~~Commodity Contracts~~


Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		AT SEPT. 30, 2021												AT DEC. 31, 2020
				GROSS AMOUNTS OFFSET ON THE BALANCE SHEET						GROSS AMOUNTS NOT OFFSET ON THE BALANCE SHEET (1)
(THOUSANDS)	BALANCE SHEET LINE ITEM	GROSS ASSET (LIABILITY)		CONTRACT NETTING		COLLATERAL		NET ASSET (LIABILITY) ON THE BALANCE SHEET		COLLATERAL		NET AMOUNT		NET ASSET (LIABILITY) ON THE BALANCE SHEET (2)
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	9,338	$	—	$	—	$	9,338	$	—	$	9,338	$	4,805
Current	Energy risk management liabilities	(1,589)		—		—		(1,589)		—		(1,589)		(1,625)
Natural gas derivatives
Current	Energy risk management assets	59,648		(1,283)		(8,900)		49,465		(41,098)		8,367		8,276
Non-current	Energy risk management assets	83,427		—		—		83,427		(13,902)		69,525		323
Current	Energy risk management liabilities	(1,283)		1,283		—		—		—		—		(828)
Non-current	Other deferred credits	—		—		—		—		—		—		(784)
Commodity-related contracts, net		$	149,541	$	—	$	(8,900)	$	140,641	$	(55,000)	$	85,641	$	10,167

~~The following tables present the fair values~~(1) Represents letters of ~~derivative instruments and their respective line items as recorded~~credit by counterparties.

(2) There were no offsetting amounts on ~~Cleco and Cleco Power’s~~or off Cleco’s Condensed Consolidated Balance ~~Sheets~~Sheet at ~~September 30, 2020, and~~ December 31, ~~2019:~~

2020.

Cleco
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS) BALANCE SHEET LINE ITEM AT SEPT. 30, 2020 AT DEC. 31, 2019
Commodity-related contracts
FTRs
Current Energy risk management assets $ 7,907 $ 6,822
Current Energy risk management liabilities (2,580) (1,044)
Other commodity derivatives
Current Energy risk management assets 12,067 201
Non-current Other deferred charges 5,276 0
Current Energy risk management liabilities 0 (3,069)
Non-current Other deferred credits 0 (2,304)
Commodity-related contracts, net $ 22,670 $ 606


Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2021		AT DEC. 31, 2020
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	6,028	$	4,337
Current	Energy risk management liabilities	(1,330)		(1,121)
Commodity-related contracts, net		$	4,698	$	3,216

Cleco Power
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS) BALANCE SHEET LINE ITEM AT SEPT. 30, 2020 AT DEC. 31, 2019
Commodity-related contracts
FTRs
Current Energy risk management assets $ 7,177 $ 6,311
Current Energy risk management liabilities (1,765) (586)
Commodity-related contracts, net $ 5,412 $ 5,725

At September 30, 2021, cash collateral received from counterparties by Cleco was $8.9 million, all of which was netted against the current portion of Energy risk management assets on Cleco’s Condensed Consolidated Balance Sheet. At December 31, 2020, there was no cash collateral paid or received by Cleco.

The following tables present the effect of derivatives not designated as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2020,~~2021, and ~~2019:~~2020:

Cleco
AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
FOR THE THREE MONTHS ENDED SEPT. 30, FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS) INCOME STATEMENT LINE ITEM 2020 2019 2020 2019
Commodity-related contracts
FTRs(1)
Electric operations $ 3,013 $ 1,997 $ 6,262 $ 12,396
FTRs(1)
Purchased power (763) (2,648) (1,053) (12,985)
Other commodity derivatives Fuel used for electric generation 20,307 3,474 22,515 704
Total $ 22,557 $ 2,823 $ 27,724 $ 115


Cleco
	AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
		FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2021		2020		2021		2020
Commodity-related contracts
FTRs(1)	Electric operations	$	1,959	$	3,013	$	11,167	$	6,262
FTRs(1)	Purchased power	(874)		(763)		(8,730)		(1,053)
Natural gas derivatives	Fuel used for electric generation	107,687		20,307		165,584		22,515
Total		$	108,772	$	22,557	$	168,021	$	27,724

(1) For the three and nine months ended September 30, 2021, unrealized gains associated with FTRs for Cleco Power of $1.2 million and $0.5 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2020, unrealized gains associated with FTRs for Cleco Power of $0.4 million and $1.4 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.


Cleco Power
	AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
		FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2021		2020		2021		2020
Commodity-related contracts
FTRs(1)	Electric operations	$	1,959	$	3,013	$	11,167	$	6,262
FTRs(1)	Purchased power	(822)		(2,326)		(9,236)		(4,397)
Total		$	1,137	$	687	$	1,931	$	1,865

(1) For the three and nine months ended September 30, ~~2019,~~2021, unrealized ~~losses~~gains associated with FTRs ~~for Cleco Power~~ of ~~$1.7~~$1.2 million and ~~$3.6~~$0.5 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

Cleco Power
AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
FOR THE THREE MONTHS ENDED SEPT. 30, FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS) INCOME STATEMENT LINE ITEM 2020 2019 2020 2019
Commodity-related contracts
FTRs(1)
Electric operations $ 3,013 $ 1,997 $ 6,262 $ 12,400
FTRs(1)
Purchased power (2,326) (1,828) (4,397) (4,800)
Total $ 687 $ 169 $ 1,865 $ 7,600

~~(1)~~ For the three and nine months ended September 30, 2020, unrealized gains associated with FTRs of $0.4 million and $1.4 million, respectively. were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2019, unrealized losses associated with FTRs of $1.7 million and $3.6 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

The total volume of FTRs that Cleco Power had outstanding at September 30, 2020, and December 31, 2019, was 14.8 million MWh and 9.2 million MWh, respectively. The total volume of FTRs that Cleco had outstanding at September 30, 2020, and December 31, 2019, was 24.1 million MWh and 14.6 million MWh, respectively. The total volume of other commodity derivatives Cleco had outstanding at September 30, 2020, and December 31, 2019, was 63.9 million MMBtus and 58.5 million MMBtus, respectively.


~~Note 8 — Debt~~

~~On March 2, 2020, Cleco Power made the final $11.1 million principal payment and completed the repayment in full of its Cleco Katrina/Rita storm recovery bonds issued in March 2008.~~

On May 1, 2020, Cleco Power repriced at a mandatory tender date its $50.0 million 2008 series A GO Zone bonds and entered into a new interest rate period with a mandatory tender date of May 1, 2025. The interest rate for the new interest rate period is fixed at 2.50% per annum.

On May 15, 2020, Cleco Power entered into an amendment for its revolving credit agreement. This amendment extends the term of the revolving credit agreement through June 28, 2022. At September 30, 2020, Cleco Power had $150.0 million of borrowings outstanding under its $300.0 million revolving credit facility at an all-in interest rate of 1.41%. The borrowing costs under the agreement currently are equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%.

~~On August 28, 2020, Cleco Power entered into a $125.0 million variable rate bank term loan due June 28, 2022.~~


CLECO
CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q

~~Amounts~~The following table presents the volume of commodity-related derivative contracts outstanding ~~under the bank term loan bear interest at a base rate plus 0.250% or LIBOR plus 1.25%. At September 30, 2020, the all-in interest rate under the term loan was 1.40%, which was based on LIBOR.~~

On May 15, 2020, Cleco Holdings entered into amendments for its revolving credit agreement and two outstanding term loan agreements. These amendments extend the terms of each agreement through June 28, 2022.

At September 30, 2020, Cleco Holdings had $88.0 million of borrowings outstanding under its $175.0 million revolving credit facility at an all-in interest rate of 2.035%. The borrowing costs under the facility currently are equal to LIBOR plus 1.875% or ABR plus 0.875%, plus commitment fees of 0.30%.

At September 30, 2020, Cleco Holdings had $330.0 million long-term variable rate bank term loans outstanding. One bank term loan had a balance of $300.0 million outstanding, at an interest rate of LIBOR plus 1.875%, for an all-in interest rate of 2.035% at September 30, ~~2020. Another bank term loan had a balance of $30.0 million outstanding, at an interest rate of LIBOR plus 1.875%,~~2021, and December 31, 2020, for ~~an all-in interest rate of 2.035% at September 30, 2020.~~Cleco and Cleco Power:

On September 11, 2019, Cleco Holdings completed the private placement of $300.0 million aggregate principal amount of its 3.375% senior notes due September 15, 2029. The proceeds from the issuance were used to repay the remaining amounts due under the $300.0 million bridge loan agreement and a portion of the $100.0 million term loan agreement, both entered into in connection with the Cleco Cajun Transaction. On July 14, 2020, Cleco Holdings completed an exchange offer for its outstanding 3.375% senior notes, which were not registered under the Securities Act of 1993, as amended, for an equal principal amount of newly issued 3.375% senior notes due September 15, 2029, that were so registered. Cleco Holdings did not receive any proceeds from the exchange offer.

Cleco

TOTAL VOLUME OUTSTANDING

(THOUSAND)

UNIT OF MEASURE

AT SEPT. 30, 2021

AT DEC. 31, 2020

Commodity-related contracts

FTRs

MWh

22,794

15,269

Natural gas derivatives

MMBtus

118,712

73,000

Cleco Power

TOTAL VOLUME OUTSTANDING

(THOUSAND)

UNIT OF MEASURE

AT SEPT. 30, 2021

AT DEC. 31, 2020

Commodity-related contracts

FTRs

MWh

14,596

9,521


Note 97 — Debt

On May 21, 2021, Cleco Holdings entered into a $175.0 million revolving credit agreement and a $266.0 million term loan agreement. These agreements replaced Cleco Holdings’ existing revolving credit agreement and term loan agreement. The revolving credit agreement matures on May 21, 2026. Under this agreement, Cleco Holdings is required to maintain total indebtedness less than or equal to 65% of total capitalization. The borrowing costs under this agreement are currently equal to LIBOR plus 1.625% or ABR plus 0.625%, plus commitment fees of 0.275%. If Cleco Holdings’ credit ratings were to be downgraded one level by the credit rating agencies, Cleco Holdings may be required to pay incremental interest and commitment fees of 0.125% and 0.05%, respectively. At September 30, 2021, Cleco Holdings had no borrowings outstanding under its revolving credit agreement. Cleco Holdings’ term loan agreement matures on May 21, 2024 and has an interest rate of LIBOR plus 1.625% or ABR plus 0.625%.

In addition, on May 21, 2021, Cleco Power entered into a $300.0 million revolving credit agreement and a $125.0 million term loan agreement. These agreements replaced Cleco Power’s existing revolving credit agreement and term loan agreement. The revolving credit agreement matures on May 21, 2026. Under this agreement, Cleco Power is required to maintain total indebtedness less than or equal to 65% of total capitalization. The borrowing costs under this agreement are currently equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%. If Cleco Power’s credit ratings were to be downgraded one level by the credit rating

agencies, Cleco Power may be required to pay incremental interest and commitment fees of 0.125% and 0.025%, respectively. At September 30, 2021, Cleco Power had no borrowings outstanding under the revolving credit agreement. Cleco Power’s term loan agreement matures on May 21, 2024 and has an interest rate of LIBOR plus 1.25% or ABR plus 0.25%.

On September 10, 2021, Cleco Power completed the issuance and private sale of $325.0 million aggregate principal amount of its floating rate senior notes due 2023. The senior notes include an optional redemption, in whole or in part, at any time on or after March 15, 2022, at 100% of the principal amount of the senior notes. The senior notes bear interest at a rate of three-month LIBOR plus 50 basis points per annum and reset quarterly. The net proceeds from the issuance were used for general limited liability company purposes, including the repayment of borrowings under Cleco Power’s revolving credit agreement. The senior notes are governed by an indenture entered into between Cleco Power and a trustee. The indenture contains certain customary covenants that restrict Cleco Power’s ability to merge, consolidate or transfer or lease all or substantially all of its assets or create or incur certain liens securing indebtedness.


Note 8 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. ~~In September 2019, Cleco made a $12.3 million discretionary contribution to the pension plan.~~ Based on ~~updated~~the funding assumptions at December 31, ~~2019,~~2020, and the funding relief provided by the American Rescue Plan Act, which was signed by the President on March 11, 2021, management estimates that ~~$66.5 million in~~no pension contributions will be required through ~~2024.~~2025. Cleco ~~expects~~has not made, and does not expect to make, ~~a $15.7 million minimum required contribution~~any contributions to the pension plan in ~~the fourth quarter of 2020.~~2021.

Cleco Power is the plan sponsor and Support Group is the plan administrator. The pension plan was amended on February 4, 2019, to include certain former NRG Energy employees who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan ~~amendment~~ reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits.

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of net periodic pension and Other Benefits cost for the three and nine months ended September 30, ~~2020,~~2021, and ~~2019~~2020 were as follows:

PENSION BENEFITS OTHER BENEFITS
FOR THE THREE MONTHS ENDED SEPT. 30, FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS) 2020 2019 2020 2019
Components of periodic benefit costs
Service cost $ 2,455 $ 2,104 $ 600 $ 328
Interest cost 5,204 5,621 418 435
Expected return on plan assets (6,244) (6,625) 0 0
Amortizations
Prior period service credit (15) (18) 0 0
Net loss 4,073 1,962 362 105
Net periodic benefit cost $ 5,473 $ 3,044 $ 1,380 $ 868

PENSION BENEFITS OTHER BENEFITS
FOR THE NINE MONTHS ENDED SEPT. 30, FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS) 2020 2019 2020 2019
Components of periodic benefit costs
Service cost $ 7,365 $ 6,311 $ 1,615 $ 896
Interest cost 15,612 16,864 1,238 1,235
Expected return on plan assets (18,731) (19,876) 0 0
Amortizations
Prior period service credit (45) (54) 0 0
Net loss 12,222 5,887 1,042 25
Net periodic benefit cost $ 16,423 $ 9,132 $ 3,895 $ 2,156


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


	PENSION BENEFITS				OTHER BENEFITS
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Components of periodic benefit costs
Service cost	$	2,629	$	2,455	$	629	$	600
Interest cost	4,667		5,204		317		418
Expected return on plan assets	(5,700)		(6,244)		—		—
Amortizations
Prior period service credit	—		(15)		—		—
Net loss	5,184		4,073		373		362
Net periodic benefit cost	6,780		5,473		1,319		1,380
Special/contractual termination benefits	3,270		—		—		—
Total benefit cost	$	10,050	$	5,473	$	1,319	$	1,380


	PENSION BENEFITS				OTHER BENEFITS
	FOR THE NINE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Components of periodic benefit costs
Service cost	$	7,887	$	7,365	$	1,819	$	1,615
Interest cost	14,001		15,612		962		1,238
Expected return on plan assets	(17,101)		(18,731)		—		—
Amortizations
Prior period service credit	—		(45)		—		—
Net loss	15,553		12,222		1,143		1,042
Net periodic benefit cost	20,340		16,423		3,924		3,895
Special/contractual termination benefits	3,270		—		—		—
Total benefit cost	$	23,610	$	16,423	$	3,924	$	3,895

Effective September 30, 2021, the pension plan was amended to offer an enhanced pension benefit to certain employees participating in the plan that elect to retire during a certain retirement window. Those certain employees who elected by September 30, 2021, to receive the enhanced pension benefits will receive a 10% increase in calculated pension benefits. This resulted in a special termination benefit cost for Cleco Power and Support Group of $2.4 million and $0.9 million, respectively, included as an expense of the pension plan.

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of

Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

months ended September 30, ~~2020,~~2021, was ~~$0.9~~$1.8 million and ~~$2.6~~$3.6 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended September 30, ~~2019,~~2020, was ~~$0.5~~$0.9 million and ~~$1.6~~$2.6 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are 0no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2020,~~2021, was ~~$1.1~~$1.2 million and $3.6 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2019,~~2020, was ~~$0.9~~$1.1 million and ~~$2.3~~$3.6 million, respectively. The current and non-current portions of

the Other Benefits liability for Cleco and Cleco Power at September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, were as follows:

Cleco
(THOUSANDS) AT SEPT. 30, 2020 AT DEC. 31, 2019
Current $ 4,401 $ 4,401
Non-current $ 47,874 $ 48,321


Cleco
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	$	4,463	$	4,463
Non-current	$	51,306	$	51,868


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT SEPT. 30, 2020		AT DEC. 31, 2019		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current	$	3,815	$	3,815	Current	$	3,865	$	3,865
Non-current	Non-current	$	41,673	$	42,080	Non-current	$	40,261	$	40,734

SERP

Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out of ~~the~~ general funds available. Cleco Power has formed a rabbi trust. The life insurance policies issued on SERP participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of ~~the~~ general cash available of the respective companies that employed the officer. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

Statements of Income. The components of the net periodic benefit cost related to SERP for the three and nine months ended September 30, ~~2020,~~2021, and ~~2019~~2020 were as follows:

FOR THE THREE MONTHS ENDED SEPT. 30, FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS) 2020 2019 2020 2019
Components of periodic benefit costs
Service cost $ 100 $ 82 $ 300 $ 247
Interest cost 733 831 2,199 2,494
Amortizations
Prior period service credit (54) (34) (161) (104)
Net loss 796 381 2,388 1,143
Net periodic benefit cost $ 1,575 $ 1,260 $ 4,726 $ 3,780


	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Components of periodic benefit costs
Service cost	$	59	$	100	$	174	$	300
Interest cost	634		733		1,903		2,199
Amortizations
Prior period service credit	(54)		(54)		(161)		(161)
Net loss	307		796		921		2,388
Net periodic benefit cost	$	946	$	1,575	$	2,837	$	4,726

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021, was $0.1 million and $0.4 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2020, was $0.2 million and $0.7 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019, was $0.2 million and $0.6 million, respectively.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, were as follows:

Cleco
(THOUSANDS) AT SEPT. 30, 2020 AT DEC. 31, 2019
Current $ 4,599 $ 4,599
Non-current $ 83,619 $ 84,529


Cleco
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	$	4,703	$	4,703
Non-current	$	90,880	$	92,522


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT SEPT. 30, 2020		AT DEC. 31, 2019		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current	$	760	$	760	Current	$	711	$	711
Non-current	Non-current	$	13,665	$	13,964	Non-current	$	19,240	$	19,828

401(k) Plan

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan ~~was amended upon the close of the Cleco Cajun Transaction to include Cleco Cajun employees. Cleco’s 401(k) Plan~~ expense for the three and nine monthsended September 30, ~~2020,~~2021, and ~~2019~~2020 was as follows:


		FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2020		2019		2020		2019		(THOUSANDS)	2021		2020		2021		2020
401(k) Plan expense	401(k) Plan expense	$	2,356	$	2,077	$	7,509	$	6,136	401(k) Plan expense	$	2,512	$	2,356	$	7,391	$	7,509

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other

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

The 4 actions filed in the Ninth Judicial District Court for Rapides Parish are captioned as follows:

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

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

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

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

In November 2014, the plaintiff in the Braunstein action moved for a dismissal of the action without prejudice, and that motion was granted in November 2014. In December 2014, the Court consolidated the remaining 3 actions and appointed interim co-lead counsel, and dismissed the investors in Cleco Partners as defendants, per agreement of the parties. Also, in December 2014, the plaintiffs in the consolidated action filed a Consolidated Amended Verified Derivative and Class Action Petition for Damages and Preliminary and Permanent Injunction.

