UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-Q

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

For the quarterly period ended ~~June~~September 30, 2011

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

__________________

Commission file number 1-15759

CLECO CORPORATION

(Exact name of registrant as specified in its charter)


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

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)

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

__________________

Commission file number 1-05663

CLECO POWER LLC

(Exact name of registrant as specified in its charter)


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

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)

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

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

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files). Yes x No ¨

Indicate by check mark whether Cleco Corporation is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨

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

Number of shares outstanding of each of Cleco Corporation’s classes of Common Stock, as of the latest practicable date.

Registrant	Description of Class		Shares Outstanding at ~~July 29,~~October 28, 2011

Cleco Corporation	Common Stock, $1.00 Par Value	~~61,062,449~~		60,665,607

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

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

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

This report should be read in its entirety as it pertains to each respective Registrant. The Notes to the Unaudited Condensed Consolidated Financial Statements are combined.

TABLE OF CONTENTS

			PAGE
GLOSSARY OF TERMS			3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			5

PART I	Financial Information
ITEM 1.	Cleco Corporation — Condensed Consolidated Financial Statements	7
	Cleco Power — Condensed Consolidated Financial Statements	16
	Notes to the Unaudited Condensed Consolidated Financial Statements	23
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4647
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	6264
ITEM 4.	Controls and Procedures	6466

PART II	Other Information
ITEM 1.	Legal Proceedings	6567
ITEM 1A.	Risk Factors	6567
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6567
ITEM 5.	Other Information	67
ITEM 6.	Exhibits	6668
	Signatures	6769

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

GLOSSARY OF TERMS

References in this filing, including all items in Parts I and II, to “Cleco” mean Cleco Corporation and its subsidiaries, including Cleco Power, and references to “Cleco Power” mean Cleco Power LLC and its subsidiaries, unless the context clearly indicates otherwise. Additional abbreviations or acronyms used in this filing, including all items in Parts I and II are defined below:

ABBREVIATION OR ACRONYM	DEFINITION
401(k) Plan	Cleco Power 401(k) Savings and Investment Plan
ABR	Alternate Base Rate
Acadia	Acadia Power Partners, LLC, a wholly owned subsidiary of APH. Acadia no longer owns any materials and supply inventory, property, plant and equipment, or land as a result of the disposition of Acadia Unit 2 to Entergy Louisiana on April 29, 2011. From February 23, 2010 to April 29, 2011, Acadia was owned 100% by Cajun and consisted of Acadia Unit 2. Prior to February 23, 2010, Acadia was 50% owned by APH and 50% owned by Cajun and consisted of Acadia Unit 1 and Acadia Unit 2.
Acadia Unit 1	Cleco Power’s 580-MW unit, combined cycle, natural gas-fired power plant located at the Acadia Power Station near Eunice, Louisiana
Acadia Unit 2	Entergy Louisiana’s 580-MW unit, combined cycle, natural gas-fired power plant located at the Acadia Power Station near Eunice, Louisiana. Prior to April 29, 2011, Acadia Unit 2 was owned by Acadia.
Acadiana Load Pocket	An area in south central Louisiana that has experienced transmission constraints caused by local load and lack of generation. Transmission within the Acadiana Load Pocket is owned by several entities, including Cleco Power.
AFUDC	Allowance for Funds Used During Construction
Amended EPC Contract	Amended and Restated EPC Contract between Cleco Power and Shaw, executed on May 12, 2006, for engineering, procurement, and construction of Madison Unit 3, as amended by Amendment No. 1 thereto effective March 9, 2007, Amendment No. 2 thereto dated as of July 2, 2008, Amendment No. 3 thereto dated as of July 22, 2009, and Amendment No. 4 thereto dated October 19, 2009.
Amended Lignite Mining Agreement	Amended and restated lignite mining agreement effective December 29, 2009
AMI	Advanced Metering Infrastructure
APH	Acadia Power Holdings LLC, a wholly owned subsidiary of Midstream
Attala	Attala Transmission LLC, a wholly owned subsidiary of Cleco Corporation
~~Brame Energy Center~~	~~Facility consisting of Nesbitt Unit 1, Rodemacher Unit 2, and Madison Unit 3. On June 11, 2010, Rodemacher Power Station was renamed Brame Energy Center.~~
Cajun	Cajun Gas Energy L.L.C., a wholly owned subsidiary of third parties. In conjunction with the disposition of Acadia Unit 2 on April 29, 2011, APH no longer has any ownership interest in Cajun. From February 23, 2010 to April 29, 2011, Cajun was 50% owned by APH and 50% owned by third parties. Prior to February 23, 2010, Cajun was 100% owned by third parties.
Cleco Innovations LLC	A wholly owned subsidiary of Cleco Corporation
Cleco Katrina/Rita	Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Coughlin	Coughlin Power Station, a combined-cycle, natural gas-fired power plant located in Evangeline Parish, Louisiana. On June 11, 2010, Evangeline Power Station was renamed Coughlin Power Station.
DHLC	Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands	Diversified Lands LLC, a wholly owned subsidiary of Cleco Innovations LLC
DOE	United States Department of Energy
Entergy Gulf States	Entergy Gulf States Louisiana, L.L.C., formerly Entergy Gulf States, Inc.
Entergy Louisiana	Entergy Louisiana, LLC
Entergy Mississippi	Entergy Mississippi, Inc.
Entergy Services	Entergy Services, Inc., as agent for Entergy Louisiana and Entergy Gulf States
EPA	United States Environmental Protection Agency
EPC	Engineering, Procurement, and Construction
ESPP	Cleco Corporation Employee Stock Purchase Plan
Evangeline	Cleco Evangeline LLC, a wholly owned subsidiary of Midstream, and its combined cycle, natural gas-fired power plant located in Evangeline Parish, Louisiana. On June 11, 2010, the power plant was renamed Coughlin Power Station.
Evangeline 2010 Tolling Agreement	Capacity Sale and Tolling Agreement between Evangeline and JPMVEC, which was executed in February 2010
Evangeline Restructuring Agreement	Purchase, Sale and Restructuring Agreement entered into on February 22, 2010, by Evangeline and JPMVEC
Evangeline Tolling Agreement	Capacity Sale and Tolling Agreement between Evangeline and BE Louisiana LLC (as successor to Williams Power Company, Inc.) which was set to expire in 2020 and was terminated in February 2010. In September 2008, BE Louisiana LLC was merged into JPMVEC.
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the United States
GO Zone	Gulf Opportunity Zone Act of 2005 (Public Law 109-135)
ICT	Independent Coordinator of Transmission
Interconnection Agreement	One of two Interconnection Agreement and Real Estate Agreements, one between Attala and Entergy Mississippi, and the other between Perryville and Entergy Louisiana
IRP	Integrated Resource Planning
IRS	Internal Revenue Service
JPMVEC	J.P. Morgan Ventures Energy Corporation. In September 2008, BE Louisiana LLC was merged into JPMVEC.
kWh	Kilowatt-hour(s) as applicable
LIBOR	London Inter-Bank Offer Rate
Lignite Mining Agreement	Dolet Hills Mine Lignite Mining Agreement, dated as of May 31, 2001

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

ABBREVIATION OR ACRONYM	DEFINITION
LPSC	Louisiana Public Service Commission
LTICP	Cleco Corporation Long-Term Incentive Compensation Plan
Madison Unit 3	A 600-MW solid-fuel generating unit at Cleco Power’s plant site in Boyce, Louisiana that commenced commercial operation on February 12, 2010. Prior to June 11, 2010, Madison Unit 3 was known as Rodemacher Unit 3.
Midstream	Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Corporation
MMBtu	Million British thermal units
Moody’s	Moody’s Investors Service
MW	Megawatt(s) as applicable
NERC	North American Electric Reliability Corporation
OCI	Other Comprehensive Income
NOx	Nitrogen oxides
Oxbow	Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO
PCAOB	Public Company Accounting Oversight Board
PCB	Polychlorinated biphenyl
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Corporation
Power Purchase Agreement	Power Purchase Agreement, dated as of January 28, 2004, between Perryville and Entergy Services
PPACA	Patient Protection and Affordable Care Act (HR 3590)
PRP	Potentially responsible party
Registrant(s)	Cleco Corporation and Cleco Power
RFP	Request for Proposal
Sale Agreement	Purchase and Sale Agreement, dated as of January 28, 2004, between Perryville and Entergy Louisiana
SEC	Securities and Exchange Commission
SERP	Cleco Corporation Supplemental Executive Retirement Plan
Shaw	Shaw Contractors, Inc., a subsidiary of The Shaw Group Inc.
SO2	Sulfur dioxide
SPP	Southwest Power Pool
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco Corporation
SWEPCO	Southwestern Electric Power Company, a wholly owned subsidiary of American Electric Power Company, Inc.
Teche	Teche Electric Cooperative, Inc.
VaR	Value-at-risk
VIE	Variable Interest Entity

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Combined Quarterly Report on Form 10-Q includes “forward-looking statements” about future events, circumstances, and results. All statements other than statements of historical fact included in this Combined Quarterly Report are forward-looking statements, including, without limitation, statements regarding Madison Unit 3; JPMVEC’s performance under the Evangeline 2010 Tolling Agreement; future capital expenditures; projections, including with respect to base revenue; business strategies; goals, beliefs, plans, and objectives; competitive strengths; market developments; development and operation of facilities; growth in sales volume; meeting capacity ~~requirements;~~requirements, including through RFPs; expansion of service to certain 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, 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:

Factors affecting utility operations, such as unusual weather conditions or other natural phenomena; catastrophic weather-related damage (such as hurricanes and other storms or severe drought conditions); unscheduled generation outages; unanticipated maintenance or repairs; unanticipated changes to fuel costs; fuel supply costs or availability constraints due to higher demand, shortages, transportation problems, or other developments; fuel mix of Cleco’s generation facilities; decreased customer load; environmental incidents; environmental compliance costs; and power transmission system constraints;

§	Cleco Corporation’s holding company structure and its dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations and pay dividends on its common stock;

§	Cleco Power’s ability to operate and maintain, within its projected costs, any self-build projects identified in future IRP and RFP processes and its participation in any government grants;

§	Dependence of Cleco Power for energy from sources other than its facilities and the uncertainty of future sources of such additional energy;

§	Nonperformance by and creditworthiness of counterparties under tolling and power purchase agreements, or the restructuring of those agreements, including possible termination;

§	Nonperformance by and creditworthiness of the guarantor counterparty of the U.S. Bank New Markets Tax Credit Fund 2008-1 LLC;

Regulatory factors such as changes in rate-setting policies, recovery of investments made under traditional regulation, recovery of storm restoration costs, the frequency and timing of rate increases or decreases, the results of periodic NERC audits and fuel audits, the formation of ICTs, and the compliance with the Electric Reliability Organization reliability standards for bulk power systems by Cleco Power and Evangeline;

§	Financial or regulatory accounting principles or policies imposed by FASB, the SEC, the PCAOB, FERC, the LPSC, or similar entities with regulatory or accounting oversight;

§	Economic conditions, including the ability of customers to continue paying for utility bills, related growth and/or down-sizing of businesses in Cleco’s service area, monetary fluctuations, changes in commodity prices, and inflation rates;

§	The current global and U.S. economic environment;

§	Credit ratings of Cleco Corporation and Cleco Power;

§	Ability to remain in compliance with debt covenants;

§	Changes in market conditions and a variety of other factors associated with physical energy, financial transactions, and energy service activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rates, and warranty risks;

§	The availability and use of alternative sources of energy and technologies;

§	The imposition of energy efficiency requirements or of increased conservation efforts of customers;

§	Reliability of all Cleco Power and Midstream generating facilities, particularly Madison Unit 3;

§	Acts of terrorism or other man-made disasters;

§	Availability or cost of capital resulting from changes in Cleco’s business or financial condition, interest rates, or market perceptions of the electric utility industry and energy-related industries;

§	Uncertain tax positions;

§	Employee work force factors, including work stoppages and changes in key executives;

§	Legal, environmental, and regulatory delays and other obstacles associated with mergers, acquisitions, reorganizations, investments in joint ventures, or other capital projects, including the joint project to upgrade the Acadiana Load Pocket transmission system, and the AMI project;

§	Costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters;

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

§	Changes in federal, state, or local laws, and changes in tax laws or rates, or regulating policies;

§	The impact of current or future environmental laws and regulations, including those related to greenhouse gases and energy efficiency, which could limit, or terminate, the

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

§	operation of certain generating units, increase costs, reduce customer demand for electricity or otherwise materially adversely impact the Registrants’ financial condition or results of operations;

§	Ability of Cleco Power to recover from its customers the costs of compliance with environmental laws and regulations; and

§	Ability of the Dolet Hills lignite reserve to provide sufficient fuel to the Dolet Hills Power Station until at least 2026.

For additional discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, please read “Risk Factors” in ~~this report~~the Registrants’ Combined Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, and the ~~Registrants’~~ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2010. All subsequent written and oral forward-looking statements attributable to the Registrants or persons acting on their behalf are expressly qualified in their entirety by the factors identified above.

The Registrants undertake no obligation to update any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements.

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cleco Corporation

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Corporation’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2010. For additional information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

FOR THE SIX MONTHS ENDED JUNE 30,

(THOUSANDS)
2011

2010

Operating revenue
Electric operations
$ 498,953 $ 513,899
Other operations
24,696 20,140
Affiliate revenue
694 686
Gross operating revenue
524,343 534,725
Electric customer credits
(5,256 ) -
Operating revenue, net
519,087 534,725
Operating expenses
Fuel used for electric generation
175,236 176,140
Power purchased for utility customers
33,926 72,727
Other operations
55,901 52,460
Maintenance
38,194 31,426
Depreciation
55,683 50,808
Taxes other than income taxes
16,783 15,949
(Gain) loss on sale of assets
(1 ) 39
Total operating expenses
375,722 399,549
Operating income 143,365 135,176
Interest income 281 234
Allowance for other funds used during construction 2,854 10,165
Other income 844 745
Other expense (2,618 ) (2,280 )
Interest charges
Interest charges, including amortization of debt expenses, premium, and discount, net of capitalized interest
49,754 44,778
Allowance for borrowed funds used during construction
(1,031 ) (3,718 )
Total interest charges
48,723 41,060
Income before income taxes 96,003 102,980
Federal and state income tax expense 30,279 31,731
Net income $ 65,724 $ 71,249
The accompanying notes are an integral part of the condensed consolidated financial statements.

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010
Net income	$	119,557		$	123,584
Other comprehensive loss, net of tax:
Amortization of post-retirement benefit net income (loss) (net of tax (expense) benefit of $(227) in 2011 and $172 in 2010)		519			(274	)
Cash flow hedges:
Net derivatives loss on interest rate swap arising during the period (net of tax benefit of $276 in 2010)		-			(441	)
Reclassification of interest expense on interest rate swap (net of tax expense of $228 in 2010)		-			364
Reclassification of interest expense on treasury rate lock (net of tax benefit of $103 in 2011 and $48 in 2010)		(164	)		(77	)
Net unrealized loss on treasury rate lock (net of tax benefit of $11,529 in 2011)		(18,433	)		-
Total other comprehensive loss, net of tax		(18,078	)		(428	)
Comprehensive income, net of tax	$	101,479		$	123,156
The accompanying notes are an integral part of the condensed consolidated financial statements.

1920

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

CLECO POWER

Condensed Consolidated ~~Statements of Comprehensive Income~~Balance Sheets (Unaudited)

FOR THE SIX MONTHS ENDED JUNE 30,

(THOUSANDS)
2011

2010

Net income $ 65,724 $ 71,249
Other comprehensive income (loss), net of tax:
Amortization of post-retirement benefit net income (loss) (net of tax (expense) benefit of $(128) in 2011 and $116 in 2010)
373 (185 )
Cash flow hedges:

Net derivatives loss on interest rate swap arising during the period (net of tax benefit of $131 in 2010)
- (210 )
Reclassification of interest expense on interest rate swap (net of tax expense of $153 in 2010)
- 246
Reclassification of interest expense on treasury rate lock (net of tax benefit of $68 in 2011 and $32 in 2010)
(109 ) (51 )
Total other comprehensive income (loss), net of tax 264 (200 )
Comprehensive income, net of tax $ 65,988 $ 71,049
The accompanying notes are an integral part of the condensed consolidated financial statements.

(THOUSANDS)	AT SEPTEMBER 30, 2011			AT DECEMBER 31, 2010
Assets
Utility plant and equipment
Property, plant and equipment	$	3,604,938		$	3,552,779
Accumulated depreciation		(1,142,414	)		(1,085,945	)
Net property, plant and equipment		2,462,524			2,466,834
Construction work in progress		214,071			130,396
Total utility plant, net		2,676,595			2,597,230
Current assets
Cash and cash equivalents		143,015			184,912
Restricted cash		3,554			14,959
Customer accounts receivable (less allowance for doubtful accounts of $1,177 in 2011 and $1,046 in 2010)		52,299			38,820
Accounts receivable - affiliate		2,802			2,738
Other accounts receivable (less allowance for doubtful accounts of $1,924 in 2011 and $2,349 in 2010)		29,323			47,992
Taxes receivable		-			4,123
Unbilled revenue		33,112			44,649
Fuel inventory, at average cost		38,070			82,737
Material and supplies inventory, at average cost		49,634			45,913
Accumulated deferred federal and state income taxes, net		38,248			2,811
Accumulated deferred fuel		9,162			10,348
Cash surrender value of company-owned life insurance policies		20,328			20,051
Prepayments		3,782			4,944
Regulatory assets - other		12,869			13,508
Other current assets		597			412
Total current assets		436,795			518,917
Equity investment in investee		13,073			13,073
Prepayments		4,580			5,274
Restricted cash, less current portion		25,253			25,992
Regulatory assets and liabilities - deferred taxes, net		213,847			203,696
Regulatory assets - other		249,410			266,431
Intangible asset		136,393			145,374
Other deferred charges		18,439			19,218
Total assets	$	3,774,385		$	3,795,205
Liabilities and member’s equity
Member’s equity	$	1,235,402		$	1,233,923
Long-term debt, net		1,370,576			1,384,709
Total capitalization		2,605,978			2,618,632
Current liabilities
Long-term debt due within one year		13,108			12,269
Accounts payable		85,382			112,487
Retainage		3,231			2,726
Accounts payable - affiliate		7,332			7,945
Customer deposits		42,181			38,934
Provision for rate refund		3,917			9,598
Taxes payable		17,558			-
Interest accrued		31,825			13,450
Energy risk management liability, net		5,159			9,027
Interest rate risk management liability		29,962			-
Regulatory liabilities - other		33,272			43,562
Uncertain tax positions		2,602			-
Other current liabilities		12,080			9,862
Total current liabilities		287,609			259,860
Commitments and Contingencies (Note 11)
Deferred credits
Accumulated deferred federal and state income taxes, net		680,287			601,574
Accumulated deferred investment tax credits		7,741			8,669
Post-retirement benefit obligations		72,466			130,757
Regulatory liabilities - other		7,026			44,313
Restricted storm reserve		24,656			25,993
Uncertain tax positions		45,014			54,835
Other deferred credits		43,608			50,572
Total deferred credits		880,798			916,713
Total liabilities and member’s equity	$	3,774,385		$	3,795,205
The accompanying notes are an integral part of the condensed consolidated financial statements.

2021

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

CLECO POWER

Condensed Consolidated ~~Balance Sheets~~Statements of Cash Flows (Unaudited)

(THOUSANDS)
AT JUNE 30, 2011

AT DECEMBER 31, 2010

Assets
Utility plant and equipment

Property, plant and equipment
$ 3,582,201 $ 3,552,779
Accumulated depreciation
(1,122,387 ) (1,085,945 )
Net property, plant and equipment
2,459,814 2,466,834
Construction work in progress
166,318 130,396
Total utility plant, net
2,626,132 2,597,230
Current assets

Cash and cash equivalents
149,841 184,912
Restricted cash
8,073 14,959
Customer accounts receivable (less allowance for doubtful accounts of $1,000 in 2011 and $1,046 in 2010)
46,007 38,820
Accounts receivable - affiliate
2,537 2,738
Other accounts receivable (less allowance for doubtful accounts of $2,752 in 2011 and $2,349 in 2010)
38,491 47,992
Taxes receivable
6,957 4,123
Unbilled revenue
40,757 44,649
Fuel inventory, at average cost
43,944 82,737
Material and supplies inventory, at average cost
50,046 45,913
Accumulated deferred federal and state income taxes, net
40,218 2,811
Accumulated deferred fuel
20,986 10,348
Cash surrender value of company-owned life insurance policies
20,139 20,051
Prepayments
3,899 4,944
Regulatory assets - other
12,973 13,508
Other current assets
199 412
Total current assets
485,067 518,917
Equity investment in investee
13,073 13,073
Prepayments
4,940 5,274
Restricted cash, less current portion
27,030 25,992
Regulatory assets and liabilities - deferred taxes, net
208,247 203,696
Regulatory assets - other
256,513 266,431
Intangible asset
139,648 145,374
Other deferred charges
18,751 19,218
Total assets $ 3,779,401 $ 3,795,205
Liabilities and member’s equity
Member’s equity
$ 1,249,910 $ 1,233,923
Long-term debt, net
1,377,346 1,384,709
Total capitalization
2,627,256 2,618,632
Current liabilities
Long-term debt due within one year
12,683 12,269
Accounts payable
97,507 112,487
Retainage
3,967 2,726
Accounts payable - affiliate
7,923 7,945
Customer deposits
41,303 38,934
Provision for rate refund
14,854 9,598
Interest accrued
24,187 13,450
Risk management liability, net
5,743 9,027
Regulatory liabilities - other
38,828 43,562
Uncertain tax positions
33,479 -
Other current liabilities
12,032 9,862
Total current liabilities
292,506 259,860
Commitments and Contingencies (Note 11)
Deferred credits
Accumulated deferred federal and state income taxes, net
667,033 601,574
Accumulated deferred investment tax credits
8,051 8,669
Post-retirement benefit obligations
72,047 130,757
Regulatory liabilities - other
26,577 44,313
Restricted storm reserve
26,433 25,993
Uncertain tax positions
19,769 54,835
Other deferred credits
39,729 50,572
Total deferred credits
859,639 916,713
Total liabilities and member’s equity $ 3,779,401 $ 3,795,205
The accompanying notes are an integral part of the condensed consolidated financial statements.

