This Annual Report on Form 10-K includes forward-looking statements. All statements other than statements of historical fact included in this Annual Report on Form 10-K 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 Annual Report on Form 10-K, 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:

•changes in environmental laws, regulations, decisions and policies, including present and potential environmental remediation costs, restrictions on greenhouse gas emissions, ~~to mitigate concerns over global climate changes,~~ possible effects on Cleco’s generation resources, or prohibitions or ~~restriction~~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, ~~including~~ epidemics, or other outbreaks,

•the ~~current COVID-19 pandemic,~~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,

•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 costs associated with these events,

•the ability of Cleco’s customers to continue paying their utility bills due to rising costs related to fuel, hurricanes, ice storms, or other events,

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

•Cleco’s ability to recontract existing power purchase agreements or secure future power purchase agreements with wholesale customers,

•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 effect of the trend toward distributed generation at customer sites,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 ~~including any effects of terrorism, cyberattacks, ransomware, or vandalism~~ 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, which could be affected by any of the factors discussed herein,

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

•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,

•failure to meet expectations and report progress on ESG initiatives, as well as the increased focus on and activism related to ESG, 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,~~

•~~deterioration in the creditworthiness of Cleco’s~~ 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 ~~energy,~~fuel,

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

•the outcome of legal 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 cost, 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,

•~~work-force~~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 recruit and retain qualified employees, and

•the unpredictability of civil unrest and its direct and indirect impact on Cleco.

GENERAL

Cleco Holdings is a public utility holding company that holds investments in several subsidiaries, including Cleco Power and Cleco Cajun. ~~Prior to the Cleco Cajun Transaction, substantially all of Cleco Holdings’ operations were conducted through Cleco Power.~~ Cleco Holdings, subject to certain limited exceptions, is exempt from regulation as a public utility holding company pursuant to provisions of the Public Utility Holding Company Act of 2005. Cleco Holdings’ predecessor was incorporated on October 30, 1998, under the laws of the state of Louisiana. On April 13, 2016, Cleco Holdings completed its merger with Merger Sub whereby Merger Sub 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, as a direct, wholly owned subsidiary of Cleco Group and an indirect, wholly owned subsidiary of Cleco Partners.

Cleco Power is a regulated electric utility engaged principally in the generation, transmission, distribution, and sale of electricity within Louisiana. Cleco Power owns 10nine generating units with a total rated capacity of ~~3,360~~3,035 MW and serves approximately ~~290,000~~291,000 customers in Louisiana through its retail business. Additionally, Cleco Power supplies wholesale power in Louisiana and Mississippi. Cleco Power was organized as a limited liability company under the laws of the state of Louisiana on December 12, 2000. Cleco Power’s predecessor was incorporated on January 2, 1935, under the laws of the state of Louisiana.

Cleco Cajun, organized as a limited liability company on December 28, 2017, under the laws of the state of Louisiana, is an unregulated electric utility that owns 14 generating units with a total rated capacity of 3,379 MW and wholesale contracts serving ~~nine Louisiana~~a mixture of electric cooperatives, ~~three wholesale~~ municipal ~~customers,~~bodies, and ~~one electric~~a utility. On February 4, 2019, Cleco Cajun acquired South Central Generating as a result of the Cleco Cajun ~~Transaction was completed.~~Transaction. For more information on the Cleco Cajun Transaction, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations.”

Cleco and Cleco Power’s mailing address is P.O. Box 5000, Pineville, Louisiana 71361-5000, and its telephone number is (318) 484-7400. Cleco’s website is located at https://www.cleco.com. Cleco and Cleco Power’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the SEC are available, free of charge, through Cleco’s website after those reports or filings are filed electronically with or furnished to the SEC. Cleco’s electronically filed reports can also be obtained on the SEC’s website located at https://www.sec.gov. Cleco’s Governance Guidelines, Code of Conduct for Financial Managers, Ethics Guide, Conflicts of Interest and Related Policies, and the charters of its Boards of Managers’ Audit, Leadership Development and Compensation, Business Planning and Budget Review, Governance and Public Affairs, and Asset Management committees are available on its website and available in print upon request. Information on Cleco’s website or any other website is not incorporated by reference into this

Annual Report on Form 10-K and does not constitute a part of this Annual Report on Form 10-K.

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

10-K the information called for by the following Part II item of Form 10-K: Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations); and the following Part III items of Form 10-K: Item 10 (Directors, Executive Officers, and Corporate Governance of the Registrants), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), and Item 13 (Certain Relationships and Related Transactions, and Director Independence).

HUMAN CAPITAL

Cleco’s key human capital management objectives are to attract, retain, and develop top ~~talent. To support these objectives, Cleco strives to provide~~talent while providing a diverse, inclusive, healthy, and safe workplace. Cleco’s programs are designed ~~to acquire talent and facilitate internal talent development~~ to create a high-performing, diverse workforce; reward and support employees through competitive pay and benefits, as well as safety and wellness programs; enhance culture through efforts aimed at making the workplace more engaging and inclusive; facilitate programs that build connections between employees and communities; and evolve and invest in technology, tools, and resources to enable employees at work.

As of December 31, ~~2020,~~2021, Cleco employed ~~1,465~~1,327 employees, of whom ~~1,192~~1,077 were professional, technical and craft ~~employees,152~~employees,135 were field management, and ~~121~~115 were corporate management. At December 31, ~~2020,~~2021, Cleco Power employed ~~860~~775 employees, of whom ~~730~~660 were professional, technical and craft employees, ~~115~~82 were field management, and 1533 were corporate management. All of these employees were full-time. Approximately 9% of Cleco’s employees are covered by collective bargaining agreements. Cleco has not experienced strikes or work stoppages and believes it has good relations with its employees.

~~D&I~~Diversity and Inclusion

Cleco believes that diverse teams working in an inclusive environment are the primary drivers of better employee engagement, increased innovation, and higher customer satisfaction. With greater workplace diversity and inclusion, Cleco seeks to create the conditions for high performing teams to do their best work. Cleco’s recent efforts have been focused in three areas: building awareness and skills of the ~~D&I~~Cleco Diversity and Inclusion Council; making observable changes in leadership diversity and inclusion behaviors; and strengthening diversity and inclusion communication and messaging. The following are some of Cleco’s ~~D&I~~diversity and inclusion achievements related to such focus areas:

•empowered the Cleco Diversity and Inclusion Council as a group of leaders to leverage diversity and inclusion to help make Cleco’s business stronger,

•~~empowered the Cleco D&I Council as a group of leaders to leverage diversity and inclusion to help make Cleco’s business stronger,~~

•signed the pledge for CEO Action for Diversity & Inclusion™ to communicate a commitment to diversity and inclusion actions,

•~~launched~~completed implicit bias awareness training with 100% participation to increase awareness of implicit bias and enhance the ability to manage diverse work teams in an inclusive work environment,

•increased diversity and inclusion communications internally and externally. Internally, a live, virtual panel of Cleco executives spoke about the importance and impact of diversity and inclusion and answered employee questions. Externally, Cleco’s website was updated to include an emphasis on Cleco’s diversity and inclusion efforts,

•established an Employee Resource Group ~~framework~~ to engage employees and allies in providing their perspective on thoughts and issues related to ~~female and~~ underrepresented groups, and

•~~launched~~continued to fund the ~~Cleco~~ Power of a Promise Scholarship to educate and employ ~~under-represented~~underrepresented minorities and females in the central Louisiana area as well as sponsor the Diversity Scholars Program.

~~Cleco continues to recruit from historically black colleges and universities in Louisiana, including Grambling State University and Southern University.~~

In an effort to provide transparency into its efforts to increase underrepresented populations in Cleco’s workforce, Cleco intends to disclose its 2020 Consolidated EEO-1 Report after submission of the report to the U.S. Equal Employment Opportunity Commission. Cleco expects to submit the 2020 Consolidated EEO-1 Report in the second quarter of 2021.

Health, Safety, and Wellness

The success of Cleco’s business is fundamentally connected to the well-being of its employees. Accordingly, Cleco is committed to the health, safety, and wellness of its employees.

Despite an overall disappointing 2021 safety performance, Cleco has a ~~robust~~strong safety culture and continues to develop programs to ensure its employees are safe at work and away from work. ~~Over the past several years,~~ Cleco ~~has been striving~~strives to improve ~~the~~its safety culture in an effort to be a “world class” safety organization with top decile performance compared to peer companies with the goal of reaching a target of zero for injuries and accidents. To accomplish this goal, Cleco ~~implemented~~continues to implement several safety initiatives throughout the organization aimed at ~~not only~~both leading and lagging ~~indicators but also leading~~ indicators in an effort to reduce the number and severity of safety incidents. Cleco utilizes employee-led safety teams throughout the company to drive the safety initiatives and provide feedback to senior management. All employees receive safety training, including human performance, designed to improve total organization performance.

Cleco provides its employees and their families with access to a variety of health and wellness programs, including programs that provide protection and security so they can have peace of mind concerning events that may require time away from work. Cleco also has programs that support employees’ physical and mental health by providing tools and resources to help them improve or maintain their health and encourage engagement in healthy behaviors. These include paid time off, family leave, flexible work schedules, employee

assistance programs, tuition assistance, and on-site services, such as fitness centers, among many others.

In response to the COVID-19 pandemic, Cleco has implemented ~~significant~~preventative measures and developed corporate response plans in an attempt to minimize unnecessary risk of exposure and infection while supporting its customers’ operations. With changes ~~that it determined~~in government regulations and the return of remote employees to ~~be in~~ the best interest of its employees, as well as the communities in which it operates, and which comply with government regulations. This includes having employees work from home, while implementing additional safety measuresworkplace, Cleco continues to monitor for ~~employees continuing essential on-site work.~~any organizational impacts. For more information about Cleco’s response to the COVID-19 pandemic, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — COVID-19.”

Compensation and Benefits

Cleco is committed to offering market-competitive compensation and benefits. Its incentive plan reinforces and rewards individuals for achievement of specific company goals. This may include involvement of outside compensation advisors or use of benchmarking data. Cleco’s benefit offerings are designed to meet the varied and evolving needs of a diverse workforce and offer choice where possible so employees can customize their benefits to meet their needs and the needs of their families. These offerings include a 401(k) Plan, healthcare benefits, health savings and flexible spending accounts, and a variety of insurance options.

Talent Acquisition and Talent Development

Cleco prioritizes investing in the attraction and development of the talent needed to build a sustainable workforce. Cleco has revamped its recruiting and hiring practices, technologies, and resources and has also expanded its focus on continuous learning and development. Cleco has implemented ~~“industry-leading”~~industry-leading methodologies to assess performance and potential, provide coaching and feedback, and develop talent. Cleco provides a series of targeted management workshops to address leadership skill and competency gaps. Additionally, its performance management program provides an ongoing opportunity for employees and managers to engage in continuous dialogue and coaching aligned with its annual performance review process. Cleco also has a multitude of ~~other~~ resources, such as online learning platforms, that provide quick access to learning resources, tuition reimbursement, and executive talent and succession planning paired with a differentiated development approach. Cleco also encourages employees to engage in external workshops and organizations to address individualized development needs and stay abreast of industry and position-specific best practices.

Employee Engagement

Employee sentiment is important to Cleco. The company measures this throughout the year via an employee engagement survey. One of the key metrics used is the Employee Net Promoter Score (eNPS), which is an indicator of employees’ likelihood to recommend Cleco as a place of employment to friends and/or family. Cleco ~~is proud~~strives to consistently receive a strong eNPS score year over year. Other important areas measured on the employee engagement survey include future outlook, leadership, safety, ~~D&I,~~diversity and inclusion, communications, vibrancy, and goals.

~~Cleco’s employee application,~~ Pulse, which is aCleco’s mobile, two-way communication platform ~~that~~for employees, allows for tracking of viewership, enables targeted messaging by employee segments, and offers key performance indicators to measure how ~~our~~ internal

employee giving, company matching, and volunteering program, employees are able to find and register for volunteer opportunities within their communities and use automated payroll deductions to donate to causes they are passionate about. ~~For 2021,~~ Cleco ~~will~~continues to match employee donations made to Louisiana qualifying causes dollar for dollar up to $1,000 per employee. Organizations are also able to enroll in the platform in order to receive donations faster and connect with corporate giving and volunteering opportunities at Cleco. Cleco also frequently collaborates with organizations on volunteer activities for its employees. Throughout the year, employees make a positive impact in their local communities and have found a multitude of special ways to continue volunteering during the COVID-19 pandemic.

Oversight and Governance

Cleco’s Leadership Development and Compensation Committee of the Board of Managers, through its charter, provides oversight of Cleco’s policies, programs, and initiatives focusing on workforce diversity and inclusion. Cleco’s Governance and Public Affairs Committee, through its charter, provides oversight of Cleco’s charitable donations, outreach, and economic development funding programs.

OPERATIONS

Cleco Power

Certain Factors Affecting Cleco Power

As an electric utility, Cleco Power is affected by a number of factors influencing the electric utility industry in general. For

more information on these factors, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Comparison of the Years Ended December 31, ~~2020,~~2021, and ~~2019~~2020 — Cleco Power — Significant Factors Affecting Cleco Power.”

Power Generation

As of December 31, ~~2020,~~2021, Cleco Power’s aggregate net electric generating capacity was ~~3,186~~2,889 MW. This amount reflects the maximum production capacity these units can sustain over a specified period of ~~time.~~time under certain conditions. On ~~March 1, 2019,~~December 31, 2021, Cleco Power ~~began to operate~~retired the Dolet Hills Power ~~Station on a seasonal dispatch from June through September; however,~~Station. On January 31, 2022, Cleco Power filed an application with the ~~Dolet Hills Power Station will continue to be available to operate in other months, if needed. In June 2020, after thorough evaluation, management decided to retire~~LPSC requesting approval of the regulatory treatment and recovery of the stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station. For more information regarding the Dolet Hills Power Station ~~anticipated closure,~~retirement, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 6 — Regulatory Assets and Liabilities — Dolet Hills Power Station Closure Costs.” Cleco Power anticipates filing an application with the LPSC in March 2021 giving notice that the Dolet Hills Power Station will be retired at the end of 2021 and requesting approval of the regulatory treatment and recovery of the stranded costs and decommissioning costs over 20 years.

The following table sets forth certain information with respect to Cleco Power’s generating facilities as of December 31, ~~2020:~~2021:

The following table sets forth the amounts of power generated by Cleco Power for the years indicated:


YEAR	YEAR	THOUSAND MWh	PERCENT OF TOTAL ENERGY REQUIREMENTS		YEAR	THOUSAND MWh	PERCENT OF TOTAL ENERGY REQUIREMENTS
2021					2021	10,774	90.7	%
2020	2020	11,801	101.5	%	2020	11,801	101.5	%
2019	2019	12,552	103.0	%	2019	12,552	103.0	%
2018		11,848	94.6	%
2017		10,864	91.1	%
2016		12,759	103.6	%

Cleco Power’s generation dispatch and transmission operations are integrated with MISO. The amount of power generated by Cleco Power is dictated by the availability of Cleco Power’s generating fleet and the manner in which MISO dispatches each generating unit. Depending on how generating units are dispatched by MISO, the amount of power

purchased from the MISO market. These quantity changes can be affected by Cleco plant outages and plant performance. For a discussion of certain risks associated with changes in fuel costs and their impact on utility customers, see Item 1A, “Risk Factors — Operational Risks — Transmission Constraints” and “— Regulatory Risks — LPSC Audits.”

The following table sets forth the percentages of power generated from various fuels at Cleco Power’s electric generating plants, the cost of fuel used per MWh attributable to each such fuel, and the weighted average fuel cost per MWh:

Power Purchases

Cleco Power is a participant in the MISO market. MISO makes economic and routine dispatch decisions regarding Cleco Power’s generating units. Power purchases are made at prevailing market prices, also referred to as LMP, which are highly correlated to natural gas prices. LMP includes a component directly related to congestion on the transmission system. Pricing zones with greater transmission congestion may have higher LMPs. Physical transmission constraints present in the MISO market could increase energy costs within Cleco Power’s pricing zones. For information on Cleco Power’s ability to pass on to its customers substantially all of its fuel and purchased power expenses, see “— Regulatory Matters, Industry Developments, and Franchises — Rates.” For information on 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.”

Coal, Petroleum Coke, and Lignite Supply

Cleco Power uses coal for generation at Rodemacher Unit 2. During ~~2020,~~2021, Cleco Power contracted with ~~Arch Coal, LLC~~multiple suppliers to provide Cleco Power’s coal needs at Rodemacher Unit 2, utilizing short-term coal agreements. The coal supply agreements were fixed-price contracts. For ~~2021,~~2022, Cleco Power intends to meet its coal needs through short-term, fixed-price coal ~~agreements which are expected to be fixed-price contracts.~~agreements. For the transportation of coal, Cleco Power renewed its agreement on January 1, 2020 ~~with Union Pacific Railroad Company~~ to transport coal from Wyoming’s Powder River Basin to Rodemacher Unit 2. The agreement is for three years, expiring on December 31, 2022. During 2021, Cleco Power ~~leases~~renewed its lease for 113 railcars

to transport its coal under one lease, which expires on March 31, ~~2021. Currently, Cleco Power is exploring multiple railcar lease options, including the renewal of its current lease, to continue its coal transportation once this current lease expires.~~2024.

The continuous supply of coal may be subject to interruption due to adverse weather conditions or other factors that may disrupt transportation to the plant site. At December 31, ~~2020,~~2021, Cleco Power’s coal inventory at Rodemacher Unit 2 was approximately ~~142,000~~127,000 tons (approximately a ~~59-day~~53-day supply).

Cleco Power uses a combination of petroleum coke and Illinois Basin coal for generation at Madison Unit 3. Petroleum coke is a by-product of the oil refinery process and is not considered a fuel specifically produced for a market; however, ample petroleum coke supplies are produced from refineries each year throughout the world, particularly in the Gulf Coast region. During ~~2020,~~2021, Cleco received its petroleum coke supply from multiple refineries located along the upper and lower Mississippi River. Cleco purchased ~~slightly more than 825,000~~approximately 948,000 tons of petroleum coke during ~~2020,~~2021, all of which were either an

evergreen extension of a previous agreement or a negotiated agreement for one year ending on December 31, ~~2020.~~2021. For ~~2021,~~2022, Cleco has contracted for ~~850,000~~880,000 tons of petroleum coke from multiple refineries located along the upper and lower Mississippi River through one-year agreements ending on December 31, ~~2021. The agreements are priced according to the Advisian Worley Group (formerly Jacobs Consultancy) Pace Petroleum Coke Quarterly Monthly Price Index or the “PACE” Monthly Index.~~ 2022.

During ~~2020,~~2021, Cleco purchased approximately ~~394,000~~294,000 tons of Illinois Basin coal. Cleco Power uses Louisiana waterways, such as the Mississippi River and the Red River, to

For more information on Oxbow, see Note 14 — “Variable Interest Entities.”

Natural Gas Supply

During ~~2020,~~2021, Cleco Power purchased ~~63.1~~47.4 million MMBtu of natural gas for the generation of electricity. The annual and average per-day quantities of gas purchased by Cleco Power from each supplier are shown in the following table:


NATURAL GAS SUPPLIER	NATURAL GAS SUPPLIER	2020 PURCHASES (MMBtu)	AVERAGE AMOUNT PURCHASED PER DAY (MMBtu)	PERCENT OF TOTAL NATURAL GAS USED		NATURAL GAS SUPPLIER	2021 PURCHASES (MMBtu)	AVERAGE AMOUNT PURCHASED PER DAY (MMBtu)	PERCENT OF TOTAL NATURAL GAS USED
Tenaska Marketing Ventures	Tenaska Marketing Ventures	19,398,593	53,147	30.7	%	Tenaska Marketing Ventures	12,309,528	33,725	26.0	%
Mansfield Power and Gas	Mansfield Power and Gas	14,348,574	39,311	22.7	%	Mansfield Power and Gas	10,254,249	28,094	21.6	%
Cima Energy LP	Cima Energy LP	9,396,459	25,744	14.9	%	Cima Energy LP	9,968,246	27,310	21.0	%
Kaiser Marketing Appalachian LLC		3,875,000	10,616	6.1	%
Spire Marketing, Inc.		3,623,400	9,927	5.7	%
Shell Energy North America		2,864,481	7,848	4.5	%
Sabine Pass Liquefaction, LLC		1,860,200	5,096	2.9	%
BP Energy Company		1,762,230	4,828	2.8	%
Sequent Energy Management		1,555,800	4,262	2.5	%

Others	Others	4,420,893	12,112	7.2	%	Others	14,884,879	40,780	31.4	%

Total	Total	63,105,630	172,891	100.0	%	Total	47,416,902	129,909	100.0	%

Cleco Power owns natural gas pipelines and interconnections at all of its generating facilities that allow it to access various natural gas supply markets and maintain a reliable, economical fuel supply for Cleco Power’s customers.

~~Natural~~Although there were spikes in natural gas prices during 2021, natural gas was available without interruption throughout ~~2020.~~the year. Cleco Power expects to continue to meet its natural gas requirements with purchases on the spot market through daily, monthly, and seasonal contracts with various natural gas suppliers. However, future supplies to Cleco Power remain vulnerable to disruptions due to weather events and transportation issues. Large industrial users of natural gas, including electric utilities, generally have low priority among gas users in the event pipeline suppliers are forced to curtail deliveries due to inadequate supplies. As a result, prices may increase rapidly in response to temporary supply interruptions. During ~~2020,~~2021, in order to partially address potential natural gas fuel curtailments and interruptions, Cleco contracted for natural gas firm transportation with ~~several~~two interstate pipelines for a period of one year ending in ~~late 2021.~~October 31, 2022.

Cleco also uses underground salt dome gas storage to help mitigate supply disruptions to Cleco Power’s generating facilities and to operationally balance gas supply to its units. The storage volume is contracted by paying a capacity reservation charge at a fixed rate. There are also variable charges incurred to withdraw and inject gas from storage. At December 31, ~~2020,~~2021, Cleco Power had ~~1.6~~1.3 million MMBtu of gas in storage. Currently, Cleco Power anticipates that its diverse supply options and gas storage, combined with its solid-fuel generation resources, are adequate to meet its generation needs during any temporary interruption of natural gas supplies.

Sales

Cleco Power’s ~~2020~~2021 and ~~2019~~2020 system peak demands, which occurred on February 16, 2021, and July 13, 2020, ~~and September 6, 2019,~~ were ~~2,536~~2,645 MW and ~~2,492~~2,536 MW, respectively. Sales and system peak demand are affected by weather and are typically highest during the summer air-conditioning season; however, peaks may occur during the winter season as well. For information on the effects of future energy sales on Cleco Power’s results of operations, financial condition, and cash flows, see Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales” and “— Weather Sensitivity.”

Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Capital Investment Projects

For a discussion of certain Cleco Power major capital investment projects, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Cleco Power — Bayou Vista to Segura Transmission Project” and “— DSMART Project.”

Capital Expenditures and Financing

For information on Cleco Power’s capital expenditures, financing, and related matters, 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.”

Cleco Cajun

Power Generation

On February 4, 2019, Cleco Cajun acquired from NRG Energy all of the outstanding membership interests in NRG South Central. As a result, Cleco Cajun became a reportable segment. For more information about the Cleco Cajun Transaction, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations.”

In December 2020, Cleco Cajun retired the 176-MW Sterlington generating facility located in Sterlington, Louisiana. As the facility had reached the end of its useful life, Cleco Cajun determined that it would be more cost effective to retire the Sterlington generating facility than it would be to make the necessary improvements to continue its operation.

The following table sets forth certain information with respect to Cleco Cajun’s generating facilities:

Fuel and Purchased Power

Cleco Cajun uses coal and natural gas for its power generation resources. Cleco Cajun procures these fuels under contracts from a variety of suppliers and transporters. Cleco Cajun maintains an inventory of coal supply on-site at its coal generating facilities. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 with an initial term of 12 months. On January 27, 2020, this lease was renewed and is set to expire on March 31, 2021. However, at the end of the current term, this lease will renew for additional one-month terms unless Cleco Cajun chooses to terminate.

Sales

Cleco Cajun sells wholesale electric supply in Louisiana, Texas, and Arkansas. It furnishes supply to its wholesale customers primarily through all-requirements power supply and service agreements, which require Cleco Cajun to provide the electric capacity, energy, and other services necessary to serve most of its customers’ load requirements. Cleco Cajun procures the entirety of the power required to fulfill these obligations through its participation in the MISO market, and sells the entirety of power produced from its generating plants to the MISO market.

Cleco Cajun’s business experiences seasonality, as it bills its customers based on actual electric energy consumed. This usage tends to be greater during periods of high and low temperatures as compared to periods of moderate temperatures.

Competition

Competition for Cleco Cajun’s customers is limited through the first quarter of 2025, when the majority of the wholesale electric supply contracts terminate. Cleco Cajun is currently participating in ~~co-operative~~electric cooperative requests for proposals for ~~load~~capacity and energy after the first quarter of 2025. In 2020, a

group of electric cooperatives, which are currently under contract with Cleco Cajun through the first quarter of 2025, conducted a request for proposal for capacity, energy, and resources beginning in the second quarter of 2025 in which Cleco Cajun participated. In March 2021, the group of electric cooperatives informed Cleco Cajun that it was not selected as a provider and filed a notice with the LPSC to certify the results of the request for proposal. Cleco Cajun subsequently filed a notice of intervention with the LPSC requesting further review prior to certifying the electric cooperatives’ notice. On January 25, 2022, the LPSC certified the electric cooperatives’ request, which did not include any of Cleco Cajun’s assets or contracts.

In 2021, a separate electric cooperative, which is currently under contract with Cleco Cajun through the first quarter of 2025, conducted a request for proposal for capacity and energy after March 27, 2025, in which Cleco Cajun participated. In August 2021, the electric cooperative informed Cleco Cajun that it was not selected as a provider, and filed a notice with the LPSC requesting certification of the results of the request for proposal. Cleco Cajun subsequently filed a notice of intervention with the LPSC requesting further review prior to the potential certification of the electric cooperative’s notice. The certification process is ongoing, and the LPSC procedural schedule extends into the third quarter of 2022. Cleco Cajun cannot predict the outcome of the process.

In 2021, an additional electric cooperative, which is currently under contract with Cleco Cajun through the first quarter of 2025, conducted a request for proposal for capacity and energy after March 31, 2025, in which Cleco Cajun participated. In December 2021, the electric cooperative

informed Cleco Cajun that it was not selected as a provider. As of March 7, 2022, the electric cooperative has not filed a notice with the LPSC requesting certification of the request for proposal results. Cleco Cajun will monitor the cooperative’s filing of a request for certification with the LPSC.

Failure to recontract ~~current cooperative load~~these and other existing agreements or failure to enter into new contracts to replace the existing contracts could have a material adverse effect on Cleco Cajun's results of operations, financial condition, or cash ~~flows.~~flows as early as the second quarter of 2025. Within MISO, competitors are typically ~~comprise~~comprised of investor-owned utilities, independent power producers, power marketers, and power plant developers. These entities typically compete on the basis of price, reliability, and residual risk to the purchasing customer and its end users.

Customers

Cleco Cajun did not have a significant customer that accounted for 10% or more of Cleco’s consolidated revenue in 2021, 2020, or 2019. For more information regarding Cleco Cajun’s sales and revenue, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Capital Expenditures

For information on Cleco Cajun’s capital expenditures and related matters, 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.”

REGULATORY MATTERS, INDUSTRY DEVELOPMENTS, AND FRANCHISES

Rates

Cleco Power’s electric operations are subject to the jurisdiction of the LPSC with respect to retail rates, standards of service, accounting, and other matters. Cleco Power is subject to the jurisdiction of FERC with respect to transmission tariffs, accounting, interconnections with other utilities, reliability, and the transmission of power. Periodically, Cleco Power has sought and received from both the LPSC and FERC increases in retail rates and transmission tariffs, respectively, to cover increases in operating costs and costs associated with additions to generation, transmission, and distribution facilities.

Cleco Cajun is subject to the jurisdiction of FERC with respect to transmission tariffs, interconnections with other utilities, reliability, and the transmission of power. The rates Cleco, through Cleco Power and Cleco Cajun, charges its wholesale customers are subject to FERC’s triennial market power analysis. ~~The~~Cleco filed its most recent triennial power analysis ~~was~~in December 2020, and it is currently pending FERC approval. The next triennial market power analysis is expected to be filed onin December ~~23, 2020.~~2023.

Prior to July 1, 2021, Cleco Power’s annual retail earnings ~~are~~were subject to an FRP ~~that was approved~~established by the LPSC in June 2014. ~~Under the terms of~~The 2014 FRP allowed Cleco ~~Power’s current FRP, Cleco~~ Power ~~is allowed~~ to earn a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, ~~60%~~60.0% of retail earnings between 10.9% and 11.75%, and all retail earnings over 11.75%, were required to be refunded to customers. On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. Effective July 1,

2021, under the terms of the new retail rate plan, 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. Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds are ultimately subject to LPSC approval.

Cleco Power’s FRP had a four-year term, and was set to expire in June 2018. As a result of the 2016 Merger, the FRP was extended an additional two years with an expiration of June 2020, and Cleco Power was required to file a newnext base rate case is required to be filed with the LPSC ~~in June 2019 with any change in rates to be implemented in July 2020. On June 28, 2019,~~on or before March 31, 2023. For more information on the new FRP for Cleco Power, ~~filed an application with the LPSC for a new FRP. However, there has been a delay in the current base rate case. Cleco Power has responded to multiple sets of data requests relating~~see Item 8, “Financial Statements and Supplementary Data — Notes to the ~~new~~Financial Statements — Note 13 — Regulation and Rates — FRP. Unless the 2014 FRP were to be extended by order of the LPSC, the FRP rates established in July 2019 will remain in effect. An FRP monitoring report for the 12-month period ending June 30, 2020, was not required. Cleco Power anticipates new rates to be effective in the first half of 2021. However, management is unable to determine the outcome of the base rate case relating to the new FRP.”

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 charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. For more information on the FAC and the most recent fuel audit, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from its customers certain costs of environmental compliance. These expenses are eligible for recovery through Cleco Power’s EAC

Industry Developments and Competition

For information on developments and competition within the electric utility industry, ~~developments,~~ see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market ~~Restructuring.~~Structure.”

~~Wholesale Electric Competition~~

For a discussion of wholesale electric competition, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Wholesale Electric Markets.”

~~Retail Electric Competition~~

For a discussion of retail electric competition, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Retail Electric Markets.”

Legislative and Regulatory Changes and Matters

Various federal and state legislative and regulatory bodies are considering a number of issues that could shape the future of the electric utility industry. Such issues include, among others:

•the ability of electric utilities to recover stranded costs,

•~~the impact of the TCJA on regulated public utilities,~~

•the role of electric utilities, independent power producers, and competitive bidding in the purchase, construction, and operation of new generating capacity,

•the role of electric utilities and independent transmission providers in competitive bidding in the construction of new transmission facilities,

•the pricing of transmission service on an electric utility’s transmission system, or the cost of transmission services provided by an RTO/ISO,

•FERC’s assessment of market power and a utility’s ability to buy generation assets,

•mandatory transmission reliability standards,

•NERC’s imposition of additional reliability and cybersecurity standards,

•the authority of FERC to grant utilities the power of eminent domain,

•increasing requirements for renewable energy sources,

•demand response and energy efficiency standards,

•comprehensive ~~multi-emissions~~ environmental regulation in the areas of air, water, and waste,

•~~regulation of greenhouse gas emissions,~~

•~~regulation of the disposal and management of CCRs from coal-fired power plants,~~ and

•FERC’s increased ability to impose financial penalties.

At this time, management is unable to predict the outcome of such issues or the effects thereof on the results of operations, financial condition, or cash flows of the Registrants.

For information on certain regulatory matters and regulatory accounting 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.”

ENVIRONMENTAL MATTERS

Environmental Quality

Cleco is subject to federal, state, and local laws and regulations governing the protection of the environment. Violations of these laws and regulations may result in substantial fines and penalties. Cleco has obtained the environmental permits necessary for its operations, and management believes Cleco is in compliance in all material respects with these permits, as well as all applicable environmental laws and regulations. Environmental requirements affecting electric power facilities are complex, change frequently, and have become more stringent over time as a result of new legislation, administrative actions, and judicial interpretations. Therefore, the capital costs and other expenditures necessary to comply with existing and new environmental requirements are difficult to determine. Cleco Power may request recovery of the costs to comply with certain environmental laws and regulations from its retail

customers. If revenue relief were to be approved by the LPSC, then Cleco Power’s retail rates could increase. If the LPSC were to deny Cleco Power’s request to recover all or part of its

requires ~~these~~all of the regulated EGUs to possess a regulatory allowance for each ton of SO2 emitted beginning in the year 2000. The EPA allocates a set number of allowances to each affected unit based on its historic emissions. Cleco had sufficient allowances for operations in ~~2020~~2021 and expects to have sufficient allowances for ~~2021~~2022 operations under the Acid Rain Program.

The Acid Rain Program also established emission rate limits on NOx emissions for certain generating units.

Compliance with the acid rain ~~permit~~emission limits for NOx has been achieved at all affected facilities.

CSAPR

In October 2016, the EPA published the finalized CSAPR update for the 2008 ozone NAAQS in the Federal ~~Register.~~Register (CSAPR Update Rule). As a result, the EPA proposed Federal Implementation Plans (FIP) that update the EGU CSAPR NOxX ~~ozone-season~~ozone season emission budgets and implemented the budgets through the existing CSAPR NOxX ~~ozone-season~~ozone season allowance trading program. The FIP required implementation beginning with the 2017 ozone season. ~~These rules did not have a material impact on the results of operations, financial condition, or cash flows of the Registrants.~~

On September 13, 2019, the D.C. Circuit Court of Appeals partially remanded the CSAPR ~~update rule~~Update Rule to the EPA because the rule did not set a deadline by which upwind states must eliminate their significant contribution to downwind states’ NAAQS nonattainment. ~~In response to the remand of the rule, on October~~On April 30, ~~2020,~~2021, the EPA ~~published a proposed rule~~issued in the Federal Register ~~Revised Cross-State Air Pollution Rule Update~~the final revised CSAPR update for the 2008 ozone NAAQS. ~~However, until~~Cleco does not expect the ~~EPA and LDEQ have published and implemented the plan, Cleco is unable~~final regulation to ~~predict if this will~~ have a material impact on the results of operations, financial condition, or cash ~~flows~~flow of the Registrants.

In October 2015, the EPA promulgated a revision to the 2015 ozone NAAQS, lowering the level of both the primary and secondary standards to 70 ppb. Under the CAA, each state is required to submit a SIP that provides for the implementation, maintenance and enforcement of each primary and secondary NAAQS. In particular, each SIP must contain adequate provisions prohibiting emissions activity within the state, which will contribute significantly to non-attainment or interfere with maintenance by any other state with respect to any such primary or secondary ambient air quality standard. This “good neighbor” SIP is to be submitted to the EPA by the state within three years of promulgation of a new or revised NAAQS. The EPA determined that the SIP submittal by Louisiana meets the SIP completeness criteria. However, onin February ~~28,~~ 2020, the EPA issued a proposed rule that indicated it would take separate actions on sub elements of the SIP that are to prohibit emissions to other states which will ~~(1)~~ significantly contribute to nonattainment of the NAAQS and ~~(2)~~ interfere with maintenance of the NAAQS. On October 15, 2021, the EPA published in the Federal Register a proposed consent decree that would establish a deadline for the EPA to approve or disapprove “good neighbor” SIP submittals by April 30, 2022, for a number of states including Louisiana. On January 12, 2022, the U.S. District Court for the Northern District of California entered the final consent decree establishing the deadlines for the EPA to approve or disapprove the SIP submittals. On February 22, 2022, the EPA issued a proposed disapproval of the “good neighbor” SIP submitted by Louisiana for the 2015 ozone NAAQS. If the EPA finalizes its proposed disapproval, the EPA may issue an FIP to address the “good neighbor” provision in Louisiana. Cleco is unable to predict the future impact of any requirements imposed under the “good neighbor” SIP or FIP for the 2015 ozone NAAQS.

MATS

For ~~more~~ information ~~on the legal proceedings of the~~about MATS, ~~ruling,~~ see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

On February 7, 2019, the EPA published in the Federal Register a proposed rule in which it proposed to find, after considering the cost of compliance relative to the hazardous air pollutant (HAP) benefits, that regulation of HAP emissions under section 112 of the CAA is not appropriate and necessary, which would reverse the EPA’s prior conclusions. However, the EPA further proposed that this new determination would not remove the Coal-and Oil-Fired source category from the CAA list of sources that must be regulated and would not

repealing the CPP and issuing a replacement to the CPP, informally known as the ACE ~~rule.~~Rule. The ACE ~~rule~~Rule requires state agencies to set standards of performance for each affected generating unit and submit the implementation plan to the EPA for approval by July 8, 2022, with compliance expected within 24 months thereafter. On January 19, 2021, the D.C. Circuit Court of Appeals ruled that the EPA’s repeal of the CPP and its 2019 promulgation of ACE were unlawful. ~~The Court therefore~~Therefore, the court issued an order to vacate and remand the ACE Rule to the EPA. ~~The Court’s mandate has not yet been issued to allow parties to request reconsideration~~On February 22, 2021, the court granted the EPA’s unopposed motion for a partial stay of the ~~ruling.~~ issuance of the mandate on vacating the CPP repeal, ordering that it will withhold issuance of the mandate with respect to the vacatur of the CPP repeal until the EPA responds to the court’s remand by promulgating a new rule to regulate GHG emissions from existing electric generating units. Therefore, the CPP will not take effect during the EPA’s rulemaking process. In addition, on March 5, 2021, the D.C. Circuit Court of Appeals issued the partial mandate effectuating the court’s vacatur of the ACE Rule that makes effective the court’s decision to vacate the ACE Rule. In April 2021, multiple parties filed petitions for a writ of certiorari asking the U.S. Supreme Court to review the decision by the D.C. Circuit Court of Appeals. On October 29, 2021, the U.S. Supreme Court granted four petitions for certiorari asking the D.C. Circuit Court of Appeals to review its decision to vacate and remand the ACE Rule.

On January 20, 2021, the ~~new~~ 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 administration also released a non-exhaustive list of agency actions to be reviewed, which includes the ACE ~~rule.~~Rule. Until the ~~Court’s~~D.C. Circuit Court of Appeals opinion has been determined to be final and the EPA has responded to the ~~Court’s~~court’s opinion and executive order, management cannot determine the future regulatory requirements for GHGs for the utility industry and the potential impact on Cleco’s existing affected units. However, any new rules that require significant reductions in CO2 emissions for existing EGUs could require significant capital expenditures or curtailment of operations of certain EGUs to achieve compliance.

In December 2018, the EPA published proposed rules to replace the August 2015 NSPS rules for CO2 emissions from new, modified, or reconstructed units. As with the current NSPS rules, the proposed rules set requirements and conditions with respect to CO2 emission standards for new, modified, or reconstructed units. Cleco does not anticipate a future modification or future reconstruction of its existing units, as defined in the proposal, ~~that~~which would trigger the application of the proposed CO2 emission limits. Until the EPA finalizes the rule, management cannot state what the final standards will entail or if the new rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Renewable Portfolio Standards (RPS)

The enactment of federal or state RPS mandating the use of renewable and alternative fuel sources such as wind, solar, biomass, and geothermal energy could result in certain changes in Cleco’s business or its competitive position. These changes could include additional costs for renewable energy credits, alternate compliance payments, or capital expenditures for renewable generation resources. RPS

legislation has been enacted in many states, and Congress is considering various bills that would create a national RPS. Cleco continues to evaluate the impacts of potential RPS

Other

On May 2, 2019, Louisiana Generating notified the EPA and the LDEQ that it has elected not to Retrofit (as such term is defined in the Consent Decree) Big Cajun II, Unit 1.

Water Quality

Cleco’s facilities are subject to federal and state laws and regulations regarding wastewater discharges. Cleco has received, from the EPA and the LDEQ, permits required under the federal Clean Water Act (CWA) for wastewater discharges from its generating stations. Wastewater discharge permits have fixed dates of expiration, and Cleco applies for renewal of these permits within the applicable time periods.

In March 2011, the EPA proposed regulations ~~which~~that would establish standards for cooling water intake structures at existing power plants and other facilities pursuant to Section 316(b) of the CWA. The EPA published its final rule in August 2014. The standards are intended to protect fish and other

aquatic wildlife by minimizing capture, both in screens attached to intake structures (impingement mortality) and in the actual intake structures themselves (entrainment mortality). The ~~proposed standards would~~final rule (1) ~~set~~sets a performance standard, dealing with fish impingement mortality or reduce the flow velocity at cooling water intakes to less than 0.5 feet per second and (2) ~~require~~requires entrainment standards to be determined on a case-by-case basis by state-delegated permitting authorities. Facilities subject to the ~~proposed~~ standards are required to complete a number of studies within a 45-month period and then comply with the rule as soon as possible after the next discharge permit renewal, by a date determined by the permitting authorities. Portions of the final rule could apply to a number of Cleco’s fossil fuel steam electric generating stations. Until the required studies are conducted, including technical and economic evaluations of the control options available, and regulatory agency officials have reviewed the studies and made determinations, Cleco remains uncertain as to which technology options or retrofits will be required to be installed on its affected facilities. The costs of required technology options and retrofits may be significant, particularly if closed cycle cooling is required.

The CWA requires the EPA to periodically review and, if appropriate, revise technology-based effluent limitations guidelines for categories of industrial facilities, including power generating facilities. In November 2015, the EPA released the Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category ~~rule~~Rule (ELG ~~rule)~~Rule). The rule is focused on reducing the discharge of metals in wastewater from generating facilities to surface waters.

In April 2017, the EPA Administrator indicated that it is appropriate and in the public interest to reconsider the rule. In September 2017, the EPA published a rule postponing for a two year period the earliest compliance dates for some of the wastewater streams that fall under the ELG rule. On October 13, 2020, the EPA published final revisions to the ~~rule~~ELG Rule that ~~would revise~~revised the technology-based effluent limitation guidelines and standards applicable to flue gas desulfurization and bottom ash transport waste waters. The revised ELG Rule, known as the Reconsideration Rule, also allows a unit to come into compliance with the ELG Rule by qualifying as an electric generating unit that will achieve permanent cessation of coal combustion by December 31, 2028. Under this compliance option, Cleco submitted a Notice of Planned Participation by the October 13, 2021, submittal deadline for the Dolet Hills Power Station, Rodemacher Unit 2, and Big Cajun II, Unit 1. The rule may require costly technological upgrades at Cleco’s facilities, particularly if additional wastewater treatment systems are required to be installed or if waste streams must be eliminated. Until Cleco and the agencies have come to an agreement on how compliance with the rule will be achieved, management cannot

predict what the final standards will entail, what controls the EPA and the state of Louisiana may require of Cleco, or if the ~~new~~ rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

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 administration also released a non-exhaustive list of agency actions to be reviewed, which includes the ELG Rule.

Solid Waste Disposal

In the course of operations, Cleco’s facilities generate solid and hazardous waste materials requiring eventual disposal. The Solid Waste Division of the LDEQ has adopted a permitting system for the management and disposal of solid waste generated by power stations. Cleco has received all required permits from the LDEQ for the on-site disposal of solid waste from its generating stations.

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 ~~federal regulation classifies CCRs as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act and allows beneficial use of CCRs with some restrictions. The rule~~CCR Rule establishes extensive requirements for existing and new

periods and will make decisions about compliance strategies and the timing of closure activities. As additional information becomes available and management makes decisions about compliance strategies and the timing of closure activities, Cleco will update the ARO balances to reflect these changes in estimates. For more information on Cleco’s compliance strategies and financial impacts of the CCR Rule, see Part II, Item 8, “Financial Statements and Supplementary Data—Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments.” For more information on the regulatory treatment of Cleco Power’s ~~current~~ AROs, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 6 — Regulatory Assets and Liabilities — AROs.”

In December 2016, the Water Infrastructure Improvements for the Nation Act (WIIN Act), including the WIIN Act’s provisions regarding CCRs, was signed into law. The WIIN Act’s CCR provisions require the EPA to establish a

CCR permitting program. It also allows for implementation of the federal CCR ~~rule~~Rule through a state-based permit program. On February 20, 2020, the EPA published in the Federal Register a proposed rule establishing the federal permit program. Permits will be required for all CCR units in states that do not have state permit programs. Until the state of Louisiana has evaluated the WIIN Act and made a decision on implementing a state-based option, Cleco cannot determine if there will be a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Cleco produces certain wastes that are classified as hazardous at its electric generating stations and at other locations. Cleco does not treat, store long-term, or dispose of these wastes on-site; therefore, no permits are required. Hazardous wastes produced by Cleco are properly disposed of at permitted hazardous waste disposal sites.

Toxic Substances Control Act (TSCA)

The TSCA directs the EPA to regulate the marketing, disposing, manufacturing, processing, distributing in commerce, and usage of various toxic substances, including PCBs. Cleco operates and may continue to operate equipment containing PCBs under the TSCA. Once the equipment reaches the end of its useful life, the EPA regulates handling and disposing of the equipment and fluids containing PCBs. Within these regulations, handling and disposing is allowed only through facilities approved and permitted by the EPA. Cleco properly disposes of its PCB waste material at TSCA-permitted disposal facilities.

Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

The CERCLA imposes liability on parties responsible for, in whole or in part, the presence of hazardous substances at a site. In 2007, Cleco received a Special Notice for Remedial Investigation and Feasibility Study (RI/FS) from the EPA for a facility known as the Devil’s Swamp Lake site located just northwest of Baton Rouge, Louisiana. The notice requested that Cleco and Cleco Power, along with many other listed potentially responsible parties (PRP), enter into negotiations with the EPA for the performance of an RI/FS at the Devil’s Swamp Lake site. In 2008, the EPA identified Cleco as one of many companies that sent PCB wastes for disposal to the site. The EPA proposed to add the Devil’s Swamp Lake site to the National Priorities List, based on the release of PCBs to

fisheries and wetlands located on the site, but no final listing decision has been made. The EPA issued a Unilateral Administrative Order to two PRPs, Clean Harbors, Inc. and Baton Rouge Disposal, to conduct an RI/FS in 2009. The Tier 1 part of the study was completed in June 2012. The tier 2 remedial investigation report ~~that fish and crawfish from the area should not be eaten,~~ was made public in December 2015. OnIn September 9, 2019, the EPA publicly announced a proposed cleanup strategy for the Superfund Site. Until a final plan is presented by the EPA, management is unable to determine how significant Cleco’s share of the costs associated with a possible response action at the site, if any, may be and whether this will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

The following risk factors could have a material adverse effect on results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrants.


STRUCTURAL RISKS

Holding Company

Cleco Holdings is a holding company and its ability to meet its debt obligations is dependent on the cash generated by its subsidiaries.

Cleco Holdings is a holding company and conducts its operations primarily through its subsidiaries. Accordingly, Cleco Holdings’ ability to meet its debt obligations is largely dependent upon the cash generated by these subsidiaries. Cleco Holdings’ subsidiaries are separate and distinct entities and have no obligations to pay any amounts due on Cleco Holdings’ debt or to make any funds available for such payment. In addition, Cleco Holdings’ subsidiaries’ ability to make dividend payments or other distributions to Cleco Holdings may be restricted by their obligations to holders of their outstanding securities and to other general business creditors. Substantially all of Cleco’s consolidated assets are held by either Cleco Power or Cleco Cajun. Cleco Holdings’ right to receive any assets of any subsidiary, and therefore the right of its creditors to participate in those assets, will be structurally subordinated to the claims of that subsidiary’s creditors, including trade creditors. In addition, even if Cleco Holdings were a creditor of any subsidiary, its rights as a creditor would be effectively subordinated to any security interest in the assets of that subsidiary and any indebtedness of the subsidiary ranking senior to that held by Cleco Holdings. Cleco Power is subject to regulation by the LPSC. The 2016 Merger Commitments also provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit/issuer ratings. As a result, Cleco Power may be prohibited from making distributions to Cleco Holdings.


OPERATIONAL RISKS

Future Electricity Sales

Cleco Power’s future electricity sales and corresponding base revenue and cash flows and Cleco Cajun’s future wholesale revenue and cash flows could be negatively affected by adverse macroeconomic conditions.

Adverse macroeconomic conditions resulting in low economic growth can negatively impact the businesses of Cleco Power’s residential, commercial, wholesale, and industrial customers, and Cleco Cajun’s wholesale customers resulting in decreased power consumption, which causes a corresponding decrease in base revenue for Cleco Power and revenue for Cleco Cajun. Reduced production or the shutdown of customer facilities could substantially reduce Cleco Power’s base revenue and Cleco Cajun’s revenue.

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.

Regulatory and legislative bodies have proposed or introduced requirements and incentives to reduce energy consumption. Conservation and energy efficiency programs are designed to reduce energy demand. Future electricity sales could be impacted by customers switching to alternative sources of energy, such as solar and wind, on-site power generation, and retail customers purchasing less electricity due to increased conservation efforts or expanded energy efficiency measures. Declining usage could result in an under-recovery of fixed costs at Cleco Power’s rate regulated business. An increase in energy conservation, energy efficiency efforts, and other efforts that reduce energy demand could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

generation supply shortages, natural gas supply shortages, increases in ~~southwest Louisiana resulting~~prices of natural gas in ~~power~~the U.S., and significant outages for approximately 132,000 of Cleco Power’s electric customers. On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana resulting in power outages for approximately 73,000 of Cleco Power’s electric customers. Also, in February 2021, two separate severe winter storms, Winter Storms Uri and Viola, moved through Louisiana impacting Cleco’s service territories in central and south Louisiana resulting in power outages for approximately 11,000 and 43,000, respectively, of Cleco Power’s customers. For more information on the hurricanes and severe winter storms, see Part II, Item 8, “Financial Statements and ~~Supplementary~~Supplementary Data — Notes to the Financial Statements — Note 19 — Storm ~~Restoration.~~Restoration, Securitization, and Cost Recovery.”

Any future severe weather, other natural disaster, or physical changes resulting from climate change could cause damage to, or the loss of, Cleco’s equipment and facilities, which could result in Cleco incurring additional costs, such as the cost to restore service, repair damaged facilities, or obtain replacement power. Any future severe weather, other natural

disaster, or physical changes resulting from climate change could also result in changes in demand for and usage of electricity in Cleco’s service territory and the service territory of Cleco’s wholesale customers. The delivery of equipment and supplies necessary to Cleco’s business could also be disrupted. Cleco Power’s recovery of costs associated with these events is subject to LPSC review and approval, and the LPSC could disallow timely and full recovery of the costs incurred. These risks and other possible effects of severe weather, other natural disasters, and climate change 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.

Weather conditions directly influence the demand for electricity, particularly with respect to residential customers. In Cleco’s service territory, demand for power typically peaks during the hot summer months. As a result, Cleco’s financial results may fluctuate on a seasonal basis. In addition, Cleco has sold less power and, consequently, earned less income when weather conditions were milder. Unusually mild weather in the future could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

~~An increase in costs resulting from Winter Storms Uri~~ For information regarding the hurricanes and ~~Viola could have a material adverse effect on the results of operations, financial condition, cash flows and liquidity of the Registrants.~~

~~In February 2021,~~winter storms that caused damages to Cleco’s service territory ~~experienced extreme~~in 2020 and ~~unprecedented winter weather that resulted in damage~~2021, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to ~~Cleco Power’s distribution~~the Financial Statements — Note 19 — Storm Restoration, Securitization, and transmission assets, electricity generation supply shortages, and natural gas supply shortages and increased wholesale prices of natural gas in the United States, primarily due to prolonged freezing temperatures, which impacted, and may continue to impact, the Registrants’ business.

OnCost Recovery February 14, 2021, Winter Storm Uri reached Louisiana resulting in power outages for approximately 11,000 of Cleco Power’s electric customers located primarily in south Louisiana. By February 17, 2021, power was restored to 100% of customers who could receive power. .”On February 17, 2021, Winter Storm Viola reached Louisiana resulting in power outages for approximately 43,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By February 22, 2021, power was restored to 100% of customers who could receive power. Cleco Power’s current estimate of the total storm restoration costs related to Winter Storms Uri and Viola is between $9.0 million and $10.0 million. Cleco Power continues its restoration efforts as damage to its distribution and transmission assets is still being assessed.

On February 16, 2021, Cleco was notified by the regional reliability coordinator, MISO, that extremely cold temperatures were causing an increase in demand for power, which resulted in an overload of the power grid. The electricity generation shortages necessitated MISO to implement controlled outages in certain of its service areas. To help protect the stability of the power grid and prevent prolonged outages, MISO instructed Cleco to reduce demand on the power grid by initiating periodic outages to customers across Louisiana. The periodic power outages were minimal and suspended within one hour of initiation at the direction of MISO because the power shortage was no longer threatening the reliability of the power grid.

The theft, damage, or improper disclosure of sensitive electronic data could subject Cleco to both penalties for violation of applicable privacy laws and claims from third parties, or harm Cleco’s reputation. In addition, new laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs, and any failure to comply with these laws and regulations could result in significant penalties and legal liability.

~~COVID-19~~Pandemics, Epidemics, or Other Outbreaks

~~The Registrants face~~Cleco faces risks related to COVID-19 and other ~~health~~pandemics, epidemics, ~~and~~or outbreaks, including economic, regulatory, legal, workforce, and cybersecurity risks, which could have a material adverse impact on the results of operations, financial condition, cash flows, or liquidity of the Registrants.

The ~~continued~~ COVID-19 pandemic is(and other pandemics, epidemics, or outbreaks) has adversely ~~affecting current~~affected and could continue to adversely affect global economic activities and conditions. An extended slowdown of economic growth, decreased demand for commodities, and/or material changes in governmental or regulatory policy in the U.S. could result in lower growth and reduced demand for and usage of electricity in Cleco’s service territory, and those of its wholesale customers, as businesses and facilities continue to close, remain closed, or implement reduced working hours. The ability of Cleco’s customers ~~contractors, and suppliers~~ to meet their obligations to Cleco, including payment obligations, could also be negatively affected under ~~the current economic~~these economic conditions.

Beginning on March 13, 2020, and as a result of an LPSC executive order, Cleco Power suspended the assessment of late fees, disconnections, and the utilization of collection agencies to help customers facing financial challenges related to the COVID-19 pandemic. On July 1, 2020, the LPSC issued an order ending the moratorium on disconnections effective July 16, 2020. Cleco resumed disconnections and late fees beginning October 1, 2020. On July 16, 2020, Cleco began setting up interest-free payment plan arrangements for customers with past due balances to be repaid over a period of up to 18 months. On December 4, 2020, Cleco Power made a filing with the LPSC requesting the recovery of the regulatory asset as well as the lost revenue associated with the disconnect fees and incremental costs. Failure to collect these balances could negatively impact Cleco’s cash flow. ~~At December 31, 2020, Cleco Power had a regulatory asset of $3.0 million for expenses incurred.~~

The LPSC, in response to a federal mandate or otherwise, could impose restrictions on the rates Cleco charges to provide its services, including the inability to implement approved rates, or delay actions with respect to Cleco Power’s base rate case and filings. In addition, the COVID-19 pandemic may affect Cleco’s ability to timely satisfy regulatory requirements such as recordkeeping and/or timely reporting requirements. Additionally, as the EPA and many state environmental agencies have issued enforcement discretion policies for such issues, it is unclear whether the effect of any possible noncompliance due to COVID-19 will be material.

~~On May 18, 2020, Cleco reopened customer service offices implementing precautionary protective measures and protocols to allow in-person meetings with restrictions in size~~

and mandatory protective gear. Cleco has also implemented precautionary measures for employees or contractors testing positive for COVID-19, exhibiting COVID-19 symptoms, or awaiting COVID-19 test results. In the event a substantial portion of Cleco’s workforce were to be impacted by COVID-19 for an extended period of time, Cleco may face challenges with respect to its services or operations, and it may not be able to execute its capital plan as anticipated. There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread, especially in light of recent variants such as the Delta and Omicron variants, and the extent and duration of governmental and other measures implemented to try to slow the spread of COVID-19, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders, and business and government ~~shutdowns. Restrictions~~shutdowns that could reduce the availability and productivity of ~~this nature have caused,~~Cleco employees, key contractors, and ~~may continue~~vendors. Cleco’s ability to cause, Cleco, its suppliers, and other business counterparties to experience operational delays. As the COVID-19 pandemic has significantly worsened in the U.S. during the winter months, this may cause federal, state, and local governments to reconsider restrictions on business and social activities. In the event governments increase restrictions, the reopening of the economy maytimely satisfy regulatory requirements, such as recordkeeping and/or timely reporting requirements, could be further curtailed. Cleco has modified and continues to modify certain business and workforce practices (including those related to employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. However, the quarantine of personnel or the inability to access Cleco’s facilities or customer sites could adversely affect its operations. Also, Cleco has a limited number of highly skilled employees for some of its operations.affected. If ~~a large proportion of~~ Cleco’s employees in those critical positions were to contract COVID-19 simultaneously, Cleco would rely upon its business continuity plans in an effort to continue operations at its facilities which includes sequestering those key employees. However, there is no certainty that such measures will be sufficient to mitigate the adverse impact to Cleco’s operations that could result from shortages of highly skilled employees.

~~As many of Cleco’s employees and~~or third-party service providers were to work remotely, ~~in accordance with government mandates,~~ Cleco ~~faces~~could face heightened cybersecurity risks related to unauthorized system access, aggressive social engineering tactics, and adversaries attacking the information technology systems, network infrastructure, technology and facilities used to conduct its ~~businesses. Cleco will continue to monitor developments affecting its employees, customers, and operations.~~

While the full impact on Cleco’s business from the continued COVID-19 pandemic is unknown at this time and difficult to predict, various aspects of its business could be adversely affected by COVID-19. While there are many unknowns as to the duration and severity of the COVID-19 pandemic, as of the date of this Annual Report on Form 10-K, it has caused significant volatility in global markets and has had an adverse impact on the operations of some of Cleco’s customers and suppliers, which could affect Cleco’s operations and its ability to access capital. The continued spread of COVID-19 and efforts to contain COVID-19, such as the imposition of additional quarantines or closures or reduced operations of businesses and other institutions, could result in an economic slowdown, which could adversely affect customer demand and consumption, cause delayed payments or uncollectible accounts, disrupt supply chains and markets,

refund until either a prudency review or a periodic fuel audit is conducted by the LPSC.

Cleco Power could be indirectly liable for the impacts of other companies’ activities on lands that have been mined and reclaimed by Cleco Power. The liability for impacts on reclaimed lands may not be recoverable in rates and could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The construction of and capital improvements to power generation, ~~and~~ transmission, and distribution facilities involve substantial risks. Should construction or capital improvement efforts be significantly more expensive than planned, the financial condition, results of operations, or liquidity of ~~Cleco~~the Registrants could be materially affected.

Cleco’s ability to complete construction of or capital improvements to power generation, ~~and~~ transmission, and distribution facilities in a timely manner and within budget is contingent upon many variables and subject to substantial risks. These variables include engineering and project execution risk and escalating costs for materials, labor, and environmental compliance. Delays in obtaining permits, shortages in materials and qualified labor, suppliers and contractors not performing as set forth under their contracts, changes in the scope and timing of projects, inaccurate cost estimates, the inability to raise capital on favorable terms, changes in commodity prices affecting revenue, fuel or material costs, changes in the economy, changes in laws or regulations, including environmental compliance requirements, and other events beyond the control of Cleco may materially affect the schedule and cost of these projects. If these projects are significantly delayed or become subject to cost overruns or cancellation, Cleco could incur additional costs including termination payments, face increased risk of potential write-off of the investment in the project, or Cleco Power may not be able to recover such costs in rates. Furthermore, failure to maintain various levels of generating unit availability or transmission and distribution reliability may result in various disallowances of Cleco Power’s investments.

Alternative Generation Technology

Changes in technology may have a material adverse effect on the value of Cleco Power and Cleco Cajun’s generating facilities.

A basic premise of Cleco’s business is that generating electricity at central power plants achieves economies of scale and produces electricity at a relatively low price. There are alternative technologies to produce electricity, most notably wind turbines, photovoltaic cells, and other solar generated power. Many companies and organizations conduct research and development activities to seek improvements in alternative technologies. As new technologies are developed and become available, the quantity and pattern of electricity purchased by customers could decline, with a corresponding decline in revenues derived by generating assets. To the extent Cleco is slow to adopt viable alternative generation


REGULATORY RISKS

Storm Restoration ~~Costs~~Cost Recovery

Cleco Power’s ability to recover costs resulting from ~~Hurricanes Laura, Delta, and Zeta are~~storm damage is subject to a prudency review and approval by the LPSC.

OnIn August ~~27,~~and October 2020, ~~Hurricane Laura made landfall in southwest Louisiana as a Category 4 storm causing~~Cleco Power’s distribution and transmission systems sustained catastrophic damage ~~to portions~~from three separate hurricanes resulting in total storm restoration costs of ~~Cleco’s service territory and causing power outages for~~ approximately ~~140,000 of Cleco Power’s electric customers located primarily in central and southwest Louisiana.~~$239.8 million. In August 2021, Cleco Power sustained additional significant damage to its distribution and transmission ~~facilities.~~systems from Hurricane Ida, which resulted in total storm restoration costs of approximately $92.0 million. The damage to equipment from the hurricanes required replacement, as well as repair of existing assets. At December 31, 2021, Cleco Power had regulatory assets, as allowed by the LPSC, for non-capital expenses resulting from Hurricanes Laura, Delta, Zeta, and Ida totaling $112.3 million.

In February 2021, Winter Storms Uri and Viola caused Cleco’s service territory to experience extreme and unprecedented winter weather that resulted in damage to Cleco Power’s distribution assets and caused electricity generation supply shortages, natural gas supply shortages, and increases in prices of natural gas in the U.S., primarily due to prolonged freezing temperatures. Cleco Power’s total storm restoration costs related to ~~Hurricane Laura is~~Winter Storms Uri and Viola are approximately $10.1 million. ~~$180.3~~At December 31, 2021, Cleco Power had a regulatory asset for non-capital expenses of $1.9 million,~~. On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana~~ as allowed by the LPSC. Cleco Power’s incremental fuel and purchased power costs incurred as a ~~Category 2~~

~~storm resulting in power outages~~result of Winter Storms Uri and Viola are approximately $55.0 million. On March 29, 2021, Cleco Power received approval from the LPSC to recover $50.0 million of these costs 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 ~~approximately 132,000 of~~the fuel costs incurred during the time period required to restore services to Cleco Power’s ~~electric~~ customers ~~located primarily~~during Winter Storms Uri and Viola. Cleco Power is responding to related data requests. Management is unable to determine the outcome or timing of the audit.

On May 19, 2021, the LPSC issued an order authorizing Cleco Power to recover $16.0 million annually for interim storm recovery. On June 1, 2021, Cleco Power began collecting this amount through rates. This order is effective until such time that the securitization of those costs is complete, which is expected in ~~central and south Louisiana.~~mid-2022.

Cleco Power has made a filing with the LPSC seeking approval for recovery of a portion of the restoration costs through the issuance of dedicated securitization bonds, which would be repaid over time through a system restoration charge imposed on Cleco Power’s ~~total storm restoration costs related to Hurricane Delta is approximately~~customers. ~~$50.7 million~~On August 5, 2021, . On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana as a Category 2 storm resulting in power outages for approximately 73,000 of Cleco Power’s electric customers located primarily in southeast Louisiana. Cleco Power’s total storm restoration costs related to Hurricane Zeta is approximately ~~$8.6 million. On December 4, 2020,~~ Cleco Power filed ~~an application~~testimony with the LPSC ~~requesting an interim rate recovery for return on the storm restoration costs associated with the hurricanes until such time~~relating to securitization of ~~such~~the final storm costs ~~can be completed. Restoration costs incurred by Cleco Power from damages caused by~~for Hurricanes Laura, Delta, and Zeta, and Winter Storms Uri and Viola, totaling $342.0 million, including the establishment of a newly funded $100.0 million storm reserve to cover future storm costs. On September 28, 2021, Cleco Power filed supplemental testimony with the LPSC relating to storm securitization requesting an additional $100.0 million for a separate storm reserve to cover costs associated with Hurricane Ida. Cleco Power continues to respond to several sets of data requests received from the LPSC related to the securitization application. Cleco expects the LPSC to issue its order

authorizing the recovery of the verified final storm costs in late March 2022 and securitization of those costs to be complete in mid-2022.

Restoration costs that were incurred by Cleco Power as a result of storm damages are subject to a prudency review by the LPSC. The LPSC has ~~the~~ authority to disallow costs found to not to have been prudently incurred. Accordingly, Cleco Power may not be able to recover some of the restoration costs incurred, which could be material. Cleco Power will seek recovery of a portion of the restoration costs through the issuance of dedicated securitization bonds, which requires prior approval by the LPSC and would be repaid over time through a system restoration charge imposed on Cleco Power’s customers.

The inability of Cleco Power’s customers to continue paying their utility bills or a decision by the LPSC to deny Cleco Power’s request to recover incurred restoration costs could have a material adverse effect on the results of operations, financial condition, and cash ~~flow~~flows of the Registrants.

Regulatory Compliance

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.

Cleco’s business is subject to extensive federal, state, and local energy, environmental, and other laws and regulations. Should Cleco be unsuccessful in obtaining necessary licenses or permits or should these regulatory authorities initiate any investigations or enforcement actions or impose penalties or disallowances on Cleco, Cleco’s business could be adversely affected. Existing regulations may be revised or reinterpreted and new laws and regulations may be adopted or become applicable to Cleco or Cleco’s facilities in a manner that may have a material adverse effect on the Registrants’ business or result in significant additional costs.

As a result of the 2016 Merger, Cleco Holdings and Cleco Power made the 2016 Merger Commitments to the LPSC including, but not limited to, the extension of Cleco Power’s current FRP for an additional two years, maintaining employee headcount, salaries, and benefits for ten years, and a limitation from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. Additionally, upon approval of the Cleco Cajun Transaction, Cleco made commitments to the LPSC including, but not limited to, holding Cleco Power retail customers harmless for any adverse impacts, increased costs of debt or equity, and credit rating downgrades attributable to the Cleco Cajun ~~Transaction;~~Transaction and the repayment of $400.0 million of Cleco Holdings’ debt by ~~2024; and a $4.0 million annual reduction to Cleco Power’s retail customer rates.~~2024.

could be materially adversely ~~affecte~~d.affected. Recovery of these costs could result in rising utility bills threatening the affordability of such costs by Cleco Power’s customers in certain demographic areas, which in turn could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power’s revenues and earnings are substantially affected by regulatory proceedings known as rate cases or, in some cases, a request for extension of an FRP. During those cases, the LPSC determines Cleco Power’s rate base, depreciation rates, operation and maintenance costs, and administrative and general costs that Cleco Power may recover from its retail customers through its rates. In some instances, the outcome of a rate case or request for extension of an FRP may impact wholesale decisions of Cleco Power. These proceedings may examine, among other things, the ~~prudence~~prudency of Cleco Power’s operation and maintenance practices, level of subject expenditures, allowed rates of return, and previously incurred capital expenditures. The LPSC has the authority to disallow costs found not to have been prudently incurred. Rate cases generally have timelines of approximately one year, and decisions are typically subject to appeal, potentially leading to additional uncertainty. The transmission tariffs of Cleco Power are regulated by FERC with its own regulatory proceedings. Both the LPSC and FERC regulatory proceedings can involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, all of whom have differing concerns but who have the common objective of just and reasonable rates.

Transmission rates that MISO transmission owners may collect are regulated by FERC. OnIn November ~~21,~~ 2019, FERC voted to adopt new methodology for evaluating base ROE for public utilities under the Federal Power Act. Cleco Power is unable to determine when a binding FERC order will be issued. Any reduction to the ROE component of the transmission rates could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Retail Electric Service

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 retail rates for residential, commercial, and industrial customers and other retail sales are regulated by the LPSC. Cleco Power’s new retail rate plan became effective on July 1, 2021. The LPSC will continue to conduct an annual review of Cleco Power’s earnings and regulatory ROE ~~once its new rates~~

~~are effective.~~beginning with the 12 months ending June 30, 2022. Cleco ~~Power anticipates new rates to be effective in the first half of 2021. Cleco Power could be~~Power’s required ~~to make a substantial~~ refund of previously recorded revenue as a result of the LPSC review ~~and such refund~~ could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power’s next base rate case is required to be filed with the LPSC on or before March 31, 2023. The outcome of any future base rate case could have a material adverse effect on the results of operations, financial condition, and cash flows of the Registrants.