The 3 actions filed in the Civil District Court for Orleans Parish were captioned as follows:

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

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

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

In December 2014, the directors and Cleco filed declinatory exceptions in each action on the basis that each action was improperly brought in Orleans Parish and should either be transferred to the Ninth Judicial District Court for Rapides Parish or dismissed. Also, in December 2014, the plaintiffs in each action jointly filed a motion to consolidate the 3 actions pending in Orleans Parish and to appoint interim co-lead plaintiffs and co-lead counsel. In January 2015, the Court in the Creative Life Services case sustained the defendants’ declinatory exceptions and dismissed the case so that it could be transferred to the Ninth Judicial District Court for Rapides Parish. In February 2015, the plaintiffs in Butler and Cashen also consented to the dismissal of their cases from Orleans Parish so they could be transferred to the Ninth Judicial District Court for Rapides Parish. By operation of the December 2014 order of the Ninth Judicial District Court for Rapides Parish, the Butler, Cashen, and Creative Life Services actions were consolidated into the actions pending in Rapides Parish.

In February 2015, the Ninth Judicial District Court for Rapides Parish held a hearing on a motion for preliminary injunction filed by plaintiffs in the consolidated action seeking to enjoin the shareholder vote for approval of the Merger


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~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

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

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

Gulf Coast Spinning

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


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The District Court denied Cleco’s exception in December 2015, after considering briefs

and arguments. In January 2016, Cleco appealed the District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal denied the request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of the District Court’s denial of Cleco’s exception. In November 2016, the Louisiana Supreme Court denied Cleco’s writ application.

In February 2016, the parties agreed to a stay of all proceedings pending discussions concerning settlement. In May 2016, the District Court lifted the stay at the request of Gulf Coast. The parties are currently participating in discovery. Cleco believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast, are otherwise without merit, and that it has substantial meritorious defenses to the claims alleged by Gulf Coast.

~~Sabine River Flood~~

~~In March 2017, Cleco was served with a summons in~~ ~~Perry Bonin, Ace Chandler, and Michael Manuel, et al. v. Sabine River Authority of Texas and Sabine River Authority of Louisiana,~~ ~~No. B-160173-C. The action was filed in the 163~~rd Judicial District Court for Orange County, Texas, and relates to flooding that occurred in Texas and Louisiana in March 2016. The plaintiffs have alleged that the flooding was the result of the release of water from the Toledo Bend spillway gates into the Sabine River. While the plaintiffs have made numerous allegations, they have specifically alleged that Cleco Power, included as one of several companies and governmental bodies, failed to repair 1 of the 2 hydroelectric generators at the Toledo Bend Dam, which in turn contributed to the flooding. Cleco Power does not operate the hydroelectric generator.

~~The suit was removed to federal court in Texas. The new federal case is~~ ~~Perry Bonin, et al. v. Sabine River Authority of Texas et al.,~~ ~~No. 17-cv-134, U.S. District Court for the Eastern District of Texas (Bonin~~ Case). The plaintiffs moved to remand the case to state court, but the district court found that the case raises a substantial federal question and denied the motion to remand. Cleco Power, along with its co-defendants, filed a motion to dismiss on various grounds, primarily arguing that the plaintiffs’ claims are preempted because they infringe on FERC’s exclusive control of dam operations. The district court granted the motion to dismiss in part, declining to rule on some of the arguments raised by the defendants, and granted the plaintiffs leave to amend their complaint. The plaintiffs filed a Fifth Amended Complaint in March 2018. Cleco Power filed a new motion to dismiss the plaintiffs’ claims.

~~In March 2018, approximately 26 other individual plaintiffs filed a petition against Cleco Power and other defendants in~~ ~~Larry Addison, et al. v. Sabine River Authority of Texas, et al.,~~ ~~No. D180096-C. The action was filed in the 260~~th ~~Judicial District Court for Orange County, Texas. The defendants removed the case to federal court in April 2018. The new federal case is Larry Addison, et al. v. Sabine River Authority of Texas, et al.,~~ ~~No. 18-cv-153, U.S. District Court for the Eastern District of Texas. The allegations are essentially identical to those in the~~ ~~Bonin~~ ~~Case. Also, in April 2018, Cleco Power filed a motion to dismiss on the same grounds that previously were successful in the~~ ~~Bonin~~ ~~Case. In July 2018, the district court entered an order consolidating the~~ ~~Addison~~ ~~Case with the~~ ~~Bonin~~ ~~Case. Management believes that both cases, as they relate to Cleco Power, have no merit. In August 2018, the Judge entered an order requiring the plaintiffs to file a more~~


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

definitive statement to clarify the plaintiffs’ claims. In response thereto, the plaintiffs filed a Sixth Amended Petition in September 2018. Cleco Power filed a response in October 2018. All claims were dismissed against Cleco Power by ruling of the Judge on March 18, 2019. The plaintiffs appealed the dismissal with the U.S. Court of Appeals for the Fifth Circuit. On June 4, 2020, the Fifth Circuit Court of Appeals affirmed the dismissal of all claims against Cleco Power.

Dispute with Saulsbury Industries

In October 2018, Cleco Power sued Saulsbury Industries, Inc., the former general contractor for the St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries, Inc.’s failure to complete the St. Mary Clean Energy Center project on time and for costs incurred by Cleco Power in hiring a replacement general contractor. The action was filed in the Ninth Judicial District Court for Rapides Parish, No. 263339. Saulsbury Industries, Inc. removed the case to the U.S. District Court for the Western District of Louisiana, on March 1, 2019. On September 14, 2020, Cabot Industries was allowed to join the case pending in the Ninth Judicial District Court for Rapides Parish.

In January 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC, in the U.S. District Court for the Western District of Louisiana. Saulsbury Industries, Inc. alleged that Cleco Power and Cabot Corporation caused delays in the St. Mary Clean Energy Center project, resulting in alleged impacts to Saulsbury Industries, Inc.’s direct and indirect costs. On June 5, 2019, Cleco Power and Cabot Corporation each filed separate motions to dismiss. On October 24, 2019, the District Court denied Cleco’s motion as premature and ruled that Saulsbury Industries, Inc. had six weeks to conduct discovery on specified jurisdictional issues. The Magistrate Judge presiding over the Western District of Louisiana consolidated cases issued a report and recommendation to the District Judge that the case instituted by Saulsbury Industries, Inc. be dismissed without prejudice and the case initiated by Cleco Power be remanded to the Ninth Judicial District Court for Rapides Parish. Saulsbury Industries, Inc. did not oppose the Magistrate Judge’s report and recommendation, and the District Judge issued a ruling that adopted the Magistrate Judge’s report and recommendation, which included reasoning consistent with Cleco Power’s arguments. Thus, the federal consolidated cases are now closed.

On October 10, 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC in the 16th Judicial District Court for St. Mary Parish, No. 133910-A. Saulsbury Industries, Inc. asserted the same claim as the Western District Litigation and further asserts claims for payment on an open account. On December 9, 2019, Cleco moved to stay the case, arguing that the Rapides Parish suit should proceed. On February 14, 2020, the

court granted Cleco’s motion, which stay order remains in place until lifted. The 16th Judicial District Court for the St. Mary Parish case held a hearing on October 16, 2020, and the judge granted Cleco’s declinatory exceptions of lis pendens. Thus, the St. Mary’s Parish case has been dismissed. Saulsbury filed a motion for a new trial. The hearing on this motion was held on February 5, 2021, and the 16th Judicial District Court judge denied Saulsbury’s motion for a new trial. Saulsbury has appealed this decision.

LPSC Audits

Fuel ~~Audit~~Audits

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered

through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997, in Docket No. U-21497 provides that an audit of FAC filings will be performed at least every other year. OnIn March ~~31,~~ 2020, Cleco Power received a notice of audit from the LPSC for the period of January 2018 to December 2019. The total amount of fuel expense included in the audit is $565.8 million. ~~On September 10, 2020,~~ Cleco Power has responded to ~~its first set~~several sets of data requests from the LPSC. Cleco Power has FAC filings for January 2020 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of fuel cost is ordered resulting in a refund, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

On March 29, 2021, Cleco Power received approval from the LPSC to recover $50.0 million of incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola over a period of 12 months beginning with the May 2021 bills. On May 11, 2021, Cleco Power received notice of an audit from the LPSC for the fuel costs incurred during the time period required to restore services to Cleco Power’s customers during Winter Storms Uri and Viola. Cleco Power has responded to its first set of data requests. Management is unable to determine the outcome or timing of the audit. For more information on these winter storms, see Note 17 — “Storm Restoration — Winter Storms Uri and Viola.”

Environmental Audit

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from its customers certain costs of environmental compliance. The costs eligible for recovery are those for prudently incurred air emissions credits associated with complying with federal, state, and local air emission regulations that apply to the generation of electricity reduced by the sale of such allowances. Also eligible for recovery are variable emission mitigation costs, which are the costs of reagents such as ammonia and limestone that are a part of the fuel mix used to reduce air emissions, among other things. On ~~March 3, 2020, Cleco Power received notice from~~October 20, 2021, the LPSC ofapproved the EAC audit for the period of January 2018 to December ~~2019.~~2019 with no findings. The total amount of environmental expense that was included in the audit iswas $26.2 million. ~~Cleco Power has responded to several sets of data requests.~~ Cleco Power has EAC filings for January 2020 and thereafter that remain subject to audit. Management is


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of environmental cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of Mercury and Air Toxics Standards (MATS). These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. In May 2020, the EPA finalized a rule that concluded that it is not appropriate and necessary to regulate hazardous air pollutants from coal- and oil-fired electric generating units. However, the EPA concluded that coal- and oil-fired electric generating units would not be removed from the list of regulated sources of hazardous air pollutants and would remain subject to MATS. The EPA also determined that the results of its risk and technology review did not require any revisions to the emissions standards. Several petitions for review of the rule’s findings were filed between May and July 2020 in the D.C. Circuit Court of Appeals. On January 20, 2021, the Presidential Administration issued an executive order directing federal agency heads to review regulations and other actions over the past four years to determine if they are inconsistent with the policies announced in the executive order. The order specifically directs the EPA to consider issuing a proposed rule to suspend, revise, or rescind the rule. The EPA has not issued a proposed rule, and management is unable to determine when a proposed rule will be issued. The EPA determined the most environmentally protective course is to implement the rules in the executive order. Management is unable to determine whether the outcome of the D.C. Circuit Court of Appeals review or the EPA’s review of the rule as a result of the executive order will result in changes to the ~~standards of MATS.~~MATS standards.


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~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

FERC Audit

Generally, Cleco Power records wholesale transmission revenue through approved formula rates, Attachment O of the MISO tariff and certain grandfathered agreements. The calculation of the rate formulas, as well as FERC accounting and reporting requirements, are subject to periodic audits by FERC. In March 2018, the Division of Audits and Accounting, within the Office of Enforcement of FERC, initiated an audit of Cleco Power for the period of January 1, 2014, through June 30, 2019. On September 27, 2019, Cleco Power received the final audit report, which indicated 12 findings of noncompliance with a combination of FERC accounting and reporting requirements and computation of revenue requirements along with 59 recommendations associated with the audit period. Cleco Power submitted a plan for implementing the audit recommendations on October 28, 2019. Cleco Power also submitted the refund analysis on November 7, 2019, which resulted in a refund related to the FERC audit findings, pending final assessment by the FERC Division of Audits and ~~Accounting. At September~~Accounting, which is expected in the fourth quarter of 2021. As of June 30, ~~2020, Cleco Power had $2.7~~2021, the refund of $4.4 million ~~recorded in Provision for rate refund on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets for the estimated refund. This amount is being~~was fully refunded to Cleco Power’s wholesale transmission customers as a combination of refund payments and a reduction in Attachment O of the MISO tariff and grandfathered agreement rates over the preceding 12 ~~months beginning June 1, 2020.~~months.

Transmission ROE

~~NaN~~In November 2013 and February 2015, customers filed complaints ~~were filed~~ with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaints covered the period December 2013 through May 2016 and sought to reduce the 12.38% ROE used in MISO’s transmission rates to a proposed 6.68%.

~~The complaints covered the period December 2013 through May 2016.~~ In June 2016, an administrative law judge issued an initial decision in the second rate case docket recommending a 9.70% base ROE. In September 2016, FERC issued a Final Order in response to the first complaint establishing a 10.32% ROE. However, on November 21, 2019, FERC voted to adopt a new methodology for evaluating base ROE for public utilities under the Federal Power Act. In addition, FERC set the MISO transmission owners’ region-wide base ROE at 9.88% for the refund period covered in the first complaint and going forward. The draft FERC order further found that complainants in the second complaint proceeding failed to show that the 9.88% base ROE was unjust and unreasonable and thus dismissed the second complaint. On May 21, 2020, FERC issued Opinion No. 569-A, which granted rehearing in part of Opinion No. 569, which had revised FERC’s methodology for analyzing the base ROE component of public utility rates under section 206 of the Federal Power Act. Opinion No. 569-A further refines FERC’s ROE methodology and finds that the MISO Transmission Owners’ base ROE should be set at 10.02% instead of 9.88%. Cleco Power is unable to determine when a final FERC Order will be issued. As of September 30, ~~2020, Cleco Power had $0.6 million accrued for~~2021, the overcollection due to the change in the ~~ROE.~~ROE was fully refunded.

In November 2014, the MISO transmission owners committee, of which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by 50 basis points for RTO participation as allowed by the MISO tariff. In January 2015, FERC granted the request. ~~Beginning January 1, 2020, the~~The collection of the adder ~~is being~~was included in MISO’s transmission rates for a total ROE of 10.38%.

and 10.52% beginning January 1, 2020, and June 1, 2020, respectively.

South Central Generating

In 2017, Louisiana Generating received insurance settlement proceeds for remediation costs, as defined in the policy of insurance, incurred to ~~resolve~~install selective non-catalytic reduction equipment on Big Cajun II, Unit 3. This installation served a dual purpose of being a prudent utility practice for compliance with environmental laws and aiding in the settlement of a lawsuit, which was brought by the EPA and the ~~LDEQ~~Louisiana Department of Environmental Quality against Louisiana Generating, related to Big Cajun II, ~~Unit 3.~~Units 1 and 2. Entergy Gulf States, as co-owner of Big Cajun II, Unit 3, is expected to be allocated a portion of the insurance settlement proceeds. ~~Any amount allocated to~~Litigation between Entergy Gulf States and Louisiana Generating ensued to determine Entergy Gulf States’ allocated amount of insurance proceeds, among other claims pursuant to the Joint Ownership Participation and Operating Agreement between Louisiana Generating and Entergy Gulf States. In August 2021, Louisiana Generating and Entergy Gulf States entered an agreement to settle all claims asserted in this litigation. Upon payment of the settlement amount in January 2022, the lawsuit will be determined by ongoing litigation and negotiations. South Central Generating estimated this amount to be $10.0 million. As part of the Cleco Cajun Transaction, Cleco Cajun assumed the $10.0 million contingent liability anddismissed. NRG Energy ~~indemnified~~will indemnify Cleco for losses associated with this litigation matter. As a result, Cleco also recorded a $10.0 million indemnification asset, which was included in the purchase price allocation and included in Other current assets on Cleco’s Condensed Consolidated Balance Sheets.

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

regarding matters arising out of the ordinary course of business. As of September 30, 2021, management estimates potential losses to be $1.5 million with respect to one of these matters. Management is unable to estimate any potential losses ~~that~~ Cleco Cajun may be ultimately be responsible for with respect to any ~~one~~ of ~~these~~the remaining matters. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with matters that existed as of the closing date, including pending litigation.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of September 30, ~~2020,~~2021, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters are ~~$5.3~~$4.1 million and has accrued this amount.

Off-Balance Sheet Commitments and Guarantees

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

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

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


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~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

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

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

expect to be required to pay Cleco Power or Entergy Louisiana under these guarantees.

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

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of the Dolet Hills Power Station, have agreed to pay the loan and lease principal obligations of the lignite miner, DHLC, when due if DHLC does not have sufficient funds or credit to pay. Any amounts paid on behalf of the miner would be credited by the lignite miner against future invoices for lignite delivered. ~~The maximum projected payment by~~As of September 30, 2021, Cleco Power does not expect any payments to be made under this ~~guarantee is estimated to be $83.0 million; however, the Amended Lignite Mining Agreement does not contain a cap.~~guarantee. 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. In April 2020, Cleco Power and SWEPCO mutually agreed to not develop additional mining areas for future lignite extraction and subsequently provided notice to the LPSC of the intent to cease mining at the Dolet Hills and Oxbow mines by June 2020. The mine closures are subject to LPSC review and approval. As of ~~September 30,~~December 31, 2020, all lignite reserves intended to be extracted from the Oxbow mine had been extracted. On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine and to include and defer certain accelerated mine closing costs in fuel and related ratemaking treatment. On March 17, 2021, the LPSC approved the establishment of a regulatory asset for the deferral of certain accelerated mine costs in fuel and related ratemaking treatment. For more information on the Dolet Hills regulatory asset, see Note 5 — “Regulatory Assets and Liabilities — Lignite Mine Closure Cost.” Cleco Power is currently responding to data requests related to the joint filing. The Amended Lignite Mining Agreement does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under this guarantee.

Cleco ~~Holdings, in relation to Cleco Cajun’s participation in MISO, and Cleco Power have~~has letters of credit to MISO pursuant to energy market requirements. ~~In June 2020, Cleco Holdings decreased its MISO letter of credit from $34.5 million to $1.3 million.~~ The letters of credit automatically renew each

year and have no impact on Cleco Holdings’ or Cleco Power’s revolving credit facility.In February 2021, as a result of Winter Storms Uri and Viola, Cleco Power and Cleco Holdings, on behalf of Cleco Cajun, were required to post collateral with MISO. In March 2021, Cleco Power and Cleco Cajun settled with MISO the purchased power obligations associated with Winter Storms Uri and Viola. MISO returned associated collateral postings of $24.9 million and $6.5 million to Cleco Power and Cleco Holdings, respectively. For more information on these winter storms, see Note 17 — “Storm Restoration — Winter Storms Uri and Viola.”

