Cleco Power 10Q 2023 Q2 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-15759

CLECO CORPORATE HOLDINGS LLC

(Exact name of registrant as specified in its charter)


Louisiana			72-1445282
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400

Commission file number 1-05663

CLECO POWER LLC

(Exact name of registrant as specified in its charter)


Louisiana			72-0244480
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400


Securities registered pursuant to Section 12(b) of the Act:
Cleco Corporate Holdings LLC: None			Cleco Power LLC: None

Indicate by check mark whether the Registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the Registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit such files). Yes ☒ No ☐

Indicate by check mark whether Cleco Corporate Holdings LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐

Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Cleco Corporate Holdings LLC has no common stock outstanding. All of the outstanding equity of Cleco Corporate Holdings LLC is held by Cleco Group LLC, a wholly owned subsidiary of Cleco Partners L.P.

Cleco Power LLC, a wholly owned subsidiary of Cleco Corporate Holdings LLC, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

This Combined Quarterly Report on Form 10-Q (this “Quarterly Report on Form 10-Q”) is separately filed by Cleco Corporate Holdings LLC and Cleco Power LLC. Information in this filing relating to Cleco Power LLC is filed by Cleco Corporate Holdings LLC and separately by Cleco Power LLC on its own behalf. Cleco Power LLC makes no representation as to information relating to Cleco Corporate Holdings LLC (except as it may relate to Cleco Power LLC) or any other affiliate or subsidiary of Cleco Corporate Holdings LLC.

This Quarterly Report on Form 10-Q should be read in its entirety as it pertains to each respective Registrant. The Notes to the Unaudited Condensed Consolidated Financial Statements for the Registrants and certain other sections of this Quarterly Report on Form 10-Q are combined.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


GLOSSARY OF TERMS

Abbreviations or acronyms used in this filing, including all items in Parts I and II, are defined below.


ABBREVIATION OR ACRONYM			DEFINITION
2016 Merger			Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016
2016 Merger Commitments			Cleco Partners’, Cleco Group’s, Cleco Holdings’, and Cleco Power’s 77 commitments to the LPSC as defined in Docket No. U-33434
401(k) Plan			Cleco Power 401(k) Savings and Investment Plan
ABR			Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or SOFR plus 1.0%
Acadia			Acadia Power Partners, LLC, previously a wholly owned subsidiary of Midstream. Acadia Power Partners, LLC was dissolved effective August 29, 2014.

Acadia Unit 1			Cleco Power’s 580-MW, natural gas-fired, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2			Entergy Louisiana’s 580-MW, natural gas-fired, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power

ADIT			Accumulated Deferred Income Tax
AFUDC			Allowance for Funds Used During Construction
Amended Lignite Mining Agreement			Amended and restated lignite mining agreement effective December 29, 2009
AMI			Advanced Metering Infrastructure
AOCI			Accumulated Other Comprehensive Income (Loss)
ARO			Asset Retirement Obligation



Big Cajun II			Cleco Cajun’s generating facility located in New Roads, Louisiana consisting of Unit 1, Unit 2, and Unit 3. Cleco Cajun has a 58% ownership interest in the capacity of Unit 3.






CCR			Coal combustion by-products or residual


CEO			Chief Executive Officer
CFO			Chief Financial Officer
CIP			Critical Infrastructure Protection
Cleco			Cleco Holdings and its subsidiaries
Cleco Cajun			Cleco Cajun LLC and its subsidiaries
Cleco Cajun Sale Group			Cleco Cajun’s business for which Cleco Holdings’ management and Board of Managers have committed to a plan to divest through a sale to one or more parties, subject to Board of Managers approval

Cleco Cajun Transaction			The transaction between Cleco Cajun and NRG Energy in which Cleco Cajun acquired all the membership interest in South Central Generating, which closed on February 4, 2019, pursuant to the Purchase and Sale Agreement, which includes the Cottonwood Sale Leaseback
Cleco Corporation			Pre-2016 Merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016

Cleco Group			Cleco Group LLC, a wholly owned subsidiary of Cleco Partners
Cleco Holdings			Cleco Corporate Holdings LLC, a wholly owned subsidiary of Cleco Group

Cleco Partners			Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by Macquarie Asset Management, British Columbia Investment Management Corporation, John Hancock Financial, and other infrastructure investors
Cleco Power			Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings
Cleco Securitization I			Cleco Securitization I LLC, a special-purpose, wholly owned subsidiary of Cleco Power

Como 1			Como 1, L.P., currently known as Cleco Partners

Cottonwood Energy			Cottonwood Energy Company LP, a wholly owned subsidiary of Cleco Cajun. Prior to the closing of the Cleco Cajun Transaction on February 4, 2019, Cottonwood Energy was an indirect subsidiary of South Central Generating.
Cottonwood Plant			Cleco Cajun’s 1,263-MW, natural gas-fired, combined cycle generating station located in Deweyville, Texas
Cottonwood Sale Leaseback			A lease agreement executed and delivered between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the Cottonwood Plant and will operate it until no later than May 2025.
Coughlin			Cleco Power’s 775-MW, natural gas-fired, combined cycle power plant located in St. Landry, Louisiana
COVID-19			Coronavirus disease 2019, including any variant thereof, and the related global outbreak that was subsequently declared a pandemic by the World Health Organization in March 2020



DHLC			Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands			Diversified Lands LLC, a wholly owned subsidiary of Cleco Holdings


Dolet Hills			A facility consisting of Dolet Hills Power Station, the Dolet Hills mine, and the Oxbow mine
Dolet Hills Power Station			A 650-MW lignite-fired, steam generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of the Dolet Hills Power Station. The Dolet Hills Power Station was retired on December 31, 2021.
EAC			Environmental Adjustment Clause

EBITDA			Earnings before interest, income taxes, depreciation, and amortization



Entergy Gulf States			Entergy Gulf States Louisiana, LLC


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


ABBREVIATION OR ACRONYM			DEFINITION
Entergy Louisiana			Entergy Louisiana, LLC
EPA			U.S. Environmental Protection Agency

ESG			Environmental, Social, and Governance

FAC			Fuel Adjustment Clause
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
Fitch			Fitch Ratings, a credit rating agency
FTR			Financial Transmission Right
FRP			Formula Rate Plan
GAAP			Generally Accepted Accounting Principles in the U.S.
GHG			Greenhouse gas

IRA of 2022			Federal tax legislation commonly referred to as the Inflation Reduction Act of 2022


IRS			Internal Revenue Service

kWh			Kilowatt-hour(s)



LIBOR			London Interbank Offered Rate


LPSC			Louisiana Public Service Commission


Madison Unit 3			A 641-MW petroleum coke/coal-fired, steam generating unit at Cleco Power’s plant site in Boyce, Louisiana

MATS			Mercury and Air Toxics Standards
Merger Agreement			Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation relating to the 2016 Merger
Merger Sub			Cleco MergerSub Inc., previously an indirect wholly owned subsidiary of Cleco Partners that was merged with and into Cleco Corporation, with Cleco Corporation surviving the 2016 Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings
Midstream			Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Holdings

MISO			Midcontinent Independent System Operator, Inc.
MMBtu			One million British thermal units
Moody’s			Moody’s Investors Service, a credit rating agency
MW			Megawatt(s)
MWh			Megawatt-hour(s)


NERC			North American Electric Reliability Corporation




Not Meaningful			A percentage comparison of these items is not statistically meaningful because the percentage difference is greater than 1,000%


NRG Energy			NRG Energy, Inc.







Other Benefits			Includes medical, dental, vision, and life insurance for Cleco’s retirees
Oxbow			Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO


Perryville			Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Holdings. Perryville Energy Partners, L.L.C. was dissolved effective September 8, 2021.



Purchase and Sale Agreement			Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, South Central Generating, and Cleco Cajun

Registrant(s)			Cleco Holdings and/or Cleco Power

Rodemacher Unit 2			A 523-MW coal-fired, steam generating unit at Cleco Power’s plant site in Boyce, Louisiana. Cleco Power has a 30% ownership interest in the capacity of Rodemacher Unit 2.
ROE			Return on Equity


RTO			Regional Transmission Organization
S&P			S&P Global Ratings, a division of S&P Global Inc, a credit rating agency

SEC			U.S. Securities and Exchange Commission


SERP			Supplemental Executive Retirement Plan


SOFR			Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York
South Central Generating			South Central Generating LLC, formerly NRG South Central Generating LLC, a wholly owned subsidiary of Cleco Cajun






Storm Recovery Property			Storm Recovery Property as defined in the financing order issued by the LPSC in April 2022, which includes the right to impose, bill, charge, collect, and receive unamortized storm recovery costs from Cleco Power’s retail customers.
Support Group			Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO			Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
TCJA			Federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
Teche Unit 3			A 359-MW natural gas-fired, steam generating unit at Cleco Power’s plant site in Baldwin, Louisiana


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements, including, without limitation, future capital expenditures; business strategies; goals, beliefs, plans, and objectives; competitive strengths; market developments; development and operation of facilities; growth in sales volume; meeting capacity requirements; expansion of service to existing customers and service to new customers; future environmental regulations and remediation liabilities; electric customer credits; and the anticipated outcome of various regulatory and legal proceedings. Although the Registrants believe that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties that could cause the actual results to differ materially from the Registrants’ expectations. In addition to any assumptions and other factors referred to specifically in connection with these forward-looking statements in this Quarterly Report on Form 10-Q, the following list identifies some of the factors that could cause the Registrants’ actual results to differ materially from those contemplated in any of the Registrants’ forward-looking statements:

•the uncertainty in the timing and ultimate outcome of the divestiture of the Cleco Cajun Sale Group,

•resolution of pending, upcoming, or future rate cases and related litigation, formula rate proceedings, and related negotiations, as well as delays in cost recovery resulting from these proceedings,

•changes in environmental laws, regulations, decisions and policies, including present and potential environmental remediation costs, restrictions on GHG emissions, possible effects on Cleco’s generation resources, or prohibitions or restrictions on new or existing services, and Cleco’s compliance with these matters,

•state and federal regulatory decisions or related judicial decisions disallowing or delaying recovery of capital investments, operating costs, commodity costs, and the ordering of refunds to customers and discretion over allowed return on investment,

•the loss of regulatory accounting treatment, which could result in the write-off of regulatory assets and the loss of regulatory deferral and recovery mechanisms,

•economic, regulatory, or workforce impacts related to pandemics, epidemics, or other outbreaks,

•economic impacts related to conflicts and hostilities, including the current armed conflict in Ukraine,

•the possibility of stranded costs with respect to assets that may be retired as a result of new climate legislation, technological advances, a shift in demand, or legal action, and Cleco Power’s ability to recover stranded costs associated with these events,

•changes in climate and weather conditions, including natural disasters such as wind and ice storms, hurricanes, floods, and droughts, and Cleco Power’s ability to recover restoration and stranded costs associated with these events,

•the ability of Cleco’s customers to pay their utility bills on time due to costs related to volatile fuel prices, severe weather recoveries, or the costs of other events that are passed through to Cleco Power’s customers,

•economic conditions in Cleco’s service areas, including inflation and the economy’s effects on customer demand for and payment of utility services,

•mechanical breakdowns or other incidents that could impair assets and disrupt operations of any of Cleco’s generation facilities, transmission and distribution systems, or other operations and may require Cleco to purchase replacement power or incur costs to repair the facilities,

•growth or decline of Cleco’s customer base, or decline in existing services, including the loss of key suppliers for fuel, materials, or services, or other disruptions to the supply chain,

•wholesale and retail competition, including alternative energy sources, growth in customer-owned power resource technologies that displace utility-supplied energy or that may be sold back to the utility, and alternative energy suppliers and delivery arrangements,

•blackouts or disruptions of interconnected transmission systems (the regional power grid),

•terrorist attacks, cyberattacks, or other malicious acts that may damage or disrupt operating or information technology systems,

•changes in technology costs that impede Cleco’s ability to effectively implement new information systems or to operate and maintain current production technology,

•changes in Cleco’s strategic business plans and/or key initiatives, which could be affected by any of the factors discussed herein,

•the impact of Cleco’s credit ratings, changes in interest rates, other capital market conditions, and global market conditions on financing through the issuance of debt and/or equity securities,

•adverse developments affecting financial institutions, including bank failures,

•changes to federal income tax laws, regulations, and interpretive guidance, including the IRA of 2022,

•failure to meet expectations and report progress on ESG initiatives and GHG targets, as well as the increased focus on and activism related to ESG, which could limit Cleco’s access to capital and/or financing,

•declining energy demand related to customer energy efficiency, conservation measures, technological advancements, or increased distributed generation,

•industry and geographic concentrations of Cleco’s counterparties, suppliers, and customers,

•volatility and illiquidity in wholesale energy markets,

•default or nonperformance on the part of any parties from whom Cleco purchases and/or sells capacity, energy, or fuel,


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

•Cleco Holdings’ and Cleco Power’s ability to remain in compliance with their respective debt covenants,

•the outcome of legal and regulatory proceedings and other contingencies,

•changes in actuarial assumptions, interest rates, and the actual return on plan assets for Cleco’s pension and other postretirement benefit plans,

•insufficient insurance coverage, more restrictive coverage terms, increasing insurance costs, and Cleco’s ability to obtain insurance,

•Cleco’s ability to remain in compliance with the commitments made to the LPSC in connection with the Cleco Cajun Transaction and the 2016 Merger,

•Cleco Holdings’ dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations, and

•workforce factors, including aging workforce, changes in key members of management, availability of workers in a variety

of skill areas, and Cleco’s ability to attract, recruit, and retain qualified employees.

For more discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, see Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and Part I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

All subsequent written and oral forward-looking statements attributable to the Registrants, or persons acting on their

behalf, are expressly qualified in their entirety by the factors identified above.

Any forward-looking statement is considered only as of the date of this Quarterly Report on Form 10-Q and, except as required by law, the Registrants undertake no obligation to update any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


PART I — FINANCIAL INFORMATION


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Operating revenue
Electric operations	$	260,789	$	366,194
Other operations	24,742		18,688

Gross operating revenue	285,531		384,882
Electric customer credits	(736)		(129)
Operating revenue, net	284,795		384,753
Operating expenses
Fuel used for electric generation	62,800		149,658
Purchased power	40,845		51,412
Other operations and maintenance	60,754		55,856
Depreciation and amortization	45,768		46,253
Taxes other than income taxes	15,249		12,307



Total operating expenses	225,416		315,486
Operating income	59,379		69,267
Interest income	673		1,066
Allowance for equity funds used during construction	1,574		808

Other expense, net	(789)		(8,470)
Interest charges
Interest charges, net	41,317		35,501
Allowance for borrowed funds used during construction	(549)		(354)
Total interest charges	40,768		35,147
Income from continuing operations before income taxes	20,069		27,524
Federal and state income tax benefit	(2,989)		(3,577)
Income from continuing operations, net of income taxes	23,058		31,101
Income (loss) from discontinued operations, net of income taxes	24,272		(29,738)
Net income	$	47,330	$	1,363
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Net income	$	47,330	$	1,363
Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $156 in 2023 and tax expense of $2 in 2022)	(423)		7

Total other comprehensive (loss) income, net of tax	(423)		7
Comprehensive income, net of tax	$	46,907	$	1,370
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Operating revenue
Electric operations	$	554,717	$	659,871
Other operations	52,046		37,774

Gross operating revenue	606,763		697,645
Electric customer credits	(1,386)		(265)
Operating revenue, net	605,377		697,380
Operating expenses
Fuel used for electric generation	181,411		250,239
Purchased power	81,283		101,822
Other operations and maintenance	118,275		108,022
Depreciation and amortization	98,557		93,451
Taxes other than income taxes	32,036		25,677



Total operating expenses	511,562		579,211
Operating income	93,815		118,169
Interest income	1,940		1,809
Allowance for equity funds used during construction	2,806		1,740

Other expense, net	(252)		(8,747)
Interest charges
Interest charges, net	81,322		68,525
Allowance for borrowed funds used during construction	(1,066)		(737)
Total interest charges	80,256		67,788
Income from continuing operations before income taxes	18,053		45,183
Federal and state income tax benefit	(3,154)		(11,110)
Income from continuing operations, net of income taxes	21,207		56,293
(Loss) income from discontinued operations, net of income taxes	(77,899)		100,814
Net (loss) income	$	(56,692)	$	157,107
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Net (loss) income	$	(56,692)	$	157,107
Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $311 in 2023 and tax expense of $8 in 2022)	(845)		21

Total other comprehensive (loss) income, net of tax	(845)		21
Comprehensive (loss) income, net of tax	$	(57,537)	$	157,128
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Assets
Current assets
Cash and cash equivalents	$	71,857	$	48,041
Restricted cash and cash equivalents	22,671		23,549
Customer accounts receivable (less allowance for credit losses of $1,252 in 2023 and $1,147 in 2022)	43,622		72,646
Accounts receivable - affiliate	19,964		14,611
Other accounts receivable	30,625		35,406

Unbilled revenue	50,856		46,040
Fuel inventory, at average cost	106,734		57,078
Materials and supplies, at average cost	134,636		116,943
Energy risk management assets	7,672		2,570
Accumulated deferred fuel	5,050		57,881
Cash surrender value of company-/trust-owned life insurance policies	54,728		52,859
Prepayments	20,500		16,623
Regulatory assets	47,888		47,173
Assets held for sale - discontinued operations	222,548		191,609
Other current assets	876		838
Total current assets	840,227		783,867
Property, plant, and equipment
Property, plant, and equipment	4,694,757		4,601,977
Accumulated depreciation	(838,302)		(752,184)
Net property, plant, and equipment	3,856,455		3,849,793
Construction work in progress	132,628		114,310
Total property, plant, and equipment, net	3,989,083		3,964,103
Equity investment in investee	2,072		2,072
Goodwill	1,490,797		1,490,797
Prepayments	1,509		1,512
Operating lease right of use assets	21,441		22,636
Restricted cash and cash equivalents	111,109		109,415
Note receivable	12,460		12,908
Regulatory assets - deferred taxes, net	33,983		8,803
Regulatory assets	604,567		611,917
Intangible asset - securitization	407,571		413,123
Intangible assets - other	15,279		20,086
Assets held for sale - discontinued operations	611,449		787,925


Other deferred charges	30,000		24,585
Total assets	$	8,171,547	$	8,253,749
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Liabilities and member’s equity
Liabilities
Current liabilities
Short-term debt	$	120,000	$	109,000
Long-term debt and finance leases due within one year	371,758		340,867
Accounts payable	108,261		131,627
Accounts payable - affiliate	13,122		13,092
Customer deposits	57,924		57,851
Provision for rate refund	3,399		3,074
Taxes payable	56,120		16,905
Interest accrued	22,132		25,540

Energy risk management liabilities	1,519		4,864
Regulatory liabilities - deferred taxes, net	41,389		42,890
Deferred compensation	13,190		12,162
Storm reserves	9,639		9,409
Liabilities held for sale - discontinued operations	69,676		76,102
Other current liabilities	31,658		29,314
Total current liabilities	919,787		872,697
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	796,243		820,300

Postretirement benefit obligations	200,093		200,665


Storm reserves	109,637		109,353




Asset retirement obligations	11,578		15,429
Operating lease liabilities	18,557		19,790
Liabilities held for sale - discontinued operations	75,978		94,467
Other deferred credits	47,937		34,887
Total long-term liabilities and deferred credits	1,260,023		1,294,891
Long-term debt and finance leases, net	3,102,207		3,139,094
Total liabilities	5,282,017		5,306,682
Commitments and contingencies (Note 14)
Member’s equity	2,889,530		2,947,067
Total liabilities and member’s equity	$	8,171,547	$	8,253,749
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023			2022
Operating activities
Net (loss) income	$	(56,692)		$	157,107
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation and amortization	127,002			154,322
Provision for credit losses	2,146			1,210


Unearned compensation expense	4,641			2,380
Allowance for equity funds used during construction	(2,806)			(1,740)
Loss (gain) on energy risk management assets and liabilities, net	69,469			(89,991)
Loss on classification as held for sale	116,000			—
Deferred lease revenue	(2,301)			(4,603)
Deferred income taxes	(51,559)			17,522
Cash surrender value of company-/trust-owned life insurance	(889)			3,092
Changes in assets and liabilities
Accounts receivable	29,310			(49,606)
Accounts receivable, affiliate	(5,351)			(3,808)
Unbilled revenue	(4,816)			(11,002)
Fuel inventory and materials and supplies	(129,183)			(39,802)
Prepayments	(11,332)			(8,494)
Accounts payable	(31,200)			51,850
Accounts payable - affiliate	30			(40,664)
Customer deposits	2,219			6,034


Regulatory assets and liabilities, net	1,716			1,815
Asset retirement obligation	(4,520)			505
Deferred fuel recoveries	46,502			(38,992)
Other deferred accounts	(5,240)			(3,248)
Taxes accrued	40,297			32,616
Interest accrued	(3,408)			465
Energy risk management collateral	(6,500)			42,500

Other operating	824			(4,961)
Net cash provided by operating activities	124,359			174,507
Investing activities
Additions to property, plant, and equipment	(115,159)			(101,673)












Return of investment in company-owned life insurance	417			15,671
Other investing	1,177			891
Net cash used in investing activities	(113,565)			(85,111)
Financing activities
Draws on revolving credit facilities	96,000			55,000
Payments on revolving credit facilities	(85,000)			—
Issuances of long-term debt	—			424,946
Repayment of long-term debt	(3,204)			(325,000)
Payment of financing costs	—			(6,913)

Distributions to member	—			(132,838)
Other financing	(443)			(367)
Net cash provided by financing activities	7,353			14,828
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	18,147			104,224
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	191,572		(1)	150,982
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	209,719	(2)	$	255,206
(1) Includes cash and cash equivalents of $48,041, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,415. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $10,567. (2) Includes cash and cash equivalents of $71,857, current restricted cash and cash equivalents of $22,671, and non-current restricted cash and cash equivalents of $111,109. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,082.

