162		$	—			$	—		$	139,162
Commercial (1)	79,829			—				—			79,829
Industrial (1)	43,380			—				—			43,380
Other retail (1)	4,039			—				—			4,039
Surcharge	6,206			—				—			6,206
Electric customer credits	(2,992		)	—				—			(2,992		)
Total retail revenue	269,624			—				—			269,624
Wholesale, net (1)	63,624			(2,420		)	(2)	—			61,204
Transmission	14,718			—				—			14,718
Other (3)	5,469			—				—			5,469
Affiliate	223			22,765				(22,988		)	—
Total revenue from contracts with customers	353,658			20,345				(22,988		)	351,015
Revenue unrelated to contracts with customers
Other (4)	7,241			—				—			7,241
Total revenue unrelated to contracts with customers	7,241			—				—			7,241
Operating revenue, net	$	360,899		$	20,345			$	(22,988	)	$	358,256

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $4.9 million of other miscellaneous fee revenue and $0.6 million of Teche Unit 3 SSR revenue, net of $0.2 million of reserves for capital expenditures.

⁽⁴⁾ Includes realized gains associated with FTRs.

34

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

	FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	CLECO POWER				CLECO CAJUN			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	327,340			$	—		$	—			$	—		$	327,340
Commercial (1)	218,209				—			—				—			218,209
Industrial (1)	109,545				—			—				—			109,545
Other retail (1)	11,391				—			—				—			11,391
Surcharge	7,692				—			—				—			7,692
Electric customer credits	(30,565		)		—			—				—			(30,565		)
Total retail revenue	643,612				—			—				—			643,612
Wholesale, net	179,633			(1)	273,256			(7,260		)	(2)	—			445,629
Transmission	38,679				36,625			—				(5,395		)	69,909
Other	14,640			(3)	—			2				—			14,642
Affiliate (4)	971				31			77,800				(78,802		)	—
Total revenue from contracts with customers	877,535				309,912			70,542				(84,197		)	1,173,792
Revenue unrelated to contracts with customers
Other	9,158			(5)	47,081		(6)	—				(1		)	56,238
Total revenue unrelated to contracts with customers	9,158				47,081			—				(1		)	56,238
Operating revenue, net	$	886,693			$	356,993		$	70,542			$	(84,198	)	$	1,230,030

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Includes $11.4 million of other miscellaneous fee revenue and $3.2 million of Teche Unit 3 SSR revenue at Cleco Power.

⁽⁴⁾ Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾ Includes realized gains associated with FTRs of $11.7 million and the reversal of the Lost Contribution to Fixed Cost revenue of $2.6 million.

⁽⁶⁾ Includes $40.9 million in lease revenue related to the Cottonwood Sale Leaseback and $6.1 million of deferred lease revenue amortization.

	FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	338,357		$	—			$	—		$	338,357
Commercial (1)	218,389			—				—			218,389
Industrial (1)	121,445			—				—			121,445
Other retail (1)	11,633			—				—			11,633
Surcharge	17,637			—				—			17,637
Electric customer credits	(24,276		)	—				—			(24,276		)
Total retail revenue	683,185			—				—			683,185
Wholesale, net (1)	165,255			(7,260		)	(2)	—			157,995
Transmission	41,166			—				—			41,166
Other (3)	19,901			1				—			19,902
Affiliate	651			55,707				(56,358		)	—
Total revenue from contracts with customers	910,158			48,448				(56,358		)	902,248
Revenue unrelated to contracts with customers
Other (4)	32,029			—				—			32,029
Total revenue unrelated to contracts with customers	32,029			—				—			32,029
Operating revenue, net	$	942,187		$	48,448			$	(56,358	)	$	934,277

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $13.4 million of other miscellaneous fee revenue and $6.5 million of Teche Unit 3 SSR revenue, net of $2.4 million of reserves for capital expenditures.

⁽⁴⁾ Includes realized gains associated with FTRs.

Cleco has unsatisfied performance obligations with durations ranging between one and fifteen years that primarily relate to stand-ready obligations as part of fixed capacity minimums. Cleco has elected to not disclose the value of unsatisfied performance obligations as part of its application of the right to invoice practical expedient.

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.

35

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

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

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Regulatory assets (liabilities)
Deferred taxes, net	$	(144,124	)	$	(155,537	)
Mining costs	—			1,274
Interest costs	4,021			4,208
AROs	3,523			3,099
Postretirement costs	134,412			140,245
Tree trimming costs	10,607			9,069
Training costs	6,279			6,396
Surcredits, net (1)	289			289
AMI deferred revenue requirement	3,272			3,681
Emergency declarations	1,750			2,980
Production operations and maintenance expenses	9,199			12,245
AFUDC equity gross-up (1)	73,541			71,952
Acadia Unit 1 acquisition costs	2,151			2,230
Financing costs	7,646			7,923
Coughlin transaction costs	915			938
Corporate franchise tax, net	864			1,416
Non-service cost of postretirement benefits	6,650			4,629
Energy efficiency	(3,056		)	2,585
Accumulated deferred fuel	56,056			20,112
Other, net	(8,048		)	(4,979		)
Total regulatory assets, net	$	165,947		$	134,755
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 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 SEPT. 30, 2019		AT DEC. 31, 2018
Total Cleco Power regulatory assets, net	$	165,947	$	134,755
Cleco 2016 Merger adjustments (1)
Fair value of long-term debt	130,847		138,701
Postretirement costs	17,896		19,387
Financing costs	8,021		8,279
Debt issuance costs	5,826		6,252
Total Cleco regulatory assets, net	$	328,537	$	307,374

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

Energy Efficiency

In December 2018, Cleco Power filed a letter of intent with the LPSC to recover the accumulated decrease in revenues, also known as the LCFC, associated with the energy efficiency programs and began collecting the accumulated LCFC revenues in Cleco Power’s energy efficiency rates effective March 1, 2019. On March 28, 2019, Cleco Power received notice from the LPSC indicating denial of the request and subsequently reversed all revenues related to the accumulated LCFC. On October 21, 2019, Cleco Power received notice from the LPSC concluding that after further analysis Cleco Power will be allowed to recover the accumulated LCFC revenues.

Other Regulatory Assets (Liabilities), Net

In June 2017, the LPSC approved the establishment of a regulatory asset upon the completion of the Coughlin Pipeline project for the revenue requirement associated with the project until Cleco Power seeks recovery in the new FRP, which is anticipated to be effective July 1, 2020. The project was placed in service on September 6, 2019. At September 30,

2019, Cleco Power had $0.2 million accrued as a regulatory asset for the Coughlin Pipeline project revenue requirement. Cleco Power anticipates collecting this amount over 12 months beginning July 1, 2020, subject to regulatory approval of Cleco Power’s new FRP.

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 September 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.

Note 7 — Fair Value Accounting

The amounts reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018, for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, short-term debt, and accounts payable approximate fair value because of their short-term nature. Cleco applies the provisions of the fair value measurement standard to its non-recurring, non-financial measurements including business combinations, as well as impairment related to goodwill and other long-lived assets.

The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments not measured at fair value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets:

Cleco
	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	3,191,452	$	3,407,190	$	2,889,631	$	2,859,924

* The carrying value of long-term debt does not include deferred issuance costs of $14.2 million at September 30, 2019, and $10.3 million at December 31, 2018.

Cleco Power
	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	1,380,605	$	1,625,480	$	1,400,930	$	1,517,152

* The carrying value of long-term debt does not include deferred issuance costs of $7.6 million at September 30, 2019, and $8.3 million at December 31, 2018.

Long-term debt liability consists of a single class. In order to fund capital requirements, Cleco issues fixed and variable rate long-term debt with various tenors. The fair value of this class fluctuates as the market interest rates for fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the debt could also change from period to period due to changes in the credit rating of the Cleco entity by which the debt was issued. The fair value of long-term debt is classified as Level 2 in the fair value hierarchy.

Fair Value Measurements and Disclosures

Cleco classifies assets and liabilities that are measured at their fair value according to three different levels depending on the inputs used in determining fair value.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured on a recurring basis:

36

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	111,885	$	—	$	111,885	$	—	$	133,722	$	—	$	133,722	$	—
FTRs	9,926		—		—		9,926		23,355		—		—		23,355
Other commodity derivatives	745		—		745		—		—		—		—		—
Total assets	$	122,556	$	—	$	112,630	$	9,926	$	157,077	$	—	$	133,722	$	23,355
Liability description
FTRs	$	1,257	$	—	$	—	$	1,257	$	468	$	—	$	—	$	468
Other commodity derivatives	41		—		41		—		—		—		—		—
Total liabilities	$	1,298	$	—	$	41	$	1,257	$	468	$	—	$	—	$	468

Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	76,947	$	—	$	76,947	$	—	$	55,900	$	—	$	55,900	$	—
FTRs	8,601		—		—		8,601		23,355		—		—		23,355
Total assets	$	85,548	$	—	$	76,947	$	8,601	$	79,255	$	—	$	55,900	$	23,355
Liability description
FTRs	$	577	$	—	$	—	$	577	$	468	$	—	$	—	$	468
Total liabilities	$	577	$	—	$	—	$	577	$	468	$	—	$	—	$	468

The following tables summarize the net changes in the net fair value of FTR assets and liabilities classified as Level 3 in the fair value hierarchy for Cleco and Cleco Power:

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Beginning balance	$	14,665		$	25,133		$	22,887		$	7,044
Unrealized (losses) gains*	(1,234		)	4,520			(4,488		)	6,153
Purchases	557			1,251			26,401			26,734
Settlements	(5,319		)	(8,644		)	(36,131		)	(17,671		)
Ending balance	$	8,669		$	22,260		$	8,669		$	22,260
* Cleco Power’s unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco’s Condensed Consolidated Balance Sheet. Cleco Cajun’s unrealized (losses) gains are reported through Purchased power on Cleco’s Condensed Consolidated Income Statement.

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Beginning balance	$	13,910		$	25,133		$	22,887		$	7,044
Unrealized (losses) gains*	(1,700		)	4,520			(3,644		)	6,153
Purchases	1,133			1,251			20,961			26,734
Settlements	(5,319		)	(8,644		)	(32,180		)	(17,671		)
Ending balance	$	8,024		$	22,260		$	8,024		$	22,260
* Unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheet.

37

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions as of September 30, 2019, and December 31, 2018:

Cleco
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Sept. 30, 2019	$	9,926	$	1,257	RTO auction pricing	FTR price - per MWh	$	(2.29	)	$	3.14
FTRs at Dec. 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10

Cleco Power
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Sept. 30, 2019	$	8,601	$	577	RTO auction pricing	FTR price - per MWh	$	(1.67	)	$	2.79
FTRs at Dec. 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10

Cleco utilizes different valuation techniques for fair value calculations. In order to measure the fair value for Level 1 assets and liabilities, Cleco obtains the closing price from published indices in active markets for the various instruments and multiplies this price by the appropriate number of instruments held. Level 2 fair values are determined by obtaining the closing price of similar assets and liabilities from published indices in active markets. Institutional money market funds assets are discounted to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. Level 3 fair values occur in situations in which there is little, if any, market activity for the asset or liability at the measurement date. Cleco’s Level 3 assets and liabilities are valued using RTO auction prices. Cleco has consistently applied the Level 2 and Level 3 fair value techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability.

At September 30, 2019, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The institutional money market funds were reported on Cleco’s Condensed Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of $91.5 million, $5.4 million, and $15.0 million, respectively, at September 30, 2019, and $103.8 million, $11.2 million, and $18.7 million, respectively, at December 31, 2018. At Cleco Power, the institutional money market funds were reported on Cleco Power’s Condensed Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of $57.4 million, $5.4 million, and $14.1 million, respectively, at September 30, 2019, and $26.1 million, $11.2 million, and $18.6 million, respectively, at December 31, 2018. If the money market funds failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by either Cleco or Cleco Power. The Level 2 institutional money market funds asset consists of a single class. In order to capture interest income and minimize risk, cash is invested in money market funds that invest primarily in short-term

securities issued by the U.S. Treasury to maintain liquidity and achieve the goal of a net asset value of a dollar. The risks associated with this class are counterparty risk of the fund manager and risk of price volatility associated with the underlying securities of the fund.

The other commodity derivatives are fixed price forwards that fluctuate in value as underlying prices change. These contracts contain counterparty credit risk because they are transacted directly with a counterparty and are not cleared on an exchange. These other commodity derivatives are recorded at fair value and categorized as Level 2 because pricing is indexed to other contracts.

Cleco Power and Cleco Cajun’s FTRs were priced using MISO’s monthly auction prices. Forward seasonal periods are not included in every monthly auction; therefore, the average of the most recent seasonal auction prices is used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from MISO auctions, which occur monthly in the Multi-Period Monthly Auction.

During the nine months ended September 30, 2019, and the year ended December 31, 2018, Cleco did not experience any transfers between levels within the fair value hierarchy.

Commodity Contracts

The following tables present the fair values of derivative instruments and their respective line items as recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018:

Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2019		AT DEC. 31, 2018
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	9,926	$	23,355
Current	Energy risk management liabilities	1,257		468
Other commodity derivatives
Current	Energy risk management assets	745		—
Current	Energy risk management liabilities	41		—
Commodity-related contracts, net		$	9,373	$	22,887

38

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2019		AT DEC. 31, 2018
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	8,601	$	23,355
Current	Energy risk management liabilities	577		468
Commodity-related contracts, net		$	8,024	$	22,887

The following tables present the effect of derivatives not designated as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for the nine months ended September 30, 2019, and 2018:

Cleco
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2019			2018			2019			2018
Commodity-related contracts
FTRs(1)	Electric operations	$	1,997		$	7,241		$	12,396		$	32,407
FTRs(1)	Purchased power	(2,648		)	(1,587		)	(12,985		)	(3,288		)
Other commodity derivatives	Fuel used for electric generation	3,474			—			704			—
Total		$	2,823		$	5,654		$	115		$	29,119

⁽¹⁾ For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs for Cleco Power of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2018, unrealized gains associated with FTRs for Cleco Power of $4.5 million and $6.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

Cleco Power
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2019			2018			2019			2018
Commodity-related contracts
FTRs(1)	Electric operations	$	1,997		$	7,241		$	12,400		$	32,407
FTRs(1)	Purchased power	(1,828		)	(1,587		)	(4,800		)	(3,288		)
Total		$	169		$	5,654		$	7,600		$	29,119

⁽¹⁾ For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2018, unrealized gains associated with FTRs of $4.5 million and $6.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

The total volume of FTRs that Cleco Power had outstanding at September 30, 2019, and December 31, 2018, was 14.6 million MWh and 8.7 million MWh, respectively. The total volume of FTRs that Cleco had outstanding at September 30, 2019, and December 31, 2018, was 23.4 million MWh and 8.7 million MWh, respectively. The total volume of other commodity derivatives Cleco had outstanding at September 30, 2019, was 18.4 million MMBtus.

Note 8 — Debt

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings borrowed $300.0 million under a new bridge loan agreement and $100.0 million under a new term loan agreement. Both loan agreements are variable rate debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to Cleco’s senior debt rating (as defined in the applicable agreement). On September 11, 2019, Cleco Holdings completed the private placement of $300.0 million aggregate principal amount of its 3.375% senior notes due September 15, 2029. The proceeds from the issuance were used to repay the remaining amounts due under the $300.0 million bridge loan agreement and to repay a portion of the $100.0 million term loan agreement. The senior notes are governed by an indenture entered into between Cleco Holdings and a trustee. The indenture contains certain covenants that restrict Cleco Holdings’ ability to merge, consolidate or transfer or lease all or substantially all of its assets or create or incur certain liens.

Upon approval of the Cleco Cajun Transaction, commitments were made to the LPSC by Cleco, including repayment of $400.0 million of Cleco Holdings’ debt prior to December 31, 2024. The cumulative minimum principal amounts committed to be repaid for each year through 2024 are as follows:

(THOUSANDS)
For the year ending Dec. 31,
2019*	$	66,700
2020	$	132,300
2021	$	200,000
2022	$	266,700
2023	$	332,300
2024	$	400,000
* At September 30, 2019, Cleco Holdings satisfied this commitment.

Also, in connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total capacity of $175.0 million. All other terms remained the same. In addition, in connection with the Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a capacity agreement customer and a gas transport company. These letters of credit automatically renew each year and have no impact on Cleco Holdings’ credit facility. At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019,

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this letter of credit no longer decreases availability under Cleco Holdings’ credit facility. This letter of credit automatically renews each year.

Cleco Power has $50.0 million of GO Zone bonds that mature in 2038 and are subject to a mandatory tender in 2020. At September 30, 2019, the bonds were included in long-term debt due within one year.

Note 9 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. On September 12, 2019, Cleco made a $12.3 million discretionary contribution to the pension plan. Cleco does not expect to make any further contributions to the pension plan in 2019. Cleco Power is the plan sponsor and Support Group is the plan administrator. The

plan was amended on February 4, 2019, to include certain former NRG Energy employees who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan amendment reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits.

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of net periodic pension and Other Benefits cost for the three and nine months ended September 30, 2019, and 2018 were as follows:

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019		2018
Components of periodic benefit costs
Service cost	$	2,104		$	2,377		$	328	$	336
Interest cost	5,621			5,215			435		361
Expected return on plan assets	(6,625		)	(5,943		)	—		—
Amortizations
Prior period service credit	(18		)	(18		)	—		—
Net loss	1,962			3,078			105		96
Net periodic benefit cost	$	3,044		$	4,709		$	868	$	793

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE NINE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019		2018
Components of periodic benefit costs
Service cost	$	6,311		$	7,130		$	896	$	1,011
Interest cost	16,864			15,869			1,235		1,076
Expected return on plan assets	(19,876		)	(17,818		)	—		—
Amortizations
Prior period service credit	(54		)	(53		)	—		—
Net loss	5,887			8,998			25		105
Net periodic benefit cost	$	9,132		$	14,126		$	2,156	$	2,192

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2019, was $0.5 million and $1.6 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2018, was $0.5 million and $1.5 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019, was $0.9 million and $2.3 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018, was $0.9 million and $2.5

million, respectively. The current and non-current portions of the other benefits liability for Cleco and Cleco Power at September 30, 2019, and December 31, 2018, were as follows:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	4,130	$	4,130
Non-current	$	35,090	$	36,325

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	3,584	$	3,584
Non-current	$	30,769	$	31,694

SERP

Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a rabbi trust. The life insurance policies issued on SERP participants designate the rabbi trust as the beneficiary.

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Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies that employed the officer. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of the net periodic benefit cost related to SERP for the three and nine months ended September 30, 2019, and 2018 were as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Components of periodic benefit costs
Service cost	$	82		$	136		$	247		$	407
Interest cost	831			769			2,494			2,296
Amortizations
Prior period service credit	(34		)	(35		)	(104		)	(104		)
Net loss	381			723			1,143			2,180
Net periodic benefit cost	$	1,260		$	1,593		$	3,780		$	4,779

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019, was $0.2 million and $0.6 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018, was $0.4 million and $1.1 million, respectively.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at September 30, 2019, and December 31, 2018, were as follows:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	4,478	$	4,478
Non-current	$	73,255	$	73,936

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	930	$	930
Non-current	$	11,759	$	12,025

401(k) Plan

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan was

amended upon the close of the Cleco Cajun Transaction to include Cleco Cajun employees. Cleco’s 401(k) Plan expense for the three and nine monthsended September 30, 2019, and 2018 was as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	2,077	$	1,424	$	6,136	$	4,716

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2019, and 2018 was as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	873	$	254	$	2,625	$	865

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 nine months ended September 30, 2019, and 2018:

Cleco
	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
	2019		2018		2019		2018
Effective tax rate	20.2	%	19.4	%	21.1	%	20.7	%

Cleco Power
	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
	2019		2018		2019		2018
Effective tax rate	19.4	%	22.1	%	21.2	%	23.1	%

For the three and nine months ended September 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 $575.5 million and $121.8 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 September 30, 2019, and December 31, 2018, Cleco and Cleco Power had no interest payable related to uncertain tax positions. For the three and nine months ended September 30,

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2019, and 2018, Cleco and Cleco Power had no interest expense related to uncertain tax positions.

At September 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 September 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.

Cleco participates in the Internal Revenue Service’s (IRS) Compliance Assurance Process in which financial results are examined and agreed upon prior to filing the federal consolidated tax return. The 2018 federal income tax year remains subject to examination by the IRS. While the statute of limitations remains open for tax years 2016 and 2017 until 2020 and 2021, respectively, management believes the likelihood of further exam by the IRS is remote.

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 nine months ended September 30, 2019, and 2018, no penalties were recognized.

Note 11 — Disclosures about Segments

Cleco’s reportable segments are based on its method of internal reporting, which disaggregates business units by its

first-tier subsidiary. Cleco’s reportable segments are Cleco Power and Cleco Cajun.

Each reportable segment engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s CEO with discrete financial information and, at least quarterly, present discrete financial information to Cleco and Cleco Power’s Boards of Managers. The reportable segment prepares budgets that are presented to and approved by Cleco and Cleco Power’s Boards of Managers. The column shown as Other in the following tables includes the holding company, a shared services subsidiary, an investment subsidiary, and a subsidiary formed to facilitate the Cleco Cajun Transaction. Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a new reportable segment. For more information on the transaction, see Note 2 — “Business Combination.”

The financial results in the following tables are presented on an accrual basis. The historical segment information was not recast because the Cleco Cajun segment only consists of the newly acquired business. There were no other changes to Cleco’s existing reportable segments. Management evaluates the performance of its segment and allocates resources to it based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.

SEGMENT INFORMATION FOR THE THREE MONTHS ENDED SEPT. 30,
2019 (THOUSANDS)	CLECO POWER			CLECO CAJUN		OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	339,869		$	114,453	$	(2,420	)	$	—		$	451,902
Other operations	18,485			33,737		—			(2,442		)	49,780
Affiliate revenue	334			31		28,252			(28,617		)	—
Electric customer credits	(13,711		)	—		—			—			(13,711		)
Operating revenue, net	$	344,977		$	148,221	$	25,832		$	(31,059	)	$	487,971
Depreciation and amortization	$	44,903		$	10,009	$	2,092		$	—		$	57,004
Interest income	$	1,421		$	220	$	228		$	(179	)	$	1,690
Interest charges	$	17,983		$	—	$	18,028		$	(179	)	$	35,832
Federal and state income tax expense (benefit)	$	12,431		$	7,612	$	(5,955	)	$	—		$	14,088
Net income (loss)	$	51,527		$	22,806	$	(18,768	)	$	—		$	55,565

2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	343,482		$	(2,420	)	$	—		$	341,062
Other operations	20,186			—			—			20,186
Affiliate revenue	223			22,765			(22,988		)	—
Electric customer credits	(2,992		)	—			—			(2,992		)
Operating revenue, net	$	360,899		$	20,345		$	(22,988	)	$	358,256
Depreciation and amortization	$	41,687		$	2,076		$	—		$	43,763
Interest income	$	1,606		$	310		$	(84	)	$	1,832
Interest charges	$	17,895		$	14,017		$	(84	)	$	31,828
Federal and state income tax expense (benefit)	$	18,016		$	(6,597	)	$	—		$	11,419
Net income (loss)	$	63,336		$	(15,975	)	$	(1	)	$	47,360

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SEGMENT INFORMATION FOR THE NINE MONTHS ENDED SEPT. 30,
2019 (THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	862,969		$	274,610		$	(7,260	)	$	(1	)	$	1,130,318
Other operations	53,318			83,619			2			(5,395		)	131,544
Affiliate revenue	971			31			77,800			(78,802		)	—
Electric customer credits	(30,565		)	(1,267		)	—			—			(31,832		)
Operating revenue, net	$	886,693		$	356,993		$	70,542		$	(84,198	)	$	1,230,030
Depreciation and amortization	$	126,610		$	25,555		$	6,231		$	(1	)	$	158,395
Interest income	$	3,281		$	842		$	841		$	(508	)	$	4,456
Interest charges	$	52,498		$	—		$	53,682		$	(509	)	$	105,671
Federal and state income tax expense (benefit)	$	34,407		$	15,169		$	(17,220	)	$	(1	)	$	32,355
Net income (loss)	$	127,595		$	46,788		$	(53,515	)	$	—		$	120,868
Additions to property, plant, and equipment	$	247,987		$	3,654		$	204		$	—		$	251,845
Equity investment in investees (1)	$	17,672		$	—		$	—		$	—		$	17,672
Goodwill (1)	$	1,490,797		$	—		$	—		$	—		$	1,490,797
Total segment assets (1)	$	5,988,444		$	998,289		$	550,323		$	(38,683	)	$	7,498,373
(1) Balances as of September 30, 2019

2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	904,746		$	(7,260	)	$	—		$	897,486
Other operations	61,066			1			—			61,067
Affiliate revenue	651			55,707			(56,358		)	—
Electric customer credits	(24,276		)	—			—			(24,276		)
Operating revenue, net	$	942,187		$	48,448		$	(56,358	)	$	934,277
Depreciation and amortization	$	121,796		$	6,281		$	(1	)	$	128,076
Interest income	$	3,560		$	652		$	(169	)	$	4,043
Interest charges	$	53,658		$	41,409		$	(173	)	$	94,894
Federal and state income tax expense (benefit)	$	39,724		$	(17,777	)	$	—		$	21,947
Net income (loss)	$	132,359		$	(48,299	)	$	—		$	84,060
Additions to property, plant, and equipment	$	193,708		$	911		$	—		$	194,619
Equity investment in investees (1)	$	18,172		$	—		$	—		$	18,172
Goodwill (1)	$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets (1)	$	5,839,853		$	633,756		$	(36,795	)	$	6,436,814
(1) Balances as of December 31, 2018

Note 12 — Regulation and Rates

At September 30, 2019, Provision for rate refund on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets consisted primarily of $38.4 million for the estimated refund for the tax-related benefits from the TCJA, $3.0 million for the estimated refund related to the FERC audit, $2.8 million for the cost of service savings refunds, $2.3 million for estimated FRP refunds, and $1.9 million for potential reductions to the transmission ROE. For more information about the FERC audit, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”

Transmission ROE

A complaint was filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. As ofSeptember 30, 2019,Cleco Power had $1.9 million accrued for potential ROE reductions. For more information on the ROE complaints, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

FRP

Cleco Power’s annual retail earnings are subject to an FRP that was approved by the LPSC in June 2014. Under the terms of Cleco Power’s current FRP, Cleco Power is allowed to earn a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, 60.0% of retail earnings between 10.9% and 11.75%, and all retail earnings over 11.75%, are required to be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC, annually. Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds are ultimately subject to LPSC approval. On June 28, 2019, Cleco Power filed an application with the LPSC for a new FRP, with anticipated new rates being effective July 1, 2020. Cleco Power has responded to several sets of data requests relating to the new FRP.

Cleco Power must file annual monitoring reports no later than October 31 for the 12-month period ending June 30. On October 31, 2017, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2017, which indicated that no refund was due as a result of the FRP and $1.2 million was due as a result of the cost of service savings from the 2016 Merger Commitments. The $1.2 million cost of service savings from the 2016 Merger Commitments were refunded in September 2018. Cleco Power expects the LPSC to approve the 2017 FRP monitoring report in the fourth quarter of 2019.

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On October 31, 2018, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2018, which indicated that no refund was due as a result of the FRP and $1.2 million of cost of service savings refunds are due to be returned to eligible customers. On December 21, 2018, Cleco Power responded to the first set of data requests for the 2018 FRP monitoring report.

On October 4, 2019, Cleco Power filed comments and supporting testimony to the LPSC’s initial and final report for the 2017 FRP monitoring report regarding the realignment of SSR revenues between fuel and base revenues. Cleco Power proposed the re-allocation of SSR revenues, which would result in no additional FRP refund for the 12-month period ended June 30, 2017, and $2.3 million of additional FRP refunds for the 12-month period ended June 30, 2018. At September 30, 2019, Cleco Power had $2.3 million accrued for the estimated FRP refunds relating to the 12-month period ended June 30, 2018.

On October 31, 2019, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2019, which indicated that no refund was due as a result of the FRP and $1.2 million of cost of service savings refunds are due to be returned to eligible customers. At September 30, 2019, Cleco Power had $1.2 million accrued for the estimated cost of service savings refunds relating to the 12-month period ended June 30, 2019.

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. As a result of the tax rate reduction, on January 1, 2018, Cleco Power began accruing an estimated reserve for the reduction in the federal statutory corporate income tax rate. In February 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flow through to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. After various filings and settlement discussions, on July 10, 2019, the LPSC approved Cleco Power’s rate refund of $79.2 million, plus interest, for the reduction in the statutory federal tax rate for the period from January 2018 to June 2020. The refund is being credited to customers over 12 months beginning August 1, 2019. At September 30, 2019, Cleco Power had $38.4 million accrued for the estimated federal tax-related benefits from the TCJA and $3.0 million accrued for related interest.

Also, on July 10, 2019, the LPSC approved Cleco Power’s motion to address the rate redesign and the regulatory liability for excess ADIT, resulting from the enactment of the TCJA, in Cleco Power’s application for its next FRP, which was filed on June 28, 2019.

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution could be implemented to mitigate reliability issues. One mitigating factor identified was Cleco Power’s Terrebonne to Bayou Vista Transmission project. The Terrebonne to Bayou Vista project was completed in April 2019. Cleco Power received a termination notice, effective

April 30, 2019, and filed paperwork to withdraw the filed Attachment Y. While operating as an SSR unit, Cleco Power received monthly payments that included recovery of expenses, including capital expenditures, related to the operations of Teche Unit 3. Additionally, MISO allocated SSR costs to the load serving entities that required the operation of the SSR unit, including Cleco Power. These payments and cost allocations were finalized as part of a MISO SSR settlement approved in December 2018. Cleco Power operated Teche Unit 3 as an SSR unit from April 2017 until April 2019.

After the end of the final SSR agreement, which was terminated on April 30, 2019, Cleco Power expects Teche Unit 3 to be available to run until the estimated 2021 in-service date of Bayou Vista to Segura Transmission project, at which time Cleco Power does not expect to offer the unit into MISO, barring any grid or customer reliability issues or other similar reasons. At September 30, 2019, Cleco Power had $6.1 million accrued for the net capital refund for capital expenditures paid for by third parties. As part of the settlement, one of the load serving entities agreed to reimburse Cleco Power for their portion of the capital refund. Management is unable to determine the timing of the capital refund.

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 Condensed 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 Condensed 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 September 30, 2019, consisted of its equity investment of $17.7 million.

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

INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Purchase price	$	12,873		$	12,873
Cash contributions	6,399			6,399
Dividends	(1,600		)	(1,100		)
Total equity investment in investee	$	17,672		$	18,172

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:

(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Oxbow’s net assets/liabilities	$	35,345	$	36,345
Cleco Power’s 50% equity	$	17,672	$	18,172
Cleco Power’s maximum exposure to loss	$	17,672	$	18,172

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The following table contains summarized financial information for Oxbow:

	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Operating revenue	$	2,776	$	2,214	$	7,114	$	4,134
Operating expenses	2,776		2,214		7,114		4,134
Income before taxes	$	—	$	—	$	—	$	—

DHLC mines lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station.

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.

Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, four actions were filed in the 9th Judicial District Court for Rapides Parish, Louisiana and three actions were filed in the Civil District Court for Orleans Parish, Louisiana. The petitions in each action generally alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the 2016 Merger at a price that allegedly undervalued Cleco, and failing to disclose material information about the 2016 Merger. The petitions also alleged that Cleco Partners, Cleco Corporation, Merger Sub, and in some cases, certain of the investors in Cleco Partners, either aided and abetted or entered into a civil conspiracy to advance those supposed breaches of duty. The petitions seek various remedies, including monetary damages, which includes attorneys’ fees and expenses.

The four actions filed in the 9th Judicial District Court for Rapides Parish are captioned as follows:

• Braunstein v. Cleco Corporation, No. 251,383B (filed October 27, 2014),

• Moore v. Macquarie Infrastructure and Real Assets, No. 251,417C (filed October 30, 2014),

• Trahan v. Williamson, No. 251,456C (filed November 5, 2014), and

• L’Herisson v. Macquarie Infrastructure and Real Assets, No. 251,515F (filed November 14, 2014).

In November 2014, the plaintiff in the Braunstein action moved for a dismissal of the action without prejudice, and that motion was granted in November 2014. In December 2014, the Court consolidated the remaining three actions and appointed interim co-lead counsel. Also, in December 2014, the plaintiffs in the consolidated action filed a Consolidated Amended Verified Derivative and Class Action Petition for Damages and Preliminary and Permanent Injunction (the Consolidated Amended Petition). The consolidated action named Cleco Corporation, its directors, Cleco Partners, and Merger Sub as defendants. The Consolidated Amended Petition alleged, among other things, that Cleco Corporation’s directors

breached their fiduciary duties to Cleco’s shareholders and grossly mismanaged Cleco by approving the Merger Agreement because it allegedly did not value Cleco adequately, failing to structure a process through which shareholder value would be maximized, engaging in self-dealing by ignoring conflicts of interest, and failing to disclose material information about the 2016 Merger. The Consolidated Amended Petition further alleged that all defendants conspired to commit the breaches of fiduciary duty. Cleco believes that the allegations of the Consolidated Amended Petition are without merit and that it has substantial meritorious defenses to the claims set forth in the Consolidated Amended Petition.

The three actions filed in the Civil District Court for Orleans Parish are captioned as follows:

• Butler v. Cleco Corporation, No. 2014-10776 (filed November 7, 2014),

• Creative Life Services, Inc. v. Cleco Corporation, No. 2014-11098 (filed November 19, 2014), and

• Cashen v. Cleco Corporation, No. 2014-11236 (filed November 21, 2014). 

Both the Butler and Cashen actions name Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, BCI, and John Hancock Financial as defendants. The Creative Life Services action names Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, and Macquarie Infrastructure Partners III, L.P., as defendants. In December 2014, the plaintiff in the Butler action filed an Amended Class Action Petition for Damages. Each petition alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties to Cleco’s shareholders by approving the Merger Agreement because it allegedly did not value Cleco adequately, failing to structure a process through which shareholder value would be maximized and engaging in self-dealing by ignoring conflicts of interest. The Butler and Creative Life Services petitions also allege that the directors breached their fiduciary duties by failing to disclose material information about the 2016 Merger. Each petition further alleged that Cleco, Cleco Partners, Merger Sub, and certain of the investors in Cleco Partners aided and abetted the directors’ breaches of fiduciary duty. In December 2014, the directors and Cleco filed declinatory exceptions in each action on the basis that each action was improperly brought in Orleans Parish and should either be transferred to the 9th Judicial District Court for Rapides Parish or dismissed. Also, in December 2014, the plaintiffs in each action jointly filed a motion to consolidate the three actions pending in Orleans Parish and to appoint interim co-lead plaintiffs and co-lead counsel. In January 2015, the Court in the Creative Life Services case sustained the defendants’ declinatory exceptions and dismissed the case so that it could be transferred to the 9th Judicial District Court for Rapides Parish. In February 2015, the plaintiffs in Butler and Cashen also consented to the dismissal of their cases from Orleans Parish so they could be transferred to the 9th Judicial District Court for Rapides Parish.

In February 2015, the 9th Judicial District Court for Rapides Parish held a hearing on a motion for preliminary injunction filed by plaintiffs Moore, L’Herisson, and Trahan seeking to enjoin the shareholder vote for approval of the Merger Agreement. Following the hearing, the Court denied the plaintiffs’ motion. In June 2015, three of the plaintiffs filed their Second Consolidated Amended Verified Derivative and

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Class Action Petition. This will be considered according to a schedule established by the 9th Judicial District Court for Rapides Parish. Cleco filed exceptions seeking dismissal of the amended petition in July 2015.

In March 2016 and May 2016, the plaintiffs filed their Third Consolidated Amended Verified Derivative Petition for Damages and Preliminary and Permanent Injunction and their Fourth Verified Consolidated Amended Class Action Petition, respectively. The fourth petition eliminated the request for preliminary and permanent injunction and also named an additional executive officer as a defendant. Cleco filed exceptions seeking dismissal of the amended Petition. A hearing was held in September 2016, and the District Court granted the exceptions filed by Cleco and dismissed all claims asserted by the former shareholders. The plaintiffs appealed the District Court’s ruling to the Louisiana Third Circuit Court of Appeal. The Third Circuit Court of Appeal heard oral arguments in the case in September 2017. In December 2017, the Third Circuit Court of Appeal issued an order reversing and remanding the case to the District Court for further proceedings. In January 2018, Cleco filed a writ with the Louisiana Supreme Court seeking review of the Third Circuit Court of Appeal’s decision. The writ was denied in March 2018 and the parties are engaged in discovery in the District Court. In November 2018, Cleco filed exceptions of no cause of action and res judicata, seeking to dismiss all claims. The District Court denied the exceptions on January 14, 2019. A hearing on the plaintiffs’ request for certification of a class was scheduled for August 26, 2019; however, prior to the hearing, the parties reached an agreement to certify a limited class. Cleco believes that the allegations of the petitions in each action are without merit and that it has substantial meritorious defenses to the claims set forth in each of the petitions.

Gulf Coast Spinning

In September 2015, a potential customer sued Cleco for failure to fully perform an alleged verbal agreement to lend or otherwise fund its startup costs to the extent of $6.5 million. Gulf Coast Spinning Company, LLC (Gulf Coast), the primary plaintiff, alleges that Cleco promised to assist it in raising approximately $60.0 million, which Gulf Coast needed to construct a cotton spinning facility near Bunkie, Louisiana. According to the petition filed by Gulf Coast in the 12^th Judicial District Court for Avoyelles Parish, Louisiana (the “District Court”), Cleco made such promises of funding assistance in order to cultivate a new industrial electric customer which would increase its revenues under a power supply agreement that it executed with Gulf Coast. Gulf Coast seeks unspecified damages arising from its inability to raise sufficient funds to complete the project, including lost profits.

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The District Court denied Cleco’s exception in December 2015, after considering briefs and arguments. In January 2016, Cleco appealed the District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal denied the request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of the District Court’s denial of Cleco’s exception. In November 2016, the Louisiana Supreme Court denied Cleco’s writ application.

In February 2016, the parties agreed to a stay of all proceedings pending discussions concerning settlement. In May 2016, the District Court lifted the stay at the request of

Gulf Coast. The parties are currently participating in discovery. Cleco believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast, are otherwise without merit, and that it has substantial meritorious defenses to the claims alleged by Gulf Coast.

Sabine River Flood

In March 2017, Cleco was served with a summons in Perry Bonin, Ace Chandler, and Michael Manuel, et al v. Sabine River Authority of Texas and Sabine River Authority of Louisiana, No. B-160173-C. The action was filed in the 163rd Judicial District Court for Orange County, Texas, and relates to flooding that occurred in Texas and Louisiana in March 2016. The plaintiffs have alleged that the flooding was the result of the release of water from the Toledo Bend spillway gates into the Sabine River. While the plaintiffs have made numerous allegations, they have specifically alleged that Cleco Power, included as one of several companies and governmental bodies, failed to repair one of the two hydroelectric generators at the Toledo Bend Dam, which in turn contributed to the flooding. Cleco Power does not operate the hydroelectric generator.

The suit was removed to federal court in Texas. The new federal case is Perry Bonin, et al. v. Sabine River Authority of Texas et al., No. 17-cv-134, U.S. District Court for the Eastern District of Texas (Bonin Case). The plaintiffs moved to remand the case to state court, but the district court found that the case raises a substantial federal question and denied the motion to remand. Cleco Power, along with its co-defendants, filed a motion to dismiss on various grounds, primarily arguing that the plaintiffs’ claims are preempted because they infringe on FERC’s exclusive control of dam operations. The district court granted the motion to dismiss in part, declining to rule on some of the arguments raised by the defendants, and granted the plaintiffs leave to amend their complaint. The plaintiffs filed a Fifth Amended Complaint in March 2018. Cleco Power filed a new motion to dismiss the plaintiffs’ claims.

In March 2018, approximately 26 other individual plaintiffs filed a petition against Cleco Power and other defendants in Larry Addison, et al. v. Sabine River Authority of Texas, et al., No. D180096-C. The action was filed in the 260th Judicial District Court for Orange County, Texas. The defendants removed the case to federal court in April 2018. The new federal case is Larry Addison, et al. v. Sabine River Authority of Texas, et al., No. 18-cv-153, U.S. District Court for the Eastern District of Texas. The allegations are essentially identical to those in the Bonin Case. Also, in April 2018, Cleco Power filed a motion to dismiss on the same grounds that previously were successful in the Bonin Case. In July 2018, the district court entered an order consolidating the Addison Case with the Bonin Case. Management believes that both cases, as they relate to Cleco Power, have no merit. In August 2018, the Judge entered an order requiring the plaintiffs to file a more definitive statement to clarify the plaintiffs’ claims. In response thereto, the plaintiffs filed a Sixth Amended Petition in September 2018. Cleco Power filed a response in October 2018. All claims were dismissed against Cleco Power by ruling of the Judge on March 18, 2019. The plaintiffs filed an appeal of the dismissal with the United States Court of Appeals for the Fifth Circuit. The case has been fully briefed.

Dispute with Saulsbury Industries

In October 2018, Cleco Power sued Saulsbury Industries, Inc., the former general contractor for the St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries,

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Inc.’s failure to complete the St. Mary Clean Energy Center project on time and for costs incurred by Cleco Power in hiring a replacement general contractor. The action was filed in the 9th Judicial District Court for Rapides Parish, No. 263339. Saulsbury Industries, Inc. removed the case to the U.S. District Court for the Western District of Louisiana, on March 1, 2019.

In January 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC, in the U.S. District Court for the Western District of Louisiana. Saulsbury Industries, Inc. alleges that Cleco Power and Cabot Corporation caused the delays in the St. Mary Clean Energy Center project, resulting in significant impact to Saulsbury Industries, Inc.’s direct and indirect costs. On June 5, 2019, Cleco Power and Cabot Corporation each filed separate motions to dismiss. On October 24, 2019, the District Court denied Cleco’s motion as premature and ruled that Saulsbury Industries, Inc. had six weeks to conduct discovery on specified jurisdictional issues.

On October 10, 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporationand Cleco Power LLC in the 16th Judicial District Court for St. Mary Parish, No. 133910-A. Saulsbury Industries, Inc. alleges that Cleco Power and Cabot Corporation caused the delays in the St. Mary Clean Energy Center project, resulting in significant impact to Saulsbury Industries, Inc.'s direct and indirect costs. Saulsbury Industries, Inc. also seeks to enforce an alleged lien on the St. Mary Energy Center project. Cleco has not filed responsive pleadings in the case but denies that the case has any merit and that Saulsbury Industries, Inc. perfected a lien against the property involved.

