UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~March 31,~~September 30, 2021

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

Commission file number 1-15759

CLECO CORPORATE HOLDINGS LLC

(Exact name of registrant as specified in its charter)


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

2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226

(Address of principal executive offices) (Zip Code)

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

Commission file number 1-05663

CLECO POWER LLC

(Exact name of registrant as specified in its charter)


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

2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226

(Address of principal executive offices) (Zip Code)

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


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

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

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

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

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

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

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

Cleco Corporate Holdings LLC has 0no common stock outstanding. All of the outstanding equity of Cleco Corporate Holdings LLC is held by Cleco Group LLC, a wholly owned subsidiary of Cleco Partners L.P.

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


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

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

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


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


GLOSSARY OF TERMS

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


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


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


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


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~


~~ABBREVIATION OR ACRONYM~~			~~DEFINITION~~
EPA			U.S. Environmental Protection Agency
ERO			Electric Reliability Organization

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.




IRS			Internal Revenue Service

kWh			Kilowatt-hour(s)



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.






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			S&P Global Ratings, a division of S&P Global ~~Inc,~~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



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.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


ABBREVIATION OR ACRONYM			DEFINITION
TCJA			Federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
Teche Unit 3			A 359-MW generating unit at Cleco Power’s plant site in Baldwin, Louisiana
WHO			World Health Organization


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

•changes in environmental laws, regulations, decisions and policies, including present and potential environmental remediation costs, restrictions on greenhouse gas emissions to mitigate concerns over global climate changes, possible effects on Cleco’s generation resources, or prohibitions or ~~restriction~~restrictions on new or existing services, and Cleco’s compliance with these matters,

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

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

•economic, regulatory, or workforce impacts related to pandemics, including the ~~current~~ COVID-19 pandemic,

•the possibility of stranded costs with respect to assets that may be retired as a result of new climate legislation, technological advances, a shift in demand, or legal action,

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

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

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

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

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

•~~growth or decline of Cleco’s customer base, or decline in existing services, including, the effect of the trend toward distributed generation at customer sites,~~ the loss of key suppliers for fuel, materials, or services, or other disruptions to the supply chain,

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

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

•terrorist attacks, cyberattacks, or other malicious acts ~~including any effects of terrorism, cyberattacks, ransomware, or vandalism~~ that may damage or disrupt operating or information technology systems,

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

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

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

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

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

•~~deterioration in the creditworthiness of Cleco’s~~ customers,

•volatility and illiquidity in wholesale energy markets,

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

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

•the outcome of legal proceedings and other contingencies,

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

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

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

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

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


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

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

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

For more discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, see Part I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

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

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

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


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


PART I — FINANCIAL INFORMATION


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2020. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

CLECO
Condensed Consolidated Statements of Income (Unaudited)
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Operating revenue
Electric operations $ 366,245 $ 311,157
Other operations 49,726 44,908
Gross operating revenue 415,971 356,065
Electric customer credits (20,976) (8,493)
Operating revenue, net 394,995 347,572
Operating expenses
Fuel used for electric generation 55,820 76,637
Purchased power 144,702 66,320
Other operations and maintenance 72,165 74,766
Depreciation and amortization 54,947 55,873
Taxes other than income taxes 21,117 16,536
Merger transaction and commitment costs (53) 2,775
Total operating expenses 348,698 292,907
Operating income 46,297 54,665
Interest income 647 1,157
Allowance for equity funds used during construction 887 (74)
Other expense, net (3,033) (12,709)
Interest charges
Interest charges, net 34,091 35,328
Allowance for borrowed funds used during construction (200) (179)
Total interest charges 33,891 35,149
Income before income taxes 10,907 7,890
Federal and state income tax (benefit) expense (9,420) 1,562
Net income $ 20,327 $ 6,328
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Net income $ 20,327 $ 6,328
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $222 in 2021 and $146 in 2020) 628 414
Total other comprehensive income, net of tax 628 414
Comprehensive income, net of tax $ 20,955 $ 6,742
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Operating revenue
Electric operations	$	462,164	$	386,388
Other operations	55,721		47,597

Gross operating revenue	517,885		433,985
Electric customer credits	(691)		(16,534)
Operating revenue, net	517,194		417,451
Operating expenses
Fuel used for electric generation	69,318		74,142
Purchased power	101,377		82,690
Other operations and maintenance	76,506		71,131
Depreciation and amortization	60,628		52,892
Taxes other than income taxes	17,766		14,660
Merger transaction and commitment costs	34		184

Total operating expenses	325,629		295,699
Operating income	191,565		121,752
Interest income	941		910
Allowance for equity funds used during construction	711		144


Other expense, net	(8,109)		(3,374)
Interest charges
Interest charges, net	35,174		34,349
Allowance for borrowed funds used during construction	(545)		(289)
Total interest charges	34,629		34,060
Income before income taxes	150,479		85,372
Federal and state income tax expense	30,569		25,075
Net income	$	119,910	$	60,297
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Assets
Current assets
Cash and cash equivalents $ 87,099 $ 84,976
Restricted cash and cash equivalents 4,430 4,545
Customer accounts receivable (less allowance for credit losses of $2,040 in 2021 and $2,758 in 2020) 88,353 82,511
Other accounts receivable 41,681 32,076
Taxes receivable 2,743 0
Unbilled revenue 32,653 40,127
Fuel inventory, at average cost 112,379 109,494
Materials and supplies, at average cost 132,410 132,449
Energy risk management assets 11,299 13,081
Accumulated deferred fuel 69,832 28,194
Cash surrender value of company-/trust-owned life insurance policies 91,980 89,138
Prepayments 11,658 14,549
Regulatory assets 21,887 21,041
Other current assets 17,492 12,711
Total current assets 725,896 664,892
Property, plant, and equipment
Property, plant, and equipment 5,400,321 5,337,190
Accumulated depreciation (746,201) (672,271)
Net property, plant, and equipment 4,654,120 4,664,919
Construction work in progress 134,956 124,622
Total property, plant, and equipment, net 4,789,076 4,789,541
Equity investment in investee 7,322 9,072
Goodwill 1,490,797 1,490,797
Prepayments 16,458 23,405
Operating lease right of use assets 25,735 26,172
Restricted cash and cash equivalents 744 744
Note receivable 14,322 14,506
Regulatory assets 572,040 554,609
Intangible assets 105,268 111,731
Other deferred charges 43,618 40,100
Total assets $ 7,791,276 $ 7,725,569
The accompanying notes are an integral part of the condensed consolidated financial statements.
(Continued on next page)


CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Net income	$	119,910	$	60,297
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $34 in 2021 and $159 in 2020)	96		448

Total other comprehensive income, net of tax	96		448
Comprehensive income, net of tax	$	120,006	$	60,745
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Liabilities and member’s equity
Liabilities
Current liabilities
Short-term debt $ 135,000 $ 75,000
Long-term debt and finance leases due within one year 66,700 66,682
Accounts payable 119,892 161,357
Accounts payable - affiliate 41,283 41,283
Customer deposits 59,485 58,718
Provision for rate refund 8,933 9,444
Taxes payable 23,097 7,530
Interest accrued 39,742 15,583
Energy risk management liabilities 1,442 2,453
Regulatory liabilities 21,335 23,509
Deferred compensation 12,813 13,240
Other current liabilities 53,473 49,813
Total current liabilities 583,195 524,612
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net 667,691 661,376
Postretirement benefit obligations 315,249 314,653
Regulatory liabilities - deferred taxes, net 147,179 157,056
Deferred lease revenue 38,355 40,657
Intangible liabilities 23,106 24,859
Asset retirement obligations 27,605 27,986
Operating lease liabilities 23,044 23,333
Other deferred credits 23,761 28,627
Total long-term liabilities and deferred credits 1,265,990 1,278,547
Long-term debt and finance leases, net 3,164,113 3,165,387
Total liabilities 5,013,298 4,968,546
Commitments and contingencies (Note 13) 0 0
Member’s equity 2,777,978 2,757,023
Total liabilities and member’s equity $ 7,791,276 $ 7,725,569
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Operating revenue
Electric operations	$	1,180,345	$	1,019,501
Other operations	150,777		137,407

Gross operating revenue	1,331,122		1,156,908
Electric customer credits	(40,185)		(34,126)
Operating revenue, net	1,290,937		1,122,782
Operating expenses
Fuel used for electric generation	150,620		218,643
Purchased power	336,573		208,515
Other operations and maintenance	221,486		217,693
Depreciation and amortization	169,892		162,852
Taxes other than income taxes	50,769		45,233
Merger transaction and commitment costs	(252)		3,234

Total operating expenses	929,088		856,170
Operating income	361,849		266,612
Interest income	2,416		2,964
Allowance for equity funds used during construction	2,703		197


Other expense, net	(15,112)		(15,827)
Interest charges
Interest charges, net	103,092		104,700
Allowance for borrowed funds used during construction	(1,280)		(777)
Total interest charges	101,812		103,923
Income before income taxes	250,044		150,023
Federal and state income tax expense	30,985		40,230
Net income	$	219,059	$	109,793
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Cash Flows (Unaudited)
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Operating activities
Net income $ 20,327 $ 6,328
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 62,549 63,307
Provision for credit losses 1,874 2,957
Unearned compensation expense 2,422 1,788
Allowance for equity funds used during construction (887) 74
(Gain) loss on risk management assets and liabilities, net (4,697) 6,509
Deferred lease revenue (2,301) (2,301)
Deferred income taxes (6,684) (2,900)
Deferred fuel costs (41,121) 7,626
Cash surrender value of company-/trust-owned life insurance (2,841) 10,686
Changes in assets and liabilities
Accounts receivable (19,478) 13,310
Unbilled revenue 7,474 2,773
Fuel inventory and materials and supplies (2,838) (27,928)
Prepayments 263 (1,638)
Accounts payable (47,838) (55,131)
Customer deposits 3,236 2,731
Provision for merger commitments (627) 1,018
Postretirement benefit obligations 1,446 1,315
Regulatory assets and liabilities, net (19,459) (721)
Other deferred accounts (4,756) (4,571)
Taxes accrued 12,459 14,563
Interest accrued 24,159 22,730
Deferred compensation (427) (2,743)
Other operating (4,298) 424
Net cash (used in) provided by operating activities (22,043) 60,206
Investing activities
Additions to property, plant, and equipment (38,658) (65,624)
Allowance for equity funds used during construction 887 (74)
Return of equity investment in investees 1,750 0
Other investing 356 285
Net cash used in investing activities (35,665) (65,413)
Financing activities
Draws on revolving credit facilities 60,000 238,000
Repayment of long-term debt 0 (11,055)
Other financing (284) (149)
Net cash provided by financing activities 59,716 226,796
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 2,008 221,589
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period 90,265 (1) 142,595
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 92,273 (2) $ 364,184
Supplementary cash flow information
Interest paid, net of amount capitalized $ 7,225 $ 9,077
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment $ 14,246 $ 11,854
(1) Includes cash and cash equivalents of $84,976, current restricted cash and cash equivalents of $4,545, and non-current restricted cash and cash equivalents of $744.
(2) Includes cash and cash equivalents of $87,099, current restricted cash and cash equivalents of $4,430, and non-current restricted cash and cash equivalents of $744.
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Net income	$	219,059	$	109,793
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $107 in 2021 and $460 in 2020)	304		1,304

Total other comprehensive income, net of tax	304		1,304
Comprehensive income, net of tax	$	219,363	$	111,097
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO
Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS) MEMBERSHIP
INTEREST RETAINED
EARNINGS AOCI TOTAL
MEMBER’S
EQUITY
Balances, Dec. 31, 2019 $ 2,454,276 $ 206,243 $ (17,513) $ 2,643,006
Net income — 6,328 — 6,328
Other comprehensive income, net of tax — — 414 414
Balances, Mar. 31, 2020 $ 2,454,276 $ 212,571 $ (17,099) $ 2,649,748
Balances, Dec. 31, 2020 $ 2,454,276 $ 328,543 $ (25,796) $ 2,757,023
Net income — 20,327 — 20,327
Other comprehensive income, net of tax — — 628 628
Balances, Mar. 31, 2021 $ 2,454,276 $ 348,870 $ (25,168) $ 2,777,978
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Assets
Current assets
Cash and cash equivalents	$	273,215	$	84,976
Restricted cash and cash equivalents	2,352		4,545
Customer accounts receivable (less allowance for credit losses of $1,757 in 2021 and $2,758 in 2020)	114,412		82,511
Accounts receivable - affiliate	3,038		1,663
Other accounts receivable	45,887		32,076
Taxes receivable	5,336		—
Unbilled revenue	36,759		40,127
Fuel inventory, at average cost	112,016		109,494
Materials and supplies, at average cost	132,848		132,449
Energy risk management assets	58,803		13,081
Accumulated deferred fuel	78,847		28,194
Cash surrender value of company-/trust-owned life insurance policies	94,361		89,138
Prepayments	15,013		14,549
Regulatory assets	26,495		21,041
Other current assets	23,292		11,048
Total current assets	1,022,674		664,892
Property, plant, and equipment
Property, plant, and equipment	5,596,964		5,337,190
Accumulated depreciation	(887,107)		(672,271)
Net property, plant, and equipment	4,709,857		4,664,919
Construction work in progress	134,130		124,622
Total property, plant, and equipment, net	4,843,987		4,789,541
Equity investment in investee	3,822		9,072
Goodwill	1,490,797		1,490,797
Prepayments	19,974		23,405
Operating lease right of use assets	24,689		26,172
Restricted cash and cash equivalents	745		744
Note receivable	13,941		14,506

Regulatory assets	756,343		554,609
Intangible assets	88,635		111,731

Energy risk management assets	83,427		323
Other deferred charges	46,773		39,777
Total assets	$	8,395,807	$	7,725,569
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Liabilities and member’s equity
Liabilities
Current liabilities
Short-term debt	$	—	$	75,000
Long-term debt and finance leases due within one year	66,736		66,682
Accounts payable	226,785		161,357
Accounts payable - affiliate	41,283		41,283
Customer deposits	60,186		58,718
Provision for rate refund	5,465		9,444
Taxes payable	47,095		7,530
Interest accrued	39,544		15,583

Energy risk management liabilities	1,589		2,453
Regulatory liabilities	46,003		23,509
Deferred compensation	13,695		13,240

Other current liabilities	60,507		49,813
Total current liabilities	608,888		524,612
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	734,717		661,376

Postretirement benefit obligations	320,504		314,653

Regulatory liabilities - deferred taxes, net	99,361		157,056



Deferred lease revenue	33,753		40,657
Intangible liabilities	20,257		24,859
Asset retirement obligations	71,390		27,986
Operating lease liabilities	21,739		23,333
Other deferred credits	25,008		28,627
Total long-term liabilities and deferred credits	1,326,729		1,278,547
Long-term debt and finance leases, net	3,483,804		3,165,387
Total liabilities	5,419,421		4,968,546
Commitments and contingencies (Note 13)	0		0
Member’s equity	2,976,386		2,757,023
Total liabilities and member’s equity	$	8,395,807	$	7,725,569
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021			2020
Operating activities
Net income	$	219,059		$	109,793
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	195,619			185,496



