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Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 2 — Summary of Significant Accounting Policies
Discontinued Operations
On November 22, 2023, the Cleco Cajun Divestiture Purchase and Sale Agreement was entered into between the Cleco Cajun Sellers and the Cleco Cajun Purchasers whereby the Cleco Cajun Sellers have agreed to sell the Cleco Cajun Sale Group to the Cleco Cajun Purchasers. Cleco Holdings’ management determined that the criteria under GAAP for the Cleco Cajun Sale Group to be classified as held for sale were met and the sale will represent a strategic shift that will have a major effect on Cleco’s future operations and financial results. Therefore, the results of operations and financial position of the Cleco Cajun Sale Group are presented as discontinued operations, and the financial information for historical periods provided in this Annual Report on Form 10-K has been recast to reflect this presentation. For more information, see Note 3 — “Discontinued Operations.”
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The accompanying consolidated financial statements of Cleco include the accounts of Cleco Holdings and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.
Following the formation of Cleco Securitization I and the closing of the storm recovery securitization financing on June 22, 2022, Cleco Power became the primary beneficiary of Cleco Securitization I, and as a result, the financial statements
of Cleco Securitization I are consolidated with the financial statements of Cleco Power. For additional information about Cleco Securitization I, see Note 15 — “Variable Interest Entities.” For additional information about the storm recovery securitization financing and its regulatory impacts, see Note 6— “Regulatory Assets and Liabilities — Deferred Storm Restoration Costs.”
Goodwill
Goodwill is the excess of the purchase price (consideration transferred and liabilities assumed) over the estimated fair value of net assets of the acquired business and is not subject to amortization. Goodwill is assessed as of August 1 of each year or more often if an event occurs or circumstances change that would indicate the carrying amount may be impaired. For more information on goodwill, see Note 18 — “Intangible Assets and Goodwill — Goodwill.”
Intangible Assets
Intangible assets include Cleco Securitization I’s right to bill and collect storm recovery charges and fair value adjustments for acquired long-term wholesale power supply agreements. These intangible assets are being amortized in a manner that best reflects the economic impact derived from such assets.
Impairment is tested if there are events or circumstances that indicate that an impairment analysis should be performed. If such an event or circumstance occurs, intangible impairment testing is performed prior to goodwill impairment testing. Impairment is calculated as the excess of the asset and liabilities’ respective carrying amounts over their respective fair values. For more information on intangible assets, see Note 18 — “Intangible Assets and Goodwill.”
Statements of Cash Flows
Cleco’s and Cleco Power’s Consolidated Statements of Cash Flows are prepared using the indirect method. This method requires adjusting net income to remove the effects of all deferrals and accruals of operating cash receipts and payments and to remove items whose cash effects are related to investing and financing cash flows.
Regulation
Cleco Power is subject to regulation by FERC and the LPSC. Cleco Cajun is subject to regulation by FERC. Cleco complies with the accounting policies and practices prescribed by its regulatory commissions. Cleco Power’s retail rates are regulated by the LPSC. Cleco Power’s and Cleco Cajun’s rates for transmission services are regulated by FERC. Rates for wholesale power sales are based on market-based rates. Cleco Power must evaluate its various transactions related to regulatory orders and accounting guidance to ensure the appropriate timing of revenue recognition, the evaluation of cost deferral, and the recoverability of certain assets and refund of certain liabilities. Cleco Power capitalizes or defers certain costs for recovery from its customers and recognizes a liability for amounts expected to be returned to its customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process. Regulatory assets and liabilities are amortized consistent with the treatment in the ratemaking process. Pursuant to this regulatory process, Cleco has recorded regulatory assets and liabilities.
Any future plan adopted by the LPSC for purposes of transitioning utilities from LPSC regulation to retail competition
may affect the regulatory assets and liabilities recorded by Cleco if the criteria for the application of the authoritative guidelines for industry regulated operations cannot continue to be met. At this time, Cleco cannot predict whether any legislation or regulation affecting Cleco will be enacted or adopted and, if enacted, what form such legislation or regulation may take.
For more information regarding the regulatory assets and liabilities recorded by Cleco Power, see Note 6 — “Regulatory Assets and Liabilities.” For more information on Cleco Power’s retail rates, see Note 14 — “Regulation and Rates.”
AROs
Cleco and Cleco Power recognize an ARO when there is a legal obligation under existing or enacted law, statute, written or oral contract, or by legal construction under the doctrine of promissory estoppel to incur costs to remove an asset when the asset is retired. These guidelines also require an ARO, which is conditional on a future event, to be recorded even if the event has not yet occurred.
Cleco and Cleco Power recognize AROs at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted to its present value each accounting period. Cleco Power defers this accretion as a regulatory asset based on its determination that these costs can be collected from customers. Concurrent with the recognition of the liability, Cleco and Cleco Power capitalize these costs to the related property, plant, and equipment asset. These capitalized costs are depreciated over the same period as the related property asset. Cleco Power also defers the current depreciation of the asset retirement cost as a regulatory asset.
For more information on Cleco’s ARO activity, see Note 16 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments.”
Property, Plant, and Equipment
Property, plant, and equipment consists primarily of electric utility generation and energy transmission and distribution assets. Property, plant, and equipment are stated at the cost to acquire or construct the assets, which includes certain materials, labor, payroll taxes and benefits, administrative and general costs, and the estimated cost of funds used during construction. Jointly owned assets are reflected in property, plant, and equipment at Cleco Power’s share of the cost to construct or purchase the respective assets. For information on jointly owned assets, see Note 7 — “Jointly Owned Generation Units.”
At the date of the 2016 Merger, Cleco’s gross balance of fixed depreciable assets was adjusted to be net of accumulated depreciation, as no accumulated depreciation existed on such date. Since pushdown accounting was not elected at the Cleco Power level, Cleco Power retained its accumulated depreciation.
Cleco’s cost of improvements to property, plant, and equipment is capitalized. Costs associated with repairs and major maintenance projects are expensed as incurred. Cleco capitalizes the cost to purchase or develop software for internal use. Cleco Power defers project costs to construction work in progress that it believes are prudently incurred and probable of recovery through future rates. These deferred costs are related to the initial stage of a construction project during which time the feasibility of the construction of property, plant, and equipment is being investigated.
Upon retirement or disposition, the cost of Cleco Power’s depreciable plant and the cost of removal, net of salvage value, are charged to accumulated depreciation. For Cleco’s other subsidiaries, upon disposition or retirement of depreciable assets, the difference between the net book value of the property and any proceeds received for the property is recorded as a gain or loss on asset disposition on Cleco’s Consolidated Statements of Income. Any cost incurred to remove the asset is charged to expense.
The amounts of unamortized computer software costs on Cleco’s Consolidated Balance Sheets at December 31, 2023, and 2022 were $156.7 million and $164.5 million, respectively. The amounts of unamortized computer software costs on Cleco Power’s Consolidated Balance Sheets at December 31, 2023, and 2022 were $154.9 million and $162.3 million, respectively. Amortization of capitalized computer software costs charged to expense in Cleco’s and Cleco Power’s Consolidated Statements of Income for the years ending December 31, 2023, 2022, and 2021 is shown in the following tables:

Cleco
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)202320222021
Amortization
$11,092 $11,881 $11,561 

Cleco Power
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)202320222021
Amortization
$10,650 $11,614 $11,268 

Depreciation on property, plant, and equipment is calculated primarily on a straight-line basis over the useful lives of the assets. The following table presents the useful lives of depreciable assets for Cleco and Cleco Power:

CATEGORY (YEARS)
YEARS
Utility Plants
Generation
10–55
Distribution
15–50
Transmission
5–55
Other utility plant
5–45
Other property, plant, and equipment
5–45

At December 31, 2023, and 2022, Cleco’s and Cleco Power’s property, plant, and equipment consisted of the following:

Cleco
AT DEC. 31,
(THOUSANDS)20232022
Utility plants
Generation$1,944,260 $1,926,482 
Distribution1,585,742 1,429,374 
Transmission844,897 789,181 
Other utility plant454,329 449,431 
Other property, plant, and equipment9,766 9,571 
Total property, plant, and equipment4,838,994 4,604,039 
Accumulated depreciation(924,624)(752,376)
Net property, plant, and equipment$3,914,370 $3,851,663 
Cleco Power
AT DEC. 31,
(THOUSANDS)20232022
Regulated utility plants
Generation$2,339,410 $2,321,640 
Distribution2,022,257 1,866,662 
Transmission1,056,218 1,000,783 
Other utility plant551,470 547,441 
Total property, plant, and equipment5,969,355 5,736,526 
Accumulated depreciation(2,244,217)(2,082,153)
Net property, plant, and equipment$3,725,138 $3,654,373 