The accompanying notes are an integral part of the condensed consolidated financial statements.


(Continued on next page)


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Supplementary cash flow information
Interest paid, net of amount capitalized	$	85,393	$	64,035
Income taxes paid, net	$	2,162	$	—
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	6,558	$	5,626


Reduction in property, plant, and equipment due to securitization of capitalized storm costs	$	—	$	197,689



The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS		AOCI		TOTAL MEMBER’S EQUITY














Balances, Mar. 31, 2022	$	2,454,276	$	669,253	$	(23,615)	$	3,099,914

Distributions to member	—		(122,838)		—		(122,838)
Net income	—		1,363		—		1,363
Other comprehensive income, net of tax	—		—		7		7
Balances, June 30, 2022	$	2,454,276	$	547,778	$	(23,608)	$	2,978,446

Balances, Mar. 31, 2023	$	2,454,276	$	388,710	$	(363)	$	2,842,623


Net income	—		47,330		—		47,330
Other comprehensive loss, net of tax	—		—		(423)		(423)
Balances, June 30, 2023	$	2,454,276	$	436,040	$	(786)	$	2,889,530




















Balances, Dec. 31, 2021	$	2,454,276	$	523,509	$	(23,629)	$	2,954,156

Distributions to member	—		(132,838)		—		(132,838)
Net income	—		157,107		—		157,107
Other comprehensive income, net of tax	—		—		21		21
Balances, June 30, 2022	$	2,454,276	$	547,778	$	(23,608)	$	2,978,446

Balances, Dec. 31, 2022	$	2,454,276	$	492,732	$	59	$	2,947,067


Net loss	—		(56,692)		—		(56,692)
Other comprehensive loss, net of tax	—		—		(845)		(845)
Balances, June 30, 2023	$	2,454,276	$	436,040	$	(786)	$	2,889,530
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco Power

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Power’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Operating revenue
Electric operations	$	263,176	$	368,614
Other operations	24,741		18,686
Affiliate revenue	1,635		1,628
Gross operating revenue	289,552		388,928
Electric customer credits	(736)		(129)
Operating revenue, net	288,816		388,799
Operating expenses
Fuel used for electric generation	62,800		149,658
Purchased power	40,845		51,412
Other operations and maintenance	57,386		52,277
Depreciation and amortization	43,722		44,299
Taxes other than income taxes	14,342		11,547



Total operating expenses	219,095		309,193
Operating income	69,721		79,606
Interest income	579		1,035
Allowance for equity funds used during construction	1,574		808
Other expense, net	(1,005)		(2,225)
Interest charges
Interest charges, net	24,732		21,659
Allowance for borrowed funds used during construction	(549)		(354)
Total interest charges	24,183		21,305
Income before income taxes	46,686		57,919
Federal and state income tax expense	3,247		3,214
Net income	$	43,439	$	54,705
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Net income	$	43,439	$	54,705
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $36 in 2023 and $113 in 2022)	96		307
Amortization of interest rate derivatives to earnings (net of tax expense of $23 in 2023 and 2022)	63		63
Total other comprehensive income, net of tax	159		370
Comprehensive income, net of tax	$	43,598	$	55,075
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Operating revenue
Electric operations	$	559,524	$	664,711
Other operations	52,044		37,771
Affiliate revenue	3,323		3,087
Gross operating revenue	614,891		705,569
Electric customer credits	(1,386)		(265)
Operating revenue, net	613,505		705,304
Operating expenses
Fuel used for electric generation	181,411		250,239
Purchased power	81,283		101,822
Other operations and maintenance	111,377		101,006
Depreciation and amortization	94,454		89,538
Taxes other than income taxes	30,337		24,178



Total operating expenses	498,862		566,783
Operating income	114,643		138,521
Interest income	1,764		1,775
Allowance for equity funds used during construction	2,806		1,740
Other income (expense), net	301		(4,261)
Interest charges
Interest charges, net	49,587		40,845
Allowance for borrowed funds used during construction	(1,066)		(737)
Total interest charges	48,521		40,108
Income before income taxes	70,993		97,667
Federal and state income tax expense	4,737		3,938
Net income	$	66,256	$	93,729
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Net income	$	66,256	$	93,729
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $71 in 2023 and $226 in 2022)	192		613
Amortization of interest rate derivatives to earnings (net of tax expense of $46 in 2023 and 2022)	126		126
Total other comprehensive income, net of tax	318		739
Comprehensive income, net of tax	$	66,574	$	94,468
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Assets
Utility plant and equipment
Property, plant, and equipment	$	5,828,485	$	5,736,526
Accumulated depreciation	(2,163,184)		(2,082,153)
Net property, plant, and equipment	3,665,301		3,654,373
Construction work in progress	131,539		113,470
Total utility plant and equipment, net	3,796,840		3,767,843
Current assets
Cash and cash equivalents	30,518		14,703
Restricted cash and cash equivalents	22,671		23,549
Customer accounts receivable (less allowance for credit losses of $1,252 in 2023 and $1,147 in 2022)	43,622		72,646
Accounts receivable - affiliate	2,435		3,771
Other accounts receivable	28,765		33,444

Unbilled revenue	50,856		46,040
Fuel inventory, at average cost	106,734		57,078
Materials and supplies, at average cost	134,636		116,943
Energy risk management assets	7,672		2,570
Accumulated deferred fuel	5,050		57,881
Cash surrender value of company-owned life insurance policies	9,630		9,471
Prepayments	13,199		11,765
Regulatory assets	40,152		39,438
Other current assets	876		838
Total current assets	496,816		490,137
Equity investment in investee	2,072		2,072
Prepayments	1,422		1,493
Operating lease right of use assets	21,438		22,628
Restricted cash and cash equivalents	111,086		109,392
Note receivable	12,460		12,908
Regulatory assets - deferred taxes, net	33,983		8,803
Regulatory assets	489,661		491,978
Intangible asset - securitization	407,571		413,123


Other deferred charges	29,312		23,796
Total assets	$	5,402,661	$	5,344,173
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Liabilities and member’s equity
Member’s equity	$	2,064,486	$	2,022,912
Long-term debt and finance leases, net	1,654,151		1,786,447
Total capitalization	3,718,637		3,809,359
Current liabilities
Short-term debt	25,000		45,000
Long-term debt and finance leases due within one year	239,904		110,344
Accounts payable	98,740		119,435
Accounts payable - affiliate	13,352		12,448
Customer deposits	57,924		57,851
Provision for rate refund	3,399		3,074

Taxes payable	50,770		15,277
Interest accrued	11,628		15,276

Energy risk management liabilities	1,519		4,864
Regulatory liabilities - deferred taxes, net	41,389		42,890
Storm reserves	9,639		9,409
Other current liabilities	20,799		18,360
Total current liabilities	574,063		454,228
Commitments and contingencies (Note 14)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	790,265		770,127

Postretirement benefit obligations	137,501		137,754


Storm reserves	109,637		109,353



Asset retirement obligations	11,452		15,301
Operating lease liabilities	18,557		19,790
Other deferred credits	42,549		28,261
Total long-term liabilities and deferred credits	1,109,961		1,080,586
Total liabilities and member’s equity	$	5,402,661	$	5,344,173
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023			2022
Operating activities
Net income	$	66,256		$	93,729
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	97,305			93,589

Provision for credit losses	2,146			1,210



Allowance for equity funds used during construction	(2,806)			(1,740)
Deferred income taxes	(7,792)			4,334

Changes in assets and liabilities
Accounts receivable	29,659			(23,192)
Accounts receivable - affiliate	2,286			11,978
Unbilled revenue	(4,816)			(11,002)
Fuel inventory and materials and supplies	(66,595)			(39,493)
Prepayments	(1,093)			404
Accounts payable	(19,923)			29,774
Accounts payable - affiliate	663			(58,837)
Customer deposits	2,219			6,034



Asset retirement obligation	(4,361)			234
Deferred fuel recoveries	46,502			(38,992)
Other deferred accounts	755			1,340
Taxes accrued	34,574			23,668
Interest accrued	(3,648)			456
Other operating	2,906			(2,824)
Net cash provided by operating activities	174,237			90,670
Investing activities
Additions to property, plant, and equipment	(110,480)			(98,162)








Other investing	1,497			869
Net cash used in investing activities	(108,983)			(97,293)
Financing activities
Draws on revolving credit facility	25,000			55,000
Payments on revolving credit facility	(45,000)			—
Issuances of long-term debt	—			424,946
Repayment of long-term debt	(3,204)			(325,000)

Payment of financing costs	—			(6,906)

Distributions to member	(25,000)			(52,000)
Other financing	(419)			(367)
Net cash (used in) provided by financing activities	(48,623)			95,673
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	16,631			89,050
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	147,644		(1)	87,341
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	164,275	(2)	$	176,391

Supplementary cash flow information
Interest paid, net of amount capitalized	$	50,692		$	35,480

Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	5,908		$	5,345


Reduction in property, plant, and equipment due to securitization of capitalized storm costs	$	—		$	197,689


(1) Includes cash and cash equivalents of $14,703, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,392. (2) Includes cash and cash equivalents of $30,518, current restricted cash and cash equivalents of $22,671, and non-current restricted cash and cash equivalents of $111,086.

The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBERSHIP INTEREST		AOCI		TOTAL MEMBER’S EQUITY














Balances, Mar. 31, 2022	$	2,005,744	$	(17,814)	$	1,987,930

Distributions to member	(52,000)		—		(52,000)
Net income	54,705		—		54,705
Other comprehensive income, net of tax	—		370		370
Balances, June 30, 2022	$	2,008,449	$	(17,444)	$	1,991,005

Balances, Mar. 31, 2023	$	2,054,094	$	(8,206)	$	2,045,888

Net income	43,439		—		43,439
Distributions to member	(25,000)		—		(25,000)
Other comprehensive income, net of tax	—		159		159
Balances, June 30, 2023	$	2,072,533	$	(8,047)	$	2,064,486




















Balances, Dec. 31, 2021	$	1,966,720	$	(18,183)	$	1,948,537

Distributions to member	(52,000)		—		(52,000)
Net income	93,729		—		93,729
Other comprehensive income, net of tax	—		739		739
Balances, June 30, 2022	$	2,008,449	$	(17,444)	$	1,991,005

Balances, Dec. 31, 2022	$	2,031,277	$	(8,365)	$	2,022,912

Net income	66,256		—		66,256
Distributions to member	(25,000)		—		(25,000)
Other comprehensive income, net of tax	—		318		318
Balances, June 30, 2023	$	2,072,533	$	(8,047)	$	2,064,486
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants

Note 1	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 2	Recent Authoritative Guidance	Cleco and Cleco Power
Note 3	Discontinued Operations	Cleco
Note 4	Revenue Recognition	Cleco and Cleco Power
Note 5	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 6	Fair Value Accounting Instruments	Cleco and Cleco Power
Note 7	Derivative Instruments	Cleco and Cleco Power
Note 8	Debt	Cleco and Cleco Power
Note 9	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 10	Income Taxes	Cleco and Cleco Power
Note 11	Segment Disclosures	Cleco
Note 12	Regulation and Rates	Cleco and Cleco Power
Note 13	Variable Interest Entities	Cleco and Cleco Power
Note 14	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 15	Affiliate Transactions	Cleco and Cleco Power
Note 16	Intangible Assets	Cleco and Cleco Power
Note 17	Accumulated Other Comprehensive Loss	Cleco and Cleco Power


Notes to the Unaudited Condensed Consolidated Financial Statements


Note 1 — Summary of Significant Accounting Policies

Discontinued Operations

In 2022, Cleco Holdings engaged in a strategic review process related to its investment in Cleco Cajun. In March 2023, Cleco Holdings’ management, with the support of its Board of Managers, committed to a plan of action for the disposition of the Cleco Cajun Sale Group, with a sale probable and subject to customary regulatory and Board of Managers approvals. As a result, 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 will represent a strategic shift that will have a major effect on Cleco’s future operations and financial results. Therefore, the Cleco Cajun Sale Group is presented as discontinued operations. The financial information for historical periods provided in this report has been recast to present the results of operations and financial position of the Cleco Cajun Sale Group as discontinued operations. Cleco has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these condensed consolidated financial statements exclude amounts related to discontinued operations, assets held for sale, and liabilities held for sale for all periods presented. For more information, see Note 3 — “Discontinued Operations.”

Principles of Consolidation

The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco 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 13 — “Variable Interest Entities.”

Basis of Presentation

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements and adjusted for discontinued operations. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary for a fair statement of the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco’s and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

estimates. For information on recent authoritative guidance and its effect on financial results, see Note 2 — “Recent Authoritative Guidance.” For information on discontinued operations, see Note 3 — “Discontinued Operations.”

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 corporate purposes.

Cleco’s and Cleco Power’s restricted cash and cash equivalents consisted of the following:


Cleco
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Current
Cleco Power’s storm restoration costs - Hurricane Ida	$	9,639	$	9,409
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	13,032		14,140
Total current	22,671		23,549
Non-current
Diversified Lands’ mitigation escrow	23		23
Cleco Power’s future storm restoration costs	104,886		103,306
Cleco Power’s storm restoration costs - Hurricane Ida	6,200		6,086

Total non-current	111,109		109,415
Total restricted cash and cash equivalents	$	133,780	$	132,964


Cleco Power
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Current
Storm restoration costs - Hurricane Ida	$	9,639	$	9,409
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs	13,032		14,140
Total current	22,671		23,549
Non-current
Future storm restoration costs	104,886		103,306
Storm restoration costs - Hurricane Ida	6,200		6,086

Total non-current	111,086		109,392
Total restricted cash and cash equivalents	$	133,757	$	132,941

Reserves for Credit Losses

Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts receivable 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 and during the first and second quarters of 2023, Cleco has 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 has experienced increases in credit loss reserves. These factors have not been and are not expected to be material to Cleco’s results of operations, financial condition, or cash flows.

The tables below present the changes in the allowance for credit losses by receivable for Cleco and Cleco Power:


Cleco
	FOR THE THREE MONTHS ENDED JUNE 30, 2023						FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, beginning of period	$	1,127	$	1,638	$	2,765	$	1,147	$	1,638	$	2,785

Current period provision	906		—		906		2,146		—		2,146
Charge-offs	(1,108)		—		(1,108)		(2,746)		—		(2,746)
Recovery	327		—		327		705		—		705
Balances, June 30, 2023	$	1,252	$	1,638	$	2,890	$	1,252	$	1,638	$	2,890

* Loan held at Diversified Lands that was fully reserved at December 31, 2020.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED JUNE 30, 2022						FOR THE SIX MONTHS ENDED JUNE 30, 2022
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, beginning of period	$	1,002	$	1,638	$	2,640	$	1,302	$	1,638	$	2,940

Current period provision	819		—		819		1,210		—		1,210
Charge-offs	(916)		—		(916)		(2,005)		—		(2,005)
Recovery	285		—		285		683		—		683
Balances, June 30, 2022	$	1,190	$	1,638	$	2,828	$	1,190	$	1,638	$	2,828

* Loan held at Diversified Lands that was fully reserved at December 31, 2020.


Cleco Power
	FOR THE THREE MONTHS ENDED JUNE 30, 2023		FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, beginning of period	$	1,127	$	1,147

Current period provision	906		2,146
Charge-offs	(1,108)		(2,746)
Recovery	327		705
Balances, June 30, 2023	$	1,252	$	1,252


	FOR THE THREE MONTHS ENDED JUNE 30, 2022		FOR THE SIX MONTHS ENDED JUNE 30, 2022
(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, beginning of period	$	1,002	$	1,302

Current period provision	819		1,210
Charge-offs	(916)		(2,005)
Recovery	285		683
Balances, June 30, 2022	$	1,190	$	1,190


Note 2 — Recent Authoritative Guidance

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. 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.


Note 3 — Discontinued Operations

In March 2023, Cleco Holdings’ management, with the support of its Board of Managers, committed to a plan of action for the disposition of the Cleco Cajun Sale Group, with a sale probable and subject to customary regulatory and Board of Managers approvals. As a result, 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 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 report has been recast to reflect this presentation. Certain expenses incurred by the Cleco Cajun Sale Group as a result of common services provided by Support Group are reflected in Cleco’s results of continuing operations due to the expected ongoing nature of those expenses. In addition, revenue recognized by Cleco Power from transmission services provided to the Cleco Cajun Sale Group is no longer eliminated upon consolidation of Cleco's financial statements and is reflected in Cleco’s results of continuing operations due to the expected ongoing nature of these services.

In February 2019 in connection with the approval of the Cleco Cajun Transaction, Cleco made commitments to the LPSC that included the repayment of $400.0 million of Cleco Holdings’ debt by December 31, 2024. Proceeds from the divestiture of the Cleco Cajun Sale Group must be used to satisfy the LPSC commitment. At June 30, 2023, $132.3 million of that debt remains outstanding. Interest expense on that debt is included in discontinued operations.

As a result of Cleco’s determination that the held for sale criteria for the Cleco Cajun Sale Group were met, Cleco determined that the estimated fair value less the estimated cost to sell the Cleco Cajun Sale Group was less than the carrying value of the Cleco Cajun Sale Group. This resulted in an impairment charge of $96.0 million in the first quarter of 2023 and an additional impairment charge of $20.0 million in the second quarter of 2023. The impairment charges reduced the carrying value of the Cleco Cajun Sale Group to its estimated fair value less estimated cost to sell. The additional impairment charge was primarily due to changes in assumptions related to the expected sale proceeds and closing date. The impairment charges are recognized in Loss from discontinued operations, net of income taxes on Cleco's Condensed Consolidated Statement of Income. The estimated fair value was based on a weighted average of potential sale scenarios that were determined through the income and market approaches. The fair value estimates involved a number of judgments and assumptions including the future performance of the Cleco Cajun Sale Group through the expected divestiture date, the expected sale proceeds and the timing of such proceeds, replacement interconnection value, and the weighted average cost of capital or discount rate. The fair value measurement of the Cleco Cajun Sale Group is classified as Level 3 in the fair value hierarchy.