Provision for credit losses	3,106			6,134
Unearned compensation expense	7,068			5,113
Allowance for equity funds used during construction	(2,703)			(197)
Gain on risk management assets and liabilities, net	(136,024)			(23,254)
Deferred lease revenue	(6,904)			(6,904)
Deferred income taxes	36,513			39,657
Cash surrender value of company-/trust-owned life insurance	(5,223)			3,586
Changes in assets and liabilities
Accounts receivable	(56,922)			(14,683)
Accounts receivable, affiliate	(1,375)			(39)
Unbilled revenue	3,368			(1,297)
Fuel inventory and materials and supplies	(3,198)			(26,747)
Prepayments	(8,573)			(12,895)
Accounts payable	(11,680)			(30,633)
Accounts payable - affiliate	—			1,469
Customer deposits	8,295			4,688
Provision for merger commitments	(1,881)			738
Postretirement benefit obligations	6,262			4,654
Regulatory assets and liabilities, net	(95,294)			(12,264)
Deferred fuel recoveries	(50,986)			(21,076)
Other deferred accounts	(9,163)			(13,799)
Taxes accrued	26,864			30,132
Interest accrued	23,961			21,063
Energy risk management collateral received	8,900			—

Other operating	(9,295)			6,344
Net cash provided by operating activities	139,794			255,079
Investing activities
Additions to property, plant, and equipment	(209,960)			(215,692)
Allowance for equity funds used during construction	2,703			197
Proceeds from sale of property, plant, and equipment	1,445			259






Return of equity investment in investee	5,250			4,000




Other investing	1,469			562
Net cash used in investing activities	(199,093)			(210,674)
Financing activities
Draws on revolving credit facilities	185,000			238,000
Payments on revolving credit facilities	(260,000)			—
Issuances of long-term debt	325,000			125,000
Repayment of long-term debt	—			(11,055)

Payment of financing costs	(4,149)			(4,448)


Other financing	(505)			(456)
Net cash provided by financing activities	245,346			347,041
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	186,047			391,446
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	90,265		(1)	142,595
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	276,312	(2)	$	534,041






Supplementary cash flow information
Interest paid, net of amount capitalized	$	70,387		$	73,714
Income taxes paid (refunded), net	$	205		$	(2,777)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	45,646		$	89,604




(1) Includes cash and cash equivalents of $84,976, current restricted cash and cash equivalents of $4,545, and non-current restricted cash and cash equivalents of $744. (2) Includes cash and cash equivalents of $273,215, current restricted cash and cash equivalents of $2,352, and non-current restricted cash and cash equivalents of $745.
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS		AOCI		TOTAL MEMBER’S EQUITY
Balances, June 30, 2020	$	2,454,276	$	255,739	$	(16,657)	$	2,693,358


Net income	—		60,297		—		60,297
Other comprehensive income, net of tax	—		—		448		448
Balances, Sept. 30, 2020	$	2,454,276	$	316,036	$	(16,209)	$	2,754,103

Balances, June 30, 2021	$	2,454,276	$	427,692	$	(25,588)	$	2,856,380


Net income	—		119,910		—		119,910
Other comprehensive income, net of tax	—		—		96		96
Balances, Sept. 30, 2021	$	2,454,276	$	547,602	$	(25,492)	$	2,976,386

Balances, Dec. 31, 2019	$	2,454,276	$	206,243	$	(17,513)	$	2,643,006


Net income	—		109,793		—		109,793
Other comprehensive income, net of tax	—		—		1,304		1,304
Balances, Sept. 30, 2020	$	2,454,276	$	316,036	$	(16,209)	$	2,754,103

Balances, Dec. 31, 2020	$	2,454,276	$	328,543	$	(25,796)	$	2,757,023


Net income	—		219,059		—		219,059
Other comprehensive income, net of tax	—		—		304		304
Balances, Sept. 30, 2021	$	2,454,276	$	547,602	$	(25,492)	$	2,976,386
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco Power

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Power’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2020. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”

1417


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Income (Unaudited)
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Operating revenue
Electric operations $ 267,158 $ 224,430
Other operations 18,626 15,764
Affiliate revenue 1,655 1,106
Gross operating revenue 287,439 241,300
Electric customer credits (20,976) (8,340)
Operating revenue, net 266,463 232,960
Operating expenses
Fuel used for electric generation 45,210 61,064
Purchased power 79,033 23,462
Other operations and maintenance 53,565 56,944
Depreciation and amortization 42,076 43,677
Taxes other than income taxes 16,502 12,276
Total operating expenses 236,386 197,423
Operating income 30,077 35,537
Interest income 642 954
Allowance for equity funds used during construction 887 (74)
Other expense, net (4,258) (2,667)
Interest charges
Interest charges, net 18,846 18,760
Allowance for borrowed funds used during construction (200) (179)
Total interest charges 18,646 18,581
Income before income taxes 8,702 15,169
Federal and state income tax (benefit) expense (9,723) 3,338
Net income $ 18,425 $ 11,831
The accompanying notes are an integral part of the condensed consolidated financial statements.


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

CLECO POWER
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Net income $ 18,425 $ 11,831
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $162 in 2021 and $152 in 2020) 458 426
Amortization of interest rate derivatives to earnings (net of tax expense of $22 in 2021 and $22 in 2020) 64 64
Total other comprehensive income, net of tax 522 490
Comprehensive income, net of tax $ 18,947 $ 12,321
The accompanying notes are an integral part of the condensed consolidated financial statements.


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Assets
Utility plant and equipment
Property, plant, and equipment $ 5,875,428 $ 5,824,378
Accumulated depreciation (2,128,642) (2,067,362)
Net property, plant, and equipment 3,746,786 3,757,016
Construction work in progress 121,385 110,613
Total utility plant and equipment, net 3,868,171 3,867,629
Current assets
Cash and cash equivalents 38,059 24,846
Restricted cash and cash equivalents 4,430 4,545
Customer accounts receivable (less allowance for credit losses of $2,040 in 2021 and $2,758 in 2020) 52,316 43,852
Accounts receivable - affiliate 15,792 14,605
Other accounts receivable 32,367 27,535
Taxes receivable 2,713 0
Unbilled revenue 32,653 40,127
Fuel inventory, at average cost 64,652 63,234
Materials and supplies, at average cost 105,097 105,340
Energy risk management assets 1,986 4,337
Accumulated deferred fuel 69,832 28,194
Cash surrender value of company-owned life insurance policies 16,212 16,184
Prepayments 4,946 7,163
Regulatory assets 14,151 13,305
Other current assets 3,842 830
Total current assets 459,048 394,097
Equity investment in investee 7,322 9,072
Prepayments 1,433 1,496
Operating lease right of use assets 25,679 26,006
Note receivable 14,322 14,506
Regulatory assets 434,482 414,535
Other deferred charges 39,807 38,806
Total assets $ 4,850,264 $ 4,766,147
The accompanying notes are an integral part of the condensed consolidated financial statements.
(Continued on next page)


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Liabilities and member’s equity
Member’s equity $ 1,826,826 $ 1,807,879
Long-term debt and finance leases, net 1,502,353 1,502,257
Total capitalization 3,329,179 3,310,136
Current liabilities
Short-term debt 135,000 75,000
Long-term debt and finance leases due within one year 700 682
Accounts payable 88,013 106,089
Accounts payable - affiliate 71,389 72,068
Customer deposits 59,485 58,718
Provision for rate refund 8,119 8,630
Taxes payable 18,748 4,778
Interest accrued 21,367 5,357
Energy risk management liabilities 898 1,121
Regulatory liabilities 21,335 23,509
Other current liabilities 24,467 24,754
Total current liabilities 449,521 380,706
Commitments and contingencies (Note 13) 0 0
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net 640,585 634,598
Postretirement benefit obligations 231,810 230,825
Regulatory liabilities - deferred taxes, net 147,179 157,056
Asset retirement obligations 11,446 11,364
Operating lease liabilities 23,009 23,295
Other deferred credits 17,535 18,167
Total long-term liabilities and deferred credits 1,071,564 1,075,305
Total liabilities and member’s equity $ 4,850,264 $ 4,766,147
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Operating revenue
Electric operations	$	357,084	$	288,852
Other operations	22,779		17,775
Affiliate revenue	1,380		1,506
Gross operating revenue	381,243		308,133
Electric customer credits	(691)		(16,534)
Operating revenue, net	380,552		291,599
Operating expenses
Fuel used for electric generation	149,127		80,148
Purchased power	38,211		32,096
Other operations and maintenance	56,720		52,595
Depreciation and amortization	43,526		40,268
Taxes other than income taxes	12,891		11,408


Total operating expenses	300,475		216,515
Operating income	80,077		75,084
Interest income	936		789
Allowance for equity funds used during construction	711		144

Other expense, net	(6,106)		(3,408)
Interest charges
Interest charges, net	19,054		18,730
Allowance for borrowed funds used during construction	(545)		(289)
Total interest charges	18,509		18,441
Income before income taxes	57,109		54,168
Federal and state income tax expense	548		18,076
Net income	$	56,561	$	36,092
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Cash Flows (Unaudited)
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Operating activities
Net income $ 18,425 $ 11,831
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 43,458 45,079
Provision for credit losses 1,874 2,569
Allowance for equity funds used during construction (887) 74
Deferred income taxes (6,975) 5,341
Deferred fuel costs (41,121) 7,626
Changes in assets and liabilities
Accounts receivable (17,179) 3,452
Accounts receivable - affiliate (302) 2,863
Unbilled revenue 7,474 2,773
Fuel inventory and materials and supplies (1,167) (22,429)
Prepayments 2,176 1,209
Accounts payable (24,222) (33,749)
Accounts payable - affiliate (155) (3,817)
Customer deposits 3,236 2,731
Provision for merger commitments (127) (1,295)
Postretirement benefit obligations 720 1,181
Regulatory assets and liabilities, net (19,956) (1,218)
Other deferred accounts (1,328) (3,452)
Taxes accrued 10,893 7,691
Interest accrued 16,010 15,260
Other operating (3,337) 330
Net cash (used in) provided by operating activities (12,490) 44,050
Investing activities
Additions to property, plant, and equipment (37,150) (61,477)
Allowance for equity funds used during construction 887 (74)
Return of equity investment in investees 1,750 0
Other investing 356 285
Net cash used in investing activities (34,157) (61,266)
Financing activities
Draws on revolving credit facility 60,000 150,000
Repayment of long-term debt 0 (11,055)
Other financing (255) (148)
Net cash provided by financing activities 59,745 138,797
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 13,098 121,581
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period 29,391 (1) 80,952
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 42,489 (2) $ 202,533
Supplementary cash flow information
Interest paid, net of amount capitalized $ 797 $ 605
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment $ 12,738 $ 11,015
(1) Includes cash and cash equivalents of $24,846 and current restricted cash and cash equivalents of $4,545.
(2) Includes cash and cash equivalents of $38,059 and current restricted cash and cash equivalents of $4,430.
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Net income	$	56,561	$	36,092
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $123 in 2021 and $132 in 2020)	350		373
Amortization of interest rate derivatives to earnings (net of tax expense of $22 in both 2021 and 2020)	63		63
Total other comprehensive income, net of tax	413		436
Comprehensive income, net of tax	$	56,974	$	36,528
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS) MEMBER’S
EQUITY AOCI TOTAL
MEMBER’S
EQUITY
Balances, Dec. 31, 2019 $ 1,735,977 $ (22,585) $ 1,713,392
Net income 11,831 — 11,831
Other comprehensive income, net of tax — 490 490
Balances, Mar. 31, 2020 $ 1,747,808 $ (22,095) $ 1,725,713
Balances, Dec. 31, 2020 $ 1,832,632 $ (24,753) $ 1,807,879
Net income 18,425 — 18,425
Other comprehensive income, net of tax — 522 522
Balances, Mar. 31, 2021 $ 1,851,057 $ (24,231) $ 1,826,826
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Operating revenue
Electric operations	$	887,191	$	752,925
Other operations	57,674		49,443
Affiliate revenue	4,259		3,852
Gross operating revenue	949,124		806,220
Electric customer credits	(40,429)		(33,974)
Operating revenue, net	908,695		772,246
Operating expenses
Fuel used for electric generation	262,970		205,276
Purchased power	151,499		74,737
Other operations and maintenance	162,448		164,207
Depreciation and amortization	126,534		125,541
Taxes other than income taxes	36,707		33,132


Total operating expenses	740,158		602,893
Operating income	168,537		169,353
Interest income	2,404		2,498
Allowance for equity funds used during construction	2,703		197

Other expense, net	(16,064)		(9,498)
Interest charges
Interest charges, net	56,672		56,401
Allowance for borrowed funds used during construction	(1,280)		(777)
Total interest charges	55,392		55,624
Income before income taxes	102,188		106,926
Federal and state income tax (benefit) expense	(219)		30,770
Net income	$	102,407	$	76,156
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020
Net income	$	102,407	$	76,156
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $386 in 2021 and $430 in 2020)	1,095		1,218
Amortization of interest rate derivatives to earnings (net of tax expense of $67 in both 2021 and 2020)	191		191
Total other comprehensive income, net of tax	1,286		1,409
Comprehensive income, net of tax	$	103,693	$	77,565
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Assets
Utility plant and equipment
Property, plant, and equipment	$	6,047,103	$	5,824,378
Accumulated depreciation	(2,242,952)		(2,067,362)
Net property, plant, and equipment	3,804,151		3,757,016
Construction work in progress	128,765		110,613
Total utility plant and equipment, net	3,932,916		3,867,629
Current assets
Cash and cash equivalents	156,318		24,846
Restricted cash and cash equivalents	2,352		4,545
Customer accounts receivable (less allowance for credit losses of $1,757 in 2021 and $2,758 in 2020)	68,581		43,852
Accounts receivable - affiliate	13,982		14,605
Other accounts receivable	30,285		27,535

Unbilled revenue	36,759		40,127
Fuel inventory, at average cost	84,534		63,234
Materials and supplies, at average cost	105,090		105,340
Energy risk management assets	6,028		4,337
Accumulated deferred fuel	78,847		28,194
Cash surrender value of company-owned life insurance policies	16,245		16,184
Prepayments	6,815		7,163
Regulatory assets	18,760		13,305
Other current assets	6,382		830
Total current assets	630,978		394,097
Equity investment in investee	3,822		9,072
Prepayments	1,306		1,496
Operating lease right of use assets	24,642		26,006

Note receivable	13,941		14,506

Regulatory assets	623,820		414,535


Other deferred charges	24,616		38,806
Total assets	$	5,256,041	$	4,766,147
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Liabilities and member’s equity
Member’s equity	$	1,911,572	$	1,807,879
Long-term debt and finance leases, net	1,825,424		1,502,257
Total capitalization	3,736,996		3,310,136
Current liabilities
Short-term debt	—		75,000
Long-term debt and finance leases due within one year	736		682
Accounts payable	177,356		106,089
Accounts payable - affiliate	69,356		72,068
Customer deposits	60,186		58,718
Provision for rate refund	5,465		8,630