LPSC Audits

The LPSC conducts fuel audits that could result in Cleco Power making substantial refunds of previously recorded revenue.

Generally, Cleco Power’s cost of fuel used for electric generation and cost of purchased power are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997 in Docket No. U-21497 provides that an audit will be performed at least every other year.

OnIn March ~~31,~~ 2020, Cleco Power received a notice of audit from the LPSC for the period of January 2018 to December 2019. The total amount of fuel expense included in the audit is $565.8 million. Cleco Power has responded to several sets of data requests from the LPSC. Cleco Power has FAC filings for January 2020 and thereafter that remain subject to audit. 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 in May 2021. 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. Cleco Power is responding to related data requests.Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. If a disallowance of fuel costs 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.

The LPSC conducts audits of environmental costs that could result in Cleco Power making substantial refunds of previously recorded revenue.

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from customers certain costs of environmental compliance. The costs eligible for recovery are 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. These expenses are eligible for recovery through Cleco Power’s EAC and subject to periodic review by the LPSC.

On ~~March 3, 2020, Cleco Power received notice from~~October 20, 2021, the LPSC ofapproved the EAC audit for the period of January 2018 to December ~~2019.~~ 2019 with no findings. The total amount of environmental expense that was included in the audit iswas $26.2 million. ~~Cleco Power has responded to several sets of data requests from the LPSC.~~ Cleco Power has EAC filings for January 2020 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. If a disallowance of environmental costs 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.

FERC Audit

FERC conducts audits that could result in Cleco Power making refunds of previously recorded revenue.

Generally, Cleco Power records wholesale transmission revenue through approved formula rates, Attachment O of the MISO tariff, and certain grandfathered agreements. The calculation of the rate formulas, as well as FERC accounting and reporting requirements, are subject to periodic audits by FERC. In March 2018, the Division of Audits and Accounting within the Office of Enforcement of FERC initiated an audit of Cleco Power for the period of January 1, 2014, through June 30, 2019. ~~On September 27, 2019, Cleco Power received the final audit report, which indicated 12 findings~~As a result of ~~noncompliance with~~ a combination of FERC accounting and reporting requirements and computation of revenue requirements along with 59 recommendations associated with the audit period. Cleco Power submitted a plan for implementing the audit recommendations on October 28, 2019. Cleco Power also submitted the refund analysis based on ~~November 7, 2019, which resulted in a refund related to the FERC~~ audit findings, ~~pending final assessment by the FERC Division~~ a total of ~~Audits and Accounting, which is expected in the third quarter of 2021. At December 31, 2020, Cleco Power had $1.9~~$4.4 million ~~recorded in Provision for rate refund on Cleco and Cleco Power’s Consolidated Balance Sheets for the estimated refund. This amount is being refunded~~was returned to Cleco Power’s wholesale transmission customers as a combination of refund payments and a reduction in Attachment O of the MISO tariff and grandfathered agreement ~~rates over 12 months beginning June~~rates. On February 1, ~~2020. Management~~2022, FERC notified Cleco of the completion of the audit and no exceptions were found to the implementation of the audit recommendations. Management is unable to predict the timing of future audits and whether or not the outcome of such future audits will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

MISO

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 a member of the MISO market region referred to as “MISO South,” which encompasses parts of Arkansas, Louisiana, Mississippi, and Texas. Dispatch of generation resources and generation volumes to the market is determined by MISO. Costs in the MISO South region are heavily influenced by commodity fuel prices, transmission congestion, dispatch of the generating assets owned not only by Cleco, but by all market participants in the MISO South region, and the overall demand and generation availability in the region.

MISO evaluates forced outage rates to assess generating unit capacity for Cleco’s planning reserve ~~margins.~~margin. If Cleco is subject to a significant amount of forced outages, Cleco may not possess sufficient planning reserves to serve its needs and could be forced to purchase capacity from the MISO resource adequacy auction. For Cleco Power, the costs of such capacity may not be recoverable in its rates and could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. Using MISO’s ~~unforce~~dunforced capacity method for ~~determining~~determining generating unit capacity, Cleco Power’s fleet provided for ~~505~~319 MW of ~~capacity~~capacity in excess of its peak, coincident to MISO’s peak, in ~~2020.~~2021.

~~TCJA~~

~~Changes in taxation due to uncertain effects of the TCJA could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

The budget reconciliation act commonly referred to as the TCJA was signed into law on December 22, 2017. Proposed rulemakings issued by the IRS subsequent to the TCJA could have a material adverse effect on the results of operations, financial conditions, or cash flows of the Registrants. The Registrants continue to assess the regulatory treatment of the TCJA, which could also have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

On July 10, 2019, the LPSC approved Cleco Power’s motion to address the rate redesign and the regulatory liability for excess ADIT, resulting from the enactment of the TCJA, in Cleco Power’s application for its next FRP, which was filed on June 28, 2019. Cleco Power anticipates new rates to be effective in the first half of 2021. ~~At December 31, 2020, Cleco Power had a regulatory liability of~~ ~~$352.4 million~~ ~~for the portion of the net reduction to ADIT subject to regulatory treatment.~~

Reliability and CIP Standards Compliance

Cleco is subject to mandatory reliability and CIP standards. Fines and civil penalties are imposed on those who fail to comply with these standards.

NERC serves as the ERO with authority to establish and enforce mandatory reliability and CIP standards, subject to FERC approval, for users of the nation’s transmission system. FERC enforces compliance with these standards. New standards are being developed and existing standards are continuously being modified.

As these standards continue to be adopted and modified, they may impose additional compliance requirements on Cleco

Power and Cleco Cajun separately, which may result in increased capital expenditures and operating expenses. Failure to comply with these standards can result in the imposition of material fines and civil penalties.

A NERC Reliability Standards audit isand NERC CIP Audit are conducted every three years for Cleco Power and Cleco Cajun. ~~The next NERC Reliability Standards audit fo~~r Cleco Power is scheduled to begin in 2023. The next NERC Reliability Standards audit for Cleco Cajun is scheduled to begin in 2022. A NERC CIP audit is also conducted every three years for Cleco PowerFor more information on Cleco’s current and ~~Cleco Cajun. Cleco Power’s current NERC CIP audit was completed on August 14, 2020,~~future audits, see Part II, Item 7, “Management’s Discussion and ~~the final report was issued by SERC on November 5, 2020. Cleco Cajun’s most recent CIP audit was completed in June 2019,~~Analysis of Financial Condition — Financial Condition — Regulatory and ~~the final report was issued by SERC on June 27, 2019.~~ Other Matters — Market Structure — Wholesale Electric Markets — ERO.”

Management is unable to ~~determine the timing of NERC’s approval of the final reports.~~

~~Management is also unable to~~ predict the ~~final~~ financial outcome of ~~the most recent CIP audits,~~ 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.

Wholesale Electric Service

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.

FERC ~~conducts~~requires a ~~review of Cleco’s generation~~utility to pass a screening test as a condition for securing and/or retaining approval to sell electricity in wholesale markets at market-based rates. An updated market power analysis must be filed with FERC every three years or upon the occurrence of a change in ~~addition to each time generation capacity changes.~~status as defined by FERC regulation. Cleco filed its most recent triennial market power analysis onin December ~~23, 2020.~~2020, and it is currently pending FERC approval. The next triennial market power analysis is expected to be filed in December 2023. In the future, if FERC determines Cleco Power and/or Cleco Cajun possesses generation market power in excess of certain thresholds, Cleco Power and/or Cleco Cajun could lose the right to sell wholesale generation at market-based rates, which could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.


FINANCIAL RISKS

Commodity ~~Hedging~~ and Commercial Transactions

Cleco may enter into fuel supply contracts, energy hedge transactions, and/or commercial transactions, including sales to wholesale ~~customers and physical and financial hedges.~~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.

Cleco Power and Cleco Cajun may each enter into ~~forward~~purchases or sales of certain physical orand financial ~~fixed price or options~~commodity contracts for ~~fuel, transmission, transportation, or capacity~~the purpose of supply, customer transactions, hedging, and ~~contracts.~~market operations. Cleco ~~may also enter into physical or financial fixed price or options transactions~~adheres to ~~economically hedge exposure to commodity price risk of all or some of its customer supply agreements, natural gas, solid fuel requirements (coal), power,~~internal controls and ~~other commodities, inclusive of transmission and transportation. Transactions are executed within board approved~~ risk management guidelines ~~including~~approved by EMT in order to manage risks related to those transactions. However, those internal controls or guidelines may not be effective or implemented as expected. All risks associated with these transactions ~~that qualify as derivatives contracts or hedge treatment~~cannot be fully eliminated. Therefore, the judgements and assumptions made in ~~accordance with accounting guidance.~~

~~Some of~~the underlying decisions related to these ~~contracts are accounted for as derivatives, which requires the Registrants to record the fair value of the commitment~~transactions could have a material adverse effect on the balance sheet. For Cleco Power, the changes in fair value are deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. At settlement, actual gains or losses are included in Cleco Power’s FAC. As previously stated, recovery of any of these FAC costs is subject to, and may be disallowed as part of, a prudency review or a periodic fuel audit conducted by the LPSC. For Cleco Cajun, the changes in fair value of all derivatives are reflected in current period earnings. As a result, Cleco is unable to accurately predict the effect that these transactions may have on itsliquidity, results of operations, financial condition, or cash ~~flows.~~flows of the Registrants.

Commodity Prices

Cleco Power and Cleco Cajun’s financial performance could be exposed to fluctuations in commodity prices and other factors, which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Because Cleco ~~Power~~

Cleco Power may enter into fuel cost hedging transactions to mitigate the volatility in fuel costs passed through to its retail customers. When transactions expire or are offset through liquidation, actual gains or losses are deferred and included in the FAC in the month the physical contract settles. Recovery of any of these FAC costs is subject to, and may be disallowed as part of, a prudency review or a periodic fuel audit conducted by the LPSC.

~~Cleco Cajun~~

~~Cleco Cajun~~ is exposed to uncertain market prices of electricity, natural gas, coal, and other commodities that can impact costs of fuel supply for generation, generation revenue, cost to serve its contracted wholesale electricity customers, and revenue from these ~~customers. Energy~~customers, Cleco may enter into transactions to mitigate the volatility in those costs that are accounted for as derivatives.

For Cleco Power, the changes in fair value of transactions accounted for as derivatives are deferred as a component of deferred fuel assets or liabilities in accordance with regulatory

policy. When transactions expire or are offset through liquidation, actual gains or losses are deferred and ~~revenues are also~~included in Cleco Power’s FAC. Recovery of these costs included in Cleco Power’s FAC is subject to, ~~volumetric risk due~~and may be disallowed as part of, a prudency review or a periodic fuel audit conducted by the LPSC. For Cleco Cajun, the changes in fair value of transactions accounted for as derivatives, as well as the actual gains and losses at settlement, are reflected in current period earnings as either a component of fuel expense, for gas-related derivatives, or purchased power expense, for FTRs. As a result, Cleco is unable to ~~fluctuations related to unexpected plant outages and uncertain customer load.~~accurately predict the effect that these transactions could have on its results of operations, financial condition, or cash flows.

that are held in trust to satisfy future obligations under Cleco’s defined benefit pension plan. Sustained adverse market performance could result in lower rates of return for these assets than projected by Cleco and could increase Cleco’s funding requirements related to the pension plan. Additionally, changes in interest rates affect the present value of Cleco’s liabilities under the pension plan. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions.

Cleco Credit Ratings

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.

Neither Cleco Holdings nor Cleco Power can assure that its current debt ratings will remain in effect for any given period of time or that one or more of its debt ratings will not be lowered or withdrawn entirely by a rating agency. If S&P, Moody’s, or Fitch were to downgrade Cleco Holdings’ or Cleco Power’s long-term ratings, particularly below investment grade, the value of their debt securities would be adversely affected. Downgrades of either Cleco Holdings’ or Cleco Power’s credit ratings could result in additional fees and higher interest rates for borrowings under their respective credit facilities and term loans. In addition, Cleco Holdings or Cleco Power, as the case may be, would likely be required to pay higher interest rates in future debt financings, may be subject to more onerous debt covenants, and their pool of potential investors and funding sources could decrease. In addition, the 2016 Merger Commitments provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit/issuer ratings. As a result, Cleco Power may be prohibited from making distributions to Cleco Holdings in the event of a ratings downgrade below investment grade. Following Hurricane Ida in August 2021, S&P revised the outlook on Cleco Holdings and Cleco Power to negative from stable.

Cleco Power LLC’s Unsecured and Unsubordinated Obligations

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.

Cleco Power LLC’s senior notes and its obligations under various loan agreements and refunding agreements with the Rapides Finance Authority, the Louisiana Public Facilities Authority, and other issuers of tax-exempt bonds for the benefit of Cleco Power LLC are unsecured and rank equally with all of Cleco Power LLC’s existing and future unsecured and unsubordinated indebtedness. As of December 31, 2021, Cleco Power LLC had an aggregate of $1.81 billion of unsecured and unsubordinated indebtedness net of debt discount and debt expense. The unsecured and unsubordinated indebtedness of Cleco Power LLC will be effectively subordinated to, and thus have a junior position to, any secured debt that Cleco Power LLC may have outstanding from time to time (including any mortgage bonds) with respect to the assets securing such debt. Certain agreements entered into by Cleco Power LLC with other lenders that are unsecured

provide that if Cleco Power LLC issues secured debt, Cleco Power LLC is obligated to grant these lenders the same security interest in certain assets of Cleco Power LLC. If such a security interest were to arise, it would further subordinate Cleco Power LLC’s unsecured and unsubordinated obligations.

As of December 31, 2021, Cleco Power LLC had no secured indebtedness outstanding. Cleco Power LLC may issue mortgage bonds in the future under any future Indenture of Mortgage, and holders of mortgage bonds would have a prior claim on certain Cleco Power LLC material assets upon dissolution, winding up, liquidation, or reorganization.


GENERAL RISK FACTORS

Presidential Administration

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.

The Presidential administration may propose substantial changes to environmental, fiscal, and tax policies, which may include comprehensive tax reform, more stringent requirements for reducing GHG emissions and other air pollutants from existing fossil fuel-fired power plants, and other objectives that may impact the results of operations, financial condition, or cash flows of the Registrants. Since taking office in January 2021, the current President has issued several executive orders designed to address climate change and GHG emissions, as well as an executive order requiring agencies to review past environmental actions. Furthermore, the current President has recommitted the U.S. to the Paris Agreement and announced the U.S.’ nationally determined contribution under the Paris Agreement at the summit on climate change on April 22, 2021. The target aims to reduce U.S. emissions by 50-52% compared to a 2005 baseline by 2030. The Presidential administration has also issued a memorandum to departments and agencies to refrain from proposing or issuing rules until a departmental or agency head appointed or designated by the administration has reviewed and approved the rule. The executive orders may result in the development of additional regulations or changes to existing regulations and it is possible that these changes could adversely affect Cleco’s business. Until any such changes are enacted, management is unable to determine the impact of any such changes on the Registrants’ business, results of operations, financial condition, or cash flows.

Taxes

Changes in taxation due to uncertain effects of the various tax reform legislation could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The Infrastructure Investment and Jobs Act (IIJA), commonly referred to as the Bipartisan Infrastructure Bill, was signed into law on November 15, 2021. This act includes new investments for all modes of transportation, water, power and energy, environmental remediation, public lands, broadband, and resilience. Management does not expect this legislation will have a significant impact on Cleco, but will continue to monitor the impact of the regulations under the IIJA.

On November 19, 2021, the U.S. House of Representatives passed the Build Back Better Act (BBBA); however, the U.S. Senate declined to vote on the legislation in its current form. The act targets individual tax relief, clean energy incentives, and increased spending on healthcare, education, childcare, and other programs. There are several tax and renewables provisions in this legislation that could have a material effect on the results of operations, financial conditions, or cash flows of the Registrants. Management continues to monitor the legislative status of the BBBA and any successor legislation.

Changes in taxation 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.

The Registrants make judgments regarding the utilization of existing income tax credits and the potential tax effects of various financial transactions and results of operations to estimate their obligations to taxing authorities. Tax obligations include income, franchise, property, sales and use, and employment-related taxes. These judgments may include reserves for potential adverse outcomes regarding tax positions that have been taken. Changes in federal, state, or local tax laws, adverse tax audit results, or adverse tax rulings on positions taken by the Registrants could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Insurance

Cleco’s insurance coverage may not be sufficient and may become more costly to maintain.

Cleco currently has property, casualty, cybersecurity, and liability insurance policies in place to protect its employees, board of managers, and assets in amounts that it considers appropriate. Such policies are subject to certain limits and deductibles. Insurance coverage may not be available in the future at current costs, on commercially reasonable terms, or at all, and the insurance proceeds received for any loss of, or any damage to, any of Cleco’s facilities may not be sufficient to restore the loss or damage without a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Like other utilities that serve coastal regions, Cleco Power does not have insurance covering its transmission and distribution system, other than substations, because it believes such insurance to be cost prohibitive. In the future, Cleco Power may not be able to recover the costs incurred in restoring transmission and distribution properties following hurricanes or other natural disasters through issuance of storm recovery bonds or a change in Cleco Power’s regulated rates or otherwise, or any such recovery may not be timely granted. Therefore, Cleco Power may not be able to restore any loss of, or damage to, any of its transmission and distribution properties without a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Litigation

The outcome of legal proceedings cannot be predicted. An adverse finding could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The Registrants are party to various litigation matters arising out of the ordinary operations of their business. The ultimate outcome of these matters cannot presently be determined, nor, in many cases, can the liability that could potentially result from a negative outcome in each case presently be reasonably estimated. The liability that the Registrants may ultimately incur with respect to any of these cases in the event of a negative outcome may be in excess of amounts currently reserved and insured against with respect to such matters and, as a result, these matters may have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Global Economic Uncertainty and Access to Capital

Changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt.

~~Amounts drawn under certain~~Certain of Cleco’s current debt agreements ~~including its revolving credit facilities,~~ bear interest at rates based on LIBOR. OnThese agreements include Cleco’s revolving credit facilities, term loans, and the floating rate senior notes due in 2023. In July ~~27,~~ 2017, the Financial Conduct Authority in the United Kingdom announced that it would phase out LIBOR as a benchmark by the end of 2021. OnIn November ~~30,~~ 2020, the Financial Conduct Authority in the United Kingdom and the ICE Benchmark Administration, which administers LIBOR quotations, announced a consultation on the extension of the quotation of most LIBOR tenors to June 30, 2023, for legacy contracts only. This deadline has been extended and most key U.S. dollar-denominated LIBOR tenors will continue to be published until June 30, 2023. Cleco’s revolving credit facilities, ~~and~~ term loans, and the floating rate senior notes due in 2023 issued by Cleco Power incorporate fallback language mechanisms ~~to amend the debt agreements~~ to accommodate the eventual establishment of an alternate rate of interest, including alternative benchmark rates such as the Secured Overnight Financing Rate, ~~(SOFR),~~ upon the occurrence of certain events related to the phase-out of any applicable interest rate. The overall financial markets may be disrupted as a result of the phase-out or replacement of LIBOR. Uncertainty as to the nature of such potential phase-out and alternative reference rates or disruption in the financial market could have a material adverse effect on the Registrants’ financial condition, results of operations, cash flows, or liquidity.

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.

The Registrants’ business is capital intensive and dependent upon the Registrants’ respective abilities to access capital at reasonable rates and other terms. The Registrants’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster or when there are spikes in the price ~~for~~of natural gas and other commodities. The occurrence of one or more contingencies, including a delay in regulatory recovery of fuel, purchased power, or storm restoration costs; higher than expected required pension contributions; an acceleration of payments or decreased credit lines; less cash flow from operations than expected; or other

unexpected events, could cause the financing needs of the Registrants to increase materially.

Events beyond the Registrants’ control, such as political uncertainty in the U.S. (including the ongoing debates related

CLECO POWER

All of Cleco Power’s electric generating stations and electric operating properties are located in Louisiana. Cleco Power considers all of its properties to be well maintained, in good operating condition, and suitable for their intended purposes. For more information on Cleco Power’s generating facilities, see Item 1, “Business — Operations — Cleco Power.”

Electric Generating Stations

As of December 31, ~~2020,~~2021, Cleco Power either owned or had an ownership interest in ~~six~~five steam electric generating stations, three combined cycle units, and one gas turbine with a combined rated capacity of ~~3,360~~ 3,035 MW, and a combined electric net generating capacity of ~~3,186~~ 2,889 MW. The net generating capacity is the result of capacity tests and operational tests performed during ~~2020,~~2021, as required by MISO. This amount reflects the maximum production capacity these units can sustain over a specified period of time. For more information on Cleco Power’s generating facilities, see Item 1, “Business — Operations — Cleco Power.”

Electric Substations

As of December 31, ~~2020,~~2021, Cleco Power owned 89 active transmission substations and ~~249~~251 active distribution substations.

Electric Lines

As of December 31, ~~2020,~~2021, Cleco Power’s transmission system consisted of 67 circuit miles of 500-kiloVolt (kV) lines; ~~561~~ 610

circuit miles of 230-kV lines; 678 circuit miles of ~~138 kV~~138-kV lines; and 29 circuit miles of 69-kV lines. Cleco Power’s distribution system consisted of ~~3,405~~3,412 circuit miles of 34.5-kV lines and ~~8,747~~8,780 circuit miles of other lines.

General Properties

Cleco Power owns various properties throughout Louisiana, which include a headquarters office building, regional offices, service centers, telecommunications equipment, and other general-purpose facilities.

Title

Cleco Power’s electric generating plants and certain other principal properties are owned in fee simple. Electric transmission and distribution lines are located either on private rights-of-way or along streets or highways by public consent.

Substantially all of Cleco Power’s property, plant, and equipment are subject to a lien under Cleco Power’s Indenture of Mortgage, which does not impair the use of such properties in the operation of its business. As of December 31, ~~2020,~~2021, no mortgage bonds were outstanding under the Indenture of Mortgage. Some of the unsecured and unsubordinated indebtedness of Cleco Power will be effectively subordinated to, and thus have a junior position to, any mortgage bonds that Cleco Power may have outstanding from time to time with respect to the assets subject to the lien of the Indenture of Mortgage. Cleco Power may issue mortgage bonds in the future under its Indenture of Mortgage, and holders of mortgage bonds would have a prior claim on certain Cleco

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CLECO
CLECO POWER						2021 FORM 10-K

Power material assets upon dissolution, winding up, liquidation, or reorganization.

CLECO CAJUN

Cleco Cajun has electric generating stations and electric operating properties located in Louisiana and Texas. Cleco Cajun considers all of its properties to be well maintained, in good operating condition, and suitable for their intended

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~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

purposes. For more information on Cleco Cajun’s generating facilities, see Item 1, “Business — Operations — Cleco Cajun.”

”

Electric Generating Stations

As of December 31, ~~2020,~~2021, Cleco Cajun has ownership interest in 4four electric generating stations which, combined, consist of 5five gas turbine units and 5five steam electric generating units

located in Louisiana as well as 4four combined cycle units located in Texas. These generating facilities have a combined rated capacity of 3,379 MW. For more information on Cleco Cajun’s generating facilities, see Item 1, “Business — Operations — Cleco Cajun.”

General Properties

Cleco Cajun owns various properties throughout Louisiana, which include a regional office, telecommunications equipment, and other general-purpose assets.

Title

Cleco Cajun’s assets are owned in fee simple and are not subject to non-ordinary course of business liens or encumbrances.

ITEM 3. LEGAL PROCEEDINGS

CLECO

For information on legal proceedings affecting Cleco, see Item 1, “Business — Environmental Matters — Air Quality,” Item 1A, “Risk Factors — Operational Risks — Litigation,” and Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

CLECO POWER

For information on legal proceedings affecting Cleco Power, see Item 1, “Business — Environmental Matters — Air Quality” and Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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CLECO POWER						~~2020~~2021 FORM 10-K

PART II

ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

CLECO HOLDINGS

There is no established public trading market for Cleco Holdings’ membership interests. All of Cleco Holdings’ outstanding membership interests are owned by Cleco Group.

Cleco Holdings’ credit facility requires a total indebtedness of less than or equal to ~~65%~~65.0% of total capitalization in order to declare dividend payments. Additionally, in accordance with the 2016 Merger Commitments, Cleco Holdings is ~~subjected~~subject to certain provisions limiting the amount of distributions that may be paid from Cleco Holdings to Cleco Group or Cleco Partners, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings.

Cleco Holdings made no distributions to Cleco Group during 2021, 2020, and 2019. ~~In 2018, Cleco Holdings made $71.4 million of distribution payments to Cleco Group.~~

Cleco Holdings received no equity contributions from Cleco Group during ~~2020~~2021 and ~~2018.~~2020. In 2019, Cleco Holdings received $384.9 million of equity contributions from Cleco Group.

CLECO POWER

There is no market for Cleco Power’s membership interests. All of Cleco Power’s outstanding membership interests are owned

by Cleco Holdings. Distributions on Cleco Power’s membership interests are paid when and if declared by Cleco Power’s Board of Managers. Any future distributions also may be restricted by any credit or loan agreements into which Cleco Power may enter.

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco Holdings by Cleco Power by requiring Cleco Power’s total indebtedness to be less than or equal to ~~65%~~65.0% of total capitalization. In addition, the 2016 Merger Commitments provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings.

Cleco Power made no distributions to Cleco Holdings in 2021 and 2020. Cleco Power made $20.0 ~~million and $121.4~~ million of distributions to Cleco Holdings during ~~2019, and 2018, respectively.~~

2019. Cleco Power received no equity contributions from Cleco Holdings in 2021, 2020, ~~2019,~~ and ~~2018.~~2019.

ITEM 6. ~~SELECTED FINANCIAL DATA~~RESERVED

~~CLECO~~

The information set forth in the following table should be read in conjunction with the Consolidated Financial Statements and the related Notes in Item 8, “Financial Statements and Supplementary Data.”

Five-Year Selected Financial Data
SUCCESSOR PREDECESSOR
(THOUSANDS, EXCEPT PER SHARE AND PERCENTAGES) FOR THE
YEAR ENDED
DEC. 31, 2020 FOR THE
YEAR ENDED
DEC. 31, 2019 FOR THE
YEAR ENDED
DEC. 31, 2018 FOR THE
YEAR ENDED
DEC. 31, 2017 APR. 13, 2016 -
DEC. 31, 2016 JAN. 1, 2016 -
APR. 12, 2016
Operating revenue, net (excluding intercompany revenue)
Cleco Power 1,020,674 $ 1,157,774 $ 1,240,722 $ 1,184,345 $ 859,006 $ 299,283
Cleco Cajun 487,149 491,510 — — — —
Other (9,677) (9,679) (9,678) (8,699) (6,001) 587
Total $ 1,498,146 $ 1,639,605 $ 1,231,044 $ 1,175,646 $ 853,005 $ 299,870
Income (loss) before income taxes 158,018 $ 195,830 $ 123,819 $ 145,159 $ (46,935) $ (492)
Net income (loss) 122,300 $ 152,665 $ 94,437 $ 138,080 $ (24,113) $ (3,960)
Capitalization
Member’s equity 46.55 % 46.31 % 42.50 % 42.50 % 42.77 %
Long-term debt and finance leases (1)
53.45 % 53.69 % 57.50 % 57.50 % 57.23 %
Member’s equity 2,757,023 $ 2,643,006 $ 2,124,740 $ 2,096,357 $ 2,046,764
Long-term debt and finance leases (1)
3,165,387 $ 3,064,679 $ 2,874,485 $ 2,836,105 $ 2,738,571
Total assets 7,725,569 $ 7,476,298 $ 6,436,814 $ 6,278,382 $ 6,343,144
Cash dividends declared per common share N/A N/A N/A N/A N/A $ 0.40
~~(1)~~ ~~Excludes long-term debt and finance leases due within one year. There were no finance lease obligations at December 31, 2017.~~

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~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to assist in understanding Cleco’s results of operations and Cleco’s present financial condition. Cleco’s historical consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K contain additional information that should be referred to when reviewing this material.

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 Annual Report on Form 10-K.

OVERVIEW

Cleco is a regional energy company that conducts substantially all of its business operations through its two principal operating business segments:

•Cleco Power, a regulated electric utility company that owns 10nine generating units with a total rated capacity of ~~3,360~~3,035 MW and serves approximately ~~290,000~~291,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi; and

•Cleco Cajun, an unregulated electric utility company that owns 14 generating units with a total rated capacity of 3,379

MW and wholesale contracts serving ~~nine Louisiana~~a mixture of electric cooperatives, ~~three wholesale~~ municipal ~~customers,~~bodies, and ~~one electric~~a utility. ~~Upon the closing of the Cleco Cajun Transaction, Cottonwood Energy entered into the Cottonwood Sale Leaseback.~~

Significant Events

~~Winter Storms Uri~~Storm Restoration and ~~Viola~~Recovery

~~In February~~During 2020 and 2021, Cleco Power’s distribution and transmission systems sustained substantial damage from four separate hurricanes and two severe winter storms. The damage to equipment from the hurricanes required replacement, as well as repair of existing assets. The winter storms caused Cleco’s service territory ~~experienced~~to experience extreme and unprecedented winter weather that resulted in damage to Cleco Power’s distribution ~~and transmission~~ assets, electricity generation supply shortages, natural gas supply shortages, and ~~increased wholesale~~increases in prices of natural gas in the ~~United States,~~U.S., primarily due to prolonged freezing temperatures.

~~On February 14, 2021, Winter Storm Uri reached Louisiana resulting in power outages for approximately 11,000 of~~ Cleco Power’s electric customers located primarily in south Louisiana. By February 17, 2021, power was restored to 100% of customers who could receive power. On February 17, 2021, Winter Storm Viola reached Louisiana resulting in power outages for approximately 43,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By February 22, 2021, power was restored to 100% of customers who could receive power. Cleco Power’s current estimate of the total storm restoration costs ~~related~~relating to ~~Winter Storms Uri~~these weather events are approximately $341.9 million. The balance sheets of Cleco and ~~Viola is between $9.0 million and $10.0 million.~~ Cleco Power ~~continues its~~reflect the capitalization of approximately $210.6 million of the total restoration ~~efforts as damage to its distribution and transmission assets is still being assessed.~~costs recorded at December 31, 2021. At December 31, 2021, Cleco Power ~~anticipates the establishment of a~~had regulatory ~~asset~~assets for non-capital expenses ~~incurred~~ related to ~~Winter Storms Uri and Viola, subject to LPSC approval.~~

~~On February 16, 2021, Cleco was notified~~these weather events, as allowed by the ~~regional reliability coordinator, MISO,~~LPSC, totaling $114.2 million. For more information on these weather events that extremely cold temperatures were causing an increase in demand for power, which resulted in an overload of the power grid. The electricity generation shortages necessitated MISO to implement controlled outages in certain of its service areas. To help protect the stability of the power gridsignificantly affected Cleco, see Item 8, “Financial Statements and prevent prolonged outages, MISO instructed Cleco to reduce demand on the power grid by initiating periodic outages to customers across Louisiana. The periodic power outages were minimal and suspended within one hour of initiation at the direction of MISO because the power shortage was no longer threatening the reliability of the power grid.

Cleco Power’s current estimate of incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola is between $45.0 million and $55.0 million. As a result of the increase in net purchased power costs exceeding its unsecured credit capacity with MISO, on February 24, 2021, Cleco Power posted collateral in the amount of $21.0 million with MISO. Cleco Power expects to settle the majority of its purchased power obligations with MISO associated with the winter storms and eliminate associated collateral postings by March 9, 2021. The amount of incremental fuel and purchased power costs are preliminary estimates and subject to final settlement. Management expects to seek recovery of these costs through Cleco PowSupplementa~~er’s FAC.~~ry

Cleco Cajun currently estimates the incremental negative impact of Winter Storms Uri and Viola on operations to be between $10.0 million and $15.0 million. As a result of the increase in net purchased power costs exceeding its unsecured credit capacity with MISO, on February 24, 2021, Cleco Cajun posted collateral in the amount of $5.0 million with MISO. Cleco Cajun expects to settle the majority of its power purchase obligations with MISO associated with the winter storms and eliminate associated collateral postings by March 9, 2021. The incremental impact to Cleco Cajun’s operations is a preliminary estimate and subject to final settlement.

~~Management is still assessing the expected impact that these winter storms and related events will have on the Registrants’ financial condition, results of operations, cash flows, or liquidity.~~

~~Hurricanes Laura, Delta, and Zet~~a

In August and October 2020, Cleco’s service territories were impacted by three separate hurricanes. While the hurricanes did not have a material impact on Cleco Cajun, Cleco Power’s distribution and transmission systems sustained substantial damage.

On August 27, 2020, Hurricane Laura made landfall in southwest Louisiana as a Category 4 storm, causing catastrophic damage to portions of Cleco Power’s service territory and causing power outages for approximately 140,000 of Cleco Power’s electric customers located primarily in central and southwest Louisiana. By September 18, 2020, power was restored to 100% of customers who could receive power.

On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana as a Category 2 storm resulting in power outages for approximately 132,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By October 16, 2020, service was restored to 100% of customers who could receive power.

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Data — Notes to the Financial Statements — Note 19 — Storm Restoration, Securitization, and Cost Recovery.”

On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana as a Category 2 storm resulting in power outages for approximately 73,000 of Cleco Power’s electric customers located primarily in southeast Louisiana. By October 31, 2020, service was restored to 100% of customers who could receive power.

~~At December 31, 2020,~~May 19, 2021, the LPSC issued an order authorizing Cleco Power ~~recognized regulatory assets~~to recover $16.0 million annually for ~~non-capital expenses related to Hurricanes Laura, Delta, and Zeta, as allowed by the LPSC, totaling $75.0 million. On December 4, 2020,~~interim storm recovery. Cleco Power ~~made a filing with the LPSC requesting interim rate recovery for return~~began collecting this amount through rates on ~~certain storm restoration costs associated with the hurricanes~~June 1, 2021. This order is effective until such time that the securitization of ~~such~~those costs can be completed. Although Cleco Power believes it has sufficient liquidity to meet its current obligations and to fund Hurricanes Laura, Delta, and Zeta restoration efforts from a combination of cash on hand and available capacity under its revolving credit facilities, Cleco Power is ~~exploring options to supplement its liquidity until such time securitization of such costs can be completed.~~complete, which is expected in mid-2022. For more information on ~~Hurricanes Laura, Delta, and Zeta and the regulatory asset for non-capital~~Cleco Power’s storm ~~expenses,~~securitization, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note ~~6 — Regulatory Assets and Liabilities — Deferred Storm Restoration Costs” and “Note~~ 19 — Storm Restoration, Securitization, and Cost Recovery — ~~Hurricanes Laura, Delta, and Zeta.~~Storm Securitization.”

COVID-19

OnIn March ~~11,~~ 2020, WHO declared the outbreak of COVID-19 ~~outbreak~~ to be a global pandemic, and ~~on March 13, 2020,~~ the U.S. declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments imposed varying degrees of restrictions on business and social activities to contain ~~COVID-19, including quarantine and “stay-at-home” orders and directives in Cleco’s service territory.~~COVID-19. These restrictions ~~have~~ significantly impacted many sectors of the economy with record levels of unemployment driven by businesses, nonprofit organizations, and governmental entities modifying, curtailing, or ceasing normal operations. State and local authorities ~~have~~ also subsequently implemented multistep policies ~~with the goal of reopening~~to reopen various sectors of the ~~economy such~~economy. Guidance was issued to reduce transmission of COVID-19, as ~~retail establishments, health~~well as provide protection against COVID-19.

Cleco is monitoring the ongoing COVID-19 pandemic and ~~personal care businesses,~~continues to adjust certain business practices to conform to government restrictions and ~~restaurants, among others. However, certain jurisdictions have begun reopening only to delay these plans or return to restrictions in~~best practices encouraged by the ~~face of increases in new COVID-19 cases. For example, the governor of the state of Louisiana issued orders in May 2020 to allow businesses to reopen at varying levels of capacity in May~~CDC, WHO, OSHA, and ~~June 2020. To address the June 2020 spike in COVID-19 cases, such reopening activities were temporarily paused or scaled back,~~other governmental and also included closing certain establishments. These restrictions resulted in a decline in new COVID-19 cases, and in September 2020, the state of Louisiana entered into the next phase of its multistep reopening plan. However, in the fall of 2020, new COVID-19 cases began to rise once again and in November 2020, the governor of the state of Louisiana issued orders reverting back to the previous phase of its multistep reopening plan, requiring businesses to temporarily pause or scale back their reopening activities. These increased restrictions again were successful in slowing the spread of COVID-19; therefore, effective March 3, 2021, the state of Louisiana reentered into the next phase of its multistep reopening plan, reducing some of the restrictions that were in effect.

regulatory authorities. The first priority in Cleco’s response to this crisis has been the health and safety of its employees, ~~and those of~~ its customers, and other business counterparties. Cleco has implemented preventative measures and developed corporate response plans to minimize unnecessary risk of exposure and prevent infection, while supporting its customers’ operations to the best of its ability in current circumstances. Cleco has an Emergency (Crisis) Response Team for health, safety, and environmental matters and personnel issues, and has established a Pandemic Plan Team to address various impacts of COVID-19 as they have been developing. This team provides leadership and guidance for planning, risk management, and any policy changes. The team ensures that Cleco plans, manages, and safely executes the pandemic plan set forth by management. In addition, Cleco has assessed and updated its existing business continuity plans for its business units in the context of the COVID-19 pandemic. The implementation of these modifications, and taking the stated precautionary measures, has resulted in the COVID-19 pandemic having a low impact to the Cleco workforce, allowing Cleco to continue providing reliable service to its customers.operations.

Beginning on March 13, 2020, and as a result of an LPSC executive order, Cleco Power suspended the assessment of late fees, disconnections, and the utilization of collection agencies to help customers facing financial challenges related to the COVID-19 pandemic. On July 1, 2020, the LPSC issued an order ending the moratorium on disconnections effective July 16, 2020. Cleco resumed disconnections and late fees beginning October 1, 2020. On July 16, 2020, Cleco began setting up interest-free payment plan arrangements for customers with past due balances to be repaid over a period of up to 18 months. On December 4, 2020, Cleco Power made a filing with the LPSC requesting the recovery of expenses incurred as a result of an LPSC executive order prohibiting the ~~regulatory asset~~disconnection of utilities for non-payment, as well as the lost revenue associated with the ~~disconnect~~disconnection fees and incremental costs. At December 31, ~~2020,~~2021, Cleco Power had a regulatory asset of $3.0 million for expenses incurred. For more information on the regulatory ~~asset related to~~treatment of the ~~COVID-19 pandemic,~~regulatory asset, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 6 — Regulatory Assets and Liabilities — COVID-19 Executive Order.”

Cleco is also working with its suppliers to understand the potential impacts to its supply chain. Cleco will continue to monitor developments affecting its workforce, customers, and suppliers and take additional precautions as ~~Cleco deems~~ warranted.

Cleco has implemented certain measures that it believes will provide financial flexibility and help maintain its liquidity. ~~On March 23, 2020, Cleco Holdings made an $88.0 million draw~~ on its revolving credit facility, and Cleco Power made a $150.0 million draw on its revolving credit facility. At December 31, 2020, there was no balance outstanding on Cleco Holdings’ revolving credit facility and $75.0 million outstanding on Cleco Power’s revolving credit facility. While Cleco continues to assess the COVID-19 situation, Cleco cannot predict the full impact that COVID-19, or the significant disruption and volatility currently being experienced in the markets, will have on its business, cash flows, liquidity, financial condition, and results of ~~operations.~~operations. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part I, Item 1A, “Risk Factors — Operational Risks — ~~COVID-19.~~Pandemics, Epidemics, or Other Outbreaks.”

Future Tax Reform

On November 19, 2021, the U.S. House of Representatives passed the Build Back Better Act (BBBA); however, the U.S. Senate declined to vote on it in its current form. The BBBA targets individual tax relief, clean energy incentives, and increased spending on healthcare, education, childcare, and other programs. There are several tax and renewables provisions in this legislation that could have a material effect on the results of operations, financial conditions, or cash flows of the Registrants. Management continues to monitor the legislative status of the BBBA and any successor legislation.

On November 13, 2021, the Louisiana state corporate income tax rate decreased from 8% to 7.5%, effective for the income tax periods beginning on or after January 1, 2022.

ESG Goals

35


~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

Cleco ~~Cajun~~

~~Upon completion~~is incorporating sustainability into its operations by establishing a combination of ESG goals. Cleco is accelerating efforts to protect the environment, manage social relationships, govern responsibly, and ensure accountability. To protect the environment, Cleco is planning to increase electrification initiatives and reduce GHG emissions by incorporating renewable energy resources into the generating fleet, as it replaces coal-fired generation units retired after serving their useful lives. Cleco’s target is to sustainably reduce 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, as well as support community investment opportunities across its service territory and create a workforce culture that rewards inclusion, safety, and innovation. To govern responsibly, Cleco plans to continue operating according to the governance framework. To ensure accountability, Cleco has created an ESG Steering Committee and has appointed a Chief Sustainability Officer to oversee the continued implementation of the ~~Cleco Cajun Transaction~~ESG goals. Currently, management is unable to predict the impact of implementing these ESG goals on ~~February 4, 2019, Cleco Cajun became a reportable segment and is reflected as such in this Annual Report on Form 10-K.~~the Registrants. For more information on ~~the Cleco Cajun Transaction,~~these ESG goals, see Part I, Item ~~8, “Financial Statements~~1, “Business — Human Capital — Diversity and ~~Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations.~~Inclusion,” Cleco’s consolidated financial statements for the year ended December 31, 2019, include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, until December 31, 2019.

~~Cleco Cajun has 13 power purchase agreements totaling nearly 2,200 MW with a mixture of cooperatives, municipal bodies,~~“— Communities,” and ~~a utility. Collectively, 95% of Cleco Cajun’s capacity is contracted through April 2025,~~“— Oversight and Cleco Cajun routinely seeks to grow the amount of power sold pursuant to these existing agreements. These contracts provide Cleco Cajun with predictable cash flow and market risk mitigation through at least 2025, but may prevent Cleco Cajun from taking advantage of rising market rates for power. Failure to recontract these agreements could have a material adverse effect on Cleco Cajun’s results of operations, financial condition, and cash flows.

In December 2020, Cleco Cajun retired the 176-MW Sterlington generating facility located in Sterlington, Louisiana. As the facility had reached the end of its useful life, Cleco Cajun determined that it would be more cost effective to retire the Sterlington generating facility than it would be to make the necessary improvements to continue its operation.

Many factors affect Cleco Cajun’s primary business of providing wholesale power and capacity. These factors include weather, the market price of power, the sales volume of power through existing contracts, the ability to comply with increasingly stringent environmental standards, and compliance with the commitments made to the LPSC as a result of the Cleco Cajun Transaction.Governance.”

Cleco Power

Many factors affect Cleco Power’s primary business of generating, delivering, and selling electricity. These factors include weather and the presence of a stable regulatory environment, which ~~impacts~~impact the ROE, ~~and the current rate case,~~ as well as the recovery of costs related to storms, growing energy demand, and rising fuel prices; the ability to increase energy sales while containing costs; the ability to reliably deliver power to its jurisdictional customers; the ability to comply with increasingly stringent regulatory and environmental standards; and the ability to successfully perform in MISO while subject to ~~the~~ related operating challenges and uncertainties, including increased wholesale competition. Cleco Power’s current key initiatives are continuing ~~construction on the Bayou Vista to Segura Transmission project; continuing~~ the DSMART ~~project;~~project and maintaining and growing its wholesale and retail ~~business.~~businesses. These and other initiatives are discussed below.

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. Effective July 1, 2021, under the terms of the new retail rate plan, 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

33


CLECO
CLECO POWER						2021 FORM 10-K

be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC, annually. For more information on the new retail rate plan for Cleco Power, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — FRP.”

Bayou Vista to Segura Transmission Project

The Bayou Vista to Segura Transmission project includes the construction of 48 miles of ~~230kV~~230 kilovolt transmission line, a 230/~~138kV~~138 kilovolt substation, and three substation expansions in south Louisiana. The project is expected to cost ~~approximately $125.0~~$125.2 million. The project is expected to increase reliability, provide transmission system redundancy, and provide hurricane hardening for customers in south Louisiana. Cleco

Power received MISO approval for the project in December 2017. As part of Cleco Power’s new retail rate plan, the LPSC approved the establishment of a regulatory asset and recovery of the revenue requirements associated with the Bayou Vista to Segura Transmission project starting in the month after completion of each phase of the project. Construction ~~was~~has been completed on expansions to existing substations. The northern phase ~~is expected to be~~of the project was completed in ~~the third quarter of~~August 2021, and the southern phase ~~is expected to be~~of the project was completed in December 2021. At December 31, 2021, Cleco Power had a regulatory asset of $1.4 million for recovery of the ~~fourth quarter~~revenue requirements for the northern phase of ~~2021.~~the project. As of December 31, ~~2020~~2021, Cleco Power had spent ~~$49.3~~$120.4 million on the ~~project.~~project, with the remaining costs relating to final clean-up costs and engineering costs.

DSMART Project

~~The~~In 2019, Cleco Power initiated the DSMART project. This project includes modernization of Cleco Power’s distribution system by replacing or upgrading distribution line equipment ~~utilizing~~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, and improved operational efficiencies.~~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 2025. In January 2019, Cleco Power began the first phase of the project.~~phases. As of December 31, ~~2020,~~2021, Cleco Power had spent ~~$14.6~~$32.1 million on the project.

Other

Cleco Power is working to secure load growth opportunities that include renewing existing franchises and wholesale contracts, pursuing new wholesale contracts and franchises, and adding new retail load opportunities with large industrial, commercial, and residential load. 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, a wholesale customer that is currently Cleco Power’s largest single customer, based on revenue, and is under contract with Cleco Power through March 31, 2024, conducted a request for proposal for capacity and energy beginning April 1, 2024, in which Cleco Power participated. In August 2021, the wholesale customer informed Cleco Power

that it was not selected as a provider of capacity and energy after the first quarter of 2024 and filed a notice with the LPSC to certify the results of the request for proposal. Cleco Power subsequently filed a notice of intervention with the LPSC requesting further review prior to certifying the wholesale customer’s notice. The certification process is ongoing, and the LPSC procedural schedule extends into the third quarter of 2022. Cleco Power cannot predict the outcome of the process. Failure to recontract this or other agreements may affect jurisdictional retail rates that will be subject to review by the LPSC in conjunction with Cleco Power’s next rate case.

Cleco Cajun

Cleco Cajun currently has power purchase agreements totaling approximately 2,100 MW with 12 wholesale customers, which consist of a mixture of electric cooperatives, municipal bodies, and a utility. Cleco Cajun routinely seeks to grow the amount of power sold pursuant to these existing agreements. These contracts provide Cleco Cajun with predictable cash flow and market risk mitigation through at least the first quarter of 2025 but may prevent Cleco Cajun from taking advantage of rising market rates for power.

In 2020, a group of electric cooperatives, which are currently under contract with Cleco Cajun through the first quarter of 2025, conducted a request for proposal for capacity, energy, and resources beginning in the second quarter of 2025 in which Cleco Cajun participated. In March 2021, the group of electric cooperatives informed Cleco Cajun that it was not selected as a provider and filed a notice with the LPSC to certify the results of the request for proposal. Cleco Cajun subsequently filed a notice of intervention with the LPSC requesting further review prior to certifying the electric cooperatives’ notice. On January 25, 2022, the LPSC certified the electric cooperatives’ request, which did not include any of Cleco Cajun’s assets or contracts.

In 2021, a separate electric cooperative, which is currently under contract with Cleco Cajun through the first quarter of 2025, conducted a request for proposal for capacity and energy after March 27, 2025, in which Cleco Cajun participated. In August 2021, the electric cooperative informed Cleco Cajun that it was not selected as a provider, and filed a notice with the LPSC requesting certification of the results of the request for proposal. Cleco Cajun subsequently filed a notice of intervention with the LPSC requesting further review prior to the potential certification of the electric cooperative’s notice. The certification process is ongoing, and the LPSC procedural schedule extends into the third quarter of 2022. Cleco Cajun cannot predict the outcome of the process.

In 2021, an additional electric cooperative, which is currently under contract with Cleco Cajun through the first quarter of 2025, conducted a request for proposal for capacity and energy after March 31, 2025, in which Cleco Cajun participated. In December 2021, the electric cooperative informed Cleco Cajun that it was not selected as a provider. As of March 7, 2022, the electric cooperative has not filed a notice with the LPSC requesting certification of the request for proposal results. Cleco Cajun will monitor the cooperative’s filing of a request for certification with the LPSC.

Failure to recontract these or other agreements or failure to enter into new contracts to replace the existing agreements could have a material adverse effect on Cleco’s results of operations, financial condition, cash flows, and liquidity as early as the second quarter of 2025. Cleco Cajun is working to secure load growth opportunities that include renewing

34


CLECO
CLECO POWER						2021 FORM 10-K

existing wholesale contracts with electric cooperatives in Louisiana, pursuing new wholesale contracts with other utilities and municipalities in MISO South, and continuing support of economic development with existing customers throughout the state.

Many factors affect Cleco Cajun’s primary business of providing wholesale power and capacity. These factors include weather, the market price of power, the sales volume of power through existing contracts, the ability to recontract existing contracts at or before their expiration or enter into new wholesale power agreements with new customers, the ability to comply with increasingly stringent environmental standards, and compliance with the commitments made to the LPSC as a result of the Cleco Cajun Transaction.

RESULTS OF OPERATIONS

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Comparison of the Years Ended December 31, 2021, and 2020


Cleco
	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2021		2020		VARIANCE		CHANGE
Operating revenue, net	$	1,745,929	$	1,498,146	$	247,783	16.5	%
Operating expenses	1,401,052		1,193,054		(207,998)		(17.4)	%
Operating income	344,877		305,092		39,785		13.0	%
Interest income	3,312		3,948		(636)		(16.1)	%
Allowance for equity funds used during construction	9,905		998		8,907		892.5	%
Other expense, net	(15,681)		(14,156)		(1,525)		(10.8)	%
Interest charges	134,336		137,864		3,528		2.6	%
Federal and state income tax expense	13,111		35,718		22,607		63.3	%
Net income	$	194,966	$	122,300	$	72,666	59.4	%

Results of operations for Cleco Power and Cleco Cajun are more fully described following the discussion of Cleco’s results of operations.

Operating Revenue

Operating revenue, net increased $247.8 million during 2021 as compared to 2020 primarily due to $189.0 million of higher fuel cost recovery revenue, $12.2 million of lower electric customer credits, and $9.4 million of higher other operations revenue at Cleco Power. Also contributing to the increase was $32.7 million of higher electric operations revenue and $7.0 million of higher other operations revenue at Cleco Cajun.

Operating Expenses

Operating expenses increased $208.0 million during 2021 as compared to 2020 primarily due to $189.0 million of higher recoverable fuel and purchased power expense, $7.9 million of

higher non-recoverable fuel and purchased power expense, $6.5 million of higher depreciation expense, $5.0 million of higher taxes other than income taxes, and $2.1 million of higher other operations and maintenance expense at Cleco Power. Also contributing to the increase was $69.7 million of higher purchased power expense, $8.1 million of higher depreciation and amortization expense, and $2.2 million of higher other operations and maintenance expense at Cleco Cajun. These increases were partially offset by $80.4 million of lower fuel used for electric generation at Cleco Cajun.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction increased$8.9 million during 2021 as compared to 2020 primarily due to higher AFUDC rates driven by the timing of the election and LPSC approval of the FERC modified formula authorized in March 2020.

Other Expense, Net

Other expense, net increased $1.5 million during 2021 as compared to 2020 primarily due to $6.3 million of higher pension non-service costs at Cleco Power and $1.0 million of disallowed costs as a result of the settlement of Cleco Power’s new retail rate plan. These increases were partially offset by $5.7 million for the increase in cash surrender value of certain trust-owned life insurance policies at Cleco Holdings as a result of more favorable market conditions.

Interest Charges

Interest charges decreased $3.5 million during 2021 as compared to 2020 primarily due to $4.3 million of lower rates on Cleco Holdings’ variable rate debt incurred in connection with the 2016 Merger and the Cleco Cajun Transaction and $1.3 million of higher allowance for borrowed funds used during construction at Cleco Power. These amounts were partially offset by $1.7 million of lower capitalized interest at Cleco Cajun.

Income Taxes

Federal and state income tax expense decreased $22.6 million during 2021 as compared to 2020 primarily due to $20.6 million for the amortization of excess ADIT, $11.1 million for adjustments to tax returns as filed, and $3.1 million for the flowthrough of tax benefits. These decreases were partially offset by $8.2 million for the change in pretax income, excluding AFUDC equity, $2.4 million for state tax expense, and $1.1 million for an adjustment for state tax rate change.

The effective income tax rates for the years ended December 31, 2021, and 2020, were different than the federal statutory rates. For more information on Cleco’s effective income tax rates, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — Cleco.”

Cleco Power

Significant Factors Affecting Cleco Power

Revenue is primarily affected by the following factors:

As an electric utility, Cleco Power is affected, to varying degrees, by a number of factors influencing the electric utility industry. These factors include, among others, an increasingly competitive business environment; the ability to recover costs through rate-setting proceedings; the ability to successfully

35


CLECO
CLECO POWER						2021 FORM 10-K

perform in MISO and the related operating challenges; the cost of compliance with environmental and reliability regulations; conditions in the credit markets and global economy; changes in the federal and state regulation of generation, transmission, and the sale of electricity; the regulatory treatment of the TCJA, and the increasing uncertainty of future federal and state regulatory and environmental policies. For a discussion of various regulatory changes and competitive forces affecting Cleco Power and other electric utilities, see “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises,” and “— Financial Condition — Regulatory and Other Matters — Market Structure.” For a discussion of risk factors affecting Cleco Power’s business, see Part I, Item 1A, “Risk Factors.” For more information about the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — TCJA.”

Cleco Power’s residential customers’ demand for electricity is affected largely by weather. Weather is generally measured in cooling degree-days and heating degree-days. A cooling degree-day is an indication of the likelihood that a consumer will use air conditioning, while a heating degree-day is an indication of the likelihood that a consumer will use 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 energy used in the winter 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.

Over the last five years, Cleco Power’s non-industrial retail sales have been relatively steady. Cleco Power anticipates moderate growth in retail sales over the next five years. Cleco Power expects to begin providing service to expansions of current customers’ operations, as well as service to new retail customers. Cleco Power’s expectations and projections regarding retail sales are dependent upon factors such as weather conditions, natural gas prices, customer conservation efforts, retail marketing and business development programs, and the economy of Cleco Power’s service area. Cleco Power is pursuing load growth opportunities that include renewal of existing franchises and wholesale contracts as well as adding new wholesale customers and franchises. For more information on other expectations of future energy sales on Cleco Power, see “Cautionary Note Regarding Forward-Looking Statements,” and Part I, Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales.”

Other issues facing the electric utility industry that could affect sales include:

•imposition of federal and/or state renewable portfolio standards,

•imposition of energy efficiency mandates,

•legislative and regulatory changes,

•increases in environmental regulations and compliance costs,

•cost of power impacted by the price movement of fuels and the addition of new generation capacity,

•transmission congestion costs,

•increases in capital and operations and maintenance costs due to higher construction and labor costs,

•changes in electric rates compared to customers’ ability to pay, and

•changes in the credit markets and local and global economies.

For more information on energy legislation in regulatory matters that could affect Cleco, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Legislative and Regulatory Changes and Matters.”

Cleco Power’s revenues and earnings are substantially affected by regulatory proceedings known as rate cases, or in some cases, a request for extension of an FRP. During those cases, the LPSC determines Cleco Power’s rate base, depreciation rates, operation and maintenance costs, and administrative and general costs that Cleco Power may recover from its retail customers through its rates. In some instances, the outcome of a rate case or request for extension of an FRP may impact wholesale decisions of Cleco Power. These proceedings may examine, among other things, the prudency of Cleco Power’s operation and maintenance practices, level of expenditures, allowed rates of return, and previously incurred capital expenditures. The LPSC has the authority to disallow costs found not to have been prudently incurred. Rate cases generally have timelines of approximately one year, and decisions are typically subject to appeal, potentially leading to additional uncertainty. On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. Effective July 1, 2021, under the terms of the new retail rate plan, 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 transmission tariffs of Cleco Power are regulated by FERC with its own regulatory proceedings. Both the LPSC and FERC regulatory proceedings can involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, all of whom have differing concerns but who have the common objective of limiting rate increases or reducing rates.

Other expenses are primarily affected by the following factors:

The majority of Cleco Power’s non-fuel cost recovery expenses consist of other operations, maintenance, depreciation and amortization, and taxes other than income taxes. Other operations expenses are affected by, among other things, the cost of employee benefits, insurance expense, and the costs associated with energy delivery and customer service. Annual maintenance expenses associated with Cleco Power’s plants generally depend upon their physical characteristics, maintenance practices, and the effectiveness of their preventive maintenance programs. Transmission and distribution maintenance expenses are generally affected by the level of repair and rehabilitation of lines to maintain reliability. Depreciation and amortization expense is primarily affected by the cost of the facilities in service, the time the facilities were placed in service, and the estimated useful life of the facilities. Taxes other than income taxes generally include payroll taxes, franchise taxes, and property taxes. Cleco Power anticipates certain non-fuel cost recovery expenses to be higher in 2022 as compared to 2021. These expenses include higher administration and general operations expense, higher depreciation and amortization expense, higher taxes other than income taxes, and higher interest expense.

36


CLECO
CLECO POWER						~~2020~~2021 FORM 10-K


	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2021		2020		VARIANCE		CHANGE
Operating revenue
Base	$	652,573	$	654,346	$	(1,773)	(0.3)	%
Fuel cost recovery	549,676		360,672		189,004		52.4	%
Electric customer credits	(40,878)		(53,119)		12,241		23.0	%
Other operations	74,625		65,237		9,388		14.4	%
Affiliate revenue	5,641		5,156		485		9.4	%
Operating revenue, net	1,241,637		1,032,292		209,345		20.3	%
Operating expenses
Recoverable fuel and purchased power	549,677		360,664		(189,013)		(52.4)	%
Non-recoverable fuel and purchased power	41,420		33,526		(7,894)		(23.5)	%
Other operations and maintenance	223,257		221,146		(2,111)		(1.0)	%
Depreciation and amortization	173,498		166,987		(6,511)		(3.9)	%
Taxes other than income taxes	49,598		44,631		(4,967)		(11.1)	%


Total operating expenses	1,037,450		826,954		(210,496)		(25.5)	%
Operating income	204,187		205,338		(1,151)		(0.6)	%
Interest income	3,294		3,362		(68)		(2.0)	%
Allowance for equity funds used during construction	9,905		998		8,907		892.5	%
Other expense, net	(19,561)		(12,259)		(7,302)		(59.6)	%
Interest charges	73,090		73,985		895		1.2	%
Federal and state income tax (benefit) expense	(9,353)		26,799		36,152		134.9	%
Net income	$	134,088	$	96,655	$	37,433	38.7	%

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


	FOR THE YEAR ENDED DEC. 31,
			FAVORABLE/
(MILLION kWh)	2021	2020	(UNFAVORABLE)
Electric sales
Residential	3,653	3,642	0.3	%
Commercial	2,564	2,521	1.7	%
Industrial	2,170	1,971	10.1	%
Other retail	125	125	—	%
Total retail	8,512	8,259	3.1	%
Sales for resale	2,880	2,957	(2.6)	%
Total retail and wholesale customer sales	11,392	11,216	1.6	%

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


	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/
(THOUSANDS)	2021		2020		(UNFAVORABLE)
Electric sales
Residential	$	304,761	$	305,430	(0.2)	%
Commercial	189,802		189,066		0.4	%
Industrial	88,661		87,313		1.5	%
Other retail	10,984		10,895		0.8	%
Surcharge	—		2,440		(100.0)	%
Total retail	594,208		595,144		(0.2)	%
Sales for resale	58,365		59,202		(1.4)	%
Total base revenue	$	652,573	$	654,346	(0.3)	%

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 cooling and heating degree-days.


	FOR THE YEAR ENDED DEC. 31,
				2021 CHANGE
	2021	2020	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	3,141	3,179	2,779	(1.2)	%	13.0	%
Heating degree-days	1,314	1,105	1,546	18.9	%	(15.0)	%

Base

Base revenue decreased $1.8 million in 2021 as compared to 2020 primarily due to $15.6 million of lower rates as a result of the implementation of Cleco Power’s new retail rate plan. The lower rates are largely due to TCJA bill credits for the retail portion of the unprotected excess ADIT. Prior to the implementation of Cleco Power’s new retail rate plan, these credits were recorded in Electric customer credits on Cleco Power’s Consolidated Statement of Income. Also contributing to the decrease is the absence of $2.4 million of Cleco Katrina/Rita storm restoration surcharge revenue as a result of the final principal and interest payments on the Cleco Katrina/Rita bonds in March 2020. These decreases were partially offset by $9.5 million of new interim rate recovery for certain storm costs relating to Hurricanes Laura, Delta, and Zeta, $3.6 million of higher revenue due to the absence of impacts from lower usage as a result of Hurricanes Laura, Delta, and Zeta in 2020, and $3.2 million of higher usage from colder winter weather.

For more information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see “— Significant Factors Affecting Cleco Power,” “Cautionary Note Regarding Forward-Looking Statements,” and Part I, Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales.”

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 charges. Approximately 76% of Cleco Power’s total fuel cost during 2021 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

37


CLECO
CLECO POWER						2021 FORM 10-K

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 fuel and purchased power costs were impacted significantly as a result of Winter Storms Uri and Viola. On March 29, 2021, Cleco Power received approval from the LPSC to recover a portion of these costs through Cleco Power’s FAC over a period of 12 months beginning in May 2021. Cleco Power’s incremental fuel and purchased power costs were also impacted by higher costs of lignite at the Dolet Hills Power Station. For more information on the accounting for MISO transactions, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Accounting for MISO Transactions.” For more information on Cleco Power’s most current fuel audits, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audits.” For more information on lignite costs at the Dolet Hills Power Station, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Risks and Uncertainties.”

Electric Customer Credits

Electric customer credits decreased $12.2 million in 2021 as compared to 2020 primarily due to lower credits to retail customers for the federal tax-related benefits of the TCJA as a result of the settlement of Cleco Power’s new retail rate plan. After the implementation of Cleco Power’s new retail rate plan, these credits offset base revenue on Cleco Power’s Consolidated Statement of Income. For more information on the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — TCJA.”

Other Operations Revenue

Other operations revenue increased $9.4 million in 2021 as compared to 2020 primarily due to $5.1 million of higher transmission revenue, $2.5 million of net higher forfeited discounts primarily as a result of Cleco Power resuming disconnection and late fees in October 2020, following the termination of the LPSC moratorium in July 2020, and $1.9 million of higher reconnection fees.

Non-Recoverable Fuel and Purchased Power

Non-recoverable fuel and purchased power increased $7.9 million in 2021 as compared to 2020 primarily due to $5.6 million of higher MISO transmission costs and $2.3 million of higher fuel expenses largely due to the winter storms in 2021.

Other Operations and Maintenance Expense

Other operations and maintenance expense increased $2.1 million during 2021 as compared to 2020 primarily due to $9.5 million of higher distribution maintenance expenses, $7.3 million of higher generating outage maintenance expenses, $4.9 million of higher customer service expenses relating to increased temporary staffing and increased collection efforts, and $1.6 million of higher reserves for injuries and damages. These increases were partially offset by $8.3 million of lower fees for outside services mostly relating to START project expenses and contract workers, $6.7 million of lower expenses

related to employee benefits, and $6.7 million of lower generation operations expenses.

Depreciation and Amortization

Depreciation and amortization increased $6.5 million during 2021 as compared to 2020 primarily due to $5.3 million of higher normal recurring additions to fixed assets and $3.1 million for the amortization of regulatory assets relating to Hurricanes Laura, Delta, and Zeta. These amounts were partially offset by $2.1 million for the absence of amortization of storm damages as a result of the final principal and interest payments on the Cleco Katrina/Rita bonds in 2020.

Taxes Other Than Income Taxes

Taxes other than income taxes increased $5.0 million during 2021 as compared to 2020 primarily due to $3.2 million of higher property taxes, $0.9 million of higher franchise taxes, and $0.6 million of higher payroll taxes.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction increased $8.9 million during 2021 as compared to 2020 primarily due to higher AFUDC rates driven by the timing of the election and LPSC approval of the FERC modified formula authorized in March 2020.

Other Expense, Net

Other expense, net increased $7.3 million during 2021 as compared to 2020 primarily due to $6.3 million of higher pension non-service costs and $1.0 million of disallowed costs as a result of the settlement of Cleco Power’s new retail rate plan.

Income Taxes

Federal and state income taxes decreased $36.2 million during 2021 as compared to 2020 primarily due to $20.6 million for the amortization of excess ADIT, $10.9 million for adjustments to tax returns as filed, $3.1 million for the flowthrough of tax benefits, and $2.1 for the change in pretax income, excluding AFUDC equity.

The effective income tax rates for the years ended December 31, 2021, and 2020, were different than the federal statutory rates. For more information on Cleco Power’s effective income tax rates, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — Cleco Power.”

38


CLECO
CLECO POWER						2021 FORM 10-K


Cleco Cajun
			FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2021		2020			VARIANCE		CHANGE
Operating revenue
Electric operations	$	398,226	$	365,555		$	32,671	8.9	%
Electric customer credits	244		(153)			397		259.5	%
Other operations	128,749		121,747			7,002		5.8	%
Affiliate revenue	—		204			(204)		(100.0)	%
Operating revenue, net	527,219		487,353			39,866		8.2	%
Operating expenses
Fuel used for electric generation	(47,052)		33,377			80,429		241.0	%
Purchased power	257,703		188,020			(69,683)		(37.1)	%
Other operations and maintenance	93,460		91,250			(2,210)		(2.4)	%
Depreciation and amortization	52,102		43,997			(8,105)		(18.4)	%
Taxes other than income taxes	11,675		13,415			1,740		13.0	%

Total operating expenses	367,888		370,059			2,171		0.6	%
Operating income	159,331		117,294			42,037		35.8	%
Interest income	15		273			(258)		(94.5)	%
Other (expense) income, net	(628)		255			(883)		(346.3)	%
Interest charges	803		(750)			(1,553)		(207.1)	%
Federal and state income tax expense	42,283		29,080			(13,203)		(45.4)	%
Net income	$	115,632	$	89,492		$	26,140	29.2	%

Electric Operations

Electric operations increased $32.7 million during 2021 as compared to 2020 primarily due to $23.6 million of higher fuel rates, $5.6 million of higher load volumes primarily due to winter storms, $4.4 million of higher MISO make-whole payments, $3.9 million of higher capacity contract rates, and $1.3 million for the absence of a 2020 customer demand adjustment. These increases were partially offset by $4.1 million for the expiration of a power supply agreement in May 2021 and $1.5 million of lower MISO capacity revenue.

Other Operations Revenue

Other operations revenue increased $7.0 million during 2021 as compared to 2020 primarily due to $9.7 million of higher transmission revenue, partially offset by $2.7 million of lower lease revenue, including variable lease revenue, as a result of the Cottonwood Sale Leaseback.

Fuel Used for Electric Generation

Fuel used for electric generation decreased $80.4 million during 2021 as compared to 2020 primarily due to $68.3 million of higher mark-to-market gains on gas-related derivative contracts and $54.7 million of settlements related to gas swaps activity. These decreases were partially offset by $41.7 million of higher coal consumption which was largely the result of higher generating unit dispatch.

Purchased Power

Purchased power increased $69.7 million during 2021 as compared to 2020 primarily due to higher costs of purchased power from MISO, largely the result of higher usage and Winter Storms Uri and Viola.

Other Operations and Maintenance

Other operations and maintenance expense increased $2.2 million during 2021 as compared to 2020 primarily due to $5.5 million of higher generating outage maintenance expenses, partially offset by $1.6 million of lower generation operations expense and $1.1 million of lower materials and supplies expense.

Depreciation and Amortization

Depreciation and amortization increased $8.1 million during 2021 as compared to 2020 primarily due to $6.2 million relating to adjustments to ARO assets to comply with the final CCR Rule as well as a reduction to the remaining lives of those assets. Also contributing to the increase was $1.9 million of higher normal recurring additions to fixed assets.

Income Taxes

Federal and state income taxes increased $13.2 million during 2021 as compared to 2020 primarily due to $8.3 million for the change in pretax income, $2.5 million for an adjustment for state tax rate change, $1.8 million for state tax expenses, and $0.5 million of permanent tax deductions. The effective income tax rate for the year ended December 31, 2021, was 27.2% which was different than the federal statutory rate.