Generally, neither Cleco Holdings nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. There are 0


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

no assets held as collateral for third parties that either Cleco Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

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

In April 2015, the EPA published a final rule in the Federal Register for regulating the disposal and management of CCRs from coal-fired power plants (CCR Rule). The rule established extensive requirements for existing and new CCR landfills and surface impoundments and all lateral expansions consisting of location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements and post closure care, and recordkeeping, notification, and internet posting requirements. In August 2018, the D.C. Court of Appeals vacated several requirements in the CCR regulation, which included eliminating the previous acceptability of compacted clay material as a liner for impoundments. As a result, on December 2, 2019, the EPA published a proposed rule that would set deadlines for costly modifications including retrofitting of clay-lined impoundments with compliant liners or closure of the impoundments. The rule was finalized and published in the Federal Register on August 28, 2020. In November 2020, Cleco submitted demonstrations to the EPA specifying its intended course of action for Rodemacher Unit 2, Dolet Hills Power Station, and Big Cajun II in order to comply with the final rule. During 2021, additional information was submitted to the LDEQ to revise and update Cleco Power’s compliance strategy. Cleco Power and Cleco Cajun have also engaged independent engineering specialists to conduct studies on the efforts and costs expected to be incurred in order to comply with the final CCR rule. During the third quarter of 2021, management received additional information in connection with Cleco Power’s and Cleco Cajun’s compliance strategies resulting in a revision to the estimated cash flows expected to be required to settle the respective AROs. Therefore, Cleco Power and Cleco Cajun recorded an increase of $13.1 million and $35.5 million, respectively, in their ARO balances.

The following tables summarize the net changes in the ARO for Cleco and Cleco Power:


(THOUSANDS)	CLECO CAJUN		CLECO POWER		CLECO
Balance, Dec. 31, 2020	$	16,658	$	11,364	$	28,022

Liabilities settled	(1,316)		$	—	(1,316)
Accretion	466		$	249	715
Revisions and adjustments	35,540		$	13,101	48,641
Balance, Sept. 30, 2021	$	51,348	$	24,714	$	76,062

As part of the Cleco Cajun Transaction, NRG agreed to indemnify Cleco for environmental costs up to $25.0 million associated with the CCR rule. At September 30, 2021, Cleco Cajun recognized indemnification assets totaling $22.1 million. The current portion of the indemnification asset of $1.1 million is reflected in Other current assets and the non-current portion of $21.0 million is reflected in Other deferred charges on Cleco’s Condensed Consolidated Balance Sheet. The indemnification asset is expected to be collected as closure costs are incurred.

Risks and Uncertainties

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

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

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

Cleco Power and Cleco Cajun are participants in the MISO market. ~~Energy prices~~Power purchases in the MISO market are ~~based on~~made at prevailing market prices, also referred to as LMP. LMP ~~which~~ includes a component directly related to congestion on the transmission ~~system. Pricing zones with greater transmission congestion may have higher LMPs. Physical transmission constraints present in~~system and, as a result, can be different based on the ~~MISO market could increase~~location and time of the day the energy is dispatched causing energy costs ~~within pricing zones.~~to increase. Cleco Power and Cleco Cajun use FTRs to mitigate transmission congestion price risks. ~~Changes to anticipated transmission paths may result in an unexpected increase in energy costs.~~

On March 1, 2019, Cleco Power began to operate the Dolet Hills Power Station from June through September of each year; however, the Dolet Hills Power Station will continue to be available to operate in other months, if needed. In ~~January~~June 2020, ~~Cleco Power’s joint owner in Dolet Hills Power Station unilaterally entered into a settlement with the Arkansas Public Service Commission to seek regulatory approval~~management decided to retire the Dolet Hills Power ~~Station by the end of 2026. This settlement did not bind~~Station.

In June 2020, Cleco Power remeasured its ARO liabilities due to ~~agree to retire~~the expected retirement of the Dolet Hills Power Station. Cleco Power’s ARO liability increased $3.3 million as a result of this remeasurement. At September 30, 2021, Cleco Power’s undivided interest in the Dolet Hills Power Station ~~by 2026.~~was $38.6 million and was included in base rates.

~~In April 2020,~~ Cleco Power ~~and SWEPCO mutually agreed to not develop additional mining areas for future lignite extraction and subsequently provided notice to~~made a filing with the LPSC ~~of the intent to cease mining at~~on September 7, 2021, giving notice that the Dolet Hills Power Station will be retired at the end of 2021. Cleco Power anticipates filing in the fourth quarter of 2021 an application with the LPSC requesting recovery of stranded and ~~Oxbow mines by June 2020, subject to LPSC review and approval. As~~decommissioning costs associated with the retirement of ~~September 30, 2020, all lignite reserves intended to be extracted from~~ the ~~Oxbow mine had been extracted.~~ Dolet Hills Power Station.

On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine, and to include and defer certain accelerated mine closing costs in fuel and related ratemaking treatment. ~~Expected~~The expected early closure of the mines has resulted in increased costs that will be billed through the fuel adjustment clause, which management currently believes are recoverable. Management does not believe the early closure of the mines will have an adverse impact on the recovery value of the Dolet Hills Power Station. Cleco Power ~~expects~~is currently responding to ~~have sufficient lignite fuel~~


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

~~available to continue seasonal operations of the Dolet Hills Power Station through the 2021 seasonal operation period.~~

Also in April 2020, Cleco Power announced its intent to seek regulatory approval to retire the Dolet Hills Power Station at the end of 2021, subject to recovery mechanisms. This announcement did not bind Cleco Power to a specific retirement plan and Cleco Power continued to evaluate the cost of operating the Dolet Hills Power Station compared with other alternatives to determine the best course of action for the Dolet Hills Power Station within the LPSC regulatory requirements and recovery mechanisms. In June 2020, Cleco Power remeasured its ARO liabilities duedata requests related to the expected abandonment of the Dolet Hills Power Station. Cleco Power’s ARO liability increased $3.3 million as a result of this remeasurement. At September 30, 2020, Cleco Power’s undivided interest in the Dolet Hills Power Station was $156.2 million and was included in base rates.joint filing.

Fuel costs incurred by the Dolet Hills Power Station are recoverable by Cleco Power through active fuel adjustment clauses. Under the Amended Lignite Mining Agreement, DHLC bills Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs as fuel is delivered. As of September 30, ~~2020, DHLC~~2021, Cleco Power estimates ~~$163.5~~$10.1 million of its proportionate share of costs will be billed ~~to Cleco Power~~by DHLC prior to the closure of the Dolet Hills Power Station. In 2009, Cleco Power acquired an interest in Oxbow, which owns mineral rights and land leases. Under a joint operating agreement pertaining to the Oxbow mineral rights and land leases, Oxbow bills Cleco Power its proportionate share of incurred costs. As of September 30, ~~2020, Oxbow~~2021, Cleco Power estimates ~~approximately $10.4~~$1.8 million of its proportionate share of costs will be


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

billed ~~to Cleco Power~~by Oxbow prior to the closure of the Dolet Hills Power Station. If any of these costs are not recoverable, it could materially impact the Registrants’ results of operations, financial condition, or cash flows.


Note 1514 — Affiliate Transactions

At September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, Cleco Holdings had an affiliate receivable of $3.0 million and $1.7 million, respectively, from Cleco Group primarily for franchise taxes. At both September 30, 2021, and December 31, 2020, Cleco Holdings had an affiliate payable of ~~$35.3~~$41.3 million ~~and $33.8 million, respectively,~~ to Cleco Group primarily for settlement of taxes payable.

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

AT SEPT. 30, 2020 AT DEC. 31, 2019
(THOUSANDS) ACCOUNTS
RECEIVABLE ACCOUNTS
PAYABLE ACCOUNTS
RECEIVABLE ACCOUNTS
PAYABLE
Cleco Holdings $ 10,349 $ 102 $ 10,351 $ 194
Support Group 2,031 14,580 3,172 13,890
Cleco Cajun 1,008 6 958 39
Total $ 13,388 $ 14,688 $ 14,481 $ 14,123


	AT SEPT. 30, 2021				AT DEC. 31, 2020
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	$	10,712	$	57,825	$	10,353	$	57,713
Support Group	2,388		11,514		3,248		14,355
Cleco Cajun	882		17		1,004		—
Total	$	13,982	$	69,356	$	14,605	$	72,068

Of the affiliate payable balances at September 30, 2021, and December 31, 2020, Cleco Power had $57.6 million payable to Cleco Holdings for the settlement of income taxes.

Oxbow bills Cleco Power its proportionate share of incurred costs related to mineral rights and land leases. These costs are included in fuel inventory and are recoverable from Cleco Power customers through the LPSC-established FAC or related wholesale contract provisions. During the three and nine months ended September 30, ~~2020,~~2021, Cleco Power recorded ~~$1.1~~$0.7 million and ~~$16.6~~$2.7 million, respectively, of its proportionate share of incurred costs. During the three and nine months ended September 30, ~~2019,~~2020, Cleco Power recorded ~~$1.4~~$1.1 million and ~~$3.6~~$16.6 million, respectively, of its proportionate share of incurred costs. At September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, Cleco Power had ~~$0.3~~$0.2 million and

~~$0.2~~ $0.3 million, respectively, payable to Oxbow. For more information on Cleco Power’s variable interest in Oxbow, see Note 1312 — “Variable Interest Entities.”

Note 1615 — Intangible Assets and Liabilities

During 2008, Cleco Katrina/Rita acquired a $177.5 million intangible asset which ~~includes~~included $176.0 million for the right to bill and collect storm recovery charges from customers of Cleco Power and $1.5 million of financing costs. This intangible asset was fully amortized in March 2020 and had 0no residual value at the end of its life.

As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the valuation of finite intangible assets relating to the Cleco Power trade name and long-term wholesale power supply agreements. At the end of their lives, these power supply agreement intangible assets will have 0no residual value. ~~The trade name intangible asset is being amortized over its estimated economic useful life of 20 years.~~ The intangible assets related to the power supply agreements are amortized over the estimated life of each applicable contract ranging between 7 and 19 years, and the amortization is included in Electric operations on Cleco’s Condensed Consolidated Statements of Income.

During the third quarter of 2021, Cleco determined that the fair value of the Cleco Power trade name was less than its carrying value and an impairment of $3.8 million was recognized reducing the carrying value to zero. The impairment resulted in an increase in amortization expense and was reflected in Depreciation and amortization on Cleco’s Condensed Consolidated Statements of Income at September 30, 2021. For more information on the the trade name intangible asset impairment, see Note 6 — “Fair Value Accounting and Financial Instruments.”

As a result of the Cleco Cajun Transaction, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the difference between the contract and market price of acquired long-term wholesale power agreements. ~~The fair value of intangible assets of $98.9 million and intangible liabilities of $14.2 million was reflected in the purchase price allocation.~~ At the end of their lives, these intangible assets and liabilities will have 0no residual value. These intangibles are amortized over the estimated life of each applicable contract ranging between 26 and 8 years. The amortization is included in Electric operations on Cleco’s Condensed Consolidated Statements of Income.

As part of the Cleco Cajun Transaction, Cleco assumed an LTSA for maintenance services related to the Cottonwood Plant. AnThis intangible liability ~~of $24.1 million was reflected in the purchase price allocation and~~ is being amortized using the straight-line method over the estimated life of the LTSA of seven years. The amortization is included as a reduction to the LTSA prepayments on Cleco’s Condensed Consolidated Balance Sheet. ~~For more information on the fair value adjustments of intangible assets and liabilities related to the Cleco Cajun Transaction, see Note 2 — “Business Combinations.”~~

The following tables present Cleco and Cleco Power’s amortization of intangible assets and liabilities:

Cleco
FOR THE THREE MONTHS ENDED SEPT. 30, FOR THE NINE MONTHS
ENDED SEPT. 30,
(THOUSANDS) 2020 2019 2020 2019
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges $ 0 $ 5,660 $ 517 $ 15,702
Trade name $ 64 $ 64 $ 191 $ 191
Power supply agreements $ 6,400 $ 6,474 $ 19,200 $ 17,873
Intangible liabilities
LTSA $ 882 $ 871 $ 2,646 $ 2,323
Power supply agreements $ 871 $ 882 $ 2,613 $ 2,352


Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	—	$	—	$	—	$	517
Trade name	$	3,770	$	64	$	3,897	$	191
Power supply agreements	$	6,400	$	6,400	$	19,200	$	19,200
Intangible liabilities
LTSA	$	871	$	871	$	2,613	$	2,613
Power supply agreements	$	389	$	882	$	1,989	$	2,646


Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	—	$	—	$	—	$	517

4951


CLECO
CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q

Cleco Power
FOR THE THREE MONTHS ENDED SEPT. 30, FOR THE NINE MONTHS
ENDED SEPT. 30,
(THOUSANDS) 2020 2019 2020 2019
Cleco Katrina/Rita right to bill and collect storm recovery charges $ 0 $ 5,660 $ 517 $ 15,702

The following tables summarize the balances for intangible assets and liabilities subject to amortization for ~~Cleco and Cleco Power:~~Cleco:

Cleco
(THOUSANDS) AT SEPT. 30, 2020 AT DEC. 31, 2019
Intangible assets
Cleco Katrina/Rita right to bill and collect storm recovery charges $ 70,594 $ 70,594
Trade name 5,100 5,100
Power supply agreements 184,004 184,004
Total intangible assets carrying amount 259,698 259,698
Intangible liabilities
LTSA 24,100 24,100
Power supply agreements 14,200 14,200
Total intangible liability carrying amount 38,300 38,300
Net intangible assets carrying amount 221,398 221,398
Accumulated amortization (129,815) (115,167)
Net intangible assets subject to amortization $ 91,583 $ 106,231


Cleco Power
Cleco						Cleco
(THOUSANDS)	(THOUSANDS)	AT SEPT. 30, 2020		AT DEC. 31, 2019		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Cleco Katrina/Rita right to bill and collect storm recovery charges		$	177,537	$	177,537
Intangible assets						Intangible assets
Trade name						Trade name	$	—	$	5,100
Power supply agreements						Power supply agreements	184,004		184,004
Total intangible assets carrying amount						Total intangible assets carrying amount	184,004		189,104
Intangible liabilities						Intangible liabilities
LTSA						LTSA	24,100		24,100
Power supply agreements						Power supply agreements	14,200		14,200
Total intangible liability carrying amount						Total intangible liability carrying amount	38,300		38,300
Net intangible assets carrying amount						Net intangible assets carrying amount	145,704		150,804
Accumulated amortization	Accumulated amortization	(177,537)		(177,020)		Accumulated amortization	(77,326)		(63,932)
Net intangible assets subject to amortization	Net intangible assets subject to amortization	$	0	$	517	Net intangible assets subject to amortization	$	68,378	$	86,872

Goodwill

On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion. Management assigned the recognized goodwill to the Cleco Power reporting unit. Goodwill is required to be tested for impairment at the reporting ~~segment~~unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires significant judgments,

including the identification of reporting units, assignments of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of the reporting units.

Cleco conducted its ~~2020~~2021 annual impairment test using an August 1, ~~2020,~~2021, measurement date. The fair value of the Cleco Power reporting unit was estimated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market

approach, which estimates fair value based on market comparables within the utility and energy industries. Significant assumptions used in these fair value estimates include estimation of future cash flows related to capital expenditures, long-term rate of growth, and weighted-average cost of capital or discount rate. Changes in these assumptions could materially affect the determination of fair value and goodwill impairment at Cleco Power. Based on the tests performed, management has determined that the fair value of the Cleco Power reporting unit exceeds the carrying value resulting in 0no impairment of Cleco Power’s goodwill as of August 1, ~~2020.~~2021.

Note 1716 — Accumulated Other Comprehensive Loss

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


Cleco	Cleco					Cleco
		FOR THE THREE MONTHS ENDED SEPT. 30, 2020		FOR THE NINE MONTHS ENDED SEPT. 30, 2020			FOR THE THREE MONTHS ENDED SEPT. 30, 2021		FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS				(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	Balances, beginning of period	$	(16,657)	$	(17,513)	Balances, beginning of period	$	(25,588)	$	(25,796)

Amounts reclassified from AOCI	Amounts reclassified from AOCI					Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	Amortization of postretirement benefit net loss	448		1,304		Amortization of postretirement benefit net loss	96		304

Balances, Sept. 30, 2020		$	(16,209)	$	(16,209)
Balances, Sept. 30, 2021						Balances, Sept. 30, 2021	$	(25,492)	$	(25,492)

FOR THE THREE MONTHS ENDED
SEPT. 30, 2019 FOR THE NINE MONTHS ENDED
SEPT. 30, 2019
(THOUSANDS) POSTRETIREMENT BENEFIT NET GAIN
Balances, beginning of period $ 1,504 $ 1,786
Amounts reclassified from AOCI
Amortization of postretirement benefit net gain (37) (319)
Balances, Sept. 30, 2019 $ 1,467 $ 1,467


	FOR THE THREE MONTHS ENDED SEPT. 30, 2020		FOR THE NINE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	$	(16,657)	$	(17,513)



Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	448		1,304


Balances, Sept. 30, 2020	$	(16,209)	$	(16,209)


	FOR THE THREE MONTHS ENDED SEPT. 30,
	2021					2020
(THOUSANDS)	CLECO POWER		CLECO CAJUN			CLECO POWER		CLECO CAJUN
Net income	$	56,561	$	86,744		$	36,092	$	38,357
Add: Depreciation and amortization	43,526		12,623		(1)	40,268		11,344		(2)
Less: Interest income	936		4			789		10
Add: Interest charges	18,509		1,117			18,441		(484)
Add: Federal and state income tax (benefit) expense	548		29,888			18,076		12,258
EBITDA	$	118,208	$	130,368		$	112,088	$	61,465
(1) Includes $3.6 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (2) Includes $3.1 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


	FOR THE NINE MONTHS ENDED SEPT. 30,
	2021					2020
(THOUSANDS)	CLECO POWER		CLECO CAJUN			CLECO POWER		CLECO CAJUN
Net income	$	102,407	$	153,719		$	76,156	$	84,655
Add: Depreciation and amortization	126,534		36,614		(1)	125,541		33,385		(2)
Less: Interest income	2,404		10			2,498		269
Add: Interest charges	55,392		786			55,624		(353)
Add: Federal and state income tax expense	(219)		52,561			30,770		27,280
EBITDA	$	281,710	$	243,670		$	285,593	$	144,698
(1) Includes $10.0 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(6.9) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction. (2) Includes $9.3 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(6.9) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.

6063


CLECO
CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q

FOR THE THREE MONTHS ENDED SEPT. 30,
2020 2019
(THOUSANDS) CLECO POWER CLECO CAJUN CLECO POWER CLECO CAJUN
Net income $ 36,092 $ 38,357 $ 51,527 $ 22,806
Add: Depreciation and amortization 40,268 11,344 (1) 44,903 10,880 (2)
Less: Interest income 789 10 1,421 220
Add: Interest charges 18,441 (484) 17,983 —
Add: Federal and state income tax expense 18,076 12,258 12,431 7,612
EBITDA $ 112,088 $ 61,465 $ 125,423 $ 41,078
(1) Includes $3.1 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.
(2) Includes $3.2 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.

