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Intangible Assets and Liabilities
 9 Months Ended
Sep. 30, 2021
Intangible Assets And Liabilities Disclosure [Abstract]  
Intangible Assets and Liabilities
Note 15 — Intangible Assets and Liabilities
During 2008, Cleco Katrina/Rita acquired a $177.5 million intangible asset which included $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 was fully amortized in March 2020 and had no residual value at the end of its life.
As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the valuation of finite intangible assets relating to the Cleco Power trade name and long-term wholesale power supply agreements. At the end of their lives, these power supply agreement intangible assets will have no residual value. The intangible assets related to the power supply agreements are amortized over the estimated life of each applicable contract ranging between 7 and 19 years, and the amortization is included in Electric operations on Cleco’s Condensed Consolidated Statements of Income.
During the third quarter of 2021, Cleco determined that the fair value of the Cleco Power trade name was less than its carrying value and an impairment of $3.8 million was recognized reducing the carrying value to zero. The impairment resulted in an increase in amortization expense and was reflected in Depreciation and amortization on Cleco’s Condensed Consolidated Statements of Income at September 30, 2021. For more information on the the trade name intangible asset impairment, see Note 6 — “Fair Value Accounting and Financial Instruments.”
As a result of the Cleco Cajun Transaction, 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. At the end of their lives, these intangible assets and liabilities will have no residual value. These intangibles are amortized over the estimated life of each applicable contract ranging between 6 and 8 years. The amortization is included in Electric operations on Cleco’s Condensed Consolidated Statements of Income.
As part of the Cleco Cajun Transaction, Cleco assumed an LTSA for maintenance services related to the Cottonwood Plant. This intangible liability is being amortized using the straight-line method over the estimated 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.
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)2021202020212020
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges
$— $— $— $517 
Trade name$3,770 $64 $3,897 $191 
Power supply agreements
$6,400 $6,400 $19,200 $19,200 
Intangible liabilities
LTSA
$871 $871 $2,613 $2,613 
Power supply agreements
$389 $882 $1,989 $2,646 

Cleco Power
 FOR THE THREE MONTHS ENDED SEPT. 30,FOR THE NINE MONTHS
 ENDED SEPT. 30,
(THOUSANDS)2021202020212020
Cleco Katrina/Rita right to bill and collect storm recovery charges
$— $— $— $517 
The following tables summarize the balances for intangible assets and liabilities subject to amortization for Cleco:

Cleco
(THOUSANDS)AT SEPT. 30, 2021AT DEC. 31, 2020
Intangible assets
Trade name$— $5,100 
Power supply agreements184,004 184,004 
Total intangible assets carrying amount184,004 189,104 
Intangible liabilities
LTSA
24,100 24,100 
Power supply agreements
14,200 14,200 
Total intangible liability carrying amount38,300 38,300 
Net intangible assets carrying amount145,704 150,804 
Accumulated amortization(77,326)(63,932)
Net intangible assets subject to amortization$68,378 $86,872 

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 unit. Goodwill is required to be tested for impairment at the reporting unit 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 unit below its carrying value. Application of the goodwill impairment test requires significant judgments, including the identification of reporting units, assignments of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of the reporting units.
Cleco conducted its 2021 annual impairment test using an August 1, 2021, measurement date. The fair value of the Cleco Power reporting unit 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 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 the fair value of the Cleco Power reporting unit exceeds the carrying value resulting in no impairment of Cleco Power’s goodwill as of August 1, 2021.