Comparison of the Years Ended December 31, 2020, and 2019

Cleco
FOR THE YEAR ENDED DEC. 31,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2020 2019 VARIANCE CHANGE
Operating revenue, net $ 1,498,146 $ 1,639,605 $ (141,459) (8.6) %
Operating expenses 1,193,054 1,324,711 131,657 9.9 %
Operating income 305,092 314,894 (9,802) (3.1) %
Interest income 3,948 6,090 (2,142) (35.2) %
Allowance for equity funds used during construction 998 15,397 (14,399) (93.5) %
Other (expense) income, net (14,156) 758 (14,914) *
Interest charges 137,864 141,309 3,445 2.4 %
Federal and state income tax expense 35,718 43,165 7,447 17.3 %
Net income $ 122,300 $ 152,665 $ (30,365) (19.9) %
* Not meaningful


Cleco
	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2020		2019		VARIANCE		CHANGE
Operating revenue, net	$	1,498,146	$	1,639,605	$	(141,459)	(8.6)	%
Operating expenses	1,193,054		1,324,711		131,657		9.9	%
Operating income	305,092		314,894		(9,802)		(3.1)	%
Interest income	3,948		6,090		(2,142)		(35.2)	%
Allowance for equity funds used during construction	998		15,397		$	(14,399)	(93.5)	%

Other (expense) income, net	(14,156)		758		$	(14,914)	*
Interest charges	137,864		141,309		$	3,445	2.4	%
Federal and state income tax expense	35,718		43,165		$	7,447	17.3	%
Net income	$	122,300	$	152,665	$	(30,365)	(19.9)	%
*Not meaningful

~~Significant factors affecting~~Results of operations for Cleco Power and Cleco Cajun are more fully described following the discussion of Cleco’s ~~net income during the year ended December 31, 2020, are described below.~~results of operations.

COVID-19 Impacts

The rapid spread of COVID-19 and the varying degrees of restrictions on business and social activities imposed by federal, state, and local governments to contain COVID-19, including quarantine and “stay-at-home” orders and directives in Cleco’s service territory, ~~have~~ caused Cleco to experience ~~increasingly~~ adverse business conditions. These directives include an executive order issued on March 13, 2020, by the LPSC prohibiting the disconnection of utilities for nonpayment. The LPSC is allowing utilities to establish a regulatory asset for the expenses incurred from the executive order. At December 31, 2020, Cleco Power had a regulatory asset of $3.0 million for

39


CLECO
CLECO POWER						2021 FORM 10-K

expenses incurred. While Cleco continues to assess the COVID-19 situation, at this time Cleco cannot estimate with any degree of certainty the full impact of the COVID-19 pandemic on its financial condition and future results of ~~operations, although Cleco expects the COVID-19 situation to adversely impact future quarters.~~operations. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part I, Item 1A, “Risk Factors — Operational Risks — ~~COVID-19.~~Pandemics, Epidemics, or Other Outbreaks.” For more information on the regulatory asset related to the COVID-19 pandemic, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 6 — Regulatory Assets and Liabilities — COVID-19 Executive Order.”

Operating Revenue

Operating revenue, net decreased $141.5 million during 2020 as compared to 2019 primarily due to $101.2 million of lower fuel cost recovery at Cleco Power. Also contributing to the decrease was $14.7 million of lower base revenue, $14.6 million of higher electric customer credits, and $7.6 million of lower other operations revenue at Cleco Power. For more information on the factors affecting operating revenue, see “— Cleco Power — Base,” “— Fuel Cost ~~Recover/~~Recovery/Recoverable Fuel and Purchased Power,” “— Electric Customer Credits,” and “— Other Operations Revenue.”

Operating Expenses

Operating expenses decreased $131.7 million during 2020 as compared to 2019 primarily due to $101.2 million of lower recoverable fuel and purchased power expenses at Cleco Power. Also contributing to the decrease was $48.1 million of lower fuel used for electric generation at Cleco Cajun. For more information on the factors affecting operating expenses at Cleco Power, see “— Cleco Power — Fuel Cost ~~Recover/~~Recovery/Recoverable Fuel and Purchased Power,” “— Other Operations and Maintenance Expense,” and “— Depreciation and Amortization.” For more information on the factors affecting operating expenses at Cleco Cajun, see “— Cleco Cajun — Fuel Used for Electric Generation,” “— Purchased Power,” “— Depreciation and Amortization,” and “— Taxes Other Than Income Taxes.”

~~Interest Income~~Non-Recoverable Fuel and Purchased Power

~~Interest income decreased~~Non-recoverable fuel and purchased power increased $7.9 million in 2021 as compared to 2020 primarily due to $5.6 million of higher MISO transmission costs and $2.3 million of higher fuel expenses largely due to the winter storms in 2021.

Other Operations and Maintenance Expense

Other operations and maintenance expense increased $2.1 million during ~~2020~~2021 as compared to ~~2019~~2020 primarily due to ~~$1.5~~$9.5 million of higher distribution maintenance expenses, $7.3 million of higher generating outage maintenance expenses, $4.9 million of higher customer service expenses relating to increased temporary staffing and increased collection efforts, and $1.6 million of higher reserves for injuries and damages. These increases were partially offset by $8.3 million of lower ~~interest rates~~fees for outside services mostly relating to START project expenses and ~~balances on temporary investment at Cleco Power and Cleco Cajun. Also contributing to the decrease was $0.7~~contract workers, $6.7 million of lower ~~interest~~ expenses

related to employee benefits, and $6.7 million of lower generation operations expenses.

Depreciation and Amortization

Depreciation and amortization increased $6.5 million during 2021 as compared to 2020 primarily due to $5.3 million of higher normal recurring additions to fixed assets and $3.1 million for the amortization of regulatory assets relating to Hurricanes Laura, Delta, and Zeta. These amounts were partially offset by $2.1 million for the absence of amortization of storm damages as a ~~fuel surcharge at~~result of the final principal and interest payments on the Cleco ~~Power.~~Katrina/Rita bonds in 2020.

Taxes Other Than Income Taxes

Taxes other than income taxes increased $5.0 million during 2021 as compared to 2020 primarily due to $3.2 million of higher property taxes, $0.9 million of higher franchise taxes, and $0.6 million of higher payroll taxes.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction ~~decreased$14.4~~increased $8.9 million during ~~2020~~2021 as compared to ~~2019~~2020 primarily due to ~~$10.7 million of lower construction costs related to various Cleco Power projects. Also contributing to the decrease was $3.7 million of lower~~higher AFUDC rates driven by the ~~impact~~timing of ~~Cleco Power’s short-term debt borrowings outstanding under its revolving credit facility.~~the election and LPSC approval of the FERC modified formula authorized in March 2020.

Other ~~(Expense) Income,~~Expense, Net

Other ~~(expense) income,~~expense, net increased ~~$14.9~~$7.3 million during ~~2020~~2021 as compared to ~~2019~~2020 primarily due to ~~$9.4~~$6.3 million of higher ~~retirement benefit related~~pension non-service ~~costs. Also contributing to the increase was $5.5~~costs and $1.0 million ~~for the change in value~~ of ~~life insurance policies~~disallowed costs as a result of ~~less favorable market conditions at~~the settlement of Cleco ~~Holdings.~~

~~Interest Charges~~

~~Interest charges decreased $3.4 million during 2020 as compared to 2019. Lower rates on Cleco Holdings’ variable~~Power’s new retail rate debt contributed $12.2 million to the decrease. Also contributing to the decrease was $2.7 million of lower interest accrued on a tax rate refund at Cleco Power. Partially offsetting these decreases were $6.9 million of higher interest associated with Cleco Holdings’ senior notes issued in September 2019 and $4.6 million of lower allowance for borrowed funds used during construction at Cleco Power.plan.

Income Taxes

Federal and state income ~~tax expense~~taxes decreased ~~$7.4~~$36.2 million during ~~2020~~2021 as compared to ~~2019~~2020 primarily due ~~$16.7~~to $20.6 million for the amortization of excess ADIT, ~~$4.2 million for the change in pretax income, excluding AFUDC equity, $3.1 million of miscellaneous tax items, and $2.4 million for state tax expense. These decreases were partially offset by $10.7~~$10.9 million for adjustments to tax returns as filed, ~~$6.0~~$3.1 million for the flowthrough of tax benefits, and $2.1 ~~million of permanent tax deductions.~~ for the change in pretax income, excluding AFUDC equity.

The effective income tax ~~rate~~rates for the ~~year~~years ended December 31, 2021, and 2020, ~~was 22.6% which was~~were different than the federal statutory ~~rate.~~rates. For more information ~~about the~~

37


~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

~~difference in the~~on Cleco Power’s effective income tax ~~rate and the federal statutory rate,~~rates, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — ~~Cleco.”~~

~~Results of operations for~~ Cleco ~~Power and Cleco Cajun are more fully described below.~~Power.”

~~Cleco Power~~

~~Significant Factors Affecting Cleco Power~~

~~Revenue is primarily affected by the following factors:~~

As an electric utility, Cleco Power is affected, to varying degrees, by a number of factors influencing the electric utility industry. These factors include, among others, an increasingly competitive business environment; the ability to recover costs through rate-setting proceedings; the ability to successfully perform in MISO and the related operating challenges; the cost of compliance with environmental and reliability regulations; conditions in the credit markets and global economy; changes in the federal and state regulation of generation, transmission, and the sale of electricity; the regulatory treatment of the TCJA, and the increasing uncertainty of future federal and state regulatory and environmental policies. For a discussion of various regulatory changes and competitive forces affecting Cleco Power and other electric utilities, see “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises,” and “— Financial Condition — Regulatory and Other Matters — Market Restructuring.” For a discussion of risk factors affecting Cleco Power’s business, see Part I, Item 1A, “Risk Factors.” For more information about the TCJA, see “— Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks — TCJA.”

Cleco Power’s residential customers’ demand for electricity is affected largely by weather. Weather is generally measured in cooling degree-days and heating degree-days. A cooling degree-day is an indication of the likelihood that a consumer will use air conditioning, while a heating degree-day is an indication of the likelihood that a consumer will use 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 energy used in the winter 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.

Over the last five years, Cleco Power’s non-industrial retail sales have been relatively steady. Cleco Power anticipates moderate growth in retail sales over the next five years. Cleco Power expects to begin providing service to expansions of current customers’ operations, as well as service to new retail customers. Cleco Power’s expectations and projections regarding retail sales are dependent upon factors such as weather conditions, natural gas prices, customer conservation efforts, retail marketing and business development programs, and the economy of Cleco Power’s service area. Cleco Power is pursuing load growth opportunities that include renewal of existing franchises and wholesale contracts as well as adding new wholesale customers and franchises. For more information on other expectations of future energy sales on Cleco Power, see “Cautionary Note Regarding Forward-Looking

~~Statements,” and Part I, Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales.”~~

~~Other issues facing the electric utility industry that could affect sales include:~~

•~~imposition of federal and/or state renewable portfolio standards,~~

•~~imposition of energy efficiency mandates,~~

•~~legislative and regulatory changes,~~

•~~increases in environmental regulations and compliance costs,~~

•~~cost of power impacted by the price movement of fuels and the addition of new generation capacity,~~

•~~transmission congestion costs,~~

•~~increases in capital and operations and maintenance costs due to higher construction and labor costs,~~

•~~changes in electric rates compared to customers’ ability to pay, and~~

•~~changes in the credit markets and local and global economies.~~

For more information on energy legislation in regulatory matters that could affect Cleco, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Legislative and Regulatory Changes and Matters.”

Cleco Power’s revenues and earnings are substantially affected by regulatory proceedings known as rate cases, or in some cases, a request for extension of an FRP. During those cases, the LPSC determines Cleco Power’s rate base, depreciation rates, operation and maintenance costs, and administrative and general costs that Cleco Power may recover from its retail customers through its rates. In some instances, the outcome of a rate case or request for extension of an FRP may impact wholesale decisions of Cleco Power. These proceedings may examine, among other things, the prudence of Cleco Power’s operation and maintenance practices, level of expenditures, allowed rates of return, and previously incurred capital expenditures. The LPSC has the authority to disallow costs found not to have been prudently incurred. Rate cases generally have timelines of approximately one year, and decisions are typically subject to appeal, potentially leading to additional uncertainty. On June 28, 2019, Cleco Power filed an application with the LPSC for a new FRP. However, there has been a delay in the current rate case. Cleco anticipates new rates to be effective in the first half of 2021. The transmission tariffs of Cleco Power are regulated by FERC with its own regulatory proceedings. Both the LPSC and FERC regulatory proceedings can involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, all of whom have differing concerns but who have the common objective of limiting rate increases or reducing rates.

~~Other expenses are primarily affected by the following factors:~~

The majority of Cleco Power’s non-fuel cost recovery expenses consist of other operations, maintenance, depreciation and amortization, and taxes other than income taxes. Other operations expenses are affected by, among other things, the cost of employee benefits, insurance expense, and the costs associated with energy delivery and customer service. Annual maintenance expenses associated with Cleco Power’s plants generally depend upon their physical characteristics, maintenance practices, and the effectiveness of their preventive maintenance programs. Transmission and

38


CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

distribution maintenance expenses are generally affected by the level of repair and rehabilitation of lines to maintain reliability. Depreciation and amortization expense is primarily affected by the cost of the facilities in service, the time the facilities were placed in service, and the estimated useful life of the facilities. Taxes other than income taxes generally include payroll taxes, franchise taxes, and property taxes. Cleco Power anticipates certain non-fuel cost recovery expenses to be higher in


Cleco Cajun
			FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2021		2020			VARIANCE		CHANGE
Operating revenue
Electric operations	$	398,226	$	365,555		$	32,671	8.9	%
Electric customer credits	244		(153)			397		259.5	%
Other operations	128,749		121,747			7,002		5.8	%
Affiliate revenue	—		204			(204)		(100.0)	%
Operating revenue, net	527,219		487,353			39,866		8.2	%
Operating expenses
Fuel used for electric generation	(47,052)		33,377			80,429		241.0	%
Purchased power	257,703		188,020			(69,683)		(37.1)	%
Other operations and maintenance	93,460		91,250			(2,210)		(2.4)	%
Depreciation and amortization	52,102		43,997			(8,105)		(18.4)	%
Taxes other than income taxes	11,675		13,415			1,740		13.0	%

Total operating expenses	367,888		370,059			2,171		0.6	%
Operating income	159,331		117,294			42,037		35.8	%
Interest income	15		273			(258)		(94.5)	%
Other (expense) income, net	(628)		255			(883)		(346.3)	%
Interest charges	803		(750)			(1,553)		(207.1)	%
Federal and state income tax expense	42,283		29,080			(13,203)		(45.4)	%
Net income	$	115,632	$	89,492		$	26,140	29.2	%

Electric Operations

Electric operations increased $32.7 million during 2021 as compared to ~~2020.~~2020 primarily due to $23.6 million of higher fuel rates, $5.6 million of higher load volumes primarily due to winter storms, $4.4 million of higher MISO make-whole payments, $3.9 million of higher capacity contract rates, and $1.3 million for the absence of a 2020 customer demand adjustment. These ~~expenses include higher taxes other than income taxes, higher distribution operations~~increases were partially offset by $4.1 million for the expiration of a power supply agreement in May 2021 and ~~maintenance expense, higher depreciation and amortization expense, higher generation maintenance expense, and higher administration and general operations and maintenance expense.~~$1.5 million of lower MISO capacity revenue.

FOR THE YEAR ENDED DEC. 31,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2020 2019 VARIANCE CHANGE
Operating revenue
Base $ 654,346 $ 669,091 $ (14,745) (2.2) %
Fuel cost recovery 360,672 461,837 (101,165) (21.9) %
Electric customer credits (53,119) (38,516) (14,603) (37.9) %
Other operations 65,237 72,833 (7,596) (10.4) %
Affiliate revenue 5,156 3,125 2,031 65.0 %
Operating revenue, net 1,032,292 1,168,370 (136,078) (11.6) %
Operating expenses
Recoverable fuel and purchased power 360,664 461,877 101,213 21.9 %
Non-recoverable fuel and purchased power 33,526 34,648 1,122 3.2 %
Other operations and maintenance 221,146 207,164 (13,982) (6.7) %
Depreciation and amortization 166,987 172,471 5,484 3.2 %
Taxes other than income taxes 44,631 43,742 (889) (2.0) %
Total operating expenses 826,954 919,902 92,948 10.1 %
Operating income 205,338 248,468 (43,130) (17.4) %
Interest income 3,362 4,744 (1,382) (29.1) %
Allowance for equity funds used during construction 998 15,397 (14,399) (93.5) %
Other expense, net (12,259) (3,616) (8,643) (239.0) %
Interest charges 73,985 71,279 (2,706) (3.8) %
Federal and state income tax expense 26,799 45,452 18,653 41.0 %
Net income $ 96,655 $ 148,262 $ (51,607) (34.8) %
Other Operations Revenue

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

FOR THE YEAR ENDED DEC. 31,
FAVORABLE/
(MILLION kWh) 2020 2019 (UNFAVORABLE)
Electric sales
Residential 3,642 3,589 1.5 %
Commercial 2,521 2,772 (9.1) %
Industrial 1,971 2,027 (2.8) %
Other retail 125 129 (3.1) %
Total retail 8,259 8,517 (3.0) %
Sales for resale 2,957 3,046 (2.9) %
Total retail and wholesale customer sales 11,216 11,563 (3.0) %

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

FOR THE YEAR ENDED DEC. 31,
FAVORABLE/
(THOUSANDS) 2020 2019 (UNFAVORABLE)
Electric sales
Residential $ 305,430 $ 297,204 2.8 %
Commercial 189,066 198,664 (4.8) %
Industrial 87,313 84,030 3.9 %
Other retail 10,895 10,786 1.0 %
Storm surcharge 2,440 22,132 (89.0) %
Total retail 595,144 612,816 (2.9) %
Sales for resale 59,202 56,275 5.2 %
Total base revenue $ 654,346 $ 669,091 (2.2) %

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 cooling and heating degree-days.

FOR THE YEAR ENDED DEC. 31,
2020 CHANGE
2020 2019 NORMAL PRIOR YEAR NORMAL
Cooling degree-days 3,179 3,178 2,779 — % 14.4 %
Heating degree-days 1,105 1,325 1,547 (16.6) % (28.6) %

~~Significant factors affecting Cleco Power’s net income~~Other operations revenue increased $7.0 million during ~~the year ended December 31, 2020, are described below.~~

~~Base~~

~~Base revenue decreased $14.7 million in 2020~~2021 as compared to ~~2019~~2020 primarily due to ~~$18.6~~$9.7 million of higher transmission revenue, partially offset by $2.7 million of lower ~~Cleco Katrina/Rita storm restoration surcharge~~lease revenue, including variable lease revenue, as a result of the ~~final principal~~Cottonwood Sale Leaseback.

Fuel Used for Electric Generation

Fuel used for electric generation decreased $80.4 million during 2021 as compared to 2020 primarily due to $68.3 million of higher mark-to-market gains on gas-related derivative contracts and ~~interest payments on the Cleco Katrina/Rita bonds in March 2020, $11.7~~$54.7 million of settlements related to lower usage from milder weather, and $6.3 million as a result of lower usage due to the impacts of Hurricanes Laura, Delta, and Zeta. Also contributing to the decrease was $5.9 million from lower usage due to the impacts of COVID-19.gas swaps activity. These decreases were partially offset by ~~$14.0~~$41.7 million of higher ~~unbilled revenue~~coal consumption which was largely the result of ~~colder December~~higher generating unit dispatch.

Purchased Power

Purchased power increased $69.7 million during 2021 as compared to 2020 ~~weather, $7.9~~primarily due to higher costs of purchased power from MISO, largely the result of higher usage and Winter Storms Uri and Viola.

Other Operations and Maintenance

Other operations and maintenance expense increased $2.2 million during 2021 as compared to 2020 primarily due to $5.5 million of higher ~~revenue related~~generating outage maintenance expenses, partially offset by $1.6 million of lower generation operations expense and $1.1 million of lower materials and supplies expense.

Depreciation and Amortization

Depreciation and amortization increased $8.1 million during 2021 as compared to 2020 primarily due to $6.2 million relating to adjustments to ARO assets to comply with the final CCR Rule as well as a reduction to the ~~St. Mary Clean Energy~~remaining lives of those assets. Also contributing to the increase was $1.9 million of higher normal recurring additions to fixed assets.

Income Taxes

Federal and state income taxes increased $13.2 million during 2021 as compared to 2020 primarily due to $8.3 million for the change in pretax income, $2.5 million for an adjustment for state tax rate change, $1.8 million for state tax expenses, and $0.5 million of permanent tax deductions. The effective income tax rate for the year ended December 31, 2021, was 27.2% which was different than the federal statutory rate.

Comparison of the Years Ended December 31, 2020, and 2019


Cleco
	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2020		2019		VARIANCE		CHANGE
Operating revenue, net	$	1,498,146	$	1,639,605	$	(141,459)	(8.6)	%
Operating expenses	1,193,054		1,324,711		131,657		9.9	%
Operating income	305,092		314,894		(9,802)		(3.1)	%
Interest income	3,948		6,090		(2,142)		(35.2)	%
Allowance for equity funds used during construction	998		15,397		$	(14,399)	(93.5)	%

Other (expense) income, net	(14,156)		758		$	(14,914)	*
Interest charges	137,864		141,309		$	3,445	2.4	%
Federal and state income tax expense	35,718		43,165		$	7,447	17.3	%
Net income	$	122,300	$	152,665	$	(30,365)	(19.9)	%
*Not meaningful

Results of operations for Cleco Power and Cleco Cajun are more fully described following the discussion of Cleco’s results of operations.

COVID-19 Impacts

The rapid spread of COVID-19 and the varying degrees of restrictions on business and social activities imposed by federal, state, and local governments to contain COVID-19, including quarantine and “stay-at-home” orders and directives in Cleco’s service territory, caused Cleco to experience adverse business conditions. These directives include an executive order issued on March 13, 2020, by the LPSC prohibiting the disconnection of utilities for nonpayment. The LPSC is allowing utilities to establish a regulatory asset for the expenses incurred from the executive order. At December 31, 2020, Cleco Power had a regulatory asset of $3.0 million for

39


CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

~~Center project, $2.0 million related~~expenses incurred. While Cleco continues to assess the ~~recognition~~COVID-19 situation, at this time Cleco cannot estimate with any degree of certainty the full impact of the ~~revenue requirement~~COVID-19 pandemic on its financial condition and future results of ~~Coughlin Pipeline, and $1.7 million related to shared services~~operations. For additional discussion regarding certain risks associated with the ~~Cleco Cajun Transaction.~~

~~For more information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power,~~COVID-19 pandemic, see ~~“— Significant Factors Affecting Cleco Power,” “Cautionary Note Regarding Forward-Looking Statements,” and~~ Part I, Item 1A, “Risk Factors — Operational Risks — ~~Future Electricity Sales.~~Pandemics, Epidemics, or Other Outbreaks.”

~~Fuel Cost Recovery/Recoverable Fuel and Purchased Power~~

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 charges. Approximately 76% of Cleco Power’s total fuel cost during 2020 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. Fuel and purchased power expenses may also be impacted by the interruption of the continuous supply of fuel due to adverse weather conditions and other factors. For more information on the ~~accounting for MISO transactions,~~regulatory asset related to the COVID-19 pandemic, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 26 — ~~Summary of Significant Accounting Policies~~Regulatory Assets and Liabilities — Accounting for MISO Transactions.” For more information on Cleco Power’s most current fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.COVID-19 Executive Order.”

~~Electric Customer Credits~~

Electric customer credits increased $14.6 million in 2020 as compared to 2019 primarily due to a net $18.8 million of higher estimated refunds for the federal tax-related benefits of the TCJA. This increase was partially offset by $2.3 million for the absence of FRP refunds and $1.7 million for the absence of refunds due to Cleco Power’s wholesale transmission customers associated with the FERC audit. For more information on the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — TCJA.”

~~Other Operations~~Operating Revenue

~~Other operations~~Operating revenue, net decreased $7.6 million in 2020 as compared to 2019 primarily due to $3.2 million of lower net generation revenue as a result of the Teche Unit 3 SSR ending in April 2019 and $3.0 million of lower transmission revenue. Also contributing to the decrease was $1.1 million of net lower forfeited discounts, which was partially the result of the LPSC executive order related to COVID-19. For more information on the SSR, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — SSR.”

~~Other Operations and Maintenance Expense~~

~~Other operations and maintenance expense increased $14.0~~$141.5 million during 2020 as compared to 2019 primarily due to

~~$10.6~~ $101.2 million of lower fuel cost recovery at Cleco Power. Also contributing to the decrease was $14.7 million of lower base revenue, $14.6 million of higher ~~outside service expenses primarily related to information technology services~~electric customer credits, and consulting expenses, $3.1 million of higher generation operations expenses largely due to the St. Mary Clean Energy Center project becoming operational in August 2019 and the absence of a major outage, $2.8 million of higher uncollectible expenses primarily related to adjustments to the provision for credit losses as a result of the COVID-19 disconnection moratorium order issued by the LPSC in March 2020, and $2.5 million of higher pension and other benefits costs. These increases were partially offset by $4.0$7.6 million of lower ~~generating station routine~~other operations revenue at Cleco Power. For more information on the factors affecting operating revenue, see “— Cleco Power — Base,” “— Fuel Cost Recovery/Recoverable Fuel and ~~outage maintenance expenses, $1.8 million of lower distribution operations expenses as a result of more costs being capitalized due to Hurricanes Laura, Delta,~~Purchased Power,” “— Electric Customer Credits,” and ~~Zeta, and $1.2 million of lower administrative and general maintenance expenses.~~“— Other Operations Revenue.”

~~Depreciation and Amortization~~Operating Expenses

~~Depreciation and amortization~~Operating expenses decreased ~~$5.5~~$131.7 million during 2020 as compared to 2019 primarily due to $18.4 million of lower amortization of storm damages as a result of the final principal and interest payments on the Cleco Katrina/Rita bonds and the absence of $2.5 million of amortization of corporate franchise taxes to a regulatory asset. These decreases were partially offset by $9.8 million of higher normal recurring additions to fixed assets and $6.2 million of higher amortization of intangible property due to the installation of the START project.

~~Allowance for Equity Funds Used During Construction~~

Allowance for equity funds used during construction decreased $14.4 million during 2020 as compared to 2019 primarily due to $10.7 million of lower construction costs related to various projects. Also contributing to this decrease was $3.7 million of lower AFUDC rates driven by the impact of Cleco Power’s short-term debt borrowings outstanding under its revolving credit facility.

~~Other Expenses, Net~~

~~Other expense, net increased $8.6 million during 2020 as compared to 2019 primarily due to higher pension non-service costs.~~

~~Interest Charges~~

Interest charges increased $2.7 million during 2020 as compared to 2019 primarily due to $4.6 million of lower allowance for borrowed funds used during construction related to various projects and $1.5 million related to the timing of accrued interest. These increases were partially offset by $2.7 million of lower interest on tax rate refunds and $1.0 million of lower interest on Cleco Katrina/Rita storm recovery bonds as a result of the final payment made in March 2020.

~~Income Taxes~~

Federal and state income taxes decreased $18.7 million during 2020 as compared to 2019 primarily due to $16.7 million for the amortization of excess ADIT, $11.0 million for the change in pretax income, excluding AFUDC equity, $5.4 million for state tax expense, and $2.7 million of miscellaneous tax items. These decreases were partially offset by $8.7 million for adjustments to tax returns as filed, $6.0 million for the flowthrough of tax benefits, and $2.3 million of permanent tax deductions. The effective income tax rate for the year ended December 31, 2020, was 21.7% which was different than the

40


~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

federal statutory rate. For more information about the difference in the effective income tax rate and the federal statutory rate, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — Cleco Power.”

Cleco Cajun
FOR THE YEAR ENDED DEC. 31,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2020 2019 VARIANCE CHANGE
Operating revenue
Electric operations $ 365,555 $ 375,489 $ (9,934) (2.6) %
Electric customer credits (153) (1,447) 1,294 89.4 %
Other operations 121,747 117,468 4,279 3.6 %
Affiliate revenue 204 108 96 88.9 %
Operating revenue, net 487,353 491,618 (4,265) (0.9) %
Operating expenses
Fuel used for electric generation 33,377 81,514 48,137 59.1 %
Purchased power 188,020 177,254 (10,766) (6.1) %
Other operations and maintenance 91,250 91,215 (35) — %
Depreciation and amortization 43,997 35,544 (8,453) (23.8) %
Taxes other than income taxes 13,415 14,785 1,370 9.3 %
Total operating expenses 370,059 400,312 30,253 7.6 %
Operating income 117,294 91,306 25,988 28.5 %
Interest income 273 987 (714) (72.3) %
Other income (expense), net 255 (368) 623 169.3 %
Interest charges (750) 35 785 *
Federal and state income tax expense 29,080 22,479 (6,601) (29.4) %
Net income $ 89,492 $ 69,411 $ 20,081 28.9 %
*Not meaningful

~~Significant factors affecting Cleco Cajun’s net income during the year ended December 31, 2020, are described below.~~

~~Electric Operations~~

Electric operations decreased $9.9 million during 2020 as compared to 2019 primarily due to $21.6 million related to lower fuel rates, $10.4 million related to lower load volumes, $7.1 million of lower MISO make whole payments, and $2.1 million of lower environmental recovery revenue. These decreases were partially offset by $30.8 million of increased electric operations revenue in 2020 as a result of the Cleco Cajun Transaction closing in February 2019.

~~Electric Customer Credits~~

Electric customer credits decreased $1.3 million during 2020 as compared to 2019 primarily due to $0.8 million for the absence of a refund due to municipality contracts and $0.5 million for the estimated refund due to wholesale customers related to a MISO refund.

~~Other Operations Revenue~~

~~Other operations revenue increased $4.3 million during 2020 as compared to 2019 primarily due to higher lease revenue, including variable lease revenue, as a result of the Cottonwood Sale Leaseback.~~

~~Fuel Used for Electric Generation~~

Fuel used for electric generation decreased $48.1 million during 2020 as compared to 2019 primarily due to $24.7 million of lower coal consumption, $17.3 million of higher mark-to-market gains for gas related derivative contracts, and $10.0 million of lower gas consumption.

~~Purchased Power~~

Purchased power increased $10.8 million during 2020 as compared to 2019 primarily due to $16.8 million as a result of higher volumes of purchased power from MISO, which is partially the result of the Cleco Cajun Transaction closing in February 2019. These amounts were partially offset by $6.1 million of higher mark-to-market gains on FTRs.

~~Depreciation and Amortization~~

Depreciation and amortization increased $8.5 million during 2020 as compared to 2019 primarily due to $7.1 million of higher normal recurring additions to fixed assets and $1.3 million of higher depreciation on ARO assets. These increases were partially the result of the Cleco Cajun Transaction closing in February 2019.

~~Taxes Other Than Income Taxes~~

~~Taxes other than income taxes decreased $1.4 million during 2020 as compared to 2019 primarily due to lower property taxes.~~

~~Income Taxes~~

Federal and state income taxes increased $6.6 million during 2020 as compared to 2019 primarily due to $5.6 million for the change in pretax income and $2.6 million for state tax expense, partially offset by $1.5 million of permanent tax deductions. The effective income tax rate for the year ended December 31, 2020, was 24.5% which was different than the federal statutory rate.

~~Comparison of the Years Ended December 31, 2019, and 2018~~
Cleco
FOR THE YEAR ENDED DEC. 31,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2019 2018 VARIANCE CHANGE
Operating revenue, net $ 1,639,605 $ 1,231,044 $ 408,561 33.2 %
Operating expenses 1,324,711 986,487 338,224 34.3 %
Operating income 314,894 244,557 70,337 28.8 %
Interest income 6,090 6,073 17 0.3 %
Allowance for equity funds used during construction 15,397 14,159 $ 1,238 8.7 %
Other income (expense), net 758 (14,328) $ 15,086 105.3 %
Interest charges 141,309 126,642 $ (14,667) (11.6) %
Federal and state income tax expense 43,165 29,382 $ (13,783) (46.9) %
Net income $ 152,665 $ 94,437 $ 58,228 61.7 %

~~Operating Revenue~~

Operating revenue, net increased $408.6 million during 2019 as compared to 2018 primarily due to the addition of $375.5 million of electric operations and $117.5 million of other operations revenue at Cleco Cajun. These increases were

41


~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

~~partially offset by $51.4 million of lower fuel cost recovery at Cleco Power.~~

~~Operating Expenses~~

Operating expenses increased $338.2 million during 2019 as compared to 2018 primarily due to the addition of $400.3 million of Cleco Cajun’s operating expenses, as well as $10.4 million of higher depreciation and amortization expenses and $4.6 million of higher other operations and maintenance expenses at Cleco Power. These increases were partially offset by $51.3$101.2 million of lower recoverable fuel and purchased power expenses at Cleco Power.

~~Other Income (Expense), Net~~

~~Other income (expense), net increased $15.1 million during 2019 as compared~~ Also contributing to ~~2018 primarily due to $10.3 million for~~ the ~~increase in cash surrender value of certain trust-owned life insurance policies as a result of favorable market conditions at Cleco Holdings and $4.0~~decrease was $48.1 million of lower ~~pension non-service costs~~fuel used for electric generation at Cleco ~~Power.~~

~~Interest Charges~~

Interest charges increased $14.7 million during 2019 as compared to 2018 primarily due to $9.3 million of interest associated with the financing of the Cleco Cajun Transaction and $3.2 million of interest associated with the private placement of senior notes entered into on September 11, 2019, at Cleco Holdings.Cajun. For more information ~~about~~on the ~~senior notes issued on September 11, 2019, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 9 — Debt — Cleco Debt.”~~

~~Income Taxes~~

Federal and state income tax expense increased $13.8 million during 2019 as compared to 2018 primarily due to the change in pretax income, excluding AFUDC equity. The effective income tax rate for the year ended December 31, 2020, was 22.0% which was different than the federal statutory rate. For more information about the difference in the effective income tax rate and the federal statutory rate, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — Cleco.”

~~Results of operations for~~factors affecting operating expenses at Cleco Power, ~~are more fully described below.~~

Cleco Power
FOR THE YEAR ENDED DEC. 31,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2019 2018 VARIANCE CHANGE
Operating revenue
Base $ 669,091 $ 678,378 $ (9,287) (1.4) %
Fuel cost recovery 461,837 513,209 (51,372) (10.0) %
Electric customer credits (38,516) (33,195) (5,321) (16.0) %
Other operations 72,833 82,330 (9,497) (11.5) %
Affiliate revenue 3,125 874 2,251 257.6 %
Operating revenue, net 1,168,370 1,241,596 (73,226) (5.9) %
Operating expenses
Recoverable fuel and purchased power 461,877 513,206 51,329 10.0 %
Non-recoverable fuel and purchased power 34,648 37,530 2,882 7.7 %
Other operations and maintenance 207,164 202,552 (4,612) (2.3) %
Depreciation and amortization 172,471 162,069 (10,402) (6.4) %
Taxes other than income taxes 43,742 47,267 3,525 7.5 %
Total operating expenses 919,902 962,624 42,722 4.4 %
Operating income 248,468 278,972 (30,504) (10.9) %
Interest income 4,744 5,052 (308) (6.1) %
Allowance for equity funds used during construction 15,397 14,159 1,238 8.7 %
Other expense, net (3,616) (8,699) 5,083 58.4 %
Interest charges 71,279 71,303 24 — %
Federal and state income tax expense 45,452 55,924 10,472 18.7 %
Net income $ 148,262 $ 162,257 $ (13,995) (8.6) %

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

FOR THE YEAR ENDED DEC. 31,
FAVORABLE/
(MILLION kWh) 2019 2018 (UNFAVORABLE)
Electric sales
Residential 3,589 3,780 (5.1) %
Commercial 2,772 2,731 1.5 %
Industrial 2,027 2,243 (9.6) %
Other retail 129 133 (3.0) %
Total retail 8,517 8,887 (4.2) %
Sales for resale 3,046 2,991 1.8 %
Total retail and wholesale customer sales 11,563 11,878 (2.7) %

42


~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

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

FOR THE YEAR ENDED DEC. 31,
FAVORABLE/
(THOUSANDS) 2019 2018 (UNFAVORABLE)
Electric sales
Residential $ 297,204 $ 304,708 (2.5) %
Commercial 198,664 192,781 3.1 %
Industrial 84,030 90,291 (6.9) %
Other retail 10,786 10,918 (1.2) %
Surcharge 22,132 23,138 (4.3) %
Total retail 612,816 621,836 (1.5) %
Sales for resale 56,275 56,542 (0.5) %
Total base revenue $ 669,091 $ 678,378 (1.4) %

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

FOR THE YEAR ENDED DEC. 31,
2019 CHANGE
2019 2018 NORMAL PRIOR YEAR NORMAL
Cooling degree-days 3,178 3,311 2,779 (4.0) % 14.4 %
Heating degree-days 1,325 1,470 1,547 (9.9) % (14.4) %

~~Base revenue decreased $9.3 million in 2019 as compared to 2018 primarily due to $6.8 million of milder weather and $2.5 million of lower rates.~~

— Fuel Cost Recovery/Recoverable Fuel and Purchased Power,

~~Fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel~~” “— Other Operations and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such charges. Approximately 76% of Cleco Power’s total fuel cost during 2019 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, fuelMaintenance Expense,” and ~~purchased power expenses are impacted by customer usage, the per unit cost of fuel used for electric generation,~~“— Depreciation and the dispatch of Cleco Power’s generating facilities by MISO. Fuel and purchased power expenses were also impacted by the interruption of the continuous supply of lignite due to adverse weather conditions and other factors that disrupted mining operations and transportation to Dolet Hills Power Station.Amortization.” For more information on the ~~accounting for MISO transactions,~~factors affecting operating expenses at Cleco Cajun, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Accounting for MISO Transactions.” For more information on“— Cleco Power’s most current fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC AuditsCajun — Fuel ~~Audit.”~~

Used for Electric ~~Customer Credits~~

~~Electric customer credits increased $5.3 million in 2019 as compared to 2018 primarily related to $3.4 million for the estimated refunds due to Cleco Power’s wholesale~~

~~transmission customers as a result of the FERC audit~~Generation,” “— Purchased Power,” “— Depreciation and ~~$2.3 million of higher estimated FRP refunds. For more information on the FERC audit, see Item 8, “Financial Statements~~Amortization,” and ~~Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — FRP” and “Note 15 — Litigation,~~“— Taxes Other ~~Commitments and Contingencies, and Disclosures about Guarantees — FERC Audit.~~Than Income Taxes.”

~~Other Operations Revenue~~

Other operations revenue decreased $9.5 million in 2019 as compared to 2018 primarily related to $6.8 million of lower net generation revenue as a result of the Teche Unit 3 SSR ending in April 2019 and $2.1 million of lower reconnect fees. For more information on the SSR, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — SSR.”

Non-Recoverable Fuel and Purchased Power

Non-recoverable fuel and purchased power ~~decreased $2.9~~increased $7.9 million in ~~2019~~2021 as compared to ~~2018~~2020 primarily due to ~~lower~~$5.6 million of higher MISO transmission costs ~~as a result~~and $2.3 million of higher fuel expenses largely due to the ~~Teche Unit 3 SSR ending~~winter storms in ~~April 2019.~~2021.

Other Operations and Maintenance Expense

Other operations and maintenance expense increased ~~$4.6~~$2.1 million during ~~2019~~2021 as compared to ~~2018~~2020 primarily ~~related~~due to ~~$6.9~~$9.5 million of higher ~~outside service~~distribution maintenance expenses, ~~$6.4~~$7.3 million of higher ~~generation operations~~generating outage maintenance expenses, ~~and $4.1~~$4.9 million of higher customer service expenses relating to increased temporary staffing and increased collection efforts, and $1.6 million of higher reserves for injuries and damages. These increases were partially offset by ~~$13.0~~$8.3 million of lower ~~generating station outage maintenance~~fees for outside services mostly relating to START project expenses and contract workers, $6.7 million of lower expenses

related to employee benefits, and $6.7 million of lower generation operations expenses.

Depreciation and Amortization

Depreciation and amortization increased ~~$10.4~~$6.5 million during ~~2019~~2021 as compared to ~~2018~~2020 primarily ~~related~~due to ~~$4.0 million of lower deferrals of corporate franchise taxes to a regulatory asset, $3.8~~$5.3 million of higher normal recurring additions to fixed assets and ~~$2.7~~$3.1 million ~~of higher~~for the amortization of ~~intangible property due~~regulatory assets relating to Hurricanes Laura, Delta, and Zeta. These amounts were partially offset by $2.1 million for the ~~installation~~absence of amortization of storm damages as a result of the ~~START project.~~final principal and interest payments on the Cleco Katrina/Rita bonds in 2020.

Taxes Other Than Income Taxes

Taxes other than income taxes ~~decreased $3.5~~increased $5.0 million ~~in 2019~~during 2021 as compared to ~~2018~~2020 primarily ~~related~~due to ~~lower corporate~~$3.2 million of higher property taxes, $0.9 million of higher franchise taxes, and $0.6 million of higher payroll taxes.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction increased $8.9 million during 2021 as compared to 2020 primarily due to higher AFUDC rates driven by the timing of the election and LPSC approval of the FERC modified formula authorized in March 2020.

Other ~~Expenses,~~Expense, Net

Other expense, net ~~decreased $5.1~~increased $7.3 million during ~~2019~~2021 as compared to ~~2018~~2020 primarily ~~related~~due to ~~$4.0~~$6.3 million of ~~lower~~higher pension non-service costs and ~~$0.6~~$1.0 million ~~for~~of disallowed costs as a result of the ~~change in cash surrender value~~settlement of ~~life insurance policies.~~Cleco Power’s new retail rate plan.

Income Taxes

Federal and state income taxes decreased ~~$10.5~~$36.2 million ~~in 2019~~during 2021 as compared to ~~2018~~2020 primarily due to ~~$6.2~~$20.6 million for the amortization of excess ADIT, $10.9 million for adjustments to tax returns as filed, $3.1 million for the flowthrough of tax benefits, and $2.1 for the change in pretax income, excluding AFUDC ~~equity, $3.2 million for flowthrough of state tax benefits, and $2.5 million of adjustment to tax returns as filed. These decreases were partially offset by $1.4 million of miscellaneous tax items.~~ equity.

The effective income tax ~~rate~~rates for the ~~year~~years ended December 31, ~~2019, was 23.5% which was~~2021, and 2020, were different than the federal statutory ~~rate.~~rates. For more information on ~~the TCJA,~~Cleco Power’s effective income tax rates, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — ~~TCJA” and “Note 13~~Cleco Power.”

—~~Regulation and Rates — TCJA.”~~

4338


CLECO
CLECO POWER						~~2020~~2021 FORM 10-K


~~Cleco Cajun~~
~~(THOUSANDS)~~	FOR THE YEAR ENDED DEC. 31, 2019
~~Operating revenue~~
~~Electric operations~~	$	~~375,489~~
~~Electric customer credits~~	~~(1,447)~~
~~Other operations~~	~~117,468~~
~~Affiliate revenue~~	~~108~~
~~Operating revenue, net~~	~~491,618~~
~~Operating expenses~~
~~Fuel used for electric generation~~	~~81,514~~
~~Purchased power~~	~~177,254~~
~~Other operations and maintenance~~	~~91,215~~
~~Depreciation and amortization~~	~~35,544~~
~~Taxes other than income taxes~~	~~14,785~~

~~Total operating expenses~~	~~400,312~~
~~Operating income~~	~~91,306~~
~~Interest income~~	~~987~~
~~Other expense, net~~	~~(368)~~
~~Interest charges~~	35
~~Federal and state income tax expense~~	~~22,479~~
~~Net income~~	$	~~69,411~~


Cleco Cajun
			FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2021		2020			VARIANCE		CHANGE
Operating revenue
Electric operations	$	398,226	$	365,555		$	32,671	8.9	%
Electric customer credits	244		(153)			397		259.5	%
Other operations	128,749		121,747			7,002		5.8	%
Affiliate revenue	—		204			(204)		(100.0)	%
Operating revenue, net	527,219		487,353			39,866		8.2	%
Operating expenses
Fuel used for electric generation	(47,052)		33,377			80,429		241.0	%
Purchased power	257,703		188,020			(69,683)		(37.1)	%
Other operations and maintenance	93,460		91,250			(2,210)		(2.4)	%
Depreciation and amortization	52,102		43,997			(8,105)		(18.4)	%
Taxes other than income taxes	11,675		13,415			1,740		13.0	%

Total operating expenses	367,888		370,059			2,171		0.6	%
Operating income	159,331		117,294			42,037		35.8	%
Interest income	15		273			(258)		(94.5)	%
Other (expense) income, net	(628)		255			(883)		(346.3)	%
Interest charges	803		(750)			(1,553)		(207.1)	%
Federal and state income tax expense	42,283		29,080			(13,203)		(45.4)	%
Net income	$	115,632	$	89,492		$	26,140	29.2	%

~~Significant factors affecting Cleco Cajun’s net income from~~Electric Operations

Electric operations increased $32.7 million during 2021 as compared to 2020 primarily due to $23.6 million of higher fuel rates, $5.6 million of higher load volumes primarily due to winter storms, $4.4 million of higher MISO make-whole payments, $3.9 million of higher capacity contract rates, and $1.3 million for the ~~closing~~absence of a 2020 customer demand adjustment. These increases were partially offset by $4.1 million for the ~~Cleco Cajun Transaction on February 4, 2019, through December 31, 2019, are described below.~~expiration of a power supply agreement in May 2021 and $1.5 million of lower MISO capacity revenue.

~~Operating~~Other Operations Revenue

~~Operating~~Other operations revenue ~~net of $491.6~~increased $7.0 million during ~~2019~~2021 as compared to 2020 primarily ~~consisted of $375.5~~due to $9.7 million of ~~electric operations~~higher transmission revenue, ~~from wholesale customers, $57.1~~partially offset by $2.7 million of lower lease revenue, including variable lease revenue, as a result of the Cottonwood Sale ~~Leaseback, and $47.9~~Leaseback.

Fuel Used for Electric Generation

Fuel used for electric generation decreased $80.4 million during 2021 as compared to 2020 primarily due to $68.3 million of ~~transmission revenue~~higher mark-to-market gains on gas-related derivative contracts and $54.7 million of settlements related to gas swaps activity. These decreases were partially offset by $41.7 million of higher coal consumption which was largely the result of higher generating unit dispatch.

Purchased Power

Purchased power increased $69.7 million during 2021 as compared to 2020 primarily due to higher costs of purchased power from ~~wholesale customers.~~MISO, largely the result of higher usage and Winter Storms Uri and Viola.

Other Operations and Maintenance

Other operations and maintenance expense increased $2.2 million during 2021 as compared to 2020 primarily due to $5.5 million of higher generating outage maintenance expenses, partially offset by $1.6 million of lower generation operations expense and $1.1 million of lower materials and supplies expense.

Depreciation and Amortization

Depreciation and amortization increased $8.1 million during 2021 as compared to 2020 primarily due to $6.2 million relating to adjustments to ARO assets to comply with the final CCR Rule as well as a reduction to the remaining lives of those assets. Also contributing to the increase was $1.9 million of higher normal recurring additions to fixed assets.

Income Taxes

Federal and state income taxes increased $13.2 million during 2021 as compared to 2020 primarily due to $8.3 million for the change in pretax income, $2.5 million for an adjustment for state tax rate change, $1.8 million for state tax expenses, and $0.5 million of permanent tax deductions. The effective income tax rate for the year ended December 31, 2021, was 27.2% which was different than the federal statutory rate.

Comparison of the Years Ended December 31, 2020, and 2019


Cleco
	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2020		2019		VARIANCE		CHANGE
Operating revenue, net	$	1,498,146	$	1,639,605	$	(141,459)	(8.6)	%
Operating expenses	1,193,054		1,324,711		131,657		9.9	%
Operating income	305,092		314,894		(9,802)		(3.1)	%
Interest income	3,948		6,090		(2,142)		(35.2)	%
Allowance for equity funds used during construction	998		15,397		$	(14,399)	(93.5)	%

Other (expense) income, net	(14,156)		758		$	(14,914)	*
Interest charges	137,864		141,309		$	3,445	2.4	%
Federal and state income tax expense	35,718		43,165		$	7,447	17.3	%
Net income	$	122,300	$	152,665	$	(30,365)	(19.9)	%
*Not meaningful

Results of operations for Cleco Power and Cleco Cajun are more fully described following the discussion of Cleco’s results of operations.

COVID-19 Impacts

The rapid spread of COVID-19 and the varying degrees of restrictions on business and social activities imposed by federal, state, and local governments to contain COVID-19, including quarantine and “stay-at-home” orders and directives in Cleco’s service territory, caused Cleco to experience adverse business conditions. These directives include an executive order issued on March 13, 2020, by the LPSC prohibiting the disconnection of utilities for nonpayment. The LPSC is allowing utilities to establish a regulatory asset for the expenses incurred from the executive order. At December 31, 2020, Cleco Power had a regulatory asset of $3.0 million for

39


CLECO
CLECO POWER						2021 FORM 10-K

expenses incurred. While Cleco continues to assess the COVID-19 situation, at this time Cleco cannot estimate with any degree of certainty the full impact of the COVID-19 pandemic on its financial condition and future results of operations. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part I, Item 1A, “Risk Factors — Operational Risks — Pandemics, Epidemics, or Other Outbreaks.” For more information on the ~~Cottonwood Sale Leaseback agreement,~~regulatory asset related to the COVID-19 pandemic, see Item 8, “Financial Statements

and Supplementary Data — Notes to the Financial Statements — Note 46 — ~~Leases~~Regulatory Assets and Liabilities —~~Lessor Agreements — Cottonwood Sale Leaseback Agreement.~~ COVID-19 Executive Order.”

Operating ~~Expense~~Revenue

Operating revenue, net decreased $141.5 million during 2020 as compared to 2019 primarily due to $101.2 million of lower fuel cost recovery at Cleco Power. Also contributing to the decrease was $14.7 million of lower base revenue, $14.6 million of higher electric customer credits, and $7.6 million of lower other operations revenue at Cleco Power. For more information on the factors affecting operating revenue, see “— Cleco Power — Base,” “— Fuel Cost Recovery/Recoverable Fuel and Purchased Power,” “— Electric Customer Credits,” and “— Other Operations Revenue.”

Operating Expenses

Operating expenses ~~of $400.3~~decreased $131.7 million during 2020 as compared to 2019 primarily ~~consisted of $120.5~~due to $101.2 million of lower recoverable fuel and purchased power ~~from MISO, $81.5~~expenses at Cleco Power. Also contributing to the decrease was $48.1 million of lower fuel used for electric generation at Cleco Cajun. For more information on the factors affecting operating expenses at Cleco Power, see “— Cleco Power — Fuel Cost Recovery/Recoverable Fuel and Purchased Power,” “— Other Operations and Maintenance Expense,” and “— Depreciation and Amortization.” For more information on the factors affecting operating expenses at Cleco Cajun, see “— Cleco Cajun — Fuel Used for ~~generation, $50.3~~Electric Generation,” “— Purchased Power,” “— Depreciation and Amortization,” and “— Taxes Other Than Income Taxes.”

Interest Income

Interest income decreased $2.1 million during 2020 as compared to 2019 primarily due to $1.5 million of ~~MISO transmission costs, $34.9~~lower interest rates and balances on temporary investments at Cleco Power and Cleco Cajun. Also contributing to the decrease was $0.7 million of ~~depreciation~~lower interest related to a fuel surcharge at Cleco Power.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction decreased$14.4 million during 2020 as compared to 2019 primarily due to $10.7 million of lower construction costs related to various Cleco Power projects. Also contributing to the decrease was $3.7 million of lower AFUDC rates driven by the impact of Cleco Power’s short-term debt borrowings outstanding under its revolving credit facility.

Other (Expense) Income, Net

Other (expense) income, net increased $14.9 million during 2020 as compared to 2019 primarily due to $9.4 million of higher retirement benefit related non-service costs. Also contributing to the increase was $5.5 million for the change in

value of life insurance policies as a result of less favorable market conditions at Cleco Holdings.

Interest Charges

Interest charges decreased $3.4 million during 2020 as compared to 2019. Lower rates on Cleco Holdings’ variable rate debt contributed $12.2 million to the decrease, as well as $2.7 million of lower interest accrued on a tax rate refund at Cleco Power. Partially offsetting these decreases were $6.9 million of higher interest associated with Cleco Holdings’ senior notes issued in September 2019 and $4.6 million of lower allowance for borrowed funds used during construction at Cleco Power.

Income Taxes

Federal and state income tax expense decreased $7.4 million during 2020 as compared to 2019 primarily due to $16.7 million for the amortization of excess ADIT, $4.2 million for the change in pretax income, excluding AFUDC equity, $3.1 million for miscellaneous tax items, and $2.4 million for state tax expense. These decreases were partially offset by $10.7 million for adjustments to tax returns as filed, $6.0 million for the flowthrough of tax benefits, and $2.1 million for permanent tax deductions. The effective income tax rate for the year ended December 31, 2020, was 22.6% which was different than the federal statutory rate. For more information about the difference in the effective income tax rate and the federal statutory rate, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — Cleco.”

40


CLECO
CLECO POWER						2021 FORM 10-K


Cleco Power
	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2020		2019		VARIANCE		CHANGE
Operating revenue
Base	$	654,346	$	669,091	$	(14,745)	(2.2)	%
Fuel cost recovery	360,672		461,837		(101,165)		(21.9)	%
Electric customer credits	(53,119)		(38,516)		(14,603)		(37.9)	%
Other operations	65,237		72,833		(7,596)		(10.4)	%
Affiliate revenue	5,156		3,125		2,031		65.0	%
Operating revenue, net	1,032,292		1,168,370		(136,078)		(11.6)	%
Operating expenses
Recoverable fuel and purchased power	360,664		461,877		101,213		21.9	%
Non-recoverable fuel and purchased power	33,526		34,648		1,122		3.2	%
Other operations and maintenance	221,146		207,164		(13,982)		(6.7)	%
Depreciation and amortization	166,987		172,471		5,484		3.2	%
Taxes other than income taxes	44,631		43,742		(889)		(2.0)	%


Total operating expenses	826,954		919,902		92,948		10.1	%
Operating income	205,338		248,468		(43,130)		(17.4)	%
Interest income	3,362		4,744		(1,382)		(29.1)	%
Allowance for equity funds used during construction	998		15,397		(14,399)		(93.5)	%
Other expense, net	(12,259)		(3,616)		(8,643)		(239.0)	%
Interest charges	73,985		71,279		(2,706)		(3.8)	%
Federal and state income tax expense	26,799		45,452		18,653		41.0	%
Net income	$	96,655	$	148,262	$	(51,607)	(34.8)	%

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


	FOR THE YEAR ENDED DEC. 31,
			FAVORABLE/
(MILLION kWh)	2020	2019	(UNFAVORABLE)
Electric sales
Residential	3,642	3,589	1.5	%
Commercial	2,521	2,772	(9.1)	%
Industrial	1,971	2,027	(2.8)	%
Other retail	125	129	(3.1)	%
Total retail	8,259	8,517	(3.0)	%
Sales for resale	2,957	3,046	(2.9)	%
Total retail and wholesale customer sales	11,216	11,563	(3.0)	%

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


	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/
(THOUSANDS)	2020		2019		(UNFAVORABLE)
Electric sales
Residential	$	305,430	$	297,204	2.8	%
Commercial	189,066		198,664		(4.8)	%
Industrial	87,313		84,030		3.9	%
Other retail	10,895		10,786		1.0	%
Surcharge	2,440		22,132		(89.0)	%
Total retail	595,144		612,816		(2.9)	%
Sales for resale	59,202		56,275		5.2	%
Total base revenue	$	654,346	$	669,091	(2.2)	%

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 cooling and heating degree-days.


	FOR THE YEAR ENDED DEC. 31,
				2020 CHANGE
	2020	2019	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	3,179	3,178	2,779	—	%	14.4	%
Heating degree-days	1,105	1,325	1,547	(16.6)	%	(28.6)	%

Base

Base revenue decreased $14.7 million in 2020 as compared to 2019 primarily due to $18.6 million of lower Cleco Katrina/Rita storm restoration surcharge revenue as a result of the final principal and interest payments on the Cleco Katrina/Rita bonds in March 2020, $11.7 million related to lower usage from milder weather, and $6.3 million as a result of lower usage due to the impacts of Hurricanes Laura, Delta, and Zeta. Also contributing to the decrease was $5.9 million from lower usage due to the impacts of COVID-19. These decreases were partially offset by $14.0 million of higher unbilled revenue, largely the result of colder December 2020 weather, $7.9 million of higher revenue related to the St. Mary Clean Energy Center project, $2.0 million related to the recognition of the revenue requirement of Coughlin Pipeline, and $1.7 million related to shared services associated with the Cleco Cajun Transaction.

For more information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see “— Significant Factors Affecting Cleco Power,” “Cautionary Note Regarding Forward-Looking Statements,” and Part I, Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales.”

Fuel Cost Recovery/Recoverable Fuel and Purchased Power

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 charges. Approximately 76% of Cleco Power’s total fuel cost during 2020 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

41


CLECO
CLECO POWER						2021 FORM 10-K

generation, and the dispatch of Cleco Power’s generating facilities by MISO. Fuel and purchased power expenses may also be impacted by the interruption of the continuous supply of fuel due to adverse weather conditions and other factors. For more information on the accounting for MISO transactions, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Accounting for MISO Transactions.” For more information on Cleco Power’s most current fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Electric Customer Credits

Electric customer credits increased $14.6 million in 2020 as compared to 2019 primarily due to a net $18.8 million of higher estimated credits to retail customers for the federal tax-related benefits of the TCJA. This increase was partially offset by $2.3 million for the absence of FRP refunds and $1.7 million for the absence of refunds due to Cleco Power’s wholesale transmission customers associated with the FERC audit. For more information on the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — TCJA.”

Other Operations Revenue

Other operations revenue decreased $7.6 million in 2020 as compared to 2019 primarily due to $3.2 million of lower net generation revenue as a result of the Teche Unit 3 SSR ending in April 2019 and $3.0 million of lower transmission revenue. Also contributing to the decrease was $1.1 million of net lower forfeited discounts, which was partially the result of the LPSC executive order related to COVID-19. For more information on the SSR, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — SSR.”

Other Operations and Maintenance Expense

Other operations and maintenance expense increased $14.0 million during 2020 as compared to 2019 primarily due to $10.6 million of higher outside service expenses primarily related to information technology services and consulting expenses, $3.1 million of higher generation operations expenses largely due to the St. Mary Clean Energy Center project becoming operational in August 2019 and the absence of a major outage, $2.8 million of higher uncollectible expenses primarily related to adjustments to the provision for credit losses as a result of the COVID-19 disconnection moratorium order issued by the LPSC in March 2020, and $2.5 million of higher pension and other benefits costs. These increases were partially offset by $4.0 million of lower generating station routine and outage maintenance expenses, $1.8 million of lower distribution operations expenses as a result of more costs being capitalized due to Hurricanes Laura, Delta, and Zeta, and $1.2 million of lower administrative and general maintenance expenses.

Depreciation and Amortization

Depreciation and amortization decreased $5.5 million during 2020 as compared to 2019 primarily due to $18.4 million of lower amortization of storm damages as a result of the final principal and interest payments on the Cleco Katrina/Rita

bonds and the absence of $2.5 million of amortization of corporate franchise taxes to a regulatory asset. These decreases were partially offset by $9.8 million of higher normal recurring additions to fixed assets ~~$29.2~~and $6.2 million of ~~general and administrative expense, $27.5~~higher amortization of intangible property related to the START project.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction decreased $14.4 million ~~for generating station operations expenses, and $26.5~~during 2020 as compared to 2019 primarily due to $10.7 million of ~~routine generating station maintenance expenses.~~lower construction costs related to various projects. Also contributing to this decrease was $3.7 million of lower AFUDC rates driven by the impact of Cleco Power’s short-term debt borrowings outstanding under its revolving credit facility.

Other Expense, Net

Other expense, net increased $8.6 million during 2020 as compared to 2019 primarily due to higher pension non-service costs.

Interest Charges

Interest charges increased $2.7 million during 2020 as compared to 2019 primarily due to $4.6 million of lower allowance for borrowed funds used during construction related to various projects and $1.5 million related to the timing of accrued interest. These increases were partially offset by $2.7 million of lower interest on tax rate refunds and $1.0 million of lower interest on Cleco Katrina/Rita storm recovery bonds as a result of the final payment made in March 2020.

Income Taxes

Federal and state income taxes ~~of $22.5~~decreased $18.7 million during 2020 as compared to 2019 primarily ~~included $19.3~~due to $16.7 million for the amortization of ~~tax expense on~~excess ADIT, $11.0 million for the change in pretax income, ~~at the statutory~~excluding AFUDC equity, $5.4 million for state tax ~~rate~~expense, and $2.7 million for ~~state taxes.~~miscellaneous tax items. These decreases were partially offset by $8.7 million for adjustments to tax returns as filed, $6.0 million for the flowthrough of tax benefits, and $2.3 million for permanent tax deductions. The effective income tax rate for ~~2019~~the year ended December 31, 2020, was ~~24.5%. The estimated annual~~21.7% which was different than the federal statutory rate. For more information about the difference in the effective income tax rate and the federal statutory rate, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — Cleco Power.”

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CLECO
CLECO POWER						2021 FORM 10-K


Cleco Cajun
			FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2020		2019			VARIANCE		CHANGE
Operating revenue
Electric operations	$	365,555	$	375,489		$	(9,934)	(2.6)	%
Electric customer credits	(153)		(1,447)			1,294		89.4	%
Other operations	121,747		117,468			4,279		3.6	%
Affiliate revenue	204		108			96		88.9	%
Operating revenue, net	487,353		491,618			(4,265)		(0.9)	%
Operating expenses
Fuel used for electric generation	33,377		81,514			48,137		59.1	%
Purchased power	188,020		177,254			(10,766)		(6.1)	%
Other operations and maintenance	91,250		91,215			(35)		—	%
Depreciation and amortization	43,997		35,544			(8,453)		(23.8)	%
Taxes other than income taxes	13,415		14,785			1,370		9.3	%

Total operating expenses	370,059		400,312			30,253		7.6	%
Operating income	117,294		91,306			25,988		28.5	%
Interest income	273		987			(714)		(72.3)	%
Other income (expense), net	255		(368)			623		169.3	%
Interest charges	(750)		35			785		*
Federal and state income tax expense	29,080		22,479			(6,601)		(29.4)	%
Net income	$	89,492	$	69,411		$	20,081	28.9	%





*Not meaningful

Electric Operations

Electric operations decreased $9.9 million during 2020 as compared to 2019 primarily due to $21.6 million related to lower fuel rates, $10.4 million related to lower load volumes, $7.1 million of lower MISO make-whole payments, and $2.1 million of lower environmental recovery revenue. These decreases were partially offset by $30.8 million of increased electric operations revenue in 2020 as a result of the Cleco Cajun Transaction closing in February 2019.

Electric Customer Credits

Electric customer credits decreased $1.3 million during 2020 as compared to 2019 primarily due to $0.8 million for the absence of a refund due to municipality contracts and $0.5 million for the estimated refund due to wholesale customers related to a MISO refund.

Other Operations Revenue

Other operations revenue increased $4.3 million during 2020 as compared to 2019 primarily due to higher lease revenue, including variable lease revenue, as a result of the Cottonwood Sale Leaseback.

Fuel Used for Electric Generation

Fuel used for electric generation decreased $48.1 million during 2020 as compared to 2019 primarily due to $24.7 million of lower coal consumption, $17.3 million of higher mark-to-market gains for gas related derivative contracts, and $10.0 million of lower gas consumption.

Purchased Power

Purchased power increased $10.8 million during 2020 as compared to 2019 primarily due to $16.8 million as a result of higher volumes of purchased power from MISO, which is partially the result of the Cleco Cajun ~~was not indicative~~Transaction closing in February 2019. These amounts were partially offset by $6.1 million of higher mark-to-market gains on FTRs.

Depreciation and Amortization

Depreciation and amortization increased $8.5 million during 2020 as compared to 2019 primarily due to $7.1 million of higher normal recurring additions to fixed assets and $1.3 million of higher depreciation on ARO assets. These increases were partially the result of the ~~full-year~~Cleco Cajun Transaction closing in February 2019.

Taxes Other Than Income Taxes

Taxes other than income taxes decreased $1.4 million during 2020 as compared to 2019 primarily due to lower property taxes.

Income Taxes

Federal and state income taxes increased $6.6 million during 2020 as compared to 2019 primarily due to $5.6 million for the change in pretax income and $2.6 million for state tax expense, partially offset by $1.5 million for permanent tax deductions. The effective income tax rate for the year ended December 31, 2020, was 24.5% which was different than the federal statutory rate.

Non-GAAP Measure

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 ~~segments.~~segments; however, it is not indicative of future performance. Management evaluates the performance of Cleco’s segments and allocates resources to them 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.

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CLECO POWER						2021 FORM 10-K

The following tables set forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to EBITDA for the ~~year~~years ended December 31, 2021, 2020, and 2019:


		FOR THE YEAR ENDED DEC. 31,													FOR THE YEAR ENDED DEC. 31,
		2020					2019					2018			2021					2020					2019
(THOUSANDS)	(THOUSANDS)	CLECO POWER		CLECO CAJUN			CLECO POWER		CLECO CAJUN			CLECO POWER		(THOUSANDS)	CLECO POWER		CLECO CAJUN			CLECO POWER		CLECO CAJUN			CLECO POWER		CLECO CAJUN
Net income	Net income	$	96,655	$	89,492		$	148,262	$	69,411		$	162,257	Net income	$	134,088	$	115,632		$	96,655	$	89,492		$	148,262	$	69,411
Add: Depreciation and amortization	Add: Depreciation and amortization	166,987		47,183		(1)	172,471		38,465		(2)	162,069		Add: Depreciation and amortization	173,498		56,438		(1)	166,987		47,183		(2)	172,471		38,465		(3)
Less: Interest income	Less: Interest income	3,362		273			4,744		987			5,052		Less: Interest income	3,294		15			3,362		273			4,744		987
Add: Interest charges	Add: Interest charges	73,985		(750)			71,279		35			71,303		Add: Interest charges	73,090		803			73,985		(750)			71,279		35
Add: Federal and state income tax expense		26,799		29,080			45,452		22,479			55,924
(Less) add: Federal and state income tax (benefit) expense														(Less) add: Federal and state income tax (benefit) expense	(9,353)		42,283			26,799		29,080			45,452		22,479
EBITDA	EBITDA	$	361,064	$	164,732		$	432,720	$	129,403		$	446,501	EBITDA	$	368,029	$	215,141		$	361,064	$	164,732		$	432,720	$	129,403
(1) Includes $12.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(9.2) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (2) Includes $11.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(8.4) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.
(1) Includes $13.5 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(9.2) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (2) Includes $12.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(9.2) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (3) Includes $11.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(8.4) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.														(1) Includes $13.5 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(9.2) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (2) Includes $12.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(9.2) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (3) Includes $11.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(8.4) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.

Selected Financial Data

The information set forth in the following table should be read in conjunction with Cleco’s Consolidated Financial Statements and the related Notes in Item 8, “Financial Statements and Supplementary Data.”



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT PER SHARE AND PERCENTAGES)	2021			2020			2019
Operating revenue, net (excluding intercompany revenue)
Cleco Power	1,228,382			$	1,020,674		$	1,157,774
Cleco Cajun	527,219			487,149			491,510
Other	(9,672)			(9,677)			(9,679)
Total	$	1,745,929		$	1,498,146		$	1,639,605
Income before income taxes	208,077			$	158,018		$	195,830
Net income	194,966			$	122,300		$	152,665
Capitalization
Member’s equity	46.56		%	46.55		%	46.31		%
Long-term debt and finance leases (1)	53.44		%	53.45		%	53.69		%
Member’s equity	$	2,954,156		$	2,757,023		$	2,643,006
Long-term debt and finance leases (1)	$	3,390,033		$	3,165,387		$	3,064,679
Total assets	$	8,125,018		$	7,725,569		$	7,476,298

(1) Excludes long-term debt and finance leases due within one year.

CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

For a narrative analysis of the results of operations explaining the revenue and expense items of Cleco Power for the years ended December 31, ~~2020,~~2021, and ~~2019,~~2020, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2020,~~2021, and ~~2019~~2020 — Cleco Power.”