The following table presents the amounts that have been reclassified from continuing operations and included in discontinued operations within Cleco’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023, and 2022:


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Operating revenue, net
Electric operations	$	123,462	$	126,089	$	232,223	$	229,722
Other operations	26,469		36,712		61,182		72,324

Operating revenue, net	149,931		162,801		293,405		302,046
Operating expenses
Fuel used for electric generation	23,548		18,954		111,147		(84,134)
Purchased power	47,962		95,522		108,587		163,630
Other operations and maintenance	23,945		21,942		47,313		41,000
Depreciation and amortization	502		21,929		15,015		43,819

Total operating expenses	95,957		158,347		282,062		164,315
Operating income	53,974		4,454		11,343		137,731


Other (expense) income, net	(3)		(4)		131		84



Interest, net	(1,924)		(1,085)		(3,710)		(1,951)
Loss on classification as held for sale	(20,000)		—		(116,000)		—
Income (loss) from discontinued operations before income taxes	32,047		3,365		(108,236)		135,864

Federal and state income tax expense (benefit)	7,775		33,103		(30,337)		35,050
Income (loss) from discontinued operations, net of income taxes	$	24,272	$	(29,738)	$	(77,899)	$	100,814

The following table presents the assets and liabilities of the Cleco Cajun Sale Group that have been reclassified as held for sale within Cleco’s Condensed Consolidated Balance Sheets as of June 30, 2023, and December 31, 2022:


(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Cash, cash equivalents, and restricted cash equivalents	$	4,082	$	10,567

Accounts receivable	61,986		60,750



Fuel inventory, at average cost	95,147		33,153
Materials and supplies, at average cost	34,790		34,195
Energy risk management assets	42,752		106,164




Property, plant, and equipment, net	637,165		650,936
Prepayments	20,515		23,601



Intangible assets - other	32,569		36,548

Other assets	20,991		23,620
Loss recognized on classification as held for sale	(116,000)		—

Total assets held for sale - discontinued operations	$	833,997	$	979,534

Accounts payable	$	52,455	$	60,586










Deferred lease revenue	19,945		22,246
Intangible liabilities	12,695		13,956
Asset retirement obligations	45,212		63,725

Other liabilities	15,347		10,056

Total liabilities held for sale - discontinued operations	$	145,654	$	170,569

Cleco has elected to present cash flows of discontinued operations combined with cash flows of continuing operations.

The following table presents the cash flows from discontinued operations related to the Cleco Cajun Sale Group for the three and six months ended June 30, 2023, and 2022:


	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Net cash (used in) provided by operating activities - discontinued operations	$	(2,454)	$	2,865
Net cash used in investing activities - discontinued operations	$	(4,031)	$	(2,839)


Note 4 — Revenue Recognition

Revenue from Contracts with Customers

On September 1, 2022, Cleco Power began billing and collecting a storm recovery surcharge from its retail customers. This surcharge represents the recovery of costs incurred by Cleco Power as a result of Hurricanes Laura, Delta, Zeta, and Ida and Winter Storms Uri and Viola, as well as interest and associated expenses. Cleco Power remits the collected storm recovery surcharge to Cleco Securitization I to service Cleco Securitization I’s storm recovery bonds. The storm recovery surcharge will continue to be billed and collected from Cleco Power’s retail customers through the life of the Cleco Securitization I storm recovery bonds.

Disaggregated Revenue

Operating revenue, net for the three and six months ended June 30, 2023, and 2022 was as follows:


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	103,144		$	—		$	—	$	103,144
Commercial (1)	68,067			—			—		68,067
Industrial (1)	37,615			—			—		37,615
Other retail (1)	4,070			—			—		4,070

Electric customer credits	(736)			—			—		(736)
Total retail revenue	212,160			—			—		212,160
Wholesale, net	48,481		(1)	(2,387)		(2)	—		46,094
Transmission	13,955			—			—		13,955
Other	4,551			—			—		4,551
Affiliate (3)	1,635			28,902			(30,537)		—
Total revenue from contracts with customers	280,782			26,515			(30,537)		276,760
Revenue unrelated to contracts with customers
Securitization	6,236			—			—		6,236
Other	1,798		(4)	1			—		1,799
Total revenue unrelated to contracts with customers	8,034			1			—		8,035
Operating revenue, net	$	288,816		$	26,516		$	(30,537)	$	284,795

(1) Includes fuel recovery revenue.

(2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

(3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

(4) Realized gains associated with FTRs.


	FOR THE THREE MONTHS ENDED JUNE 30, 2022
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	131,813		$	—		$	—	$	131,813
Commercial (1)	84,336			—			—		84,336
Industrial (1)	50,188			—			—		50,188
Other retail (1)	4,297			—			—		4,297

Electric customer credits	(129)			—			—		(129)
Total retail revenue	270,505			—			—		270,505
Wholesale, net	91,934		(1)	(2,420)		(2)	—		89,514
Transmission	13,688			—			—		13,688
Other	4,998			—			—		4,998
Affiliate (3)	1,628			25,752			(27,380)		—
Total revenue from contracts with customers	382,753			23,332			(27,380)		378,705
Revenue unrelated to contracts with customers
Other	6,046		(4)	2			—		6,048
Total revenue unrelated to contracts with customers	6,046			2			—		6,048
Operating revenue, net	$	388,799		$	23,334		$	(27,380)	$	384,753

(1) Includes fuel recovery revenue.

(2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements.

(3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

(4) Realized gains associated with FTRs.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


	FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	210,340		$	—		$	—	$	210,340
Commercial (1)	145,724			—			—		145,724
Industrial (1)	87,025			—			—		87,025
Other retail (1)	8,644			—			—		8,644
Electric customer credits	(1,386)			—			—		(1,386)
Total retail revenue	450,347			—			—		450,347
Wholesale, net	105,164		(1)	(4,807)		(2)	—		100,357
Transmission, net	26,485			—			—		26,485
Other	10,100			—			—		10,100
Affiliate (3)	3,323			56,416			(59,739)		—
Total revenue from contracts with customers	595,419			51,609			(59,739)		587,289
Revenue unrelated to contracts with customers
Securitization	15,462			—			—		15,462
Other	2,624		(4)	2			—		2,626
Total revenue unrelated to contracts with customers	18,086			2			—		18,088
Operating revenue, net	$	613,505		$	51,611		$	(59,739)	$	605,377
(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.


	FOR THE SIX MONTHS ENDED JUNE 30, 2022
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	244,236		$	—		$	—	$	244,236
Commercial (1)	160,870			—			—		160,870
Industrial (1)	96,462			—			—		96,462
Other retail (1)	8,426			—			—		8,426

Electric customer credits	(265)			—			—		(265)
Total retail revenue	509,729			—			—		509,729
Wholesale, net	147,298		(1)	(4,840)		(2)	—		142,458
Transmission, net	27,580		(4)	—			—		27,580
Other	10,191			1			—		10,192
Affiliate (6)	3,087			53,145			(56,232)		—
Total revenue from contracts with customers	697,885			48,306			(56,232)		689,959
Revenue unrelated to contracts with customers
Other	7,419		(4)	2			—		7,421
Total revenue unrelated to contracts with customers	7,419			2			—		7,421
Operating revenue, net	$	705,304		$	48,308		$	(56,232)	$	697,380
(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.

Cleco and Cleco Power have unsatisfied performance obligations under contracts with electric cooperatives, retail customers, and municipalities with durations ranging between 2 and 12 years that primarily relate to stand-ready obligations as part of fixed capacity minimums. At June 30, 2023, Cleco and Cleco Power had $300.1 million of unsatisfied fixed performance obligations that will be recognized as revenue over the term of such contracts as the stand-ready obligation to provide energy is provided.


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


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

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.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

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.


Note 6 — Fair Value Accounting Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable inputs. Cleco makes certain assumptions it believes that market participants would use in pricing assets or liabilities, including assumptions about risks such as the risks inherent in valuation techniques and risks associated with inputs to those valuation techniques. Credit risk of Cleco and its counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which were immaterial at June 30, 2023, and December 31, 2022. Cleco’s valuation techniques maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices, unadjusted, in active markets for

identical assets or liabilities and the lowest priority to unobservable inputs. In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. Significant increases or decreases in any of those inputs in isolation could result in a significantly different fair value measurement. Cleco classifies fair value balances based on the fair value hierarchy defined as follows:

•Level 1 — unadjusted quoted prices in active markets for identical assets or liabilities that Cleco can observe as of the reporting date.

•Level 2 — inputs other than quoted prices included within Level 1 that are similar and directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

•Level 3 — unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

Cleco applies the provisions of the fair value measurement standard to its non-recurring, non-financial measurements including business combinations as well as impairment related to goodwill and other long-lived assets. For information on the impairment related to discontinued operations, see Note 3 — “Discontinued Operations.”

Fair Value Measurements on a Recurring Basis

The amounts reflected in Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at June 30, 2023, and December 31, 2022, for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, short-term debt, and accounts payable approximate fair value because of their short-term nature.

The following tables disclose the fair value of financial assets and liabilities measured on a recurring basis on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. These amounts are presented on a gross basis.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT JUNE 30, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Short-term investments	$	199,672	$	199,672	$	—	$	—	$	172,741	$	172,741	$	—	$	—
FTRs	7,330		—		—		7,330		2,570		—		—		2,570
Natural gas derivatives	916		—		916		—		—		—		—		—
Total assets	$	207,918	$	199,672	$	916	$	7,330	$	175,311	$	172,741	$	—	$	2,570
Liability description
FTRs	$	871	$	—	$	—	$	871	$	294	$	—	$	—	$	294
Natural gas derivatives	648		—		648		—		4,570		—		4,570		—
Total liabilities	$	1,519	$	—	$	648	$	871	$	4,864	$	—	$	4,570	$	294


Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT JUNE 30, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Short-term investments	$	158,483	$	158,483	$	—	$	—	$	139,752	$	139,752	$	—	$	—
FTRs	7,330		—		—		7,330		2,570		—		—		2,570
Natural gas derivatives	916		—		916		—		—		—		—		—
Total assets	$	166,729	$	158,483	$	916	$	7,330	$	142,322	$	139,752	$	—	$	2,570
Liability description
FTRs	$	871	$	—	$	—	$	871	$	294	$	—	$	—	$	294
Natural gas derivatives	648		—		648		—		4,570		—		4,570		—
Total liabilities	$	1,519	$	—	$	648	$	871	$	4,864	$	—	$	4,570	$	294

Cleco has consistently applied the Level 2 and Level 3 fair value techniques between comparative fiscal periods. During the six months ended June 30, 2023, and the year ended December 31, 2022, Cleco did not experience any transfers into or out of Level 3 of the fair value hierarchy.

Short-term Investments

At June 30, 2023, Cleco and Cleco Power had short-term investments in money market funds and treasury bills that have a maturity of three months or less when purchased. At December 31, 2022, Cleco and Cleco Power had short-term investments in money market funds that had a maturity of three months or less when purchased.

The following tables present the short-term investments as recorded on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at June 30, 2023, and December 31, 2022:


Cleco
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Cash and cash equivalents	$	65,894	$	39,779
Current restricted cash and cash equivalents	$	22,671	$	23,548
Non-current restricted cash and cash equivalents	$	111,107	$	109,414


Cleco Power
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Cash and cash equivalents	$	24,727	$	6,813
Current restricted cash and cash equivalents	$	22,671	$	23,548
Non-current restricted cash and cash equivalents	$	111,085	$	109,391

FTRs

FTRs are financial instruments used to provide a financial hedge to manage the risk of transmission congestion charges between MISO nodes in MISO’s Day-Ahead Energy Market. Cleco is awarded and/or purchases FTRs in auctions facilitated by MISO. FTRs are derivatives not designated as hedging instruments for accounting purposes.

FTRs are valued using MISO’s monthly auction prices as a price index reference (Level 3). Unrealized gains or losses are deferred as a component of Accumulated deferred fuel on the balance sheet in accordance with regulatory policy, and at settlement, realized gains or losses are included in Cleco Power’s FAC and reflected on customers’ bills as a component of the fuel charge.

The following table summarizes the net changes in the net fair value of FTR assets and liabilities classified as Level 3 in the fair value hierarchy for Cleco and Cleco Power:


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Balances, beginning of period	$	633	$	567	$	2,276	$	4,918
Unrealized (losses) gains*	(211)		4,267		(211)		4,267
Purchases	8,087		6,577		8,023		6,869
Settlements	(2,050)		(1,273)		(3,629)		(5,916)
Balances, June 30, 2023	$	6,459	$	10,138	$	6,459	$	10,138
* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheet.

The following table quantifies the significant unobservable inputs used in developing the fair value of Level 3 positions for Cleco and Cleco Power as of June 30, 2023, and December 31, 2022:


	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW		HIGH
FTRs at June 30, 2023	$	7,330	$	871	RTO auction pricing	FTR price - per MWh	$	(5.40)	$	8.06
FTRs at Dec. 31, 2022	$	2,570	$	294	RTO auction pricing	FTR price - per MWh	$	(5.11)	$	13.65

Natural Gas Derivatives

Cleco may enter into physical and financial fixed price or options contracts that financially settle or are delivered at a future date. Management has not elected to apply hedge accounting to these contracts as allowed under applicable accounting standards. Cleco Power’s natural gas derivative contracts are marked-to-market with the resulting unrealized gain or loss recorded as a component of Accumulated deferred fuel on the balance sheet. At settlement, realized gains or losses are included in Cleco Power’s FAC and reflected on customer’s bills as a component of the fuel charge.

Fair Value Measurements on a Nonrecurring Basis

The following tables summarize the carrying value and estimated market value of Cleco’s and Cleco Power’s financial instruments not measured at fair value on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets:


Cleco
	AT JUNE 30, 2023				AT DEC. 31, 2022
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	3,475,808	$	3,185,371	$	3,482,556	$	3,180,208

* The carrying value of long-term debt does not include deferred issuance costs of $15.0 million at June 30, 2023, and $16.2 million at December 31, 2022.


Cleco Power
	AT JUNE 30, 2023				AT DEC. 31, 2022
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	1,892,462	$	1,834,453	$	1,895,508	$	1,825,192

* The carrying value of long-term debt does not include deferred issuance costs of $11.6 million at June 30, 2023, and $12.3 million at December 31, 2022.

In order to fund capital requirements, Cleco may issue fixed and variable rate long-term debt with various tenors. The fair value of this class fluctuates as the market interest rates for fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the debt could also change from period to period due to changes in the credit rating of the Cleco entity by which the debt was issued. The fair value of

long-term debt is classified as Level 2 in the fair value hierarchy.

Concentrations of Credit Risk

At June 30, 2023, and December 31, 2022, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. If the short-term investments failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required. In order to capture interest income and minimize risk, cash is invested primarily in short-term securities issued by the U.S. government to maintain liquidity and achieve the goal of a net asset value of a dollar.

When Cleco enters into commodity derivative or physical commodity transactions directly with market participants, Cleco may be exposed to counterparty credit risk. Cleco is exposed to counterparty credit risk when a counterparty fails to meet their financial obligations causing Cleco to potentially incur replacement cost losses. Cleco enters into master agreements with counterparties that govern the risk of credit default and allow for collateralization above prenegotiated thresholds to help mitigate potential losses. Alternatively, Cleco may be required to provide credit support with respect to any open trading contracts that Cleco has entered into or may enter into in the future. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on the amount of the initial contract, changes in the market price, changes in open contracts, changes in the amounts counterparties owe to Cleco, and any prenegotiated unsecured thresholds agreed to in the master contract. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

Note 7 — Derivative Instruments

In the normal course of business, Cleco utilizes derivative instruments, such as natural gas derivatives and FTRs, to mitigate volatility of overall fuel and purchased power costs. For Cleco Power, recovery of these costs is included in its FAC and reflected on customers’ bills as a component of the fuel charge.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

Cleco has not elected to designate any of its current instruments as an accounting hedge. At June 30, 2023, there was no collateral posted with or received from counterparties that was netted on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. At December 31, 2022, cash collateral received from counterparties by Cleco Cajun was $6.5 million, all of which is included in Assets held for sale on Cleco’s Condensed Consolidated Balance Sheet. The following table presents the fair values of derivative instruments and their respective line items as recorded on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at June 30, 2023, and at December 31, 2022:


	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT JUNE 30, 2023		AT DEC. 31, 2022
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	7,330	$	2,570
Current	Energy risk management liabilities	(871)		(294)
Natural gas derivatives
Current	Energy risk management assets	342		—
Non-current	Energy risk management assets	574		—
Current	Energy risk management liabilities	(648)		(4,570)
Commodity-related contracts, net		$	6,727	$	(2,294)

The following table presents the effect of derivatives not designated as hedging instruments on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023, and 2022:


	AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2023		2022		2023		2022
Commodity-related contracts
FTRs(1)	Electric operations	$	1,835	$	6,080	$	2,694	$	7,663
FTRs(1)	Purchased power	(1,499)		(1,846)		(2,096)		(3,083)
Natural gas derivatives(2) (3)	Fuel used for electric generation	(11,284)		—		(17,823)		—
Total		$	(10,948)	$	4,234	$	(17,225)	$	4,580

(1) For the three and six months ended June 30, 2023, unrealized losses associated with FTRs of $0.2 million were reported through Accumulated deferred fuel on the balance sheet. For the three and six months ended June 30, 2022, unrealized gains associated with FTRs of $4.3 million were reported through Accumulated deferred fuel on the balance sheet.

(2) For the three and six months ended June 30, 2023, unrealized gains associated with natural gas derivatives of $8.2 million and $3.7 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. Cleco Power had no natural gas derivatives during the six months ended June 30, 2022.

(3) For the three and six months ended June 30, 2023, realized losses associated with natural gas derivatives of $0.6 million were reported through Accumulated deferred fuel on the balance sheet. Cleco Power had no natural gas derivatives during the six months ended June 30, 2022.

The following table presents the volume of commodity-related derivative contracts outstanding at June 30, 2023, and December 31, 2022, for Cleco and Cleco Power:

TOTAL VOLUME OUTSTANDING

(THOUSAND)

UNIT OF MEASURE

AT JUNE 30, 2023

AT DEC. 31, 2022

Commodity-related contracts

FTRs

MWh

20,554

9,085

Natural gas derivatives

MMBtus

31,615

4,840


Note 8 — Debt

On February 17, 2023, Cleco Holdings and Cleco Power amended their respective revolving credit facilities and bank term loans to transition the benchmark interest rate from LIBOR to SOFR.

On May 1, 2023, Cleco Holdings amended certain terms of the supplemental indenture governing its $165.0 million senior notes due in 2023. As a result, the interest rate of the

senior notes changed to a floating interest rate equal to SOFR plus 1.725% and the maturity date was extended from May 1, 2023, to May 1, 2025.

At June 30, 2023, and December 31, 2022, Cleco’s long-term debt and finance leases outstanding due within one year was $371.8 million and $340.9 million, respectively. The increase of $30.9 million is primarily due to the reclassification of $125.0 million of Cleco Power’s bank term loan due in May 2024, $66.7 million of Cleco Holdings’ bank term loan due in May 2024, and an additional $4.6 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds. These increases are partially offset by the reclassification of Cleco Holdings’ $165.0 million senior notes due in 2023 to long-term debt as a result of the extension of the maturity date of such senior notes to May 1, 2025.

At June 30, 2023, and December 31, 2022, Cleco Power’s long-term debt and finance leases outstanding due within one year was $239.9 million and $110.3 million, respectively. The increase of $129.6 million is primarily due to the reclassification of Cleco Power’s $125.0 million bank term loan due in May


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

2024 and an additional $4.6 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds.