LPSC Audits

Fuel Audit

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997, in Docket No. U-21497 provides that an audit of FAC filings will be performed at least every other year. In March 2018, Cleco Power received notice of an FAC audit from the LPSC for the period of January 2016, to December 2017. The total amount of fuel expense included in the audit was $536.2 million. In August 2018, LPSC Staff issued its audit report, which recommended no disallowance of fuel costs. On April 26, 2019, the report was approved by the LPSC. Cleco Power has FAC filings for January 2018 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of fuel cost is ordered resulting in a refund, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Environmental Audit

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from customers certain costs of environmental compliance. The costs eligible for recovery are prudently incurred air emissions credits associated with complying with federal, state, and local air emission regulations that apply to the generation of

electricity reduced by the sale of such allowances. Also eligible for recovery are variable emission mitigation costs, which are the costs of reagents such as ammonia and limestone that are a part of the fuel mix used to reduce air emissions, among other things. In May 2018, Cleco Power received notice of an EAC audit from the LPSC for the period of January 2016 to December 2017. The total amount of environmental expense included in this audit is $30.7 million. On July 16, 2019, LPSC Staff issued its audit report, which recommended no disallowance of environmental cost. On September 11, 2019, the report was approved by the LPSC. Cleco Power has EAC filings for January 2018 and thereafter that remain subject to audit. Historically, the disallowances have not been material. If a disallowance of environmental cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of Mercury and Air Toxics Standards (MATS). In June 2015, the U.S. Supreme Court remanded the MATS rule to the D.C. Circuit Court of Appeals. In December 2015, the D.C. Circuit Court of Appeals remanded the rule to the EPA; however, the D.C. Circuit Court of Appeals did not vacate this rule. In April 2016, the EPA released a final supplemental finding that, even considering costs, it is appropriate and necessary to regulate hazardous air pollutants. By the June 2016 deadline, six petitions were filed with the U.S. Court of Appeals for the D.C. Circuit Court of Appeals for review of the EPA’s findings. At the request of the EPA, in April 2017, the court issued an order holding the cases in abeyance pending the EPA’s review of its supplemental finding. These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC.

FERC Audit

Generally, Cleco Power records wholesale transmission revenue through approved formula rates, Attachment O of the MISO tariff and certain grandfathered agreements. The calculation of the rate formulas, as well as FERC accounting and reporting requirements, are subject to periodic audits by FERC. In March 2018, the Division of Audits and Accounting, within the Office of Enforcement of FERC, initiated an audit of Cleco Power for the period of January 1, 2014, through June 30, 2019. On September 27, 2019, Cleco Power received the final audit report, which indicated 12 findings of noncompliance with a combination of FERC accounting and reporting requirements and computation of revenue requirements along with 59 recommendations associated with the audit period. Cleco Power submitted a plan for implementing the audit recommendations on October 28, 2019. Cleco Power also submitted the refund analysis on November 7, 2019, which resulted in an estimate refund of $3.0 million related to the FERC audit findings. This amount was recorded in Provision for rate refund on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019. Cleco Power anticipates this amount to be refunded to its wholesale transmission customers as a reduction in Attachment O and grandfathered agreement rates over 12 months commencing June 1, 2020.

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Transmission ROE

A complaint was filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaint sought to reduce the 12.38% ROE used in MISO’s transmission rates to a proposed 6.68%.

The complaint, filed in February 2015, was for the period February 2015 through May 2016. In June 2016, an administrative law judge issued an initial decision in the rate case docket recommending a 9.70% base ROE. Cleco Power is unable to determine when a binding FERC order will be issued on the ROE complaint.

In November 2014, the MISO transmission owners committee, of which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by 50 basis points for RTO participation as allowed by the MISO tariff. In January 2015, FERC granted the request. The collection of the adder is delayed until the resolution of the ROE complaint proceedings.

As of September 30, 2019, Cleco Power had $1.9 million accrued for potential ROE reductions. Management believes a reduction in the ROE, as well as any additional refund, will not have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. 

South Central Generating

In 2017, Louisiana Generating received insurance settlement proceeds for costs incurred to resolve a lawsuit which was brought by the EPA and the LDEQ against Louisiana Generating related to Big Cajun II, Unit 3. Entergy Gulf States, as co-owner of Big Cajun II, Unit 3, is expected to be allocated a portion of the insurance settlement proceeds. Any amount allocated to Entergy Gulf States will be determined by ongoing litigation and negotiations. South Central Generating estimated this amount to be $10.0 million. As part of the Cleco Cajun Transaction, Cleco Cajun assumed the $10.0 million contingent liability and NRG Energy indemnified Cleco for losses associated with this litigation matter. As a result, Cleco also recorded a $10.0 million indemnification asset, which was included in the preliminary purchase price allocation.

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts regarding matters arising out of the ordinary course of business. Management is unable to estimate any potential losses that Cleco Cajun may ultimately be responsible for with respect to any one of these matters in the event of a negative outcome. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with matters that existed as of the closing date, including pending litigation.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of September 30, 2019, believes the probable and reasonably estimable liabilities based on the eventual

disposition of these matters are $6.0 million and has accrued this amount.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require the Registrants to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees.

Cleco Holdings entered into these off-balance sheet commitments in order to entice desired counterparties to contract with its affiliates by providing some measure of credit assurance to the counterparty in the event Cleco’s affiliates do not fulfill certain contractual obligations. If Cleco Holdings had not provided the off-balance sheet commitments, the desired counterparties may not have contracted with Cleco’s affiliates, or may have contracted with them at terms less favorable to its affiliates.

The off-balance sheet commitments are not recognized on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets because management has determined that Cleco and Cleco Power’s affiliates are able to perform the obligations under their contracts and that it is not probable that payments by Cleco or Cleco Power will be required.

Cleco Holdings provided guarantees and indemnities to Entergy Louisiana and Entergy Gulf States as a result of the sale of the Perryville generation facility in 2005. The remaining indemnifications relate to environmental matters that may have been present prior to closing. These remaining indemnifications have no time limitations. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. Management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under these guarantees.

On behalf of Acadia, Cleco Holdings provided guarantees and indemnifications as a result of the sales of Acadia Unit 1 to Cleco Power and Acadia Unit 2 to Entergy Louisiana in 2010 and 2011, respectively. The remaining indemnifications relate to the fundamental organizational structure of Acadia. These remaining indemnifications have no time limitations or maximum potential future payments. Management does not expect to be required to pay Cleco Power or Entergy Louisiana under these guarantees.

Cleco Holdings provided indemnifications to Cleco Power as a result of the transfer of Coughlin to Cleco Power in March 2014. Cleco Power also provided indemnifications to Cleco Holdings and Evangeline as a result of the transfer of Coughlin to Cleco Power. The maximum amount of the potential payment to Cleco Power, Cleco Holdings, and Evangeline for their respective indemnifications is $40.0 million, except for indemnifications relating to the fundamental organizational structure of each respective entity, of which the maximum amount is $400.0 million. Management does not expect to be required to make any payments under these indemnifications.

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of Dolet Hills Power Station, have agreed to pay the loan and lease principal obligations of the lignite miner, DHLC, when due if DHLC does not have sufficient funds or credit to pay. Any amounts paid on behalf of the miner would be credited by the lignite miner against future invoices for lignite delivered. The maximum projected payment

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by Cleco Power under this guarantee is estimated to be $86.4 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement is not expected to terminate pursuant to its terms until 2036 and does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under this guarantee.

At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019, this letter of credit no longer decreases availability under Cleco Holdings’ credit facility. This letter of credit automatically renews each year.

Generally, neither Cleco Holdings nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. There are no assets held as collateral for third parties that either Cleco Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

Cleco has accrued for liabilities related to third parties, employee medical benefits, and AROs.

Risks and Uncertainties

Cleco could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their obligations or if Cleco or its affiliates are not in compliance with loan agreements or bond indentures.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows.

Changes in the regulatory environment or market forces could cause Cleco to determine its assets have suffered an other-than-temporary decline in value, whereby an impairment would be required and Cleco’s financial condition could be materially adversely affected.

Cleco Power and Cleco Cajun are participants in the MISO market. Energy prices in the MISO market are based on LMP, which includes a component directly related to congestion on the transmission system. Pricing zones with greater transmission congestion may have higher LMPs. Physical transmission constraints present in the MISO market could increase energy costs within pricing zones. Cleco Power and Cleco Cajun use FTRs to mitigate transmission congestion price risks. Changes to anticipated transmission paths may result in an unexpected increase in energy costs.

Note 15 — Affiliate Transactions

At September 30, 2019, Cleco has an affiliate payable of $3.2 million to Cleco Group for a federal income tax refund that was received by Cleco Holdings.

Cleco Power has balances that are payable to or due from its affiliates. The following table is a summary of those balances:

	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	$	1	$	94	$	699	$	88
Support Group	1,361		8,610		2,619		7,755
Cleco Cajun	712		18		—		—
Total	$	2,074	$	8,722	$	3,318	$	7,843

Note 16 — Intangible Assets and Liabilities

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. This intangible asset is expected to have a life of 12 years, but could have a life up to 15 years depending on the time period required to collect the required amount from Cleco Power’s customers. 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 2016 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 2016 Merger. Cleco Katrina/Rita records amortization expense based on actual collections.

As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed 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. The intangible assets related to the power supply agreements are amortized over the remaining life of each applicable contract ranging between 4 years and 16 years and the amortization is included in Electric operations on Cleco’s Condensed Consolidated Statement of Income.

As a result of the Cleco Cajun Transaction, preliminary fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the difference between the contract and market price of acquired long-term wholesale power agreements. The preliminary fair value of intangible assets of $98.9 million and intangible liabilities of $14.2 million was reflected in the preliminary purchase price allocation. At the end of their life, these intangible assets and liabilities will have no residual value. These intangibles are amortized over the remaining life of each applicable contract ranging between two years and eight years. The amortization is included in Electric operations on Cleco’s Condensed Consolidated Statement of Income.

As part of the Cleco Cajun Transaction, Cleco assumed an LTSA for maintenance services related to the Cottonwood Plant. An intangible liability of $24.1 million was reflected in the preliminary purchase price allocation and is being amortized using the straight-line method over the estimated remaining life

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of the LTSA of seven years. The amortization is included as a reduction to the LTSA prepayments on Cleco’s Condensed Consolidated Balance Sheet. For more information on the fair value adjustments of intangible assets and liabilities related to the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

The following tables present Cleco and Cleco Power’s amortization of intangible assets and liabilities:

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	5,660	$	5,623	$	15,702	$	15,617
Trade name	$	64	$	64	$	191	$	191
Power supply agreements	$	6,474	$	2,420	$	17,873	$	7,260
Intangible liabilities
LTSA	$	871	$	—	$	2,323	$	—
Power supply agreements	$	882	$	—	$	2,352	$	—

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	5,660	$	5,623	$	15,702	$	15,617

The following tables summarize the balances for intangible assets and liabilities subject to amortization for Cleco and Cleco Power:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	70,594		$	70,594
Trade name	5,100			5,100
Power supply agreements	184,004			85,104
Total intangible assets carrying amount	259,698			160,798
Intangible liabilities
LTSA	24,100			—
Power supply agreements	14,200			—
Total intangible liability carrying amount	38,300			—
Net intangible assets carrying amount	221,398			160,798
Accumulated amortization	(105,583		)	(76,491		)
Net intangible assets subject to amortization	$	115,815		$	84,307

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	177,537		$	177,537
Accumulated amortization	(172,146		)	(156,444		)
Net intangible assets subject to amortization	$	5,391		$	21,093

Goodwill

On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion.

Management assigned the recognized goodwill to the Cleco Power reporting segment. Goodwill is required to be tested for impairment at the reporting segment level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting segment below its carrying value. Application of the goodwill impairment test requires significant judgments, including the identification of reporting segments, assignments of assets and liabilities to reporting segments, assignment of goodwill to reporting segments, and the determination of the fair value of the reporting segments.

Cleco conducted its 2019 annual impairment test using an August 1, 2019, measurement date. The fair value of the Cleco Power reporting segment was estimated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries. Significant assumptions used in these fair value estimates include estimation of future cash flows related to capital expenditures, long-term rate of growth, and weighted-average cost of capital (WACC) or discount rate. Changes in these assumptions could materially affect the determination of fair value and goodwill impairment at Cleco Power. Based on the tests performed, management has determined that there was no impairment of Cleco Power’s goodwill as of August 1, 2019.

Management estimated the fair value of Cleco Power’s equity to be $3.97 billion at the August 1, 2019, measurement date. The carrying value of Cleco Power’s equity was approximately $3.40 billion with the excess of the fair value over the carrying value representing 16.8% or $570.4 million. There were no accumulated impairment charges.

Note 17 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are summarized in the following tables for Cleco and Cleco Power. All amounts are reported net of income taxes. Amounts in parentheses indicate losses.

Cleco
	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019			FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN
Balances, beginning of period	$	1,504		$	1,786
Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(37		)	(319		)
Balances, Sept. 30, 2019	$	1,467		$	1,467

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018			FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	$	(2,631	)	$	(2,921	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	261			551
Balances, Sept. 30, 2018	$	(2,370	)	$	(2,370	)

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Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30, 2019									FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI			POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(6,775	)	$	(5,994	)	$	(12,769	)	$	(7,060	)	$	(6,122	)	$	(13,182	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	230			—			230			515			—			515
Reclassification of net loss to interest charges	—			63			63			—			191			191
Balances, Sept. 30, 2019	$	(6,545	)	$	(5,931	)	$	(12,476	)	$	(6,545	)	$	(5,931	)	$	(12,476	)

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018									FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI			POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(7,877	)	$	(5,178	)	$	(13,055	)	$	(8,377	)	$	(5,306	)	$	(13,683	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	312			—			312			812			—			812
Reclassification of net loss to interest charges	—			112			112			—			240			240
Balances, Sept. 30, 2018	$	(7,565	)	$	(5,066	)	$	(12,631	)	$	(7,565	)	$	(5,066	)	$	(12,631	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cleco uses its website, https://www.cleco.com, as a routine channel for distribution of important information, including news releases and financial information. Cleco’s website is the primary source of publicly disclosed news about Cleco. Cleco is providing the address to its website solely for informational purposes and does not intend for the address to be an active link. The contents of the website are not incorporated into this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in combination with the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and Cleco and Cleco Power’s Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three and nine months ended September 30, 2019, and 2018.

OVERVIEW

Cleco is a regional energy company that, prior to the close of the Cleco Cajun Transaction, conducted substantially all of its business operations through its primary subsidiary, Cleco Power. As a result of the Cleco Cajun Transaction, Cleco now conducts substantially all of its business operations through its two primary subsidiaries:

• Cleco Power, a regulated electric utility company that owns nine generating units with a total nameplate capacity of 3,310 MW and serves approximately 291,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi; and

• Cleco Cajun, an unregulated electric utility company that owns eight generating units with a net capacity of 3,555 MW and supplies wholesale power and capacity in Arkansas, Louisiana, and Texas. The Cottonwood Sale Leaseback was entered into upon the close of the Cleco Cajun Transaction.

Cleco Cajun Transaction

Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a new reportable segment and is reflected as such in this Quarterly Report on

Form 10-Q for the quarter ended September 30, 2019. For more information on the transaction, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 2 — Business Combination.” Cleco’s condensed consolidated financial statements include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, until September 30, 2019.

Cleco Power

Many factors affect Cleco Power’s primary business of generating, delivering, and selling electricity. These factors include weather and the presence of a stable regulatory environment, which impacts cost recovery and the ROE, as well as the recovery of costs related to growing energy demand and rising fuel prices; the ability to increase energy sales while containing costs; the ability to reliably deliver power to its jurisdictional customers; the ability to comply with increasingly stringent regulatory and environmental standards; and the ability to successfully perform in MISO while subject to the related operating challenges and uncertainties, including increased wholesale competition. Cleco Power’s current key initiatives are beginning construction on the Bayou Vista to Segura Transmission project; stabilizing the START project; continuing the DSMART project; and maintaining and growing its wholesale and retail business. These initiatives are discussed below.

St. Mary Clean Energy Center Project

The St. Mary Clean Energy Center project includes Cleco Power constructing, owning, and operating a 47.6 net MW generating unit to be fueled by waste heat from Cabot Corporation’s carbon black manufacturing plant in Franklin, Louisiana. The project is expected to generate more than 300,000 MWh of zero additional carbon emitting energy each year. The unit was placed in service on August 8, 2019, and is expected to have a final cost of $139.8 million. As of September 30, 2019, Cleco Power had spent $138.1 million on the project. Legal proceedings are pending in connection with the St. Mary Clean Energy Center project. For more information about the ongoing litigation, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies,

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and Disclosures about Guarantees — Litigation — Dispute with Saulsbury Industries.”

Terrebonne to Bayou Vista Transmission Project

The Terrebonne to Bayou Vista Transmission project includes the construction of additional transmission interconnection facilities south of Teche Power Station. The project is expected to increase reliability, reduce congestion, and provide hurricane hardening of the 230-kilovolt transmission system for customers in south Louisiana. The project was placed in service in April 2019. Cleco Power’s portion of the joint project with Entergy Louisiana is expected to cost $64.2 million. As of September 30, 2019, Cleco Power had spent $62.1 million on the project, with the remaining costs relating to final construction and clean-up costs.

Coughlin Pipeline Project

The Coughlin Pipeline project includes construction of a pipeline directly connecting the Pine Prairie Energy Center to Cleco’s Coughlin Power Station. The project is expected to increase reliability for fuel delivery and mitigate exposure to transportation cost increases. In June 2017, the LPSC approved a regulatory asset to be established upon the completion of the Coughlin Pipeline project for the revenue requirement associated with the project until Cleco Power seeks recovery in the new FRP, which is anticipated to be effective July 1, 2020. The project was placed in service on September 6, 2019, and is expected to have a final cost of $31.2 million. As of September 30, 2019, Cleco Power had spent $30.5 million on the project.

Bayou Vista to Segura Transmission Project

The Bayou Vista to Segura Transmission project includes the construction of 48 miles of 230kV transmission line, a 230/138kV substation and three substation expansions in south Louisiana. The project is expected to cost approximately $136.1 million. The project is expected to increase reliability, provide transmission system redundancy, and provide hurricane hardening for customers in south Louisiana. Cleco Power received MISO approval for the project in December 2017. The project is currently in the design and engineering phase. Construction has begun on expansions to existing substations, with the northern phase expected to be completed in the fourth quarter of 2020 and the southern phase expected to be completed in the fourth quarter of 2021. As of September 30, 2019, Cleco Power had spent $5.4 million on the project.

START Project

The START project replaces outdated business department applications with a modern, fully integrated enterprise business application suite. The project’s objectives are to gain efficiencies through consistent, industry-leading work processes and practices; enable better decision making through data transparency across business functions; mitigate risk through knowledge transfer and better process documentation; provide a modernized, flexible platform to support future growth and changing business models; and provide customer-centric focus through technology and flexibility. The project became operational in May 2019. Originally, the total estimated project cost was $157.3 million. As of September 30, 2019, Cleco had spent $163.3 million on the project. Additional costs are related to the timing of the implementation of the project.

DSMART Project

The DSMART project includes modernization of Cleco Power’s distribution system by replacing or upgrading distribution line equipment utilizing new and emerging technologies to facilitate automatic fault isolation, service restoration, and fault location. The project is expected to provide savings through a reduction in outage restoration time, time to locate faults, and improved operational efficiencies. The project is also expected to improve safety and reliability of Cleco Power’s distribution assets by minimizing outage patrols and improving situational awareness in the distribution operations center. The total estimated project cost is $90.2 million. The project implementation will be completed in phases and management expects the total project will be completed by the end of 2025. In January 2019, Cleco Power began the first phase of the project. As of September 30, 2019, Cleco Power had spent $0.4 million on the project.

Other

Cleco Power is working to secure load growth opportunities that include renewing existing franchises and wholesale contracts, pursuing new wholesale contracts and franchises, and adding new retail load opportunities with large industrial, commercial, and residential load. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government and military, wood and paper, health care, information technology, transportation, and other manufacturing.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2019, and 2018

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2019			2018			VARIANCE			CHANGE
Operating revenue, net	$	487,971		$	358,256		$	129,715		36.2	%
Operating expenses	386,432			272,146			(114,286		)	(42.0	)%
Operating income	101,539			86,110			15,429			17.9	%
Interest income	1,690			1,832			(142		)	(7.8	)%
Allowance for equity funds used during construction	3,619			3,829			(210		)	(5.5	)%
Other expense, net	(1,363		)	(1,164		)	(199		)	(17.1	)%
Interest charges	35,832			31,828			(4,004		)	(12.6	)%
Federal and state income tax expense	14,088			11,419			(2,669		)	(23.4	)%
Net income	$	55,565		$	47,360		$	8,205		17.3	%

Operating revenue, net increased $129.7 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to the addition of $114.5 million of electric operations revenue and $33.7 million of other operations revenue at Cleco Cajun. These increases were partially offset by $10.7 million of higher electric customer credits, and $9.3 million of lower fuel cost recovery revenue at Cleco Power.

Operating expenses increased $114.3 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to the addition of Cleco Cajun’s expenses, as well as $6.9 million of higher other operations and maintenance expenses and $3.2 million of higher depreciation and amortization expenses at Cleco Power. These increases

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were partially offset by $9.2 million of lower recoverable fuel and purchased power expenses at Cleco Power.

Interest charges increased $4.0 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to $2.9 million of higher interest associated with the financing of the Cleco Cajun Transaction and $0.7 million of higher interest on the estimated refunds for the federal tax-related benefits of the TCJA.

Federal and state income tax expense increased $2.7 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to $2.9 million to record the tax expense at the projected annual effective income tax rate and $2.3 million for the changes in pretax income, excluding AFUDC equity. These increases were partially offset by $1.8 million for the flow through of state tax benefits and $1.5 million for tax returns as filed.

The effective income tax rate for the third quarter of 2019 and 2018 was 20.2% and 19.4%, respectively. The estimated annual effective income tax rate used during the third quarter of 2019 and 2018 for Cleco may not be indicative of the full-year income tax rate.

Results of operations for Cleco Power and Cleco Cajun are more fully described below.

Cleco Power
				FOR THE THREE MONTHS ENDED SEPT. 30,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2019			2018				VARIANCE			CHANGE
Operating revenue
Base	$	197,882		$	192,188			$	5,694		3.0	%
Fuel cost recovery	141,987			151,294				(9,307		)	(6.2	)%
Electric customer credits	(13,711		)	(2,992		)		(10,719		)	(358.3	)%
Other operations	18,485			20,186				(1,701		)	(8.4	)%
Affiliate revenue	334			223				111			49.8	%
Operating revenue, net	344,977			360,899				(15,922		)	(4.4	)%
Operating expenses
Recoverable fuel and purchased power	142,070			151,291				9,221			6.1	%
Non-recoverable fuel and purchased power	9,669			9,304				(365		)	(3.9	)%
Other operations and maintenance	57,718			50,837				(6,881		)	(13.5	)%
Depreciation and amortization	44,903			41,687				(3,216		)	(7.7	)%
Taxes other than income taxes	12,485			11,717				(768		)	(6.6	)%
Total operating expenses	266,845			264,836				(2,009		)	(0.8	)%
Operating income	78,132			96,063				(17,931		)	(18.7	)%
Interest income	1,421			1,606				(185		)	(11.5	)%
Allowance for equity funds used during construction	3,619			3,829				(210		)	(5.5	)%
Other expense, net	(1,231		)	(2,251		)		1,020			45.3	%
Interest charges	17,983			17,895				(88		)	(0.5	)%
Federal and state income tax expense	12,431			18,016				5,585			31.0	%
Net income	$	51,527		$	63,336			$	(11,809	)	(18.6	)%

Cleco Power’s net income in the third quarter of 2019 decreased $11.8 million compared to the third quarter of 2018 primarily as a result of the following factors:

• higher electric customer credits,

• higher other operations and maintenance expense, and

• higher depreciation and amortization.

These increases were partially offset by:

•higher base revenue and

•lower federal and state income tax expense.

The following table shows the components of Cleco Power’s retail and wholesale customer sales related to base revenue:

	FOR THE THREE MONTHS ENDED SEPT. 30,
(MILLION kWh)	2019	2018	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	1,177	1,156		1.8	%
Commercial	786	793		(0.9	)%
Industrial	477	583		(18.2	)%
Other retail	35	35		—	%
Total retail	2,475	2,567		(3.6	)%
Sales for resale	983	904		8.7	%
Total retail and wholesale customer sales	3,458	3,471		(0.4	)%

The following table shows the components of Cleco Power’s base revenue:

	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	99,136	$	95,808		3.5	%
Commercial	55,278		50,670			9.1	%
Industrial	19,329		22,555			(14.3	)%
Other retail	2,926		2,774			5.5	%
Surcharge	6,049		6,206			(2.5	)%
Total retail	182,718		178,013			2.6	%
Sales for resale	15,164		14,175			7.0	%
Total base revenue	$	197,882	$	192,188		3.0	%

Cleco Power’s residential customers’ demand for electricity is largely affected by weather. Weather generally is measured in cooling degree-days and heating degree-days. A cooling degree-day is an indication of the likelihood that a consumer will use air conditioning, while a heating degree-day is an indication of the likelihood that a consumer will use heating. An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days because alternative heating sources are more readily available, and winter energy is typically priced below the rate charged for energy used in the summer. Normal heating degree-days and cooling degree-days are calculated for a month by separately calculating the average actual heating and cooling degree-days for that month over a period of 30 years.

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The following chart shows how cooling degree-days varied from normal conditions and from the prior period. Cleco Power uses weather data provided by the National Oceanic and Atmospheric Administration to determine cooling and heating degree-days.

	FOR THE THREE MONTHS ENDED SEPT. 30,
				CHANGE
	2019	2018	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	1,716	1,691	1,511	1.5	%	13.6	%

Base

Base revenue increased $5.7 millionduring the third quarter of 2019 compared to the third quarter of 2018 primarily due to $12.1 million related to higher usage from warmer weather, partially offset by $6.4 million of lower rates. For information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see Part II, Item 1A, “Risk Factors — Future Electricity Sales” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Fuel Cost Recovery/Recoverable Fuel and Purchased Power

Changes in fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such charges. Approximately 75% of Cleco Power’s total fuel cost during the third quarter of 2019 was regulated by the LPSC. Recovery of FAC costs is subject to periodic fuel audits by the LPSC which may result in a refund to customers. Generally, fuel and purchased power expenses are impacted by customer usage, the per unit cost of fuel used for electric generation, and the dispatch of Cleco Power’s generating facilities by MISO. For more information on fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Electric Customer Credits

Electric customer credits increased $10.7 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to the absence of a $5.5 million adjustment to the estimated accrued refunds for the June 2018 FRP monitoring report, $3.0 million of estimated refunds due to Cleco Power’s wholesale transmission customers as a result of the FERC audit, and $2.3 million of higher estimated FRP refunds. For more information on the FRP, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — FRP.” For more information on the FERC audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”

Other Operations and Maintenance Expense

Other operations and maintenance expense increased $6.9 millionduring the third quarter of 2019 compared to the third quarter of 2018 primarily due to $2.6 million of higher uncollectible accounts expense, $2.1 million of higher generating station routine maintenance expenses, and $1.3 million higher customer service expenses.

Depreciation and Amortization

Depreciation and amortization increased $3.2 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to $1.3 million of higher amortization of intangible property due to the installation of a new enterprise business application suite, $1.0 million of higher amortization of regulatory assets, and $0.8 million of normal recurring additions to fixed assets.

Income Taxes

Federal and state income tax expense decreased $5.6 million during the third quarter of 2019 compared to the third quarter of 2018 primarily due to $3.6 million for the change in pretax income, excluding AFUDC equity, $1.9 million for tax returns as filed, $1.8 million for flowthrough of state tax benefits, and $1.1 million for state tax expenses. These decreases were partially offset by $2.5 million to record tax expense at the projected annual effective tax rate.

The effective income tax rate for the third quarter of 2019 and 2018 was 19.4% and 22.1%, respectively. The estimated annual effective income tax rate used during the third quarter of 2019 and 2018 for Cleco Power may not be indicative of the full-year income tax rate.

Cleco Cajun
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019
Operating revenue
Electric operations	$	114,453
Other operations	33,737
Affiliate revenue	31
Operating revenue, net	148,221
Operating expenses
Fuel used for electric generation	24,891
Purchased power	52,709
Other operations and maintenance	26,221
Depreciation and amortization	10,009
Taxes other than income taxes	4,239
Total operating expenses	118,069
Operating income	30,152
Interest income	220
Other income, net	46
Federal and state income tax expense	7,612
Net income	$	22,806

Significant factors affecting Cleco Cajun’s net income during the third quarter of 2019 are described below.

Operating Revenue

Operating revenue of $148.2 million for the third quarter of 2019 primarily consisted of $114.5 million of electric operations revenue primarily from wholesale customers, $18.3 million of lease revenue, including variable lease revenue, as a result of the Cottonwood Sale Leaseback, and $15.4 million of transmission revenue from wholesale customers. For more information on the Cottonwood Sale Leaseback agreement, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 4 — Leases— Lessor Agreements — Cottonwood Sale Leaseback Agreement.”

Operating Expenses

Operating expenses of $118.1 million for the third quarter of 2019 primarily consisted of $37.9 million of purchased power

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from MISO, $24.9 million of fuel expenses for generation, $14.9 million of MISO transmission costs, $9.8 million of general depreciation expenses on fixed assets, $9.4 million in general and administrative expenses, $8.2 million of generation operations expenses, and $5.9 million of generating station routine maintenance expenses.

Income Taxes

Federal and state income tax expense of $7.6 million for the third quarter of 2019 primarily included $6.4 million of tax expense on pretax income at the statutory tax rate and $1.3 million for state taxes.

The effective income tax rate for the third quarter of 2019 was 25.0%. The estimated annual effective income tax rate used during the third quarter of 2019 for Cleco Cajun may not be indicative of the full-year income tax rate.

Comparison of the Nine Months Ended September 30, 2019, and 2018

Cleco
	FOR THE NINE MONTHS ENDED SEPT. 30,
						FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2019		2018			VARIANCE			CHANGE
Operating revenue, net	$	1,230,030	$	934,277		$	295,753		31.7	%
Operating expenses	990,709		739,724			(250,985		)	(33.9	)%
Operating income	239,321		194,553			44,768			23.0	%
Interest income	4,456		4,043			413			10.2	%
Allowance for equity funds used during construction	14,825		9,416			5,409			57.4	%
Other income (expense), net	292		(7,111		)	7,403			104.1	%
Interest charges	105,671		94,894			(10,777		)	(11.4	)%
Federal and state income tax expense	32,355		21,947			(10,408		)	(47.4	)%
Net income	$	120,868	$	84,060		$	36,808		43.8	%

Operating revenue, net increased $295.8 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to the addition of $274.6 million of electric operations revenue and $83.6 million of other operations revenue at Cleco Cajun. These increases were partially offset by $26.3 million of lower fuel cost recovery revenue, $15.4 million of lower base revenue, $7.7 million of lower other operations revenue, and $6.3 million of higher electric customer credits at Cleco Power.

Operating expenses increased $251.0 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to the addition of Cleco Cajun’s expenses. The increases in operating expenses related to Cleco Cajun operations were partially offset by $26.3 million of lower recoverable fuel and purchased power expenses and $9.8 million of lower other operations and maintenance expenses at Cleco Power.

Allowance for equity funds used during construction increased $5.4 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to higher Cleco Power construction costs related to various projects.

Other income (expense), net increased $7.4 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to $3.1 million for the increase in the cash surrender value of certain trust-owned life insurance

policies as a result of favorable market conditions at Cleco Holdings and $3.2 million of lower pension non-service costs at Cleco Power.

Interest charges increased $10.8 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to $10.2 million of interest associated with the financing of the Cleco Cajun Transaction, and $2.1 million in interest on the estimated refund for the federal related tax benefits of the TCJA. These increases were partially offset by $2.6 million of higher allowance for borrowed funds used during construction at Cleco Power.

Federal and state income tax expense increased $10.4 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to $8.5 million for the change in pretax income, excluding AFUDC equity, and $2.8 million to record tax expense at the projected annual effective tax rate.

The effective income tax rate for the nine months ended September 30, 2019, and 2018 was 21.1% and 20.7%, respectively. The estimated annual effective income tax rate used during the nine months ended September 30, 2019, and 2018 for Cleco might not be indicative of the full-year income tax rate.

Results of operations for Cleco Power are more fully described below.

Cleco Power
				FOR THE NINE MONTHS ENDED SEPT. 30,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2019			2018			VARIANCE			CHANGE
Operating revenue
Base	$	508,435		$	523,862		$	(15,427	)	(2.9	)%
Fuel cost recovery	354,534			380,884			(26,350		)	(6.9	)%
Electric customer credits	(30,565		)	(24,276		)	(6,289		)	(25.9	)%
Other operations	53,318			61,066			(7,748		)	(12.7	)%
Affiliate revenue	971			651			320			49.2	%
Operating revenue, net	886,693			942,187			(55,494		)	(5.9	)%
Operating expenses
Recoverable fuel and purchased power	354,532			380,880			26,348			6.9	%
Non-recoverable fuel and purchased power	25,713			27,606			1,893			6.9	%
Other operations and maintenance	148,330			158,170			9,840			6.2	%
Depreciation and amortization	126,610			121,796			(4,814		)	(4.0	)%
Taxes other than income taxes	33,023			34,548			1,525			4.4	%
Total operating expenses	688,208			723,000			34,792			4.8	%
Operating income	198,485			219,187			(20,702		)	(9.4	)%
Interest income	3,281			3,560			(279		)	(7.8	)%
Allowance for equity funds used during construction	14,825			9,416			5,409			57.4	%
Other expense, net	(2,091		)	(6,422		)	4,331			67.4	%
Interest charges	52,498			53,658			1,160			2.2	%
Federal and state income tax expense	34,407			39,724			5,317			13.4	%
Net income	$	127,595		$	132,359		$	(4,764	)	(3.6	)%

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Cleco Power’s net income in the first nine months of 2019 decreased $4.8 million compared to the first nine months of 2018 primarily as a result of the following factors:

• lower base revenue,

• lower other operations revenue, and

• higher electric customer credits.

These decreases are partially offset by:

• lower operations and maintenance expense,

• higher allowance for equity funds used during construction,

• lower federal and state income taxes, and

• lower other expense, net.

The following table shows the components of Cleco Power’s retail and wholesale customer sales related to base revenue:

	FOR THE NINE MONTHS ENDED SEPT. 30,
(Million kWh)	2019	2018	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	2,855	2,957		(3.4	)%
Commercial	2,118	2,110		0.4	%
Industrial	1,483	1,662		(10.8	)%
Other retail	97	100		(3.0	)%
Total retail	6,553	6,829		(4.0	)%
Sales for resale	2,387	2,326		2.6	%
Total retail and wholesale customer sales	8,940	9,155		(2.3	)%

The following table shows the components of Cleco Power’s base revenue:

	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	229,430	$	238,922		(4.0	)%
Commercial	149,089		147,922			0.8	%
Industrial	61,575		67,183			(8.3	)%
Other retail	8,029		8,234			(2.5	)%
Surcharge	16,973		17,637			(3.8	)%
Total retail	465,096		479,898			(3.1	)%
Sales for resale	43,339		43,964			(1.4	)%
Total base revenue	$	508,435	$	523,862		(2.9	)%

The following chart shows how cooling and heating degree-days varied from normal conditions and from the prior period. Cleco Power uses weather data provided by the National Oceanic and Atmospheric Administration to determine degree-days.

			FOR THE NINE MONTHS ENDED SEPT. 30,
				2019 CHANGE
	2019	2018	NORMAL	PRIOR YEAR		NORMAL
Heating degree-days	778	881	942	(11.7	)%	(17.4	)%
Cooling degree-days	2,869	2,948	2,531	(2.7	)%	13.4	%

Base

Base revenue decreased $15.4 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to $20.6 million of lower rates, partially offset by $5.2 million related to higher usage from warmer weather. For

information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see Part II, Item 1A, “Risk Factors — Future Electricity Sales” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Fuel Cost Recovery/Recoverable Fuel and Purchased Power

Changes in fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such charges. Approximately 76% of Cleco Power’s total fuel cost during the first nine months of 2019 was regulated by the LPSC. Recovery of FAC costs is subject to periodic fuel audits by the LPSC which may result in a refund to customers. Generally, fuel and purchased power expenses are impacted by customer usage, the per unit cost of fuel used for electric generation, and the dispatch of Cleco Power’s generating facilities by MISO. For more information on fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Electric Customer Credits

Electric customer credits increased $6.3 million during the first nine months of 2019 compared to the first nine months of 2018 primarily related to $3.0 million for estimated refunds due to Cleco Power’s wholesale transmission customers as a result of the FERC audit, $2.3 million of higher estimated FRP refunds, and $1.2 million of higher estimated refunds for the federal tax-related benefits of the TCJA. For more information on the TCJA, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — TCJA.” For more information on the FERC audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”

Other Operations Revenue

Other operations revenue decreased $7.7 million during the first nine months of 2019 compared to the first nine months of 2018 primarily related to $3.4 million of lower net generation revenue as a result of the Teche Unit 3 SSR ending in April 2019, $2.6 million of lower net transmission and distribution revenue, and $1.7 million of lower reconnect fees. For more information on the SSR, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — SSR.”

Other Operations and Maintenance Expense

Other operations and maintenance expense decreased $9.8 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to the absence of $17.4 million of generating station major outage maintenance expenses. These decreases were partially offset by $3.5 million of higher uncollectible accounts expense, $2.5 million of higher outside service expenses, and $1.8 million of higher customer service expenses.

Depreciation and Amortization

Depreciation and amortization expense increased $4.8 million during the first nine months of 2019 compared to the first nine

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months of 2018 primarily due to $2.4 million of higher normal recurring additions to fixed assets and $1.2 million of higher amortization of intangible property due to the installation of a new enterprise business application suite.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction increased $5.4 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to higher construction costs related to the St. Mary Clean Energy Center project, the Coughlin Pipeline project, the START project, and the Bayou Vista to Segura Transmission project.

Other Expense, Net

Other expense, net decreased $4.3 million during the first nine months of 2019 compared to the first nine months of 2018 primarily due to lower pension non-service costs.

Income Taxes

Federal and state income tax expense decreased $5.3 million during first nine months of 2019 compared to the first nine months of 2018 primarily due to $3.5 million for the change in pretax income, excluding AFUDC equity, $1.9 million for flowthrough of state tax benefits, and $1.9 million for tax returns as filed. These decreases were partially offset by $2.1 million to record tax expense at the projected annual effective tax rate.

The effective income tax rate for the nine months ended September 30, 2019, and 2018 was 21.2% and 23.1%, respectively. The estimated annual effective income tax rate used during the nine months ended September 30, 2019, and 2018 for Cleco Power may not be indicative of the full-year income tax rate.

Cleco Cajun
(THOUSANDS)	FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Operating revenue
Electric operations	$	274,610
Other operations	83,619
Electric customer credits	(1,267		)
Affiliate revenue	31
Operating revenue, net	356,993
Operating expenses
Fuel used for electric generation	57,724
Purchased power	136,259
Other operations and maintenance	64,313
Depreciation and amortization	25,555
Taxes other than income taxes	11,583
Total operating expenses	295,434
Operating income	61,559
Interest income	842
Other expense, net	(444		)
Federal and state income tax expense	15,169
Net income	$	46,788
From the closing of the Cleco Cajun Transaction on February 4, 2019, through September 30, 2019.

Significant factors affecting Cleco Cajun’s net income from the closing of the Cleco Cajun Transaction on February 4, 2019, through September 30, 2019, are described below.

Operating Revenue

Operating revenue of $357.0 million during2019 primarily consisted of $274.6 million of electric operations revenue from wholesale customers, $47.1 million of lease revenue, including variable lease revenue, as a result of the Cottonwood Sale Leaseback, and $36.6 million of transmission revenue from wholesale customers. For more information on the Cottonwood Sale Leaseback agreement, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 4 — Leases— Lessor Agreements — Cottonwood Sale Leaseback Agreement.”

Operating Expenses

Operating expenses of $295.4 million during 2019 primarily consisted of $99.0 million of purchased power from MISO, $57.7 million of fuel expenses for generation, $35.4 million of MISO transmission costs, $25.1 million of depreciation on fixed assets, $21.5 million of general and administrative expenses, $19.9 million of routine generating station maintenance expenses, $17.8 million for generating station operations expenses, and $9.0 million of property tax expenses.

Income Taxes

Federal and state income tax expense of $15.2 million during 2019 primarily included $13.0 million of tax expense on pretax income at the statutory tax rate and $2.3 million for state taxes.

The effective income tax rate for 2019 was 24.5%. The estimated annual effective income tax rate used for 2019 for Cleco Cajun may not be indicative of the full-year income tax rate.

FINANCIAL CONDITION

Liquidity and Capital Resources

General Considerations and Credit-Related Risks

Credit Ratings and Counterparties

Financing for operational needs and capital expenditure requirements not satisfied by operating cash flows depends upon the cost and availability of external funds through both short- and long-term financing. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain or expand its businesses. Access to funds is dependent upon factors such as general economic and capital market conditions, regulatory authorizations and policies, Cleco Holdings’ and Cleco Power’s credit ratings, cash flows from routine operations, and credit ratings of project counterparties. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. The following table presents the credit ratings of Cleco Holdings and Cleco Power at September 30, 2019:

	SENIOR UNSECURED DEBT			CORPORATE/LONG-TERM ISSUER
	S&P	MOODY’S	FITCH	S&P	MOODY’S	FITCH
Cleco Holdings	BBB-	Baa3	BBB-	BBB-	Baa3	BBB-
Cleco Power	BBB+	A3	BBB+	BBB+	A3	BBB

Credit ratings are not recommendations to buy, sell, or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

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Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest rating held. Savings are dependent upon the level of borrowings. If Cleco Holdings’ or Cleco Power’s credit ratings were to be downgraded, Cleco Holdings or Cleco Power, respectively, could be required to pay additional fees and incur higher interest rates for borrowings under their respective credit facilities.

With respect to any open trading contracts that Cleco has or may initiate in the future, Cleco may be required to provide credit support or pay liquidated damages. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on the amount of the initial contract, changes in the market price, changes in open contracts, and changes in the amount counterparties owe Cleco. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

Cleco Power and Cleco Cajun participate in the MISO market, which operates a fully functioning RTO market with two major market processes: the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. Both use market-based mechanisms to manage transmission congestion across the MISO market area. MISO requires Cleco Power and Cleco Cajun to provide credit support which may increase or decrease due to the timing of the settlement schedules. At September 30, 2019, Cleco Power had a $2.0 million letter of credit to MISO pursuant to the credit requirements of FTRs. The letter of credit automatically renews each year. At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019, this letter of credit no longer decreases availability under Cleco Holdings’ credit facility. This letter of credit automatically renews each year. For information about MISO, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates of Cleco Power” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Global and U.S. Economic Environment

Global and domestic economic conditions may have an impact on Cleco’s business and financial condition. Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. During periods of capital market volatility, the availability of capital could be limited and the costs of capital may increase for many companies. Although the Registrants have not experienced restrictions in the financial markets, their ability to access the capital markets may be restricted at a time when the Registrants would like, or need, to do so. Any restrictions could have a material impact on the Registrants’ ability to fund capital expenditures or debt service, or on their flexibility to react to changing economic and business conditions. Credit constraints could have a material negative impact on the Registrants’ lenders or customers, causing them to fail to meet their obligations to the Registrants or to delay payment of such obligations. The lower interest rates to which the Registrants have been exposed have been beneficial to debt issuances; however, these rates have negatively affected interest income for the Registrants’ short-term investments.

TCJA

The TCJA was signed into law on December 22, 2017. The provisions of the law reduce the top federal statutory corporate income tax rate from 35% to 21%, generally allow for 100% bonus depreciation for new and used equipment purchased after September 27, 2017, generally restrict deduction of interest expense to 30% of adjusted taxable EBITDA, and repeal the corporate alternative minimum tax. As defined by the TCJA, rate regulated activities are not allowed to utilize 100% bonus depreciation and are not subject to the restricted interest deduction.