Taxes payable	42,931		4,778
Interest accrued	21,251		5,357

Energy risk management liabilities	1,330		1,121
Regulatory liabilities	46,003		23,509

Other current liabilities	26,940		24,754
Total current liabilities	451,554		380,706
Commitments and contingencies (Note 13)	0		0
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	670,036		634,598

Postretirement benefit obligations	237,818		230,825

Regulatory liabilities - deferred taxes, net	99,361		157,056




Asset retirement obligations	21,182		11,364
Operating lease liabilities	21,709		23,295
Other deferred credits	17,385		18,167
Total long-term liabilities and deferred credits	1,067,491		1,075,305
Total liabilities and member’s equity	$	5,256,041	$	4,766,147
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021			2020
Operating activities
Net income	$	102,407		$	76,156
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	132,986			129,740

Provision for credit losses	3,106			5,746
Unearned compensation expense	1,746			1,135
Allowance for equity funds used during construction	(2,703)			(197)
Deferred income taxes	(1,737)			5,358
Cash surrender value of company-owned life insurance	(61)			1,418
Changes in assets and liabilities
Accounts receivable	(38,558)			(29,942)
Accounts receivable - affiliate	4,187			3,751
Unbilled revenue	3,368			(1,297)
Fuel inventory and materials and supplies	(21,326)			(9,511)
Prepayments	210			1,107
Accounts payable	(4,067)			(22,666)
Accounts payable - affiliate	(2,389)			1,015
Customer deposits	8,295			4,688
Provision for merger commitments	(1,381)			(1,574)
Postretirement benefit obligations	4,910			2,581
Regulatory assets and liabilities, net	(96,785)			(13,755)
Deferred fuel recoveries	(50,986)			(21,076)
Other deferred accounts	(6,394)			(14,490)
Taxes accrued	30,789			50,638
Interest accrued	15,893			13,589
Other operating	(6,807)			5,573
Net cash provided by operating activities	74,703			187,987
Investing activities
Additions to property, plant, and equipment	(202,940)			(205,765)
Allowance for equity funds used during construction	2,703			197
Proceeds from sale of property, plant, and equipment	1,445			259
Return of equity investment in investee	5,250			4,000





Other investing	1,469			562
Net cash used in investing activities	(192,073)			(200,747)
Financing activities
Draws on revolving credit facility	185,000			150,000
Payments on revolving credit facility	(260,000)			—
Issuances of long-term debt	325,000			125,000
Repayment of long-term debt	—			(11,055)

Payment of financing costs	(2,846)			(1,619)


Other financing	(505)			(456)
Net cash provided by financing activities	246,649			261,870
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	129,279			249,110
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	29,391		(1)	80,952
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	158,670	(2)	$	330,062
Supplementary cash flow information

Interest paid, net of amount capitalized	$	35,065		$	34,454

Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	45,305		$	88,939



(1) Includes cash and cash equivalents of $24,846 and current restricted cash and cash equivalents of $4,545. (2) Includes cash and cash equivalents of $156,318 and current restricted cash and cash equivalents of $2,352.

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


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBER’S EQUITY		AOCI		TOTAL MEMBER’S EQUITY
Balances, June 30, 2020	$	1,776,041	$	(21,612)	$	1,754,429


Net income	36,092		—		36,092
Other comprehensive income, net of tax	—		436		436
Balances, Sept. 30, 2020	$	1,812,133	$	(21,176)	$	1,790,957

Balances, June 30, 2021	$	1,878,478	$	(23,880)	$	1,854,598


Net income	56,561		—		56,561
Other comprehensive income, net of tax	—		413		413
Balances, Sept. 30, 2021	$	1,935,039	$	(23,467)	$	1,911,572

Balances, Dec. 31, 2019	$	1,735,977	$	(22,585)	$	1,713,392


Net income	76,156		—		76,156
Other comprehensive income, net of tax	—		1,409		1,409
Balances, Sept. 30, 2020	$	1,812,133	$	(21,176)	$	1,790,957

Balances, Dec. 31, 2020	$	1,832,632	$	(24,753)	$	1,807,879


Net income	102,407		—		102,407
Other comprehensive income, net of tax	—		1,286		1,286
Balances, Sept. 30, 2021	$	1,935,039	$	(23,467)	$	1,911,572
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


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

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


Notes to the Unaudited Condensed Consolidated Financial Statements


Note 1 — Summary of Significant Accounting Policies

COVID-19 Impacts

In March 2020, WHO declared the outbreak of COVID-19 to be a global pandemic, and the U.S. declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments imposed varying degrees of restrictions on business and social activities to contain COVID-19, including quarantine and “stay-at-home” orders and directives in Cleco’s service territory. State and local authorities also subsequently implemented multistep policies to reopen various sectors of the economy such as retail establishments, health and personal care businesses, and restaurants, among others. ~~Due~~During March and April 2021, due to the reduction in new COVID-19 cases and hospitalizations and the availability of COVID-19 vaccines, ~~effective March 31, 2021,~~ the governor of the state of Louisiana ~~issued orders reducing some of the~~reduced restrictions that were previously in effect, ~~and easing~~eased capacity limits on businesses ~~as well as~~and social ~~gatherings. Effective April 28, 2021, the governor of the state of Louisiana further reduced restrictions by revoking~~gatherings, and revoked the mandatory, state-wide mask mandate.

~~The~~ However, effective August 4, 2021, the state-wide mask mandate was reinstated due to a surge in COVID-19 ~~pandemic may worsen~~cases. Due to the decrease in the ~~U.S. during~~number of COVID-19 cases, effective October 27, 2021, the upcoming 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.mandatory, state-wide mask mandate was once again revoked.

Cleco has modified some of its business operations, as these restrictions have significantly impacted many sectors of the economy. Impacts include record levels of unemployment, with businesses, nonprofit organizations, and governmental entities modifying, curtailing, or ceasing normal operations. Cleco ~~has also modified~~is monitoring the ongoing COVID-19 pandemic and continues to adjust certain business practices to conform to government restrictions and best practices encouraged by the CDC, WHO, OSHA, and other governmental and regulatory authorities. The COVID-19 pandemic may worsen in the U.S. during the upcoming months, which may cause federal, state, and local governments to reconsider restrictions on business and social activities. In the event governments reinstate or

increase restrictions, the reopening of the economy may be further curtailed.

On September 9, 2021, the Presidential Administration announced mandatory COVID-19 vaccination plans impacting federal contractors and employees of companies having 100 or more employees. On November 4, 2021, OSHA announced a new emergency temporary standard requiring employers with 100 or more employees to develop, implement, and enforce a mandatory COVID-19 vaccination policy, unless they adopt a policy requiring employees to choose to either be vaccinated or undergo regular COVID-19 testing and wear a face covering at work. Cleco is closely monitoring updates concerning these vaccination mandates and any potential impacts they may have on its businesses and workforce. The impact of these vaccination standards could have an adverse impact on Cleco’s workforce, labor relations, and operations.

In March 2020, the LPSC issued an executive order prohibiting the disconnection of utilities for nonpayment. At September 30, 2021, Cleco Power had a regulatory asset of $3.0 million recorded for expenses incurred related to the executive order, as allowed by the LPSC. While Cleco continues to assess the COVID-19 situation, Cleco cannot predict the full impact that COVID-19, or the significant disruption and volatility currently being experienced

in the markets, will have on its business, cash flows, liquidity, financial condition, and results of operations at this time, due to numerous uncertainties. ~~The~~However, the ultimate impacts will depend on future developments, including, among others, the ultimate geographic spread of COVID-19, the consequences of governmental and other measures designed to prevent the spread of COVID-19, the availability, ~~and~~ timely distribution and acceptance of effective treatments and vaccines, the duration of the pandemic, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

Principles of Consolidation

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

Basis of Presentation

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

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

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 2 — “Recent Authoritative Guidance.”

Restricted Cash and Cash Equivalents

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

Cleco
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Current
Cleco Katrina/Rita’s storm recovery bonds $ 2,626 $ 2,626
Cleco Power’s charitable contributions 1,603 1,718
Cleco Power’s rate credit escrow 201 201
Total current 4,430 4,545
Non-current
Diversified Lands’ mitigation escrow 22 22
Cleco Cajun’s defense fund 722 722
Total non-current 744 744
Total restricted cash and cash equivalents $ 5,174 $ 5,289


Cleco
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current
Cleco Katrina/Rita storm recovery surcharge	$	1,674	$	2,626

Cleco Power’s charitable contributions	678		1,718
Cleco Power’s rate credit escrow	—		201
Total current	2,352		4,545
Non-current
Diversified Lands’ mitigation escrow	22		22
Cleco Cajun’s defense fund	723		722




Total non-current	745		744
Total restricted cash and cash equivalents	$	3,097	$	5,289


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current					Current
Cleco Katrina/Rita’s storm recovery bonds		$	2,626	$	2,626
Cleco Katrina/Rita storm recovery surcharge						Cleco Katrina/Rita storm recovery surcharge	$	1,674	$	2,626

Charitable contributions	Charitable contributions	1,603		1,718		Charitable contributions	678		1,718
Rate credit escrow	Rate credit escrow	201		201		Rate credit escrow	—		201

Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	$	4,430	$	4,545	Total restricted cash and cash equivalents	$	2,352	$	4,545

Prior to the repayment of the storm recovery bonds at their scheduled maturity in March 2020, Cleco Katrina/Rita had the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash was collected, it was restricted for payment of ~~administration~~administrative fees, interest, and principal on the storm recovery bonds. ~~The remaining $2.6 million of restricted cash at March 31, 2021, was used in~~In April 2021, after payments for all final administrative and winding up activities of Cleco Katrina/~~Rita. Refunds~~Rita were made, Cleco Katrina/Rita transferred its remaining restricted cash to Cleco Power ~~customers for amounts remaining after all other costs and expenses of Cleco Katrina/Rita are expected~~ to be ~~paid with~~used to benefit retail customers in a manner and timing as approved by the ~~completion of Cleco Power’s current LPSC base rate case.~~LPSC.

Reserves for Credit Losses

Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts ~~receivables~~receivable are generally considered to become past due 20 days after the billing date. Cleco recognizes write-offs within the allowance for credit losses once all recovery methods have been exhausted. It is the policy of management to review accounts receivable and unbilled revenue monthly using a reserve matrix based on historical bad debt write-offs, as well as current and forecasted economic conditions, to establish a credit loss estimate. Management’s historical credit loss analysis included periods of economic recessions, natural disasters, and temporary changes to collection policies. Due to the critical necessity of electricity, none of these past events have significantly impacted Cleco’s credit loss rates.

Although Cleco’s service territory experienced a recent economic decline ~~in the economy in~~during 2020 and 2021, primarily related to the COVID-19 pandemic and weather-related events, the economic outlook at ~~March 31,~~September 30, 2021, was still within range of its historical credit loss analysis.

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

Cleco
(THOUSANDS) ACCOUNTS
RECEIVABLE OTHER* TOTAL
Balances, Dec. 31, 2020 $ 2,758 $ 1,638 $ 4,396
Current period provision 1,874 0 1,874
Charge-offs (2,859) 0 (2,859)
Recovery 267 0 267
Balances, Mar. 31, 2021 $ 2,040 $ 1,638 $ 3,678

* Loan held at Diversified Lands that was fully reserved for at March 31, 2021.

(THOUSANDS) ACCOUNTS
RECEIVABLE OTHER* TOTAL
Balances, Dec. 31, 2019 $ 3,005 $ 1,250 $ 4,255
CECL adoption 71 — 71
Current period provision 2,498 388 2,886
Charge-offs (4,092) 0 (4,092)
Recovery 641 0 641
Balances, Mar. 31, 2020 $ 2,123 $ 1,638 $ 3,761

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


~~Cleco Power~~
~~(THOUSANDS)~~	ACCOUNTS RECEIVABLE
~~Balances, Dec. 31, 2020~~	$	~~2,758~~

~~Current period provision~~	~~1,874~~
~~Charge-offs~~	~~(2,859)~~
~~Recovery~~	~~267~~
~~Balances, Mar. 31, 2021~~	$	~~2,040~~


~~(THOUSANDS)~~	ACCOUNTS RECEIVABLE
~~Balances, Dec. 31, 2019~~	$	~~3,005~~
~~CECL adoption~~	71
~~Current period provision~~	~~2,498~~
~~Charge-offs~~	~~(4,092)~~
~~Recovery~~	~~641~~
~~Balances, Mar. 31, 2020~~	$	~~2,123~~

2227


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30, 2021						FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, beginning of period	$	1,334	$	1,638	$	2,972	$	2,758	$	1,638	$	4,396

Current period provision	567		—		567		3,057		—		3,057
Charge-offs	(730)		—		(730)		(5,172)		—		(5,172)
Recovery	586		—		586		1,114		—		1,114
Balances, Sept. 30, 2021	$	1,757	$	1,638	$	3,395	$	1,757	$	1,638	$	3,395

* Loan held at Diversified Lands that was fully reserved for at September 30, 2021.


	FOR THE THREE MONTHS ENDED SEPT. 30, 2020						FOR THE NINE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, beginning of period	$	3,486	$	1,638	$	5,124	$	3,005	$	1,250	$	4,255
CECL adoption	—		—		—		71		—		71
Current period provision	2,041		—		2,041		5,675		388		6,063
Charge-offs	—		—		—		(4,091)		—		(4,091)
Recovery	54		—		54		921		—		921
Balances, Sept. 30, 2020	$	5,581	$	1,638	$	7,219	$	5,581	$	1,638	$	7,219

* Loan held at Diversified Lands that was fully reserved for at September 30, 2020.


Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30, 2021		FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, beginning of period	$	1,334	$	2,758

Current period provision	567		3,057
Charge-offs	(730)		(5,172)
Recovery	586		1,114
Balances, Sept. 30, 2021	$	1,757	$	1,757


	FOR THE THREE MONTHS ENDED SEPT. 30, 2020		FOR THE NINE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, beginning of period	$	3,486	$	3,005
CECL adoption	—		71
Current period provision	2,041		5,675
Charge-offs	—		(4,091)
Recovery	54		921
Balances, Sept. 30, 2020	$	5,581	$	5,581


Note 2 — Recent Authoritative Guidance

In March 2020, FASB issued optional guidance, for a limited period of time, that applies to entities meeting certain criteria for the contract modifications or hedging relationships that are referencing LIBOR or another reference rate expected to be discontinued due to reference rate reform. The guidance includes a general principal that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The optional guidance may be applied from March 12, 2020, through December 31, 2022. Management has identified contracts with reference rates that will be discontinued, primarily related to long-term debt obligations. Certain debt contracts have been amended to include fallback provisions that provide substitute reference rates upon the discontinuance of LIBOR, among other amendments. Management will continue to modify contracts to include

similar fallback language and expects to apply this guidance on an ~~on-going~~ongoing basis. Management does not expect this guidance to have a significant impact on the Registrants’ results of operations, financial condition, or cash flows.