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 $25.7 million minimum required contribution to the pension plan in 2024. Cleco is not required 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 and six months ended June 30, 2023, and 2022 were as follows:


	PENSION BENEFITS				OTHER BENEFITS
	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs
Service cost	$	1,173	$	2,040	$	365	$	546
Interest cost	6,606		4,960		566		368
Expected return on plan assets	(7,386)		(6,177)		—		—
Amortizations

Net loss (gain)	—		3,083		(13)		298
Net periodic benefit cost	$	393	$	3,906	$	918	$	1,212



	PENSION BENEFITS				OTHER BENEFITS
	FOR THE SIX MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs
Service cost	$	2,347	$	4,086	$	729	$	1,092
Interest cost	13,211		9,920		1,132		736
Expected return on plan assets	(14,772)		(12,354)		—		—
Amortizations

Net loss (gain)	—		6,168		(25)		596
Net periodic benefit cost	$	786	$	7,820	$	1,836	$	2,424

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 and six months ended June 30, 2023, was $0.4 million and $0.8 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and six months ended June 30, 2022, was $0.7 million and $1.4 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 and six months ended June 30, 2023, was $0.9 million and $1.7 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022, was $1.1 million and $2.2 million, respectively. The current and non-current portions of

the Other Benefits liability for Cleco and Cleco Power at June 30, 2023, and December 31, 2022, were as follows:


Cleco
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Current	$	5,017	$	5,017
Non-current	$	37,172	$	38,366


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


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

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 and six months ended June 30, 2023, and 2022 were as follows:


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs
Service cost	$	35	$	57	$	71	$	113
Interest cost	901		670		1,802		1,340
Amortizations
Prior period service credit	(54)		(54)		(107)		(107)
Net (gain) loss	(15)		262		(32)		524
Net periodic benefit cost	$	867	$	935	$	1,734	$	1,870

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023, was $0.1 million and $0.2 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022, was $0.1 million and $0.3 million, respectively.

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 June 30, 2023, and December 31, 2022, were as follows:


Cleco
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Current	$	4,713	$	4,713
Non-current	$	63,409	$	63,714


Cleco Power
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Current	$	672	$	672
Non-current	$	8,907	$	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 and six months ended June 30, 2023, and 2022 was as follows:


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
401(k) Plan expense	$	1,926	$	1,522	$	4,080	$	3,702

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 and six months ended June 30, 2023, and 2022 was as follows:


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
401(k) Plan expense	$	670	$	539	$	1,572	$	1,449


Note 10 — Income Taxes

Effective Tax Rates

The following tables summarize the effective income tax rates from continuing operations for Cleco and Cleco Power for the three and six months ended June 30, 2023, and 2022:


Cleco
	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
	2023		2022		2023		2022
Effective tax rate	(14.9)	%	(13.0)	%	(17.5)	%	(24.6)	%


Cleco Power
	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
	2023		2022		2023		2022
Effective tax rate	7.0	%	5.5	%	6.7	%	4.0	%

For Cleco and Cleco Power, the effective income tax rates for the three and six months ended June 30, 2023, were different than the federal statutory rate primarily due to the amortization of excess ADIT, the adjustment to record tax expense at the projected annual effective tax rate, and state tax expense.

For Cleco, the effective income tax rates for the three and six months ended June 30, 2022, were different than the federal statutory rate primarily due to the adjustment to record tax expense at the projected annual effective tax rate, the amortization of excess ADIT, the flow through of state tax benefits, permanent deductions, and state tax expense.

For Cleco Power, the effective income tax rate for the three months ended June 30, 2022, was different than the federal statutory rate primarily due to the adjustment to record tax expense at the projected annual effective tax rate, the amortization of excess ADIT, the flow through of state tax benefits, and state tax expense.

For Cleco Power, the effective income tax rate for the six months ended June 30, 2022, was different than the federal statutory rate primarily due to the amortization of excess ADIT, the flow through of state tax benefits, and state tax expense.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. For the three and six months ended June 30, 2023, and 2022, Cleco and Cleco Power had no interest expense related to uncertain tax positions. At June 30, 2023, and December 31, 2022, Cleco and Cleco Power had no liability for uncertain tax positions or interest payable related to uncertain tax positions.

Income Tax Audits

Cleco participates in the IRS’s Compliance Assurance Process in which tax positions are examined and agreed upon prior to filing the federal tax return. While the statute of limitations remains open for tax years 2019, 2020, and 2021, the IRS has completed its review of tax years 2019 and 2020, and these tax returns were filed consistent with the IRS’s review. The IRS has placed Cleco in the Bridge phase of the Compliance Assurance Process for the 2021 tax year. In this phase, the IRS will not accept any disclosures, conduct any reviews, or provide any assurances. The IRS has accepted Cleco’s application for the Compliance Assurance Process for the 2022 tax year and the Compliance Assurance Maintenance phase for the 2023 tax year.

The state income tax years 2019, 2020, and 2021 remain subject to examination by the Louisiana Department of Revenue.

Cleco classifies income tax penalties as a component of other expense. For the three and six months ended June 30, 2023, and 2022, no penalties were recognized.


Note 11 — Segment Disclosures

Segment disclosures are based on Cleco’s method of internal reporting, which disaggregates business units by first-tier subsidiary. The financial information for historical periods

provided in this report has been recast to reflect the presentation of the Cleco Cajun Sale Group as discontinued operations within the Other column. Cleco’s segment structure and its allocation of corporate expenses were updated to reflect how management measures performance and allocates resources. Cleco has recast data from prior periods to reflect this change to conform to the current year presentation. For more information, see Note 3 — “Discontinued Operations.”

Segment managers report periodically to Cleco’s CEO, who is Cleco’s chief operating decision maker, with discrete financial information and, at least quarterly, present discrete financial information to Cleco Holdings’ and, in the case of Cleco Power, Cleco Power’s Boards of Managers. The reportable segment prepares budgets that are presented to and approved by Cleco Holdings’ and, in the case of Cleco Power, Cleco Power’s Boards of Managers. The column shown as Other in the following tables includes the holding company, a shared services subsidiary, an investment subsidiary, and discontinued operations.

The financial results in the following tables are presented on an accrual basis. EBITDA is a key non-GAAP financial measure used by the CEO to assess the operating performance of Cleco’s segment. Management evaluates the performance of Cleco’s segment and allocates resources to it based on segment profit and the requirements to implement strategic initiatives and projects to meet current business objectives. EBITDA is defined as net income adjusted for interest, income taxes, depreciation, and amortization. Depreciation and amortization in the following tables includes amortization of intangible assets recorded for the fair value adjustment of wholesale power supply agreements as a result of the 2016 Merger. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.


Segment Information
FOR THE THREE MONTHS ENDED JUNE 30, 2023 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	263,176
Other operations	24,741
Affiliate revenue	1,635
Electric customer credits	(736)
Operating revenue, net	$	288,816
Net income	$	43,439
Add: Depreciation and amortization	43,722
Less: Interest income	579
Add: Interest charges	24,183
Add: Federal and state income tax expense	3,247



EBITDA	$	114,012


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


FOR THE THREE MONTHS ENDED JUNE 30, 2023 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	263,176	$	(2,387)		$	—	$	260,789
Other operations	24,741		1			—		24,742
Affiliate revenue	1,635		28,902			(30,537)		—
Electric customer credits	(736)		—			—		(736)
Operating revenue, net	$	288,816	$	26,516		$	(30,537)	$	284,795
Depreciation and amortization	$	43,722	$	4,433	(1)	$	—	$	48,155
Interest income	$	579	$	133		$	(39)	$	673
Interest charges	$	24,183	$	16,624		$	(39)	$	40,768

Federal and state income tax expense (benefit)	$	3,247	$	(6,236)		$	—	$	(2,989)
Income (loss) from continuing operations, net of income taxes	$	43,439	$	(20,380)		$	(1)	$	23,058
Income from discontinued operations, net of income taxes	—		24,272			—		24,272
Net income	$	43,439	$	3,892		$	(1)	$	47,330




(1) Includes $2.4 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.


FOR THE THREE MONTHS ENDED JUNE 30, 2022 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	368,614
Other operations	18,686
Affiliate revenue	1,628
Electric customer credits	(129)
Operating revenue, net	$	388,799
Net income	$	54,705
Add: Depreciation and amortization	44,299
Less: Interest income	1,035
Add: Interest charges	21,305
Add: Federal and state income tax expense	3,214
EBITDA	$	122,488


FOR THE THREE MONTHS ENDED JUNE 30, 2022 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	368,614	$	(2,420)		$	—	$	366,194
Other operations	18,686		2			—		18,688
Affiliate revenue	1,628		25,752			(27,380)		—
Electric customer credits	(129)		—			—		(129)
Operating revenue, net	$	388,799	$	23,334		$	(27,380)	$	384,753
Depreciation and amortization	$	44,299	$	4,373	(1)	$	1	$	48,673
Interest income	$	1,035	$	53		$	(22)	$	1,066
Interest charges	$	21,305	$	13,863		$	(21)	$	35,147
Federal and state income tax expense (benefit)	$	3,214	$	(6,791)		$	—	$	(3,577)
Income (loss) from continuing operations, net of income taxes	$	54,705	$	(23,603)		$	(1)	$	31,101
Loss from discontinued operations, net of income taxes	—		(29,738)			—		(29,738)
Net income	$	54,705	$	(53,341)		$	(1)	$	1,363




(1) Includes $2.4 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.


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CLECO POWER						2023 2ND QUARTER FORM 10-Q


Segment Information
FOR THE SIX MONTHS ENDED JUNE 30, 2023 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	559,524
Other operations	52,044
Affiliate revenue	3,323
Electric customer credits	(1,386)
Operating revenue, net	$	613,505
Net income	$	66,256
Add: Depreciation and amortization	94,454
Less: Interest income	1,764
Add: Interest charges	48,521
Add: Federal and state income tax expense	4,737
EBITDA	$	212,204


FOR THE SIX MONTHS ENDED JUNE 30, 2023 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	559,524	$	(4,807)		$	—	$	554,717
Other operations	52,044		2			—		52,046
Affiliate revenue	3,323		56,416			(59,739)		—
Electric customer credits	(1,386)		—			—		(1,386)
Operating revenue, net	$	613,505	$	51,611		$	(59,739)	$	605,377
Depreciation and amortization	$	94,454	$	8,910	(2)	$	—	$	103,364
Interest income	$	1,764	$	277		$	(101)	$	1,940
Interest charges	$	48,521	$	31,836		$	(101)	$	80,256
Federal and state income tax expense (benefit)	$	4,737	$	(7,891)		$	—	$	(3,154)
Income (loss) from continuing operations, net of income taxes	$	66,256	$	(45,047)		$	(2)	$	21,207
Loss from discontinued operations, net of income taxes	—		(77,899)			—		(77,899)
Net income (loss)	$	66,256	$	(122,946)		$	(2)	$	(56,692)
Additions to property, plant, and equipment	$	110,480	$	4,679		$	—	$	115,159
Equity investment in investees (1)	$	2,072	$	(345,348)		$	345,348	$	2,072
Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (1)	$	6,893,458	$	1,081,729		$	196,360	$	8,171,547
(1) Balances as of June 30, 2023. (2) Includes $4.8 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.


FOR THE SIX MONTHS ENDED JUNE 30, 2022 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	664,711
Other operations	37,771
Affiliate revenue	3,087
Electric customer credits	(265)
Operating revenue, net	$	705,304
Net income	$	93,729
Add: Depreciation and amortization	89,538
Less: Interest income	1,775
Add: Interest charges	40,108
Add: Federal and state income tax expense	3,938
EBITDA	$	225,538


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


FOR THE SIX MONTHS ENDED JUNE 30, 2022 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	664,711	$	(4,840)		$	—	$	659,871
Other operations	37,771		3			—		37,774
Affiliate revenue	3,087		53,145			(56,232)		—
Electric customer credits	(265)		—			—		(265)
Operating revenue, net	$	705,304	$	48,308		$	(56,232)	$	697,380
Depreciation and amortization	$	89,538	$	8,752	(2)	$	1	$	98,291
Interest income	$	1,775	$	83		$	(49)	$	1,809
Interest charges	$	40,108	$	27,730		$	(50)	$	67,788
Federal and state income tax expense (benefit)	$	3,938	$	(15,048)		$	—	$	(11,110)
Income (loss) from continuing operations, net of income taxes	$	93,729	$	(37,436)		$	—	$	56,293
Loss from discontinued operations, net of income taxes	—		100,814			—		100,814
Net income	$	93,729	$	63,378		$	—	$	157,107
Additions to property, plant, and equipment	$	98,162	$	3,511		$	—	$	101,673
Equity investment in investees (1)	$	2,072	$	(320,348)		$	320,348	$	2,072
Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (1)	$	6,834,970	$	1,237,096		$	181,683	$	8,253,749
(1) Balances as of December 31, 2022. (2) Includes $4.8 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.



	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Net income (loss)	$	47,330	$	1,363	$	(56,692)	$	157,107
Less: income (loss) from discontinued operations, net of income taxes	24,272		(29,738)		(77,899)		100,814
Income (loss) from continuing operations, net of income taxes	$	23,058	$	31,101	$	21,207	$	56,293
Add: Depreciation and amortization	48,155		48,673		103,364		98,291

Less: Interest income	673		1,066		1,940		1,809
Add: Interest charges	40,768		35,147		80,256		67,788
Add: Federal and state income tax benefit	(2,989)		(3,577)		(3,154)		(11,110)
Add: Other corporate costs and noncash items (1)	5,693		12,210		12,471		16,085
Total segment EBITDA	$	114,012	$	122,488	$	212,204	$	225,538
(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA.


Note 12 — Regulation and Rates

FRP

On June 16, 2021, the LPSC approved Cleco Power’s current FRP. Effective July 1, 2021, under the terms of the FRP, Cleco Power is allowed to earn a target ROE of 9.5%, while providing the opportunity to earn up to 10.0%. Additionally, 60.0% of retail earnings between 10.0% and 10.5%, and all retail earnings over 10.5%, are required to be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC annually. On June 30, 2023, Cleco Power filed an application with the LPSC for a new FRP, with anticipated new rates being effective July 1, 2024.

On October 31, 2022, a monitoring report was filed for the 12 months ending June 30, 2022, indicating no refund was due. In May 2023, Cleco Power received the LPSC Staff’s draft report indicating no material findings. Cleco Power anticipates the approval of the draft report in the third quarter of 2023.

TCJA

On June 16, 2021, the LPSC approved Cleco Power’s current retail rate plan which includes the settlement of the TCJA protected and unprotected excess ADIT. Effective July 1, 2021, all retail customers continued receiving bill credits resulting from the TCJA. The target retail portion of the unprotected excess ADIT is approximately $2.5 million monthly

and will be credited over a period of three years concluding on June 30, 2024. The retail portion of the protected excess ADIT will be credited until the full amount of the protected excess ADIT has been returned to Cleco Power’s customers through bill credits. At June 30, 2023, Cleco Power had $236.6 million accrued for the excess ADIT, of which $41.4 million is reflected in current regulatory liabilities.

Teche Unit 3

In July 2022, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3, barring any violations of specific applicable reliability standards. On January 31, 2023, Cleco Power filed a notice with the LPSC to retire Teche Unit 3 in May 2023. However, in April 2023, Cleco Power filed notices with MISO and the LPSC to delay the retirement of Teche Unit 3. Management continues to monitor regulatory capacity requirements and customer needs to determine the appropriate timing of the retirement of Teche Unit 3.


Note 13 — 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


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

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 Condensed Consolidated Balance Sheets:


(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Restricted cash - current	$	13,032	$	14,139
Accounts receivable - affiliate	3,475		3,348
Intangible asset - securitization	407,571		413,123
Total assets	$	424,078	$	430,610
Long-term debt due within one year	$	14,214	$	9,574

Accounts payable - affiliate	146		165
Interest accrued	6,276		9,953
Long-term debt, net	401,284		408,741
Member’s equity	2,158		2,177
Total liabilities and member’s equity	$	424,078	$	430,610

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


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Operating revenue	$	6,206	$	—	$	15,383	$	—
Operating expenses	1,399		—		5,753		—
Interest income	85		—		242		—
Interest charges, net	4,867		—		9,823		—
Income before taxes	$	25	$	—	$	49	$	—

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 Condensed 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 Condensed 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 June 30, 2023, consisted of its equity investment of $2.1 million.

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


INCEPTION TO DATE (THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Distributions	(17,200)		(17,200)
Total equity investment in investee	$	2,072	$	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:


(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Oxbow’s net assets/liabilities	$	4,145	$	4,145
Cleco Power’s 50% equity	$	2,072	$	2,072
Cleco Power’s maximum exposure to loss	$	2,072	$	2,072

The following table contains summarized financial information for Oxbow:


	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Operating revenue	$	108	$	85	$	233	$	151
Operating expenses	(108)		(85)		(233)		(151)
Income before taxes	$	—	$	—	$	—	$	—

Prior to June 30, 2020, DHLC mined lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves were intended to be used to provide fuel to the Dolet Hills Power Station. Under the Amended Lignite Mining Agreement, DHLC billed Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs. Oxbow billed Cleco Power its proportionate share of incurred costs related to mineral rights and land leases. On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine. At December 31, 2021, the Dolet Hills Power Station was retired, and all of Cleco Power’s proportionate share of lignite-related costs had been billed by DHLC and Oxbow. For more information on DHLC and the Oxbow mine, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

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


Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, four actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and three actions were filed in the Civil District Court for Orleans Parish, Louisiana. The petitions in each action generally alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the 2016 Merger at a price that allegedly undervalued Cleco, and failing to disclose material information about the 2016 Merger. The petitions also alleged that Como 1, Cleco Corporation, Merger Sub, and, in some cases, certain of the investors in Como 1 either aided and abetted or entered into a civil conspiracy to advance those supposed breaches of duty. The petitions sought various remedies, including monetary damages, which includes attorneys’ fees and expenses.

The four actions filed in the Ninth Judicial District Court for Rapides Parish are captioned as follows:

•Braunstein v. Cleco Corporation, No. 251,383B (filed October 27, 2014),

•Moore v. Macquarie Infrastructure and Real Assets, No. 251,417C (filed October 30, 2014),

•Trahan v. Williamson, No. 251,456C (filed November 5, 2014), and

•L’Herisson v. Macquarie Infrastructure and Real Assets, No. 251,515F (filed November 14, 2014).

In November 2014, the plaintiff in the Braunstein action moved for a dismissal of the action without prejudice, and that motion was granted in November 2014. In December 2014, the court consolidated the remaining three actions and appointed interim co-lead counsel, and dismissed the investors in Cleco Partners as defendants, per agreement of the parties. Also, in December 2014, the plaintiffs in the consolidated action filed a Consolidated Amended Verified Derivative and Class Action Petition for Damages and Preliminary and Permanent Injunction.

The three actions filed in the Civil District Court for Orleans Parish were captioned as follows:

•Butler v. Cleco Corporation, No. 2014-10776 (filed November 7, 2014),

•Creative Life Services, Inc. v. Cleco Corporation, No. 2014-11098 (filed November 19, 2014), and

•Cashen v. Cleco Corporation, No. 2014-11236 (filed November 21, 2014).

In December 2014, the directors and Cleco filed declinatory exceptions in each action on the basis that each action was improperly brought in Orleans Parish and should either be transferred to the Ninth Judicial District Court for Rapides Parish or dismissed. Also, in December 2014, the plaintiffs in each action jointly filed a motion to consolidate the three actions pending in Orleans Parish and to appoint interim co-lead plaintiffs and co-lead counsel. In January 2015, the Court in the Creative Life Services case sustained the defendants’ declinatory exceptions and dismissed the case so that it could be transferred to the Ninth Judicial District Court for Rapides Parish. In February 2015, the plaintiffs in Butler and Cashen also consented to the dismissal of their cases from Orleans Parish so they could be transferred to the Ninth Judicial District Court for Rapides Parish. By operation of the December 2014 order of the Ninth Judicial District Court for Rapides Parish, the Butler, Cashen, and Creative Life Services actions were consolidated into the actions pending in Rapides Parish.