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010
Operating activities
Net income	$	119,557		$	123,584
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		95,482			88,607
Unearned compensation expense		1,768			1,303
Allowance for other funds used during construction		(3,757	)		(11,052	)
Net deferred income taxes		35,174			20,628
Deferred fuel costs		(6,422	)		13,994
Cash surrender value of company-owned life insurance		(277	)		(236	)
Changes in assets and liabilities:
Accounts receivable		(20,442	)		(31,579	)
Accounts and notes receivable, affiliate		68			(1,977	)
Unbilled revenue		11,538			(23,359	)
Fuel, materials and supplies inventory		40,946			(11,707	)
Prepayments		1,858			974
Accounts payable		(30,345	)		(12,137	)
Accounts and notes payable, affiliate		(1,386	)		(18,524	)
Customer deposits		9,718			9,490
Post-retirement benefit obligations		(58,259	)		(1,020	)
Regulatory assets and liabilities, net		(40,204	)		(77,331	)
Other deferred accounts		(6,361	)		(4,021	)
Retainage payable		(2,481	)		-
Taxes accrued		21,680			20,858
Interest accrued		11,075			9,297
Energy risk management assets and liabilities, net		3,880			6,340
Other operating		1,878			(2,444	)
Net cash provided by operating activities		184,688			99,688
Investing activities
Additions to property, plant and equipment		(131,014	)		(98,399	)
Allowance for other funds used during construction		3,757			11,052
Equity investment in investee		-			(200	)
Transfer of cash from restricted accounts		12,144			15,111
Other investing		2,257			(83	)
Net cash used in investing activities		(112,856	)		(72,519	)
Financing activities
Retirement of long-term debt		(12,269	)		(11,533	)
Distribution to parent		(100,000	)		(125,000	)
Other financing		(1,460	)		(1,365	)
Net cash used in financing activities		(113,729	)		(137,898	)
Net decrease in cash and cash equivalents		(41,897	)		(110,729	)
Cash and cash equivalents at beginning of period		184,912			138,113
Cash and cash equivalents at end of period	$	143,015		$	27,384
Supplementary cash flow information
Interest paid (net of amount capitalized)	$	52,220		$	48,155
Income taxes paid (refunded)	$	2,233		$	(5,425	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant and equipment	$	20,088		$	4,757
Non-cash additions to property, plant and equipment	$	4,074		$	304,134
Non-cash assumption of deferred tax liability	$	-		$	78,402
The accompanying notes are an integral part of the condensed consolidated financial statements.

2122

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

~~CLECO POWER~~

~~Condensed Consolidated Statements of Cash Flows (Unaudited)~~

FOR THE SIX MONTHS ENDED JUNE 30,

(THOUSANDS)
2011

2010

Operating activities
Net income
$ 65,724 $ 71,249
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
62,768 57,626
Unearned compensation expense
1,108 616
Allowance for other funds used during construction
(2,854 ) (10,165 )
Net deferred income taxes
20,577 7,589
Deferred fuel costs
(16,077 ) 8,897
Cash surrender value of company-owned life insurance
(88 ) (126 )
Changes in assets and liabilities:

Accounts receivable
(20,779 ) (20,812 )
Accounts and notes receivable, affiliate
333 252
Unbilled revenue
3,892 (34,944 )
Fuel, materials and supplies inventory
34,660 (713 )
Prepayments
1,379 713
Accounts payable
(6,703 ) (21,494 )
Accounts and notes payable, affiliate
(569 ) (18,728 )
Customer deposits
6,426 6,384
Post-retirement benefit obligations
(58,678 ) (2,331 )
Regulatory assets and liabilities, net
(18,531 ) (38,433 )
Other deferred accounts
(2,230 ) 1,916
Retainage payable
(430 ) -
Taxes accrued
(2,834 ) 23,602
Interest accrued
(372 ) 1,155
Risk management assets and liabilities, net
1,990 4,870
Other operating
2,076 (2,191 )
Net cash provided by operating activities
70,788 34,932
Investing activities
Additions to property, plant and equipment
(58,453 ) (63,781 )
Allowance for other funds used during construction
2,854 10,165
Transfer of cash from restricted accounts
5,849 7,522
Other investing
1,160 (293 )
Net cash used in investing activities
(48,590 ) (46,387 )
Financing activities
Retirement of long-term debt
(6,283 ) (5,947 )
Distribution to parent
(50,000 ) (75,000 )
Other financing
(986 ) (937 )
Net cash used in financing activities
(57,269 ) (81,884 )
Net decrease in cash and cash equivalents (35,071 ) (93,339 )
Cash and cash equivalents at beginning of period 184,912 138,113
Cash and cash equivalents at end of period $ 149,841 $ 44,774
Supplementary cash flow information
Interest paid (net of amount capitalized)
$ 42,473 $ 37,222
Income taxes paid (refunded)
$ 2,233 $ (5,425 )
Supplementary non-cash investing and financing activities
Accrued additions to property, plant and equipment
$ 20,281 $ 7,137
Non-cash additions to property, plant and equipment
$ 2,257 $ 304,134
Non-cash assumption of deferred tax liability
$ - $ 78,402
The accompanying notes are an integral part of the condensed consolidated financial statements.

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

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

Note 1	Summary of Significant Accounting Policies	Cleco Corporation and Cleco Power
Note 2	Recent Authoritative Guidance	Cleco Corporation and Cleco Power
Note 3	Regulatory Assets and Liabilities	Cleco Corporation and Cleco Power
Note 4	Fair Value Accounting	Cleco Corporation and Cleco Power
Note 5	Debt	Cleco Corporation and Cleco Power
Note 6	Pension Plan and Employee Benefits	Cleco Corporation and Cleco Power
Note 7	Income Taxes	Cleco Corporation and Cleco Power
Note 8	Disclosures about Segments	Cleco Corporation
Note 9	Electric Customer Credits	Cleco Corporation and Cleco Power
Note 10	Variable Interest Entities	Cleco Corporation and Cleco Power
Note 11	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco Corporation and Cleco Power
Note 12	LPSC Fuel Audit	Cleco Corporation and Cleco Power
Note 13	Affiliate Transactions	Cleco Corporation and Cleco Power
Note 14	Evangeline Transactions	Cleco Corporation
Note 15	Acadia Transactions	Cleco Corporation and Cleco Power
Note 16	Subsequent Event	Cleco Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco and its majority owned subsidiaries after elimination of intercompany accounts and transactions.

Prior to April 30, 2011, Cleco reported its investment in Cajun on the equity method of accounting. In conjunction with the disposition of Acadia Unit 2 to Entergy Louisiana, APH received 100% ownership in Acadia in exchange for its 50% ownership interest in Cajun, and Acadia became a consolidated subsidiary of APH. Following the disposition, Acadia’s assets, liabilities, revenues, expenses, and cash flows are presented on the corresponding line items of Cleco’s ~~condensed consolidated financial statements,~~Condensed Consolidated Financial Statements, prospectively. For additional information on the Acadia Unit 2 transaction, see Note 15 — “Acadia Transactions — Acadia Unit 2.”

Cleco and Cleco Power report the investment in Oxbow on the equity method of accounting. Under the equity method, the assets and liabilities of this entity are reported as equity investment in investees on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets. The revenue and expenses of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Condensed Consolidated Statements of Income. For additional information on the operations of these entities, see Note 10 — “Variable Interest Entities.”

Basis of Presentation

The condensed consolidated financial statements of Cleco Corporation and Cleco Power have been prepared pursuant to the rules and regulations of the SEC. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, Cleco believes that the disclosures are adequate to make the information presented not misleading.

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The unaudited financial information included in the condensed consolidated financial statements of Cleco Corporation and Cleco Power reflects all adjustments of a normal recurring nature which are, in the opinion of the management of Cleco Corporation and Cleco Power, necessary for a fair statement of the financial position and the results of operations for the interim periods. Information for interim periods is affected by seasonal variations in sales, rate changes, timing of fuel expense recovery, and other factors, and is not indicative necessarily of the results that may be expected for the full fiscal year. For additional information on recent authoritative guidance and its effect on financial results, see Note 2 — “Recent Authoritative Guidance.”

Property, Plant and Equipment

Property, plant and equipment consist primarily of regulated utility generation and energy transmission assets. Regulated assets, utilized primarily for retail 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 share of the cost to construct or purchase the assets. ~~Property, plant and equipment consist of:~~

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

Property, plant and equipment consist of:

(THOUSANDS)	AT JUNE 30, 2011			AT DECEMBER 31, 2010			AT SEPTEMBER 30, 2011			AT DECEMBER 31, 2010
Regulated utility plants	$	3,582,201		$	3,552,054		$	3,604,938		$	3,552,054
Other		257,010			258,842			254,683			258,842
Total property, plant and equipment		3,839,211			3,810,896			3,859,621			3,810,896
Accumulated depreciation		(1,198,373	)		(1,162,456	)		(1,218,818	)		(1,162,456	)
Net property, plant and equipment	$	2,640,838		$	2,648,440		$	2,640,803		$	2,648,440

Restricted Cash

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes. ~~At June 30, 2011, and December 31, 2010, $35.2 million and $41.0 million of cash, respectively, were restricted. At June 30, 2011,~~Cleco’s restricted cash consisted ~~of $0.1 million under~~of:

(THOUSANDS)	AT SEPTEMBER 30, 2011		AT DECEMBER 31, 2010
Diversified Lands’ mitigation escrow	$	97	$	97
Cleco Power’s future storm restoration costs		24,652		25,992
Cleco Power’s renewable energy grant		600		-
Cleco Katrina/Rita’s storm recovery bonds		3,554		8,822
Cleco Power’s GO Zone bonds		-		6,137
Total restricted cash	$	28,903	$	41,048

Cleco Katrina/Rita has the ~~Diversified Lands mitigation escrow agreement, $26.4 million reserved at Cleco Power for future~~right to bill and collect storm restoration costs ~~$8.1 million at~~from Cleco ~~Katrina/Rita~~Power’s customers. As cash is collected, it is restricted for payment of operating expenses, interest, and principal on storm recovery ~~bonds~~bonds. During 2011, Cleco Katrina/Rita has collected $14.5 million net of operating expenses. In March and ~~$0.6~~September 2011, Cleco Katrina/Rita used $6.3 million ~~reserved at~~and $6.0 million, respectively for scheduled storm recovery bond principal payments and $3.8 million and $3.7 million, respectively for related interest. In 2011, Cleco Power ~~for~~received a renewable energy grant ~~received~~ from the Louisiana Department of Natural Resources. The $5.8 million net decrease in restricted cash from December 31, 2010, to June 30, 2011, is primarily due to the use of Cleco Katrina/Rita funds for a scheduled storm recovery bond payment of $6.3 million and related interest of $3.8 million made in March 2011 and the use of $6.1 million of GO Zone bond funds during the six months ended June 30, 2011. These decreases were partially offset by $9.4 million of collections for Cleco Katrina/Rita funds, $0.6 million of a renewable energy grant received, and $0.4 million in collections of storm recovery costs.

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 are required to disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes under GAAP. Other financial assets and liabilities, such as long-term debt, are reported at their carrying values at their date of issuance on the condensed consolidated balance sheets with their fair values disclosed without regard to the three levels. For additional information about fair value levels, see Note 4 — “Fair Value Accounting.”

Risk Management

Market risk inherent in Cleco Power’s market risk-sensitive instruments and positions includes potential changes arising from changes in interest rates and the commodity market prices of power and natural gas on different energy exchanges.

Commodity Market Price Risk

Cleco’s Energy Market Risk Management Policy authorizes the use of various derivative instruments, including exchange traded futures and option contracts, forward purchase and sales contracts, and swap transactions to reduce exposure to fluctuations in the price of power and natural gas. Cleco applies the authoritative guidance as it relates to derivatives and hedging to determine whether the market risk-sensitive instruments and positions are required to be marked-to-market. Generally, Cleco Power’s market risk-sensitive instruments and positions qualify for the normal-purchase, normal-sale exception to mark-to-market accounting because Cleco Power takes physical delivery and the instruments and positions are used to satisfy customer requirements. Cleco Power entered into certain financial transactions it considered economic hedges to mitigate the risk associated with a contract for fixed-price power provided to a wholesale customer through December 2010. These transactions were marked-to-market with the resulting gain or loss recorded on the income statement as a component of operating revenue. The contract expired on December 31, 2010 along with the economic hedges; therefore, no gain or loss related to the economic hedges was recorded during the three and ~~six~~nine months ended ~~June~~September 30, 2011. For the three and ~~six~~nine months ended ~~June~~September 30, 2010, Cleco Power had realized losses of $0.3 million and ~~$0.5~~$0.8 million and mark-to-market gains of ~~$0.4~~$0.2 million ~~and less than $0.1 million, respectively,~~for both periods recorded in other operations revenue.

Cleco Power has entered into other positions to mitigate the volatility in customer fuel costs. These positions are marked-to-market with the resulting gain or loss recorded on the balance sheet as a component of energy risk management assets or liabilities. Such gain or loss is deferred as a component of deferred fuel assets or liabilities. When these positions close, actual gains or losses will be included in the fuel adjustment clause and reflected on customers’ bills as a component of the fuel cost adjustment. Based on market prices at ~~June~~September 30, 2011, and December 31, 2010, the net mark-to-market impact relating to these positions were losses of ~~$7.7~~$5.7 million and $15.1 million, respectively. Deferred losses relating to closed natural gas positions totaled ~~$2.1~~$1.3 million and $1.6 million at ~~June~~September 30, 2011, and December 31, 2010, respectively.

Cleco Power maintains margin accounts with commodity brokers used to partially fund the acquisition of natural gas futures, options, and swap contracts. These contracts/positions are used to mitigate the risks associated with the volatility in customer fuel costs noted above. At ~~June~~September 30, 2011, and December 31, 2010, Cleco Power had deposited net collateral of ~~$1.8~~$0.5 million and $4.3 million, respectively, to cover requirements relating to open natural gas futures, options, and swap positions. The current and long-term portions of collateral are reported as a component of energy risk management assets or liabilities and other deferred credits, respectively.

Cleco and Cleco Power maintain a master netting agreement policy and monitor credit risk exposure through review of counterparty credit quality, counterparty credit exposure, and

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

counterparty concentration levels. Cleco manages these risks by establishing appropriate credit and concentration limits on transactions with counterparties and by requiring contractual guarantees, cash deposits, or letters of credit from counterparties or their affiliates, as deemed necessary. Cleco Power has agreements in place with various counterparties that authorize the netting of financial buys and sells and contract

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

payments to mitigate credit risk for transactions entered into for risk management purposes.

Interest Rate Risk

In August ~~2009,~~2011, Cleco Power entered into a ~~$50.0 million bank loan with variable interest, paid monthly, calculated at 3.00% plus the one-month LIBOR. The loan was set to mature on August 19, 2012. In~~treasury rate lock contract in order to mitigate the ~~risk of future floating interest rates, Cleco Power entered into an~~ interest rate ~~swap in the third quarter of 2009. Based~~exposure on ~~the~~coupon payments related to a forecasted debt issuance. The notional amount of the ~~bank loan,~~treasury rate lock is $150.0 million, with a pricing date of November 14, 2011 or the ~~swap required a monthly net settlement between Cleco Power’s fixed payment~~date of ~~1.84% and the swap counterparty’s floating payment~~issuance of the ~~one-month LIBOR.~~debt, whichever is earlier. The ~~swap was set to mature on May 31, 2012. Under the authoritative guidance for derivatives and hedging, the swap met~~treasury rate lock meets the criteria of a cash flow ~~hedge. Changes~~hedge under the authoritative guidance as it relates to derivatives and hedging. The 3.77% rate lock was based on the 30-year treasury note yield as of August 12, 2011. At September 30, 2011, the 30-year treasury note yield was 2.89%, which resulted in ~~the swap’s fair value related to the effective portion of cash flow hedges were recognized~~Cleco Power recognizing a $30.0 million unrealized mark-to-market loss in other comprehensive income whereas changes in the fair value related to the ineffective portion were recognized in earnings. As settlements were made, the swap’s other comprehensive income fair values were reclassified into earnings as a component of interest expense. In November 2010, Cleco Power terminated the interest rate swap and repaid in full the associated $50.0 million bank loan. At the time of the termination, the remaining $1.1 million of losses in accumulated other comprehensive income were reclassified to other expense. Forfor the three and ~~six~~nine months ended ~~June~~September 30, ~~2010, there were $0.2 million~~2011. The offsetting liability was recorded on Cleco Corporation and ~~$0.4 million, respectively, of reclassification adjustments from accumulated other comprehensive loss to~~Cleco Power’s Condensed Consolidated Balance Sheets as an interest ~~expense as a result of monthly settlements.~~rate risk management liability. There was no impact to earnings due to ineffectiveness for the three and ~~six~~nine months ended ~~June~~September 30, ~~2010.~~ 2011. Management determined that the forecasted debt issuance is probable of occurring before or on November 14, 2011, and in an amount at least equal to the treasury rate lock contract’s notional amount. When the forecasted debt issuance occurs and the treasury rate lock contract is settled, the effective portion of the settlement will be recognized in accumulated other comprehensive income and any ineffective portion will be reclassified into the income statement.

For additional information on accounting for derivatives, see Note 4 — “Fair Value Accounting.”

Reclassifications

Certain reclassifications have been made to the 2010 financial statements to conform them to the presentation used in the 2011 financial statements. These reclassifications had no effect on Cleco Corporation’s net income applicable to common stock or total common shareholder’s equity or Cleco Power’s net income or total member’s equity.

The Registrants determined that an error existed in the statement of cash flow methodology for determining non-cash transactions related to property, plant and equipment, specifically the dollar amount of property, plant and equipment acquisitions included in accounts ~~payable for each period.~~payable. This caused errors between the operating activities section and investing activities section for prior periods, including 2008, 2009, and 2010.

Cleco and Cleco Power’s ~~Consolidated Statements of Cash Flows and~~ Condensed Consolidated Statements of Cash Flows for the period ended September 30, 2010, have been adjusted ~~for each of the reporting periods shown below~~ to correct the presentation of cash flows related to accruals for property, plant and equipment. These corrections had no impact on the Registrants’ financial condition or results of operations. Management believes that these corrections did not have a material effect on the Registrants’ Condensed Consolidated Statements of Cash ~~Flows or~~Flows. The corrections to the September 30, 2010 Condensed Consolidated Statements of Cash Flows ~~for each of the reporting periods. The corrections to the Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Cash Flows for each of the reporting periods~~ are presented in the following ~~tables.~~table.

	CLECO						CLECO POWER
	FOR THE NINE MONTHS ENDED						FOR THE NINE MONTHS ENDED
	SEPTEMBER 30, 2010						SEPTEMBER 30, 2010
(THOUSANDS)	AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED
Accounts receivable	$	(49,329	)	$	(30,329	)	$	(50,579	)	$	(31,579	)
Accounts payable	$	(17,248	)	$	(13,277	)	$	(16,621	)	$	(12,137	)
Retainage payable	$	745		$	-		$	745		$	-
Net cash provided by operating activities	$	170,141		$	192,368		$	76,949		$	99,688
Additions to property, plant and equipment	$	(230,485	)	$	(252,711	)	$	(75,660	)	$	(98,399	)
Net cash used in investing activities	$	(212,592	)	$	(234,819	)	$	(49,780	)	$	(72,519	)
Net decrease in cash and cash equivalents	$	(77,357	)	$	(77,357	)	$	(110,729	)	$	(110,729	)
Cash and cash equivalents at the beginning of the period	$	145,193		$	145,193		$	138,113		$	138,113
Cash and cash equivalents at the end of the period	$	67,836		$	67,836		$	27,384		$	27,384
Accrued additions to property, plant and equipment	$	17,506		$	5,314		$	17,506		$	4,757

~~Cleco~~

FOR THE YEAR ENDED

2008

2009

2010

(THOUSANDS)
AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

Accounts receivable $ (5,557 ) $ (5,557 ) $ 8,310 $ 8,310 $ (35,156 ) $ (16,156 )
Accounts payable $ 2,806 $ (6,334 ) $ 11,231 $ 18,593 $ 3,459 $ 8,167
Retainage payable $ 12,709 $ (60 ) $ (11,921 ) $ (13,011 ) $ 1,913 $ (27 )
Net cash provided by operating activities $ 89,526 $ 67,618 $ 135,179 $ 141,452 $ 193,405 $ 215,173
Additions to property, plant and equipment $ (335,757 ) $ (313,848 ) $ (250,286 ) $ (256,558 ) $ (283,389 ) $ (305,157 )
Net cash used in investing activities $ (368,725 ) $ (346,817 ) $ (177,176 ) $ (183,449 ) $ (285,137 ) $ (306,905 )
Net decrease in cash and cash equivalents $ (31,530 ) $ (31,530 ) $ 47,710 $ 47,710 $ 45,935 $ 45,935
Cash and cash equivalents at the beginning of the period $ 129,013 $ 129,013 $ 97,483 $ 97,483 $ 145,193 $ 145,193
Cash and cash equivalents at the end of the period $ 97,483 $ 97,483 $ 145,193 $ 145,193 $ 191,128 $ 191,128
Accrued additions to property, plant and equipment $ 16,935 $ 36,074 $ 3,069 $ 11,396 $ 17,765 $ 6,032

FOR THE THREE MONTHS ENDED

FOR THE SIX MONTHS ENDED

FOR THE NINE MONTHS ENDED

FOR THE THREE MONTHS ENDED

MARCH 31, 2010

JUNE 30, 2010

SEPTEMBER 30, 2010

MARCH 31, 2011

(THOUSANDS)
AS REPORTED*

AS ADJUSTED

AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

Accounts receivable $ (17,889 ) $ (17,889 ) $ (19,498 ) $ (19,498 ) $ (49,329 ) $ (30,329 ) $ 5,042 $ (13,958 )
Accounts payable $ (50,499 ) $ (53,362 ) $ (31,420 ) $ (25,684 ) $ (17,248 ) $ (13,277 ) $ (31,823 ) $ (35,617 )
Retainage payable $ (862 ) $ - $ 195 $ - $ 745 $ - $ 1,004 $ (13 )
Net cash provided by operating activities $ 60,792 $ 58,791 $ 102,437 $ 107,978 $ 170,141 $ 192,368 $ 26,111 $ 2,302
Additions to property, plant and equipment $ (183,561 ) $ (181,560 ) $ (212,119 ) $ (217,660 ) $ (230,485 ) $ (252,711 ) $ (45,692 ) $ (21,883 )
Net cash used in investing activities $ (149,609 ) $ (147,608 ) $ (191,363 ) $ (196,904 ) $ (212,592 ) $ (234,819 ) $ (43,346 ) $ (19,537 )
Net decrease in cash and cash equivalents $ (52,971 ) $ (52,971 ) $ (93,038 ) $ (93,038 ) $ (77,357 ) $ (77,357 ) $ (53,937 ) $ (53,937 )
Cash and cash equivalents at the beginning of the period $ 145,193 $ 145,193 $ 145,193 $ 145,193 $ 145,193 $ 145,193 $ 191,128 $ 191,128
Cash and cash equivalents at the end of the period $ 92,222 $ 92,222 $ 52,155 $ 52,155 $ 67,836 $ 67,836 $ 137,191 $ 137,191
Accrued additions to property, plant and equipment $ 4,039 $ 10,268 $ 2,738 $ 7,232 $ 17,506 $ 5,314 $ 17,155 $ 23,245
*These amounts were previously revised in the Registrants’ Combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011.