For a narrative analysis of the results of operations explaining the revenue and expense items of Cleco Power for the years ended December 31, ~~2019,~~2020, and ~~2018,~~2019, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2019,~~2020, and ~~2018~~2019 — Cleco Power.”

The narrative analysis referenced above should be read in combination with Cleco Power’s Financial Statements and the Notes contained in this Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES

Cleco’s critical accounting policies include accounting policies that are important to Cleco’s financial condition and results of operations and that require management to make difficult, subjective, or complex judgments about future events, which could result in a material impact to the financial statements of Cleco. The preparation of financial statements contained in this report requires management to make estimates and

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~~CLECO POWER~~						~~2020 FORM 10-K~~

assumptions. Estimates and assumptions about future events and their effects cannot be made with certainty. These estimates involve judgments regarding many factors that in and of themselves could materially affect the financial statements and disclosures. On an ongoing basis, these estimates and assumptions are evaluated and, if necessary, adjustments are made when warranted by new or updated information or by a change in circumstances or environment. Actual results may differ significantly from these estimates under different assumptions or conditions. For more information on Cleco’s accounting policies, see Item 8, ~~“Financial~~

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CLECO POWER						2021 FORM 10-K

“Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies.”

Cleco believes that the following are the most significant critical accounting policies:

•Regulatory Accounting: Cleco has concluded it is probable that regulatory assets can be recovered from ratepayers in future rates. At December 31, 2021, Cleco Power had $663.6 million of net regulatory assets. As a result of the 2016 Merger, Cleco Holdings recognized regulatory assets. At December 31, 2021, Cleco Holdings had $137.7 million of regulatory assets. If future recovery of costs ceases to be probable due to actions by the LPSC or other factors, Cleco could be required to record a loss on some or all of its regulatory assets. For more information on this regulatory accounting policy, see “— Cleco Power.” For more information on the LPSC and regulatory assets, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Regulation,” and “Note 6 — Regulatory Assets and Liabilities.”

•Goodwill: On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion, all of which was assigned to the Cleco Power reporting unit. Goodwill is required to be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires management to make significant assumptions and estimates, including the identification of reporting units, assignments of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of the reporting units, in which independent valuation experts are often used. Changes in management’s assumptions and estimates could materially affect the determination of fair value and goodwill impairment. For more information on goodwill recorded in connection with the 2016 Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Intangible Assets, Intangible Liabilities, and Goodwill — Goodwill.”

•Pension and Other Postretirement Benefits: To determine assets, liabilities, and expenses relating to pension and other postretirement benefits, management must make assumptions about future trends. Assumptions and estimates include, but are not limited to, discount rates, expected return on plan assets, mortality rates, future rate of compensation increases, and medical inflation trend rates. These assumptions are reviewed and updated on an annual basis. Changes in the rates from year-to-year and newly-enacted laws could have a material effect on Cleco’s financial condition and results of operations by changing the recorded assets, liabilities, expense, or required funding of the pension plan obligation. One component of pension expense is the expected return on plan assets. It is an assumed percentage return on the market-related value of plan assets. The market-related value of plan assets differs from the fair value of plan assets by the amount of deferred asset gains or losses. Actual asset returns that differ from the expected return on plan assets are deferred and

recognized in the market-related value of assets on a straight-line basis over a five-year period. The ~~2020~~2021 return on plan assets was ~~15.89%~~ 7.14% compared to an expected long-term return of ~~5.91%~~5.00%. For ~~2019,~~2020, the plan assets had a return of ~~22.17%~~15.89% compared to an expected long-term return of ~~6.55%~~5.91%. For the calculation of the ~~2021~~2022 periodic expense, Cleco ~~decreased~~increased the expected long-term return on plan assets to ~~5.00%~~5.25%.

Management uses a theoretical bond portfolio in order to calculate the discount rate for the measurement of liabilities. As a result of the annual review of assumptions, the pension plan discount rate ~~decreased~~increased from ~~3.43%~~2.74% to ~~2.74%~~2.98% for the December 31, ~~2020,~~2021, measurement of liabilities.

A change in the assumed discount rate creates a deferred actuarial gain or loss. Generally, when the assumed discount rate decreases compared to the prior measurement date, a deferred actuarial loss is created. When the assumed discount rate increases compared to the prior measurement date, a deferred actuarial gain is created. Actuarial gains and losses also are created when actual results, such as compensation increases, differ from assumptions. On December 31, ~~2020,~~2021, Cleco Power recognized a ~~$30.1~~$26.9 million actuarial ~~loss~~gain primarily ~~related~~due to ~~a decrease~~an increase in the discount rate ~~offset partially by~~and higher than expected return on ~~assets.~~assets, partially offset by an update to the census data. Historically, Cleco Power has been allowed to recover pension plan expenses; therefore, deferred actuarial gains and losses are recorded as a

regulatory asset or liability. The net of the deferred gains and losses is amortized to pension expense over the average service life of the remaining plan participants (approximately ~~seven~~six years as of December 31, ~~2020,~~2021, for Cleco’s plan) when it exceeds certain thresholds. This approach of amortizing gains and losses has the effect of reducing the volatility of pension expense. Over time, it is not expected to reduce or increase the pension expense relative to an approach that immediately recognizes losses and gains.

The following table shows the impact of a 0.5% change in Cleco’s pension plan discount rate, salary scale, and rate of return on plan assets:


ACTUARIAL ASSUMPTION (THOUSANDS)	ACTUARIAL ASSUMPTION (THOUSANDS)	CHANGE IN ASSUMPTION	CHANGE IN PROJECTED BENEFIT OBLIGATION		CHANGE IN ESTIMATED BENEFIT COST		ACTUARIAL ASSUMPTION (THOUSANDS)	CHANGE IN ASSUMPTION	CHANGE IN PROJECTED BENEFIT OBLIGATION		CHANGE IN ESTIMATED BENEFIT COST
Discount rate	Discount rate	0.5% increase	$	(48,301)	$	(4,927)	Discount rate	0.5% increase	$	(45,713)	$	(4,495)
		0.5% decrease	$	54,334	$	5,447		0.5% decrease	$	51,238	$	4,952
Salary scale	Salary scale	0.5% increase	$	9,514	$	1,844	Salary scale	0.5% increase	$	6,801	$	1,334
		0.5% decrease	$	(8,665)	$	(1,676)		0.5% decrease	$	(6,218)	$	(1,212)
Expected return on assets	Expected return on assets	0.5% increase	$	—	$	(2,281)	Expected return on assets	0.5% increase	$	—	$	(2,344)
		0.5% decrease	$	—	$	2,281		0.5% decrease	$	—	$	2,344

Cleco Power did not make any required or discretionary contributions to the pension plan in 2021 and made a $15.8 million required contribution to the pension plan in December 2020 and a $12.3 milliondiscretionary contribution to the pension plan in 2019. ~~Cleco Power did not make any required or discretionary contributions to the pension plan in~~ ~~2018.~~ Based on funding assumptions at December 31, ~~2020,~~2021, and the funding relief provided by the American Rescue Plan Act, which was signed by the President on March 11, 2021, management estimates that ~~$53.5~~$5.4 million inof pension contributions will be required through ~~2025.~~2026. Cleco ~~expects~~has not made, and does not expect to make, ~~$67.0 million~~any contributions to the pension plan in ~~discretionary contributions during 2021, which would reduce the future required contributions.~~

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CLECO POWER						2021 FORM 10-K

2022. Future discretionary contributions may be made depending on changes in assumptions, the ability to utilize the contribution as a tax deduction, and requirements concerning recognizing a minimum pension liability. Future required contributions are driven by liability funding target percentages set by law which could cause the required contributions to change from year-to-year. The ultimate amount and timing of the contributions will be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions.

For more information on pension and other postretirement benefits, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 10 — Pension Plan and Employee Benefits.”

•~~Regulatory Accounting:~~ Cleco has concluded it is probable that regulatory assets can be recovered from ratepayers in future rates. At December 31, 2020, Cleco Power had $275.5 million of net regulatory assets. As a result of the 2016 Merger, Cleco Holdings recognized regulatory assets. At December 31, 2020, Cleco Holdings had $147.8 million of regulatory assets. If future recovery of costs ceases to be probable due to actions by the LPSC or other factors, Cleco could be required to record a loss on some or all of its regulatory assets. For more information on this regulatory accounting policy, see “— Cleco Power.” For more information on the LPSC and regulatory assets, see Item 8, “Financial Statements and Supplementary Data — Notes to

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~~CLECO~~
~~CLECO POWER~~						~~2020 FORM 10-K~~

~~the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Regulation,” and “Note 6 — Regulatory Assets and Liabilities.~~”

•Income Taxes: Income tax expense and related balance sheet amounts are comprised of a “current” portion and a “deferred” portion. The current portion represents Cleco’s estimate of the income taxes payable or receivable for the current year. The deferred portion represents Cleco’s estimate of the future income tax effects of events that have been recognized in the financial statements or income tax returns in the current or prior years. Cleco makes assumptions and estimates when it records income taxes, such as its ability to deduct items on its tax returns, the timing of the deduction, and the effect of regulation on income taxes. Cleco’s income tax expense and related assets and liabilities could be affected by changes in its assumptions and estimates and by ultimate resolution of assumptions and estimates with taxing authorities. The actual results may differ from the estimated results based on these assumptions and may have a material effect on Cleco’s results of operations.

For more information on income taxes, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes.”

•Loss Contingencies: Cleco is currently involved in certain legal proceedings and management has estimated the probable costs for the resolution of these claims. These estimates are based on an analysis of potential results, assuming a combination of litigation and settlement assumptions. For more information on legal proceedings affecting Cleco, see Part I, Item 1, “Business — Environmental Matters — Air Quality,” Item 1A, “Risk Factors — Operational Risks — Litigation,” and Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

•Business Combinations: Assets acquired and liabilities assumed in an acquired business are recorded at their estimated fair value on the date of acquisition. The difference between the purchase price amount and the net fair value of assets acquired and liabilities assumed is recognized as goodwill on the balance sheet if it exceeds the estimated fair value. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment, often utilizing independent valuation experts, and involves the use of significant estimates and assumptions.

Intangible assets and liabilities were recognized as a result of fair value adjustments in connection with the 2016 Merger and the Cleco Cajun Transaction. Management’s judgments and estimates could materially impact the financial statements in periods after acquisition, such as through depreciation, amortization, and impairments of intangible assets and liabilities. For more information on the Cleco Cajun Transaction and on intangible assets and liabilities, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations” and “Note 17 — Intangible Assets, Intangible Liabilities, and Goodwill.”

•~~Goodwill:~~ On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion, all of which was assigned to the Cleco Power reporting unit. Goodwill is required to be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires management to make significant assumptions and estimates, including the identification of reporting units, assignments of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of the reporting units, in which independent valuation experts are often used. Changes in management’s assumptions and estimates could materially affect the determination of fair value and goodwill impairment. For more information on goodwill recorded in connection with the 2016 Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Intangible Assets, Intangible Liabilities, and Goodwill — Goodwill.”

Cleco Power

Cleco Power’s retail rates are regulated by the LPSC and its tariffs for transmission services are regulated by FERC, while rates for wholesale power sales are based on market-based rates and ultimately reviewed by FERC. Cleco Power must evaluate its various transactions related to regulatory orders and accounting guidance to ensure the appropriate timing of revenue recognition, the evaluation of cost deferral and the recoverability and refund of certain assets. Future rate changes could have a material impact on the results of operations, financial condition, or cash flows of Cleco Power. Areas that could be materially impacted by future actions of regulators are described below:

•The LPSC determines the ability of Cleco Power to recover prudent costs incurred in developing long-lived assets. If the LPSC were to rule that the cost of current or future long-lived assets was imprudent and not recoverable, Cleco Power could be required to write down the imprudent cost and incur a corresponding impairment loss. At December 31, ~~2020,~~2021, the carrying value of Cleco Power’s long-lived assets was ~~$3.76~~$3.83 billion. Currently, Cleco Power has concluded that none of its long-lived assets are impaired.

•The LPSC determines the amount and type of fuel and purchased power expenses that Cleco Power can charge customers through the FAC. Changes in the determination of allowable costs already incurred by Cleco Power could cause material changes in fuel revenue. OnIn March ~~31,~~ 2020, Cleco Power received a notice of audit from the LPSC for the period of January 2018 to December 2019. The total amount of fuel expense included in the audit is $565.8 million. Cleco Power has responded to several sets of data requests from the LPSC. Cleco Power has FAC filings for January 2020 and thereafter that are subject to audit. Management believes all FAC costs were prudently incurred. 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. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, by the LPSC related to these filings. For more information on LPSC fuel audits, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees —Litigation — LPSC Audits.” For information on fuel revenue, see “— Results of Operations — Comparison of the Years Ended December 31, 2021, and 2020 — Cleco Power — Significant Factors Affecting Cleco Power — Fuel Cost Recovery/Recoverable Fuel and Power Purchased.”

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CLECO POWER						~~2020~~2021 FORM 10-K

about Guarantees —Litigation — LPSC Audits.” For information on fuel revenue, see “— Results of Operations — Comparison of the Years Ended December 31, 2020, and 2019 — Cleco Power — Significant Factors Affecting Cleco Power — Fuel Cost Recovery/Recoverable Fuel and Power Purchased.”

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 onwith favorable terms could negatively affect Cleco’s ability to maintain or expand its ~~businesses.~~business. Access to funds is dependent upon factors such as general economic and capital market conditions, including the impact of COVID-19, 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 presents the credit ratings of Cleco Holdings and Cleco Power at December 31, ~~2020:~~2021:

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+

A3

BBB+

A3

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.

Following Hurricane Ida in August 2021, S&P revised its outlook on Cleco Holdings and Cleco Power to negative from stable. According to S&P, this revision was attributable to Cleco Power’s ongoing exposure to severe weather, including hurricanes, S&P’s expectation for weaker financial measures due to delayed recovery of most of the costs related to the 2020 hurricanes, the incurrence of additional costs related to Hurricane Ida, as well as Cleco’s lack of access to public equity markets. S&P expects that financial measures will remain weak until Cleco Power receives authorization from the LPSC to issue storm restoration financing. It is possible that S&P could revise their outlook to stable if Cleco’s financial measures materially strengthen without any weakening in its business risk profile, which may occur upon the completion of the storm restoration costs securitization expected in mid-2022. However, the risk of significant weather events may continue to influence rating agencies’ perception of risk, and could potentially impact the thresholds that Cleco Holdings and Cleco Power are held to, which could have subsequent implications for their respective capital structures in the future.

Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest rating held. ~~Savings are dependent upon the level of borrowings.~~ 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 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. On February 24, 2021, Cleco Power and Cleco Cajun posted collateral in the amount of $21.0 million and $5.0 million, respectively, with MISO as a result of increased net purchased power costs related to Winter Storms Uri and Viola exceeding the respective unsecured credit capacity with MISO. For more information about MISO, see “— Regulatory and Other Matters — Transmission Rates.” For more information about credit support, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.” For more information on Winter Storms Uri and Viola, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 19 — Storm Restoration — Winter Storms Uri and Viola.”

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 lower interest rates to which the Registrants have been exposed have been beneficial with regard to debt issuances; however, these rates have negatively affected interest income for the Registrants’ short-term investments.

Annual inflation rates, as measured by the U.S. Consumer Price Index, have averaged 2.6% during the three years ended December 31, 2021, but inflationary pressures have increased substantially recently. 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.

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. As a result of the tax rate reduction, on January 1, 2018, Cleco Power began accruing an estimated reduction in reserve for the federal statutory corporate income tax rate. In February 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flowthrough to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. In July 2019,On June 16, 2021, the LPSC approved Cleco Power’s new retail rate ~~refund~~plan, which included the settlement of ~~$79.2 million, plus interest, for~~ the ~~reduction in the statutory federal tax rate for the period from January 2018 to June 2020. This refund was credited to~~TCJA protected and unprotected excess ADIT. Effective July 1, 2021, all retail customers ~~over 12 months beginning August 1, 2019.~~

~~In July 2019, the LPSC also approved Cleco Power’s motion to address the rate redesign and the regulatory liability for excess ADIT,~~will continue receiving bill credits resulting from the ~~enactment~~TCJA. For more information on the regulatory impact of the TCJA, ~~in Cleco Power’s current base rate case.~~

~~As a result of~~see Item 8, “Financial Statements and Supplementary Data — Notes to the delay in the rate case, on July 15, 2020, the LPSC approved Cleco Power’s application to extend the TCJA bill credits at the same rate as determined in the initial TCJA refund of approximately $7.0 million per month. The extension was for the period of August 2020 through November 2020. On NovemberFinancial Statements — Note 13 ~~2020, Cleco Power again received approval of its application to extend the TCJA bill~~— Regulation and Rates — TCJA.”

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CLECO POWER						~~2020~~2021 FORM 10-K

credits from November 30, 2020, until such time that the rate case is complete. The $7.0 million monthly refund will consist of approximately $4.4 million, which is to be funded by the unprotected excess ADIT, and approximately $2.5 million, which is the change in the federal statutory corporate income tax rate from 35% to 21%. At December 31, 2020, Cleco Power had $2.1 million accrued for the estimated federal tax-related benefits from the TCJA. The mechanism to refund the remaining balance of the excess ADIT will be determined in Cleco Power’s current LPSC base rate case. At December 31, 2020, Cleco Power had $352.4 million accrued for the excess ADIT, of which $18.5 million is reflected in current regulatory liabilities. Cleco Power’s current base rate case is ongoing and management is unable to determine its outcome.

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power are required to disclose the fair value of certain assets and liabilities by one of three levels. Other financial assets and liabilities are reported at their carrying values at their date of issuance on the consolidated balance sheets with their fair values as of the balance sheet date disclosed within the three levels. For more information about fair value levels, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 8 — Fair Value ~~Accounting.~~Accounting and Financial Instruments.”

Cash Generation and Cash Requirements

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general company purposes. For more information on Cleco and Cleco Power’s restricted cash and cash equivalents, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

Debt

Cleco

At December 31, ~~2020,~~2021, Cleco had ~~$75.0 million of~~no short-term debt outstanding under its $475.0 million revolving credit facilities, at an average all-in interest rate of 1.40%. As a result of the COVID-19 pandemic, Cleco has implemented certain measures that it believes will provide financial flexibility and help Cleco maintain liquidity. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part I, Item 1A “Risk Factors — Operational Risks — COVID-19.”facilities. Cleco had no$75.0 million of short-term debt outstanding at December 31, ~~2019.~~2020, under its revolving credit facilities.

At December 31, ~~2020,~~2021, Cleco’s long-term debt and finance leases outstanding was ~~$3.23~~$3.48 billion, of which ~~$66.7~~$93.5 million was due within one year. The long-term debt due within one year at December 31, 2021, primarily represents $67.7 million of principal payments on Cleco Holdings’ debt as required by the Cleco Cajun Transaction commitments to the LPSC, as well as $25.0 million of Cleco Power’s senior notes due in December 2022. Long-term debt increased by $251.4 million from December 31, 2020, primarily ~~represents~~due to the issuance of $325.0 million floating rate senior notes on September 10, 2021 by Cleco Power. This increase was partially offset by the repayment of $66.0 million of principal payments on Cleco Holdings’ debt, as required by the Cleco Cajun Transaction commitments to the

LPSC. Long-term debt increased by $41.4 million from December 31, 2019, primarily due to Cleco Power’s $125.0 million term loan agreement entered into on August 28, 2020. This increase was partially offset by the $64.0 million payment on Cleco Holdings’ bank term loans in November 2020, and the $11.1 million final principal payment made on the Cleco Katrina/Rita storm recovery bonds on March 2, 2020. For more information on Cleco’s debt, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 9 — Debt.”

Cash and cash equivalents available at December 31, ~~2020,~~2021, were ~~$85.0~~$148.6 million combined with ~~$400.0~~$475.0 million available revolving credit facility capacity ($175.0 million from Cleco Holdings and ~~$225.0~~$300.0 million from Cleco Power) for total liquidity of ~~$485.0~~$623.6 million. For more information on the credit facility capacity, see “— Credit Facilities.” Cleco Holdings and Cleco Power have uncommitted lines of credit that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

At December 31, ~~2020,~~2021, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents. In order to mitigate potential credit risk, Cleco and Cleco Power have

established guidelines for short-term investments. For more information on the concentration of credit risk through short-term investments classified as cash equivalents, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 8 — Fair Value ~~Accounting.~~Accounting and Financial Instruments.”

At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco had a working capital surplus of ~~$140.3~~$254.8 million and ~~$126.7~~$140.3 million, respectively. The ~~$13.6~~$114.5 million increase in working capital is primarily due to:

•a ~~$59.3~~$75.0 million decrease in ~~long-term~~short-term debt due ~~within one year primarily due~~ to ~~the long-term refinancing~~repayment of ~~$50.0 million 2008 Series A GO Zone bonds and the $11.1 million final principal payment on the~~ Cleco ~~Katrina/Rita storm recovery bonds on March 2, 2020,~~Power's revolving credit facility,

•a ~~$29.5~~$63.6 million ~~decrease~~increase in ~~provision for rate refund primarily due to refunds to Cleco Power customers for tax-related benefits of the TCJA,~~cash and cash equivalents,

•a ~~$26.4~~$31.0 million increase in accumulated deferred fuel, ~~inventory~~excluding Cleco Power’s FTRs, primarily due to additional deferrals through a ~~decrease~~fuel surcharge for incremental costs related to Winter Storms Uri and Viola and a fuel surcharge due to an increase in ~~coal consumption~~lignite costs as a result of the closure of the mines, partially offset by the timing of collections at Cleco Power,

•a $29.2 million increase in energy risk management assets, excluding Cleco Power’s FTRs, primarily due to market value changes on gas-related derivative contracts at Cleco Cajun, and

•a ~~$13.6~~$9.4 million increase in ~~material and supplies inventory~~the cash surrender value of life insurance policies primarily due to ~~higher purchases for~~favorable market conditions at Cleco ~~Power’s storm restoration and other projects.~~Holdings.

These increases in working capital were partially offset by:

•a ~~$75.0~~$40.7 million decrease in fuel inventory primarily due to an increase in ~~short-term debt~~the burning of lignite in anticipation of the December 31, 2021, retirement of the Dolet Hills Power Station, as well as an increase in coal being burned at Cleco Cajun due to ~~a draw on~~higher gas prices, partially offset by higher per unit costs of petroleum coke at Cleco ~~Power’s revolving credit facility,~~Power,

•a ~~$31.3~~$26.8 million ~~decrease~~increase in ~~cash and cash equivalents, and~~long-term debt due within one year, primarily due to the reclassification of Cleco Power's senior notes due in December 2022,

•a ~~$16.8~~$20.6 million increase in regulatory liabilities, primarily due to the reclassification of the short-term portion of the regulatory liability related to the TCJA, partially offset by ~~credits~~the amortization of the TCJA regulatory liability, and

•a $10.0 million increase in affiliate accounts payable, primarily due to a 2020 federal income tax refund owed to Cleco ~~Power’s customers for~~Group.

At December 31, 2021, Cleco’s Consolidated Balance Sheets reflected $5.17 billion of total liabilities compared to $4.97 billion at December 31, 2020. The $202.3 million increase in total liabilities during 2021 was primarily due to:

•an increase in total long-term debt of $251.4 million, as previously discussed,

•an increase in accumulated deferred federal and state income taxes, net of $94.4 million, and

•an increase in AROs of $46.4 million, primarily due to an increase in costs expected to be required in order to comply with the ~~TCJA refunds and the absence of over collections of revenue from the delay of the St. Mary Clean Energy Center project.~~final CCR Rule.

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CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

At December 31, 2020, Cleco’s Consolidated Balance Sheets reflected $4.97 billion of total liabilities compared to $4.83 billion at December 31, 2019. The $135.3 million increase in total liabilities during 2020 was primarily due to:

•~~an increase in short-term debt of $75.0 million due to a draw on Cleco Power’s revolving credit facility,~~

•~~an increase in total long-term debt of $41.4 million, as previously discussed,~~

•~~an increase in postretirement benefit obligations of $31.6 million primarily due to lower discount rates, and~~

•an increase in net deferred taxes regulatory liabilities of $28.6 million primarily due to temporary tax differences and adjustments to tax returns as filed, partially offset by the amortization of excess ADIT related to the TCJA.

These increases in total liabilities were partially offset by:

•a decrease in ~~provision for rate refund~~regulatory liabilities of ~~$29.5~~$85.0 million, primarily due to ~~refunds~~amortization of excess ADIT related to ~~Cleco Power customers for tax-related benefits of~~ the TCJA, partially offset by temporary tax differences and adjustments to tax returns as filed,

•a decrease in short-term debt of $75.0 million due to repayment of Cleco Power’s revolving credit facility, and

•a decrease in ~~restricted storm reserve~~postretirement benefit obligations of ~~$12.3~~$22.4 million primarily due to ~~storm costs.~~higher discount rates.

Cleco Holdings

Cleco Holdings had no short-term debt outstanding at December 31, ~~2020,~~2021, and ~~2019.~~2020.

At December 31, ~~2020,~~2021, Cleco Holding’s long-term debt outstanding was ~~$1.60~~$1.54 billion, ~~$66.0~~$67.7 million of which was due within one year. The long-term debt due within one year at December 31, ~~2020,~~2021, represents principal payments on Cleco Holdings’ debt as required by the Cleco Cajun Transaction commitments to the LPSC. For Cleco Holdings, long-term debt decreased ~~$63.7~~$64.5 million primarily due to the ~~$64.0~~$66.0 million principal payment on Cleco Holdings’ ~~bank term loans.~~debt as required by the Cleco Cajun Transaction commitments to the LPSC.

At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco Holdings had no borrowings outstanding under its $175.0 million revolving credit facility. For more information on Cleco Holding’s 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 December 31, ~~2020.~~2021.

Cash and cash equivalents available at Cleco Holdings at December 31, ~~2020,~~2021, were ~~$21.6~~$10.4 million, combined with $175.0 million available revolving credit facility capacity for a total liquidity of ~~$196.6~~$185.4 million.

Cleco Power

At December 31, ~~2020,~~2021, Cleco Power had no short-term debt outstanding under its $300.0 million revolving credit facility. Cleco Power had $75.0 million of short-term debt outstanding at December 31, 2020, under its ~~$300.0 million~~ revolving credit ~~facility, at an all-in interest rate of 1.40%.~~facility. For more information on Cleco Power’s revolving credit facility, see “— Credit Facilities.” ~~Cleco Power had no short-term debt outstanding at December 31, 2019. As a result of~~Following the ~~COVID-19 pandemic, Cleco has implemented certain measures that it believes will provide financial flexibility~~restoration efforts for Hurricanes Laura, Delta, Zeta, and help Cleco maintain liquidity. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part I, Item 1A “Risk Factors — Operational Risks — COVID-19.” AlthoughIda, Cleco Power believes it has sufficient liquidity to meet its current obligations ~~and to fund Hurricanes Laura, Delta, and Zeta restoration~~

~~efforts from~~using a combination of cash on hand and available capacity under its revolving credit ~~facilities,~~facilities. On August 5, 2021, Cleco Power ~~is exploring options~~filed testimony with the LPSC relating to ~~supplement its liquidity until such time~~ securitization of ~~such~~the final storm costs ~~can~~for Hurricanes Laura, Delta, and Zeta, and Winter Storms Uri and Viola, totaling $342.0 million, which included the establishment of a newly funded $100.0 million storm reserve to cover future storm costs. In addition, on September 28, 2021, Cleco Power made a supplemental filing to its application requesting an additional $100.0 million for a separate storm reserve to cover costs associated with Hurricane Ida. The securitization is anticipated to be ~~completed.~~completed in mid-2022. For more information on Hurricanes Laura, Delta, Zeta, and ~~Zeta,~~Ida, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 19 — Storm ~~Restoration.~~Restoration, Securitization, and Cost Recovery.” 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 their working capital needs. There were no amounts outstanding under the uncommitted line of credit at December 31, 2021.

On September 10, 2021, Cleco Power completed the issuance and private sale of $325.0 million aggregate principal amount of its floating rate senior notes due June 15, 2023. The proceeds from the issuance were used for general limited liability company purposes, which included the repayment of $245.0 million of borrowings under its revolving credit agreement.

At December 31, ~~2020,~~2021, Cleco Power’s long-term debt and finance leases outstanding was ~~$1.50~~$1.83 billion, of which ~~$0.7~~$25.8 million was due within one year. The amount due within one year primarily represents $25.0 million of senior notes due in December 2022. Long-term debt increased ~~$114.0~~$323.7 million from December 31, ~~2019,~~2020, primarily due to the ~~$125.0~~issuance of $325.0 million ~~term loan agreement entered into~~floating rate senior notes on ~~August 28, 2020, partially offset by the $11.1 million final principal payment made on the Cleco Katrina/Rita storm recovery bonds on March 2, 2020.~~

On August 28, 2020, Cleco Power entered into a $125.0 million variable rate bank term loan due on June 28, 2022. Proceeds from the term loan will be used to fund capital expenditures and working capital requirements for Cleco Power and other general corporate purposes. For more information on Cleco Power’s debt, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 9 — Debt.”September 10, 2021.

Cash and cash equivalents available at December 31, ~~2020,~~2021, were ~~$24.8~~$85.7 million combined with ~~$225.0~~$300.0 million available revolving credit facility capacity for total liquidity of ~~$249.8~~$385.7 million.

At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco Power had a working capital surplus of ~~$13.4~~$110.2 million and ~~$33.5~~$13.4 million, respectively. The ~~$20.1~~$96.8 million ~~decrease~~increase in working capital is primarily due to:

•a $75.0 million ~~increase~~decrease in short-term debt due to ~~a draw on~~repayment of the revolving credit facility,

•a ~~$57.9~~$60.8 million increase in ~~affiliate accounts payable,~~cash and cash equivalents,

•a ~~$30.6~~$31.0 million ~~decrease~~increase in ~~cash~~accumulated deferred fuel, excluding FTRs, primarily due to additional deferrals through a fuel surcharge for incremental costs related to Winter Storms Uri and ~~cash equivalents,~~Viola and a fuel surcharge due to an increase in lignite costs as a result of the closure of the mines, partially offset by the timing of collections, and

•an $8.2 million increase in regulatory assets, primarily due to the establishment of several regulatory assets upon approval of the new retail rate plan by the LPSC.

These decreases in working capital were partially offset by:

•a ~~$16.8~~$25.1 million increase in long-term debt due within one year, primarily due to the reclassification of senior notes due in December 2022,

•a $20.6 million increase in regulatory liabilities, primarily due to the reclassification of the short-term portion of the regulatory liability related to the TCJA, partially offset by ~~credits to customers for~~the amortization of the TCJA ~~refunds and the absence of over collections of revenue from the delay of the St. Mary Clean Energy Center project.~~

~~These decreases in working capital were partially offset by:~~

regulatory liability,

•a ~~$60.9~~$17.1 million decrease in ~~long-term debt due within one year~~fuel inventory primarily due to an increase in the ~~long-term refinancing~~burning of ~~$50.0 million 2008 series A GO Zone bonds~~lignite in anticipation of the December 31, 2021, retirement of the Dolet Hills Power Station, partially offset by higher per unit costs of petroleum coke, and ~~the $11.1 million final principal payment on the Cleco Katrina/Rita storm recovery bonds on March 2, 2020,~~

•a ~~$34.1 million decrease in taxes payable primarily due to intercompany tax settlements, partially offset by higher provisions for income taxes,~~

•~~a $29.6 million decrease in provision for rate refund primarily due to refunds to customers for tax-related benefits of the TCJA,~~

•~~a $13.4~~$9.1 million increase in ~~material and supplies inventory~~accounts payable, excluding FTR purchases, primarily due to higher MISO power purchases, ~~for storm restoration~~an increase in severance accruals, an increase in accrued lignite costs due to accelerated mine closure costs, and ~~other projects,~~an increase in petroleum coke purchases due to higher gas prices, partially offset by timing of vendor payments.

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CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

•~~a $6.9 million increase in unbilled revenue primarily due to higher usage as a result of colder weather, and~~

•~~a $6.7 million increase in accumulated deferred fuel, excluding FTRs, primarily due to the timing of collections and additional deferrals through a fuel surcharge.~~

At December 31, ~~2020,~~2021, Cleco Power’s Consolidated Balance Sheets reflected ~~$2.96~~$3.18 billion of total liabilities compared to ~~$2.76~~$2.96 billion at December 31, ~~2019.~~2020. The ~~$195.1~~$222.7 million increase in total liabilities during ~~2020~~2021 was primarily due to:

•an increase in total long-term debt of ~~$114.0~~$323.7 million, as previously discussed

•~~an increase in short-term debt of $75.0 million due to a draw on the revolving credit facility,~~

•~~an increase in affiliate accounts payable of $57.9 million,~~

•an increase in net deferred taxes regulatory liabilities of $28.6 million primarily due to temporary tax differences and adjustments to tax returns as filed, partially offset by the amortization of excess ADIT related to the TCJA, and

•an increase in ~~postretirement benefit obligations~~accumulated deferred federal and state income taxes, net of ~~$24.6 million primarily due to lower discount rates.~~$72.9 million.

These increases in total liabilities were partially offset by:

•a decrease in ~~taxes payable~~regulatory liabilities of ~~$34.1~~$85.0 million, ~~as a result~~primarily related to amortization of ~~intercompany tax settlements,~~excess ADIT related to the TCJA, partially offset by ~~higher provisions for income taxes,~~temporary tax differences and adjustments to tax returns as filed,

•a decrease in ~~provision for rate refund~~short-term debt of ~~$29.6~~$75.0 million ~~primarily~~ due to ~~refunds to customers for tax-related benefits~~repayment of the ~~TCJA,~~

•~~a decrease in accumulated deferred federal and state income taxes, net of $23.2 million,~~revolving credit facility, and

•a decrease in ~~restricted storm reserve~~postretirement benefit obligations of ~~$12.3~~$25.1 million primarily due to ~~storm costs.~~higher discount rates.

Credit Facilities

At December 31, ~~2020,~~2021, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with no outstanding borrowings and one for Cleco Power in the amount of $300.0 million with no outstanding ~~borrowings of $75.0 million.~~borrowings. These revolving credit agreements were entered into on May 21, 2021, and replaced the respective previously existing agreements. The total of all revolving credit facilities creates a maximum aggregate capacity of $475.0 ~~million with outstanding borrowings of $75.0~~ million.

Cleco Holdings’ revolving credit facility provides for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and expires in ~~June 2022.~~May 2026. Under covenants contained in Cleco Holdings’ revolving credit facility, Cleco is required to maintain total indebtedness less than or equal to ~~65%~~65.0% of total capitalization. At December 31, ~~2020,~~2021, Cleco Holdings was in compliance with the covenants of its revolving credit facility. ~~The~~At December 31, 2021, the borrowing costs under the facility ~~are~~were equal to LIBOR plus ~~1.875%~~1.625% or ABR plus ~~0.875%~~0.625%, plus commitment fees of ~~0.30%~~0.275%. If Cleco Holdings’ credit ratings were to be downgraded one level by the credit rating agencies, Cleco Holdings may be required to pay ~~higher~~incremental interest and commitment fees of 0.125% and ~~additional interest of 0.50%~~0.05%, respectively, under the pricing levels of its revolving credit facility.

Cleco Power’s revolving credit facility provides for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and expires in ~~June 2022.~~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%~~65.0% of total capitalization. At December 31, ~~2020,~~2021, Cleco Power was in compliance with the covenants of its revolving credit facility. At December 31, ~~2020,~~2021, the borrowing costs under the facility were equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%. If Cleco Power’s credit ratings were to be downgraded one level by the credit rating agencies, Cleco Power may be required to pay ~~higher~~incremental interest and commitment fees ~~and additional interest~~ of 0.125% and 0.025%, respectively, under the pricing levels of its revolving credit facility.

If Cleco Holdings or Cleco Power were to default under the 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 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 December 31, ~~2020,~~2021, 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%~~48.0% and Cleco Power’s corporate credit rating is investment grade with two of the three credit rating agencies. At December 31, ~~2020,~~2021, 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.”

Cleco Cash Flows

Net Operating Cash Flow

Internally generated cash from operating activities consists of net income, adjusted for non-cash expenses, non-cash income, and changes in operating assets and liabilities. Non-cash items include depreciation and amortization, ~~deferred fuel costs,~~gain or loss on risk management assets and liabilities, deferred income taxes, and allowance for equity funds used during construction. Cash provided by operating activities for Cleco may vary year to year primarily as a result of the cash provided by operating activities at Cleco Power and Cleco Cajun. Changes in Cleco Power’s cash provided by operating activities are discussed below. Cleco Cajun’s cash provided by operating activities may vary year to year primarily as a result of changes in wholesale contracts, cost of fuel and purchased power, and costs for generation station operations and maintenance.

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CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

~~as a result of changes in wholesale contracts, cost of fuel and purchased power, and costs for generation station operations and maintenance.~~

Net cash provided by operating activities was ~~$205.8~~$182.6 million and $~~430.1~~205.8 million for the years ended December 31, ~~2020,~~2021, and ~~2019,~~2020, respectively. Net cash provided by operating activities during 2021 decreased $23.2 million from 2020 primarily due to:

•higher fuel costs of $113.4 million at Cleco Power primarily related to accelerated mine closure costs,

•higher recoverable fuel and purchased power costs of $25.3 million primarily associated with Winter Storms Uri and Viola not yet collected from Cleco Power’s customers,

•lower collections from Cleco Cajun’s customers of $10.4 million due to timing of receipts,

•lower collections from Cleco Cajun’s joint owners of $6.0 million primarily due to timing of receipts for their portions of generating station expenses,

•lower collections from Cleco Power’s joint owners of $5.1 million primarily due to timing of receipts for their portions of generating station expenses, and

•the absence of Cleco Katrina/Rita storm restoration surcharge collections from Cleco Power’s customers of $2.4 million as a result of the final principal and interest payments on Cleco Katrina/Rita storm recovery bonds in March 2020.

These decreases were partially offset by:

•lower payments for fuel inventory at Cleco Cajun of $47.3 million due to lower coal purchases,

•lower payments for non-capital storm restoration costs of $33.3 million at Cleco Power,

•the absence of pension plan contributions of $15.8 million at Cleco Power,

•higher collections from Cleco Power’s customers of $9.3 million due to timing, and

•lower payments to vendors of $4.8 million at Cleco Power primarily due to timing of payments related to other operating and maintenance activities.

Net cash provided by operating activities during 2020 decreased $224.3 million from 2019 primarily due to:

•higher payments for non-capital hurricane and storm restoration costs of $75.0 million at Cleco Power,

•lower collections from Cleco Power customers of $43.0 million due to the rate refund for tax-related benefits from the TCJA, which began being credited to customers in August 2019,

•higher payments for fuel inventory of $27.9 million primarily due to higher gas purchases, higher solid fuel purchases, and higher per unit lignite costs,

•lower Cleco Katrina/Rita storm restoration surcharge collections from Cleco Power customers of $18.6 million as a result of the final principal and interest payment on the Cleco Katrina/Rita bonds in March 2020,

•lower net fuel and purchased power collections at Cleco Power of $15.3 million primarily due to the timing of collections,

•higher payments for transmission and distribution inventory of $10.9 million at Cleco Power,

•higher payments for purchases of power of $7.5 million primarily due to the closing of the Cleco Cajun Transaction in February 2019, and

•higher payments for employee benefits of $7.1 million.

~~Net cash provided by operating activities during 2019 increased $112.3 million from 2018 primarily due to:~~

•~~$124.0 million for the addition of Cleco Cajun operations, including receipts of $37.7 million as a result of the Cottonwood Sale Leaseback,~~

•~~higher net fuel and purchased power collections at Cleco Power of $29.7 million primarily due to the timing of collections, and~~

•~~lower payments for fuel purchases of $18.6 million primarily due to lower purchases of petroleum coke at Cleco Power.~~

~~These increases were partially offset by:~~

•~~payments for pension plan contributions of $12.3 million at Cleco Power,~~

•~~lower receipts of $8.6 million, primarily due to the timing of receipts of Cleco Power’s joint owners’ portion of generating stations expenditures,~~

•~~lower Cleco Power customer deposits of $7.9 million, and~~

•~~higher interest paid on long-term debt at Cleco Holdings of $6.8 million primarily as a result of additional borrowings to finance the Cleco Cajun Transaction.~~

Net Investing Cash Flow

Net cash used in investing activities was ~~$377.9~~$300.8 million and $~~1.12 billion~~377.9 million for the years ended December 31, ~~2020,~~2021, and ~~2019,~~2020, respectively. Net cash used in investing activities decreased $77.1 million primarily due to lower additions to property, plant, and equipment, excluding AFUDC, of $77.9 million.

Net cash used in investing activities during 2020 decreased $737.5 million from 2019 primarily due to the absence of payment for the Cleco Cajun Transaction of $962.2 million, partially offset by cash received of $147.2 million. This

decrease was partially offset by higher additions to property, plant, and equipment, ~~net of~~excluding AFUDC, of $80.6 million.

Net ~~cash used in investing activities during 2019 increased $827.2 million from 2018 primarily due to:~~

•~~payment for the acquisition of all the membership interest in South Central Generating of $962.2 million, partially offset by cash received of $147.2 million and~~

•~~higher additions to property, plant, and equipment, net of AFUDC, of $31.5 million.~~

~~These increases were partially offset by the absence of the issuance of a $16.8 million note receivable.~~

~~Net~~ Financing Cash Flow

Net cash provided by f~~inancing~~ financing activities was ~~$119.8~~$178.9 million and ~~$687.8~~$119.8 million for the years ended December 31, ~~2020,~~2021, and ~~2019,~~2020, respectively. Net cash provided by financing activities increased $59.1 million during 2021 primarily due to the issuance of $325.0 million floating rate senior notes at Cleco Power in September 2021.

This increase was partially offset by:

•the absence of borrowing a $125.0 million term loan at Cleco Power in August 2020,

•higher payments on revolving credit facilities of $97.0 million, and

•lower draws on revolving credit facilities of $53.0 million.

Net cash provided by financing activities during 2020 decreased $568.0 million ~~during 2020~~from 2019 primarily due to:

•the absence of borrowings of $400.0 million related to the financing of the Cleco Cajun Transaction,

•absence of contributions from Cleco Group of $384.9 million,

•the absence of issuance of $300.0 million principal amount of senior notes at Cleco Holdings, and

•higher payments on revolving credit facilities of $55.0 million.

These decreases were partially offset by:

•lower repayments of long-term debt of $315.5 million,

•higher draws on revolving credit facilities of $130.0 million, and

•the borrowing of a $125.0 million term loan at Cleco Power in August 2020.

~~Net cash provided by financing activities during 2019 increased $729.5 million from 2018 primarily due to:~~

•~~borrowings of $400.0 million related to the financing of the Cleco Cajun Transaction,~~

•~~higher contributions from Cleco Group of $384.9 million,~~

•~~the issuance of $300.0 million principal amount of senior notes at Cleco Holdings, and~~

•~~the absence of distributions to Cleco Group of $71.4 million.~~

~~These increases were partially offset by:~~

•~~higher repayments of long-term debt of $371.4 million and~~

•~~the absence of the issuance of $50.0 million principal amount of senior notes in March 2018 at Cleco Power.~~

Cleco Power Cash Flows

Net Operating Cash Flow

Internally generated cash from operating activities consists of net income, adjusted for non-cash expenses, non-cash income, and changes in operating assets and liabilities. Non-cash items include depreciation and amortization, deferred ~~fuel costs, deferred~~ income taxes, and allowance for equity funds used during construction. Cash provided by operating activities for Cleco Power may vary year to year primarily as a result of the impact of rate cases, weather, timing of fuel and purchased power collections, and costs for generation operations and maintenance.

Net cash provided by operating activities was $102.5 million and $127.8 million for the years ended December 31, 2021, and 2020, respectively. Net cash provided by operating

51


CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

activities during 2021 decreased $25.3 million from 2020 primarily due to:

•higher fuel costs of $113.4 million primarily due to accelerated mine closure costs,

•higher recoverable fuel and purchased power ~~collections,~~costs of $25.3 million primarily associated with Winter Storms Uri and ~~costs for generation operations and maintenance.~~Viola not yet collected from customers,

~~Net cash provided by~~•lower collections from joint owners of $5.1 million primarily due to timing of receipts for their portions of generating station expenses, and

•the absence of Cleco Katrina/Rita storm restoration surcharge collections from customers of $2.4 million as a result of the final principal and interest payment on the Cleco Katrina/Rita bonds in March 2020.

These decreases were partially offset by:

•lower payments for affiliate settlements of $55.5 million,

•lower payments for non-capital storm restoration costs of $33.3 million,

•the absence of pension plan contributions of $15.8 million at Cleco Power

•higher collections from customers of $9.3 million due to timing, and

•lower payments to vendors of $4.8 million primarily due to timing of payments related to other operating ~~activities was $127.8 million~~ and ~~$352.5 million for the years ended December 31, 2020~~maintenance activities.

~~, and 2019, respectively.~~

Net cash provided by operating activities during 2020 decreased $224.7 million from 2019 primarily due to:

•higher payments for non-capital hurricane and storm restoration costs of $75.0 million,

•lower collections from customers of $43.0 million due to the rate refund for the tax-related benefits from the TCJA, which began being credited to customers in August 2019,

•higher payments to vendors of $28.9 million primarily due to timing of vendor payments related to other operating and maintenance activities,

•lower Cleco Katrina/Rita storm restoration surcharge collections from customers of $18.6 million as a result of the final principal and interest payment on the Cleco Katrina/Rita bonds in March 2020,

•lower net fuel and purchased power collections of $15.3 million primarily due to the timing of collections,

•higher payments for transmission and distribution inventory of $10.9 million, and

•higher payout for employee benefits of $3.3 million.

These decreases in net operating cash were partially offset by lower payments for affiliate settlements of $37.9 million.

Net ~~cash provided by operating activities during 2019 increased $12.8 million from 2018 primarily due to:~~

•~~higher net fuel and power purchase collections of $29.7 million primarily due to the timing of collections,~~

•~~lower payments for fuel purchases of $18.6 million primarily due to lower purchases of petroleum coke, and~~

•~~lower payments for employee benefits of $7.8 million.~~

~~These increases in net operating cash were partially offset by:~~

•~~higher payments for affiliate settlements of $23.6 million,~~

•~~payments for pension plan contributions of $12.3 million, and~~

•~~lower receipts for other accounts receivable of $8.6 million, primarily due to the timing of receipts of joint owners’ portion of generating station expenditures.~~

~~Net~~ Investing Cash Flow

Net cash used in investing activities was ~~$365.9~~$290.7 million and ~~$292.3~~$365.9 million for the years ended December 31, 2021, and 2020, respectively. Net cash used in investing activities during 2021 decreased$75.2 million from 2020 primarily due to higher additions to property, plant, and ~~2019, respectively.~~ equipment, excluding AFUDC, of $76.1 million.

Net cash used in investing activities during 2020 increased $73.6 million from 2019 primarily due to higher additions to property, plant, and equipment, ~~net of~~ excluding

AFUDC, of $78.5 million. This increase was partially offset by higher returns on equity investment in investee of $6.9 million.

~~Net cash used in investing activities during 2019 increased~~$3.3 million from 2018 primarily due to higher additions to property, plant, and equipment, net of AFUDC, of $23.6 million. This increase was partially offset by the absence of the issuance of a $16.8 million note receivable.

Net Financing Cash Flow

Net cash provided by financing activities was $246.2 million for the year ended December 31, 2021. Net cash provided by financing activities was $186.6 million for the year ended December 31, 2020. Net cash ~~used in~~provided by financing activities ~~was $41.2~~during 2021 increased $59.6 million ~~for~~ from 2020 primarily due to:

•the ~~year ended December 31, 2019.~~ issuance of $325.0 million floating rate senior notes in September 2021,

•higher draws on credit facilities of $35.0 million, and

•the absence of the final repayment of Cleco Katrina/Rita storm recovery bonds of $11.1 million.

These increases were partially offset by:

•higher payments on revolving credit facilities of $185.0 million and

•the absence of borrowing a $125.0 million term loan in August 2020.

Net cash provided by financing activities during 2020 increased $227.8 million from 2019 primarily ~~due to:~~due:

•the borrowing of a $125.0 million term loan in August 2020,

•higher draws on revolving credit facilities of $117.0 million, and

•lower repayments of long-term debt of $9.5 million.

These increases were partially offset by higher payments on revolving credit facilities of $42.0 million.

Net cash used in financing activities during 2019 decreased $50.5 million from 2018 primarily due to lower distributions to Cleco Holdings of $101.4 million. This decrease was partially offset by the absence of the issuance of $50.0 million principal amount of senior notes in March 2018.

Capital Expenditures

Cleco’s capital expenditures are primarily incurred at Cleco Power and Cleco Cajun. Cleco Power’s capital expenditures relate primarily to assets that may be included in Cleco Power’s rate base and, if considered prudent by the LPSC, can be recovered from its customers. Those assets also earn a rate of return authorized by the LPSC and are subject to the FRP. Such assets primarily consist of improvements to Cleco Power’s distribution system, transmission system, and generating stations as well as hardware and software upgrades. Cleco Cajun’s capital expenditures primarily consist of improvements to Cleco Cajun’s transmission system and generating stations as well as hardware and software upgrades.

During the years ended December 31, 2021, 2020, ~~2019,~~ and ~~2018,~~2019, Cleco Power had capital expenditures, excluding AFUDC, of $301.0 million, $377.0 million, and $298.6 million, respectively. Cleco Power funded its capital expenditures for 2021 and ~~$275.0 million, respectively. In~~ 2020 from internally generated funds and funds obtained through debt issuances. Cleco Power fully funded its capital expenditures in 2019 ~~and 2018, 100% of Cleco Power’s capital expenditure requirements were funded internally.~~with internally generated funds.

During the years ended December 31, 2021, 2020, ~~2019,~~ and ~~2018,~~2019, other subsidiaries had capital expenditures ~~excluding capitalized interest,~~ of $10.2 million, $12.0 million, and $9.8 million, ~~and $1.9 million,~~ respectively. ~~The higher capital expenditures in 2020 and 2019 were primarily due to the addition of Cleco Cajun’s capital expenditures.~~

In ~~2021~~2022 and for the five-year period ending ~~2025,~~2026, Cleco and Cleco Power expect to materially fund ~~its~~their capital expenditure requirements with internally generated funds. However, Cleco Power may choose to issue debt in order to supplement its funding sources and achieve its stipulated ~~regulatory capital structure. All computations of internally funded capital expenditures exclude AFUDC and capitalized interest.~~

Cleco and Cleco Power’s estimated capital expenditures and debt maturities for 2021 and for the five-year period ending December 31, 2025 are presented in the following tables. All amounts exclude AFUDC and capitalized interest.

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Cleco
PROJECT (THOUSANDS) 2021 % 2021-2025 %
Environmental $ — — % $ 97,000 6 %
New business 18,000 5 % 84,000 5 %
Transmission reliability 73,000 21 % 92,000 5 %
Fuel optimization 34,000 10 % 385,000 22 %
General (1)
215,000 64 % 1,078,000 62 %
Total capital expenditures $ 340,000 100 % $ 1,736,000 100 %
Debt payments 66,000 (2) 806,000
Total capital expenditures and debt payments $ 406,000 $ 2,542,000
(1) Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades at Cleco Power.
(2) Consists of the principal amount committed to be repaid as a result of the Cleco Cajun Transaction. There are no long-term debt obligations with a maturity date in 2021. For more information on the committed principal amount, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 9 — Debt.”
regulatory capital structure. All computations of internally funded capital expenditures exclude AFUDC and capitalized interest.

Cleco Power
PROJECT (THOUSANDS) 2021 % 2021-2025 %
Environmental $ — — % $ 97,000 6 %
New business 18,000 6 % 84,000 5 %
Transmission reliability 73,000 23 % 92,000 6 %
Fuel optimization 34,000 11 % 385,000 23 %
General (1)
197,000 60 % 993,000 60 %
Total capital expenditures $ 322,000 100 % $ 1,651,000 100 %
Debt payments — 375,000
Total capital expenditures and debt payments $ 322,000 $ 2,026,000
(1) Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades.

~~Capital~~Cleco and Cleco Power’s estimated capital expenditures and debt maturities for ~~other subsidiaries, including Cleco Cajun, in 2021 are estimated to total $18.0 million. For~~

2022 and for the five-year period ending December 31, ~~2025,~~2026 are presented in the following tables. All amounts exclude AFUDC and capitalized interest.


Cleco
PROJECT (THOUSANDS)	2022			%		2022-2026		%
Environmental	$	—		—	%	$	52,000	4	%
Fuel optimization	—			—	%	33,000		2	%
New business	28,000			11	%	134,000		10	%
Transmission reliability	37,000			14	%	41,000		3	%
General (1)	200,000			75	%	1,084,000		81	%
Total capital expenditures	$	265,000		100	%	$	1,344,000	100	%
Debt payments	93,000		(2)			1,730,000
Total capital expenditures and debt payments	$	358,000				$	3,074,000
(1) Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades at Cleco Power. (2) Consists of the principal amount committed to be repaid as a result of the Cleco Cajun Transaction. There is one long-term debt obligation with a maturity date in 2022. For more information on the future debt payments, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 9 — Debt.”


Cleco Power
PROJECT (THOUSANDS)	2022			%		2022-2026		%
Environmental	$	—		—	%	$	52,000	4	%
Fuel optimization	—			—	%	33,000		3	%
New business	28,000			11	%	134,000		10	%
Transmission reliability	37,000			15	%	41,000		3	%
General (1)	187,000			74	%	1,011,000		80	%
Total capital expenditures	$	252,000		100	%	$	1,271,000	100	%
Debt payments	25,000		(2)			830,000
Total capital expenditures and debt payments	$	277,000				$	2,101,000
(1) Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades. (2) There is one long-term debt obligation with a maturity date in 2022. For more information on the future debt payments, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 9 — Debt.”

Capital expenditures for other subsidiaries in 2022 are estimated to total $13.0 million. For the five-year period ending December 31, 2026, capital expenditures for other subsidiaries ~~including Cleco Cajun,~~ are estimated to total ~~$85.0~~$73.0 million. Cleco expects cash and cash equivalents on hand, in addition to cash generated from operations, borrowings from credit facilities, and the net proceeds of any issuances of debt securities, to be adequate to fund normal ongoing capital expenditures, working capital, and debt service requirements for the foreseeable future.

Other Cash Requirements

Cleco Power’s regulated operations and Cleco ~~Cajun~~Cajun’s unregulated operations are Cleco’s primary sources of internally generated funds. These funds, along with the issuance of additional debt in future years, will be used for general company purposes, capital expenditures, debt service, human capital expenditures, contractual obligations, and off-balance sheet arrangements, if required.

Contractual Obligations

Cleco, in the course of normal business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the consolidated financial statements. ~~The~~These obligations ~~listed in the following table~~ do not include amounts for ongoing needs for which no contractual obligation existed as of December 31, ~~2020,~~2021, and represent only the projected future payments that Cleco was contractually obligated to make as of December 31, ~~2020.~~2021.

For contractual obligations related to leases, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 4 — Leases.” For information on amounts expected to be contributed to the employee pension plan and the projected benefit payments for Other Benefits and SERP, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 10 — Pension Plan and Employee Benefits.”

PAYMENTS DUE BY PERIOD
CONTRACTUAL OBLIGATIONS (THOUSANDS) TOTAL UP TO 12 MONTHS BEYOND 12
MONTHS
Cleco
Long-term debt (1)
$ 4,817,444 $ 201,409 $ 4,616,035
Finance lease (2)
31,487 2,611 28,876
Operating lease 32,117 3,682 28,435
Purchase 138,095 74,435 63,660
Other long-term liabilities (3)
24,341 5,878 18,463
Postretirement benefits 266,491 9,279 257,212
Total Cleco $ 5,309,975 $ 297,294 $ 5,012,681
Cleco Power
Long-term debt (1)
$ 2,552,412 $ 142,095 $ 2,410,317
Finance lease (2)
31,487 2,611 28,876
Operating lease 31,899 3,543 28,356
Purchase 104,850 50,994 53,856
Other long-term liabilities (3)
9,000 1,800 7,200
Postretirement benefits 53,500 — 53,500
Total Cleco Power $ 2,783,148 $ 201,043 $ 2,582,105


			PAYMENTS DUE BY PERIOD
CONTRACTUAL OBLIGATIONS (THOUSANDS)	TOTAL		UP TO 12 MONTHS		BEYOND 12 MONTHS
Cleco
Long-term debt (1)	$	4,900,009	$	151,187	$	4,748,822


Purchase obligations	$	279,445	$	198,111	$	81,334
Other long-term liabilities (2)	$	22,650	$	4,924	$	17,726


Cleco Power
Long-term debt (1)	$	2,744,005	$	94,263	$	2,649,742


Purchase obligations	$	123,268	$	73,898	$	49,370
Other long-term liabilities (2)	$	6,400	$	1,600	$	4,800

(1) For Cleco, the amount above excludes the fair value adjustments related to the 2016 Merger. Cleco’s and Cleco Power’s anticipated interest payments related to long-term debt also are included in this category and do not reflect anticipated future refinancing, early redemption, or debt issuance.

(2) ~~Cleco’s anticipated interest payments and operating fees related to the finance lease obligation are included in this category.~~

~~(3)~~Other long-term liabilities primarily consist of obligations for deferred compensation and various operating and maintenance agreements.

For purposes of this table, it is assumed that all terms and rates related to the above obligations will remain the same and all franchises will be renewed according to the rates used in the table.

Off-Balance Sheet Commitments and ~~On-Balance Sheet~~ 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 ~~on-balance sheet~~ guarantees, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies,

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~~— Note 15 — Litigation, Other Commitments and Contingencies,~~ and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.”

Cybersecurity

The operation of Cleco’s electrical systems relies on evolving operational and information technology systems and network infrastructures that are complex. The failure of Cleco or its vendors’ operational and information technology systems and networks, due to a physical attack, or cyberattack, or other event, could significantly disrupt operations; cause harm to the public or employees; result in outages or reduced generating output; result in damage to Cleco’s assets or operations, or those of third parties; result in damage to Cleco’s reputation; and subject Cleco to claims by customers or third parties, any of which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. Cleco continues to assess its cybersecurity tools and processes and has taken a variety of actions to monitor and address cyber-related risks. Cleco’s Chief Information and Supply Chain Officer leads Cleco’s cybersecurity team and oversees Cleco’s cybersecurity maturity plan. Each month, management provides cybersecurity updates to Cleco’s Asset Management Committee. ~~On December 13, 2020,~~ Cleco’s third party ~~provider publicly confirmed a breach of its monitoring products in~~providers are susceptible to data breaches, which ~~a vulnerability was inserted and, if present and activated,~~ could potentially allow an attacker to compromise the ~~server~~third party servers on which the products run. ~~Although~~ Cleco ~~has found no impact~~could have potential impacts to the confidentiality, integrity, or availability of its data or ~~systems to date, the incident is still under investigation by the~~systems. The third party ~~provider.~~providers and Cleco ~~will continue~~investigate data breach incidents. Past instances have resulted in no negative impacts to ~~evaluate the impact to~~Cleco’s confidentiality, integrity, or availability of its data ~~and systems as new information becomes available.~~or systems. For more information on risks related to Cleco’s cybersecurity, see Part I, Item 1A, “Risk Factors — Operational Risks — Technology and Terrorism Threats.”

Regulatory and Other Matters

Environmental Matters

For information on environmental matters, see Part I, Item 1, “Business — Environmental Matters.”

Retail Rates of Cleco Power

For ~~2020~~2021 and ~~2019,~~2020, retail rates, which includes the retail portion of FAC and EAC revenue, regulated by the LPSC accounted for approximately 85% and 86%, respectively, of Cleco Power’s total base, FAC, and EAC revenue.

Fuel Rates

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 charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. Management is unable to determine the outcome or timing of these audits. For more information on the FAC and the most recent fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Environmental Rates

In July 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from

customers certain costs of environmental compliance. These

expenses are eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. For more information on the EAC and the most recent environmental audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

Base Rates

Prior to July 1, 2021, Cleco Power’s annual retail earnings ~~are~~were subject to an FRP ~~that was approved~~established by the LPSC in June 2014. On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan effective July 1, 2021. For more information on ~~the~~the LPSC’s regulation of Cleco Power’s base rates, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Rates.”

For more information on the regulatory impacts of the TCJA on Cleco Power and the LPSC Staff’s FRP reviews, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — TCJA” and “— FRP.”

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution could be implemented to mitigate reliability issues. Cleco Power received a termination notice, effective April 30, 2019, and filed paperwork to withdraw the filed Attachment Y. For more information on the MISO SSR designation of Teche Unit 3, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — SSR.”

Energy Efficiency

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. Cleco Power has recovered approximately $3.3 million annually for each of the program years through an approved rate tariff. In January 2018, Cleco began recovering an additional $3.3 million annually for estimated costs related to programs specific to political subdivisions.

On ~~December 17, 2019,~~June 9, 2021, the LPSC initiated an audit on program years ~~three~~2019 and ~~four~~2020 to consider all program costs. Cleco Power has responded to several sets of data requests regarding the audit. ~~In October 2020, a preliminary report was received by Cleco Power with no material findings. The LPSC approved the audit report in November 2020.~~ Program ~~year five~~years 2021 and ~~program years~~ thereafter are ~~still~~ subject to ~~be audited.~~audit. Management is unable to predict or give a reasonable estimate of the outcome of ~~the audit.~~this or any future audits.

Generally utility companies are allowed to recover from customers the accumulated decrease in revenues associated with the energy efficiency programs. On October 21, 2019, Cleco Power received notice of approval from the LPSC allowing recovery of the accumulated LCFC revenues ~~until such a time that~~when base rates reset, which ~~is expected in the first half of~~took place on July 1, 2021.

Wholesale Rates

The rates Cleco, through Cleco Power and Cleco Cajun, charges its wholesale customers are subject to FERC’s

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~~Wholesale Rates~~

~~The rates Cleco, through Cleco Power and Cleco Cajun, charges its wholesale customers are subject to FERC’s~~ triennial market power analysis. FERC requires a utility to pass a screening test as a condition for securing and/or retaining approval to sell electricity in wholesale markets at market-based rates. An updated market power analysis must be filed with FERC every three years or upon the occurrence of a change in status as defined by FERC regulation. Cleco filed its most recent triennial market power analysis onin December ~~23, 2020.~~2020, and it is currently pending FERC approval. The next triennial market power analysis is expected to be filed in December 2023.

Transmission Rates

In July 2011, FERC issued Order No. 1000 that reformed the electric transmission planning and cost allocation requirements for public utility transmission providers. The rule builds on the reforms of Order No. 890 and corrects remaining deficiencies with respect to transmission planning processes and cost allocation methods. In 2015, MISO and the Southwest Power Pool made separate filings containing different metrics to meet specific requirements. A compliance determination for both filings has not been made and no timetable is available for when a determination will be made. Until a determination is made, Cleco is unable to determine if this order will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power and Cleco Cajun’s generation dispatch and transmission operations are integrated with MISO. MISO operates a fully functioning RTO market with two major market processes: the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. Both use market-based mechanisms to manage transmission congestion across the MISO market area. For more information about the risks associated with Cleco’s participation in MISO, see Part I, Item 1A, “Risk Factors — Regulatory Risks — MISO.”

Cleco Power and Cleco Cajun earn transmission revenues pursuant to MISO’s FERC filed tariff. The performance obligation of transmission service is satisfied as service is provided. Revenue is recognized upon delivery of the transmission service. For Cleco Power, revenue from the transmission of electricity is recorded based on a FERC-approved annual formula rate mechanism. This mechanism provides for an annual filing of revenue requirements with rates effective June 1 of each year. For Cleco Cajun, revenue from the transmission of electricity is recorded based on a FERC-approved annual filing rate mechanism effective June 1 of each year. Cleco Cajun charges transmission rates based on its cost to provide transmission services.

Two complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaints covered the period December 2013 through May 2016. For more information about the ROE complaints, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

~~Transmission and~~ Distribution Projects

Cleco Power’s significant ongoing ~~projects include the Bayou Vista to Segura transmission~~ project ~~and~~includes the DSMART distribution project. For information on ~~these projects,~~this project, see “— Overview — Cleco Power.”

Market ~~Restructuring~~Structure

Wholesale Electric Markets

RTO

In 1999, FERC issued Order No. 2000, which established a general framework for all transmission-owning entities in the nation to voluntarily place their transmission facilities under the control of an appropriate RTO. Cleco Power and Cleco Cajun’s generation dispatch and transmission operations are integrated with MISO. For more information about Cleco Power and Cleco Cajun’s integration into MISO, see “— Transmission Rates.”

ERO

~~The Energy Policy Act~~NERC, subject to oversight by FERC, is the ERO responsible for developing and enforcing mandatory reliability standards for users, owners, and operators of ~~2005 added Section 215 to~~ the ~~Federal Power Act, which provides for a uniform system of mandatory, enforceable reliability standards. In 2006, FERC named~~bulk power system. NERC, as the ERO, ~~that will be required~~delegates authority to ~~develop and enforce the mandatory reliability standards.~~SERC.

A NERC Reliability Standards audit is conducted every three years for Cleco Power and Cleco Cajun. The next NERC Reliability Standards ~~audit~~audits for Cleco Power isand Cleco Cajun are scheduled to begin in ~~2023. The next NERC Reliability Standards audit for Cleco Cajun is scheduled to begin in~~September 2022.

A NERC CIP audit is also conducted every three years for Cleco Power and Cleco Cajun. Cleco Power’s current NERC CIP audit was completed on August 14, 2020, and the final report was issued by SERC on November 5, 2020. Cleco Cajun’s most recent CIP audit occurred during June 2019, and the final report was issued by SERC on June 27, 2019. ~~Management is unable to determine the timing~~SERC has disposed of ~~NERC’s approval~~all potential violations through dismissal or use of the ~~final reports.~~NERC Find, Fix, Track and Report process with no financial penalties. The next NERC CIP audits for Cleco Power and Cleco Cajun are scheduled to begin in 2023.

Management is also unable to predict the final financial outcome of the most recent CIP audits, 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.”

Retail Electric Markets

Currently, the LPSC does not provide exclusive service territories for electric utilities under its jurisdiction. Instead, retail service is obtained through a long-term nonexclusive franchise. The LPSC uses a “300-foot rule” for determining the supplier for new customers. The “300-foot rule” requires a customer to take service from the electric utility that is within 300 feet of the respective customer. If the customer is beyond 300 feet from any existing utility service, they may choose their electric supplier. The LPSC’s review of the “300-foot rule” in Docket No. R-32763 has been ongoing since April 2013. On February 5, 2020, the docket was closed due to no substantive actions in the proceedings since October 2014. Management is unable to predict if this docket will be reopened for reconsideration in the future and cannot determine the impact any potential rulemaking may have on the results of operations, financial condition, or cash flows of Cleco Power. The application of the current rule has led to competition with neighboring utilities for retail customers at the borders of Cleco Power’s service areas. Cleco Power also competes in its service area with suppliers of alternative forms of energy, some of which may be less costly than electricity for certain

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applications. Cleco Power could experience some competition for electric sales to industrial customers in the form of ~~cogeneration or from independent power producers.~~cogeneration.

Integrated Resource Plan (IRP)

~~In accordance with the General Order in LPSC Docket No. R-30021, in~~On October ~~2017,~~20, 2021, Cleco Power filed aits request with the LPSC to initiate anits next IRP process. ~~In February 2018,~~ Cleco Power filed ~~the~~its initial data assumptions to be used in its IRP ~~analysis.~~analysis on February 21, 2022. The IRP process includes conducting stakeholder meetings and receiving feedback from ~~stakeholders. LPSC acknowledgment~~stakeholders with the first stakeholders meeting proposed to take place in March 2022. The first draft of ~~a completed~~the IRP ~~process was received with no objections or discussions on January 22, 2020.~~is expected to be filed in October 2022.

The IRP report describes how Cleco Power plans to meet its forecasted load requirements on a reliable and economic basis. The IRP is used as a guide in future decision-making and does not represent firm operational commitments. ~~LPSC acknowledgment of a completed IRP process does not represent approval of any actions stated in the IRP report.~~

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. Cleco Power ~~has not submitted~~is currently working to complete a new five-year program to submit to the LPSC for approval. Cleco Power filed its annual SQP monitoring report on March 27, 2020.

Franchises

For information on franchises, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Franchises.”

