Regulatory Assets and Liabilities

6 Months Ended

Jun. 30, 2023

Regulated Operations [Abstract]

Regulatory Assets and Liabilities

Note 5 — Regulatory Assets and Liabilities

Cleco Power recognizes an asset for certain costs capitalized or deferred for recovery from customers and recognizes a liability for amounts expected to be returned to customers or collected for future expected costs. Cleco Power records these assets and liabilities based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

Under the current regulatory environment, Cleco Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or

competition, Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. In addition, potential deregulation of the industry, or possible

future changes in the method of rate regulation of Cleco Power, could require discontinuance of the application of the authoritative guidance on regulated operations.

The following table summarizes Cleco Power’s regulatory assets and liabilities:

Cleco Power
					REMAINING RECOVERY PERIOD (YRS.)
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Regulatory assets
Acadia Unit 1 acquisition costs	$	1,754	$	1,807	16.5
Accumulated deferred fuel (1)	5,050		57,881		Various
Affordability study	11,026		11,715		8
AFUDC equity gross-up	61,929		63,477		Various	(2)
AMI deferred revenue requirement	1,227		1,499		2.75
AROs (8)	18,636		17,218
Bayou Vista to Segura transmission project deferred revenue requirement	—		2,510
Coughlin transaction costs	799		815		26
COVID-19 executive order (8)	2,953		2,953
Deferred lignite and mine closure costs (7)	135,104		133,587
Deferred storm restoration costs - Hurricane Delta (6)	88		109
Deferred storm restoration costs - Hurricane Ida (7)	9,639		9,409
Deferred storm restoration costs - Hurricane Laura (6)	367		457
Deferred storm restoration costs - Hurricane Zeta (6)	7		9
Deferred taxes, net	33,983		8,803		Various
Dolet Hills Power Station closure costs (7)	147,238		147,082
Energy efficiency	—		235
Financing costs (1)	6,272		6,456		Various	(3)
Interest costs	3,085		3,210		Various	(2)
Madison Unit 3 property taxes	13,150		13,038		Various	(9)
Non-service cost of postretirement benefits	14,878		14,810		Various	(2)
Other	15,508		14,114		Various
Postretirement costs	47,317		47,317		Various	(4)
Production operations and maintenance expenses	9,010		10,443		Various	(5)
Rodemacher Unit 2 deferred costs (8)	15,635		12,645
St. Mary Clean Energy Center	3,480		4,350		2
Training costs	5,696		5,774		36.5
Tree trimming costs	5,015		6,377		1.75
Total regulatory assets	568,846		598,100
Regulatory liabilities
Deferred taxes, net	(41,389)		(42,890)		Various
Storm reserves	(119,276)		(118,762)
Total regulatory liabilities	(160,665)		(161,652)
Total regulatory assets, net	$	408,181	$	436,448
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at June 30, 2023, and December 31, 2022. All other assets are earning a return on investment. (2) Amortized over the estimated lives of the respective assets. (3) Amortized over the terms of the related debt issuances. (4) Amortized over the average service life of the remaining plan participants. (5) Deferral is recovered over the following three-year regulatory period. (6) From June 1, 2021, through August 31, 2022, these were being recovered through the interim storm recovery rate. The storm recovery surcharge became effective on September 1, 2022. (7) Currently not in a recovery period. The balance remaining represents amounts under a prudency review by the LPSC. (8) Currently not in a recovery period. (9) Beginning July 1, 2021, property taxes paid for the year ended December 31, are being amortized over the subsequent 12 months beginning July 1.

The following table summarizes Cleco’s net regulatory assets and liabilities:

Cleco
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Total Cleco Power regulatory assets, net	$	408,181	$	436,448
2016 Merger adjustments *
Fair value of long-term debt	101,047		104,748
Postretirement costs	10,442		11,436
Financing costs	6,732		6,904
Debt issuance costs	4,421		4,587
Total Cleco regulatory assets, net	$	530,823	$	564,123

* Cleco regulatory assets include acquisition accounting adjustments as a result of the 2016 Merger.

Accumulated Deferred Fuel

Cleco Power is allowed to recover the cost of fuel used for electric generation and power purchased for utility customers through the LPSC established FAC or related wholesale contract provisions, which enable Cleco Power to pass on to its customers substantially all such expenses.

At June 30, 2023, Cleco Power recorded a decrease of $52.8 million in the associated regulatory asset as a result of lower fuel costs.