In December 2019, FASB amended the guidance for accounting for income taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to general principles included in the accounting guidance. Effective January 1, 2021, Cleco adopted the amended accounting guidance. Adoption of this guidance did not materially impact the Registrants’ results of operations, financial condition, or cash flows.

Note 3 — Leases

Cleco maintains operating and finance leases in its ordinary course of business activities.

Cottonwood Sale Leaseback Agreement

Upon closing the Cleco Cajun Transaction, the Cottonwood Sale Leaseback was executed. Under the terms of the lease,

NRG Energy will operate the Cottonwood Plant, incur all costs, and receive all revenues from the operations of the plant. Cottonwood Energy will receive fixed lease payments of $40.0 million per year and variable lease payments for LTSA costs and property taxes paid by NRG Energy on behalf of Cleco. Cleco may terminate the lease contract under specific circumstances stated in the lease contract. The residual value under the Cottonwood Sale Leaseback is expected to be recovered through sales of power generation from the plant. The residual value of the Cottonwood Plant has been determined using the plant’s estimated economic life.

Cleco Cajun is Cleco’s only entity with lessor arrangements. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback is included in Other operations within Cleco’s Condensed Consolidated Statement of Income. Cleco Cajun’s lease income under the Cottonwood Sale Leaseback for the three and nine months ended ~~March 31,~~September 30, 2021, and 2020, was as follows:

FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Fixed payments $ 10,000 $ 10,000
Variable payments 5,465 5,566
Amortization of deferred lease liability*
2,301 2,302
Total lease income $ 17,766 $ 17,868


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


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

* Consists of amortization of the deferred lease revenue resulting from the fair value of the lease between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy.


Note 4 — Revenue Recognition

Operating revenue, net for the three and nine months ended ~~March 31,~~September 30, 2021, and 2020, was as follows:


		FOR THE THREE MONTHS ENDED MAR. 31, 2021														FOR THE THREE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL		(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers	Revenue from contracts with customers														Revenue from contracts with customers
Retail revenue	Retail revenue														Retail revenue
Residential (1)	Residential (1)	$	95,081		$	0		$	0		$	0	$	95,081	Residential (1)	$	148,522		$	—		$	—		$	—	$	148,522
Commercial (1)	Commercial (1)	63,026			0			0			0		63,026		Commercial (1)	82,711			—			—			—		82,711
Industrial (1)	Industrial (1)	36,666			0			0			0		36,666		Industrial (1)	45,446			—			—			—		45,446
Other retail (1)	Other retail (1)	3,570			0			0			0		3,570		Other retail (1)	4,479			—			—			—		4,479

Electric customer credits	Electric customer credits	(20,976)			0			0			0		(20,976)		Electric customer credits	(764)			—			—			—		(764)
Total retail revenue	Total retail revenue	177,367			0			0			0		177,367		Total retail revenue	280,394			—			—			—		280,394
Wholesale, net	Wholesale, net	61,722		(1)	101,507			(2,420)		(2)	0		160,809		Wholesale, net	74,831		(1)	107,501			(2,420)		(2)	—		179,912
Transmission, net	Transmission, net	13,982			15,257			0			(1,940)		27,299		Transmission, net	17,235		(3)	17,903			—			(2,217)		32,921
Other	Other	4,642			0			0			0		4,642		Other	5,618			—			—			—		5,618
Affiliate ~~(3)~~(4)	Affiliate ~~(3)~~(4)	1,655			0			27,156			(28,811)		0		Affiliate ~~(3)~~(4)	1,380			—			32,116			(33,496)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	259,368			116,764			24,736			(30,751)		370,117		Total revenue from contracts with customers	379,458			125,404			29,696			(35,713)		498,845
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers														Revenue unrelated to contracts with customers
Other	Other	7,095		(4)	17,782		(5)	1			0		24,878		Other	1,094		(5)	17,254		(6)	1			—		18,349
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	7,095			17,782			1			0		24,878		Total revenue unrelated to contracts with customers	1,094			17,254			1			—		18,349
Operating revenue, net	Operating revenue, net	$	266,463		$	134,546		$	24,737		$	(30,751)	$	394,995	Operating revenue, net	$	380,552		$	142,658		$	29,697		$	(35,713)	$	517,194

(1) Includes fuel recovery revenue.

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

(3) Includes $0.1 million of electric customer credits.

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

~~(4)~~(5) ~~Represents realized~~Realized gains associated with FTRs.

~~(5)~~(6) Includes ~~$15.5~~$14.9 million in lease revenue related to the Cottonwood Sale Leaseback and $2.3 million of deferred lease revenue amortization.


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~


		FOR THE THREE MONTHS ENDED MAR. 31, 2020														FOR THE THREE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS)	(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL		(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers	Revenue from contracts with customers														Revenue from contracts with customers
Retail revenue	Retail revenue														Retail revenue
Residential (1)	Residential (1)	$	81,571		$	0		$	0		$	0	$	81,571	Residential (1)	$	128,981		$	—		$	—		$	—	$	128,981
Commercial (1)	Commercial (1)	61,110			0			0			0		61,110		Commercial (1)	68,220			—			—			—		68,220
Industrial (1)	Industrial (1)	32,210			0			0			0		32,210		Industrial (1)	32,809			—			—			—		32,809
Other retail (1)	Other retail (1)	3,461			0			0			0		3,461		Other retail (1)	3,614			—			—			—		3,614
Surcharge		2,443			0			0			0		2,443

Electric customer credits	Electric customer credits	(8,340)			0			0			0		(8,340)		Electric customer credits	(16,534)			—			—			—		(16,534)
Total retail revenue	Total retail revenue	172,455			0			0			0		172,455		Total retail revenue	217,090			—			—			—		217,090
Wholesale, net	Wholesale, net	42,229		(1)	89,147			(2,420)		(2)	0		128,956		Wholesale, net	52,216		(1)	99,956			(2,420)		(2)	—		149,752
Transmission, net	Transmission, net	12,069			12,931		(3)	0			(1,818)		23,182		Transmission, net	14,656			13,818			—			(1,510)		26,964
Other	Other	3,695			0			1			0		3,696		Other	3,118			—			—			—		3,118
Affiliate ~~(4)~~(3)	Affiliate ~~(4)~~(3)	1,106			161			29,278			(30,545)		0		Affiliate ~~(4)~~(3)	1,506			—			35,522			(37,028)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	231,554			102,239			26,859			(32,363)		328,289		Total revenue from contracts with customers	288,586			113,774			33,102			(38,538)		396,924
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers														Revenue unrelated to contracts with customers
Other	Other	1,406		(5)	17,877		(6)	0			0		19,283		Other	3,013		(4)	17,513		(5)	1			—		20,527
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	1,406			17,877			0			0		19,283		Total revenue unrelated to contracts with customers	3,013			17,513			1			—		20,527
Operating revenue, net	Operating revenue, net	$	232,960		$	120,116		$	26,859		$	(32,363)	$	347,572	Operating revenue, net	$	291,599		$	131,287		$	33,103		$	(38,538)	$	417,451

(1) Includes fuel recovery revenue.

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

(3) Includes ~~$0.2 million of electric customer credits.~~

~~(4)~~ ~~Includes~~ interdepartmental rents and support services. This revenue is eliminated upon consolidation.

~~(5)~~(4) ~~Represents realized~~Realized gains associated with FTRs.

~~(6)~~(5) Includes ~~$15.6~~$15.2 million in lease revenue related to the Cottonwood Sale Leaseback and $2.3 million of deferred lease revenue amortization.

CLECO

CLECO POWER

2021 3RD QUARTER FORM 10-Q


	FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	348,918		$	—		$	—		$	—	$	348,918
Commercial (1)	214,129			—			—			—		214,129
Industrial (1)	119,497			—			—			—		119,497
Other retail (1)	11,925			—			—			—		11,925

Electric customer credits	(40,794)			—			—			—		(40,794)
Total retail revenue	653,675			—			—			—		653,675
Wholesale, net	182,769		(1)	300,415			(7,260)		(2)	—		475,924
Transmission, net	44,530		(3)	46,733		(4)	—			(5,752)		85,511
Other	13,509			—			—			(1)		13,508
Affiliate (5)	4,259			—			85,392			(89,651)		—
Total revenue from contracts with customers	898,742			347,148			78,132			(95,404)		1,228,618
Revenue unrelated to contracts with customers
Other	9,953		(6)	52,362		(7)	4			—		62,319
Total revenue unrelated to contracts with customers	9,953			52,362			4			—		62,319
Operating revenue, net	$	908,695		$	399,510		$	78,136		$	(95,404)	$	1,290,937

(1) Includes fuel recovery revenue.

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

(3) Includes $0.4 million of electric customer credits.

(4) Includes $0.2 million of electric customer credits.

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

(6) Realized gains associated with FTRs.

(7) Includes $45.4 million in lease revenue related to the Cottonwood Sale Leaseback and $6.9 million of deferred lease revenue amortization.


	FOR THE NINE MONTHS ENDED SEPT. 30, 2020
(THOUSANDS)	CLECO POWER			CLECO CAJUN			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	308,525		$	—		$	—		$	—	$	308,525
Commercial (1)	190,905			—			—			—		190,905
Industrial (1)	94,227			—			—			—		94,227
Other retail (1)	10,416			—			—			—		10,416
Surcharge	2,440			—			—			—		2,440
Electric customer credits	(33,219)			—			—			—		(33,219)
Total retail revenue	573,294			—			—			—		573,294
Wholesale, net	140,139		(1)	273,836			(7,260)		(2)	—		406,715
Transmission, net	38,273		(3)	39,880		(4)	—			(4,966)		73,187
Other	10,416			—			—			1		10,417
Affiliate (5)	3,852			204			93,938			(97,994)		—
Total revenue from contracts with customers	765,974			313,920			86,678			(102,959)		1,063,613
Revenue unrelated to contracts with customers
Other	6,272		(6)	52,895		(7)	2			—		59,169
Total revenue unrelated to contracts with customers	6,272			52,895			2			—		59,169
Operating revenue, net	$	772,246		$	366,815		$	86,680		$	(102,959)	$	1,122,782

(1) Includes fuel recovery revenue.

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

(3) Includes $0.8 million of electric customer credits.

(4) Includes $0.2 million of electric customer credits.

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

(6) Realized gains associated with FTRs.

(7) Includes $46.0 million in lease revenue related to the Cottonwood Sale Leaseback and $6.9 million of deferred lease revenue amortization.

Cleco and Cleco Power have unsatisfied performance obligations under contracts with cooperatives and municipalities with durations ranging between 1 and 14 years that primarily relate to stand-ready obligations as part of fixed capacity minimums. At ~~March 31,~~September 30, 2021, Cleco and Cleco Power had ~~$70.7~~$65.7 million of unsatisfied fixed performance obligations that will be recognized as revenue over the term of such contracts as the stand-ready obligation to provide energy is provided.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


Note 5 — Regulatory Assets and Liabilities

Cleco Power capitalizes or defers certain costs for recovery from customers and recognizes a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

Under the current regulatory environment, Cleco Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or

competition, Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. In addition, potential deregulation of the industry, or possible future changes in the method of rate regulation of Cleco Power, could require discontinuance of the application of the authoritative guidance on regulated operations.

The following table summarizes Cleco Power’s regulatory assets and liabilities:


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.

2431


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

~~The following table summarizes Cleco Power’s regulatory assets and liabilities:~~

Cleco Power
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Regulatory assets
Acadia Unit 1 acquisition costs $ 1,992 $ 2,019
Accumulated deferred fuel 69,832 28,194
AFUDC equity gross-up *
68,896 69,670
AMI deferred revenue requirement 2,454 2,591
AROs 6,345 5,488
Coughlin transaction costs 869 876
COVID-19 executive order 2,953 2,953
Deferred storm restoration costs -
  Hurricane Delta 17,052 17,051
Deferred storm restoration costs -
  Hurricane Laura 54,744 54,406
Deferred storm restoration costs -
  Hurricane Zeta 3,613 3,493
Deferred storm restoration costs -
  Winter Storms Uri & Viola 1,938 0
Dolet Hills closure costs 70,192 48,982
Emergency declarations 131 270
Energy efficiency 2,703 2,820
Financing costs 7,091 7,184
Interest costs 3,646 3,708
Non-service cost of postretirement benefits 10,181 9,901
Other, net 4,682 4,229
Postretirement costs 160,674 165,437
Production operations and maintenance expenses 3,361 4,058
Rodemacher Unit 2 closure costs 2,722 1,333
St. Mary Clean Energy Center 5,219 3,479
Training costs 6,046 6,085
Tree trimming costs 11,129 11,807
Total regulatory assets 518,465 456,034
Regulatory liabilities
AFUDC (4,574) (4,218)
Corporate franchise tax, net (1,133) (763)
Deferred taxes, net (162,807) (175,584)
Total regulatory liabilities (168,514) (180,565)
Total regulatory assets, net $ 349,951 $ 275,469
* Represents regulatory assets for past expenditures that were not earning a return on investment at March 31, 2021, and December 31, 2020, respectively. All other assets are earning a return on investment.

The following table summarizes Cleco’s net regulatory assets and liabilities:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Total Cleco Power regulatory assets, net	Total Cleco Power regulatory assets, net	$	349,951	$	275,469	Total Cleco Power regulatory assets, net	$	576,062	$	275,469
2016 Merger adjustments *	2016 Merger adjustments *					2016 Merger adjustments *
Fair value of long-term debt	Fair value of long-term debt	117,703		119,553		Fair value of long-term debt	114,001		119,553
Postretirement costs	Postretirement costs	14,915		15,411		Postretirement costs	13,921		15,411
Financing costs	Financing costs	7,506		7,592		Financing costs	7,334		7,592
Debt issuance costs	Debt issuance costs	5,170		5,254		Debt issuance costs	5,004		5,254
Total Cleco regulatory assets, net	Total Cleco regulatory assets, net	$	495,245	$	423,279	Total Cleco regulatory assets, net	$	716,322	$	423,279

* Cleco regulatory assets include acquisition accounting adjustments as a result of the 2016 Merger.

Accumulated Deferred Fuel

In February 2021, Winter Storms Uri and Viola moved through Louisiana causing substantial damage to Cleco’s distribution

assets, electricity generation supply shortages, natural gas supply shortages, and increases in wholesale prices of natural gas in the ~~United States,~~U.S., primarily due to prolonged freezing temperatures. Incremental fuel and purchased power costs were incurred as a result of the winter storms. On March 29, 2021, Cleco Power received approval from the LPSC to ~~recover~~defer $50.0 million of these costs and recover them over 12 months through Cleco Power’s FAC ~~over a period of 12 months~~ beginning in May 2021. For more information about the incremental fuel and purchased power costs related to Winter Storms Uri and Viola, see Note 17 — “Storm Restoration — Winter Storms Uri and Viola.”

Higher lignite and natural gas costs also contributed to the increase in Cleco Power’s accumulated deferred fuel.

