Regulatory Assets and Liabilities

3 Months Ended

Mar. 31, 2021


Note 5 — Regulatory Assets and Liabilities

Cleco Power 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 Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco Power’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 Power 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 Power could require discontinuance of the application of the authoritative guidance on regulated operations.

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


Cleco Power
(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020
Regulatory assets
Acadia Unit 1 acquisition costs	$	1,992	$	2,019
Accumulated deferred fuel	69,832		28,194
AFUDC equity gross-up *	68,896		69,670
AMI deferred revenue requirement	2,454		2,591
AROs	6,345		5,488
Coughlin transaction costs	869		876
COVID-19 executive order	2,953		2,953
Deferred storm restoration costs - Hurricane Delta	17,052		17,051
Deferred storm restoration costs - Hurricane Laura	54,744		54,406
Deferred storm restoration costs - Hurricane Zeta	3,613		3,493
Deferred storm restoration costs - Winter Storms Uri & Viola	1,938		—
Dolet Hills closure costs	70,192		48,982
Emergency declarations	131		270
Energy efficiency	2,703		2,820
Financing costs	7,091		7,184
Interest costs	3,646		3,708
Non-service cost of postretirement benefits	10,181		9,901
Other, net	4,682		4,229
Postretirement costs	160,674		165,437
Production operations and maintenance expenses	3,361		4,058
Rodemacher Unit 2 closure costs	2,722		1,333
St. Mary Clean Energy Center	5,219		3,479

Training costs	6,046		6,085
Tree trimming costs	11,129		11,807
Total regulatory assets	518,465		456,034
Regulatory liabilities
AFUDC	(4,574)		(4,218)
Corporate franchise tax, net	(1,133)		(763)
Deferred taxes, net	(162,807)		(175,584)
Total regulatory liabilities	(168,514)		(180,565)
Total regulatory assets, net	$	349,951	$	275,469
* Represents regulatory assets for past expenditures that were not earning a return on investment at March 31, 2021, and December 31, 2020, respectively. All other assets are earning a return on investment.

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


Cleco
(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020
Total Cleco Power regulatory assets, net	$	349,951	$	275,469
2016 Merger adjustments *
Fair value of long-term debt	117,703		119,553
Postretirement costs	14,915		15,411
Financing costs	7,506		7,592
Debt issuance costs	5,170		5,254
Total Cleco regulatory assets, net	$	495,245	$	423,279

* Cleco regulatory assets include acquisition accounting adjustments as a result of the 2016 Merger.

Accumulated Deferred Fuel

In February 2021, Winter Storms Uri and Viola moved through Louisiana causing substantial damage to Cleco’s distribution

assets, electricity generation supply shortages, natural gas supply shortages, and increases in wholesale prices of natural gas in the United States, primarily due to prolonged freezing temperatures. Incremental fuel and purchased power costs were incurred as a result of the winter storms. On March 29, 2021, Cleco Power received approval from the LPSC to recover $50.0 million of these costs through Cleco Power’s FAC over a period of 12 months beginning in May 2021. For more information about the incremental fuel and purchased power costs related to Winter Storms Uri and Viola, see Note 17 — “Storm Restoration — Winter Storms Uri and Viola.”

Deferred Storm Restoration Costs — Winter Storms

In February 2021, Cleco Power’s service territory experienced extreme and unprecedented winter weather.

On February 14, 2021, Winter Storm Uri reached Louisiana resulting in power outages for approximately 11,000 of Cleco Power’s electric customers located primarily in south Louisiana.

On February 17, 2021, Winter Storm Viola reached Louisiana resulting in power outages for approximately 43,000 of Cleco Power’s electric customers located primarily in central and south Louisiana.

On March 17, 2021, the LPSC approved utilities establishing a regulatory asset to track and defer non-capital expenses associated with these winter storms. For more information about Winter Storms Uri and Viola, see Note 17 — “Storm Restoration — Winter Storms Uri and Viola.”