Variable Interest Entities

12 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Note 15 — Variable Interest Entities

Cleco Securitization I

Cleco Securitization I is a special-purpose, wholly owned subsidiary of Cleco Power that was formed for the purpose of issuing storm recovery bonds to finance the securitization of Storm Recovery Property at Cleco Power. On June 22, 2022, the securitized financing was complete. Cleco Securitization I’s assets cannot be used to settle Cleco Power’s obligations and the holders of the storm recovery bonds have no recourse against Cleco Power.

Because Cleco Securitization I’s equity at risk is less than 1% of its total assets, it is considered to be a variable interest entity. Through its equity ownership interest and role as servicer, Cleco Power has the power to direct the most significant financial and operating activities of Cleco Securitization I, including billing, collections, and remittance of retail customer cash receipts to enable Cleco Securitization I to pay the principal and interest payments on the storm recovery bonds. Cleco Power also has the obligation to absorb losses up to its equity investment and rights to receive returns from Cleco Securitization I. Therefore, management has determined that Cleco Power is the primary beneficiary of Cleco Securitization I, and as a result, Cleco Securitization I is included in the consolidated financial statements of Cleco Power. No gain or loss was recognized upon initial consolidation.

The following table summarizes the impact of Cleco Securitization I on Cleco’s and Cleco Power’s Consolidated Balance Sheets:

	AT DEC. 31,
(THOUSANDS)	2023		2022
Restricted cash - current	$	15,818	$	14,139
Accounts receivable - affiliate	3,492		3,348
Intangible asset - securitization	398,658		413,123
Total assets	$	417,968	$	430,610
Long-term debt due within one year	14,499		9,574
Accounts payable - affiliate	176		165
Interest accrued	6,191		9,953
Long-term debt, net	394,944		408,741
Total liabilities	415,810		428,433
Member’s equity	2,158		2,177
Total liabilities and member’s equity	$	417,968	$	430,610

The following table summarizes the impact of Cleco Securitization I on Cleco’s and Cleco Power’s Consolidated Statements of Income:

	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2023		2022
Operating revenue	$	33,913	$	13,181
Operating expenses	(14,884)		(2,992)
Interest income	537		63
Interest charges, net	(19,467)		(10,200)
Income before taxes	$	99	$	52

Oxbow

Cleco and Cleco Power apply the equity method of accounting to report the investment in Oxbow in the consolidated financial statements. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in investee on Cleco’s and Cleco Power’s Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco’s and Cleco Power’s Consolidated Statements of Income.

Oxbow is owned 50% by Cleco Power and 50% by SWEPCO. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco Power’s current assessment of its maximum exposure to loss related to Oxbow at December 31, 2023, consisted of its equity investment of approximately $2.0 million.

The following table presents the components of Cleco Power’s equity investment in Oxbow:

	AT DEC. 31,
INCEPTION TO DATE (THOUSANDS)	2023		2022
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Distributions	(17,280)		(17,200)
Total equity investment in investee	$	1,992	$	2,072

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco Power’s maximum exposure to loss related to its investment in Oxbow:

	AT DEC. 31,
(THOUSANDS)	2023		2022
Oxbow’s net assets/liabilities	$	3,985	$	4,145
Cleco Power’s 50% equity	$	1,992	$	2,072
Cleco Power’s maximum exposure to loss	$	1,992	$	2,072

The following tables contain summarized financial information for Oxbow:

	AT DEC. 31,
(THOUSANDS)	2023		2022
Current assets	$	5,385	$	6,187
Property, plant, and equipment, net	3,638		3,798
Total assets	$	9,023	$	9,985
Current liabilities	$	336	$	395
Other liabilities	4,702		5,445
Partners’ capital	3,985		4,145
Total liabilities and partners’ capital	$	9,023	$	9,985

	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2023		2022		2021
Operating revenue	$	327	$	332	$	5,155
Operating expenses	(424)		(332)		(5,155)
Interest income	97		—		—
Income before taxes	$	—	$	—	$	—

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.