In February 2015, the Ninth Judicial District Court for Rapides Parish held a hearing on a motion for preliminary injunction filed by plaintiffs in the consolidated action seeking

to enjoin the shareholder vote for approval of the Merger Agreement. The District Court heard and denied the plaintiffs’ motion. In June 2015, the plaintiffs filed their Second Consolidated Amended Verified Derivative and Class Action Petition. Cleco filed exceptions seeking dismissal of the second amended petition in July 2015. The LPSC voted to approve the 2016 Merger before the court could consider the plaintiffs’ peremptory exceptions.

In March 2016 and May 2016, the plaintiffs filed their Third Consolidated Amended Verified Derivative Petition for Damages and Preliminary and Permanent Injunction and their Fourth Verified Consolidated Amended Class Action Petition, respectively. The fourth amended petition, which remains the operative petition and was filed after the 2016 Merger closed, eliminated the request for preliminary and permanent injunction and also named an additional executive officer as a defendant. The defendants filed exceptions seeking dismissal of the fourth amended Petition. In September 2016, the District Court granted the exceptions of no cause of action and no right of action and dismissed all claims asserted by the former shareholders. The plaintiffs appealed the District Court’s ruling to the Louisiana Third Circuit Court of Appeal. In December 2017, the Third Circuit Court of Appeal issued an order reversing and remanding the case to the District Court for further proceedings. In January 2018, Cleco filed a writ with the Louisiana Supreme Court seeking review of the Third Circuit Court of Appeal’s decision. The writ was denied in March 2018 and the parties are engaged in discovery in the District Court. In November 2018, Cleco filed renewed exceptions of no cause of action and res judicata, seeking to dismiss all claims. On December 21, 2018, the court dismissed Cleco Partners and Cleco Holdings as defendants per the agreement of the parties, leaving as the only remaining defendants certain former executive officers and independent directors. The District Court denied the defendants’ exceptions on January 14, 2019. A hearing on the plaintiffs’ motion for certification of a class was scheduled for August 26, 2019; however, prior to the hearing, the parties reached an agreement to certify a limited class. On September 7, 2019, the District Court certified a class limited to shareholders who voted against, abstained from voting, or did not vote on the 2016 Merger. On October 18, 2021, the District Court issued an order consistent with a joint motion by the parties to dismiss all claims against the former independent directors leaving two former executives as the only remaining defendants. Cleco believes that the allegations of the petitions in each action are without merit and that it has substantial meritorious defenses to the claims set forth in each of the petitions.

Gulf Coast Spinning

In September 2015, a potential customer sued Cleco for failure to fully perform an alleged verbal agreement to lend or otherwise fund its startup costs to the extent of $6.5 million. Gulf Coast Spinning Company, LLC (Gulf Coast), the primary plaintiff, alleges that Cleco promised to assist it in raising approximately $60.0 million, which Gulf Coast needed to construct a cotton spinning facility near Bunkie, Louisiana (the Bunkie project). According to the petition filed by Gulf Coast in the 12th Judicial District Court for Avoyelles Parish, Louisiana, Cleco made such promises of funding assistance in order to cultivate a new industrial electric customer which would increase its revenues under a power supply agreement that it executed with Gulf Coast. Gulf Coast seeks unspecified


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

damages arising from its inability to raise sufficient funds to complete the project, including lost profits.

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The 12th Judicial District Court denied Cleco’s exception in December 2015, after considering briefs and arguments. In January 2016, Cleco appealed the 12th Judicial District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal denied the request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of the 12th Judicial District Court’s denial of Cleco’s exception. In November 2016, the Louisiana Supreme Court denied Cleco’s writ application.

In February 2016, the parties agreed to a stay of all proceedings pending discussions concerning settlement. In May 2016, the 12th Judicial District Court lifted the stay at the request of Gulf Coast. The parties are currently participating in discovery.

Diversified Lands loaned $2.0 million to Gulf Coast for the Bunkie project. The loan was secured by a mortgage on the Bunkie project site. Diversified Lands foreclosed on the Bunkie property in February 2020 and has also asserted claims personally against the former owner of Gulf Coast. These claims are based on contracts and credit documents executed by Gulf Coast, the obligations and performance of which were personally guaranteed by the former owner of Gulf Coast. Diversified Lands is seeking recovery of the indebtedness still owed by Gulf Coast to Diversified Lands following the February 2020 foreclosure, which action has been consolidated with the litigation filed by Gulf Coast in the 12th Judicial District Court for Avoyelles Parish, Louisiana. Discovery is ongoing and no trial date has been set.

Cleco believes all allegations made by Gulf Coast are contradicted by the written documents executed by Gulf Coast, are otherwise without merit, and that it has substantial meritorious defenses to the claims alleged by Gulf Coast.

Dispute with Saulsbury Industries

In October 2018, Cleco Power sued Saulsbury Industries, Inc., the former general contractor for the St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries, Inc.’s failure to complete the St. Mary Clean Energy Center project on time and for costs incurred by Cleco Power in hiring a replacement general contractor. The action was filed in the Ninth Judicial District Court for Rapides Parish. Saulsbury Industries, Inc. removed the case to the U.S. District Court for the Western District of Louisiana, on March 1, 2019. On September 14, 2020, Cabot Corporation was allowed to join the case pending in the Ninth Judicial District Court for Rapides Parish.

In January 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC, in the U.S. District Court for the Western District of Louisiana. Saulsbury Industries, Inc. alleged that Cleco Power and Cabot Corporation caused delays in the St. Mary Clean Energy Center project, resulting in alleged impacts to Saulsbury Industries, Inc.’s direct and indirect costs. On June 5, 2019, Cleco Power and Cabot Corporation each filed separate motions to dismiss. On October 24, 2019, the District Court denied Cleco Power’s motion as premature and ruled that Saulsbury Industries, Inc. had six weeks to conduct discovery on specified jurisdictional issues. The Magistrate Judge presiding over the Western District of Louisiana

consolidated cases issued a report and recommendation to the District Judge that the case instituted by Saulsbury Industries, Inc. be dismissed without prejudice and the case initiated by Cleco Power be remanded to the Ninth Judicial District Court for Rapides Parish. Saulsbury Industries, Inc. did not oppose the Magistrate Judge’s report and recommendation, and the District Judge issued a ruling that adopted the Magistrate Judge’s report and recommendation, which included reasoning consistent with Cleco Power’s arguments. Thus, the federal consolidated cases are now closed.

On October 10, 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC in the 16th Judicial District Court for St. Mary Parish. Saulsbury Industries, Inc. asserted the same claim as the Western District litigation and further asserts claims for payment on an open account. On December 9, 2019, Cleco Power moved to stay the case, arguing that the Rapides Parish suit should proceed. On February 14, 2020, the court granted Cleco Power’s motion. The 16th Judicial District Court for the St. Mary Parish case held a hearing on October 16, 2020, and the judge granted Cleco Power’s declinatory exceptions of lis pendens. Thus, the St. Mary’s Parish case has been dismissed. Saulsbury appealed this decision.

On May 17, 2022, the Court of Appeal, First Circuit, ruled in favor of Cleco Power and affirmed the decision of the 16th Judicial District Court for St. Mary Parish with respect to Cleco Power. However, the First Circuit Court reversed the 16th Judicial District Court for St. Mary Parish’s decision dismissing Cabot Corporation from the St. Mary Parish case. All parties filed applications for rehearing, which were denied on June 29, 2022.

Cabot Corporation applied for review by the Louisiana Supreme Court of the portion of the First Circuit Court's ruling that denied Cabot Corporation’s exception seeking dismissal from the St. Mary Parish litigation. On November 1, 2022, the Louisiana Supreme Court rendered a decision in favor of Cabot Corporation. The Louisiana Supreme Court’s decision reversed the First Circuit Court’s decision and reinstated the decision of the 16th Judicial District Court granting Cabot Corporation’s declinatory exceptions of lis pendens. The St. Mary Parish case has been dismissed in full.

The stay was lifted in the Rapides Parish case and the Rapides Parish case is proceeding.

LPSC Audits and Reviews

Fuel Audits

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such expenses. Recovery of FAC costs is subject to periodic fuel audits by the LPSC, which are performed at least every other year.

In January 2023, Cleco Power received a notice of audit from the LPSC for the period of January 2020 to December 2022. The total amount of fuel expense included in the audit is $1.10 billion. Cleco Power has responded to the first set of LPSC data requests. Cleco Power has FAC filings for January 2023 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of fuel cost is ordered resulting in a refund, any


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

On March 29, 2021, Cleco Power received approval from the LPSC to recover $50.0 million of incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola over a period of 12 months beginning with the May 2021 bills. On May 11, 2021, Cleco Power received notice of an audit from the LPSC for the fuel costs incurred during the time period required to restore services to Cleco Power’s customers during Winter Storms Uri and Viola. On March 27, 2023, Cleco Power received a draft audit report from the LPSC indicating no material findings. Management expects the draft audit report to be approved in the third quarter of 2023.

Environmental Audit

In 2009, the LPSC approved Cleco Power to recover from its customers certain costs of environmental compliance, through an EAC. The costs eligible for recovery are those for prudently incurred air emissions credits associated with complying with federal, state, and local air emission regulations that apply to the generation of electricity reduced by the sale of such allowances. Also eligible for recovery are variable emission mitigation costs, which are the costs of reagents such as ammonia and limestone that are a part of the fuel mix used to reduce air emissions, among other things. In April 2023, Cleco Power received a notice of audit from the LPSC for the period of January 2020 to December 2022. The total amount of environmental fuel expense to be included in the audit is $38.3 million. Cleco Power has responded to the first set of LPSC data requests. Cleco Power has EAC filings for January 2023 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of environmental cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of MATS. These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. In May 2020, the EPA finalized a rule that concluded that it is not appropriate and necessary to regulate hazardous air pollutants from coal- and oil-fired electric generating units. However, the EPA concluded that coal- and oil-fired electric generating units would not be removed from the list of regulated sources of hazardous air pollutants and would remain subject to MATS. The EPA also determined that the results of its risk and technology review did not require any revisions to the emissions standards. Several petitions for review of the rule’s findings were filed between May and July 2020 in the D.C. Circuit Court of Appeals. On January 20, 2021, the Presidential Administration issued an executive order, which directs federal agency heads to review regulations and other actions over the past four years to determine if they are inconsistent with the policies announced in the executive order. The order specifically directed the EPA to consider issuing a proposed rule to suspend, revise, or rescind the rule. The EPA determined the most environmentally protective course is to implement the rules in the executive order. On March 6, 2023, the EPA published in the Federal Register a final rule that reinstates the April 25, 2016, finding

that it is appropriate and necessary to regulate hazardous air pollutants from coal and oil-fired electric generating units through MATS. On April 24, 2023, the EPA published in the Federal Register proposed amendments to MATS that are the result of the EPA’s review of the May 2020 residual risk and technology review of MATS. Management is unable to determine whether the outcome of the D.C. Circuit Court of Appeals’ review or the EPA’s review of the rule as a result of the executive order will result in changes to the MATS standards.

Energy Efficiency Audit

In 2013, the LPSC issued a General Order adopting rules promoting energy efficiency programs. Cleco Power began participating in energy efficiency programs in November 2014. Through an approved rate tariff, Cleco Power recovered $8.5 million and $6.8 million for the 2022 and 2021 program years, respectively.

Program years 2021 and thereafter are subject to audit. Management is unable to predict or give a reasonable estimate of the outcome of this or any future audits.

Prudency Reviews

Dolet Hills Power Station and Mine Closure Costs and Deferred Lignite Costs

Cleco Power is seeking recovery for stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station as well as deferred fuel and other mine-related closure costs. Recovery of these costs is subject to a prudency review by the LPSC, which is currently in progress. Cleco Power believes these costs are prudent and recoverable. However, initial testimony by the LPSC Staff advisors filed in August 2022 indicates disagreement with the prudency of these incurred costs. Cleco Power filed rebuttal testimony on September 23, 2022, rebutting the LPSC Staff’s testimony. A hearing was held in May 2023, with the outcome pending. Due to the nature of the regulatory process, Cleco Power is currently unable to determine the timing of this process and if any portion of the incurred costs will be disallowed for recovery. Cleco Power continues to assert that recovery of those costs is probable.

South Central Generating

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts regarding matters arising out of the ordinary course of business. As of June 30, 2023, management has reserved $1.5 million with respect to one of these matters and the amounts are recorded in Liabilities held for sale on Cleco’s Condensed Consolidated Balance Sheet. Management is unable to estimate any potential losses Cleco may be ultimately responsible for with respect to any of the remaining matters. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with certain matters that existed as of the closing date, including pending litigation.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

incur with respect to any one of these matters may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of June 30, 2023, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters are $6.3 million and has accrued this amount.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require the Registrants to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees.

Cleco Holdings entered into these off-balance sheet commitments in order to entice desired counterparties to contract with its affiliates by providing some measure of credit assurance to the counterparty in the event Cleco’s affiliates do not fulfill certain contractual obligations. If Cleco Holdings had not provided the off-balance sheet commitments, the desired counterparties may not have contracted with Cleco’s affiliates, or may have contracted with them at terms less favorable to its affiliates.

The off-balance sheet commitments are not recognized on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets because management has determined that Cleco’s and Cleco Power’s affiliates are able to perform the obligations under their contracts and that it is not probable that payments by Cleco or Cleco Power will be required.

Cleco Holdings provided guarantees and indemnities to Entergy Louisiana and Entergy Gulf States as a result of the sale of the Perryville generation facility in 2005. The remaining indemnities relate to environmental matters that may have been present prior to closing. These remaining indemnities have no time limitations. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. Management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under these guarantees.

On behalf of Acadia, Cleco Holdings provided guarantees and indemnities as a result of the sales of Acadia Unit 1 to Cleco Power and Acadia Unit 2 to Entergy Louisiana in 2010 and 2011, respectively. The remaining indemnities relate to the fundamental organizational structure of Acadia. These remaining indemnities have no time limitations or maximum potential future payments. Management does not expect to be required to pay Cleco Power or Entergy Louisiana under these guarantees.

Cleco Holdings provided indemnities to Cleco Power as a result of the transfer of Coughlin to Cleco Power in March 2014. Cleco Power also provided indemnities to Cleco Holdings as a result of the transfer of Coughlin to Cleco Power. The maximum amount of the potential payment to Cleco Power and Cleco Holdings, for their respective indemnities is $40.0 million, except for indemnities relating to the fundamental organizational structure of each respective entity, of which the maximum amount is $400.0 million. Management does not expect to be required to make any payments under these indemnities.

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of the Dolet Hills Power Station, have agreed to pay the loan and lease principal

obligations of the lignite miner, DHLC, when due if DHLC does not have sufficient funds or credit to pay. Any amounts projected to be paid would be based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for reclamation obligations. As of June 30, 2023, Cleco Power does not expect any payments to be made under this guarantee. Cleco Power has the right to dispute the incurrence of such loan and lease obligations through the review of the mining reclamation plan before the incurrence of such obligations. The Amended Lignite Mining Agreement does not affect the amount the Registrants can borrow under their credit facilities.

In April 2020, Cleco Power and SWEPCO mutually agreed not to develop additional mining areas for future lignite extraction and subsequently provided notice to the LPSC of the intent to cease mining at the Dolet Hills and Oxbow mines by June 2020. The mine closures are subject to LPSC review and approval. As of June 30, 2020, all lignite reserves intended to be extracted from the mines had been extracted. On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine and to include and defer certain accelerated mine closing costs in fuel and related ratemaking treatment. For more information on the joint filing, see “— Risks and Uncertainties.” For more information on the LPSC prudency review associated with the mine closure costs, see “— LPSC Audits and Reviews — Prudency Reviews — Dolet Hills Power Station and Mine Closure Costs and Deferred Lignite Costs.”

Cleco has letters of credit to MISO pursuant to energy market requirements. The letters of credit automatically renew each year and have no impact on Cleco Holdings’ or Cleco Power’s revolving credit facility.

Generally, neither Cleco Holdings nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. There are no assets held as collateral for third parties that either Cleco Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

Cleco has accrued for liabilities related to third parties, employee medical benefits, and AROs.

In April 2015, the EPA published a final rule in the Federal Register for regulating the disposal and management of CCRs from coal-fired power plants (CCR Rule). The CCR Rule established extensive requirements for existing and new CCR landfills and surface impoundments and all lateral expansions consisting of location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements and post closure care, and recordkeeping, notification, and internet posting requirements. In August 2018, the D.C. Court of Appeals vacated several requirements in the CCR regulation, which included eliminating the previous acceptability of compacted clay material as a liner for impoundments. As a result, in August 2020, the EPA published a final rule in the Federal Register that would set deadlines for costly modifications including retrofitting of clay-lined impoundments with compliant liners or closure of the impoundments. In November 2020, demonstrations were submitted to the EPA specifying an intended course of action for the ash disposal facilities at Big Cajun II, Rodemacher Unit 2, and the Dolet Hills Power Station, in order to comply with the final CCR Rule. On January 11, 2022, Cleco Power and Cleco


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

Cajun received communication from the EPA that the demonstrations had been deemed complete. Cleco Power withdrew the Dolet Hills demonstration due to the cessation of receiving waste. The two remaining demonstrations are still subject to EPA approval based on pending technical review.

At March 31, 2023, Cleco Cajun recorded a decrease of $19.5 million in its ARO balance due to revised cost estimates, which is recorded in Liabilities held for sale on Cleco’s Condensed Consolidated Balance Sheet.

As part of the Cleco Cajun Transaction, NRG Energy agreed to indemnify Cleco for certain environmental costs up to $25.0 million associated with the CCR Rule, for both ARO and non-ARO related expenses. At June 30, 2023, Cleco Cajun had an indemnification asset totaling $17.8 million, which was substantially related to AROs associated with ash pond remediation. This asset is recorded in Assets held for sale on Cleco’s Condensed Consolidated Balance Sheet. As additional periodic expenses related to covered costs are incurred, the associated indemnification asset will be recognized. The indemnification asset is expected to be collected as indemnified costs, either recognized in the ARO or as periodic expenses, are incurred.

Risks and Uncertainties

Cleco could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their obligations or if Cleco or its affiliates are not in compliance with loan agreements or bond indentures.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows.

Changes in the regulatory environment or market forces could cause Cleco to determine its assets have suffered an other-than-temporary decline in value, whereby an impairment would be required, and Cleco’s financial condition could be materially adversely affected.


Note 15 — Affiliate Transactions

At June 30, 2023, and December 31, 2022, Cleco Holdings had an affiliate receivable of $20.0 million and $14.6 million, respectively, primarily for income taxes paid on behalf of Cleco Group. At June 30, 2023, and December 31, 2022, Cleco Holdings had an affiliate payable of $13.1 million, to Cleco Group primarily for settlement of taxes payable.

Cleco Power has balances that are payable to or due from its affiliates. The following table is a summary of those balances:


	AT JUNE 30, 2023				AT DEC. 31, 2022
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	$	24	$	1,194	$	5	$	1,138
Support Group	1,150		11,647		2,299		11,305
Cleco Cajun	1,261		511		1,467		5
Total	$	2,435	$	13,352	$	3,771	$	12,448

Cleco Power’s affiliate payable to Support Group at both June 30, 2023, and December 31, 2022, primarily consisted of amounts due for intercompany services.