As a result of the tax rate reduction, on January 1, 2018, Cleco Power began accruing an estimated reduction in reserve for the federal statutory corporate income tax rate. In February 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flowthrough to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. After various filings and settlement discussions, on July 10, 2019, the LPSC approved Cleco Power to accrue rate refunds of $79.2 million, plus interest, for the reduction in the statutory federal tax rate for the period from January 2018 to June 2020. The refund is being credited to customers over 12 months beginning August 1, 2019. At September 30, 2019, Cleco Power had $38.4 million accrued for the estimated tax-related benefits from the TCJA and $3.0 million accrued for related interest.

Also, on July 10, 2019, the LPSC approved Cleco Power’s motion to address the rate redesign and the regulatory liability for excess ADIT resulting from the enactment of the TCJA in Cleco Power’s application for its next FRP, which was filed on June 28, 2019, with anticipated new rates being effective July 1, 2020. At September 30, 2019, Cleco Power had a regulatory liability of $375.0 million for the portion of the net reduction to ADIT subject to regulatory treatment. Due to the uncertainty around the regulatory treatment, the entire regulatory liability is reflected in non-current liabilities.

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power are required to disclose the fair value of certain assets and liabilities by one of three levels. Other financial assets and liabilities are reported at their carrying values at their date of issuance on the consolidated balance sheets with their fair values as of the balance sheet date disclosed within the three levels. For more information about fair value levels, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 7 — Fair Value Accounting.”

Cash Generation and Cash Requirements

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes. For more information on Cleco and Cleco Power’s restricted cash and cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 —

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Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

Debt

Cleco

At September 30, 2019, and December 31, 2018, Cleco had no short-term debt outstanding.

At September 30, 2019, Cleco’s long-term debt outstanding was $3.19 billion, of which $63.7 million was due within one year. The long-term debt due within one year at September 30, 2019, primarily represents $50.0 million of GO Zone bonds with a mandatory tender in 2020 and $10.9 million of principal payments, net of related debt discount and expense, for the Cleco Katrina/Rita storm recovery bonds. Long-term debt increased by $297.4 million from December 31, 2018, primarily due to the private placement of $300.0 million of senior notes on September 11, 2019, and $30.0 million balance remaining on the $100.0 million bank term loan entered into on February 4, 2019, in connection with the Cleco Cajun Transaction. These increases were partially offset by $20.6 million for scheduled payments made on Cleco Katrina/Rita storm recovery bonds. For more information on Cleco’s debt, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 8 — Debt.”

Cash and cash equivalents available at September 30, 2019, were $101.4 million combined with $440.5 million available credit facility capacity ($140.5 million from Cleco Holdings and $300.0 million from Cleco Power) for total liquidity of $541.9 million. For more information on the credit facility capacity, see “— Credit Facilities.” Cleco Holdings and Cleco Power have uncommitted lines of credit that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

At September 30, 2019, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents. In order to mitigate potential credit risk, Cleco and Cleco Power have established guidelines for short-term investments. For more information on the concentration of credit risk through short-term investments classified as cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 7 — Fair Value Accounting.”

At September 30, 2019, and December 31, 2018, Cleco had a working capital surplus of $154.9 million and $185.9 million, respectively. The $31.0 milliondecrease in working capital is primarily due to:

• a $42.6 million increase in long-term debt due within one year primarily due to $50.0 million of GO Zone bonds with a mandatory tender in 2020, partially offset by $9.5 million of lower principal payments for the Cleco Katrina/Rita storm recovery bonds due to the bonds maturing in March 2020,

• a $30.2 million increase in taxes payable primarily due to accruals of property taxes,

• a $28.0 million increase in accrued interest primarily due to the timing of interest payments on long-term debt,

• a $22.9 million increase in other current liabilities primarily due to additional liabilities incurred as a result of the Cleco Cajun Transaction and the timing of payroll accruals,

• a $16.4 million decrease in fuel inventory primarily due to lower petroleum coke purchases at Cleco Power and higher lignite usage at Cleco Power due to the seasonal operations

of the Dolet Hills Power Station, partially offset by inventory acquired in the Cleco Cajun Transaction,

• a $14.9 million increase in provision for rate refund primarily due to the estimated refunds for the tax-related benefits of the TCJA and the FERC audit,

• an $8.9 million increase in other regulatory liabilities primarily due to the collections of revenue related to the St. Mary Clean Energy Center project that is being returned to retail customers as part of the July 2019 FRP rate adjustment as a result in a delay in the project’s commercial operational date, and

• an $8.8 million decrease in cash and cash equivalents.

These decreases in working capital were partially offset by:

• a $75.1 million increase in customer accounts receivable primarily due to additional Cleco Cajun receivables and the timing of a payment from a Cleco Power wholesale customer,

• a $28.7 million increase in materials and supplies inventory primarily due to the Cleco Cajun Transaction,

• a $20.4 million increase in accumulated deferred fuel primarily due to additional deferrals as a result of fuel surcharges,

• a $10.8 million increase in unbilled revenue due to higher usage as a result of warmer weather, and

• a $9.6 million increase in other current assets primarily due to an indemnification asset at Cleco Cajun as a result of a contingent liability assumed with the Cleco Cajun Transaction.

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings borrowed $300.0 million under a bridge loan agreement and $100.0 million under a term loan agreement. Both loan agreements are variable rate debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to Cleco’s senior debt rating (as defined in the applicable agreement). On September 11, 2019, Cleco Holdings completed the private placement of $300.0 million aggregate principal amount of its 3.375% senior notes due September 15, 2029. The proceeds from the issuance were used to repay the remaining amounts due under the $300.0 million bridge loan agreement and to repay a portion of the $100.0 million term loan agreement. The senior notes are governed by an indenture entered into between Cleco Holdings and a trustee. The indenture contains certain covenants that restrict Cleco Holdings’ ability to merge, consolidate or transfer or lease all or substantially all of its assets or create or incur certain liens.

In connection with the Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a capacity agreement customer and a gas transport company. These letters of credit automatically renew each year and have no impact on the Cleco Holdings’ credit facility. At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019, this letter of credit no longer decreases availability under Cleco

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Holdings’ credit facility. This letter of credit automatically renews each year.

Cleco Holdings

At September 30, 2019, and December 31, 2018, Cleco Holdings had no short-term debt outstanding.

At September 30, 2019, Cleco Holding’s long-term debt outstanding was $1.80 billion, of which $2.2 million was due within one year.

At September 30, 2019, and December 31, 2018, Cleco Holdings had no borrowings outstanding under its $175.0 million credit facility. This credit facility provides for working capital and other financing needs. The credit facility includes restrictive financial covenants and expires in 2021. Cleco Holdings and Cleco Power have uncommitted lines of credit that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

Cash and cash equivalents available at September 30, 2019, were $11.4 million, combined with $140.5 million credit facility capacity for total liquidity of $151.9 million. For more information on the credit facility capacity, see “— Credit Facilities.”

Cleco Power

At September 30, 2019, and December 31, 2018, Cleco Power had no short-term debt outstanding.

At September 30, 2019, Cleco Power’s long-term debt outstanding was $1.39 billion, of which $61.5 million was due within one year. The long-term debt due within one year at September 30, 2019, primarily represents $50.0 million of GO Zone bonds with a mandatory tender in 2020 and $10.9 million of principal payments, net of related debt discount and expense, for the Cleco Katrina/Rita storm recovery bonds. For Cleco Power, long-term debt decreased$20.1 million from December 31, 2018, primarily due to scheduled payments made on the Cleco Katrina/Rita storm recovery bonds.

At September 30, 2019, and December 31, 2018, Cleco Power had no borrowings outstanding under its $300.0 million credit facility. This credit facility provides for working capital and other financing needs. The credit facility includes restrictive financial covenants and expires in 2021. Cleco Holdings and Cleco Power have uncommitted lines of credit that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

Cash and cash equivalents available at September 30, 2019, were $64.2 million, combined with $300.0 million credit facility capacity for total liquidity of $364.2 million.

At September 30, 2019, and December 31, 2018, Cleco Power had a working capital surplus of $51.4 million and $62.3 million, respectively. The $10.9 milliondecrease in working capital is primarily due to:

• a $41.5 million decrease in fuel inventory primarily due to lower petroleum coke purchases at Cleco Power and higher lignite usage at Cleco Power due to the seasonal operations of the Dolet Hills Power Station,

• a $40.4 million increase in long-term debt due within one year primarily due to $50.0 million of GO Zone bonds with a mandatory tender in 2020, partially offset by $9.5 million of lower principal payments for the Cleco Katrina/Rita storm recovery bonds due to the bonds maturing in March 2020,

• a $16.3 million increase in accrued interest primarily due to the timing of interest payments on long-term debt,

• a $13.6 million increase in provision for rate refund primarily due to the estimated refunds for the tax-related benefits of the TCJA and the FERC audit,

• an $8.9 million increase in other regulatory liabilities primarily due to the collections of revenue related to the St. Mary Clean Energy Center project that will be returned to retail customers as part of the July 2019 FRP rate adjustment as a result in a delay in the project’s commercial operational date,

• a $5.9 million decrease in restricted cash and cash equivalents, and

• a $5.2 million increase in other current liabilities primarily due to the timing of payroll accruals.

These decreases in working capital were partially offset by:

• a $33.3 million decrease in accounts payable, excluding FTR purchases, primarily due to a decrease in operations and maintenance expenses and lower capital expenditures,

• a $32.3 million increase in cash and cash equivalents,

• a $22.9 million increase in customer accounts receivable due to the timing of a payment from a wholesale customer,

• a $20.4 million increase in accumulated deferred fuel, excluding FTRs, primarily due to additional deferrals as a result of fuel surcharges,

• a $10.8 million increase in unbilled revenue due to higher usage as a result of warmer weather, and

• a $5.0 million decrease in taxes payable primarily due to lower provisions for income taxes, partially offset by the timing of accruals of property taxes.

Credit Facilities

At September 30, 2019, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million and one for Cleco Power in the amount of $300.0 million, with a maximum aggregate capacity of $475.0 million.

In connection with the Cleco Cajun Transaction, on February 4, 2019, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total credit facility of $175.0 million credit facility. The credit facility includes restrictive financial covenants and expires in 2021. At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019, this letter of credit no longer decreases availability under Cleco Holdings’ credit facility. This letter of credit automatically renews each year. At September 30, 2019, Cleco Holdings was in compliance with the covenants of its credit facility. The borrowing costs under Cleco Holdings’ credit facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%. If Cleco Holdings’ credit ratings were to be downgraded one level, Cleco Holdings would be required to pay higher fees and additional interest of 0.075% and 0.50%, respectively, under the pricing levels of its credit facility.

At September 30, 2019, Cleco Power had a $300.0 million credit facility. The credit facility includes restrictive financial covenants and expires in 2021. At September 30, 2019, Cleco Power was in compliance with the covenants of its credit facility. The borrowing costs under Cleco Power’s credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%. If Cleco Power’s credit ratings

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were to be downgraded one level, Cleco Power would be required to pay higher fees and additional interest of 0.05% and 0.125%, respectively, under the pricing levels of its credit facility.

If Cleco Holdings or Cleco Power were to default under the covenants in their respective credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities and the lenders could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its credit facility or other debt agreements, Cleco Holdings would be considered in default under its credit facility.

Debt and Distribution Limitations

The 2016 Merger Commitments include provisions for limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings. Cleco Holdings may not make any distribution unless, after giving effect to such distribution, Cleco Holdings’ debt to EBITDA ratio is equal to or less than 6.50 to 1.00 and Cleco Holdings’ corporate credit rating is investment grade with one or more of the three credit rating agencies. At September 30, 2019, Cleco Holdings was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. Additionally, in accordance with the 2016 Merger Commitments, Cleco Power is subject to certain provisions limiting the amount of distributions that may be paid to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings. Cleco Power may not make any distribution unless, after giving effect to such distribution, Cleco Power’s common equity ratio would not be less than 48% and Cleco Power’s corporate credit rating is investment grade with two of the three credit rating agencies. At September 30, 2019, Cleco Power was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. The 2016 Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. For more information on the 2016 Merger Commitments, see Part II, Item 1A, “Risk Factors — Regulatory Compliance” and “— Holding Company” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Cleco Consolidated Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was $340.8 million and $285.2 million during the nine months ended September 30, 2019, and 2018, respectively. Net cash provided by operating activities increased$55.6 million primarily due to:

• $85.2 million for the addition of Cleco Cajun operations, including receipts of $30.0 million as a result of the Cottonwood Sale Leaseback,

• higher net fuel and purchased power collections at Cleco Power of $11.7 million primarily due to timing of collections, and

• lower payout for employee benefits of $5.4 million.

These increases were partially offset by:

• pension plan contributions of $12.3 million,

• lower receipts for customer deposits of $7.2 million,

• lower receipts for other accounts receivable at Cleco Power of $6.9 million, including the timing of receipts of joint owners’ portion of generating station expenditures,

• lower collections from Cleco Power customers of $6.8 million, and

• higher payments for property insurance of $4.3 million.

Net Investing Cash Flow

Net cash used in investing activities was $1.05 billion and $197.0 million during the nine months ended September 30, 2019, and 2018, respectively. Net cash used in investing activities increased$850.0 million primarily due to:

• payment for the acquisition of all the membership interest in South Central Generating of $962.2 million, partially offset by cash received of $147.2 million and

• higher additions to property, plant, and equipment, net of AFUDC, of $51.8 million.

These increases were partially offset by the absence of the issuance of a $16.8 million note receivable.

Net Financing Cash Flow

Net cash provided by financing activities was $688.0 million during the nine months ended September 30, 2019. Net cash used in financing activities was $30.7 million during the nine months ended September 30, 2018. Net cash provided by financing activities increased$718.7 million primarily due to:

• borrowings of $400.0 million related to the financing of the Cleco Cajun Transaction,

• higher contributions from Cleco Group of $384.9 million,

• the issuance of $300.0 million in senior notes at Cleco Holdings,

• higher draws on Cleco’s credit facilities of $108.0 million, and

• the absence of distributions to Cleco Group of $60.5 million.

These increases were partially offset by:

• higher repayments of long-term debt of $371.4 million,

• higher payments on Cleco’s credit facilities of $108.0 million, and

• the absence of a $50.0 million issuance of senior notes in March 2018 at Cleco Power.

Cleco Power Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was $272.8 million and $270.9 million during the nine months ended September 30, 2019, and 2018, respectively. Net cash provided by operating activities increased$1.9 million primarily due to:

• higher payments for affiliate settlements of $35.8 million,

• payments for pension plan contributions of $12.3 million, and

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• lower receipts for other accounts receivable of $6.9 million, including the timing of receipts of joint owners’ portion of generating station expenditures.

These decreases were partially offset by:

• lower payments to vendors of $14.9 million,

• higher net fuel and purchased power collections of $11.7 million primarily due to timing of collections, and

• lower payout for employee benefits of $7.8 million.

Net Investing Cash Flow

Net cash used in investing activities was $229.8 million and $198.9 million during the nine months ended September 30, 2019, and 2018, respectively. Net cash used in investing activities increased$30.9 million primarily due to higher additions to property, plant, and equipment, net of AFUDC, of $48.9 million. This decrease was partially offset by the absence of the issuance of a $16.8 million note receivable.

Net Financing Cash Flow

Net cash used in financing activities was $21.0 million and $91.6 million during the nine months ended September 30, 2019, and 2018, respectively. Net cash used in financing activities decreased$70.6 million primarily due to:

• the absence of distributions to Cleco Holdings of $121.4 million and

• higher draws on Cleco Power’s credit facilities of $33.0 million.

These decreases were partially offset by:

• the absence of a $50.0 million issuance of senior notes in March 2018 and

• higher payments on Cleco Power’s credit facilities of $33.0 million.

Capital Expenditures

As a result of the Cleco Cajun Transaction, Cleco’s total estimated capital expenditures increased to include Cleco Cajun’s estimated capital expenditures.

During the nine months ended September 30, 2019, Cleco and Cleco Cajun had capital expenditures, excluding AFUDC, of $246.0 million and $3.5 million, respectively.

Cleco Cajun’s estimated capital expenditures for the three months ending December 31, 2019, and for the remainder of the five-year period ending December 31, 2023, are $5.0 million and $88.0 million, respectively. Cleco’s estimated capital expenditures and debt maturities for the three months ending December 31, 2019, and for the remainder of the five-year period ending December 31, 2023, excluding AFUDC, are $33.0 million and $1.80 billion, respectively. For more information on Cleco and Cleco Power’s estimated capital expenditures for 2019 and the five-year period ending December 31, 2023, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Cash Generation and Cash Requirements — Capital Expenditures” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Cleco expects cash and cash equivalents on hand in addition to cash generated from operations, borrowings from

credit facilities, and the net proceeds of any issuances of debt securities to be adequate to fund normal ongoing capital expenditures, working capital, and debt service requirements for the foreseeable future.

Contractual Obligations

Cleco, in the normal course of business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Condensed Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the Condensed Consolidated Financial Statements. For more information regarding Cleco’s Contractual Obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Contractual Obligations” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees. For more information about off-balance sheet commitments and on-balance sheet guarantees, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.”

Cybersecurity

The operation of Cleco’s electrical systems relies on evolving operational and information technology systems and network infrastructures that are complex. The failure of Cleco or its vendors’ operational and information technology systems and networks due to a physical or cyberattack, or other event could significantly disrupt operations; cause harm to the public or employees; result in outages or reduced generating output; result in damage to Cleco’s assets or operations, or those of third parties; result in damage to Cleco’s reputation; and subject Cleco to claims by customers or third parties, any of which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. In addition, the Cleco Cajun Transaction could increase the risk associated with cybersecurity that could have a material adverse effect on Cleco’s results of operations, financial condition, or cash flows including phishing attacks, denial of service attacks, and employee insider attacks. Cleco continues to assess its cybersecurity tools and processes and has taken a variety of actions to monitor and address cyber-related risks. Cleco’s Chief Digital and Information Officer leads Cleco’s cybersecurity team and oversees Cleco’s cybersecurity maturity plan. Each quarter, management provides cybersecurity updates to Cleco’s Board of Managers. For more information on risks related to Cleco’s cybersecurity, see Part II, Item 1A, “Risk Factors — Technology and Terrorism Threats” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

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Regulatory and Other Matters

Environmental Matters

Cleco is subject to extensive environmental regulation by federal, state, and local authorities and is required to comply with numerous environmental laws and regulations, and to obtain and comply with numerous governmental permits, in operating its facilities. In addition, existing environmental laws, regulations, and permits could be revised or reinterpreted; new laws and regulations could be adopted or become applicable to Cleco or its facilities; and future changes in environmental laws and regulations could occur, including potential regulatory and enforcement developments related to air emissions, water and/or waste management. Cleco may incur significant additional costs to comply with these revisions, reinterpretations, and requirements. Cleco Power could then seek recovery of additional environmental compliance costs as riders through the LPSC’s EAC or FRP. If Cleco fails to comply with these revisions, reinterpretations, and requirements, it could be subject to civil or criminal liabilities and fines. For a discussion of other Cleco environmental matters, see Part I, Item 1, “Business — Environmental Matters” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

On May 2, 2019, Louisiana Generating notified the EPA and the LDEQ that it has elected not to Retrofit (as such term is defined in the Consent Decree) Big Cajun II, Unit 1.

On July 8, 2019, the EPA published in the Federal Register a final rule to replace the Clean Power Plan, formally titled Repeal of the Clean Power Plan; Emission Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emission Guidelines Implementing Regulations. The state agency will have to set standards of performance for each affected generating unit and submit the implementation plan to the EPA for approval within three years from the date of rule publication in the Federal Register. Until the state agency has set standards for the affected generating units, management cannot determine the future regulatory requirements and impact on Cleco’s existing affected units nor if the new rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Retail Rates of Cleco Power

Fuel Rates

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. For more information on the FAC and the most recent fuel audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Environmental Rates

In July 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from customers certain costs of environmental compliance. These expenses are eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. For more information on the EAC and the ongoing environmental audit

covering January 1, 2016, through December 31, 2017, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

Energy Efficiency

In 2009, the LPSC opened a docket to study the promotion of energy efficiency by jurisdictional electric and natural gas utilities. In 2013, the LPSC issued a General Order adopting rules promoting energy efficiency programs. The order addressed two energy efficiency programs, Phase I and Phase II. Phase I, known as the Quick Start program, was a three-year program to expedite the energy efficiency implementation and was expected to develop into Phase II, a more detailed and comprehensive program. Cleco Power participated in the Phase I program beginning in November 2014 for three years and designed several energy efficiency programs for customers. In January 2017, the LPSC amended the third year of the Phase I program to allocate no less than 50% of its annual program budgets to applicable government and state agencies. Beginning in November 2014, Cleco Power recovered approximately $3.3 million annually for each of the three program years through an approved rate tariff.

In September 2017, the LPSC extended Phase I for an additional year. Cleco Power began recovery of approximately $3.3 million for estimated costs for the fourth program year beginning January 1, 2018. Also, in September 2017, the LPSC approved a motion for additional energy efficiency program funds for the exclusive benefit of school districts, local governments, state agencies, and higher education institutions or any other public entities (political subdivision). The recovery of approximately $3.3 million annually for estimated costs for the political subdivision program began on January 1, 2018. On December 19, 2018, the LPSC extended Phase I for an additional year. The LPSC Staff has begun to work on Phase II rules.

In November 2017, the LPSC initiated an audit on the first two program years to consider all program costs. On June 19, 2019, the LPSC approved the audit report and concluded the costs were reasonable and prudent, and eligible for recovery consistent with the Energy Efficiency Rules.

Generally, utility companies are allowed to recover from customers the accumulated decrease in revenues associated with the energy efficiency programs. In December 2018, Cleco Power filed a letter of intent with the LPSC to recover certain accumulated decrease in revenues, also known as LCFC. On March 28, 2019, Cleco Power received notice from the LPSC indicating denial of the request. However, on October 21, 2019, Cleco Power received notice from the LPSC concluding that after further analysis Cleco Power will be allowed to recover accumulated LCFC revenues.

MISO Cost Benefit Analysis

Cleco Power entered into MISO in 2013. Within five years of joining MISO, the LPSC required Cleco Power to conduct a study of the costs and benefits of its membership in MISO. During the second quarter of 2017, Cleco Power submitted an analysis with both a backward-looking, historical analysis and a forward-looking, prospective analysis of the costs and benefits of operating in MISO, as compared to a scenario where Cleco Power and Entergy Louisiana exit MISO and operate independently. Cleco Power’s analysis indicated that

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continued MISO membership would best serve the public interest. Cleco Power has responded to several sets of data requests on the analysis. Management is unable to predict the outcome of this analysis or give a reasonable estimate of the possible range of disallowance of costs, if any.

Wholesale Rates

The rates Cleco charges its wholesale customers are subject to FERC’s triennial market power analysis. FERC requires a utility to pass a screening test as a condition for securing and/or retaining approval to sell electricity in wholesale markets at market-based rates. An updated market power analysis must be filed with FERC every three years or upon the occurrence of a change in status as defined by FERC regulation. Cleco’s next triennial market power analysis is expected to be filed during the fourth quarter of 2020.

Transmission Rates of Cleco Power

A complaint was filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. For more information about the ROE complaint, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

For information about the risks associated with Cleco Power’s participation in MISO, see Part II, Item 1A, “Risk Factors — MISO” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

For information on transmission rates of Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates of Cleco Power” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Transmission, Distribution, and Generation Projects

Cleco Power’s significant ongoing projects include the Bayou Vista to Segura transmission project, the DSMART distribution project and the St. Mary Clean Energy Center generation project. For information on these projects, see “— Overview — Cleco Power.”

Market Restructuring

Wholesale Electric Markets

RTO

For information on Cleco Power’s operations within MISO and for information on regulatory aspects of wholesale electric markets affecting Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Wholesale Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

ERO

The Energy Policy Act of 2005 added Section 215 to the Federal Power Act, which provides for a uniform system of mandatory, enforceable reliability standards. In 2006, FERC

named NERC as the ERO that will be required to develop and enforce the mandatory reliability standards.

A NERC Reliability Standards audit is conducted every three years for Cleco Power and Cleco Cajun. On October 17, 2019, Cleco Power’s NERC Reliability Standards audit was completed. The final report was issued on October 31, 2019. Cleco Power expects approval from NERC for the audit report by the end of 2019. The Cleco Cajun NERC Reliability Standards audit occurred during April 2019. There were no violations or areas of concern discovered during the Cleco Cajun audit.

A NERC CIP audit is also conducted every three years. Cleco Power’s next NERC CIP audit is scheduled to begin in the second quarter of 2020. Cleco Cajun’s CIP audit occurred during June 2019. The preliminary findings have been received by Cleco Cajun.

Management is unable to predict the final financial outcome of the current Cleco Power NERC Reliability Standards audit, the current Cleco Cajun CIP audit, or any future audits, or whether any findings will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. For a discussion of risks associated with FERC’s regulation of Cleco Power’s transmission system, see Part II, Item 1A, “Risk Factors — Reliability and Infrastructure Protection Standards Compliance” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Retail Electric Markets

For information on the regulatory aspects of retail electric markets affecting Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Retail Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Integrated Resource Plan (IRP)

In accordance with the General Order in LPSC Docket No. R-30021, on October 20, 2017, Cleco Power filed a request with the LPSC to initiate an IRP process. On February 20, 2018, Cleco Power filed the data assumptions to be used in its IRP analysis. The IRP process includes conducting stakeholder meetings and receiving feedback from stakeholders. The first stakeholder meeting was held on April 5, 2018. Comments from the stakeholders were filed on June 5, 2018. Cleco Power responded to multiple sets of data requests. Cleco Power filed a draft IRP report on January 29, 2019. A second stakeholder meeting was held on February 28, 2019. Comments from stakeholders were received on April 30, 2019. Cleco Power filed the Final IRP Report on August 30, 2019. LPSC acknowledgment of a completed IRP process is expected in January 2020.

The IRP report describes how Cleco Power plans to meet its forecasted load requirements on a reliable and economic basis. The IRP is used as a guide in future decision-making and does not represent firm operational commitments. LPSC acknowledgment of a completed IRP process does not represent approval of any actions stated in the IRP report.

Franchises

Cleco Power operates under nonexclusive franchise rights granted by governmental units, such as municipalities and

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parishes (counties), and enforced by state law. Cleco Power’snext municipal franchise expires in July 2021.

In June 2019, the Village of Loreauville voted to renew the franchise agreement with Cleco Power with an effective date of June 6, 2019. The franchise agreement is for 27 years until June 2046. Currently, approximately 384 customers are located in the Village of Loreauville.

In July 2019, the City of Opelousas voted to renew the franchise agreement with Cleco Power with an effective date of August 11, 2021. The franchise agreement is for 10 years from the effective date, until August 2031. Currently, approximately 9,604 customers are located in the City of Opelousas.

For more information on franchises, see Part I, Item 1, “Business Regulatory Matters, Industry Developments, and Franchises — Franchises” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Recent Authoritative Guidance.”

CRITICAL ACCOUNTING POLICIES

Cleco’s critical accounting policies include accounting policies that are important to Cleco’s financial condition and results of operations and that require management to make difficult, subjective, or complex judgments about future events, which could result in a material impact to the financial statements of Cleco. The preparation of financial statements contained in this report requires management to make estimates and

assumptions. Estimates and assumptions about future events and their effects cannot be made with certainty. These estimates involve judgments regarding many factors that in and of themselves could materially affect the financial statements and disclosures. On an ongoing basis, these estimates and assumptions are evaluated and, if necessary, adjustments are made when warranted by new or updated information or by a change in circumstances or environment. Actual results may differ significantly from these estimates under different assumptions or conditions.

For more information on Cleco’s critical accounting policies, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in the Registrant’s Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

Cleco Power meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q and is, therefore, permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Cleco Power has omitted from this report the information called for by Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

RISK OVERVIEW

Cleco is exposed to several forms of market risk, consisting primarily of credit risk, liquidity risk, interest rate risk, and commodity price risk. Cleco maintains policies and procedures to help manage these risks.

Credit Risks

Cleco monitors credit risk exposure through review of counterparty credit quality and regular measurement of counterparty credit exposure. Cleco manages counterparty credit risk exposure by establishing appropriate credit limits with counterparties and requiring contractual guarantees, cash deposits, or letters of credit from counterparties, per contract terms and as deemed necessary. Cleco Power and Cleco Cajun have agreements in place with various counterparties that may authorize transaction netting and contract payments to mitigate credit risk of transactions. For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Liquidity Risks

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Future actions or inactions of the federal government, including a failure to increase the government debt limit, could increase the actual or perceived risk that the

U.S. may not pay its obligations when due and may disrupt financial markets, including capital markets, potentially limiting availability and increasing costs of capital. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain and expand its businesses. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. Cleco Holdings and Cleco Power pay fees and interest under their respective credit facilities based on the highest rating held. For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Interest Rate Risks

Cleco monitors its mix of fixed- and variable-rate debt obligations in light of changing market conditions and from time to time may alter that mix, for example, refinancing balances outstanding under its variable-rate credit facility with fixed-rate debt. Calculations of the changes in fair market value and interest expense of the debt securities are made over a one-year period.

Sensitivity to changes in interest rates for variable-rate obligations is computed by assuming a 1% change in the current interest rate applicable to such debt.

At September 30, 2019, Cleco Holdings had no variable-rate debt outstanding under its $175.0 million credit facility.

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The borrowing costs under Cleco Holdings’ credit facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%.

At September 30, 2019, Cleco Holdings had $330.0 million long-term variable rate bank term loans outstanding. One bank term loan has a balance of $300.0 million outstanding, at an interest rate of LIBOR plus 1.625%, for an all-in interest rate of 3.735% at September 30, 2019. Another bank term loan has a balance of $30.0 million outstanding, at an interest rate of LIBOR plus 1.625%, for an all-in interest rate of 3.675% at September 30, 2019. The weighted average rate for all outstanding term loan debt was 3.73%. Each 1% increase in the interest rate applicable to such debt would result in a decrease in Cleco Holdings’ pretax earnings of $3.3 million.

At September 30, 2019, Cleco Power had no variable-rate debt outstanding. Cleco Power’s borrowing costs under its $300.0 million credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%.

Cleco may enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For each reporting period presented, the Registrants did not enter into any contracts to mitigate the volatility in interest rate risk.

Commodity Price Risks

Cleco Power and Cleco Cajun are exposed to changes in market prices inherent in fuel supply, generation, and customer supply activities. Cleco’s Energy Market Risk Management Policy authorizes hedging commodity price risk with physical or financially settled derivative instruments. Some of these contracts may qualify for the normal purchase, normal sale

(NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. The majority of these FTRs are purchased in annual auctions during the second quarter, but additional FTRs may be purchased in monthly auctions. FTRs represent economic hedges of future congestion charges that will be incurred in serving customer load. FTRs are derivatives not designated as hedging instruments for accounting purposes. At September 30, 2019, Cleco Power’s Condensed Consolidated Balance Sheet reflected FTRs of $8.6 million in Energy risk management assets and $0.6 million in Energy risk management liabilities. At September 30, 2019, Cleco’s Condensed Consolidated Balance Sheet reflected FTRs of $9.9 million in Energy risk management assets and $1.3 million in Energy risk management liabilities.

Cleco Cajun entered into other commodity derivative contracts that are fixed price forwards which fluctuate in value as underlying prices change. At September 30, 2019, Cleco’s Condensed Consolidated Balance Sheet reflected other commodity derivatives of $0.7 million in Energy risk management assets.

For more information on the accounting treatment and fair value of FTRs and other commodity derivatives, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Derivatives and Other Risk Management Activity” and “Note 7 — Fair Value Accounting — Commodity Contracts.”

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures

The Registrants’ disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports the Registrants file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to management, including the Registrants’ CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. As of September 30, 2019, the end of the period covered by this Quarterly Report on Form 10-Q, management performed an evaluation, under the supervision and with the participation of the Registrants’ CEO and the CFO, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on this evaluation, the CEO and the CFO concluded that the Registrants’ disclosure controls and procedures were not effective as of September 30, 2019, the end of the period covered by this Quarterly Report on Form 10-Q, due to the material weaknesses in internal control over financial reporting discussed below.

In light of the foregoing conclusion, the Registrants undertook additional procedures to allow the Registrants’ management to conclude that reasonable assurance exists regarding the reliability of financial reporting and the preparation of the condensed consolidated financial

statements contained in this Quarterly Report on Form 10-Q. Accordingly, the Registrants’ management concluded that the Registrants’ condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019, fairly present, in all material respects, the Registrants’ financial position, results of operations, and cash flows for the periods presented in such financial statements.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

During the three months ended June 30, 2019, the Registrants transitioned to a new enterprise business application (ERP) which required it to modify certain existing and implement new processes and internal controls to adapt to the new application. Subsequent to the implementation, a material weakness related to the design and operation of certain information technology (IT) general controls for information systems that are relevant to the preparation of the financial statements were identified.

Specifically, the Registrants did not sufficiently design and maintain (i) testing and approval controls for program development to ensure the implementation of a new ERP system is aligned with business and IT requirements which contributed to deficiencies related to (ii) user access controls

66

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

to ensure appropriate segregation of duties and that adequately restrict user and privileged access to certain financial applications, programs, and data to appropriate personnel, and (iii) program change management controls for certain financial systems to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately.

These IT deficiencies did not result in a material misstatement to the financial statements; however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

The Registrants also identified a material weakness in the design and operating effectiveness of controls over the completeness and accuracy of billed and unbilled revenue from contracts with customers. Specifically, there were deficiencies in controls to (i) verify the accuracy of billing estimates, (ii) record revenue in the appropriate period, and (iii) validate the completeness and accuracy of reports used in recording unbilled revenue.

The deficiencies resulted in immaterial errors and out-of-period adjustments in recorded retail revenue, customer accounts receivable, and unbilled revenue for the interim periods ended June 30, 2019, and September 30, 2019. However, the identified control deficiencies could result in a misstatement of the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would

not be prevented or detected.

Remediation Plan

The Registrants have initiated a plan to remediate the material weaknesses discussed above. This remediation plan includes performing an independent assessment of the core functionality of the recently implemented financial systems supporting financial reporting in order to improve the design, implementation, and operating effectiveness of IT general controls and controls over the customer billing process.

As the Registrants’ management continues to evaluate and work to improve the Registrants’ internal control over financial reporting, the Registrants may take additional measures to address these control deficiencies, or the Registrants may modify some of the remediation measures to improve the design and/or operating effectiveness of those measures. These material weaknesses will not be considered remediated until the applicable remediated controls are designed, implemented, and operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

On February 4, 2019, Cleco Cajun acquired from NRG Energy all of the outstanding membership interests in South Central Generating. Cleco continues to evaluate any changes to processes and other components of internal controls over financial reporting of Cleco Cajun as part of its ongoing integration activities.

There have been no other changes in the Registrants’ internal control over financial reporting that occurred during the three months ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.

67

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

PART II — OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

CLECO

For information on legal proceedings affecting Cleco, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

CLECO POWER

For information on legal proceedings affecting Cleco Power, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which supplemented and updated the risk factors disclosed in Part I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended

December 31, 2018. For risks that could affect actual results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrants, see the risk factors disclosed under Part II, Item 1A, “Risk Factors” of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

ITEM 6.   EXHIBITS
CLECO
4.1*	Indenture, dated as of September 11, 2019, by and between Cleco Corporate Holdings LLC and Regions Bank (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-15759) of Cleco Corporate Holdings LLC filed with the SEC on September 12, 2019).
4.2*	Supplemental Indenture No.1, dated as of September 11, 2019, by and between Cleco Corporate Holdings LLC and Regions Bank (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-15759) of Cleco Corporate Holdings LLC filed with the SEC on September 12, 2019).
4.3*	Registration Rights Agreement, dated as of September 11, 2019, by and among Cleco Corporate Holdings LLC and Mizuho Securities USA LLC, Credit Agricole Securities (USA) Inc. and Scotia Capital (USA) Inc. (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K (File No. 001-15759) of Cleco Corporate Holdings LLC filed with the SEC on September 12, 2019).
4.4*	Form of 3.375% Senior Note due 2029 (included in Exhibit 4.2 hereto) (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K (File No. 001-15759) of Cleco Corporate Holdings LLC filed with the SEC on September 12, 2019).
31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
CLECO POWER
31.3	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.4	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.3	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.4	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
* Previously Filed

68

CLECO
CLECO POWER	2019 3RD QUARTER FORM 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CLECO CORPORATE HOLDINGS LLC
(Registrant)
By:	/s/ F. Tonita Laprarie
	F. Tonita Laprarie
	Controller and Chief Accounting Officer

Date: November 13, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CLECO POWER LLC
(Registrant)
By:	/s/ F. Tonita Laprarie
	F. Tonita Laprarie
	Controller and Chief Accounting Officer

Date: November 13, 2019

69

EX-31.1

CLECO CORPORATE HOLDINGS LLC EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, William G. Fontenot, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2019, of Cleco Corporate Holdings LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   November 13, 2019

/s/ William G. Fontenot

William G. Fontenot

President and Chief Executive Officer

EX-31.2

CLECO CORPORATE HOLDINGS LLC EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kazi K. Hasan, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2019, of Cleco Corporate Holdings LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   November 13, 2019

/s/  Kazi K. Hasan

Kazi K. Hasan

Chief Financial Officer

EX-31.3

CLECO POWER LLC          EXHIBIT 31.3

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, William G. Fontenot, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2019, of Cleco Power LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 13, 2019

/s/  William G. Fontenot

William G. Fontenot

Chief Executive Officer

EX-31.4

CLECO POWER LLC          EXHIBIT 31.4

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kazi K. Hasan, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2019, of Cleco Power LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   November 13, 2019

/s/  Kazi K. Hasan

Kazi K. Hasan

Chief Financial Officer

EX-32.1

CLECO CORPORATE HOLDINGS LLC EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Corporate Holdings LLC (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William G. Fontenot, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:   November 13, 2019

/s/  William G. Fontenot

William G. Fontenot

President and Chief Executive Officer

EX-32.2

CLECO CORPORATE HOLDINGS LLC EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Corporate Holdings LLC (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kazi K. Hasan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  November 13, 2019

/s/  Kazi K. Hasan

Kazi K. Hasan

Chief Financial Officer

EX-32.3

CLECO POWER LLC EXHIBIT 32.3

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Power LLC (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William G. Fontenot, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:   November 13, 2019

/s/  William G. Fontenot

William G. Fontenot

Chief Executive Officer

EX-32.4

CLECO POWER LLC EXHIBIT 32.4

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Power LLC (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kazi K. Hasan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  November 13, 2019

/s/  Kazi K. Hasan

Kazi K. Hasan

Chief Financial Officer

XML

Business Combination (Tables)

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Assets Acquired and Liabilities Assumed and Measurement Period Adjustments

The measurement period adjustments were based upon information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of the amounts recognized at that date.

Measurement Period Adjustments
(THOUSANDS)	AT JUNE 30, 2019
Current assets
Customer and other accounts receivable	$	1,408
Other current assets	$	56
Non-current assets
Property, plant, and equipment, net	$	13,297
Prepayments	$	(56	)
Intangible assets	$	(3,600	)
Other deferred charges	$	1
Current liabilities
Accounts payable	$	3,022
Energy risk management liabilities	$	(1	)
Other current liabilities	$	327
Non-current liabilities
Accumulated deferred federal and state income taxes, net	$	421
Deferred lease revenue	$	(3,600	)
Intangible liabilities	$	6,400
Asset retirement obligations	$	4,534
Operating lease liabilities	$	3

Cleco Cajun accounted for the Cleco Cajun Transaction as a business combination, and accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the date of the acquisition. Cleco made certain measurement period adjustments at June 30, 2019. The following chart presents Cleco’s current preliminary purchase price allocation:

Preliminary Purchase Price Allocation
(THOUSANDS)	AT FEB. 4, 2019
Current assets
Cash and cash equivalents	$	146,494
Customer and other accounts receivable	49,809
Fuel inventory	22,060
Materials and supplies	25,659
Energy risk management assets	4,193
Other current assets	10,056
Non-current assets
Property, plant, and equipment, net	741,203
Prepayments	36,166
Restricted cash and cash equivalents	707
Intangible assets	98,900
Other deferred charges	133
Total assets acquired	1,135,380
Current liabilities
Accounts payable	38,478
Taxes payable	723
Energy risk management liabilities	241
Other current liabilities	14,570
Non-current liabilities
Accumulated deferred federal and state income taxes, net	7,165
Deferred lease revenue	58,300
Intangible liabilities	38,300
Asset retirement obligations	15,323
Operating lease liabilities	110
Total liabilities assumed	173,210
Total purchase price consideration	$	962,170

Unaudited Pro Forma Information

The unaudited pro forma financial information presented in the following table is not necessarily indicative of the consolidated results of operations that would have been achieved had the transaction taken place on the dates indicated, or the future consolidated results of operations of the combined companies.

Unaudited Pro Forma Financial Information
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Operating revenue, net	$	487,971	$	469,419	$	1,250,787	$	1,263,182
Net income	$	56,004	$	71,076	$	122,771	$	140,255

XML

Intangible Assets and Liabilities

9 Months Ended

Sep. 30, 2019

Intangible Assets And Liabilities Disclosure [Abstract]

Intangible Assets and Liabilities

Note 16 — Intangible Assets and Liabilities

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. This intangible asset is expected to have a life of 12 years, but could have a life up to 15 years depending on the time period required to collect the required amount from Cleco Power’s customers. 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 2016 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 2016 Merger. Cleco Katrina/Rita records amortization expense based on actual collections.

As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed 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. The intangible assets related to the power supply agreements are amortized over the remaining life of each applicable contract ranging between 4 years and 16 years and the amortization is included in Electric operations on Cleco’s Condensed Consolidated Statement of Income.

As a result of the Cleco Cajun Transaction, preliminary fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the difference between the contract and market price of acquired long-term wholesale power agreements. The preliminary fair value of intangible assets of $98.9 million and intangible liabilities of $14.2 million was reflected in the preliminary purchase price allocation. At the end of their life, these intangible assets and liabilities will have no residual value. These intangibles are amortized over the remaining life of each applicable contract ranging between two years and eight years. The amortization is included in Electric operations on Cleco’s Condensed Consolidated Statement of Income.

As part of the Cleco Cajun Transaction, Cleco assumed an LTSA for maintenance services related to the Cottonwood Plant. An intangible liability of $24.1 million was reflected in the preliminary purchase price allocation and is being amortized using the straight-line method over the estimated remaining life of the LTSA of seven years. The amortization is included as a reduction to the LTSA prepayments on Cleco’s Condensed Consolidated Balance Sheet. For more information on the fair value adjustments of intangible assets and liabilities related to the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

The following tables present Cleco and Cleco Power’s amortization of intangible assets and liabilities:

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	5,660	$	5,623	$	15,702	$	15,617
Trade name	$	64	$	64	$	191	$	191
Power supply agreements	$	6,474	$	2,420	$	17,873	$	7,260
Intangible liabilities
LTSA	$	871	$	—	$	2,323	$	—
Power supply agreements	$	882	$	—	$	2,352	$	—

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	5,660	$	5,623	$	15,702	$	15,617

The following tables summarize the balances for intangible assets and liabilities subject to amortization for Cleco and Cleco Power:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	70,594		$	70,594
Trade name	5,100			5,100
Power supply agreements	184,004			85,104
Total intangible assets carrying amount	259,698			160,798
Intangible liabilities
LTSA	24,100			—
Power supply agreements	14,200			—
Total intangible liability carrying amount	38,300			—
Net intangible assets carrying amount	221,398			160,798
Accumulated amortization	(105,583		)	(76,491		)
Net intangible assets subject to amortization	$	115,815		$	84,307

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	177,537		$	177,537
Accumulated amortization	(172,146		)	(156,444		)
Net intangible assets subject to amortization	$	5,391		$	21,093

Goodwill

On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion. Management assigned the recognized goodwill to the Cleco Power reporting segment. Goodwill is required to be tested for impairment at the reporting segment level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting segment below its carrying value. Application of the goodwill impairment test requires significant judgments, including the identification of reporting segments, assignments of assets and liabilities to reporting segments, assignment of goodwill to reporting segments, and the determination of the fair value of the reporting segments.