Affordability Study

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. As a result, Cleco Power was allowed to establish a regulatory asset of $13.6 million related to outside consulting fees for the assessment of Cleco Power’s practices and assistance in the identification of potential cost savings opportunities, while maintaining superior levels of employee safety, reliability, customer service, environmental stewardship, community involvement, and regulatory transparency. The regulatory asset is being amortized over 10 years beginning July 1, 2021.

Bayou Vista To Segura Deferred Revenue Requirement

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. As a result, Cleco Power was allowed to establish a regulatory asset and recover the revenue requirements, including interest at Cleco Power’s weighted average cost of capital, upon the completion of each phase of the Bayou Vista to Segura Transmission project. The northern phase of the project was completed in August 2021. At September 30, 2021, Cleco Power had a regulatory asset of $0.3 million related to deferred revenue associated with the northern phase of the Bayou Vista to Segura Transmission project. The regulatory asset will be amortized over 12 months beginning July 1, 2022.

Deferred Storm Restoration Costs — Hurricane Ida

On August 29, 2021, Hurricane Ida made landfall in southeast Louisiana as a Category 4 storm, causing power outages for approximately 100,000 of Cleco Power’s electric customers located primarily in southeastern Louisiana.

On September 22, 2021, the LPSC approved Cleco Power’s establishment of a regulatory asset to track and defer non-capital expenses associated with the hurricane. For more information about Hurricane Ida, see Note 17 — “Storm Restoration — Hurricane Ida.”

Deferred Storm Restoration Costs — Winter Storms

In February 2021, Cleco Power’s service territory experienced extreme and unprecedented winter weather.

On February 14, 2021, Winter Storm Uri reached Louisiana resulting in power outages for approximately 11,000 of Cleco Power’s electric customers located primarily in south Louisiana.

On February 17, 2021, Winter Storm Viola reached Louisiana resulting in power outages for approximately 43,000 of Cleco Power’s electric customers located primarily in central and south Louisiana.

On March 17, 2021, the LPSC approved utilities establishing a regulatory asset to track and defer non-capital expenses associated with these winter storms. For more information about Winter Storms Uri and Viola, see Note 17 — “Storm Restoration — Winter Storms Uri and Viola.”

Lignite Mine Closure Cost

On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine and to include and defer certain accelerated mine closing costs in fuel and related ratemaking treatment. On March 17, 2021, the LPSC approved the establishment of a regulatory asset for certain lignite costs that would otherwise be billed through Cleco Power’s FAC and any reasonable incremental third-party professional costs related to the closure of the mine. At September 30, 2021, Cleco Power had a regulatory asset of $93.1 million for these mine-related incurred costs. For more information on the Oxbow mine, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

Madison Unit 3 Property Taxes

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. As a result, beginning July 1, 2022, Cleco Power will be allowed to recover property taxes paid for Madison Unit 3, including a carrying charge at Cleco Power’s weighted average cost of capital, grossed up for income taxes. At September 30, 2021, Cleco Power had a regulatory asset of $6.3 million for the accrued 2021 Madison Unit 3 property taxes. The amount included in the cost recovery mechanism each year will amortize over 12 months.

Other

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan resulting in Cleco Power establishing several regulatory assets. Cleco Power was allowed to establish a regulatory asset to recover the undercollection of revenues related to the Northlake Transmission Agreement capped at $5.7 million. The amount recorded in the regulatory asset at June 30, 2021, began being amortized over 12 months on July 1, 2021. Amounts recorded in the regulatory asset after June 30, 2021, are being amortized over the remaining regulatory period ending June 30, 2022. At September 30, 2021, Cleco Power had a regulatory asset of $4.2 million relating to the Northlake Transmission Agreement.

In addition, the LPSC approved recovery of other previously deferred costs associated with Cleco Power’s


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

recently approved retail rate plan, which began being amortized over four years on July 1, 2021. At September 30, 2021, Cleco Power had a regulatory asset of $3.9 million for deferred costs.

In June 2017, and prior to the approval of Cleco Power’s new retail rate plan, the LPSC approved the establishment of a regulatory asset upon the completion of the Coughlin Pipeline project, for the revenue requirement associated with the project, until Cleco Power’s new retail rate plan was approved. As approved by the LPSC in Cleco Power’s new retail rate plan, the regulatory asset began being amortized over four years on July 1, 2021. At September 30, 2021, Cleco Power had a regulatory asset of $5.1 million related to the deferred revenue associated with the Coughlin Pipeline project.

St. Mary Clean Energy Center

Cleco Power had a regulatory asset for revenue requirements related to the St. Mary Clean Energy Center project. As approved by the LPSC in Cleco Power’s new retail rate plan, the regulatory asset began being amortized over four years on July 1, 2021.


Note 6 — Fair Value Accounting and Financial Instruments

The amounts reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2021, and December 31, 2020, for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, short-term debt, and accounts payable approximate fair value because of their short-term nature. Cleco applies the provisions of the fair value measurement standard to its non-recurring, non-financial measurements including business combinations, as well as impairment related to goodwill and other long-lived assets.

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


Cleco	Cleco									Cleco
		AT MAR. 31, 2021				AT DEC. 31, 2020					AT SEPT. 30, 2021				AT DEC. 31, 2020
(THOUSANDS)	(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE		(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	Long-term debt	$	3,228,726	$	3,556,579	$	3,230,500	$	3,541,349	Long-term debt	$	3,550,179	$	3,836,960	$	3,230,500	$	3,541,349

* The carrying value of long-term debt does not include deferred issuance costs of ~~$12.7~~$14.1 million at
~~March 31,~~September 30, 2021, and $13.4 million at December 31, 2020.


Cleco Power	Cleco Power									Cleco Power
		AT MAR. 31, 2021				AT DEC. 31, 2020					AT SEPT. 30, 2021				AT DEC. 31, 2020
(THOUSANDS)	(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE		(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	Long-term debt	$	1,495,024	$	1,865,938	$	1,494,947	$	1,794,799	Long-term debt	$	1,820,177	$	2,100,029	$	1,494,947	$	1,794,799

* The carrying value of long-term debt does not include deferred issuance costs of ~~$6.8~~$8.5 million at
~~March 31,~~September 30, 2021, and $7.0 million at December 31, 2020.

In order to fund capital requirements, Cleco issues fixed and variable rate long-term debt with various tenors. The fair value of this class fluctuates as the market interest rates for


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the debt could also change from period to period due to changes in the credit rating of the Cleco entity by which the debt was issued. The fair value of long-term debt is classified as Level 2 in the fair value hierarchy.

Fair Value Measurements and Disclosures

Cleco classifies assets and liabilities that are measured at their fair value according to three different levels depending on the inputs used in determining fair value. Cleco elects not to designate derivatives as cash flow or fair value hedges, as allowed by accounting guidance. Cleco utilizes a mark-to-market approach recognizing changes in the fair value of FTRs and ~~other~~ commodity derivatives at Cleco Cajun in earnings and changes in the fair value of FTRs at Cleco Power as a component of deferred fuel assets and liabilities. Cleco utilizes different valuation techniques for fair value measurements under a fair value hierarchy. Assets and liabilities classified as Level 1 under the hierarchy utilize observable inputs that

reflect quotable prices in active markets. Assets and liabilities classified as Level 2 are measured through proxy inputs ~~other than quoted prices, either directly~~of similar index or ~~indirectly. Institutional money market fund assets are discounted to the current period using a published U.S. Treasury interest rate as a proxy for a risk-free rate of return.~~composite pricing. Assets and liabilities classified as Level 3 under the hierarchy are valued based on unobservable inputs, such as internally generated valuation models or valuations obtained in inactive markets where there is no readily available information. Cleco has consistently applied the Level 2 and Level 3 fair value techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability. During the nine months ended September 30, 2021, and the year ended December 31, 2020, Cleco did not experience any transfers between levels within the fair value hierarchy.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured on a recurring ~~basis:~~basis. These amounts are presented on a gross basis before consideration of amounts netted under master netting agreements and the application of collateral received or paid:

Cleco
FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS) AT MAR. 31, 2021 QUOTED PRICES
IN ACTIVE MARKETS
FOR IDENTICAL
ASSETS
(LEVEL 1) SIGNIFICANT
OTHER
OBSERVABLE
INPUTS
(LEVEL 2) SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3) AT DEC. 31, 2020 QUOTED PRICES
IN ACTIVE MARKETS
FOR IDENTICAL
ASSETS
(LEVEL 1) SIGNIFICANT
OTHER
OBSERVABLE
INPUTS
(LEVEL 2) SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
Asset description
Institutional money market funds $ 87,686 $ 0 $ 87,686 $ 0 $ 86,001 $ 0 $ 86,001 $ 0
FTRs 2,140 0 0 2,140 4,805 0 0 4,805
Other commodity derivatives* 12,125 0 12,125 0 8,599 0 8,599 0
Total assets $ 101,951 $ 0 $ 99,811 $ 2,140 $ 99,405 $ 0 $ 94,600 $ 4,805
Liability description
FTRs $ 1,117 $ 0 $ 0 $ 1,117 $ 1,625 $ 0 $ 0 $ 1,625
Other commodity derivatives* 428 0 428 0 1,612 0 1,612 0
Total liabilities $ 1,545 $ 0 $ 428 $ 1,117 $ 3,237 $ 0 $ 1,612 $ 1,625

* Other commodity derivatives include fixed price physical forwards and swap transactions.

Cleco Power
FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS) AT MAR. 31, 2021 QUOTED PRICES IN ACTIVE MARKETS
FOR IDENTICAL
ASSETS
(LEVEL 1) SIGNIFICANT
OTHER
OBSERVABLE
INPUTS
(LEVEL 2) SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3) AT DEC. 31, 2020 QUOTED PRICES
IN ACTIVE MARKETS
FOR IDENTICAL
ASSETS
(LEVEL 1) SIGNIFICANT
OTHER
OBSERVABLE
INPUTS
(LEVEL 2) SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
Asset description
Institutional money market funds $ 38,242 $ 0 $ 38,242 $ 0 $ 25,357 $ 0 $ 25,357 $ 0
FTRs 1,986 0 0 1,986 4,337 0 0 4,337
Total assets $ 40,228 $ 0 $ 38,242 $ 1,986 $ 29,694 $ 0 $ 25,357 $ 4,337
Liability description
FTRs $ 898 $ 0 $ 0 $ 898 $ 1,121 $ 0 $ 0 $ 1,121
Total liabilities $ 898 $ 0 $ 0 $ 898 $ 1,121 $ 0 $ 0 $ 1,121

2633


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2021		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2020		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	252,807	$	—	$	252,807	$	—	$	86,001	$	—	$	86,001	$	—
FTRs	9,338		—		—		9,338		4,805		—		—		4,805
Natural gas derivatives*	132,892		—		132,892		—		8,599		—		8,599		—
Total assets	$	395,037	$	—	$	385,699	$	9,338	$	99,405	$	—	$	94,600	$	4,805
Liability description
FTRs	$	1,589	$	—	$	—	$	1,589	$	1,625	$	—	$	—	$	1,625
Natural gas derivatives*	—		—		—		—		1,612		—		1,612		—
Total liabilities	$	1,589	$	—	$	—	$	1,589	$	3,237	$	—	$	1,612	$	1,625

* Natural gas derivatives include fixed price physical forwards and swap transactions.


Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT SEPT. 30, 2021		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2020		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	135,763	$	—	$	135,763	$	—	$	25,357	$	—	$	25,357	$	—
FTRs	6,028		—		—		6,028		4,337		—		—		4,337
Total assets	$	141,791	$	—	$	135,763	$	6,028	$	29,694	$	—	$	25,357	$	4,337
Liability description
FTRs	$	1,330	$	—	$	—	$	1,330	$	1,121	$	—	$	—	$	1,121
Total liabilities	$	1,330	$	—	$	—	$	1,330	$	1,121	$	—	$	—	$	1,121

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

Cleco
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Beginning balance $ 3,180 $ 5,778
Unrealized gains (losses)* 16,123 (1,398)
Purchases 849 466
Settlements (19,129) (3,750)
Ending balance $ 1,023 $ 1,096
* Cleco Power’s unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s Condensed Consolidated Balance Sheet. Cleco Cajun’s unrealized (losses) gains are reported through Purchased power on Cleco’s Condensed Consolidated Income Statement.


Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Beginning balance	$	7,501	$	8,040	$	3,180	$	5,778
Unrealized gains (losses)*	3,955		4		18,861		(736)
Purchases	619		443		11,426		10,175
Settlements	(4,326)		(3,160)		(25,718)		(9,890)
Ending balance	$	7,749	$	5,327	$	7,749	$	5,327
* Cleco Power’s unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s Condensed Consolidated Balance Sheet. Cleco Cajun’s unrealized gains (losses) are reported through Purchased power on Cleco’s Condensed Consolidated Income Statement.


Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Beginning balance	$	5,990	$	7,511	$	3,216	$	5,725
Unrealized gains*	1,196		426		545		1,355
Purchases	619		443		9,236		8,219
Settlements	(3,107)		(2,968)		(8,299)		(9,887)
Ending balance	$	4,698	$	5,412	$	4,698	$	5,412
* Unrealized gains are reported through Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheet.

Cleco Power and Cleco Cajun’s FTRs are valued using MISO’s monthly auction prices. Forward seasonal periods are not included in every monthly auction; therefore, the average of

Cleco Power
FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Beginning balance $ 3,216 $ 5,725
Unrealized losses* (37) (1,311)
Purchases 849 466
Settlements (2,940) (3,731)
Ending balance $ 1,088 $ 1,149
* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheet.
the most recent seasonal auction prices is used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant value available


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

comes from MISO auctions, which occur monthly in the Multi-Period Monthly Auction.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions for

Cleco and Cleco Power as of ~~March 31,~~September 30, 2021, and December 31, 2020:

Cleco
FAIR VALUE VALUATION TECHNIQUE
SIGNIFICANT
UNOBSERVABLE INPUTS
FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE) ASSETS LIABILITIES LOW HIGH
FTRs at Mar. 31, 2021 $ 2,140 $ 1,117 RTO auction pricing FTR price - per MWh $ (1.18) $ 4.09
FTRs at Dec. 31, 2020 $ 4,805 $ 1,625 RTO auction pricing FTR price - per MWh $ (3.49) $ 4.36


Cleco
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW		HIGH
FTRs at Sept. 30, 2021	$	9,338	$	1,589	RTO auction pricing	FTR price - per MWh	$	(8.18)	$	9.16
FTRs at Dec. 31, 2020	$	4,805	$	1,625	RTO auction pricing	FTR price - per MWh	$	(3.49)	$	4.36


Cleco Power	Cleco Power											Cleco Power
		FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE					FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW		HIGH		(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW		HIGH
FTRs at Mar. 31, 2021		$	1,986	$	898	RTO auction pricing	FTR price - per MWh	$	(1.18)	$	4.09
FTRs at Sept. 30, 2021												FTRs at Sept. 30, 2021	$	6,028	$	1,330	RTO auction pricing	FTR price - per MWh	$	(3.26)	$	9.16
FTRs at Dec. 31, 2020	FTRs at Dec. 31, 2020	$	4,337	$	1,121	RTO auction pricing	FTR price - per MWh	$	(3.34)	$	4.36	FTRs at Dec. 31, 2020	$	4,337	$	1,121	RTO auction pricing	FTR price - per MWh	$	(3.34)	$	4.36

AtAs a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the valuation of a finite intangible asset relating to the Cleco Power trade name. In August 2021, a wholesale customer that is currently under contract with Cleco Power through March 31, 2024, informed Cleco Power that it was not selected through its RFP process as a provider of load after the first quarter of 2024. Cleco considered this to be a triggering event and determined that the carrying value of the trade name intangible asset may not be recoverable. Therefore, a valuation of the Cleco Power trade name was conducted to test for impairment. A discounted cash flow model utilizing an estimated weighted average cost of capital of 8% was used to determine the fair value of the Cleco Power trade name. As a result, Cleco determined that the fair value of the Cleco Power trade name was less than its carrying value and an impairment of $3.8 million was recognized reducing the carrying value to zero. The fair value measurement of the intangible asset is classified as Level 3 in the fair value hierarchy. For more information on the Cleco Power trade name intangible asset, see Note 15 — “Intangible Assets and Liabilities.”