FOR THE NINE MONTHS ENDED SEPT. 30,
2020 2019
(THOUSANDS) CLECO POWER CLECO CAJUN CLECO POWER CLECO CAJUN
Net income $ 76,156 $ 84,655 $ 127,595 $ 46,788
Add: Depreciation and amortization 125,541 33,385 (1) 126,610 27,679 (2)
Less: Interest income 2,498 269 3,281 842
Add: Interest charges 55,624 (353) 52,498 —
Add: Federal and state income tax expense 30,770 27,280 34,407 15,169
EBITDA $ 285,593 $ 144,698 $ 337,829 $ 88,794
(1) Includes $9.3 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(6.9) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.
(2) Includes $8.3 million of amortization of intangible assets and liabilities related to wholesale power supply agreements as a result of the Cleco Cajun Transaction and $(6.1) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


FINANCIAL CONDITION

Liquidity and Capital Resources

General Considerations and Credit-Related Risks

Credit Ratings and Counterparties

Financing for operational needs and capital expenditure requirements not satisfied by operating cash flows depends upon the cost and availability of external funds through both short- and long-term financing. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain or expand its businesses. Access to funds is dependent upon factors such as general economic and capital market conditions, including the impact of COVID-19, regulatory authorizations and policies, Cleco Holdings’ and Cleco Power’s credit ratings, cash flows from routine operations, and credit ratings of project counterparties. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. The following table presents the credit ratings of Cleco Holdings and Cleco Power at September 30, ~~2020:~~2021:

SENIOR UNSECURED DEBT

CORPORATE/LONG-TERM ISSUER

S&P

MOODY’S

FITCH

S&P

MOODY’S

FITCH

Cleco Holdings

BBB-

Baa3

BBB-

Baa3

BBB-

Cleco Power

BBB+

BBB

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

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

Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest ratings held. ~~Savings are dependent upon the level of borrowings.~~ If Cleco Holdings’ or Cleco Power’s credit ratings

were to be downgraded, Cleco Holdings or Cleco Power, respectively, could be required to pay additional fees and incur higher interest rates for borrowings under their respective revolving credit facilities.

~~With~~Cleco may be required to provide credit support with respect to any open trading contracts that Cleco has or may initiate in the ~~future, Cleco may be required to provide credit support or pay liquidated damages.~~future. The amount of credit support that Cleco

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

Cleco Power and Cleco Cajun participate in the MISO market. MISO requires Cleco Power and Cleco Cajun to provide credit support which may increase or decrease due to the timing of the settlement ~~schedules.~~ schedules and MISO margining formulas. In February 2021, as a result of Winter Storms Uri and Viola, Cleco Power and Cleco Holdings, on behalf of Cleco Cajun, were required to post collateral with MISO. In March 2021, Cleco Power and Cleco Cajun settled with MISO the purchased power obligations associated with Winter Storms Uri and Viola. MISO returned associated collateral postings of $24.9 million and $6.5 million to Cleco Power and Cleco Holdings, respectively. For more information about MISO, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission ~~Rates of Cleco Power”~~Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. For more information about credit support see Item 1, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1413 — Litigation, ~~— Off-Balance Sheet~~Other Commitments and Contingencies, and Disclosures about Guarantees.” For more information on Winter Storms Uri and Viola, see Item 1, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Storm Restoration — Winter Storms Uri and Viola.”

Global and U.S. Economic Environment

Global and domestic economic conditions may have an impact on Cleco’s business and financial condition. Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. During periods of capital market volatility, the availability of capital could be limited and the costs of capital may increase for many companies. Although the Registrants have not experienced restrictions in the financial markets, their


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

ability to access the capital markets may be restricted at a time when the Registrants would like, or need, to do so. Any restrictions could have a material impact on the Registrants’ ability to fund capital expenditures or debt service, or on their flexibility to react to changing economic and business conditions. Credit constraints could have a material negative impact on the Registrants’ lenders or customers, causing them to fail to meet their obligations to the Registrants or to delay payment of such obligations. The lower interest rates to which the Registrants have been exposed have been beneficial to debt issuances; however, ~~these~~lower rates have negatively affected interest income for the Registrants’ short-term investments.

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. As a result of the tax rate reduction, on January 1, 2018, Cleco Power began accruing an estimated reduction in reserve for the federal statutory corporate income tax rate. In February 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flowthrough to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. After various filings and settlement discussions, on July 10, 2019, the LPSC approved for Cleco Power to accrue rate refunds of $79.2 million, plus interest, for the reduction in the statutory federal tax rate for the period from January 2018 toOn June ~~2020. The refund was credited to customers over 12 months beginning August 1, 2019.~~

~~In July 2019,~~16, 2021, the LPSC approved Cleco Power’s ~~motion to address~~new retail rate plan, which includes the ~~rate redesign~~settlement of the TCJA protected and ~~the regulatory liability for~~unprotected excess ~~ADIT,~~ADIT. Effective July 1, 2021, all retail customers will continue receiving bill credits resulting from the ~~enactment~~TCJA. For more information on the regulatory impact of the TCJA, ~~in Cleco Power’s current base rate case.~~see

~~On July 15, 2020,~~


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

Item 1, “Notes to the LPSC approved Cleco Power’s application to extend the TCJA bill credits at the same rate as determined in the initial TCJA refund of approximately $7.0 million per month. The extension was for the period of August 2020 through November 2020. The refund will consist of the change in the federal statutory corporate income tax rate from 35% to 21%, which is approximately $2.5 million per monthUnaudited Condensed Consolidated Financial Statements — Note 11 — Regulation and an additional $4.4 million that will be refunded by the unprotected excess ADIT. At September 30, 2020, Cleco Power had $2.1 million accrued for the estimated federal tax-related benefits from the TCJA. The mechanism to refund the remaining balance of the excess ADIT will be determined in Cleco Power’s current LPSC base rate case. At September 30, 2020, Cleco Power had $366.0 million accrued for the excess ADIT, of which $28.4 million is reflected in current liabilities. Cleco Power’s current base rate case is ongoing and management is unable to determine its outcome. On September 30, 2020, Cleco Power filed an application to extend the TCJA bill credits from November 30, 2020, until such time that the rate case is complete.Rates.”

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power are required to disclose the fair value of certain assets and liabilities by one of three levels. Other financial assets and liabilities are reported at their carrying values at their date of issuance on the

consolidated balance sheets with their fair values as of the balance sheet date disclosed within the three levels. For more information about fair value levels, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 76 — Fair Value ~~Accounting.~~Accounting and Financial Instruments.”

Cash Generation and Cash Requirements

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes. For more information on Cleco and Cleco Power’s restricted cash and cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

Debt

Cleco

At September 30, ~~2020,~~2021, Cleco had ~~$238.0 million of~~no short-term debt outstanding under its $475.0 million revolving credit facilities, at an average all-in interest rate of 1.64%. As a result of the COVID-19 pandemic, Cleco has implemented certain measures that it believes will provide financial flexibility and help Cleco maintain liquidity. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part II, Item 1A “Risk Factors — COVID-19” in this Quarterly Report on Form 10-Q.facilities. Cleco had no$75.0 million of short-term debt outstanding at December 31, ~~2019.~~2020.

At September 30, ~~2020,~~2021, Cleco’s long-term debt and finance leases outstanding ~~was $3.30~~totaled $3.55 billion, of which ~~$64.0~~$66.7 million was due within one year. The long-term debt due within one year at September 30, ~~2020,~~2021, primarily represents ~~$63.3~~$66.0 million of principal payments on Cleco Holdings’ debt as required by the Cleco Cajun Transaction commitments to the LPSC. Cleco Holdings repaid the $66.0 million of principal payments on October 29, 2021. Long-term debt increased by ~~$106.8~~$318.5 million from December 31, ~~2019,~~2020, primarily due to the issuance of $325.0 million floating rate senior notes on September 10, 2021 by Cleco Power’s $125.0 million term loan agreement entered into on August 28, 2020, partially offset by the $11.1 million final principal payment made on the Cleco Katrina/Rita storm recovery bonds on March 2, 2020.Power. For more information on ~~Cleco’s debt,~~the senior notes, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 87 — Debt.”

Cash and cash equivalents available at September 30, ~~2020,~~2021, were ~~$528.7~~$273.2 million combined with ~~$237.0~~$475.0 million available revolving credit facility capacity ($~~87.0~~175.0 million from Cleco Holdings and ~~$150.0~~$300.0 million from Cleco Power) for total liquidity of ~~$765.7~~$748.2 million. For more information on the credit facility capacity, see “— Credit Facilities.” Cleco Holdings and Cleco Power have uncommitted lines of credit that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

At September 30, ~~2020,~~2021, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents. In order to mitigate potential credit risk, Cleco and Cleco Power have

established guidelines for short-term investments. For more information on the concentration of credit risk through short-term investments classified as cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 6 — Fair Value Accounting and Financial Instruments.”

At September 30, 2021, and December 31, 2020, Cleco had a working capital surplus of $413.8 million and $140.3 million, respectively. The $273.5 million increase in working capital is primarily due to:

•a $188.2 million increase in cash and cash equivalents primarily due to the issuance of $325.0 million floating rate senior notes by Cleco Power, partially offset by payments made on Cleco Power’s revolving credit facility,

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

•a $50.7 million increase in accumulated deferred fuel, excluding Cleco Power FTRs, primarily due to additional deferrals through a fuel surcharge at Cleco Power for incremental costs related to Winter Storms Uri and Viola,

•a $44.0 million increase in energy risk management assets, excluding Cleco Power FTRs, primarily due to market value changes on gas-related derivative contracts at Cleco Cajun,

•a $31.9 million increase in customer accounts receivable primarily due to an increase in fuel cost recovery mainly due to Winter Storms Uri and Viola, as well as an increase in usage due to the hot weather conditions, partially offset by payments made by Cleco Power’s customers on their payment plans originating in 2020 as a result of COVID-19,

•a $13.8 million increase in other accounts receivable primarily due to the settlement of gas-related derivative contracts at Cleco Cajun, and

•a $12.2 million increase in other current assets primarily due to timing of employee benefit payments.

These increases in working capital were partially offset by:

•a $64.0 million increase in accounts payable, excluding Cleco Power FTR purchases, primarily due to an increase in storm accruals and payables related to the restoration efforts for Hurricane Ida,

•a $39.6 million increase in taxes payable primarily due to accruals of property taxes,

•a $24.0 million increase in interest accrued primarily due to timing of interest payments on long-term debt, and

•a $22.5 million increase in regulatory liabilities primarily due to the reclassification of the short-term portion of the regulatory liability related to the TCJA, partially offset by credits to Cleco Power’s customers for the TCJA refunds.

Cleco Holdings

At September 30, 2021, and December 31, 2020 Cleco Holdings had no short-term debt outstanding.

At September 30, 2021, Cleco Holdings’ long-term debt outstanding was $1.61 billion, of which $66.0 million was due within one year. The long-term debt due within one year at September 30, 2021, represents principal payments on Cleco Holdings’ debt as required by the Cleco Cajun Transaction commitments to the LPSC. Cleco Holdings repaid the $66.0 million of principal payments on October 29, 2021.

At September 30, 2021, Cleco Holdings had no borrowings outstanding under its $175.0 million revolving credit facility. For more information on Cleco Holdings’

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CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q

~~“Notes to the Unaudited Condensed Consolidated Financial Statements — Note 7 — Fair Value Accounting.”~~

At September 30, 2020, and December 31, 2019, Cleco had a working capital surplus of $248.0 million and $126.7 million, respectively. The $121.3 million increase in working capital is primarily due to:

•~~a $412.4 million increase in cash and cash equivalents, primarily due to the draws on Cleco’s revolving credit facilities and the issuance of Cleco Power’s $125.0 million term loan,~~

•a $62.0 million decrease in long-term debt due within one year primarily due to the long-term refinancing of $50.0 million 2008 series A GO Zone bonds and the $11.1 million final principal payment on the Cleco Katrina/Rita storm recovery bonds on March 2, 2020,

•~~a $29.1 million decrease in provision for rate refund primarily due to refunds to Cleco Power customers for tax-related benefits of the TCJA,~~

•a $23.0 million increase in accumulated deferred fuel, excluding Cleco Power FTRs, primarily due to additional deferrals through a fuel surcharge at Cleco Power and the timing of collections at Cleco Power,

•~~a $16.7 million increase in fuel inventory primarily due to a decrease in coal consumption at Cleco Cajun, and~~

•~~a $12.1 million increase in energy risk management assets primarily due to the purchase of additional other commodity derivatives.~~

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

•~~a $238.0 million increase in short-term debt due to draws on Cleco’s $475.0 million revolving credit facilities,~~

•~~a $124.5 million increase in accounts payable, excluding Cleco Power FTR purchases, primarily due to accruals for storm restoration costs associated with Hurricane Laura,~~

•~~a $31.4 million increase in taxes payable primarily due to accruals of property taxes~~

•a $23.0 million increase in regulatory liabilities primarily due to the reclassification of the short term portion of the regulatory liability related to the TCJA, partially offset by credits to Cleco Power’s retail customers for the over-collection of revenue from the delay of the St. Mary Clean Energy Center project, and

•~~a $21.1 million increase in interest accrued primarily to the timing of interest payments on long-term debt.~~

~~Cleco Holdings~~

At September 30, 2020, Cleco Holdings had $88.0 million of short-term debt outstanding under its $175.0 million revolving credit facility, at an all-in interest rate of 2.035%. For more information on Cleco Holding’s revolving credit facility, see “— Credit Facilities.” Cleco Holdings has an uncommitted line of credit that allows up to $10.0 million in short-term borrowings, but no more than $10.0 million in the aggregate with Cleco Power’s similar line of credit, to support its working capital needs. There were no amounts outstanding under the uncommitted line of credit at September 30, ~~2020. Cleco Holdings had no short-term debt outstanding at December 31, 2019.~~

At September 30, 2020, Cleco Holding’s long-term debt outstanding was $1.67 billion, of which $63.3 million was due within one year. The long-term debt due within one year at September 30, 2020, represents principal payments on Cleco

~~Holdings’ debt as required by the Cleco Cajun Transaction commitments to the LPSC.~~2021.

Cash and cash equivalents available at Cleco Holdings at September 30, ~~2020,~~2021, were ~~$97.7~~$25.4 million, combined with ~~$87.0~~$175.0 million revolving credit facility capacity for total liquidity of ~~$184.7~~$200.4 million.

Cleco Power

At September 30, ~~2020,~~2021, Cleco Power had ~~$150.0 million of~~no short-term debt outstanding under its $300.0 million revolving credit ~~facility, at an all-in interest rate of 1.41%.~~facility. For more information on Cleco Power’s revolving credit facility, see “— Credit Facilities.” ~~As a result of~~Cleco Power had $75.0 million short-term debt outstanding at December 31, 2020. Following the ~~COVID-19 pandemic, Cleco has implemented certain measures that it believes will provide financial flexibility~~restoration efforts for Hurricanes Laura, Delta, Zeta, and help Cleco maintain liquidity. For additional discussion regarding certain risks associated with the COVID-19 pandemic, see Part II, Item 1A “Risk Factors — COVID-19” in this Quarterly Report on Form 10-Q. AlthoughIda, Cleco Power believes it has sufficient liquidity to meet its current obligations ~~and to fund Hurricanes Laura, Delta, and Zeta restoration efforts from~~using a combination of cash on hand and available capacity under its revolving credit ~~facilities,~~ facilities. On August 5, 2021, Cleco Power ~~is exploring options~~filed testimony with the LPSC relating to ~~supplement its liquidity until such time~~ securitization of ~~such~~the final storm costs ~~can~~for Hurricanes Laura, Delta, and Zeta, and Winter Storms Uri and Viola, totaling $342.0 million, which included the establishment of a newly funded $100.0 million storm reserve to cover future storm costs. In addition, on September 28, 2021, Cleco Power made a supplemental filing to its application requesting an additional $100.0 million for a separate storm reserve to cover costs associated with Hurricane Ida. The approval order for the securitization is anticipated in December 2021, with the financing order to follow in January 2022, and the securitization to be ~~completed.~~complete by March 2022. For more information on Hurricanes Laura, Delta, Zeta, and ~~Zeta,~~Ida, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1817 — Storm Restoration.” Cleco Power has an uncommitted line of credit that allows up to $10.0 million in short-term borrowings, but no more than $10.0 million in the aggregate with Cleco Holdings’ similar line of credit, to support their working capital needs. There were no amounts outstanding under the uncommitted line of credit at September 30, ~~2020.~~2021.

On September 10, 2021, Cleco Power ~~had no short-term debt outstanding at December 31, 2019.~~completed the issuance and private sale of $325.0 million aggregate principal amount of its floating rate senior notes due June 15, 2023. The proceeds from the issuance were used for general limited liability company purposes, which included the repayment of $245.0 million of borrowings under its revolving credit agreement.

At September 30, ~~2020,~~2021, Cleco Power’s long-term debt outstanding was ~~$1.50~~$1.83 billion, of which $0.7 million was due within one year. ~~For~~ Cleco ~~Power,~~Power’s long-term debt increased ~~$114.0~~$323.2 million from December 31, ~~2019,~~2020, primarily due to the ~~$125.0~~issuance of $325.0 million ~~term loan agreement entered into~~floating rate senior notes on ~~August 28, 2020, partially offset~~September 10, 2021 by ~~the $11.1 million final principal payment made on the~~ Cleco ~~Katrina/Rita storm recovery bonds on March 2, 2020.~~

On August 28, 2020, Cleco Power entered into a $125.0 million variable rate bank term loan due June 28, 2022. Proceeds from the term loan will be used to fund capital expenditures and working capital requirements of Cleco Power and other general corporate purposes.Power. For more information on ~~Cleco Power’s debt,~~the senior notes, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 87 — Debt.”

Cash and cash equivalents available at September 30, ~~2020,~~2021, were ~~$325.4~~$156.3 million, combined with ~~$150.0~~$300.0 million revolving credit facility capacity for total liquidity of ~~$475.4~~$456.3 million.


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

At September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, Cleco Power had a working capital surplus of ~~$61.7~~$179.4 million and ~~$33.5~~a surplus of $13.4 million, respectively. The ~~$28.1~~$166.0 million increase in working capital is primarily due to:

•a ~~$270.0~~$131.5 million increase in cash and cash equivalents primarily due to the ~~draw~~issuance of $325.0 million floating rate senior notes, partially offset by payments made on the revolving credit facility, ~~and the issuance of a $125.0 million term loan,~~

•a ~~$60.9~~$75.0 million decrease in ~~long-term~~short-term debt due ~~within one year primarily due~~ to repayment of the ~~long-term refinancing of $50.0 million 2008 series A GO Zone bonds and the $11.1 million final principal payment on the Cleco Katrina/Rita storm recovery bonds on March 2, 2020,~~revolving credit facility,

•a ~~$29.2 million decrease in provision for rate refund primarily due to refunds to customers for tax-related benefits of the TCJA,~~

•~~a $23.0~~$50.7 million increase in accumulated deferred fuel, excluding FTRs, primarily due to additional deferrals through a fuel surcharge for incremental costs related to Winter Storms Uri and ~~the timing of collections,~~Viola,

•a ~~$15.7~~$24.7 million increase in customer accounts receivable primarily due to an increase in fuel cost recovery mainly due to Winter Storms Uri and Viola, as well as an increase in usage due to the ~~hold~~hot weather conditions, partially offset by payments made by Cleco Power’s customers on ~~disconnects and late fees~~their payment plans originating in 2020 as a result of ~~the~~ COVID-19, ~~pandemic, partially offset by the timing of a payment from a wholesale customer,~~ and

•a ~~$9.0~~$21.3 million increase in ~~material and supplies~~fuel inventory primarily due to decreases in usage, as well as higher ~~purchases for storm restoration~~per unit costs of both lignite and ~~other projects.~~petroleum coke.

