Pension Plan and Employee Benefits

3 Months Ended

Mar. 31, 2023

Retirement Benefits [Abstract]

Pension Plan and Employee Benefits

Note 9 — 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, 2022, management estimates that pension contributions totaling $74.5 million will be required through 2027. Cleco expects to make a $26.0 million minimum required contribution to the pension plan in 2024. Cleco has not made, and does not expect to make, any contributions to the pension plan in 2023.

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 months ended March 31, 2023, and 2022 were as follows:

	PENSION BENEFITS				OTHER BENEFITS
	FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs
Service cost	$	1,173	$	2,047	$	365	$	546
Interest cost	6,606		4,960		566		368
Expected return on plan assets	(7,386)		(6,177)		—		—
Amortizations
Net loss (gain)	—		3,085		(13)		298
Net periodic benefit cost	$	393	$	3,915	$	918	$	1,212

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 months ended March 31, 2023, and 2022, was $0.4 million and $0.7 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 months ended March 31, 2023, and 2022, was $0.9 million and $1.1 million, respectively. The current and non-current portions of the Other Benefits liability for Cleco and

Cleco Power at March 31, 2023, and December 31, 2022, were as follows:

Cleco
(THOUSANDS)	AT MAR. 31, 2023		AT DEC. 31, 2022
Current	$	5,017	$	5,017
Non-current	$	38,089	$	38,366

Cleco Power
(THOUSANDS)	AT MAR. 31, 2023		AT DEC. 31, 2022
Current	$	4,310	$	4,310
Non-current	$	29,846	$	30,082

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 months ended March 31, 2023, and 2022 were as follows:

	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2023		2022
Components of periodic benefit costs
Service cost	$	35	$	57
Interest cost	901		670
Amortizations
Prior period service credit	(54)		(54)
Net (gain) loss	(15)		262
Net periodic benefit cost	$	867	$	935

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for both of the three months ended March 31, 2023, and 2022, was $0.1 million.

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 March 31, 2023, and December 31, 2022, were as follows:

Cleco
(THOUSANDS)	AT MAR. 31, 2023		AT DEC. 31, 2022
Current	$	4,713	$	4,713
Non-current	$	63,561	$	63,714

Cleco Power
(THOUSANDS)	AT MAR. 31, 2023		AT DEC. 31, 2022
Current	$	672	$	672
Non-current	$	8,997	$	9,087

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 months ended March 31, 2023, and 2022 was as follows:

	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2023		2022
401(k) Plan expense	$	2,154	$	2,179

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 months ended March 31, 2023, and 2022 was as follows:

	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2023		2022
401(k) Plan expense	$	902	$	910