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.