Cleco conducted its 2019 annual impairment test using an August 1, 2019, measurement date. The fair value of the Cleco Power reporting segment was estimated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries. Significant assumptions used in these fair value estimates include estimation of future cash flows related to capital expenditures, long-term rate of growth, and weighted-average cost of capital (WACC) or discount rate. Changes in these assumptions could materially affect the determination of fair value and goodwill impairment at Cleco Power. Based on the tests performed, management has determined that there was no impairment of Cleco Power’s goodwill as of August 1, 2019.

Management estimated the fair value of Cleco Power’s equity to be $3.97 billion at the August 1, 2019, measurement date. The carrying value of Cleco Power’s equity was approximately $3.40 billion with the excess of the fair value over the carrying value representing 16.8% or $570.4 million. There were no accumulated impairment charges.

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Regulation and Rates

9 Months Ended

Sep. 30, 2019

Regulated Operations [Abstract]

Regulation and Rates

Note 12 — Regulation and Rates

At September 30, 2019, Provision for rate refund on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets consisted primarily of $38.4 million for the estimated refund for the tax-related benefits from the TCJA, $3.0 million for the estimated refund related to the FERC audit, $2.8 million for the cost of service savings refunds, $2.3 million for estimated FRP refunds, and $1.9 million for potential reductions to the transmission ROE. For more information about the FERC audit, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”

Transmission ROE

A complaint was filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. As ofSeptember 30, 2019,Cleco Power had $1.9 million accrued for potential ROE reductions. For more information on the ROE complaints, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

FRP

Cleco Power’s annual retail earnings are subject to an FRP that was approved by the LPSC in June 2014. Under the terms of Cleco Power’s current FRP, Cleco Power is allowed to earn a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, 60.0% of retail earnings between 10.9% and 11.75%, and all retail earnings over 11.75%, are required to be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC, annually. Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds are ultimately subject to LPSC approval. On June 28, 2019, Cleco Power filed an application with the LPSC for a new FRP, with anticipated new rates being effective July 1, 2020. Cleco Power has responded to several sets of data requests relating to the new FRP.

Cleco Power must file annual monitoring reports no later than October 31 for the 12-month period ending June 30. On October 31, 2017, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2017, which indicated that no refund was due as a result of the FRP and $1.2 million was due as a result of the cost of service savings from the 2016 Merger Commitments. The $1.2 million cost of service savings from the 2016 Merger Commitments were refunded in September 2018. Cleco Power expects the LPSC to approve the 2017 FRP monitoring report in the fourth quarter of 2019.

On October 31, 2018, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2018, which indicated that no refund was due as a result of the FRP and $1.2 million of cost of service savings refunds are due to be returned to eligible customers. On December 21, 2018, Cleco Power responded to the first set of data requests for the 2018 FRP monitoring report.

On October 4, 2019, Cleco Power filed comments and supporting testimony to the LPSC’s initial and final report for the 2017 FRP monitoring report regarding the realignment of SSR revenues between fuel and base revenues. Cleco Power proposed the re-allocation of SSR revenues, which would result in no additional FRP refund for the 12-month period ended June 30, 2017, and $2.3 million of additional FRP refunds for the 12-month period ended June 30, 2018. At September 30, 2019, Cleco Power had $2.3 million accrued for the estimated FRP refunds relating to the 12-month period ended June 30, 2018.

On October 31, 2019, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2019, which indicated that no refund was due as a result of the FRP and $1.2 million of cost of service savings refunds are due to be returned to eligible customers. At September 30, 2019, Cleco Power had $1.2 million accrued for the estimated cost of service savings refunds relating to the 12-month period ended June 30, 2019.

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. As a result of the tax rate reduction, on January 1, 2018, Cleco Power began accruing an estimated reserve for the reduction in the federal statutory corporate income tax rate. In February 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flow through to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. After various filings and settlement discussions, on July 10, 2019, the LPSC approved Cleco Power’s rate refund of $79.2 million, plus interest, for the reduction in the statutory federal tax rate for the period from January 2018 to June 2020. The refund is being credited to customers over 12 months beginning August 1, 2019. At September 30, 2019, Cleco Power had $38.4 million accrued for the estimated federal tax-related benefits from the TCJA and $3.0 million accrued for related interest.

Also, on July 10, 2019, the LPSC approved Cleco Power’s motion to address the rate redesign and the regulatory liability for excess ADIT, resulting from the enactment of the TCJA, in Cleco Power’s application for its next FRP, which was filed on June 28, 2019.

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution could be implemented to mitigate reliability issues. One mitigating factor identified was Cleco Power’s Terrebonne to Bayou Vista Transmission project. The Terrebonne to Bayou Vista project was completed in April 2019. Cleco Power received a termination notice, effective April 30, 2019, and filed paperwork to withdraw the filed Attachment Y. While operating as an SSR unit, Cleco Power received monthly payments that included recovery of expenses, including capital expenditures, related to the operations of Teche Unit 3. Additionally, MISO allocated SSR costs to the load serving entities that required the operation of the SSR unit, including Cleco Power. These payments and cost allocations were finalized as part of a MISO SSR settlement approved in December 2018. Cleco Power operated Teche Unit 3 as an SSR unit from April 2017 until April 2019.

After the end of the final SSR agreement, which was terminated on April 30, 2019, Cleco Power expects Teche Unit 3 to be available to run until the estimated 2021 in-service date of Bayou Vista to Segura Transmission project, at which time Cleco Power does not expect to offer the unit into MISO, barring any grid or customer reliability issues or other similar reasons. At September 30, 2019, Cleco Power had $6.1 million accrued for the net capital refund for capital expenditures paid for by third parties. As part of the settlement, one of the load serving entities agreed to reimburse Cleco Power for their portion of the capital refund. Management is unable to determine the timing of the capital refund.

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Fair Value Accounting - Carrying Value and Estimated Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred debt issuance costs not included in the carrying value of long-term debt	$ 14,200	$ 10,300
CARRYING VALUE
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	3,191,452	2,889,631
FAIR VALUE
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	3,407,190	2,859,924
CLECO POWER
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred debt issuance costs not included in the carrying value of long-term debt	7,600	8,300
CLECO POWER | CARRYING VALUE
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	1,380,605	1,400,930
CLECO POWER | FAIR VALUE
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 1,625,480	$ 1,517,152

XML

Intangible Assets and Liabilities - Schedule of Amortization of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
LTSA
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible liabilities	$ 871	$ 0	$ 2,323	$ 0
Power supply agreements
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible liabilities	882	0	2,352	0
Cleco Katrina/Rita right to bill and collect storm recovery charges
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	5,660	5,623	15,702	15,617
Cleco Katrina/Rita right to bill and collect storm recovery charges | CLECO POWER
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	5,660	5,623	15,702	15,617
Trade name
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	64	64	191	191
Power supply agreements
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 6,474	$ 2,420	$ 17,873	$ 7,260

XML

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	$ 467,647	$ 351,015	$ 1,173,792	$ 902,248
Revenue unrelated to contracts with customers
Other	20,324	7,241	56,238	32,029
Total revenue unrelated to contracts with customers	20,324	7,241	56,238	32,029
Operating revenue, net	487,971	358,256	1,230,030	934,277
Deferred lease amortization			6,137	0
Total retail revenue
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	254,604	269,624	643,612	683,185
Residential
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	142,265	139,162	327,340	338,357
Commercial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	84,816	79,829	218,209	218,389
Industrial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	36,830	43,380	109,545	121,445
Other retail
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	4,234	4,039	11,391	11,633
Surcharge
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	170	6,206	7,692	17,637
Electric customer credits
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	(13,711)	(2,992)	(30,565)	(24,276)
Wholesale, net
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	181,564	61,204	445,629	157,995
Transmission
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	27,027	14,718	69,909	41,166
Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	4,452	5,469	14,642	19,902
Affiliate
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
CLECO POWER | Other
Revenue unrelated to contracts with customers
Other miscellaneous fee revenue		4,900	11,400	13,400
Reserves for capital expenditures		200		2,400
CLECO POWER | Lost contribution to fixed cost
Revenue unrelated to contracts with customers
Other			2,600
CLECO POWER | Price Risk Derivative | Other
Revenue unrelated to contracts with customers
Other			11,700
CLECO POWER | SSR | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers		600	3,200	6,500
CLECO CAJUN
Revenue unrelated to contracts with customers
Deferred lease amortization	2,300		6,100
Operating Segments | CLECO POWER
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	342,982	353,658	877,535	910,158
Revenue unrelated to contracts with customers
Other	1,995	7,241	9,158	32,029
Total revenue unrelated to contracts with customers	1,995	7,241	9,158	32,029
Operating revenue, net	344,977	360,899	886,693	942,187
Operating Segments | CLECO POWER | Total retail revenue
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	254,604	269,624	643,612	683,185
Operating Segments | CLECO POWER | Residential
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	142,265	139,162	327,340	338,357
Operating Segments | CLECO POWER | Commercial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	84,816	79,829	218,209	218,389
Operating Segments | CLECO POWER | Industrial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	36,830	43,380	109,545	121,445
Operating Segments | CLECO POWER | Other retail
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	4,234	4,039	11,391	11,633
Operating Segments | CLECO POWER | Surcharge
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	170	6,206	7,692	17,637
Operating Segments | CLECO POWER | Electric customer credits
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	(13,711)	(2,992)	(30,565)	(24,276)
Operating Segments | CLECO POWER | Wholesale, net
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	69,558	63,624	179,633	165,255
Operating Segments | CLECO POWER | Transmission
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	14,034	14,718	38,679	41,166
Operating Segments | CLECO POWER | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	4,452	5,469	14,640	19,901
Operating Segments | CLECO POWER | Affiliate
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	334	223	971	651
Operating Segments | CLECO CAJUN
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	129,892		309,912
Revenue unrelated to contracts with customers
Other	18,329		47,081
Total revenue unrelated to contracts with customers	18,329		47,081
Operating revenue, net	148,221		356,993
Lease revenue	16,000		40,900
Operating Segments | CLECO CAJUN | Total retail revenue
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Residential
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Commercial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Industrial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Other retail
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Surcharge
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Electric customer credits
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Wholesale, net
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	114,426		273,256
Operating Segments | CLECO CAJUN | Transmission
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	15,435		36,625
Operating Segments | CLECO CAJUN | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0		0
Operating Segments | CLECO CAJUN | Affiliate
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	31		31
OTHER
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	25,832	20,345	70,542	48,448
Revenue unrelated to contracts with customers
Other	0	0	0	0
Total revenue unrelated to contracts with customers	0	0	0	0
Operating revenue, net	25,832	20,345	70,542	48,448
OTHER | Total retail revenue
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Residential
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Commercial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Industrial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Other retail
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Surcharge
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Electric customer credits
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Wholesale, net
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	(2,420)	(2,420)	(7,260)	(7,260)
OTHER | Transmission
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
OTHER | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	2	1
OTHER | Affiliate
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	28,252	22,765	77,800	55,707
ELIMINATIONS
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	(31,059)	(22,988)	(84,197)	(56,358)
Revenue unrelated to contracts with customers
Other	0	0	(1)	0
Total revenue unrelated to contracts with customers	0	0	(1)	0
Operating revenue, net	(31,059)	(22,988)	(84,198)	(56,358)
ELIMINATIONS | Total retail revenue
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Residential
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Commercial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Industrial
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Other retail
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Surcharge
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Electric customer credits
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Wholesale, net
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Transmission
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	(2,442)	0	(5,395)	0
ELIMINATIONS | Other
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	0	0	0	0
ELIMINATIONS | Affiliate
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	$ (28,617)	$ (22,988)	$ (78,802)	$ (56,358)

XML

Intangible Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Finite-Lived Intangible Assets [Line Items]

Schedule of Amortization of Intangible Assets and Liabilities

The following tables present Cleco and Cleco Power’s amortization of intangible assets and liabilities:

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	5,660	$	5,623	$	15,702	$	15,617
Trade name	$	64	$	64	$	191	$	191
Power supply agreements	$	6,474	$	2,420	$	17,873	$	7,260
Intangible liabilities
LTSA	$	871	$	—	$	2,323	$	—
Power supply agreements	$	882	$	—	$	2,352	$	—

Schedule of Finite-Lived Intangible Assets and Liabilities

The following tables summarize the balances for intangible assets and liabilities subject to amortization for Cleco and Cleco Power:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	70,594		$	70,594
Trade name	5,100			5,100
Power supply agreements	184,004			85,104
Total intangible assets carrying amount	259,698			160,798
Intangible liabilities
LTSA	24,100			—
Power supply agreements	14,200			—
Total intangible liability carrying amount	38,300			—
Net intangible assets carrying amount	221,398			160,798
Accumulated amortization	(105,583		)	(76,491		)
Net intangible assets subject to amortization	$	115,815		$	84,307

CLECO POWER

Finite-Lived Intangible Assets [Line Items]

Schedule of Amortization of Intangible Assets and Liabilities

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	5,660	$	5,623	$	15,702	$	15,617

Schedule of Finite-Lived Intangible Assets and Liabilities

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	177,537		$	177,537
Accumulated amortization	(172,146		)	(156,444		)
Net intangible assets subject to amortization	$	5,391		$	21,093

XML

Business Combination - Assets Acquired and Liabilities Assumed (Details) - South Central Generating $ in Thousands	Feb. 04, 2019 USD ($)
Current assets
Cash and cash equivalents	$ 146,494
Customer and other accounts receivable	49,809
Energy risk management assets	4,193
Other current assets	10,056
Non-current assets
Property, plant, and equipment, net	741,203
Prepayments	36,166
Restricted cash and cash equivalents	707
Intangible assets	98,900
Other deferred charges	133
Total assets acquired	1,135,380
Current liabilities
Accounts payable	38,478
Taxes payable	723
Energy risk management liabilities	241
Other current liabilities	14,570
Non-current liabilities
Accumulated deferred federal and state income taxes, net	7,165
Deferred lease revenue	58,300
Intangible liabilities	38,300
Asset retirement obligations	15,323
Operating lease liabilities	110
Total liabilities assumed	173,210
Total purchase price consideration	962,170
Fuel inventory
Current assets
Inventory	22,060
Materials and supplies
Current assets
Inventory	$ 25,659

XML

Leases - Operating Leases (Details)	Sep. 30, 2019	Sep. 30, 2019 municipality	Sep. 30, 2019 non_municipal_public_body	Sep. 30, 2019 railcar	Sep. 30, 2019 towboat	Jul. 09, 2019
CLECO POWER
Lessee, Lease, Description [Line Items]
Operating lease, number of lessors		2	1
CLECO POWER | Utility Systems | Municipality One
Lessee, Lease, Description [Line Items]
Operating lease term	10 years
Operating lease renewal term						10 years
CLECO POWER | Utility Systems | Municipality Two
Lessee, Lease, Description [Line Items]
Operating lease term	10 years
CLECO POWER | Utility Systems | Non-Municipal Public Body
Lessee, Lease, Description [Line Items]
Operating lease term	27 years
CLECO POWER | Railcars
Lessee, Lease, Description [Line Items]
Operating lease, number of leased assets				200
CLECO POWER | Railcars | Operating Lease, Expiring March 31, 2021
Lessee, Lease, Description [Line Items]
Operating lease, number of leased assets				115
CLECO POWER | Railcars | Operating Lease, Expiring March 31, 2020
Lessee, Lease, Description [Line Items]
Operating lease, number of leased assets				85
CLECO POWER | Towboats
Lessee, Lease, Description [Line Items]
Operating lease term	10 years
Operating lease renewal term	5 years
Operating lease, number of leased assets | towboat					3
Cleco Cajun | Railcars
Lessee, Lease, Description [Line Items]
Operating lease term	12 months
Operating lease renewal term	1 month
Operating lease, number of leased assets				135

XML

Fair Value Accounting - Fair Value of Derivative Instruments as Recorded in Condensed Consolidated Balance Sheets (Details) - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Commodity-related contracts
Commodity-related contracts, net	$ 9,373	$ 22,887
Price Risk Derivative
Commodity-related contracts
Energy risk management assets	9,926	23,355
Energy risk management liabilities	1,257	468
Other commodity derivatives
Commodity-related contracts
Energy risk management assets	745	0
Energy risk management liabilities	41	0
CLECO POWER | Price Risk Derivative
Commodity-related contracts
Energy risk management assets	8,601	23,355
Energy risk management liabilities	577	468
Commodity-related contracts, net	$ 8,024	$ 22,887

XML

Income Taxes - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018
Uncertain Tax Positions [Line Items]
Interest payable related to uncertain tax positions	$ 0		$ 0			$ 0
Interest expense related to uncertain tax positions	0	$ 0	0	$ 0
Liability for uncertain tax positions	0		0
Penalties	0	0	0	0
Scenario, Forecast | Federal
Uncertain Tax Positions [Line Items]
Net operating losses					$ 575,500,000
Scenario, Forecast | State
Uncertain Tax Positions [Line Items]
Net operating losses					$ 121,800,000
CLECO POWER
Uncertain Tax Positions [Line Items]
Interest payable related to uncertain tax positions	0		0			$ 0
Interest expense related to uncertain tax positions	$ 0	$ 0	$ 0	$ 0

XML

Variable Interest Entities - Equity Method Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Total equity investment in investee	$ 17,672		$ 17,672		$ 18,172
CLECO POWER
Schedule of Equity Method Investments [Line Items]
Purchase price	12,873		12,873		12,873
Cash contributions	6,399		6,399		6,399
Dividends	(1,600)		(1,600)		(1,100)
Total equity investment in investee	17,672		17,672		$ 18,172
Operating revenue	2,776	$ 2,214	7,114	$ 4,134
Operating expenses	2,776	2,214	7,114	4,134
Income before taxes	$ 0	$ 0	$ 0	$ 0

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Pension Plan and Employee Benefits - Narrative (Details) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 12, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Discretionary contribution	$ 12,300,000
Defined benefit plan contributions by employer		$ 3,044,000	$ 4,709,000	$ 9,132,000	$ 14,126,000
Other Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer		868,000	793,000	2,156,000	2,192,000
Assets held-in-trust, noncurrent		0		0
SERP
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer		1,260,000	1,593,000	3,780,000	4,779,000
CLECO POWER | Other Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer		900,000	900,000	2,300,000	2,500,000
CLECO POWER | SERP
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer		200,000	400,000	600,000	1,100,000
Other Subsidiaries | Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan contributions by employer		$ 500,000	$ 500,000	$ 1,600,000	$ 1,500,000

XML

Leases - Lease Income Under Cottonwood Sale Leaseback (Details) - Cleco Cajun - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Lessor, Lease, Description [Line Items]
Fixed payments	$ 10,000	$ 26,667
Variable payments	6,010	14,248
Amortization of deferred lease liability	2,301	6,137
Total lease income	$ 18,311	$ 47,052

XML

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited) - USD ($) $ in Thousands	Total	MEMBERSHIP INTEREST	RETAINED EARNINGS	AOCI	CLECO POWER	CLECO POWER MEMBERSHIP INTEREST	CLECO POWER AOCI
Balances, beginning of period at Dec. 31, 2017	$ 2,096,357	$ 2,069,376	$ 29,902	$ (2,921)	$ 1,550,679	$ 1,564,362	$ (13,683)
Increase (Decrease) in Equity [Roll Forward]
Distributions to member	(60,500)		(60,500)		(121,400)	(121,400)
Net income	84,060		84,060		132,359	132,359
Other comprehensive income (loss), net of tax	551			551	1,052		1,052
Balances, end of period at Sep. 30, 2018	2,120,468	2,069,376	53,462	(2,370)	1,562,690	1,575,321	(12,631)
Balances, beginning of period at Jun. 30, 2018	2,093,447	2,069,376	26,702	(2,631)	1,549,331	1,562,386	(13,055)
Increase (Decrease) in Equity [Roll Forward]
Distributions to member	(20,600)		(20,600)		(50,400)	(50,400)
Net income	47,360		47,360		63,336	63,336
Other comprehensive income (loss), net of tax	261			261	424		424
Balances, end of period at Sep. 30, 2018	2,120,468	2,069,376	53,462	(2,370)	1,562,690	1,575,321	(12,631)
Balances, beginning of period at Dec. 31, 2018	2,124,740	2,069,376	53,578	1,786	1,594,533	1,607,715	(13,182)
Increase (Decrease) in Equity [Roll Forward]
Contribution from member	384,900		384,900
Net income	120,868		120,868		127,595	127,595
Other comprehensive income (loss), net of tax	(319)			(319)	706		706
Balances, end of period at Sep. 30, 2019	2,630,189	2,069,376	559,346	1,467	1,722,834	1,735,310	(12,476)
Balances, beginning of period at Jun. 30, 2019	2,574,661	2,069,376	503,781	1,504	1,671,014	1,683,783	(12,769)
Increase (Decrease) in Equity [Roll Forward]
Net income	55,565		55,565		51,527	51,527
Other comprehensive income (loss), net of tax	(37)			(37)	293		293
Balances, end of period at Sep. 30, 2019	$ 2,630,189	$ 2,069,376	$ 559,346	$ 1,467	$ 1,722,834	$ 1,735,310	$ (12,476)

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Leases - Total Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Finance lease cost
Amortization of ROU assets	$ 280	$ 840
Interest on lease liabilities	410	1,240
Operating lease cost	1,158	3,411
Variable lease cost	116	423
Total lease cost	1,964	5,914
CLECO POWER
Finance lease cost
Amortization of ROU assets	280	840
Interest on lease liabilities	410	1,240
Operating lease cost	1,101	3,243
Variable lease cost	116	423
Total lease cost	$ 1,907	$ 5,746

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 101,392	$ 110,175
Restricted cash and cash equivalents	5,356	11,241
Customer accounts receivable (less allowance for doubtful accounts)	125,125	50,043
Other accounts receivable	31,089	27,196
Unbilled revenue	46,080	35,314
Fuel inventory, at average cost	66,441	82,836
Materials and supplies, at average cost	121,380	92,671
Energy risk management assets	10,671	23,355
Accumulated deferred fuel	56,056	20,112
Cash surrender value of company-/trust-owned life insurance policies	84,122	80,391
Prepayments	6,826	7,911
Regulatory assets	19,398	22,461
Other current assets	11,714	1,256
Total current assets	685,650	564,962
Property/Utility, plant, and equipment
Property, plant, and equipment	4,813,017	3,728,477
Accumulated depreciation	(411,485)	(303,727)
Net property, plant, and equipment	4,401,532	3,424,750
Construction work in progress	221,386	354,045
Total property/utility, plant, and equipment, net	4,622,918	3,778,795
Equity investment in investee	17,672	18,172
Goodwill	1,490,797	1,490,797
Prepayments	24,312	2,251
Operating lease right of use assets	29,719	0
Restricted cash and cash equivalents	15,113	18,670
Note receivable	15,362	15,829
Regulatory assets	408,557	425,330
Intangible assets	149,440	84,307
Other deferred charges	38,833	37,701
Total assets	7,498,373	6,436,814
Current liabilities
Long-term debt and finance leases due within one year	63,684	21,128
Accounts payable	160,240	156,589
Accounts payable - affiliate	3,175	0
Customer deposits	57,542	61,736
Provision for rate refund	50,777	35,842
Taxes payable, net	73,875	43,674
Interest accrued	43,829	15,828
Energy risk management liabilities	1,298	468
Regulatory liabilities - other	11,350	2,496
Deferred compensation	11,548	10,753
Other current liabilities	53,408	30,536
Total current liabilities	530,726	379,050
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	653,529	608,030
Postretirement benefit obligations	238,392	249,264
Regulatory liabilities - other	0	2,496
Regulatory liabilities - deferred taxes, net	144,124	155,537
Restricted storm reserve	12,185	15,485
Deferred lease revenue	52,163	0
Intangible liabilities	33,625	0
Asset retirement obligations	23,026	6,881
Operating lease liabilities	25,828	0
Other deferred credits	25,209	20,846
Total long-term liabilities and deferred credits	1,208,081	1,058,539
Long-term debt and finance leases, net	3,129,377	2,874,485
Total liabilities	4,868,184	4,312,074
Commitments and contingencies (Note 14)
Member’s equity
Member’s equity	2,630,189	2,124,740
Total liabilities and member’s equity	7,498,373	6,436,814
CLECO POWER
Current assets
Cash and cash equivalents	64,237	31,987
Restricted cash and cash equivalents	5,356	11,241
Customer accounts receivable (less allowance for doubtful accounts)	72,897	50,043
Accounts receivable - affiliate	2,074	3,318
Other accounts receivable	26,864	24,523
Unbilled revenue	46,080	35,314
Fuel inventory, at average cost	41,343	82,836
Materials and supplies, at average cost	95,157	92,671
Energy risk management assets	8,601	23,355
Accumulated deferred fuel	56,056	20,112
Cash surrender value of company-/trust-owned life insurance policies	17,534	20,497
Prepayments	3,020	6,143
Regulatory assets	9,466	13,603
Other current assets	616	1,162
Total current assets	449,301	416,805
Property/Utility, plant, and equipment
Property, plant, and equipment	5,325,641	5,015,004
Accumulated depreciation	(1,873,752)	(1,804,563)
Net property, plant, and equipment	3,451,889	3,210,441
Construction work in progress	216,959	351,828
Total property/utility, plant, and equipment, net	3,668,848	3,562,269
Equity investment in investee	17,672	18,172
Prepayments	4,213	2,251
Operating lease right of use assets	29,375	0
Restricted cash and cash equivalents	14,274	18,649
Note receivable	15,362	15,829
Regulatory assets	255,899	261,569
Intangible assets	5,391	21,093
Other deferred charges	37,312	32,419
Total assets	4,497,647	4,349,056
Current liabilities
Long-term debt and finance leases due within one year	61,488	21,128
Accounts payable	113,615	146,314
Accounts payable - affiliate	8,722	7,843
Customer deposits	57,542	61,736
Provision for rate refund	49,403	35,842
Taxes payable, net	43,133	48,177
Interest accrued	24,549	8,252
Energy risk management liabilities	577	468
Regulatory liabilities - other	11,350	2,496
Other current liabilities	27,507	22,263
Total current liabilities	397,886	354,519
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	666,489	630,765
Postretirement benefit obligations	172,576	182,721
Regulatory liabilities - other	0	2,496
Regulatory liabilities - deferred taxes, net	144,124	155,537
Restricted storm reserve	12,185	15,485
Asset retirement obligations	7,212	6,881
Operating lease liabilities	25,682	0
Other deferred credits	21,358	18,345
Total long-term liabilities and deferred credits	1,049,626	1,012,230
Long-term debt and finance leases, net	1,327,301	1,387,774
Total capitalization	3,050,135	2,982,307
Commitments and contingencies (Note 14)
Member’s equity
Member’s equity	1,722,834	1,594,533
Total liabilities and member’s equity	$ 4,497,647	$ 4,349,056

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 13, 2019
Entity Information [Line Items]
Entity Registrant Name	Cleco Corporate Holdings LLC
Entity Central Index Key	0001089819
Entity Current Reporting Status	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		0
Cleco Power
Entity Information [Line Items]
Entity Registrant Name	CLECO POWER LLC
Entity Central Index Key	0000018672
Entity Current Reporting Status	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		0

XML

Leases - Finance Lease (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) event	Sep. 30, 2019 USD ($) event	Apr. 30, 2018 barge
Lessee, Lease, Description [Line Items]
Finance lease, number of cancellation events triggering early termination | event	1	1
Finance lease, number of cancellation events | event	4	4
CLECO POWER
Lessee, Lease, Description [Line Items]
Finance lease payments | $	$ 0.6	$ 1.7
Revenue from subleases | $	$ 0.4	$ 1.3
CLECO POWER | Barges
Lessee, Lease, Description [Line Items]
Finance lease, number of leased assets | barge			42

XML

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Lessor, Lease, Description [Line Items]

Future Minimum Lease Payments Due Under Long-Term Operating Leases

The following is a schedule by year of future minimum lease payments due under Cleco and Cleco Power’s long-term operating leases together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)	CLECO POWER		CLECO
Three months ending Dec. 31, 2019	$	1,014	$	1,065
Years ending Dec. 31,
2020	3,960		3,994
2021	3,410		3,443
2022	3,256		3,287
2023	3,220		3,249
Thereafter	21,833		21,853
Total minimum lease payments	36,693		36,891
Less: amount representing interest	7,395		7,358
Present value of net minimum operating lease payments	$	29,298	$	29,533
Current liabilities	$	3,616	$	3,705
Non-current liabilities	$	25,682	$	25,828

Summary of Expected Operating Lease Payments as of Prior Year

The following table is a summary of expected operating lease payments for Cleco and Cleco Power at December 31, 2018:

(THOUSANDS)	CLECO HOLDINGS		CLECO POWER		CLECO
Year ending Dec. 31,
2019	$	120	$	4,030	$	4,150
2020	—		3,890		3,890
2021	—		2,789		2,789
2022	—		1,239		1,239
2023	—		1,214		1,214
Thereafter	—		7,235		7,235
Total operating lease payments	$	120	$	20,397	$	20,517

Analysis of Leased Property Under Finance Leases, Supplemental Balance Sheet Information, and Property Associated with Sale Leaseback

The following is an analysis of the leased property under the finance lease:

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Barges	$	16,800		$	16,800
Accumulated amortization	(1,680		)	(840		)
Net finance lease	$	15,120		$	15,960

Property associated with the Cottonwood Sale Leaseback was as follows:

(THOUSANDS)	AT SEPT. 30, 2019
Property, plant, and equipment	$	540,409
Accumulated depreciation	(16,140		)
Net property, plant, and equipment	$	524,269

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Future Minimum Lease Payments Due Under Finance Lease

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	$	16,006
Current liabilities	$	602
Non-current liabilities	$	15,404

Future Minimum Lease Payments Due Under Finance Lease as of Prior Year

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of December 31, 2018:

(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Total Lease Costs, Supplemental Cash Flow Information, and Other Supplemental Information

Cleco
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	3,387
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,881

The following tables reflect total lease costs for Cleco and Cleco Power for the three and nine months ended September 30, 2019:

Cleco
(THOUSANDS)	FOR THE THREE  MONTHS ENDED SEPT. 30, 2019		FOR THE NINE  MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,158		3,411
Variable lease cost	116		423
Total lease cost	$	1,964	$	5,914

	AT SEPT. 30, 2019
(THOUSANDS)	CLECO POWER		CLECO
Other supplemental information
Operating leases
Weighted-average remaining lease term	11.0 years		10.9 years
Weighted-average discount rate	4.31	%	4.31	%
Finance leases
Weighted-average remaining lease term	13.5 years		13.5 years
Weighted-average discount rate	10.18	%	10.18	%

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Lease Income Under Cottonwood Sale Leaseback

Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was as follows:

(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Fixed payments	$	10,000	$	26,667
Variable payments	6,010		14,248
Amortization of deferred lease liability(1)	2,301		6,137
Total lease income	$	18,311	$	47,052

⁽¹⁾ The deferred lease revenue resulting from the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.

Remaining Minimum Lease Payments To Be Received

The remaining minimum lease payments to be received under the Cottonwood Sale Leaseback are as follows:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$	226,666

Cleco Power

Lessor, Lease, Description [Line Items]

Total Lease Costs, Supplemental Cash Flow Information, and Other Supplemental Information

Cleco Power
(THOUSANDS)	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,101		3,243
Variable lease cost	116		423
Total lease cost	$	1,907	$	5,746

Cleco Power
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,034	$	3,189
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,749

XML

Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Cumulative Minimum Principal Amounts Committed to be Repaid

The cumulative minimum principal amounts committed to be repaid for each year through 2024 are as follows:

(THOUSANDS)
For the year ending Dec. 31,
2019*	$	66,700
2020	$	132,300
2021	$	200,000
2022	$	266,700
2023	$	332,300
2024	$	400,000
* At September 30, 2019, Cleco Holdings satisfied this commitment.

XML

Variable Interest Entities (Tables) - CLECO POWER

9 Months Ended

Sep. 30, 2019

Variable Interest Entity [Line Items]

Equity Method Investments

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

INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Purchase price	$	12,873		$	12,873
Cash contributions	6,399			6,399
Dividends	(1,600		)	(1,100		)
Total equity investment in investee	$	17,672		$	18,172

The following table contains summarized financial information for Oxbow:

	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Operating revenue	$	2,776	$	2,214	$	7,114	$	4,134
Operating expenses	2,776		2,214		7,114		4,134
Income before taxes	$	—	$	—	$	—	$	—

Carrying Amount of Assets and Liabilities with Maximum Exposure to Loss

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:

(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Oxbow’s net assets/liabilities	$	35,345	$	36,345
Cleco Power’s 50% equity	$	17,672	$	18,172
Cleco Power’s maximum exposure to loss	$	17,672	$	18,172

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Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

Note 8 — Debt

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings borrowed $300.0 million under a new bridge loan agreement and $100.0 million under a new term loan agreement. Both loan agreements are variable rate debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to Cleco’s senior debt rating (as defined in the applicable agreement). On September 11, 2019, Cleco Holdings completed the private placement of $300.0 million aggregate principal amount of its 3.375% senior notes due September 15, 2029. The proceeds from the issuance were used to repay the remaining amounts due under the $300.0 million bridge loan agreement and to repay a portion of the $100.0 million term loan agreement. The senior notes are governed by an indenture entered into between Cleco Holdings and a trustee. The indenture contains certain covenants that restrict Cleco Holdings’ ability to merge, consolidate or transfer or lease all or substantially all of its assets or create or incur certain liens.

Upon approval of the Cleco Cajun Transaction, commitments were made to the LPSC by Cleco, including repayment of $400.0 million of Cleco Holdings’ debt prior to December 31, 2024. The cumulative minimum principal amounts committed to be repaid for each year through 2024 are as follows:

(THOUSANDS)
For the year ending Dec. 31,
2019*	$	66,700
2020	$	132,300
2021	$	200,000
2022	$	266,700
2023	$	332,300
2024	$	400,000
* At September 30, 2019, Cleco Holdings satisfied this commitment.

Also, in connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total capacity of $175.0 million. All other terms remained the same. In addition, in connection with the Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a capacity agreement customer and a gas transport company. These letters of credit automatically renew each year and have no impact on Cleco Holdings’ credit facility. At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019, this letter of credit no longer decreases availability under Cleco Holdings’ credit facility. This letter of credit automatically renews each year.

Cleco Power has $50.0 million of GO Zone bonds that mature in 2038 and are subject to a mandatory tender in 2020. At September 30, 2019, the bonds were included in long-term debt due within one year.

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Note 4 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Effective January 1, 2019, Cleco adopted new guidance which requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. A lease is deemed to exist when the right to control the use of identified property, plant, or equipment is conveyed through a contract for a certain period of time and consideration is paid. For more information on the new guidance, see Note 3 — “Recent Authoritative Guidance.” For more information on how leases are identified, see Note 1 — “Summary of Significant Accounting Policies — Leases.”

Operating Leases

Cleco Power leases utility systems from two municipalities and one non-municipal public body. The first municipal lease has a term of 10 years and expires on August 11, 2021. On July 9, 2019, this municipal lease was renewed for an additional term of 10 years and expires on August 11, 2031. The second municipal lease has a term of 10 years and expires on May 13, 2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains fixed and variable components, as well as provisions for extensions.

Cleco Power has leases for 200 railcars for coal transportation. One lease for 115 railcars expires on March 31, 2021, and the other lease for 85 railcars expires on March 31, 2020. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 and is a short-term lease with an initial term of 12 months. This short-term lease renews for additional one-month terms unless Cleco Cajun chooses to terminate. Cleco reassesses its need for the railcars upon the expiration of each term. Cleco pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

Cleco Power has leases for three towboats in order to transport petroleum coke to Madison Unit 3. Each of the towboat leases has a term of 10 years and expires on March 31, 2028. Under these agreements, the rates are adjusted annually per the Producer Price Index. Each lease contains provisions for a five-year extension.

Cleco and Cleco Power’s remaining operating leases provide for office and operating facilities, office equipment, and tower rentals.

The following is a schedule by year of future minimum lease payments due under Cleco and Cleco Power’s long-term operating leases together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)	CLECO POWER		CLECO
Three months ending Dec. 31, 2019	$	1,014	$	1,065
Years ending Dec. 31,
2020	3,960		3,994
2021	3,410		3,443
2022	3,256		3,287
2023	3,220		3,249
Thereafter	21,833		21,853
Total minimum lease payments	36,693		36,891
Less: amount representing interest	7,395		7,358
Present value of net minimum operating lease payments	$	29,298	$	29,533
Current liabilities	$	3,616	$	3,705
Non-current liabilities	$	25,682	$	25,828

The following table is a summary of expected operating lease payments for Cleco and Cleco Power at December 31, 2018:

(THOUSANDS)	CLECO HOLDINGS		CLECO POWER		CLECO
Year ending Dec. 31,
2019	$	120	$	4,030	$	4,150
2020	—		3,890		3,890
2021	—		2,789		2,789
2022	—		1,239		1,239
2023	—		1,214		1,214
Thereafter	—		7,235		7,235
Total operating lease payments	$	120	$	20,397	$	20,517

Finance Lease

In April 2018, Cleco Power entered into an agreement with Savage Inland Marine for 42 barges used to transport petroleum coke through March 2033. The agreement meets the accounting definition of a finance lease.

The barge lease rate contains both a fixed and variable component, of which the latter is adjusted every third anniversary of the agreement for estimated executory costs. If the barges are idle, the lessor is required to attempt to sublease the barges to third parties with the revenue reducing Cleco Power’s lease payment. This agreement contains a provision for early termination upon the occurrence of any one of four cancellation events.

For the three and nine months ended September 30, 2019, Cleco Power paid $0.6 million and $1.7 million, respectively, in lease payments. For the three and nine months ended September 30, 2019, Cleco Power received $0.4 million and $1.3 million, respectively, of revenue from subleases.

The following is an analysis of the leased property under the finance lease:

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Barges	$	16,800		$	16,800
Accumulated amortization	(1,680		)	(840		)
Net finance lease	$	15,120		$	15,960

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	$	16,006
Current liabilities	$	602
Non-current liabilities	$	15,404

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of December 31, 2018:

(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Additional Lessee Disclosures

Cleco and Cleco Power’s total lease cost includes amounts on the income statement, as well as amounts capitalized as part of property, plant, or equipment or inventory. The following tables reflect total lease costs for Cleco and Cleco Power for the three and nine months ended September 30, 2019:

Cleco
(THOUSANDS)	FOR THE THREE  MONTHS ENDED SEPT. 30, 2019		FOR THE NINE  MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,158		3,411
Variable lease cost	116		423
Total lease cost	$	1,964	$	5,914

Cleco Power
(THOUSANDS)	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,101		3,243
Variable lease cost	116		423
Total lease cost	$	1,907	$	5,746

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Cleco
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	3,387
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,881

Cleco Power
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,034	$	3,189
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,749

	AT SEPT. 30, 2019
(THOUSANDS)	CLECO POWER		CLECO
Other supplemental information
Operating leases
Weighted-average remaining lease term	11.0 years		10.9 years
Weighted-average discount rate	4.31	%	4.31	%
Finance leases
Weighted-average remaining lease term	13.5 years		13.5 years
Weighted-average discount rate	10.18	%	10.18	%

Lessor Agreements

Upon the closing of the Cleco Cajun Transaction, Cleco assumed two lessor contracts leasing land to farmers for a term of one year. Both of these lessor contracts are classified as operating leases. For more information on the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease, NRG Energy will operate the plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

Cleco Cajun is Cleco’s only entity with lessor arrangements. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was as follows:

(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Fixed payments	$	10,000	$	26,667
Variable payments	6,010		14,248
Amortization of deferred lease liability(1)	2,301		6,137
Total lease income	$	18,311	$	47,052

⁽¹⁾ The deferred lease revenue resulting from the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.

The remaining minimum lease payments to be received under the Cottonwood Sale Leaseback are as follows:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$	226,666

Depreciation expense associated with Cleco’s property under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was $6.6 million and $16.1 million, respectively. Cleco calculated depreciation on a straight-line basis over the useful life of the asset. Property associated with the Cottonwood Sale Leaseback was as follows:

(THOUSANDS)	AT SEPT. 30, 2019
Property, plant, and equipment	$	540,409
Accumulated depreciation	(16,140		)
Net property, plant, and equipment	$	524,269

Leases

Note 4 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Effective January 1, 2019, Cleco adopted new guidance which requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. A lease is deemed to exist when the right to control the use of identified property, plant, or equipment is conveyed through a contract for a certain period of time and consideration is paid. For more information on the new guidance, see Note 3 — “Recent Authoritative Guidance.” For more information on how leases are identified, see Note 1 — “Summary of Significant Accounting Policies — Leases.”

Operating Leases

Cleco Power leases utility systems from two municipalities and one non-municipal public body. The first municipal lease has a term of 10 years and expires on August 11, 2021. On July 9, 2019, this municipal lease was renewed for an additional term of 10 years and expires on August 11, 2031. The second municipal lease has a term of 10 years and expires on May 13, 2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains fixed and variable components, as well as provisions for extensions.

Cleco Power has leases for 200 railcars for coal transportation. One lease for 115 railcars expires on March 31, 2021, and the other lease for 85 railcars expires on March 31, 2020. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 and is a short-term lease with an initial term of 12 months. This short-term lease renews for additional one-month terms unless Cleco Cajun chooses to terminate. Cleco reassesses its need for the railcars upon the expiration of each term. Cleco pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

Cleco Power has leases for three towboats in order to transport petroleum coke to Madison Unit 3. Each of the towboat leases has a term of 10 years and expires on March 31, 2028. Under these agreements, the rates are adjusted annually per the Producer Price Index. Each lease contains provisions for a five-year extension.

Cleco and Cleco Power’s remaining operating leases provide for office and operating facilities, office equipment, and tower rentals.

The following is a schedule by year of future minimum lease payments due under Cleco and Cleco Power’s long-term operating leases together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)	CLECO POWER		CLECO
Three months ending Dec. 31, 2019	$	1,014	$	1,065
Years ending Dec. 31,
2020	3,960		3,994
2021	3,410		3,443
2022	3,256		3,287
2023	3,220		3,249
Thereafter	21,833		21,853
Total minimum lease payments	36,693		36,891
Less: amount representing interest	7,395		7,358
Present value of net minimum operating lease payments	$	29,298	$	29,533
Current liabilities	$	3,616	$	3,705
Non-current liabilities	$	25,682	$	25,828

The following table is a summary of expected operating lease payments for Cleco and Cleco Power at December 31, 2018:

(THOUSANDS)	CLECO HOLDINGS		CLECO POWER		CLECO
Year ending Dec. 31,
2019	$	120	$	4,030	$	4,150
2020	—		3,890		3,890
2021	—		2,789		2,789
2022	—		1,239		1,239
2023	—		1,214		1,214
Thereafter	—		7,235		7,235
Total operating lease payments	$	120	$	20,397	$	20,517

Finance Lease

In April 2018, Cleco Power entered into an agreement with Savage Inland Marine for 42 barges used to transport petroleum coke through March 2033. The agreement meets the accounting definition of a finance lease.