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

ITEM 7A. 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 ~~Risks~~Risk

When Cleco enters into ~~bilateral~~ 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 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 credit terms and thresholds in master agreements, the notional value of the initial contract, changes in the market prices, changes in open contracts, and changes in the amounts counterparties owe to Cleco. 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 7, “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 ~~Risks~~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. ~~Future actions or inactions~~Disruption in the capital and credit markets, which could be impacted by the failure of the federal government ~~including a failure~~ to increase the government debt limit, ~~could~~may potentially increase the ~~actual or perceived risk that the U.S. may not pay its obligations when due and may disrupt financial markets, including capital markets, potentially limiting availability and increasing~~ costs of ~~capital.~~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 ~~businesses.~~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. Cleco Holdings and Cleco Power pay fees and interest under their respective credit facilities based on the highest rating held. For more information, see Item 7, “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 ~~Risks~~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 revolving credit facility with fixed-rate debt. 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 December 31, 2020, Cleco Holdings had no short-term debt outstanding under its $175.0 million revolving credit facility. At December 31, 2020, the borrowing costs under Cleco Holdings’ revolving credit facility were equal to LIBOR plus 1.875% or ABR plus 0.875%, plus commitment fees of 0.30%.

56


CLECO
CLECO POWER						~~2020~~2021 FORM 10-K

At December 31, ~~2020,~~2021, Cleco Holdings had no short-term debt outstanding under its $175.0 million revolving credit facility. At December 31, 2021, the borrowing costs under Cleco Holdings’ revolving credit facility were equal to LIBOR plus 1.625% or ABR plus 0.625%, plus commitment fees of 0.275%.

At December 31, 2021, Cleco Holdings had a ~~$266.0~~$200.0 million long-term variable rate bank term loan outstanding at an interest rate of LIBOR plus ~~1.875%~~1.625%, for an all-in interest rate of ~~2.025%~~1.735%. 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 ~~$2.7~~$2.0 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Holdings for the year ended December 31, ~~2020,~~2021, was ~~2.29%~~1.84%.

At December 31, ~~2020,~~2021, Cleco Power had ~~$75.0 million of~~no short-term debt outstanding under its $300.0 million revolving credit ~~facility at an all-in interest rate of 1.40%.~~facility. At December 31, ~~2020,~~2021, Cleco Power’s borrowing costs under its $300.0 million revolving credit facility were equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%.

At December 31, ~~2020,~~2021, Cleco Power had a $125.0 million long-term variable rate bank term loan outstanding, at an interest rate of LIBOR plus 1.25%, for an all-in interest rate of ~~1.40%~~1.36%. Each 1% increase in the interest rate applicable to Cleco Power’s short- and long-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of $2.0 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Power for the year ended December 31, ~~2020,~~2021, was ~~1.41%~~1.36%.

At December 31, 2021, Cleco Power had $325.0 million long-term floating rate senior notes outstanding. These notes bear interest at a rate of three-month LIBOR plus 50 basis points per annum, for an all-in interest rate of 0.716% at December 31, 2021. The weighted average rate for the outstanding floating rate senior notes at Cleco Power for the year ended December 31, 2021, was 0.63%. 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 $4.5 million on an annualized basis.

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 pretax earnings of ~~$4.7~~$6.5 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 ~~Risks~~Risk

~~Cleco Power and Cleco Cajun’s~~Cleco’s financial performance can be impacted by changes in commodity prices that can impact fuel costs, generation ~~revenues,~~revenue, costs to serve its contracted wholesale electricity customers, and ~~customer supply costs~~revenue from those customers. Cleco’s risk management policies and ~~revenue. Cleco’s Energy Market Risk Management Policy authorizes~~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 LMP 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 ~~2020,~~2021, Cleco Cajun entered into gas-related derivative contracts including fixed price physical forwards and financially settled swap transactions. These are included in ~~other commodity~~natural gas derivatives in the following tables.

The following tables present the fair values of derivative instruments and their respective line items as recorded on

Cleco and Cleco Power’s Consolidated Balance Sheets at December 31, ~~2020:~~2021:


Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		AT DEC. 31, 2021
				GROSS AMOUNTS OFFSET ON THE BALANCE SHEET				GROSS AMOUNTS NOT OFFSET ON THE BALANCE SHEET (1)
(THOUSANDS)	BALANCE SHEET LINE ITEM	GROSS ASSET (LIABILITY)		CONTRACT NETTING		NET ASSET (LIABILITY) ON THE BALANCE SHEET		COLLATERAL		NET AMOUNT
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	6,977	$	—	$	6,977	$	—	$	6,977
Current	Energy risk management liabilities	(834)		—		(834)		—		(834)
Natural gas derivatives
Current	Energy risk management assets	37,061		(559)		36,502		(15,000)		21,502
Non-current	Energy risk management assets	50,962		—		50,962		—		50,962
Current	Energy risk management liabilities	(559)		559		—		—		—

Commodity-related contracts, net		$	93,607	$	—	$	93,607	$	(15,000)	$	78,607

(1) Represents letters of credit by counterparties.

57


~~Cleco~~CLECO
	~~DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS~~
~~(THOUSANDS)~~	~~BALANCE SHEET LINE ITEM~~	~~AT DEC. 31, 2020~~
~~Commodity-related contracts~~
~~FTRs~~
~~Current~~	~~Energy risk management assets~~	$	~~4,805~~CLECO POWER
~~Current~~2021 FORM 10-K	~~Energy risk management liabilities~~	~~(1,625)~~
~~Other commodity derivatives~~
~~Current~~	~~Energy risk management assets~~	~~8,276~~
~~Non-current~~	~~Other deferred charges~~	~~323~~
~~Current~~	~~Energy risk management liabilities~~	~~(828)~~
~~Non-current~~	~~Other deferred credits~~	~~(784)~~
~~Commodity-related contracts, net~~		$	~~10,167~~


Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT DEC. 31, ~~2020~~2021
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	~~4,337~~5,515
Current	Energy risk management liabilities	~~(1,121)~~(597)
Commodity-related contracts, net		$	~~3,216~~4,918

Cleco monitors the Value at Risk (VaR) of its ~~other commodity~~natural gas derivative contracts requiring derivative accounting treatment. ~~Cleco applies a portfolio VaR covariance analytical approach within a 5-day holding period at a 95% confidence interval.~~ VaR is defined as the minimum expected loss over a given holding period at a given confidence level based on observable market price volatilities. Cleco uses a parametric variance-covariance model methodology to estimate VaR. VaR is calculated using 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 ~~other commodity~~natural gas derivative contracts ~~for 2020, as well as the VaR at December 31, 2020,~~ based on these assumptions:


				FOR THE YEAR ENDED DEC. 31, 2020									FOR THE YEAR ENDED DEC. 31, 2021
(THOUSANDS)	(THOUSANDS)	AT DEC. 31, 2020		HIGH		LOW		AVERAGE		(THOUSANDS)	AT DEC. 31, 2021		HIGH		LOW		AVERAGE
Cleco	Cleco	$	7,138	$	7,879	$	3,425	$	5,451	Cleco	$	20,775	$	22,914	$	7,199	$	12,264

For more information on the accounting treatment and fair value of FTRs and other commodity derivatives, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Derivatives and Other Risk Management Activity” and “Note 8 — Fair Value Accounting and Financial Instruments — Commodity Contracts.”

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco Corporate Holdings LLC and its subsidiaries (the “Company”) as of December 31, ~~2020~~2021 and ~~2019,~~2020, and the related consolidated statements of income, of comprehensive income, of changes in ~~member’s~~member's equity and of cash flows for each of the three years in the period ended December 31, ~~2020,~~2021, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2021 and ~~2019,~~2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020~~2021 in conformity with accounting principles generally accepted in the United States of America.

~~Change in Accounting Principle~~

~~As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of January 1, 2019.~~

~~Basis for Opinion~~

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentationof

~~the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.~~

~~Critical Audit Matters~~

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

~~Goodwill Impairment Assessment – Cleco Power reporting unit~~

As described in Note 2 and Note 17 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1.49 billion at December 31, 2020, all of which was assigned to the Cleco Power Reporting Unit. Management conducts an impairment test as of August 1 of each year, or more often if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Fair value is estimated by management using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries. Significant assumptions used in these fair value estimates include estimation of future cash flows related to capital expenditures, long-term rate of growth, and weighted-average cost of capital or discount rate.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Cleco Power reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of the reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to capital expenditures, long-term rate of growth, and discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management’s process for developing the fair value estimate; (ii) evaluating the appropriateness of the discounted cash flow model; (iii) testing the completeness, accuracy, and relevance of underlying data used in the model; and (iv) evaluating the significant assumptions used by management relating to

the current and past performance of the reporting unit, (ii) the consistency with external market and modeled rate base changes, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the long-term rate of growth and discount rate assumptions.

Accounting for the Effects of Regulatory Matters

As described in Notes 2 and 6 to the consolidated financial statements, Cleco Power complies with the accounting policies and practices prescribed by its regulatory commissions, Federal Energy Regulatory Commission (FERC) and the Louisiana Public Service Commission (LPSC). Cleco Power’s retail rates are regulated by the LPSC and its tariffs for transmission services are regulated by FERC, while rates for wholesale power sales are based on market-based rates and are ultimately reviewed by FERC. Cleco Power must evaluate its various transactions related to regulatory orders and accounting guidance to ensure the appropriate timing of revenue recognition, the evaluation of cost deferral and the recoverability and refund of certain assets. Cleco Power capitalizes or defers certain costs for recovery from customers and recognizes a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process. As of December 31, 2021, there were $896.9 million of deferred costs included in regulatory assets and $95.5 million of regulatory liabilities awaiting cash outflow or potential refund. Under the current regulatory environment, Cleco Power

believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. Further, 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 of regulated operations.

The principal considerations for our determination that performing procedures relating to the accounting for the effects of regulatory matters is a critical audit matter are (i) the significant judgment by management in evaluating the impact of regulatory orders and accounting guidance on relevant transactions and (ii) a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence related to the timing of revenue recognition, the evaluation of cost deferral and the recoverability and refund of certain assets.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, evaluating (i) management’s process for identifying relevant transactions which require regulatory treatment; (ii) management’s assessment regarding the accounting impacts arising from regulatory orders and accounting guidance; (iii) the reasonableness of management’s assessment regarding the timing of revenue recognition, probability of recovery of regulatory assets and the establishment of regulatory liabilities; and (iv) the regulatory assets and liabilities calculated by management based on provisions and formulas outlined in rate orders and other correspondence.

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

March 7, 2022

We have served as the Company’s auditor since 2016.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco Power LLC and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of changes in member's equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated

financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for the Effects of Regulatory Matters

As described in Notes 2 and 6 to the consolidated financial statements, Cleco Power complies with the accounting policies and practices prescribed by its regulatory commissions, Federal Energy Regulatory Commission (FERC) and the Louisiana Public Service Commission (LPSC). Cleco Power’s retail rates are regulated by the LPSC and its tariffs for transmission services are regulated by FERC, while rates for wholesale power sales are based on market-based rates and are ultimately reviewed by FERC. Cleco Power must evaluate its various transactions related to regulatory orders and accounting guidance to ensure the appropriate timing of revenue recognition, the evaluation of cost deferral and the recoverability and refund of certain assets. Cleco Power capitalizes or defers certain costs for recovery from customers and recognizes a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process. As of December 31, ~~2020,~~2021, there were ~~$456.0~~$759.2 million of deferred costs included in regulatory assets and ~~$180.6~~$95.5 million of regulatory liabilities awaiting cash outflow or potential refund. Under the current regulatory environment, Cleco Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. Further, 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 of regulated operations.

The principal considerations for our determination that performing procedures relating to the accounting for the effects of regulatory matters is a critical audit matter are (i) the significant judgment by management in evaluating the impact of regulatory orders and accounting guidance on relevant transactions and (ii) a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and

procedures included, among others, evaluating (i) management’s process for identifying relevant transactions which require regulatory treatment; (ii) management’s assessment regarding the accounting impacts arising from regulatory orders and accounting guidance; (iii) the reasonableness of management’s assessment regarding the timing of revenue recognition, probability of recovery of

regulatory assets and the establishment of regulatory liabilities; and (iv) the regulatory assets and liabilities calculated by management based on provisions and formulas outlined in rate orders and other correspondence.

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

March ~~3, 2021~~7, 2022

We have served as the Company’s auditor since 2016.

Note 1 — The Company

Cleco is composed of the following:

•Cleco Power, a regulated electric utility subsidiary, which owns 109 generating units with a total rated capacity of ~~3,360~~3,035 MW and serves approximately ~~290,000~~291,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. Cleco Power also owns a 50% interest in an entity that owns lignite reserves. Cleco Power owns all of the outstanding membership interests in Cleco Katrina/Rita, a special purpose entity that is consolidated with Cleco Power in its financial statements.Oxbow.

•Cleco Cajun, an unregulated electric utility subsidiary, which owns 14 generating units with a total rated capacity of 3,379 MW and supplies wholesale power and capacity in Arkansas, Louisiana, and Texas. ~~Cleco Cajun owns all of the outstanding membership interest in Cottonwood Energy.~~ Upon the ~~closing~~close of the Cleco Cajun Transaction ~~Cottonwood Energy entered into the Cottonwood Sale Leaseback.~~in 2019, Cleco Cajun became a reportable segment of Cleco. For more information on the Cleco Cajun Transaction, see Note 3 — “Business Combinations.”

•Cleco’s other operations consist of the following:

◦Cleco Holdings, a holding company,

◦Support Group, a shared services subsidiary, and

◦Diversified Lands, an investment ~~subsidiary, and~~subsidiary.

◦~~Attala and Perryville, 2 subsidiaries that owned and operated transmission interconnection facilities prior to the assets being sold by Cleco on December 29, 2017.~~

~~Note 2 — Summary of Significant Accounting Policies~~

COVID-19 Impacts

OnIn March ~~11,~~ 2020, WHO declared the outbreak of COVID-19 to be a global pandemic, and ~~on March 13, 2020,~~ the U.S. declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments imposed varying degrees of restrictions on business and social activities to contain COVID-19, including quarantine and “stay-at-home” orders and directives in Cleco’s service territory. These restrictions have significantly impacted many sectors of the economy with record levels of unemployment, driven by businesses, nonprofit organizations, and governmental entities modifying, curtailing, or ceasing normal operations. State and local authorities ~~have~~ also subsequently implemented multistep policies ~~with the goal of reopening~~to reopen various sectors of the ~~economy such~~economy. Guidance was issued to reduce transmission of COVID-19, as retail establishments, health and personal care businesses, and restaurants, among others. However, certain jurisdictions have begun reopening only to delay these plans or return to restrictions in the face of increases in new COVID-19 cases. For example, the governor of the state of Louisiana issued orders in May 2020 to allow businesses to reopen at varying levels of capacity in May and June 2020. To address the June 2020 spike in COVID-19 cases, such reopening activities were temporarily paused or scaled back, and also included closing certain establishments. These restrictions resulted in a decline in new COVID-19 cases, and in September 2020, the state of Louisiana entered into the next phase of its multistep reopening plan. However, in the fall of 2020, new COVID-19 cases began to rise once again and in November 2020, the governor of the state of Louisiana issued orders reverting back to the previous phase of its multistep reopening plan, requiring businesses to temporarily pause or scale back their reopening activities. These increased restrictions again were successful in slowing the spread of COVID-19; therefore, effective March 3, 2021, the state of Louisiana reentered into the next phase of its multistep

well as provide protection against COVID-19.

Note 2 — Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The accompanying consolidated financial statements of Cleco include the accounts of Cleco and its majority-owned subsidiaries after elimination of intercompany accounts and transactions. Cleco’s consolidated financial statements include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, through December 31, ~~2020.~~2021. For more information on the Cleco Cajun Transaction, see Note 3 — “Business Combinations.”

Goodwill

Goodwill is the excess of the purchase price (consideration transferred and liabilities assumed) over the estimated fair value of net assets of the acquired business and is not subject to amortization. Goodwill is assessed as of August 1 of each year or more often if an event occurs or circumstances change that would indicate the carrying amount may be impaired. For more information on goodwill, see Note 17 — “Intangible Assets, Intangible Liabilities, and Goodwill.”

Intangible Assets and Liabilities

~~Intangible~~At December 31, 2021, intangible assets ~~include Cleco Katrina/Rita’s right to bill~~ and ~~collect storm recovery charges through March 2020, fair value~~

~~adjustments for long-term wholesale power supply agreements as well as a fair value adjustment for the valuation of the Cleco trade name. Intangible~~ liabilities ~~also include~~included fair value adjustments for long-term wholesale power supply ~~agreements and~~agreements. Intangible liabilities also included a fair value adjustment for the LTSA assumed for maintenance services related to the Cottonwood Plant. ~~The~~These intangible assets and liabilities are being amortized over their estimated useful lives in a manner that best reflects the economic impact derived from such assets and liabilities. Prior to being fully amortized in March 2020, intangible assets also included Cleco Katrina/Rita’s right to bill and collect storm recovery charges from Cleco Power’s customers.

During the third quarter of 2021, an impairment was recognized on the intangible asset related to Cleco Power’s trade name, and the carrying value of the intangible asset was reduced to zero. Impairment ~~will be~~is tested if there are events or circumstances that indicate that an impairment analysis should be performed. If such an event or circumstance occurs, intangible impairment testing ~~will be~~is performed prior to goodwill impairment testing. Impairment is calculated as the excess of the asset and liabilities’ respective carrying amounts over their respective fair values. For more information on intangible assets and liabilities, see Note 17 — “Intangible Assets, Intangible Liabilities, and Goodwill.”

Statements of Cash Flows

Cleco and Cleco Power’s Consolidated Statements of Cash Flows are prepared using the indirect method. This method requires adjusting net income to remove the effects of all deferrals and accruals of operating cash receipts and payments and to remove items whose cash effects are related to investing and financing cash flows. Derivatives meeting the

definition of an accounting hedge are classified in the same category as the item being hedged.

Regulation

Cleco Power is subject to regulation by FERC and the LPSC. Cleco Cajun is subject to regulation by FERC. Cleco complies with the accounting policies and practices prescribed by its regulatory commissions. Cleco Power’s retail rates are regulated by the LPSC. Cleco and Cleco Cajun’s rates for transmission services are regulated by FERC. Rates for wholesale power sales are based on market-based rates, pending FERC review of Cleco’s generation market power analysis. Cleco Power must evaluate its various transactions related to regulatory orders and accounting guidance to ensure the appropriate timing of revenue recognition, the evaluation of cost deferral, and the recoverability of certain assets and refund of certain ~~assets.~~liabilities. Cleco Power capitalizes or defers certain costs for recovery from its customers and recognizes a liability for amounts expected to be returned to its customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process. Regulatory assets and liabilities are amortized consistent with the treatment ~~of the related cost~~ in the ratemaking process. Pursuant to this regulatory ~~approval,~~process, Cleco has recorded regulatory assets and liabilities.

Any future plan adopted by the LPSC for purposes of transitioning utilities from LPSC regulation to retail competition may affect the regulatory assets and liabilities recorded by Cleco if the criteria for the application of the authoritative guidelines for industry regulated operations cannot continue to be met. At this time, Cleco cannot predict whether any legislation or regulation affecting Cleco will be enacted or adopted and, if enacted, what form such legislation or regulation may take.

For more information regarding the regulatory assets and liabilities recorded by Cleco Power, see Note 6 — “Regulatory Assets and Liabilities.”

Contingencies, and Disclosures and ~~Guarantee~~Guarantees — ~~Risks and Uncertainties.~~Other Commitments.”

Property, Plant, and Equipment

Property, plant, and equipment consists primarily of utility generation and energy transmission and distribution assets. Assets utilized primarily for retail and wholesale operations and electric transmission and distribution are stated at the cost of construction, which includes certain materials, labor, payroll taxes and benefits, administrative and general costs, and the estimated cost of funds used during construction. Jointly owned assets are reflected in property, plant, and equipment at Cleco Power’s and Cleco Cajun’s share of the cost to construct or purchase the respective assets. For information on jointly owned assets, see Note 7 — “Jointly Owned Generation Units.”

At the date of the 2016 Merger, Cleco’s gross balance of fixed depreciable assets was adjusted to be net of accumulated depreciation, as no accumulated depreciation existed on such date. Since pushdown accounting was not elected at the Cleco Power level, Cleco Power retained its accumulated depreciation.

Cleco’s cost of improvements to property, plant, and equipment is capitalized. Costs associated with repairs and major maintenance projects are expensed as incurred. Cleco capitalizes the cost to purchase or develop software for internal use. On August 1, 2019, Cleco and Cleco Power began amortizing the computer software related to the START project. The amounts of unamortized computer software costs on Cleco’s Consolidated Balance Sheets at December 31, 2021, and 2020 were $172.7 million and ~~2019 were~~ $178.1 million, ~~and $168.6 million,~~

respectively. The amounts of unamortized computer software costs on Cleco Power’s Consolidated Balance Sheets at December 31, 2021, and 2020 ~~and 2019~~ were ~~$177.0~~$167.4 million and ~~$166.2~~$177.0 million, respectively. Amortization of capitalized computer software costs charged to expense in Cleco and Cleco Power’s Consolidated Statements of Income for the years ending December 31, 2021, 2020, ~~2019,~~ and ~~2018~~2019 is shown in the following tables:


Cleco	Cleco							Cleco
		FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		2018		(THOUSANDS)	2021		2020		2019
Amortization	Amortization	$	11,015	$	4,917	$	2,154	Amortization	$	11,878	$	11,015	$	4,917


Cleco Power	Cleco Power							Cleco Power
		FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		2018		(THOUSANDS)	2021		2020		2019
Amortization	Amortization	$	10,379	$	4,321	$	1,607	Amortization	$	11,268	$	10,379	$	4,321

Cleco Power
AT DEC. 31,
(THOUSANDS) 2020 2019
Regulated utility plants
Generation $ 2,673,271 $ 2,633,590
Distribution 1,796,841 1,593,104
Transmission 857,833 805,701
Other utility plant 496,433 457,062
Total property, plant, and equipment 5,824,378 5,489,457
Accumulated depreciation (2,067,362) (1,905,031)
Net property, plant, and equipment $ 3,757,016 $ 3,584,426


Cleco
	AT DEC. 31,
(THOUSANDS)	2021		2020
Acadia Unit 1
Plant acquisition adjustment	$	76,116	$	76,116
Accumulated amortization	(18,201)		(15,018)
Net plant acquisition adjustment	$	57,915	$	61,098

On February 4, 2019, Cleco acquired $741.2 million of unregulated property, plant, and equipment as a result of the Cleco Cajun Transaction. These assets were recorded at fair market value at the date of the acquisition. For more information on the Cleco Cajun Transaction, see Note 3 — “Business Combinations.”

~~During 2020, Cleco Power’s regulated utility property, plant, and equipment increased primarily due to the costs related to Hurricanes Laura, Delta, and Zeta, and other capital projects.~~


Cleco Power
	AT DEC. 31,
(THOUSANDS)	2021		2020
Acadia Unit 1
Plant acquisition adjustment	$	95,578	$	95,578
Accumulated amortization	(37,663)		(34,480)
Net plant acquisition adjustment	$	57,915	$	61,098

Deferred Project Costs

Cleco Power defers costs related to the initial stage of a construction project during which time the feasibility of the construction of property, plant, and equipment is being investigated. At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco Power had deferred ~~$2.5~~$4.5 million and ~~$1.4~~$2.5 million, respectively, for projects that are in the initial stages of development. These amounts are classified as Other deferred charges on Cleco Power’s Consolidated Balance Sheets.

Fuel Inventory and Materials and Supplies

~~Fuel~~At December 31, 2021, fuel inventory ~~consists~~consisted primarily of petroleum coke, coal, limestone, ~~lignite,~~ and natural gas used to generate electricity. Prior to the retirement of the Dolet Hills Power Station on December 31, 2021, fuel inventory also consisted of lignite.

Materials and supplies consists of transmission and distribution line construction and repair materials. It also consists of generating station and transmission and distribution substation repair materials.

Both fuel inventory and materials and supplies are recorded at the lower of cost or net realizable value using the average cost method and are issued from stock using the average cost of existing stock. Materials and supplies are recorded when purchased and subsequently charged to expense or capitalized to property, plant, and equipment when installed.

Reserves for Credit Losses

Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts receivables are generally considered to become past due 20 days after the billing date. Cleco recognizes write-offs within the allowance for credit losses once all recovery methods have been exhausted. It is the policy of management to review accounts receivable and unbilled revenue monthly using a reserve matrix based on historical bad debt write-offs as well as current and forecasted economic conditions to establish a credit loss estimate. Management’s historical credit loss analysis included periods of economic recessions, natural disasters, and temporary changes to collection policies. Due to the critical necessity of electricity, none of these past events have significantly impacted Cleco’s credit loss rates.

In response to the COVID-19 pandemic, the LPSC issued an executive order prohibiting the disconnection of utilities for nonpayment from March 13, 2020, through July 16, 2020. As a result of this executive order, Cleco Power suspended the assessment of late fees, disconnections, and the utilization of collection agencies, which resulted in no additional charge-offs during the second and third quarters of 2020. On July 16, 2020, Cleco Power began setting up payment plan arrangements for customers with past due balances to be repaid over a period of up to 18 months. ~~On August 27, 2020, Hurricane Laura made landfall in southwest Louisiana causing substantial damage to Cleco’s distribution and transmission facilities and to the properties of Cleco’s customers.~~ Although Cleco’s service territory experienced a recent economic decline ~~in the economy~~during 2021 and 2020 primarily related to ~~these~~the COVID-19 pandemic and weather-related events, the

economic outlook at December 31, ~~2020,~~2021, was still within range of its historical credit loss analysis. Cleco began resuming disconnections and late fees and utilizing collection agencies on October 1, 2020. In October 2020, hurricanes Delta and Zeta made landfall in south Louisiana causing substantial damage to Cleco’s distribution and transmission facilities and to the properties of Cleco’s customers. Due to the hurricanes, Cleco suspended disconnections for part of October and began resuming disconnections on November 3, 2020.

The table below presents the changes in the allowance for credit losses by receivable for Cleco and Cleco Power:

Cleco
(THOUSANDS) ACCOUNTS
RECEIVABLE OTHER* TOTAL
Balances, Dec. 31, 2019 $ 3,005 $ 1,250 $ 4,255
CECL adoption 71 — 71
Current period provision 5,029 388 5,417
Charge-offs (6,423) 0 (6,423)
Recovery 1,076 0 1,076
Balances, Dec. 31, 2020 $ 2,758 $ 1,638 $ 4,396

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


Cleco
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, Dec. 31, 2019	$	3,005	$	1,250	$	4,255
CECL adoption	71		—		71
Current period provision	5,029		388		5,417
Charge-offs	(6,423)		—		(6,423)
Recovery	1,076		—		1,076
Balances, Dec. 31, 2020	2,758		1,638		4,396

Current period provision	4,003		—		4,003
Charge-offs	(6,919)		—		(6,919)
Recovery	1,460		—		1,460
Balances, Dec. 31, 2021	$	1,302	$	1,638	$	2,940
* Loan held at Diversified Lands that was fully reserved for at December 31, 2020.


Cleco Power
(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, Dec. 31, 2019	$	3,005
CECL adoption	71
Current period provision	5,029
Charge-offs	(6,423)
Recovery	1,076
Balances, Dec. 31, 2020	2,758

Current period provision	4,003
Charge-offs	(6,919)
Recovery	1,460
Balances, Dec. 31, 2021	$	~~2,758~~1,302

~~For more information on the adoption of CECL, see “— Recent Authoritative Guidance.”~~

Other Reserves

Cleco maintains property insurance on generating stations, buildings and contents, and substations. Cleco is self-insured for any damage to its power lines. To mitigate the exposure to potential financial loss for damage to lines, Cleco Power maintains an LPSC-approved ~~funded~~ storm reserve.

Cleco also maintains liability and workers’ compensation insurance to mitigate financial losses due to injuries and damages to the property of others. Cleco’s insurance covers claims that exceed certain self-insured limits. For claims within certain self-insured limits, Cleco maintains reserves. At December 31, ~~2020,~~2021, and ~~2019,~~2020, the general liability and

related escrow accounts and becomes available for its intended purposes and/or general company purposes.

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


Cleco	Cleco					Cleco
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Current	Current					Current
Cleco Katrina/Rita’s storm recovery bonds		$	2,626	$	9,632
Cleco Katrina/Rita’s storm recovery surcharge						Cleco Katrina/Rita’s storm recovery surcharge	$	1,674	$	2,626
Cleco Power’s charitable contributions	Cleco Power’s charitable contributions	1,718		1,200		Cleco Power’s charitable contributions	—		1,718
Cleco Power’s rate credit escrow	Cleco Power’s rate credit escrow	201		268		Cleco Power’s rate credit escrow	—		201
Total current	Total current	4,545		11,100		Total current	1,674		4,545
Non-current	Non-current					Non-current
Diversified Lands’ mitigation escrow	Diversified Lands’ mitigation escrow	22		21		Diversified Lands’ mitigation escrow	22		22
Cleco Cajun’s defense fund	Cleco Cajun’s defense fund	722		719		Cleco Cajun’s defense fund	723		722
Cleco Cajun’s margin deposits		0		100
Cleco Power’s future storm restoration costs		0		12,269
Cleco Power’s charitable contributions		0		2,094

Total non-current	Total non-current	744		15,203		Total non-current	745		744
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	$	5,289	$	26,303	Total restricted cash and cash equivalents	$	2,419	$	5,289


Cleco Power	Cleco Power					Cleco Power
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Current	Current					Current
Cleco Katrina/Rita’s storm recovery bonds		$	2,626	$	9,632
Cleco Katrina/Rita’s storm recovery surcharges						Cleco Katrina/Rita’s storm recovery surcharges	$	1,674	$	2,626
Charitable contributions	Charitable contributions	1,718		1,200		Charitable contributions	—		1,718
Rate credit escrow	Rate credit escrow	201		268		Rate credit escrow	—		201
Total current		4,545		11,100
Non-current
Future storm restoration costs		0		12,269
Charitable contributions		0		2,094

Total non-current		0		14,363

Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	$	4,545	$	25,463	Total restricted cash and cash equivalents	$	1,674	$	4,545

Other Operations Revenue

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

Sales and Use Taxes

Cleco collects a sales and use tax on the sale of electricity that subsequently is remitted to the state in accordance with state law. These amounts are not recorded as income or expense on ~~Cleco and Cleco Power’s~~Cleco’s Consolidated Statements of Income but are reflected at gross amounts on ~~Cleco and Cleco Power’s~~Cleco’s Consolidated Balance Sheets as a receivable until the tax is collected and as a payable until the liability is paid. Cleco currently has no sales tax collected from customers reflected on its income statement.

Franchise Fees

Cleco Power collects a consumer fee for one of its franchise agreements. This fee is not recorded on Cleco and Cleco Power’s Consolidated Statements of Income as revenue and expense, but is reflected at gross amounts on Cleco and Cleco Power’s Consolidated Balance Sheets as a receivable until it is collected and as a payable until the liability is paid.

AFUDC

The capitalization of AFUDC by Cleco Power is a utility accounting practice prescribed by FERC and the LPSC. AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance construction of new and existing facilities. While cash is not realized currently from

such allowance, AFUDC increases the revenue requirement over the same life of the plant through a higher rate base and higher depreciation. Under regulatory practices, a return on and recovery of AFUDC is permitted in setting rates charged for utility services. For 2020, Cleco Power’s average short-term debt balance exceeded its average construction work-in-progress balance; however, Cleco Power elected the FERC capital structure waiver contained in FERC Docket Number AC20-127-000. The composite AFUDC rate, including borrowed and other funds, was 10.05% on a pretax basis (7.81% net of tax) for 2021, 10.14% on a pretax basis (7.96% net of tax) for 2020 and 10.71% on a pretax basis (8.37% net of tax) for ~~2019 and 9.58%~~2019. For more information on ~~a pretax basis (7.08% net~~the regulatory treatment of ~~tax) for 2018. Since Cleco Power has not received LPSC authority to recover~~the retail portion of AFUDC calculated under the FERC waiver, ~~Cleco Power recognized a regulatory liability for the difference between AFUDC calculated under the FERC waiver~~see Note 6 — “Regulatory Assets and ~~AFUDC calculated using only short-term debt as a source of financing.~~Liabilities — AFUDC.”

Fair Value Measurements and Disclosures

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes. For more information about fair value levels, see Note 8 — “Fair Value ~~Accounting.~~Accounting and Financial Instruments.”

Derivatives and Other Risk Management Activity

Cleco’s Energy Market Risk Management Policy authorizes hedging of commodity price risk with physical or financially settled derivative instruments. Some of these contracts 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 are awarded and/or purchase FTRs in auctions facilitated by MISO. The majority of these FTRs are purchased in annual auctions during the second quarter, but additional FTRs may be purchased in monthly auctions. FTRs represent economic hedges of future congestion charges that will be incurred in serving customer load. FTRs are derivatives not designated as hedging instruments for accounting purposes.

Cleco Power’s FTRs are marked-to-market with the resulting unrealized gains or losses deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. At settlement, realized gains or losses are included in the FAC and reflected on customers’ bills as a component of the fuel charge.

Cleco Cajun’s FTRs are marked-to-market with the resulting unrealized gains and losses recorded on the income statement as a component of purchased power expense. At settlement, realized gains or losses are also recorded on the income statement as a component of purchased power expense.

Cleco Cajun has natural gas commodity contracts that are fixed price physical forwards and financial ~~swaps contracts.~~swaps. Management did not elect to apply hedge accounting to these contracts as allowed under applicable accounting standards. When these contracts are marked-to-market, the resulting unrealized gain or loss is

Cleco recognizes ROU assets and lease liabilities for leasing arrangements with terms greater than one year. Except for the marine transportation asset class, Cleco accounts for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco’s marine transportation contracts, which include barges and towboats, contain non-lease components, such as maintenance and labor. Cleco allocates the consideration in these contracts between lease and non-lease components based on estimates of fair value from third parties that typically execute leases for this class of assets.

Expense for a lessee operating lease is recognized as a single lease cost on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the leased asset’s function. Income for a lessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function. For more information on leases, see Note 4 — “Leases.”

Recent Authoritative Guidance

In ~~June 2016, FASB amended the guidance for the measurement of credit losses on receivables and certain other assets. In-scope items for Cleco include unbilled revenue,~~

trade receivables, notes receivables, other accounts receivables, and guarantees. The guidance requires use of a current expected loss model, which may result in earlier recognition of credit losses. Effective January 1, 2020, Cleco adopted the amended guidance using the prospective transition method. Adoption of this standard resulted in less than a $0.1 million increase in credit loss reserves related to unbilled revenue and trade receivables. The current expected credit loss model did not impact reserves related to any other in-scope items. For more information on Cleco’s accounting for credit losses, see “— Reserves for Credit Losses.”

In August 2018, FASB issued guidance that allows for the deferral of certain implementation costs incurred in a cloud computing arrangement. Effective January 1, 2020, Cleco adopted the guidance using the prospective transition method. Adoption of this guidance did not materially impact the Registrants’ results of operations, financial condition, or cash flows.

In March 2020, FASB issued optional guidance, for a limited period of time, that applies to entities meeting certain criteria for the contract modifications or hedging relationships that are referencing LIBOR or another reference rate expected to be discontinued due to reference rate reform. The guidance includes a general principal that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The optional guidance may be applied from March 12, 2020, through December 31, 2022. Management has ~~initiated a review of~~identified contracts ~~to identify those~~ with reference rates that will be discontinued, primarily related to long-term debt obligations. Certain debt contracts have been amended to include fallback provisions that provide substitute reference rates upon the discontinuance of LIBOR, among other amendments. Management will continue to modify contracts to include similar fallback language and expects to apply this guidance on an ~~on-going~~ongoing basis. Management does not expect this guidance to have a significant impact on the Registrants’ results of operations, financial condition, or cash flows.

In December 2019, FASB amended the guidance for accounting for income taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to general principles included in the accounting guidance. Effective January 1, 2021, Cleco adopted the amended accounting guidance. Adoption of this guidance did not materially impact the Registrants’ results of operations, financial condition, or cash flows.

Note 3 — Business Combinations

On February 4, 2019, Cleco Cajun acquired from NRG Energy all of the outstanding membership interests in South Central Generating. This acquisition enabled Cleco to significantly increase the scale of its operations in Louisiana and included the following:

•a 176-MW natural-gas-fired generating station located in Sterlington, Louisiana,

•a 220-MW natural-gas-fired facility and a 210-MW natural-gas-fired peaking facility, both located in Jarreau, Louisiana,

•a 580-MW coal-fired generating facility, a 540-MW natural-gas-fired generating station, and 58% of a 588-MW coal-fired generating station all located in New Roads, Louisiana,

•~~225 MW~~75% of a 300-MW natural-gas-fired peaking facility located in Jennings, Louisiana,

•a 1,263-MW natural-gas-fired generating station located in Deweyville, Texas (the Cottonwood Plant),

•wholesale contracts to provide electricity and capacity to 9 Louisiana electric cooperatives, 5 municipalities across Arkansas, Louisiana, and Texas, and 1 investor-owned utility,

•transmission assets, which consist of equipment and land required to connect the generation stations and the wholesale customers to the transmission grid, and

•current assets consisting of cash, inventory, receivables and other miscellaneous assets.

Accounting for the Cleco Cajun Transaction

As consideration for all of the outstanding membership interest in South Central Generating, Cleco paid cash of approximately $962.2 million, which represents the ~~$1.0~~$1.00 billion acquisition price net of working capital and other adjustments of $37.8 million.

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings borrowed $300.0 million under a bridge loan agreement and $100.0 million under a term loan ~~agreement.~~agreement to partially finance the transaction. Both loan agreements ~~are variable rate debt and have a three-year term. Both loan agreements contain~~contained certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to Cleco’s senior debt rating (as defined in the applicable agreement). On September 11, 2019, Cleco Holdings refinanced the remaining amounts due under the $300.0 million bridge loan agreement and a portion of the $100.0 million term loan agreement with the proceeds from the private

placement of $300.0 million aggregate principal amount of senior notes. ~~For more information, see Note 9 — “Debt.”~~ On July 14, 2020, Cleco Holdings completed an exchange offer for its outstanding 3.375% senior notes, which were not registered under the Securities Act of 1933, as amended, for an equal principal amount of newly issued 3.375% senior notes due on September 15, 2029, that were registered. Cleco Holdings did not receive any proceeds from the exchange offer.

Also, in connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total capacity of $175.0 ~~million. All~~million, all other terms remained the ~~same. Also, in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings~~same, and made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

The remaining cash required to finance the transaction consisted of an equity contribution from Cleco Group of $384.9 million and $102.3 million from cash on hand at Cleco Holdings.

Cleco Cajun accounted for the Cleco Cajun Transaction as a business combination, and accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the date of the acquisition. Cleco made certain measurement period adjustments at June 30, 2019. The following chart presents Cleco’s ~~current~~ purchase price allocation:


Purchase Price Allocation
(THOUSANDS)
Current assets
Cash and cash equivalents	$	146,494
Customer and other accounts receivable	49,809
Fuel inventory	22,060
Materials and supplies	25,659
Energy risk management assets	4,193
Other current assets	10,056
Non-current assets
Property, plant, and equipment, net	741,203
Prepayments	36,166
Restricted cash and cash equivalents	707
Intangible assets	98,900
Other deferred charges	133
Total assets acquired	1,135,380
Current liabilities
Accounts payable	38,478
Taxes payable	723
Energy risk management liabilities	241
Other current liabilities	14,570
Non-current liabilities
Accumulated deferred federal and state income taxes, net	7,165
Deferred lease revenue	58,300
Intangible liabilities	38,300
Asset retirement obligations	15,323
Operating lease liabilities	110
Total liabilities assumed	173,210
Total purchase price consideration	$	962,170

The fair values of Cleco Cajun’s acquired assets and assumed liabilities were determined based on significant estimates and assumptions, including projected future cash flows and discount rates reflecting risk inherent in those future cash flows. There were also estimates made to determine the expected useful lives of each class of assets acquired.

On the date of the acquisition, fair value adjustments were recorded on Cleco’s Consolidated Balance Sheet for the difference between the contract and market price of acquired long-term wholesale power agreements. The fair value of intangible assets of $98.9 million and intangible liabilities of

reflected in the purchase price allocation and is being amortized over the term of the lease agreement. The amortization is included in Other operations revenue on Cleco’s Consolidated Statement of Income.

During the second quarter of 2019, certain modifications were made to the preliminary valuations as of February 4, 2019, due to the refinement of valuation models, assumptions, and inputs. The measurement period adjustments were based upon information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of the amounts recognized at that date.


Measurement Period Adjustments
(THOUSANDS)	AT JUNE 30, 2019
Current assets
Customer and other accounts receivable	$	1,408
Other current assets	$	56
Non-current assets
Property, plant, and equipment, net	$	13,297
Prepayments	$	(56)
Intangible assets	$	(3,600)
Other deferred charges	$	1

Current liabilities
Accounts payable	$	3,022
Energy risk management liabilities	$	(1)
Other current liabilities	$	327
Non-current liabilities
Accumulated deferred federal and state income taxes, net	$	421
Deferred lease revenue	$	(3,600)
Intangible liabilities	$	6,400
Asset retirement obligations	$	4,534
Operating lease liabilities	$	3

The measurement period adjustments resulted in an increase in electric operations revenue of $0.5 million, a decrease in other operations revenue of $0.1 million, and an increase in depreciation expense of $0.2 million recorded for the three months ended June 30, 2019.

As of December 31, 2019, Cleco completed its evaluation and determination of the fair value of assets acquired and

liabilities assumed in the Cleco Cajun Transaction. There were no adjustments to those amounts during the third and fourth quarters of 2019.

Pro forma Impact of the Cleco Cajun Transaction

The following table includes the unaudited pro forma financial information reflecting the consolidated results of operations of Cleco as if the Cleco Cajun Transaction had taken place on January 1, 2018. The pro forma net income for the year ended December 31, 2019, was adjusted to exclude nonrecurring transaction-related expenses of $4.7 million. ~~The pro forma net income for the year ended December 31, 2018, includes nonrecurring transaction-related expenses.~~

The unaudited pro forma financial information presented in the following table is not necessarily indicative of the consolidated results of operations that would have been achieved had the transaction taken place on the dates indicated, or the future consolidated results of operations of the combined companies.

Unaudited Pro Forma Financial Information
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2019 2018
Operating revenue, net $ 1,660,362 $ 1,668,022
Net income $ 154,898 $ 170,224


Unaudited Pro Forma Financial Information
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2019
Operating revenue, net	$	1,660,362
Net income	$	154,898

Note 4 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Operating Leases

Cleco Power leases utility systems from 2 municipalities and 1 non-municipal public body. ~~On July 9, 2019, one~~One municipal lease ~~was renewed for an additional~~has a term of 10 years and expires on August 11, 2031. The second municipal lease has a term of 10 years and expires on May 13, 2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains fixed and variable components, as well as provisions for extensions.

During 2021, Cleco Power ~~has a~~renewed its lease for 113 railcars for coal transportation, which expires on March 31, 2021. Cleco Cajun has a lease for 135 railcars for coal transportation, which commenced in February 2019 and was a short-term lease with an initial term of 12 months. On January 27, 2020, this lease was renewed and expires on March 31, 2021. This lease renews for additional one-month terms unless Cleco Cajun chooses to terminate.2024. Cleco reassesses its need for the railcars upon the expiration of each term. Cleco pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

Cleco Power has leases for 3 towboats in order to transport petroleum coke to Madison Unit 3. Each of the towboat leases has a term of 10 years and expires on March 31, 2028. Under these agreements, the rates are adjusted annually per the Producer Price Index. Each lease contains provisions for a five-year extension.

Cleco and Cleco Power’s remaining operating leases provide for office and operating facilities, office equipment, and tower rentals.

The barge lease rate contains both a fixed and variable component, of which the latter is adjusted every third anniversary of the agreement for estimated executory costs. If the barges are idle, the lessor is required to attempt to sublease the barges to third parties with the revenue reducing Cleco Power’s lease payment. This agreement contains a provision for early termination upon the occurrence of any 1 of 4 cancellation events.

For each of the years ended December 31, 2021, 2020, ~~2019,~~ and ~~2018,~~2019, Cleco Power paid $2.2 million ~~$2.2 million, and $2.0 million, respectively,~~ in lease payments. For the years ended December 31, 2021, 2020, ~~2019,~~ and ~~2018,~~2019, Cleco Power received $0.2 million, $0.8 million, ~~$1.7 million,~~ and ~~$0.5~~$1.7 million, respectively, of revenue from subleases.

The following is an analysis of the leased property under the finance lease:


(THOUSANDS)	(THOUSANDS)	AT DEC. 31, 2020		AT DEC. 31, 2019		(THOUSANDS)	AT DEC. 31, 2021		AT DEC. 31, 2020
Barges	Barges	$	16,800	$	16,800	Barges	$	16,800	$	16,800
Accumulated amortization	Accumulated amortization	(3,080)		(1,960)		Accumulated amortization	(4,200)		(3,080)
Net finance lease asset	Net finance lease asset	$	13,720	$	14,840	Net finance lease asset	$	12,600	$	13,720

~~The following tables present additional information related to Cleco and Cleco Power’s operating and finance leases as of and for the years ended December 31, 2020, and 2019:~~


Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,800	$	4,120
Operating cash flows from finance leases	$	1,521	$	1,587
Financing cash flows from finance leases	$	682	$	617

Cleco
AT DEC. 31,
(THOUSANDS) BALANCE SHEET LINE ITEM 2020 2019
Supplemental balance sheet information
ROU assets
Operating Operating lease right of use assets $ 26,172 $ 28,791
Finance Property, plant, and equipment 13,720 14,840
Total ROU assets $ 39,892

$ 43,631
Current lease liabilities
Operating
Other current liabilities
$ 2,802 $ 2,978
Finance Long-term debt and finance leases due within one year 682 617
Non-current lease liabilities
Operating Operating lease liabilities 23,333 25,779
Finance Long-term debt and finance leases, net 14,562 15,244
Total lease liabilities $ 41,379 $ 44,618


Cleco
	AT DEC. 31,
(THOUSANDS)	2021		2020
Other supplemental information
Operating leases
Weighted-average remaining lease term	9.0 years		9.9 years
Weighted-average discount rate	4.30	%	4.31	%
Finance leases
Weighted-average remaining lease term	11.3 years		12.3 years
Weighted-average discount rate	10.18	%	10.18	%

Cleco Power
AT DEC. 31,
(THOUSANDS) BALANCE SHEET LINE ITEM 2020 2019
Supplemental balance sheet information
ROU assets
Operating Operating lease right of use assets $ 26,006 $ 28,633
Finance Property, plant, and equipment 13,720 14,840
Total ROU assets $ 39,726

$ 43,473
Current lease liabilities
Operating Other current liabilities $ 2,672 $ 2,935
Finance Long-term debt and finance leases due within one year 682 617
Non-current lease liabilities
Operating Operating lease liabilities 23,295 25,658
Finance Long-term debt and finance leases, net 14,562 15,244
Total lease liabilities $ 41,211 $ 44,454

Cleco
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2020 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 4,504 $ 4,452
Operating cash flows from finance leases $ 1,587 $ 1,646
Financing cash flows from finance leases $ 617 $ 557
ROU assets obtained in exchange for new lease liabilities $ 0 $ 15,881

Cleco Power
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2020 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 4,120 $ 4,203
Operating cash flows from finance leases $ 1,587 $ 1,646
Financing cash flows from finance leases $ 617 $ 557
ROU assets obtained in exchange for new lease liabilities $ 0 $ 15,749

Cleco
AT DEC. 31,
(THOUSANDS) 2020 2019
Other supplemental information
Operating leases
Weighted-average remaining lease term 9.9 years 10.8 years
Weighted-average discount rate 4.31 % 4.31 %
Finance leases
Weighted-average remaining lease term 12.3 years 13.3 years
Weighted-average discount rate 10.18 % 10.18 %

Cleco Power

AT DEC. 31, 2020

AT DEC. 31, 2021

(THOUSANDS)

2020

2019

(THOUSANDS)

2021

2020

Other supplemental information

Operating leases

Weighted-average remaining lease term

10.0 years

10.8 years

Weighted-average remaining lease term

9.0 years

10.0 years

Weighted-average discount rate

4.31

%

4.31

%

Weighted-average discount rate

4.30

%

4.31

%

Finance leases

Weighted-average remaining lease term

12.3 years

13.3 years

Weighted-average remaining lease term

11.3 years

12.3 years

Weighted-average discount rate

10.18

%

10.18

%

Weighted-average discount rate

10.18

%

10.18

%

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease, NRG Energy will operate the Cottonwood Plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

most recent bill to the end of the respective accounting period. Cleco Power uses actual customer energy consumption data available from AMI to calculate unbilled revenue. Also included in Cleco Power’s retail revenue is electric customer credits, which primarily represents the ~~accrued estimated refunds~~credits to Cleco Power’s retail customers for the ~~tax related~~federal tax-related benefits of the ~~TCJA.~~TCJA prior to the settlement of Cleco Power’s new retail rate plan. Subsequent to the settlement of Cleco Power’s new retail rate plan, these credits offset base revenue.

Wholesale Revenue

Cleco’s wholesale revenue is generated primarily through the sale of energy and capacity to electric cooperatives and municipalities. The electricity revenue performance obligations, representing both energy and capacity, are satisfied as a

series of performance obligations, and progress towards satisfaction of the performance obligations are measured using an output method. The energy performance obligation measure of progress is based on kWh delivered. The capacity performance obligation measure of progress is based on time elapsed and is recognized each month as Cleco’s generating units stand ready to deliver electricity to the customer. Cleco recognizes wholesale revenue, inclusive of both performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice. Cleco, through Cleco Power and Cleco Cajun, charges its wholesale customers market based rates that are subject to FERC’s triennial market power analysis. Cleco also enters into transactions through MISO for spot energy sales which are transacted in the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market.

Transmission Revenue

Cleco Power and Cleco Cajun earn transmission revenues pursuant to MISO’s FERC filed tariff. The performance obligation of transmission service is satisfied as service is provided. Revenue from the transmission of electricity for

Cleco Power and Cleco Cajun is recorded based on a separate FERC-approved annual filing rate mechanism effective June 1 of each year. These rates are based on the respective costs to provide transmission services.

Other Revenue

Other revenue from contracts with customers, which is not a significant source of Cleco’s revenue, consisted of customer-forfeited discounts and reconnect fees, electric property rental, and other miscellaneous fees. For 2019, ~~and 2018,~~ other revenue ~~includes~~also included Cleco Power’s Teche Unit 3 SSR revenue. The performance obligation under these contracts is satisfied and revenue is recognized as control of the products is delivered or services are rendered.

Revenue Unrelated to Contracts with Customers

Cleco’s energy-related transactions with the following characteristics qualify as derivative contracts and are recorded pursuant to derivatives and hedging accounting guidance: a) their value is based on the notional amount or payment provisions of an underlying asset; b) they require no or a diminutive initial net investment; and c) their terms require or permit net settlement.

Cleco Cajun’s other revenue includes fixed lease payments and certain variable payments for costs paid by NRG Energy on behalf of Cleco. For more information on the Cottonwood lease agreement, see Note 4 — “Leases — ~~Lessor Agreements~~Additional Lessee Disclosures — Cottonwood Sale Leaseback Agreement.”

Disaggregated Revenue

Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a reportable segment. For more information on the Cleco Cajun Transaction, see Note 3 — “Business Combinations.”

Operating revenue, net for the ~~year~~years ended December 31, 2021, 2020, and 2019 was as follows:

Cleco and Cleco Power have unsatisfied performance obligations under contracts with electric cooperatives and municipalities with durations ranging between 1 and 1413 years that primarily relate to stand-ready obligations as part of fixed capacity minimums. At December 31, ~~2020,~~2021, Cleco and Cleco Power had ~~$73.2~~$63.2 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 6 — Regulatory Assets and Liabilities

Cleco Power capitalizes or defers certain costs for recovery from customers and recognizes a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

Under the current regulatory environment, Cleco Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. In

addition, potential deregulation of the industry or possible future changes in the method of rate regulation of Cleco Power, could require discontinuance of the application of the authoritative guidance of regulated operations.

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

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


Cleco	Cleco					Cleco
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Total Cleco Power regulatory assets, net	Total Cleco Power regulatory assets, net	$	275,469	$	152,549	Total Cleco Power regulatory assets, net	$	663,621	$	275,469
2016 Merger adjustments (1)	2016 Merger adjustments (1)					2016 Merger adjustments (1)
Fair value of long-term debt	Fair value of long-term debt	119,553		127,977		Fair value of long-term debt	112,150		119,553
Postretirement costs	Postretirement costs	15,411		17,399		Postretirement costs	13,424		15,411
Financing costs	Financing costs	7,592		7,935		Financing costs	7,248		7,592
Debt issuance costs	Debt issuance costs	5,254		5,665		Debt issuance costs	4,920		5,254
Total Cleco regulatory assets, net	Total Cleco regulatory assets, net	$	423,279	$	311,525	Total Cleco regulatory assets, net	$	801,363	$	423,279

(1) Cleco regulatory assets include acquisition accounting adjustments as a result of the 2016 Merger.

Acadia Unit 1 Acquisition Costs

In 2009, the LPSC approved Cleco Power’s request to establish a regulatory asset for costs incurred as a result of the acquisition by Cleco Power of Acadia Unit 1 and half of Acadia Power Station’s related common facilities. The Acadia Unit 1 acquisition costs are being recovered over a 30-year period beginning February 2010.

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 charges. The difference between fuel and purchased power revenues collected from retail and wholesale customers and the current fuel and purchased power costs is generally recorded as Accumulated deferred fuel on Cleco Power’s Consolidated Balance Sheet. For ~~2020,~~2021, approximately 76% of Cleco Power’s total fuel cost was regulated by the LPSC.

In February 2021, Winter Storms Uri and Viola moved through Louisiana causing substantial damage to Cleco’s distribution assets, electricity generation supply shortages, natural gas supply shortages, and increases in prices of natural gas in the U.S., primarily due to prolonged freezing temperatures. Incremental fuel and purchased power costs were incurred as a result of the winter storms. On March 29, 2021, Cleco Power received approval from the LPSC to defer $50.0 million of these costs and recover them over 12 months through Cleco Power’s FAC beginning in May 2021. For more information about the incremental fuel and purchased power costs related to Winter Storms Uri and Viola, see Note 19 — “Storm Restoration, Securitization, and Cost Recovery — Winter Storms Uri and Viola.”

Higher lignite and natural gas costs also contributed to the increase in Cleco Power’s accumulated deferred fuel.

Affordability Study

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. As a result, Cleco Power was allowed to establish a regulatory asset of $13.6 million related to outside consulting fees for the assessment of Cleco Power’s practices and assistance in the identification of potential cost savings opportunities, while maintaining superior levels of employee safety, reliability, customer service, environmental stewardship, community involvement, and regulatory transparency. The regulatory asset is being amortized over 10 years beginning July 1, 2021.

2020, Cleco Power made a filing with the LPSC requesting the recovery of the regulatory asset as well as the ~~costs~~lost revenue associated with the ~~disconnect~~disconnection fees and incremental costs over a four-year period. At December 31, ~~2020,~~2021, Cleco Power had a regulatory asset of $3.0 million for expenses incurred.

Deferred Storm Restoration Costs

~~On August 27,~~In 2020 ~~Hurricane Laura made landfall~~and 2021, Cleco Power’s distribution and transmission systems sustained substantial damage for four seperate hurricanes and two severe winter storms resulting in ~~southwest Louisiana as a Category 4 storm, causing power~~significant outages for ~~approximately 140,000 of~~its customers during each storm. Cleco ~~Power’s electric customers located primarily in central and southwest Louisiana.~~

~~On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana as~~Power established a ~~Category 2 storm, causing peak power outages for approximately 132,000 of Cleco Power’s electric customers located primarily in central and south Louisiana.~~

On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana as a Category 2 storm, causing peak power outages for approximately 73,000 of Cleco Power’s electric customers located primarily in southeast Louisiana.

~~The LPSC approved utilities establishing a~~separate regulatory asset to track and defer non-capital expenses associated with each corresponding storm, as approved by the hurricanes. On December 4, 2020, Cleco Power made a filing with the LPSC requesting interim rate recovery for return on certain storm damage costs until such time that securitization of the costs associated with Hurricanes Laura, Delta, and Zeta can be completed.LPSC. For more information about ~~Hurricanes Laura, Delta,~~the storm restoration and ~~Zeta,~~cost recovery, see Note 19 — “Storm ~~Restoration.~~Restoration, Securitization, and Cost Recovery.”

Dolet Hills Power Station Closure Costs

In June 2020, Cleco Power revised depreciation rates for the Dolet Hills Power Station to utilize the December 31, 2021, expected end-of-life and early ~~closure~~retirement of the Dolet Hills Power Station and defer depreciation expense to a regulatory asset for the amount in excess of the previously LPSC-approved depreciation rates. ~~At December 31, 2020, Cleco Power had $49.0 million deferred as a regulatory asset for accelerated depreciation.~~

~~Cleco Power anticipates filing an application in March 2021 with the LPSC giving notice that the~~The Dolet Hills Power Station ~~will be~~was retired aton December 31, 2021. On January 31, 2022, Cleco Power filed an application with the ~~end of 2021 and~~LPSC requesting ~~the~~ approval of the regulatory treatment and recovery of ~~the~~ stranded ~~costs~~ and decommissioning costs associated with the retirement of the Dolet Hills Power Station over 20 years. At December 31, 2021, Cleco Power had $145.8 million deferred as a regulatory asset for stranded costs. For

more information on the Dolet Hills Power Station, see Note 15 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Risks and Uncertainties.”

Emergency Declarations

In August 2016, the LPSC issued emergency declaration executive orders following flooding events in south Louisiana which prohibited public utilities from disconnecting or charging late fees to customers for non-payment in affected parishes. In January 2017, the LPSC issued an order that terminated the executive orders effective March 1, 2017, and allowed public utilities to formally petition the LPSC to recover lost revenues as a result of the executive orders. In July 2017, Cleco Power began recovering lost revenues associated with the flooding ~~events and expects the~~events. This regulatory ~~assets to be~~asset was fully amortized byin June 2021.

Energy Efficiency

In December 2018, Cleco Power filed a letter of intent with the LPSC to recover the under recovery of the accumulated decrease in revenues, also known as the LCFC, associated with the energy efficiency program for years 2014 through 2018 to be recovered over a four-year period. Cleco Power began collecting the accumulated LCFC revenues in Cleco Power’s energy efficiency rates effective March 1, 2019. On October 21, 2019, Cleco Power received notice of approval from the LPSC allowing recovery of the accumulated LCFC revenues.

Financing Costs

In 2011, Cleco Power entered into and settled 2 treasury rate locks. Of the $26.8 million in settlements, $7.4 million was deferred as a regulatory asset relating to ineffectiveness of the

hedge relationships. Also in 2011, Cleco Power entered into a forward starting swap contract. These derivatives were entered into in order to mitigate the interest rate exposure on coupon payments related to forecasted debt issuances. In May 2013, the forward starting interest rate swap was settled at a loss of $3.3 million. Cleco Power deferred $2.9 million of the losses as a regulatory asset, which is being amortized over the terms of the related debt issuances.

Interest Costs

Cleco Power’s deferred interest costs include additional deferred capital construction financing costs authorized by the LPSC. These costs are being amortized over the estimated lives of the respective assets.

Lignite Mine Closure Costs

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. On March 17, 2021, the LPSC approved the establishment of a regulatory asset for certain lignite costs that would otherwise be billed through Cleco Power’s FAC and any reasonable incremental third-party professional costs related to the closure of the mine. At December 31, 2021, Cleco Power had a regulatory asset of $137.0 million for deferred fuel and mine-related incurred costs, which were included in the application filed with the LPSC on January 31, 2022. For more information on the Oxbow mine, see Note 15 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

Madison Unit 3 Property Taxes

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. As a result, beginning July 1, 2022, Cleco Power will be allowed to recover property taxes paid for Madison Unit 3, including a carrying charge at Cleco Power’s weighted average cost of capital, grossed up for income taxes. At December 31, 2021, Cleco Power had a regulatory asset of $8.4 million for the accrued 2021 Madison Unit 3 property taxes. The amount included in the cost recovery mechanism each year will amortize over 12 months.

Non-Service Cost of Postretirement Benefits

On January 1, 2018, FASB’s amended guidance related to defined benefit pension and other postretirement plans became effective. The amendment allows only the service cost component of net benefit cost to be eligible for capitalization within property, plant, and equipment. Beginning January 1, 2018, Cleco Power’s non-service cost previously eligible for capitalization into property, plant, and equipment are being deferred to a regulatory asset and will be amortized over the estimated lives of the respective assets.

Other ~~Regulatory Assets (Liabilities), Net~~

~~At December 31, 2020, Other, net consisted of~~On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan resulting in Cleco Power establishing several regulatory assets. Cleco Power was allowed to establish a ~~$3.9 million~~ regulatory asset ~~for~~to recover the ~~Coughlin Pipeline revenue requirement and a $0.3 million~~undercollection of revenues related to the Northlake Transmission Agreement capped at $5.7 million. The amount recorded in the regulatory asset ~~for~~at June 30, 2021, began being amortized over 12 months on July 1, 2021. Amounts recorded in the ~~increase in revenue~~regulatory asset after June 30, 2021, are being amortized over the remaining regulatory

~~requirements resulting from~~period ending June 30, 2022. At December 31, 2021, Cleco Power had a regulatory asset of $2.9 million relating to the ~~decrease in excess ADIT used to fund the TCJA bill credits. The regulatory liability for~~Northlake Transmission Agreement.

In addition, the LPSC approved recovery of other previously deferred costs associated with Cleco ~~Cajun Transaction commitment was fully~~Power’s recently approved retail rate plan, which began being amortized ~~during 2020.~~over four years on July 1, 2021. At December 31, 2021, Cleco Power had a regulatory asset of $3.6 million for deferred costs.

In June 2017, and prior to the approval of Cleco Power’s new retail rate plan, the LPSC approved the establishment of a regulatory asset, upon the completion of the Coughlin Pipeline project, for the revenue requirement associated with the project, until Cleco ~~Power seeks recovery~~Power’s new retail rate plan was approved. As approved by the LPSC in ~~the new FRP with the completion of the rate case. Cleco Power anticipates collecting this amount over 12 months, subject to regulatory approval of~~ Cleco Power’s new ~~FRP.~~

~~On November 13, 2020,~~retail rate plan, the ~~LPSC approved the establishment of~~regulatory asset began being amortized over four years on July 1, 2021. At December 31, 2021, Cleco Power had a regulatory asset ~~for the increase in revenue requirements caused by the increase in rate base as the excess ADIT balances decrease. The mechanism to collect the balance~~ of this regulatory asset will be determined in Cleco Power’s current LPSC base rate case. Cleco Power’s current base rate case is ongoing and management is unable to determine its outcome. On November 30, 2020, Cleco Power received approval of its application to extend the TCJA bill credits from November 30, 2020, until such time that the rate case is complete. For more information about the excess ADIT, see Note 13 — “Regulation and Rates — TCJA.”

~~In January 2019, the LPSC approved the Cleco Cajun Transaction. Approval of the Cleco Cajun Transaction was conditioned upon certain commitments, including a $4.0~~$4.7 million annual reduction to Cleco Power’s retail customer rates. For the period from February 4, 2019, to June 30, 2019, Cleco Power recorded a regulatory liability for the annual reduction until the July 1, 2019, FRP rate adjustment reflected the annual savings. Also on July 1, 2019, Cleco Power began amortizing the regulatory liability over 12 months. In June 2020, Cleco Power had fully amortized the regulatory liability. Duerelated to the ~~delay in~~deferred revenue associated with the ~~current base rate case, Cleco Power continues to charge FRP rates established in July 2019.~~Coughlin Pipeline project.

Postretirement Costs

Cleco Power recognizes the funded status of its postretirement benefit plans as a net liability or asset. The net liability or asset is defined as the difference between the benefit obligation and the fair market value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. Historically, the LPSC has allowed Cleco Power to recover pension plan expense. Cleco Power, therefore, recognizes a regulatory asset based on its determination that these costs can be collected from customers. These costs are amortized to pension expense over the average service life of the remaining plan participants (approximately ~~seven~~six years as of December 31, ~~2020,~~2021, for Cleco’s plan) when it exceeds certain thresholds. The amount and timing of the recovery will be based on the changing funded status of the pension plan in future periods. For more information on Cleco’s pension plan and adoption of these authoritative guidelines, see Note 10 — “Pension Plan and Employee Benefits.”

Production Operations and Maintenance Expenses

Annually, Cleco Power is allowed to defer, as a regulatory asset, production operations and maintenance expenses, net of fuel and payroll, above the retail jurisdictional portion of ~~$45.0~~$34.9 million, adjusted annually for a growth factor (deferral threshold). The amount of the regulatory asset is capped at ~~$23.0~~$25.0 million. The LPSC allows Cleco Power to recover the amount deferred in any calendar year over the following ~~three-~~

~~year~~three-year regulatory period, beginning on July 1, when the annual rates are set. Cleco Power had a deferral of $9.7 million in 2021 and no deferral in ~~2020 or 2019.~~2020.

Rodemacher Unit 2 ~~Closure~~Deferred Costs

As a result of environmental regulations, Cleco Power revised Rodemacher Unit 2’s expected end-of-life to coincide with its application to the EPA for an alternative closure date of October 17, 2028. Rodemacher Unit 2’s depreciation expense in excess of the previously LPSC-approved depreciation rates are deferred to a regulatory asset. At December 31, ~~2020,~~2021, Cleco Power had ~~$1.3~~$6.9 million deferred as a regulatory asset for accelerated depreciation.

St. Mary Clean Energy Center

~~On July 1, 2018,~~ Cleco Power ~~began collecting the~~has a regulatory asset for revenue requirements related to the St. Mary Clean Energy Center ~~project based~~project. As

approved by the LPSC in Cleco Power’s new retail rate plan, the regulatory asset began being amortized over four years on expected commercial operations in the third quarter of 2018. Due to the delay in commercial operations, Cleco Power recorded a $9.6 million regulatory liability for over collections for the 12-month period ending June 30, 2019. On July 1, 2019, Cleco Power’s rider FRP rates were adjusted by the amount of the over collection and the liability was amortized over a period of 12 months. Due to the delay in the current base rate case, Cleco Power continues to charge FRP rates established in July 2019, which includes a portion of the revenue requirements adjusted by the over collections. On February 12, 2021, Cleco Power received its first set of data requests from the LPSC. Cleco Power had a regulatory asset of $3.5 million at December 31, 2020, for the resulting under collection of revenue related to St. Mary Clean Energy Center project.

~~Surcredits, Net~~

Cleco Power has recorded surcredits as the result of a settlement with the LPSC that addressed, among other things, the recovery of the storm damages related to hurricanes and uncertain tax positions. In the settlement, Cleco Power was required to implement surcredits to provide ratepayers with the economic benefit of the carrying charges of certain ADIT liabilities at a rate of return which was set by the LPSC. The settlement, through a true-up mechanism, allows the surcredits to be adjusted to reflect the actual tax deductions allowed by the IRS.

Cleco Power recorded a true-up to the surcredits to reflect the actual tax deductions allowed by the IRS for storm damages and uncertain tax positions. As a result of the true-ups, Cleco Power recorded a regulatory asset that represents excess surcredits refunded to customers that were collected from ratepayers and amortized over a four-year period, through June 2018. Cleco Power began collecting the balance as part of the July 1, 2019, FRP rate adjustment.2021.

Training Costs

In 2008, the LPSC approved Cleco Power’s request to establish a regulatory asset for training costs associated with existing processes and technology for new employees at Madison Unit 3. Recovery of these expenditures was approved by the LPSC in 2009. In 2010, Cleco Power began amortizing the regulatory asset over a 50-year period.

