Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 8 — Derivative Instruments

In the normal course of business, Cleco is exposed to a number of market risks. Cleco uses derivatives primarily to mitigate commodity price risk, particularly fuel price risk. Cleco Power has limited exposure to effects of market price risk because it operates primarily under cost-based rate regulation. Cleco Power utilizes derivative instruments to hedge against the exposure of transmission congestion costs and price volatility inherent in fuel purchased for electric generation that are recovered from customers.

On Cleco’s Consolidated Balance Sheets, the fair value of amounts associated with Cleco Cajun’s derivative instruments are offset with related cash collateral balances with the same counterparty. Cleco has not elected to designate any of its current instruments as an accounting hedge. At December 31, 2022, cash collateral received from counterparties by Cleco Cajun was $6.5 million, all of which was netted against the current portion of Energy risk management assets on Cleco’s Consolidated Balance Sheet. At December 31, 2021, there was no cash collateral posted with or received from counterparties that was netted on Cleco’s Consolidated Balance Sheet. The following tables present the fair values of derivative instruments and their respective line items as recorded on Cleco’s and Cleco Power’s Consolidated Balance Sheets at December 31, 2022, and 2021:


Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		AT DEC. 31, 2022
				GROSS AMOUNTS OFFSET ON THE BALANCE SHEET				GROSS AMOUNTS NOT OFFSET ON THE BALANCE SHEET (1)
(THOUSANDS)	BALANCE SHEET LINE ITEM	GROSS ASSET (LIABILITY)		CASH COLLATERAL		NET ASSET (LIABILITY) ON THE BALANCE SHEET		COLLATERAL		NET AMOUNT
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	3,088	$	—	$	3,088	$	—	$	3,088
Current	Energy risk management liabilities	(1,862)		—		(1,862)		—		(1,862)
Natural gas derivatives
Current	Energy risk management assets	53,251		(6,500)		46,751		(32,578)		14,173
Non-current	Energy risk management assets	58,895		—		58,895		(20,422)		38,473
Current	Energy risk management liabilities	(6,979)		—		(6,979)		—		(6,979)

Commodity-related contracts, net		$	106,393	$	(6,500)	$	99,893	$	(53,000)	$	46,893

(1) Represents letters of credit by counterparties.


Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		AT DEC. 31, 2021
				GROSS AMOUNTS OFFSET ON THE BALANCE SHEET				GROSS AMOUNTS NOT OFFSET ON THE BALANCE SHEET (1)
(THOUSANDS)	BALANCE SHEET LINE ITEM	GROSS ASSET (LIABILITY)		CONTRACT NETTING		NET ASSET (LIABILITY) ON THE BALANCE SHEET		COLLATERAL		NET AMOUNT
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	6,977	$	—	$	6,977	$	—	$	6,977
Current	Energy risk management liabilities	(834)		—		(834)		—		(834)
Natural gas derivatives
Current	Energy risk management assets	37,061		(559)		36,502		(15,000)		21,502
Non-current	Energy risk management assets	50,962		—		50,962		—		50,962
Current	Energy risk management liabilities	(559)		559		—		—		—

Commodity-related contracts, net		$	93,607	$	—	$	93,607	$	(15,000)	$	78,607

(1) Represents letters of credit by counterparties.


Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		AT DEC. 31,
(THOUSANDS)	BALANCE SHEET LINE ITEM	2022		2021
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	2,570	$	5,515
Current	Energy risk management liabilities	(294)		(597)
Natural gas derivatives
Current	Energy risk management liabilities	(4,570)		—

Commodity-related contracts, net		$	(2,294)	$	4,918

The following tables present the effect of derivatives not designated as hedging instruments on Cleco’s and Cleco Power’s Consolidated Statements of Income for the years December 31, 2022, 2021, and 2020:


Cleco
	AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	DERIVATIVES LINE ITEM	2022		2021			2020
Commodity contracts
FTRs (1)	Electric operations	$	14,118	$	12,797		$	9,213
FTRs (1)	Purchased power	(10,829)		(14,813)		(2)	(10,141)		(2)
Natural gas derivatives (3)	Fuel used for electric generation	180,522		134,144			12,159		(2)
Total		$	183,811	$	132,128		$	11,231

(1) For the years ended December 31, 2022, 2021, and 2020, unrealized (losses) gains associated with FTRs for Cleco Power of $(0.5) million, $2.8 million and $0.5 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

(2) Prior year balance has been revised to correct errors that were immaterial for the years ended December 31, 2021, and 2020.

(3) For the year ended December 31, 2022, unrealized gains associated with natural gas derivatives for Cleco Power of $4.9 million were reported through Accumulated deferred fuel on the balance sheet. Cleco Power had no natural gas derivatives during the years ended December 31, 2021, and 2020.


Cleco Power
	AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	DERIVATIVES LINE ITEM	2022		2021		2020
Commodity contracts (1)
FTRs (2)	Electric operations	$	14,118	$	12,797	$	9,213
FTRs (2)	Purchased power	(7,331)		(10,360)		(6,803)

Total		$	6,787	$	2,437	$	2,410

(1) For the year ended December 31, 2022, unrealized gains associated with natural gas derivatives of $4.9 million were reported through Accumulated deferred fuel on the balance sheet. Cleco Power had no natural gas derivatives during the years ended December 31, 2021, and 2020.

(2) For the years ended December 31, 2022, 2021, and 2020, unrealized (losses) gains associated with FTRs of $(0.5) million, $2.8 million, and $0.5 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

The following tables present the volume of commodity-related derivative contracts outstanding at December 31, 2022, and 2021 for Cleco and Cleco Power:

Cleco

TOTAL VOLUME OUTSTANDING

UNIT OF MEASURE

AT DEC. 31,

(THOUSAND)

2022

2021

Commodity-related contracts

FTRs

MWh

14,656

14,055

Natural gas derivatives

MMBtus

85,350

109,306

Cleco Power