Concentrations of Credit Risk

At September 30, 2021, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The following tables present the institutional money market funds in cash and cash equivalents and restricted cash and cash equivalents as recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2021, and December 31, 2020:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	82,512	$	80,712	Cash and cash equivalents	$	249,711	$	80,712
Current restricted cash and cash equivalents	Current restricted cash and cash equivalents	$	4,430	$	4,545	Current restricted cash and cash equivalents	$	2,352	$	4,545
Non-current restricted cash and cash equivalents	Non-current restricted cash and cash equivalents	$	744	$	744	Non-current restricted cash and cash equivalents	$	744	$	744


Cleco Power
(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Cash and cash equivalents	$	133,411	$	20,812
Current restricted cash and cash equivalents	$	2,352	$	4,545

Cleco Power
(THOUSANDS) AT MAR. 31, 2021 AT DEC. 31, 2020
Cash and cash equivalents $ 33,812 $ 20,812
Current restricted cash and cash equivalents $ 4,430 $ 4,545

Institutional money market fund assets are discounted to the current period using a published U.S. Treasury interest rate as a proxy for a risk-free rate of return. If the money market funds failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by either Cleco or Cleco Power. The Level 2 institutional money market funds asset consists of a single class. In order to capture interest income and minimize risk, cash is invested in money market funds that invest primarily in short-term securities issued by the U.S. Treasury to maintain liquidity and achieve the goal of a net asset value of a dollar. The risks associated with this class are

counterparty risk of the fund manager and risk of price volatility associated with the underlying securities of the fund.

~~These contracts contain counterparty credit risk because they are transacted directly with a counterparty and are not cleared on an exchange.~~ Cleco may be required to provide credit support or pay liquidated damages with respect to any open trading contracts that Cleco has entered into or may enter into in the future. The amount of credit support that Cleco may be required to provide at any point in the future is dependent on the amount of the initial contract, changes in the market price, changes in open contracts, 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 Power and Cleco Cajun’s FTRs are valued using MISO’s monthly auction prices. Forward seasonal periods are not included in every monthly auction; therefore, the average of the most recent seasonal auction prices is used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant value available comes from MISO auctions, which occur monthly in the Multi-Period Monthly Auction.

~~During the three months ended March 31, 2021, and the year ended December 31, 2020, Cleco did not experience any transfers between levels within the fair value hierarchy.~~

Commodity Contracts

On Cleco’s Condensed Consolidated Balance Sheets, the fair value of amounts associated with Cleco Cajun’s derivative instruments are offset with related cash collateral balances with the same counterparty. There were no offsetting amounts at December 31, 2020. 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, 2021, and December 31, 2020:

2735


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q


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

(1) Represents letters of credit by counterparties.

~~Cleco and Cleco Power’s~~(2) There were no offsetting amounts on or off Cleco’s Condensed Consolidated Balance ~~Sheets~~Sheet at ~~March 31, 2021, and~~ December 31, ~~2020:~~2020.


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
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS) BALANCE SHEET LINE ITEM AT MAR. 31, 2021 AT DEC. 31, 2020
Commodity-related contracts
FTRs
Current Energy risk management assets $ 2,140 $ 4,805
Current Energy risk management liabilities (1,117) (1,625)
Other commodity derivatives
Current Energy risk management assets 9,159 8,276
Non-current Other deferred charges 2,966 323
Current Energy risk management liabilities (325) (828)
Non-current Other deferred credits (103) (784)
Commodity-related contracts, net $ 12,720 $ 10,167

Cleco Power
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS) BALANCE SHEET LINE ITEM AT MAR. 31, 2021 AT DEC. 31, 2020
Commodity-related contracts
FTRs
Current Energy risk management assets $ 1,986 $ 4,337
Current Energy risk management liabilities (898) (1,121)
Commodity-related contracts, net $ 1,088 $ 3,216

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 ~~March 31,~~September 30, 2021, and 2020:


Cleco	Cleco							Cleco
		AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES							AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
			FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	INCOME STATEMENT LINE ITEM	2021		2020			(THOUSANDS)	INCOME STATEMENT LINE ITEM	2021		2020		2021		2020
Commodity-related contracts	Commodity-related contracts							Commodity-related contracts
FTRs(1)	FTRs(1)	Electric operations	$	7,444	$	1,396		FTRs(1)	Electric operations	$	1,959	$	3,013	$	11,167	$	6,262
FTRs(1)	FTRs(1)	Purchased power	(8,560)		(381)			FTRs(1)	Purchased power	(874)		(763)		(8,730)		(1,053)
Other commodity derivatives		Fuel used for electric generation	(4,710)		(7,108)
Natural gas derivatives								Natural gas derivatives	Fuel used for electric generation	107,687		20,307		165,584		22,515
Total	Total		$	(5,826)	$	(6,093)		Total		$	108,772	$	22,557	$	168,021	$	27,724

(1) For the three and nine months ended ~~March 31,~~September 30, 2021, unrealized ~~losses~~gains associated with FTRs for Cleco Power of ~~less than $0.1~~$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 ~~March 31,~~September 30, 2020, unrealized ~~losses~~gains associated with FTRs for Cleco Power of ~~$1.3~~$0.4 million and $1.4 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.


Cleco Power	Cleco Power							Cleco Power
		AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES							AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
			FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	INCOME STATEMENT LINE ITEM	2021		2020			(THOUSANDS)	INCOME STATEMENT LINE ITEM	2021		2020		2021		2020
Commodity-related contracts	Commodity-related contracts							Commodity-related contracts
FTRs(1)	FTRs(1)	Electric operations	$	7,444	$	1,396		FTRs(1)	Electric operations	$	1,959	$	3,013	$	11,167	$	6,262
FTRs(1)	FTRs(1)	Purchased power	(7,182)		(751)			FTRs(1)	Purchased power	(822)		(2,326)		(9,236)		(4,397)
Total	Total		$	262	$	645		Total		$	1,137	$	687	$	1,931	$	1,865

(1) For the three and nine months ended ~~March 31,~~September 30, 2021, unrealized ~~losses~~gains associated with FTRs of ~~less than $0.1~~$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
~~March 31,~~ September 30, 2020, unrealized ~~losses~~gains associated with FTRs of ~~$1.3~~$0.4 million and $1.4 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

The ~~total~~following table presents the volume of ~~FTRs that Cleco Power had~~commodity-related derivative contracts outstanding at ~~March 31,~~September 30, 2021, and December 31, 2020, ~~was 3.7 million MWh~~for Cleco and ~~9.5 million MWh, respectively. The total volume of FTRs that~~ Cleco had outstanding at March 31, 2021, and December 31, 2020, was 6.0 million MWh and 15.3 million MWh, respectively. The total volume of other commodity derivatives Cleco had outstanding at March 31, 2021, and December 31, 2020, was 138.2 million MMBtus and 73.0 million MMBtus, respectively.Power:

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 7 — Debt

~~At March 31,~~On May 21, 2021, Cleco ~~Power~~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 ~~$135.0 million of~~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 ~~facility at an all-in interest rate~~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 ~~1.35%.~~total capitalization. The borrowing costs under ~~the~~this agreement are currently ~~are~~ 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 December 2020, Cleco made a $15.8 million required contribution to the pension plan.~~ Based on the funding assumptions at December 31, 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 0no pension contributions will be required through 2025. ~~As of March 31, 2021,~~ Cleco ~~expects~~has not made, and does not expect to make, ~~$67.0 million in discretionary~~any contributions to the pension plan in ~~2021, which offsets future required contributions.~~2021.

Cleco Power is the plan sponsor and Support Group is the plan administrator. Benefits under the plan reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

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 ~~March 31,~~September 30, 2021, and 2020 were as follows:

PENSION BENEFITS OTHER BENEFITS
FOR THE THREE MONTHS ENDED MAR. 31, FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020 2021 2020
Components of periodic benefit costs
Service cost $ 2,528 $ 2,328 $ 595 $ 508
Interest cost 4,615 5,130 323 410
Expected return on plan assets (5,703) (6,245) 0 0
Amortizations
Prior period service cost (credit) 0 (15) 0 0
Net loss 4,763 3,672 384 339
Net periodic benefit cost $ 6,203 $ 4,870 $ 1,302 $ 1,257

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 months ended ~~March 31,~~September 30, 2021, was ~~$0.9 million.~~$1.8 million and $3.6 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and nine months ended ~~March 31,~~September 30, 2020, was ~~$0.4 million.~~$0.9 million and $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 ~~both~~ the three and nine months ended ~~March 31,~~September 30, 2021, was $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, 2020, was ~~$1.2 million.~~$1.1 million and $3.6 million, respectively. The current and non-current portions of

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


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current	$	4,463	$	4,463	Current	$	4,463	$	4,463
Non-current	Non-current	$	51,727	$	51,868	Non-current	$	51,306	$	51,868


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current	$	3,865	$	3,856	Current	$	3,865	$	3,865
Non-current	Non-current	$	40,616	$	40,734	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 ~~March 31,~~September 30, 2021, and 2020 were as follows:


		FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2021		2020			(THOUSANDS)	2021		2020		2021		2020
Components of periodic benefit costs	Components of periodic benefit costs						Components of periodic benefit costs
Service cost	Service cost	$	55	$	95		Service cost	$	59	$	100	$	174	$	300
Interest cost	Interest cost	625		733			Interest cost	634		733		1,903		2,199
Amortizations	Amortizations						Amortizations
Prior period service credit	Prior period service credit	(53)		(40)			Prior period service credit	(54)		(54)		(161)		(161)
Net loss	Net loss	1,016		757			Net loss	307		796		921		2,388
Net periodic benefit cost	Net periodic benefit cost	$	1,643	$	1,545		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 ~~March 31,~~September 30, 2021, was ~~$0.3 million.~~$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 ~~March 31,~~September 30, 2020, was $0.2 ~~million.~~million and $0.7 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 ~~March 31,~~September 30, 2021, and December 31, 2020, were as follows:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current	$	4,703	$	4,703	Current	$	4,703	$	4,703
Non-current	Non-current	$	91,818	$	92,522	Non-current	$	90,880	$	92,522


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Current	Current	$	711	$	711	Current	$	711	$	711
Non-current	Non-current	$	19,490	$	19,828	Non-current	$	19,240	$	19,828


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

401(k) Plan

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan expense for the three and nine months ended ~~March 31,~~September 30, 2021, and 2020 was as follows:


		FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2021		2020			(THOUSANDS)	2021		2020		2021		2020
401(k) Plan expense	401(k) Plan expense	$	2,759	$	3,256		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

subsidiaries for the three and nine months ended ~~March 31,~~September 30, 2021, and 2020 was as follows:


		FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2021		2020			(THOUSANDS)	2021		2020		2021		2020
401(k) Plan expense	401(k) Plan expense	$	1,380	$	1,662		401(k) Plan expense	$	1,185	$	996	$	3,511	$	3,491

Effective September 30, 2021, the 401(k) plan was amended to offer an enhanced 401(k) 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 401(k) benefits will receive a one-time contribution up to 30% of the employee’s 2021 base salary in accordance with IRS contribution limits. This resulted in a one-time benefit cost of $0.2 million included as an expense of the 401(k) plan.


Note 9 — Income Taxes

Effective Tax Rates

The following tables summarize the effective income tax rates for Cleco and Cleco Power for the three and nine months ended ~~March 31,~~September 30, 2021, and 2020:


Cleco	Cleco						Cleco
		FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
		2021		2020				2021		2020		2021		2020
Effective tax rate	Effective tax rate	(86.4)	%	19.8	%		Effective tax rate	20.3	%	29.4	%	12.4	%	26.8	%


Cleco Power	Cleco Power						Cleco Power
		FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
		2021		2020				2021		2020		2021		2020
Effective tax rate	Effective tax rate	(111.7)	%	22.0	%		Effective tax rate	1.0	%	33.4	%	(0.2)	%	28.8	%

For ~~the three months ended March 31, 2021,~~Cleco, the effective income tax ~~rates~~rate for ~~both Cleco~~the three and ~~Cleco Power~~nine months ended September 30, 2021, and 2020, were different than the federal statutory rate primarily due to the flow through of tax benefits, including AFUDC; the amortization of excess ~~ADIT.~~

~~For the three months ended March 31, 2020, the effective income tax rates for both Cleco and Cleco Power were different than the federal statutory rate primarily due to the~~ADIT; adjustment to record tax expense at the projected annual effective tax rate; ~~an adjustment~~adjustments for ~~increased allowable interest expense deduction~~tax returns as ~~a result of~~filed; and state tax expense.

For Cleco Power, the ~~CARES Act; permanent~~effective income tax ~~differences;~~rate for the ~~flowthrough~~three and nine months ended September 30, 2021, and 2020, were different than the federal statutory rate primarily due to the flow through of tax benefits, including AFUDC equity; amortization of excess ADIT; adjustment to record tax expense at the projected annual effective tax rate; adjustments for tax returns as filed; and state tax expense.

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. At ~~March 31,~~September 30, 2021, and December 31, 2020, Cleco and Cleco Power had 0no liability for uncertain tax positions or interest payable related to uncertain tax positions. Cleco estimates that it is reasonably possible that the balance of unrecognized tax benefits as of ~~March 31,~~September 30, 2021, for Cleco and Cleco Power would be unchanged in the next 12 months. The settlement of open tax years could involve the payment of


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q

additional taxes, and/or the recognition of tax benefits, which may have an effect on Cleco’s effective tax rate.

