Variable Interest Entities

12 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Note 14 — 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 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 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 December 31, 2020, consisted of its equity investment of $9.1 million. During 2020, Cleco Power received $8.0 million from Oxbow as a return of investment.

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

	AT DEC. 31,
INCEPTION TO DATE (THOUSANDS)	2020		2019
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Dividend received	(10,200)		(2,200)
Total equity investment in investee	$	9,072	$	17,072

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:

	AT DEC. 31,
(THOUSANDS)	2020		2019
Oxbow’s net assets/liabilities	$	18,145	$	34,145
Cleco Power’s 50% equity	$	9,072	$	17,072
Cleco Power’s maximum exposure to loss	$	9,072	$	17,072

The following tables contain summarized financial information for Oxbow:

	AT DEC. 31,
(THOUSANDS)	2020		2019
Current assets	$	16,805	$	2,239
Property, plant, and equipment, net	4,910		23,738
Other assets	3,360		9,364
Total assets	$	25,075	$	35,341
Current liabilities	$	369	$	1,196
Other liabilities	6,561		—
Partners’ capital	18,145		34,145
Total liabilities and partners’ capital	$	25,075	$	35,341

	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2020		2019		2018
Operating revenue	$	34,827	$	8,886	$	6,992
Operating expenses	34,827		8,886		6,992
Income before taxes	$	—	$	—	$	—

Prior to June 30, 2020, DHLC mined 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. Under the Amended Lignite Mining Agreement, DHLC bills Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs. Oxbow bills Cleco Power its proportionate share of incurred costs related to mineral rights and land leases. For more information on DHLC and the Oxbow mine, see Note 15 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

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