Note 16 — Intangible Assets

Securitized Intangible Asset

On June 22, 2022, Cleco Securitization I acquired the Storm Recovery Property from Cleco Power for a purchase price of $415.9 million. The Storm Recovery Property is classified as a securitized intangible asset on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. This securitized intangible asset is being amortized ratably each period consistent with actual collections of the asset’s portion of the revenue requirement billed to Cleco Power’s customers. Amortization is included in Depreciation and amortization on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. During the three and six months ended June 30, 2023, amortization expense of $1.3 million and $5.6 million, respectively, was recognized. At the end of its life, this securitized intangible asset will have no residual value.

The following table summarizes the balance of the securitized intangible asset subject to amortization included on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets:


(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022
Storm Recovery Property intangible asset	$	415,946	$	415,946
Accumulated amortization	(8,375)		(2,823)
Net intangible asset subject to amortization	$	407,571	$	413,123

Other Intangible Assets

As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the valuation of finite intangible assets relating to long-term wholesale power supply agreements. At the end of their lives, these power supply agreement intangible assets will have no residual value. The intangible assets related to the power supply agreements are amortized over the estimated life of each applicable contract ranging between 7 and 19 years, and the amortization is included in Electric operations on Cleco’s Condensed Consolidated Statements of Income.

The following table presents the amortization expense recognized during the three and six months ended June 30, 2023, and 2022:


Cleco
	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		2023		2022
Amortization expense
Power supply agreements	$	2,387	$	2,420	$	4,807	$	4,840

The following table summarizes the balance of other intangible assets subject to amortization included in Cleco’s Condensed Consolidated Balance Sheets:


Cleco
(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022

Power supply agreements	$	85,104	$	85,104






Accumulated amortization	(69,825)		(65,018)
Net intangible assets subject to amortization	$	15,279	$	20,086


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

Note 17 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are summarized in the following tables for Cleco and Cleco Power. All amounts are reported net of income taxes. Amounts in parentheses indicate debits.


Cleco
	FOR THE THREE MONTHS ENDED JUNE 30, 2023		FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN (LOSS)
Balances, beginning of period	$	(363)	$	59


Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(423)		(845)


Balances, June 30, 2023	$	(786)	$	(786)


	FOR THE THREE MONTHS ENDED JUNE 30, 2022		FOR THE SIX MONTHS ENDED JUNE 30, 2022
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	$	(23,615)	$	(23,629)



Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	7		21


Balances, June 30, 2022	$	(23,608)	$	(23,608)


Cleco Power
	FOR THE THREE MONTHS ENDED JUNE 30, 2023						FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI		POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, beginning of period	$	(3,222)	$	(4,984)	$	(8,206)	$	(3,318)	$	(5,047)	$	(8,365)



Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	96		—		96		192		—		192
Reclassification of net loss to interest charges	—		63		63		—		126		126

Balances, June 30, 2023	$	(3,126)	$	(4,921)	$	(8,047)	$	(3,126)	$	(4,921)	$	(8,047)


	FOR THE THREE MONTHS ENDED JUNE 30, 2022						FOR THE SIX MONTHS ENDED JUNE 30, 2022
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI		POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, beginning of period	$	(12,579)	$	(5,235)	$	(17,814)	$	(12,885)	$	(5,298)	$	(18,183)


Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	307		—		307		613		—		613
Reclassification of net loss to interest charges	—		63		63		—		126		126

Balances, June 30, 2022	$	(12,272)	$	(5,172)	$	(17,444)	$	(12,272)	$	(5,172)	$	(17,444)


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cleco uses its website, https://www.cleco.com, as a routine channel for distribution of important information, including news releases and financial information. Cleco’s website is the primary source of publicly disclosed news about Cleco. Cleco is providing the address to its website solely for informational purposes and does not intend for the address to be an active link. The contents of the website are not incorporated into this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in combination with the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and Cleco’s and Cleco Power’s Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three and six months ended June 30, 2023, and 2022.


OVERVIEW

Cleco is a regional energy company that conducts substantially all of its business operations through its principal operating business segment, Cleco Power. Cleco Power is a

regulated electric utility company that owns nine generating units with a total rated capacity of 3,035 MW and serves approximately 293,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi.

Many factors affect Cleco’s primary business of generating, delivering, and selling electricity. These factors include the ability to increase energy sales while containing costs and the ability to successfully perform in MISO while subject to the related operating challenges and uncertainties, including increased wholesale competition. In addition, factors affecting Cleco Power include weather and the presence of a stable regulatory environment, which impacts the ROE and the current rate case, as well as the recovery of costs related to storms, growing energy demand, and volatile fuel prices; the ability to reliably deliver power to its jurisdictional customers; and the ability to comply with increasingly stringent regulatory and environmental standards. Significant events and major initiatives impacting Cleco and Cleco Power are discussed below.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

Cleco Cajun Divestiture

In 2022, Cleco Holdings engaged in a strategic review process related to its investment in Cleco Cajun. In March 2023, Cleco Holdings’ management, with the support of its Board of Managers, committed to a plan of action for the disposition of the Cleco Cajun Sale Group, with a sale probable and subject to customary regulatory and Board of Managers approvals. As a result, 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 will represent a strategic shift that will have a major effect on Cleco’s future operations and financial results. Therefore, the Cleco Cajun Sale Group is presented as discontinued operations and the results of operations and financial position for historical periods provided in this report have been recast to reflect this presentation. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

Dolet Hills Securitization

On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine. At December 31, 2021, the Dolet Hills Power Station was retired, and all of Cleco Power’s proportionate share of lignite-related costs had been billed by DHLC and Oxbow. On January 31, 2022, Cleco Power filed an application with the LPSC requesting recovery of stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station as well as deferred fuel and other costs associated with the closure of the Oxbow mine. These costs are currently under a prudency review by the LPSC. Pending the outcome of the prudency review, Cleco Power intends to seek a financing order to securitize the unrecovered Dolet Hills Power Station closure costs and Oxbow mine closure costs. Due to the nature of the regulatory process, Cleco Power is currently unable to determine the timing of this process and if any portion of the incurred costs will be disallowed for recovery. Cleco Power continues to assert that recovery of those costs is probable. For more information on the prudency review of the deferred fuel and other mine-related closure costs, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — LPSC Audits and Reviews — Prudency Reviews — Dolet Hills Power Station and Mine Closure Costs and Deferred Lignite Costs.”

ESG

Cleco is accelerating its efforts to protect the environment, manage social relationships, govern responsibly, and ensure accountability. To protect the environment, Cleco is increasing its renewable and electrification initiatives and is aiming to reduce GHG emissions in ways such as incorporating renewable energy resources into its generating fleet, as it replaces coal-fired generation units retired after serving their useful lives. Cleco aims to sustainably reduce its GHG emissions 60.0% by 2030 with aspirations of net zero emissions by 2050. To manage social relationships, Cleco plans to ensure that the electricity that it generates is affordable, reliable, and sustainable. Cleco also continues to support community investment opportunities across its service territory and has created a workforce culture that rewards inclusion, safety, and innovation. To govern responsibly, Cleco plans to continue operating according to policies and practices that support the governance framework. To ensure

accountability, Cleco has created an ESG Steering Committee and appointed a Chief Sustainability Officer to oversee the continued implementation of ESG initiatives. Currently, management is unable to predict the impact of implementing these ESG initiatives on the Registrants. For more information on these ESG initiatives, see Part I, Item 1, “Business — Human Capital — Diversity and Inclusion,” “— Communities,” and “— Oversight and Governance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For more information about Cleco’s environmental initiatives, see “— Renewable and Electrification Initiatives.”

Tax Reform

On August 16, 2022, the IRA of 2022 became law. The IRA of 2022 seeks to lower gasoline and electricity prices, increase energy security, and help consumers afford emissions-cutting technologies. In addition, the IRA of 2022 provides tax credits for clean electricity sources and energy storage, as well as creates programs to enable states and electric utilities to transition to clean power. There are several tax and renewables provisions in this legislation that could have a material effect on the results of operations, financial condition, or cash flows of the Registrants. These include provisions related to direct pay and credit transferability, enhanced carbon capture and sequestration credits, new technology-neutral clean energy investment credits, and new technology-neutral clean energy production credits. These credits are expected to help fund Cleco Power’s Project Diamond Vault as well as future renewable and electrification projects. Management continues to monitor any potential impact the IRA of 2022 could have on the Registrants.

Renewable and Electrification Initiatives

Project Diamond Vault

On April 11, 2022, Cleco Power announced Project Diamond Vault, a carbon capture and sequestration facility that is anticipated to be constructed at the Brame Energy Center. This facility is expected to capture and compress carbon dioxide produced by the combustion of fuel at Madison Unit 3 and store the compressed gas permanently in deep geological formations located beneath the Brame Energy Center. Cleco Power expects to reduce the carbon dioxide output of Madison Unit 3 by up to 95% with the implementation of this technology. Through this project, Cleco Power plans to leverage technology advancements and Louisiana’s natural resources to create a clean power solution.

The Front End Engineering Design (FEED) study for Project Diamond Vault has begun and is projected to cost approximately $12.0 million. A $9.0 million congressional appropriation has been secured, subject to the U.S. Department of Energy’s grant process, to help offset costs of this study. The FEED study is expected to be completed in mid-2024 and major permitting is expected to be completed in the second half of 2025. Construction of the project is expected to begin by the end of 2025. Management expects the total project will be completed by the end of 2028. After the cost of the FEED study, the remaining project cost is currently estimated to be between $1.40 billion and $1.70 billion. This estimate will be refined throughout the FEED study process as additional information and cost estimates become available. Cleco anticipates funding this project through one or more sources including tax credits provided by the IRA of 2022,


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

Department of Energy grants, debt financing, private equity investment, and partnership interests.

Other

On July 22, 2022, Cleco Power entered into a long-term agreement to purchase, among other things, the output, capacity, and current and future environmental resource credits of a 240-MW solar electric generation facility to be constructed in DeSoto Parish and owned by a third party. The agreement is subject to LPSC approval and other conditions precedent. If approved, Cleco Power expects to begin receiving output from this facility in 2025.

Cleco Power is also pursuing electrification initiatives such as gas compression, e-trucking, green tariffs, residential heating programs, and increasing the supply of light duty electric vehicles and forklifts, among others.

Cleco Power is seeking available funds from the U.S. government for funding of these electrification initiatives. Cleco Power cannot predict the likelihood that any funding from the U.S. government ultimately will be approved.

DSMART Project

The DSMART project includes modernization of Cleco Power’s distribution system by replacing or upgrading distribution line equipment to utilize new and emerging technologies to facilitate automatic fault isolation, service restoration, and fault location. The project is expected to provide savings through a reduction in outage restoration time and improve operational efficiencies and time to locate faults. The project is also expected to improve safety and reliability of Cleco Power’s distribution assets by minimizing outage patrols and improving situational awareness in the distribution operations center. The total estimated project cost is $90.2 million. The project implementation will be completed in phases, and management expects the total project will be completed by the end of 2028. Cleco Power is currently in the second phase of the project. As of June 30, 2023, Cleco Power had spent $48.2 million on the project.

Other

Cleco Power is working to secure load growth opportunities that include renewing existing franchises, pursuing new franchises, and adding new retail load opportunities with large industrial, commercial, and residential loads. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government and military, wood and paper, health care, information technology, transportation, and other manufacturing.

In 2021 through a request for proposal process, a significant wholesale customer currently under contract with Cleco Power informed Cleco Power that it was not selected as a provider of capacity and energy after the first quarter of 2024, and on October 19, 2022, the LPSC certified these results. Cleco Power’s failure to recontract this agreement is expected to affect jurisdictional retail rates that will be subject to review by the LPSC in conjunction with Cleco Power’s rate case. On June 30, 2023, Cleco Power filed an application with the LPSC for its next rate case, with anticipated new rates being effective July 1, 2024.


RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2023, and 2022


Cleco
	FOR THE THREE MONTHS ENDED JUNE 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2023		2022		VARIANCE		CHANGE
Operating revenue, net	$	284,795	$	384,753	$	(99,958)	(26.0)	%
Operating expenses	225,416		315,486		90,070		28.5	%
Operating income	59,379		69,267		(9,888)		(14.3)	%
Interest income	673		1,066		(393)		(36.9)	%
Allowance for equity funds used during construction	1,574		808		766		94.8	%

Other expense, net	(789)		(8,470)		7,681		90.7	%
Interest charges	40,768		35,147		(5,621)		(16.0)	%
Federal and state income tax benefit	(2,989)		(3,577)		(588)		(16.4)	%
Income from continuing operations, net of income taxes	23,058		31,101		(8,043)		(25.9)	%
Income (loss) from discontinued operations, net of income taxes	24,272		(29,738)		54,010		181.6	%
Net income	$	47,330	$	1,363	$	45,967	*
* Not meaningful

The increase in Cleco’s results of operations are primarily attributable to the following:

•activity of its reportable segment, Cleco Power. For detailed discussions of those impacts, see “— Cleco Power.”

•the effects of the presentation of the Cleco Cajun Sale Group as discontinued operations and, as a result, Cleco Cajun no longer being reflected as a reportable segment. For information on discontinued operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

The estimated annual effective income tax rates used during the second quarter of 2023 and 2022 for Cleco may not be indicative of the full-year income tax rates. For more information on Cleco’s effective income tax rates on continuing operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


Cleco Power
			FOR THE THREE MONTHS ENDED JUNE 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2023		2022			VARIANCE		CHANGE
Operating revenue
Base	$	170,026	$	178,714		$	(8,688)	(4.9)	%
Fuel cost recovery	93,150		189,900			(96,750)		(50.9)	%
Electric customer credits	(736)		(129)			(607)		(470.5)	%
Other operations	24,741		18,686			6,055		32.4	%
Affiliate revenue	1,635		1,628			7		0.4	%
Operating revenue, net	288,816		388,799			(99,983)		(25.7)	%
Operating expenses
Recoverable fuel and purchased power	93,355		189,991			96,636		50.9	%
Non-recoverable fuel and purchased power	10,290		11,079			789		7.1	%
Other operations and maintenance	57,386		52,277			(5,109)		(9.8)	%
Depreciation and amortization	43,722		44,299			577		1.3	%
Taxes other than income taxes	14,342		11,547			(2,795)		(24.2)	%



Total operating expenses	219,095		309,193			90,098		29.1	%
Operating income	69,721		79,606			(9,885)		(12.4)	%
Interest income	579		1,035			(456)		(44.1)	%
Allowance for equity funds used during construction	1,574		808			766		94.8	%
Other expense, net	(1,005)		(2,225)			1,220		54.8	%
Interest charges	24,183		21,305			(2,878)		(13.5)	%
Federal and state income tax expense	3,247		3,214			(33)		(1.0)	%
Net income	$	43,439	$	54,705		$	(11,266)	(20.6)	%

The following table shows the components of Cleco Power’s retail and wholesale customer sales related to base revenue:


	FOR THE THREE MONTHS ENDED JUNE 30,
(MILLION kWh)	2023	2022	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	919	973		(5.5)	%
Commercial	690	706		(2.3)	%
Industrial	554	574		(3.5)	%
Other retail	31	31		—	%
Total retail	2,194	2,284		(3.9)	%
Sales for resale	755	789		(4.3)	%
Total retail and wholesale customer sales	2,949	3,073		(4.0)	%

The following table shows the components of Cleco Power’s base revenue:


	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	79,915	$	86,831		(8.0)	%
Commercial	49,502		50,873			(2.7)	%
Industrial	22,126		22,181			(0.2)	%
Other retail	3,199		2,746			16.5	%

Total retail	154,742		162,631			(4.9)	%
Sales for resale	15,284		16,083			(5.0)	%
Total base revenue	$	170,026	$	178,714		(4.9)	%

Cleco Power’s residential customers’ demand for electricity is largely affected by weather. Weather generally is measured in cooling degree-days and heating degree-days. A high number of cooling degree-days may indicate consumers will use more air conditioning, while a high number of heating degree-days may indicate consumers will use more heating. An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days because alternative heating sources are more readily available, and winter energy is typically priced below the rate charged for energy used in the summer. Normal heating degree-days and cooling degree-days are calculated for a month by separately calculating the average actual heating and cooling degree-days for that month over a period of 30 years.

The following chart shows how cooling degree-days varied from normal conditions and from the prior period. Cleco Power uses weather data provided by the National Oceanic and Atmospheric Administration to determine degree-days.


	FOR THE THREE MONTHS ENDED JUNE 30,
				2023 CHANGE
	2023	2022	NORMAL	PRIOR YEAR		NORMAL

Cooling degree-days	1,102	1,215	983	(9.3)	%	12.1	%

Base

Base revenue decreased $8.7 million primarily due to lower usage as a result of milder weather.

For information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see Part I, Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Fuel Cost Recovery/Recoverable Fuel and Purchased Power


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

incremental recoverable fuel and purchased power expenses for the three months ended June 30, 2023, were impacted primarily by lower natural gas costs as compared to the three months ended June 30, 2022. For more information on Cleco Power’s most current fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”

Other Operations Revenue

Other operations revenue increased $6.1 million primarily due to storm recovery securitization revenue which began in September 2022.

Other Operations and Maintenance Expense

Other operations and maintenance expense increased $5.1 million primarily due to $3.7 million of higher employee-related expenses, $1.0 million of higher distribution maintenance expense, and $0.8 million of higher outside service costs largely related to information technology support and consulting.

Taxes Other Than Income Taxes

Taxes other than income taxes increased $2.8 million primarily due to the amortization of the Madison Unit 3 property tax regulatory asset that began in July 2022.

Other Expense, Net

Other expense, net decreased $1.2 million primarily due to $2.2 million for the absence of non-service pension costs amortization as a result of an increase in the discount rate which caused actuarial gains.

Interest Charges

Interest charges increased $2.9 million primarily due to $4.2 million for interest on storm recovery bonds issued in June 2022 by Cleco Securitization I and $1.4 million related to higher interest rates on variable rate debt. These increases were partially offset by $1.6 million for the absence of interest on floating rate senior notes that were redeemed at par in June 2022 and $1.2 million of lower amortization of debt expense.

Income Taxes

The estimated annual effective income tax rates used during the second quarter of 2023 and 2022 for Cleco Power may not be indicative of the full-year income tax rates. For more information on Cleco Power’s effective income tax rates, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”

Comparison of the Six Months Ended June 30, 2023, and 2022


Cleco
	FOR THE SIX MONTHS ENDED JUNE 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2023		2022		VARIANCE		CHANGE
Operating revenue, net	$	605,377	$	697,380	$	(92,003)	(13.2)	%
Operating expenses	511,562		579,211		67,649		11.7	%
Operating income	93,815		118,169		(24,354)		(20.6)	%
Interest income	1,940		1,809		131		7.2	%
Allowance for equity funds used during construction	2,806		1,740		1,066		61.3	%
Other expense, net	(252)		(8,747)		8,495		97.1	%
Interest charges	80,256		67,788		(12,468)		(18.4)	%
Federal and state income tax benefit	(3,154)		(11,110)		(7,956)		(71.6)	%
Income from continuing operations, net of income taxes	21,207		56,293		(35,086)		(62.3)	%
(Loss) income from discontinued operations, net of income taxes	(77,899)		100,814		(178,713)		(177.3)	%
Net (loss) income	$	(56,692)	$	157,107	$	(213,799)	(136.1)	%

The decrease in Cleco’s results of operations are primarily attributable to the following:

•activity of its reportable segment, Cleco Power. For detailed discussions of those impacts, see “— Cleco Power.”