Income Tax Audits

Cleco participates in the IRS’s Compliance Assurance Process in which tax positions are examined and agreed upon prior to filing the federal ~~consolidated~~ tax return. While the statute of limitations remains open for tax years ~~2017,~~ 2018, 2019, and ~~2019,~~2020, the IRS has completed its review of ~~the year 2017~~years 2018 through ~~2019,~~2020, and these tax returns were filed consistent with the IRS’s review. The IRS has placed Cleco in the Bridge phase of the Compliance Assurance Process for ~~2020.~~the 2020 and 2021 tax years. In this phase, the IRS will not accept any disclosures, conduct any reviews, or provide any assurances. The IRS has accepted Cleco’s application for the Compliance Assurance Process for the 2022 tax year.

The state income tax years ~~2017,~~ 2018, 2019, and ~~2019~~2020 remain ~~subject~~open to examination by the Louisiana Department of Revenue.

Cleco classifies income tax penalties as a component of other expense. For the three and nine months ended ~~March 31,~~September 30, 2021, and 2020, 0no penalties were recognized.

CARES Act

In March 2020, the CARES Act was signed into law. The CARES Act includes tax relief provisions such as an alternative minimum tax credit refund, a five-year net operating loss carryback from years 2018 through 2020, and deferred payments of employer payroll taxes.

Cleco deferred $6.0 million in employer payroll tax payments for the period March 27, 2020, through December 31, 2020. Cleco will pay $3.0 million of the obligation by December 31, 2021, and the remaining $3.0 million by December 31, 2022.

Cleco Power deferred $3.6 million in employer payroll tax payments for the period March 27, 2020, through December 31, 2020. Cleco Power will pay $1.8 million of the obligation by December 31, 2021, and the remaining $1.8 million by December 31, 2022.

The CARES Act also includes modifications on the limitations of business interest for the ~~2020~~2019 and ~~2019~~2020 tax years. The modifications increase the allowable business interest deduction from 30% to 50% of adjusted taxable income. Cleco does not ~~anticipate having~~have any disallowed interest for the 2020 tax year.

Consolidated Appropriations Act of 2021

In December 2020, the Consolidated Appropriations Act of 2021 (CAA) was signed into law. The CAA includes COVID-19 tax relief and tax extender ~~provisions including~~provisions. These include extensions of time to begin construction on ~~and placed in-service~~certain solar assets ~~generating production tax credits and income tax credits,~~eligible for the Investment Tax Credit (ITC), 100% deductibility of business meals in 2021 and 2022, and an extension of the work opportunity tax credit. The ~~income tax credit~~ITC percentage has been increased for projects starting construction through 2023 and placed in service by the end of


~~CLECO~~
~~CLECO POWER~~						~~2021 1ST QUARTER FORM 10-Q~~

2025. Management does not expect the CAA to have a material impact on the Registrants.

~~American Jobs Act of 2021~~

~~On March 31, 2021,~~

Future Tax Reform

Cleco is monitoring the ~~President announced~~President’s current tax reform proposals, as well as the ~~American Jobs Act. This proposal includes a number of incentives~~current proposed infrastructure bill. The proposals have the potential to ~~encourage construction of certain transmission and energy storage property. The proposed act also proposes to raise~~increase the federal statutory corporate income tax rate from the current rate of 21% ~~to 28% and to introduce a minimum tax based on book income.~~. Currently, management is unable to predict the impact of the ~~proposed act~~proposals on the Registrants.

Cleco is also monitoring possible updates related to a decreased Louisiana state corporate income tax rate proposal and a Louisiana state sales tax proposal to be voted on in November 2021.


Note 10 — Disclosures about Segments

Cleco’s reportable segments are based on its method of internal reporting, which disaggregates business units by its first-tier subsidiary. Cleco’s reportable segments are Cleco Power and Cleco Cajun.

Each reportable segment engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s CEO, who is Cleco’s chief operating decision maker, with discrete financial information and, at least quarterly, present discrete financial information to Cleco Holdings’ and, in the case of Cleco Power, Cleco Power’s Boards of Managers. The reportable segment prepares budgets that are presented to and approved by

Cleco Holdings’ and, in the case of Cleco Power, Cleco Power’s Boards of Managers. The column shown as Other in the following tables includes the holding company, a shared services subsidiary, and an investment subsidiary. There were no changes to Cleco’s existing reportable segments.

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

Segment Information For The Three Months Ended Mar. 31,
2021 (THOUSANDS)
CLECO POWER CLECO CAJUN TOTAL SEGMENTS
Revenue
Electric operations $ 267,158 $ 101,507 $ 368,665
Other operations 18,626 33,039 51,665
Affiliate revenue 1,655 0 1,655
Electric customer credits (20,976) 0 (20,976)
Operating revenue, net $ 266,463 $ 134,546 $ 401,009
Net income $ 18,425 $ 14,481 $ 32,906
Add: Depreciation and amortization 42,076 11,653 (1) 53,729
Less: Interest income 642 3 645
Add: Interest charges 18,646 (152) 18,494
Add: Federal and state income tax (benefit) expense (9,723) 4,610 (5,113)
EBITDA $ 68,782 $ 30,589 $ 99,371
Additions to property, plant, and equipment $ 37,150 $ 2,313 $ 39,463
Equity investment in investee $ 7,322 $ 0 $ 7,322
Goodwill $ 1,490,797 $ 0 $ 1,490,797
Total segment assets $ 6,341,061 $ 1,031,541 $ 7,372,602
(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.

3140


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

2021 (THOUSANDS)
TOTAL SEGMENTS OTHER ELIMINATIONS TOTAL
Revenue
Electric operations $ 368,665 $ (2,420) $ 0 $ 366,245
Other operations 51,665 1 (1,940) 49,726
Affiliate revenue 1,655 27,156 (28,811) 0
Electric customer credits (20,976) 0 0 (20,976)
Operating revenue, net $ 401,009 $ 24,737 $ (30,751) $ 394,995
Depreciation and amortization $ 53,729 $ 4,435 (1) $ 0 $ 58,164
Interest income $ 645 $ 43 $ (41) $ 647
Interest charges $ 18,494 $ 15,440 $ (43) $ 33,891
Federal and state income tax (benefit) $ (5,113) $ (4,307) $ 0 $ (9,420)
Net income (loss) $ 32,906 $ (12,579) $ 0 $ 20,327
Additions to property, plant, and equipment $ 39,463 $ (805) $ 0 $ 38,658
Equity investment in investee $ 7,322 $ 0 $ 0 $ 7,322
Goodwill $ 1,490,797 $ 0 $ 0 $ 1,490,797
Total segment assets $ 7,372,602 $ 586,718 $ (168,044) $ 7,791,276
(1) Includes $2.4 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.


Segment Information for the Three Months Ended Sept. 30,
2021 (THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue
Electric operations	$	357,084	$	107,500		$	464,584
Other operations	22,779		35,158			57,937
Affiliate revenue	1,380		—			1,380
Electric customer credits	(691)		—			(691)
Operating revenue, net	$	380,552	$	142,658		$	523,210
Net income	$	56,561	$	86,744		$	143,305
Add: Depreciation and amortization	43,526		12,623		(1)	56,149
Less: Interest income	936		4			940
Add: Interest charges	18,509		1,117			19,626
Add: Federal and state income tax expense	548		29,888			30,436



EBITDA	$	118,208	$	130,368		$	248,576




(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.

2020 (THOUSANDS)
CLECO POWER CLECO CAJUN TOTAL SEGMENTS
Revenue
Electric operations $ 224,430 $ 89,147 $ 313,577
Other operations 15,764 30,961 46,725
Affiliate revenue 1,106 161 1,267
Electric customer credits (8,340) (153) (8,493)
Operating revenue, net $ 232,960 $ 120,116 $ 353,076
Net income $ 11,831 $ 19,535 $ 31,366
Add: Depreciation and amortization 43,677 10,900 (1) 54,577
Less: Interest income 954 155 1,109
Add: Interest charges 18,581 10 18,591
Add: Federal and state income tax expense 3,338 6,421 9,759
EBITDA $ 76,473 $ 36,711 $ 113,184
Additions to property, plant, and equipment $ 61,477 $ 3,341 $ 64,818
Equity investment in investees (2)
$ 9,072 $ 0 $ 9,072
Goodwill (2)
$ 1,490,797 $ 0 $ 1,490,797
Total segment assets (2)
$ 6,256,944 $ 1,029,812 $ 7,286,756
(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.
(2) Balances as of December 31, 2020.


2021 (THOUSANDS)	TOTAL SEGMENTS		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	464,584	$	(2,420)		$	—	$	462,164
Other operations	57,937		1			(2,217)		55,721
Affiliate revenue	1,380		32,116			(33,496)		—
Electric customer credits	(691)		—			—		(691)
Operating revenue, net	$	523,210	$	29,697		$	(35,713)	$	517,194
Depreciation and amortization	$	56,149	$	8,189	(1)	$	—	$	64,338
Interest income	$	940	$	43		$	(42)	$	941
Interest charges	$	19,626	$	15,044		$	(41)	$	34,629

Federal and state income tax expense	$	30,436	$	133		$	—	$	30,569
Net income (loss)	$	143,305	$	(23,396)		$	1	$	119,910




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

2020 (THOUSANDS)
TOTAL SEGMENTS OTHER ELIMINATIONS TOTAL
Revenue
Electric operations $ 313,577 $ (2,420) $ 0 $ 311,157
Other operations 46,725 1 (1,818) 44,908
Affiliate revenue 1,267 29,278 (30,545) 0
Electric customer credits (8,493) 0 0 (8,493)
Operating revenue, net $ 353,076 $ 26,859 $ (32,363) $ 347,572
Depreciation and amortization $ 54,577 $ 4,514 (1) $ (1) $ 59,090
Interest income $ 1,109 $ 100 $ (52) $ 1,157
Interest charges $ 18,591 $ 16,610 $ (52) $ 35,149
Federal and state income tax expense (benefit) $ 9,759 $ (8,197) $ 0 $ 1,562
Net income (loss) $ 31,366 $ (25,039) $ 1 $ 6,328
Additions to property, plant, and equipment $ 64,818 $ 806 $ 0 $ 65,624
Equity investment in investees (2)
$ 9,072 $ 0 $ 0 $ 9,072
Goodwill (2)
$ 1,490,797 $ 0 $ 0 $ 1,490,797
Total segment assets (2)
$ 7,286,756 $ 595,217 $ (156,404) $ 7,725,569
(1) Includes $2.4 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.
(2) Balances as of December 31, 2020.


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		—			1,506
Electric customer credits	(16,534)		—			(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.

3241


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS) 2021 2020
Net income $ 20,327 $ 6,328
Add: Depreciation and amortization 58,164 59,090
Less: Interest income 647 1,157
Add: Interest charges 33,891 35,149
Add: Federal and state income tax (benefit) expense (9,420) 1,562
Add: Other corporate costs and noncash items (1)
(2,944) 12,212
Total segment EBITDA $ 99,371 $ 113,184
(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA.


2020 (THOUSANDS)	TOTAL SEGMENTS		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	388,808	$	(2,420)		$	—	$	386,388
Other operations	49,106		1			(1,510)		47,597
Affiliate revenue	1,506		35,522			(37,028)		—
Electric customer credits	(16,534)		—			—		(16,534)
Operating revenue, net	$	422,886	$	33,103		$	(38,538)	$	417,451
Depreciation and amortization	$	51,612	$	4,497	(1)	$	—	$	56,109
Interest income	$	799	$	121		$	(10)	$	910
Interest charges	$	17,957	$	16,115		$	(12)	$	34,060
Federal and state income tax expense (benefit)	$	30,334	$	(5,260)		$	1	$	25,075
Net income (loss)	$	74,449	$	(14,154)		$	2	$	60,297




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


Segment Information for the Nine Months Ended Sept. 30,
2021 (THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue
Electric operations	$	887,191	$	300,415		$	1,187,606
Other operations	57,674		98,851			156,525
Affiliate revenue	4,259		—			4,259
Electric customer credits	(40,429)		244			(40,185)
Operating revenue, net	$	908,695	$	399,510		$	1,308,205
Net income	$	102,407	$	153,719		$	256,126
Add: Depreciation and amortization	126,534		36,614		(2)	163,148
Less: Interest income	2,404		10			2,414
Add: Interest charges	55,392		786			56,178
Add: Federal and state income tax (benefit) expense	(219)		52,561			52,342
EBITDA	$	281,710	$	243,670		$	525,380
Additions to property, plant, and equipment	$	202,940	$	5,904		$	208,844
Equity investment in investees (1)	$	3,822	$	—		$	3,822
Goodwill (1)	$	1,490,797	$	—		$	1,490,797
Total segment assets (1)	$	6,746,838	$	1,212,968		$	7,959,806
(1) Balances as of September 30, 2021. (2) 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.


2021 (THOUSANDS)	TOTAL SEGMENTS		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	1,187,606	$	(7,260)		$	(1)	$	1,180,345
Other operations	156,525		4			(5,752)		150,777
Affiliate revenue	4,259		85,392			(89,651)		—
Electric customer credits	(40,185)		—			—		(40,185)
Operating revenue, net	$	1,308,205	$	78,136		$	(95,404)	$	1,290,937
Depreciation and amortization	$	163,148	$	17,052	(2)	$	(1)	$	180,199
Interest income	$	2,414	$	100		$	(98)	$	2,416
Interest charges	$	56,178	$	45,732		$	(98)	$	101,812
Federal and state income tax expense (benefit)	$	52,342	$	(21,357)		$	—	$	30,985
Net income (loss)	$	256,126	$	(37,068)		$	1	$	219,059
Additions to property, plant, and equipment	$	208,844	$	1,116		$	—	$	209,960
Equity investment in investees (1)	$	3,822	$	19,099		$	(19,099)	$	3,822
Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (1)	$	7,959,806	$	685,410		$	(249,409)	$	8,395,807
(1) Balances as of September 30, 2021. (2) Includes $7.3 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


2020 (THOUSANDS)	CLECO POWER		CLECO CAJUN			TOTAL SEGMENTS
Revenue
Electric operations	$	752,925	$	273,836		$	1,026,761
Other operations	49,443		92,928			142,371
Affiliate revenue	3,852		204			4,056
Electric customer credits	(33,974)		(153)			(34,127)
Operating revenue, net	$	772,246	$	366,815		$	1,139,061
Net income	$	76,156	$	84,655		$	160,811
Add: Depreciation and amortization	125,541		33,385		(2)	158,926
Less: Interest income	2,498		269			2,767
Add: Interest charges	55,624		(353)			55,271
Add: Federal and state income tax expense	30,770		27,280			58,050
EBITDA	$	285,593	$	144,698		$	430,291
Additions to property, plant, and equipment	$	205,765	$	7,908		$	213,673
Equity investment in investees (1)	$	9,072	$	—		$	9,072
Goodwill (1)	$	1,490,797	$	—		$	1,490,797
Total segment assets (1)	$	6,256,944	$	1,029,812		$	7,286,756
(1) Balances as of December 31, 2020. (2) Includes $9.3 million of amortization of intangible assets and liabilities related to wholesale power supply agreements and $(6.9) million deferred lease revenue amortization as a result of the Cleco Cajun Transaction.