During 2023, Cleco Power’s regulated utility property, plant, and equipment increased primarily due to the distribution system restoration and modernization project and the construction of new substations.
Cleco Power’s property, plant, and equipment includes plant acquisition costs related primarily to the acquisition of Acadia Unit 1 in 2010. The plant acquisition adjustment and accumulated amortization are reported in Property, plant, and equipment and Accumulated depreciation, respectively, on Cleco’s and Cleco Power’s Consolidated Balance Sheets at December 31, 2023, and 2022, and are shown in the following tables:

Cleco
AT DEC. 31,
(THOUSANDS)20232022
Acadia Unit 1
Plant acquisition adjustment$76,116 $76,116 
Accumulated amortization(24,566)(21,383)
Net plant acquisition adjustment$51,550 $54,733 

Cleco Power
AT DEC. 31,
(THOUSANDS)20232022
Acadia Unit 1
Plant acquisition adjustment$95,578 $95,578 
Accumulated amortization(44,028)(40,845)
Net plant acquisition adjustment$51,550 $54,733 
Fuel Inventory and Materials and Supplies
At December 31, 2023, and 2022, fuel inventory consisted primarily of petroleum coke, coal, limestone, and natural gas used to generate electricity.
Materials and supplies consists of transmission and distribution line construction and repair materials. It also consists of generating station and transmission and distribution substation repair materials.
Both fuel inventory and materials and supplies are recorded at the lower of cost or net realizable value using the average cost method and are issued from stock using the average cost of existing stock. Fuel inventory is recorded when purchased and subsequently charged to expense when used. Materials and supplies are recorded when purchased and subsequently charged to expense or capitalized to property, plant, and equipment when installed.
Reserves for Credit Losses
Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts
receivables are generally considered to become past due 20 days after the billing date. Cleco recognizes write-offs within the allowance for credit losses once all recovery methods have been exhausted. It is the policy of management to review accounts receivable and unbilled revenue monthly using a reserve matrix based on historical bad debt write-offs as well as current and forecasted economic conditions to establish a credit loss estimate. Management’s historical credit loss analysis included periods of economic recessions, natural disasters, and temporary changes to collection policies. Due to the critical necessity of electricity, none of these past events have significantly impacted Cleco’s credit loss rates.
As a result of the market price volatility of natural gas throughout 2022, Cleco experienced significant increases to the pass-through fuel component of retail customer energy bills. Due to these increased customer fuel costs, along with the impacts of a 40-year high inflation rate, Cleco experienced increases in credit loss reserves. These factors have not been material to Cleco’s results of operations, financial condition, or cash flows.
Cleco’s credit losses at December 31, 2023, are within normal levels and historical trends.
The table below presents the changes in the allowance for credit losses by receivable for Cleco and Cleco Power:

Cleco
(THOUSANDS)ACCOUNTS
RECEIVABLE
OTHER
TOTAL
Balances, Dec. 31, 2021$1,302 $1,638 $2,940 
Current period provision3,362 — 3,362 
Charge-offs(4,800)— (4,800)
Recovery1,283 — 1,283 
Balances, Dec. 31, 20221,147 1,638 2,785 
Current period provision5,506 — 5,506 
Charge-offs(4,939)— (4,939)
Recovery1,298 — 1,298 
Balances, Dec. 31, 2023$3,012 $1,638 $4,650 
Cleco Power
(THOUSANDS)ACCOUNTS
RECEIVABLE
Balances, Dec. 31, 2021$1,302 
Current period provision3,362 
Charge-offs(4,800)
Recovery1,283 
Balances, Dec. 31, 20221,147 
Current period provision5,506 
Charge-offs(4,939)
Recovery1,298 
Balances, Dec. 31, 2023$3,012 
Other Reserves
Cleco maintains property insurance on generating stations, buildings and contents, and substations. Cleco is self-insured for any damage to its power lines. To mitigate the exposure to potential financial loss for storm-related damage to lines and property, the LPSC approved Cleco Power to establish a funded storm reserve. For more information on the storm reserve, see Note 6 — “Regulatory Assets and Liabilities — Storm Reserves.”
Cleco also maintains liability and workers’ compensation insurance to mitigate financial losses due to injuries and damages to the property of others. Cleco’s insurance covers
claims that exceed certain self-insured limits. For claims within certain self-insured limits, Cleco maintains reserves. At December 31, 2023, and 2022, the general liability and workers compensation reserves together were $6.7 million and $6.9 million, respectively.
Additionally, Cleco maintains directors and officers insurance to protect managers from claims which may arise from their decisions and actions taken within the scope of their regular duties.
Cash Equivalents
Cleco considers highly liquid, marketable securities, and other similar instruments with original maturity dates of three months or less to be cash equivalents.
Restricted Cash and Cash Equivalents
Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general company purposes.
Cleco’s and Cleco Power’s restricted cash and cash equivalents consisted of the following:

Cleco
AT DEC. 31,
(THOUSANDS)20232022
Current
Cleco Power’s storm restoration costs - Hurricane Ida
$— $9,409 
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service15,818 14,140 
Total current15,818 23,549 
Non-current
Diversified Lands’ mitigation escrow24 23 
Cleco Power’s future storm restoration costs113,549 103,306 
Cleco Power’s storm restoration costs - Hurricane Ida— 6,086 
Total non-current113,573 109,415 
Total restricted cash and cash equivalents$129,391 $132,964 

Cleco Power
AT DEC. 31,
(THOUSANDS)20232022
Current
Storm restoration costs - Hurricane Ida$— $9,409 
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service15,818 14,140 
Total current15,818 23,549 
Non-current
Future storm restoration costs113,549 103,306 
Storm restoration costs - Hurricane Ida— 6,086 
Total non-current113,549 109,392 
Total restricted cash and cash equivalents$129,367 $132,941 

On September 20, 2023, the LPSC approved a settlement for the prudency review of the remaining unrecovered Hurricane Ida storm restoration costs deferred as a regulatory asset. The settlement allowed Cleco Power to withdraw the remaining unrecovered Hurricane Ida storm restoration costs, plus a carrying charge through September 2023, from the
Hurricane Ida storm reserve. The settlement also approved the transfer of the remaining balance of the Hurricane Ida storm reserve to the restricted reserve for future storm restoration costs. As a result of the settlement, the corresponding Hurricane Ida restricted cash and cash equivalents was reduced by $10.3 million and the remaining balance was transferred to the restricted cash and cash equivalents account for future storm restoration costs. For more information about the regulatory asset and storm reserves, see Note 6— “Regulatory Assets and Liabilities — Storm Reserves.”
Equity Investments
Cleco and Cleco Power account for investments in unconsolidated affiliated companies using the equity method of accounting. The amounts reported on Cleco’s and Cleco Power’s Consolidated Balance Sheets represent assets contributed by Cleco or Cleco Power, plus their share of the net income of the affiliate, less any distributions of earnings (dividends) received from the affiliate. The revenues and expenses (excluding income taxes) of these affiliates are netted and reported on one line item as equity income from investees on Cleco’s and Cleco Power’s Consolidated Statements of Income.
Cleco evaluates for impairments of equity method investments at each balance sheet date to determine if events and circumstances have occurred that indicate a possible other-than-temporary decline in the fair value of the investment and the possible inability to recover the carrying value through operations. Cleco uses estimates of the future cash flows from the investee and observable market transactions in order to calculate fair value and recoverability. An impairment is recognized when an other-than-temporary decline in market value occurs and recovery of the carrying value is not probable. There were no impairments recorded for 2023, 2022, or 2021. For more information on Cleco’s equity investments, see Note 15 — “Variable Interest Entities.”
Income Taxes
Cleco accounts for income taxes under the asset and liability method. Income taxes recorded on the income statement and related balance sheet amounts are comprised of a current portion and a deferred portion. The current portion represents Cleco’s estimate of the income taxes payable or receivable for the current year. The deferred portion represents Cleco’s estimate of the future income tax effects of events that have been recognized in the financial statements or income tax returns in the current or prior years. Cleco makes assumptions and estimates when it records income taxes, such as its ability to deduct items on its tax returns, the timing of the deduction, and the effect of regulation on income taxes. Cleco’s income tax expense and benefit and related assets and liabilities could be affected by changes in its assumptions and estimates and by ultimate resolution of assumptions and estimates with taxing authorities and changes in tax regulations. The actual results may differ from the estimated results based on these assumptions and may have a material effect on Cleco’s results of operations. Cleco Group files a federal income tax return for all wholly owned subsidiaries. Cleco Power computes its federal and state income taxes as if it were a stand-alone taxpayer. The LPSC generally requires Cleco Power to flow the effects of state income taxes to customers. For more information on income taxes, see Note 12 — “Income Taxes.”
Investment Tax Credits
Investment tax credits, which were deferred for financial statement purposes, are amortized as a reduction to income tax expense over the estimated service lives of the properties that gave rise to the credits.
Debt Issuance Costs, Premiums, and Discounts
Issuance costs, premiums, and discounts applicable to debt securities are amortized to interest expense ratably over the lives of the related issuances. Expenses and call premiums related to refinanced Cleco Power debt are deferred and amortized over the life of the new issuance. Debt issuance costs, premiums, and discounts are presented as a direct deduction from the carrying value of the related debt liability.
Revenue and Fuel Costs