These increases in working capital were partially offset by:

•a ~~$150.0 million increase in short-term debt due to a draw on the revolving credit facility,~~

•~~a $132.9~~$69.9 million increase in accounts payable, excluding FTR purchases, primarily due to ~~expenditures~~an increase in storm accruals and payables related to ~~accruals~~the restoration efforts for ~~storm restoration costs associated with~~ Hurricane ~~Laura,~~Ida,

•a ~~$51.9~~$38.2 million increase in taxes payable primarily due to accruals of property taxes, ~~and higher provisions for income taxes,~~

•a ~~$23.0~~$22.5 million increase in regulatory liabilities primarily due to the reclassification of the ~~short term~~short-term portion of the regulatory liability related to the TCJA, partially offset by credits to ~~retail~~Cleco Power’s customers for the ~~over-collection of revenue from the delay of the St. Mary Clean Energy Center project,~~TCJA refunds, and

•a ~~$13.6~~$15.9 million increase in interest accrued primarily due to timing of interest payments on long-term debt.

Credit Facilities

At September 30, ~~2020,~~2021, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with no outstanding borrowings ~~of $88.0 million~~ and one for Cleco Power in the amount of $300.0 million with no outstanding ~~borrowings of $150.0 million.~~borrowings. These revolving credit agreements were entered into on May 21, 2021, and replaced the respective existing agreements. The total of all revolving credit facilities creates a maximum aggregate capacity of $475.0 ~~million with outstanding borrowings of $238.0~~ million.

Cleco Holdings’ revolving credit facility provides for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and expires in ~~2022.~~May 2026. Under covenants contained in Cleco Holdings’ revolving credit facility, Cleco is required to maintain total indebtedness less than or equal to 65% of total capitalization. At September 30, ~~2020,~~2021, Cleco Holdings was in compliance with the covenants of its revolving credit facility. ~~The~~At September 30, 2021, the borrowing costs under the facility ~~currently are~~were equal to LIBOR plus ~~1.875%~~1.625% or

ABR plus ~~0.875%~~0.625%, plus commitment fees of ~~0.3%~~0.275%. If Cleco Holdings’ credit ratings were to be downgraded one level by the credit rating agencies, Cleco Holdings may be required to pay ~~higher~~incremental interest and


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

commitment fees of 0.125% and ~~additional interest of 0.50%~~0.05%, respectively, under the pricing levels of its revolving credit facility.

Cleco Power’s revolving credit facility provides for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and expires in ~~2022.~~May 2026. Under covenants contained in Cleco Power’s revolving credit facility, Cleco Power is required to maintain total indebtedness less than or equal to 65% of total capitalization. At September 30, ~~2020,~~2021, Cleco Power was in compliance with the covenants of its revolving credit facility. ~~The~~At September 30, 2021, the borrowing costs under the facility ~~currently are~~were equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%. If Cleco Power’s credit ratings were to be downgraded one level by the credit rating agencies, Cleco Power may be required to pay ~~higher~~incremental interest and commitment fees ~~and additional interest~~ of 0.125% and 0.025%, respectively, under the pricing levels of its revolving credit facility.

If Cleco Holdings or Cleco Power were to default under the covenants in their respective revolving credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities, and the lenders could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its revolving credit facility or other debt agreements, Cleco Holdings would be considered in default under its revolving credit facility.

Debt and Distribution Limitations

The 2016 Merger Commitments include provisions for limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings. Cleco Holdings may not make any distribution unless, after giving effect to such distribution, Cleco Holdings’ debt to EBITDA ratio is equal to or less than 6.50 to 1.00 and Cleco Holdings’ corporate credit rating is investment grade with one or more of the three credit rating agencies. At September 30, ~~2020,~~2021, Cleco Holdings was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. Additionally, in accordance with the 2016 Merger Commitments, Cleco Power is subject to certain provisions limiting the amount of distributions that may be paid to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings. Cleco Power may not make any distribution unless, after giving effect to such distribution, Cleco Power’s common equity ratio would not be less than 48% and Cleco Power’s corporate credit rating is investment grade with two of the three credit rating agencies. At September 30, ~~2020,~~2021, Cleco Power was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. The 2016 Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. For more information on the 2016 Merger Commitments, see Part I, Item 1A, “Risk Factors — ~~Regulatory Compliance”~~Structural Risks — Holding Company” and “— ~~Holding Company”~~Regulatory Risks — Regulatory Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Cleco Consolidated Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was $139.8 million and $255.1 million during the nine months ended September

30, 2021, and 2020, respectively. Net cash provided by operating activities decreased $115.3 million primarily due to:

•higher fuel costs of $92.5 million at Cleco Power primarily related to accelerated mine closure costs,

•higher recoverable fuel and purchased power costs of $29.9 million primarily associated with Winter Storms Uri and Viola not yet collected from Cleco Power customers,

•lower collections from Cleco Cajun’s customers of $16.4 million due to timing of receipts,

•lower collections from Cleco Cajun’s joint owners of $16.2 million primarily due to timing of receipts for their portions of generating station expenditures,

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

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

These decreases were partially offset by:

•lower payments for fuel inventory at Cleco Cajun of $36.5 million due to lower coal deliveries,

•lower operations and maintenance payments related to storm restoration activities of $12.5 million at Cleco Power,

•lower payments for fuel inventory at Cleco Power of $4.1 million primarily due to lower gas purchases, and

•lower payments for employee benefits of $3.2 million.

Net Investing Cash Flow

Net cash used in investing activities was $199.1 million and $210.7 million during the nine months ended September 30, 2021, and 2020, respectively. Net cash used in investing activities decreased $11.6 million primarily due to:

•lower additions to property, plant, and equipment, net of AFUDC, of $8.2 million,

•lower returns of equity investment in investees of $1.3 million, and

•higher proceeds from sale of property, plant, and equipment of $1.2 million.

Net Financing Cash Flow

Net cash provided by financing activities was $245.3 million and $347.0 million during the nine months ended September 30, 2021, and 2020, respectively. Net cash provided by financing activities decreased $101.7 million primarily due to:

•higher payments on revolving credit facilities of $260.0 million,

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

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

These decreases were partially offset by:

•the issuance of $325.0 million floating rate senior notes at Cleco Power in September 2021 and

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

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CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q

~~Cleco Consolidated Cash Flows~~

~~Net Operating Cash Flow~~

Net cash provided by operating activities was $255.1 million and $340.8 million during the nine months ended September 30, 2020, and 2019, respectively. Net cash provided by operating activities decreased $85.7 million primarily due to:

•~~higher payments for fuel inventory of $44.4 million primarily due to higher gas purchases, higher solid fuel purchases, and higher per unit lignite costs,~~

•~~lower collections from Cleco Power customers of $25.0 million due to the rate refund for the tax-related benefits from the TCJA, which began being credited to customers in August 2019,~~

•~~higher operations and maintenance payments related to hurricane and other storm restoration activities of $21.4 million at Cleco Power,~~

•~~higher payments for purchased power of $14.5 million primarily due to the closing of the Cleco Cajun Transaction in February 2019,~~

•lower Cleco Katrina/Rita storm restoration surcharge collections from Cleco Power customers of $13.4 million as a result of the final principal and interest payments on the Cleco Katrina/Rita bonds in March 2020, and

•~~higher payout for employee benefits of $7.1 million.~~

~~These decreases were partially offset by:~~

•~~higher collections for electric and other operations revenue at Cleco Cajun of $21.1 million partially the result of the Cleco Cajun Transaction closing in February 2019 and~~

•~~lower pension plan contributions of $12.3 million.~~

~~Net Investing Cash Flow~~

Net cash used in investing activities was $210.7 million and $1.05 billion during the nine months ended September 30, 2020, and 2019, respectively. Net cash used in investing activities decreased $836.3 million primarily due to:

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

•~~lower additions to property, plant, and equipment, net of AFUDC, of $21.5 million.~~

~~Net Financing Cash Flow~~

Net cash provided by financing activities was $347.0 million and $688.0 million during the nine months ended September 30, 2020, and 2019, respectively. Net cash provided by financing activities decreased $340.9 million primarily due to:

•~~the absence of borrowings of $400.0 million related to the financing of the Cleco Cajun Transaction in February 2019,~~

•~~the absence of issuance of $300.0 million in senior notes at Cleco Holdings in September 2019, and~~

•~~lower contributions from Cleco Group of $384.9 million.~~

~~These decreases were partially offset by:~~

•~~lower repayments of long-term debt of $379.5 million,~~

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

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

•~~lower payments on revolving credit facilities of $108.0 million.~~

Cleco Power Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was ~~$188.0~~$74.7 million and ~~$272.8~~$188.0 million during the nine months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, respectively. Net cash provided by operating activities decreased ~~$84.8~~$113.3 million primarily due to:

•higher ~~payments to vendors~~fuel costs of ~~$34.1~~$92.5 million ~~primarily due to timing of vendor payments~~ primarily related to ~~other operating~~accelerated mine closure costs,

•higher recoverable fuel and ~~maintenance activities,~~purchased power costs of $29.9 million primarily associated with Winter Storms Uri and Viola not yet collected from customers,

•lower collections from ~~customers~~joint owners of ~~$25.0 million due to the rate refund for the tax-related benefits from the TCJA, which began being credited to customers in August 2019,~~

•~~higher operations and maintenance payments related to hurricane and other storm restoration activities of $21.4 million,~~

•~~higher payments for fuel inventory of $18.3~~$5.1 million primarily due to ~~higher gas purchases~~ timing of receipts for their portions of generating station expenditures,and ~~higher per unit lignite costs,~~

•~~lower~~the absence of Cleco Katrina/Rita storm restoration surcharge collections from customers of ~~$13.4~~$2.4 million as a result of the final principal and interest payments on the Cleco Katrina/Rita storm recovery bonds in March ~~2020,~~

•~~lower cash receipts of advance deposits for operations and maintenance costs on jointly owned generating units of $7.1 million,~~

•~~higher vendor payments of $6.9 million primarily due to higher purchases of supplies and materials,~~

•~~higher payments to vendors of $4.4 million primarily due to higher purchased power, and~~

•~~higher payout for employee benefits of $3.3 million.~~2020.

These decreases were partially offset by:

•lower operations and maintenance payments ~~for affiliate settlements~~related to storm restoration activities of ~~$42.8~~$12.5 million and

•lower ~~pension plan contributions~~payments for fuel inventory of ~~$12.3 million.~~$4.1 million primarily due to lower gas purchases.

Net Investing Cash Flow

Net cash used in investing activities was ~~$200.7~~$192.1 million and ~~$229.8~~$200.7 million during the nine months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, respectively. Net cash used in investing activities decreased ~~$29.0~~$8.6 million primarily due to:

•lower additions to property, plant, and equipment, net of AFUDC, of ~~$27.6~~$5.3 million, ~~and~~

•~~higher~~lower returns of equity investment in investees of ~~$3.5~~$1.3 million, and

•higher proceeds from sale of property, plant, and equipment of $1.2 million.


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

Net Financing Cash Flow

Net cash provided by financing activities was $246.6 million and $261.9 million during the nine months ended September 30, ~~2020. Net cash used in financing activities was $21.0 million during the nine months ended September 30, 2019.~~2021, and 2020, respectively. Net cash provided by financing activities ~~increased $282.9~~decreased $15.3 million primarily due to:

•higher payments on revolving credit facilities of $260.0 million,

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

•~~higher~~lower draws on revolving credit facilities of ~~$117.0 million,~~$53.0 million.

These decreases were partially offset by:

•~~lower payments on revolving credit facilities~~the issuance of ~~$33.0~~$325.0 million floating rate senior notes in September 2021 and

•~~lower repayments~~the absence of ~~long-term debt~~the final repayment of ~~$9.5~~Cleco Katrina/Rita storm recovery bonds of $11.1 million.

Contractual Obligations

Cleco, in the normal course of business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Condensed

Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the Condensed Consolidated Financial Statements. For more information regarding Cleco’s Contractual Obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Contractual Obligations” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees. For more information about off-balance sheet commitments and on-balance sheet guarantees, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.”

Cybersecurity

The operation of Cleco’s electrical systems relies on evolving operational and information technology systems and network infrastructures that are complex. The failure of Cleco or its vendors’ operational and information technology systems and networks due to a physical attack or cyber attack or other event could significantly disrupt operations; cause harm to the public or employees; result in outages or reduced generating output; result in damage to Cleco’s assets or operations, or those of third parties; result in damage to Cleco’s reputation; and subject Cleco to claims by customers or third parties, any of which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. Cleco continues to assess its cybersecurity tools and processes and has taken a variety of actions to monitor and address cyber-related risks. Cleco’s Chief Information and Supply Chain Officer leads Cleco’s cybersecurity team and oversees Cleco’s cybersecurity maturity plan. Each month, management provides cybersecurity updates to Cleco’s Asset Management Committee. Cleco’s third party providers are susceptible to data breaches, which could potentially allow an attacker to compromise the third party servers on which the products run. Cleco could have potential impacts to the confidentiality, integrity, or availability of its data or systems. The third party providers and Cleco investigate data breach incidents. Past instances have resulted in no negative impacts to Cleco’s confidentiality, integrity, or availability of its data or systems. For more information on risks related to Cleco’s cybersecurity, see Part I, Item 1A, “Risk Factors —

Operational Risks — Technology and Terrorism Threats” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Regulatory and Other Matters

Environmental Matters

Cleco is subject to extensive environmental regulation by federal, state, and local authorities and is required to comply


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

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

In April 2015, the EPA published a final rule in the Federal Register for regulating the disposal and management of CCRs from coal-fired power plants (CCR Rule). The federal regulation classifies CCRs as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act and allows beneficial use of CCRs with some restrictions. The rule establishes extensive requirements for existing and new CCR landfills and surface impoundments. These requirements include all lateral expansions consisting of location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements and post closure care, and recordkeeping, notification, and internet posting requirements. As a result of the Court of Appeals for the D.C. Circuit vacating several requirements in the CCR regulation, on December 2, 2019, the EPA published a proposed rule titled Hazardous and Solid Waste Management System: Disposal of Coal Combustion Residuals From Electric Utilities; A Holistic Approach to Closure Part A: Deadline To Initiate Closure (Part A rule). The proposed regulation was finalized on August 28, 2020, and sets deadlines for costly modifications including retrofitting of clay-lined impoundments with compliant liners or closure of the impacted impoundments. By the November 30, 2020, deadline, Cleco will submit an application to the EPA specifying its intended course of action in order to comply with the final rule. The application is subject to EPA approval.

In September 2017, the EPA published a rule postponing for a two year period the earliest compliance dates for some of the wastewater streams that fall under the Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category rule. On October 13, 2020, the EPA published final revisions to the rule that would revise the technology-based effluent limitation guidelines and standards applicable to flue gas desulfurization and bottom ash transport waste waters. The rule may require costly technological upgrades at Cleco’s facilities, particularly if additional wastewater treatment systems are required to be installed or if waste streams must be eliminated. Until Cleco and the agencies have come to agreement on how compliance with the rule will be achieved, management cannot predict what the final standards will entail, what controls the EPA and


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

~~the state of Louisiana may require of Cleco, or if the new rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.~~

For a discussion of other Cleco environmental matters, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit” in this Quarterly Report on Form 10-Q and Part I, Item 1, “Business — Environmental Matters” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Regional Haze State Implementation Plan (SIP)

The Clean Air Act contains a regional haze program with the goal of returning Class I Federal areas of the nation to natural visibility by 2064. States are required to develop a SIP and revise it every ten years. A SIP must include requirements for the installation of Best Available Retrofit Technology (BART) for applicable electrical generating units in Louisiana. The EPA issued a final approval of the Louisiana SIP for the first planning phase in December 2017. Although the approval was appealed to the U.S. Court of Appeals for the Fifth Circuit by multiple organizations, the court denied all the challenges to the EPA’s approval of the Louisiana Regional Haze SIP. Because the Louisiana SIP mandates use of existing controls and participation in the CSAPR as BART, Cleco does not believe the Louisiana SIP will have a material impact on the results of operations, financial condition, or cash flows of the Registrants. The second planning period for the regional haze program covers the period from 2018 through 2028 and requires states to adopt SIPs that make reasonable further progress toward achieving natural visibility conditions in Class I Federal areas. The LDEQ published a proposed SIP for the second planning period in April 2021 for public comment and may be subject to revision upon further review by the LDEQ. The proposal does not call for new controls on any state sources but relies upon existing consent decrees and expected source retirements to achieve reasonable progress in reducing emissions and improving visibility in Class I Federal areas. The SIP for the second planning phase has not been submitted to the EPA. Until the LDEQ determines what the reasonable progress requirements are for Cleco units and completes its update of the SIP and the EPA approves the SIP, Cleco is unable to predict if the second phase SIP will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

CPP and ACE

On January 19, 2021, the D.C. Circuit Court of Appeals ruled that the EPA’s repeal of the CPP and its 2019 promulgation of ACE were unlawful. Therefore, the court issued an order to

vacate and remand the ACE rule to the EPA. On February 22, 2021, the court granted the EPA’s unopposed motion for a partial stay of the issuance of the mandate on vacating the CPP repeal ordering that it will withhold issuance of the mandate with respect to the vacatur of the CPP repeal until the EPA responds to the court’s remand by promulgating a new rule to regulate greenhouse gas emissions from existing electric generating units. This means that the CPP will not take effect during the EPA’s rulemaking process. In addition, on March 5, 2021, the court issued the partial mandate effectuating the court’s vacatur of the ACE rule which makes effective the court’s decision to vacate the ACE rule. At the end of April 2021, several parties filed petitions for a writ of certiorari asking the U.S. Supreme Court to review the decision by the D.C. Circuit Court of Appeals. On October 29, 2021, the U.S. Supreme Court granted four petitions for certiorari asking the Court to review the decision by the D.C. Circuit Court of Appeals to vacate and remand the ACE Rule.

CSAPR

On September 13, 2019, the D.C. Circuit Court of Appeals partially remanded the CSAPR update rule to the EPA because the rule did not set a deadline by which upwind states must eliminate their significant contribution to downwind states’ National Ambient Air Quality Standards (NAAQS) nonattainment. In response to the remand of the rule, on October 30, 2020, the EPA published a proposed rule in the Federal Register, Revised CSAPR Update for the 2008 ozone NAAQS. On April 30, 2021, the EPA issued in the Federal Register the final rule. Cleco does not foresee the final regulation having a material impact on the results of operations, financial condition, or cash flow of the Registrants.

Water Quality

The Clean Water Act requires the EPA to periodically review and, if appropriate, revise technology-based effluent limitations guidelines for categories of industrial facilities, including power generating facilities.