The estimated annual effective income tax rates used during the six months ended June 30, 2023, and 2022 for Cleco might not be indicative of the full-year income tax rates. For more information on Cleco’s effective income tax rates on continuing operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


Cleco Power
			FOR THE SIX MONTHS ENDED JUNE 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2023		2022		VARIANCE		CHANGE
Operating revenue
Base	$	314,313	$	335,738	$	(21,425)	(6.4)	%
Fuel cost recovery	245,211		328,973		(83,762)		(25.5)	%
Electric customer credits	(1,386)		(265)		(1,121)		(423.0)	%
Other operations	52,044		37,771		14,273		37.8	%
Affiliate revenue	3,323		3,087		236		7.6	%
Operating revenue, net	613,505		705,304		(91,799)		(13.0)	%
Operating expenses
Recoverable fuel and purchased power	245,179		328,943		83,764		25.5	%
Non-recoverable fuel and purchased power	17,515		23,118		5,603		24.2	%
Other operations and maintenance	111,377		101,006		(10,371)		(10.3)	%
Depreciation and amortization	94,454		89,538		(4,916)		(5.5)	%
Taxes other than income taxes	30,337		24,178		(6,159)		(25.5)	%



Total operating expenses	498,862		566,783		67,921		12.0	%
Operating income	114,643		138,521		(23,878)		(17.2)	%
Interest income	1,764		1,775		(11)		(0.6)	%
Allowance for equity funds used during construction	2,806		1,740		1,066		61.3	%
Other income (expense), net	301		(4,261)		4,562		107.1	%
Interest charges	48,521		40,108		(8,413)		(21.0)	%
Federal and state income tax expense	4,737		3,938		(799)		(20.3)	%
Net income	$	66,256	$	93,729	$	(27,473)	(29.3)	%

The following table shows the components of Cleco Power’s retail and wholesale customer sales related to base revenue:


	FOR THE SIX MONTHS ENDED JUNE 30,
(Million kWh)	2023	2022	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	1,673	1,863		(10.2)	%
Commercial	1,270	1,305		(2.7)	%
Industrial	1,079	1,118		(3.5)	%
Other retail	62	61		1.6	%
Total retail	4,084	4,347		(6.1)	%
Sales for resale	1,399	1,472		(5.0)	%
Total retail and wholesale customer sales	5,483	5,819		(5.8)	%

The following table shows the components of Cleco Power’s base revenue:


	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	140,109	$	156,747		(10.6)	%
Commercial	95,545		99,137			(3.6)	%
Industrial	42,712		43,538			(1.9)	%
Other retail	5,987		5,448			9.9	%
Total retail	284,353		304,870			(6.7)	%
Sales for resale	29,960		30,868			(2.9)	%
Total base revenue	$	314,313	$	335,738		(6.4)	%

The following chart shows how cooling and heating degree-days varied from normal conditions and from the prior period. Cleco Power uses weather data provided by the National Oceanic and Atmospheric Administration to determine degree-days.


			FOR THE SIX MONTHS ENDED JUNE 30,
				2023 CHANGE
	2023	2022	NORMAL	PRIOR YEAR		NORMAL
Heating degree-days	542	944	888	(42.6)	%	(39.0)	%
Cooling degree-days	1,381	1,309	1,083	5.5	%	27.5	%

Base

Base revenue decreased $21.4 million primarily due to lower usage as a result of milder weather.

Fuel Cost Recovery/Recoverable Fuel and Purchased Power

Changes in fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such expenses. Approximately 78% of Cleco Power’s total fuel cost during the first six months of 2023 was regulated by the LPSC. Recovery of FAC costs is subject to periodic fuel audits by the LPSC which may result in a refund to customers. Generally, fuel and purchased power expenses are impacted by customer usage, the per unit cost of fuel used for electric generation, and the dispatch of Cleco Power’s generating facilities by MISO. Cleco Power’s incremental recoverable fuel and purchased power expenses for the six months ended June 30, 2023, were impacted primarily by lower natural gas costs as compared to the six months ended June 30, 2022. For more information on Cleco Power’s most current fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

Other Operations Revenue

Other operations revenue increased $14.3 million primarily due to storm recovery securitization revenue which began in September 2022.

Non-Recoverable Fuel and Purchased Power

Non-recoverable fuel and purchased power decreased $5.6 million primarily due to $3.3 million for the timing of transmission costs and $2.0 million of lower fuel expense primarily due to the expiration of a wholesale contract in December 2022.

Other Operations and Maintenance Expense

Other operations and maintenance expense increased $10.4 million primarily due to $6.0 million of higher employee-related expenses, $1.6 million of higher distribution maintenance expense, and $1.6 million of higher materials and supplies expense.

Depreciation and Amortization

Depreciation and amortization increased $4.9 million primarily due to $5.6 million for the amortization of the securitized intangible asset that began in November 2022 and $4.2 million related to a change in the estimated useful life of internal software. These increases were partially offset by $4.7 million for the absence of amortization of regulatory assets relating to Hurricanes Laura, Delta, and Zeta.

Taxes Other Than Income Taxes

Taxes other than income taxes increased $6.2 million primarily due to the amortization of the Madison Unit 3 property tax regulatory asset that began in July 2022.

Other Income (Expense), Net

Other income (expense), net increased $4.6 million primarily due to the absence of non-service pension costs amortization as a result of an increase in the discount rate which caused actuarial gains.

Interest Charges

Interest charges increased $8.4 million primarily due to $9.0 million for interest on storm recovery bonds issued in June 2022 by Cleco Securitization I and $3.0 million related to higher interest rates on variable rate debt. These increases were partially offset by $2.4 million for the absence of interest on floating rate senior notes that were redeemed at par in June 2022 and $1.2 million of lower amortization of debt expense.

Income Taxes

The estimated annual effective income tax rates used during the six months ended June 30, 2023, and 2022 for Cleco Power might not be indicative of the full-year income tax rates. For more information on Cleco Power’s effective income tax rates, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”

Non-GAAP Measure

The financial results in the following table are presented on an accrual basis. EBITDA is a key non-GAAP financial measure used by the CEO to assess the operating performance of Cleco’s segment; however, it is not indicative of future performance. Management evaluates the performance of Cleco’s segment and allocates resources to it based on

segment profit and the requirements to implement strategic initiatives and projects to meet current business objectives. EBITDA is defined as net income adjusted for interest, income taxes, depreciation, and amortization.

The financial information for historical periods provided in this report has been recast to reflect the presentation of the Cleco Cajun Sale Group as discontinued operations. Cleco’s segment structure and its allocation of corporate expenses were updated to reflect how management makes financial decisions and allocates resources. Cleco has recast data from prior periods to reflect this change to conform to the current year presentation. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

The following table sets forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to EBITDA for the three and six months ended June 30, 2023, and 2022 for the Cleco Power reportable segment:


	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022

Net income	$	43,439	$	54,705
Add: Depreciation and amortization	43,722		44,299
Less: Interest income	579		1,035
Add: Interest charges	24,183		21,305
Add: Federal and state income tax expense	3,247		3,214
EBITDA	$	114,012	$	122,488


	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022
Net income	$	66,256	$	93,729
Add: Depreciation and amortization	94,454		89,538
Less: Interest income	1,764		1,775
Add: Interest charges	48,521		40,108
Add: Federal and state income tax expense	4,737		3,938
EBITDA	$	212,204	$	225,538


FINANCIAL CONDITION

Liquidity and Capital Resources

General Considerations and Credit-Related Risks

Credit Ratings and Counterparties

Financing for operational needs and capital expenditure requirements not satisfied by operating cash flows depends upon the cost and availability of external funds through both short- and long-term financing. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain or expand its businesses. Access to funds is dependent upon factors such as general economic and capital market conditions, regulatory authorizations and policies, Cleco Holdings’ and Cleco Power’s credit ratings, cash flows from routine operations, and credit ratings of project counterparties. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. The following table


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

presents the credit ratings of Cleco Holdings and Cleco Power at June 30, 2023:

SENIOR UNSECURED DEBT

CORPORATE/LONG-TERM ISSUER

S&P

MOODY’S

FITCH

S&P

MOODY’S

FITCH

Cleco Holdings

BBB-

Baa3

BBB-

Baa3

BBB-

Cleco Power

BBB+

BBB

Credit ratings are not recommendations to buy, sell, or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest ratings held. If Cleco Holdings’ or Cleco Power’s credit ratings were to be downgraded, Cleco Holdings or Cleco Power, respectively, could be required to pay additional fees and incur higher interest rates for borrowings under their respective revolving credit facilities.

Cleco may be required to provide credit support with respect to any open trading contracts that Cleco has or may initiate in the future. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on the notional value of the initial contract, changes in forward market prices, changes in the volume of open contracts, changes in credit ratings or credit quality where netting agreements are in place, and changes in the amount counterparties owe Cleco. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

Cleco Power and Cleco Cajun participate in the MISO market. MISO requires Cleco Power and Cleco Cajun to provide credit support which may increase or decrease due to the timing of the settlement schedules and MISO margining formulas. For more information about MISO, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For more information about credit support see Item 1, “Financial Statements and Supplementary Data — Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees.”

Global and U.S. Economic Environment

Global and domestic economic conditions may have an impact on Cleco’s business and financial condition. Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. During periods of capital market volatility, the availability of capital could be limited and the costs of capital may increase for many companies. Although the Registrants have not experienced restrictions in the financial markets, their ability to access the capital markets may be restricted at a time when the Registrants would like, or need, to do so. Any restrictions could have a material impact on the Registrants’ ability to fund capital expenditures or debt service, or on their flexibility to react to changing economic and business conditions. Credit constraints could have a material negative impact on the Registrants’ lenders or customers, causing them to fail to meet their obligations to the Registrants or to delay payment of such obligations. The rising interest rates the Registrants have recently been exposed to have negatively

affected interest expense on variable rate debt and positively affected interest income for the Registrants’ short-term investments.

In recent years, inflationary pressures have increased substantially. Under established regulatory practice, historical costs have traditionally formed the basis for recovery from customers. As a result, Cleco Power’s future cash flows designed to provide recovery of historical plant costs may not be adequate to replace property, plant, and equipment in future years. For information on the impacts of inflation and market price volatility of natural gas on credit loss reserves related to customer accounts receivable, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Reserves for Credit Losses.”

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. On June 16, 2021, the LPSC approved Cleco Power’s current retail rate plan, which included the settlement of the TCJA protected and unprotected excess ADIT. As a result of this settlement, all retail customers will continue receiving bill credits resulting from the TCJA. For more information on the regulatory impact of the TCJA, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — TCJA.”

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Cleco may be required to provide credit support with respect to any open trading contracts that Cleco has entered into or may enter into in the future. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on the amount of the initial contract, changes in amounts counterparties owe to Cleco, and any prenegotiated unsecured thresholds agreed to in the master contract. For more information about fair value levels, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 6 — Fair Value Accounting Instruments.”

Cash Generation and Cash Requirements

Restricted Cash and Cash Equivalents

For information on Cleco’s and Cleco Power’s restricted cash and cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

Debt

Cleco

At June 30, 2023, and December 31, 2022, Cleco had $120.0 million and $109.0 million, respectively, of outstanding borrowings under its aggregate $475.0 million revolving credit facilities. For more information on Cleco’s revolving credit facilities, see “— Credit Facilities.”

At June 30, 2023, Cleco’s long-term debt and finance leases outstanding was $3.47 billion, of which $371.8 million was due within one year. The long-term debt due within one year at June 30, 2023, primarily represents $132.3 million of Cleco Holdings’ bank term loan due in May 2024, of which


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q

$65.6 million is due by December 2023 as required by the Cleco Cajun Transaction commitments to the LPSC; $125.0 million of Cleco Power’s bank term loan due in May 2024; $100.0 million of Cleco Power’s senior notes due in December 2023; and $14.2 million of Cleco Securitization I storm recovery bond principal payments scheduled to be paid in September 2023 and March 2024.

On February 17, 2023, Cleco Holdings and Cleco Power amended their respective bank term loans to transition the benchmark interest rate from LIBOR to SOFR.

On May 1, 2023, Cleco Holdings amended certain terms of the supplemental indenture governing its $165.0 million senior notes due in 2023. As a result, the interest rate of the senior notes changed to a floating interest rate equal to SOFR plus 1.725% and the maturity date was extended from May 1, 2023, to May 1, 2025.

Proceeds from the divestiture of the Cleco Cajun Sale Group, which is subject to customary regulatory and Board of Managers approvals, must be used to satisfy the LPSC commitment related to the debt that funded the Cleco Cajun Transaction. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

At June 30, 2023, cash and cash equivalents available of $71.9 million combined with $355.0 million of available revolving credit facility capacity ($80.0 million from Cleco Holdings and $275.0 million from Cleco Power) provided a total liquidity of $426.9 million.

At June 30, 2023, and December 31, 2022, Cleco had a working capital deficit of $79.6 million and $88.8 million, respectively. The $9.2 million increase in working capital is primarily due to:

•a $49.7 million increase in fuel inventory primarily due to an increase in volume of petroleum coke at a lower price per ton and an increase in volume of coal at a higher price per ton,

•a $37.4 million increase in the net assets and liabilities held for sale primarily due to the reclassification of all assets and liabilities related to the Cleco Cajun Sale Group,

•a $27.3 million decrease in accounts payable, excluding Cleco Power’s FTRs, primarily due to lower accruals for natural gas, solid fuels, and generating station outage maintenance,

•a $23.8 million increase in cash and cash equivalents,

•a $17.7 million increase in materials and supplies inventory primarily due to higher purchases of transmission and distribution inventory in order to support future needs and mitigate future supply chain uncertainty,

•a $5.4 million increase in accounts receivable from affiliates primarily due to estimated tax payments made on behalf of Cleco Group,

•a $4.8 million increase in unbilled revenue primarily due to higher usage as a result of warmer weather at the end of June 2023,

•a $3.9 million increase in prepayments primarily due to property insurance premiums paid in June 2023, and

•a $3.9 million decrease in energy risk management liabilities primarily due to the settlement of gas related derivative contracts.

These increases in working capital were partially offset by:

•a $52.5 million decrease in accumulated deferred fuel, excluding Cleco Power’s FTRs, primarily due to lower fuel costs,

•a $39.2 million increase in taxes payable primarily due to an accrual for property tax payments and higher provision for federal and state income taxes,

•a $30.9 million increase in long-term debt and finance leases due within one year primarily due to the reclassification of $125.0 million of Cleco Power’s bank term loan due in May 2024, $66.7 million of Cleco Holdings’ bank term loan due in May 2024, and an additional $4.6 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds, partially offset by the reclassification of Cleco Holdings’ $165.0 million senior notes due in 2023 to long-term debt as a result of the extension of the maturity date of such senior notes to May 1, 2025,

•a $29.0 million decrease in customer accounts receivable primarily due to timing of payments received from a wholesale customer and lower accruals for fuel recovery revenue, and

•an $11.0 million increase in short-term debt due to higher outstanding draws on revolving credit facilities.

Cleco Holdings

At June 30, 2023, and December 31, 2022, Cleco Holdings had $95.0 million and $64.0 million, respectively, of outstanding borrowings under its $175.0 million revolving credit facility. For more information on Cleco Holdings’ revolving credit facility, see “— Credit Facilities.” Cleco Holdings has an uncommitted line of credit that allows up to $10.0 million in short-term borrowings, but no more than $10.0 million in the aggregate with Cleco Power’s similar line of credit, to support its working capital needs. There were no amounts outstanding under the uncommitted line of credit at June 30, 2023.

At June 30, 2023, Cleco Holdings’ long-term debt outstanding was $1.58 billion, of which $131.9 million was due within one year. The long-term debt due within one year at June 30, 2023, primarily represents the $132.3 million bank term loan due in May 2024, of which $65.6 million is due by December 2023 as required by the Cleco Cajun Transaction commitments to the LPSC.

At June 30, 2023, cash and cash equivalents available at Cleco Holdings of $4.2 million combined with $80.0 million of available revolving credit facility capacity provided a total liquidity of $84.2 million.

Cleco Power

At June 30, 2023, and December 31, 2022, Cleco Power had $25.0 million and $45.0 million, respectively, of outstanding borrowings under its $300.0 million revolving credit facility. For more information on Cleco Power’s revolving credit facility, see “— Credit Facilities.”

Cleco Power has an uncommitted line of credit that allows up to $10.0 million in short-term borrowings, but no more than $10.0 million in the aggregate with Cleco Holdings’ similar line of credit, to support its working capital needs. There were no amounts outstanding under the uncommitted line of credit at June 30, 2023.

At June 30, 2023, Cleco Power’s long-term debt and finance leases outstanding was $1.89 billion, of which $239.9 million was due within one year. The long-term debt due within


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

one year at June 30, 2023, primarily represents the $125.0 million bank term loan due in May 2024, $100.0 million of senior notes due in December 2023, and $14.2 million of Cleco Securitization I storm recovery bond principal payments scheduled to be paid in September 2023 and March 2024.

At June 30, 2023, cash and cash equivalents available of $30.5 million combined with $275.0 million of available revolving credit facility capacity provided a total liquidity of $305.5 million.

At June 30, 2023, Cleco Power had a working capital deficit of $77.2 million. At December 31, 2022, Cleco Power had a working capital surplus of $35.9 million. The $113.1 million decrease in working capital is primarily due to:

•a $129.6 million increase in long-term debt and finance leases due within one year primarily due to the reclassification of Cleco Power’s $125.0 million bank term loan due in May 2024 and an additional $4.6 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds,

•a $52.5 million decrease in accumulated deferred fuel, excluding FTRs, primarily due to lower fuel costs,

•a $35.5 million increase in taxes payable primarily due to an accrual for property tax payments and higher provision for federal and state income taxes, and

•a $29.0 million decrease in customer accounts receivable primarily due to timing of payments received from a wholesale customer and lower accruals for fuel recovery revenue.

These decreases in working capital were partially offset by:

•a $49.7 million increase in fuel inventory primarily due to an increase in volume of petroleum coke at a lower price per ton and an increase in volume of coal at a higher price per ton,

•a $24.6 million decrease in accounts payable, excluding FTRs, primarily due to lower accruals for natural gas, solid fuels, and generating station outage maintenance,

•a $20.0 million decrease in short-term debt primarily due to lower outstanding draws on the revolving credit facility,

•a $15.8 million increase in cash and cash equivalents, and

•a $4.8 million increase in unbilled revenue primarily due to higher usage as a result of warmer weather at the end of June 2023.

Credit Facilities

At June 30, 2023, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with $95.0 million of outstanding borrowings and one for Cleco Power in the amount of $300.0 million with $25.0 million outstanding borrowings. On February 17, 2023, Cleco Holdings and Cleco Power amended their respective revolving credit facilities to transition the benchmark interest rate from LIBOR to SOFR. The total of all revolving credit facilities maintains a maximum aggregate capacity of $475.0 million.

Cleco and Cleco Power had no amounts outstanding under their uncommitted lines of credit at June 30, 2023.

Cleco Holdings’ revolving credit facility provides funding for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and matures in May 2026. Under covenants contained in Cleco Holdings’ revolving credit facility, Cleco is required to maintain total indebtedness less than or equal to 65% of total capitalization. At June 30, 2023, Cleco Holdings was in compliance with the covenants of its revolving credit facility. At June 30, 2023, the borrowing costs for amounts drawn under the facility were equal to SOFR plus 1.725% or ABR plus 0.625%, plus commitment fees of 0.275% paid on the unused portion of the facility. If Cleco Holdings’ credit ratings were to be downgraded one level by the credit rating agencies, Cleco Holdings may be required to pay incremental interest and commitment fees of 0.125% and 0.05%, respectively, under the pricing levels of its revolving credit facility.

Cleco Power’s revolving credit facility provides funding for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and matures in May 2026. Under covenants contained in Cleco Power’s revolving credit facility, Cleco Power is required to maintain total indebtedness less than or equal to 65% of total capitalization. At June 30, 2023, Cleco Power was in compliance with the covenants of its revolving credit facility. At June 30, 2023, the borrowing costs for amounts drawn under the facility were equal to SOFR plus 1.35% or ABR plus 0.25%, plus commitment fees of 0.15% paid on the unused portion of the facility. If Cleco Power’s credit ratings were to be downgraded one level by the credit rating agencies, Cleco Power may be required to pay incremental interest and commitment fees of 0.125% and 0.025%, respectively, under the pricing levels of its revolving credit facility.

