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Intangible Assets, Intangible Liabilities, and Goodwill
 9 Months Ended
Sep. 30, 2022
Intangible Assets And Liabilities Disclosure [Abstract]  
Intangible Assets, Intangible Liabilities, and Goodwill
Note 15 — Intangible Assets, Intangible Liabilities, and Goodwill

Securitized Intangible
On June 22, 2022, Cleco Securitization I acquired the Storm Recovery Property from Cleco Power in the amount of $415.9 million. The Storm Recovery Property is classified as a securitized intangible asset on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. This securitized intangible asset will be amortized over the estimated periods needed to collect the required amounts from Cleco Power’s customers to service Cleco Securitization I’s storm recovery bonds, currently estimated through September 2044. There was no amortization during the current period because collections from Cleco Power’s customers were allocated to expenses that take priority to the storm recovery bonds as allowed by the storm recovery bond indenture. At the end of its life, this securitized intangible asset will have no residual value. For additional information on Cleco Power’s storm costs and the securitization financing, see Note 5 — “Regulatory Assets and Liabilities,” Note 7 — “Debt,” and Note 17 — “Storm Securitization and Cost Recovery.”

Other Intangibles
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 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.
As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the valuation of a finite intangible asset relating to the Cleco Power trade name. In August 2021, a wholesale customer that is currently under contract with Cleco Power through March 31, 2024, informed Cleco Power that it was not selected through its request for proposal process as a provider of load after the first quarter of 2024. Cleco considered this to be a triggering event and determined that the carrying value of the trade name intangible asset may not be recoverable. Therefore, a valuation of the Cleco Power trade name was conducted to test for impairment. A discounted cash flow model utilizing an estimated weighted average cost of capital of 8% was used to determine the fair value of the Cleco Power trade name. As a result, 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 at September 30, 2021.
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 table presents Cleco’s amortization of other intangible assets and liabilities included in its Condensed Consolidated Income Statements:

Cleco
 FOR THE THREE MONTHS ENDED SEPT. 30,FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)2022202120222021
Intangible assets
Trade name$— $3,770 $— $3,897 
Power supply agreements
$6,400 $6,400 $19,200 $19,200 
Intangible liabilities
LTSA
$871 $871 $2,613 $2,613 
Power supply agreements
$389 $389 $1,168 $1,989 
The following table summarizes the balance of other intangible assets and liabilities subject to amortization for Cleco included in its Condensed Consolidated Balance Sheets:

Cleco
(THOUSANDS)AT SEPT. 30, 2022AT DEC. 31, 2021
Intangible assets
Power supply agreements$184,004 $184,004 
Total intangible assets carrying amount184,004 184,004 
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 amount145,704 145,704 
Accumulated amortization(97,885)(82,466)
Net intangible assets subject to amortization$47,819 $63,238 

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 or whenever events or circumstances indicate that the value of goodwill may be impaired.
In performing the impairment test, Cleco compares the fair value of the reporting unit to its carrying value including goodwill. If the carrying value including goodwill were to exceed the fair value of a reporting unit, an impairment loss would be recognized. A goodwill impairment loss is measured as the amount by which a reporting unit's carrying value exceeds fair value, not to exceed the carrying amount of goodwill.
Cleco estimates the reporting unit's fair value 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. The income approach cash flow valuations involve a number of estimates that require broad assumptions and significant judgment by management regarding future performance, including estimation of future cash flows related to capital expenditures, the weighted average cost of capital or discount rate and the assumed long-term growth rate approach, which incorporates management's assumptions regarding sustainable long-term growth. The market approach includes significant assumptions around the implied market multiples for
certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of the test date.
Cleco performs an annual impairment test each August. In between annual tests, Cleco monitors its estimates and assumptions regarding estimated future cash flows, including the impact of movements in market indicators in future quarters, and will update the impairment analyses if a
triggering event occurs. While Cleco believes the assumptions are reasonable, actual results may differ from projections. To the extent projected results or cash flows are revised downward, Cleco may be required to reduce all or a portion of the carrying value of goodwill, which could adversely impact earnings.
Cleco conducted its 2022 annual impairment test using an August 1, 2022, measurement date and determined that the estimated fair value of the reporting unit exceeded its carrying value, and no impairment existed.