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New words:
ACE, addressing, BBB, book, bottom, burning, core, cumulative, decided, derecognized, discharge, EGU, Feasibility, filterable, fired, focused, franchise, inactive, installation, issuer, landfill, leachate, legacy, MU, MUs, optimize, Overview, particulate, prepaid, remitted, repaid, Research, scope, Section, size, strategy, switching, tender, timeline, twelve, unique, viable, wastewater
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begun, beneath, compressed, concluding, consistently, Cottonwood, create, customary, deep, develop, Deweyville, discount, draft, drawn, existed, extracted, extraction, geological, half, inconsistent, indemnified, indemnify, intent, Leaseback, leverage, maximize, mutually, permanently, permitting, pond, produced, rebuttal, refined, solution, store, testimony, top
Financial report summary
?Risks
- Cleco Holdings is a holding company and its ability to meet its debt obligations is dependent on the cash generated by its subsidiaries.
- The divestiture of the unregulated electric utility business by subsidiaries of Cleco Holdings may not occur on the initial terms agreed to by the parties, in the expected time frame, or at all and, as a result, could adversely affect the Registrants’ business and financial condition.
- Cleco’s future electricity sales and cash flows could be negatively affected by adverse macroeconomic conditions.
- Energy conservation, energy efficiency efforts, and other factors that reduce energy demand could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.
- Cleco’s operations and power generation could be harmed due to the impact of severe weather events, other natural disasters, or climate change, which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.
- The operating results of Cleco are affected by weather conditions and may fluctuate on a seasonal basis.
- Failure to attract, retain, and develop an appropriately qualified workforce could have a negative impact on business operations and a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.
- The operational and information technology systems on which Cleco relies to conduct its business and serve customers could fail to function properly due to technological problems, cyberattacks, physical attacks on Cleco’s assets, acts of terrorism, severe weather, solar events, electromagnetic events, natural disasters, the age and condition of information technology assets, human error, or other reasons that could disrupt Cleco’s operations and cause Cleco to incur unanticipated losses and expense.
- Cleco’s generation facilities are susceptible to unplanned outages, significant maintenance requirements, and interruption of fuel deliveries.
- The construction of and capital improvements to power generation, transmission, and distribution facilities involve substantial risks. Should construction or capital improvement efforts be unsuccessful or significantly more expensive than planned, the financial condition, results of operations, or liquidity of the Registrants could be materially affected.
- Changes in technology may have a material adverse effect on the value of Cleco Power’s and Cleco Cajun’s generating facilities.
- Cleco operates in a highly regulated environment and adverse regulatory decisions or changes in applicable regulations could have a material adverse effect on the Registrants’ business or result in significant additional costs.
- The LPSC and FERC regulate the retail rates and wholesale transmission tariffs, respectively, that Cleco Power can charge its customers.
- Cleco Power’s retail electric rates and business practices are regulated by the LPSC and reviews may result in refunds to customers.
- Cleco Power’s ability to recover costs associated with the retirement of the Dolet Hills Power Station and lignite mine closure is subject to a prudency review by the LPSC that could result in significant refunds to customers or disallowance of recovery.
- The LPSC conducts fuel audits that could result in Cleco Power making substantial refunds of previously recorded revenue.
- The LPSC conducts audits of environmental costs that could result in Cleco Power making substantial refunds of previously recorded revenue.
- FERC conducts audits that could result in Cleco Power making refunds of previously recorded revenue.
- MISO market operations could have a material adverse effect on the results of operations, generation revenues, energy supply costs, financial condition, or cash flows of the Registrants.
- Cleco is subject to mandatory reliability and CIP standards. Fines and civil penalties are imposed on those who fail to comply with these standards.
- Cleco’s costs of compliance with environmental laws and regulations are significant. The costs of compliance with new environmental laws and regulations, as well as the incurrence of incremental environmental liabilities, could be significant to the Registrants.
- Cleco’s business practices are regulated by FERC, and the wholesale rates of both Cleco Power and Cleco Cajun are subject to FERC’s triennial market power analysis. Cleco Power and/or Cleco Cajun could lose the right to sell wholesale generation at market-based rates.
- Cleco may enter into fuel supply contracts, energy hedge transactions, and/or commercial transactions, including sales to wholesale customers. If risks related to these transactions are not managed effectively, they may have a material adverse effect on the liquidity, results of operations, or financial condition of the Registrants.
- Transmission congestion could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.
- Cleco may be required to provide credit support to its counterparties, which could have a material adverse effect on the Registrants’ liquidity.
- Cleco is exposed to the risk that counterparties may not meet their performance obligations, which could have a material adverse effect on the operating and financial performance of the Registrants.
- Adverse capital market performance could result in reductions in the fair value of benefit plan assets and increase the Registrants’ liabilities related to such plans. Sustained declines in the fair value of the plan’s assets or sustained increases in plan liabilities could result in significant increases in funding requirements, which could adversely affect the Registrants’ liquidity and results of operations.
- A downgrade in Cleco Holdings’ or Cleco Power’s credit ratings could result in an increase in their respective borrowing costs, a reduced pool of potential investors and funding sources, and a restriction on Cleco Power making distributions to Cleco Holdings.
- Cleco Power LLC’s unsecured and unsubordinated obligations, including, without limitation, its senior notes, will be effectively subordinated to any secured debt of Cleco Power LLC and structurally subordinated to indebtedness and other liabilities and preferred equity of any of Cleco Power LLC’s subsidiaries.
- The Presidential administration has made and may continue to make substantial changes to environmental, fiscal, and tax policies that could have a material adverse effect on the Registrants’ business.
- Changes in taxation due to uncertain effects of various tax reform legislation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.
- Cleco’s insurance coverage may not be sufficient and may become more costly to maintain.
- Disruptions in the capital and credit markets may adversely affect the Registrants’ cost of capital and ability to meet liquidity needs or access capital to operate and grow the business.
- Inflation may negatively impact the results of operations, financial condition, or cash flows of the Registrants.
- Increased focus on and changing expectations regarding ESG programs, as well as failure to achieve ESG goals, may adversely impact the Registrants’ access to capital, results of operations, financial condition, and cash flows.
Management Discussion
- •lower gains on gas-related derivative contracts, net of income taxes, at Cleco Cajun of $217.3 million included in continuing operations.
- •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 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Discontinued Operations.”