If Cleco Holdings or Cleco Power were to not comply with certain covenants in their respective revolving credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities, and the lenders under the respective credit facility or debt agreement could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its revolving credit facility or other debt agreements, Cleco Holdings would be considered in default under its revolving credit facility.

Debt and Distribution Limitations

The 2016 Merger Commitments include provisions for limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings. Cleco Holdings may not make any distribution unless, after giving effect to such distribution, Cleco Holdings’ debt to EBITDA ratio is equal to or less than 6.50 to 1.00 and Cleco Holdings’ corporate credit rating is investment grade with one or more of the three credit rating agencies. At June 30, 2023, Cleco Holdings was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. Additionally, in accordance with the 2016 Merger Commitments, Cleco Power is subject to certain provisions limiting the amount of distributions that may be paid to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings. Cleco Power may not make any distribution unless, after giving effect to such distribution, Cleco Power’s common equity ratio would not be less than 48% and Cleco Power’s corporate credit rating is


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

investment grade with two of the three credit rating agencies. At June 30, 2023, Cleco Power was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. The 2016 Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. For more information on the 2016 Merger Commitments, see Part I, Item 1A, “Risk Factors — Structural Risks — Holding Company” and “— Regulatory Risks — Regulatory Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Cash Flows

Cleco’s operating, investing, and financing cash flows include both continuing and discontinued operations. For information on the cash flows from discontinued operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

Cleco’s and Cleco Power’s net cash activities are as follows for the six months ended June 30, 2023, and 2022:


	CLECO						CLECO POWER
	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2023		2022		VARIANCE			2023		2022		VARIANCE
Net cash provided by operating activities	$	124,359	$	174,507	$	(50,148)		$	174,237	$	90,670	$	83,567
Net cash used in investing activities	$	(113,565)	$	(85,111)	$	(28,454)		$	(108,983)	$	(97,293)	$	(11,690)
Net cash provided by (used in) financing activities	$	7,353	$	14,828	$	(7,475)		$	(48,623)	$	95,673	$	(144,296)

Cleco - Net Operating Cash Flow

Net cash provided by operating activities decreased $50.1 million, which includes net cash used related to discontinued operations of $5.3 million, primarily due to:

•$136.9 million of higher payments for fuel inventory primarily due to higher volume of purchases of coal at Cleco Power and Cleco Cajun,

•the absence of $49.0 million of collateral received from counterparties related to Cleco Cajun’s natural gas derivatives, and

•$25.2 million of higher purchased power at Cleco Power and Cleco Cajun.

These decreases were partially offset by:

•$86.6 million of higher recoveries of fuel and purchased power costs primarily due to the timing of collections at a higher fuel rate at Cleco Power,

•$40.7 million of higher collections from Cleco Power’s customers, and

•the absence of $40.6 million of affiliate intercompany tax settlements.

Cleco - Net Investing Cash Flow

Net cash used in investing activities increased $28.5 million, which includes $1.2 million related to discontinued operations, primarily due to:

•the absence of $15.3 million of life insurance proceeds and

•$13.5 million for higher additions to property, plant, and equipment, net of AFUDC.

Cleco - Net Financing Cash Flow

Net cash provided by financing activities decreased $7.5 million primarily due to:

•the absence of proceeds of $424.9 million, net of discount, from the issuance of Cleco Securitization I’s senior secured storm recovery bonds and

•$85.0 million of higher payments on revolving credit facilities.

These decreases were partially offset by:

•$321.8 million of lower repayments on long-term debt,

•the absence of distributions to Cleco Group of $132.8 million, and

•$41.0 million of higher draws on revolving credit facilities.

Cleco Power - Net Operating Cash Flow

Net cash provided by operating activities increased $83.6 million primarily due to:

•$86.6 million of higher recoveries of fuel and purchased power costs primarily due to the timing of collections at a higher fuel rate,

•the absence of $59.5 million of affiliate intercompany tax settlements, and

•$40.7 million of higher collections from customers.

These increases were partially offset by:

•$75.1 million of higher payments for fuel inventory primarily due to higher volume of purchases of coal,

•$15.2 million of higher interest paid on debt, and

•$9.5 million of higher purchases of materials and supplies inventory to mitigate future supply chain issues.

Cleco Power - Net Investing Cash Flow

Net cash used in investing activities increased $11.7 million primarily due to higher additions to property, plant, and equipment, net of AFUDC, of $12.3 million.

Cleco Power - Net Financing Cash Flow

Net cash used in financing activities increased $144.3 million primarily due to:

•the absence of proceeds of $424.9 million, net of discount, from the issuance of Cleco Securitization I’s senior secured storm recovery bonds,

•$45.0 million of higher payments on revolving credit facilities, and

•$30.0 million of higher draws on revolving credit facilities.


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

These increases were partially offset by:

•$321.8 million of lower repayments on long-term debt and

•$27.0 million of lower distributions to Cleco Holdings.

Capital Expenditures

During the six months ended June 30, 2023, Cleco and Cleco Cajun had capital expenditures of $115.2 million and $4.0 million, respectively. Cleco’s estimated capital expenditures, excluding the Cleco Cajun Sale Group, and debt maturities for the six months ended December 31, 2023, and for the remainder of the five-year period ending December 31, 2027, were $317.7 million and $2.91 billion, respectively. All amounts exclude AFUDC.

For more information on the Cleco Cajun Sale Group, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

For more information on Cleco’s and Cleco Power’s estimated capital expenditures for 2023 and the five-year period ending December 31, 2027, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Cash Generation and Cash Requirements — Capital Expenditures” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Contractual Obligations

Cleco, in the normal course of business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Condensed Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the Condensed Consolidated Financial Statements. For more information regarding Cleco’s Contractual Obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Contractual Obligations” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees. For more information about off-balance sheet commitments and guarantees, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.”

Cybersecurity

For information related to Cleco’s cybersecurity, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Cybersecurity” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Regulatory and Other Matters

Environmental Matters

Cleco is subject to extensive environmental regulation by federal, state, and local authorities and is required to comply with numerous environmental laws and regulations, and to obtain and comply with numerous governmental permits in operating its facilities. In addition, existing environmental laws, regulations, and permits could be revised or reinterpreted; new laws and regulations could be adopted or become applicable to Cleco or its facilities; and future changes in environmental laws and regulations could occur, including potential regulatory and enforcement developments related to air emissions, water and/or waste management. Cleco may incur significant additional costs to comply with these revisions, reinterpretations, and requirements. Cleco Power could then seek recovery of additional environmental compliance costs as riders through the LPSC’s EAC or FRP. If Cleco fails to comply with these revisions, reinterpretations, and requirements, it could be subject to civil or criminal liabilities and fines.

On May 23, 2023, the EPA published in the Federal Register a proposed rule targeting carbon emissions from power plants. Cleco is currently evaluating the possible impacts this proposed rule may have on its generating units. For a discussion of other Cleco environmental matters, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Environmental Audit” in this Quarterly Report on Form 10-Q and Part I, Item 1, “Business — Environmental Matters” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Retail and Wholesale Rates

For information on Cleco Power’s base rates, fuel rates, and environmental rates, see Part I, Item 1, “Regulatory Matters, Industry Developments, and Franchises — Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

For information on Cleco Power’s FRP, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — FRP.”

For information on Cleco Power’s FAC and the most recent fuel audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”

For information on Cleco Power’s EAC, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Environmental Audit.”

For information on Cleco Power’s and Cleco Cajun’s wholesale rates, see Part I, Item 1, “Regulatory Matters, Industry Developments, and Franchises — Rates” in the


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Transmission Rates

For information about the risks associated with Cleco’s participation in MISO, see Part I, Item 1A, “Risk Factors — Regulatory Risks — MISO” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

For information on transmission rates of Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Market Structure

Wholesale Electric Markets

RTO

For information on Cleco’s operations within MISO and for information on regulatory aspects of wholesale electric markets affecting Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Structure — Wholesale Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Electric Reliability Organization (ERO)

NERC, subject to oversight by FERC, is the ERO responsible for developing and enforcing mandatory reliability standards for users, owners, and operators of the bulk power system. NERC, as the ERO, delegates authority to SERC Reliability Corporation.

A revised NERC reliability standard relating to the winterization of generation assets became effective on April 1, 2023. This revised standard requires the implementation of cold weather preparedness plans that include geographical based freeze protection measures, annual inspections, unit design temperature basis, and employee training. A new winterization standard requiring additional freeze protection measures has been approved by FERC with an effective date of October 1, 2024, and a targeted implementation period of 60 months from the effective date. Currently, management is unable to determine the impact this new standard will have on Cleco’s results of operations, financial condition, or cash flows.

A NERC Operations and Planning Reliability Standards audit is conducted every three years for Cleco Power and Cleco Cajun. The next Reliability Standards audit for Cleco Power is scheduled to begin in 2025.

A NERC CIP audit is also conducted every three years for Cleco Power and Cleco Cajun. The NERC CIP audits for Cleco Power and Cleco Cajun began in the fourth quarter of 2022 and concluded on February 23, 2023. Management expects the final reports to be issued by October 2023. Management does not expect any significant findings.

Management is unable to predict the final financial outcome of any future audits or whether any findings will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. For a discussion of risks associated with FERC’s regulation of Cleco Power’s transmission system, see Part I, Item 1A, “Risk Factors —

Regulatory Risks — Reliability and CIP Standards Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Retail Electric Markets

For information on the regulatory aspects of retail electric markets affecting Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Structure — Retail Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Integrated Resource Plan (IRP)

The IRP process includes conducting stakeholder meetings and receiving feedback from stakeholders. The final IRP was filed with the LPSC on May 31, 2023. Disputes and alternative recommendations may be filed by stakeholders through July 31, 2023.

The IRP report describes how Cleco Power plans to meet its forecasted load requirements on a reliable and economic basis, while reducing Cleco Power’s carbon footprint. The IRP is used as a guide in future decision-making and does not represent firm operational commitments.

Service Quality Plan (SQP)

In October 2015, the LPSC proposed an SQP containing 21 requirements for Cleco Power. The SQP has provisions relating to employee headcount, customer service, reliability, vegetation management, and reporting. In April 2016, the SQP was approved by the LPSC. The SQP expired on December 31, 2020. A request to renew the conditions of the expired SQP was included in Cleco Power’s application for its next rate case, which was filed with the LPSC on June 30, 2023. On March 31, 2023, Cleco Power filed its annual SQP monitoring report for 2022 based on the expired reporting requirements.

Franchises

For information on franchises, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Franchises” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 2 — Recent Authoritative Guidance.”


CRITICAL ACCOUNTING ESTIMATES

The preparation of Cleco’s and Cleco Power’s Consolidated Financial Statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that could have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

For more information on Cleco’s critical accounting estimates, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in the Registrant’s Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.


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CLECO POWER						2023 2ND QUARTER FORM 10-Q


CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

Cleco Power meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q and is, therefore, permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Cleco Power has omitted from this report the information called

for by Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


RISK OVERVIEW

Cleco is exposed to counterparty credit risk, liquidity risk, interest rate risk, and commodity price risk. Cleco has implemented a governance framework, inclusive of risk policies and procedures to help manage these and other risks.

Counterparty Credit Risk

When Cleco enters into commodity derivative or physical commodity transactions directly with market participants, Cleco may be exposed to counterparty credit risk. Cleco is exposed to counterparty credit risk when a counterparty fails to meet their financial obligations causing Cleco to incur replacement cost losses. Cleco enters into master agreements with counterparties that govern the risk of credit default and allow for collateralization above prenegotiated thresholds to help mitigate potential losses. Alternatively, Cleco may be required to provide credit support or pay liquidated damages with respect to any open trading contracts that Cleco has entered into or may enter into in the future. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on the amount of the initial contract, changes in the market price, changes in open contracts, changes in the amounts counterparties owe to Cleco, and any prenegotiated unsecured thresholds agreed to in the master contract. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

Cleco monitors and manages its credit risk exposure through credit risk management policies and procedures that include:

•routine review of counterparty credit quality and credit exposure,

•entering into industry standard master agreements with specific terms and conditions for credit exposure and non-performance,

•measuring expected and potential future exposure regularly, and

•exchanging guarantees or forms of cash equivalent collateral for financial assurance.

For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Liquidity Risk

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Disruption in the capital and credit markets may potentially increase the costs of capital and limit

the ability to access the capital markets. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain and expand its business. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Interest Rate Risk

Cleco monitors its mix of fixed- and variable-rate debt obligations in light of changing market conditions and from time to time may alter that mix, for example, refinancing balances outstanding under its variable-rate bank facilities with fixed-rate debt or vice versa. Calculations of the changes in fair market value and interest expense of the debt securities are made over a one-year period.

Sensitivity to changes in interest rates for variable-rate obligations is computed by assuming a 1% change in the current interest rate applicable to such debt.

At June 30, 2023, Cleco Holdings had $95.0 million of short-term debt outstanding under its $175.0 million revolving credit facility at a weighted average all-in interest rate of 6.833%. At June 30, 2023, the borrowing costs for amounts drawn under Cleco Holdings’ revolving credit facility were equal to SOFR plus 1.725% or ABR plus 0.625%, plus commitment fees of 0.275% paid on the unused portion of the facility. Each 1% increase in the interest rate applicable to Cleco Holdings’ short-term variable rate debt would result in a decrease in Cleco Holdings’ pretax earnings of $1.0 million on an annualized basis.

At June 30, 2023, Cleco Holdings had a $132.3 million long-term variable rate bank term loan outstanding at an interest rate of SOFR plus 1.725%, for an all-in interest rate of 6.827%. Each 1% increase in the interest rate applicable to Cleco Holdings’ long-term variable rate debt would result in a decrease in Cleco Holdings’ pretax earnings of $1.3 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Holdings for the six months ended June 30, 2023, was 6.453%.

On May 1, 2023, Cleco Holdings amended certain terms of the supplemental indenture governing its $165.0 million senior notes changing the terms to a floating interest rate. At June 30, 2023, the senior notes had an interest rate of SOFR plus 1.725%, for an all-in interest rate of 6.885%. Each 1% increase in the interest rate applicable to Cleco Holdings’ long-term variable rate debt would result in a decrease in Cleco Holdings’ pretax earnings of $1.7 million on an annualized basis. The weighted average rate for the outstanding senior


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CLECO POWER						2023 2ND QUARTER FORM 10-Q

notes at Cleco Power for the period May 1, 2023, through June 30, 2023, was 6.800%.

At June 30, 2023, Cleco Power had $25.0 million of short-term debt outstanding under its $300.0 million revolving credit facility at an all-in interest rate of 6.439%. The borrowing costs for amounts drawn under Cleco Power’s $300.0 million revolving credit facility are equal to SOFR plus 1.35% or ABR plus 0.25%, plus commitment fees of 0.15% paid on the unused portion of the facility. Each 1% increase in the interest rate applicable to Cleco Power’s short-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of $0.2 million on an annualized basis.

At June 30, 2023, Cleco Power had a $125.0 million long-term variable rate bank term loan outstanding, at an interest rate of SOFR plus 1.35%, for an all-in interest rate of 6.452%. Each 1% increase in the interest rate applicable to Cleco Power’s long-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of $1.2 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Power for the six months ended June 30, 2023, was 6.078%.

Each 1% increase in the interest rate applicable to Cleco’s short- and long-term variable rate debt would result in a decrease in Cleco’s consolidated pretax earnings of $5.4 million on an annualized basis.

Cleco may enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For each reporting period presented, the Registrants did not enter into any contracts to mitigate the volatility in interest rate risk.

Commodity Price Risk

Cleco’s financial performance can be impacted by changes in commodity prices that can impact fuel costs, generation revenue, costs to serve its contracted wholesale electricity customers, and revenue from those customers. Cleco’s risk management policies and procedures authorize hedging commodity price risk with physical or financially settled

derivative instruments within approved guidelines and limits of authority. Some of these transactions may qualify for the normal purchase, normal sale (NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun, each separately and individually, may be exposed to transmission congestion price risk as a result of physical transmission constraints present between MISO locational marginal price nodes when serving customer load. Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. FTRs are accounted for as derivatives not designated as hedging instruments for accounting purposes.

During the six months ended June 30, 2023, Cleco Cajun and Cleco Power had natural gas derivative contracts consisting of fixed price physical forwards and financially settled swap transactions.

Cleco monitors the Value at Risk (VaR) of its natural gas derivative contracts requiring derivative accounting treatment. VaR is defined as the maximum expected loss over a given holding period at a given confidence level based on observable market prices and volatilities. Cleco uses a parametric variance-covariance model methodology to estimate VaR. VaR is calculated using a combination of implied and historical volatilities within a 5-day holding period at a 95% confidence interval. Given Cleco’s reliance on historical data, VaR is effective in estimating risk exposures in markets in which there are no sudden fundamental changes or abnormal shifts in market conditions. An inherent limitation of VaR is that past changes in market risk factors, even when weighted toward more recent observations, may not produce accurate predictions of future market risk. VaR should be evaluated in light of this and the methodology’s other limitations. The following table presents the VaR of natural gas derivative contracts based on these assumptions:


			FOR THE THREE MONTHS ENDED JUNE 30, 2023						FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS)	AT JUNE 30, 2023		HIGH		LOW		AVERAGE		HIGH		LOW		AVERAGE
Cleco Power	$	8,498	$	10,329	$	2,576	$	4,635	$	10,329	$	1,628	$	4,543

For more information on the accounting treatment and fair value of FTRs and other commodity derivatives, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial

Statements — Note 6 — Fair Value Accounting Instruments” and “Note 7 — Derivative Instruments.”


ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of Cleco Holdings and Cleco Power (individually, “Registrant” and collectively, the “Registrants”) management, including the CEO and CFO, the Registrants have evaluated the effectiveness of their disclosure controls and procedures as of June 30, 2023. Based on the evaluations, the CEO and CFO have concluded that the Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms; and

that the Registrants’ disclosure controls and procedures are also effective in ensuring that such information is accumulated and communicated to the Registrants’ management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Registrants’ internal control over financial reporting that occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


PART II — OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


CLECO

For information on legal proceedings affecting Cleco, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


CLECO POWER

For information on legal proceedings affecting Cleco Power, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


ITEM 1A. RISK FACTORS

Other than the updates to the risk factors disclosed in Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, there have been no other material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors” of the Registrants’ Combined Annual

Report on Form 10-K for the fiscal year ended December 31, 2022. For risks that could affect actual results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrants, see the risk factors disclosed in the aforementioned reports.


ITEM 5. OTHER INFORMATION

During the three months ended June 30, 2023, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Cleco Holdings or Cleco Power adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


ITEM 6. EXHIBITS

CLECO
*	10.1	Supplemental Agreement, dated May 16, 2023, by and between Cleco Corporate Holdings LLC and Mark Kleehammer
	31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	Inline XBRL Taxonomy Extension Schema
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

CLECO POWER
	31.3	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.4	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.3	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	32.4	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	Inline XBRL Taxonomy Extension Schema
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

The Report designated by an asterisk are management contracts and compensatory plans and arrangements required to be filed as Exhibits to this Report.


CLECO
CLECO POWER						2023 2ND QUARTER FORM 10-Q


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			CLECO CORPORATE HOLDINGS LLC
			(Registrant)

			By:			/s/ Tonita Laprarie
						Tonita Laprarie
						Controller and Chief Accounting Officer

Date: August 9, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			CLECO POWER LLC
			(Registrant)

			By:			/s/ Tonita Laprarie
						Tonita Laprarie
						Controller and Chief Accounting Officer

Date: August 9, 2023

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Cleco Power 10-Q2023 Q2 Quarterly report

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