The barge lease rate contains both a fixed and variable component, of which the latter is adjusted every third anniversary of the agreement for estimated executory costs. If the barges are idle, the lessor is required to attempt to sublease the barges to third parties with the revenue reducing Cleco Power’s lease payment. This agreement contains a provision for early termination upon the occurrence of any one of four cancellation events.

For the three and nine months ended September 30, 2019, Cleco Power paid $0.6 million and $1.7 million, respectively, in lease payments. For the three and nine months ended September 30, 2019, Cleco Power received $0.4 million and $1.3 million, respectively, of revenue from subleases.

The following is an analysis of the leased property under the finance lease:

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Barges	$	16,800		$	16,800
Accumulated amortization	(1,680		)	(840		)
Net finance lease	$	15,120		$	15,960

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	$	16,006
Current liabilities	$	602
Non-current liabilities	$	15,404

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of December 31, 2018:

(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Additional Lessee Disclosures

Cleco and Cleco Power’s total lease cost includes amounts on the income statement, as well as amounts capitalized as part of property, plant, or equipment or inventory. The following tables reflect total lease costs for Cleco and Cleco Power for the three and nine months ended September 30, 2019:

Cleco
(THOUSANDS)	FOR THE THREE  MONTHS ENDED SEPT. 30, 2019		FOR THE NINE  MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,158		3,411
Variable lease cost	116		423
Total lease cost	$	1,964	$	5,914

Cleco Power
(THOUSANDS)	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,101		3,243
Variable lease cost	116		423
Total lease cost	$	1,907	$	5,746

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Cleco
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	3,387
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,881

Cleco Power
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,034	$	3,189
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,749

	AT SEPT. 30, 2019
(THOUSANDS)	CLECO POWER		CLECO
Other supplemental information
Operating leases
Weighted-average remaining lease term	11.0 years		10.9 years
Weighted-average discount rate	4.31	%	4.31	%
Finance leases
Weighted-average remaining lease term	13.5 years		13.5 years
Weighted-average discount rate	10.18	%	10.18	%

Lessor Agreements

Upon the closing of the Cleco Cajun Transaction, Cleco assumed two lessor contracts leasing land to farmers for a term of one year. Both of these lessor contracts are classified as operating leases. For more information on the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease, NRG Energy will operate the plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

Cleco Cajun is Cleco’s only entity with lessor arrangements. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was as follows:

(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Fixed payments	$	10,000	$	26,667
Variable payments	6,010		14,248
Amortization of deferred lease liability(1)	2,301		6,137
Total lease income	$	18,311	$	47,052

⁽¹⁾ The deferred lease revenue resulting from the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.

The remaining minimum lease payments to be received under the Cottonwood Sale Leaseback are as follows:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$	226,666

Depreciation expense associated with Cleco’s property under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was $6.6 million and $16.1 million, respectively. Cleco calculated depreciation on a straight-line basis over the useful life of the asset. Property associated with the Cottonwood Sale Leaseback was as follows:

(THOUSANDS)	AT SEPT. 30, 2019
Property, plant, and equipment	$	540,409
Accumulated depreciation	(16,140		)
Net property, plant, and equipment	$	524,269

Leases

Note 4 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Effective January 1, 2019, Cleco adopted new guidance which requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. A lease is deemed to exist when the right to control the use of identified property, plant, or equipment is conveyed through a contract for a certain period of time and consideration is paid. For more information on the new guidance, see Note 3 — “Recent Authoritative Guidance.” For more information on how leases are identified, see Note 1 — “Summary of Significant Accounting Policies — Leases.”

Operating Leases

Cleco Power leases utility systems from two municipalities and one non-municipal public body. The first municipal lease has a term of 10 years and expires on August 11, 2021. On July 9, 2019, this municipal lease was renewed for an additional term of 10 years and expires on August 11, 2031. The second municipal lease has a term of 10 years and expires on May 13, 2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains fixed and variable components, as well as provisions for extensions.

Cleco Power has leases for 200 railcars for coal transportation. One lease for 115 railcars expires on March 31, 2021, and the other lease for 85 railcars expires on March 31, 2020. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 and is a short-term lease with an initial term of 12 months. This short-term lease renews for additional one-month terms unless Cleco Cajun chooses to terminate. Cleco reassesses its need for the railcars upon the expiration of each term. Cleco pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

Cleco Power has leases for three towboats in order to transport petroleum coke to Madison Unit 3. Each of the towboat leases has a term of 10 years and expires on March 31, 2028. Under these agreements, the rates are adjusted annually per the Producer Price Index. Each lease contains provisions for a five-year extension.

Cleco and Cleco Power’s remaining operating leases provide for office and operating facilities, office equipment, and tower rentals.

The following is a schedule by year of future minimum lease payments due under Cleco and Cleco Power’s long-term operating leases together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)	CLECO POWER		CLECO
Three months ending Dec. 31, 2019	$	1,014	$	1,065
Years ending Dec. 31,
2020	3,960		3,994
2021	3,410		3,443
2022	3,256		3,287
2023	3,220		3,249
Thereafter	21,833		21,853
Total minimum lease payments	36,693		36,891
Less: amount representing interest	7,395		7,358
Present value of net minimum operating lease payments	$	29,298	$	29,533
Current liabilities	$	3,616	$	3,705
Non-current liabilities	$	25,682	$	25,828

The following table is a summary of expected operating lease payments for Cleco and Cleco Power at December 31, 2018:

(THOUSANDS)	CLECO HOLDINGS		CLECO POWER		CLECO
Year ending Dec. 31,
2019	$	120	$	4,030	$	4,150
2020	—		3,890		3,890
2021	—		2,789		2,789
2022	—		1,239		1,239
2023	—		1,214		1,214
Thereafter	—		7,235		7,235
Total operating lease payments	$	120	$	20,397	$	20,517

Finance Lease

In April 2018, Cleco Power entered into an agreement with Savage Inland Marine for 42 barges used to transport petroleum coke through March 2033. The agreement meets the accounting definition of a finance lease.

The barge lease rate contains both a fixed and variable component, of which the latter is adjusted every third anniversary of the agreement for estimated executory costs. If the barges are idle, the lessor is required to attempt to sublease the barges to third parties with the revenue reducing Cleco Power’s lease payment. This agreement contains a provision for early termination upon the occurrence of any one of four cancellation events.

For the three and nine months ended September 30, 2019, Cleco Power paid $0.6 million and $1.7 million, respectively, in lease payments. For the three and nine months ended September 30, 2019, Cleco Power received $0.4 million and $1.3 million, respectively, of revenue from subleases.

The following is an analysis of the leased property under the finance lease:

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Barges	$	16,800		$	16,800
Accumulated amortization	(1,680		)	(840		)
Net finance lease	$	15,120		$	15,960

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	$	16,006
Current liabilities	$	602
Non-current liabilities	$	15,404

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of December 31, 2018:

(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Additional Lessee Disclosures

Cleco and Cleco Power’s total lease cost includes amounts on the income statement, as well as amounts capitalized as part of property, plant, or equipment or inventory. The following tables reflect total lease costs for Cleco and Cleco Power for the three and nine months ended September 30, 2019:

Cleco
(THOUSANDS)	FOR THE THREE  MONTHS ENDED SEPT. 30, 2019		FOR THE NINE  MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,158		3,411
Variable lease cost	116		423
Total lease cost	$	1,964	$	5,914

Cleco Power
(THOUSANDS)	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,101		3,243
Variable lease cost	116		423
Total lease cost	$	1,907	$	5,746

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Cleco
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	3,387
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,881

Cleco Power
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,034	$	3,189
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,749

	AT SEPT. 30, 2019
(THOUSANDS)	CLECO POWER		CLECO
Other supplemental information
Operating leases
Weighted-average remaining lease term	11.0 years		10.9 years
Weighted-average discount rate	4.31	%	4.31	%
Finance leases
Weighted-average remaining lease term	13.5 years		13.5 years
Weighted-average discount rate	10.18	%	10.18	%

Lessor Agreements

Upon the closing of the Cleco Cajun Transaction, Cleco assumed two lessor contracts leasing land to farmers for a term of one year. Both of these lessor contracts are classified as operating leases. For more information on the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease, NRG Energy will operate the plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

Cleco Cajun is Cleco’s only entity with lessor arrangements. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was as follows:

(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Fixed payments	$	10,000	$	26,667
Variable payments	6,010		14,248
Amortization of deferred lease liability(1)	2,301		6,137
Total lease income	$	18,311	$	47,052

⁽¹⁾ The deferred lease revenue resulting from the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.

The remaining minimum lease payments to be received under the Cottonwood Sale Leaseback are as follows:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$	226,666

Depreciation expense associated with Cleco’s property under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was $6.6 million and $16.1 million, respectively. Cleco calculated depreciation on a straight-line basis over the useful life of the asset. Property associated with the Cottonwood Sale Leaseback was as follows:

(THOUSANDS)	AT SEPT. 30, 2019
Property, plant, and equipment	$	540,409
Accumulated depreciation	(16,140		)
Net property, plant, and equipment	$	524,269

Leases

Note 4 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Effective January 1, 2019, Cleco adopted new guidance which requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. A lease is deemed to exist when the right to control the use of identified property, plant, or equipment is conveyed through a contract for a certain period of time and consideration is paid. For more information on the new guidance, see Note 3 — “Recent Authoritative Guidance.” For more information on how leases are identified, see Note 1 — “Summary of Significant Accounting Policies — Leases.”

Operating Leases

Cleco Power leases utility systems from two municipalities and one non-municipal public body. The first municipal lease has a term of 10 years and expires on August 11, 2021. On July 9, 2019, this municipal lease was renewed for an additional term of 10 years and expires on August 11, 2031. The second municipal lease has a term of 10 years and expires on May 13, 2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains fixed and variable components, as well as provisions for extensions.

Cleco Power has leases for 200 railcars for coal transportation. One lease for 115 railcars expires on March 31, 2021, and the other lease for 85 railcars expires on March 31, 2020. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 and is a short-term lease with an initial term of 12 months. This short-term lease renews for additional one-month terms unless Cleco Cajun chooses to terminate. Cleco reassesses its need for the railcars upon the expiration of each term. Cleco pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

Cleco Power has leases for three towboats in order to transport petroleum coke to Madison Unit 3. Each of the towboat leases has a term of 10 years and expires on March 31, 2028. Under these agreements, the rates are adjusted annually per the Producer Price Index. Each lease contains provisions for a five-year extension.

Cleco and Cleco Power’s remaining operating leases provide for office and operating facilities, office equipment, and tower rentals.

The following is a schedule by year of future minimum lease payments due under Cleco and Cleco Power’s long-term operating leases together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)	CLECO POWER		CLECO
Three months ending Dec. 31, 2019	$	1,014	$	1,065
Years ending Dec. 31,
2020	3,960		3,994
2021	3,410		3,443
2022	3,256		3,287
2023	3,220		3,249
Thereafter	21,833		21,853
Total minimum lease payments	36,693		36,891
Less: amount representing interest	7,395		7,358
Present value of net minimum operating lease payments	$	29,298	$	29,533
Current liabilities	$	3,616	$	3,705
Non-current liabilities	$	25,682	$	25,828

The following table is a summary of expected operating lease payments for Cleco and Cleco Power at December 31, 2018:

(THOUSANDS)	CLECO HOLDINGS		CLECO POWER		CLECO
Year ending Dec. 31,
2019	$	120	$	4,030	$	4,150
2020	—		3,890		3,890
2021	—		2,789		2,789
2022	—		1,239		1,239
2023	—		1,214		1,214
Thereafter	—		7,235		7,235
Total operating lease payments	$	120	$	20,397	$	20,517

Finance Lease

In April 2018, Cleco Power entered into an agreement with Savage Inland Marine for 42 barges used to transport petroleum coke through March 2033. The agreement meets the accounting definition of a finance lease.

The barge lease rate contains both a fixed and variable component, of which the latter is adjusted every third anniversary of the agreement for estimated executory costs. If the barges are idle, the lessor is required to attempt to sublease the barges to third parties with the revenue reducing Cleco Power’s lease payment. This agreement contains a provision for early termination upon the occurrence of any one of four cancellation events.

For the three and nine months ended September 30, 2019, Cleco Power paid $0.6 million and $1.7 million, respectively, in lease payments. For the three and nine months ended September 30, 2019, Cleco Power received $0.4 million and $1.3 million, respectively, of revenue from subleases.

The following is an analysis of the leased property under the finance lease:

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Barges	$	16,800		$	16,800
Accumulated amortization	(1,680		)	(840		)
Net finance lease	$	15,120		$	15,960

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of September 30, 2019:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	$	16,006
Current liabilities	$	602
Non-current liabilities	$	15,404

The following is a schedule by year of future minimum lease payments due under the finance lease together with the present value of the net minimum lease payments as of December 31, 2018:

(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Additional Lessee Disclosures

Cleco and Cleco Power’s total lease cost includes amounts on the income statement, as well as amounts capitalized as part of property, plant, or equipment or inventory. The following tables reflect total lease costs for Cleco and Cleco Power for the three and nine months ended September 30, 2019:

Cleco
(THOUSANDS)	FOR THE THREE  MONTHS ENDED SEPT. 30, 2019		FOR THE NINE  MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,158		3,411
Variable lease cost	116		423
Total lease cost	$	1,964	$	5,914

Cleco Power
(THOUSANDS)	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Finance lease cost
Amortization of ROU assets	$	280	$	840
Interest on lease liabilities	410		1,240
Operating lease cost	1,101		3,243
Variable lease cost	116		423
Total lease cost	$	1,907	$	5,746

The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the three and nine months ended September 30, 2019:

		AT SEPT. 30, 2019
(THOUSANDS)	BALANCE SHEET LINE ITEM	CLECO POWER		CLECO
Supplemental balance sheet information
ROU assets
Operating	Operating lease right of use assets	$	29,375	$	29,719
Finance	Property, plant, and equipment	15,120		15,120
Total ROU assets		$	44,495	$	44,839
Current lease liabilities
Operating	Other current liabilities	$	3,616	$	3,705
Finance	Long-term debt and finance leases due within one year	602		602
Non-current lease liabilities
Operating	Operating lease liabilities	25,682		25,828
Finance	Long-term debt and finance leases, net	15,404		15,404
Total lease liabilities		$	45,304	$	45,539

Cleco
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,108	$	3,387
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,881

Cleco Power
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,034	$	3,189
Operating cash flows from finance leases	$	410	$	1,240
Financing cash flows from finance leases	$	141	$	412
ROU assets obtained in exchange for new lease liabilities	$	15,749	$	15,749

	AT SEPT. 30, 2019
(THOUSANDS)	CLECO POWER		CLECO
Other supplemental information
Operating leases
Weighted-average remaining lease term	11.0 years		10.9 years
Weighted-average discount rate	4.31	%	4.31	%
Finance leases
Weighted-average remaining lease term	13.5 years		13.5 years
Weighted-average discount rate	10.18	%	10.18	%

Lessor Agreements

Upon the closing of the Cleco Cajun Transaction, Cleco assumed two lessor contracts leasing land to farmers for a term of one year. Both of these lessor contracts are classified as operating leases. For more information on the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease, NRG Energy will operate the plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

Cleco Cajun is Cleco’s only entity with lessor arrangements. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was as follows:

(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Fixed payments	$	10,000	$	26,667
Variable payments	6,010		14,248
Amortization of deferred lease liability(1)	2,301		6,137
Total lease income	$	18,311	$	47,052

⁽¹⁾ The deferred lease revenue resulting from the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.

The remaining minimum lease payments to be received under the Cottonwood Sale Leaseback are as follows:

(THOUSANDS)
Three months ending Dec. 31, 2019	$	10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$	226,666

Depreciation expense associated with Cleco’s property under the Cottonwood Sale Leaseback for the three and nine months ended September 30, 2019, was $6.6 million and $16.1 million, respectively. Cleco calculated depreciation on a straight-line basis over the useful life of the asset. Property associated with the Cottonwood Sale Leaseback was as follows:

(THOUSANDS)	AT SEPT. 30, 2019
Property, plant, and equipment	$	540,409
Accumulated depreciation	(16,140		)
Net property, plant, and equipment	$	524,269

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Fair Value Accounting - Amount of Gain (Loss) Recognized in Income on Derivatives (Details) - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS - Price Risk Derivative - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Commodity-related contracts
Net gain (loss) recognized in income on derivatives	$ 2,823	$ 5,654	$ 115	$ 29,119
Accumulated deferred fuel
Commodity-related contracts
Unrealized gains (losses) associated with FTRs	(1,700)	4,500	(3,600)	6,200
Electric operations
Commodity-related contracts
Gain recognized in income on derivatives	1,997	7,241	12,396	32,407
Purchased power
Commodity-related contracts
Loss recognized in income on derivatives	(2,648)	(1,587)	(12,985)	(3,288)
Fuel used for electric generation
Commodity-related contracts
Gain recognized in income on derivatives	3,474	0	704	0
CLECO POWER
Commodity-related contracts
Net gain (loss) recognized in income on derivatives	169	5,654	7,600	29,119
CLECO POWER | Accumulated deferred fuel
Commodity-related contracts
Unrealized gains (losses) associated with FTRs	(1,700)	4,500	(3,600)	6,200
CLECO POWER | Electric operations
Commodity-related contracts
Gain recognized in income on derivatives	1,997	7,241	12,400	32,407
CLECO POWER | Purchased power
Commodity-related contracts
Loss recognized in income on derivatives	$ (1,828)	$ (1,587)	$ (4,800)	$ (3,288)

XML

Disclosures about Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Apr. 13, 2016
Revenue
Electric operations	$ 451,902	$ 341,062	$ 1,130,318	$ 897,486
Other operations	49,780	20,186	131,544	61,067
Affiliate revenue	0	0	0	0
Electric customer credits	(13,711)	(2,992)	(31,832)	(24,276)
Operating revenue, net	487,971	358,256	1,230,030	934,277
Depreciation and amortization	57,004	43,763	158,395	128,076
Interest income	1,690	1,832	4,456	4,043
Interest charges	35,832	31,828	105,671	94,894
Federal and state income tax expense (benefit)	14,088	11,419	32,355	21,947
Net income (loss)	55,565	47,360	120,868	84,060
Additions to property, plant, and equipment			251,845	194,619
Equity investment in investees	17,672		17,672		$ 18,172
Goodwill	1,490,797		1,490,797		1,490,797	$ 1,490,000
Total segment assets	7,498,373		7,498,373		6,436,814
Operating Segments | CLECO POWER
Revenue
Electric operations	339,869	343,482	862,969	904,746
Other operations	18,485	20,186	53,318	61,066
Affiliate revenue	334	223	971	651
Electric customer credits	(13,711)	(2,992)	(30,565)	(24,276)
Operating revenue, net	344,977	360,899	886,693	942,187
Depreciation and amortization	44,903	41,687	126,610	121,796
Interest income	1,421	1,606	3,281	3,560
Interest charges	17,983	17,895	52,498	53,658
Federal and state income tax expense (benefit)	12,431	18,016	34,407	39,724
Net income (loss)	51,527	63,336	127,595	132,359
Additions to property, plant, and equipment			247,987	193,708
Equity investment in investees	17,672		17,672		18,172
Goodwill	1,490,797		1,490,797		1,490,797
Total segment assets	5,988,444		5,988,444		5,839,853
Operating Segments | CLECO CAJUN
Revenue
Electric operations	114,453		274,610
Other operations	33,737		83,619
Affiliate revenue	31		31
Electric customer credits	0		(1,267)
Operating revenue, net	148,221		356,993
Depreciation and amortization	10,009		25,555
Interest income	220		842
Interest charges	0		0
Federal and state income tax expense (benefit)	7,612		15,169
Net income (loss)	22,806		46,788
Additions to property, plant, and equipment			3,654
Equity investment in investees	0		0
Goodwill	0		0
Total segment assets	998,289		998,289
OTHER
Revenue
Electric operations	(2,420)	(2,420)	(7,260)	(7,260)
Other operations	0	0	2	1
Affiliate revenue	28,252	22,765	77,800	55,707
Electric customer credits	0	0	0	0
Operating revenue, net	25,832	20,345	70,542	48,448
Depreciation and amortization	2,092	2,076	6,231	6,281
Interest income	228	310	841	652
Interest charges	18,028	14,017	53,682	41,409
Federal and state income tax expense (benefit)	(5,955)	(6,597)	(17,220)	(17,777)
Net income (loss)	(18,768)	(15,975)	(53,515)	(48,299)
Additions to property, plant, and equipment			204	911
Equity investment in investees	0		0		0
Goodwill	0		0		0
Total segment assets	550,323		550,323		633,756
ELIMINATIONS
Revenue
Electric operations	0	0	(1)	0
Other operations	(2,442)	0	(5,395)	0
Affiliate revenue	(28,617)	(22,988)	(78,802)	(56,358)
Electric customer credits	0	0	0	0
Operating revenue, net	(31,059)	(22,988)	(84,198)	(56,358)
Depreciation and amortization	0	0	(1)	(1)
Interest income	(179)	(84)	(508)	(169)
Interest charges	(179)	(84)	(509)	(173)
Federal and state income tax expense (benefit)	0	0	(1)	0
Net income (loss)	0	$ (1)	0	0
Additions to property, plant, and equipment			0	$ 0
Equity investment in investees	0		0		0
Goodwill	0		0		0
Total segment assets	$ (38,683)		$ (38,683)		$ (36,795)

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Variable Interest Entities - Carrying Amount of Assets and Liabilities with Maximum Exposure to Loss (Details) - CLECO POWER - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Variable Interest Entity [Line Items]
Oxbow’s net assets/liabilities	$ 35,345	$ 36,345
Oxbow
Variable Interest Entity [Line Items]
Cleco Power’s 50% equity	17,672	18,172
Cleco Power’s maximum exposure to loss	$ 17,672	$ 18,172

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Pension Plan and Employee Benefits - Net Periodic Pension and Benefits Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
PENSION BENEFITS
Components of periodic benefit costs
Service cost	$ 2,104	$ 2,377	$ 6,311	$ 7,130
Interest cost	5,621	5,215	16,864	15,869
Expected return on plan assets	(6,625)	(5,943)	(19,876)	(17,818)
Amortizations
Prior period service credit	(18)	(18)	(54)	(53)
Net loss	1,962	3,078	5,887	8,998
Net periodic benefit cost	3,044	4,709	9,132	14,126
OTHER BENEFITS
Components of periodic benefit costs
Service cost	328	336	896	1,011
Interest cost	435	361	1,235	1,076
Expected return on plan assets	0	0	0	0
Amortizations
Prior period service credit	0	0	0	0
Net loss	105	96	25	105
Net periodic benefit cost	868	793	2,156	2,192
SERP
Components of periodic benefit costs
Service cost	82	136	247	407
Interest cost	831	769	2,494	2,296
Amortizations
Prior period service credit	(34)	(35)	(104)	(104)
Net loss	381	723	1,143	2,180
Net periodic benefit cost	$ 1,260	$ 1,593	$ 3,780	$ 4,779

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Tax expense (benefit) of postretirement benefits gain (loss)	$ 13	$ (26)	$ 112	$ (128)
CLECO POWER
Tax expense (benefit) of postretirement benefits gain (loss)	(81)	(110)	(182)	(287)
Tax expense on amortization of interest rate derivatives to earnings	$ 22		$ 67
Tax expense (benefit) on amortization of interest rate derivatives to earnings		$ 26		$ (19)

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Leases - Future Minimum Lease Payments Due Under Finance Lease as of Prior Year (Details) - CLECO POWER $ in Thousands	Dec. 31, 2018 USD ($)
Years ending Dec. 31,
2019	$ 2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	16,418
Current liabilities	557
Non-current liabilities	$ 15,861

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Leases - Summary of Expected Operating Lease Payments as of Prior Year (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Year ending Dec. 31,
2019	$ 4,150
2020	3,890
2021	2,789
2022	1,239
2023	1,214
Thereafter	7,235
Total operating lease payments	20,517
CLECO HOLDINGS
Year ending Dec. 31,
2019	120
2020	0
2021	0
2022	0
2023	0
Thereafter	0
Total operating lease payments	120
CLECO POWER
Year ending Dec. 31,
2019	4,030
2020	3,890
2021	2,789
2022	1,239
2023	1,214
Thereafter	7,235
Total operating lease payments	$ 20,397

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Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Cash and cash equivalents	$ 101,392	$ 110,175
Restricted cash and cash equivalents, current	5,356	11,241
Restricted cash and cash equivalents, noncurrent	15,113	18,670
CLECO POWER
Cash and cash equivalents	64,237	31,987
Restricted cash and cash equivalents, current	5,356	11,241
Restricted cash and cash equivalents, noncurrent	$ 14,274	$ 18,649

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Leases - Cottonwood Sale Leaseback Agreement (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Lessor, Lease, Description [Line Items]
Depreciation expense	$ 6.6	$ 16.1
Cottonwood Energy
Lessor, Lease, Description [Line Items]
Fixed lease payments per year	$ 40.0	$ 40.0

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Affiliate Transactions (Tables)

9 Months Ended

Sep. 30, 2019

CLECO POWER

Related Party Transaction [Line Items]

Summary of Balances Payable To or Due From Affiliates

The following table is a summary of those balances:

	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	$	1	$	94	$	699	$	88
Support Group	1,361		8,610		2,619		7,755
Cleco Cajun	712		18		—		—
Total	$	2,074	$	8,722	$	3,318	$	7,843

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Operating revenue, net for the three and nine months ended September 30, 2019, and 2018, was as follows:

	FOR THE THREE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	CLECO POWER				CLECO CAJUN			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	142,265			$	—		$	—			$	—		$	142,265
Commercial (1)	84,816				—			—				—			84,816
Industrial (1)	36,830				—			—				—			36,830
Other retail (1)	4,234				—			—				—			4,234
Surcharge	170				—			—				—			170
Electric customer credits	(13,711		)		—			—				—			(13,711		)
Total retail revenue	254,604				—			—				—			254,604
Wholesale, net	69,558			(1)	114,426			(2,420		)	(2)	—			181,564
Transmission	14,034				15,435			—				(2,442		)	27,027
Other	4,452			(3)	—			—				—			4,452
Affiliate (4)	334				31			28,252				(28,617		)	—
Total revenue from contracts with customers	342,982				129,892			25,832				(31,059		)	467,647
Revenue unrelated to contracts with customers
Other	1,995			(5)	18,329		(6)	—				—			20,324
Total revenue unrelated to contracts with customers	1,995				18,329			—				—			20,324
Operating revenue, net	$	344,977			$	148,221		$	25,832			$	(31,059	)	$	487,971

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other miscellaneous fee revenue.

⁽⁴⁾ Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾ Includes realized gains associated with FTRs.

⁽⁶⁾ Includes $16.0 million in lease revenue related to the Cottonwood Sale Leaseback and $2.3 million of deferred lease revenue amortization.

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	139,162		$	—			$	—		$	139,162
Commercial (1)	79,829			—				—			79,829
Industrial (1)	43,380			—				—			43,380
Other retail (1)	4,039			—				—			4,039
Surcharge	6,206			—				—			6,206
Electric customer credits	(2,992		)	—				—			(2,992		)
Total retail revenue	269,624			—				—			269,624
Wholesale, net (1)	63,624			(2,420		)	(2)	—			61,204
Transmission	14,718			—				—			14,718
Other (3)	5,469			—				—			5,469
Affiliate	223			22,765				(22,988		)	—
Total revenue from contracts with customers	353,658			20,345				(22,988		)	351,015
Revenue unrelated to contracts with customers
Other (4)	7,241			—				—			7,241
Total revenue unrelated to contracts with customers	7,241			—				—			7,241
Operating revenue, net	$	360,899		$	20,345			$	(22,988	)	$	358,256

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $4.9 million of other miscellaneous fee revenue and $0.6 million of Teche Unit 3 SSR revenue, net of $0.2 million of reserves for capital expenditures.

⁽⁴⁾ Includes realized gains associated with FTRs.

	FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	CLECO POWER				CLECO CAJUN			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	327,340			$	—		$	—			$	—		$	327,340
Commercial (1)	218,209				—			—				—			218,209
Industrial (1)	109,545				—			—				—			109,545
Other retail (1)	11,391				—			—				—			11,391
Surcharge	7,692				—			—				—			7,692
Electric customer credits	(30,565		)		—			—				—			(30,565		)
Total retail revenue	643,612				—			—				—			643,612
Wholesale, net	179,633			(1)	273,256			(7,260		)	(2)	—			445,629
Transmission	38,679				36,625			—				(5,395		)	69,909
Other	14,640			(3)	—			2				—			14,642
Affiliate (4)	971				31			77,800				(78,802		)	—
Total revenue from contracts with customers	877,535				309,912			70,542				(84,197		)	1,173,792
Revenue unrelated to contracts with customers
Other	9,158			(5)	47,081		(6)	—				(1		)	56,238
Total revenue unrelated to contracts with customers	9,158				47,081			—				(1		)	56,238
Operating revenue, net	$	886,693			$	356,993		$	70,542			$	(84,198	)	$	1,230,030

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Includes $11.4 million of other miscellaneous fee revenue and $3.2 million of Teche Unit 3 SSR revenue at Cleco Power.

⁽⁴⁾ Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾ Includes realized gains associated with FTRs of $11.7 million and the reversal of the Lost Contribution to Fixed Cost revenue of $2.6 million.

⁽⁶⁾ Includes $40.9 million in lease revenue related to the Cottonwood Sale Leaseback and $6.1 million of deferred lease revenue amortization.

	FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	338,357		$	—			$	—		$	338,357
Commercial (1)	218,389			—				—			218,389
Industrial (1)	121,445			—				—			121,445
Other retail (1)	11,633			—				—			11,633
Surcharge	17,637			—				—			17,637
Electric customer credits	(24,276		)	—				—			(24,276		)
Total retail revenue	683,185			—				—			683,185
Wholesale, net (1)	165,255			(7,260		)	(2)	—			157,995
Transmission	41,166			—				—			41,166
Other (3)	19,901			1				—			19,902
Affiliate	651			55,707				(56,358		)	—
Total revenue from contracts with customers	910,158			48,448				(56,358		)	902,248
Revenue unrelated to contracts with customers
Other (4)	32,029			—				—			32,029
Total revenue unrelated to contracts with customers	32,029			—				—			32,029
Operating revenue, net	$	942,187		$	48,448			$	(56,358	)	$	934,277

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $13.4 million of other miscellaneous fee revenue and $6.5 million of Teche Unit 3 SSR revenue, net of $2.4 million of reserves for capital expenditures.

⁽⁴⁾ Includes realized gains associated with FTRs.

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Pension Plan and Employee Benefits (Tables)

9 Months Ended

Sep. 30, 2019

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Net Periodic Pension and Other Benefits Cost

The components of net periodic pension and Other Benefits cost for the three and nine months ended September 30, 2019, and 2018 were as follows:

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019		2018
Components of periodic benefit costs
Service cost	$	2,104		$	2,377		$	328	$	336
Interest cost	5,621			5,215			435		361
Expected return on plan assets	(6,625		)	(5,943		)	—		—
Amortizations
Prior period service credit	(18		)	(18		)	—		—
Net loss	1,962			3,078			105		96
Net periodic benefit cost	$	3,044		$	4,709		$	868	$	793

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE NINE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019		2018
Components of periodic benefit costs
Service cost	$	6,311		$	7,130		$	896	$	1,011
Interest cost	16,864			15,869			1,235		1,076
Expected return on plan assets	(19,876		)	(17,818		)	—		—
Amortizations
Prior period service credit	(54		)	(53		)	—		—
Net loss	5,887			8,998			25		105
Net periodic benefit cost	$	9,132		$	14,126		$	2,156	$	2,192

The components of the net periodic benefit cost related to SERP for the three and nine months ended September 30, 2019, and 2018 were as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Components of periodic benefit costs
Service cost	$	82		$	136		$	247		$	407
Interest cost	831			769			2,494			2,296
Amortizations
Prior period service credit	(34		)	(35		)	(104		)	(104		)
Net loss	381			723			1,143			2,180
Net periodic benefit cost	$	1,260		$	1,593		$	3,780		$	4,779

Current and Non-Current Portions of Other Benefits Liability

The current and non-current portions of the SERP liability for Cleco and Cleco Power at September 30, 2019, and December 31, 2018, were as follows:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	4,478	$	4,478
Non-current	$	73,255	$	73,936

The current and non-current portions of the other benefits liability for Cleco and Cleco Power at September 30, 2019, and December 31, 2018, were as follows:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	4,130	$	4,130
Non-current	$	35,090	$	36,325

Expense of the 401(k) Plan

The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2019, and 2018 was as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	873	$	254	$	2,625	$	865

Cleco’s 401(k) Plan expense for the three and nine monthsended September 30, 2019, and 2018 was as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	2,077	$	1,424	$	6,136	$	4,716

CLECO POWER

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Current and Non-Current Portions of Other Benefits Liability

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	3,584	$	3,584
Non-current	$	30,769	$	31,694

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	930	$	930
Non-current	$	11,759	$	12,025

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Fair Value Accounting

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Accounting

Note 7 — Fair Value Accounting

The amounts reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018, for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, short-term debt, and accounts payable approximate fair value because of their short-term nature. Cleco applies the provisions of the fair value measurement standard to its non-recurring, non-financial measurements including business combinations, as well as impairment related to goodwill and other long-lived assets.

The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments not measured at fair value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets:

Cleco
	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	3,191,452	$	3,407,190	$	2,889,631	$	2,859,924

* The carrying value of long-term debt does not include deferred issuance costs of $14.2 million at September 30, 2019, and $10.3 million at December 31, 2018.

Cleco Power
	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	1,380,605	$	1,625,480	$	1,400,930	$	1,517,152

* The carrying value of long-term debt does not include deferred issuance costs of $7.6 million at September 30, 2019, and $8.3 million at December 31, 2018.

Long-term debt liability consists of a single class. In order to fund capital requirements, Cleco issues fixed and variable rate long-term debt with various tenors. The fair value of this class fluctuates as the market interest rates for fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the debt could also change from period to period due to changes in the credit rating of the Cleco entity by which the debt was issued. The fair value of long-term debt is classified as Level 2 in the fair value hierarchy.

Fair Value Measurements and Disclosures

Cleco classifies assets and liabilities that are measured at their fair value according to three different levels depending on the inputs used in determining fair value.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured on a recurring basis:

Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	111,885	$	—	$	111,885	$	—	$	133,722	$	—	$	133,722	$	—
FTRs	9,926		—		—		9,926		23,355		—		—		23,355
Other commodity derivatives	745		—		745		—		—		—		—		—
Total assets	$	122,556	$	—	$	112,630	$	9,926	$	157,077	$	—	$	133,722	$	23,355
Liability description
FTRs	$	1,257	$	—	$	—	$	1,257	$	468	$	—	$	—	$	468
Other commodity derivatives	41		—		41		—		—		—		—		—
Total liabilities	$	1,298	$	—	$	41	$	1,257	$	468	$	—	$	—	$	468

Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	76,947	$	—	$	76,947	$	—	$	55,900	$	—	$	55,900	$	—
FTRs	8,601		—		—		8,601		23,355		—		—		23,355
Total assets	$	85,548	$	—	$	76,947	$	8,601	$	79,255	$	—	$	55,900	$	23,355
Liability description
FTRs	$	577	$	—	$	—	$	577	$	468	$	—	$	—	$	468
Total liabilities	$	577	$	—	$	—	$	577	$	468	$	—	$	—	$	468

The following tables summarize the net changes in the net fair value of FTR assets and liabilities classified as Level 3 in the fair value hierarchy for Cleco and Cleco Power:

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Beginning balance	$	14,665		$	25,133		$	22,887		$	7,044
Unrealized (losses) gains*	(1,234		)	4,520			(4,488		)	6,153
Purchases	557			1,251			26,401			26,734
Settlements	(5,319		)	(8,644		)	(36,131		)	(17,671		)
Ending balance	$	8,669		$	22,260		$	8,669		$	22,260
* Cleco Power’s unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco’s Condensed Consolidated Balance Sheet. Cleco Cajun’s unrealized (losses) gains are reported through Purchased power on Cleco’s Condensed Consolidated Income Statement.

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Beginning balance	$	13,910		$	25,133		$	22,887		$	7,044
Unrealized (losses) gains*	(1,700		)	4,520			(3,644		)	6,153
Purchases	1,133			1,251			20,961			26,734
Settlements	(5,319		)	(8,644		)	(32,180		)	(17,671		)
Ending balance	$	8,024		$	22,260		$	8,024		$	22,260
* Unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheet.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions as of September 30, 2019, and December 31, 2018:

Cleco
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Sept. 30, 2019	$	9,926	$	1,257	RTO auction pricing	FTR price - per MWh	$	(2.29	)	$	3.14
FTRs at Dec. 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10

Cleco Power
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Sept. 30, 2019	$	8,601	$	577	RTO auction pricing	FTR price - per MWh	$	(1.67	)	$	2.79
FTRs at Dec. 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10

Cleco utilizes different valuation techniques for fair value calculations. In order to measure the fair value for Level 1 assets and liabilities, Cleco obtains the closing price from published indices in active markets for the various instruments and multiplies this price by the appropriate number of instruments held. Level 2 fair values are determined by obtaining the closing price of similar assets and liabilities from published indices in active markets. Institutional money market funds assets are discounted to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. Level 3 fair values occur in situations in which there is little, if any, market activity for the asset or liability at the measurement date. Cleco’s Level 3 assets and liabilities are valued using RTO auction prices. Cleco has consistently applied the Level 2 and Level 3 fair value techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability.

At September 30, 2019, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The institutional money market funds were reported on Cleco’s Condensed Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of $91.5 million, $5.4 million, and $15.0 million, respectively, at September 30, 2019, and $103.8 million, $11.2 million, and $18.7 million, respectively, at December 31, 2018. At Cleco Power, the institutional money market funds were reported on Cleco Power’s Condensed Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of $57.4 million, $5.4 million, and $14.1 million, respectively, at September 30, 2019, and $26.1 million, $11.2 million, and $18.6 million, respectively, at December 31, 2018. If the money market funds failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by either Cleco or Cleco Power. The Level 2 institutional money market funds asset consists of a single class. In order to capture interest income and minimize risk, cash is invested in money market funds that invest primarily in short-term securities issued by the U.S. Treasury to maintain liquidity and achieve the goal of a net asset value of a dollar. The risks associated with this class are counterparty risk of the fund manager and risk of price volatility associated with the underlying securities of the fund.

The other commodity derivatives are fixed price forwards that fluctuate in value as underlying prices change. These contracts contain counterparty credit risk because they are transacted directly with a counterparty and are not cleared on an exchange. These other commodity derivatives are recorded at fair value and categorized as Level 2 because pricing is indexed to other contracts.

Cleco Power and Cleco Cajun’s FTRs were priced using MISO’s monthly auction prices. Forward seasonal periods are not included in every monthly auction; therefore, the average of the most recent seasonal auction prices is used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from MISO auctions, which occur monthly in the Multi-Period Monthly Auction.

During the nine months ended September 30, 2019, and the year ended December 31, 2018, Cleco did not experience any transfers between levels within the fair value hierarchy.

Commodity Contracts

The following tables present the fair values of derivative instruments and their respective line items as recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018:

Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2019		AT DEC. 31, 2018
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	9,926	$	23,355
Current	Energy risk management liabilities	1,257		468
Other commodity derivatives
Current	Energy risk management assets	745		—
Current	Energy risk management liabilities	41		—
Commodity-related contracts, net		$	9,373	$	22,887

Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2019		AT DEC. 31, 2018
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	8,601	$	23,355
Current	Energy risk management liabilities	577		468
Commodity-related contracts, net		$	8,024	$	22,887

The following tables present the effect of derivatives not designated as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for the nine months ended September 30, 2019, and 2018:

Cleco
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2019			2018			2019			2018
Commodity-related contracts
FTRs(1)	Electric operations	$	1,997		$	7,241		$	12,396		$	32,407
FTRs(1)	Purchased power	(2,648		)	(1,587		)	(12,985		)	(3,288		)
Other commodity derivatives	Fuel used for electric generation	3,474			—			704			—
Total		$	2,823		$	5,654		$	115		$	29,119

⁽¹⁾ For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs for Cleco Power of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2018, unrealized gains associated with FTRs for Cleco Power of $4.5 million and $6.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

Cleco Power
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2019			2018			2019			2018
Commodity-related contracts
FTRs(1)	Electric operations	$	1,997		$	7,241		$	12,400		$	32,407
FTRs(1)	Purchased power	(1,828		)	(1,587		)	(4,800		)	(3,288		)
Total		$	169		$	5,654		$	7,600		$	29,119

⁽¹⁾ For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2018, unrealized gains associated with FTRs of $4.5 million and $6.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

The total volume of FTRs that Cleco Power had outstanding at September 30, 2019, and December 31, 2018, was 14.6 million MWh and 8.7 million MWh, respectively. The total volume of FTRs that Cleco had outstanding at September 30, 2019, and December 31, 2018, was 23.4 million MWh and 8.7 million MWh, respectively. The total volume of other commodity derivatives Cleco had outstanding at September 30, 2019, was 18.4 million MMBtus.

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Recent Authoritative Guidance

9 Months Ended

Sep. 30, 2019

Accounting Changes and Error Corrections [Abstract]

Recent Authoritative Guidance

Note 3 — Recent Authoritative Guidance

In February 2016, FASB amended the guidance to account for leases. Effective January 1, 2019, Cleco adopted the amended guidance using the optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption, apply the new disclosure requirements beginning in the period of adoption, and continue to present comparative period information as required under previous guidance.

In addition, Cleco elected the transition practical expedient that permits an entity to not reassess prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits entities to not assess existing land easements under the new standard.

Adoption of this standard resulted in the recognition of ROU assets and lease liabilities for Cleco and Cleco Power’s operating leases of $16.1 million and $15.9 million, respectively. There was no impact to retained earnings as a result of adopting this standard. Adoption of this standard did not materially impact the Registrants’ results of operations or liquidity, and their accounting for finance leases is substantially unchanged. For more information on Cleco’s lease obligations, see Note 4 — “Leases.”

In June 2016, FASB amended the guidance for the measurement of credit losses on receivables and certain other assets. The guidance requires use of a current expected loss model, which may result in earlier recognition of credit losses. The adoption of this guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Management is evaluating the impact that the adoption of this guidance will have on the results of operations, financial condition, or cash flows of the Registrants.

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Affiliate Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Affiliate Transactions

Note 15 — Affiliate Transactions

At September 30, 2019, Cleco has an affiliate payable of $3.2 million to Cleco Group for a federal income tax refund that was received by Cleco Holdings.

Cleco Power has balances that are payable to or due from its affiliates. The following table is a summary of those balances:

	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	$	1	$	94	$	699	$	88
Support Group	1,361		8,610		2,619		7,755
Cleco Cajun	712		18		—		—
Total	$	2,074	$	8,722	$	3,318	$	7,843

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Disclosures about Segments

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Disclosures about Segments

Note 11 — Disclosures about Segments

Cleco’s reportable segments are based on its method of internal reporting, which disaggregates business units by its first-tier subsidiary. Cleco’s reportable segments are Cleco Power and Cleco Cajun.

Each reportable segment engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s CEO with discrete financial information and, at least quarterly, present discrete financial information to Cleco and Cleco Power’s Boards of Managers. The reportable segment prepares budgets that are presented to and approved by Cleco and Cleco Power’s Boards of Managers. The column shown as Other in the following tables includes the holding company, a shared services subsidiary, an investment subsidiary, and a subsidiary formed to facilitate the Cleco Cajun Transaction. Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a new reportable segment. For more information on the transaction, see Note 2 — “Business Combination.”