Tree Trimming Costs

In October 2016, the LPSC approved Cleco Power to defer and recover through its base rates tree trimming costs. The LPSC authorized a deferral up to $10.9 million, excluding debt

Cleco Power
FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS) AT DEC. 31, 2020 QUOTED
PRICES IN
ACTIVE MARKETS
FOR IDENTICAL
ASSETS
(LEVEL 1) SIGNIFICANT
OTHER
OBSERVABLE
INPUTS
(LEVEL 2) SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3) AT DEC. 31, 2019 QUOTED
PRICES IN
ACTIVE MARKETS
FOR IDENTICAL
ASSETS
(LEVEL 1) SIGNIFICANT
OTHER
OBSERVABLE
INPUTS
(LEVEL 2) SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
Asset Description
Institutional money market
funds
$ 25,357 $ 0 $ 25,357 $ 0 $ 74,903 $ 0 $ 74,903 $ 0
FTRs 4,337 0 0 4,337 6,311 0 0 6,311
Total assets $ 29,694 $ 0 $ 25,357 $ 4,337 $ 81,214 $ 0 $ 74,903 $ 6,311
Liability Description
FTRs $ 1,121 $ 0 $ 0 $ 1,121 $ 586 $ 0 $ 0 $ 586
Total liabilities $ 1,121 $ 0 $ 0 $ 1,121 $ 586 $ 0 $ 0 $ 586

designate derivatives as cash flow or fair value hedges, as allowed by accounting guidance. Cleco utilizes a mark-to-market approach recognizing changes in the fair value of FTRs and commodity derivatives at Cleco Cajun in earnings and changes in the fair value of FTRs at Cleco Power as a component of deferred fuel assets and liabilities. Cleco utilizes different valuation techniques for fair value measurements under a fair value hierarchy. Assets and liabilities classified as Level 1 under the hierarchy utilize observable inputs that reflect quotable prices in active markets. Assets and liabilities classified as Level 2 are measured through proxy inputs of similar index or composite pricing. Assets and liabilities classified as Level 3 under the hierarchy are valued based on unobservable inputs, such as internally generated valuation models or valuations obtained in inactive markets where there is no readily available information. Cleco has consistently

applied the Level 2 and Level 3 fair value techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability. During the years ended December 31, 2021, and 2020, Cleco did not experience any transfers into or out of Level 3 of the fair value hierarchy.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured on a recurring basis. These amounts are presented on a gross basis before consideration of amounts netted under master netting agreements and the application of collateral received or paid:

The following tables summarize 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					Cleco
		FOR THE YEAR ENDED DEC. 31,					FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Beginning balance	Beginning balance	$	5,778	$	22,887	Beginning balance	$	3,180	$	5,778
Unrealized (losses) gains *		187		(1,659)
Unrealized gains *						Unrealized gains *	2,567		187
Purchases	Purchases	11,333		27,881		Purchases	12,061		11,333
Settlements	Settlements	(14,118)		(43,331)		Settlements	(11,665)		(14,118)
Ending balance	Ending balance	$	3,180	$	5,778	Ending balance	$	6,143	$	3,180
* Cleco Power’s unrealized (losses) gains are reported through Accumulated deferred fuel on Cleco’s Consolidated Balance Sheet. Cleco Cajun’s unrealized (losses) gains are reported through Purchased power on Cleco’s Consolidated Income Statement.
* Cleco Power’s unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s Consolidated Balance Sheet. Cleco Cajun’s unrealized gains (losses) are reported through Purchased power on Cleco’s Consolidated Statement of Income.						* Cleco Power’s unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s Consolidated Balance Sheet. Cleco Cajun’s unrealized gains (losses) are reported through Purchased power on Cleco’s Consolidated Statement of Income.


Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020
Beginning balance	$	3,216	$	5,725
Unrealized gains *	2,828		450
Purchases	9,871		9,378
Settlements	(10,997)		(12,337)
Ending balance	$	4,918	$	3,216
* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco Power's Consolidated Balance Sheets.

~~Cleco utilizes different valuation techniques for~~As a result of the 2016 Merger, fair value ~~calculations.~~adjustments were recorded on Cleco’s Consolidated Balance Sheet for the valuation of a finite intangible asset relating to the Cleco Power trade name. In ~~order~~August 2021, a wholesale customer that is currently under contract with Cleco Power through March 31, 2024, informed Cleco Power that it was not selected through its request for proposal process as a provider of load after the first quarter of 2024. Cleco considered this to ~~measure~~be a triggering event and determined that the carrying value of the trade name intangible asset may not be recoverable. Therefore, a valuation of the Cleco Power trade name was conducted to test for impairment. A discounted cash flow model utilizing the significant unobservable input of estimated weighted average cost of capital of 8% was used to determine the fair value ~~for Level 1 assets~~of the Cleco Power trade name. As a result, Cleco determined that the fair value of the Cleco Power trade name was less than its carrying value and ~~liabilities, Cleco obtains~~an impairment of $3.8 million was recognized reducing the ~~closing price from published indices in active markets for~~carrying value to zero. The fair value measurement of the various instruments and multiplies this price by the appropriate volume of instruments held. Level 2 fair values are determined by obtaining the closing price of similar assets and liabilities from published indices in active markets. Institutional money market funds assets are discounted to the current period using a U.S. Treasury published interest rateintangible asset is classified as ~~a proxy for a risk-free rate of return.~~ Level 3 ~~fair values occur~~ in ~~situations in which there is little, if any, market activity for~~ the ~~asset or liability at the measurement date and prices are not observable. Cleco has consistently applied the Level 2 and Level 3~~ fair value ~~techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. The~~hierarchy. For more information on the Cleco

~~assets~~Power trade name intangible asset, see Note 17 — “Intangible Assets, Intangible Liabilities, and ~~liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability.~~Goodwill.”

Concentrations of Credit Risk

At December 31, ~~2020,~~2021, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The following tables present the ~~institutional~~ money market funds in cash and cash equivalents and restricted cash and cash equivalents as recorded on Cleco and Cleco Power’s ~~Condensed~~ Consolidated Balance Sheets at December 31, ~~2020,~~2021, and ~~2019:~~2020:


Cleco	Cleco					Cleco
		FOR THE YEAR ENDED DEC. 31,					FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Cash and cash equivalents	Cash and cash equivalents	$	80,712	$	103,409	Cash and cash equivalents	$	145,011	$	80,712
Current restricted cash and cash equivalents	Current restricted cash and cash equivalents	$	4,545	$	11,100	Current restricted cash and cash equivalents	$	—	$	4,545
Non-current restricted cash and cash equivalents	Non-current restricted cash and cash equivalents	$	744	$	15,134	Non-current restricted cash and cash equivalents	$	22	$	744


Cleco Power	Cleco Power					Cleco Power
		FOR THE YEAR ENDED DEC. 31,					FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Cash and cash equivalents	Cash and cash equivalents	$	20,812	$	49,509	Cash and cash equivalents	$	82,411	$	20,812
Current restricted cash and cash equivalents	Current restricted cash and cash equivalents	$	4,545	$	11,100	Current restricted cash and cash equivalents	$	—	$	4,545
Non-current restricted cash and cash equivalents		$	0	$	14,294

Cleco Power

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

(THOUSANDS)

BALANCE SHEET LINE ITEM

AT DEC. 31, 2020

AT DEC. 31, 2019

(THOUSANDS)

BALANCE SHEET LINE ITEM

AT DEC. 31, 2021

AT DEC. 31, 2020

Commodity-related contracts

FTRs:

Current

Energy risk management assets

$

4,337

$

6,311

Current

Energy risk management assets

$

5,515

$

4,337

Current

Energy risk management liabilities

(1,121)

(586)

Current

Energy risk management liabilities

(597)

(1,121)

Commodity-related contracts, net

$

3,216

$

5,725

Commodity-related contracts, net

$

4,918

$

3,216

The ~~total~~following tables present the volume of ~~FTRs that Cleco Power had~~commodity-related derivative contracts outstanding at December 31, ~~2020,~~2021, and ~~2019 was 9.5 million MWh and 9.2 million MWh, respectively. The total volume of FTRs that Cleco had outstanding at~~ December 31, 2020, for Cleco and ~~2019 was 15.3 million MWh and 14.6 million MWh, respectively. The total volume of other commodity derivatives~~ Cleco ~~had outstanding at December 31, 2020, and 2019 was 73.0 million MMBtus and 58.5 million MMBtus, respectively.~~Power:

Cleco

TOTAL VOLUME OUTSTANDING

(THOUSAND)

UNIT OF MEASURE

AT DEC. 31, 2021

AT DEC. 31, 2020

Commodity-related contracts

FTRs

MWh

14,055

15,269

Natural gas derivatives

MMBtus

109,306

73,000

Cleco Power

TOTAL VOLUME OUTSTANDING

(THOUSAND)

UNIT OF MEASURE

AT DEC. 31, 2021

AT DEC. 31, 2020

Commodity-related contracts

FTRs

MWh

8,899

9,521

Note 9 — Debt

Cleco Power’s total long-term indebtedness as of December 31, ~~2020,~~2021, and ~~2019~~2020 was as follows:


Cleco Power	Cleco Power					Cleco Power
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Bonds	Bonds					Bonds
Senior notes, 2.94%, due 2022	Senior notes, 2.94%, due 2022	$	25,000	$	25,000	Senior notes, 2.94%, due 2022	$	25,000	$	25,000
Senior notes, 3.08%, due 2023	Senior notes, 3.08%, due 2023	100,000		100,000		Senior notes, 3.08%, due 2023	100,000		100,000
Senior notes, 3.17%, due 2024	Senior notes, 3.17%, due 2024	50,000		50,000		Senior notes, 3.17%, due 2024	50,000		50,000
Senior notes, 3.68%, due 2025	Senior notes, 3.68%, due 2025	75,000		75,000		Senior notes, 3.68%, due 2025	75,000		75,000
Senior notes, 3.47%, due 2026	Senior notes, 3.47%, due 2026	130,000		130,000		Senior notes, 3.47%, due 2026	130,000		130,000
Senior notes, 4.33%, due 2027	Senior notes, 4.33%, due 2027	50,000		50,000		Senior notes, 4.33%, due 2027	50,000		50,000
Senior notes, 3.57%, due 2028	Senior notes, 3.57%, due 2028	200,000		200,000		Senior notes, 3.57%, due 2028	200,000		200,000
Senior notes, 6.50%, due 2035	Senior notes, 6.50%, due 2035	295,000		295,000		Senior notes, 6.50%, due 2035	295,000		295,000
Senior notes, 6.00%, due 2040	Senior notes, 6.00%, due 2040	250,000		250,000		Senior notes, 6.00%, due 2040	250,000		250,000
Senior notes, 5.12%, due 2041	Senior notes, 5.12%, due 2041	100,000		100,000		Senior notes, 5.12%, due 2041	100,000		100,000
Senior notes, floating rate, due 2023						Senior notes, floating rate, due 2023	325,000		—
Series A GO Zone bonds, 2.50%, due 2038, mandatory tender in 2025	Series A GO Zone bonds, 2.50%, due 2038, mandatory tender in 2025	50,000		50,000		Series A GO Zone bonds, 2.50%, due 2038, mandatory tender in 2025	50,000		50,000
Series B GO Zone bonds, 4.25%, due 2038	Series B GO Zone bonds, 4.25%, due 2038	50,000		50,000		Series B GO Zone bonds, 4.25%, due 2038	50,000		50,000

Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023		0		11,055

Total bonds	Total bonds	1,375,000		1,386,055		Total bonds	1,700,000		1,375,000
Bank term loan, variable rate, due 2022		125,000		0
Bank term loan, variable rate, due 2024						Bank term loan, variable rate, due 2024	125,000		125,000
Finance leases	Finance leases					Finance leases

Barge lease obligations	Barge lease obligations	15,244		15,861		Barge lease obligations	14,562		15,244
Gross amount of long-term debt and finance leases	Gross amount of long-term debt and finance leases	1,515,244		1,401,916		Gross amount of long-term debt and finance leases	1,839,562		1,515,244
Less: long-term debt due within one year		0		60,970
Less: finance leases classified as long-term debt due within one year		682		617
Long-term debt due within one year						Long-term debt due within one year	(25,000)		—
Finance leases classified as long-term debt due within one year						Finance leases classified as long-term debt due within one year	(755)		(682)
Unamortized debt discount	Unamortized debt discount	(5,053)		(5,368)		Unamortized debt discount	(4,746)		(5,053)
Unamortized debt issuance costs	Unamortized debt issuance costs	(7,252)		(7,589)		Unamortized debt issuance costs	(8,207)		(7,252)
Total long-term debt and finance leases, net	Total long-term debt and finance leases, net	$	1,502,257	$	1,327,372	Total long-term debt and finance leases, net	$	1,800,854	$	1,502,257

Cleco’s total long-term indebtedness as of December 31, ~~2020,~~2021, and ~~2019~~2020 was as follows:


Cleco	Cleco					Cleco
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Total Cleco Power long-term debt and finance leases, net	Total Cleco Power long-term debt and finance leases, net	$	1,502,257	$	1,327,372	Total Cleco Power long-term debt and finance leases, net	$	1,800,854	$	1,502,257
Cleco Holdings’ long-term debt, net	Cleco Holdings’ long-term debt, net					Cleco Holdings’ long-term debt, net
Senior notes, 3.250%, due 2023	Senior notes, 3.250%, due 2023	165,000		165,000		Senior notes, 3.250%, due 2023	165,000		165,000
Senior notes, 3.743%, due 2026	Senior notes, 3.743%, due 2026	535,000		535,000		Senior notes, 3.743%, due 2026	535,000		535,000
Senior notes, 3.375%, due 2029	Senior notes, 3.375%, due 2029	300,000		300,000		Senior notes, 3.375%, due 2029	300,000		300,000
Senior notes, 4.973%, due 2046	Senior notes, 4.973%, due 2046	350,000		350,000		Senior notes, 4.973%, due 2046	350,000		350,000
Bank term loan, variable rate, due 2022		266,000		300,000
Bank term loan, variable rate, due 2022		0		30,000
Bank term loan, variable rate, due 2024						Bank term loan, variable rate, due 2024	200,000		266,000

Long-term debt due within one year	Long-term debt due within one year	(66,000)		(64,398)		Long-term debt due within one year	(67,700)		(66,000)
Unamortized debt issuance costs(1)	Unamortized debt issuance costs(1)	(6,423)		(6,271)		Unamortized debt issuance costs(1)	(5,271)		(6,423)
Fair value adjustment	Fair value adjustment	119,553		127,976		Fair value adjustment	112,150		119,553
Total Cleco long-term debt and finance leases, net	Total Cleco long-term debt and finance leases, net	$	3,165,387	$	3,064,679	Total Cleco long-term debt and finance leases, net	$	3,390,033	$	3,165,387

(1) For December 31, ~~2020,~~2021, and ~~2019,~~2020, this amount includes unamortized debt issuance costs for Cleco Holdings of ~~$11.7~~$10.2 million and ~~$11.9~~$11.7 million, respectively, partially offset by deferred debt issuance costs eliminated as a result of the 2016 Merger of ~~$5.3~~$4.9 million and ~~$5.6~~$5.3 million, respectively. For more information, see Note 6 — “Regulatory Assets and Liabilities — Cleco Holdings’ 2016 Merger Adjustments.”

The principal amounts payable under long-term debt agreements for each year through ~~2025~~2026 and thereafter are as follows:


(THOUSANDS)	(THOUSANDS)	CLECO		CLECO POWER		(THOUSANDS)	CLECO POWER		CLECO
For the year ending Dec. 31,	For the year ending Dec. 31,					For the year ending Dec. 31,
2021		$	0	$	0
2022	2022	$	416,000	$	150,000	2022	$	25,000	$	25,000
2023	2023	$	265,000	$	100,000	2023	$	425,000	$	590,000
2024	2024	$	50,000	$	50,000	2024	$	175,000	$	375,000
2025(1)	2025(1)	$	75,000	$	75,000	2025(1)	$	75,000	$	75,000
2026						2026	$	130,000	$	665,000
Thereafter	Thereafter	$	2,310,000	$	1,125,000	Thereafter	$	995,000	$	1,645,000


(THOUSANDS)
For the year ending Dec. 31,
2019	$	66,700
2020	$	133,300
2021	$	200,000
2022	$	267,700
2023	$	333,300
2024	$	400,000

Credit Facilities

At December 31, ~~2020,~~2021, Cleco had 2 separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with 0no outstanding borrowings and one for Cleco Power in the amount of $300.0 million with no outstanding ~~borrowings of $75.0 million.~~borrowings. These revolving credit agreements were entered into on May 21, 2021, and replaced the respective existing agreements. The total of all revolving credit facilities creates a maximum aggregate capacity of $475.0 ~~million with outstanding borrowings of $75.0~~ million.

~~On May 15, 2020,~~ Cleco ~~Holdings entered into amendments for its revolving credit agreement. These amendments extend the terms of its~~Holdings’ revolving credit facility ~~through June 2022.~~provides for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and expires 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%~~65.0% of total capitalization. At December 31, ~~2020,~~2021, Cleco Holdings was in compliance with the covenants of its revolving credit facility. At December 31, ~~2020,~~2021, the borrowing costs under the facility were equal to LIBOR plus ~~1.875%~~1.625% or ABR plus ~~0.875%~~0.625%, plus commitment fees of ~~0.30%~~0.275%. If Cleco Holdings’ credit ratings were to be downgraded one level by the credit rating agencies, Cleco Holdings may be required to pay ~~higher~~incremental interest and commitment fees of 0.125% and ~~additional interest of 0.50%~~0.05%, respectively, under the pricing levels of its revolving credit facility.

~~On May 15, 2020,~~ Cleco ~~Power entered into an amendment for its revolving credit agreement. This amendment extends the term of the~~Power’s revolving credit facility ~~through 2022.~~provides for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and expires 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%~~65.0% of total capitalization. At December 31, ~~2020,~~2021, Cleco Power was in compliance with the covenants of its credit facility. At December 31, ~~2020,~~2021, the borrowing costs under the facility were equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%. If Cleco Power’s credit ratings were to be downgraded one level by the credit rating agencies, Cleco Power may be required to pay ~~higher~~incremental interest and commitment fees ~~and additional interest~~ of 0.125% and 0.025%, respectively, under the pricing levels of its revolving credit facility.

If Cleco Holdings or Cleco Power were to default under the 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 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.

Note 10 — 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. Benefits under the plan reflect an employee’s years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last ten years of employment with Cleco. Cleco’s policy is to base its contributions to the employee pension plan upon actuarial computations utilizing the projected unit credit method, subject to the IRS’s full funding limitation. OnCleco did not make any required or discretionary contributions to the pension plan in 2021. In December 4, 2020, Cleco made a $15.8 million required contribution to the pension plan. In September 2019, Cleco made a $12.3 million discretionary contribution to the pension plan. Cleco ~~did~~does not ~~make any required or discretionary contributions to the pension plan in 2018. Cleco expects~~expect to make ~~$67.0 million in~~any discretionary contributions in ~~2021, which would reduce the future required contributions.~~2022. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. Based on the funding assumptions at December 31, ~~2020,~~2021, and the funding relief provided by the American Rescue Plan Act, which was signed by the President on March 11, 2021, management estimates that ~~$53.5~~$5.4 million inof pension contributions will be required through ~~2025.~~2026. Future discretionary contributions may be made depending on changes in assumptions, the ability to utilize the contribution as a tax deduction, and requirements concerning recognizing a minimum pension liability. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The pension plan was amended on February 4, 2019, to include certain former NRG Energy employees who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan amendment reflect the employee’s years of service, age at retirement, and accrued benefit at retirement. The interest crediting rate on the cash balance plan was 3.06% and 3.15% ~~and 3.65% for years ended~~at December 31, ~~2020,~~2021, and ~~2019,~~2020, respectively.

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. Cleco recognizes the expected cost of Other Benefits during the periods in which the benefits are earned.

~~The employee pension plan and Other Benefits plan obligation, plan assets, and funded status at December 31, 2020, and 2019 are presented in the following table:~~

PENSION BENEFITS OTHER BENEFITS
FOR THE YEAR ENDED DEC. 31, FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2020 2019 2020 2019
Change in benefit obligation
Benefit obligation at beginning of period $ 610,323 $ 530,936 $ 52,722 $ 40,455
Service cost 9,820 8,414 2,153 1,191
Interest cost 20,816 22,485 1,651 1,646
Plan participants’ contributions 0 0 1,289 1,229
Actuarial loss (gain) 71,708 73,655 4,221 13,897
Expenses paid (2,661) (2,933) 0 0
Benefits paid (23,622) (22,234) (5,705) (5,696)
Benefit obligation at end of period 686,384 610,323 56,331 52,722
Change in plan assets
Fair value of plan assets at beginning of period 460,097 391,933 0 0
Actual return on plan assets 66,557 81,081 0 0
Employer contributions 15,750 12,250 0 0
Expenses paid (2,662) (2,933) 0 0
Benefits paid (23,622) (22,234) 0 0
Fair value of plan assets at end of period 516,120 460,097 0 0
Unfunded status $ (170,264) $ (150,226) $ (56,331) $ (52,722)

The employee pension plan and Other Benefits plan obligation, plan assets, and funded status at December 31, 2021, and 2020 are presented in the following table:

The employee pension plan accumulated benefit obligation at December 31, ~~2020,~~2021, and ~~2019~~2020 is presented in the following table:


		PENSION BENEFITS					PENSION BENEFITS
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Accumulated benefit obligation	Accumulated benefit obligation	$	636,199	$	568,354	Accumulated benefit obligation	$	640,490	$	636,199

The pension net actuarial gain was $26.9 million for the year ended December 31, 2021, primarily due to an increase in the discount rate and higher than expected return on assets, partially offset by an update to the census data. The pension net actuarial loss was $30.1 million ~~and $19.1 million~~ for the ~~years~~year ended December 31, 2020, ~~and 2019, respectively. The pension net actuarial loss for the years ended December 31, 2020, and 2019, was~~ primarily due to a decline in the discount

The following table presents net actuarial gains/losses ~~and prior service costs/credits~~ in accumulated other comprehensive income for Other Benefits and in regulatory assets for pension that have not been recognized as components of net periodic benefit costs for the employee pension plan and Other Benefits plans at December 31, ~~2020,~~2021, and ~~2019:~~2020:

PENSION BENEFITS OTHER BENEFITS
AT DEC. 31, AT DEC. 31,
(THOUSANDS) 2020 2019 2020 2019
Net actuarial loss $ 165,437 $ 151,603 $ 21,342 $ 15,732
Prior service credit $ 0 $ (60) $ 0 $ 0

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Consolidated Statements of Income. The components of net periodic pension and Other Benefits costs for 2020, 2019, and 2018 are as follows:


	PENSION BENEFITS				OTHER BENEFITS
	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2021		2020		2021		2020
Net actuarial loss	$	117,773	$	165,437	$	22,785	$	21,342

PENSION BENEFITS OTHER BENEFITS
FOR THE YEAR ENDED DEC. 31, FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2020 2019 2018 2020 2019 2018
Components of periodic benefit costs
Service cost $ 9,820 $ 8,414 $ 9,507 $ 2,153 $ 1,191 $ 1,320
Interest cost 20,816 22,485 20,860 1,651 1,646 1,465
Expected return on plan assets (24,974) (26,502) (23,773) 0 0 0
Amortizations
Prior service credit (60) (71) (71) 0 0 0
Net loss (gain) 16,292 7,849 12,312 1,389 21 135
Net periodic benefit cost $ 21,894 $ 12,175 $ 18,835 $ 5,193 $ 2,858 $ 2,920

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Consolidated Statements

of Income. The components of net periodic pension and Other Benefits costs for 2021, 2020, and 2019 are as follows:

Effective September 30, 2021, the pension plan was amended to offer an enhanced pension benefit to certain employees participating in the plan that elected to retire during a certain retirement window. Those certain employees who elected by September 30, 2021, to receive the enhanced pension benefits will receive a 10% increase in calculated pension benefits. This resulted in a special termination benefit cost for Cleco Power and Support Group of $2.4 million and $0.9 million, respectively, included as an expense of the pension plan.

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 years ended December 31, 2021, 2020, and 2019 ~~and 2018~~ was ~~$3.5~~$4.5 million, $~~2.2~~3.5 million, and ~~$2.0~~$2.2 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are 0no 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 Consolidated Statements of Income for the years ended December 31, 2021, 2020, and 2019 ~~and 2018~~ was $4.7

million, $4.8 million, ~~$3.1 million,~~ and ~~$3.3~~$3.1 million, respectively. The current and non-current portions of the Other Benefits liability for Cleco and Cleco Power at December 31, ~~2020,~~2021, and ~~2019~~2020 are as follows:


Cleco	Cleco					Cleco
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Current	Current	$	4,463	$	4,401	Current	$	5,181	$	4,463
Non-current	Non-current	$	51,868	$	48,321	Non-current	$	50,093	$	51,868


Cleco Power	Cleco Power					Cleco Power
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Current	Current	$	3,865	$	3,815	Current	$	4,432	$	3,865
Non-current	Non-current	$	40,734	$	42,080	Non-current	$	39,315	$	40,734

The measurement date used to determine the pension and other postretirement benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows:

The expected return on plan assets was determined by examining the risk profile of each target category as compared to the expected return on that risk, within the parameters

determined by the ~~retirement committee.~~Retirement Committee. In assessing the risk as compared to return profile, historical returns as compared to risk were considered. The historical risk compared to returns

was adjusted for the expected future long-term relationship between risk and return. The adjustment for the future risk compared to returns was, in part, subjective and not based on any measurable or observable events. For the calculation of the ~~2021~~2022 periodic expense, Cleco ~~decreased~~increased the expected long-term return on plan assets to ~~5.00%~~5.25%. Cleco expects pension expense to ~~increase~~decrease in ~~2021~~2022 by approximately ~~$2.9~~$14.3 million due to ~~a decrease~~an increase in the discount rate and ~~a decrease~~an increase in expected return on plan assets.

Employee pension plan assets are invested in accordance with the Pension Plan’s Investment Policy Statement. At December 31, ~~2020,~~2021, allowable investments included U.S. Equity Portfolios, International Equity - Developed Markets Portfolios, Emerging Markets Equity Portfolios, Multi-Asset Credits, Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS), Fixed Income Portfolios - Long Credit and Intermediate Government Credit, and Real Estate Portfolios.

Real estate funds and the pooled separate accounts are stated at estimated market value based on appraisal reports prepared annually by independent real estate appraisers (members of the American Institute of Real Estate Appraisers).

The estimated market value of recently acquired properties is assumed to approximate cost.

Level 3 valuations are derived from other valuation methodologies including pricing models, discounted cash flow models, and similar techniques. Level 3 valuations incorporate subjective judgments and consider assumptions including capitalization rates, discount rates, cash flows, and other factors that are not observable in the market. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The following is a reconciliation of the beginning and ending balances of the pension plan’s real estate funds measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, ~~2020,~~2021, and ~~2019:~~2020:

Multi-Asset Credits

•Assets can include, but would not be limited to, high yield debt, emerging market debt, global investment grade credit and bank loans, as well as fixed income strategies.

•Currency hedging decisions are the discretion of the investment manager.

Treasury STRIPS

•The STRIPS are synthetic zero-coupon bonds that are created by separating each coupon and principal payment of a treasury bond into a separate security. STRIPS take the form of a zero-coupon bond which is sold at a discount to face value and mature at par. They are backed by U.S. Treasury securities.

•Implementation of the portfolio is either through Treasury Futures or purchase of Treasury STRIPS through an investment manager.

issued on SERP participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, 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. All SERP benefits are paid out of the general cash available of the respective companies that employed the officer. Cleco Power is the plan sponsor and Support Group is the plan administrator.

SERP’s funded status at December 31, ~~2020,~~2021, and ~~2019~~2020 is presented in the following table:


				SERP BENEFITS					SERP BENEFITS
		FOR THE YEAR ENDED DEC. 31,					FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Change in benefit obligation	Change in benefit obligation					Change in benefit obligation
Benefit obligation at beginning of period	Benefit obligation at beginning of period	$	89,128	$	78,414	Benefit obligation at beginning of period	$	97,225	$	89,128
Service cost	Service cost	399		330		Service cost	232		399
Interest cost	Interest cost	2,932		3,326		Interest cost	2,538		2,932
Actuarial loss (gain)		9,621		11,608
Actuarial (gain) loss						Actuarial (gain) loss	(1,932)		9,621
Benefits paid	Benefits paid	(4,590)		(4,550)		Benefits paid	(4,884)		(4,590)
Plan amendments	Plan amendments	(265)		0		Plan amendments	—		(265)

Benefit obligation at end of period	Benefit obligation at end of period	$	97,225	$	89,128	Benefit obligation at end of period	$	93,179	$	97,225

SERP’s accumulated benefit obligation at December 31, ~~2020,~~2021, and ~~2019~~2020 is presented in the following table:


		SERP BENEFITS					SERP BENEFITS
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Accumulated benefit obligation	Accumulated benefit obligation	$	97,225	$	89,128	Accumulated benefit obligation	$	93,179	$	97,225

The measurement date used to determine the SERP benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows:


		SERP BENEFITS					SERP BENEFITS
		AT DEC. 31,					AT DEC. 31,
		2020		2019			2021		2020
Weighted-average assumptions used to determine the benefit obligation	Weighted-average assumptions used to determine the benefit obligation					Weighted-average assumptions used to determine the benefit obligation
Discount rate	Discount rate	2.64	%	3.37	%	Discount rate	2.95	%	2.64	%
Rate of compensation increase	Rate of compensation increase	N/A		5.00	%	Rate of compensation increase	N/A		N/A

The expense related to SERP reflected on Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2021, 2020, and 2019 ~~and 2018~~ was ~~$1.0~~$0.6 million, $~~0.8~~1.0 million, and ~~$1.4~~$0.8 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 December 31, ~~2020,~~2021, and ~~2019~~2020 are as follows:


Cleco	Cleco					Cleco
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Current	Current	$	4,703	$	4,599	Current	$	4,654	$	4,703
Non-current	Non-current	$	92,522	$	84,529	Non-current	$	88,523	$	92,522


Cleco Power	Cleco Power					Cleco Power
		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Current	Current	$	711	$	760	Current	$	679	$	711
Non-current	Non-current	$	19,828	$	13,964	Non-current	$	12,909	$	19,828

Information about current and deferred income tax expense is as follows:


			FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020		2019
Current federal income tax (benefit) expense	$	(2)	$	(2,634)	$	1,600
Deferred federal income tax (benefit) expense	(9,581)		21,865		37,963
Amortization of accumulated deferred investment tax credits	(142)		(159)		(191)
Total federal income tax (benefit) expense	$	(9,725)	$	19,072	$	39,372
Current state income tax (benefit) expense	(699)		2,636		1,675
Deferred state income tax expense	23,535		14,010		2,118
Total state income tax expense	$	22,836	$	16,646	$	3,793
Total federal and state income tax expense	$	13,111	$	35,718	$	43,165
Items charged or credited directly to member’s equity
Federal deferred	514		(2,202)		(5,130)
State deferred	(120)		(720)		(1,678)
Total tax expense (benefit) from items charged directly to member’s equity	$	394	$	(2,922)	$	(6,808)
Total federal and state income tax expense	$	13,505	$	32,796	$	36,357

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2020 2019 2018
Current federal income tax (benefit) expense $ (2,634) $ 1,600 $ 15,304
Deferred federal income tax expense 21,865 37,963 5,863
Amortization of accumulated deferred investment tax credits (159) (191) (236)
Total federal income tax expense $ 19,072 $ 39,372 $ 20,931
Current state income tax expense 2,636 1,675 7,771
Deferred state income tax expense 14,010 2,118 680
Total state income tax expense $ 16,646 $ 3,793 $ 8,451
Total federal and state income tax expense $ 35,718 $ 43,165 $ 29,382
Items charged or credited directly to member’s equity
Federal deferred (2,202) (5,130) 1,408
State deferred (720) (1,678) 460
Total tax expense (benefit) from items charged directly to member’s equity $ (2,922) $ (6,808) $ 1,868
Total federal and state income tax expense $ 32,796 $ 36,357 $ 31,250

The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, ~~2020,~~2021, and ~~2019~~2020 was comprised of the following:


		AT DEC. 31,					AT DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Depreciation and property basis differences	Depreciation and property basis differences	$	(865,807)	$	(862,263)	Depreciation and property basis differences	$	(885,747)	$	(865,807)
Net operating loss carryforward	Net operating loss carryforward	109,819		120,955		Net operating loss carryforward	195,488		109,819
NMTC	NMTC	92,364		92,364		NMTC	92,364		92,364
Fuel costs	Fuel costs	(8,906)		(3,984)		Fuel costs	(38,070)		(8,906)

Other comprehensive income	Other comprehensive income	13,016		10,612		Other comprehensive income	12,750		13,016
Regulated operations regulatory liability, net	Regulated operations regulatory liability, net	47,060		34,836		Regulated operations regulatory liability, net	(93,990)		47,060
Postretirement benefits	Postretirement benefits	25,775		22,691		Postretirement benefits	34,683		25,775
Merger fair value adjustments	Merger fair value adjustments	(51,073)		(52,957)		Merger fair value adjustments	(49,806)		(51,073)
Other	Other	(23,624)		(19,312)		Other	(23,436)		(23,624)
Accumulated deferred federal and state income taxes, net	Accumulated deferred federal and state income taxes, net	$	(661,376)	$	(657,058)	Accumulated deferred federal and state income taxes, net	$	(755,764)	$	(661,376)

Cleco Power

For the year ended December 31, 2021, income tax expense was lower than the amount computed by applying the statutory rate. For the years ended December 31, 2020, ~~2019,~~ and ~~2018,~~2019, income tax expense was higher than the amount computed by applying the statutory rate. The differences are as follows:

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT PERCENTAGES) 2020 2019 2018
Income before tax $ 123,454 $ 193,714 $ 218,181
Statutory rate 21.0 % 21.0 % 21.0 %
Tax expense at federal statutory rate $ 25,925 $ 40,680 $ 45,818
Increase (decrease)
Plant differences, including AFUDC flowthrough 5,100 (4,687) (401)
State income taxes, net of federal benefit 6,303 11,683 11,080
Return to accrual adjustment 7,082 (2,008) 483
Amortization of excess ADIT (16,667) 0 0
Other, net (944) (216) (1,056)
Total taxes $ 26,799 $ 45,452 $ 55,924
Effective rate 21.7 % 23.5 % 25.6 %


	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT PERCENTAGES)	2021			2020			2019
Income before tax	$	124,735		$	123,454		$	193,714
Statutory rate	21.0		%	21.0		%	21.0		%
Tax expense at federal statutory rate	$	26,194		$	25,925		$	40,680
Increase (decrease)
Plant differences, including AFUDC flowthrough	(356)			5,100			(4,687)

State income taxes, net of federal benefit	6,343			6,303			11,683

Return to accrual adjustment	(3,831)			7,082			(2,008)

Amortization of excess ADIT	(37,254)			(16,667)			—
Other, net	(449)			(944)			(216)
Total taxes	$	(9,353)		$	26,799		$	45,452
Effective rate	(7.5)		%	21.7		%	23.5		%

Information about current and deferred income tax expense is as follows:


		FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		2018		(THOUSANDS)	2021		2020		2019
Current federal income tax expense	Current federal income tax expense	$	15,724	$	14,781	$	44,411	Current federal income tax expense	$	—	$	15,724	$	14,781
Deferred federal income tax (benefit) expense	Deferred federal income tax (benefit) expense	(5,033)		22,443		(9,033)		Deferred federal income tax (benefit) expense	(23,071)		(5,033)		22,443
Amortization of accumulated deferred investment tax credits	Amortization of accumulated deferred investment tax credits	(159)		(191)		(236)		Amortization of accumulated deferred investment tax credits	(142)		(159)		(191)
Total federal income tax expense		$	10,532	$	37,033	$	35,142
Total federal income tax (benefit) expense								Total federal income tax (benefit) expense	$	(23,213)	$	10,532	$	37,033
Current state income tax expense	Current state income tax expense	5,069		9,063		23,293		Current state income tax expense	—		5,069		9,063
Deferred state income tax benefit		11,198		(644)		(2,511)
Deferred state income tax expense (benefit)								Deferred state income tax expense (benefit)	13,860		11,198		(644)
Total state income tax expense	Total state income tax expense	$	16,267	$	8,419	$	20,782	Total state income tax expense	$	13,860	$	16,267	$	8,419
Total federal and state income taxes		$	26,799	$	45,452	$	55,924
Total federal and state income tax (benefit) expense								Total federal and state income tax (benefit) expense	$	(9,353)	$	26,799	$	45,452
Items charged or credited directly to members’ equity	Items charged or credited directly to members’ equity							Items charged or credited directly to members’ equity
Federal deferred	Federal deferred	(576)		(2,500)		797		Federal deferred	1,714		(576)		(2,500)
State deferred	State deferred	(189)		(818)		261		State deferred	338		(189)		(818)
Total tax expense (benefit) from items charged directly to member’s equity	Total tax expense (benefit) from items charged directly to member’s equity	$	(765)	$	(3,318)	$	1,058	Total tax expense (benefit) from items charged directly to member’s equity	$	2,052	$	(765)	$	(3,318)
Total federal and state income tax expense		$	26,034	$	42,134	$	56,982
Total federal and state income tax (benefit) expense								Total federal and state income tax (benefit) expense	$	(7,301)	$	26,034	$	42,134

~~The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, 2020, and 2019 was comprised of the following:~~

AT DEC. 31,
(THOUSANDS) 2020 2019
Depreciation and property basis differences $ (725,034) $ (705,423)
Net operating loss carryforward 35,442 2,714
Fuel costs (7,072) (5,608)
Other comprehensive income 8,274 7,510
Regulated operations regulatory liability, net 47,060 34,836
Postretirement benefits 11,951 10,044
Other (5,219) (1,907)
Accumulated deferred federal and state income taxes, net $ (634,598) $ (657,834)

The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, 2021, and 2020 was comprised of the following:


	AT DEC. 31,
(THOUSANDS)	2021		2020
Depreciation and property basis differences	$	(744,594)	$	(725,034)
Net operating loss carryforward	125,392		35,442
Fuel costs	(14,552)		(7,072)
Other comprehensive income	6,222		8,274
Regulated operations regulatory liability, net	(93,990)		47,060
Postretirement benefits	20,649		11,951
Other	(6,606)		(5,219)
Accumulated deferred federal and state income taxes, net	$	(707,479)	$	(634,598)

Tax Rate Changes

On November 13, 2021, the Louisiana state corporate income tax rate decreased from 8% to 7.5%, effective for the income tax periods beginning on or after January 1, 2022. In accordance with accounting guidance, the impact of the rate change was recorded on Cleco and Cleco Power’s consolidated financial statements at December 31, 2021. The impact was a $20.0 million increase to Accumulated deferred federal and state income taxes, net and a $20.0 million decrease to Regulatory liabilities - deferred taxes, net. There was no impact to income tax expense.

Valuation Allowance

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco had a deferred tax asset resulting from a NMTC carryforward of $92.4 million. If the NMTC carryforward is not utilized, it will begin to expire in 2030. Management considers it more likely than not that the deferred tax asset related to the NMTC carryforward will be realized; therefore, 0no valuation allowance has been recorded for Cleco and Cleco Power.

Net Operating Losses

For the ~~2019~~2020 tax year, Cleco created a federal net operating loss of approximately ~~$433.2~~$550.0 million and a state net operating loss of approximately $186.1 million. For the ~~2020~~2021 tax year, Cleco expects to create an additional federal net operating loss of ~~$65.0~~$218.4 million and a state net operating loss of ~~$134.6~~$252.9 million.

For the 2020 tax year, Cleco Power ~~expects to create~~created a federal net operating loss of ~~$136.3~~approximately $187.8 million and a state operating loss of ~~$134.6~~$186.1 million.

~~The~~ For the 2021 tax year, Cleco Power expects to create an additional federal net operating loss ~~may be carried forward indefinitely,~~ and state net operating loss ~~carryforwards will begin to expire in 2040.~~of $249.6 million and $252.9 million, respectively.

Both the federal and state net operating losses may be carried forward indefinitely. Cleco ~~considers~~and Cleco Power consider it more likely than not that these income tax losses will be utilized to reduce future income tax payments, and ~~utilize~~ the entire net operating loss carryforward will be utilized within the statutory deadlines.

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco and Cleco Power had 0 no

interest payable related to uncertain tax positions. For the years ended December 31, ~~2020, 2019, and 2018, Cleco and Cleco Power had 0 interest expense related to uncertain tax positions.~~

~~At December 31,~~2021, 2020, and 2019, Cleco and Cleco Power had 0no interest expense related to uncertain tax positions. At December 31, 2021, and 2020, Cleco and Cleco Power had no liability for unrecognized tax positions. Cleco estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2020, for Cleco and Cleco Power would be unchanged in the next 12 months. The settlement of open tax years could involve the payment of additional taxes, and/or the recognition of tax benefits, which may affect Cleco’s effective income tax rate.

Income Tax Audits

Cleco participates in the IRS’s Compliance Assurance Process in which ~~financial results~~tax positions are examined and agreed upon prior to filing the federal ~~consolidated~~ tax ~~returns.~~return. While the statute of limitations remains open for tax years ~~2017,~~ 2018, 2019, and ~~2019, management believes the likelihood of further examination by~~2020, the IRS ~~is remote.~~has completed its review of years 2018 through 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 2020 and 2021 tax years. 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.

The state income tax years ~~2017,~~ 2018, 2019, and ~~2019~~2020 remain subject to examination by the Louisiana Department of Revenue.

Cleco classifies income tax penalties as a component of other expenses. For the years ended December 31, 2021, 2020, and 2019, ~~and 2018, 0~~no penalties were recognized.

TCJA

On December 22, 2017, the TCJA was enacted into law. The TCJA includes significant changes to the IRC, as amended, including amendments which significantly change the taxation of business entities and includes specific provisions related to

rate regulated activities, including Cleco Power. The most significant change that impacts Cleco is the reduction of the corporate federal income tax rate from 35% to 21%.

At December 31, ~~2020,~~2021, and ~~2019,~~2020, Cleco and Cleco Power had $302.0 million and $352.4 million, ~~and $375.0 million,~~respectively, accrued for the excess ~~ADIT, respectively.~~ADIT. For more information on the regulatory treatment of the TCJA regulatory liability, see Note 6 — “Regulatory Assets and Liabilities — ~~Income Taxes”~~Deferred Taxes, Net” and Note 13 — “Regulation and Rates — TCJA.”

Additionally, as a result of the TCJA, effective for tax years beginning after December 31, 2017, corporations are no longer subject to the alternative minimum tax (AMT). For companies with unused AMT credits, the credits may be carried forward and used as refundable credits for tax years beginning after 2017, but before 2022. At December 31, 2019, Cleco had $1.4 million in non-current AMT credits recorded in Other deferred charges on Cleco’s Consolidated Balance Sheets. The CARES Act passed in 2020 allowed businesses to claim the refund in the current year. Cleco used the remaining unused AMT credits in 2020.

CARES Act

OnIn March ~~27,~~ 2020, the CARES Act was ~~enacted and~~ signed into ~~law in response to the COVID-19 pandemic. Among other provisions, the~~law. The CARES Act includes tax relief provisions such as an alternative minimum tax credit refund, a five-year net operating loss carryback from years 2018 through 2020, and deferred payments of employer payroll taxes.

Cleco deferred $6.0 million in employer payroll tax payments for the period March 27, 2020, through December 31, 2020. Cleco paid $3.0 million of the obligation in the fourth quarter of 2021, and will pay the remaining $3.0 million by December 31, 2022.

Cleco Power deferred $3.6 million in employer payroll tax payments for the period March 27, 2020, through December 31, 2020. Cleco Power paid $1.8 million of the obligation in the fourth quarter of 2021, and will pay the remaining $1.8 million by December 31, 2022.

The CARES Act also included modifications on the limitations of business interest for the 2020 and 2019 tax years. The modifications ~~increase~~increased the allowable business interest deduction from 30% to 50% of adjusted taxable income. Cleco did not have any disallowed interest for the 2020 and 2019 tax ~~year~~years.

Consolidated Appropriations Act of 2021

In December 2020, the Consolidated Appropriations Act of 2021 (CAA) was signed into law. The CAA includes COVID-19 tax relief and tax extender provisions. These include extensions of time to begin construction on certain solar assets eligible for the Investment Tax Credit (ITC), 100% deductibility of business meals in 2021 and 2022, and an extension of the work opportunity tax credit. The ITC percentage has been increased for projects starting construction through 2023 and placed in service by the end of 2025. Management does not ~~anticipate having any disallowed interest for~~expect the ~~2020 tax year.~~CAA to have a material impact on the Registrants.

Note 12 — Disclosures about Segments

Cleco

Cleco’s reportable segments are based on its method of internal reporting, which disaggregates business units by its first-tier subsidiary. Cleco’s reportable segments are Cleco Power and Cleco Cajun.

Each reportable segment engages in business activities from which it earns revenue and incurs expenses. 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’s Board~~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’s Board~~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, and an investment subsidiary. Upon the completion of the Cleco Cajun Transaction on February 4, 2019, Cleco Cajun became a reportable segment. For more information on the Cleco Cajun Transaction, see Note 3 — “Business Combinations.” There are no other changes to Cleco’s existing reportable segments.

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 segments. Management evaluates the performance of Cleco’s segments and allocates resources to them 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

Cleco Power

Cleco Power is a vertically integrated, regulated electric utility operating within Louisiana and Mississippi and is viewed as 1 unit by management. Discrete financial reports are prepared only at the company level.

Note 13 — Regulation and Rates

Provision for rate refund on Cleco and Cleco Power’s ~~Condensed~~ Consolidated Balance Sheets consisted primarily of the following:


(THOUSANDS)	(THOUSANDS)	AT DEC. 31, 2020		AT DEC. 31, 2019		(THOUSANDS)	AT DEC. 31, 2021		AT DEC. 31, 2020
TCJA		$	2,057	$	28,700
Cleco Katrina/Rita storm recovery charges						Cleco Katrina/Rita storm recovery charges	$	1,611	$	1,617
FERC audit	FERC audit	$	1,912	$	3,482	FERC audit	$	—	$	1,912
FRP	FRP	$	1,786	$	1,851	FRP	$	1,229	$	1,786
Cleco Katrina/Rita storm recovery charges		$	1,617	$	0
Site-specific industrial customer	Site-specific industrial customer	$	710	$	844	Site-specific industrial customer	$	833	$	710
TCJA						TCJA	$	2,057	$	2,057
Transmission ROE	Transmission ROE	$	595	$	1,020	Transmission ROE	$	—	$	595

Cleco Katrina/Rita Storm Recovery Charges

Prior to the repayment of the Cleco Katrina/Rita storm recovery bonds in March 2020, Cleco Katrina/Rita had the right to bill and collect storm restoration costs from Cleco Power’s customers to pay administrative fees, interest, and principal on the Cleco Katrina/Rita storm recovery bonds. In April 2021, after payments for all final administrative and winding up activities of Cleco Katrina/Rita were made, Cleco Katrina/Rita transferred its remaining restricted cash to Cleco Power. As a result, at December 31, 2021, Cleco Power had $1.6 million accrued for amounts to be used to benefit retail customers in a manner and timing as approved by the LPSC. For more information on Cleco Katrina/Rita’s storm recovery, see Note 2 — “Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

FERC Audit

By June 30, 2021, $4.4 million was returned to Cleco Power’s wholesale transmission customers as a combination of refund payments related to the FERC audit findings and a reduction in Attachment O of the MISO tariff and grandfathered agreement rates. For more information about the FERC audit, see Note 15 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”

FRP

Prior to July 1, 2021, Cleco Power’s annual retail earnings were subject to an FRP established by the LPSC in June 2014. The 2014 FRP allowed Cleco Power to earn a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, 60% of retail earnings between 10.9% and 11.75%, and all retail earnings over 11.75% were required to be refunded to customers. On June 16, 2021, the LPSC approved Cleco Power’s new FRP. Effective July 1, 2021, under the terms of the new 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. Cleco Power’s next base rate case is required to be filed with the LPSC on or before March 31, 2023.

Cleco Power filed its monitoring report for the 12 months ended June 30, 2019, on October 31, 2019, indicating that no refund was due. On September 22, 2021, the LPSC approved the 2019 monitoring report indicating no refund was due. Monitoring reports for the 12 months ended June 30, 2020, and 2021, were not required due to the expiration of the 2014

December ~~31, 2020, Cleco Power had $0.6 million accrued for~~2013 through May 2016. By September 30, 2021, the overcollection due to the change in ~~ROE.~~ROE was fully refunded. For more information on the ROE ~~complaint,~~complaints, see Note 15 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

2016 Merger Commitments

~~On March 28, 2016, the LPSC approved the 2016 Merger.~~ The LPSC’s written order ~~approving the~~in April 2016, ~~Merger was issued on April 7, 2016. Approval of~~approving the 2016 Merger was conditioned upon certain commitments, including ~~$136.0 million of customer rate credits. As of December 31, 2020, Cleco Power had issued $136.0 million of customer rate credits. Also included in the 2016 Merger Commitments were~~ $2.5 million of contributions for economic development for Louisiana state and local organizations to be disbursed over five years, an additional $7.0 million one-time contribution in 2016 for economic development in Cleco Power’s service territory to be administered by Louisiana Economic Development, and $6.0 million of charitable contributions to be disbursed over five years. At December 31, ~~2020,~~2021, Cleco Power had ~~$2.1 million remaining accrued for~~satisfied the previously discussed 2016 Merger ~~Commitments discussed above.~~Commitments.

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution could be implemented to mitigate reliability issues. One mitigating factor identified was Cleco Power’s Terrebonne to Bayou Vista Transmission project, which was completed in April 2019. Cleco Power received a termination notice, effective April 30, 2019, and filed paperwork to withdraw the filed Attachment Y. While operating as an SSR unit, Cleco Power received monthly payments that included recovery of expenses, including capital expenditures, related to the operations of Teche Unit 3. Additionally, MISO allocated SSR costs to the load serving entities that required the operation of the SSR unit, including Cleco Power. These payments and cost allocations were finalized as part of a MISO SSR settlement approved in December 2018. Cleco Power operated Teche Unit 3 as an SSR unit from April 2017 until April 2019.

Oxbow prior to the closure of the Dolet Hills Power Station. For more information on DHLC and the Oxbow mine, see Note 15 — “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 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, 4 actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and 3 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 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 4 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),

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.~~Louisiana (the Bunkie project). According to the petition filed by Gulf Coast in the 12th Judicial District Court for Avoyelles Parish, Louisiana (the ~~“District Court”)~~District Court), 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 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 District Court denied Cleco’s exception in December 2015, after considering briefs and arguments. In January 2016, Cleco appealed the 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 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 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.

Cleco believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast, are

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 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. Cleco Power is responding to related data requests. Management is unable to determine the outcome or timing of the audit. For more information on these winter storms, see Note 19 — “Storm Restoration — Winter Storms Uri and Viola.”

Environmental Audit

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from its customers certain costs of environmental compliance. 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. On ~~March 3, 2020, Cleco Power received notice from~~October 20, 2021, the LPSC ofapproved the EAC audit for the period of January 2018 to December ~~2019.~~2019 with no findings. The total amount of environmental expense that was included in the audit iswas $26.2 million. ~~Cleco Power has responded to several sets of data requests from the LPSC.~~ Cleco Power has EAC filings for January 2020 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 ~~new~~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~~order specifically ~~directs~~directed the EPA to consider issuing a proposed rule ~~by August 2021~~ 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 February 9, 2022, the EPA published in the Federal Register a proposed rule to revoke the agency’s May 2020 finding with respect to whether it is appropriate and necessary to regulate coal and oil-fired generating units under MATS, but the EPA has not yet acted on a review of the risk and technology determination from the May 2020 rule. 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.

FERC Audit

Generally, Cleco Power records wholesale transmission revenue through approved formula rates, Attachment O of the MISO tariff, and certain grandfathered agreements. The calculation of the rate formulas, as well as FERC accounting and reporting requirements, are subject to periodic audits by FERC. In March 2018, the Division of Audits and Accounting, within the Office of Enforcement of FERC, initiated an audit of Cleco Power for the period of January 1, 2014, through June 30, ~~2019. On September 27,~~ 2019, ~~Cleco Power received the final audit report, which indicated 12 findings~~A total of noncompliance with a combination of FERC accounting and reporting requirements and computation of revenue requirements along with 59 recommendations associated with the audit period. Cleco Power submitted a plan for implementing the audit recommendations on October 28, 2019. Cleco Power also submitted the refund analysis on November 7, 2019, which resulted in a refund related to the FERC audit findings, pending final assessment by the FERC Division of Audits and Accounting, which is expected in the third quarter of 2021. At December 31, 2020, Cleco Power had $1.9$4.4 million ~~recorded in Provision for rate refund on Cleco and Cleco Power’s Consolidated Balance Sheets for the estimated refund. This amount is being refunded~~was returned to Cleco Power’s wholesale transmission customers as a combination of refund payments and a reduction in Attachment O of the MISO tariff and grandfathered agreement ~~rates over 12 months beginning June~~rates. On February 1, ~~2020.~~2022, FERC notified Cleco of the completion of the audit and no exceptions were found to the implementation of the audit recommendations.

Transmission ROE

~~NaN~~In November 2013 and February 2015, customers filed complaints ~~were filed~~ with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaints covered the period December 2013 through May 2016 and sought to reduce the 12.38% ROE used in MISO’s transmission rates to a proposed 6.68%.

~~The complaints covered the period December 2013 through May 2016.~~ In June 2016, an administrative law judge issued an initial decision in the second rate case docket recommending a 9.70% base ROE. In September 2016, FERC issued a Final Order in response to the first complaint establishing a 10.32% ROE. However, on November 21, 2019, FERC voted to adopt a new methodology for evaluating base ROE for public utilities under the Federal Power Act. In addition, FERC set the MISO transmission owners’ region-wide base ROE at 9.88% for the refund period covered in the first complaint and going forward. The draft FERC order further found that complainants in the second complaint proceeding failed to show that the 9.88% base ROE was unjust and unreasonable and thus dismissed the second complaint. On May 21, 2020, FERC issued Opinion No. 569-A, which granted a rehearing in part of Opinion No. 569, which had revised FERC’s methodology for analyzing the base ROE component of public utility rates under section 206 of the Federal Power Act. Opinion No. 569-A further refines FERC’s ROE methodology and finds that the MISO Transmission Owners’ base ROE should be set at 10.02% instead of 9.88%. Cleco Power is unable to determine when a final FERC Order will be issued. As of ~~December 31, 2020, Cleco Power had $0.6 million accrued for~~September 30, 2021, the overcollection due to the change in the ~~ROE.~~ROE was fully refunded.

In November 2014, the MISO transmission owners committee, of which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by 50 basis points for RTO participation as allowed by the MISO tariff. In ~~January 2015, FERC granted the request. Beginning January 1, 2020, the collection of the adder was included in MISO’s transmission rates for a total ROE of 10.38%. On June 1, 2020,~~

January 2015, FERC granted the ~~total ROE~~request. The collection of the adder was included in MISO’s transmission ~~rate was~~rates for a total ROE of 10.38% and 10.52%. beginning January 1, 2020, and June 1, 2020, respectively.

South Central Generating

In 2017, Louisiana Generating received insurance settlement proceeds for remediation costs, as defined in the policy of insurance, incurred to ~~resolve~~install selective non-catalytic reduction equipment on Big Cajun II, Unit 3. This installation served a dual purpose of being a prudent utility practice for compliance with environmental laws and aiding in the settlement of a lawsuit, which was brought by the EPA and the LDEQ against Louisiana Generating, related to Big Cajun II, ~~Unit 3.~~Units 1 and 2. Entergy Gulf States, as co-owner of Big Cajun II, Unit 3, is expected to be allocated a portion of the insurance settlement proceeds. ~~Any amount allocated to~~Litigation between Entergy Gulf States ~~will be determined by ongoing litigation~~ and ~~negotiations. South Central~~Louisiana Generating ~~estimated~~ensued to determine Entergy Gulf States’ allocated amount of insurance proceeds, among other claims pursuant to the Joint Ownership Participation and Operating Agreement between Louisiana Generating and Entergy Gulf States. In August 2021, Louisiana Generating and Entergy Gulf States entered an agreement to settle all claims asserted in this litigation. NRG Energy paid the settlement amount ~~to be $10.0 million. As part~~in January 2022. The Courts issued signed orders of dismissal in early 2022, recognizing the dismissal of the ~~Cleco Cajun Transaction, Cleco Cajun assumed the $10.0 million contingent liability and~~lawsuits with prejudice. NRG Energy indemnified Cleco for losses associated with this litigation matter.

As part of the Cleco Cajun transaction, Cleco Cajun had assumed a $10.0 million contingent liability associated with this matter. As a result, Cleco ~~also~~had recorded a $10.0 million indemnification asset, which was included in the purchase price allocation and included in Other current assets on Cleco’s Consolidated Balance ~~Sheets.~~Sheet. Upon payment by NRG in January 2022 for the settlement of the associated legal matter, the contingent liability as well as the indemnification asset were removed from Cleco’s Consolidated Balance Sheet.

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 December 31, 2021, management estimates potential losses to be $1.5 million with respect to one of these matters. Management is unable to estimate any potential losses ~~that~~ Cleco Cajun may be ultimately be responsible for with respect to any ~~one~~ of ~~these~~the remaining matters. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with 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 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 December 31, ~~2020,~~2021, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters are ~~$5.4~~$6.0 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 and Cleco Power’s Consolidated Balance Sheets because management has determined that Cleco 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 indemnifications relate to environmental matters that may have been present prior to closing. These remaining indemnifications 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 indemnifications 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 indemnifications relate to the fundamental organizational structure of Acadia. These remaining indemnifications 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 indemnifications to Cleco Power as a result of the transfer of Coughlin to Cleco Power in March 2014. Cleco Power also provided indemnifications to Cleco Holdings ~~and Evangeline~~ as a result of the transfer of Coughlin to Cleco Power. The maximum amount of the potential payment to Cleco Power and Cleco Holdings ~~and Evangeline~~ for their respective indemnifications is $40.0 million, except for indemnifications 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 indemnifications.

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 paid on behalf of the miner would be credited by the lignite miner against future invoices for lignite delivered. ~~The maximum~~Any amounts projected ~~payment by Cleco Power under this guarantee is estimated~~ to be ~~$32.6 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is~~paid would be based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. As of December 31, 2021, Cleco

Power does not expect any payments to be made under this guarantee. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under this guarantee.

In April 2020, Cleco Power and SWEPCO mutually agreed not to ~~not~~ 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 ~~December 31,~~June 30, 2020, all lignite reserves intended to be extracted from the Oxbow mine 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. ~~The Amended~~On March 17, 2021, the LPSC approved the establishment of a regulatory asset for the deferral of certain accelerated mine costs in fuel and related ratemaking treatment. Cleco Power is currently responding to data requests related to the joint filing. On January 31, 2022, Cleco Power filed an application with the LPSC requesting recovery of stranded and decommissioning costs associated with the closure of the mines. For more information on the regulatory asset related to the closure of the lignite mines, see Note 6 — “Regulatory Assets and Liabilities — Lignite ~~Mining Agreement does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under this guarantee.~~Mine Closure Costs.”

Cleco ~~Holdings, in relation to Cleco Cajun’s participation in MISO, and Cleco Power have~~has letters of credit to MISO

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.

Cleco Power and Cleco Cajun are participants in the MISO market. ~~Energy prices~~Power purchases in the MISO market are ~~based on~~made at prevailing market prices, also referred to as LMP. LMP ~~which~~ includes a component directly related to congestion on the transmission ~~system. Pricing zones with greater transmission congestion may have higher LMPs. Physical transmission constraints present in~~system and, as a result, can be different based on the ~~MISO market could increase~~location and time of the day the energy is dispatched causing energy costs ~~within pricing zones.~~to increase. Cleco Power and Cleco Cajun use FTRs to mitigate transmission congestion price risks. ~~Changes~~

In June 2020, management decided to ~~anticipated transmission paths may result in an unexpected increase in energy costs.~~

~~On March 1, 2019,~~retire the Dolet Hills Power Station. Cleco Power ~~began to operate~~made a filing with the LPSC on September 7, 2021, giving notice that the Dolet Hills Power Station ~~from June through September~~would be retired at the end of ~~each year; however, Dolet Hills~~2021. On January 31, 2022, Cleco Power ~~Station will continue to be available to operate in other months, if needed. In June 2020, after thorough evaluation, management decided to retire~~filed an application with the LPSC requesting recovery of stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station. For more information regarding the regulatory asset associated with the Dolet Hills Power Station ~~anticipated closure,~~retirement, see Note 6 — “Regulatory Assets and Liabilities — Dolet Hills Power Station Closure Costs.”

~~In April 2020,~~ At December 31, 2021, Cleco ~~Power and SWEPCO mutually agreed to not develop additional mining areas for future lignite extraction and subsequently provided notice to the LPSC of the intent to cease mining at~~Power’s undivided interest in the Dolet Hills Power Station was $7.2 million and ~~Oxbow mines by June 2020, subject to LPSC review and approval. As of December 31, 2020, all lignite reserves intended to be extracted from the Oxbow mine had been extracted.~~ was included in base rates.

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~~rate-making treatment. The expected early closure of the mines ~~has~~ resulted in increased lignite costs. On March 17, 2021, the LPSC approved the establishment of a regulatory asset for certain lignite costs that ~~will~~would otherwise be billed through Cleco Power’s FAC and any reasonable incremental third-party professional costs related to the ~~fuel adjustment clause, which management~~closure of the mine. Management currently believes these costs are recoverable. Management does not believe the early closure of the mines will have an adverse impact on the recovery value of the Dolet Hills Power Station. Cleco Power ~~expects~~is currently responding to ~~have sufficient lignite fuel available~~data requests related to ~~continue seasonal operations of~~ the ~~Dolet Hills Power Station through 2021.~~

Cleco Power anticipates filing an application in March 2021 with the LPSC giving notice that the Dolet Hills Power Station will be retired at the end of 2021 and requesting the approval of the regulatory treatment and recovery of the stranded costs and decommissioning costs over 20 years.joint filing. For more information regarding the ~~Dolet Hills Power Station~~regulatory asset associated with the closure of the mines, see Note 6 — “Regulatory Assets and Liabilities — ~~Dolet Hills~~Lignite Mine Closure Costs.”

In June 2020, Cleco Power remeasured its ARO liabilities due to the expected retirement of the Dolet Hills Power Station. Cleco Power’s ARO liability increased $3.3 million as a result of this remeasurement. At December 31, 2020, Cleco Power’s undivided interest in the Dolet Hills Power Station was ~~$99.0 million~~ ~~and was included in base rates. For more information on the accounting treatment of Cleco Power’s AROs, see Note 2 — “Summary of Significant Accounting Policies — AROs.”~~

Fuel costs incurred by Dolet Hills Power Station are recoverable by Cleco Power through active fuel adjustment clauses. Under the Amended Lignite Mining Agreement, DHLC bills Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs as fuel is delivered. As of December 31, ~~2020, DHLC estimates~~2021, ~~$154.2 million~~all of Cleco Power’s proportional share of lignite costs ~~will be~~have been billed ~~to Cleco Power prior to the closure of the Dolet Hills Power Station.~~by DHLC. In 2009, Cleco Power acquired an interest in Oxbow, which owns mineral rights and

The following tables present Cleco and Cleco Power’s amortization of intangible assets and liabilities:


Cleco
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020		2019
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recover charges	$	—	$	517	$	20,576
Trade name	$	3,897	$	255	$	255
Power supply agreements	$	25,600	$	25,600	$	24,273
Intangible liabilities
LTSA	$	3,484	$	3,484	$	3,234
Power supply agreements	$	2,378	$	3,528	$	3,194
An impairment on the Trade name intangible asset was recognized in 2021. No impairments for intangibles in the table above were recognized for 2020 and 2019.


Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020		2019
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	—	$	517	$	20,576

The following tables summarize the balances for intangible assets and liabilities subject to amortization for Cleco:


Cleco
	AT DEC. 31,
(THOUSANDS)	2021		2020
Intangible assets
Trade name	$	—	$	5,100
Power supply agreements	184,004		184,004
Total intangible assets carrying amount	184,004		189,104
Intangible liabilities
LTSA	24,100		24,100
Power supply agreements	14,200		14,200
Total intangible liabilities carrying amount	38,300		38,300
Net intangible assets carrying amount	145,704		150,804
Accumulated amortization	(82,466)		(63,932)
Net intangible assets subject to amortization	$	63,238	$	86,872

The following table summarizes the amortization expense related to intangible assets and liabilities expected to be recognized in Cleco’s Consolidated Statements of Income:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	INTANGIBLE ASSETS		INTANGIBLE LIABILITIES		(THOUSANDS)	INTANGIBLE ASSETS		INTANGIBLE LIABILITIES
For the year ending Dec. 31,	For the year ending Dec. 31,					For the year ending Dec. 31,
2021		$	25,855	$	(5,862)
2022	2022	$	25,855	$	(5,041)	2022	$	25,600	$	(5,041)
2023	2023	$	25,628	$	(5,041)	2023	$	25,373	$	(5,041)
2024	2024	$	19,056	$	(5,041)	2024	$	18,801	$	(5,041)
2025	2025	$	5,292	$	(3,875)	2025	$	5,037	$	(3,874)
2026						2026	$	744	$	—
Thereafter	Thereafter	$	10,046	$	0	Thereafter	$	6,680	$	—

Note 19 — Storm Restoration, Securitization, and Cost Recovery

Hurricanes Laura, Delta, and Zeta

In August and October 2020, ~~Cleco’s service territories were impacted by 3 separate hurricanes. While the hurricanes did not have a material impact on Cleco Cajun,~~ Cleco Power’s distribution and transmission systems sustained substantial ~~damage.~~

~~On August 27, 2020, Hurricane Laura made landfall in southwest Louisiana as a Category 4 storm, causing catastrophic~~ damage to portions of Cleco Power’s service territory and causing power outages for approximately 140,000 of Cleco Power’s electric customers located primarily in central and southwest Louisiana. By September 18, 2020, power was restored to 100% of customers who could receive power.from 3 separate hurricanes.

Cleco Power’s total storm restoration costs related to ~~Hurricane Laura is~~the hurricanes was approximately ~~$180.3~~$239.8 million. ~~Cleco Power continues to work to restore the distribution and transmission systems to their pre-storm condition.~~ The damage to equipment from the ~~storm~~hurricanes required replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately ~~62%~~63%, or approximately ~~$112.5~~$150.4 million, of the total restoration costs recorded at December 31, ~~2020. Approximately $9.4 million of the repair-related restoration cost associated with Hurricane~~2021. At December 31, 2021, Cleco Power had regulatory assets for non-capital expenses related to Hurricanes Laura, ~~was offset against Cleco Power’s existing storm damage reserve,~~Delta, and ~~$54.4 million of costs was recorded as a regulatory asset,~~Zeta, as allowed by the ~~LPSC.~~

On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana as a Category 2 storm resulting in power outages for approximately 132,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By October 16, 2020, power was restored to 100% of customers who could receive power. Cleco Power’s total storm restoration costs related to Hurricane Delta is approximately $50.7LPSC, totaling $74.7 million. ~~The damage to equipment from the storm required~~

~~replacement, as well as repair of existing assets. Therefore,~~On May 19, 2021, the ~~balance sheets of Cleco and~~LPSC issued an order authorizing Cleco Power ~~reflect the capitalization of approximately 65%, or approximately $32.9~~to recover $16.0 million ~~of the total restoration costs recorded at December 31, 2020. At December 31, 2020,~~annually for interim storm recovery. Cleco Power ~~recognized $17.1 million as a regulatory asset for deferred, non-capital Hurricane Delta storm restoration costs, as allowed by the LPSC.~~

On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana as a Category 2 storm resulting in power outages for approximately 73,000 of Cleco Power’s electric customers located primarily in southeast Louisiana. By October 31, 2020, service was restored to 100% of customers who could receive power. Cleco Power’s total storm restoration costs related to Hurricane Zetabegan collecting this amount through rates on June 1, 2021. This order is approximately $8.6 million. The damage to equipment from the storm required replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 57%, or approximately $4.9 million, of the total restoration costs recorded at December 31, 2020. At December 31, 2020, Cleco Power recognized $3.5 million as a regulatory asset for deferred, non-capital Hurricane Zeta storm restoration costs, as allowed by the LPSC.

~~On December 4, 2020, Cleco Power filed an application with the LPSC requesting an interim rate recovery for return on the storm restoration costs associated with the hurricanes~~effective until such time that the securitization of ~~such~~those costs ~~can be completed. Cleco Power,~~is complete, which is expected in line with other impacted utilities, will seek available funds from the U.S. government for relief of costs incurred from Hurricanes Laura, Delta, and Zeta. Cleco Power cannot predict the likelihood that any reimbursement from the U.S. government ultimately will be approved. In addition to securitization, other recovery options are being analyzed.mid-2022.