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

~~Cleco Power~~

FOR THE YEAR ENDED

2008

2009

2010

(THOUSANDS)
AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

Accounts receivable $ (5,972 ) $ (5,972 ) $ 9,646 $ 9,646 $ (35,261 ) $ (16,261 )
Accounts payable $ 942 $ (8,197 ) $ 10,831 $ 18,254 $ 3,936 $ 8,934
Retainage payable $ 12,709 $ (60 ) $ (11,921 ) $ (13,011 ) $ 1,913 $ (27 )
Net cash provided by operating activities $ 62,078 $ 40,170 $ 141,726 $ 148,059 $ 148,701 $ 170,759
Additions to property, plant and equipment $ (334,652 ) $ (312,744 ) $ (249,252 ) $ (255,585 ) $ (127,153 ) $ (149,211 )
Net cash used in investing activities $ (353,248 ) $ (331,340 ) $ (141,998 ) $ (148,331 ) $ (112,614 ) $ (134,672 )
Net decrease in cash and cash equivalents $ 79,598 $ 79,598 $ 46,571 $ 46,571 $ 46,799 $ 46,799
Cash and cash equivalents at the beginning of the period $ 11,944 $ 11,944 $ 91,542 $ 91,542 $ 138,113 $ 138,113
Cash and cash equivalents at the end of the period $ 91,542 $ 91,542 $ 138,113 $ 138,113 $ 184,912 $ 184,912
Accrued additions to property, plant and equipment $ 16,935 $ 36,074 $ 3,069 $ 11,335 $ 17,765 $ 5,697

FOR THE THREE MONTHS ENDED

FOR THE SIX MONTHS ENDED

FOR THE NINE MONTHS ENDED

FOR THE THREE MONTHS ENDED

MARCH 31, 2010

JUNE 30, 2010

SEPTEMBER 30, 2010

MARCH 31, 2011

(THOUSANDS)
AS REPORTED*

AS ADJUSTED

AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

AS REPORTED

AS ADJUSTED

Accounts receivable $ (20,597 ) $ (20,597 ) $ (20,812 ) $ (20,812 ) $ (50,579 ) $ (31,579 ) $ 8,280 $ (10,720 )
Accounts payable $ (43,863 ) $ (46,245 ) $ (27,280 ) $ (21,494 ) $ (16,621 ) $ (12,137 ) $ (31,202 ) $ (34,966 )
Retainage payable $ (862 ) $ - $ 195 $ - $ 745 $ - $ 1,004 $ (13 )
Net cash provided by operating activities $ (12,130 ) $ (13,650 ) $ 29,341 $ 34,932 $ 76,949 $ 99,688 $ 29,081 $ 5,299
Additions to property, plant and equipment $ (30,257 ) $ (28,737 ) $ (58,190 ) $ (63,781 ) $ (75,660 ) $ (98,399 ) $ (44,501 ) $ (20,720 )
Net cash used in investing activities $ (12,126 ) $ (10,606 ) $ (40,796 ) $ (46,387 ) $ (49,780 ) $ (72,519 ) $ (32,737 ) $ (8,955 )
Net decrease in cash and cash equivalents $ (55,625 ) $ (55,625 ) $ (93,339 ) $ (93,339 ) $ (110,729 ) $ (110,729 ) $ (60,472 ) $ (60,472 )
Cash and cash equivalents at the beginning of the period $ 138,113 $ 138,113 $ 138,113 $ 138,113 $ 138,113 $ 138,113 $ 184,912 $ 184,912
Cash and cash equivalents at the end of the period $ 82,488 $ 82,488 $ 44,774 $ 44,774 $ 27,384 $ 27,384 $ 124,440 $ 124,440
Accrued additions to property, plant and equipment $ 4,039 $ 9,742 $ 2,738 $ 7,137 $ 17,506 $ 4,757 $ 17,233 $ 23,246
*These amounts were previously revised in the Registrants’ Combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011.

Earnings per Average Common Share

The following table shows the calculation of basic and diluted earnings per share.

							FOR THE THREE MONTHS ENDED JUNE 30,												FOR THE THREE MONTHS ENDED SEPTEMBER 30,
					2011						2010						2011						2010
(THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)	INCOME		SHARES		PER SHARE AMOUNT		INCOME		SHARES		PER SHARE AMOUNT		INCOME		SHARES		PER SHARE AMOUNT		INCOME		SHARES		PER SHARE AMOUNT
Income from continuing operations	$	70,348					$	35,186					$	65,842					$	49,612
Deduct: non-participating stock dividends (4.5% preferred stock)		15						12						-						12
Deduct: non-participating stock redemption costs (4.5% preferred stock)		112						-
Basic net income applicable to common stock	$	70,221		60,655,538	$	1.16	$	35,174		60,431,930	$	0.58	$	65,842		60,467,595	$	1.09	$	49,600		60,471,183	$	0.82
Effect of dilutive securities
Add: stock option grants				21,634						28,742						20,441						26,680
Add: restricted stock (LTICP)				346,267						244,597						385,275						327,435
Diluted net income applicable to common stock	$	70,221		61,023,439	$	1.15	$	35,174		60,705,269	$	0.58	$	65,842		60,873,311	$	1.08	$	49,600		60,825,298	$	0.82

							FOR THE SIX MONTHS ENDED JUNE 30,												FOR THE NINE MONTHS ENDED SEPTEMBER 30,
					2011						2010						2011						2010
(THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)	INCOME		SHARES		PER SHARE AMOUNT		INCOME		SHARES		PER SHARE AMOUNT		INCOME		SHARES		PER SHARE AMOUNT		INCOME		SHARES		PER SHARE AMOUNT
Income from continuing operations	$	99,363					$	185,155					$	165,205					$	234,768
Deduct: non-participating stock dividends (4.5% preferred stock)		26						23						26						35
Deduct: non-participating stock redemption costs (4.5% preferred stock)		112						-						112						-
Basic net income applicable to common stock	$	99,225		60,613,371	$	1.64	$	185,132		60,374,233	$	3.07	$	165,067		60,549,860	$	2.73	$	234,733		60,405,388	$	3.89
Effect of dilutive securities
Add: stock option grants				21,067						29,713						20,965						29,771
Add: restricted stock (LTICP)				163,107						115,120						259,426						196,979
Diluted net income applicable to common stock	$	99,225		60,797,545	$	1.63	$	185,132		60,519,066	$	3.06	$	165,067		60,830,251	$	2.71	$	234,733		60,632,138	$	3.87

Note 8 — Disclosures about Segments

Cleco’s reportable segments are based on its method of internal reporting, which disaggregates business units by first-tier subsidiary. Cleco’s reportable segments are Cleco Power and Midstream. The reconciling items in the following tables consist of the holding company, a shared services subsidiary, two transmission interconnection facilities, and an investment subsidiary.

Each reportable segment engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s Chief Executive Officer (the chief operating decision-maker) with discrete financial information and, at least quarterly, present discrete financial information to Cleco Corporation’s Board of Directors. Each reportable segment prepared budgets for 2011 that were presented to and approved by Cleco Corporation’s Board of Directors.

The financial results of Cleco’s segments are presented on an accrual basis. Management evaluates the performance of its segments and allocates resources to them based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services provided by Support Group.

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

SEGMENT INFORMATION FOR THE THREE MONTHS ENDED ~~JUNE~~SEPTEMBER 30,

	CLECO					RECONCILING									CLECO				RECONCILING
2011 (THOUSANDS)	POWER			MIDSTREAM		ITEMS			ELIMINATIONS			CONSOLIDATED			POWER		MIDSTREAM		ITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	260,485		$	-	$	-		$	-		$	260,485		$	324,532	$	-	$	-		$	-		$	324,532
Tolling operations		-			4,222		-			-			4,222			-		9,133		-			-			9,133
Other operations		12,453			7		526			(3	)		12,983			15,565		1		500			(2	)		16,064
Electric customer credits		(4,822	)		-		-			-			(4,822	)		1,852		-		-			-			1,852
Affiliate revenue		348			12		13,075			(13,380	)		55			347		-		13,448			(13,795	)		-
Operating revenue	$	268,464		$	4,241	$	13,601		$	(13,383	)	$	272,923		$	342,296	$	9,134	$	13,948		$	(13,797	)	$	351,581
Depreciation	$	28,282		$	1,457	$	246		$	-		$	29,985		$	28,859	$	1,457	$	241		$	-		$	30,557
Interest charges	$	24,322		$	628	$	631		$	38		$	25,619		$	25,306	$	752	$	(308	)	$	29		$	25,779
Interest income	$	168		$	-	$	(35	)	$	37		$	170		$	276	$	5	$	199		$	29		$	509
Equity income from investees, before tax	$	-		$	61,440	$	-		$	-		$	61,440
Equity loss from investees, before tax															$	-	$	-	$	(1	)	$	-		$	(1	)
Federal and state income tax expense (benefit)	$	15,879		$	21,536	$	(895	)	$	-		$	36,520		$	31,656	$	444	$	(7,363	)	$	-		$	24,737
Segment profit ~~(1)~~	$	35,694		$	34,425	$	229		$	-		$	70,348		$	53,833	$	5,946	$	6,063		$	-		$	65,842
Additions to long-lived assets	$	35,185		$	122	$	611		$	-		$	35,918		$	76,213	$	4,074	$	81		$	-		$	80,368
Equity investment in investees	$	13,073		$	-	$	10		$	-		$	13,083		$	13,073	$	-	$	9		$	(1	)	$	13,081
Total segment assets	$	3,779,401		$	233,099	$	225,981		$	(179,762	)	$	4,058,719		$	3,774,385	$	234,537	$	200,854		$	(138,235	)	$	4,071,541
(1) Reconciliation of segment profit to consolidated profit:	Segment profit								$	70,348
	Unallocated items:
	Preferred dividends requirements, net of tax									15
	Preferred stock redemption costs, net of tax									112
	Net income applicable to common stock								$	70,221

	CLECO					RECONCILING									CLECO					RECONCILING
2010 (THOUSANDS)	POWER		MIDSTREAM			ITEMS			ELIMINATIONS			CONSOLIDATED			POWER			MIDSTREAM		ITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	261,101	$	-		$	-		$	-		$	261,101		$	325,629		$	-	$	-		$	-		$	325,629
Tolling operations		-		4,399			-			-			4,399			-			11,153		-			-			11,153
Other operations		9,755		1			492			(3	)		10,245			12,819			1		488			(3	)		13,305
Electric customer credits																(6,314	)		-		-			-			(6,314	)
Affiliate revenue		344		13			12,011			(12,210	)		158			343			5		11,290			(11,519	)	$	119
Operating revenue	$	271,200	$	4,413		$	12,503		$	(12,213	)	$	275,903		$	332,477		$	11,159	$	11,778		$	(11,522	)	$	343,892
Depreciation	$	28,162	$	1,444		$	192		$	-		$	29,798		$	27,133		$	1,446	$	268		$	-		$	28,847
Interest charges	$	22,318	$	1,431		$	780		$	(11	)	$	24,518		$	16,044		$	1,109	$	7,949		$	(34	)	$	25,068
Interest income	$	76	$	-		$	14		$	(10	)	$	80		$	117		$	-	$	44		$	(33	)	$	128
Equity loss from investees, before tax	$	-	$	(1,129	)	$	-		$	-		$	(1,129	)
Equity income from investees, before tax															$	-		$	2,494	$	-		$	-		$	2,494
Federal and state income tax expense (benefit)	$	19,236	$	(1,241	)	$	(606	)	$	-		$	17,389		$	26,568		$	2,758	$	830		$	(1	)	$	30,155
Segment profit (loss) (1)	$	39,089	$	(1,991	)	$	(1,913	)	$	1		$	35,186		$	52,335		$	5,156	$	(7,879	)	$	-		$	49,612
Additions to long-lived assets	$	32,438	$	574		$	50		$	-		$	33,062		$	35,308		$	454	$	441		$	-		$	36,203
Equity investment in investees (2)	$	13,073	$	73,648		$	11		$	-		$	86,732		$	13,073		$	73,648	$	11		$	-		$	86,732
Total segment assets (2)	$	3,795,205	$	316,165		$	401,663		$	(351,623	)	$	4,161,410		$	3,795,205		$	316,165	$	401,663		$	(351,623	)	$	4,161,410
(1) Reconciliation of segment profit to consolidated profit:	Segment profit								$	35,186					Segment profit								$	49,612
(2) Balances as of December 31, 2010	Unallocated items:														Unallocated items:
	Preferred dividends requirements, net of tax									12					Preferred dividends requirements, net of tax									12
	Net income applicable to common stock								$	35,174					Net income applicable to common stock								$	49,600

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

SEGMENT INFORMATION FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30,

CLECO

RECONCILING

2011 (THOUSANDS)

POWER

MIDSTREAM

ITEMS

ELIMINATIONS
CONSOLIDATED
Revenue
Electric operations
$ 498,953 $ - $ - $ - $ 498,953
Tolling operations
- 7,003 - - 7,003
Other operations
24,696 7 1,010 (2 ) 25,711
Electric customer credits
(5,256 ) - - - (5,256 )
Affiliate revenue 694 45 24,096 (24,633 ) 202
Operating revenue $ 519,087 $ 7,055 $ 25,106 $ (24,635 ) $ 526,613
Depreciation $ 55,683 $ 2,913 $ 487 $ 1 $ 59,084
Interest charges $ 48,723 $ 1,211 $ 2,198 $ 100 $ 52,232
Interest income $ 281 $ 1 $ (96 ) $ 99 $ 285
Equity income (loss) from investees, before tax $ - $ 62,053 $ (1 ) $ - $ 62,052
Federal and state income tax expense (benefit) $ 30,279 $ 20,853 $ (2,417 ) $ (1 ) $ 48,714
Segment profit (1)
$ 65,724 $ 33,328 $ 311 $ - $ 99,363
Additions to long-lived assets $ 75,914 $ 1,128 $ 671 $ - $ 77,713
Equity investment in investees $ 13,073 $ - $ 10 $ - $ 13,083
Total segment assets $ 3,779,401 $ 233,099 $ 225,981 $ (179,762 ) $ 4,058,719
(1) Reconciliation of segment profit to consolidated profit:
Segment profit $ 99,363
Unallocated items:

Preferred dividends requirements, net of tax
26

Preferred stock redemption costs, net of tax
112
Net income applicable to common stock $ 99,225

	CLECO					RECONCILING
2011 (THOUSANDS)	POWER			MIDSTREAM		ITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	823,484		$	-	$	-		$	-		$	823,484
Tolling operations		-			16,137		-			-			16,137
Other operations		40,261			8		1,511			(5	)		41,775
Electric customer credits		(3,405	)		-		-			-			(3,405	)
Affiliate revenue		1,041			45		37,544			(38,428	)		202
Operating revenue	$	861,381		$	16,190	$	39,055		$	(38,433	)	$	878,193
Depreciation	$	84,543		$	4,370	$	728		$	-		$	89,641
Interest charges	$	74,029		$	1,963	$	1,891		$	128		$	78,011
Interest income	$	557		$	6	$	103		$	128		$	794
Equity income (loss) from investees, before tax	$	-		$	62,053	$	(2	)	$	-		$	62,051
Federal and state income tax expense (benefit)	$	61,935		$	21,296	$	(9,781	)	$	1		$	73,451
Segment profit (1)	$	119,557		$	39,274	$	6,374		$	-		$	165,205
Additions to long-lived assets	$	152,082		$	5,202	$	749		$	-		$	158,033
Equity investment in investees	$	13,073		$	-	$	9		$	(1	)	$	13,081
Total segment assets	$	3,774,385		$	234,537	$	200,854		$	(138,235	)	$	4,071,541
(1) Reconciliation of segment profit to consolidated profit:	Segment profit								$	165,205
	Unallocated items:
	Preferred dividends requirements, net of tax									26
	Preferred stock redemption costs, net of tax									112
	Net income applicable to common stock								$	165,067

CLECO

RECONCILING

2010 (THOUSANDS)

POWER

MIDSTREAM

ITEMS

ELIMINATIONS
CONSOLIDATED
Revenue
Electric operations
$ 513,899 $ - $ - $ - $ 513,899
Tolling operations
- 11,863 - - 11,863
Other operations
20,140 1 983 (5 ) 21,119
Affiliate revenue 686 918 23,494 (23,791 ) 1,307
Operating revenue $ 534,725 $ 12,782 $ 24,477 $ (23,796 ) $ 548,188
Depreciation $ 50,808 $ 2,887 $ 356 $ - $ 54,051
Interest charges $ 41,060 $ 4,863 $ 1,626 $ (597 ) $ 46,952
Interest income $ 234 $ - $ 605 $ (597 ) $ 242
Equity income from investees, before tax $ - $ 36,717 $ 1 $ - $ 36,718
Gain on toll settlement $ - $ 148,402 $ - $ - $ 148,402
Federal and state income tax expense (benefit) $ 31,731 $ 70,147 $ (4,622 ) $ - $ 97,256
Segment profit (1)
$ 71,249 $ 112,020 $ 1,887 $ (1 ) $ 185,155
Additions to long-lived assets $ 361,993 $ 1,122 $ 740 $ - $ 363,855
Equity investment in investees (2)
$ 13,073 $ 73,648 $ 11 $ - $ 86,732
Total segment assets (2)
$ 3,795,205 $ 316,165 $ 401,663 $ (351,623 ) $ 4,161,410
(1) Reconciliation of segment profit to consolidated profit:
Segment profit $ 185,155
(2) Balances as of December 31, 2010
Unallocated items:

Preferred dividends requirements, net of tax
23
Net income applicable to common stock $ 185,132

	CLECO					RECONCILING
2010 (THOUSANDS)	POWER			MIDSTREAM		ITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	839,528		$	-	$	-		$	-		$	839,528
Tolling operations		-			23,016		-			-			23,016
Other operations		32,959			2		1,470			(6	)		34,425
Electric customer credits		(6,314	)		-		-			-			(6,314	)
Affiliate revenue		1,029			924		34,783			(35,310	)		1,426
Operating revenue	$	867,202		$	23,942	$	36,253		$	(35,316	)	$	892,081
Depreciation	$	77,941		$	4,334	$	624		$	-		$	82,899
Interest charges	$	57,104		$	5,972	$	9,575		$	(631	)	$	72,020
Interest income	$	351		$	-	$	649		$	(631	)	$	369
Equity income from investees, before tax	$	-		$	39,211	$	1		$	-		$	39,212
Gain on toll settlement	$	-		$	148,402	$	-		$	-		$	148,402
Federal and state income tax expense (benefit)	$	58,299		$	72,905	$	(3,793	)	$	-		$	127,411
Segment profit (loss) (1)	$	123,584		$	117,176	$	(5,992	)	$	-		$	234,768
Additions to long-lived assets	$	397,301		$	1,576	$	1,181		$	-		$	400,058
Equity investment in investees (2)	$	13,073		$	73,648	$	11		$	-		$	86,732
Total segment assets (2)	$	3,795,205		$	316,165	$	401,663		$	(351,623	)	$	4,161,410
(1) Reconciliation of segment profit to consolidated profit:	Segment profit								$	234,768
(2) Balances as of December 31, 2010	Unallocated items:
	Preferred dividends requirements, net of tax									35
	Net income applicable to common stock								$	234,733

Note 9 — Electric Customer Credits

Beginning in 2010, the amount of Cleco Power’s yearly retail earnings is subject to the terms of a FRP established by the LPSC. The new rates and the FRP became effective upon commencement of commercial operations at Madison Unit 3 on February 12, 2010. The 2010 FRP establishes a target return on equity and requires all or a portion of regulated earnings for each yearly review period above the targeted regulatory rate of return on equity to be credited to Cleco Power’s customers. The 2010 FRP allows Cleco Power the opportunity to earn a target return on equity of 10.7%, including returning to retail customers 60% of retail earnings between 11.3% and 12.3% and all retail earnings over 12.3%. The amount of credits due customers, if any, is determined by Cleco Power and the LPSC annually. The 2010 FRP established that Cleco Power file monitoring reports for both the 12 months ended June 30, 2010, and September 30, 2010, on or before October 31, 2010, and January 31, 2011, respectively. Beginning in 2011, Cleco Power will file annual monitoring reports no later than October 31 for the 12-month period ending June 30.

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

On October 29, 2010, Cleco Power filed its report for the 12 months ended June 30, 2010, which indicated that no refund was due for this period. On January 28, 2011, Cleco

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

Power filed its report for the 12 months ended September 30, 2010, which indicated that $9.0 million was due to be returned to customers. On June 23, 2011, the LPSC Staff completed its review of this report and determined that the results presented by Cleco Power in the September 30, 2010 filing were consistent with the terms of the 2010 FRP and that no changes were necessary. Cleco Power ~~will issue~~issued refunds for this filing ~~to be included~~ on customers’ bills in the third quarter of 2011. On October 31, 2011, Cleco Power filed its report for the 12 months ended June 30, 2011, which indicated that $3.8 million was due to be returned to customers. The ultimate amount of any customer refund is subject to LPSC approval.

The accrual for estimated electric customer credits reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at ~~June 30, 2011, reflect accruals for electric customer credits related to the 12 month period ended~~ September ~~30, 2010, and estimated electric customer credits through the 12 month period ended June 30, 2011. At June~~ 30, 2011, and December 31, 2010, ~~the provision for rate refund~~ was ~~$14.9~~$3.9 million and $9.6 million, respectively.

Note 10 — Variable Interest Entities

Cleco reports its investments in VIEs in accordance with the authoritative guidance. Cleco and Cleco Power report the investment in Oxbow on the equity method of accounting. Under the equity method, the assets and liabilities of this entity are reported as equity investment in investees on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets. The revenue and expenses of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Prior to April 30, 2011, Cleco Corporation also reported its investment in Cajun on the equity method of accounting. In conjunction with the disposition of Acadia Unit 2, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH.

Consolidated VIEs

Acadia

In February 2009, Cleco Power announced that it had chosen the acquisition of Acadia Unit 1 as the lowest bid in its 2007 long-term RFP for capacity beginning in 2010. Beginning in January 2010, Acadia operated the plant and served Cleco Power under a short-term tolling agreement covering Acadia Unit 1. In February 2010, Cleco Power acquired Acadia Unit 1 and half of Acadia Power Station’s related common facilities and the tolling agreement was terminated. In conjunction with this transaction, Acadia became 100% owned by Cajun, which prior to April 29, 2011, was 50% owned by APH and 50% owned by third parties. For additional information regarding the Acadia Unit 1 transaction, see Note 15 — “Acadia Transactions — Acadia Unit 1.”

In October 2009, Acadia and Entergy Louisiana announced that definitive agreements had been executed whereby Entergy Louisiana would acquire Acadia Unit 2. On April 29, 2011, Acadia completed its disposition of Acadia Unit 2 to Entergy Louisiana for $298.8 million. Following the disposition, Acadia no longer owns any materials and supply inventory, property, plant and equipment, or land. Acadia has minimal ongoing operations relating only to settling accounts receivable and accounts payable resulting from operations prior to the closing of the transaction and servicing indemnifications which Cleco assumed in the transaction. In conjunction with the transaction, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH. Cleco Power continues to operate both units at the Acadia Power Station. For additional information on the Acadia Unit 2 transaction, see Note 15 — “Acadia Transactions — Acadia Unit 2.”

The following tables contain summarized financial information for Cajun prior to the disposition of Acadia Unit 2.

(THOUSANDS)	AT DECEMBER 31, 2010		AT DECEMBER 31, 2010
Current assets	$	7,133	$	7,133
Property, plant and equipment, net		203,793		203,793
Total assets	$	210,926	$	210,926
Current liabilities	$	1,950	$	1,950
Other liabilities		9,429		9,429
Partners’ (deficit) capital		199,547
Partners’ capital				199,547
Total liabilities and partners’ capital	$	210,926	$	210,926

	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)		2011	*		2010		FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010
Operating revenue	$	50		$	10,861			$	31,883
Operating expenses		1,133			13,291				30,566
Gain on sale of assets		71,465			-
Other income		57			172				3,671
Income (loss) before taxes	$	70,439		$	(2,258	)
* The 2011 income statement includes activity prior to the April 29, 2011, reconsolidation.
Income before taxes								$	4,988

	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)		2011	*		2010			2011	*		2010
Operating revenue	$	5,227		$	14,625		$	5,227		$	46,508
Operating expenses		5,914			23,454			5,914			54,011
Gain on sale of assets		71,422			82,033			71,422			82,023
Other income		929			229			929			3,902
Income (loss) before taxes	$	71,664		$	73,433
* The 2011 income statement includes activity prior to the April 29, 2011, reconsolidation.
Income before taxes							$	71,664		$	78,422
* The 2011 income statement includes only activity prior to the April 29, 2011, reconsolidation.						* The 2011 income statement includes only activity prior to the April 29, 2011, reconsolidation.