The financial results in the following tables are presented on an accrual basis. The historical segment information was not recast because the Cleco Cajun segment only consists of the newly acquired business. There were no other changes to Cleco’s existing reportable segments. Management evaluates the performance of its segment and allocates resources to it based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.

SEGMENT INFORMATION FOR THE THREE MONTHS ENDED SEPT. 30,
2019 (THOUSANDS)	CLECO POWER			CLECO CAJUN		OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	339,869		$	114,453	$	(2,420	)	$	—		$	451,902
Other operations	18,485			33,737		—			(2,442		)	49,780
Affiliate revenue	334			31		28,252			(28,617		)	—
Electric customer credits	(13,711		)	—		—			—			(13,711		)
Operating revenue, net	$	344,977		$	148,221	$	25,832		$	(31,059	)	$	487,971
Depreciation and amortization	$	44,903		$	10,009	$	2,092		$	—		$	57,004
Interest income	$	1,421		$	220	$	228		$	(179	)	$	1,690
Interest charges	$	17,983		$	—	$	18,028		$	(179	)	$	35,832
Federal and state income tax expense (benefit)	$	12,431		$	7,612	$	(5,955	)	$	—		$	14,088
Net income (loss)	$	51,527		$	22,806	$	(18,768	)	$	—		$	55,565

2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	343,482		$	(2,420	)	$	—		$	341,062
Other operations	20,186			—			—			20,186
Affiliate revenue	223			22,765			(22,988		)	—
Electric customer credits	(2,992		)	—			—			(2,992		)
Operating revenue, net	$	360,899		$	20,345		$	(22,988	)	$	358,256
Depreciation and amortization	$	41,687		$	2,076		$	—		$	43,763
Interest income	$	1,606		$	310		$	(84	)	$	1,832
Interest charges	$	17,895		$	14,017		$	(84	)	$	31,828
Federal and state income tax expense (benefit)	$	18,016		$	(6,597	)	$	—		$	11,419
Net income (loss)	$	63,336		$	(15,975	)	$	(1	)	$	47,360

SEGMENT INFORMATION FOR THE NINE MONTHS ENDED SEPT. 30,
2019 (THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	862,969		$	274,610		$	(7,260	)	$	(1	)	$	1,130,318
Other operations	53,318			83,619			2			(5,395		)	131,544
Affiliate revenue	971			31			77,800			(78,802		)	—
Electric customer credits	(30,565		)	(1,267		)	—			—			(31,832		)
Operating revenue, net	$	886,693		$	356,993		$	70,542		$	(84,198	)	$	1,230,030
Depreciation and amortization	$	126,610		$	25,555		$	6,231		$	(1	)	$	158,395
Interest income	$	3,281		$	842		$	841		$	(508	)	$	4,456
Interest charges	$	52,498		$	—		$	53,682		$	(509	)	$	105,671
Federal and state income tax expense (benefit)	$	34,407		$	15,169		$	(17,220	)	$	(1	)	$	32,355
Net income (loss)	$	127,595		$	46,788		$	(53,515	)	$	—		$	120,868
Additions to property, plant, and equipment	$	247,987		$	3,654		$	204		$	—		$	251,845
Equity investment in investees (1)	$	17,672		$	—		$	—		$	—		$	17,672
Goodwill (1)	$	1,490,797		$	—		$	—		$	—		$	1,490,797
Total segment assets (1)	$	5,988,444		$	998,289		$	550,323		$	(38,683	)	$	7,498,373
(1) Balances as of September 30, 2019

2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	904,746		$	(7,260	)	$	—		$	897,486
Other operations	61,066			1			—			61,067
Affiliate revenue	651			55,707			(56,358		)	—
Electric customer credits	(24,276		)	—			—			(24,276		)
Operating revenue, net	$	942,187		$	48,448		$	(56,358	)	$	934,277
Depreciation and amortization	$	121,796		$	6,281		$	(1	)	$	128,076
Interest income	$	3,560		$	652		$	(169	)	$	4,043
Interest charges	$	53,658		$	41,409		$	(173	)	$	94,894
Federal and state income tax expense (benefit)	$	39,724		$	(17,777	)	$	—		$	21,947
Net income (loss)	$	132,359		$	(48,299	)	$	—		$	84,060
Additions to property, plant, and equipment	$	193,708		$	911		$	—		$	194,619
Equity investment in investees (1)	$	18,172		$	—		$	—		$	18,172
Goodwill (1)	$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets (1)	$	5,839,853		$	633,756		$	(36,795	)	$	6,436,814
(1) Balances as of December 31, 2018

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Restricted Cash and Cash Equivalents Items [Line Items]

Restricted Cash and Cash Equivalents

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of the following:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current
Cleco Katrina/Rita’s storm recovery bonds	$	3,612	$	9,505
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	544		536
Total current	5,356		11,241
Non-current
Diversified Lands’ mitigation escrow	22		21
Cleco Cajun’s defense fund	717		—
Cleco Cajun’s margin deposits	100		—
Cleco Power’s future storm restoration costs	12,089		15,391
Cleco Power’s charitable contributions	2,185		2,753
Cleco Power’s rate credit escrow	—		505
Total non-current	15,113		18,670
Total restricted cash and cash equivalents	$	20,469	$	29,911

CLECO POWER

Restricted Cash and Cash Equivalents Items [Line Items]

Restricted Cash and Cash Equivalents

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current
Cleco Katrina/Rita’s storm recovery bonds	$	3,612	$	9,505
Charitable contributions	1,200		1,200
Rate credit escrow	544		536
Total current	5,356		11,241
Non-current
Future storm restoration costs	12,089		15,391
Charitable contributions	2,185		2,753
Rate credit escrow	—		505
Total non-current	14,274		18,649
Total restricted cash and cash equivalents	$	19,630	$	29,890

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Regulatory Assets and Liabilities - Narrative (Details) - CLECO POWER - USD ($) $ in Thousands		1 Months Ended
	Feb. 04, 2019	Jan. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Regulatory Assets [Line Items]
Annual reduction to retail customer rates	$ 4,000	$ 4,000
Annual reduction to retail customer rates
Regulatory Assets [Line Items]
Regulatory liability			$ 1,700
Energy efficiency
Regulatory Assets [Line Items]
Regulatory liability			3,056
Energy efficiency
Regulatory Assets [Line Items]
Regulatory assets				$ 2,585
Coughlin Pipeline project revenue requirement
Regulatory Assets [Line Items]
Regulatory assets			$ 200

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	$ 2,574,661	$ 2,093,447	$ 2,124,740	$ 2,096,357
Amounts reclassified from accumulated AOCI
Balances, end of period	2,630,189	2,120,468	2,630,189	2,120,468
TOTAL AOCI
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	1,504	(2,631)	1,786	(2,921)
Amounts reclassified from accumulated AOCI
Balances, end of period	1,467	(2,370)	1,467	(2,370)
POSTRETIREMENT BENEFIT NET LOSS
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	1,504	(2,631)	1,786	(2,921)
Amounts reclassified from accumulated AOCI
Amounts reclassified from AOCI	(37)	261	(319)	551
Balances, end of period	1,467	(2,370)	1,467	(2,370)
CLECO POWER
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	1,671,014	1,549,331	1,594,533	1,550,679
Amounts reclassified from accumulated AOCI
Balances, end of period	1,722,834	1,562,690	1,722,834	1,562,690
CLECO POWER | TOTAL AOCI
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	(12,769)	(13,055)	(13,182)	(13,683)
Amounts reclassified from accumulated AOCI
Balances, end of period	(12,476)	(12,631)	(12,476)	(12,631)
CLECO POWER | POSTRETIREMENT BENEFIT NET LOSS
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	(6,775)	(7,877)	(7,060)	(8,377)
Amounts reclassified from accumulated AOCI
Amounts reclassified from AOCI	230	312	515	812
Balances, end of period	(6,545)	(7,565)	(6,545)	(7,565)
CLECO POWER | NET LOSS ON CASH FLOW HEDGES
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances, beginning of period	(5,994)	(5,178)	(6,122)	(5,306)
Amounts reclassified from accumulated AOCI
Amounts reclassified from AOCI	63	112	191	240
Balances, end of period	$ (5,931)	$ (5,066)	$ (5,931)	$ (5,066)

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Intangible Assets and Liabilities - Intangible Assets and Liabilities Narrative (Details) - USD ($)		9 Months Ended	12 Months Ended
	Feb. 04, 2019	Sep. 30, 2019	Dec. 31, 2008	Dec. 31, 2016
Power supply agreements
Finite-Lived Intangible Assets [Line Items]
Intangible liabilities, residual value		$ 0
Preliminary fair value of intangible liabilities	$ 14,200,000
Intangible liabilities, remaining life		6 years
LTSA
Finite-Lived Intangible Assets [Line Items]
Intangible liabilities	$ 24,100,000
Intangible liabilities, remaining life	7 years
Trade name
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life		20 years
Intangible assets, residual value		$ 0
Power supply agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, residual value	$ 0	$ 0
Preliminary fair value of intangible assets	$ 98,900,000
Power supply agreements | Minimum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life		4 years
Intangible assets, remaining life	2 years
Power supply agreements | Maximum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life		16 years
Intangible assets, remaining life	8 years
Cleco Katrina/Rita
Finite-Lived Intangible Assets [Line Items]
Intangible assets, residual value		$ 0
Accumulated amortization				$ 0
Cleco Katrina/Rita | Cleco Katrina/Rita right to bill and collect storm recovery charges
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired			$ 177,500,000
Cleco Katrina/Rita | Cleco Katrina/Rita right to bill and collect storm recovery charges | Minimum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life			12 years
Cleco Katrina/Rita | Cleco Katrina/Rita right to bill and collect storm recovery charges | Maximum
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life			15 years
Cleco Katrina/Rita | Cleco Katrina/Rita right to bill and collect storm recovery charges from customers, net of financing costs
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired			$ 176,000,000
Cleco Katrina/Rita | Financing costs
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired			$ 1,500,000

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Revenue Recognition - Narrative (Details)	9 Months Ended
	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
Payment terms	20 days
Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unsatisfied performance obligations	1 year
Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unsatisfied performance obligations	15 years

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Leases - Future Minimum Lease Payments Due Under Long-Term Operating Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Three months ending Dec. 31, 2019	$ 1,065
Years ending Dec. 31,
2020	3,994
2021	3,443
2022	3,287
2023	3,249
Thereafter	21,853
Total minimum lease payments	36,891
Less: amount representing interest	7,358
Present value of net minimum operating lease payments	29,533
Current liabilities	3,705
Non-current liabilities	25,828	$ 0
CLECO POWER
Lessee, Lease, Description [Line Items]
Three months ending Dec. 31, 2019	1,014
Years ending Dec. 31,
2020	3,960
2021	3,410
2022	3,256
2023	3,220
Thereafter	21,833
Total minimum lease payments	36,693
Less: amount representing interest	7,395
Present value of net minimum operating lease payments	29,298
Current liabilities	3,616
Non-current liabilities	$ 25,682	$ 0

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Loss [Line Items]

Schedule of Accumulated Other Comprehensive Income Loss

The components of accumulated other comprehensive loss are summarized in the following tables for Cleco and Cleco Power. All amounts are reported net of income taxes. Amounts in parentheses indicate losses.

Cleco
	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019			FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN
Balances, beginning of period	$	1,504		$	1,786
Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(37		)	(319		)
Balances, Sept. 30, 2019	$	1,467		$	1,467

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018			FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	$	(2,631	)	$	(2,921	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	261			551
Balances, Sept. 30, 2018	$	(2,370	)	$	(2,370	)

CLECO POWER

Accumulated Other Comprehensive Loss [Line Items]

Schedule of Accumulated Other Comprehensive Income Loss

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30, 2019									FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI			POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(6,775	)	$	(5,994	)	$	(12,769	)	$	(7,060	)	$	(6,122	)	$	(13,182	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	230			—			230			515			—			515
Reclassification of net loss to interest charges	—			63			63			—			191			191
Balances, Sept. 30, 2019	$	(6,545	)	$	(5,931	)	$	(12,476	)	$	(6,545	)	$	(5,931	)	$	(12,476	)

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018									FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI			POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(7,877	)	$	(5,178	)	$	(13,055	)	$	(8,377	)	$	(5,306	)	$	(13,683	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	312			—			312			812			—			812
Reclassification of net loss to interest charges	—			112			112			—			240			240
Balances, Sept. 30, 2018	$	(7,565	)	$	(5,066	)	$	(12,631	)	$	(7,565	)	$	(5,066	)	$	(12,631	)

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Business Combination - Measurement Period Adjustments (Details) - South Central Generating $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($)
Current assets
Customer and other accounts receivable	$ 1,408
Other current assets	56
Non-current assets
Property, plant, and equipment, net	13,297
Prepayments	(56)
Intangible assets	(3,600)
Other deferred charges	1
Current liabilities
Accounts payable	3,022
Energy risk management liabilities	(1)
Other current liabilities	327
Non-current liabilities
Accumulated deferred federal and state income taxes, net	421
Deferred lease revenue	(3,600)
Intangible liabilities	6,400
Asset retirement obligations	4,534
Operating lease liabilities	$ 3

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Leases - Supplemental Balance Sheet and Cash Flow Information and Other Supplemental Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
ROU assets
Operating	$ 29,719	$ 29,719	$ 0
Finance	15,120	15,120
Total ROU assets	44,839	44,839
Current lease liabilities
Operating	3,705	3,705
Finance	602	602
Non-current lease liabilities
Operating	25,828	25,828	0
Finance	15,404	15,404
Total lease liabilities	45,539	45,539
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	1,108	3,387
Operating cash flows from finance leases	410	1,240
Financing cash flows from finance leases	141	412
ROU assets obtained in exchange for new lease liabilities	$ 15,749	$ 15,881
Operating leases
Weighted-average remaining lease term	10 years 11 months	10 years 11 months
Weighted-average discount rate	4.31%	4.31%
Finance leases
Weighted-average remaining lease term	13 years 6 months	13 years 6 months
Weighted-average discount rate	10.18%	10.18%
CLECO POWER
ROU assets
Operating	$ 29,375	$ 29,375	0
Finance	15,120	15,120	15,960
Total ROU assets	44,495	44,495
Current lease liabilities
Operating	3,616	3,616
Finance	602	602
Non-current lease liabilities
Operating	25,682	25,682	$ 0
Finance	15,404	15,404
Total lease liabilities	45,304	45,304
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	1,034	3,189
Operating cash flows from finance leases	410	1,240
Financing cash flows from finance leases	141	412
ROU assets obtained in exchange for new lease liabilities	$ 15,749	$ 15,749
Operating leases
Weighted-average remaining lease term	11 years	11 years
Weighted-average discount rate	4.31%	4.31%
Finance leases
Weighted-average remaining lease term	13 years 6 months	13 years 6 months
Weighted-average discount rate	10.18%	10.18%

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Customer accounts receivable, allowance for doubtful accounts	$ 3,895	$ 814
CLECO POWER
Customer accounts receivable, allowance for doubtful accounts	$ 3,895	$ 814

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Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Operating revenue
Electric operations	$ 451,902	$ 341,062	$ 1,130,318	$ 897,486
Other operations	49,780	20,186	131,544	61,067
Affiliate revenue	0	0	0	0
Gross operating revenue	501,682	361,248	1,261,862	958,553
Electric customer credits	(13,711)	(2,992)	(31,832)	(24,276)
Operating revenue, net	487,971	358,256	1,230,030	934,277
Operating expenses
Fuel used for electric generation	141,722	130,987	354,921	275,565
Purchased power	85,176	29,608	213,912	132,921
Other operations and maintenance	82,913	49,321	208,608	154,043
Depreciation and amortization	57,004	43,763	158,395	128,076
Taxes other than income taxes	17,611	12,091	47,081	35,674
Merger transaction and commitment costs	2,006	6,376	7,792	13,445
Total operating expenses	386,432	272,146	990,709	739,724
Operating income	101,539	86,110	239,321	194,553
Interest income	1,690	1,832	4,456	4,043
Allowance for equity funds used during construction	3,619	3,829	14,825	9,416
Other income (expense), net	(1,363)	(1,164)	292	(7,111)
Interest charges
Interest charges, net	37,412	33,072	111,426	98,059
Allowance for borrowed funds used during construction	(1,580)	(1,244)	(5,755)	(3,165)
Total interest charges	35,832	31,828	105,671	94,894
Income before income taxes	69,653	58,779	153,223	106,007
Federal and state income tax expense	14,088	11,419	32,355	21,947
Net income	55,565	47,360	120,868	84,060
CLECO POWER
Operating revenue
Electric operations	339,869	343,482	862,969	904,746
Other operations	18,485	20,186	53,318	61,066
Affiliate revenue	334	223	971	651
Gross operating revenue	358,688	363,891	917,258	966,463
Electric customer credits	(13,711)	(2,992)	(30,565)	(24,276)
Operating revenue, net	344,977	360,899	886,693	942,187
Operating expenses
Fuel used for electric generation	116,831	130,987	297,197	275,565
Purchased power	34,908	29,608	83,048	132,921
Other operations and maintenance	57,718	50,837	148,330	158,170
Depreciation and amortization	44,903	41,687	126,610	121,796
Taxes other than income taxes	12,485	11,717	33,023	34,548
Total operating expenses	266,845	264,836	688,208	723,000
Operating income	78,132	96,063	198,485	219,187
Interest income	1,421	1,606	3,281	3,560
Allowance for equity funds used during construction	3,619	3,829	14,825	9,416
Other income (expense), net	(1,231)	(2,251)	(2,091)	(6,422)
Interest charges
Interest charges, net	19,563	19,139	58,253	56,823
Allowance for borrowed funds used during construction	(1,580)	(1,244)	(5,755)	(3,165)
Total interest charges	17,983	17,895	52,498	53,658
Income before income taxes	63,958	81,352	162,002	172,083
Federal and state income tax expense	12,431	18,016	34,407	39,724
Net income	$ 51,527	$ 63,336	$ 127,595	$ 132,359

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Leases - Analysis of Leased Property Under Finance Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Net finance lease	$ 15,120
CLECO POWER
Lessee, Lease, Description [Line Items]
Barges	16,800	$ 16,800
Accumulated amortization	(1,680)	(840)
Net finance lease	$ 15,120	$ 15,960

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Fair Value Accounting - Narrative (Details) MWh in Millions, MMBTU in Millions, $ in Millions	9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) MMBTU	Sep. 30, 2019 USD ($) MWh	Dec. 31, 2018 USD ($) MWh
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Fair value, concentration of risk, amount of money market funds in cash and cash equivalents	$ 91.5	$ 91.5	$ 103.8
Volume outstanding	18.4	23.4	8.7
Current restricted cash and cash equivalents
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Fair value, concentration of risk, amount of money market funds in institutional money market funds	$ 5.4	$ 5.4	$ 11.2
Non-current restricted cash and cash equivalents
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Fair value, concentration of risk, amount of money market funds in institutional money market funds	15.0	15.0	18.7
CLECO POWER
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Fair value, concentration of risk, amount of money market funds in cash and cash equivalents	57.4	$ 57.4	$ 26.1
Volume outstanding | MWh		14.6	8.7
CLECO POWER | Current restricted cash and cash equivalents
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Fair value, concentration of risk, amount of money market funds in institutional money market funds	5.4	$ 5.4	$ 11.2
CLECO POWER | Non-current restricted cash and cash equivalents
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Fair value, concentration of risk, amount of money market funds in institutional money market funds	$ 14.1	$ 14.1	$ 18.6

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Income Taxes - Effective Tax Rate Reconciliation (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Effective Income Tax Rate [Line Items]
Effective tax rate	20.20%	19.40%	21.10%	20.70%
CLECO POWER
Effective Income Tax Rate [Line Items]
Effective tax rate	19.40%	22.10%	21.20%	23.10%

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Variable Interest Entities - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Variable Interest Entity [Line Items]
Equity investment in investee	$ 17,672	$ 18,172
CLECO POWER
Variable Interest Entity [Line Items]
Equity investment in investee	$ 17,672	$ 18,172
CLECO POWER | Oxbow
Variable Interest Entity [Line Items]
Ownership percentage by Cleco Power (in hundredths)	50.00%
Ownership percentage by other parties (in hundredths)	50.00%

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Debt - Cumulative Minimum Principal Amounts Committed to be Repaid (Details) - South Central Generating $ in Thousands	Sep. 30, 2019 USD ($)
For the year ending Dec. 31,
2019	$ 66,700
2020	132,300
2021	200,000
2022	266,700
2023	332,300
2024	$ 400,000

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Pension Plan and Employee Benefits - Current and Non-Current Portions of SERP Liability (Details) - SERP Benefits - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Current	$ 4,478	$ 4,478
Non-current	73,255	73,936
CLECO POWER
Defined Benefit Plan Disclosure [Line Items]
Current	930	930
Non-current	$ 11,759	$ 12,025

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Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees - Off-Balance Sheet Commitments and Guarantees (Details)	9 Months Ended
	Sep. 30, 2019 USD ($)
Guarantor Obligations [Line Items]
Guarantor obligations, collateral held directly or by third parties, amount	$ 0
Performance Guarantee
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	42,400,000
Indemnification Agreement
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	40,000,000
Indemnification Agreement including fundamental organizational structure
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	400,000,000
CLECO POWER
Guarantor Obligations [Line Items]
Guarantor obligations, collateral held directly or by third parties, amount	0
CLECO POWER | Indemnification Agreement
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	40,000,000
CLECO POWER | Indemnification Agreement including fundamental organizational structure
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	400,000,000
CLECO POWER | Financial Guarantee
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	86,400,000
CLECO HOLDINGS | Letters of Credit
Guarantor Obligations [Line Items]
Letters of credit	$ 34,500,000

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Pension Plan and Employee Benefits

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Pension Plan and Employee Benefits

Note 9 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. On September 12, 2019, Cleco made a $12.3 million discretionary contribution to the pension plan. Cleco does not expect to make any further contributions to the pension plan in 2019. Cleco Power is the plan sponsor and Support Group is the plan administrator. The plan was amended on February 4, 2019, to include certain former NRG Energy employees who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan amendment reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits.

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of net periodic pension and Other Benefits cost for the three and nine months ended September 30, 2019, and 2018 were as follows:

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019		2018
Components of periodic benefit costs
Service cost	$	2,104		$	2,377		$	328	$	336
Interest cost	5,621			5,215			435		361
Expected return on plan assets	(6,625		)	(5,943		)	—		—
Amortizations
Prior period service credit	(18		)	(18		)	—		—
Net loss	1,962			3,078			105		96
Net periodic benefit cost	$	3,044		$	4,709		$	868	$	793

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE NINE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019		2018
Components of periodic benefit costs
Service cost	$	6,311		$	7,130		$	896	$	1,011
Interest cost	16,864			15,869			1,235		1,076
Expected return on plan assets	(19,876		)	(17,818		)	—		—
Amortizations
Prior period service credit	(54		)	(53		)	—		—
Net loss	5,887			8,998			25		105
Net periodic benefit cost	$	9,132		$	14,126		$	2,156	$	2,192

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2019, was $0.5 million and $1.6 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2018, was $0.5 million and $1.5 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019, was $0.9 million and $2.3 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018, was $0.9 million and $2.5 million, respectively. The current and non-current portions of the other benefits liability for Cleco and Cleco Power at September 30, 2019, and December 31, 2018, were as follows:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	4,130	$	4,130
Non-current	$	35,090	$	36,325

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	3,584	$	3,584
Non-current	$	30,769	$	31,694

SERP

Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a rabbi trust. The life insurance policies issued on SERP participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies that employed the officer. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of the net periodic benefit cost related to SERP for the three and nine months ended September 30, 2019, and 2018 were as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Components of periodic benefit costs
Service cost	$	82		$	136		$	247		$	407
Interest cost	831			769			2,494			2,296
Amortizations
Prior period service credit	(34		)	(35		)	(104		)	(104		)
Net loss	381			723			1,143			2,180
Net periodic benefit cost	$	1,260		$	1,593		$	3,780		$	4,779

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019, was $0.2 million and $0.6 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018, was $0.4 million and $1.1 million, respectively.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at September 30, 2019, and December 31, 2018, were as follows:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	4,478	$	4,478
Non-current	$	73,255	$	73,936

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current	$	930	$	930
Non-current	$	11,759	$	12,025

401(k) Plan

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan was amended upon the close of the Cleco Cajun Transaction to include Cleco Cajun employees. Cleco’s 401(k) Plan expense for the three and nine monthsended September 30, 2019, and 2018 was as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	2,077	$	1,424	$	6,136	$	4,716

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2019, and 2018 was as follows:

	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	873	$	254	$	2,625	$	865

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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 5 — Revenue Recognition

Revenue from Contracts with Customers

Retail Utility Revenue

Cleco’s retail revenue from contracts with customers is generated primarily from Cleco Power’s regulated revenue from residential, commercial, and industrial customers. Cleco recognizes retail revenue from these contracts as a series, and progress towards satisfaction of the performance obligation is measured using an output method based on kWh delivered. Accordingly, revenue from electricity sales is recognized as energy is delivered to the customer. Cleco bills retail customers, based on rates regulated by the LPSC, on a monthly basis with payments generally due within 20 days of the invoice date.

Included in Cleco’s retail revenue is unbilled electric revenue, which represents the amount customers will be billed for services rendered from the last meter reading to the end of the respective accounting period. Cleco uses actual customer energy consumption data available from AMI to calculate unbilled revenue. Also included in Cleco’s retail revenue is electric customer credits, which primarily represents the accrued estimated refunds to Cleco Power’s retail customers for the tax related benefits of the TCJA.

Wholesale Revenue

Cleco’s wholesale revenue is generated primarily through the sale of energy and capacity to cooperatives, municipalities, and the MISO transmission provider. Cleco also enters into transactions through MISO for spot energy sales which are transacted in the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. The electricity revenue performance obligations, representing both energy and capacity, are satisfied as a series of performance obligations, and progress towards satisfaction of the performance obligations are measured using an output method. The energy performance obligation measure of progress is based on kWh delivered. The capacity performance obligation measure of progress is based on time elapsed and is recognized each month as Cleco’s generating units stand ready to deliver electricity to the customer. Cleco recognizes wholesale revenue, inclusive of both performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice. Cleco charges its wholesale customers market based rates that are subject to FERC’s triennial market power analysis.

Transmission Revenue

Cleco earns transmission revenues pursuant to MISO’s FERC filed tariff. The performance obligation of transmission service is satisfied as service is provided. Revenue is recognized upon delivery of the transmission service. Cleco Power’s revenue from the transmission of electricity is recorded based on a FERC-approved annual formula rate mechanism. This mechanism provides for an annual filing of revenue requirements with rates effective June 1 of each year. Cleco Cajun charges transmission rates based on its cost to provide transmission services.

Other Revenue

Other revenue from contracts with customers, which is not a significant source of Cleco’s revenue, includes Cleco Power’s Teche Unit 3 SSR revenue and miscellaneous fees. The performance obligation under these contracts is satisfied and revenue is recognized as control of the products is delivered or services are rendered.

Revenue Unrelated to Contracts with Customers

Cleco’s energy-related transactions with the following characteristics, qualify as derivative contracts and are recorded pursuant to derivatives and hedging accounting guidance: a) their value is based on the notional amount or payment provisions of an underlying asset; b) they require no or a diminutive initial net investment; and c) their terms require or permit net settlement.

Cleco Cajun’s other revenue includes fixed lease payments and certain variable payments for costs paid by NRG Energy on behalf of Cleco. For more information on the Cottonwood lease agreement, see Note 4 — “Leases — Lessor Agreements — Cottonwood Sale Leaseback Agreement.”

Disaggregated Revenue

Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a new reportable segment. For more information on the transaction, see Note 2 — “Business Combination.”

Operating revenue, net for the three and nine months ended September 30, 2019, and 2018, was as follows:

	FOR THE THREE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	CLECO POWER				CLECO CAJUN			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	142,265			$	—		$	—			$	—		$	142,265
Commercial (1)	84,816				—			—				—			84,816
Industrial (1)	36,830				—			—				—			36,830
Other retail (1)	4,234				—			—				—			4,234
Surcharge	170				—			—				—			170
Electric customer credits	(13,711		)		—			—				—			(13,711		)
Total retail revenue	254,604				—			—				—			254,604
Wholesale, net	69,558			(1)	114,426			(2,420		)	(2)	—			181,564
Transmission	14,034				15,435			—				(2,442		)	27,027
Other	4,452			(3)	—			—				—			4,452
Affiliate (4)	334				31			28,252				(28,617		)	—
Total revenue from contracts with customers	342,982				129,892			25,832				(31,059		)	467,647
Revenue unrelated to contracts with customers
Other	1,995			(5)	18,329		(6)	—				—			20,324
Total revenue unrelated to contracts with customers	1,995				18,329			—				—			20,324
Operating revenue, net	$	344,977			$	148,221		$	25,832			$	(31,059	)	$	487,971

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other miscellaneous fee revenue.

⁽⁴⁾ Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾ Includes realized gains associated with FTRs.

⁽⁶⁾ Includes $16.0 million in lease revenue related to the Cottonwood Sale Leaseback and $2.3 million of deferred lease revenue amortization.

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	139,162		$	—			$	—		$	139,162
Commercial (1)	79,829			—				—			79,829
Industrial (1)	43,380			—				—			43,380
Other retail (1)	4,039			—				—			4,039
Surcharge	6,206			—				—			6,206
Electric customer credits	(2,992		)	—				—			(2,992		)
Total retail revenue	269,624			—				—			269,624
Wholesale, net (1)	63,624			(2,420		)	(2)	—			61,204
Transmission	14,718			—				—			14,718
Other (3)	5,469			—				—			5,469
Affiliate	223			22,765				(22,988		)	—
Total revenue from contracts with customers	353,658			20,345				(22,988		)	351,015
Revenue unrelated to contracts with customers
Other (4)	7,241			—				—			7,241
Total revenue unrelated to contracts with customers	7,241			—				—			7,241
Operating revenue, net	$	360,899		$	20,345			$	(22,988	)	$	358,256

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $4.9 million of other miscellaneous fee revenue and $0.6 million of Teche Unit 3 SSR revenue, net of $0.2 million of reserves for capital expenditures.

⁽⁴⁾ Includes realized gains associated with FTRs.

	FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	CLECO POWER				CLECO CAJUN			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	327,340			$	—		$	—			$	—		$	327,340
Commercial (1)	218,209				—			—				—			218,209
Industrial (1)	109,545				—			—				—			109,545
Other retail (1)	11,391				—			—				—			11,391
Surcharge	7,692				—			—				—			7,692
Electric customer credits	(30,565		)		—			—				—			(30,565		)
Total retail revenue	643,612				—			—				—			643,612
Wholesale, net	179,633			(1)	273,256			(7,260		)	(2)	—			445,629
Transmission	38,679				36,625			—				(5,395		)	69,909
Other	14,640			(3)	—			2				—			14,642
Affiliate (4)	971				31			77,800				(78,802		)	—
Total revenue from contracts with customers	877,535				309,912			70,542				(84,197		)	1,173,792
Revenue unrelated to contracts with customers
Other	9,158			(5)	47,081		(6)	—				(1		)	56,238
Total revenue unrelated to contracts with customers	9,158				47,081			—				(1		)	56,238
Operating revenue, net	$	886,693			$	356,993		$	70,542			$	(84,198	)	$	1,230,030

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Includes $11.4 million of other miscellaneous fee revenue and $3.2 million of Teche Unit 3 SSR revenue at Cleco Power.

⁽⁴⁾ Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾ Includes realized gains associated with FTRs of $11.7 million and the reversal of the Lost Contribution to Fixed Cost revenue of $2.6 million.

⁽⁶⁾ Includes $40.9 million in lease revenue related to the Cottonwood Sale Leaseback and $6.1 million of deferred lease revenue amortization.

	FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	338,357		$	—			$	—		$	338,357
Commercial (1)	218,389			—				—			218,389
Industrial (1)	121,445			—				—			121,445
Other retail (1)	11,633			—				—			11,633
Surcharge	17,637			—				—			17,637
Electric customer credits	(24,276		)	—				—			(24,276		)
Total retail revenue	683,185			—				—			683,185
Wholesale, net (1)	165,255			(7,260		)	(2)	—			157,995
Transmission	41,166			—				—			41,166
Other (3)	19,901			1				—			19,902
Affiliate	651			55,707				(56,358		)	—
Total revenue from contracts with customers	910,158			48,448				(56,358		)	902,248
Revenue unrelated to contracts with customers
Other (4)	32,029			—				—			32,029
Total revenue unrelated to contracts with customers	32,029			—				—			32,029
Operating revenue, net	$	942,187		$	48,448			$	(56,358	)	$	934,277

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $13.4 million of other miscellaneous fee revenue and $6.5 million of Teche Unit 3 SSR revenue, net of $2.4 million of reserves for capital expenditures.

⁽⁴⁾ Includes realized gains associated with FTRs.

Cleco has unsatisfied performance obligations with durations ranging between one and fifteen years that primarily relate to stand-ready obligations as part of fixed capacity minimums. Cleco has elected to not disclose the value of unsatisfied performance obligations as part of its application of the right to invoice practical expedient.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco Holdings and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.

Cleco’s condensed consolidated financial statements include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, through September 30, 2019. For more information about the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Basis of Presentation

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to the Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to fairly state the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 3 — “Recent Authoritative Guidance.”

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of the following:

Cleco
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current
Cleco Katrina/Rita’s storm recovery bonds	$	3,612	$	9,505
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	544		536
Total current	5,356		11,241
Non-current
Diversified Lands’ mitigation escrow	22		21
Cleco Cajun’s defense fund	717		—
Cleco Cajun’s margin deposits	100		—
Cleco Power’s future storm restoration costs	12,089		15,391
Cleco Power’s charitable contributions	2,185		2,753
Cleco Power’s rate credit escrow	—		505
Total non-current	15,113		18,670
Total restricted cash and cash equivalents	$	20,469	$	29,911

Cleco Power
(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Current
Cleco Katrina/Rita’s storm recovery bonds	$	3,612	$	9,505
Charitable contributions	1,200		1,200
Rate credit escrow	544		536
Total current	5,356		11,241
Non-current
Future storm restoration costs	12,089		15,391
Charitable contributions	2,185		2,753
Rate credit escrow	—		505
Total non-current	14,274		18,649
Total restricted cash and cash equivalents	$	19,630	$	29,890

Cleco Katrina/Rita has the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of administration fees, interest, and principal on storm recovery bonds. The change from December 31, 2018, to September 30, 2019, was due to Cleco Katrina/Rita using $20.6 million for scheduled storm recovery bond principal payments and $1.5 million for related interest payments, partially offset by collections of $16.2 million net of administration fees.

As part of the Cleco Cajun Transaction, Cleco acquired restricted cash of $0.7 million to be used by Cleco Cajun’s cooperative customers for defense funds in the event of potential takeovers. There is no further obligation of Cleco with respect to such expenses, including the replenishment of the fund.

Leases

Cleco accounts for leases in accordance with accounting guidance effective January 1, 2019. For more information on this guidance, see Note 3 — “Recent Authoritative Guidance.”

Cleco determines if a contract is a lease at its inception. If a contract is determined to be a lease, Cleco recognizes a ROU asset and lease liability at the commencement date based on the present value of lease payments over the lease term. The present value of the lease payments is determined by using the implicit interest rate if readily determinable. Cleco’s incremental borrowing rate for a term similar to the duration of the lease based on information available at the commencement date is used if the implicit interest rate is not readily determinable.

Cleco recognizes ROU assets and lease liabilities for leasing arrangements with terms greater than one year. Except for the marine transportation asset class, Cleco accounts for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco’s marine transportation contracts, which include barges and towboats, contain non-lease components, such as maintenance and labor. Cleco allocates the consideration in these contracts between lease and non-lease components based on estimates of fair value from third parties that typically execute leases for this class of assets.

Expense for a lessee operating lease is recognized as a single lease cost on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the leased asset’s function. Income for a lessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function.

Fair Value Measurements and Disclosures

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes. For more information about fair value levels, see Note 7 — “Fair Value Accounting.”

Derivatives and Other Risk Management Activity

Cleco’s Energy Market Risk Management Policy authorizes hedging of commodity price risk with physical or financially settled derivative instruments. Some of these contracts may qualify for the normal purchase, normal sale (NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. The majority of these FTRs are purchased in annual auctions during the second quarter, but additional FTRs may be purchased in monthly auctions. FTRs represent economic hedges of future congestion charges that will be incurred in serving customer load. FTRs are derivatives not designated as hedging instruments for accounting purposes.

Cleco Power’s FTRs are marked-to-market with the resulting unrealized gains or losses deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. At settlement, realized gains or losses are included in the FAC and reflected on customers’ bills as a component of the fuel charge.

Cleco Cajun’s FTRs are marked-to-market with the resulting unrealized gains and losses recorded on the income statement as a component of purchased power expense. At settlement, realized gains or losses are also recorded on the income statement as a component of purchased power expense.

Cleco Cajun entered into other commodity derivative contracts during the nine months ended September 30, 2019, that did not qualify for hedge accounting under applicable accounting standards. When these contracts are marked-to-market, the resulting unrealized gain or loss is recorded on the income statement as a component of fuel expense. At settlement, realized gains or losses will also be recorded on the income statement as a component of fuel expense.

For more information on FTRs and other commodity derivatives, see Note 7 — “Fair Value Accounting — Commodity Contracts.”

Cleco may also enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For each reporting period presented, the Registrants did not enter into any contracts to mitigate the volatility in interest rate risk.

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Fair Value Accounting (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Carrying Value and Estimated Fair Value

The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments not measured at fair value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets:

Cleco
	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	3,191,452	$	3,407,190	$	2,889,631	$	2,859,924

* The carrying value of long-term debt does not include deferred issuance costs of $14.2 million at September 30, 2019, and $10.3 million at December 31, 2018.

Fair Value of Financial Assets and Liabilities Measured On A Recurring Basis

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured on a recurring basis:

Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	111,885	$	—	$	111,885	$	—	$	133,722	$	—	$	133,722	$	—
FTRs	9,926		—		—		9,926		23,355		—		—		23,355
Other commodity derivatives	745		—		745		—		—		—		—		—
Total assets	$	122,556	$	—	$	112,630	$	9,926	$	157,077	$	—	$	133,722	$	23,355
Liability description
FTRs	$	1,257	$	—	$	—	$	1,257	$	468	$	—	$	—	$	468
Other commodity derivatives	41		—		41		—		—		—		—		—
Total liabilities	$	1,298	$	—	$	41	$	1,257	$	468	$	—	$	—	$	468

Net Changes in Net Fair Value of FTR Assets and Liabilities Classified as Level 3

The following tables summarize the net changes in the net fair value of FTR assets and liabilities classified as Level 3 in the fair value hierarchy for Cleco and Cleco Power:

Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Beginning balance	$	14,665		$	25,133		$	22,887		$	7,044
Unrealized (losses) gains*	(1,234		)	4,520			(4,488		)	6,153
Purchases	557			1,251			26,401			26,734
Settlements	(5,319		)	(8,644		)	(36,131		)	(17,671		)
Ending balance	$	8,669		$	22,260		$	8,669		$	22,260
* Cleco Power’s unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco’s Condensed Consolidated Balance Sheet. Cleco Cajun’s unrealized (losses) gains are reported through Purchased power on Cleco’s Condensed Consolidated Income Statement.

Significant Unobservable Inputs Used in Developing Fair Value of Level 3 Positions

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions as of September 30, 2019, and December 31, 2018:

Cleco
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Sept. 30, 2019	$	9,926	$	1,257	RTO auction pricing	FTR price - per MWh	$	(2.29	)	$	3.14
FTRs at Dec. 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10

Fair Value of Derivative Instruments as Recorded in Condensed Consolidated Balance Sheets

The following tables present the fair values of derivative instruments and their respective line items as recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018:

Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2019		AT DEC. 31, 2018
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	9,926	$	23,355
Current	Energy risk management liabilities	1,257		468
Other commodity derivatives
Current	Energy risk management assets	745		—
Current	Energy risk management liabilities	41		—
Commodity-related contracts, net		$	9,373	$	22,887

Amount of Gain (Loss) Recognized in Income on Derivatives

The following tables present the effect of derivatives not designated as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for the nine months ended September 30, 2019, and 2018:

Cleco
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2019			2018			2019			2018
Commodity-related contracts
FTRs(1)	Electric operations	$	1,997		$	7,241		$	12,396		$	32,407
FTRs(1)	Purchased power	(2,648		)	(1,587		)	(12,985		)	(3,288		)
Other commodity derivatives	Fuel used for electric generation	3,474			—			704			—
Total		$	2,823		$	5,654		$	115		$	29,119

⁽¹⁾ For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs for Cleco Power of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2018, unrealized gains associated with FTRs for Cleco Power of $4.5 million and $6.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

CLECO POWER

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Carrying Value and Estimated Fair Value

Cleco Power
	AT SEPT. 30, 2019				AT DEC. 31, 2018
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	1,380,605	$	1,625,480	$	1,400,930	$	1,517,152

* The carrying value of long-term debt does not include deferred issuance costs of $7.6 million at September 30, 2019, and $8.3 million at December 31, 2018.

Fair Value of Financial Assets and Liabilities Measured On A Recurring Basis

Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	76,947	$	—	$	76,947	$	—	$	55,900	$	—	$	55,900	$	—
FTRs	8,601		—		—		8,601		23,355		—		—		23,355
Total assets	$	85,548	$	—	$	76,947	$	8,601	$	79,255	$	—	$	55,900	$	23,355
Liability description
FTRs	$	577	$	—	$	—	$	577	$	468	$	—	$	—	$	468
Total liabilities	$	577	$	—	$	—	$	577	$	468	$	—	$	—	$	468

Net Changes in Net Fair Value of FTR Assets and Liabilities Classified as Level 3

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019			2018			2019			2018
Beginning balance	$	13,910		$	25,133		$	22,887		$	7,044
Unrealized (losses) gains*	(1,700		)	4,520			(3,644		)	6,153
Purchases	1,133			1,251			20,961			26,734
Settlements	(5,319		)	(8,644		)	(32,180		)	(17,671		)
Ending balance	$	8,024		$	22,260		$	8,024		$	22,260
* Unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheet.

Significant Unobservable Inputs Used in Developing Fair Value of Level 3 Positions

Cleco Power
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Sept. 30, 2019	$	8,601	$	577	RTO auction pricing	FTR price - per MWh	$	(1.67	)	$	2.79
FTRs at Dec. 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10

Fair Value of Derivative Instruments as Recorded in Condensed Consolidated Balance Sheets

Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2019		AT DEC. 31, 2018
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	8,601	$	23,355
Current	Energy risk management liabilities	577		468
Commodity-related contracts, net		$	8,024	$	22,887

Amount of Gain (Loss) Recognized in Income on Derivatives

Cleco Power
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2019			2018			2019			2018
Commodity-related contracts
FTRs(1)	Electric operations	$	1,997		$	7,241		$	12,400		$	32,407
FTRs(1)	Purchased power	(1,828		)	(1,587		)	(4,800		)	(3,288		)
Total		$	169		$	5,654		$	7,600		$	29,119

⁽¹⁾ For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2018, unrealized gains associated with FTRs of $4.5 million and $6.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

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Disclosures about Segments (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Information

The financial results in the following tables are presented on an accrual basis. The historical segment information was not recast because the Cleco Cajun segment only consists of the newly acquired business. There were no other changes to Cleco’s existing reportable segments. Management evaluates the performance of its segment and allocates resources to it based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.