On October 13, 2020, the EPA published final revisions to the Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category rule (ELG rule) that revised the technology-based effluent limitation guidelines and standards applicable to flue gas desulfurization and bottom ash transport waste waters. The rule also allows a unit to come into compliance with the ELG rule by qualifying as an electric generating unit that will achieve permanent cessation of coal combustion by December 31, 2028. Under this compliance option, Cleco submitted a Notice of Planned Participation by the October 13, 2021, submittal deadline for the Dolet Hills Power Station, Rodemacher Unit 2, and Big Cajun II Unit 1.

Solid Waste Disposal

On January 20, 2021, the President issued an executive order which directs federal agency heads to review regulations and other actions over the past four years to determine if they are inconsistent with the policies announced in the executive order. The administration also released a nonexhaustive list of agency actions to be reviewed, which includes the CCR rules promulgated in July 2018, August 2020, and November 2020. It is now indicated on the EPA coal ash rule website that the EPA completed review of the three CCR rules in response to the executive order. The EPA determined that the most environmentally protective course is to implement these rules.


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

For more information on Cleco’s compliance with the coal combustion residual rules, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments.”

Retail Rates of Cleco Power

Base Rates

Effective July 1, 2021, Cleco Power’s annual retail earnings are subject to an FRP that was approved by the LPSC on June 16, 2021. For more information on the new FRP, see Note 11 — “Regulation and Rates — FRP.”

Fuel Rates

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. Management is unable to determine the outcome or timing of these audits. For more information on the FAC and the most recent fuel ~~audit,~~audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel ~~Audit.~~Audits.”

Environmental Rates

In July 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides Cleco Power an EAC to recover from customers certain costs of environmental compliance. These expenses are eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. For more information on the EAC and the most recent environmental audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

Energy Efficiency

In 2013, the LPSC issued a General Order adopting rules promoting energy efficiency programs. Cleco Power began participating in energy efficiency programs in November 2014. Cleco Power has recovered approximately $3.3 million annually for each of the program years through an approved rate tariff. In January 2018, Cleco began recovering an additional $3.3 million annually for estimated costs related to programs specific to political subdivisions.

On ~~December 17, 2019,~~June 9, 2021, the LPSC initiated an audit on program years ~~three~~five and ~~four~~six to consider all program costs. Cleco Power has responded to several sets of data requests regarding the audit. ~~A preliminary report has been received by Cleco Power with no material findings. Cleco Power has program year 2019~~Program years seven and thereafter are subject to audit. Management is unable to predict or give a reasonable estimate of the outcome of ~~the audit.~~this or any future audits.

Generally, utility companies are allowed to recover from customers the accumulated decrease in revenues associated with the energy efficiency programs. On October 21, 2019, Cleco Power received notice of approval from the LPSC allowing recovery of the accumulated ~~LCFC~~Lost Contribution to Fixed Cost revenues until ~~such a time that~~ base rates reset, which ~~is expected in the first half of~~took effect on July 1, 2021.

Wholesale Rates

The rates Cleco, through Cleco Power and Cleco Cajun, charges its wholesale customers are subject to FERC’s triennial market power analysis. FERC requires a utility to pass a screening test as a condition for securing and/or retaining approval to sell electricity in wholesale markets at market-based rates. An updated market power analysis must be filed with FERC every three years or upon the occurrence of a change in status as defined by FERC regulation. ~~Cleco’s next~~Cleco filed its most recent triennial market power analysis ~~is expected to be filed in~~on December 23, 2020.

Transmission Rates

Two complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaints covered the period December 2013 through May 2016. For more information about the ROE complaints, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

For information about the risks associated with Cleco’s participation in MISO, see Part ~~II,~~I, Item 1A, “Risk Factors — Regulatory Risks — MISO” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

For information on transmission rates of Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission ~~Rates of Cleco Power”~~Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Transmission, Distribution, and Generation Projects

Cleco Power’s significant ongoing projects include the Bayou Vista to Segura ~~transmission~~Transmission project and the DSMART distribution project. For information on these projects, see “— Overview — Cleco Power.”

Market Restructuring

Wholesale Electric Markets

RTO

For information on Cleco Power’s operations within MISO and for information on regulatory aspects of wholesale electric markets affecting Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Wholesale Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

ERO

The Energy Policy Act of 2005 added Section 215 to the Federal Power Act, which provides for a uniform system of mandatory, enforceable reliability standards. In 2006, FERC named NERC as the ERO that will be required to develop and enforce the mandatory reliability standards.

A NERC Reliability Standards audit is conducted every three years for Cleco Power and Cleco Cajun. ~~On October 17, 2019, Cleco Power’s~~The next NERC Reliability Standards ~~audit was completed. The final report was issued on October 31, 2019. The final disposition of the single notice of potential violation~~audits for Cleco Power and Cleco Cajun are scheduled to begin in 2022.

6770


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CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q

~~resulted in no financial penalty. The Cleco Cajun NERC Reliability Standards audit occurred during April 2019. There were no violations or areas of concern discovered during the Cleco Cajun audit.~~

A NERC ~~Critical Infrastructure Protection (CIP)~~CIP audit is also conducted every three ~~years.~~years for Cleco Power and Cleco Cajun. Cleco Power’s current NERC CIP audit ~~began in the second quarter of 2020. The audit~~ was completed on August 14, ~~2020. The~~2020, and the final report was issued by SERC on November 5, 2020. Cleco Cajun’s most recent CIP audit occurred during June ~~2019. The~~2019, and the final report was issued by SERC on June 27, 2019.

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

Management is also unable to predict the final financial outcome of the most recent ~~Cleco Cajun~~ CIP ~~audit, the current Cleco Power CIP audit or~~audits, any future audits, or whether any findings will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. For a discussion of risks associated with FERC’s regulation of Cleco Power’s transmission system, see Part ~~II,~~I, Item 1A, “Risk Factors — Regulatory ~~Compliance~~Risks — Reliability and CIP Standards Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Retail Electric Markets

For information on the regulatory aspects of retail electric markets affecting Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Retail Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Integrated Resource Plan (IRP)

On October 20, 2021, Cleco Power filed its request with the LPSC to initiate its next IRP process. Cleco Power is scheduled to file its initial data assumptions to be used in its IRP analysis in February 2022. The IRP process includes conducting stakeholder meetings and receiving feedback from stakeholders with the first stakeholders meeting proposed to take place in March 2022. The IRP report describes how Cleco Power plans to meet its forecasted load requirements on a reliable and economic basis. The IRP is used as a guide in future decision-making and does not represent firm operational commitments.

Franchises

Cleco Power operates under nonexclusive franchise rights granted by governmental units, such as municipalities and parishes (counties), and is enforced by state law. These franchises are for fixed terms, which vary from 10 years to more than 50 years. Historically, Cleco Power has been ~~substantially~~ successful in the timely renewal of substantially all franchises as each neared the end of its term. Cleco Power’s next municipal franchise expires in April 2022.

For more information on franchises, see Part I, Item 1, “Business Regulatory Matters, Industry Developments, and Franchises — Franchises” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~

2020.

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 32 — Recent Authoritative Guidance.”


CRITICAL ACCOUNTING POLICIES

Cleco’s critical accounting policies include accounting policies that are important to Cleco’s financial condition and results of operations and that require management to make difficult, subjective, or complex judgments about future events, which could result in a material impact to the financial statements of Cleco. The preparation of financial statements contained in this report requires management to make estimates and assumptions. Estimates and assumptions about future events and their effects cannot be made with certainty. These estimates involve judgments regarding many factors that in and of themselves could materially affect the financial statements and disclosures. On an ongoing basis, these estimates and assumptions are evaluated and, if necessary, adjustments are made when warranted by new or updated information or by a change in circumstances or environment. Actual results may differ significantly from these estimates under different assumptions or conditions.

For more information on Cleco’s critical accounting policies, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in the Registrant’s Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.


CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

Cleco Power meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q and is, therefore, permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Cleco Power has omitted from this report the information called for by Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).


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CLECO POWER						2021 3RD QUARTER FORM 10-Q


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


RISK OVERVIEW

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

Counterparty Credit Risk

When Cleco enters into ~~bilateral~~ commodity derivative or physical commodity transactions directly with market participants, Cleco may be exposed to counterparty credit risk. Cleco is exposed to counterparty credit risk when a counterparty fails to meet their financial obligations causing Cleco to incur replacement cost losses. Cleco may be required to provide credit support or pay liquidated damages with respect to any open trading contracts that Cleco has entered into or may enter into in the future. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on credit terms and thresholds in master agreements, the notional value of the initial contract, changes in the market prices, changes in open contracts, and changes in the amounts counterparties owe to Cleco. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

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

•routine review of counterparty credit quality and credit exposure,

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

•measuring expected and potential future exposure regularly, and

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

For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital


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~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

Resources — General Considerations and Credit-Related Risks.”

Liquidity Risk

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Future actions or inactions of the federal government, including a failure to increase the government debt limit, could increase the actual or perceived risk that the U.S. may not pay its obligations when due and may disrupt financial markets, including capital markets, potentially limiting availability and increasing costs of capital. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain and expand its businesses. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. Cleco Holdings and Cleco Power pay fees and interest under their respective ~~revolving~~ credit facilities based on the highest rating held. For more information, see Item 2, “Management’s

Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Interest Rate Risk

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

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

At September 30, ~~2020,~~2021, Cleco Holdings had ~~$88.0 million of~~no short-term debt outstanding under its $175.0 million revolving credit ~~facility at an all-in interest rate of 2.035%. The~~facility. At September 30, 2021, the borrowing costs under Cleco Holdings’ revolving credit facility ~~currently are~~were equal to LIBOR plus ~~1.875%~~1.625% or ABR plus ~~0.875%~~0.625%, plus commitment fees of ~~0.30%~~0.275%.

At September 30, ~~2020,~~2021, Cleco Holdings had ~~$330.0~~a $266.0 million long-term variable rate bank term ~~loans outstanding. One bank term~~ loan ~~had a balance of $300.0 million~~ outstanding at an interest rate of LIBOR plus ~~1.875%~~1.625%, for an all-in interest rate of ~~2.035% at September 30, 2020. Another bank term loan had a balance of $30.0 million outstanding, at an interest rate of LIBOR plus 1.875%, for an all-in interest rate of 2.035% at September 30, 2020.~~1.715%. Each 1% increase in the interest rate applicable to ~~Cleco’s short- and~~Cleco Holdings’ long-term variable rate debt would result in a decrease in Cleco Holdings’ pretax earnings of ~~$4.2~~$2.7 million on an annualized basis. The weighted average rate for all outstanding term loan debt at Cleco Holdings for the nine months ended September 30, ~~2020,~~2021, was ~~2.38%~~1.87%.

At September 30, ~~2020,~~2021, Cleco Power had ~~$150.0 million of~~no short-term debt outstanding under its $300.0 million revolving credit ~~facility at an all-in interest rate of 1.41%.~~facility. At September 30, 2021, Cleco Power’s borrowing costs under its $300.0 million revolving credit facility ~~currently are~~were equal to LIBOR plus 1.25% or ABR plus 0.25%, plus commitment fees of 0.15%.

At September 30, ~~2020,~~2021, Cleco Power had a $125.0 million long-term variable rate bank term loan outstanding, at an

interest rate of LIBOR plus 1.25%, for an all-in interest rate of ~~1.40%~~1.34%. Each 1% increase in the interest rate applicable to Cleco Power’s short- and long-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of $2.8 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Power for the nine months ended September 30, ~~2020,~~2021, was ~~1.41%~~1.36%.

At September 30, 2021, Cleco Power had $325.0 million long-term floating rate senior notes outstanding. These notes bear interest at a rate of three-month LIBOR plus 50 basis points per annum, for an initial all-in interest rate of 0.616%. The weighted average rate for the outstanding floating rate senior notes at Cleco Power for the nine months ended September 30, 2021, was 0.62%. Each 1% increase in the interest rate applicable to Cleco Power’s long-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of $4.5 million on an annualized basis.

Each 1% increase in the interest rate applicable to Cleco’s short- and long-term variable rate debt would result in a decrease in Cleco’s pretax earnings of $7.2 million on an annualized basis.

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


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CLECO POWER						2021 3RD QUARTER FORM 10-Q

reporting period presented, the Registrants did not enter into any contracts to mitigate the volatility in interest rate risk.

Commodity Price Risk

Cleco Power and Cleco Cajun’s financial performance can be impacted by changes in commodity prices that impact fuel costs, generation revenues, and customer supply ~~cost~~costs and ~~revenue.~~customer revenues. Cleco’s ~~Energy Market Risk Management Policy authorizes~~risk management policies and procedures authorize hedging commodity price risk with physical or financially settled derivative instruments within approved guidelines and limits of authority. Some of these transactions may qualify for the normal purchase, normal sale (NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun, each separately and individually, may be exposed to transmission congestion price

risk as a result of physical transmission constraints present between MISO LMP nodes when serving customer load. Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. FTRs are accounted for as derivatives not designated as hedging instruments for accounting purposes.

During the ~~three and~~ nine months ended September 30, ~~2020,~~2021, Cleco Cajun entered into ~~other commodity~~gas-related derivative contracts including fixed price physical forwards and financially settled swap transactions. These are included in natural gas derivatives in the following tables.

The following tables present the fair values of derivative instruments and their respective line items as recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, ~~2020:~~2021:

~~Cleco~~

~~DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS~~

~~(THOUSANDS)~~

~~BALANCE SHEET LINE ITEM~~

~~AT SEPT. 30, 2020~~

~~Commodity-related contracts~~

~~FTRs~~

~~Current~~

~~Energy risk management assets~~

~~7,907~~

~~Current~~

~~Energy risk management liabilities~~

~~(2,580)~~

~~Other commodity derivatives~~

~~Current~~

~~Energy risk management assets~~

~~12,067~~

~~Non-current~~

~~Other deferred charges~~

~~5,276~~

~~Commodity-related contracts, net~~

~~22,670~~


Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		AT SEPT. 30, 2021
				GROSS AMOUNTS OFFSET ON THE BALANCE SHEET						GROSS AMOUNTS NOT OFFSET ON THE BALANCE SHEET (1)
(THOUSANDS)	BALANCE SHEET LINE ITEM	GROSS ASSET (LIABILITY)		CONTRACT NETTING		COLLATERAL		NET ASSET (LIABILITY) ON THE BALANCE SHEET		COLLATERAL		NET AMOUNT
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	9,338	$	—	$	—	$	9,338	$	—	$	9,338
Current	Energy risk management liabilities	(1,589)		—		—		(1,589)		—		(1,589)
Natural gas derivatives
Current	Energy risk management assets	59,648		(1,283)		(8,900)		49,465		(41,098)		8,367
Non-current	Energy risk management assets	83,427		—		—		83,427		(13,902)		69,525
Current	Energy risk management liabilities	(1,283)		1,283		—		—		—		—
Non-current	Other deferred credits	—		—		—		—		—		—
Commodity-related contracts, net		$	149,541	$	—	$	(8,900)	$	140,641	$	(55,000)	$	85,641

(1) Represents letters of credit by counterparties.

Cleco Power

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

(THOUSANDS)

BALANCE SHEET LINE ITEM

AT SEPT. 30, ~~2020~~2021

Commodity-related contracts

FTRs

Current

Energy risk management assets

~~7,177~~6,028

Current

Energy risk management liabilities

~~(1,765)~~(1,330)

Commodity-related contracts, net

~~5,412~~4,698


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

Cleco monitors the Value at Risk (VaR) of its other commodity derivative contracts requiring derivative accounting treatment. ~~Cleco applies a portfolio VaR covariance analytical approach within a 5-day holding period at a 95% confidence interval.~~ VaR is defined as the minimum expected loss over a given holding period at a given confidence level based on

observable market price volatilities. Cleco uses a parametric variance-covariance model methodology to estimate VaR. VaR is calculated using historical volatilities within a 5-day holding period at a 95% confidence interval. Given Cleco’s reliance on historical data, VaR is effective in estimating risk exposures in markets in which there are no sudden fundamental changes or abnormal shifts in market conditions. An inherent limitation of VaR is that past changes in market risk factors, even when weighted toward more recent observations, may not produce accurate predictions of future market risk. VaR should be evaluated in light of this and the methodology’s other limitations.

The following table presents the VaR of other commodity derivative contracts ~~for the three and nine months ended September 30, 2020, as well as the VaR at September 30, 2020,~~ based on these assumptions:

FOR THE THREE MONTHS ENDED SEPT. 30, 2020 FOR THE NINE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS) AT SEPT. 30, 2020 HIGH LOW AVERAGE HIGH LOW AVERAGE
Cleco $ 6,347 $ 6,347 $ 4,196 $ 5,083 $ 6,507 $ 2,087 $ 4,746


			FOR THE THREE MONTHS ENDED SEPT. 30, 2021						FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	AT SEPT. 30, 2021		HIGH		LOW		AVERAGE		HIGH		LOW		AVERAGE
Cleco	$	16,393	$	16,393	$	7,685	$	9,846	$	16,393	$	7,199	$	9,318

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

Statements — Note ~~1 — Summary of Significant Accounting~~

~~Policies — Derivatives and Other Risk Management Activity” and “Note 7~~6 — Fair Value Accounting and Financial Instruments — Commodity Contracts.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of Cleco Holdings and Cleco Power (individually, “Registrant” and collectively, the “Registrants”) management, including the CEO and CFO, the Registrants have evaluated the effectiveness of their disclosure controls and procedures as of September 30, ~~2020.~~2021. Based on the evaluations, the CEO and CFO have concluded that the Registrants’ disclosure controls and procedures are ~~ineffective~~effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934, as ~~of September 30, 2020, due to~~amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the ~~material weaknesses~~time periods specified in ~~internal control over financial reporting as previously disclosed in Part II, Item 9A, “Controls~~

SEC rules and ~~Procedures” in~~forms; and that the Registrants’ ~~Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2019.~~

~~In light of the foregoing conclusion, the Registrants undertook additional~~disclosure controls and procedures are also effective in ensuring that such information is accumulated and communicated to ~~allow~~ the Registrants’ management, including the CEO and CFO, as appropriate, to ~~conclude that reasonable assurance exists~~allow timely decisions regarding the reliability of financial reporting and the preparation of the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. Accordingly, the Registrants’ management concluded that the Registrants’ condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for the three months ended September 30, 2020, fairly present, in all material respects, the Registrants’ financial position, results of operations, and cash flows for the periods presented in such financial statements.required disclosure.

~~Remediation Plan~~

The Registrants began taking steps to remediate the underlying cause of these material weaknesses and improve the design and operating effectiveness of its internal control over financial reporting during the three month period ending September 30, 2019, and has continued this effort through September 30, 2020.