Utility Revenue
Revenue from retail sales and transmission of electricity is recognized when the service is provided. The costs of fuel and purchased power used for Cleco Power’s retail customers currently are recovered from its customers through Cleco Power’s FAC. These costs are subject to audit and final determination by the LPSC. Sales taxes and pass-through fees collected on the sale of electricity are not recorded in utility revenue.
Cleco recognizes wholesale revenue, inclusive of both energy and capacity performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice.

Unbilled Revenue
Cleco Power accrues estimated revenue monthly for energy used by customers but not yet billed. The monthly estimated unbilled revenue amounts are recorded as unbilled revenue and a receivable. Cleco Power uses actual customer energy consumption data available from AMI to calculate unbilled revenues.

Other Operations Revenue
Other operations revenue is recognized at the time products or services are provided to and accepted by customers, and collectability is reasonably assured.

Sales and Use Taxes
Cleco collects a sales and use tax on the sale of electricity that subsequently is remitted to the state in accordance with state law. These amounts are not recorded as income or expense on Cleco’s or Cleco Power’s Consolidated Statements of Income but are reflected at gross amounts on Cleco’s and Cleco Power’s Consolidated Balance Sheets as a receivable until the tax is collected and as a payable until the liability is paid.

Franchise and Consumer Fees
Cleco Power operates under nonexclusive franchise rights granted by municipalities through franchise agreements in which franchise fees are collected and paid. A portion of the franchise fees associated with these franchise agreements is collected by Cleco Power from its retail customers and submitted to the municipality. These fees are recorded as a receivable until it is collected and as a payable until the liability is paid.
Cleco Power also pays periodic franchise fees to the government units, which may include upfront payments upon
the renewal of the franchise agreement. The upfront payments are amortized over the life of the franchise agreement and the periodic fees are expensed in the period in which they are incurred. These amounts are recovered from retail customers through base rates.
Cleco Power collects a consumer fee for one of its franchise agreements. This fee is not recorded on Cleco’s and Cleco Power’s Consolidated Statements of Income as revenue and expense, but is reflected at gross amounts on Cleco’s and Cleco Power’s Consolidated Balance Sheets as a receivable until it is collected and as a payable until the liability is paid.
AFUDC and Capitalized Interest
The capitalization of AFUDC by Cleco Power is a utility accounting practice prescribed by FERC and the LPSC.
AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance construction of new and existing facilities. While cash is not realized currently from such allowance, AFUDC increases the revenue requirement over the same life of the plant through a higher rate base and higher depreciation. Under regulatory practices, a return on and recovery of AFUDC is permitted in setting rates charged for utility services.
The following tables show the composite AFUDC rates, including borrowed and other funds for the years ended December 31, 2023, 2022, and 2021:
FOR THE YEAR ENDED DEC. 31,
202320222021
PRETAX BASISNET OF TAXPRETAX BASISNET OF TAXPRETAX BASISNET OF TAX
AFUDC composite rate8.11 %6.50 %9.06 %7.09 %10.05 %7.81 %
Fair Value Measurements and Disclosures
Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes. For more information about fair value levels, see Note 8 — “Fair Value Accounting Instruments.”
Derivatives and Other Risk Management Activity
Accounting guidance requires derivative instruments and hedging activities to be recognized at fair value on the balance sheet. Cleco may elect the normal purchase and normal sale scope exception to the application of fair value accounting for these instruments and activities if they meet certain accounting criteria. Cleco’s Energy Market Risk Management Policy authorizes hedging against commodity price risk with physical or financially settled derivative instruments. For Cleco Power, due to regulatory treatment, associated mark-to-market adjustments for changes in fair value of recognized derivatives are generally recognized in Accumulated deferred fuel on the balance sheet. For Cleco Cajun, the changes in the fair value of recognized natural gas derivatives are recorded in continuing operations. Cleco Cajun’s FTR activity is recorded in discontinued operations. For more information on derivative instruments, see Note 9 — “Derivative Instruments.”
Accounting for MISO Transactions
Cleco Power and Cleco Cajun participates in MISO’s Energy and Operating Reserve market and have the opportunity to participate in the MISO capacity market. For Cleco Power, the hourly power sales and purchases are netted. Net sales and net purchases are reported in Electric operations and Purchased power, respectively, on Cleco’s and Cleco Power’s Consolidated Statements of Income. Power sales and purchases in the MISO market are made at prevailing market prices, also known as LMP, which represents the cost of providing the next MW of electrical energy at a specific location on the grid. LMP includes a component directly