SEGMENT INFORMATION FOR THE THREE MONTHS ENDED SEPT. 30,
2019 (THOUSANDS)	CLECO POWER			CLECO CAJUN		OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	339,869		$	114,453	$	(2,420	)	$	—		$	451,902
Other operations	18,485			33,737		—			(2,442		)	49,780
Affiliate revenue	334			31		28,252			(28,617		)	—
Electric customer credits	(13,711		)	—		—			—			(13,711		)
Operating revenue, net	$	344,977		$	148,221	$	25,832		$	(31,059	)	$	487,971
Depreciation and amortization	$	44,903		$	10,009	$	2,092		$	—		$	57,004
Interest income	$	1,421		$	220	$	228		$	(179	)	$	1,690
Interest charges	$	17,983		$	—	$	18,028		$	(179	)	$	35,832
Federal and state income tax expense (benefit)	$	12,431		$	7,612	$	(5,955	)	$	—		$	14,088
Net income (loss)	$	51,527		$	22,806	$	(18,768	)	$	—		$	55,565

2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	343,482		$	(2,420	)	$	—		$	341,062
Other operations	20,186			—			—			20,186
Affiliate revenue	223			22,765			(22,988		)	—
Electric customer credits	(2,992		)	—			—			(2,992		)
Operating revenue, net	$	360,899		$	20,345		$	(22,988	)	$	358,256
Depreciation and amortization	$	41,687		$	2,076		$	—		$	43,763
Interest income	$	1,606		$	310		$	(84	)	$	1,832
Interest charges	$	17,895		$	14,017		$	(84	)	$	31,828
Federal and state income tax expense (benefit)	$	18,016		$	(6,597	)	$	—		$	11,419
Net income (loss)	$	63,336		$	(15,975	)	$	(1	)	$	47,360

SEGMENT INFORMATION FOR THE NINE MONTHS ENDED SEPT. 30,
2019 (THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	862,969		$	274,610		$	(7,260	)	$	(1	)	$	1,130,318
Other operations	53,318			83,619			2			(5,395		)	131,544
Affiliate revenue	971			31			77,800			(78,802		)	—
Electric customer credits	(30,565		)	(1,267		)	—			—			(31,832		)
Operating revenue, net	$	886,693		$	356,993		$	70,542		$	(84,198	)	$	1,230,030
Depreciation and amortization	$	126,610		$	25,555		$	6,231		$	(1	)	$	158,395
Interest income	$	3,281		$	842		$	841		$	(508	)	$	4,456
Interest charges	$	52,498		$	—		$	53,682		$	(509	)	$	105,671
Federal and state income tax expense (benefit)	$	34,407		$	15,169		$	(17,220	)	$	(1	)	$	32,355
Net income (loss)	$	127,595		$	46,788		$	(53,515	)	$	—		$	120,868
Additions to property, plant, and equipment	$	247,987		$	3,654		$	204		$	—		$	251,845
Equity investment in investees (1)	$	17,672		$	—		$	—		$	—		$	17,672
Goodwill (1)	$	1,490,797		$	—		$	—		$	—		$	1,490,797
Total segment assets (1)	$	5,988,444		$	998,289		$	550,323		$	(38,683	)	$	7,498,373
(1) Balances as of September 30, 2019

2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	904,746		$	(7,260	)	$	—		$	897,486
Other operations	61,066			1			—			61,067
Affiliate revenue	651			55,707			(56,358		)	—
Electric customer credits	(24,276		)	—			—			(24,276		)
Operating revenue, net	$	942,187		$	48,448		$	(56,358	)	$	934,277
Depreciation and amortization	$	121,796		$	6,281		$	(1	)	$	128,076
Interest income	$	3,560		$	652		$	(169	)	$	4,043
Interest charges	$	53,658		$	41,409		$	(173	)	$	94,894
Federal and state income tax expense (benefit)	$	39,724		$	(17,777	)	$	—		$	21,947
Net income (loss)	$	132,359		$	(48,299	)	$	—		$	84,060
Additions to property, plant, and equipment	$	193,708		$	911		$	—		$	194,619
Equity investment in investees (1)	$	18,172		$	—		$	—		$	18,172
Goodwill (1)	$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets (1)	$	5,839,853		$	633,756		$	(36,795	)	$	6,436,814
(1) Balances as of December 31, 2018

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive Loss

Note 17 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are summarized in the following tables for Cleco and Cleco Power. All amounts are reported net of income taxes. Amounts in parentheses indicate losses.

Cleco
	FOR THE THREE  MONTHS ENDED  SEPT. 30, 2019			FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN
Balances, beginning of period	$	1,504		$	1,786
Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(37		)	(319		)
Balances, Sept. 30, 2019	$	1,467		$	1,467

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018			FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	$	(2,631	)	$	(2,921	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	261			551
Balances, Sept. 30, 2018	$	(2,370	)	$	(2,370	)

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30, 2019									FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI			POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(6,775	)	$	(5,994	)	$	(12,769	)	$	(7,060	)	$	(6,122	)	$	(13,182	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	230			—			230			515			—			515
Reclassification of net loss to interest charges	—			63			63			—			191			191
Balances, Sept. 30, 2019	$	(6,545	)	$	(5,931	)	$	(12,476	)	$	(6,545	)	$	(5,931	)	$	(12,476	)

	FOR THE THREE MONTHS ENDED SEPT. 30, 2018									FOR THE NINE MONTHS ENDED SEPT. 30, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI			POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(7,877	)	$	(5,178	)	$	(13,055	)	$	(8,377	)	$	(5,306	)	$	(13,683	)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	312			—			312			812			—			812
Reclassification of net loss to interest charges	—			112			112			—			240			240
Balances, Sept. 30, 2018	$	(7,565	)	$	(5,066	)	$	(12,631	)	$	(7,565	)	$	(5,066	)	$	(12,631	)

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Variable Interest Entities

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

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 Condensed 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 Condensed 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 September 30, 2019, consisted of its equity investment of $17.7 million.

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

INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Purchase price	$	12,873		$	12,873
Cash contributions	6,399			6,399
Dividends	(1,600		)	(1,100		)
Total equity investment in investee	$	17,672		$	18,172

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:

(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Oxbow’s net assets/liabilities	$	35,345	$	36,345
Cleco Power’s 50% equity	$	17,672	$	18,172
Cleco Power’s maximum exposure to loss	$	17,672	$	18,172

The following table contains summarized financial information for Oxbow:

	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS  ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Operating revenue	$	2,776	$	2,214	$	7,114	$	4,134
Operating expenses	2,776		2,214		7,114		4,134
Income before taxes	$	—	$	—	$	—	$	—

DHLC mines lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station.

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.

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Business Combination - Narrative (Details)		1 Months Ended	3 Months Ended			9 Months Ended
	Feb. 04, 2019 USD ($) municipality cooperative investor_owned_utility instrument MW	Jan. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)
Business Acquisition [Line Items]
Repayment of long-term debt						$ 390,571,000	$ 19,193,000
Draws on credit facilities						108,000,000	0
Electric operations			$ 451,902,000		$ 341,062,000	1,130,318,000	897,486,000
Other operations revenue			(49,780,000)		(20,186,000)	(131,544,000)	(61,067,000)
Depreciation and amortization			57,004,000		43,763,000	158,395,000	128,076,000
South Central Generating
Business Acquisition [Line Items]
Repayment of long-term debt	$ 400,000,000	$ 400,000,000
Conditional commitment due within one year			66,700,000			66,700,000
Indemnification asset	10,000,000
Contingent liability	10,000,000
Consideration transferred	962,200,000
Acquisition price	1,000,000,000
Working capital and other adjustments	37,800,000
Intangible assets	98,900,000
Intangible liabilities	38,300,000
Deferred lease revenue	58,300,000
Pro forma net income			56,004,000		71,076,000	122,771,000	140,255,000
South Central Generating | Fair Value Adjustments
Business Acquisition [Line Items]
Electric operations				$ 500,000
Other operations revenue				100,000
Depreciation and amortization				$ 200,000
South Central Generating | Transaction Related Expenses
Business Acquisition [Line Items]
Pro forma net income			600,000			$ 4,500,000
Power supply agreements
Business Acquisition [Line Items]
Intangible liabilities	14,200,000
Intangible liabilities, remaining life						6 years
Power supply agreements | South Central Generating
Business Acquisition [Line Items]
Intangible liabilities	$ 14,200,000
LTSA
Business Acquisition [Line Items]
Intangible liabilities, remaining life	7 years
LTSA | South Central Generating
Business Acquisition [Line Items]
Intangible liabilities	$ 24,100,000
Intangible liabilities, remaining life	7 years
Cleco Cajun
Business Acquisition [Line Items]
Number of customers served | investor_owned_utility	1
Cleco Cajun | Letters of Credit
Business Acquisition [Line Items]
Line of credit facility, maximum borrowing capacity	$ 1,100,000.0
Number of letters of credit | instrument	3
Cleco Cajun | Jennings, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	225
Cleco Cajun | Louisiana
Business Acquisition [Line Items]
Number of customers served | cooperative	9
Cleco Cajun | Arkansas, Louisiana, and Texas
Business Acquisition [Line Items]
Number of customers served | municipality	3
Cleco Cajun | Natural-gas-fired Facility | Jarreau, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	220
Cleco Cajun | Natural-gas-fired Peaking Facility | Jarreau, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	210
Cleco Cajun | Natural-gas-fired Peaking Facility | Jennings, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	300
Cleco Cajun | Coal-fired Generating Facility | New Roads, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	580
Cleco Cajun | Coal-fired Generating Station | New Roads, Louisiana | Jointly Owned Electricity Generation Plant
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	588
Percentage ownership	58.00%
Cleco Cajun | Natural-gas-fired Generating Station | Sterlington, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	176
Cleco Cajun | Natural-gas-fired Generating Station | New Roads, Louisiana
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	540
Cleco Cajun | Natural-gas-fired Generating Station | Deweyville, Texas
Business Acquisition [Line Items]
Number of megawatts in station or facility (mw) | MW	1,263
CLECO POWER
Business Acquisition [Line Items]
Repayment of long-term debt						$ 20,571,000	19,193,000
Annual reduction to retail customer rates	$ 4,000,000	$ 4,000,000
Draws on credit facilities						33,000,000	0
Electric operations			339,869,000		343,482,000	862,969,000	904,746,000
Other operations revenue			(18,485,000)		(20,186,000)	(53,318,000)	(61,066,000)
Depreciation and amortization			$ 44,903,000		$ 41,687,000	$ 126,610,000	$ 121,796,000
CLECO HOLDINGS
Business Acquisition [Line Items]
Debt instrument term	3 years
Debt to capital ratio	0.65
CLECO HOLDINGS | Revolving Credit Facility
Business Acquisition [Line Items]
Increase in credit facility capacity	$ 75,000,000
Line of credit facility, maximum borrowing capacity	175,000,000.0
Draws on credit facilities	75,000,000.0
Repayments of credit facilities	75,000,000
CLECO HOLDINGS | Letters of Credit
Business Acquisition [Line Items]
Line of credit facility, maximum borrowing capacity	1,100,000.0
CLECO HOLDINGS | Bridge Loan
Business Acquisition [Line Items]
Debt amount	300,000,000.0
CLECO HOLDINGS | Term loan
Business Acquisition [Line Items]
Debt amount	100,000,000.0
CLECO HOLDINGS | South Central Generating
Business Acquisition [Line Items]
Acquisition price	102,300,000
Cleco Group | South Central Generating
Business Acquisition [Line Items]
Equity contribution	$ 384,900,000

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Recent Authoritative Guidance (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use assets	$ 29,719		$ 0
Lease liabilities	29,533
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use assets		$ 16,100
Lease liabilities		16,100
CLECO POWER
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use assets	29,375		$ 0
Lease liabilities	$ 29,298
CLECO POWER | Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use assets		15,900
Lease liabilities		$ 15,900

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Fair Value Accounting - Fair Value of Financial Assets and Liabilities Measured On A Recurring Basis (Details) - Measured On A Recurring Basis - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Asset description
Institutional money market funds	$ 111,885	$ 133,722
Total assets	122,556	157,077
Liability description
Total liabilities	1,298	468
FTRs
Asset description
FTRs and other commodity derivatives	9,926	23,355
Liability description
FTRs and other commodity derivatives	1,257	468
Other commodity derivatives
Asset description
FTRs and other commodity derivatives	745	0
Liability description
FTRs and other commodity derivatives	41	0
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)
Asset description
Institutional money market funds	0	0
Total assets	0	0
Liability description
Total liabilities	0	0
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) | FTRs
Asset description
FTRs and other commodity derivatives	0	0
Liability description
FTRs and other commodity derivatives	0	0
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) | Other commodity derivatives
Asset description
FTRs and other commodity derivatives	0	0
Liability description
FTRs and other commodity derivatives	0	0
SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)
Asset description
Institutional money market funds	111,885	133,722
Total assets	112,630	133,722
Liability description
Total liabilities	41	0
SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) | FTRs
Asset description
FTRs and other commodity derivatives	0	0
Liability description
FTRs and other commodity derivatives	0	0
SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) | Other commodity derivatives
Asset description
FTRs and other commodity derivatives	745	0
Liability description
FTRs and other commodity derivatives	41	0
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	0	0
FTRs and other commodity derivatives	9,926	23,355
Total assets	9,926	23,355
Liability description
FTRs and other commodity derivatives	1,257	468
Total liabilities	1,257	468
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | FTRs
Asset description
FTRs and other commodity derivatives	9,926	23,355
Liability description
FTRs and other commodity derivatives	1,257	468
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | Other commodity derivatives
Asset description
FTRs and other commodity derivatives	0	0
Liability description
FTRs and other commodity derivatives	0	0
CLECO POWER
Asset description
Institutional money market funds	76,947	55,900
FTRs and other commodity derivatives	8,601	23,355
Total assets	85,548	79,255
Liability description
FTRs and other commodity derivatives	577	468
Total liabilities	577	468
CLECO POWER | QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)
Asset description
Institutional money market funds	0	0
FTRs and other commodity derivatives	0	0
Total assets	0	0
Liability description
FTRs and other commodity derivatives	0	0
Total liabilities	0	0
CLECO POWER | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)
Asset description
Institutional money market funds	76,947	55,900
FTRs and other commodity derivatives	0	0
Total assets	76,947	55,900
Liability description
FTRs and other commodity derivatives	0	0
Total liabilities	0	0
CLECO POWER | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	0	0
FTRs and other commodity derivatives	8,601	23,355
Total assets	8,601	23,355
Liability description
FTRs and other commodity derivatives	577	468
Total liabilities	$ 577	$ 468

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Regulatory Assets and Liabilities - Schedule of Regulatory Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Regulatory Liabilities [Line Items]
Total regulatory assets, net	$ 328,537	$ 307,374
CLECO POWER
Regulatory Liabilities [Line Items]
Total regulatory assets, net	165,947	134,755
CLECO POWER | Deferred taxes, net
Regulatory Liabilities [Line Items]
Regulatory liabilities	(144,124)	(155,537)
CLECO POWER | Energy efficiency
Regulatory Liabilities [Line Items]
Regulatory liabilities	(3,056)
CLECO POWER | Other, net
Regulatory Liabilities [Line Items]
Regulatory liabilities	$ (8,048)	$ (4,979)

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Intangible Assets and Liabilities - Schedule of Finite-Lived Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Total intangible assets carrying amount	$ 259,698	$ 160,798
Total intangible liability carrying amount	38,300	0
Net intangible assets carrying amount	221,398	160,798
Accumulated amortization	(105,583)	(76,491)
Net intangible assets subject to amortization	115,815	84,307
LTSA
Finite-Lived Intangible Assets [Line Items]
Total intangible liability carrying amount	24,100	0
Power supply agreements
Finite-Lived Intangible Assets [Line Items]
Total intangible liability carrying amount	14,200	0
Cleco Katrina/Rita right to bill and collect storm recovery charges
Finite-Lived Intangible Assets [Line Items]
Total intangible assets carrying amount	70,594	70,594
Cleco Katrina/Rita right to bill and collect storm recovery charges | CLECO POWER
Finite-Lived Intangible Assets [Line Items]
Net intangible assets carrying amount	177,537	177,537
Accumulated amortization	(172,146)	(156,444)
Net intangible assets subject to amortization	5,391	21,093
Trade name
Finite-Lived Intangible Assets [Line Items]
Total intangible assets carrying amount	5,100	5,100
Power supply agreements
Finite-Lived Intangible Assets [Line Items]
Total intangible assets carrying amount	$ 184,004	$ 85,104

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Affiliate Transactions - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Related Party Transactions [Abstract]
Accounts payable - affiliate	$ 3,175	$ 0

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Leases - Remaining Minimum Lease Payments To Be Received (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Three months ending Dec. 31, 2019	$ 10,000
Years ending Dec. 31,
2020	40,000
2021	40,000
2022	40,000
2023	40,000
Thereafter	56,666
Total payments	$ 226,666

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Principles of Consolidation

The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco Holdings and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.

Cleco’s condensed consolidated financial statements include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, through September 30, 2019.

Basis of Presentation

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to the Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to fairly state the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 3 — “Recent Authoritative Guidance.”

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.

Cleco Katrina/Rita has the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of administration fees, interest, and principal on storm recovery bonds.

Leases

Cleco accounts for leases in accordance with accounting guidance effective January 1, 2019. For more information on this guidance, see Note 3 — “Recent Authoritative Guidance.”

Cleco determines if a contract is a lease at its inception. If a contract is determined to be a lease, Cleco recognizes a ROU asset and lease liability at the commencement date based on the present value of lease payments over the lease term. The present value of the lease payments is determined by using the implicit interest rate if readily determinable. Cleco’s incremental borrowing rate for a term similar to the duration of the lease based on information available at the commencement date is used if the implicit interest rate is not readily determinable.

Cleco recognizes ROU assets and lease liabilities for leasing arrangements with terms greater than one year. Except for the marine transportation asset class, Cleco accounts for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco’s marine transportation contracts, which include barges and towboats, contain non-lease components, such as maintenance and labor. Cleco allocates the consideration in these contracts between lease and non-lease components based on estimates of fair value from third parties that typically execute leases for this class of assets.

Expense for a lessee operating lease is recognized as a single lease cost on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the leased asset’s function. Income for a lessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function.

Leases

Cleco accounts for leases in accordance with accounting guidance effective January 1, 2019. For more information on this guidance, see Note 3 — “Recent Authoritative Guidance.”

Cleco determines if a contract is a lease at its inception. If a contract is determined to be a lease, Cleco recognizes a ROU asset and lease liability at the commencement date based on the present value of lease payments over the lease term. The present value of the lease payments is determined by using the implicit interest rate if readily determinable. Cleco’s incremental borrowing rate for a term similar to the duration of the lease based on information available at the commencement date is used if the implicit interest rate is not readily determinable.

Cleco recognizes ROU assets and lease liabilities for leasing arrangements with terms greater than one year. Except for the marine transportation asset class, Cleco accounts for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco’s marine transportation contracts, which include barges and towboats, contain non-lease components, such as maintenance and labor. Cleco allocates the consideration in these contracts between lease and non-lease components based on estimates of fair value from third parties that typically execute leases for this class of assets.

Expense for a lessee operating lease is recognized as a single lease cost on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the leased asset’s function. Income for a lessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function.

Fair Value Measurements and Disclosures

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes.

Derivatives and Other Risk Management Activity

Cleco’s Energy Market Risk Management Policy authorizes hedging of commodity price risk with physical or financially settled derivative instruments. Some of these contracts may qualify for the normal purchase, normal sale (NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. The majority of these FTRs are purchased in annual auctions during the second quarter, but additional FTRs may be purchased in monthly auctions. FTRs represent economic hedges of future congestion charges that will be incurred in serving customer load. FTRs are derivatives not designated as hedging instruments for accounting purposes.

Cleco Power’s FTRs are marked-to-market with the resulting unrealized gains or losses deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. At settlement, realized gains or losses are included in the FAC and reflected on customers’ bills as a component of the fuel charge.

Cleco Cajun’s FTRs are marked-to-market with the resulting unrealized gains and losses recorded on the income statement as a component of purchased power expense. At settlement, realized gains or losses are also recorded on the income statement as a component of purchased power expense.

Cleco Cajun entered into other commodity derivative contracts during the nine months ended September 30, 2019, that did not qualify for hedge accounting under applicable accounting standards. When these contracts are marked-to-market, the resulting unrealized gain or loss is recorded on the income statement as a component of fuel expense. At settlement, realized gains or losses will also be recorded on the income statement as a component of fuel expense.

For more information on FTRs and other commodity derivatives, see Note 7 — “Fair Value Accounting — Commodity Contracts.”

Cleco may also enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For each reporting period presented, the Registrants did not enter into any contracts to mitigate the volatility in interest rate risk.

Recent Authoritative Guidance

In February 2016, FASB amended the guidance to account for leases. Effective January 1, 2019, Cleco adopted the amended guidance using the optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption, apply the new disclosure requirements beginning in the period of adoption, and continue to present comparative period information as required under previous guidance.

In addition, Cleco elected the transition practical expedient that permits an entity to not reassess prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits entities to not assess existing land easements under the new standard.

Adoption of this standard resulted in the recognition of ROU assets and lease liabilities for Cleco and Cleco Power’s operating leases of $16.1 million and $15.9 million, respectively. There was no impact to retained earnings as a result of adopting this standard. Adoption of this standard did not materially impact the Registrants’ results of operations or liquidity, and their accounting for finance leases is substantially unchanged. For more information on Cleco’s lease obligations, see Note 4 — “Leases.”

In June 2016, FASB amended the guidance for the measurement of credit losses on receivables and certain other assets. The guidance requires use of a current expected loss model, which may result in earlier recognition of credit losses. The adoption of this guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Management is evaluating the impact that the adoption of this guidance will have on the results of operations, financial condition, or cash flows of the Registrants.

Revenue from Contracts with Customers

Retail Utility Revenue

Cleco’s retail revenue from contracts with customers is generated primarily from Cleco Power’s regulated revenue from residential, commercial, and industrial customers. Cleco recognizes retail revenue from these contracts as a series, and progress towards satisfaction of the performance obligation is measured using an output method based on kWh delivered. Accordingly, revenue from electricity sales is recognized as energy is delivered to the customer. Cleco bills retail customers, based on rates regulated by the LPSC, on a monthly basis with payments generally due within 20 days of the invoice date.

Included in Cleco’s retail revenue is unbilled electric revenue, which represents the amount customers will be billed for services rendered from the last meter reading to the end of the respective accounting period. Cleco uses actual customer energy consumption data available from AMI to calculate unbilled revenue. Also included in Cleco’s retail revenue is electric customer credits, which primarily represents the accrued estimated refunds to Cleco Power’s retail customers for the tax related benefits of the TCJA.

Wholesale Revenue

Cleco’s wholesale revenue is generated primarily through the sale of energy and capacity to cooperatives, municipalities, and the MISO transmission provider. Cleco also enters into transactions through MISO for spot energy sales which are transacted in the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. The electricity revenue performance obligations, representing both energy and capacity, are satisfied as a series of performance obligations, and progress towards satisfaction of the performance obligations are measured using an output method. The energy performance obligation measure of progress is based on kWh delivered. The capacity performance obligation measure of progress is based on time elapsed and is recognized each month as Cleco’s generating units stand ready to deliver electricity to the customer. Cleco recognizes wholesale revenue, inclusive of both performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice. Cleco charges its wholesale customers market based rates that are subject to FERC’s triennial market power analysis.

Transmission Revenue

Cleco earns transmission revenues pursuant to MISO’s FERC filed tariff. The performance obligation of transmission service is satisfied as service is provided. Revenue is recognized upon delivery of the transmission service. Cleco Power’s revenue from the transmission of electricity is recorded based on a FERC-approved annual formula rate mechanism. This mechanism provides for an annual filing of revenue requirements with rates effective June 1 of each year. Cleco Cajun charges transmission rates based on its cost to provide transmission services.

Other Revenue

Other revenue from contracts with customers, which is not a significant source of Cleco’s revenue, includes Cleco Power’s Teche Unit 3 SSR revenue and miscellaneous fees. The performance obligation under these contracts is satisfied and revenue is recognized as control of the products is delivered or services are rendered.

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.

Pension Plan and Employee Benefits

Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a rabbi trust. The life insurance policies issued on SERP participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies that employed the officer. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate.

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. On September 12, 2019, Cleco made a $12.3 million discretionary contribution to the pension plan. Cleco does not expect to make any further contributions to the pension plan in 2019. Cleco Power is the plan sponsor and Support Group is the plan administrator. The plan was amended on February 4, 2019, to include certain former NRG Energy employees who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan amendment reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits.

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Income Taxes

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense.

Cleco classifies income tax penalties as a component of other expense.

Segment Reporting

The financial results in the following tables are presented on an accrual basis. The historical segment information was not recast because the Cleco Cajun segment only consists of the newly acquired business. There were no other changes to Cleco’s existing reportable segments. Management evaluates the performance of its segment and allocates resources to it based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.

Equity Method Investments

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 Condensed 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 Condensed Consolidated Statements of Income.

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 Condensed 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 Condensed Consolidated Statements of Income.

Goodwill

Cleco conducted its 2019 annual impairment test using an August 1, 2019, measurement date. The fair value of the Cleco Power reporting segment was estimated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries. Significant assumptions used in these fair value estimates include estimation of future cash flows related to capital expenditures, long-term rate of growth, and weighted-average cost of capital (WACC) or discount rate. Changes in these assumptions could materially affect the determination of fair value and goodwill impairment at Cleco Power.

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Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, four actions were filed in the 9th Judicial District Court for Rapides Parish, Louisiana and three actions were filed in the Civil District Court for Orleans Parish, Louisiana. The petitions in each action generally alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the 2016 Merger at a price that allegedly undervalued Cleco, and failing to disclose material information about the 2016 Merger. The petitions also alleged that Cleco Partners, Cleco Corporation, Merger Sub, and in some cases, certain of the investors in Cleco Partners, either aided and abetted or entered into a civil conspiracy to advance those supposed breaches of duty. The petitions seek various remedies, including monetary damages, which includes attorneys’ fees and expenses.

The four actions filed in the 9th Judicial District Court for Rapides Parish are captioned as follows:

• Braunstein v. Cleco Corporation, No. 251,383B (filed October 27, 2014),

• Moore v. Macquarie Infrastructure and Real Assets, No. 251,417C (filed October 30, 2014),

• Trahan v. Williamson, No. 251,456C (filed November 5, 2014), and

• L’Herisson v. Macquarie Infrastructure and Real Assets, No. 251,515F (filed November 14, 2014).

In November 2014, the plaintiff in the Braunstein action moved for a dismissal of the action without prejudice, and that motion was granted in November 2014. In December 2014, the Court consolidated the remaining three actions and appointed interim co-lead counsel. Also, in December 2014, the plaintiffs in the consolidated action filed a Consolidated Amended Verified Derivative and Class Action Petition for Damages and Preliminary and Permanent Injunction (the Consolidated Amended Petition). The consolidated action named Cleco Corporation, its directors, Cleco Partners, and Merger Sub as defendants. The Consolidated Amended Petition alleged, among other things, that Cleco Corporation’s directors breached their fiduciary duties to Cleco’s shareholders and grossly mismanaged Cleco by approving the Merger Agreement because it allegedly did not value Cleco adequately, failing to structure a process through which shareholder value would be maximized, engaging in self-dealing by ignoring conflicts of interest, and failing to disclose material information about the 2016 Merger. The Consolidated Amended Petition further alleged that all defendants conspired to commit the breaches of fiduciary duty. Cleco believes that the allegations of the Consolidated Amended Petition are without merit and that it has substantial meritorious defenses to the claims set forth in the Consolidated Amended Petition.

The three actions filed in the Civil District Court for Orleans Parish are captioned as follows:

• Butler v. Cleco Corporation, No. 2014-10776 (filed November 7, 2014),

• Creative Life Services, Inc. v. Cleco Corporation, No. 2014-11098 (filed November 19, 2014), and

• Cashen v. Cleco Corporation, No. 2014-11236 (filed November 21, 2014). 

Both the Butler and Cashen actions name Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, BCI, and John Hancock Financial as defendants. The Creative Life Services action names Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, and Macquarie Infrastructure Partners III, L.P., as defendants. In December 2014, the plaintiff in the Butler action filed an Amended Class Action Petition for Damages. Each petition alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties to Cleco’s shareholders by approving the Merger Agreement because it allegedly did not value Cleco adequately, failing to structure a process through which shareholder value would be maximized and engaging in self-dealing by ignoring conflicts of interest. The Butler and Creative Life Services petitions also allege that the directors breached their fiduciary duties by failing to disclose material information about the 2016 Merger. Each petition further alleged that Cleco, Cleco Partners, Merger Sub, and certain of the investors in Cleco Partners aided and abetted the directors’ breaches of fiduciary duty. In December 2014, the directors and Cleco filed declinatory exceptions in each action on the basis that each action was improperly brought in Orleans Parish and should either be transferred to the 9th Judicial District Court for Rapides Parish or dismissed. Also, in December 2014, the plaintiffs in each action jointly filed a motion to consolidate the three actions pending in Orleans Parish and to appoint interim co-lead plaintiffs and co-lead counsel. In January 2015, the Court in the Creative Life Services case sustained the defendants’ declinatory exceptions and dismissed the case so that it could be transferred to the 9th Judicial District Court for Rapides Parish. In February 2015, the plaintiffs in Butler and Cashen also consented to the dismissal of their cases from Orleans Parish so they could be transferred to the 9th Judicial District Court for Rapides Parish.

In February 2015, the 9th Judicial District Court for Rapides Parish held a hearing on a motion for preliminary injunction filed by plaintiffs Moore, L’Herisson, and Trahan seeking to enjoin the shareholder vote for approval of the Merger Agreement. Following the hearing, the Court denied the plaintiffs’ motion. In June 2015, three of the plaintiffs filed their Second Consolidated Amended Verified Derivative and Class Action Petition. This will be considered according to a schedule established by the 9th Judicial District Court for Rapides Parish. Cleco filed exceptions seeking dismissal of the amended petition in July 2015.

In March 2016 and May 2016, the plaintiffs filed their Third Consolidated Amended Verified Derivative Petition for Damages and Preliminary and Permanent Injunction and their Fourth Verified Consolidated Amended Class Action Petition, respectively. The fourth petition eliminated the request for preliminary and permanent injunction and also named an additional executive officer as a defendant. Cleco filed exceptions seeking dismissal of the amended Petition. A hearing was held in September 2016, and the District Court granted the exceptions filed by Cleco and dismissed all claims asserted by the former shareholders. The plaintiffs appealed the District Court’s ruling to the Louisiana Third Circuit Court of Appeal. The Third Circuit Court of Appeal heard oral arguments in the case in September 2017. In December 2017, the Third Circuit Court of Appeal issued an order reversing and remanding the case to the District Court for further proceedings. In January 2018, Cleco filed a writ with the Louisiana Supreme Court seeking review of the Third Circuit Court of Appeal’s decision. The writ was denied in March 2018 and the parties are engaged in discovery in the District Court. In November 2018, Cleco filed exceptions of no cause of action and res judicata, seeking to dismiss all claims. The District Court denied the exceptions on January 14, 2019. A hearing on the plaintiffs’ request for certification of a class was scheduled for August 26, 2019; however, prior to the hearing, the parties reached an agreement to certify a limited class. Cleco believes that the allegations of the petitions in each action are without merit and that it has substantial meritorious defenses to the claims set forth in each of the petitions.

Gulf Coast Spinning

In September 2015, a potential customer sued Cleco for failure to fully perform an alleged verbal agreement to lend or otherwise fund its startup costs to the extent of $6.5 million. Gulf Coast Spinning Company, LLC (Gulf Coast), the primary plaintiff, alleges that Cleco promised to assist it in raising approximately $60.0 million, which Gulf Coast needed to construct a cotton spinning facility near Bunkie, Louisiana. According to the petition filed by Gulf Coast in the 12^th Judicial District Court for Avoyelles Parish, Louisiana (the “District Court”), Cleco made such promises of funding assistance in order to cultivate a new industrial electric customer which would increase its revenues under a power supply agreement that it executed with Gulf Coast. Gulf Coast seeks unspecified damages arising from its inability to raise sufficient funds to complete the project, including lost profits.

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The District Court denied Cleco’s exception in December 2015, after considering briefs and arguments. In January 2016, Cleco appealed the District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal denied the request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of the District Court’s denial of Cleco’s exception. In November 2016, the Louisiana Supreme Court denied Cleco’s writ application.

In February 2016, the parties agreed to a stay of all proceedings pending discussions concerning settlement. In May 2016, the District Court lifted the stay at the request of Gulf Coast. The parties are currently participating in discovery. Cleco believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast, are otherwise without merit, and that it has substantial meritorious defenses to the claims alleged by Gulf Coast.

Sabine River Flood

In March 2017, Cleco was served with a summons in Perry Bonin, Ace Chandler, and Michael Manuel, et al v. Sabine River Authority of Texas and Sabine River Authority of Louisiana, No. B-160173-C. The action was filed in the 163rd Judicial District Court for Orange County, Texas, and relates to flooding that occurred in Texas and Louisiana in March 2016. The plaintiffs have alleged that the flooding was the result of the release of water from the Toledo Bend spillway gates into the Sabine River. While the plaintiffs have made numerous allegations, they have specifically alleged that Cleco Power, included as one of several companies and governmental bodies, failed to repair one of the two hydroelectric generators at the Toledo Bend Dam, which in turn contributed to the flooding. Cleco Power does not operate the hydroelectric generator.

The suit was removed to federal court in Texas. The new federal case is Perry Bonin, et al. v. Sabine River Authority of Texas et al., No. 17-cv-134, U.S. District Court for the Eastern District of Texas (Bonin Case). The plaintiffs moved to remand the case to state court, but the district court found that the case raises a substantial federal question and denied the motion to remand. Cleco Power, along with its co-defendants, filed a motion to dismiss on various grounds, primarily arguing that the plaintiffs’ claims are preempted because they infringe on FERC’s exclusive control of dam operations. The district court granted the motion to dismiss in part, declining to rule on some of the arguments raised by the defendants, and granted the plaintiffs leave to amend their complaint. The plaintiffs filed a Fifth Amended Complaint in March 2018. Cleco Power filed a new motion to dismiss the plaintiffs’ claims.

In March 2018, approximately 26 other individual plaintiffs filed a petition against Cleco Power and other defendants in Larry Addison, et al. v. Sabine River Authority of Texas, et al., No. D180096-C. The action was filed in the 260th Judicial District Court for Orange County, Texas. The defendants removed the case to federal court in April 2018. The new federal case is Larry Addison, et al. v. Sabine River Authority of Texas, et al., No. 18-cv-153, U.S. District Court for the Eastern District of Texas. The allegations are essentially identical to those in the Bonin Case. Also, in April 2018, Cleco Power filed a motion to dismiss on the same grounds that previously were successful in the Bonin Case. In July 2018, the district court entered an order consolidating the Addison Case with the Bonin Case. Management believes that both cases, as they relate to Cleco Power, have no merit. In August 2018, the Judge entered an order requiring the plaintiffs to file a more definitive statement to clarify the plaintiffs’ claims. In response thereto, the plaintiffs filed a Sixth Amended Petition in September 2018. Cleco Power filed a response in October 2018. All claims were dismissed against Cleco Power by ruling of the Judge on March 18, 2019. The plaintiffs filed an appeal of the dismissal with the United States Court of Appeals for the Fifth Circuit. The case has been fully briefed.

Dispute with Saulsbury Industries

In October 2018, Cleco Power sued Saulsbury Industries, Inc., the former general contractor for the St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries, Inc.’s failure to complete the St. Mary Clean Energy Center project on time and for costs incurred by Cleco Power in hiring a replacement general contractor. The action was filed in the 9th Judicial District Court for Rapides Parish, No. 263339. Saulsbury Industries, Inc. removed the case to the U.S. District Court for the Western District of Louisiana, on March 1, 2019.

In January 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC, in the U.S. District Court for the Western District of Louisiana. Saulsbury Industries, Inc. alleges that Cleco Power and Cabot Corporation caused the delays in the St. Mary Clean Energy Center project, resulting in significant impact to Saulsbury Industries, Inc.’s direct and indirect costs. On June 5, 2019, Cleco Power and Cabot Corporation each filed separate motions to dismiss. On October 24, 2019, the District Court denied Cleco’s motion as premature and ruled that Saulsbury Industries, Inc. had six weeks to conduct discovery on specified jurisdictional issues.

On October 10, 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporationand Cleco Power LLC in the 16th Judicial District Court for St. Mary Parish, No. 133910-A. Saulsbury Industries, Inc. alleges that Cleco Power and Cabot Corporation caused the delays in the St. Mary Clean Energy Center project, resulting in significant impact to Saulsbury Industries, Inc.'s direct and indirect costs. Saulsbury Industries, Inc. also seeks to enforce an alleged lien on the St. Mary Energy Center project. Cleco has not filed responsive pleadings in the case but denies that the case has any merit and that Saulsbury Industries, Inc. perfected a lien against the property involved.

LPSC Audits

Fuel Audit

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997, in Docket No. U-21497 provides that an audit of FAC filings will be performed at least every other year. In March 2018, Cleco Power received notice of an FAC audit from the LPSC for the period of January 2016, to December 2017. The total amount of fuel expense included in the audit was $536.2 million. In August 2018, LPSC Staff issued its audit report, which recommended no disallowance of fuel costs. On April 26, 2019, the report was approved by the LPSC. Cleco Power has FAC filings for January 2018 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of fuel cost is ordered resulting in a refund, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Environmental Audit

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from customers certain costs of environmental compliance. The costs eligible for recovery are prudently incurred air emissions credits associated with complying with federal, state, and local air emission regulations that apply to the generation of electricity reduced by the sale of such allowances. Also eligible for recovery are variable emission mitigation costs, which are the costs of reagents such as ammonia and limestone that are a part of the fuel mix used to reduce air emissions, among other things. In May 2018, Cleco Power received notice of an EAC audit from the LPSC for the period of January 2016 to December 2017. The total amount of environmental expense included in this audit is $30.7 million. On July 16, 2019, LPSC Staff issued its audit report, which recommended no disallowance of environmental cost. On September 11, 2019, the report was approved by the LPSC. Cleco Power has EAC filings for January 2018 and thereafter that remain subject to audit. Historically, the disallowances have not been material. If a disallowance of environmental cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of Mercury and Air Toxics Standards (MATS). In June 2015, the U.S. Supreme Court remanded the MATS rule to the D.C. Circuit Court of Appeals. In December 2015, the D.C. Circuit Court of Appeals remanded the rule to the EPA; however, the D.C. Circuit Court of Appeals did not vacate this rule. In April 2016, the EPA released a final supplemental finding that, even considering costs, it is appropriate and necessary to regulate hazardous air pollutants. By the June 2016 deadline, six petitions were filed with the U.S. Court of Appeals for the D.C. Circuit Court of Appeals for review of the EPA’s findings. At the request of the EPA, in April 2017, the court issued an order holding the cases in abeyance pending the EPA’s review of its supplemental finding. These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC.

FERC Audit

Generally, Cleco Power records wholesale transmission revenue through approved formula rates, Attachment O of the MISO tariff and certain grandfathered agreements. The calculation of the rate formulas, as well as FERC accounting and reporting requirements, are subject to periodic audits by FERC. In March 2018, the Division of Audits and Accounting, within the Office of Enforcement of FERC, initiated an audit of Cleco Power for the period of January 1, 2014, through June 30, 2019. On September 27, 2019, Cleco Power received the final audit report, which indicated 12 findings of noncompliance with a combination of FERC accounting and reporting requirements and computation of revenue requirements along with 59 recommendations associated with the audit period. Cleco Power submitted a plan for implementing the audit recommendations on October 28, 2019. Cleco Power also submitted the refund analysis on November 7, 2019, which resulted in an estimate refund of $3.0 million related to the FERC audit findings. This amount was recorded in Provision for rate refund on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2019. Cleco Power anticipates this amount to be refunded to its wholesale transmission customers as a reduction in Attachment O and grandfathered agreement rates over 12 months commencing June 1, 2020.

Transmission ROE

A complaint was filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaint sought to reduce the 12.38% ROE used in MISO’s transmission rates to a proposed 6.68%.

The complaint, filed in February 2015, was for the period February 2015 through May 2016. In June 2016, an administrative law judge issued an initial decision in the rate case docket recommending a 9.70% base ROE. Cleco Power is unable to determine when a binding FERC order will be issued on the ROE complaint.

In November 2014, the MISO transmission owners committee, of which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by 50 basis points for RTO participation as allowed by the MISO tariff. In January 2015, FERC granted the request. The collection of the adder is delayed until the resolution of the ROE complaint proceedings.

As of September 30, 2019, Cleco Power had $1.9 million accrued for potential ROE reductions. Management believes a reduction in the ROE, as well as any additional refund, will not have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. 

South Central Generating

In 2017, Louisiana Generating received insurance settlement proceeds for costs incurred to resolve a lawsuit which was brought by the EPA and the LDEQ against Louisiana Generating related to Big Cajun II, Unit 3. Entergy Gulf States, as co-owner of Big Cajun II, Unit 3, is expected to be allocated a portion of the insurance settlement proceeds. Any amount allocated to Entergy Gulf States will be determined by ongoing litigation and negotiations. South Central Generating estimated this amount to be $10.0 million. As part of the Cleco Cajun Transaction, Cleco Cajun assumed the $10.0 million contingent liability and NRG Energy indemnified Cleco for losses associated with this litigation matter. As a result, Cleco also recorded a $10.0 million indemnification asset, which was included in the preliminary purchase price allocation.

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts regarding matters arising out of the ordinary course of business. Management is unable to estimate any potential losses that Cleco Cajun may ultimately be responsible for with respect to any one of these matters in the event of a negative outcome. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with matters that existed as of the closing date, including pending litigation.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of September 30, 2019, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters are $6.0 million and has accrued this amount.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require the Registrants to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees.

Cleco Holdings entered into these off-balance sheet commitments in order to entice desired counterparties to contract with its affiliates by providing some measure of credit assurance to the counterparty in the event Cleco’s affiliates do not fulfill certain contractual obligations. If Cleco Holdings had not provided the off-balance sheet commitments, the desired counterparties may not have contracted with Cleco’s affiliates, or may have contracted with them at terms less favorable to its affiliates.

The off-balance sheet commitments are not recognized on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets because management has determined that Cleco and Cleco Power’s affiliates are able to perform the obligations under their contracts and that it is not probable that payments by Cleco or Cleco Power will be required.

Cleco Holdings provided guarantees and indemnities to Entergy Louisiana and Entergy Gulf States as a result of the sale of the Perryville generation facility in 2005. The remaining indemnifications relate to environmental matters that may have been present prior to closing. These remaining indemnifications have no time limitations. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. Management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under these guarantees.

On behalf of Acadia, Cleco Holdings provided guarantees and indemnifications as a result of the sales of Acadia Unit 1 to Cleco Power and Acadia Unit 2 to Entergy Louisiana in 2010 and 2011, respectively. The remaining indemnifications relate to the fundamental organizational structure of Acadia. These remaining indemnifications have no time limitations or maximum potential future payments. Management does not expect to be required to pay Cleco Power or Entergy Louisiana under these guarantees.

Cleco Holdings provided indemnifications to Cleco Power as a result of the transfer of Coughlin to Cleco Power in March 2014. Cleco Power also provided indemnifications to Cleco Holdings and Evangeline as a result of the transfer of Coughlin to Cleco Power. The maximum amount of the potential payment to Cleco Power, Cleco Holdings, and Evangeline for their respective indemnifications is $40.0 million, except for indemnifications relating to the fundamental organizational structure of each respective entity, of which the maximum amount is $400.0 million. Management does not expect to be required to make any payments under these indemnifications.