As the management of the Registrants continues to evaluate and work to improve the Registrants’ internal control over financial reporting, the Registrants may take additional measures to address these control deficiencies, or the

Registrants may modify some of the remediation measures to improve the design and/or operating effectiveness of those measures. Management of the Registrants has made significant progress in its remediation efforts, including but not limited to the following:

•~~Replacement of failed meters.~~

•~~Development and implementation of a plan to monitor meter failures.~~

•~~Proposed automation and configurations to allow for automated exception identification in key processes.~~

•~~Implementation of estimation monitoring with the ability to pause the billing process and request new reads.~~

•~~Development of analytics for comparison of the number of bills estimated and the estimation amount.~~

•~~Designed and implemented new controls (both preventive and detective) to address gaps in relevant risks.~~

•Completed assessment of the newly implemented ERP system to identify opportunities for more comprehensive control coverage over identified risks and is in the process of implementing enhanced system automation.

However, the material weakness in IT general controls and the material weakness over revenue will not be considered remediated until the applicable new controls operate for a sufficient period of time where management is able to conclude, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

There have been no changes in the Registrants’ internal control over financial reporting that occurred during the ~~three months~~quarter ended September 30, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial ~~reporting, with the exception of the remediation efforts discussed above.~~

reporting.


CLECO
CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q


PART II — OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


CLECO

For information on legal proceedings affecting Cleco, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


CLECO POWER

For information on legal proceedings affecting Cleco Power, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


ITEM 1A. RISK FACTORS

~~The following risk factors, which supplement~~There have been no material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019, and updates the risk factor disclosed in Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020,~~2020. For risks that could ~~have a material adverse effect on~~affect actual results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the ~~Registrants.~~


~~OPERATIONAL RISKS~~

~~COVID-19~~

~~The~~ Registrants, ~~face risks related to COVID-19 and other health epidemics and outbreaks, including economic, regulatory, legal, workforce, and cybersecurity risks, which could have a material adverse impact on~~see the ~~results of operations, financial condition, cash flows or liquidity~~risk factors disclosed under Part I, Item 1A, “Risk Factors” of the ~~Registrants.~~

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

Beginning on March 13, 2020, and as a result of an LPSC executive order, Cleco Power suspended the assessment of late fees, disconnections, and the utilization of collection agencies to help customers facing financial challenges related to the COVID-19 pandemic. On July 1, 2020, the LPSC issued an order ending the moratorium on disconnections effective July 16, 2020. However, Cleco extended its suspension and reinstated disconnections and late fees beginning October 1, 2020. On July 16, 2020, Cleco began setting up interest-free payment plan arrangements for customers with past due balances to be repaid over a period of up to 18 months. Failure to collect these balances could negatively impact Cleco’s cash flow. The LPSC, in response to a federal mandate or otherwise, could impose restrictions on the rates Cleco charges to provide its services, including the inability to implement approved rates, or delay actions with respect to Cleco’s rate

cases and filings. For example, on June 28, 2019, Cleco Power filed an application with the LPSC for a new FRP, with anticipated new rates being effective July 1, 2020. However, due to COVID-19, there has been a delay in the current base rate case and Cleco Power now anticipates new rates to be ~~effective in the first half of 2021. In addition, the COVID-19 pandemic may affect Cleco’s ability~~ to timely satisfy regulatory requirements such as recordkeeping and/or timely reporting requirements. Additionally, as the EPA and many state environmental agencies have issued enforcement discretion policies for such issues, it is unclear whether the effect of any possible noncompliance due to COVID-19 will be ma~~terial.~~

On May 18, 2020, Cleco reopened customer service offices implementing precautionary protective measures and protocols to allow in-person meetings with restrictions in size and mandatory protective gear. Cleco has also implemented precautionary measures for employees or contractors testing positive for COVID-19, exhibiting COVID-19 symptoms, or awaiting COVID-19 test results. In the event a substantial portion of Cleco’s workforce were to be impacted by COVID-19 for an extended period of time, Cleco may face challenges with respect to its services or operations, and it may not be able to execute its capital plan as anticipated. There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spread of COVID-19, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders, and business and government shutdowns. Restrictions of this nature have caused, and may continue to cause, Cleco, its suppliers, and other business counterparties to experience operational delays. The COVID-19 outbreak may significantly worsen in the U.S. during the upcoming winter months, which may cause federal, state and local governments to reconsider restrictions on business and social activities. In the event governments increase restrictions, the reopening of the economy may be further curtailed. Cleco has modified and continues to modify certain business and workforce practices (including those related to employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. However, the quarantine of personnel or the inability to access Cleco’s facilities or customer sites could adversely affect its operations. Also, Cleco has a limited number of highly skilled employees for some of its operations. If a large proportion of Cleco’s employees in those critical positions were to contract COVID-19 at the same time, Cleco would rely upon its


~~CLECO~~
~~CLECO POWER~~						~~2020 3RD QUARTER FORM 10-Q~~

business continuity plans in an effort to continue operations at its facilities, but there is no certainty that such measures will be sufficient to mitigate the adverse impact to Cleco’s operations that could result from shortages of highly skilled employees.

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

While the full impact on Cleco’s business from the outbreak of COVID-19 is unknown at this time and difficult to predict, various aspects of its business could be adversely affected by COVID-19. While there are many unknowns as to the duration and severity of the COVID-19 pandemic, as of the date of this QuarterlyRegistrants’ Combined Annual Report on Form ~~10-Q, it has caused significant volatility in global markets and has had an adverse impact on~~10-K for the operations of some of Cleco’s customers and suppliers, which could affect Cleco’s operations and its ability to access capital. The continued spread of COVID-19 and efforts to contain COVID-19, such as the imposition of additional quarantines or closures or reduced operations of businesses and other institutions, could result in an economic slowdown, which could adversely affect customer demand and consumption, cause delayed payments or uncollectible accounts, disrupt supply chains and markets, cause potential delays in the timing of completion of capital projects, or cause other unpredictable events. These impacts could ultimately result in a downgrade of Cleco’s credit ratings. Any of the foregoing events or other unforeseen consequences of COVID-19 could have a material adverse effect on the results of operations, financial condition, cash flows, or liquidity of the Registrants.

~~Weather Sensitivity~~

Cleco’s operations and power generation could be harmed due to the impact of severe weather or other natural disaster, which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Severe weather, such as hurricanes and tropical storms, and other natural disasters, such as floods, could cause major damage to Cleco’s equipment and facilities, disruptions in service, and damage to the properties of Cleco’s customers. For example, in August and October 2020, Cleco’s service territory sustained substantial damage from three separate hurricanes. On August 27, 2020, Hurricane Laura made landfall hitting the southwest coast of Louisiana causing power outages for approximately 140,000 of Cleco Power’s electric customers. On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana resulting in power outages for approximately 132,000 of Cleco Power’s electric customers. On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana resulting in power outages for approximately 73,000 of Cleco Power’s electric customers.

~~Any future severe weather or other natural disaster could cause damage to, or the loss of, Cleco’s equipment and facilities, which could result in Cleco incurring additional costs,~~fiscal year ended December 31, 2020.

such as the cost to restore service, repair damaged facilities, or obtain replacement power. Damage to the properties of Cleco’s customers as a result of severe weather or other natural disaster could result in reduced demand for and usage of electricity in Cleco’s service territory and the service territory of Cleco’s wholesale customers. Severe weather or other natural disasters could also disrupt the delivery of equipment and supplies necessary to Cleco’s business. Cleco Power’s recovery of severe weather or other natural disaster costs is subject to LPSC review and approval, and the LPSC could disallow timely and full recovery of the costs incurred. These risks and other possible effects of severe weather and natural disasters could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.


~~REGULATORY RISKS~~

~~Storm Restoration Costs~~

~~Cleco Power’s ability to recover costs resulting from Hurricanes Laura, Delta, and Zeta are subject to LPSC review and approval, and recovery of some costs could be disallowed.~~

On August 27, 2020, Hurricane Laura made landfall in southwest Louisiana as a Category 4 storm causing catastrophic damage to portions of Cleco’s service territory and causing power outages for approximately 140,000 of Cleco Power’s electric customers located primarily in central and southwest Louisiana. Cleco Power sustained significant damage to its distribution and transmission facilities. Cleco Power’s current estimate of the total storm restoration costs related to Hurricane Laura is between ~~$185.0 million and $190.0 million.~~ On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana as a Category 2 storm resulting in power outages for approximately 132,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. Cleco Power’s current estimate of total storm restoration costs related to Hurricane Delta is between $50.0 million and $55.0 million. On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana as a Category 2 storm resulting in power outages for approximately 73,000 of Cleco Power’s electric customers located primarily in southeast Louisiana. Cleco Power’s current estimate of total storm restoration costs related to Hurricane Zeta is between $7.0 million and $8.0 million. Restoration costs incurred by Cleco Power from damages caused by Hurricanes Laura, Delta, and Zeta are subject to a prudency review by the LPSC in which Cleco Power will be required to demonstrate that the costs were prudently incurred. Accordingly, Cleco Power may not be able to recover some of the restoration costs incurred, which could be material. Cleco Power may seek recovery of a portion of the restoration costs through the issuance of dedicated securitization bonds, which would require prior approval by the LPSC and would be repaid over time through a system restoration charge imposed on Cleco Power’s customers. The inability of Cleco Power’s customers to continue paying their utility bills or a decision by the LPSC to deny Cleco Power’s request to recover incurred restoration costs could have a material adverse effect on the results of operations, financial condition, and cash flow of the Registrants.

7275


CLECO
CLECO POWER									~~2020~~2021 3RD QUARTER FORM 10-Q


ITEM 6. EXHIBITS

CLECO
~~10.1~~4.1			~~Term Loan Agreement~~Indenture, dated as of ~~August 28, 2020 among~~September 10, 2021, by and between Cleco Power LLC ~~the Lenders from time to time party thereto~~ and ~~Sumitomo Mitsui Banking Corporation,~~Regions Bank, as ~~administrative agent~~trustee (incorporated by reference to Exhibit ~~10.1 of~~4.1 to the Current Report on Form 8-K filed September 10, 2021).
4.2			Supplemental Indenture No. 1, dated as of September 10, 2021, by and between Cleco Power LLC and Regions Bank, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed September ~~2, 2020)~~10, 2021).
4.3			Form of Note (included in Supplemental Indenture No. 1, dated as of September 10, 2021, by and between Cleco Power LLC and Regions Bank, as trustee) (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed September 10, 2021).
31.1			CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2			CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1			CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2			CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			Inline XBRL Taxonomy Extension Schema
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

CLECO POWER
~~10.1~~4.1			~~Term Loan Agreement~~Indenture, dated as of ~~August 28, 2020 among~~September 10, 2021, by and between Cleco Power LLC ~~the Lenders from time to time party thereto~~ and ~~Sumitomo Mitsui Banking Corporation,~~Regions Bank, as ~~administrative agent~~trustee (incorporated by reference to Exhibit ~~10.1 of~~4.1 to the Current Report on Form 8-K filed September 10, 2021).
4.2			Supplemental Indenture No. 1, dated as of September 10, 2021, by and between Cleco Power LLC and Regions Bank, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed September ~~2, 2020)~~10, 2021).
4.3			Form of Note (included in Supplemental Indenture No. 1, dated as of September 10, 2021, by and between Cleco Power LLC and Regions Bank, as trustee) (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed September 10, 2021).
31.3			CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.4			CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.3			CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.4			CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			Inline XBRL Taxonomy Extension Schema
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

7376


CLECO
CLECO POWER									~~2020~~2021 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 CORPORATE HOLDINGS LLC
			(Registrant)

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

Date: November ~~9, 2020~~5, 2021

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/ F. Tonita Laprarie
						F. Tonita Laprarie
						Controller and Chief Accounting Officer

Date: November ~~9, 2020~~5, 2021

7477


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


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


ABBREVIATION OR ACRONYM			DEFINITION
2016 Merger			Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016
2016 Merger Commitments			Cleco Partners’, Cleco Group’s, Cleco Holdings’, and Cleco Power’s 77 commitments to the LPSC as defined in Docket No. U-33434
401(k) Plan			Cleco Power 401(k) Savings and Investment Plan
ABR			Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or LIBOR plus 1.0%
Acadia			Acadia Power Partners, LLC, previously a wholly owned subsidiary of Midstream. Acadia Power Partners, LLC was dissolved effective August 29, 2014.
Acadia Unit 1			Cleco Power’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2			Entergy Louisiana’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power
ACE			Affordable Clean Energy
ADIT			Accumulated Deferred Income Tax
AFUDC			Allowance for Funds Used During Construction

Amended Lignite Mining Agreement			Amended and restated lignite mining agreement effective December 29, 2009
AMI			Advanced Metering Infrastructure
AOCI			Accumulated Other Comprehensive Income (Loss)

ARO			Asset Retirement Obligation


~~BCI~~			~~British Columbia Investment Management Corporation~~


Big Cajun II, Unit 1			A 580-MW coal-fired generating unit at Cleco Cajun’s plant site in New Roads, Louisiana.
Big Cajun II, Unit 3			A 588-MW coal-fired generating unit at Cleco Cajun’s plant site in New Roads, Louisiana. Cleco Cajun has a 58% ownership interest in the capacity of Big Cajun II, Unit 3.
CARES Act			Coronavirus Aid, Relief, and Economic Security Act of March 2020
CCR			Coal combustion by-products or residual

CDC			Centers for Disease Control and Prevention
CECL			Current Expected Credit Losses
CEO			Chief Executive Officer
CFO			Chief Financial Officer
CIP			Critical Infrastructure Protection
Cleco			Cleco Holdings and its subsidiaries
Cleco Cajun			Cleco Cajun LLC (formerly Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings) and its subsidiaries
Cleco Cajun Transaction			The transaction between Cleco Cajun and NRG Energy in which Cleco Cajun acquired all the membership interest in South Central Generating, which closed on February 4, 2019, pursuant to the Purchase and Sale Agreement, which includes the Cottonwood Sale ~~Leaseback.~~Leaseback
Cleco Corporation			Pre-2016 Merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016

Cleco Group			Cleco Group LLC, a wholly owned subsidiary of Cleco Partners
Cleco Holdings			Cleco Corporate Holdings LLC, a wholly owned subsidiary of Cleco Group
Cleco Katrina/Rita			Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Cleco Partners			Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by ~~MIRA, BCI,~~Macquarie Asset Management, British Columbia Investment Management Corporation, John Hancock Financial, and other infrastructure investors
Cleco Power			Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings

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

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

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


Dolet Hills			A facility consisting of Dolet Hills Power Station, the Dolet Hills mine, and the Oxbow mine


ABBREVIATION OR ACRONYM			DEFINITION
Dolet Hills Power Station			A 650-MW generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of the Dolet Hills Power Station.
EAC			Environmental Adjustment Clause

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



Entergy Gulf States			Entergy Gulf States Louisiana, LLC
Entergy Louisiana			Entergy Louisiana, LLC
EPA			U.S. Environmental Protection Agency
ERO			Electric Reliability Organization


~~ABBREVIATION OR ACRONYM~~			~~DEFINITION~~
Evangeline			Cleco Evangeline LLC, a wholly owned subsidiary of ~~Midstream~~Midstream. Cleco Evangeline LLC was dissolved effective July 29, 2021.
FAC			Fuel Adjustment Clause
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
Fitch			Fitch Ratings, a credit rating agency
FTR			Financial Transmission Right
FRP			Formula Rate Plan
GAAP			Generally Accepted Accounting Principles in the U.S.
~~GO Zone~~			~~Gulf Opportunity Zone Act of 2005 (Public Law 109-135)~~



IRS			Internal Revenue Service

kWh			Kilowatt-hour(s)
~~LCFC~~			~~Lost Contribution to Fixed Cost~~
~~LDEQ~~			~~Louisiana Department of Environmental Quality~~

LIBOR			London Interbank Offered Rate
LMP			Locational Marginal Price
Louisiana Generating			Louisiana Generating, LLC, a wholly owned subsidiary of South Central Generating
LPSC			Louisiana Public Service Commission

LTSA			Long-Term Parts and Service Agreement between Cottonwood Energy and a third party, dated January 19, 2001, that Cleco Cajun assumed as a result of the Cleco Cajun Transaction to provide maintenance services related to the Cottonwood Plant
Madison Unit 3			A 641-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana

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

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


N/A			Not Applicable
NERC			North American Electric Reliability Corporation



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


NRG Energy			NRG Energy, Inc.
~~NRG South Central~~			~~NRG South Central Generating LLC~~





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

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



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

Registrant(s)			Cleco Holdings and/or Cleco Power
RFP			Request for Proposal
Rodemacher Unit 2			A 523-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana. Cleco Power has a 30% ownership interest in the capacity of Rodemacher Unit 2.
ROE			Return on Equity


RTO			Regional Transmission Organization
S&P			~~Standard & Poor’s~~S&P Global Ratings, ~~Services,~~a division of S&P Global Inc., a credit rating agency

SEC			U.S. Securities and Exchange Commission

SERP			Supplemental Executive Retirement Plan

South Central Generating			South Central Generating LLC, formerly NRG South Central Generating LLC


SSR			System Support Resource
~~START~~			~~Strategic Alignment and Real-Time Transformation~~


Support Group			Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO			Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.