Other liabilities at December 31, 2010, represented an indemnification liability related to the Cleco Power transaction. For additional information on Acadia’s indemnification liability, see Note 11 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Disclosures about Guarantees.”

Prior to the reconsolidation, income tax expenses related to Cajun were recorded on APH’s financial statements. For the ~~month of April 2011, income taxes related to Cajun on APH’s financial statements were $23.7 million, compared to a tax benefit of $0.5 million for the three months ended June 30, 2010. For the~~ four months ended April 30, 2011, income taxes related to Cajun on APH’s financial statements were $24.0 ~~million, compared to $13.8 million for~~million. For the ~~six~~three and nine months ended ~~June~~September 30, ~~2010.~~2010, tax expenses recorded on APH’s financial statements were $1.0 million and $14.8 million, respectively.

In connection with the Entergy Louisiana transaction, APH has agreed to indemnify the ~~third party~~third-party owners of Cajun and their affiliates against their share of Acadia’s contingent obligations related to the transaction. For additional information on the Entergy Louisiana indemnification, see Note 11 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Disclosures about Guarantees.”

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

Equity Method VIEs

Equity investment in investees at ~~June~~September 30, 2011, primarily represented Cleco Power’s $13.1 million investment in Oxbow. Equity investments which are less than 100% owned by Cleco Innovations LLC represented less than $0.1 million of the total balance.

The following table presents the equity income (loss) from each investment accounted for using the equity method.

	FOR THE THREE MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011		2010			2011			2010
Cajun	$	61,440	$	(1,129	)	$	-		$	2,494
Subsidiaries less than 100% owned by Cleco Innovations		-		-			(1	)		-
Total equity income	$	61,440	$	(1,129	)
Total equity (loss) income						$	(1	)	$	2,494

	FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010		2011			2010
Cajun	$	62,053		$	36,717	$	62,053		$	39,211
Subsidiaries less than 100% owned by Cleco Innovations		(1	)		1		(2	)		1
Total equity income	$	62,052		$	36,718	$	62,051		$	39,212

Note 11 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

Devil’s Swamp

In October 2007, Cleco received a Special Notice for Remedial Investigation and Feasibility Study (RI/FS) from the EPA. The special notice requested that Cleco Corporation and Cleco Power, along with many other listed PRPs, enter into negotiations with the EPA for the performance of an RI/FS at an area known as the Devil’s Swamp Lake site just northwest of Baton Rouge, Louisiana. The EPA has identified Cleco as one of many companies sending PCB wastes for disposal to the site. The Devil’s Swamp Lake site has been proposed to be added to the National Priorities List (NPL) based on the release of PCBs to fisheries and wetlands located on the site. The EPA has yet to make a final determination on whether to add Devil’s Swamp Lake site to the NPL. The PRPs began discussing a potential proposal to the EPA in February 2008. Negotiations among the PRPs and the EPA are ongoing in regard to the RI/FS for the Devil’s Swamp Lake site, with little progress having been made since February 2008. Since this investigation is in the preliminary stages, management is unable to determine whether the costs associated with possible remediation of the facility site, if any, will have a material

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CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

adverse effect on the Registrants’ financial condition, results of operations, or cash flows.

Discrimination ~~Complaint~~Complaints

On December 11, 2009, a complaint was filed in the U.S. District Court for the Western District of Louisiana (the Court) on behalf of eight current employees and four former employees alleging that Cleco discriminated against each of them on the basis of race. Each is seeking various remedies provided under applicable statutes prohibiting racial discrimination in the workplace, and together, the plaintiffs seek monetary compensation exceeding $35.0 million. On July 29, 2010, the plaintiffs moved to add an additional current employee alleging that Cleco had discriminated on the basis of race. The plaintiff seeks compensation of no less than $2.5 million and became the thirteenth plaintiff. On April 13, 2011, Cleco entered into a settlement with one of the current employees which resulted in a dismissal of one of the thirteen cases with prejudice. ~~Cleco is awaiting~~On September 22, 2011 the ~~Court’s decision as to~~Court ruled on Cleco’s summary judgment motions that ~~it has submitted~~had been pending for the last year. The judge granted and denied the motions in part, with ~~respect to each~~the end result that eleven out of twelve of the ~~other twelve cases. No trial in this matter is currently scheduled.~~remaining plaintiffs have at least one claim remaining. The Court has severed the cases of the eleven remaining plaintiffs for further discovery and proceedings, and if necessary, trial. None of these matters have been set for trial. In view of the uncertainty of the claims, management is not able to predict or give a reasonable estimate of the possible range, if any, of these claims.

On September 23, 2010, the New Orleans Field Office of the U.S. Equal Employment Opportunity Commission (EEOC) issued its determination that there is reason to believe that violations of Title VII of the Civil Rights Act of 1964 had occurred at one of Cleco’s training facilities on October 5, 2007. In its initial determination, the EEOC suggested that Cleco pay the charging party $0.1 million in satisfaction of any compensatory or punitive damages. Under EEOC procedures, Cleco pursued conciliation efforts to resolve the charge which resulted in a complete settlement with the charging party and the EEOC.

City of Opelousas

On March 9, 2010, a complaint was filed in the 27th Judicial District Court of St. Landry Parish, State of Louisiana, on behalf of three Cleco Power customers in Opelousas, Louisiana. The complaint alleges that Cleco Power overcharged the plaintiffs by applying to customers in Opelousas the same retail rates as Cleco Power applies to all of its retail customers. The plaintiffs allege that Cleco Power should have established, solely for customers in Opelousas, retail rates that are separate and distinct from the retail rates that apply to other customers of Cleco Power and that Cleco Power should not collect from customers in Opelousas the storm surcharge approved by the LPSC following Hurricanes Katrina and Rita. Cleco Power currently operates in Opelousas pursuant to a franchise granted to Cleco Power by the City of Opelousas in 1986 and an operating and franchise agreement dated May 14, 1991, pursuant to which Cleco Power operates its own electric facilities and leases and operates electric facilities owned by the City of Opelousas. In April 2010, Cleco Power filed a petition with the LPSC appealing to its expertise in declaring that the ratepayers of Opelousas have been properly charged the rates that are applicable to Cleco Power’s retail customers and that no overcharges have been collected. In addition, Cleco Power removed the purported class action lawsuit filed on behalf of Opelousas electric customers from the state court to the U.S. District Court for the Western District of Louisiana in April 2010, so that it could be properly addressed under the terms of the Class Action Fairness Act. On May 11, 2010, a second class action lawsuit was filed in the 27th Judicial District Court of St. Landry Parish, State of Louisiana, repeating the allegations of the first complaint, which was submitted on behalf of 249 Opelousas residents. Cleco Power has responded in the same manner as with the first class action lawsuit. On September 29, 2010, the federal court remanded both cases to the state court in which they were originally filed for further proceedings. On January 21, 2011, the presiding judge in the state court proceeding ruled that the jurisdiction to hear the two class actions resides in the state court and not with the LPSC as argued by both Cleco and the LPSC Staff. Both Cleco and the LPSC Staff appealed this ruling to the Third Circuit Court of Appeals for the State of Louisiana (Third Circuit). On September 9, 2011, the Third Circuit denied both appeals. On October 10, 2011, both Cleco and ~~await a decision by such court.~~the LPSC appealed the Third Circuit’s ruling to the Louisiana Supreme Court. On February 7, 2011, the administrative law judge in the LPSC proceeding ruled that the LPSC has jurisdiction to decide the claims raised by the class action plaintiffs. The customers have not stated an amount of overcharges they seek to recover. In view of the uncertainty of the claims, management is not able to predict or give a reasonable estimate of the possible range, if any, of these claims.

Madison Unit 3

In August 2005, Cleco Power entered into an EPC contract with Shaw to construct Madison Unit 3. Construction of Madison Unit 3 began in May 2006. In May 2006, Cleco Power and Shaw entered into an Amended EPC Contract, which contract has subsequently been amended by the parties. The project achieved commercial operations on February 12, 2010, whereby Cleco Power accepted care, custody, and control of the unit. Shaw has not reached project completion under the contract, as various performance tests, the reliability test, and specified boiler performance criteria have not been met. Shaw must correct identified items, complete performance guarantee tests, meet a 30-day reliability performance test, and correct warranty issues to meet final acceptance by August 11, 2011, or pay certain liquidated damages and financially settle incomplete work. Cleco Power and Shaw ~~have~~ submitted various claims, relating to the Amended EPC Contract, to arbitration. On April 30, 2010, Shaw filed a demand for arbitration asserting claims of $32.0 million including impacts due to the 2008 hurricane force majeure, alleged excess fuel moisture, intake water quality and a river embankment slope failure, and the associated recovery of schedule related liquidated damages withheld by Cleco Power. In May 2010, Cleco Power issued to Shaw a notice of default relating to Shaw’s inability to meet certain material obligations under the Amended EPC Contract. Furthermore, as a result of Shaw filing the demand for arbitration, certain claims exceeded a $1.0 million threshold, triggering an unwind of certain fuel-related matters included in a prior settlement between the parties, Amendment No. 4, and

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

~~unwind of certain fuel related matters included in a prior settlement between the parties, Amendment No. 4, and~~ Cleco demanded an associated payment of $19.0 million. In February 2011, Cleco drew on the Shaw letter of credit in an amount of $19.0 million for amounts relating to the unwind. Shaw has amended its demand for arbitration to contest the unwind, and is seeking recovery of such amounts in the on-going arbitration proceedings. Under the arbitration proceedings, Cleco has also filed compulsory counterclaims for liquidated damages associated with Shaw’s inability to meet various guarantees or remedy warranty claims associated with boiler performance burning petroleum coke. Certain of these matters were argued in arbitration hearings which concluded on June 8, 2011. On June 24, 2011, Cleco and Shaw each submitted their proposed resolutions to all of the matters in dispute in this arbitration proceeding. Shaw submitted that Cleco ~~owes~~owed $32.5 million in satisfaction of all of such matters. Cleco submitted that it ~~only owes~~owed Shaw $4.0 million. AsOn August 5, 2011, the arbitrator announced his decision in favor of ~~June 30,~~Shaw’s claims of Cleco Power owing Shaw $32.5 million (including the return of the amounts drawn on Shaw’s letter of credit). Cleco Power paid this amount on August 22, 2011, ~~Cleco had accrued $4.0 million related to its proposed resolution.~~which was included as a cost of Madison Unit 3 and reflected as property, plant and equipment.

Shaw has not reached project completion as defined in the Amended EPC Contract, as various performance tests, the reliability test, and specified boiler performance criteria have not been met. Under the Amended EPC Contract, Shaw must correct the ~~arbitrator is required~~identified items, complete the performance guarantee tests, meet a 30-day reliability performance test, and correct certain warranty issues to ~~select one~~meet final acceptance, or pay certain liquidated damages and financially settle incomplete work. The disputed items relating to the liquidated damages for Shaw’s inability to meet performance guarantees, as well as for completion of ~~these two amounts~~minor or warranty work, were bifurcated from the arbitration proceedings and ~~is expected to announce his decision by August 8, 2011.~~ remain outstanding. These matters may be resolved through a second arbitration proceeding or potentially settled.

LPSC Fuel Audit

The LPSC is currently auditing Cleco Power’s fuel expenditures for the years 2003 through 2008 which includes approximately $3.2 billion of fuel expenses. Cleco Power has responded to several sets of data requests and the responses are currently under review. The LPSC has not stated an amount of the fuel costs, if any, that would be disallowed and result in a refund to Cleco Power’s customers. As such, management is not able to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to this ~~audit as of June 30, 2011.~~audit. However, if a disallowance of fuel costs is ordered resulting in a refund, any such refund could have a material adverse effect on the Registrants’ results of operations, financial condition, and cash flows.

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 in the event of a negative outcome may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of ~~June~~September 30, 2011, believes the range of probable and reasonably estimable liabilities based on the eventual disposition of these matters is between $2.0 million and ~~$17.0~~$6.0 million.

Off-Balance Sheet Commitments

Cleco Corporation 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 Corporation’s subsidiaries and equity investees (affiliates). Cleco Corporation and Cleco Power also have agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees in the authoritative guidance.

Cleco Corporation 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 Corporation 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 Corporation’s Condensed Consolidated Balance Sheets because management has determined that Cleco’s affiliates are able to perform these obligations under their contracts and that it is not probable that payments by Cleco will be required. Cleco’s off-balance sheet commitments as of ~~June~~September 30, 2011, are summarized in the following table, and a discussion of the off-balance sheet commitments follows the table. The discussion should be read in conjunction with the table to understand the impact of the off-balance sheet commitments on Cleco’s financial condition.

			AT JUNE 30, 2011						AT SEPTEMBER 30, 2011
	FACE				NET		FACE				NET
(THOUSANDS)	AMOUNT		REDUCTIONS		AMOUNT		AMOUNT		REDUCTIONS		AMOUNT
Cleco Corporation
Guarantee issued to Entergy Mississippi on behalf of Attala		500		-		500	$	500	$	-	$	500
Cleco Power
Obligations under standby letter of credit issued to the Louisiana Department of Labor		3,725		-		3,725		3,725		-		3,725
Total	$	4,225		-	$	4,225	$	4,225	$	-	$	4,225

In January 2006, Cleco Corporation provided a $0.5 million guarantee to Entergy Mississippi for Attala’s obligations under the Interconnection Agreement. This guarantee will be effective through the life of the agreement.

Acadia provided limited guarantees and indemnifications to Cleco Power under the Master Reorganization and Redemption Agreement related to the acquisition of Acadia Unit 1 and half of Acadia Power Station’s related common facilities in February 2010. In connection with this transaction, Acadia became 100% owned by Cajun. Prior to April 29, 2011, Cleco Corporation reported the investment in Cajun on the equity method of accounting and therefore APH’s 50% portion of the indemnity was off-balance sheet. On April 29, 2011, in

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

conjunction with the disposition of Acadia Unit 2, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH.

Acadia and Entergy Services entered into an amended capacity sale and fuel conversion services agreement on June 30, 2010, with an effective date of October 1, 2010. In conjunction with the agreement, Cleco Corporation provided to Entergy Louisiana a limited guarantee, in an amount not to exceed $10.0 million, for certain performance obligations by

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

Acadia under the agreement. On April 29, 2011, the agreement and the related guarantee terminated as a result of the Acadia Unit 2 transaction. For additional information regarding this transaction, see Note 15 — “Acadia Transactions — Acadia Unit 2.”

The State of Louisiana allows employers of certain financial net worth to self-insure their workers’ compensation benefits. Cleco Power has a certificate of self-insurance from the Louisiana Office of Workers’ Compensation and is required to post a $3.7 million letter of credit, an amount equal to 110% of the average losses over the previous three years, as surety.

Disclosures about Guarantees

Cleco Corporation provided a limited guarantee and an indemnification to Entergy Louisiana and Entergy Gulf States for Perryville’s performance, indemnity, representation, and warranty obligations under the Sale Agreement, the Power Purchase Agreement, and other ancillary agreements related to the sale of the Perryville facility in 2004. This is a continuing guarantee and all obligations of Cleco Corporation shall continue until the guaranteed obligations have been fully performed or otherwise extinguished. The discounted probability-weighted liability under the guarantees and indemnifications recognized on Cleco Corporation’s Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2011, was $0.2 million. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. Currently, management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under the guarantee.

In February 2010, Cleco Power acquired Acadia Unit 1 and half of Acadia Power Station’s related common facilities. Acadia provided limited guarantees and indemnifications to Cleco Power under the Master Reorganization and Redemption Agreement. The maximum amount of the potential payment to Cleco Power for indemnifications is $30.0 million, except for the indemnifications relating to the fundamental organizational structure of Acadia against which there is no maximum amount. Cleco Corporation is obligated to pay a maximum of $10.0 million if Acadia is unable to pay claims to Cleco Power pursuant to the guarantee. Acadia recorded an indemnification liability and a corresponding reduction of the gain of $13.5 million which represents the fair value of these indemnifications. In a related agreement, APH agreed to accept 50% of Acadia’s indemnification liability that would be held by the third parties who indirectly owned 50% of Acadia in return for $6.8 million received from the third parties. The $6.8 million was recorded as an indemnification liability by APH. Events that would require payments to Cleco Power pursuant to the indemnity include, but are not limited to:

§	Environmental costs that were caused by events occurring before the closing of the transaction;

§	Claims against Cleco Power for liabilities retained by Acadia;

§	Certain conditions of Acadia Unit 1 that were discovered prior to September 30, 2010; and

§	Breach of fundamental representations of Acadia, such as legal existence, ownership of Acadia Unit 1, and valid authorization to dispose of Acadia Unit 1.

Acadia and APH will ~~be released from~~reduce the ~~underlying~~ indemnification liabilities either through expiration of the contractual life or through a reduction in the probability of a claim arising. The indemnification obligation is expected to have a term of approximately three years, which reflects both contractual expiration of the underlying indemnifications and management’s assumptions about the decreasing probability of a payment due to the passage of time. After the three-year period, a residual value of less than $0.1 million will remain. At ~~June~~September 30, 2011, Acadia had an indemnification liability of ~~$8.4~~$7.6 million, which represents the risk of payment, as a contingent sale obligation recorded on Cleco Corporation’s Condensed Consolidated Balance Sheet. APH recognized no income for the three months ended September 30, 2011, and $0.5 million for the nine months ended September 30, 2011, primarily due to the contractual expiration of the underlying indemnification. During the three and ~~six~~nine months ended ~~June~~September 30, 2011, ~~APH~~Acadia recognized income of ~~less than $0.1~~$1.0 million and ~~$0.5~~$1.1 million, respectively, primarily due to the contractual expiration of the underlying indemnification. ~~Acadia recognized income of $0.1 million for the three and six months ended June 30, 2011, primarily due to the contractual expiration of the underlying indemnification.~~

On April 29, 2011, Acadia completed its disposition of Acadia Unit 2 and Acadia Power Station’s remaining common facilities to Entergy Louisiana. Following the disposition, Acadia no longer owns any materials and supply inventory, property, plant and equipment, or land. Ongoing operations are minimal relating only to the previously established receivables and payables and servicing of indemnities. Acadia provided limited guarantees and indemnifications to Entergy Louisiana and recorded an indemnification liability and a corresponding reduction of the gain of $21.8 million, which represents the fair value of these indemnifications. APH agreed to indemnify the ~~third party~~third-party owners of Cajun and their affiliates against 50% of Acadia’s liabilities and other obligations related to the Acadia Unit 2 transaction in exchange for $10.9 million received from the third parties. The $10.9 million was recorded as an indemnification liability by APH. In conjunction with the disposition of Acadia Unit 2, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH. Events that would require payments to Entergy Louisiana pursuant to the indemnity include, but are not limited to:

§	Environmental costs that were caused by events occurring before the closing of the transaction;

§	Claims against Entergy Louisiana for liabilities retained by Acadia;

§	Certain conditions of Acadia Unit 2 that were discovered prior to ~~April 2011;~~September 30, 2010; and

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CLECO POWER	2011 3RD QUARTER FORM 10-Q

§	Breach of fundamental representations of Acadia, such as legal existence, ownership of Acadia Unit 2, and valid authorization to dispose of Acadia Unit 2.

Acadia and APH will ~~be released from~~reduce the ~~underlying~~ indemnification liabilities either through expiration of the contractual life or through a reduction in the probability of a claim

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

arising. The indemnification obligation is expected to have a term of three years, which reflects both contractual expiration of the underlying indemnifications and management’s assumptions about the decreasing probability of a payment due to the passage of time. After the three-year period, a residual value of approximately $0.2 million will remain. At ~~June~~September 30, 2011, Acadia had an indemnification liability of $21.8 million, which represents the risk of payment, as a contingent sale obligation recorded on Cleco Corporation’s Condensed Consolidated Balance Sheet. The maximum amount of the potential payment to Entergy Louisiana for the indemnifications is the purchase price of $298.8 million, except for the liabilities retained by Acadia, for which there is no maximum amount. Cleco Corporation is obligated to pay the same maximum amounts as Acadia if Acadia is unable to pay claims to Entergy Louisiana pursuant to the guarantee.

As part of the Lignite Mining Agreement amended in 2009, Cleco Power and SWEPCO, joint owners of Dolet Hills, have agreed to pay the lignite miner’s loan and lease principal obligations when due, if the lignite miner 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 the next invoice for lignite delivered. At ~~June~~September 30, 2011, Cleco Power had a liability of $3.8 million related to the amended agreement. The maximum projected payment by Cleco Power under this guarantee is estimated to be $72.5 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. 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 terminate pursuant to its terms until 2026 and 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 the guarantee.

The following table summarizes the expected termination dates of the off-balance sheet commitments and on-balance sheet guarantees discussed above:

							AT JUNE 30, 2011										AT SEPTEMBER 30, 2011
			AMOUNT OF COMMITMENT EXPIRATION PER PERIOD										AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
	NET								MORE		NET								MORE
	AMOUNT		LESS THAN						THAN		AMOUNT		LESS THAN						THAN
(THOUSANDS)	COMMITTED		ONE YEAR		1-3 YEARS		3-5 YEARS		5 YEARS		COMMITTED		ONE YEAR		1-3 YEARS		3-5 YEARS		5 YEARS
Off-balance sheet commitments	$	4,225	$	3,725	$	-	$	-	$	500	$	4,225	$	3,725	$	-	$	-	$	500
On-balance sheet guarantees		34,249		-		30,243		-		4,006		33,449		-		29,443		-		4,006
Total	$	38,474	$	3,725	$	30,243	$	-	$	4,506	$	37,674	$	3,725	$	29,443	$	-	$	4,506

In its bylaws, Cleco Corporation has agreed to indemnify directors, officers, agents, and employees who are made a party to a pending or completed suit, arbitration, investigation, or other proceeding whether civil, criminal, investigative or administrative, if the basis of inclusion arises as the result of acts conducted in the discharge of their official capacity. Cleco Corporation has purchased various insurance policies to reduce the risks associated with the indemnification. In its Operating Agreement, Cleco Power provides for the same indemnification as described above with respect to its managers, officers, agents, and employees.

Generally, neither Cleco Corporation nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. The one exception is the insurance contracts associated with the indemnification of directors, managers, officers, agents, and employees. There are no assets held as collateral for third parties that either Cleco Corporation or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

Acadia Transactions

In October 2009, Acadia and Entergy Louisiana announced that definitive agreements had been executed whereby Entergy Louisiana would acquire Acadia Unit 2. A capacity sale and fuel conversion services agreement between Acadia and Entergy Louisiana began in June 2010. Effective October 1, 2010, this agreement was subject to a $10.0 million guarantee by Cleco Corporation. For additional information regarding this guarantee, please refer to “— Off-Balance Sheet Commitments” above. On April 29, 2011, the transaction closed and the agreement terminated. Cleco Power will continue to operate both units at the Acadia Power Station. In connection with this transaction and in exchange for reasonable consideration, APH has indemnified the ~~third-party~~third-

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party owners of Cajun and their affiliates against their 50% of Acadia’s liabilities and other obligations related to the Entergy Louisiana transaction. For additional information on the Acadia Unit 2 transaction, see Note 15 — “Acadia Transactions — Acadia Unit 2.”

~~Risks and Uncertainties~~

~~Cleco Corporation~~

~~Cleco Corporation could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their~~

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~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

~~obligations or if Cleco Corporation or its affiliates are not in compliance with loan agreements or bond indentures.~~

~~Evangeline 2010 Tolling Agreement~~

JPMorgan Chase & Co. guarantees JPMVEC’s obligations under the Evangeline 2010 Tolling Agreement. For additional information regarding this tolling agreement, see Note 14 — “Evangeline Transactions.”