related to congestion on the transmission system and, as a result, can be different based on the location and time of the day the energy is dispatched causing energy costs to increase.
Power sales and purchases for Cleco Cajun are reported in discontinued operations. For more information, see Note 3 — “Discontinued Operations.”
Leases
Cleco determines if a contract is a lease at its inception. A lease is deemed to exist when the right to control the use of identified property, plant, or equipment is conveyed through a contract for a certain period of time and consideration is paid. If a contract is determined to be a lease, Cleco recognizes a ROU asset and lease liability at the commencement date based on the present value of lease payments over the lease term. The present value of the lease payments is determined by using the implicit interest rate if readily determinable. Cleco’s incremental borrowing rate for a term similar to the duration of the lease based on information available at the commencement date is used if the implicit interest rate is not readily determinable.
Cleco recognizes ROU assets and lease liabilities for leasing arrangements with terms greater than one year. Except for the marine transportation asset class, Cleco accounts for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco’s marine transportation contracts, which include barges and towboats, contain non-lease components, such as maintenance and labor. Cleco allocates the consideration in these contracts between lease and non-lease components based on estimates of fair value from third parties that typically execute leases for this class of assets.
Expense for a lessee operating lease is recognized as a single lease cost on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the leased asset’s function. Income for a lessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function. For more information on leases, see Note 4 — “Leases.”
Recent Authoritative Guidance
In November 2021, FASB issued guidance requiring annual disclosures about government assistance with the objective of increasing transparency and reducing existing diversity in practice. This guidance requires disclosure of the types of assistance, an entity’s accounting for the assistance, and the effect of the assistance on the entity’s financial statements. This guidance is effective for annual periods beginning after December 15, 2021. Management will continue to monitor this activity to determine what, if any, disclosures are required. Management does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.
A congressional appropriation has been secured, subject to the U.S. Department of Energy’s (DOE) grant process, to help offset current and future costs associated with Cleco Power’s Project Diamond Vault through November 2024. As of December 31, 2023, Cleco Power received $2.8 million of the $9.0 million congressional appropriation, and these funds were recorded against the deferred project costs incurred and reflected as construction work in progress. Cleco Power has commitments to complete the FEED study, comply with the DOE approved grant budget, and provide 20% of the funding of the total costs. The Louisiana Department of Economic Development (LED) has commitments to review plans and invoices, be the scientific and technical liaison, and conduct annual project reviews and meetings. The LED also has rights to audit costs submitted for reimbursement. If an audit finds that Cleco Power received funds that were not within the scope of the DOE grant, those amounts could be recaptured. On March 1, 2024, Cleco Power received an additional $1.4 million of the congressional appropriation. For more information related to the accounting for deferred project costs, see “— Property, Plant, and Equipment.”
In March 2023, FASB issued guidance that applies to leases between entities under common control. The guidance provides a practical expedient for determining whether an arrangement between entities under common control is a lease as well as the classification of the lease. In addition, the leasehold improvements amortization period is to be determined by the useful life to the common group rather than the term of the lease. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Cleco has arrangements between entities under common control and management is evaluating the impacts of this guidance on the results of operations, financial condition, and cash flows of the Registrants.
In November 2023, FASB issued guidance to improve reportable segment disclosure requirements. The guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. Disclosure requirements include disclosing significant segment expenses by reportable segment if they are regularly provided to the chief operating decision maker and included in each reported measure of segment profit or loss. Disclosures are required on both an annual and an interim basis. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Management does not expect this guidance to have a
significant impact on the results of operations, financial condition, or cash flows of the Registrants.