Winter Storms Uri and Viola

In February 2021, Winter Storms Uri and Viola caused Cleco’s service ~~territories experienced~~territory to experience extreme and unprecedented winter weather that resulted in damage to Cleco Power’s distribution assets and caused electricity generation supply shortages, natural gas supply shortages, and increases in prices of natural gas in the U.S., primarily due to prolonged freezing temperatures. Cleco Power’s total storm restoration costs related to Winter Storms Uri and Viola was $10.1 million. The damage to equipment from the storms required replacement, as well as repair of the existing assets. Therefore,

~~damage to Cleco Power’s distribution and transmission assets, electricity generation supply shortages, natural gas supply shortages and increased wholesale prices of natural gas in~~ the ~~United States, primarily due to prolonged freezing temperatures.~~

~~On February 14, 2021, Winter Storm Uri reached Louisiana resulting in power outages for approximately 11,000~~balance sheets of Cleco ~~Power’s electric customers located primarily in south Louisiana. By February 17, 2021, power was restored to 100%~~and Cleco Power reflect the capitalization of ~~customers who could receive power. On February 17, 2021, Winter Storm Viola reached Louisiana resulting in power outages for~~ approximately 43,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By February 22, 2021, power was restored to 100% of customers who could receive power. Cleco Power’s current estimate80%, or approximately $8.1 million, of the estimated total ~~storm~~ restoration costs ~~related to Winter Storms Uri and Viola is between $9.0 million and $10.0 million.~~recorded at December 31, 2021. At December 31, 2021, Cleco Power ~~continues its restoration efforts as damage to its distribution and transmission assets is still being assessed. Cleco Power anticipates the establishment of~~had a regulatory asset for non-capital expenses ~~incurred related to Winter Storms Uri and Viola, subject to LPSC approval.~~

~~On February 16, 2021, Cleco was notified~~of $1.9 million, as allowed by the ~~regional reliability coordinator, MISO,~~LPSC. Cleco Power has requested recovery of these costs through the storm securitization filing that ~~extremely cold temperatures were causing an increase in demand for power, which resulted in an overload of~~was made with the power grid. The electricity generation shortages necessitated MISO to implement controlled outages in certain of its service areas. To help protect the stability of the power grid and prevent prolonged outages, MISO instructed Cleco to reduce demandLPSC on the power grid by initiating periodic outages to customers across Louisiana. The periodic power outages were minimal and suspended within one hour of initiation at the direction of MISO because the power

~~shortage was no longer threatening the reliability of the power grid.~~August 5, 2021.

Cleco Power’s ~~current estimate of~~ incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola is ~~between $45.0 million and~~approximately $55.0 million. ~~As a result of of the increase in net purchased power costs exceeding its unsecured credit capacity with MISO, on February 24,~~On March 29, 2021, Cleco Power ~~posted collateral in~~received approval from the ~~amount of $21.0~~LPSC to recover $50.0 million with MISO. Cleco Power expects to settle the majority of its purchase power obligations with MISO associated with the winter storms and eliminate associated collateral postings by March 9, 2021. These amounts are preliminary estimates and are subject to final settlement. Management expects to seek recovery of these costs ~~through~~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 ~~FAC. Recovery~~customers during Winter Storms Uri and Viola. Cleco Power is responding to related data requests. Management is unable to determine the outcome or timing of ~~these~~the audit.

Hurricane Ida

On August 29, 2021, Hurricane Ida made landfall in southeast Louisiana as a Category 4 storm, causing power outages for approximately 100,000 of Cleco Power’s electric customers located primarily in southeastern Louisiana. By September 11, 2021, power was restored to 100% of customers who could receive power.

Cleco Power’s total storm restoration costs ~~are subject~~related to ~~LPSC review~~Hurricane Ida is approximately $92.0 million. The damage to equipment from the hurricane required replacement, as well as repair of existing assets. Therefore, the balance sheets of

Cleco and Cleco Power reflect the capitalization of approximately 56%, or approximately $52.1 million, of the total restoration costs recorded at December 31, 2021. At December 31, 2021, Cleco Power had a regulatory asset for non-capital expenses related to Hurricane Ida, as allowed by the LPSC, ~~could disallow timely~~totaling $37.6 million.

On September 28, 2021, Cleco Power made a supplemental filing to its application for storm restoration costs securitization to recover costs related to Hurricane Ida.

Storm Securitization and ~~full recovery~~Cost Recovery

On August 5, 2021, Cleco Power filed testimony with the LPSC relating to securitization of ~~these costs.~~

~~Cleco Cajun currently estimates~~ the ~~incremental negative impact of~~final storm costs for Hurricanes Laura, Delta, and Zeta, and Winter Storms Uri and Viola, ~~on operations~~totaling $342.0 million, including the establishment of a newly funded $100.0 million storm reserve to cover future storm costs. On September 28, 2021, Cleco Power filed supplemental testimony with the LPSC relating to storm securitization requesting an additional $100.0 million for a separate storm reserve to cover costs associated with Hurricane Ida. Cleco Power continues to respond to several sets of data requests received from the LPSC related to the securitization application. Cleco Power expects the LPSC to issue its order authorizing the recovery of the verified final storm costs in late March 2022 and securitization of those costs to be ~~between $10.0 million~~complete in mid-2022.

Cleco Power, in line with other impacted utilities, will seek available funds from the U.S. government for relief of costs incurred from Hurricanes Laura, Delta, and ~~$15.0 million. As a result of of~~Zeta. Cleco Power cannot predict the ~~increase in net purchased power costs exceeding its unsecured credit capacity with MISO, on February 24, 2021, Cleco Cajun posted collateral in~~likelihood that any funding from the amount of $5.0 million with MISO. Cleco Cajun expects to settle the majority of its power purchase obligations with MISO associated with the winter storms and eliminate associated collateral postings by March 9, 2021. The incremental impact to Cleco Cajun’s operations is a preliminary estimate and subject to final settlement.

~~Management is still assessing the expected impact that these winter storms and related events~~U.S. government ultimately will ~~have on the Registrants’ financial condition, results of operations, cash flows, or liquidity.~~be approved.

None.

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 December 31, ~~2020.~~2021. 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.

~~Remediation of Previously Disclosed Material Weaknesses~~

~~The Registrants concluded that the material weaknesses in internal control over financial reporting previously disclosed in Part II, Item 9A, “Controls and Procedures” in the Registrants’~~

Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2019, have been remediated. The Registrants implemented new internal controls and enhanced existing internal controls to remediate the aforementioned material weaknesses. These controls were in the following areas:

•~~Monitoring of meter failures~~

•~~Exception identification in key processes~~

•~~Estimation monitoring~~

•~~Revenue analytics~~

•~~System development lifecycle (SDLC)~~

•~~Access security~~

•~~Change management~~

Internal Control Over Financial Reporting

Managements’ Reports on Internal Control Over Financial Reporting

The management of the Registrants are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. The Registrants’ internal control over financial reporting is a

~~None~~

On February 22, 2022, Domingo Solís-Hernández was appointed to Cleco Holdings’ and Cleco Power’s Boards of Managers as described in Cleco Holdings’ and Cleco Power’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 28, 2022. At the time of the

Form 8-K filing, the Boards of Managers had not made a determination regarding any committee assignments. On March 4, 2022, the Boards of Managers appointed Mr. Solís-Hernández to serve on the Asset Management Committee and the Business Planning and Budget Review Committee.

Cleco Power

The information called for by Items 10, 11, 12 and 13 with respect to Cleco Power is omitted pursuant to General Instruction I(2)(c) to Form 10-K (Omission of Information by Certain Wholly Owned Subsidiaries).

Boards of Managers of Cleco

As of March ~~3, 2021,~~7, 2022, the Board of Managers of Cleco Holdings is comprised of 1213 managers, as set forth below. Cleco Power’s Board of Managers is comprised of 1314 managers, including the same 1213 managers that comprise the Board of Managers of Cleco Holdings, plus one additional manager, Melissa Stark. The Board of Managers of Cleco Holdings and the Board of Managers of Cleco Power are collectively referred to below as “the Boards.” The managers’ ages, dates of appointment, employment history, and committee assignments as of March ~~3, 2021,~~7, 2022, are also set forth below. Each of Ms. Scott and Messrs. Gallot, Gilchrist, and Wainer serve pursuant to one-year agreements which are considered for renewal annually by the Boards. Mr. Fontenot serves by virtue of his position as the CEO, and the other managers are designated for membership by BCI, John Hancock, or ~~MIRA.~~MAM.

Andrew Chapman joined ~~MIRA~~Macquarie in ~~2006.~~2006 and retired on September 30, 2021. Through his consulting company WesWave LLC, Mr. Chapman is a consultant to MAM and serves on the Boards of Cleco and on the board of the entity that holds Lordstown Energy Center, a gas-fired power plant in eastern Ohio. During his 1415 years with ~~MIRA,~~Macquarie, Mr. Chapman has served as a director of utility companies owned in part by ~~MIRA’s~~MAM’s funds, including Puget Sound Energy, Duquesne Light Company, Aquarion Water Company, Cleco, and entities related to those holdings. ~~Along with Cleco, he now serves on the board for the entity holding Lordstown Energy Center, a gas-fired power plant in eastern Ohio.~~ Mr. Chapman is 6566 years old and became a member of the Boards in 2016. He is the Chair of the Business Planning and Budget Review Committee, Chair of the Leadership Development and Compensation Committee, and a member of the Asset Management Committee, the Governance and Public Affairs Committee and the Audit Committee.

Mr. Chapman held executive positions with Elizabethtown Water Company, E-town Corporation, American Water Works and the State of New Jersey prior to joining ~~MIRA~~Macquarie in 2006.

Mr. Chapman earned his Master of Business Administration from the Yale School of Management.

William “Bill” Fontenot has served as the President and CEO of Cleco Holdings since January 2018 and CEO of Cleco Power and Cleco Cajun since February 2019. Mr. Fontenot is 5859 years old and was appointed to the Boards in 2018. He is a member of the Asset Management Committee, the Business Planning and Budget Review Committee, and the Governance and Public Affairs Committee. During Mr. Fontenot’s 3435 years of service, he managed ~~the~~marketing, operations, and commercial development and generation restructuring ~~efforts of generation~~ projects valued at over $900.0 million, as well as led the development and construction of the $1.0 billion power plant, Madison Unit 3. His previous background was in marketing and the development of merchant power businesses.$2.00 billion.

Mr. Fontenot serves on the boards of the Council for a Better Louisiana, ~~Association of Edison Illuminating Companies,~~the Southeastern Electric Exchange, and the Central

Louisiana Community Foundation. He is ~~a member~~president of ~~St. Rita Catholic Church.~~

the Association of Edison Illuminating Companies, the electric utility industry’s longest-serving and preeminent association of leading operations experts.

Mr. Fontenot holds a Bachelor of Science degree in electrical engineering from Louisiana State University.

Paraskevas “Paris” Fronimos is a Senior Principal on the Infrastructure and Renewable Resource Investments team of ~~the BC Investment Management Corporation (BCI).~~BCI. He is 4647 years old and became a member of the Boards in 2019. Mr. Fronimos is the Chair of the Asset Management Committee and a member of the Business Planning and Budget Review Committee.

Mr. Fronimos joined BCI in 2017 and works with the management teams of portfolio companies primarily in the energy and utility sectors in the Americas. Mr. Fronimos currently serves as a Director of NTS, a Brazilian natural gas pipeline, a Director of Isagen, a Colombian power producer, and Director of Brookfield Brazil Motorways Holdings SRL, a toll road holding company in Barbados. Mr. Fronimos served as a Director of Tribus Services Inc, a U.S. utility services company, from 2018 to 2020. Prior to BCI, Mr. Fronimos was employed by Nova Scotia Power, a Canadian power utility, as a fuels portfolio manager. He has more than 15 years of experience in the energy and utilities space, having worked on environmental and energy policy, developing greenfield energy projects, advising on transactions, and driving fleet and fuel supply optimization activities, including commodity pricing and hedging.

Mr. Fronimos holds a bachelor’s degree in Mineral Resources Engineering from the Technical University of Crete and a Master’s in Business Administration (specializing in Natural Resources and Energy) from the University of Alberta. He is an Energy Risk Professional (ERP®) certified by the Global Association of Risk Professionals.

Richard “Rick” Gallot, Jr. is the President of Grambling State University. He is 5455 years old and became a member of the Boards in 2016. Mr. Gallot is a member of the Leadership Development and Compensation Committee and the Governance and Public Affairs Committee.

Mr. Gallot serves on the board of Origin Bancorp, Inc. (Nasdaq: OBNK). He recently served as a Louisiana state senator for District 29, where he held the position ~~of Vice-chair~~of vice chairman of the Commerce Committee and was a member of the Agriculture, Forestry, Aquaculture, and Rural ~~Development~~Development Committee and the Revenue and Fiscal Affairs Committee. He previously served as a member of the Louisiana House of Representatives for District 11, where he served as Chair of the House and Governmental Affairs Committee and was a member of the Executive Committee.

Mr. Gallot obtained his Juris Doctorate from Southern University School of Law and has been a licensed Louisiana ~~Attorney~~attorney since 1990.

David Randall “Randy” Gilchrist is the President and CEO of Gilchrist Construction Company (GCC), a central Louisiana-based infrastructure contractor specializing in road and bridge construction. He is 6162 years old and became a member of the Boards in 2016. Mr. Gilchrist is a member of the Asset Management Committee and the Audit Committee.

Under Mr. Gilchrist’s leadership, GCC has grown since 1985 from a small site work contractor to one of Louisiana’s leading highway contractors. Mr. Gilchrist has served as President of ~~Associated~~Associated General Contractors, Chair of Driving Louisiana Forward, Chair of the Central Louisiana Chamber of Commerce, and ~~Vice Chair~~vice chairman of Central Louisiana Economic Development Alliance. He ~~has~~has also served on the boards of ~~The~~the Rapides Foundation and Rapides Healthcare System.

Gerald Hanrahan is a Senior Industry Advisor to the Power and Infrastructure Team at John Hancock. The Power and Infrastructure Team is responsible for transactions in public utility, independent power project and infrastructure financing areas for John Hancock and manages a portfolio of over ~~$21.0~~$21.00 billion in assets spanning over 300 individual investments. Mr. Hanrahan is 6061 years old and became a member of the Boards in 2018. He is a member of the Asset Management Committee.

Mr. Hanrahan joined John Hancock as a director in 2001, served as managing director from 2003 to 2011, and served as Team Leader - Vice President from 2011 until 2016. He has worked in the financing area of the power industry since 1990. Before joining John Hancock, Mr. Hanrahan worked for four years in the Boston and London offices of InterGen, where he coordinated all financing activities on ~~$2.7~~$2.70 billion in power projects in Turkey, Colombia and Egypt. Before that, he spent nine years in the structured finance and financial advisory divisions of Bank of Tokyo Capital Corporation in Boston.

Mr. Hanrahan holds a Master of Business Administration from Babson College and a Bachelor of Science degree from Northeastern University.

Domingo Solís-Hernández is a Managing Director at MAM where he oversees origination of new assets and works with management teams of portfolio companies in the infrastructure sector. He is 43 years old and became a member of the Boards in February 2022. Mr. Solís-Hernández is a member of the Asset Management Committee and the Business Planning and Budget Review Committee.

Mr. Solís-Hernández has over 18 years of experience in the infrastructure sector. Since 2012, he has worked for the Macquarie Group in Europe and the U.S. Prior to Macquarie, he worked as a merger & acquisition investment banker and started his career working as a consultant engineer.

Mr. Solís-Hernández previously served as a director of Italian companies Hydro Dolomiti Energia, a hydro operator, and Societa Gasdotti Italia, a natural gas transmission operator. He also served as a director of Renvico, a renewables operator in France and Italy.

Mr. Solís-Hernández holds a Bachelor’s degree and a Master’s degree in Industrial Engineering from the University of Malaga and a Master of Business Administration from the University of Kentucky.

Christopher Leslie is ~~Executive Chairman~~Senior Managing Director and Global Head of ~~MIRA Americas.~~Sustainability for MAM. Prior to taking that role in July 2016, Mr. Leslie was the CEO of Macquarie Infrastructure Partners Inc., ~~the manager of MIRA’s U.S.-based~~where he managed Macquarie’s flagship private North American infrastructure ~~funds, Macquarie Infrastructure Partners I, II~~platform and ~~III, which collectively manage more than $7.0~~was integral in raising and investing approximately $9.00 billion in ~~U.S. and Canadian infrastructure investments.~~North American infrastructure. Mr. ~~Leslie~~Leslie is 5657 years old and became a member of the Boards in 2016. He is a member of the Leadership Development and Compensation Committee. Mr. Leslie has been or is a director of a number of MAM portfolio companies in the energy, transportation, and communications sectors.

Mr. Leslie joined Macquarie in 1992 in ~~Australia.~~Australia. He has been instrumental in expanding Macquarie’s infrastructure business globally, having launched Macquarie offices in Southeast Asia, India, and North America.

Mr. Leslie holds a Bachelor of Commerce degree from the University of Melbourne.

Jon Perry is a Senior Principal within the Infrastructure & Renewable Resources Department at BCI, where he is responsible for sourcing, executing and managing infrastructure investments. He is 4445 years old and became a member of the Boards in 2018. Mr. Perry is the Chair of the Audit Committee.

Mr. Perry has over 10 years of experience in the utility and energy sectors. Prior to working with BCI, he held positions as Manager, Mergers and Acquisitions at TransAlta, a leading Canadian independent power producer and Manager, Regulatory and Financial Reporting at FortisAlberta, a regulated distribution utility. Before then, Mr. Perry held financial and investor relations positions in Canadian junior and mid-cap oil and gas companies.

Mr. Perry holds a Bachelor of Medical Laboratory Sciences from the University of British Columbia. He is also a Chartered Accountant in the Province of Alberta and is a Chartered Financial Analyst charter holder.

Aaron Rubin is a Managing Director at ~~MIRA,~~MAM, where he is responsible for ~~MIRA’s~~MAM’s North American power and utilities investment team. He is 4344 years old and became a member of the Boards in 2018. Mr. Rubin is a member of the Business Planning and Budget Review Committee.

Since joining ~~MIRA~~Macquarie in 2008, Mr. Rubin has had extensive responsibility for investment origination and execution as well as for management of portfolio investments. He has also served as the CEO of the Moscow-based Macquarie Russia & CIS Infrastructure Fund, and has been or is a director of a number of ~~MIRA~~Macquarie portfolio companies in the energy, transportation, and communications sectors. Mr. Rubin is currently a director of Lordstown Energy Center, a 940-MW gas-fired power plant construction project in Ohio. Mr. Rubin is also the director of Cyrq Energy, a leading U.S. geothermal power company. Prior to joining ~~MIRA,~~Macquarie, Mr. Rubin was a Vice President inon JPMorgan’s North American mergers and acquisitions team.

Mr. Rubin holds a Bachelor of Commerce and a Bachelor of Laws degree from the University of Queensland.

Peggy Scott currently serves as the Chair of the Boards. She served as Chairperson and Interim CEO of Cleco Holdings from February 9, 2017, through December 31, 2017. She also serves on Cleco’s Audit Committee and Governance and Public Affairs Committee. Presently, Ms. Scott ~~advises~~is an adviser to

growing companies in diverse ~~industries, including healthcare and technology.~~industries. She is 6970 years old and became a member of the Boards in 2016.

Ms. Scott serves on the boards of The Eastern Company (Nasdaq: EML), Gresham Smith Partners, Martin Sustainable Resources, and the Blue Cross ~~Blue Shield~~Foundation of ~~Louisiana Foundation.~~Louisiana. She served on the board of Benefytt Technologies, Inc. (BFYT) until its 2020 acquisition and ~~on International Plan Solutions, LLC.~~various community organizations. Previously, she served as the Executive Vice President, Chief Operating Officer, and CFO of Blue Cross Blue Shield of Louisiana (BCBS) and as Chief Strategy Officer. Prior to BCBS, Ms. Scott was an office Managing Partner with Deloitte and held senior executive positions in U.S. and International companies in seven countries where she led ~~transformations,~~transformational growth ~~strategies,~~ and ~~operations in seven foreign countries.~~change.

Ms. Scott was named one of the ten Outstanding Young Women of America, featured in the Wall Street Journal as National Financial Executive of the year, and inducted into the American Institute of CPAs’ Hall of Fame. She is in the Louisiana State University’s Alumni Hall of Distinction, named a Tulane Outstanding Alumnus and holds a Presidential citation.

Ms. Scott is a CPA and ~~also is~~ certified in Valuations and ~~Forensics.~~Forensics and as a Professional Corporate Director. She holds a Master of Business Administration from Tulane University and a Bachelor of Science degree in accounting from Louisiana State University.

Audit Committee

Cleco has a separately-designated standing Audit Committee. The members of Cleco’s Audit Committee are Andrew Chapman, Randy Gilchrist, Jon Perry (who serves as Chair of the committee) and Peggy Scott. The Boards have determined that Andrew Chapman is the Audit Committee financial expert.

Code of Business Conduct & Ethics and Related Party Transactions

Cleco has adopted a Code of Conduct that applies to its principal executive officer, principal financial officer, principal accounting officer, and treasurer. Cleco also has adopted an Ethics Guide applicable to all employees and the Boards. In addition, the Boards have adopted Conflicts of Interest and Related Policies to prohibit certain conduct and to reflect the expectation of the Boards that their members engage in and promote honest and ethical conduct in carrying out their duties and responsibilities, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships and corporate opportunities. Under the Conflicts of Interest and Related Policies, Cleco considers transactions that are reportable under the SEC’s rules for transactions with related parties to be conflicts of interest and prohibits them. Any request, waiver, interpretation or other administration of the policy shall be referred to the Governance and Public Affairs Committee. Any recommendations by the Governance and Public Affairs Committee to implement a waiver shall be referred to the full Boards for a final determination. The Code of Conduct for Financial Managers, Ethics Guide, and Conflicts of Interest and Related Policies are posted on Cleco’s website at https://cleco.com/about/leadership-governance/codes-of-conduct. Each of these documents is also available free of charge by request sent to:

Public Relations, Cleco, P.O. Box 5000, Pineville, LA 71361-5000.

Communications with the Boards

The Corporate Governance Guidelines provide for communications with the Boards by interested persons. In order for employees and other interested persons to make their concerns known to the Boards, Cleco has established a procedure for communications with the Boards through the ~~Board’s~~Boards’ Chair. The procedure is intended to provide a method

for confidential communication, while at the same time protecting the privacy of the members of the Boards. Any interested person wishing to communicate with the Boards, or the non-management members of the Boards, may do so by addressing such communication as follows:

Chair of the Boards of Managers

c/o Corporate Secretary

Cleco Holdings

P.O. Box 5000

Pineville, LA 71361-5000

Upon receipt, Cleco’s Corporate Secretary will forward the communication, unopened, directly to the Chair of the Boards. The Chair will, upon review of the communication, make a determination as to whether it should be brought to the attention of the other non-management members and/or the management member of the Boards and whether any response should be made to the person sending the communication, unless the communication was made anonymously.

Compensation Discussion and Analysis (CD&A)

This section provides information about the compensation program in place for the Company’s named executive officers who are included in the Summary Compensation Table. It includes a discussion and analysis of the overall objectives of ~~our~~its compensation program and each element of compensation the Company provides.

Executive Summary

~~2020 Business Highlights~~

In 2020, the Company had strong operational performance; however, due to impacts from the pandemic and extreme weather-related events, Cleco Power experienced shortfalls in achieving its financial targets. Even so, the Company

~~continued to work on transformational strategic projects. Below are some of our accomplishments for the year:~~

•~~Key Strategic Initiatives~~

◦~~Implemented several key elements of the safety strategy focused on improving employee and contractor safety to build a stronger safety culture~~

◦~~Reached first quartile achievement on customer satisfaction~~

◦~~Established six-year business plan~~

◦~~Completed Cleco Cajun’s integration into Cleco’s enterprise business applications~~

◦~~Advanced cybersecurity maturity~~

◦~~Continuing the organizational transformation efforts related to talent development, succession planning, and diversity and inclusion~~

Roles and Responsibilities

Leadership Development and Compensation Committee

The Committee, which consists of one independent Board Manager and three investor Board Managers, is responsible for developing and overseeing the Company’s executive compensation program. The Committee met nine times during ~~2020, including eight~~2021, which were all virtual meetings. The Chief Human Resources and Diversity Officer attended the Committee meetings on behalf of management but did not participate in all of the Committee’s executive sessions.

The Committee’s responsibilities, which are more fully described in its charter, include:

•establishing and overseeing the Company’s executive compensation philosophy and goals and the programs which align with those;

•engaging and evaluating an independent compensation consultant;

•determining if the Company’s executive compensation and benefit programs are achieving their intended ~~purpose,~~purposes,

being properly administered and creating proper incentives in light of the Company’s risk factors;

•analyzing the executive compensation and benefits practices of peer companies and annually reporting to the Board or recommending for approval by the Board the overall design of the Company’s executive compensation and benefit programs;

•annually evaluating the performance of the CEO and the CFO and recommending to the Board adjustments in the ~~CEO~~CEO's and CFO’s compensation and benefits;

•overseeing the administrative committees and periodically reviewing the Company’s benefit plans, including retirement plans;

•annually reviewing the Committee’s charter and revising as necessary;

•annually ensuring there is a process for talent and succession management for executives; and

•~~reviews~~reviewing and ~~makes~~making recommendations on efforts to promote diversity and inclusion.

The Compensation Consultant

The Committee engaged Pay Governance to consult on matters concerning executive officers’ compensation and benefits. All executive compensation adjustments and award calculations for ~~2020~~2021 were reviewed by Pay Governance on behalf of the Committee. Pay Governance acted at the direction of the Committee and was independent of management. Pay Governance was responsible for:

•recommending a group of peer companies to use for its market comparisons;

•reviewing the Company’s executive compensation program, including compensation levels in relation to Company performance, pay opportunities relative to those at comparable companies, short- and long-term incentive targets and metrics, executive retirement benefits, and other executive benefits;

•reviewing the Company’s Board of Manager compensation program;

•reporting on emerging trends and best practices in the area of executive and Board of Manager compensation; and

•attending the Committee meetings.

The Committee reviewed the firm’s qualifications as well as its independence and the potential for conflicts of interest. The Committee concluded that Pay Governance is independent, and its services to the Committee do not create any conflicts of interest. The Committee has the sole authority to approve Pay Governance’s compensation and determine the nature and scope of its services. Pay Governance does not perform any other services for or receive any other fees from the Company.

CEO

The CEO discusses with the Committee base salary adjustments, cash incentives, and long-term incentive awards

for executives other than himself. The CEO participates in meetings of the Committee to discuss executive compensation, including measures and performance targets but is subsequently excused to allow the Committee to meet in executive session without management present.

Evaluation and Design of the Compensation and Benefit Programs

The Committee believes that compensation and benefits for ~~our~~ executive officers who successfully enhance investors’ value should be competitive with the compensation and benefits offered by similar companies in ~~our~~the industry to attract and retain the high quality executive talent required by the Company. The Committee examines executive officers’ compensation against comparable positions using publicly available proxy data for a group of 1312 industry peers (Peer Group) and utility industry survey data to help design and benchmark ~~our~~ executive officer compensation. This evaluation includes base salary, annual and long-term incentive plan targets, other potential awards, retirement benefits, and target total compensation. The Peer Group is used to track comparable performance of the long-term incentive plan. The combination of the Peer Group and the utility industry survey data is referred to as the “Comparator Group.”

The Peer Group changed in 2021. El Paso Electric was ~~unchanged in 2020.~~removed from the Peer Group due to its acquisition by the Infrastructure Investment Fund whereby it is no longer a public reporting company. The Committee will continue to evaluate the Peer Group annually as companies are often acquired, taken private, or grow at a rate that renders them inappropriate for comparison purposes. The Committee evaluates the Peer Group to ensure that peer companies are of similar scope in relation to revenues, assets, and employee count and have a good operational fit.

In setting executive compensation levels in ~~2020,~~2021, the Committee also used utility industry survey data from the most recent Willis Towers Watson Energy Services Executive Compensation Database. Survey data provides a broader energy industry perspective. This survey data is used in conjunction with the Peer Group data as a competitive market reference point for the Committee to consider in determining pay levels.

Decisions Made in ~~2020~~2021 with Regard to Each Compensation and Benefit Component

Base Salary

The base salary levels for the executive officers as a group, including the named executive officers are set atso that, in combination with other pay elements, it will deliver a ~~level approximating +/-10%~~total compensation opportunity comparable to that of the ~~Comparator Group market median for total remuneration.~~Company’s Peer Group. The Committee sets the base salary level for the CEO and CFO.

Base salaries for the named executive officers in ~~2020~~2021 are shown in the table below:


NAME	NAME	2020 BASE SALARY		2020 % CHANGE (1)		NAME	2021 BASE SALARY		2021 % CHANGE (1)
Mr. Fontenot	Mr. Fontenot	$	700,000	7.7	%	Mr. Fontenot	$	721,000	3.0	%
Mr. Hasan		$	430,000	7.5	%
Ms. Guillory (2)						Ms. Guillory (2)	$	380,000	40.0	%
Mr. LaBorde	Mr. LaBorde	$	290,000	9.4	%	Mr. LaBorde	$	310,000	6.9	%
Mr. Hilton ~~(2)~~(3)	Mr. Hilton ~~(2)~~(3)	$	275,000	5.8	%	Mr. Hilton ~~(2)~~(3)	$	285,000	3.6	%
Mr. Adrian (3)		$	335,000	3.1	%
Mr. Conway						Mr. Conway	$	365,000	4.3	%

(1) Base salary increases were adjusted to a level approximating +/-10% of the Comparator Group market

median for total remuneration.

(2) ~~Mr. Hilton is a Cleco Power employee.~~Ms. Guillory was promoted to CFO effective July 10, 2021.

(3) ~~Mr. Adrian is a~~ Cleco ~~Cajun~~Power employee.

Annual Cash Incentive

The Company maintains the STIP, an annual, performance-based cash incentive plan. The STIP applies to all regular, full-time employees, and it includes weighting for corporate and individual performance goals. The STIP award opportunities for executive officers are ~~targeted to approximate the median of~~set so that, in combination with other pay elements, it will deliver a total compensation opportunity

~~the annual cash incentive target award~~comparable to that of the ~~Comparator~~Company’s Peer Group. The Committee sets the annual cash incentive level for the CEO and CFO. Payouts are capped at 200% of target.

The table below presents the target STIP opportunities for the named executive officers in ~~2020:~~2021:


NAME			TARGET AS % OF BASE SALARY
Mr. Fontenot			100%
~~Mr. Hasan~~Ms. Guillory			~~50%~~65%
Mr. LaBorde			50%
Mr. Hilton (1)			50%
Mr. ~~Adrian~~ Conway~~(2)~~			50%

(1) ~~Mr. Hilton is a~~ Cleco Power employee.

~~(2)~~ ~~Mr. Adrian is a Cleco Cajun employee.~~

The ~~2020~~2021 STIP award for the named executive officers was based on the corporate and individual performance measures described below. This includes measures that apply to non-named executive officers and employees. The ~~2020~~2021 corporate performance measures consisted of the elements listed below based on the business unit (weighting):

The Committee included Milestone Measures (Measures) in the ~~2020~~2021 STIP corporate metrics for EMT and other corporate officers weighted at 20%. These Measures were associated with progress milestones on key strategic corporate projects related to ~~affordability, the START project, cybersecurity,~~organizational transformation, ESG, business process improvements utilizing technology, and ~~the Human Resources strategy.~~cybersecurity. For the STIP calculation, the Committee put the greatest emphasis on financial performance using an adjusted EBITDA metric at both the business unit and consolidated levels. Adjusted EBITDA represents net income before interest, income taxes, depreciation, and amortization adjusted for certain pension and SERP expenses, gains and losses on certain life insurance policies, 2016 Merger and Cleco Cajun transaction related expenses, variable lease revenue, and gains and losses on FTRs and gas-related contract derivatives. In addition, to continually focus the entire organization on the importance of safety, system reliability, generation fleet availability, and to focus Cleco Power and Cleco Support executives and employees on customer satisfaction the remainder of the bonus opportunity was attributable to these operational measures.

Management recommended the STIP financial performance and other measures to the Committee. Based on the historical performance relative to target and the relative historical performance versus the Peer Group, the Committee reviews, revises as appropriate, and approves the STIP measures for the upcoming year.

Details Related to Corporate Performance Metrics Established to Determine ~~2020~~2021 STIP Award Levels

Metric # 1: Safety Consolidated — For ~~2020,~~2021, the Company included both the frequency of incidents represented by the Total Recordable Incident Rate (TRIR) and the severity of incidents represented by the Days Away, Restricted or Transferred (DART) rate for its safety measure. Each of these measures represents 5% of the overall STIP award for the corporate measures totaling 10% for the safety metric. The targets for both safety measures were based on the average

rates of the companies in the Southeastern Electric Exchange, of which Cleco is a member, over the period ~~2018-2019.~~2019-2020.


SAFETY - TRIR MATRIX (5%)
PERFORMANCE LEVEL			% OF TRIR TARGET AWARD PAID
Above ~~0.655~~0.672			0%
~~0.586~~0.569 - ~~0.655~~0.672			50%
~~0.515~~0.465 - ~~0.585~~0.568			100%
~~0.444~~0.361 - ~~0.514~~0.464			150%
At or below ~~0.443~~0.360			200%
~~2020~~2021 Result ~~(0.458)~~(1.071)			~~150%~~0%


SAFETY - DART MATRIX (5%)
PERFORMANCE LEVEL			% OF DART TARGET AWARD PAID
Above ~~0.359~~0.346			0%
~~0.301~~0.292 - ~~0.359~~0.346			50%
~~0.242~~0.237 - ~~0.300~~0.291			100%
~~0.183~~0.182 - ~~0.241~~0.236			150%
At or below ~~0.182~~0.181			200%
~~2020 Result (0.196)~~2021 Results (0.500)			~~150%~~0%

Metric # 2: Adjusted EBITDA Consolidated — The following Adjusted EBITDA matrix was developed to determine performance and payout ranges related to consolidated Adjusted EBITDA performance in ~~2020. This~~2021. For Cleco Power and Cleco Cajun, this measure represents 30% of the overall STIP award for the corporate measures for non-executives and 20% of the overall STIP award for the corporate measures for executives. For Cleco Support, this measure represents 65% of the overall STIP award for the corporate measures for non-executives and 45% of the overall STIP award for the corporate measures for executives. The final percentage of the financial target award is interpolated based on the performance level.


ADJUSTED EBITDA MATRIX - CONSOLIDATED (20%) CLECO POWER AND CLECO CAJUN; 45% CLECO SUPPORT)
PERFORMANCE LEVEL			% OF FINANCIAL TARGET AWARD PAID
At or below ~~$475.97~~$470.19 million			0%
Below ~~$534.80~~$518.2 and above ~~$475.97~~$470.19 million			50%
$~~534.80~~518.2 million			100%
Above ~~$534.80~~$518.2 and below ~~$593.63~~$571.6 million			150%
At or above ~~$593.63~~$571.6 million			200%
~~2020~~2021 Result - ~~$520.70~~$523.3 million			~~88%~~109.6%

Metric # 3: EFORd — This metric represents the probability a generator will fail either completely or in part when its operation is required and is 10% of the overall STIP award for the Cleco Power measures, ~~7.5%~~10% of the overall STIP award for the Cleco Support corporate measures (Cleco Support employees weighting is 50% of the Cleco Power weighting and 50% of the Cleco Cajun weighting), and 5%10% of the overall STIP award for the Cleco Cajun corporate measures. The ~~2020~~2021 target was based on the average performance over the three-year period of ~~2017-2019.~~2018-2020.


EFORd MATRIX - CLECO POWER (10%)
PERFORMANCE LEVEL			% OF EFORd TARGET AWARD PAID
Above ~~8.29%~~8.59%			0%
~~6.66%~~6.98% - ~~8.29%~~8.59%			50%
~~5.02%~~5.36% - ~~6.65%~~6.97%			100%
~~3.39%~~3.73% - ~~5.01%~~5.35%			150%
At or below ~~3.38%~~3.72%			200%
~~2020~~2021 Result ~~(5.76%~~(4.25%)			~~100~~150%%


EFORd MATRIX - CLECO CAJUN ~~(5%~~(10%)
PERFORMANCE LEVEL			% of EFORd TARGET AWARD PAID
Above ~~12.65%~~11.89%			0%
~~10.40%~~8.96% - ~~12.64%~~11.89%			50%
~~8.15%~~6.02% - ~~10.39%~~8.95%			100%
~~5.89%~~3.09% - ~~8.14%~~6.01%			150%
At or below ~~5.88%~~3.08%			200%
~~2020~~2021 Result ~~(6.69%~~(5.16%)			150%

Metric # 4: Peak EAF - Cleco Cajun and Cleco Support — This metric represents the amount of time that the power generation plant is able to produce electricity without any outages or deratings over a peak period (defined as May through September, Monday through Friday, hours ending 0700 through 2200), divided by the amount of time in the peak period, and is ~~15%~~10% of the overall STIP award for the Cleco Cajun corporate measures and ~~7.5%~~5% of the overall STIP award for the Cleco Support corporate measures (Cleco Support employees weighting is 50% of the Cleco Cajun weighting). The ~~2020~~2021 target was based on the Cajun fleet’s average performance over the three-year period of ~~2017-2019.~~2018-2020.


PEAK EAF MATRIX - CLECO CAJUN ~~(15%~~(10%)
PERFORMANCE LEVEL			% OF PEAK EAF TARGET AWARD PAID
Below ~~91.63%~~92.79%			0%
92.79% - 94.58%			50%
94.59% - 96.40%			100%
96.41% - 98.21%			150%
At or above ~~91.63%~~98.22%			~~100%~~200%
~~2020~~2021 Result ~~(97.67%~~(96.44%)			~~100%~~150%

Metric # 5: Customer Satisfaction - Cleco Power and Cleco Support — The Company included Customer Satisfaction in its performance measures in ~~2020~~2021 using the JD Power South Midsize segment (JD Power study) for comparison. For the STIP metric, the Company used the ~~2019~~2020 performance of the JD Power study to set the target. In addition, the Company compared its overall performance against its peers in the JD Power study. This metric represents 15% of the overall STIP award for Cleco Power corporate measures and 7.5% of the overall STIP award for the Cleco Support corporate measures (Cleco Support employees weighting is 50% of the Cleco Power weighting). ~~The Committee used discretion to decrease the payout for officers to 50% of the target based on its review of 2020 performance. The resulting payout for 2020 was calculated as follows:~~


CUSTOMER SATISFACTION MATRIX - CLECO POWER (15%)
PERFORMANCE LEVEL			% OF CUSTOMER SATISFACTION TARGET AWARD PAID
Below ~~675~~25th Percentile			0%
~~675~~25th - ~~715~~49th Percentile			50%
~~716 - 736~~50th Percentile			100%
~~737~~51st - ~~745~~89th Percentile			150%
At or above ~~746~~90th Percentile			200%
~~2020~~2021 Result ~~(773)~~- 50th Percentile			~~200%~~100%

Metric # 6: LPSC SAIDI - Cleco Power and Cleco Support — SAIDI measures the average amount of time a customer’s service is interrupted during the year and is measured in hours per customer per year and excludes major events per the LPSC’s criteria. The ~~2020~~2021 LPSC SAIDI goal was based on the long-term goal of consistent performance improvement ~~compared to~~aligned with the LPSC target. This metric represents 5% of the overall STIP award for the Cleco Power corporate measures and 2.5% of the overall STIP award for the Cleco Support corporate measures (Cleco Support employees weighting is 50% of the Cleco Power weighting).


LPSC SAIDI MATRIX - CLECO POWER (5%)
PERFORMANCE LEVEL			% OF LPSC SAIDI TARGET AWARD PAID
Above 2.87			0%
At or below 2.87			100%
~~2020~~2021 Result ~~(2.69)~~(2.76)			100%

Metric # 7: Adjusted EBITDA — The following Adjusted EBITDA matrix was developed to determine performance and payout ranges related to respective Business Unit Adjusted EBITDA performance in 2020. This measure represents 30% for Cleco Power, 35% for Cleco Support (Cleco Support employees weighting 50% of the Cleco Power weighting and 50% of the Cleco Cajun weighting), 40% for Cleco Cajun of the2021. The overall STIP award for the corporate measures for non-executives is 30% for Cleco Power and 40% for Cleco Cajun. The overall STIP award for the corporate measures for executives is 20% for Cleco Power and 30% for

~~Power, 25% for~~ Cleco Support (Cleco Support employees weighting is 50% of the Cleco Power weighting and 50% of the Cleco Cajun weighting), 30% for Cleco Cajun of the overall STIP award for the corporate measures for executives.Cajun. The final percentage of the financial target award is interpolated based on the performance level.


ADJUSTED EBITDA MATRIX - CLECO POWER (20%)
PERFORMANCE LEVEL	% OF FINANCIAL TARGET AWARD PAID
At or below ~~$386.28~~$371.49 million	0	%
Below ~~$417.60~~$401.60 and above ~~$386.28~~$371.49 million	50	%
$~~417.60~~401.60 million	100	%
Above ~~$417.60~~$401.60 and below ~~$448.92~~$431.70 million	150	%
At or above ~~$448.92~~$431.70 million	200	%
~~2020~~2021 Result - ~~$381.60~~$398.3 million	0		%94.6%


ADJUSTED EBITDA MATRIX - CLECO CAJUN (30%)
PERFORMANCE LEVEL	% OF FINANCIAL TARGET AWARD PAID
At or below ~~$88.59~~$97.89 million	0	%
Below ~~$116.10~~$115.8 million and above ~~$88.59~~$97.89 million	50	%
$~~116.10~~115.8 million	100	%
Above ~~$116.10~~$115.8 and below ~~$143.63~~$139.1 million	150	%
At or above ~~$143.63~~$139.1 million	200	%
~~2020~~2021 Result - ~~$139.40~~$125.2 million	~~184.6~~		%140.5%

Metric # 8: Milestone Measures — Cleco officers had an additional STIP metric for ~~2020~~2021. This metric represents 20% of the overall STIP award for the corporate measures for executives and measures progress on certain strategic initiatives. ~~The four broad~~These initiatives included ~~the business plan execution~~ESG (5%), ~~the~~ business application strategy (5%), cybersecurity (5%), and ~~the~~ organizational transformation (5%). The Committee evaluated the performance of each initiative and determined the ~~2020~~2021 result for the Milestone Measures as follows.


MILESTONE MEASURES (20%)
~~2020~~2021 RESULTS			% OF MILESTONE TARGET AWARD PAID
Cleco Power			~~85%~~20.5%
Support Group			~~85%~~20.5%
Cleco Cajun			~~85%~~20.5%

Total Payout for EMT Cleco Power: The calculated STIP payout for Cleco Power was ~~94.6%~~96.3% of target. The ~~executive management team used discretion to decrease the payout for officers by 1% of target to provide an increased incentive for non-officers. The resulting~~ total STIP corporate payout ~~of 93.6%~~ for ~~2020~~2021 was calculated as follows:


		% OF TARGET		x	AWARD LEVEL		=	% OF PAYOUT			% OF TARGET		x	AWARD LEVEL		=	% OF PAYOUT
Safety Consolidated	Safety Consolidated	10	%		150.0	%		15.0	%	Safety Consolidated	10	%		0.0	%		0.0%
Adjusted EBITDA Consolidated	Adjusted EBITDA Consolidated	20	%		88.0	%		17.6	%	Adjusted EBITDA Consolidated	20	%		109.6	%		21.9%
EFORd	EFORd	10	%		100.0	%		10.0	%	EFORd	10	%		150.0	%		15.0%
Customer Satisfaction	Customer Satisfaction	15	%		200.0	%		30.0	%	Customer Satisfaction	15	%		100.0	%		15.0%
LPSC SAIDI	LPSC SAIDI	5	%		100.0	%		5.0	%	LPSC SAIDI	5	%		100.0	%		5.0%
Adjusted EBITDA	Adjusted EBITDA	20	%		0.0	%		0.0	%	Adjusted EBITDA	20	%		94.6	%		18.9%
Milestone Measures	Milestone Measures	20	%		85.0	%		17.0	%	Milestone Measures	20	%		102.5	%		20.5%
Total	Total							94.6	%	Total	100	%					96.3	%
Executive Team Discretion								(1.0)	%
Resulting Total		100	%					93.6	%

Total Payout for EMT Cleco Support: The calculated STIP payout for Cleco Support was ~~111.0%~~102.3% of target. The ~~executive management team used discretion to decrease the payout for officers by 1% of target to provide an increased incentive to non-officers. The resulting~~ total STIP corporate payout ~~of 110.0%~~ for ~~2020~~2021 was calculated as follows:

paid in cash and is included in column G of the Summary Compensation Table for ~~2020.~~2021.

Retirement Plans - Nonqualified Deferred Compensation Plan

The Company maintains a Deferred Compensation Plan so that members of the Boards, executive officers, and certain key employees may defer receipt and taxation of certain forms of compensation. Members of the Boards may defer up to 100% of their compensation; executive officers and other key employees may defer up to 50% of their base salary and up to 100% of their annual cash incentive. The use of deferred compensation plans is prevalent within ~~our~~the industry and within the companies in the Peer Group. The Company does not match deferrals or contribute to the plan. Actual participation in the plan is voluntary. The notional investment options made available to participants are selected by the CFO. The allocation of deferrals among investment options is made by individual participants. The notional investment options include money market, fixed income, and equity funds. No changes were made to the plan during ~~2020.~~2021.

Retirement Plans - SERP

The Company maintains a SERP for the benefit of the executive officers who are designated as participants by the Committee. SERP was designed to attract and retain executive officers who have contributed and will continue to contribute to ~~our~~the Company’s overall success by ensuring that adequate compensation will be provided or replaced during retirement. In July 2014, the Cleco Corporation Board of Directors voted to close SERP to new participants.

Benefits under SERP vest after ten years of service or upon death or disability while a participant is employed by the Company. The Committee may reduce the vesting period, which typically would occur in association with recruiting efforts. Benefits, whether or not vested, are forfeited in the event a participant is terminated for cause.

Generally, benefits are based upon a participant’s attained age at the time of separation from service. The maximum benefit is payable at age 65 and is 65% of final compensation. Payments from the Company’s defined benefit pension plan (Pension Plan), certain employer contributions to the 401(k) Plan and payments paid or payable from prior and subsequent employers’ defined benefit retirement or similar supplemental plans reduce or offset SERP benefits. If a participant has not attained age 55 at the time of separation and receives SERP benefits before attaining age 65, SERP benefits are actuarially reduced to reflect early payment. The “Pension Benefits” table lists the present value of accumulated SERP benefits for the named executive officers as of December 31, ~~2020.~~2021.

In 2011, the Committee amended SERP to eliminate the business transaction benefit previously included in SERP, as well as the requirement that a SERP participant be a party to an employment agreement to receive change in control benefits.

With regard to current SERP participants, two participants have agreed to fix the base compensation portion of their SERP calculation as of December 31, ~~2020.~~2021. Additionally, they have agreed to use target rather than actual awards under the annual incentive plan for years ~~2017~~2016 and ~~2020~~2017 for the average incentive award portion of the SERP calculation. A third participant’s SERP benefit will be set at a specified amount based upon the year of separation.

In the event a SERP participant’s employment is involuntarily terminated by the Company without cause, or the participant terminates his or her employment on account of good reason, occurring within the 36-month period following a change in control event for all participants who commenced participation in SERP prior to October 28, 2011, or the 24-month period following a change in control event for all participants who commenced participation in SERP on or after October 28, 2011, such participant’s benefit shall: (i) become fully vested; (ii) be increased by adding three years to an affected participant’s age, subject to a minimum benefit of 50% of final compensation; and (iii) be subject to a modified reduction determined by increasing the executive’s age by three years.

Change in Employment Status and Change in Control Events

During ~~2020,~~2021, the Company had no employment agreements with current named executives other than the agreement with Mr. Fontenot as President & ~~CEO.~~CEO and Mr. Conway as Chief Compliance Officer & General Counsel. The Company may enter into employment agreements with its executives generally in connection with recruiting efforts. The standard agreement provides for a non-renewing term, generally two years, and does not contain a change in control tax gross-up provision.

The Cleco Corporation Executive Severance Plan

In recognition of the non-renewal of executive employment contracts, the Cleco Corporation Board of Directors adopted the Cleco Corporation Executive Severance Plan (the Executive Severance Plan) on October 28, 2011. The Executive Severance Plan provides the executive officers and other key employees with cash severance benefits in the event

100 miles from the residence to be purchased. Limits on the purchase amount are the same as the relocation program described above.

The Committee approves the perquisites based on what it believes is prevailing market practice, as well as specific Company needs. The Company believes the relocation program is an important element in attracting executive talent. Perquisite expenses related to business and spousal companion travel for the executive officers are reviewed by Internal Audit, and any exceptions are reported to the Audit Committee.

See the section titled “All Other Compensation” for details of these perquisites and their value for the named executive officers.

The executive officers, including the named executive officers, participate in the other benefit plans on the same terms as other employees. These plans include paid time off for vacation, sick leave, and bereavement; group medical, dental, vision, and prescription drug coverage (including the annual wellness program); basic life insurance; supplemental life insurance; dependent life insurance; accidental death and dismemberment insurance; defined benefit pension plan (for those hired prior to August 1, 2007); and the 401(k) Plan with a Company match for those employees hired before August 1, 2007, as well as a 401(k) Plan with an enhanced benefit for those employees hired on or after August 1, 2007.

Board Compensation

The Governance and Public Affairs Committee may engage the Committee’s independent consultant from time to time to conduct market competitive reviews of the Board

compensation program. Details of the Boards’ compensation are shown in the “Board of Manager Compensation” table.

Other Tools and Analyses to Support Compensation Decisions

Tally Sheets

At least annually, the Committee reviews tally sheets that set forth the items listed below. This review is conducted as part of the comparison of the compensation and benefit components that are prevalent within the Comparator Group. The comparison facilitates discussion with the Committee’s outside independent consultant as to the use and amount of each compensation and benefit component versus the applicable Peer Group.

•Annual compensation expense for each named executive officer - this includes the rate of change in total cash compensation from year-to-year; the annual periodic cost of providing retirement benefits; and the annual cost of providing other benefits such as health insurance, as well as the status of any deferred compensation.

•Reportable compensation - to further evaluate total compensation; to evaluate total compensation of the CEO compared to the other executive officers; and to otherwise evaluate internal equity among the named officers.

•Post-employment payments - reviewed pursuant to the potential separation events discussed in “Potential Payments at Termination or Change in Control.”

Trends and Regulatory Updates

As needed, and generally at least annually, the Committee reviews reports related to industry trends, legislative and

regulatory developments, and compliance requirements based on management’s analysis and guidance provided by Pay Governance, as applicable. Plan revisions and compensation program design changes are implemented as needed.

Risk Assessment

The Committee also seeks to structure compensation that will provide sufficient incentives for the executive officers to drive results while avoiding unnecessary or excessive risk taking that could harm the long-term value of the Company. The Committee believes that the following actions and/or measures help achieve this goal:

•the Committee reviews the design of the executive compensation program to ensure an appropriate balance between business risk and resulting compensation;

•the Committee allocates pay mix between base salary and performance-based pay to provide a balance of incentives;

•the design of the incentive measures is structured to align management’s actions with the interests of the investors;

•incentive payments are dependent on the Company’s performance measured against pre-established targets and goals and/or compared to the performance of companies in the Peer Group;

•the range and sensitivity of potential payouts relative to target performance are reasonable;

•the Committee imposes checks and balances on the payment of compensation discussed herein;

•detailed processes establish the Company’s financial performance measures under its incentive plans; and

General

The Summary Compensation Table sets forth individual compensation information for the CEO, the CFO, and the three other most highly compensated executive officers of Cleco and its affiliates for services rendered in all capacities to Cleco and its affiliates during the fiscal years ended December 31, 2021, 2020, ~~2019,~~ and ~~2018~~2019 (the “named executives” or “named executive

officers”). The table also includes former executive officers, who would have been named executives had they not left the Company. Compensation components represent both payments made to the named executive officers during the year and other forms of compensation as follows:

salary changes made in ~~2020~~2021 for ~~our~~ named executives and the reasons for those changes are discussed in “— Compensation Discussion and Analysis — Decisions Made in ~~2020~~2021 with Regard to Each Compensation and Benefit Component — Base Salary.”

Bonus

Column D, “Bonus” includes non-plan-based, discretionary incentives earned during 2021, 2020, ~~2019,~~ or ~~2018.~~2019. Amounts in this column for 2019 represent special awards made to the named executive officers for completion of the Cleco Cajun Transaction. No such awards were earned in ~~2020~~2021 and ~~2018~~2020 by the named executive officers.

Non-Equity Incentive Plan Compensation

Column E, “Non-Equity Incentive Plan Compensation” contains cash awards earned during ~~2020~~2021 that will be paid in March 2022 under the STIP; earned during 2020 and paid in March 2021 under the STIP; and earned during 2019 and paid in March 2020 ~~under the STIP; and earned during 2018 and paid in March 2019~~ under the STIP. Deferral of annual cash incentive payments made by Mr. Fontenot, Mr. ~~Hasan,~~LaBorde, and Mr. ~~LaBorde~~Hasan pursuant to the Deferred Compensation Plan also is included in Column E and is further detailed in the “Nonqualified Deferred Compensation” table. Column E also includes cash awards earned during ~~2020~~2021 that will be paid in March ~~2021;~~

2022; earned during 2020 that were paid in March 2021, and earned during 2019 that were paid in ~~March~~February 2020 ~~and earned during 2018 that were paid in March 2019~~ for the LTIP performance periods ended December 31, ~~2020,~~2021, December 31, ~~2019,~~2020, and December 31, ~~2018,~~2019, respectively.

Change in Pension Value and Nonqualified Deferred Compensation Earnings

The values in Column F represent the aggregate increase in the actuarial present value of benefits earned by each named executive officer during 2021, 2020, ~~2019,~~ and ~~2018~~2019 under the Pension Plan and SERP, including SERP’s supplemental death benefit provision. These values do not represent cash received by the named executives in 2021, 2020, ~~2019,~~ and ~~2018;~~2019; rather, these amounts represent the present value of future retirement payments ~~we project~~Cleco projects will be made to each named executive. Changes in the present value of the Pension Plan and SERP benefits from December 31, 2020, to December 31,

2021; from December 31, 2019 to December 31, 2020; and from December 31, 2018, to December 31, ~~2019; and from December 31, 2017, to December 31, 2018,~~2019, result from an additional year of earned service, compensation changes and the increase (or decrease) in value caused by the change in the discount rate used to compute present value. (Generally, a decrease in the discount rate will increase the present value of benefits and an increase in the discount rate will decrease the present value.) If the discount rate increases by a large enough amount, it can cause the accrued pension and SERP liability to decline versus the prior year. When this occurs, the values reported for Column F are zero.

The present value of the accumulated benefit obligation for each named executive officer is included in the table, “Pension Benefits.” These values are reviewed by the Committee in conjunction with its annual tally sheet analysis. An explanation of why the Company uses SERP and its relationship to other compensation elements can be found in “Decisions Made in ~~2020~~2021 With Regard to Each Compensation and Benefit Component.”

Column F also would include any above-market or preferential earnings on deferred compensation paid by the Company. There were no such preferential earnings paid by the Company in 2021, 2020, ~~2019,~~ and ~~2018.~~2019.

All Other Compensation

Payments made to or on behalf of ~~our~~ named executive officers in Column G, “All Other Compensation,” include the following:

•Contributions by Cleco under the 401(k) Plan on behalf of the named executive officers;

•Term life insurance premiums paid for the benefit of the named executive officers;

•Spousal travel;

•~~For 2020, for Ms. Callis, a payment for unused vacation at the time of her separation from the Company and severance paid pursuant to her separation agreement;~~

•~~For 2020, for Mr. Bunting, a payment for unused vacation at the time of his retirement;~~Certain corporate memberships; and

•Federal Insurance Contributions Act (FICA) tax due currently and paid by the Company on the annual increase in the named executive officers’ future SERP benefits.

The value of the Column G items for 2021 for each named executive officer is as follows:

General

The target values for each of the Company’s incentive plans — the STIP and the LTIP — are determined as part of the Committee’s review of executive officer compensation. The Committee’s review, supported by data prepared by Pay Governance, includes comparisons of base salary and annual and long-term incentive levels of Cleco executive officers versus the Comparator Group as detailed in “— Compensation Discussion and Analysis — Evaluation and Design of the Compensation and Benefit Programs.” Targets for both the STIP and the LTIP are set as a percentage of base salary and stated in their dollar equivalent in the table above.

Estimated Future Payments under Non-Equity Incentive Plan Awards (STIP)

See “— Compensation Discussion and Analysis — Decisions Made in ~~2020~~2021 with Regard to Each Compensation and Benefit Component — Annual Cash Incentive” for a discussion of ~~our 2020~~2021 STIP award calculations.

Estimated Future Payments under Non-Equity Incentive Plan Awards (LTIP)

See “— Compensation Discussion and Analysis — Decisions Made in ~~2020~~2021 with Regard to Each Compensation and Benefit Component — Long-Term Compensation” for a discussion of ~~our~~ grants made in ~~2020.~~2021.

General

The Company provides executive officers who meet certain tenure requirements benefits from the Pension Plan and SERP. Vesting in the Pension Plan requires five years of service with the Company. ~~Messrs.~~Mr. Fontenot, Ms. Guillory, and Mr. Hilton are fully vested in the Pension Plan. Mr. LaBorde is fully vested in the Pension Plan based on previous service with the Company. Having been rehired after August 1, 2007, he was no longer eligible to participate in the Pension Plan and was included in an enhanced 401(k) Plan for those employees hired (or

rehired) on or after August 1, 2007. Messrs. Conway, Hasan and Adrian, ~~and Ms. Callis,~~ having been hired after August 1, 2007, were not eligible to participate in the Pension Plan and were included in an enhanced 401(k) Plan for those employees hired on or after August 1, 2007. ~~Mr. Bunting was fully vested in the Pension Plan at his retirement.~~

Vesting in SERP requires ten years of service. Under the terms of SERP, automatic vesting occurs upon a Change in Control if a participating executive is involuntarily terminated from the Company. Messrs. Fontenot and LaBorde ~~and Ms. Callis~~ are all fully vested in ~~the~~ SERP based on years of service. Ms. Guillory and

Messrs. Hilton, Conway, Hasan, ~~Hilton,~~ and Adrian are not participants in ~~the~~ SERP. ~~Mr. Bunting was fully vested in the SERP at his retirement.~~

The present value of each of the named executive officer’s accumulated benefit values was actuarially calculated and represents the values as of December 31, ~~2020.~~2021. These calculations were made using the projected unit credit method for valuation purposes and a discount rate of ~~2.74%~~2.98%. Other material assumptions relating to the valuation include use of the Pri-2012 Employee and Healthy Retiree gender distinct mortality tables projected generationally using Scale MP-2020 (using White Collar for SERP present values and no collar for Qualified Plan present values), assumed retirement at age 65 and retirement payments in the form of joint and 100% survivor with 10 years certain payment.

The sum of the change in actuarial value of the Pension Plan during ~~2020~~2021 and the change in value of SERP is included in Column F, “Change in Pension Value and Nonqualified Deferred Compensation Earnings,” in the Summary Compensation Table. Negative changes, if any, are reported as zero.

Pension Plan

The Cleco Corporate Holdings LLC Pension Plan, restated effective September 1, 2020, is a defined benefit plan funded entirely by employer contributions. Effective August 1, 2007, the Pension Plan was closed to new participants. Employees hired or rehired on or after August 1, 2007 are eligible to participate in an enhanced 401(k) Plan. Mr. Fontenot, ~~Mr. Bunting,~~Ms. Guillory, and Mr. Hilton were hired prior to August 1, 2007.

Benefits under the Pension Plan are determined by years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last ten years of employment. Earnings include base pay, cash incentives, merit lump sums, imputed income with respect to life insurance premiums paid by the Company, pre-tax contributions to the 401(k) Plan, salary and bonus deferrals to the Deferred Compensation Plan, and any other form of payment taxable under IRC Section 3401(a). Earnings exclude reimbursement of expenses, gifts, severance pay, moving expenses, outplacement assistance, relocation allowances, welfare benefits, benefits accrued (other than salary and bonus deferrals) or paid pursuant to the Deferred

Compensation Plan, the value of benefits accrued or paid (including dividends) under the LTIP, income from the exercise of stock options and income from disqualifying stock dispositions. For ~~2020,~~2021, the amount of earnings was further limited to ~~$285,000~~$290,000 as prescribed by the IRS.

The formula for calculating the defined benefit under the Pension Plan is as follows:

1. Defined Benefit = Annual Benefit + Supplement Benefit

2. Annual Benefit = Final Average Earnings × Years of Service × Pension Factor

3. Supplement Benefit = (Final Average Earnings - Social Security Covered Compensation) × Years of Service × .0065

The pension factor varies with the retirement year. For ~~2020,~~2021, the applicable factor was 1.25%. Social Security-covered income is prescribed by the IRS based on the year of birth.

Benefits from the Pension Plan are generally paid at normal, late or early retirement dates and are subject to a limit prescribed by the IRS, generally ~~$230,000~~$235,000 in ~~2020.~~2021. Normal

retirement at age 65 entitles the participant to a full pension. A participant may elect to delay retirement past age 65 as long as he/she is actively employed. Years of service continue to accumulate (up to a maximum of 35) and earnings continue to count toward the final earnings calculation. If a participant chooses to retire after age 55 but before normal retirement age, the amount of the annual pension benefit is reduced by 3% per year between ages 55 and 62. For example, the normal pension benefit at age 55 is reduced by 21%.

SERP

SERP is designed to provide retirement income of 65% of an executive officer’s final compensation at normal retirement, age 65. Final compensation under SERP is based on the sum of the highest annual salary paid during the five years prior to termination of employment and the average of the three highest STIP awards paid to the participant during the preceding 60 months. Final compensation also is determined without regard to the IRS limit on compensation. The SERP benefit rate at normal retirement is reduced by 2% per year for each year a participant retires prior to age 65, with a minimum benefit rate of 45% at age 55. The final benefit rate also may be reduced further if a participant separates from service prior to age 55. This actuarially determined reduction factor is equivalent to that used in ~~our~~the Pension Plan, which is 3% for each year from age 55 to 62. For example, if a SERP participant were to terminate service at age 50 and start receiving his or her SERP benefit at age 55, his or her SERP benefit rate would be 35.6%. This is the product of the minimum SERP benefit of 45% reduced by another 21% for early commencement. The actual SERP benefit payments are reduced if a participant is to receive benefit payments from ~~our~~the Pension Plan, has received certain employer contributions related to ~~our~~the 401(k) Plan and/or is eligible to receive retirement-type payments from former employers and subsequent employers, if applicable.

SERP provides survivor benefits, which are payable to a participant’s surviving spouse or other beneficiary. SERP also contains a supplemental death benefit that was added in 1999 to reflect market practice. If a SERP participant dies while actively employed, the amount of the supplemental death benefit is equal to the sum of two times the participant’s annual

Estimated Annual Payments

The following table shows the estimated annual payments at age 55 (or actual attained age if greater than 55) to each of the named executives under the Pension Plan and SERP as of December 31, ~~2020. Amounts shown for former executives reflect actual payments.~~2021.

ESTIMATED PAYMENTS AT 55
(OR ACTUAL ATTAINED AGE IF GREATER THAN 55)
PENSION SERP TOTAL
Mr. Fontenot $ 118,532 $ 121,468 $ 240,000
Mr. Hasan $ 0 $ 0 $ 0
Mr. LaBorde $ 40,020 $ 60,369 $ 100,389
Mr. Hilton $ 97,678 $ 0 $ 97,678
Mr. Adrian $ 0 $ 0 $ 0
Ms. Callis $ 0 $ 118,853 $ 118,853
Mr. Bunting (1)
$ 100,762 $ 119,238 $ 220,000
(1) Figures represent actual payments to Mr. Bunting that commenced September 1, 2020.


	ESTIMATED PAYMENTS AT 55 (OR ACTUAL ATTAINED AGE IF GREATER THAN 55)
	PENSION		SERP		TOTAL
Mr. Fontenot	$	125,686	$	139,314	$	265,000
Ms. Guillory	$	48,544	$	0	$	48,544
Mr. LaBorde	$	40,020	$	59,315	$	99,335
Mr. Hilton	$	102,926	$	0	$	102,926
Mr. Conway (1)	$	0	$	0	$	0
Mr. Hasan (1)	$	0	$	0	$	0
Mr. Adrian (1)	$	0	$	0	$	0
(1) Messrs. Conway, Hasan and Adrian were not participants in the Pension Plan, as they were hired after August 1, 2007, nor SERP, as they were hired after the plan was closed to new participants in July 2014.

Deferred Compensation

Named executives and other key employees are eligible to participate in the Company’s Deferred Compensation Plan. Participants are allowed to defer up to 50% of their base salary and up to 100% of their annual cash incentive, as reported in Columns C and G in the Summary Compensation Table. Consequently, the executive officer contributions listed in Column B above are made by the participant and not by Cleco. ~~Mr.~~Messrs. Fontenot, ~~Mr.~~LaBorde and Hasan ~~and Mr. LaBorde~~ elected to participate in the Deferred Compensation Plan during ~~2020.~~2021. All deferral elections for ~~2020~~2021 were made prior to the beginning of ~~2020~~2021 as required by the regulations under IRC Section 409A. There are no matching contributions made by the Company.

Deferrals become general funds for use by the Company to be repaid to the participant at a pre-specified date. Short-term deferrals may be paid out as early as five years following the end of the plan year (i.e., the year in which compensation was earned). Retirement deferrals are paid at the later of termination of service or the attainment of an age specified by the participant. A bookkeeping account is maintained for each participant that records deferred salary and/or bonus, as well as earnings on deferred amounts. Earnings are determined by the performance of notional investment alternatives, which are

similar to the investments available under the 401(k) Plan. Participants select which of these alternatives will be used to determine the earnings on their own accounts. The Deferred

Compensation Plan is not intended to provide for the payment of above-market or preferential earnings (as these terms are defined under the SEC regulations) on compensation deferred under the plan. As such, the Deferred Compensation Plan does not provide a guaranteed rate of return.

Potential Payments at Termination or Change in Control

The following tables, “Potential Payments at Termination or Change in ~~Control”~~Control,” detail the estimated value of payments and benefits provided to each ~~of our~~ named executive ~~officers~~officer assuming the following separation events occurred as of December 31, ~~2020:~~2021: termination by the executive; disability; death; retirement; constructive termination; termination by the Company for cause; and termination in connection with a change in control. The Company has selected these events based on long-standing provisions in ~~our~~ employee benefit plans, such as the Pension Plan and 401(k) Plan, or because ~~their~~the use is common within the industry and Comparator Group. Some of the potential severance payments are

December 31, ~~2020,~~2021, all of the named executive officers were covered by the Executive Severance Plan.

The following narrative describes the type and form of payments and benefits for each separation event. The tables under “Potential Payments at Termination or Change in Control” provide an estimate of potential payments and benefits to each named executive officer under each separation event. Throughout this section, reference to “executive officers” is inclusive of named executive officers.

Termination by the Executive

If an executive officer resigns voluntarily, no payments are made or benefits provided other than those required by law.

Disability

Annual disability benefits are payable when a total and permanent disability occurs and are paid until the executive officer’s normal retirement age, which is age 65. This benefit is provided under SERP, if applicable, and is paid regardless of whether the executive was vested in SERP at the time of disability. At age 65, a disabled executive is eligible to receive annual retirement benefits under the Pension Plan, for those who are participants, and SERP as outlined under the headings “Pension Plan” and “SERP,” respectively. The executive officer also is eligible to receive a one-time, prorated share of the current year’s STIP award and a prorated award for each LTIP performance cycle in which he/she participates to the extent those performance cycles award at their completion.

Death

A prorated share of the current year’s STIP award and a supplemental death benefit provided from SERP, if applicable, are paid to an executive officer’s designated beneficiary in the event of death in service. Both are one-time payments. The executive officer’s designated beneficiary is also is eligible to receive a prorated award for each LTIP performance cycle in which the executive officer participates, to the extent those performance cycles award at their completion.

Annual survivor benefits are payable to an executive officer’s surviving spouse for his/her life, or if there is no surviving spouse, to the executive officer’s designated beneficiary for a period of ten years or, if no designated beneficiary is named, to the executive officer’s estate for a period of ten years. Amounts are calculated under the provisions of the Pension Plan and SERP. For more information, see the discussion under the headings “Pension Plan” and “SERP,” respectively, as well as SERP provisions relating to death while in service. Survivor benefits are paid from SERP regardless of vested status in SERP at the time of death. The SERP supplemental death benefit is paid only to executives who were employed by the Company on or after December 17, 1999. ~~All of our named executives~~Messrs. Fontenot and LaBorde are eligible for ~~the death~~this benefit.