~~Other~~

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Market conditions during the past few years have limited the availability and have increased the costs of capital for many companies. The inability to raise capital on favorable terms could negatively affect Cleco Corporation’s and Cleco Power’s ability to maintain and expand their businesses. After assessing the current operating performance, liquidity, and credit ratings of Cleco, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. If Cleco Corporation’s credit ratings were to be downgraded by Moody’s and Standard & Poor’s, Cleco Corporation would be required to pay additional fees and higher interest rates under its bank credit and other debt agreements.

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 to be taken and Cleco’s financial condition could be materially adversely affected.

~~Cleco Power~~

Cleco Power supplies the majority of its customers’ electric power requirements from its own generation facilities. In addition to power obtained from power purchase agreements, Cleco Power purchases power from other utilities and marketers to supplement its generation at times of relatively high demand or when the purchase price of power is less than its own cost of generation. Due to its location on the transmission grid, Cleco Power relies on two main suppliers of electric transmission when accessing external power markets. At times, constraints limit the amount of purchased power these transmission providers can deliver into Cleco Power’s service territory.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Market conditions during the past few years have limited the availability and have increased the costs of capital for many companies. The inability to raise capital on favorable terms could negatively affect Cleco Power’s ability to maintain and expand its businesses. After assessing the current operating performance, liquidity, and credit ratings of Cleco Power, management believes that Cleco Power will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. Cleco Power pays fees and interest under its bank credit agreements based on the highest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s and Standard & Poor’s, Cleco Power would be required to pay additional fees and higher interest rates under its bank credit agreements. Cleco Power’s collateral for derivatives is based on the lowest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s or Standard & Poor’s, Cleco Power would be required to pay additional collateral for derivatives.

In August 2005, Cleco Power entered into an EPC contract with Shaw to construct Madison Unit 3. In May 2006, Cleco Power and Shaw entered into an Amended EPC Contract. Under the terms of the Amended EPC Contract until final acceptance of Madison Unit 3, in the event Cleco Power does not maintain a senior unsecured credit rating of either: (i) Baa3 or better from Moody’s or (ii) BBB- or better from Standard & Poor’s, Cleco Power will be required to provide a letter of credit to Shaw in the amount of $20.0 million. In the event of further downgrade to both of its credit ratings to: (i) Ba2 or below from Moody’s, and (ii) BB or below from Standard & Poor’s, Cleco Power will be required to provide an additional $15.0 million letter of credit to Shaw.

RESULTS OF OPERATIONS

Overview

Cleco is a regional energy ~~services holding~~ company that conducts substantially all of its business operations through its two primary subsidiaries:

Cleco Power, ~~an integrated~~a regulated electric utility ~~services~~ company, ~~regulated by the LPSC, FERC,~~which owns 10 generating units with a total nameplate capacity of 2,572 MWs and ~~other regulators, which~~ serves approximately 279,000 customers in Louisiana through its retail business and 10 communities across Louisiana and ~~also engages in energy management activities;~~Mississippi through wholesale power contracts; and

Midstream, a ~~merchant~~wholesale energy ~~company regulated by FERC,~~business, which owns Evangeline (which operates Coughlin). Prior to April 29, 2011, Midstream also owned a 50 percent indirect interest in Acadia. On April 29, 2011, Acadia completed its disposition of Acadia Unit 2 to Entergy Louisiana. For additional information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 15 — Acadia Transactions — Acadia Unit 2.”

Cleco Power

Many factors affect Cleco Power’s primary business of selling electricity. These factors include the presence of a stable regulatory environment, which can impact cost recovery and return on equity, as well as the recovery of costs related to growing energy demand and rising fuel prices; the ability to increase energy sales while containing costs; and the ability to meet increasingly stringent regulatory and environmental standards. Key initiatives that Cleco Power is currently working on include the Acadiana Load Pocket project, ~~and~~ the AMI ~~project. Another key~~ project ~~the Teche Unit 4 Blackstart project, was completed in April 2011. A brief discussion of these projects is included~~and power supply options for 2012 and beyond. These initiatives are discussed below.

Acadiana Load Pocket Project

In September 2008, Cleco Power entered into an agreement with two other utilities to upgrade and expand interconnected transmission systems in south central Louisiana in an area known as the Acadiana Load Pocket. The project received LPSC and SPP approval in February 2009. Cleco Power’s initial portion of the estimated cost was approximately $150.0 million, including AFUDC. Due to lower material and labor costs than initially expected, Cleco Power’s estimated costs for its portion of the project were reduced to $125.0 million, including AFUDC. At ~~June~~September 30, 2011, Cleco Power had spent ~~$74.4~~$86.3 million on the project and expects to incur an additional ~~$23.0~~$9.6 million during 2011, including AFUDC. ~~The~~A return on and recovery of the costs associated with the completed portions of the Acadiana Load Pocket project are included in base revenue. The project is estimated to be ~~77%~~81% complete with the final completion date expected in 2012. For additional information, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Regulatory Matters — Acadiana Load Pocket Project” in the Registrants’ Combined

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

Annual Report on Form 10-K for the fiscal year ended December 31, 2010. For information on the impact the Acadiana Load Pocket project is expected to have on base revenue, see “— Comparison of the ~~Six~~Three Months Ended ~~June~~September 30, 2011, and 2010 — Cleco Power — Base.”

AMI Project

In May 2010, Cleco Power accepted the terms of a $20.0 million grant from the DOE under the DOE’s small-grant process to implement smart-grid technology for all of Cleco Power’s retail customers. Cleco Power estimates the project will cost $73.0 million, with the DOE grant providing $20.0 million toward the project and Cleco Power providing the remaining $53.0 million. The grant program is a part of the American Recovery and Reinvestment Act of 2009, an economic stimulus package passed by Congress in February 2009. Smart-grid technology includes the installation of electric meters that enable two-way communication capabilities between a home or business and a utility company. At ~~June~~September 30, 2011, Cleco Power had incurred ~~$5.1~~$6.9 million in project costs, of which ~~$2.3~~$3.0 million has been submitted to the DOE for reimbursement. As of ~~June~~September 30, 2011, Cleco Power had received ~~$1.4~~$2.8 million in payments from the DOE. The project is expected to be completed in the ~~second~~third quarter of 2013. For additional information, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Other Matters — AMI Project” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

~~Teche Unit 4 Blackstart Project~~Power Supply Options

Cleco Power is evaluating a range of power supply options for 2012 and beyond. Cleco Power is continuing to update its IRP to look at future sources of supply to meet its capacity and energy requirements and to comply with new environmental standards, primarily the Cross-State Air Pollution Rule. In ~~April~~August 2011, Cleco Power ~~completed work on its project~~issued one RFP for resources to ~~improve its “blackstart” process (the return~~enhance reliability for January through April 2012. In October 2011, a second RFP, seeking up to approximately 750 MWs of ~~its generation system~~capacity and energy, for a three- or five-year period was issued for supply starting May 1, 2012 to ~~service in~~meet the event of a total shutdown). The project was considered complete when a 33-MW gas turbine at Teche Power Station, which has been designated Teche Unit 4, was placed into commercial operation. At June 30, 2011,Cross-State Air Pollution Rule. Cleco Power ~~had spent $29.4 million on the project and expects~~also plans to ~~incur~~release an additional $0.5 million during the remainder of 2011. For additional information, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Other Matters — Teche Unit 4 Blackstart Project”RFP in ~~the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2010.~~2012 seeking long-term resources.

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

Cleco Midstream

Evangeline

In March 2010, Evangeline restructured its tolling agreement with JPMVEC and shortened the expiration of the prior long-term agreement from 2020 to December 31, 2011 (with a JPMVEC option to extend one year). JPMVEC did not exercise the option to extend the tolling agreement and as a result, Coughlin’s capacity and energy will be available to Midstream beginning January 1, 2012. Currently, Midstream is marketing Coughlin’s capacity for periods beginning on or after January 1, 2012, and is evaluating various options to optimize Coughlin’s value. Evangeline was one of the successful bidders in Cleco Power’s RFP for short-term 2012 resources. Cleco Power has filed with the LPSC an application for a certificate of public convenience and necessity for this agreement. For additional information, see “— Financial Condition — Liquidity and Capital Resources — Regulatory Matters — Generation RFP.”

Acadia

In October 2009, Acadia and Entergy Louisiana executed definitive agreements whereby Entergy Louisiana would purchase Acadia Unit 2. On April 29, 2011, Acadia completed its disposition of Acadia Unit 2 to Entergy Louisiana for $298.8 million. APH’s portion of the proceeds from the sale were used to repay Cleco Corporation’s $150.0 million bank term loan. For additional information on the Acadia Unit 2 transaction, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 15 — Acadia Transactions — Acadia Unit 2.”

Comparison of the Three Months Ended ~~June~~September 30, 2011, and 2010

Cleco Consolidated

			FOR THE THREE MONTHS ENDED JUNE 30,												FOR THE THREE MONTHS ENDED SEPTEMBER 30,
						FAVORABLE/(UNFAVORABLE)											FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2011		2010			VARIANCE			CHANGE			2011			2010		VARIANCE			CHANGE
Operating revenue, net	$	272,923	$	275,903		$	(2,980	)		(1.1	)%	$	351,581		$	343,892	$	7,689			2.2	%
Operating expenses		202,628		195,809			(6,819	)		(3.5	)%		235,401			243,905		8,504			3.5	%
Operating income	$	70,295	$	80,094		$	(9,799	)		(12.2	)%	$	116,180		$	99,987	$	16,193			16.2	%
Equity income (loss) from investees, before tax	$	61,440	$	(1,129	)	$	62,569			*
Other income	$	1,050	$	266		$	784			294.7	%
Equity (loss) income from investees, before tax												$	(1	)	$	2,494	$	(2,495	)		(100.0	)%
Other expense	$	1,344	$	2,577		$	1,233			47.8	%	$	3,360		$	1,416	$	(1,944	)		(137.3	)%
Interest charges	$	25,619	$	24,518		$	(1,101	)		(4.5	)%	$	25,779		$	25,068	$	(711	)		(2.8	)%
Federal and state income taxes	$	36,520	$	17,389		$	(19,131	)		(110.0	)%	$	24,737		$	30,155	$	5,418			18.0	%
Net income applicable to common stock	$	70,221	$	35,174		$	35,047			99.6	%	$	65,842		$	49,600	$	16,242			32.7	%
* Not meaningful

4748

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

Other expense decreased $1.2 million, or 47.8%, in the second quarter of 2011 compared to the second quarter of 2010 primarily due to lower charitable donations and the absence in the second quarter of 2011 of decreases in the cash surrender value of life insurance policies at Cleco Corporation.

Interest charges increased $1.1 million, or 4.5%, during the second quarter of 2011 compared to the second quarter of 2010 primarily due to higher interest charges at Cleco Power. Partially offsetting this increase were lower interest charges related to uncertain tax positions at Evangeline.

Federal and state income taxes increased $19.1 million, or 110.0%, during the second quarter of 2011 compared to the second quarter of 2010 primarily due to an increase in pre-tax income, excluding equity AFUDC. Federal and state income taxes increased $20.6 million for the change in pre-tax income excluding AFUDC equity and $1.2 million to record tax expense at the consolidated projected annual effective tax rate. These increases were partially offset by $2.4 million for the tax impact of a valuation allowance for capital loss carryforwards recorded in 2010 and reversed in 2011 due to capital gains generated in 2011, and $0.3 million for miscellaneous items.

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

~~Cleco Power~~

FOR THE THREE MONTHS ENDED JUNE 30,

FAVORABLE/(UNFAVORABLE)

(THOUSANDS)
2011

2010

VARIANCE

CHANGE

Operating revenue
Base
$ 157,934 $ 157,057 $ 877 0.6 %
Fuel cost recovery
102,551 104,044 (1,493 ) (1.4 )%
Electric customer credits
(4,822 ) - (4,822 ) -
Other operations
12,453 9,755 2,698 27.7 %
Affiliate revenue
348 344 4 1.2 %
Operating revenue, net
268,464 271,200 (2,736 ) (1.0 )%
Operating expenses
Fuel used for electric generation – recoverable
77,277 79,676 2,399 3.0 %
Power purchased for utility customers – recoverable
25,269 24,331 (938 ) (3.9 )%
Non-recoverable fuel and power purchased
1,199 2,059 860 41.8 %
Other operations
29,912 28,051 (1,861 ) (6.6 )%
Maintenance
22,581 19,704 (2,877 ) (14.6 )%
Depreciation
28,282 28,162 (120 ) (0.4 )%
Taxes other than income taxes
8,396 7,909 (487 ) (6.2 )%
Total operating expenses
192,916 189,892 (3,024 ) (1.6 )%
Operating income $ 75,548 $ 81,308 $ (5,760 ) (7.1 )%
Interest charges $ 24,322 $ 22,318 $ (2,004 ) (9.0 )%
Federal and state income taxes $ 15,879 $ 19,236 $ 3,357 17.5 %
Net income $ 35,694 $ 39,089 $ (3,395 ) (8.7 )%

Cleco Power’s net income in the ~~second~~third quarter of 2011 ~~decreased $3.4~~increased $1.5 million, or ~~8.7%~~2.9%, compared to the ~~second~~third quarter of 2010. Contributing factors include:

§	~~higher~~lower electric customer credits,

§	lower maintenance expense,

§	higher other operations revenue,

§	lower non-recoverable fuel and ~~maintenance expenses,~~power purchased,

§	higher base revenue, and

§	higher ~~interest charges.~~other income.

These were partially offset by:

§	higher ~~other operations revenue,~~interest charges,

§	higher ~~base revenue,~~other operations expense,

§	~~lower non-recoverable fuel and power purchased,~~higher depreciation, and

§	~~lower~~higher effective income tax rate.

	FOR THE THREE MONTHS ENDED JUNE 30,							FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(MILLION kWh)	2011		2010		FAVORABLE/ (UNFAVORABLE)			2011	2010	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential		871		854		2.0	%	1,274	1,263	0.9 %
Commercial		648		627		3.3	%	796	771	3.2 %
Industrial		597		543		9.9	%	619	592	4.6 %
Other retail		33		34		(2.9	)%	36	37	(2.7)%
Total retail		2,149		2,058		4.4	%	2,725	2,663	2.3 %
Sales for resale		397		426		(6.8	)%	652	639	2.0 %
Unbilled		204		251		(18.7	)%	(129)	(125)	(3.2)%
Total retail and wholesale customer sales		2,750		2,735		0.5	%	3,248	3,177	2.2 %

	FOR THE THREE MONTHS ENDED JUNE 30,									FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010			FAVORABLE/ (UNFAVORABLE)			2011			2010			FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	69,338		$	62,012			11.8	%	$	99,144		$	100,301			(1.2	)%
Commercial		44,309			39,140			13.2	%		48,732			48,193			1.1	%
Industrial		21,205			19,050			11.3	%		22,468			22,563			(0.4	)%
Other retail		2,418			2,249			7.5	%		2,600			2,721			(4.4	)%
Surcharge		2,833			1,660			70.7	%		2,983			1,350			121.0	%
Other		(1,585	)		(1,704	)		7.0	%		(1,578	)		(1,704	)		7.4	%
Total retail		138,518			122,407			13.2	%		174,349			173,424			0.5	%
Sales for resale		11,039			10,673			3.4	%		11,455			14,745			(22.3	)%
Unbilled		8,377			23,977			(65.1	)%		(7,645	)		(11,585	)		34.0	%
Total retail and wholesale customer sales	$	157,934		$	157,057			0.6	%	$	178,159		$	176,584			0.9	%

Cleco Power’s residential customers’ demand for electricity largely is affected by weather. Weather generally is 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 available and because winter energy is priced below the rate charged for energy used in the summer. Normal heating-degree days and cooling-degree days are calculated for a month by separately calculating the average actual heating- and cooling-degree days for that month over a period of 30 years.

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

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

FOR THE THREE MONTHS ENDED JUNE 30,

2011 CHANGE

2011

2010

NORMAL

PRIOR YEAR

NORMAL

Cooling-degree days 1,206 1,163 898 3.7 % 34.3 %

			FOR THE THREE MONTHS ENDED SEPTEMBER 30,
				2011 CHANGE
	2011	2010	NORMAL	PRIOR YEAR	NORMAL
Cooling-degree days	1,671	1,728	1,489	(3.3)%	12.2%

Base

Base revenue increased ~~$0.9~~$1.6 million, or ~~0.6%~~0.9%, during the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to higher electric sales, generally resulting from favorable weather. Although cooling degree days for the quarter were slightly down, Cleco Power experienced warmer weather in August 2011 as compared to the same period last year. Cleco Power anticipates incremental base revenue over the remainder of 2011 of ~~$3.6~~$1.8 million and an additional $6.8 million for 2012 associated with the completed portions of the Acadiana Load Pocket transmission project.

Cleco Power expects new industrial load to be added during the remainder of 2011, 2012, and 2013, principally driven by expected development of Haynesville shale gas recently discovered in Northwestern Louisiana and the construction of a new gas storage facility. In addition, Cleco Power also expects to begin providing service to expansions of current customers’ operations, as well as service to a new customer. These expansions of service to current customers and service to a new customer are expected to contribute base revenue of ~~$4.7~~$2.2 million during the remainder of 2011, an additional ~~$2.4~~$2.9 million in 2012, and an additional ~~$0.3~~$0.4 million in 2013. For information on the effects of future energy sales on Cleco Power’s financial condition, results of operations, and cash flows, see “Risk Factors — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Fuel Cost Recovery

Fuel cost recovery revenue billed to customers decreased ~~$1.5~~$2.7 million, or ~~1.4%~~1.8%, during the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to decreases in the per-unit cost of fuel used for electric ~~generation.~~generation and power purchased for utility customers. Also contributing to the decrease were lower volumes of power purchased for utility customers. Partially offsetting the decrease were ~~increases in the per-unit cost of power purchased for utility customers and~~ higher volumes of fuel used for electric ~~generation and power purchased for utility customers.~~generation. 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 fuel adjustment clause, which enables Cleco Power to pass on to its customers substantially all such charges. Approximately ~~95%~~94% of Cleco Power’s total fuel cost during the ~~second~~third quarter of 2011 was regulated by the LPSC, while the remainder was regulated by FERC. Recovery of fuel adjustment clause costs is subject to refund until approval is received from the LPSC. For information on Cleco Power’s current LPSC fuel audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — LPSC Fuel Audit.”

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

Electric Customer Credits

Electric customer credits ~~increased $4.8~~decreased $8.2 million, or 129.3%, during the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 ~~as a result of recording an estimated accrual~~primarily due to lower accruals for ~~a rate refund based on actual results for the 12 months ended June 30, 2011.~~customer credits. For additional information on the accrual for electric customer credits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 9 — Electric Customer Credits.”

Other Operations

Other operations revenue increased $2.7 million, or ~~27.7%~~21.4%, in the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to $1.6 million of higher mineral lease payments and $1.1 million related to the gain ~~related to~~on sales of Cleco Power’s fuel oil supply.

Operating Expenses

Operating expenses ~~increased $3.0~~decreased $5.4 million, or ~~1.6%~~2.3%, in the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010. Fuel used for electric generation (recoverable) ~~decreased $2.4~~increased $23.9 million, or ~~3.0%~~24.4%, primarily due to ~~lower per unit costs~~higher volumes of fuel used for electric generation. Partially offsetting this ~~decrease~~increase were ~~higher volumes~~lower per unit costs of fuel used for electric generation as compared to the ~~second~~third quarter of 2010. Power purchased for utility customers (recoverable) ~~increased $0.9~~decreased $26.6 million, or ~~3.9%~~51.9%, largely due to ~~higher~~lower volumes and ~~higher~~lower per unit costs of purchased power. Fuel used for electric generation and power purchased for utility customers generally are influenced by natural gas prices, as well as availability of transmission. However, other factors such as scheduled and/or unscheduled outages, unusual maintenance or repairs, or other developments may affect fuel used for electric generation and power purchased for utility customers. Non-recoverable fuel and power purchased decreased ~~$0.9~~$2.0 million, or ~~41.8%~~63.9%, primarily due to the absence of non-recoverable expenses related to fixed-price power that was provided to a wholesale customer in the ~~second~~third quarter of 2010. Other operations expense increased ~~$1.9~~$2.5 million, or ~~6.6%~~8.8%, primarily due to higher transmission and generating station expenses, ~~higher customer service expenses,~~ and higher employee benefit costs and administrative expenses. ~~Partially offsetting these increases were lower professional fees.~~ Maintenance expense ~~increased $2.9~~decreased $4.5 million, or ~~14.6%~~22.2%, primarily due to lower generating station and distribution maintenance work performed during the third quarter of 2011. Depreciation expense increased $1.7 million, or 6.4%, primarily due to higher ~~transmission, distribution,~~amortization expense as a result of a change in rates and ~~generating station maintenance work performed during~~ the ~~second quarter of~~Teche Unit 4 Blackstart Project being placed in service in 2011.

~~Interest Charges~~Other Income

~~Interest charges~~Other income increased ~~$2.0~~$1.0 million, or ~~9.0%~~351.5%, during the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to higher revenue from mutual assistance to other utilities for restoration efforts and higher royalty payments.

Interest Charges

Interest charges increased $9.3 million, or 57.7%, during the third quarter of 2011 compared to the third quarter of 2010 primarily due to $7.3 million related to uncertain tax positions and $3.8 million related to the November 2010 issuance of $250.0 million of senior notes. Partially offsetting this increase ~~were~~was a $1.8 million decrease related to other miscellaneous interest charges and the repayment of insured quarterly notes and a bank term loan in October 2010 and November 2010, respectively.

Income Taxes

Federal and state income taxes ~~decreased $3.4~~increased $5.1 million, or ~~17.5%~~19.2%, during the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010. The ~~decrease~~increase is primarily due to a ~~$2.8~~$2.5 million change in pre-tax income excluding AFUDC equity, ~~and $2.4~~$1.9 million for miscellaneous items, and $1.5 million to record tax expense at the projected annual effective tax ~~impact~~rate. These increases were partially offset by $0.7 million for tax benefits taken on the prior year income tax return and $0.1 million to record tax expense at the projected annual effective tax rate.

Midstream

	FOR THE THREE MONTHS ENDED SEPTEMBER 30,
						FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2011			2010		VARIANCE			CHANGE
Operating revenue
Tolling operations	$	9,133		$	11,153	$	(2,020	)		(18.1	)%
Other operations		1			1		-			-
Affiliate revenue		-			5		(5	)		(100.0	)%
Operating revenue		9,134			11,159		(2,025	)		(18.1	)%
Operating expenses
Other operations		2,121			1,944		(177	)		(9.1	)%
Maintenance		(1,131	)		2,987		4,118			137.9	%
Depreciation		1,457			1,446		(11	)		(0.8	)%
Taxes other than income taxes		620			76		(544	)		(715.8	)%
(Gain) loss on sale of assets		(62	)		6		68			*
Total operating expenses		3,005			6,459		3,454			53.5	%
Operating income	$	6,129		$	4,700	$	1,429			30.4	%
Equity income from investees, before tax	$	-		$	2,494	$	(2,494	)		(100.0	)%
Other income	$	1,012		$	1,836	$	(824	)		(44.9	)%
Federal and state income tax expenses	$	444		$	2,758	$	2,314			83.9	%
Net income	$	5,946		$	5,156	$	790			15.3	%
* Not meaningful

Factors affecting Midstream during the third quarter of ~~a valuation allowance~~2011 are described below.

