Variable Interest Entities

12 Months Ended

Dec. 31, 2021

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, 2021, consisted of its equity investment of $2.1 million. During 2021, Cleco Power received $7.0 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)	2021		2020
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Dividend received	(17,200)		(10,200)
Total equity investment in investee	$	2,072	$	9,072

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)	2021		2020
Oxbow’s net assets/liabilities	$	4,145	$	18,145
Cleco Power’s 50% equity	$	2,072	$	9,072
Cleco Power’s maximum exposure to loss	$	2,072	$	9,072

The following tables contain summarized financial information for Oxbow:

	AT DEC. 31,
(THOUSANDS)	2021		2020
Current assets	$	6,979	$	16,805
Property, plant, and equipment, net	3,798		4,910
Other assets	—		3,360
Total assets	$	10,777	$	25,075
Current liabilities	$	393	$	369
Other liabilities	6,239		6,561
Partners’ capital	4,145		18,145
Total liabilities and partners’ capital	$	10,777	$	25,075

	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020		2019
Operating revenue	$	5,155	$	34,827	$	8,886
Operating expenses	5,155		34,827		8,886
Income before taxes	$	—	$	—	$	—

Prior to June 30, 2020, DHLC mined lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves were 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. In June 2020, management decided to retire the Dolet Hills Power Station. On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine. As of December 31, 2021, all of Cleco Power’s proportionate share of lignite-related costs have been billed by

Oxbow prior to the closure of the Dolet Hills Power Station. 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.