Retirement

In the event of early or normal retirement, the executive officer is eligible to receive a prorated share of the current year’s STIP award and at least a prorated award for each LTIP performance cycle in which he/she participates to the extent those performance cycles award at their completion. Retirement benefits are provided pursuant to the Pension Plan and SERP. Payments are made monthly and are calculated

using the assumptions described in the discussion following the “Pension Benefits” table.

Constructive Termination

Payments made and benefits provided upon a constructive termination are ordinarily greater than payments made on account of an executive officer’s retirement, death or disability because separation effectively is initiated by the Company. Certain payments are made contingent upon the execution of a waiver, release and covenants agreement in favor of the Company. Constructive termination also may be initiated by an executive officer if there has been (i) a material reduction in his/her base compensation, other than a reduction uniformly applicable to all executive officers; and (ii) a contemporaneous, material reduction in his/her authority, job duties, or responsibilities.

Under the terms of the Executive Severance Plan, an executive would receive constructive termination payments including up to 52 weeks of base compensation, up to $50,000 in lieu of outplacement services and reimbursement of premiums paid to maintain coverage under ~~our~~Cleco’s medical plan for up to 18 months. The executive also would be eligible for a prorated portion of the current year’s payout under the STIP and a prorated award for the LTIP performance cycles in which he/she participates, to the extent those performance cycles award at their completion.

If the executive officer has vested retirement benefits and has attained eligible retirement age, he/she would receive retirement benefits as described under “Pension Benefits.”

Termination for Cause

“Cause” is defined as an executive’s (i) intentional act of fraud, embezzlement or theft in the course of employment or other intentional misconduct that is materially injurious to the Company’s financial condition or business reputation; (ii) intentional damage to Company property, including the wrongful disclosure of its confidential information; (iii) willful and intentional refusal to perform the essential duties of his/her position; (iv) failure to fully cooperate with government or independent agency investigations; (v) conviction of a felony or crime involving moral turpitude; (vi) willful, reckless, or negligent violation of the material provisions of Cleco’s Code of Conduct; or (vii) ~~intentional,~~ reckless or intentional acts or failures to act in a manner which materially compromises his/her ability to perform the essential duties of his/her position; or (viii) willful, reckless, or negligent violation of rules related to the Sarbanes-Oxley Act or rules adopted by the SEC. No payments, other than those required by law, are made or benefits provided under the Executive Severance Plan if an executive officer is terminated for cause. If an executive officer is vested in SERP, that benefit is forfeited. The value of that forfeiture is shown as a negative number in the separation payments tables.

outstanding securities of the Company or an employee stock ownership plan (within the meaning of Code Section 4975(e)(7)) sponsored by the Company or an Affiliate, is or becomes the “beneficial owner” (as determined in Rule 13d-3 promulgated under the Exchange Act) of 80% or more of the combined voting power of the outstanding securities of the Company;

•The Company is party to a merger or consolidation with another entity and, as a result of such transaction, 80% or more of the combined voting power of outstanding securities of the Company or its successor in the merger (or a direct or indirect parent company of the Company or its successor in the merger) is owned in the aggregate by persons who were not “beneficial owners” (as determined in Rule 13d-3 promulgated under the Exchange Act) of securities of the Company immediately before such transaction;

•The Company sells, leases, or otherwise disposes of, in one transaction or in a series of related transactions, all or substantially all of its assets;

•The owners of the Company approve a plan of dissolution or liquidation; or

•All or substantially all of the assets or the issued and outstanding membership interests of Cleco Power LLC is sold, leased or otherwise disposed of in one or a series of related transactions to a person, other than the Company or an Affiliate.

Except as described below, payments are made and benefits provided only if an executive’s employment is terminated during the 60-day period preceding or the 24-month period following the Change in Control.

Termination must be involuntary and by the Company without cause or initiated by the executive on account of “Good Reason.” Good reason means that (i) a Participant’s base compensation in effect immediately before the commencement of a Change in Control Period is materially reduced, or there is a material reduction or termination of such Participant’s rights to any employee benefit in effect immediately prior to such period; (ii) a Participant’s authority, duties or responsibilities are materially reduced from those in effect immediately before the commencement of a Change in Control Period, or such Participant has reasonably determined that, as a result of a change in circumstances that materially affects his or her employment with the Company, he or she is unable to exercise the authority, power, duties and responsibilities assigned to him or her immediately before the

commencement of such period; or (iii) a Participant is required to transfer to an office or business location that is more than 60 miles from the primary location to which he or she was assigned prior to the commencement of a Change in Control Period. No event or condition shall constitute Good Reason hereunder unless (a) a Participant provides to the Committee

written notice of his or her objection to such event not later than 60 days after such Participant first learns, or should have learned, of such event; (b) such event is not corrected by the Company promptly after receipt of such notice, but in no event more than 30 days after receipt thereof; and (c) such Participant Separates from Service not more than 15 days following the expiration of the 30-day period described in clause (b) hereof. The executive also must satisfy the conditions included in the waiver, release and covenants agreement defined in the Executive Severance Plan.

Under the Executive Severance Plan, an executive would receive an amount up to two times the sum of annualized base salary and the average non-equity incentive plan bonus over the last three fiscal years and reimbursement of COBRA premiums for up to 24 months. Payments may also include the purchase of the executive officer’s primary residence and reimbursement of relocation expenses, but only if the executive relocates his/her primary residence more than 100 miles. No excise tax payments or gross-ups are made; instead, benefits will be reduced ~~to avoid~~in lieu of the imposition of the tax. The numbers shown below do not give effect to this reduction.

Subject to the conditions described above, upon a Change in Control, SERP benefits are: (i) fully vested; (ii) increased by adding three years to an affected executive’s age, subject to a minimum benefit of 50% of compensation; and (iii) subject to a modified actuarial reduction determined by increasing the executive’s age by three years.

If an executive officer is vested and of eligible retirement age, he or she may become eligible to begin to receive the annual retirement benefit described above upon a Change in Control.

The following tables set forth the value of post-employment payments and benefits that are not generally made available to all employees. Each separation event is assumed to occur on December 31, ~~2020.~~2021. Retirement is assumed to occur at age 55 or the named executive officer’s actual attained age if greater than 55. Estimated payments under ~~our~~the STIP and LTIP for disability, death, retirement and constructive termination are uncertain until the completion of the performance period/cycle. In the case of the STIP, the performance period is the current fiscal year. The estimated payment for the home purchase and relocation is a projection of the expense to the Company to sell the named executive officer’s principal residence including any loss avoided by the named executive officer by having the right to sell the residence to the Company, plus the projected cost to the Company to relocate the named executive officer.

Pursuant to Item 401(j) of Regulation S-K, the separation events disclosed in this Annual Report on Form 10-K are assumed to occur in the past, as of December 31, ~~2020.~~2021.

BOARD OF MANAGERS COMPENSATION

~~2020~~2021 Board of Managers Compensation


NAME (1)	NAME (1)	FEES EARNED OR PAID IN CASH AND/ OR STOCK ($)		TOTAL ($)		NAME (1)	FEES EARNED OR PAID IN CASH ($)		TOTAL ($)
A	A	B		C		A	B		C
Rick Gallot	Rick Gallot	$	150,000	$	150,000	Rick Gallot	$	160,000	$	160,000
Randy Gilchrist	Randy Gilchrist	$	150,000	$	150,000	Randy Gilchrist	$	160,000	$	160,000
Peggy Scott	Peggy Scott	$	232,500	$	232,500	Peggy Scott	$	250,000	$	250,000
Melissa Stark	Melissa Stark	$	3,750	$	3,750	Melissa Stark	$	3,750	$	3,750
Bruce Wainer	Bruce Wainer	$	150,000	$	150,000	Bruce Wainer	$	160,000	$	160,000

(1)Messrs. Chapman, Fronimos, Hanrahan, Leslie, Perry, Rubin, Turner, and ~~Turner~~Solís-Hernández were appointed to the Boards by the Owner Group and do not receive additional compensation for their service on the Boards.

General

Column B, “Fees Earned or Paid in ~~Cash and/or Stock”~~Cash” represents cash compensation earned and/or received in ~~2020.~~2021.

A non-management Board Manager may elect to participate in the Company’s Deferred Compensation Plan and defer the receipt of all or part of his or her fees. Benefits are equal to the amount credited to each Board Manager’s individual account based on compensation deferred plus applicable investment returns as specified by the director upon election to participate in the plan. Investment options are similar to those provided to participants in the 401(k) Plan. Funds may be reallocated between investments at the discretion of the Board Manager. Accounts, which may be designated separately by deferral year, are payable in the form of a single-sum payment or in the form of substantially equal annual installments, not to exceed 15, when a Board Manager ceases to serve on the Cleco’s Boards or attains a specified age.

Fees Earned or Paid in Cash ~~and/or Stock~~

During ~~2020,~~2021, each Board Manager who is not a Cleco employee or appointed by the Owner Group, except Ms. Stark, received an annual cash retainer of ~~$150,000.~~$160,000. Ms. Stark received an annual cash retainer of $3,750. During this period, the non-management Chair was compensated with an additional retainer of ~~$82,500.~~$90,000.

Board Managers are permitted to defer receipt of their fees under the Company’s Deferred Compensation Plan. Messrs. Gallot and Gilchrist elected to defer all or a portion of their fees in ~~2020.~~2021.

Cleco reimburses Board Managers for travel and related expenses incurred for attending meetings of Cleco’s Boards and Board committees, including travel costs for spouses/companions. No expenses for spouses/companions were incurred during ~~2020.~~2021.

Cleco also provides its Board Managers who are not employed by Cleco or appointed by the Owner Group with $200,000 of life insurance and permanent total disability coverage under a group accidental death and dismemberment plan maintained by Cleco Power. The total ~~2020~~2021 premium for all coverage (exempt employees, officers and Board Managers) under this plan was $6,128.

Interests of the Board of Managers

In ~~2020,~~2021, no non-management member of Cleco’s Boards performed services for or received compensation from Cleco or its affiliates except for those services relating to his or her duty as a member of Cleco’s Boards.

REPORT OF THE LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE

The Leadership Development and Compensation Committee of the Boards (see “Boards of Managers of Cleco” above and “Director Independence and Related Party Transactions” below), includes four managers, one of whom meets the additional requirements for independence which were adopted by the Board. The Leadership Development and Compensation Committee operates under a written charter last revised in ~~November 2019,~~December 2021, a copy of which is posted on Cleco’s web site at https://www.cleco.com/about/leadership-governance/board-committees. A copy of this charter also is available free of charge by request sent to: Public Relations, Cleco, P.O. Box 5000, Pineville, LA 71361-5000.

The Leadership Development and Compensation Committee was established in April 2016.

Based on the review and discussions referred to above, the Leadership Development and Compensation Committee recommended to the Company’s Boards that the CD&A and related required compensation disclosure tables be included in this Annual Report on Form 10-K and filed with the SEC.

The Leadership Development and Compensation Committee of the Boards of Managers of Cleco Holdings and Cleco Power

Andrew Chapman, Chair

Christopher Leslie

Rick Gallot

Steven Turner

Leadership Development and Compensation Committee Interlocks and Insider Participation

The members of the Leadership Development and Compensation Committee are set forth above. No members of the Leadership Development and Compensation Committee were officers or employees of the Company or any of its subsidiaries during 2020, were former Company officers, or had any relationship otherwise requiring disclosure.

Security Ownership of Directors and Management and Certain Beneficial Owners

Following the closing of the 2016 Merger, there are no longer any outstanding shares of Cleco Corporation common stock.

Equity Compensation Plan Information

Cleco has no compensation plans under which equity securities are awarded.

Director Independence and Related Party Transactions

Cleco’s Boards have adopted categorical standards to assist them in making determinations of managers’ independence. These categorical standards are posted on Cleco’s web site at https://cleco.com/about/leadership-governance/governance-guidelines. A copy of the standards is also available free of charge by request sent to: Public Relations, Cleco, P.O. Box 5000, Pineville, LA 71361-5000. The Boards have determined that Rick Gallot (member of the Boards of Cleco Group, Cleco

Holdings and Cleco Power), Randy Gilchrist (member of the Boards of Cleco Group, Cleco Holdings and Cleco Power), Peggy Scott (member of the Boards of Cleco Group, Cleco Holdings, and Cleco Power), Melissa Stark (member of the Board of Cleco Power), and Bruce Wainer (member of the Boards of Cleco Group, Cleco Holdings and Cleco Power) are independent within the meaning of the categorical standards adopted by the Boards.

Cleco has no relationships to report under Item 407(a)(3).

Aggregate fees for professional services rendered by PricewaterhouseCoopers LLP (PwC) for the years ended December 31, ~~2020,~~2021, and ~~2019,~~2020, respectively, were as follows:


		2020		2019			2021		2020
Audit fees	Audit fees	$	3,005,041	$	3,740,200	Audit fees	$	2,258,964	$	3,005,041
Audit related fees		13,000		707,300
Audit-related fees						Audit-related fees	206,250		13,000
Tax fees	Tax fees	550,000		570,000		Tax fees	394,920		550,000
Other fees	Other fees	4,700		21,700		Other fees	8,251		4,700
Total	Total	$	3,572,741	$	5,039,200	Total	$	2,868,385	$	3,572,741

~~The~~ Audit fees include professional fees rendered by PwC for financial statement ~~audits~~audit and ~~reviews under statutory or regulatory requirements and~~review services that are customary under generally ~~only~~accepted auditing standards or that are customary for the ~~auditor reasonably can provide, including issuance~~purpose of ~~comfort letter and consents for debt and equity issuances and other asset services required by statute~~rendering an opinion or ~~regulation.~~review report on the financial statements.

~~The Audit related~~Audit-related fees consist of assurance and related services that are traditionally performed by the auditor, such as ~~accounting assistance and~~ due diligence ~~in connection with acquisitions, consulting~~services, consultations concerning financial accounting and reporting standards, and audits of stand-alone financial statements or other assurance services not required by statute or regulation.

Note 1 — Summary of Significant Accounting Policies

The condensed financial statements represent the financial information required by SEC Regulation S-X 5-04 for Cleco Holdings, which requires the inclusion of parent company only financial statements if the restricted net assets of consolidated subsidiaries exceed 25% of total consolidated net assets as of the last day of its most recent fiscal year. As of December 31, ~~2020,~~2021, Cleco Holdings’ restricted net assets of consolidated subsidiaries were ~~$1.51~~$1.76 billion and exceeded 25% of its total consolidated net assets.

Cleco Holdings’ major, first-tier subsidiaries are Cleco Power and Cleco Cajun. Cleco Power contains the LPSC-jurisdictional generation, transmission, and distribution electric utility operations serving its retail and wholesale customers. Upon completion of the Cleco Cajun Transaction, Cleco Cajun became a major, first tier subsidiary. Cleco Cajun is an unregulated electric utility company that owns generation and transmission assets and supplies wholesale power and capacity to its customers. For more information about the Cleco Cajun Transaction, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations.”

The accompanying financial statements have been prepared to present the results of operations, financial condition, and cash flows of Cleco Holdings on a stand-alone basis as a holding company. Investments in subsidiaries and other investees are presented using the equity method. These financial statements should be read in conjunction with Cleco’s consolidated financial statements.

Note 2 — Debt

At December 31, ~~2020,~~2021, and ~~2019~~2020 Cleco Holdings had 0no short-term debt outstanding.

At December 31, ~~2020,~~2021, Cleco Holding’s long-term debt outstanding was ~~$1.60~~$1.54 billion, of which ~~$66.0~~$67.7 million was due within one year. The amount due within one year represents principal payments on Cleco Holdings’ debt as required by the Cleco Cajun Transaction commitments to the LPSC.

On ~~September 11, 2019,~~May 21, 2021, Cleco Holdings ~~completed the private placement of $300.0~~entered into a $175.0 million ~~aggregate principal amount of its 3.375% senior notes due September 15, 2029. The proceeds from the issuance were used to repay the remaining amounts due under the $300.0 million bridge loan~~revolving credit agreement and a ~~portion of the $100.0~~$266.0 million term loan agreement. These agreements replaced Cleco Holdings’ existing revolving credit agreement ~~both entered into in connection with the Cleco Cajun Transaction. On July 14, 2020,~~and term loan agreement. The revolving credit agreement matures on May 21, 2026. Under this agreement, Cleco Holdings ~~completed an exchange offer for its outstanding 3.375% senior notes, which~~is required to maintain total indebtedness less than or equal to 65.0% of total capitalization. The borrowing costs under this agreement are currently equal to LIBOR plus 1.625% or ABR plus 0.625%, plus commitment fees of 0.275%. If Cleco Holdings’ credit ratings were ~~not registered under~~to be downgraded one level by the ~~Securities Act of 1933, as amended, for an equal principal amount of newly issued 3.375% senior notes due September 15, 2029, that were so registered.~~credit rating agencies, Cleco Holdings ~~did not receive any proceeds from the exchange offer.~~may be required to pay incremental interest and commitment fees of 0.125% and 0.05%, respectively. At December 31, 2021, Cleco Holdings had no borrowings outstanding under its revolving credit agreement. Cleco Holdings’ term loan agreement matures on May 21, 2024 and has an interest rate of LIBOR plus 1.625% or ABR plus 0.625%.

Upon approval of the Cleco Cajun Transaction, commitments were made to the LPSC by Cleco Holdings, including repayment of $400.0 million of Cleco Holdings’ debt

by December 31, 2024. As of December 31, ~~2020,~~2021, Cleco Holdings was in compliance with these commitments. The cumulative minimum principal amounts committed to be repaid for each year through 2024 are as follows:


(THOUSANDS)
For the year ending Dec. 31,
2019	$	66,700
2020	$	133,300
2021	$	200,000
2022	$	267,700
2023	$	333,300
2024	$	400,000

The principal amounts payable under long-term debt agreements for each year through ~~2025~~2026 and thereafter are as follows:


AMOUNTS PAYABLE UNDER LONG-TERM DEBT ARRANGEMENTS	AMOUNTS PAYABLE UNDER LONG-TERM DEBT ARRANGEMENTS	(THOUSANDS)		AMOUNTS PAYABLE UNDER LONG-TERM DEBT ARRANGEMENTS	(THOUSANDS)
For the year ending Dec. 31,	For the year ending Dec. 31,			For the year ending Dec. 31,
2021		$	0
2022	2022	$	266,000	2022	$	—
2023	2023	$	165,000	2023	$	165,000
2024	2024	$	0	2024	$	200,000
2025	2025	$	0	2025	$	—
2026				2026	$	535,000
Thereafter	Thereafter	$	1,185,000	Thereafter	$	650,000

Note 3 — Cash Distributions and Equity Contributions

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco Holdings by Cleco Power by requiring Cleco Power’s total indebtedness to be less than or equal to ~~65%~~65.0% of total capitalization. In addition, the 2016 Merger Commitments provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings.

The following table summarizes the cash distributions Cleco Holdings received from affiliates during 2021, 2020, ~~2019,~~ and ~~2018:~~2019:


		FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	(THOUSANDS)	2020		2019		2018		(THOUSANDS)	2021		2020		2019
Cleco Power	Cleco Power	$	0	$	20,000	$	121,400	Cleco Power	$	—	$	—	$	20,000
Cleco Cajun	Cleco Cajun	134,000		205,000		0		Cleco Cajun	111,000		134,000		205,000
Perryville		0		0		225
Attala		0		0		217

Total	Total	$	134,000	$	225,000	$	121,842	Total	$	111,000	$	134,000	$	225,000

~~Group. During the year ended December 31, 2019, Cleco~~ Holdings received $384.9 million equity contributions from Cleco Group.

During the years ended December 31, 2021, 2020, and 2019, Cleco Holdings made ~~0 distribution payments to Cleco Group. During the year ended December 31, 2018, Cleco Holdings made $71.4 million of~~no distribution payments to Cleco Group.

Note 4 — Income Taxes

Cleco Holdings’ (Parent Company Only) Condensed Statements of Income reflect income tax expense (benefit) for the following line items:

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2020 2019 2018
Federal and state income tax benefit $ (15,646) $ (20,358) $ (22,317)
Equity income from subsidiaries - federal and state income tax expense $ 51,364 $ 63,523 $ 51,699


	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2021		2020		2019
Federal and state income tax benefit	$	(14,454)	$	(15,646)	$	(20,358)
Equity income from subsidiaries - federal and state income tax expense	$	27,565	$	51,364	$	63,523

For information regarding the TCJA, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — TCJA.”

Note 5 — Commitments and Contingencies

For information regarding commitments and contingencies related to Cleco Holdings, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees.”


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


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


TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		6

PART I
ITEM 1.	Business
	General	8
	Human Capital	8
	Operations	10
	Regulatory Matters, Industry Developments, and Franchises	14
	Environmental Matters	15
ITEM 1A.	Risk Factors	20
ITEM 1B.	Unresolved Staff Comments	3130
ITEM 2.	Properties	3130
ITEM 3.	Legal Proceedings	3231
ITEM 4.	Mine Safety Disclosures	3231

PART II
ITEM 5.	Market for Registrants’ Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	3332
ITEM 6.	~~Selected Financial Data~~ Reserved	3332
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3432
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	56
ITEM 8.	Financial Statements and Supplementary Data	5859
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~122~~124
ITEM 9A.	Controls and Procedures	~~122~~125
ITEM 9B.	Other Information	~~123~~125
ITEM 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	125

PART III
ITEM 10.	Directors, Executive Officers, and Corporate Governance of the Registrants	~~124~~126
ITEM 11.	Executive Compensation	~~128~~130
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~145~~146
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	~~145~~146
ITEM 14.	Principal Accountant Fees and Services	~~145~~147

PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	~~147~~148
ITEM 16.	Form 10-K Summary	~~150~~152
	Signatures	~~158~~160


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 LIBOR 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, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2			Entergy Louisiana’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power
ACE			Affordable Clean Energy
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

~~Attala~~			~~Attala Transmission LLC, a wholly owned subsidiary of Cleco Holdings~~
BCI			British Columbia Investment Management Corporation
~~Brame Energy Center~~Big Cajun II, Unit 1			A 580-MW coal-fired generating unit at Cleco Cajun’s plant site in New Roads, Louisiana.
Big Cajun II, Unit 3			A ~~facility consisting~~588-MW coal-fired generating unit at Cleco Cajun’s plant site in New Roads, Louisiana. Cleco Cajun has a 58% ownership interest in the capacity of ~~Nesbitt~~Big Cajun II, Unit ~~1, Rodemacher Unit 2, and Madison Unit 3~~3.

CAA			Clean Air Act
CARES Act			Coronavirus Aid, Relief, and Economic Security Act of March 2020
CCR			Coal combustion by-products or residual
CDC			Centers for Disease Control and Prevention
CECL			Current Expected Credit Losses
CEO			Chief Executive Officer
CFO			Chief Financial Officer
CIP			Critical Infrastructure Protection
Cleco			Cleco Holdings and its subsidiaries
Cleco Cajun			Cleco Cajun LLC (formerly Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings) and its subsidiaries
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 Katrina/Rita			Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
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 ~~MIRA,~~MAM, BCI, John Hancock Financial, and other infrastructure investors
Cleco Power			Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings
CO2			Carbon dioxide
Como 1			Como 1, L.P., currently known as Cleco Partners
Consent Decree			The Consent Decree, entered March 5, 2013, in Civil Action No. 09-100-JJB-DLD, ~~United States~~U.S. District Court for the Middle District of Louisiana, by and among the EPA, the LDEQ, and Louisiana Generating relating to Big Cajun II, Unit 1 located in New Roads, Louisiana
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 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, combined-cycle power plant located in St. Landry, Louisiana
~~COVID-19~~			~~Novel coronavirus disease 2019 and the related global outbreak that was subsequently declared a pandemic by WHO in March 2020~~
~~CPP~~			~~Clean Power Plan~~


ABBREVIATION OR ACRONYM			DEFINITION
COVID-19			Coronavirus disease 2019, including any variant thereof, and the related global outbreak that was subsequently declared a pandemic by WHO in March 2020
CPP			Clean Power Plan
CSAPR			Cross-State Air Pollution Rule
~~D&I~~			~~Diversity and Inclusion~~
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 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
EAF			Equivalent Availability Factor
EBITDA			Earnings before interest, income taxes, depreciation, and amortization
EGU			Electric Generating Unit
EFORd			Equivalent Forced Outage Rate on demand
EMT			Executive Management Team
Entergy Gulf States			Entergy Gulf States Louisiana, LLC
Entergy Louisiana			Entergy Louisiana, LLC
EPA			U.S. Environmental Protection Agency
ERO			Electric Reliability Organization
ESG			Environmental, Social, and Governance
Evangeline			Cleco Evangeline LLC, a wholly owned subsidiary of ~~Midstream~~Midstream. Cleco Evangeline LLC was dissolved effective July 29, 2021.
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
GO Zone			Gulf Opportunity Zone Act of 2005 (Public Law 109-135)
IRC			Internal Revenue Code

IRS			Internal Revenue Service
ISO			Independent System Operator
kWh			Kilowatt-hour(s)
LCFC			Lost Contribution to Fixed Cost
LDEQ			Louisiana Department of Environmental Quality

LIBOR			London Interbank Offered Rate
LMP			Locational Marginal Price
Louisiana Generating			Louisiana Generating, LLC, a wholly owned subsidiary of South Central Generating
LPSC			Louisiana Public Service Commission
LTIP			Long-Term Incentive ~~Compensation~~ Plan
LTSA			Long-Term Parts and Service Agreement between Cottonwood Energy and a third party, dated January 19, 2001, that Cleco Cajun assumed as a result of the Cleco Cajun Transaction to provide maintenance services related to the Cottonwood Plant
Madison Unit 3			A 641-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana
MAM			Macquarie Asset Management
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

~~MIRA~~			~~Macquarie Infrastructure and Real Assets Inc.~~
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)
N/A			Not Applicable
NAAQS			National Ambient Air Quality Standards
NERC			North American Electric Reliability Corporation
NMTC			New Markets Tax Credit


~~Not Meaningful~~			~~A percentage comparison of these items is not statistically meaningful because the percentage difference is greater than 1,000%~~
NO2			~~Nitrogen dioxide~~


ABBREVIATION OR ACRONYM			DEFINITION
Not Meaningful			A percentage comparison of these items is not statistically meaningful because the percentage difference is greater than 1,000%
NO2			Nitrogen dioxide
NOx			Nitrogen oxide
NRG Energy			NRG Energy, Inc.
NRG South Central			NRG South Central Generating LLC




NSPS			New Source Performance Standards
OSHA			Occupational Safety and Health Administration
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
Paris Agreement			The Paris Agreement, often referred to as the Paris Accords or the Paris Climate Accords, is an international treaty on climate change, adopted in 2015. It covers climate change mitigation, adaptation, and finance.
PCB			Polychlorinated biphenyl
Perryville			Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco ~~Holdings~~Holdings. Perryville Energy Partners, L.L.C. was dissolved effective September 8, 2021.
ppb			Parts per billion

~~Predecessor~~			~~Pre-merger activity of Cleco. Cleco has accounted for the 2016 Merger transaction by applying the acquisition method of accounting. The predecessor period is not comparable to the successor period.~~
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 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
ROIC			Return on Invested Capital
ROU			Right of Use
RTO			Regional Transmission Organization
S&P			S&P Global Ratings, a division of S&P Global Inc, a credit rating agency
SAIDI			System Average Interruption Duration Index
SEC			U.S. Securities and Exchange Commission

SERC			SERC Reliability Corporation
SERP			Supplemental Executive Retirement Plan
SIP			State Implementation Plan
SO2			Sulfur dioxide
South Central Generating			South Central Generating LLC, formerly NRG South Central Generating LLC


SSR			System Support Resource
START			Strategic Alignment and Real-Time Transformation
STIP			Short-Term Incentive Plan
~~Successor~~			~~Post-merger activity of Cleco. Cleco has accounted for the 2016 Merger transaction by applying the acquisition method of accounting. The successor period is not comparable to the predecessor period.~~
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 generating unit at Cleco Power’s plant site in Baldwin, Louisiana
WHO			World Health Organization


GENERATING STATION	GENERATING STATION	YEAR OF INITIAL OPERATION	RATED CAPACITY (MW)		NET CAPACITY (MW)	(1)	PRIMARY FUEL USED FOR GENERATION	GENERATION TYPE	GENERATING STATION	YEAR OF INITIAL OPERATION	RATED CAPACITY (MW)		NET CAPACITY (MW)	(1)	PRIMARY FUEL USED FOR GENERATION	GENERATION TYPE
Brame Energy Center	Brame Energy Center								Brame Energy Center
Nesbitt Unit 1	Nesbitt Unit 1	1975	440		413		natural gas	steam	Nesbitt Unit 1	1975	440		426		natural gas	steam
Rodemacher Unit 2	Rodemacher Unit 2	1982	157	(2)	149	(2)	coal	steam	Rodemacher Unit 2	1982	157	(2)	149	(2)	coal	steam
Madison Unit 3	Madison Unit 3	2010	641		623		petroleum coke/coal	steam	Madison Unit 3	2010	641		625		petroleum coke/coal	steam
Acadia Unit 1	Acadia Unit 1	2002	580		549		natural gas	combined cycle	Acadia Unit 1	2002	580		536		natural gas	combined cycle
Coughlin Unit 6	Coughlin Unit 6	2000	264		248		natural gas	combined cycle	Coughlin Unit 6	2000	264		259		natural gas	combined cycle
Coughlin Unit 7	Coughlin Unit 7	2000	511		474		natural gas	combined cycle	Coughlin Unit 7	2000	511		478		natural gas	combined cycle
Teche Unit 3	Teche Unit 3	1971	359		331		natural gas	steam	Teche Unit 3	1971	359		336		natural gas	steam
Teche Unit 4	Teche Unit 4	2011	33		34		natural gas	combustion	Teche Unit 4	2011	33		33		natural gas	combustion
Dolet Hills Power Station		1986	325	(3)	318	(3)	lignite	steam
St. Mary Clean Energy Center	St. Mary Clean Energy Center	2019	50		47		waste heat	steam	St. Mary Clean Energy Center	2019	50		47		waste heat	steam
Total generating capability	Total generating capability		3,360		3,186				Total generating capability		3,035		2,889


GENERATING STATION	GENERATING STATION	COMMENCEMENT OF COMMERCIAL OPERATION	RATED CAPACITY (MW)		NET CAPACITY (MW)	(1)	PRIMARY FUEL USED FOR GENERATION	GENERATION TYPE	GENERATING STATION	COMMENCEMENT OF COMMERCIAL OPERATION	RATED CAPACITY (MW)		NET CAPACITY (MW)	(1)	PRIMARY FUEL USED FOR GENERATION	GENERATION TYPE
Bayou Cove (2)	Bayou Cove (2)	2002	225	(4)	219	(4)	natural gas	combustion	Bayou Cove (2)	2002	225	(4)	216	(4)	natural gas	combustion
Big Cajun I	Big Cajun I								Big Cajun I
Unit 1 and Unit 2	Unit 1 and Unit 2	1972	220		185		natural gas	steam	Unit 1 and Unit 2	1972	220		175		natural gas	steam
Unit 3 and Unit 4	Unit 3 and Unit 4	2001	210		178		natural gas	combustion	Unit 3 and Unit 4	2001	210		195		natural gas	combustion
Big Cajun II	Big Cajun II								Big Cajun II
Unit 1	Unit 1	1981	580		537		coal	steam	Unit 1	1981	580		524		coal	steam
Unit 2	Unit 2	1982	540		579		natural gas	steam	Unit 2	1982	540		565		natural gas	steam
Unit 3	Unit 3	1983	341	(5)	323	(5)	coal	steam	Unit 3	1983	341	(5)	322	(5)	coal	steam
Cottonwood (3)	Cottonwood (3)	2003	1,263		1,165		natural gas	combined cycle	Cottonwood (3)	2003	1,263		1,177		natural gas	combined cycle

Total generating capability	Total generating capability		3,379		3,186				Total generating capability		3,379		3,174


Five-Year Selected Financial Data
	SUCCESSOR															PREDECESSOR
(THOUSANDS, EXCEPT PER SHARE AND PERCENTAGES)	FOR THE YEAR ENDED DEC. 31, 2020			FOR THE YEAR ENDED DEC. 31, 2019			FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating revenue, net (excluding intercompany revenue)
Cleco Power	1,020,674			$	1,157,774		$	1,240,722		$	1,184,345		$	859,006		$	299,283
Cleco Cajun	487,149			491,510			—			—			—			—
Other	(9,677)			(9,679)			(9,678)			(8,699)			(6,001)			587
Total	$	1,498,146		$	1,639,605		$	1,231,044		$	1,175,646		$	853,005		$	299,870
Income (loss) before income taxes	158,018			$	195,830		$	123,819		$	145,159		$	(46,935)		$	(492)
Net income (loss)	122,300			$	152,665		$	94,437		$	138,080		$	(24,113)		$	(3,960)
Capitalization
Member’s equity	46.55		%	46.31		%	42.50		%	42.50		%	42.77		%
Long-term debt and finance leases (1)	53.45		%	53.69		%	57.50		%	57.50		%	57.23		%
Member’s equity	2,757,023			$	2,643,006		$	2,124,740		$	2,096,357		$	2,046,764
Long-term debt and finance leases (1)	3,165,387			$	3,064,679		$	2,874,485		$	2,836,105		$	2,738,571
Total assets	7,725,569			$	7,476,298		$	6,436,814		$	6,278,382		$	6,343,144
Cash dividends declared per common share	N/A			N/A			N/A			N/A			N/A			$	0.40


	FOR THE YEAR ENDED DEC. 31,
				2019 CHANGE
	2019	2018	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	3,178	3,311	2,779	(4.0)	%	14.4	%
Heating degree-days	1,325	1,470	1,547	(9.9)	%	(14.4)	%


CLECO

Consolidated Statements of Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2020		2019		2018
Operating revenue
Electric operations	$	1,370,893	$	1,496,736	$	1,181,907
Other operations	180,524		182,832		82,332

Gross operating revenue	1,551,417		1,679,568		1,264,239
Electric customer credits	(53,271)		(39,963)		(33,195)
Operating revenue, net	1,498,146		1,639,605		1,231,044
Operating expenses
Fuel used for electric generation	326,869		466,831		382,556
Purchased power	282,255		280,991		168,180
Other operations and maintenance	299,640		291,031		197,032
Depreciation and amortization	219,363		216,320		170,414
Taxes other than income taxes	61,321		61,870		48,791
Merger transaction and commitment costs	3,606		7,668		19,514

Total operating expenses	1,193,054		1,324,711		986,487
Operating income	305,092		314,894		244,557
Interest income	3,948		6,090		6,073
Allowance for equity funds used during construction	998		15,397		14,159

Other (expense) income, net	(14,156)		758		(14,328)
Interest charges
Interest charges, net	139,272		147,346		131,348
Allowance for borrowed funds used during construction	(1,408)		(6,037)		(4,706)
Total interest charges	137,864		141,309		126,642
Income before income taxes	158,018		195,830		123,819
Federal and state income tax expense	35,718		43,165		29,382
Net income	$	122,300	$	152,665	$	94,437
The accompanying notes are an integral part of the consolidated financial statements.


CLECO

Consolidated Statements of Comprehensive Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2020		2019		2018
Net income	$	122,300	$	152,665	$	94,437
Other comprehensive income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $2,922, tax benefit of $6,808, and tax expense of $1,868, respectively)	(8,283)		(19,299)		5,296

Total other comprehensive (loss) income, net of tax	(8,283)		(19,299)		5,296
Comprehensive income, net of tax	$	114,017	$	133,366	$	99,733
The accompanying notes are an integral part of the consolidated financial statements.


CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2020		2019
Assets
Current assets
Cash and cash equivalents	$	84,976	$	116,292
Restricted cash and cash equivalents	4,545		11,100
Customer accounts receivable (less allowance for credit losses of $2,758 in 2020 and $3,005 in 2019	82,511		83,591

Other accounts receivable	32,076		35,731

Unbilled revenue	40,127		33,207
Fuel inventory, at average cost	109,494		83,061
Materials and supplies, at average cost	132,449		118,858
Energy risk management assets	13,081		7,023
Accumulated deferred fuel	28,194		22,910
Cash surrender value of company-/trust-owned life insurance policies	89,138		86,096
Prepayments	14,549		7,711
Regulatory assets	21,041		19,807
Other current assets	12,711		12,688
Total current assets	664,892		638,075
Property, plant, and equipment
Property, plant, and equipment	5,337,190		4,982,255
Accumulated depreciation	(672,271)		(454,874)
Net property, plant, and equipment	4,664,919		4,527,381
Construction work in progress	124,622		117,630
Total property, plant, and equipment, net	4,789,541		4,645,011
Equity investment in investee	9,072		17,072
Goodwill	1,490,797		1,490,797
Prepayments	23,405		25,949
Operating lease right of use assets	26,172		28,791
Restricted cash and cash equivalents	744		15,203


Note receivable	14,506		15,198
Regulatory assets	554,609		422,431

Intangible assets	111,731		138,103

Other deferred charges	40,100		39,668
Total assets	$	7,725,569	$	7,476,298
The accompanying notes are an integral part of the consolidated financial statements.

(Continued on next page)


CLECO

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2020		2019		2018
Operating activities
Net income	$	122,300	$	152,665	$	94,437
Adjustment to reconcile net income to net cash provided by operating activities
Depreciation and amortization	249,494		245,682		187,426

Provision for credit losses	5,488		2,348		797


Unearned compensation expense	5,715		5,409		5,837
Allowance for equity funds used during construction	(998)		(15,397)		(14,159)
(Gain) loss on risk management assets and liabilities, net	(13,261)		10,180		0
Deferred lease revenue	(9,205)		(8,439)		0
Deferred income taxes	35,876		40,081		6,543
Deferred fuel costs	(4,142)		11,132		(18,549)
Cash surrender value of company-/trust-owned life insurance	(3,042)		(5,705)		2,726
Changes in assets and liabilities
Accounts receivable	(8,772)		(9,532)		3,123
Accounts receivable - affiliate	(621)		(1,041)		635
Unbilled revenue	(6,920)		2,107		1,084
Fuel inventory and materials and supplies	(39,602)		18,463		(2,981)
Prepayments	(20,117)		(14,479)		153
Accounts payable	(19,612)		13,507		18,898
Accounts payable - affiliate	1,470		3,175		0
Customer deposits	6,663		5,888		13,757
Provision for merger commitments	560		(1,848)		(3,273)
Postretirement benefit obligations	(9,588)		(10,981)		4,646
Regulatory assets and liabilities, net	(76,428)		90		3,032
Other deferred accounts	(16,931)		(7,147)		(9,748)
Taxes accrued	4,633		(3,619)		20,976
Interest accrued	(3,417)		3,173		1,124
Deferred compensation	1,125		1,316		(1,521)
Other operating	5,151		(6,909)		2,798
Net cash provided by operating activities	205,819		430,119		317,761
Investing activities
Additions to property, plant, and equipment	(390,013)		(323,791)		(291,061)
Allowance for equity funds used during construction	998		15,397		14,159

Reimbursement for property loss	115		141		1,375

Return of equity investment in investee	8,000		1,100		0

Return of investment in company-owned life insurance	1,912		3,761		0

Return of equity investment in tax credit fund	0		1,625		2,775
Issuance of note receivable	0		0		(16,800)
Payment to acquire business, net of cash received	0		(814,969)		0
Other investing	1,081		1,313		1,392
Net cash used in investing activities	(377,907)		(1,115,423)		(288,160)
The accompanying notes are an integral part of the consolidated financial statements.

(Continued on next page)


CLECO

Consolidated Statements of Changes in Member’s Equity
(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS		AOCI		TOTAL MEMBER’S EQUITY
Balances,Dec. 31, 2017	$	2,069,376	$	29,902	$	(2,921)	$	2,096,357
Distributions to member	—		(71,350)		—		(71,350)
Net income	—		94,437		—		94,437
Other comprehensive income, net of tax	—		—		5,296		5,296
Reclassification of effect of tax rate change	—		589		(589)		0
Balances, Dec. 31, 2018	$	2,069,376	$	53,578	$	1,786	$	2,124,740
Contributions from member	384,900		0		—		384,900
Net income	—		152,665		—		152,665
Other comprehensive loss, net of tax	—		—		(19,299)		(19,299)
Balances, Dec. 31, 2019	$	2,454,276	$	206,243	$	(17,513)	$	2,643,006


Net income	—		122,300		—		122,300
Other comprehensive loss, net of tax	—		—		(8,283)		(8,283)

Balances, Dec. 31, 2020	$	2,454,276	$	328,543	$	(25,796)	$	2,757,023
The accompanying notes are an integral part of the consolidated financial statements.


Note 1	The Company	Cleco and Cleco Power
Note 2	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 3	Business Combinations	Cleco
Note 4	Leases	Cleco and Cleco Power
Note 5	Revenue Recognition	Cleco and Cleco Power
Note 6	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 7	Jointly Owned Generation Units	Cleco and Cleco Power
Note 8	Fair Value Accounting and Financial Instruments	Cleco and Cleco Power
Note 9	Debt	Cleco and Cleco Power
Note 10	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 11	Income Taxes	Cleco and Cleco Power
Note 12	Disclosures about Segments	Cleco
Note 13	Regulation and Rates	Cleco and Cleco Power
Note 14	Variable Interest Entities	Cleco and Cleco Power
Note 15	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 16	Affiliate Transactions	Cleco and Cleco Power
Note 17	Intangible Assets, Intangible Liabilities, and Goodwill	Cleco and Cleco Power
Note 18	Accumulated Other Comprehensive Loss	Cleco and Cleco Power
Note 19	Storm Restoration	Cleco and Cleco Power


CATEGORY (YEARS)	CATEGORY (YEARS)	CLECO			CLECO POWER			CATEGORY (YEARS)	CLECO			CLECO POWER
Utility Plants	Utility Plants							Utility Plants
Generation	Generation	6	–	95	10	–	95	Generation	10	–	95	10	–	95
Distribution	Distribution	15	–	50	15	–	50	Distribution	15	–	50	15	–	50
Transmission	Transmission	5	–	55	5	–	55	Transmission	5	–	55	5	–	55
Other utility plant	Other utility plant	2	–	45	5	–	45	Other utility plant	5	–	45	5	–	45
Other property, plant, and equipment	Other property, plant, and equipment	5	–	45	5	–	45	Other property, plant, and equipment	5	–	45	5	–	45


		FOR THE YEAR ENDED DEC. 31, 2019														FOR THE YEAR ENDED DEC. 31, 2019
(THOUSANDS)	(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL		(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers	Revenue from contracts with customers														Revenue from contracts with customers
Retail revenue	Retail revenue														Retail revenue
Residential (1)	Residential (1)	$	415,242		$	0		$	0		$	0	$	415,242	Residential (1)	$	415,242		$	—		$	—		$	—	$	415,242
Commercial (1)	Commercial (1)	289,197			0			0			0		289,197		Commercial (1)	289,197			—			—			—		289,197
Industrial (1)	Industrial (1)	149,711			0			0			0		149,711		Industrial (1)	149,711			—			—			—		149,711
Other retail (1)	Other retail (1)	15,046			0			0			0		15,046		Other retail (1)	15,046			—			—			—		15,046
Surcharge	Surcharge	22,132			0			0			0		22,132		Surcharge	22,132			—			—			—		22,132
Electric customer credits	Electric customer credits	(35,880)			0			0			0		(35,880)		Electric customer credits	(35,880)			—			—			—		(35,880)
Total retail revenue	Total retail revenue	855,448			0			0			0		855,448		Total retail revenue	855,448			—			—			—		855,448
Wholesale, net	Wholesale, net	226,978		(1)	374,635		(2)	(9,680)		(3)	(1)		591,932		Wholesale, net	226,978		(1)	374,635		(2)	(9,680)		(3)	(1)		591,932
Transmission	Transmission	50,874		(4)	51,315		(5)	0			(7,471)		94,718		Transmission	50,874		(4)	51,315		(5)	—			(7,471)		94,718
Other	Other	19,324		(6)	0			2			0		19,326		Other	19,324		(6)	—			2			—		19,326
Affiliate (7)	Affiliate (7)	3,125			108			109,067			(112,300)		0		Affiliate (7)	3,125			108			109,067			(112,300)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	1,155,749			426,058			99,389			(119,772)		1,561,424		Total revenue from contracts with customers	1,155,749			426,058			99,389			(119,772)		1,561,424
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers														Revenue unrelated to contracts with customers
Other	Other	12,621		(8)	65,560		(9)	0			0		78,181		Other	12,621		(8)	65,560		(9)	—			—		78,181
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	12,621			65,560			0			0		78,181		Total revenue unrelated to contracts with customers	12,621			65,560			—			—		78,181
Operating revenue, net	Operating revenue, net	$	1,168,370		$	491,618		$	99,389		$	(119,772)	$	1,639,605	Operating revenue, net	$	1,168,370		$	491,618		$	99,389		$	(119,772)	$	1,639,605


~~CLECO~~Cleco Power
~~CLECO POWER~~	AT DEC. 31, 2021
~~2020 FORM 10-K~~(THOUSANDS, EXCEPT PERCENTAGES AND MW)	RODEMACHER UNIT 2
Utility plant in service	$	157,855
Accumulated depreciation	$	93,963
Construction work in progress	$	400
Ownership interest percentage	30		%
Rated capacity (MW)	523
Ownership interest (MW)	157


Cleco Power
				AT DEC. 31, 2020
(THOUSANDS, EXCEPT PERCENTAGES AND MW)	RODEMACHER UNIT 2			DOLET HILLS POWER STATION			TOTAL
Utility plant in service	$	150,138		$	404,467		$	554,605
Accumulated depreciation	$	85,112		$	303,526		$	388,638
Construction work in progress	$	1,090		$	2,548		$	3,638
Ownership interest percentage	30		%	50		%
Rated capacity (MW)	523			650
Ownership interest (MW)	157			325


Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT DEC. 31, 2020		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Institutional money market funds	$	86,001	$	0	$	86,001	$	0	$	129,643	$	0	$	129,643	$	0
FTRs	4,805		0		0		4,805		6,822		0		0		6,822
Other commodity derivatives	8,599		0		8,599		0		201		0		201		0
Total assets	$	99,405	$	0	$	94,600	$	4,805	$	136,666	$	0	$	129,844	$	6,822
Liability Description

FTRs	$	1,625	$	0	$	0	$	1,625	$	1,044	$	0	$	0	$	1,044
Other commodity derivatives	1,612		0		1,612		0		5,373		0		5,373		0
Total liabilities	$	3,237	$	0	$	1,612	$	1,625	$	6,417	$	0	$	5,373	$	1,044


(THOUSANDS)
~~Balance, Dec. 31, 2018~~	$	~~20,298~~
~~Realized losses~~	~~370~~
~~Unrealized gains~~	~~(1,727)~~
~~Purchases~~	~~759~~
~~Sales~~	~~(1,683)~~
Balance, Dec. 31, 2019	$	18,017
Realized gains	251
Unrealized losses	(1,603)
Purchases	20,893
Sales	(1,596)
Balance, Dec. 31, 2020	$	35,962
Realized gains	503
Unrealized gains	3,524
Purchases	1,865
Sales	(2,763)
Balance, Dec. 31, 2021	$	39,091


		PERCENT OF TOTAL PLAN ASSETS							PERCENT OF TOTAL PLAN ASSETS
				AT DEC. 31, 2020							AT DEC. 31, 2021
		MINIMUM		TARGET		MAXIMUM			MINIMUM		TARGET		MAXIMUM
Return-seeking	Return-seeking							Return-seeking
Domestic equity	Domestic equity			19	%			Domestic equity			19	%
International equity	International equity			20	%			International equity			20	%
Multi-asset credit	Multi-asset credit			6	%			Multi-asset credit			6	%
Real estate	Real estate			5	%			Real estate			5	%
Total return-seeking	Total return-seeking	45	%	50	%	55	%	Total return-seeking	45	%	50	%	55	%
Liability hedging*	Liability hedging*	45	%	50	%	55	%	Liability hedging*	45	%	50	%	55	%
*Liability hedging has no target subcategories.	*Liability hedging has no target subcategories.							*Liability hedging has no target subcategories.


		SERP BENEFITS					SERP BENEFITS
		AT DEC. 31					AT DEC. 31
(THOUSANDS)	(THOUSANDS)	2020		2019		(THOUSANDS)	2021		2020
Net actuarial loss	Net actuarial loss	$	34,825	$	28,731	Net actuarial loss	$	31,526	$	34,825
Prior service credit	Prior service credit	$	(1,728)	$	(1,678)	Prior service credit	$	(1,514)	$	(1,728)


SEGMENT INFORMATION
	FOR THE YEAR ENDED DEC. 31, 2020
(THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue
Electric operations	$	1,015,018	$	365,555		$	1,380,573
Other operations	65,237		121,747			186,984
Affiliate revenue	5,156		204			5,360
Electric customer credits	(53,119)		(153)			(53,272)
Operating revenue, net	$	1,032,292	$	487,353		$	1,519,645
Net income	$	96,655	$	89,492		$	186,147
Add: Depreciation and amortization	166,987		47,183		(1)	214,170
Less: Interest income	3,362		273			3,635
Add: Interest charges	73,985		(750)			73,235
Add: Federal and state income tax expense	26,799		29,080			55,879








EBITDA	$	361,064	$	164,732		$	525,796
Additions to property, plant, and equipment	$	378,042	$	8,920		$	386,962
Equity investment in investee	$	9,072	$	0		$	9,072
Goodwill	$	1,490,797	$	0		$	1,490,797
Total segment assets	$	6,256,944	$	1,029,812		$	7,286,756
(1) Includes $12.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(9.2) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


		FOR THE YEAR ENDED DEC. 31, 2018										FOR THE YEAR ENDED DEC. 31, 2019
(THOUSANDS)	(THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL		(THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue	Revenue										Revenue
Electric operations	Electric operations	$	1,191,587	$	(9,680)		$	0	$	1,181,907	Electric operations	$	1,130,928	$	375,489		$	1,506,417
Other operations	Other operations	82,330		2			0		82,332		Other operations	72,833		117,468			190,301
Affiliate revenue	Affiliate revenue	874		74,591			(75,465)		0		Affiliate revenue	3,125		108			3,233
Electric customer credits	Electric customer credits	(33,195)		0			0		(33,195)		Electric customer credits	(38,516)		(1,447)			(39,963)
Operating revenue, net	Operating revenue, net	$	1,241,596	$	64,913		$	(75,465)	$	1,231,044	Operating revenue, net	$	1,168,370	$	491,618		$	1,659,988
Depreciation and amortization		$	162,069	$	18,024	(1)	$	1	$	180,094
Interest income		$	5,052	$	1,338		$	(317)	$	6,073
Interest charges		$	71,303	$	55,659		$	(320)	$	126,642
Federal and state income tax expense		$	55,924	$	(26,541)		$	(1)	$	29,382
Net income (loss)		$	162,257	$	(67,819)		$	(1)	$	94,437
Net income											Net income	$	148,262	$	69,411		$	217,673
Add: Depreciation and amortization											Add: Depreciation and amortization	172,471		38,465		(1)	210,936
Less: Interest income											Less: Interest income	4,744		987			5,731
Add: Interest charges											Add: Interest charges	71,279		35			71,314
Add: Federal and state income tax expense											Add: Federal and state income tax expense	45,452		22,479			67,931

EBITDA											EBITDA	$	432,720	$	129,403		$	562,123
Additions to property, plant, and equipment	Additions to property, plant, and equipment	$	289,153	$	1,908		$	0	$	291,061	Additions to property, plant, and equipment	$	298,565	$	9,174		$	307,739
Equity investment in investee	Equity investment in investee	$	18,172	$	0		$	0	$	18,172	Equity investment in investee	$	17,072	$	—		$	17,072
Goodwill	Goodwill	$	1,490,797	$	0		$	0	$	1,490,797	Goodwill	$	1,490,797	$	—		$	1,490,797
Total segment assets	Total segment assets	$	5,839,853	$	633,756		$	(36,795)	$	6,436,814	Total segment assets	$	5,967,327	$	1,011,591		$	6,978,918
(1) Includes $9.7 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.
(1)Includes $11.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(8.4) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.											(1)Includes $11.4 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(8.4) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


		AT DEC. 31,					AT DEC. 31,
INCEPTION TO DATE (THOUSANDS)	INCEPTION TO DATE (THOUSANDS)	2020		2019		INCEPTION TO DATE (THOUSANDS)	2021		2020
Purchase price	Purchase price	$	12,873	$	12,873	Purchase price	$	12,873	$	12,873
Cash contributions	Cash contributions	6,399		6,399		Cash contributions	6,399		6,399
Dividend received	Dividend received	(10,200)		(2,200)		Dividend received	(17,200)		(10,200)
Total equity investment in investee	Total equity investment in investee	$	9,072	$	17,072	Total equity investment in investee	$	2,072	$	9,072


NAME OF EXECUTIVE			POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
William G. Fontenot Cleco Holdings Cleco Power Cleco Cajun			President and CEO since January 2018. CEO since February 2019; President and CEO from January 2018 to February 2019; Interim CEO from February 2017 to December 2017; Chief Operating Officer from April 2016 to February ~~2017; Senior Vice President Utility Operations from March 2012 to April 2016.~~2017. CEO since February 2019. (Age ~~58; 34~~59; 35 years of service)
~~Kazi K. Hasan~~Kristin L. Guillory Cleco Holdings Cleco Cajun Cleco Holdings Cleco Power ~~Cleco Cajun~~			CFO since ~~October 2018; Chief Risk Officer, AES Corporation~~July 2021. President from ~~late 2014~~September 2019 to ~~May 2018.~~July 2021. ~~CFO since~~Treasurer from February 2019. (Age 50; 2 years of service)


~~Robert R. LaBorde, Jr.~~ ~~Cleco Holdings~~ ~~Cleco Power~~			~~Chief Operations Officer since February~~2018 to September 2019; ~~Vice President Generation Operations & Environmental Services~~General Manager Finance and Assistant Treasurer from ~~April~~May 2016 to February 2019. Vice President Generation Operations from November 2012 to April 2016. (Age 53; 29 years of service)

~~Justin S. Hilton~~ ~~Cleco Power~~ ~~Cleco Holdings~~ ~~Cleco Power~~			President since February 2019. Vice President MISO Operations from April 2016 to February 2019; General Manager Transmission Strategy from March 2012 to April 2016. (Age 51; 31 years of service)
~~Robert E. Adrian~~ ~~Cleco Cajun~~			~~Chief Operating Officer since November 2018; CEO, eServices, LLC from January 2012 to November~~ 2018. (Age ~~61; 2~~39; 17 years of service)


NAME OF EXECUTIVE			POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
J. Robert ~~Cleghorn~~R. LaBorde, Jr. Cleco Holdings			Chief Operations & Sustainability Officer since January 2022; Chief Operations Officer from February 2019 to January 2022; Vice President Generation Operations & Environmental Services from April 2016 to February 2019. (Age 54; 30 years of service)
Justin S. Hilton Cleco Power Cleco Holdings Cleco Power			President since February 2019. Vice President ~~Regulatory Strategy since~~MISO Operations from April 2016. General Manager Regulatory Strategy & Planning from March 20122016 to ~~April 2016.~~February 2019. (Age ~~62; 33~~52; 32 years of service)
~~Gregory A. Coco~~ ~~Cleco Power~~ ~~Cleco Holdings~~ ~~Cleco Power~~			Vice President Transmission & Distribution Operations since April 2016. General Manager Brame Energy Center from March 2013 to April 2016. (Age 61; 39 years of service)
William B. Conway, Jr. Cleco Holdings Cleco Power			Chief Compliance Officer and General Counsel since July 2020; Retired from May 2017 to June 2020; Partner, Skadden, Arps, Slate, Meagher & Flom LLP from April 2008 to April 2017. (Age ~~63; < 1 year of service)~~
~~Kristin L. Guillory~~ ~~Cleco Cajun~~ ~~Cleco Holdings~~ ~~Cleco Power~~			President since September 2019. Treasurer from February 2018 to September 2019; General Manager Finance and Assistant Treasurer from May 2016 to February 2018; Manager Finance Risk and Analytics & Assistant Treasurer from December 2013 to May 2016. (Age 38; 16 years of service)
~~Sidney D. Jacobson~~ ~~Cleco Holdings~~			Vice President Risk Management since May 2020; Director Risk Management from January 2019 to May 2020; Managing Director, Pivotal Risk Advisors from October 2015 to January 2019. (Age 54; 1 year of service)
~~Jeremy J. Kliebert~~ ~~Cleco Holdings~~ ~~Cleco Power~~			Vice President Corporate Development and Associate General Counsel since September 2020; Associate General Counsel from March 2019 to September 2020; Vice President, Deputy General Counsel, Chief Data Privacy Officer, Chief IP Counsel, and Chief Privacy Counsel, Albemarle Corporation from December 2017 to March 2019; Vice President, Deputy General Counsel, Chief IP Counsel and Data Privacy Counsel, Albemarle Corporation from January 2015 to December 2017. (Age 45;64; 2 ~~years of service)~~
~~F. Tonita Laprarie~~ ~~Cleco Holdings~~ ~~Cleco Power~~ ~~Cleco Cajun~~			Controller & Chief Accounting Officer since July 2016; General Manager Audit & Risk from March 2014 to July 2016. Controller & Chief Accounting Officer since February 2019. (Age 56; 20 years of service)
Mark A. Madsen Cleco Holdings			Chief Information & Supply Chain Officer since August 2020; Chief Digital & Information Officer from May 2019 to August 2020; Chief Information Officer, Vice President of IT - Waste Management Inc. from March 2010 to January 2019. (Age ~~51; 2 years of service)~~
~~Sybil S. Montegut~~ ~~Cleco Holdings~~			Vice President Enterprise Analytics & Innovation since May 2020; Director Innovation and Transformation from March 2019 to May 2020; General Manager Transformation Office from March 2018 to March 2019; Supervisor Corporate Analytics from May 2016 to March 2018; Senior Investor Relations Analyst from November 2012 to May 2016. (Age 43; 1252; 3 years of service)
Normanique G. Preston Cleco Holdings			Chief Human Resources & Diversity Officer since September 2019; Vice President Human Resources from August 2018 to September 2019; Vice President - Human Resources, Dynegy, Inc. from November 2015 to June 2018. (Age ~~54; 2~~55; 3 years of service)

~~Eric A. Schouest~~ ~~Cleco Power~~ ~~Cleco Cajun~~ ~~Cleco Holdings~~ ~~Cleco Power~~			Vice President Governmental Affairs since September 2019. President from February 2019 to September 2019; Interim President from May 2018 to February 2019. Vice President Governmental Affairs from March 2018 to May 2018; Vice President Marketing South from August 2016 to March 2018; General Manager Governmental Affairs/Regulatory Sales from February 2013 to August 2016. (Age 55; 19 years of service)
~~Dean C. Sikes~~ ~~Cleco Holdings~~ ~~Cleco Power~~			Vice President Engineering, Construction & Project Management since April 2016; General Manager Generation Engineering & Construction from March 2013 to April 2016. (Age 57; 33 years of service)
~~Vincent M. Sipowicz~~ ~~Cleco Holdings~~ ~~Cleco Power~~			Treasurer since May 2020; Director of Investor Relations, AES Corporation from 2015 to April 2020. (Age 47; <1 year of service)
~~Marty A. Smith~~ ~~Cleco Power~~ ~~Cleco Holdings~~			Vice President Marketing since May 2018; Vice President Marketing North from January 2017 to May 2018; General Manager Distribution Engineering & Real Estate from February 2013 to April 2016. General Manager Corporate Safety from April 2016 to January 2017. (Age 59; 29 years of service)


~~NAME OF EXECUTIVE~~			~~POSITION AND FIVE-YEAR EMPLOYMENT HISTORY~~
~~Russell L. Snyder~~ ~~Cleco Power~~			Vice President Generation Operations since February 2019; General Manager Southern Gas Fleet from May 2016 to February 2019; Manager Power Plant (>500 MW) from February 2010 to May 2016. (Age 60; 36 years of service)
~~Terry J. Whitmore~~ ~~Cleco Holdings~~ ~~Cleco Power~~			Vice President Transmission Services since February 2019. General Manager Transmission Strategy from May 2016 to February 2019; Manager Transmission Strategy & Support from March 2012 to May 2016. (Age 57; 31 years of service)


~~2020~~2021 PAY ELEMENT			DESCRIPTION
Base Salary			• Fixed pay element • Delivered in cash
Annual Cash Incentive (STIP)			• Performance-based annual incentive plan that pays out in cash • Adjusted EBITDA is the primary metric for the named executive officers • Additional metrics include safety, system reliability, customer service, generation fleet availability, and milestone measures
Long-Term Incentives			• Performance-based incentive paid in cash currently with a three-year cycle • Payout is contingent on Average ROIC and Adjusted Total ~~Shareholder Return,~~EBITDA, each weighted at 50%
Benefits			• Broad-based benefits such as group medical, dental, vision, and prescription drug coverage; basic life insurance; supplemental life insurance; dependent life insurance; accidental death and dismemberment insurance; a defined benefit pension plan (for those employees hired prior to August 1, 2007); and a 401(k) Plan with a Company match for those employees hired before August 1, 2007, as well as a 401(k) Plan with an enhanced benefit for those employees hired on or after August 1, ~~2007; same as those provided to all employees~~2007
Executive Benefits			• SERP (closed to new participants in 2014) • Nonqualified Deferred Compensation Plan
Perquisites			• Limited to executive physicals, spousal/companion travel, and relocation assistance


~~2020~~2021 PEER GROUP COMPANIES
ALLETE, Inc.	Hawaiian Electric Industries, Inc.	~~Pinnacle West Capital~~Otter Tail Corporation
Alliant Energy Corporation	IDACORP, Inc.	~~PNM Resources, Inc.~~Pinnacle West Capital Corporation
Avista Corporation	NorthWestern Corporation	~~Portland General Electric Company~~PNM Resources, Inc.
Black Hills Corporation	OGE Energy Corp.
~~El Paso~~Portland General Electric Company	~~Otter Tail Corporation~~


		CONSOLIDATED		BUSINESS UNIT					MILESTONE MEASURES		CONSOLIDATED		BUSINESS UNIT					MILESTONE MEASURES
		SAFETY	ADJUSTED EBITDA	EFORd	PEAK EAF	CUSTOMER SATISFACTION	LPSC SAIDI	ADJUSTED EBITDA			SAFETY	ADJUSTED EBITDA	EFORd	PEAK EAF	CUSTOMER SATISFACTION	LPSC SAIDI	ADJUSTED EBITDA
Cleco Power	Cleco Power	10%	20%	10%		15%	5%	20%	20%	Cleco Power	10%	20%	10%		15%	5%	20%	20%
Cleco Support (1)	Cleco Support (1)	10%	20%	7.5%			2.5%	25%	20%	Cleco Support (1)	10%	45%	10%	5%	7.5%	2.5%		20%
Cleco Cajun	Cleco Cajun	10%	20%	5%	15%			30%	20%	Cleco Cajun	10%	20%	10%				30%	20%


NAME	TARGET AS % OF BASE SALARY(1)
Mr. Fontenot	~~231~~236	%
~~Mr. Hasan~~Ms. Guillory	110	%
Mr. LaBorde	~~100~~95	%
Mr. Hilton (2)	~~110~~100	%
Mr. ~~Adrian~~ Conway~~(3)~~	~~110~~105	%


NAME AND PRINCIPAL POSITION	NAME AND PRINCIPAL POSITION	YEAR	SALARY($)		BONUS($)		NON-EQUITY INCENTIVE PLAN COMPENSATION ($)		CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(1)		ALL OTHER COMPENSATION ($)		TOTAL ($)		NAME AND PRINCIPAL POSITION	YEAR	SALARY($)		BONUS($)		NON-EQUITY INCENTIVE PLAN COMPENSATION ($)		CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(1)		ALL OTHER COMPENSATION ($)		TOTAL ($)
A	A	B	C		D		E		F		G		H		A	B	C		D		E		F		G		H
William G. Fontenot,	William G. Fontenot,	2020	$	721,154	$	0	$	1,806,020	$	1,320,099	$	17,520	$	3,864,793	William G. Fontenot,	2021	$	719,385	$	0	$	2,200,081	$	42,503	$	20,877	$	2,982,846
President & CEO	President & CEO	2019	$	639,616	$	345,000	$	1,171,839	$	1,402,994	$	17,293	$	3,576,742	President & CEO	2020	$	721,154	$	0	$	1,806,020	$	1,320,099	$	17,520	$	3,864,793
		2018	$	552,885	$	0	$	819,412	$	0	$	12,921	$	1,385,218		2019	$	639,616	$	345,000	$	1,171,839	$	1,402,994	$	17,293	$	3,576,742

Kazi K. Hasan,		2020	$	443,078	$	0	$	243,693	$	0	$	19,314	$	706,085
Kristin L. Guillory, (2)															Kristin L. Guillory, (2)	2021	$	320,000	$	0	$	329,917	$	12,029	$	12,251	$	674,197
CFO	CFO	2019	$	400,008	$	0	$	257,005	$	0	$	31,324	$	688,337	CFO
		2018	$	46,155	$	0	$	0	$	0	$	942	$	47,097

Robert R. LaBorde, Jr.,	Robert R. LaBorde, Jr.,	2020	$	298,269	$	0	$	319,608	$	485,114	$	13,693	$	1,116,684	Robert R. LaBorde, Jr.,	2021	$	308,462	$	0	$	442,313	$	0	$	26,673	$	777,448
Chief Operations Officer	Chief Operations Officer	2019	$	261,539	$	60,000	$	363,152	$	519,366	$	12,703	$	1,216,760	Chief Operations Officer	2020	$	298,269	$	0	$	319,608	$	485,114	$	13,693	$	1,116,684
		2018	$	239,231	$	0	$	356,506	$	0	$	28,490	$	624,227		2019	$	261,539	$	60,000	$	363,152	$	519,366	$	12,703	$	1,216,760

Justin S. Hilton, (2)		2020	$	283,846	$	0	$	237,357	$	376,853	$	10,050	$	908,106
Justin S. Hilton,															Justin S. Hilton,	2021	$	284,231	$	0	$	416,023	$	50,551	$	12,241	$	763,046
President - Cleco Power	President - Cleco Power	2019	$	253,769	$	107,500	$	269,359	$	381,155	$	7,033	$	1,018,816	President - Cleco Power	2020	$	283,846	$	0	$	237,357	$	376,853	$	10,050	$	908,106
																2019	$	253,769	$	107,500	$	269,359	$	381,155	$	7,033	$	1,018,816
Robert E. Adrian, (3)		2020	$	346,731	$	0	$	219,308	$	0	$	18,482	$	584,521
Chief Operating Officer - Cleco Cajun

William B. Conway, Jr., (2)															William B. Conway, Jr., (2)	2021	$	363,846	$	0	$	186,108	$	0	$	13,462	$	563,416
Chief Compliance Officer & General Counsel															Chief Compliance Officer & General Counsel

Former Executive Officers:	Former Executive Officers:														Former Executive Officers:
Julia E. Callis, (4)		2020	$	71,250	$	0	$	176,462	$	440,031	$	378,592	$	1,066,335
Former Chief Compliance Officer & General Counsel		2019	$	282,923	$	67,500	$	479,222	$	544,561	$	13,762	$	1,387,968
Kazi K. Hasan, (3)															Kazi K. Hasan, (3)	2021	$	223,462	$	0	$	0	$	0	$	31,938	$	255,400
Former CFO															Former CFO	2020	$	443,078	$	0	$	243,693	$	0	$	19,314	$	706,085
		2018	$	268,846	$	0	$	486,712	$	0	$	13,616	$	769,174		2019	$	400,008	$	0	$	257,005	$	0	$	31,324	$	688,337

Anthony L. Bunting, (5)		2020	$	214,616	$	0	$	312,919	$	310,014	$	25,787	$	863,336
Former Chief Transformation Officer		2019	$	292,523	$	61,500	$	465,619	$	598,968	$	21,262	$	1,439,872
Robert E. Adrian, (4)															Robert E. Adrian, (4)	2021	$	313,462	$	0	$	1,100,000	$	0	$	50,969	$	1,464,431
Former Chief Operating Officer - Cleco Cajun															Former Chief Operating Officer - Cleco Cajun	2020	$	346,731	$	0	$	219,308	$	0	$	18,482	$	584,521
		2018	$	245,389	$	0	$	452,027	$	886,982	$	18,806	$	1,603,204