Operating Revenue

Operating revenue decreased $2.0 million, or 18.1%, in the third quarter of 2011 compared to the third quarter of 2010 primarily due to lower tolling revenue at Evangeline resulting from lower plant run time.

4950

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

for capital loss carryforwards recorded in 2010 and reversed in 2011 due to capital gains generated in 2011. These decreases were partially offset by $1.8 million to record tax expense at the projected annual effective tax rate.

~~Midstream~~

FOR THE THREE MONTHS ENDED JUNE 30,

FAVORABLE/(UNFAVORABLE)

(THOUSANDS)
2011

2010

VARIANCE

CHANGE

Operating revenue
Tolling operations
$ 4,222 $ 4,399 $ (177 ) (4.0 )%
Other operations
7 1 6 600.0 %
Affiliate revenue
12 13 (1 ) (7.7 )%
Operating revenue
4,241 4,413 (172 ) (3.9 )%
Operating expenses
Other operations
2,058 1,822 (236 ) (13.0 )%
Maintenance
5,534 1,851 (3,683 ) (199.0 )%
Depreciation
1,457 1,444 (13 ) (0.9 )%
Taxes other than income taxes
626 75 (551 ) (734.7 )%
(Gain) loss on sale of assets (506 ) 6 512 *
Total operating expenses
9,169 5,198 (3,971 ) (76.4 )%
Operating loss $ (4,928 ) $ (785 ) $ (4,143 ) (527.8 )%
Equity income (loss) from investees, before tax $ 61,440 $ (1,129 ) $ 62,569 *
Interest charges $ 628 $ 1,431 $ 803 56.1 %
Federal and state income tax expenses (benefit) $ 21,536 $ (1,241 ) $ (22,777 ) *
Net income (loss) $ 34,425 $ (1,991 ) $ 36,416 *
* Not meaningful

~~Factors affecting Midstream during the second quarter of 2011 are described below.~~

Operating ~~Revenue~~Expenses

Operating ~~revenue~~expenses decreased ~~$0.2~~$3.5 million, or ~~3.9%~~53.5%, in the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to lower ~~tolling revenue~~maintenance expenses at Evangeline ~~resulting from lower plant run time.~~

~~Operating Expenses~~

~~Operating~~and $2.4 million of insurance recovery related to outage expenses ~~increased $4.0 million, or 76.4%, in~~incurred during the second quarter of ~~2011 compared to the second quarter of 2010 primarily due to higher maintenance expenses at Evangeline resulting from an outage.~~2011.

Equity Income from Investees

Equity income from investees ~~increased $62.6~~decreased $2.5 million, ~~during~~or 100.0%, in the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to ~~increased~~the absence in the third quarter of 2011 of equity earnings at ~~APH. The increased equity earnings were primarily from the recognition of a $62.0 million gain~~APH resulting from the disposition of Acadia Unit 2 and the subsequent consolidation of Acadia ~~Power Station’s remaining common facilities to Entergy Louisiana.~~effective April 29, 2011. For additional information on the disposition of Acadia Unit 2, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Variable Interest Entities and Note 15 — Acadia Transactions — Acadia Unit 2.”

~~Interest Charges~~Other Income

~~Interest charges~~Other income decreased $0.8 million, or ~~56.1%~~44.9%, ~~during~~in the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 ~~primarily due to~~largely as a result of lower ~~interest charges~~contractual expirations of underlying indemnifications related to ~~uncertain tax positions.~~Acadia Unit 1.

��

Income Taxes

Federal and state income taxes ~~increased $22.8~~decreased $2.3 million, or 83.9%, during the ~~second~~third quarter of 2011 compared to the ~~second~~third quarter of 2010 primarily due to tax benefits taken in the ~~disposition of Acadia Unit 2 to Entergy Louisiana.~~prior year income tax return and a decrease in pre-tax income. The effective income tax rate is different than the federal statutory rate due to state tax expense.

Comparison of the ~~Six~~Nine Months Ended ~~June~~September 30, 2011, and 2010

Cleco Consolidated

			FOR THE SIX MONTHS ENDED JUNE 30,										FOR THE NINE MONTHS ENDED SEPTEMBER 30,
					FAVORABLE/(UNFAVORABLE)										FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2011		2010		VARIANCE			CHANGE			2011		2010		VARIANCE			CHANGE
Operating revenue, net	$	526,613	$	548,188	$	(21,575	)		(3.9	)%	$	878,193	$	892,081	$	(13,888	)		(1.6	)%
Operating expenses		391,088		412,197		21,109			5.1	%		626,489		656,101		29,612			4.5	%
Operating income	$	135,525	$	135,991	$	(466	)		(0.3	)%	$	251,704	$	235,980	$	15,724			6.7	%
Allowance for other funds used during construction	$	2,854	$	10,165	$	(7,311	)		(71.9	)%	$	3,757	$	11,052	$	(7,295	)		(66.0	)%
Equity income from investees, before tax	$	62,052	$	36,718	$	25,334			69.0	%	$	62,051	$	39,212	$	22,839			58.2	%
Gain on toll settlement	$	-	$	148,402	$	(148,402	)		-		$	-	$	148,402	$	(148,402	)		(100.0	)%
Other income	$	2,254	$	807	$	1,447			179.3	%
Interest charges	$	52,232	$	46,952	$	(5,280	)		(11.2	)%	$	78,011	$	72,020	$	(5,991	)		(8.3	)%
Federal and state income taxes	$	48,714	$	97,256	$	48,542			49.9	%	$	73,451	$	127,411	$	53,960			42.4	%
Net income applicable to common stock	$	99,225	$	185,132	$	(85,907	)		(46.4	)%	$	165,067	$	234,733	$	(69,666	)		(29.7	)%

Consolidated net income applicable to common stock decreased ~~$85.9~~$69.7 million, or ~~46.4%~~29.7%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to the absence of 2010 gains at Midstream related to the termination of the Evangeline Tolling Agreement and Acadia Unit 1 transaction, ~~in the first half of 2010,~~ partially offset by the 2011 gain from the Acadia Unit 2 transaction. Also contributing to the decrease were lower Cleco Power ~~and~~earnings. Partially offsetting these decreases were higher corporate earnings.

Operating revenue, net decreased ~~$21.6~~$13.9 million, or ~~3.9%~~1.6%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 largely as a result of lower fuel cost recovery revenue at Cleco Power due to lower per unit costs of fuel used for electric ~~generation. Also contributing to the decrease were~~generation and lower per unit costs and volumes of power purchased for utility customers.

Operating expenses decreased ~~$21.1~~$29.6 million, or ~~5.1%~~4.5%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to lower per unit costs and volumes of power purchased for utility customers.

Allowance for other funds used during construction decreased $7.3 million, or ~~71.9%~~66.0%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to the cessation of AFUDC accruals related to the completion of construction activity at Madison Unit 3.

Equity income from investees increased ~~$25.3~~$22.8 million, or ~~69.0%~~58.2%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to increased equity earnings at

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

APH primarily from the recognition of a $62.0 million gain from the disposition of Acadia Unit 2 and Acadia Power Station’s remaining common facilities to Entergy ~~Louisiana and lower maintenance expenses on Acadia Unit 2.~~Louisiana. Partially offsetting this increase was the absence of the gain from Cleco Power’s acquisition of Acadia Unit 1 and half of Acadia Power Station’s related common facilities during 2010. For additional information on the Acadia Unit 1 and 2 transactions, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Variable Interest Entities and Note 15 — Acadia Transactions.”

Gain on toll settlement was $148.4 million in the first ~~six~~nine months of 2010 due to transactions related to the termination of the existing Evangeline Tolling Agreement and the execution of the Evangeline 2010 Tolling Agreement. For additional information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Evangeline Transactions.”

~~Other income~~Interest charges increased ~~$1.4~~$6.0 million, or ~~179.3%~~8.3%, induring the first ~~six~~nine months of 2011 compared to the first ~~six months of 2010 primarily due to higher gains on the cash surrender value of life insurance policies at Cleco Corporation.~~

~~Interest charges increased $5.3 million, or 11.2%, during the first six months of 2011 compared to the first six~~nine months of 2010 primarily due to higher interest charges at Cleco Power. Partially offsetting this increase were lower corporate interest charges related to uncertain tax positions and the repayment of a bank term loan in April 2011.

Federal and state income taxes decreased ~~$48.5~~$54.0 million, or ~~49.9%~~42.4%, during the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010. Decreases include ~~$49.0~~$44.7 million for the change in pre-tax income excluding AFUDC equity, $2.4 million for the tax impact of a valuation allowance for capital loss carryforwards recorded in 2010 and reversed in 2011 due to capital gains generated in 2011, $1.9 million for a Medicare D adjustment resulting from new legislation enacted in 2010, ~~and $1.0~~$7.8 million for ~~other miscellaneous items.~~tax benefits taken on the prior year income tax return, and $0.2 million to record tax expense at the consolidated annual projected effective tax rate. These decreases were partially offset by $3.0 million for the adjustment in 2010 related to the implementation of the new rates approved by the ~~LPSC and $2.8 million to record tax expense at the consolidated projected annual effective tax rate.~~LPSC.

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

Results of operations for Cleco Power and Midstream are more fully described below.

Cleco Power

				FOR THE SIX MONTHS ENDED JUNE 30,											FOR THE NINE MONTHS ENDED SEPTEMBER 30,
						FAVORABLE/(UNFAVORABLE)												FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2011			2010		VARIANCE			CHANGE			2011			2010			VARIANCE			CHANGE
Operating revenue
Base	$	292,007		$	272,005	$	20,002			7.4	%	$	470,166		$	448,589		$	21,577			4.8	%
Fuel cost recovery		206,946			241,894		(34,948	)		(14.4	)%		353,318			390,939			(37,621	)		(9.6	)%
Electric customer credits		(5,256	)		-		(5,256	)		-			(3,405	)		(6,314	)		2,909			46.1	%
Other operations		24,696			20,140		4,556			22.6	%		40,261			32,959			7,302			22.2	%
Affiliate revenue		694			686		8			1.2	%		1,041			1,029			12			1.2	%
Operating revenue, net		519,087			534,725		(15,638	)		(2.9	)%		861,381			867,202			(5,821	)		(0.7	)%
Operating expenses
Fuel used for electric generation – recoverable		173,421			172,295		(1,126	)		(0.7	)%		295,160			270,165			(24,995	)		(9.3	)%
Power purchased for utility customers – recoverable		33,519			69,594		36,075			51.8	%		58,145			120,812			62,667			51.9	%
Non-recoverable fuel and power purchased		2,222			6,978		4,756			68.2	%		3,369			10,154			6,785			66.8	%
Other operations		55,901			52,460		(3,441	)		(6.6	)%		87,086			81,111			(5,975	)		(7.4	)%
Maintenance		38,194			31,426		(6,768	)		(21.5	)%		53,962			51,697			(2,265	)		(4.4	)%
Depreciation		55,683			50,808		(4,875	)		(9.6	)%		84,543			77,941			(6,602	)		(8.5	)%
Taxes other than income taxes		16,783			15,949		(834	)		(5.2	)%		25,585			25,110			(475	)		(1.9	)%
Gain (loss) on sale of assets		(1	)		39		40			102.6	%
(Gain) loss on sale of assets													(7	)		47			54			114.9	%
Total operating expenses		375,722			399,549		23,827			6.0	%		607,843			637,037			29,194			4.6	%
Operating income	$	143,365		$	135,176	$	8,189			6.1	%	$	253,538		$	230,165		$	23,373			10.2	%
Allowance for other funds used during construction	$	2,854		$	10,165	$	(7,311	)		(71.9	)%	$	3,757		$	11,052		$	(7,295	)		(66.0	)%
Other income												$	2,168		$	1,038		$	1,130			108.9	%
Other expense												$	4,499		$	3,619		$	(880	)		(24.3	)%
Interest charges	$	48,723		$	41,060	$	(7,663	)		(18.7	)%	$	74,029		$	57,104		$	(16,925	)		(29.6	)%
Federal and state income taxes	$	30,279		$	31,731	$	1,452			4.6	%	$	61,935		$	58,299		$	(3,636	)		(6.2	)%
Net income	$	65,724		$	71,249	$	(5,525	)		(7.8	)%	$	119,557		$	123,584		$	(4,027	)		(3.3	)%

Cleco Power’s net income in the first ~~six~~nine months of 2011 decreased ~~$5.5~~$4.0 million, or ~~7.8%~~3.3%, compared to the first ~~six~~nine months of 2010. Contributing factors include:

§	higher interest charges,

§	higher other operations and maintenance expenses,

§	~~higher interest charges,~~

§	lower allowance for other funds used during construction,

§	~~higher electric customer credits,~~

§	higher depreciation expense, and

§	higher effective income tax rate.

These were partially offset by:

§	higher base revenue,

§	higher other operations revenue,

§	lower non-recoverable fuel and power purchased expenses, and

§	~~higher other operations revenue.~~

FOR THE SIX MONTHS ENDED JUNE 30,

(MILLION kWh)
2011

2010

FAVORABLE/
(UNFAVORABLE)

Electric sales
Residential
1,831 1,893 (3.3 )%
Commercial
1,242 1,219 1.9 %
Industrial
1,151 1,087 5.9 %
Other retail
66 69 (4.3 )%
Total retail
4,290 4,268 0.5 %
Sales for resale
843 902 (6.5 )%
Unbilled
39 127 (69.3 )%
Total retail and wholesale customer sales 5,172 5,297 (2.4 )%

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~ lower electric customer credits.

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(MILLION kWh)	2011	2010	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	3,105	3,156	(1.6)%
Commercial	2,037	1,990	2.4 %
Industrial	1,770	1,679	5.4 %
Other retail	103	106	(2.8)%
Total retail	7,015	6,931	1.2 %
Sales for resale	1,495	1,541	(3.0)%
Unbilled	(90)	2	*
Total retail and wholesale customer sales	8,420	8,474	(0.6)%
* Not meaningful

	FOR THE SIX MONTHS ENDED JUNE 30,									FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010			FAVORABLE/ (UNFAVORABLE)			2011			2010			FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	136,527		$	108,509			25.8	%	$	235,672		$	208,811			12.9	%
Commercial		88,401			68,703			28.7	%		137,133			116,897			17.3	%
Industrial		41,855			33,211			26.0	%		64,323			55,774			15.3	%
Other retail		4,884			4,006			21.9	%		7,484			6,727			11.3	%
Surcharge		4,550			5,855			(22.3	)%		7,534			7,205			4.6	%
Other		(3,295	)		(2,679	)		(23.0	)%		(4,875	)		(4,383	)		(11.2	)%
Total retail		272,922			217,605			25.4	%		447,271			391,031			14.4	%
Sales for resale		22,978			19,456			18.1	%		34,433			34,199			0.7	%
Unbilled		(3,893	)		34,944			(111.1	)%		(11,538	)		23,359			(149.4	)%
Total retail and wholesale customer sales	$	292,007		$	272,005			7.4	%	$	470,166		$	448,589			4.8	%

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

					FOR THE SIX MONTHS ENDED JUNE 30,										FOR THE NINE MONTHS ENDED SEPTEMBER 30,
							2011 CHANGE									2011 CHANGE
	2011		2010		NORMAL		PRIOR YEAR			NORMAL			2011	2010	NORMAL	PRIOR YEAR	NORMAL
Heating-degree days		937		1,317		999		(28.9	)%		(6.2	)%	937	1,317	999	(28.9)%	(6.2)%
Cooling-degree days		1,345		1,175		964		14.5	%		39.5	%	3,016	2,903	2,453	3.9 %	23.0 %

Base

Base revenue increased ~~$20.0~~$21.6 million, or ~~7.4%~~4.8%, during the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to the base rate increase that became effective in February 2010, which included Madison Unit 3 and the investment in Acadia Unit 1. Also included in base revenue were amounts related to the completed portions of the Acadiana Load Pocket transmission project. Partially offsetting these increases were lower kWh electric sales, primarily related to milder winter weather in the first quarter of 2011. For information on the anticipated effects of changes in base revenue in future periods, see “— Comparison of the Three Months Ended ~~June~~September 30, 2011, and 2010 — Cleco Power — Base.” For information on the effects of future energy sales on Cleco Power’s financial condition, results of operations, and cash flows, see “Risk Factors — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Fuel Cost Recovery

Fuel cost recovery revenue billed to customers decreased ~~$34.9~~$37.6 million, or ~~14.4%~~9.6%, during the first ~~six~~nine months of 2011

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

compared to the first ~~six~~nine months in 2010 primarily due to decreases in the per-unit cost of fuel used for electric generation, ~~and~~ power purchased for utility ~~customers. Also contributing to the decrease were~~customers, and lower volumes of power purchased for utility customers. Partially offsetting the decrease were higher volumes of fuel used for electric generation. Lower volumes of power purchased were primarily due to Madison Unit 3 being placed in service and the acquisition of Acadia Unit 1 during 2010. For information on Cleco Power’s ability to recover fuel and purchase power costs, see “— Comparison of the Three Months Ended ~~June~~September 30, 2011, and 2010 — Cleco Power — Fuel Cost Recovery.”

Electric Customer Credits

Electric customer credits ~~increased $5.3~~decreased $2.9 million, or 46.1%, during the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 as a result of ~~recording an~~a lower estimated accrual for a rate ~~refund based on actual results for the 12 months ended June 30, 2011.~~refund. For additional information on the accrual of electric customer credits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 9 — Electric Customer Credits.”

Other Operations

Other operations revenue increased ~~$4.6~~$7.3 million, or ~~22.6%~~22.2%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to ~~$2.7~~a $3.8 million ~~related to the~~ gain on ~~sales~~sale of Cleco Power’s fuel oil supply, ~~$1.1~~$2.7 million of higher mineral lease payments, ~~$0.5~~$0.6 million related to the absence of net unfavorable results ~~in the first half of 2010~~ relating to economic hedge transactions associated with fixed-price power that was provided to a wholesale customer, and $0.3 million of higher customer fees.

Operating Expenses

Operating expenses decreased ~~$23.8~~$29.2 million, or ~~6.0%~~4.6%, in the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010. Fuel used for electric generation (recoverable) increased ~~$1.1~~$25.0 million, or ~~0.7%~~9.3%, primarily due to higher volumes of fuel used as compared to the first ~~six~~nine months of 2010. Partially offsetting this increase were lower per unit costs of fuel used for electric generation. Power purchased for utility customers (recoverable) decreased ~~$36.1~~$62.7 million, or ~~51.8%~~51.9%, largely due to lower volumes and lower per-unit costs of purchased power. Lower volumes of power purchased were primarily due to Madison Unit 3 being placed in service and the acquisition of Acadia Unit 1. Fuel used for electric generation and power purchased for utility customers generally are influenced by natural gas prices, as well as availability of transmission. However, other factors such as scheduled and/or unscheduled outages, unusual maintenance or repairs, or other developments may affect fuel used for electric generation and power purchased for utility customers. Non-recoverable fuel and purchased power decreased ~~$4.8~~$6.8 million, or ~~68.2%~~66.8%, primarily due to the absence of non-recoverable expenses related to fixed-price power that was provided to a wholesale customer during 2010 and lower capacity payments made during the first ~~six~~nine months of 2011 primarily due to the commencement of commercial operations of Madison Unit 3 and the acquisition of Acadia Unit 1. Other operations expense increased ~~$3.4~~$6.0 million, or ~~6.6%~~7.4%, primarily due to higher ~~transmission~~generating station and ~~generating station~~distribution expenses, higher employee benefit costs and administrative expenses and higher customer service ~~expenses, and higher general liability expense.~~expenses. Partially offsetting these increases were lower professional fees. Maintenance expense increased ~~$6.8~~$2.3 million, or ~~21.5%~~4.4%, primarily due to higher generating station,

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

distribution, and transmission maintenance work performed during the first ~~six~~nine months of 2011. Other operations and maintenance expenses were impacted during the first ~~six~~nine months of 2011 as a result of Madison Unit 3 being placed in service and the acquisition of Acadia Unit 1. Depreciation expense increased ~~$4.9~~$6.6 million, or ~~9.6%~~8.5%, largely due to Madison Unit 3 being placed in service and the acquisition of Acadia Unit 1. ~~Taxes other than income taxes increased $0.8 million, or 5.2%, primarily due to higher property taxes, payroll taxes, and state franchise taxes.~~

Allowance for Other Funds Used During Construction

Allowance for other funds used during construction decreased $7.3 million, or ~~71.9%~~66.0%, during the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to the cessation of AFUDC accruals related to the completion of construction activity at Madison Unit 3.

Other Income

Other income increased $1.1 million, or 108.9%, during the first nine months of 2011 compared to the first nine months of 2010 primarily due to higher royalty payments and higher revenue from mutual assistance to other utilities for restoration efforts.

Other Expense

Other expense increased $0.9 million, or 24.3%, during the first nine months of 2011 compared to the first nine months of 2010 primarily due to higher amortization of the plant acquisition adjustment related to Cleco Power’s acquisition of Acadia Unit 1 and higher expenses from mutual assistance to other utilities for restoration efforts.

Interest Charges

Interest charges increased ~~$7.7~~$16.9 million, or ~~18.7%~~29.6%, during the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010 primarily due to ~~$7.5~~$11.3 million related to the November 2010 issuance of $250.0 million of senior notes, $7.6 million related to uncertain tax positions, and $2.7 million of lower interest charges capitalized in 2011 compared to 2010 ~~(allowance for borrowed funds used during construction)~~ associated with Madison Unit 3. Partially offsetting this increase was ~~$1.9~~$2.9 million from the repayment of insured quarterly notes and a bank term loan in October 2010 and November 2010, respectively, and ~~$0.6~~$1.8 million of other miscellaneous interest charges.

Income Taxes

Federal and state income taxes ~~decreased $1.5~~increased $3.6 million, or ~~4.6%~~6.2%, during the first ~~six~~nine months of 2011 compared to the first ~~six~~nine months of 2010. The ~~decrease is primarily due~~increase includes $2.6 million for the change in pre-tax income excluding AFUDC equity, $3.0 million for the adjustment in 2010 related to the

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

implementation of new rates approved by the LPSC, $1.7 million for miscellaneous items, and $0.9 million to record tax expense at the projected annual effective tax rate. These increases were partially offset by $2.4 million for the tax impact of a valuation allowance for capital loss carryforwards recorded in 2010 and reversed in 2011 due to capital gains generated in 2011, $1.5 million for a Medicare D adjustment resulting from new legislation enacted in 2010, ~~$0.6 million to record tax expense at the projected annual effective tax rate,~~ and ~~$0.1 for other miscellaneous items. These decreases were partially offset by $3.0~~$0.7 million for tax benefits taken in the ~~adjustment in 2010 related to the implementation of new rates approved by the LPSC and $0.1 million for the change in pre-tax~~prior year income ~~including AFUDC equity.~~

tax return.