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of Dolet Hills Power Station, have agreed to pay the loan and lease principal obligations of the lignite miner, DHLC, when due if DHLC does not have sufficient funds or credit to pay. Any amounts paid on behalf of the miner would be credited by the lignite miner against future invoices for lignite delivered. The maximum projected payment by Cleco Power under this guarantee is estimated to be $86.4 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement is not expected to terminate pursuant to its terms until 2036 and does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under this guarantee.

At September 30, 2019, Cleco Holdings had a $34.5 million letter of credit to MISO pursuant to energy market requirements related to Cleco Cajun’s participation in MISO, which decreased availability under Cleco Holdings’ credit facility. Effective October 4, 2019, this letter of credit no longer decreases availability under Cleco Holdings’ credit facility. This letter of credit automatically renews each year.

Generally, neither Cleco Holdings nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. There are no assets held as collateral for third parties that either Cleco Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

Cleco has accrued for liabilities related to third parties, employee medical benefits, and AROs.

Risks and Uncertainties

Cleco could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their obligations or if Cleco or its affiliates are not in compliance with loan agreements or bond indentures.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows.

Changes in the regulatory environment or market forces could cause Cleco to determine its assets have suffered an other-than-temporary decline in value, whereby an impairment would be required and Cleco’s financial condition could be materially adversely affected.

Cleco Power and Cleco Cajun are participants in the MISO market. Energy prices in the MISO market are based on LMP, which includes a component directly related to congestion on the transmission system. Pricing zones with greater transmission congestion may have higher LMPs. Physical transmission constraints present in the MISO market could increase energy costs within pricing zones. Cleco Power and Cleco Cajun use FTRs to mitigate transmission congestion price risks. Changes to anticipated transmission paths may result in an unexpected increase in energy costs.

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Feb. 04, 2019	Dec. 31, 2018
Restricted Cash and Cash Equivalents Items [Line Items]
Current	$ 5,356		$ 11,241
Non-current	15,113		18,670
Total restricted cash and cash equivalents	20,469		29,911
South Central Generating
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash acquired		$ 707
Cleco Katrina/Rita’s storm recovery bonds
Restricted Cash and Cash Equivalents Items [Line Items]
Current	3,612		9,505
Charitable contributions
Restricted Cash and Cash Equivalents Items [Line Items]
Current	1,200		1,200
Non-current	2,185		2,753
Rate credit escrow
Restricted Cash and Cash Equivalents Items [Line Items]
Current	544		536
Non-current	0		505
Diversified Lands’ mitigation escrow
Restricted Cash and Cash Equivalents Items [Line Items]
Non-current	22		21
Cleco Cajun’s defense fund
Restricted Cash and Cash Equivalents Items [Line Items]
Non-current	717		0
Cleco Cajun’s margin deposits
Restricted Cash and Cash Equivalents Items [Line Items]
Non-current	100		0
Future storm restoration costs
Restricted Cash and Cash Equivalents Items [Line Items]
Non-current	12,089		15,391
Cleco Katrina/Rita scheduled storm recovery bond principal payments
Restricted Cash and Cash Equivalents Items [Line Items]
Payments for investment in restricted cash from pollution control bond	20,600
Cleco Katrina/Rita related interest payments
Restricted Cash and Cash Equivalents Items [Line Items]
Payments for investment in restricted cash from pollution control bond	1,500
Cleco Katrina/Rita administration fees
Restricted Cash and Cash Equivalents Items [Line Items]
Payments from distribution in restricted cash from pollution control bond	16,200
CLECO POWER
Restricted Cash and Cash Equivalents Items [Line Items]
Current	5,356		11,241
Non-current	14,274		18,649
Total restricted cash and cash equivalents	19,630		29,890
CLECO POWER | Cleco Katrina/Rita’s storm recovery bonds
Restricted Cash and Cash Equivalents Items [Line Items]
Current	3,612		9,505
CLECO POWER | Charitable contributions
Restricted Cash and Cash Equivalents Items [Line Items]
Current	1,200		1,200
Non-current	2,185		2,753
CLECO POWER | Rate credit escrow
Restricted Cash and Cash Equivalents Items [Line Items]
Current	544		536
Non-current	0		505
CLECO POWER | Future storm restoration costs
Restricted Cash and Cash Equivalents Items [Line Items]
Non-current	$ 12,089		$ 15,391

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Business Combination - Unaudited Pro Forma Information (Details) - South Central Generating - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Business Acquisition [Line Items]
Operating revenue, net	$ 487,971	$ 469,419	$ 1,250,787	$ 1,263,182
Net income	$ 56,004	$ 71,076	$ 122,771	$ 140,255

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Regulatory Assets and Liabilities - Schedule of Regulatory Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Regulatory Assets [Line Items]
Total regulatory assets, net	$ 328,537	$ 307,374
Fair value of long-term debt
Regulatory Assets [Line Items]
Regulatory assets	130,847	138,701
Postretirement costs
Regulatory Assets [Line Items]
Regulatory assets	17,896	19,387
Financing costs
Regulatory Assets [Line Items]
Regulatory assets	8,021	8,279
Debt issuance costs
Regulatory Assets [Line Items]
Regulatory assets	5,826	6,252
CLECO POWER
Regulatory Assets [Line Items]
Total regulatory assets, net	165,947	134,755
CLECO POWER | Mining costs
Regulatory Assets [Line Items]
Regulatory assets	0	1,274
CLECO POWER | Interest costs
Regulatory Assets [Line Items]
Regulatory assets	4,021	4,208
CLECO POWER | AROs
Regulatory Assets [Line Items]
Regulatory assets	3,523	3,099
CLECO POWER | Postretirement costs
Regulatory Assets [Line Items]
Regulatory assets	134,412	140,245
CLECO POWER | Tree trimming costs
Regulatory Assets [Line Items]
Regulatory assets	10,607	9,069
CLECO POWER | Training costs
Regulatory Assets [Line Items]
Regulatory assets	6,279	6,396
CLECO POWER | Surcredits, net
Regulatory Assets [Line Items]
Regulatory assets	289	289
CLECO POWER | AMI deferred revenue requirement
Regulatory Assets [Line Items]
Regulatory assets	3,272	3,681
CLECO POWER | Emergency declarations
Regulatory Assets [Line Items]
Regulatory assets	1,750	2,980
CLECO POWER | Production operations and maintenance expenses
Regulatory Assets [Line Items]
Regulatory assets	9,199	12,245
CLECO POWER | AFUDC equity gross-up
Regulatory Assets [Line Items]
Regulatory assets	73,541	71,952
CLECO POWER | Acquisition/ transaction costs
Regulatory Assets [Line Items]
Regulatory assets	2,151	2,230
CLECO POWER | Acquisition/ transaction costs | Coughlin transaction costs
Regulatory Assets [Line Items]
Regulatory assets	915	938
CLECO POWER | Financing costs
Regulatory Assets [Line Items]
Regulatory assets	7,646	7,923
CLECO POWER | Corporate franchise tax, net
Regulatory Assets [Line Items]
Regulatory assets	864	1,416
CLECO POWER | Non-service cost of postretirement benefits
Regulatory Assets [Line Items]
Regulatory assets	6,650	4,629
CLECO POWER | Energy efficiency
Regulatory Assets [Line Items]
Regulatory assets		2,585
CLECO POWER | Accumulated deferred fuel
Regulatory Assets [Line Items]
Regulatory assets	$ 56,056	$ 20,112

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Intangible Assets and Liabilities - Goodwill Narrative (Details) - USD ($)	Aug. 01, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Apr. 13, 2016
Goodwill [Line Items]
Goodwill		$ 1,490,797,000		$ 1,490,797,000				$ 1,490,000,000
Carrying value of equity		2,630,189,000	$ 2,574,661,000	2,124,740,000	$ 2,120,468,000	$ 2,093,447,000	$ 2,096,357,000
CLECO POWER
Goodwill [Line Items]
Impairment of goodwill	$ 0
Equity, fair value	3,970,000,000
Carrying value of equity	$ 3,400,000,000	$ 1,722,834,000	$ 1,671,014,000	$ 1,594,533,000	$ 1,562,690,000	$ 1,549,331,000	$ 1,550,679,000
Excess of the fair value over the carrying value, percent	16.80%
Excess of the fair value over the carrying value	$ 570,400,000
Accumulated impairment charges	$ 0

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Affiliate Transactions - Summary of Balances Payable To or Due From Affiliates (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
ACCOUNTS PAYABLE	$ 3,175	$ 0
CLECO POWER
Related Party Transaction [Line Items]
ACCOUNTS RECEIVABLE	2,074	3,318
ACCOUNTS PAYABLE	8,722	7,843
CLECO POWER | Cleco Holdings
Related Party Transaction [Line Items]
ACCOUNTS RECEIVABLE	1	699
ACCOUNTS PAYABLE	94	88
CLECO POWER | Support Group
Related Party Transaction [Line Items]
ACCOUNTS RECEIVABLE	1,361	2,619
ACCOUNTS PAYABLE	8,610	7,755
CLECO POWER | Cleco Cajun
Related Party Transaction [Line Items]
ACCOUNTS RECEIVABLE	712	0
ACCOUNTS PAYABLE	$ 18	$ 0

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Leases - Property Associated with Sale Leaseback (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Property, plant, and equipment	$ 540,409
Accumulated depreciation	(16,140)
Net property, plant, and equipment	$ 524,269

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Fair Value Accounting - Net Changes in Net Fair Value of FTR Assets and Liabilities Classified as Level 3 (Details) - Price Risk Derivative - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning balance	$ 14,665	$ 25,133	$ 22,887	$ 7,044
Unrealized (losses) gains	(1,234)	4,520	(4,488)	6,153
Purchases	557	1,251	26,401	26,734
Settlements	(5,319)	(8,644)	(36,131)	(17,671)
Ending balance	8,669	22,260	8,669	22,260
CLECO POWER
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning balance	13,910	25,133	22,887	7,044
Unrealized (losses) gains	(1,700)	4,520	(3,644)	6,153
Purchases	1,133	1,251	20,961	26,734
Settlements	(5,319)	(8,644)	(32,180)	(17,671)
Ending balance	$ 8,024	$ 22,260	$ 8,024	$ 22,260

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2019		Sep. 30, 2018
Operating activities
Net income		$ 120,868		$ 84,060
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		180,240		140,887
Provision for doubtful accounts		3,800		323
Unearned compensation expense		4,015		4,112
Allowance for equity funds used during construction		(14,825)		(9,416)
Loss on risk management assets and liabilities, net		4,092		0
Deferred lease revenue		(6,137)		0
Deferred income taxes		27,033		5,876
Deferred fuel costs		(21,207)		(32,903)
Cash surrender value of company-/trust-owned life insurance		(3,731)		(2,635)
Changes in assets and liabilities
Accounts receivable		(44,070)		(25,487)
Unbilled revenue		(10,767)		(5,968)
Fuel inventory and materials and supplies		35,488		27,951
Prepayments		(10,680)		2,446
Accounts payable		20,315		(139)
Accounts payable - affiliate		3,175		0
Customer deposits		3,113		10,272
Provision for merger commitments		(1,623)		(2,684)
Postretirement benefit obligations		(11,301)		3,355
Regulatory assets and liabilities, net		8,196		11,439
Other deferred accounts		(5,690)		(582)
Taxes accrued		29,268		43,308
Interest accrued		28,001		26,223
Other operating		3,202		4,728
Net cash provided by operating activities		340,775		285,166
Investing activities
Additions to property, plant, and equipment		(251,845)		(194,619)
Allowance for equity funds used during construction		14,825		9,416
Reimbursement for property loss		105		1,258
Issuance of note receivable		0		(16,800)
Return of investment in company-owned life insurance		1,891		0
Return of equity investment in tax credit fund		1,625		2,775
Payment to acquire business, net of cash acquired		(814,969)		0
Other investing		1,402		934
Net cash used in investing activities		(1,046,966)		(197,036)
Financing activities
Draws on credit facilities		108,000		0
Payments on credit facilities		(108,000)		0
Issuances of long-term debt		700,000		50,000
Repayment of long-term debt		(390,571)		(19,193)
Payment of financing costs		(5,951)		(734)
Contributions from member		384,900		0
Distributions to member		0		(60,500)
Other financing		(412)		(251)
Net cash provided by (used in) financing activities		687,966		(30,678)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents		(18,225)		57,452
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	[1]	140,086		152,202
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	[2]	121,861		209,654
Supplementary cash flow information
Interest paid, net of amount capitalized		74,055		67,158
Income taxes (refunded) paid, net		(19)		272
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment		15,982		54,294
Incurrence of finance lease obligation - barges		0		16,800
CLECO POWER
Operating activities
Net income		127,595		132,359
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		130,927		126,515
Provision for doubtful accounts		3,800		323
Unearned compensation expense		635		1,172
Allowance for equity funds used during construction		(14,825)		(9,416)
Deferred income taxes		24,063		5,950
Deferred fuel costs		(21,207)		(32,903)
Cash surrender value of company-/trust-owned life insurance		2,963		(167)
Changes in assets and liabilities
Accounts receivable		(38,373)		(25,141)
Accounts receivable - affiliate		2,606		1,456
Unbilled revenue		(10,767)		(5,968)
Fuel inventory and materials and supplies		39,090		27,951
Prepayments		747		1,929
Accounts payable		22,362		1,982
Accounts payable - affiliate		757		(2,005)
Customer deposits		3,113		10,272
Provision for merger commitments		(1,623)		(2,684)
Postretirement benefit obligations		(10,809)		3,054
Regulatory assets and liabilities, net		6,706		9,948
Other deferred accounts		(5,630)		(155)
Taxes accrued		(7,743)		6,544
Interest accrued		16,297		15,572
Other operating		2,075		4,359
Net cash provided by operating activities		272,759		270,947
Investing activities
Additions to property, plant, and equipment		(247,987)		(193,708)
Allowance for equity funds used during construction		14,825		9,416
Reimbursement for property loss		105		1,258
Issuance of note receivable		0		(16,800)
Return of investment in company-owned life insurance		1,891		0
Other investing		1,402		934
Net cash used in investing activities		(229,764)		(198,900)
Financing activities
Draws on credit facilities		33,000		0
Payments on credit facilities		(33,000)		0
Issuances of long-term debt		0		50,000
Repayment of long-term debt		(20,571)		(19,193)
Distributions to member		0		(121,400)
Other financing		(434)		(960)
Net cash provided by (used in) financing activities		(21,005)		(91,553)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents		21,990		(19,506)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period		61,877	[3]	102,957	[1]
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period		83,867	[4]	83,451	[2]
Supplementary cash flow information
Interest paid, net of amount capitalized		34,893		37,764
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment		15,668		54,166
Incurrence of finance lease obligation - barges		$ 0		$ 16,800

[1] Includes cash and cash equivalents of $110,175, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,670.

[2] Includes cash and cash equivalents of $101,392, current restricted cash and cash equivalents of $5,356, and non-current restricted cash and cash equivalents of $15,113.

[3] Includes cash and cash equivalents of $31,987, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,649.

[4] Includes cash and cash equivalents of $64,237, current restricted cash and cash equivalents of $5,356, and non-current restricted cash and cash equivalents of $14,274.

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Leases - Lessor Agreements (Details) - contract	Sep. 30, 2019	Feb. 04, 2019
Leases [Abstract]
Number of contracts		2
Lease term	1 year

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Leases - Future Minimum Lease Payments Due Under Finance Lease (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Years ending Dec. 31,
Current liabilities	$ 602
Non-current liabilities	15,404
CLECO POWER
Lessee, Lease, Description [Line Items]
Three months ending Dec. 31, 2019	551
Years ending Dec. 31,
2020	2,203
2021	2,203
2022	2,203
2023	2,203
2024	2,203
Thereafter	17,675
Total minimum lease payments	29,241
Less: amount representing interest	13,235
Present value of net minimum finance lease payments	16,006
Current liabilities	602
Non-current liabilities	$ 15,404

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ 55,565	$ 47,360	$ 120,868	$ 84,060
Other comprehensive (loss) income, net of tax
Postretirement benefits gain (loss), net of tax expense (benefit)	(37)	261	(319)	551
Total other comprehensive (loss) income, net of tax	(37)	261	(319)	551
Comprehensive income, net of tax	55,528	47,621	120,549	84,611
CLECO POWER
Net income	51,527	63,336	127,595	132,359
Other comprehensive (loss) income, net of tax
Postretirement benefits gain (loss), net of tax expense (benefit)	230	312	515	812
Amortization of interest rate derivatives to earnings	63		191
Amortization of interest rate derivatives to earnings		112		240
Total other comprehensive (loss) income, net of tax	293	424	706	1,052
Comprehensive income, net of tax	$ 51,820	$ 63,760	$ 128,301	$ 133,411

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Pension Plan and Employee Benefits - Current and Non-Current Portions of the Other Benefits Liability (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Non-current	$ 238,392	$ 249,264
Other Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Current	4,130	4,130
Non-current	35,090	36,325
CLECO POWER
Defined Benefit Plan Disclosure [Line Items]
Non-current	172,576	182,721
CLECO POWER | Other Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Current	3,584	3,584
Non-current	$ 30,769	$ 31,694

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Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees - Litigation (Details)		1 Months Ended							12 Months Ended	24 Months Ended
	Nov. 07, 2019 USD ($)	May 31, 2018 USD ($)	Mar. 31, 2018 plaintiff	Jun. 30, 2016 petition	Sep. 30, 2015 USD ($)	Jun. 30, 2015 claim	Feb. 28, 2015	Nov. 30, 2014	Dec. 31, 2016 claim	Dec. 31, 2017 USD ($)	Sep. 30, 2019 USD ($)	Sep. 27, 2019 finding recommendation	Jul. 10, 2019 USD ($)	Feb. 04, 2019 USD ($)	Dec. 31, 2018 USD ($)	Aug. 31, 2018 USD ($)	Mar. 31, 2017 generation_unit
Loss Contingencies [Line Items]
Provision for rate refund											$ 50,777,000				$ 35,842,000
Loss contingency, estimate of possible loss											6,000,000
South Central Generating
Loss Contingencies [Line Items]
Indemnification asset														$ 10,000,000
Contingent liability														$ 10,000,000
FERC | MISO Transmission Rates
Loss Contingencies [Line Items]
Public utilities, requested rate increase (decrease), percentage (in hundredths)								0.50%
Gulf Coast Spinning start up costs
Loss Contingencies [Line Items]
Allegations by plaintiff, failure to perform					$ 6,500,000
Gulf Coast Spinning construction of cotton spinning facility
Loss Contingencies [Line Items]
Allegations by plaintiff, failure to perform					$ 60,000,000
Actions filed in the 9th Judicial District Court | Alleged Breach of Fiduciary Duties
Loss Contingencies [Line Items]
Number of actions filed | claim									4
Actions filed in the Civil District Court | Alleged Breach of Fiduciary Duties
Loss Contingencies [Line Items]
Number of actions filed | claim						3			3
Perry Bonin, Ace Chandler, and Michael Manuel, et al v. Sabine River Authority of Texas and Sabine River Authority of Louisiana, No. B-160173-C | Pending Litigation
Loss Contingencies [Line Items]
Number of generation units failed to repair | generation_unit																	1
Number of generation units owned | generation_unit																	2
Larry Addison, Et Al. V. Sabine River Authority Of Texas, Et Al | Pending Litigation
Loss Contingencies [Line Items]
Number of plaintiffs | plaintiff			26
CLECO POWER
Loss Contingencies [Line Items]
Provision for rate refund											49,403,000		$ 79,200,000		$ 35,842,000
CLECO POWER | LPSC 2016-2017 Fuel Audit
Loss Contingencies [Line Items]
Fuel costs										$ 536,200,000
Cost disallowance in audit, excluding interest																$ 0
CLECO POWER | LPSC 2016-2017 EAC Audit
Loss Contingencies [Line Items]
Loss contingency, damages sought, value		$ 30,700,000
CLECO POWER | LPSC Nov 2010-Dec 2015 EAC Audit
Loss Contingencies [Line Items]
Number of petitions filed with the U.S. Court of Appeals | petition				6
CLECO POWER | FERC
Loss Contingencies [Line Items]
Number of findings | finding												12
Number of recommendations | recommendation												59
Provision for rate refund											3,000,000
CLECO POWER | FERC | MISO Transmission Rates
Loss Contingencies [Line Items]
Public utilities, approved return on equity, percentage (In hundredths)							12.38%
Public utilities, proposed return on equity, percentage (in hundredths)				9.70%			6.68%
Provision for rate refund											$ 1,900,000
Subsequent Event | CLECO POWER | FERC
Loss Contingencies [Line Items]
Estimated refund interest amount	$ 3,000,000

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Fair Value Accounting - Significant Unobservable Inputs Used in Developing Fair Value of Level 3 Positions (Details) $ in Thousands	Sep. 30, 2019 USD ($) $ / MW	Dec. 31, 2018 USD ($) $ / MW
Minimum
FAIR VALUE
FORWARD PRICE RANGE (usd per mwh) | $ / MW	(2.29)	(4.4)
Maximum
FAIR VALUE
FORWARD PRICE RANGE (usd per mwh) | $ / MW	3.14	15.1
Measured On A Recurring Basis | Level 3
FAIR VALUE
ASSETS	$ 9,926	$ 23,355
LIABILITIES	$ 1,257	$ 468
CLECO POWER | Minimum
FAIR VALUE
FORWARD PRICE RANGE (usd per mwh) | $ / MW	(1.67)	(4.4)
CLECO POWER | Maximum
FAIR VALUE
FORWARD PRICE RANGE (usd per mwh) | $ / MW	2.79	15.1
CLECO POWER | Measured On A Recurring Basis
FAIR VALUE
ASSETS	$ 8,601	$ 23,355
LIABILITIES	577	468
CLECO POWER | Measured On A Recurring Basis | Level 3
FAIR VALUE
ASSETS	8,601	23,355
LIABILITIES	$ 577	$ 468

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Pension Plan and Employee Benefits - 401 (K) Plans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Defined Contribution Plan Disclosure [Line Items]
401(k) Plan expense	$ 2,077	$ 1,424	$ 6,136	$ 4,716
Other Subsidiaries
Defined Contribution Plan Disclosure [Line Items]
401(k) Plan expense	$ 873	$ 254	$ 2,625	$ 865

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Regulation and Rates (Details) - USD ($)	3 Months Ended
	Sep. 30, 2019	Jul. 10, 2019	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Jun. 30, 2017
Regulation and Rates [Line Items]
Refund due to customers	$ 50,777,000			$ 35,842,000
CLECO POWER
Regulation and Rates [Line Items]
Estimated refund for the tax-related benefits from the TCJA	38,400,000
Refund due to customers	49,403,000	$ 79,200,000		$ 35,842,000
Payments received for capital expenditures subject to refund	2,800,000
Accrual for related interest	3,000,000
CLECO POWER | FERC
Regulation and Rates [Line Items]
Refund due to customers	3,000,000
CLECO POWER | LPSC | Merger Commitments, cost savings
Regulation and Rates [Line Items]
Accrual for net capital refund for capital expenditures paid for by third parties	6,100,000
CLECO POWER | FRP
Regulation and Rates [Line Items]
Refund due to customers	$ 2,300,000
CLECO POWER | FRP | LPSC
Regulation and Rates [Line Items]
Refund due to customers			$ 0
Target ROE allowed by FRP	10.00%
Percentage of retail earnings within range to be returned to customers (in hundredths)	60.00%
ROE for customer credit, low range	10.90%
ROE for customer credit, high range	11.75%
CLECO POWER | FRP | LPSC | Maximum
Regulation and Rates [Line Items]
Target ROE allowed by FRP	10.90%
CLECO POWER | Transmission return on equity | FERC
Regulation and Rates [Line Items]
Refund due to customers	$ 1,900,000
CLECO POWER | 2017 FRP Monitoring Report, Cost of Service Savings | LPSC
Regulation and Rates [Line Items]
Refund due to customers						$ 1,200,000
CLECO POWER | 2018 FRP Monitoring Report, Earnings-Related Refunds | LPSC
Regulation and Rates [Line Items]
Refund due to customers					$ 0
CLECO POWER | 2018 FRP Monitoring Report, Cost of Service Savings | LPSC
Regulation and Rates [Line Items]
Refund due to customers					1,200,000
CLECO POWER | 2017 FRP Monitoring Report | LPSC
Regulation and Rates [Line Items]
Refund due to customers						$ 0
CLECO POWER | 2018 FRP Monitoring Report | LPSC
Regulation and Rates [Line Items]
Refund due to customers					$ 2,300,000
Payments received for capital expenditures subject to refund	$ 2,300,000
CLECO POWER | 2019 FRP Monitoring Report | LPSC
Regulation and Rates [Line Items]
Refund due to customers			$ 1,200,000

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Debt - Narrative (Details)		1 Months Ended	7 Months Ended	9 Months Ended
	Feb. 04, 2019 USD ($) instrument	Jan. 31, 2019 USD ($)	Sep. 11, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)
Debt [Line Items]
Repayment of long-term debt				$ 390,571,000	$ 19,193,000
South Central Generating
Debt [Line Items]
Repayment of long-term debt	$ 400,000,000	$ 400,000,000
CLECO HOLDINGS
Debt [Line Items]
Debt term	3 years
Debt to capital ratio	0.65
CLECO HOLDINGS | Letters of Credit
Debt [Line Items]
Maximum borrowing capacity	$ 1,100,000.0
Number of instruments | instrument	3
Letters of credit				34,500,000
CLECO HOLDINGS | Bridge Loan Agreement
Debt [Line Items]
Repayment of long-term debt			$ 300,000,000.0
CLECO HOLDINGS | Bank Term Loan Agreement
Debt [Line Items]
Repayment of long-term debt			100,000,000.0
CLECO HOLDINGS | 3.375% senior notes due September 15, 2029
Debt [Line Items]
Aggregate principal amount			$ 300,000,000.0
Debt instrument, interest rate			3.375%
CLECO HOLDINGS | Loans payable
Debt [Line Items]
Debt term	3 years
Debt to capital ratio	0.65
CLECO HOLDINGS | Loans payable | Bridge Loan Agreement
Debt [Line Items]
Aggregate principal amount	$ 300,000,000.0
CLECO HOLDINGS | Loans payable | Bank Term Loan Agreement
Debt [Line Items]
Aggregate principal amount	100,000,000.0
CLECO HOLDINGS | Line of Credit
Debt [Line Items]
Increase in credit facility capacity	75,000,000.0
Maximum borrowing capacity	$ 175,000,000.0
CLECO POWER
Debt [Line Items]
Repayment of long-term debt				20,571,000	$ 19,193,000
CLECO POWER | Bonds | GO Zone Bond, Maturing 2038
Debt [Line Items]
Aggregate principal amount				$ 50,000,000.0

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Regulatory Assets and Liabilities

9 Months Ended

Sep. 30, 2019

Regulated Operations [Abstract]

Regulatory Assets and Liabilities

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 SEPT. 30, 2019			AT DEC. 31, 2018
Regulatory assets (liabilities)
Deferred taxes, net	$	(144,124	)	$	(155,537	)
Mining costs	—			1,274
Interest costs	4,021			4,208
AROs	3,523			3,099
Postretirement costs	134,412			140,245
Tree trimming costs	10,607			9,069
Training costs	6,279			6,396
Surcredits, net (1)	289			289
AMI deferred revenue requirement	3,272			3,681
Emergency declarations	1,750			2,980
Production operations and maintenance expenses	9,199			12,245
AFUDC equity gross-up (1)	73,541			71,952
Acadia Unit 1 acquisition costs	2,151			2,230
Financing costs	7,646			7,923
Coughlin transaction costs	915			938
Corporate franchise tax, net	864			1,416
Non-service cost of postretirement benefits	6,650			4,629
Energy efficiency	(3,056		)	2,585
Accumulated deferred fuel	56,056			20,112
Other, net	(8,048		)	(4,979		)
Total regulatory assets, net	$	165,947		$	134,755
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 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 SEPT. 30, 2019		AT DEC. 31, 2018
Total Cleco Power regulatory assets, net	$	165,947	$	134,755
Cleco 2016 Merger adjustments (1)
Fair value of long-term debt	130,847		138,701
Postretirement costs	17,896		19,387
Financing costs	8,021		8,279
Debt issuance costs	5,826		6,252
Total Cleco regulatory assets, net	$	328,537	$	307,374

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

Energy Efficiency

In December 2018, Cleco Power filed a letter of intent with the LPSC to recover the accumulated decrease in revenues, also known as the LCFC, associated with the energy efficiency programs and began collecting the accumulated LCFC revenues in Cleco Power’s energy efficiency rates effective March 1, 2019. On March 28, 2019, Cleco Power received notice from the LPSC indicating denial of the request and subsequently reversed all revenues related to the accumulated LCFC. On October 21, 2019, Cleco Power received notice from the LPSC concluding that after further analysis Cleco Power will be allowed to recover the accumulated LCFC revenues.

Other Regulatory Assets (Liabilities), Net

In June 2017, the LPSC approved the establishment of a regulatory asset upon the completion of the Coughlin Pipeline project for the revenue requirement associated with the project until Cleco Power seeks recovery in the new FRP, which is anticipated to be effective July 1, 2020. The project was placed in service on September 6, 2019. At September 30, 2019, Cleco Power had $0.2 million accrued as a regulatory asset for the Coughlin Pipeline project revenue requirement. Cleco Power anticipates collecting this amount over 12 months beginning July 1, 2020, subject to regulatory approval of Cleco Power’s new FRP.

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 September 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.

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Business Combination

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Business Combination

Note 2 — Business Combination

On February 4, 2019, Cleco Cajun acquired from NRG Energy all of the outstanding membership interests in South Central Generating. This acquisition will enable Cleco to significantly increase the scale of its operations in Louisiana. As a result, Cleco Cajun owns:

• a 176-MW natural-gas-fired generating station located in Sterlington, Louisiana,

• a 220-MW natural-gas-fired facility and a 210-MW natural-gas-fired peaking facility, both located in Jarreau, Louisiana,

• a 580-MW coal-fired generating facility, a 540-MW natural-gas-fired generating station, and 58% of a 588-MW coal-fired generating station all located in New Roads, Louisiana,

• 225 MW of a 300-MW natural-gas-fired peaking facility located in Jennings, Louisiana,

• a 1,263-MW natural-gas-fired generating station located in Deweyville, Texas (the Cottonwood Plant),

• wholesale contracts to provide electricity and capacity to nine Louisiana cooperatives, three municipalities across Arkansas, Louisiana, and Texas, and one investor-owned utility,

• transmission assets, which consist of equipment and land required to connect the generation stations and the wholesale customers to the transmission grid, and

• current assets consisting of cash, inventory, receivables and other miscellaneous assets.

Cleco Cajun, NRG Energy, and South Central Generating each made customary representations, warranties and covenants in the Cleco Cajun Transaction, which include customary indemnification provisions. Cleco Holdings has agreed to guarantee the obligations of Cleco Cajun, subject to certain limitations. In addition, upon closing, a lease agreement was executed and delivered between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the Cottonwood Plant and will operate it no later than May 2025. Upon closing, Cottonwood Energy became a subsidiary of Cleco Cajun.

Regulatory Matters

In January 2019, the LPSC approved the Cleco Cajun Transaction. Approval of the transaction was conditioned upon certain commitments, including holding Cleco Power ratepayers harmless for any adverse impacts, increased costs of debt or equity, and credit rating downgrades attributable to the Cleco Cajun Transaction; the repayment of $400.0 million of Cleco Holdings’ debt by 2024, of which $66.7 million in required payments for 2019 was satisfied as of September 30, 2019; and a $4.0 million annual reduction to Cleco Power’s retail customer rates. For more information about the debt and rate reduction commitments, see Note 8 — “Debt” and Note 6 — “Regulatory Assets and Liabilities,” respectively.

South Central Generating

In 2017, Louisiana Generating received insurance settlement proceeds for costs incurred to resolve a lawsuit which was brought by the EPA and the LDEQ against Louisiana Generating related to Big Cajun II, Unit 3. Entergy Gulf States, as co-owner of Big Cajun II, Unit 3, is expected to be allocated a portion of the insurance settlement proceeds. Any amount allocated to Entergy Gulf States will be determined by ongoing litigation and negotiations. South Central Generating estimated this amount to be $10.0 million. As part of the Cleco Cajun Transaction, Cleco Cajun assumed the $10.0 million contingent liability and NRG Energy indemnified Cleco for losses associated with this litigation matter. As a result, Cleco also recorded a $10.0 million indemnification asset, which was included in the preliminary purchase price allocation.

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts regarding matters arising out of the ordinary course of business. Management is unable to estimate any potential losses that Cleco Cajun may ultimately be responsible for with respect to any one of these matters in the event of a negative outcome. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with matters that existed as of the closing date, including pending litigation.

Accounting for the Cleco Cajun Transaction

As consideration for all of the outstanding membership interest in South Central Generating, Cleco paid cash of approximately $962.2 million, which represents the $1.0 billion acquisition price net of working capital and other adjustments of $37.8 million.

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings borrowed $300.0 million under a bridge loan agreement and $100.0 million under a term loan agreement. Both loan agreements are variable rate debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to Cleco’s senior debt rating (as defined in the applicable agreement). On September 11, 2019, Cleco Holdings refinanced the remaining amounts due under the $300.0 million bridge loan agreement and a portion of the $100.0 million term loan agreement with the proceeds from a private placement of senior notes. For more information, see Note 8 — “Debt.” Also, in connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total capacity of $175.0 million. All other terms remained the same. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

The remaining cash required to finance the transaction consisted of an equity contribution from Cleco Group of $384.9 million and $102.3 million from cash on hand at Cleco Holdings.

In connection with the Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a capacity agreement customer and a gas transport company. These letters of credit automatically renew each year and have no impact on Cleco Holdings’ credit facility.

Cleco Cajun accounted for the Cleco Cajun Transaction as a business combination, and accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the date of the acquisition. Cleco made certain measurement period adjustments at June 30, 2019. The following chart presents Cleco’s current preliminary purchase price allocation:

Preliminary Purchase Price Allocation
(THOUSANDS)	AT FEB. 4, 2019
Current assets
Cash and cash equivalents	$	146,494
Customer and other accounts receivable	49,809
Fuel inventory	22,060
Materials and supplies	25,659
Energy risk management assets	4,193
Other current assets	10,056
Non-current assets
Property, plant, and equipment, net	741,203
Prepayments	36,166
Restricted cash and cash equivalents	707
Intangible assets	98,900
Other deferred charges	133
Total assets acquired	1,135,380
Current liabilities
Accounts payable	38,478
Taxes payable	723
Energy risk management liabilities	241
Other current liabilities	14,570
Non-current liabilities
Accumulated deferred federal and state income taxes, net	7,165
Deferred lease revenue	58,300
Intangible liabilities	38,300
Asset retirement obligations	15,323
Operating lease liabilities	110
Total liabilities assumed	173,210
Total purchase price consideration	$	962,170

The fair values of Cleco Cajun’s acquired assets and assumed liabilities were determined based on significant estimates and assumptions, including projected future cash flows and discount rates reflecting risk inherent in those future cash flows. There were also estimates made to determine the expected useful lives of each class of assets acquired.

On the date of the acquisition, preliminary fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the difference between the contract and market price of acquired long-term wholesale power agreements. The preliminary fair value of intangible assets of $98.9 million and intangible liabilities of $14.2 million was reflected in the preliminary purchase price allocation. The valuation of the acquired intangible assets and liabilities was estimated by applying the income method, which is based upon discounted projected future cash flows associated with the underlying contracts. The power supply agreement intangible assets and liabilities are being amortized to Electric operations on Cleco’s Condensed Consolidated Statement of Income over the remaining term of the applicable agreements.

As part of the Cleco Cajun Transaction, Cleco assumed an LTSA for maintenance services related to the Cottonwood Plant. The preliminary fair value of the LTSA was estimated by applying the income method. An intangible liability of $24.1 million was reflected in the preliminary purchase price allocation and is being amortized using the straight-line method over the estimated remaining life of the LTSA of seven years. The amortization is included as a reduction to the LTSA prepayments on Cleco’s Condensed Consolidated Balance Sheet.

On the date of the acquisition, the preliminary fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy was estimated by applying the income method. Deferred lease revenue of $58.3 million was reflected in the preliminary purchase price allocation and is being amortized over the term of the lease agreement. The amortization is included in Other operations revenue on Cleco’s Condensed Consolidated Statement of Income.

Valuations were performed to assess the fair value of certain assets acquired and liabilities assumed and were considered preliminary as a result of the short time period between the closing of the acquisition and the end of the first quarter of 2019. Accounting guidance provides that the allocation of the purchase price may be modified up to one year from the date of the acquisition as more information becomes available. Cleco expects these final valuations and assessments will be completed by the end of 2019, which may affect the purchase price allocation.

During the second quarter of 2019, certain modifications were made to the preliminary valuations as of February 4, 2019, due to the refinement of valuation models, assumptions, and inputs. The measurement period adjustments were based upon information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of the amounts recognized at that date.

Measurement Period Adjustments
(THOUSANDS)	AT JUNE 30, 2019
Current assets
Customer and other accounts receivable	$	1,408
Other current assets	$	56
Non-current assets
Property, plant, and equipment, net	$	13,297
Prepayments	$	(56	)
Intangible assets	$	(3,600	)
Other deferred charges	$	1
Current liabilities
Accounts payable	$	3,022
Energy risk management liabilities	$	(1	)
Other current liabilities	$	327
Non-current liabilities
Accumulated deferred federal and state income taxes, net	$	421
Deferred lease revenue	$	(3,600	)
Intangible liabilities	$	6,400
Asset retirement obligations	$	4,534
Operating lease liabilities	$	3

The measurement period adjustments resulted in an increase in electric operations revenue of $0.5 million, a decrease in other operations revenue of $0.1 million, and an increase in depreciation expense of $0.2 million recorded for the three months ended June 30, 2019.

During the third quarter of 2019, no additional modifications were made to the preliminary valuation as of February 4, 2019. Consequently, no measurement period adjustments were made.

Pro forma Impact of the Cleco Cajun Transaction

The following table includes the unaudited pro forma financial information reflecting the consolidated results of operations of Cleco as if the Cleco Cajun Transaction had taken place on January 1, 2018. The pro forma net income for the three and nine months ended September 30, 2019, was adjusted to exclude nonrecurring transaction-related expenses of $0.6 million and $4.5 million, respectively. The pro forma net income for the three and nine months ended September 30, 2018, includes nonrecurring transaction-related expenses.

The unaudited pro forma financial information presented in the following table is not necessarily indicative of the consolidated results of operations that would have been achieved had the transaction taken place on the dates indicated, or the future consolidated results of operations of the combined companies.

Unaudited Pro Forma Financial Information
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2019		2018		2019		2018
Operating revenue, net	$	487,971	$	469,419	$	1,250,787	$	1,263,182
Net income	$	56,004	$	71,076	$	122,771	$	140,255

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Income Taxes

9 Months Ended

Sep. 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 nine months ended September 30, 2019, and 2018:

Cleco
	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
	2019		2018		2019		2018
Effective tax rate	20.2	%	19.4	%	21.1	%	20.7	%

Cleco Power
	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
	2019		2018		2019		2018
Effective tax rate	19.4	%	22.1	%	21.2	%	23.1	%

For the three and nine months ended September 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 $575.5 million and $121.8 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 September 30, 2019, and December 31, 2018, Cleco and Cleco Power had no interest payable related to uncertain tax positions. For the three and nine months ended September 30, 2019, and 2018, Cleco and Cleco Power had no interest expense related to uncertain tax positions.

At September 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 September 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.

Cleco participates in the Internal Revenue Service’s (IRS) Compliance Assurance Process in which financial results are examined and agreed upon prior to filing the federal consolidated tax return. The 2018 federal income tax year remains subject to examination by the IRS. While the statute of limitations remains open for tax years 2016 and 2017 until 2020 and 2021, respectively, management believes the likelihood of further exam by the IRS is remote.

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 nine months ended September 30, 2019, and 2018, no penalties were recognized.

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Regulatory Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Regulatory Assets [Line Items]

Schedule of Regulatory Assets

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

(THOUSANDS)	AT SEPT. 30, 2019		AT DEC. 31, 2018
Total Cleco Power regulatory assets, net	$	165,947	$	134,755
Cleco 2016 Merger adjustments (1)
Fair value of long-term debt	130,847		138,701
Postretirement costs	17,896		19,387
Financing costs	8,021		8,279
Debt issuance costs	5,826		6,252
Total Cleco regulatory assets, net	$	328,537	$	307,374

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

CLECO POWER

Regulatory Assets [Line Items]

Schedule of Regulatory Assets

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

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Regulatory assets (liabilities)
Deferred taxes, net	$	(144,124	)	$	(155,537	)
Mining costs	—			1,274
Interest costs	4,021			4,208
AROs	3,523			3,099
Postretirement costs	134,412			140,245
Tree trimming costs	10,607			9,069
Training costs	6,279			6,396
Surcredits, net (1)	289			289
AMI deferred revenue requirement	3,272			3,681
Emergency declarations	1,750			2,980
Production operations and maintenance expenses	9,199			12,245
AFUDC equity gross-up (1)	73,541			71,952
Acadia Unit 1 acquisition costs	2,151			2,230
Financing costs	7,646			7,923
Coughlin transaction costs	915			938
Corporate franchise tax, net	864			1,416
Non-service cost of postretirement benefits	6,650			4,629
Energy efficiency	(3,056		)	2,585
Accumulated deferred fuel	56,056			20,112
Other, net	(8,048		)	(4,979		)
Total regulatory assets, net	$	165,947		$	134,755
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 30, 2019, and December 31, 2018, respectively. All other assets are earning a return on investment.

Schedule of Regulatory Liabilities

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

(THOUSANDS)	AT SEPT. 30, 2019			AT DEC. 31, 2018
Regulatory assets (liabilities)
Deferred taxes, net	$	(144,124	)	$	(155,537	)
Mining costs	—			1,274
Interest costs	4,021			4,208
AROs	3,523			3,099
Postretirement costs	134,412			140,245
Tree trimming costs	10,607			9,069
Training costs	6,279			6,396
Surcredits, net (1)	289			289
AMI deferred revenue requirement	3,272			3,681
Emergency declarations	1,750			2,980
Production operations and maintenance expenses	9,199			12,245
AFUDC equity gross-up (1)	73,541			71,952
Acadia Unit 1 acquisition costs	2,151			2,230
Financing costs	7,646			7,923
Coughlin transaction costs	915			938
Corporate franchise tax, net	864			1,416
Non-service cost of postretirement benefits	6,650			4,629
Energy efficiency	(3,056		)	2,585
Accumulated deferred fuel	56,056			20,112
Other, net	(8,048		)	(4,979		)
Total regulatory assets, net	$	165,947		$	134,755
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 30, 2019, and December 31, 2018, respectively. All other assets are earning a return on investment.

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2019

Effective Income Tax Rate [Line Items]

Effective Income Tax Rates

The following tables summarize the effective income tax rates for Cleco and Cleco Power for the three and nine months ended September 30, 2019, and 2018:

Cleco
	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
	2019		2018		2019		2018
Effective tax rate	20.2	%	19.4	%	21.1	%	20.7	%

CLECO POWER

Effective Income Tax Rate [Line Items]

Effective Income Tax Rates

Cleco Power
	FOR THE THREE MONTHS  ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
	2019		2018		2019		2018
Effective tax rate	19.4	%	22.1	%	21.2	%	23.1	%