XML 39 R25.htm IDEA: XBRL DOCUMENT v3.22.2.2
Pension Plan and Employee Benefits
 9 Months Ended
Sep. 30, 2022
Retirement Benefits [Abstract]  
Pension Plan and Employee Benefits
Note 8 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan
Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Based on the funding assumptions at December 31, 2021, management estimates that no contributions will be required until 2026, at which time $5.4 million of required pension contributions are expected. Cleco has not made, and does not expect to make, any contributions to the pension plan in 2022.
Cleco Power is the plan sponsor and Support Group is the plan administrator. Benefits under the plan reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.
Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits.
The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. The components of net periodic pension and Other Benefits cost for the three and nine months ended September 30, 2022, and 2021 were as follows:
PENSION BENEFITSOTHER BENEFITS
FOR THE THREE MONTHS ENDED SEPT. 30,FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)2022202120222021
Components of periodic benefit costs
Service cost$2,146 $2,629 $551 $629 
Interest cost4,960 4,667 371 317 
Expected return on plan assets(6,177)(5,700)— — 
Amortizations
Net loss3,084 5,184 303 373 
Net periodic benefit cost$4,013 $6,780 $1,225 $1,319 
Special/contractual termination benefits— 3,270 — — 
Total benefit cost$4,013 $10,050 $1,225 $1,319 

PENSION BENEFITSOTHER BENEFITS
FOR THE NINE MONTHS ENDED SEPT. 30,FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)2022202120222021
Components of periodic benefit costs
Service cost$6,439 $7,887 $1,653 $1,819 
Interest cost14,881 14,001 1,113 962 
Expected return on plan assets(18,531)(17,101)— — 
Amortizations
Net loss9,251 15,553 908 1,143 
Net periodic benefit cost$12,040 $20,340 $3,674 $3,924 
Special/contractual termination benefits— 3,270 — — 
Total benefit cost$12,040 $23,610 $3,674 $3,924 
Effective September 30, 2021, the pension plan was amended to offer an enhanced pension benefit to certain employees participating in the plan that elected to retire during a certain retirement window. Those certain employees who elected by September 30, 2021, to receive the enhanced pension benefits received a 10% increase in calculated pension benefits. This resulted in a special termination benefit cost for Cleco Power and Support Group of $2.4 million and $0.9 million, respectively, included as an expense of the pension plan.
Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred, with a like amount of assets, to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2022, was $0.8 million and $2.4 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2021, was $1.8 million and $3.6 million, respectively.
Cleco Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022, was $1.1 million and $3.3 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021, was $1.2 million and $3.6 million, respectively. The current and non-current portions of the Other Benefits liability for Cleco and Cleco Power at September 30, 2022, and December 31, 2021, were as follows:

Cleco
(THOUSANDS)AT SEPT. 30, 2022AT DEC. 31, 2021
Current$5,181 $5,181 
Non-current$48,829 $50,093 

Cleco Power
(THOUSANDS)AT SEPT. 30, 2022AT DEC. 31, 2021
Current$4,432 $4,432 
Non-current$38,344 $39,315 

SERP
Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out of cash available of the respective company of the employed officer. Because the SERP is a non-qualified plan, Cleco has purchased life insurance policies on certain SERP participants as a mechanism to provide a source of funding. These policies are held in a rabbi trust formed by Cleco Power. The rabbi trust is the named beneficiary of the life insurance policies and, therefore, receives the proceeds upon the death of the insured participants. The life insurance policies may be used to reimburse Cleco for benefits paid from general funds, pay the SERP participants’ death benefits, or pay future SERP payments. Market conditions could have a significant impact on the cash surrender value of these life insurance policies. Because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in
the event of insolvency. Cleco Power is the plan sponsor and Support Group is the plan administrator.
The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. The components of the net periodic benefit cost related to SERP for the three and nine months ended September 30, 2022, and 2021 were as follows:

FOR THE THREE MONTHS ENDED SEPT. 30,FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)2022202120222021
Components of periodic benefit costs
Service cost $57 $59 $170 $174 
Interest cost670 634 2,009 1,903 
Amortizations
Prior period service credit(54)(54)(161)(161)
Net loss262 307 787 921 
Net periodic benefit cost$935 $946 $2,805 $2,837 

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022, was $0.1 million and $0.4 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021, was $0.1 million and $0.4 million, respectively.
Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at September 30, 2022, and December 31, 2021, were as follows:

Cleco
(THOUSANDS)AT SEPT. 30, 2022AT DEC. 31, 2021
Current$4,654 $4,654 
Non-current$86,210 $88,523 

Cleco Power
(THOUSANDS)AT SEPT. 30, 2022AT DEC. 31, 2021
Current$679 $679 
Non-current$12,546 $12,909 
401(k) Plan
Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan
expense for the three and nine months ended September 30, 2022, and 2021 was as follows:

 FOR THE THREE MONTHS ENDED SEPT. 30,FOR THE NINE MONTHS
ENDED SEPT. 30,
(THOUSANDS)2022202120222021
401(k) Plan expense
$2,180 $2,512 $6,602 $7,391 

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, 2022, and 2021 was as follows:

 FOR THE THREE MONTHS ENDED SEPT. 30,FOR THE NINE MONTHS
ENDED SEPT. 30,
(THOUSANDS)2022202120222021
401(k) Plan expense
$985 $1,185 $3,154 $3,511 

Effective September 30, 2021, the 401(k) plan was amended to offer an enhanced 401(k) benefit to certain employees participating in the plan that elected to retire during a certain retirement window. Those certain employees who elected by September 30, 2021, to receive the enhanced 401(k) benefits received a one-time contribution up to 30% of the employee’s 2021 base salary in accordance with IRS contribution limits. This resulted in a one-time benefit cost of $0.2 million included as an expense of the 401(k) plan.