Midstream

	FOR THE SIX MONTHS ENDED JUNE 30,											FOR THE NINE MONTHS ENDED SEPTEMBER 30,
						FAVORABLE/(UNFAVORABLE)											FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2011			2010		VARIANCE			CHANGE			2011			2010		VARIANCE			CHANGE
Operating revenue
Tolling operations	$	7,003		$	11,863	$	(4,860	)		(41.0	)%	$	16,137		$	23,016	$	(6,879	)		(29.9	)%
Other operations		7			1		6			600.0	%		8			2		6			300.0	%
Affiliate revenue		45			918		(873	)		(95.1	)%		45			924		(879	)		(95.1	)%
Operating revenue		7,055			12,782		(5,727	)		(44.8	)%		16,190			23,942		(7,752	)		(32.4	)%
Operating expenses
Other operations		3,874			4,016		142			3.5	%		5,999			5,962		(37	)		(0.6	)%
Maintenance		6,666			3,916		(2,750	)		(70.2	)%		5,535			6,902		1,367			19.8	%
Depreciation		2,913			2,887		(26	)		(0.9	)%		4,370			4,334		(36	)		(0.8	)%
Taxes other than income taxes		1,260			185		(1,075	)		(581.1	)%		1,880			261		(1,619	)		(620.3	)%
(Gain) loss on sale of assets		(494	)		7		501			*			(556	)		12		568			*
Total operating expenses		14,219			11,011		(3,208	)		(29.1	)%		17,228			17,471		243			1.4	%
Operating (loss) income	$	(7,164	)	$	1,771	$	(8,935	)		(504.5	)%	$	(1,038	)	$	6,471	$	(7,509	)		(116.0	)%
Equity income from investees, before tax	$	62,053		$	36,717	$	25,336			69.0	%	$	62,053		$	39,211	$	22,842			58.3	%
Gain on toll settlement	$	-		$	148,402	$	(148,402	)		*		$	-		$	148,402	$	(148,402	)		(100.0	)%
Interest charges	$	1,211		$	4,863	$	3,652			75.1	%	$	1,963		$	5,972	$	4,009			67.1	%
Federal and state income tax expense	$	20,853		$	70,147	$	49,294			70.3	%	$	21,296		$	72,905	$	51,609			70.8	%
Net income	$	33,328		$	112,020	$	(78,692	)		(70.2	)%	$	39,274		$	117,176	$	(77,902	)		(66.5	)%
* Not meaningful

5556

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

facility matures on November 23, 2014. This facility provides for working capital and other needs. Cleco Corporation’s borrowing costs under the facility are equal to LIBOR plus 2.05%, plus facility fees of 0.45%. The interest rate on outstanding borrowings under the credit facility at June 30, 2011, was 2.24%. The existing borrowing had 30-day terms and matured on July 29, 2011, at which time the borrowings were repaid. An additional line of credit, with a bank, up to $10.0 million is available to support Cleco Corporation’s working capital needs.

Cash and cash equivalents available at June 30, 2011, were $9.0 million. Cash and cash equivalents available at June 30, 2011, increased $3.6 million when compared to cash and cash equivalents available at December 31, 2010, primarily due to routine working capital fluctuations. ~~At June 30, 2011, credit facility draws reduced available borrowings by $10.0 million, leaving an available borrowing capacity of $190.0 million.~~

Cleco Power

There was no short-term debt outstanding at Cleco Power at ~~June~~September 30, 2011, or December 31, 2010. At ~~June~~September 30, 2011, Cleco Power’s long-term debt outstanding was ~~$1.4~~$1.38 billion, of which ~~$12.7~~$13.1 million was due within one year, compared to ~~$1.4~~$1.40 billion at December 31, 2010, of which $12.3 million was due within one year. The ~~$12.7~~$13.1 million of long-term debt due within one year at ~~June~~September 30, 2011, represents principal payments for the Cleco Katrina/Rita storm recovery bonds scheduled to be paid in the next twelve months. For Cleco Power, long-term debt decreased ~~$6.9~~$13.3 million primarily due to ~~a $6.3~~$12.3 million of scheduled Cleco Katrina/Rita storm recovery bond principal ~~payment~~payments made in March ~~2011.~~and September 2011, and $1.3 million of capital lease payments. These decreases were partially offset by debt premium amortizations of $0.3 million.

At ~~June~~September 30, 2011, no borrowings were outstanding under Cleco Power’s $300.0 million credit facility. This facility provides for working capital and other needs. Cleco ~~Power’s borrowing costs under the facility are equal to LIBOR plus 1.90%, plus facility fees of 0.35%. An additional line~~Corporation and Cleco Power have uncommitted lines of credit with a bank that allow up to $10.0 million ~~also is available~~each in short term borrowings, but no more than $10.0 million in aggregate, to support ~~Cleco Power’s~~their working capital needs.

At June 30, 2011, and December 31, 2010, Cleco Power had a working capital surplus of $192.6 million and $259.1 million, respectively. Included in working capital at June 30, 2011, and December 31, 2010, were $8.1 million and $15.0 million, respectively, which were restricted for the use of debt payments. The $66.5 million decrease in working capital is primarily due to a decrease in cash and cash equivalents, the recognition of uncertain tax positions and related interest charges expected to be settled in the next 12 months as a current liability, and the reduction of fuel inventories. Cash and cash equivalents decreased $35.1 million, as discussed below.

Cash and cash equivalents available at ~~June~~September 30, 2011, were ~~$149.8~~$143.0 million, combined with $300.0 million facility capacity for total liquidity of ~~$449.8~~$443.0 million. Cash and cash equivalents decreased ~~$35.1~~$41.9 million, when compared to cash and cash equivalents at December 31, 2010, primarily due to the repayment of debt, a contribution to the pension plan, and additions to property, plant and equipment.

At September 30, 2011, and December 31, 2010, Cleco ~~Power’s~~Power had a working capital surplus of $149.2 million and $259.1 million, respectively. The $109.9 million decrease in working capital is primarily due to:

§	$44.7 million reduction of fuel inventories,

§	$41.9 million decrease in cash and cash equivalents as discussed above,

§	$30.0 million of mark-to-market losses on the treasury rate lock outstanding at September 30, 2011, and

§	$11.4 million net reduction of restricted cash used for GO Zone projects and Cleco Katrina/Rita debt service payments.

These decreases in working capital were partially offset by:

§	$10.3 million reduction in the deferred construction carrying costs owed to customers in the next 12 months, and

§	$3.9 million net increase related to changes in the recognition of current taxes and uncertain tax positions and related interest charges expected to be settled in the next 12 months.

The $32.0 million solid waste disposal facility bonds due in 2038, which were issued by the Rapides Finance Authority for the benefit of Cleco Power in October 2008, were required to be mandatorily tendered by the bondholders for purchase on October 1, 2011, pursuant to the terms of the indenture. On October 3, 2011, Cleco Power purchased all $32.0 million outstanding bonds at face value plus $1.0 million of accrued interest. In connection with the purchase, the interest rate of the bonds was converted to a weekly mode and will reset each week based on the SIFMA (Securities Industry and Financial Markets Association) index. The initial interest rate of the bonds at October 3, 2011, was 0.16% per annum. The bonds were issued by the Rapides Finance Authority in connection with a loan agreement between the Rapides Finance Authority and Cleco ~~Power’s~~Power. The bonds remain outstanding and Cleco Power will report the bonds as a $32.0 million long-term liability and a corresponding $32.0 million long-term asset. Interest expense will continue to be recorded with a corresponding amount recorded as interest income, excluding amortization of debt issuance costs. Cleco Power has the option to remarket the bonds for new terms and new interest rates, both to be determined by market conditions.

The $100.0 million GO Zone bonds due in 2038, which were issued by the Louisiana Public Facilities Authority for the benefit of Cleco Power, are required to be mandatorily tendered by the holders for purchase on ~~October 1, 2011, and~~ December 1, 2011, ~~respectively,~~ pursuant to the terms of the ~~respective indentures,~~indenture governing the bonds, at which time Cleco Power will have the option to either repay all $100.0 million of Cleco Power’s obligations under the ~~respective~~ loan ~~agreements~~agreement relating to the bonds and hold the bonds or cause the bonds to be retired, or cause the bonds to be remarketed. Cleco Power ~~expects~~has the option to cause the bonds to be remarketed for new terms at new interest rates, both to be determined by market conditions.

~~Midstream~~

~~Midstream had no short- or long-term debt outstanding at June 30, 2011, or December 31, 2010.~~

Cash Generation and Cash Requirements

Restricted Cash

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes. ~~At June 30, 2011, and December 31, 2010, $35.2 million and $41.0 million of cash, respectively, were restricted on Cleco Corporation’s Condensed Consolidated Balance Sheets. At June 30, 2011,~~Cleco’s restricted cash consisted ~~of $0.1 million under~~of:

(THOUSANDS)	AT SEPTEMBER 30, 2011		AT DECEMBER 31, 2010
Diversified Lands’ mitigation escrow	$	97	$	97
Cleco Power’s future storm restoration costs		24,652		25,992
Cleco Power’s renewable energy grant		600		-
Cleco Katrina/Rita’s storm recovery bonds		3,554		8,822
Cleco Power’s GO Zone bonds		-		6,137
Total restricted cash	$	28,903	$	41,048

CLECO CORPORATION
CLECO POWER	2011 3RD QUARTER FORM 10-Q

expenses. In March and ~~$0.6~~September 2011, Cleco Katrina/Rita used $6.3 million ~~reserved at~~and $6.0 million, respectively for scheduled storm recovery bond principal payments and $3.8 million and $3.7 million, respectively for related interest. In 2011, Cleco Power ~~for~~received a renewable energy grant ~~received~~ from the Louisiana Department of Natural Resources. The $5.8 million net decrease in restricted cash from December 31, 2010, to June 30, 2011, is primarily due to the use of Cleco Katrina/Rita funds for a scheduled storm recovery bond payment of $6.3 million and related interest of $3.8 million made in March 2011 and the use of $6.1 million GO Zone bond funds during the six months ended June 30, 2011. These decreases were partially offset by $9.4 million of collections for Cleco Katrina/Rita funds, $0.6 million of a renewable energy grant received, and $0.4 million in collections of storm recovery costs.

Cleco Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was ~~$147.8~~$262.6 million during the first ~~six~~nine months of 2011, compared to ~~$108.0~~$192.4 million during the first ~~six~~nine months of 2010.

Cash provided by operating activities during the first ~~six~~nine months of 2011 increased ~~$39.8~~$70.2 million from the first ~~six~~nine months of 2010, primarily due to the following items:

§	return on equity investment in Acadia of $58.7 million,

~~CLECO CORPORATION~~
~~CLECO POWER~~	~~2011 2ND QUARTER FORM 10-Q~~

§	higher collection of receivables of ~~$38.8~~$47.0 million,

§	sales of fuel oil inventory of ~~$28.0~~$35.2 million,

§	absence of 2010 Madison Unit 3 construction carrying costs, Acadia Unit 1 acquisition costs, rate case costs, and IRP/FRP costs of ~~$19.9 million,~~

§	~~lower vendor payments of $16.3~~$30.3 million, and

§	lower petroleum coke inventory purchases of ~~$10.5 million.~~$26.2 million due to the build-up of inventory in 2010.

These were partially offset by:

§	higher pension plan contributions of $55.0 million,

§	absence of the 2010 collection of a $28.0 million receivable related to the Evangeline transactions,

§	higher vendor payments of $21.7 million, and

§	absence of the 2010 cash portion of the gain related to the Evangeline Restructuring Agreement for $18.5 ~~million,~~

§	~~higher income tax payments of $10.6 million, and~~

§	~~higher maintenance expenses of $9.6~~ million.

Net Investing Cash Flow

Net cash ~~provided by~~used in investing activities was ~~$18.2~~$54.1 million during the first ~~six~~nine months of 2011, compared to ~~net cash used of $196.9~~$234.8 million during the first ~~six~~nine months of 2010. Net cash ~~related to~~used in investing activities during the first ~~six~~nine months of 2011 was ~~higher~~lower than the first nine months of 2010 primarily due to lower additions to property, plant and equipment, the return of equity investment in Acadia, and lower contributions to the tax credit fund, partially offset by lower ~~additions to property, plant and equipment.~~ transfers of cash from restricted accounts.

During the first ~~six~~nine months of 2011, Cleco had ~~an $89.7 million return of equity investment in Acadia and transferred $5.8 million from restricted accounts, primarily related to GO Zone bonds. This was partially offset by~~ additions to property, plant and equipment, net of AFUDC, of ~~$63.2~~$141.9 million and an $18.5 million investment in New Markets Tax Credits. This was partially offset by an $89.7 million return of equity investment in Acadia and the transfer of $12.1 million of cash from restricted accounts, primarily related to GO Zone bonds and cash restricted for storm costs.

During the first ~~six~~nine months of 2010, Cleco had additions to property, plant and equipment, net of AFUDC of ~~$207.5~~$241.7 million, a ~~$17.6~~$28.8 million investment in New Markets Tax Credits, ~~and~~ an $8.5 million investment in ~~Acadia.~~Acadia, and a $0.2 million investment in Oxbow. This was partially offset by the transfer of ~~$37.7~~$45.2 million of cash from restricted accounts, primarily related to Evangeline, ~~and~~ GO Zone ~~bonds.~~bonds, and cash restricted for storm costs.

Net Financing Cash Flow

Net cash used in financing activities was ~~$195.1~~$241.4 million during the first ~~six~~nine months of 2011, compared to ~~$4.1~~$34.9 million during the first ~~six~~nine months of 2010. Net cash used in financing activities during the first ~~six~~nine months of 2011 was ~~more~~higher than the first ~~six~~nine months of 2010 primarily due to lower draws on the revolving credit facility, higher repayments of short-term debt, ~~and~~ the absence of short-term debt ~~issuances.~~issuances, repurchase of common stock, and higher dividends paid on common stock. This was partially offset by lower payments on the ~~revolving~~ credit facility and lower retirements of long-term debt.

During the first ~~six~~nine months of 2011, Cleco repaid a $150.0 million bank term loan ~~$15.0~~and $37.3 million of long-term debt, consisting of $25.0 million of credit facility draws and ~~$6.3~~$12.3 million of long-term bonds. Cleco also used ~~$32.2~~$49.2 million for the payment of common stock ~~dividends.~~dividends and $13.0 million for the repurchase of common stock. This was partially offset by $10.0 million in credit facility draws.

During the first ~~six~~nine months of 2010, Cleco retired ~~$366.1~~$396.7 million of long-term debt, consisting of ~~$325.0~~$350.0 million of credit facility draws, $35.2 million of Evangeline debt, and ~~$5.9~~$11.5 million of long-term bonds. Cleco also used ~~$28.7~~$43.8 million for the payment of common stock dividends. This was partially offset by ~~draws on the revolving~~$255.0 million of credit facility ~~of $240.0 million~~draws and by the issuance of a $150.0 million bank term loan, which was used to facilitate the acquisition of Acadia Unit 1.

Cleco Power Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was ~~$70.8~~$184.7 million during the first ~~six~~nine months of 2011, compared to ~~$34.9~~$99.7 million during the first ~~six~~nine months of 2010.

Cash provided by operating activities during the first ~~six~~nine months of 2011 increased ~~$35.9~~$85.0 million from the first ~~six~~nine months of 2010 primarily due to the following items:

§	higher collection of receivables of $46.0 million,

§	sales of fuel oil inventory of ~~$28.0~~$35.2 million,

§	absence of 2010 Madison 3 construction carrying costs, Acadia Unit 1 acquisition costs, rate case costs, and IRP/FRP costs of ~~$19.9~~$30.3 million,

§	lower ~~vendor payments~~petroleum coke inventory purchases of ~~$12.2~~$26.2 million due to the build-up of inventory in 2010,

§	lower payments to affiliates of ~~$18.2 million,~~

§	~~lower petroleum coke purchases of $10.5~~$17.1 million, and

§	lower income taxes paid of $7.7 million.

These were partially offset by:

§	higher pension plan contributions of $55.0 million, and

§	higher ~~maintenance expenses~~vendor payments of ~~$6.8 million, primarily at Brame Energy Center and Acadia Unit 1.~~$18.2 million.

~~Net Investing Cash Flow~~

Net cash used in investing activities was $48.6 million during the first six months of 2011, compared to $46.4 million during the first six months of 2010. Net cash used in investing activities during 2011 was comparable to the first six months of 2010.

During the first six months of 2011, Cleco Power had additions to property, plant and equipment, net of AFUDC of $55.6 million. This was partially offset by the transfer of $5.8 million of cash from restricted accounts, primarily related to GO Zone bonds.

During the first six months of 2010, Cleco Power had additions to property, plant and equipment, net of AFUDC of $53.6 million. This was partially offset by the transfer of $7.5 million of cash from restricted accounts, primarily related to GO Zone bonds.

~~Net Financing Cash Flow~~

Net cash used in financing activities was $57.3 million during the first six months of 2011, compared to $81.9 million during the first six months of 2010. Net cash used in financing activities during the first six months of 2011 was lower than the first six months of 2010 primarily due to $25.0 million of lower distributions made to Cleco Corporation.

5758

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Common Stock Repurchases

~~Purchases of Equity Securities~~

~~On June 24,~~In January 2011, Cleco ~~Corporation redeemed all 10,288 outstanding~~Corporation’s Board of Directors approved the implementation of a new common stock repurchase program. This program authorizes management to repurchase, from time to time, shares of ~~its 4.5% preferred stock. The redemption price was $101 per share, plus accrued and unpaid dividends to the redemption date, or $101.296 per share. As of June 30, 2011, no~~common stock so that Cleco’s diluted average shares of ~~4.5% preferred~~common stock ~~were outstanding.~~outstanding remain approximately equal to its diluted average shares of common stock outstanding for 2010. Under this program, purchases may be made on a discretionary basis at times and in amounts as determined by management, subject to market conditions, legal requirements and other factors. Purchases under the program will not be announced in advance and may be made in the open market or through privately negotiated transactions.

The following table summarizes the ~~4.5% preferred~~common stock ~~redeemed~~repurchases by Cleco Corporation during the quarter ended ~~June~~September 30, 2011:

PERIOD
TOTAL NUMBER OF
SHARES PURCHASED

AVERAGE PRICE PAID PER SHARE*

TOTAL NUMBER OF SHARES
PURCHASED AS PART OF PUBLICLY
ANNOUNCED PLANS OR PROGRAMS

MAXIMUM NUMBER OF SHARES
THAT MAY YET BE PURCHASED
UNDER THE PLANS OR PROGRAMS

April 2011 - $ - $ - $ -
May 2011 - $ - $ - $ 10,288
June 2011 10,288 $ 101.00 $ 10,288 $ -
* Accrued and unpaid dividends of $0.296 per share were paid in addition to the redemption price of $101 per share.

PERIOD	TOTAL NUMBER OF SHARES PURCHASED		AVERAGE PRICE PAID PER SHARE		TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS		MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS
July 2011		-	$	-		-		400,000
August 2011		400,000	$	32.49		400,000		-	*
September 2011		-	$	-		-		-
*Management does not anticipate repurchasing any shares of common stock during the fourth quarter of 2011. Pursuant to the objectives of the program, repurchases under the program should resume in 2012.

ITEM 5. OTHER INFORMATION

On October 28, 2011, the Board of Directors (Board) of Cleco Corporation adopted the Cleco Corporation Executive Severance Plan (Executive Plan) to be effective as of such date. As an alternative to benefits previously provided by employment agreements, the Executive Plan provides severance and change in control benefits to senior officers, officers, and general managers in the event of a change in control, provided that a qualifying termination has occurred and certain additional conditions are satisfied. Since Cleco Corporation’s general managers currently are covered by the Cleco Corporation Severance Pay Plan, which was adopted by Cleco Corporation in 2009, a conforming amendment to that plan removing general managers as covered employees also was approved by the Board on October 28, 2011, effective as of that date.

In addition, the Board adopted amendments to the SERP, the LTICP, and the Cleco Corporation Deferred Compensation Plan (Deferred Compensation Plan) effective October 28, 2011. These amendments eliminate the business transaction benefit in the SERP and LTICP. The SERP amendment also prospectively reduces the eligibility period during which change in control benefits can be triggered to conform to the period in the Executive Plan and eliminates the requirement that a participant also be a party to an employment agreement to receive change in control benefits. The Deferred Compensation Plan amendment adds a definition of business transaction which previously was included only by reference to the LTICP.

6567

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

ITEM 6. EXHIBITS

CLECO CORPORATION
3.1	Bylaws of Cleco Corporation, revised effective October 29, 2011
10.1	Cleco Corporation Executive Severance Plan, effective October 28, 2011
10.2	Cleco Corporation Supplemental Executive Retirement Plan Amendment, effective October 28, 2011
10.3	Summary of Director Compensation, Benefits and Policies, Last Revised on July 5,29, 2011
10.4	Cleco Corporation 2010 Long-Term Incentive Compensation Plan Amendment, effective October 28, 2011
10.5	Cleco Corporation Deferred Compensation Plan Amendment, effective October 28, 2011
10.6	First Amendment dated as of October 7, 2011 to the Credit Agreement dated as of November 23, 2010 among Cleco Corporation, various financial institutions, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of Cleco Corporation Form 8-K (file no. 001-15759), filed with the SEC on October 14, 2011)
12(a)	Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Stock Dividends for the three-, ~~six-~~nine-, and twelve-month periods ended ~~June~~September 30, 2011, for Cleco Corporation
31.1	CEO Certification in accordance with section 302 of the Sarbanes-Oxley Act of 2002
31.2	CFO Certification in accordance with section 302 of the Sarbanes-Oxley Act of 2002
32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase
CLECO POWER
10.7	First Amendment dated as of October 7, 2011 to the Credit Agreement dated as of November 23, 2010 among Cleco Power LLC, various financial institutions, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 of Cleco Power LLC Form 8-K (file no. 001-05663), filed with the SEC on October 14, 2011)
12(b)	Computation of Ratios of Earnings to Fixed Charges for the three-, ~~six-~~nine-, and twelve-month periods ended ~~June~~September 30, 2011, for Cleco Power
31.3	CEO Certification in accordance with section 302 of the Sarbanes-Oxley Act of 2002
31.4	CFO Certification in accordance with section 302 of the Sarbanes-Oxley Act of 2002
32.3	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.4	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

*XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

6668

CLECO CORPORATION
CLECO POWER	2011 ~~2ND~~3RD QUARTER FORM 10-Q

SIGNATURES

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

	CLECO CORPORATION
	(Registrant)




	By: /s//s/ R. Russell Davis
	R. Russell Davis
	Vice President - Investor Relations & Chief Accounting Officer

Date: ~~August 3,~~November 2, 2011

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

	CLECO POWER LLC
	(Registrant)




	By: /s/ R. Russell Davis
	R. Russell Davis
	Vice President - Investor Relations & Chief Accounting Officer

Date: ~~August 3,~~November 2, 2011

(THOUSANDS)	AT JUNE 30, 2011			AT DECEMBER 31, 2010			AT SEPTEMBER 30, 2011			AT DECEMBER 31, 2010
Liabilities and shareholders’ equity
Liabilities
Current liabilities
Short-term debt	$	-		$	150,000		$	-		$	150,000
Long-term debt due within one year		12,683			12,269			13,108			12,269
Accounts payable		110,814			123,042			93,186			123,042
Retainage		3,967			2,726			3,231			2,726
Accounts payable - affiliate		-			155			-			155
Customer deposits		41,303			38,934			42,181			38,934
Provision for rate refund		14,854			9,598			3,917			9,598
Interest accrued		53,120			34,462			62,377			34,462
Risk management liability, net		5,743			9,027
Energy risk management liability, net								5,159			9,027
Interest rate risk management liability								29,962			-
Regulatory liabilities - other		38,828			43,562			33,272			43,562
Deferred compensation		8,345			7,751			7,562			7,751
Uncertain tax positions		73,325			31,853			42,674			31,853
Other current liabilities		15,040			14,302			14,784			14,302
Total current liabilities		378,022			477,681			351,413			477,681
Deferred credits
Accumulated deferred federal and state income taxes, net		588,282			553,211			624,429			553,211
Accumulated deferred investment tax credits		8,051			8,669			7,741			8,669
Post-retirement benefit obligations		108,968			166,387			109,865			166,387
Regulatory liabilities - other		26,577			44,313			7,026			44,313
Restricted storm reserve		26,433			25,993			24,656			25,993
Uncertain tax positions		20,375			60,395			47,715			60,395
Tax credit fund investment, net		56,563			44,514			48,494			44,514
Contingent sale obligations		30,243			4,714			29,443			4,714
Other deferred credits		40,784			57,617			44,070			57,617
Total deferred credits		906,276			965,813			943,439			965,813
Long-term debt, net		1,387,346			1,399,709			1,370,576			1,399,709
Total liabilities		2,671,644			2,843,203			2,665,428			2,843,203
Commitments and Contingencies (Note 11)
Shareholders’ equity
Preferred stock
Not subject to mandatory redemption, $100 par value, authorized 1,491,900 shares, issued 0 and 10,288 shares at June 30, 2011 and December 31, 2010, respectively		-			1,029
Not subject to mandatory redemption, $100 par value, authorized 1,491,900 shares, issued 0 and 10,288 shares at September 30, 2011 and December 31, 2010, respectively								-			1,029
Common shareholders’ equity
Common stock, $1 par value, authorized 100,000,000 shares, issued 60,676,750 and 60,539,624 shares and outstanding 60,665,382 and 60,526,126 shares at June 30, 2011, and December 31, 2010, respectively		60,677			60,540
Common stock, $1 par value, authorized 100,000,000 shares, issued 60,683,947 and 60,539,624 shares and outstanding 60,273,131 and 60,526,126 shares at September 30, 2011, and December 31, 2010, respectively								60,684			60,540
Premium on common stock		407,638			405,313			409,040			405,313
Retained earnings		930,098			863,237			978,942			863,237
Treasury stock, at cost, 11,368 and 13,498 shares at June 30, 2011, and December 31, 2010, respectively		(231	)		(274	)
Treasury stock, at cost, 410,816 and 13,498 shares at September 30, 2011, and December 31, 2010, respectively								(13,228	)		(274	)
Accumulated other comprehensive loss		(11,107	)		(11,638	)		(29,325	)		(11,638	)
Total common shareholders’ equity		1,387,075			1,317,178			1,406,113			1,317,178
Total shareholders’ equity		1,387,075			1,318,207			1,406,113			1,318,207
Total liabilities and shareholders’ equity	$	4,058,719		$	4,161,410		$	4,071,541		$	4,161,410
The accompanying notes are an integral part of the condensed consolidated financial statements.