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


TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		56

PART I	Financial Information
ITEM 1.	Cleco — Condensed Consolidated Financial Statements (Unaudited)	78
	Cleco Power — Condensed Consolidated Financial Statements (Unaudited)	17
	Notes to the Unaudited Condensed Consolidated Financial Statements	26
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5154
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	6872
ITEM 4.	Controls and Procedures	7073

PART II	Other Information
ITEM 1.	Legal Proceedings	7175
ITEM 1A.	Risk Factors	7175



ITEM 6.	Exhibits	7376
	Signatures	7477


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2020		2019
Operating revenue
Electric operations	$	386,388	$	451,902
Other operations	47,597		49,780

Gross operating revenue	433,985		501,682
Electric customer credits	(16,534)		(13,711)
Operating revenue, net	417,451		487,971
Operating expenses
Fuel used for electric generation	74,142		141,722
Purchased power	82,690		85,176
Other operations and maintenance	71,131		82,913
Depreciation and amortization	52,892		57,004
Taxes other than income taxes	14,660		17,611
Merger transaction and commitment costs	184		2,006

Total operating expenses	295,699		386,432
Operating income	121,752		101,539
Interest income	910		1,690
Allowance for equity funds used during construction	144		3,619


Other expense, net	(3,374)		(1,363)
Interest charges
Interest charges, net	34,349		37,412
Allowance for borrowed funds used during construction	(289)		(1,580)
Total interest charges	34,060		35,832
Income before income taxes	85,372		69,653
Federal and state income tax expense	25,075		14,088
Net income	$	60,297	$	55,565
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2020		2019
Net income	$	60,297	$	55,565
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $159 in 2020 and tax benefit of $13 in 2019)	448		(37)

Total other comprehensive income (loss), net of tax	448		(37)
Comprehensive income, net of tax	$	60,745	$	55,528
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2020		AT DEC. 31, 2019
Assets
Current assets
Cash and cash equivalents	$	528,678	$	116,292
Restricted cash and cash equivalents	4,619		11,100
Customer accounts receivable (less allowance for credit losses of $5,581 in 2020 and $3,005 in 2019)	90,136		83,591

Other accounts receivable	33,554		35,731

Unbilled revenue	34,504		33,207
Fuel inventory, at average cost	99,739		83,061
Materials and supplies, at average cost	128,552		118,858
Energy risk management assets	19,974		7,023
Accumulated deferred fuel	43,612		22,910
Cash surrender value of company-/trust-owned life insurance policies	82,510		86,096
Prepayments	11,848		7,711
Regulatory assets	19,814		19,807
Other current assets	11,927		12,688
Total current assets	1,109,467		638,075
Property, plant, and equipment
Property, plant, and equipment	5,149,355		4,982,255
Accumulated depreciation	(604,833)		(454,874)
Net property, plant, and equipment	4,544,522		4,527,381
Construction work in progress	211,065		117,630
Total property, plant, and equipment, net	4,755,587		4,645,011
Equity investment in investee	13,072		17,072
Goodwill	1,490,797		1,490,797
Prepayments	32,999		25,949
Operating lease right of use assets	27,022		28,791
Restricted cash and cash equivalents	744		15,203
Note receivable	14,685		15,198

Regulatory assets	491,274		422,431
Intangible assets	118,195		138,103

Other deferred charges	44,232		39,668
Total assets	$	8,098,074	$	7,476,298
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2020			2019
Operating activities
Net income	$	109,793		$	120,868
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	185,496			180,240



Provision for credit losses	6,134			3,800
Unearned compensation expense	5,113			4,015
Allowance for equity funds used during construction	(197)			(14,825)
(Gain) loss on risk management assets and liabilities, net	(23,254)			4,092
Deferred lease revenue	(6,904)			(6,137)
Deferred income taxes	39,657			27,033
Deferred fuel costs	(21,076)			(21,207)
Cash surrender value of company-/trust-owned life insurance	3,586			(3,731)
Changes in assets and liabilities
Accounts receivable	(14,683)			(44,070)

Unbilled revenue	(1,297)			(10,767)
Fuel inventory and materials and supplies	(26,747)			35,488
Prepayments	(12,895)			(10,680)
Accounts payable	(30,633)			20,315
Accounts payable - affiliate	1,469			3,175
Customer deposits	4,688			3,113
Provision for merger commitments	738			(1,623)
Postretirement benefit obligations	4,654			(11,301)
Regulatory assets and liabilities, net	(12,264)			8,196
Other deferred accounts	(13,324)			(5,690)
Taxes accrued	30,132			29,268
Interest accrued	21,063			28,001


Other operating	5,830			3,202
Net cash provided by operating activities	255,079			340,775
Investing activities
Additions to property, plant, and equipment	(215,692)			(251,845)
Allowance for equity funds used during construction	197			14,825







Return of equity investment in investees	4,000			500

Return of equity investment in tax credit fund	0			1,625
Return of investment in company-owned life insurance	0			1,891
Payment to acquire business, net of cash acquired	0			(814,969)
Other investing	821			1,007
Net cash used in investing activities	(210,674)			(1,046,966)
Financing activities
Draws on revolving credit facilities	238,000			108,000
Payments on revolving credit facilities	0			(108,000)
Issuances of long-term debt	125,000			700,000
Repayment of long-term debt	(11,055)			(390,571)

Payment of financing costs	(4,448)			(5,951)
Contributions from member	0			384,900

Other financing	(456)			(412)
Net cash provided by financing activities	347,041			687,966
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	391,446			(18,225)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	142,595		(1)	140,086
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	534,041	(2)	$	121,861
(1) Includes cash and cash equivalents of $116,292, current restricted cash and cash equivalents of $11,100, and non-current restricted cash and cash equivalents of $15,203. (2) Includes cash and cash equivalents of $528,678, current restricted cash and cash equivalents of $4,619, and non-current restricted cash and cash equivalents of $744.



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

(Continued on next page)


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

Note 1	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 2	~~Business Combinations~~	~~Cleco~~
~~Note 3~~	Recent Authoritative Guidance	Cleco and Cleco Power
Note 43	Leases	Cleco and Cleco Power
Note 54	Revenue Recognition	Cleco and Cleco Power
Note 65	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 76	Fair Value Accounting and Financial Instruments	Cleco and Cleco Power
Note 87	Debt	Cleco and Cleco Power
Note 98	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 109	Income Taxes	Cleco and Cleco Power
Note 1110	Disclosures about Segments	Cleco
Note 1211	Regulation and Rates	Cleco and Cleco Power
Note 1312	Variable Interest Entities	Cleco and Cleco Power
Note 1413	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 1514	Affiliate Transactions	Cleco and Cleco Power
Note 1615	Intangible Assets and Liabilities	Cleco and Cleco Power
Note 1716	Accumulated Other Comprehensive Loss	Cleco and Cleco Power
Note 1817	Storm Restoration	Cleco and Cleco Power


Cleco
									FOR THE THREE MONTHS ENDED SEPT. 30, 2020						FOR THE NINE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS)	(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, June 30, 2020		$	3,486	$	1,638	$	5,124

Balances, beginning of period								Balances, beginning of period	$	3,486	$	1,638	$	5,124	$	3,005	$	1,250	$	4,255
CECL adoption								CECL adoption	—		—		—		71		—		71
Current period provision	Current period provision	2,041		0		2,041		Current period provision	2,041		—		2,041		5,675		388		6,063

Charge-offs								Charge-offs	—		—		—		(4,091)		—		(4,091)
Recovery	Recovery	54		0		54		Recovery	54		—		54		921		—		921
Balances, Sept. 30, 2020	Balances, Sept. 30, 2020	$	5,581	$	1,638	$	7,219	Balances, Sept. 30, 2020	$	5,581	$	1,638	$	7,219	$	5,581	$	1,638	$	7,219


~~(THOUSANDS)~~	ACCOUNTS RECEIVABLE
~~Balances, Dec. 31, 2019~~	$	~~3,005~~
~~CECL adoption~~	71
~~Current period provision~~	~~5,675~~
~~Charge-offs~~	~~(4,091)~~
~~Recovery~~	~~921~~
~~Balances, Sept. 30, 2020~~	$	~~5,581~~


~~Purchase Price Allocation~~
~~(THOUSANDS)~~
~~Current assets~~
~~Cash and cash equivalents~~	$	~~146,494~~
~~Customer and other accounts receivable~~	~~49,809~~
~~Fuel inventory~~	~~22,060~~
~~Materials and supplies~~	~~25,659~~
~~Energy risk management assets~~	~~4,193~~
~~Other current assets~~	~~10,056~~
~~Non-current assets~~
~~Property, plant, and equipment, net~~	~~741,203~~
~~Prepayments~~	~~36,166~~
~~Restricted cash and cash equivalents~~	~~707~~
~~Intangible assets~~	~~98,900~~
~~Other deferred charges~~	~~133~~
~~Total assets acquired~~	~~1,135,380~~
~~Current liabilities~~
~~Accounts payable~~	~~38,478~~
~~Taxes payable~~	~~723~~
~~Energy risk management liabilities~~	~~241~~
~~Other current liabilities~~	~~14,570~~
~~Non-current liabilities~~
~~Accumulated deferred federal and state income taxes, net~~	~~7,165~~
~~Deferred lease revenue~~	~~58,300~~
~~Intangible liabilities~~	~~38,300~~
~~Asset retirement obligations~~	~~15,323~~
~~Operating lease liabilities~~	~~110~~
~~Total liabilities assumed~~	~~173,210~~
~~Total purchase price consideration~~	$	~~962,170~~


~~Measurement Period Adjustments~~
~~(THOUSANDS)~~	~~AT JUNE 30, 2019~~
~~Current assets~~
~~Customer and other accounts receivable~~	$	~~1,408~~
~~Other current assets~~	$	56
~~Non-current assets~~
~~Property, plant, and equipment, net~~	$	~~13,297~~
~~Prepayments~~	$	~~(56)~~
~~Intangible assets~~	$	~~(3,600)~~
~~Other deferred charges~~	$	1

~~Current liabilities~~
~~Accounts payable~~	$	~~3,022~~
~~Energy risk management liabilities~~	$	~~(1)~~
~~Other current liabilities~~	$	~~327~~
~~Non-current liabilities~~
~~Accumulated deferred federal and state income taxes, net~~	$	~~421~~
~~Deferred lease revenue~~	$	~~(3,600)~~
~~Intangible liabilities~~	$	~~6,400~~
~~Asset retirement obligations~~	$	~~4,534~~
~~Operating lease liabilities~~	$	3


Unaudited Pro Forma Financial Information
(THOUSANDS)	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
Operating revenue, net	$	487,971	$	1,250,787
Net income	$	56,004	$	122,771


		FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2020		2019		2020		2019		(THOUSANDS)	2021		2020		2021		2020
Fixed payments	Fixed payments	$	10,000	$	10,000	$	30,000	$	26,667	Fixed payments	$	10,000	$	10,000	$	30,000	$	30,000
Variable payments	Variable payments	5,190		6,010		15,950		14,248		Variable payments	4,938		5,190		15,413		15,950
Amortization of deferred lease liability*	Amortization of deferred lease liability*	2,301		2,301		6,904		6,137		Amortization of deferred lease liability*	2,301		2,301		6,904		6,904
Total lease income	Total lease income	$	17,491	$	18,311	$	52,854	$	47,052	Total lease income	$	17,239	$	17,491	$	52,317	$	52,854


Cleco Power
					REMAINING RECOVERY PERIOD (YRS.)
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Regulatory assets
Acadia Unit 1 acquisition costs	$	1,939	$	2,019	18.5
Accumulated deferred fuel (1)	78,847		28,194		Various	(2)
AFUDC equity gross-up	67,348		69,670		Various	(3)
Affordability study	13,438		—		10
AMI deferred revenue requirement	2,181		2,591		4
AROs (1)(7)	8,060		5,488
Bayou Vista to Segura deferred revenue requirement (7)	287		—
Coughlin transaction costs	853		876		28
COVID-19 executive order (7)	2,953		2,953
Deferred storm restoration costs - Hurricane Delta (7)	17,866		17,051
Deferred storm restoration costs - Hurricane Ida (7)	36,836		—
Deferred storm restoration costs - Hurricane Laura (7)	56,815		54,406
Deferred storm restoration costs - Hurricane Zeta (7)	3,496		3,493
Deferred storm restoration costs - Winter Storms Uri & Viola (7)	1,974		—
Dolet Hills Power Station closure costs (7)	112,158		48,982
Emergency declarations	—		270		—
Energy efficiency	1,998		2,820		1.5
Financing costs (1)	6,919		7,184		Various	(4)
Interest costs	3,521		3,708		Various	(3)
Lignite Mine closure costs (7)	93,093		—
Madison Unit 3 property taxes (7)	6,272		—
Non-service cost of postretirement benefits	11,662		9,901		Various	(3)
Other	13,247		4,229		Various	(2)
Postretirement costs	149,883		165,437		Various	(5)
Production operations and maintenance expenses	1,998		4,058		Various	(6)
Rodemacher Unit 2 deferred costs (7)	5,519		1,333
St. Mary Clean Energy Center	6,524		3,479		4

Training costs	5,968		6,085		38.5
Tree trimming costs	9,771		11,807		3.5
Total regulatory assets	721,426		456,034
Regulatory liabilities
AFUDC (7)	(6,500)		(4,218)
Corporate franchise tax, net	—		(763)		—
Deferred taxes, net	(138,864)		(175,584)		Various
Total regulatory liabilities	(145,364)		(180,565)
Total regulatory assets, net	$	576,062	$	275,469
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 30, 2021, and December 31, 2020, respectively. All other assets are earning a return on investment. (2) For more information related to the remaining recovery period, refer to the following disclosures for each specific regulatory asset or liability. (3) Amortized over the estimated lives of the respective assets. (4) Amortized over the terms of the related debt issuances. (5) Amortized over the average service life of the remaining plan participants. (6) Deferral is recovered over the following three year regulatory period. (7) Currently not in a recovery period.


Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2020		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2019		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	530,475	$	0	$	530,475	$	0	$	129,643	$	0	$	129,643	$	0
FTRs	7,907		0		0		7,907		6,822		0		0		6,822
Other commodity derivatives	17,343		0		17,343		0		201		0		201		0
Total assets	$	555,725	$	0	$	547,818	$	7,907	$	136,666	$	0	$	129,844	$	6,822
Liability description
FTRs	$	2,580	$	0	$	0	$	2,580	$	1,044	$	0	$	0	$	1,044
Other commodity derivatives	0		0		0		0		5,373		0		5,373		0
Total liabilities	$	2,580	$	0	$	0	$	2,580	$	6,417	$	0	$	5,373	$	1,044


Cleco
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW		HIGH
FTRs at Sept. 30, 2020	$	7,907	$	2,580	RTO auction pricing	FTR price - per MWh	$	(4.01)	$	4.62
FTRs at Dec. 31, 2019	$	6,822	$	1,044	RTO auction pricing	FTR price - per MWh	$	(2.57)	$	2.86


Cleco
	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2020		2019		2020		2019
Commodity-related contracts
FTRs(1)	Electric operations	$	3,013	$	1,997	$	6,262	$	12,396
FTRs(1)	Purchased power	(763)		(2,648)		(1,053)		(12,985)
Other commodity derivatives	Fuel used for electric generation	20,307		3,474		22,515		704
Total		$	22,557	$	2,823	$	27,724	$	115


Segment Information For The Three Months Ended Sept. 30,
2020 (THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue
Electric operations	$	288,852	$	99,956		$	388,808
Other operations	17,775		31,331			49,106
Affiliate revenue	1,506		0			1,506
Electric customer credits	(16,534)		0			(16,534)
Operating revenue, net	$	291,599	$	131,287		$	422,886
Net income	$	36,092	$	38,357		$	74,449
Add: Depreciation and amortization	40,268		11,344		(1)	51,612
Less: Interest income	789		10			799
Add: Interest charges	18,441		(484)			17,957
Add: Federal and state income tax expense	18,076		12,258			30,334



EBITDA	$	112,088	$	61,465		$	173,553
(1) Includes $3.1 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


2019 (THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue
Electric operations	$	339,869	$	114,453		$	454,322
Other operations	18,485		33,737			52,222
Affiliate revenue	334		31			365
Electric customer credits	(13,711)		0			(13,711)
Operating revenue, net	$	344,977	$	148,221		$	493,198
Net income	$	51,527	$	22,806		$	74,333

Add: Depreciation and amortization	44,903		10,880		(1)	55,783

Less: Interest income	1,421		220			1,641
Add: Interest charges	17,983		0			17,983
Add: Federal and state income tax expense	12,431		7,612			20,043
EBITDA	$	125,423	$	41,078		$	166,501
(1) Includes $3.2 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


Segment Information For The Nine Months Ended Sept. 30,
2020 (THOUSANDS)		CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Segment Information for the Three Months Ended Sept. 30,									Segment Information for the Three Months Ended Sept. 30,
2021 (THOUSANDS)									2021 (THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue	Revenue								Revenue
Electric operations	Electric operations	$	752,925	$	273,836		$	1,026,761	Electric operations	$	357,084	$	107,500		$	464,584
Other operations	Other operations	49,443		92,928			142,371		Other operations	22,779		35,158			57,937
Affiliate revenue	Affiliate revenue	3,852		204			4,056		Affiliate revenue	1,380		—			1,380
Electric customer credits	Electric customer credits	(33,974)		(153)			(34,127)		Electric customer credits	(691)		—			(691)
Operating revenue, net	Operating revenue, net	$	772,246	$	366,815		$	1,139,061	Operating revenue, net	$	380,552	$	142,658		$	523,210
Net income	Net income	$	76,156	$	84,655		$	160,811	Net income	$	56,561	$	86,744		$	143,305

Add: Depreciation and amortization	Add: Depreciation and amortization	125,541		33,385		(2)	158,926		Add: Depreciation and amortization	43,526		12,623		(1)	56,149

Less: Interest income	Less: Interest income	2,498		269			2,767		Less: Interest income	936		4			940
Add: Interest charges	Add: Interest charges	55,624		(353)			55,271		Add: Interest charges	18,509		1,117			19,626
Add: Federal and state income tax expense	Add: Federal and state income tax expense	30,770		27,280			58,050		Add: Federal and state income tax expense	548		29,888			30,436

EBITDA	EBITDA	$	285,593	$	144,698		$	430,291	EBITDA	$	118,208	$	130,368		$	248,576
Additions to property, plant, and equipment		$	205,765	$	7,908		$	213,673
Equity investment in investees (1)		$	13,072	$	0		$	13,072
Goodwill (1)		$	1,490,797	$	0		$	1,490,797
Total segment assets (1)		$	6,473,935	$	1,066,387		$	7,540,322
(1) Balances as of September 30, 2020. (2) Includes $9.3 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(6.9) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.

(1) Includes $3.6 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.									(1) Includes $3.6 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(2.3) million of deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2020		AT DEC. 31, 2019
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Dividends	(6,200)		(2,200)
Total equity investment in investee	$	13,072	$	17,072


Note 1413 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees


	FOR THE THREE MONTHS ENDED SEPT. 30, 2019		FOR THE NINE MONTHS ENDED SEPT. 30, 2019
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN
Balances, beginning of period	$	1,504	$	1,786



Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(37)		(319)


Balances, Sept. 30, 2019	$	1,467	$	1,467


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


Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2020		2019		VARIANCE		CHANGE
Operating revenue, net	$	417,451	$	487,971	$	(70,520)	(14.5)	%
Operating expenses	295,699		386,432		90,733		23.5	%
Operating income	121,752		101,539		20,213		19.9	%
Interest income	910		1,690		(780)		(46.2)	%
Allowance for equity funds used during construction	144		3,619		(3,475)		(96.0)	%

Other expense, net	(3,374)		(1,363)		(2,011)		(147.5)	%
Interest charges	34,060		35,832		1,772		4.9	%
Federal and state income tax expense	25,075		14,088		(10,987)		(78.0)	%
Net income	$	60,297	$	55,565	$	4,732	8.5	%


	FOR THE THREE MONTHS ENDED SEPT. 30,
(MILLION kWh)	2020	2019	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	1,159	1,177		(1.5)	%
Commercial	741	786		(5.7)	%
Industrial	481	477		0.8	%
Other retail	32	35		(8.6)	%
Total retail	2,413	2,475		(2.5)	%
Sales for resale	917	983		(6.7)	%
Total retail and wholesale customer sales	3,330	3,458		(3.7)	%


	FOR THE THREE MONTHS ENDED SEPT. 30,
				2021 CHANGE
	2021	2020	NORMAL	PRIOR YEAR		NORMAL

Cooling degree-days	1,591	1,604	1,511	(0.8)	%	5.3	%


			FOR THE NINE MONTHS ENDED SEPT. 30,
				2019 CHANGE
	2020	2019	NORMAL	PRIOR YEAR		NORMAL
Heating degree-days	615	778	942	(21.0)	%	(34.7)	%
Cooling degree-days	2,866	2,869	2,531	(0.1)	%	13.2	%