	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010			2011			2010
Financing activities
Issuance of short-term debt		-			150,000		$	-		$	150,000
Retirement of short-term debt		(150,000	)		-			(150,000	)		-
Draws on revolving credit facility		10,000			240,000
Payments on revolving credit facility		(15,000	)		(325,000	)
Draws on credit facility								10,000			255,000
Payments on credit facility								(25,000	)		(350,000	)
Retirement of long-term debt		(6,283	)		(41,110	)		(12,269	)		(46,696	)
Repurchase of common stock								(13,009	)		-
Redemption of preferred stock		(1,039	)		-			(1,039	)		-
Dividends paid on preferred stock		(26	)		(23	)		(26	)		(35	)
Dividends paid on common stock		(32,168	)		(28,718	)		(49,170	)		(43,848	)
Other financing		(565	)		739			(928	)		673
Net cash used in financing activities		(195,081	)		(4,112	)		(241,441	)		(34,906	)
Net decrease in cash and cash equivalents		(29,002	)		(93,038	)		(32,896	)		(77,357	)
Cash and cash equivalents at beginning of period		191,128			145,193			191,128			145,193
Cash and cash equivalents at end of period	$	162,126		$	52,155		$	158,232		$	67,836
Supplementary cash flow information
Interest paid (net of amount capitalized)	$	44,170		$	42,270		$	53,936		$	55,623
Income taxes paid	$	13,486		$	2,882		$	18,241		$	17,047
Supplementary non-cash investing and financing activities
Accrued additions to property, plant and equipment	$	14,548		$	7,232		$	11,491		$	5,314
Issuance of treasury stock - LTICP	$	43		$	48		$	55		$	74
Issuance of common stock - LTICP/ESPP	$	157		$	147		$	241		$	222
Non-cash additions to property, plant and equipment	$	2,257		$	152,067		$	4,074		$	152,067
Non-cash return of investment	$	-		$	152,067		$	-		$	152,067
Non-cash contribution to subsidiary, net of tax	$	-		$	225,732		$	-		$	225,732
The accompanying notes are an integral part of the condensed consolidated financial statements.

	AT JUNE 30,			AT DECEMBER 31,			AT SEPTEMBER 30,			AT DECEMBER 31,
(THOUSANDS)	2011			2010			2011			2010
Regulatory assets and liabilities – deferred taxes, net	$	208,247		$	203,696
Regulatory assets – deferred taxes, net							$	213,847		$	203,696
Deferred mining costs	$	20,392		$	21,666		$	19,755		$	21,666
Deferred interest costs		6,850			7,033			6,758			7,033
Deferred asset removal costs		799			768			814			768
Deferred postretirement plan costs		114,909			117,651			113,538			117,651
Deferred tree trimming costs		9,729			11,086			9,057			11,086
Deferred training costs		7,564			7,642			7,525			7,642
Deferred storm surcredits, net		11,138			10,633			9,080			10,633
Deferred construction carrying costs		14,202			18,830			12,416			18,830
Lignite mining agreement contingency		3,781			3,781			3,781			3,781
AFUDC equity gross-up		74,753			74,859			74,496			74,859
Deferred rate case costs		1,385			1,654			1,252			1,654
Deferred Acadia Unit 1 acquisition costs		3,024			3,076			2,997			3,076
Deferred IRP/RFP costs		742			977			625			977
Deferred AMI pilot costs		218			283			185			283
Total regulatory assets – other	$	269,486		$	279,939		$	262,279		$	279,939
Deferred construction carrying costs		(65,405	)		(87,875	)		(40,298	)		(87,875	)
Deferred fuel and purchased power		20,986			10,348			9,162			10,348
Total regulatory assets and liabilities, net	$	433,314		$	406,108
Total regulatory assets, net							$	444,990		$	406,108

	AT JUNE 30, 2011				AT DECEMBER 31, 2010				AT SEPTEMBER 30, 2011				AT DECEMBER 31, 2010
(THOUSANDS)	CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE
Financial instruments not marked-to-market
Cash and cash equivalents	$	162,126	$	162,126	$	191,128	$	191,128	$	158,232	$	158,232	$	191,128	$	191,128
Restricted cash	$	35,199	$	35,199	$	41,048	$	41,048	$	28,903	$	28,903	$	41,048	$	41,048
Long-term debt, excluding debt issuance costs	$	1,392,553	$	1,496,438	$	1,403,836	$	1,462,063	$	1,376,567	$	1,566,805	$	1,403,836	$	1,462,063
Preferred stock not subject to mandatory redemption	$	-	$	-	$	1,029	$	844	$	-	$	-	$	1,029	$	844

	AT JUNE 30, 2011				AT DECEMBER 31, 2010				AT SEPTEMBER 30, 2011				AT DECEMBER 31, 2010
(THOUSANDS)	CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE
Financial instruments not marked-to-market
Cash and cash equivalents	$	149,841	$	149,841	$	184,912	$	184,912	$	143,015	$	143,015	$	184,912	$	184,912
Restricted cash	$	35,103	$	35,103	$	40,951	$	40,951	$	28,807	$	28,807	$	40,951	$	40,951
Long-term debt, excluding debt issuance costs	$	1,382,553	$	1,486,438	$	1,388,836	$	1,447,063	$	1,376,567	$	1,566,805	$	1,388,836	$	1,447,063

	FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2011			2010			2011			2010
Operating revenue
Electric operations	$	260,485		$	261,101		$	324,532		$	325,629
Tolling operations		4,222			4,399			9,133			11,153
Other operations		12,983			10,245			16,064			13,305
Affiliate revenue		55			158			-			119
Gross operating revenue		277,745			275,903			349,729			350,206
Electric customer credits		(4,822	)		-			1,852			(6,314	)
Operating revenue, net		272,923			275,903			351,581			343,892
Operating expenses
Fuel used for electric generation		78,268			81,558			122,774			100,587
Power purchased for utility customers		25,477			24,508			24,739			51,678
Other operations		31,671			29,845			32,872			30,288
Maintenance		28,269			21,633			14,587			23,362
Depreciation		29,985			29,798			30,557			28,847
Taxes other than income taxes		9,464			8,565			9,845			9,123
Gain on sale of assets		(506	)		(98	)
Loss on sale of assets								27			20
Total operating expenses		202,628			195,809			235,401			243,905
Operating income		70,295			80,094			116,180			99,987
Interest income		170			80			509			128
Allowance for other funds used during construction		876			359			902			887
Equity income (loss) from investees, before tax		61,440			(1,129	)
Equity (loss) income from investees, before tax								(1	)		2,494
Other income		1,050			266			2,128			2,755
Other expense		(1,344	)		(2,577	)		(3,360	)		(1,416	)
Interest charges
Interest charges, including amortization of debt expenses, premium, and discount, net of capitalized interest		25,935			24,663
Interest charges, including amortization of debt expense, premium, and discount, net								26,105			25,404
Allowance for borrowed funds used during construction		(316	)		(145	)		(326	)		(336	)
Total interest charges		25,619			24,518			25,779			25,068
Income before income taxes		106,868			52,575			90,579			79,767
Federal and state income tax expense		36,520			17,389			24,737			30,155
Net income		70,348			35,186			65,842			49,612
Preferred dividends requirements, net of tax		15			12			-			12
Preferred stock redemption costs, net of tax		112			-
Net income applicable to common stock	$	70,221		$	35,174		$	65,842		$	49,600

Average number of basic common shares outstanding		60,655,538			60,431,930			60,467,595			60,471,183
Average number of diluted common shares outstanding		61,023,439			60,705,269			60,873,311			60,825,298
Basic earnings per share
Net income applicable to common stock	$	1.16		$	0.58		$	1.09		$	0.82
Diluted earnings per share
Net income applicable to common stock	$	1.15		$	0.58		$	1.08		$	0.82
Cash dividends paid per share of common stock	$	0.28		$	0.25		$	0.28		$	0.25
The accompanying notes are an integral part of the condensed consolidated financial statements.

	FOR THE YEAR ENDED
				2008						2009						2010
(THOUSANDS)	AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED
Accounts receivable	$	(5,557	)	$	(5,557	)	$	8,310		$	8,310		$	(35,156	)	$	(16,156	)
Accounts payable	$	2,806		$	(6,334	)	$	11,231		$	18,593		$	3,459		$	8,167
Retainage payable	$	12,709		$	(60	)	$	(11,921	)	$	(13,011	)	$	1,913		$	(27	)
Net cash provided by operating activities	$	89,526		$	67,618		$	135,179		$	141,452		$	193,405		$	215,173
Additions to property, plant and equipment	$	(335,757	)	$	(313,848	)	$	(250,286	)	$	(256,558	)	$	(283,389	)	$	(305,157	)
Net cash used in investing activities	$	(368,725	)	$	(346,817	)	$	(177,176	)	$	(183,449	)	$	(285,137	)	$	(306,905	)
Net decrease in cash and cash equivalents	$	(31,530	)	$	(31,530	)	$	47,710		$	47,710		$	45,935		$	45,935
Cash and cash equivalents at the beginning of the period	$	129,013		$	129,013		$	97,483		$	97,483		$	145,193		$	145,193
Cash and cash equivalents at the end of the period	$	97,483		$	97,483		$	145,193		$	145,193		$	191,128		$	191,128
Accrued additions to property, plant and equipment	$	16,935		$	36,074		$	3,069		$	11,396		$	17,765		$	6,032

	FOR THE THREE MONTHS ENDED						FOR THE SIX MONTHS ENDED						FOR THE NINE MONTHS ENDED						FOR THE THREE MONTHS ENDED
				MARCH 31, 2010						JUNE 30, 2010			SEPTEMBER 30, 2010									MARCH 31, 2011
(THOUSANDS)	AS REPORTED*			AS ADJUSTED			AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED
Accounts receivable	$	(17,889	)	$	(17,889	)	$	(19,498	)	$	(19,498	)	$	(49,329	)	$	(30,329	)	$	5,042		$	(13,958	)
Accounts payable	$	(50,499	)	$	(53,362	)	$	(31,420	)	$	(25,684	)	$	(17,248	)	$	(13,277	)	$	(31,823	)	$	(35,617	)
Retainage payable	$	(862	)	$	-		$	195		$	-		$	745		$	-		$	1,004		$	(13	)
Net cash provided by operating activities	$	60,792		$	58,791		$	102,437		$	107,978		$	170,141		$	192,368		$	26,111		$	2,302
Additions to property, plant and equipment	$	(183,561	)	$	(181,560	)	$	(212,119	)	$	(217,660	)	$	(230,485	)	$	(252,711	)	$	(45,692	)	$	(21,883	)
Net cash used in investing activities	$	(149,609	)	$	(147,608	)	$	(191,363	)	$	(196,904	)	$	(212,592	)	$	(234,819	)	$	(43,346	)	$	(19,537	)
Net decrease in cash and cash equivalents	$	(52,971	)	$	(52,971	)	$	(93,038	)	$	(93,038	)	$	(77,357	)	$	(77,357	)	$	(53,937	)	$	(53,937	)
Cash and cash equivalents at the beginning of the period	$	145,193		$	145,193		$	145,193		$	145,193		$	145,193		$	145,193		$	191,128		$	191,128
Cash and cash equivalents at the end of the period	$	92,222		$	92,222		$	52,155		$	52,155		$	67,836		$	67,836		$	137,191		$	137,191
Accrued additions to property, plant and equipment	$	4,039		$	10,268		$	2,738		$	7,232		$	17,506		$	5,314		$	17,155		$	23,245
*These amounts were previously revised in the Registrants’ Combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011.

	CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:																CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(THOUSANDS)	AT JUNE 30, 2011		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DECEMBER 31, 2010		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT SEPTEMBER 30, 2011		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DECEMBER 31, 2010		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Energy market derivatives	$	-	$	-	$	-	$	-	$	97	$	-	$	97	$	-	$	-	$	-	$	-	$	-	$	97	$	-	$	97	$	-
Institutional money market funds		192,599		-		192,599		-		229,748		-		229,748		-		182,603		-		182,603		-		229,748		-		229,748		-
Total assets	$	192,599	$	-	$	192,599	$	-	$	229,845	$	-	$	229,845	$	-	$	182,603	$	-	$	182,603	$	-	$	229,845	$	-	$	229,845	$	-
Liability Description
Energy market derivatives	$	7,665	$	1,532	$	6,133	$	-	$	15,245	$	3,317	$	11,928	$	-	$	5,685	$	381	$	5,304	$	-	$	15,245	$	3,317	$	11,928	$	-
Treasury rate lock																		29,962		-		29,962		-		-		-		-		-
Total liabilities	$	7,665	$	1,532	$	6,133	$	-	$	15,245	$	3,317	$	11,928	$	-	$	35,647	$	381	$	35,266	$	-	$	15,245	$	3,317	$	11,928	$	-

	CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:																CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(THOUSANDS)	AT JUNE 30, 2011		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DECEMBER 31, 2010		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT SEPTEMBER 30, 2011		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DECEMBER 31, 2010		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Energy market derivatives	$	-	$	-	$	-	$	-	$	97	$	-	$	97	$	-	$	-	$	-	$	-	$	-	$	97	$	-	$	97	$	-
Institutional money market funds		180,802		-		180,802		-		224,451		-		224,451		-		168,307		-		168,307		-		224,451		-		224,451		-
Total assets	$	180,802	$	-	$	180,802	$	-	$	224,548	$	-	$	224,548	$	-	$	168,307	$	-	$	168,307	$	-	$	224,548	$	-	$	224,548	$	-
Liability Description
Energy market derivatives	$	7,665	$	1,532	$	6,133	$	-	$	15,245	$	3,317	$	11,928	$	-	$	5,685	$	381	$	5,304	$	-	$	15,245	$	3,317	$	11,928	$	-
Treasury rate lock																		29,962		-		29,962		-		-		-		-		-
Total liabilities	$	7,665	$	1,532	$	6,133	$	-	$	15,245	$	3,317	$	11,928	$	-	$	35,647	$	381	$	35,266	$	-	$	15,245	$	3,317	$	11,928	$	-

	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS							DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
	LIABILITY DERIVATIVES							LIABILITY DERIVATIVES
(THOUSANDS) FAIR VALUE	BALANCE SHEET LINE ITEM	AT JUNE 30, 2011			DECEMBER 31, 2010			BALANCE SHEET LINE ITEM	AT SEPTEMBER 30, 2011			DECEMBER 31, 2010
Commodity contracts
Fuel cost hedges:
Current	Risk management liability, net	$	(7,576	)	$	(13,497	)	Energy risk management liability, net	$	(5,685	)	$	(13,497	)
Long-term	Other deferred credits		(89	)		(1,651	)	Other deferred credits		-			(1,651	)
Total		$	(7,665	)	$	(15,148	)		$	(5,685	)	$	(15,148	)

		FOR THE THREE MONTHS ENDED JUNE 30, 2011					FOR THE THREE MONTHS ENDED JUNE 30, 2010							FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011						FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010
(THOUSANDS)		AMOUNT RECOGNIZED IN OCI		AMOUNT OF GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)			AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF (LOSS) GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)				AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)			AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF (LOSS) GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)
Interest rate swap(1)		$	-	$	-		$	(60	)	$	(197	)*		$	-		$	-		$	(376	)	$	(194	)*
Treasury rate locks		$	-	$	89	*	$	-		$	42	*		$	(29,962	)	$	89	*	$	-		$	41	*
* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.	* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.												* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.
(1) In November 2010, the interest rate swap was terminated.
(1) In November 2010, the interest rate swap was terminated. All remaining losses in accumulated OCI were reclassified to other expense.													(1) In November 2010, the interest rate swap was terminated. All remaining losses in accumulated OCI were reclassified to other expense.

		FOR THE SIX MONTHS ENDED JUNE 30, 2011					FOR THE SIX MONTHS ENDED JUNE 30, 2010							FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011						FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(THOUSANDS)		AMOUNT RECOGNIZED IN OCI		AMOUNT OF GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)			AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF (LOSS) GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)				AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)			AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF (LOSS) GAIN RECLASSIFIED FROM ACCUMULATED OCI INTO INCOME (EFFECTIVE PORTION)
Interest rate swap(1)		$	-	$	-		$	(341	)	$	(399	)*		$	-		$	-		$	(717	)	$	(592	)*
Treasury rate locks		$	-	$	177	*	$	-		$	83	*		$	(29,962	)	$	267	*	$	-		$	125	*
* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.	* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.												* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.
(1) In November 2010, the interest rate swap was terminated.
(1) In November 2010, the interest rate swap was terminated. All remaining losses in accumulated OCI were reclassified to other expense.													(1) In November 2010, the interest rate swap was terminated. All remaining losses in accumulated OCI were reclassified to other expense.

	PENSION BENEFITS						OTHER BENEFITS						PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED JUNE 30,												FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(THOUSANDS)	2011			2010			2011			2010			2011			2010			2011			2010
Components of periodic benefit costs:
Service cost	$	2,143		$	1,973		$	379		$	383		$	2,097		$	1,863		$	390		$	383
Interest cost		4,422			4,459			460			499			4,407			4,286			443			499
Expected return on plan assets		(6,811	)		(5,248	)		-			-			(6,161	)		(5,057	)		-			-
Amortizations:
Transition obligation		-			-			5			5			-			-			5			5
Prior period service cost		(18	)		(18	)		(51	)		(505	)		(18	)		(18	)		(51	)		(505	)
Net loss		1,376			1,095			256			250			1,389			789			246			250
Net periodic benefit cost	$	1,112		$	2,261		$	1,049		$	632		$	1,714		$	1,863		$	1,033		$	632

	FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE THREE MONTHS ENDED SEPTEMBER 30,		FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2011			2010			2011			2010			2011	2010	2011	2010
Cleco Corporation		34.2	%		33.1	%		32.9	%		34.4	%	27.3%	37.8%	30.8%	35.2%
Cleco Power		30.8	%		33.0	%		31.5	%		30.8	%	37.0%	33.7%	34.1%	32.1%

(THOUSANDS)	LIABILITY FOR UNRECOGNIZED TAX BENEFITS			LIABILITY FOR UNRECOGNIZED TAX BENEFITS
Balance at December 31, 2010	$	102,785		$	102,785
Reduction for tax positions of current period		(1,813	)		(3,116	)
Additions for tax positions of prior periods		4,312			10,585
Reduction for tax positions of prior periods		(876	)		(9,546	)
Reduction for settlement with taxing authority		-			-
Reduction for lapse of statute of limitations		-			-
Balance at June 30, 2011	$	104,408
Balance at September 30, 2011				$	100,708

INCEPTION TO DATE (THOUSANDS)	AT JUNE 30, 2011		AT DECEMBER 31, 2010		AT SEPTEMBER 30, 2011		AT DECEMBER 31, 2010
Purchase price	$	12,873	$	12,873	$	12,873	$	12,873
Cash contributions		200		200		200		200
Total equity investment in investee	$	13,073	$	13,073	$	13,073	$	13,073

	FOR THE SIX MONTHS ENDED JUNE 30,				FOR THE NINE MONTHS ENDED SEPTEMBBER 30,
(THOUSANDS)	2011		2010		2011		2010
Operating revenue	$	498	$	319	$	880	$	564
Operating expenses		498		319		880		564
Income before taxes	$	-	$	-	$	-	$	-

(THOUSANDS)	CONTRIBUTION		CONTRIBUTION
Six months ending December 31, 2011	$	25,442
Three months ending December 31, 2011			$	11,508
Years ending December 31,
2012		76,629		76,629
2013		36,225		36,225
2014		22,927		22,927
2015		21,904		21,904
Thereafter		20,808		20,808
Total	$	203,935	$	190,001

(THOUSANDS)
Equity contributions, imputed interest rate 6%
Principal payment schedule above:	$	190,001
Less: unamortized discount		22,098
Total	$	167,903

	SENIOR UNSECURED DEBT
	MOODY’S	STANDARD & POOR’S
Cleco Corporation	Baa3	BBB-
Cleco Power	Baa2	BBB

	FOR THE THREE MONTHS ENDED JUNE 30, 2011						FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011
(THOUSANDS)	HIGH		LOW		AVERAGE		HIGH		LOW		AVERAGE
Fuel cost hedges	$	1,374.4	$	756.4	$	1,084.6	$	820.4	$	379.4	$	580.2

	FOR THE SIX MONTHS ENDED JUNE 30, 2011						AT JUNE 30,		AT DECEMBER 31,		FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011						AT SEPTEMBER 30,		AT DECEMBER 31,
(THOUSANDS)	HIGH		LOW		AVERAGE		2011		2010		HIGH		LOW		AVERAGE		2011		2010
Fuel cost hedges	$	1,458.3	$	756.4	$	1,133.8	$	756.4	$	1,346.0	$	1,458.3	$	379.4	$	946.3	$	379.4	$	1,346.0

PERIOD	TOTAL NUMBER OF SHARES PURCHASED		AVERAGE PRICE PAID PER SHARE*		TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS		MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS
April 2011		-	$	-	$	-	$	-
May 2011		-	$	-	$	-	$	10,288
June 2011		10,288	$	101.00	$	10,288	$	-
* Accrued and unpaid dividends of $0.296 per share were paid in addition to the redemption price of $101 per share.