2020 (THOUSANDS)	TOTAL SEGMENTS		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	1,026,761	$	(7,260)		$	—	$	1,019,501
Other operations	142,371		2			(4,966)		137,407
Affiliate revenue	4,056		93,938			(97,994)		—
Electric customer credits	(34,127)		—			1		(34,126)
Operating revenue, net	$	1,139,061	$	86,680		$	(102,959)	$	1,122,782
Depreciation and amortization	$	158,926	$	13,575	(2)	$	1	$	172,502
Interest income	$	2,767	$	276		$	(79)	$	2,964
Interest charges	$	55,271	$	48,731		$	(79)	$	103,923
Federal and state income tax expense (benefit)	$	58,050	$	(17,821)		$	1	$	40,230
Net income (loss)	$	160,811	$	(51,019)		$	1	$	109,793
Additions to property, plant, and equipment	$	213,673	$	2,019		$	—	$	215,692
Equity investment in investees (1)	$	9,072	$	—		$	—	$	9,072
Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (1)	$	7,286,756	$	595,217		$	(156,404)	$	7,725,569
(1) Balances as of December 31, 2020. (2) Includes $7.3 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.


	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Net income	$	119,910	$	60,297	$	219,059	$	109,793
Add: Depreciation and amortization	64,338		56,109		180,199		172,502

Less: Interest income	941		910		2,416		2,964
Add: Interest charges	34,629		34,060		101,812		103,923
Add: Federal and state income tax expense	30,569		25,075		30,985		40,230
Add: Other corporate costs and noncash items (1)	71		(1,078)		(4,259)		6,807
Total segment EBITDA	$	248,576	$	173,553	$	525,380	$	430,291
(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA.


CLECO
CLECO POWER						2021 3RD QUARTER FORM 10-Q


Note 11 — Regulation and Rates

Provision for rate refund on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets consisted primarily of the following:


(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
FRP		$	2,089	$	1,786
TCJA		$	2,057	$	2,057
Cleco Katrina/Rita storm recovery charges	Cleco Katrina/Rita storm recovery charges	$	1,609	$	1,617	Cleco Katrina/Rita storm recovery charges	$	1,610	$	1,617
FERC audit	FERC audit	$	951	$	1,912	FERC audit	$	—	$	1,912
FRP						FRP	$	1,236	$	1,786
Site-specific industrial customer	Site-specific industrial customer	$	865	$	710	Site-specific industrial customer	$	611	$	710
TCJA						TCJA	$	2,057	$	2,057
Transmission ROE	Transmission ROE	$	595	$	595	Transmission ROE	$	—	$	595

Cleco Katrina/Rita Storm Recovery Charges

Prior to the repayment of the Cleco Katrina/Rita storm recovery bonds in March 2020, Cleco Katrina/Rita had the right to bill and collect storm restoration costs from Cleco Power’s customers to pay administrative fees, interest, and principal on the Cleco Katrina/Rita storm recovery bonds. In April 2021, after payments for all final administrative and winding up activities of Cleco Katrina/Rita were made, Cleco Katrina/Rita transferred its remaining restricted cash to Cleco Power. As a result, at September 30, 2021, Cleco Power had $1.6 million accrued for amounts to be used to benefit retail customers in a manner and timing as approved by the LPSC. For more information on Cleco Katrina/Rita’s storm recovery, see Note 1 — “Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

FERC Audit

As of September 30, 2021, $4.4 million, including accrued interest, was fully refunded to Cleco Power’s wholesale transmission customers as a combination of refund payments related to the FERC audit findings and a reduction in Attachment O of the MISO tariff and grandfathered agreement rates over the preceding 12 months. For more information about the FERC audit, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”

FRP

Prior to July 1, 2021, Cleco Power’s annual retail earnings ~~are~~were subject to an FRP ~~that was approved~~established by the LPSC in June 2014. ~~Under the terms of~~The 2014 FRP allowed Cleco ~~Power’s current FRP, Cleco~~ Power ~~is allowed~~ to earn a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, 60.0% of retail earnings between 10.9% and 11.75%, and all retail earnings over 11.75%, were required to be refunded to customers. In June 2019, Cleco Power filed an application with the LPSC for a new FRP. On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. Effective July 1, 2021, under the terms of the new FRP, Cleco Power is allowed to earn a target ROE of 9.5%, while providing the opportunity to earn up to 10.0%. Additionally, 60.0% of retail earnings between 10.0% and 10.5%, and all retail earnings over 10.5%, are required to be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC annually. ~~Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds are ultimately subject to LPSC approval.~~ Cleco Power’s FRP had a four-year term, which was set to expire in June 2018. As a result of the 2016 Merger, the FRP was extended an additional two years with an expiration of June 2020, and Cleco Power was required to file a newnext base rate case ~~in June 2019 with any change in rates~~is required to be ~~implemented in July 2020. On June 28, 2019, Cleco Power~~ filed ~~an application~~ with the LPSC for a new FRP. However, there has been a delay in the current base rate case. Cleco Power has responded to multiple sets of data requests relating to the new FRP. Unless the 2014 FRP were to be extended by order of the LPSC, the FRP rates established in July 2019 will remain in effect. Cleco Power anticipates new rates to be effective on ~~July 1, 2021. However, management is unable to determine the outcome of the base rate case relating to the new FRP.~~or before March 31, 2023.

Cleco Power filed its monitoring report for the 12 months ended June 30, 2019, on October 31, 2019, indicating that no refund was due. On September 22, 2021, the LPSC approved

the 2019 monitoring report indicating no refund was due. Monitoring reports for the 12 months ended June 30, 2020, and 2021, were not required due to the expiration of the 2014 FRP. The next monitoring report will be filed on or before October 31, 2022, for the 12 months ending June 30, 2022.

Cleco Power ~~has responded~~continued to ~~data requests relating to~~accrue the ~~2019 FRP monitoring report.~~

~~Cleco Power’s monitoring report also included a $1.2 million~~ annual cost of service savings ~~as a result of~~resulting from the 2016 Merger ~~Commitments. The~~Commitments through June 30, 2021. Beginning July 1, 2021, the annual cost of service savings ~~is not subject to the target ROE or any sharing mechanism. The cost of service savings is refunded annually~~are included in ~~September and will continue until~~ Cleco Power’s ~~next FRP is in effect, which is~~

~~expected on~~new retail rate plan. In September 2021, Cleco Power refunded $1.2 million for the period of July 1, ~~2021.~~2019, through June 30, 2020. At ~~March 31,~~September 30, 2021, Cleco Power had ~~$2.1~~$1.2 million accrued for the ~~estimated cost of service savings refunds.~~period July 1, 2020, through June 30, 2021, which is expected to be refunded to customers in September 2022.

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 reserve for the reduction in 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 flow through to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. In July 2019, the LPSC approved Cleco Power’s rate refund of $79.2 million, plus interest, for the reduction in the statutory federal tax rate for the period from January 2018 to June 2020. The refund was credited to customers over 12 months beginning August 1, 2019.

In July 2019, the LPSC approved Cleco Power’s motion to address the rate redesign and the regulatory liability for excess ADIT, resulting from the enactment of the TCJA, in Cleco Power’s current base rate case.

As a result of the delay in the rate case, on July 15, 2020, the LPSC approved Cleco Power’s application to extend the TCJA bill credits at the same rate as determined in the initial TCJA refund of approximately $7.0 million per month. The extension was for the period of August 2020 through November 2020. On November 13, 2020, Cleco Power again received approval for its application to extend the TCJA bill credits from ~~November 30,~~December 1, 2020, until such a time that the rate case ~~is complete.~~was completed. The $7.0 million monthly refund ~~will consist~~consisted of approximately $4.4 million, which iswas to be funded by the unprotected excess ADIT, and approximately $2.6 million, which is the change in the federal statutory corporate income tax rate from 35% to 21%. At ~~March 31,~~September 30, 2021, Cleco Power had $2.1 million accrued for the estimated federal tax-related benefits from the TCJA.

On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan which includes the settlement of the TCJA protected and unprotected excess ADIT. Effective July 1, 2021, all retail customers will continue receiving bill credits resulting from the TCJA. The ~~mechanism to refund~~target retail portion of the ~~remaining balance~~unprotected excess ADIT is approximately $2.5 million monthly and will be credited over a period of three years concluding on June 30, 2024. The retail portion of the protected excess ADIT will be ~~determined in~~credited until the full amount of the protected excess ADIT has been returned to Cleco Power’s ~~current LPSC base rate case.~~customers through bill credits. At ~~March 31,~~September 30, 2021, Cleco Power had ~~$337.4~~$313.9 million accrued for the excess ADIT, of which ~~$15.6~~$39.5 million is reflected in current regulatory liabilities. ~~Cleco Power’s current base rate case is ongoing and management is unable to determine its outcome.~~

~~Cleco Katrina/Rita Storm Recovery Charges~~

Prior to the repayment of the storm recovery bonds in March 2020, Cleco Katrina/Rita had the right to bill and collect storm restoration costs from Cleco Power’s customers to pay administrative fees, interest, and principal on the Cleco Katrina/Rita storm recovery bonds. Amounts remaining after the final principal and interest payments on the storm recovery bonds and payments for final administrative and winding up

3344


CLECO
CLECO POWER						2021 ~~1ST~~3RD QUARTER FORM 10-Q

activities are subject to refund. For more information on Cleco Katrina/Rita’s restricted cash, see Note 1 — “Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

~~FERC Audit~~

~~For more information about the FERC audit, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — FERC Audit.”~~

Transmission ROE

NaN complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco Power, may collect under the MISO tariff. The complaints covered the period December 2013 through May 2016. As of ~~March 31,~~September 30, 2021, ~~Cleco Power had $0.6 million accrued for~~ the overcollection due to the change in ~~ROE.~~ROE was fully refunded. For more information on the ROE complaints, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution could be implemented to mitigate reliability issues. One mitigating factor identified was Cleco Power’s Terrebonne to Bayou Vista Transmission project, which was completed in April 2019. Cleco Power received a termination notice, effective April 30, 2019, and filed paperwork to withdraw the filed Attachment Y. While operating as an SSR unit, Cleco Power received monthly payments that included recovery of expenses, including capital expenditures, related to the operations of Teche Unit 3. Additionally, MISO allocated SSR costs to the load serving entities that required the operation of the SSR unit, including Cleco Power. These payments and cost allocations were finalized as part of a MISO SSR settlement approved in December 2018. Cleco Power operated Teche Unit 3 as an SSR unit from April 2017 until April 2019.

On September 7, 2021, Cleco Power ~~expects~~made a filing with the LPSC giving notice of its intent to consider retiring Teche Unit 3, ~~to continue to~~barring any violations of specific applicable reliability standards. Assuming no violations are found, Teche Unit 3 could be ~~available to run and to continue to offer the unit into MISO through 2024, barring a significant unit failure.~~retired in 2022. At ~~March 31,~~September 30, 2021, Cleco Power had ~~$6.1~~$4.3 million accrued for the net capital refund for capital expenditures paid for by third parties while operating under the SSR agreement. ~~As part of the settlement, one of the load serving entities agreed to reimburse Cleco Power for a portion of their capital refund.~~ The capital refund is expected to be paid in ~~late 2021.~~early 2022.


Note 12 — Variable Interest Entities

Cleco and Cleco Power apply the equity method of accounting to report the investment in Oxbow in the consolidated financial statements. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in investee on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Oxbow is owned 50% by Cleco Power and 50% by SWEPCO. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco Power’s current assessment of its maximum exposure to loss related to Oxbow at ~~March 31,~~September 30, 2021, consisted of its equity investment of ~~$7.3~~$3.8 million. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, Cleco Power ~~received $1.8 million from Oxbow as~~had a return of equity ~~investment.~~investment from Oxbow of $5.3 million.

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


INCEPTION TO DATE (THOUSANDS)	INCEPTION TO DATE (THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Purchase price	Purchase price	$	12,873	$	12,873	Purchase price	$	12,873	$	12,873
Cash contributions	Cash contributions	6,399		6,399		Cash contributions	6,399		6,399
Dividends		(11,950)		(10,200)
Distributions						Distributions	(15,450)		(10,200)
Total equity investment in investee	Total equity investment in investee	$	7,322	$	9,072	Total equity investment in investee	$	3,822	$	9,072

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco Power’s maximum exposure to loss related to its investment in Oxbow:


(THOUSANDS)	(THOUSANDS)	AT MAR. 31, 2021		AT DEC. 31, 2020		(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Oxbow’s net assets/liabilities	Oxbow’s net assets/liabilities	$	14,645	$	18,145	Oxbow’s net assets/liabilities	$	7,645	$	18,145
Cleco Power’s 50% equity	Cleco Power’s 50% equity	$	7,322	$	9,072	Cleco Power’s 50% equity	$	3,822	$	9,072
Cleco Power’s maximum exposure to loss	Cleco Power’s maximum exposure to loss	$	7,322	$	9,072	Cleco Power’s maximum exposure to loss	$	3,822	$	9,072

The following table contains summarized financial information for Oxbow:


		FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2021		2020			(THOUSANDS)	2021		2020		2021		2020
Operating revenue	Operating revenue	$	1,999	$	1,882		Operating revenue	$	1,486	$	2,275	$	5,113	$	33,266
Operating expenses	Operating expenses	1,999		1,882			Operating expenses	1,486		2,275		5,113		33,266
Income before taxes	Income before taxes	$	0	$	0		Income before taxes	$	—	$	—	$	—	$	—

Prior to June 30, 2020, DHLC mined lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves ~~are~~were intended to be used to provide fuel to the Dolet Hills Power Station. Under the Amended Lignite Mining Agreement, DHLC bills Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs. Oxbow bills Cleco Power its proportionate share of incurred costs related to mineral rights and land leases. In June 2020, management decided to retire the 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. As of September 30, 2021, Cleco Power estimates $1.8 million of its proportionate share of costs will be billed by Oxbow prior to the closure of the Dolet Hills Power Station. For more information on DHLC and the Oxbow mine, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

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


Note 13 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, 4 actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and 3 actions were filed in the Civil District Court for Orleans Parish, Louisiana. The petitions in each action generally alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an

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

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

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

•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

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~~FERC Audit

FRP

Prior to July 1, 2021, Cleco Power’s annual retail earnings were subject to an FRP established by the LPSC in June 2014. The 2014 FRP allowed Cleco Power to earn a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, 60.0% of retail earnings between 10.9% and 11.75%, and all retail earnings over 11.75%, were required to be refunded to customers. In June 2019, Cleco Power filed an application with the LPSC for a new FRP. On June 16, 2021, the LPSC approved Cleco Power’s new retail rate plan. Effective July 1, 2021, under the terms of the new FRP, Cleco Power is allowed to earn a target ROE of 9.5%, while providing the opportunity to earn up to 10.0%. Additionally, 60.0% of retail earnings between 10.0% and 10.5%, and all retail earnings over 10.5%, are required to be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC annually. Cleco Power’s next base rate case is required to be filed with the LPSC on or before March 31, 2023.

Cleco Power filed its monitoring report for the 12 months ended June 30, 2019, on October 31, 2019, indicating that no refund was due. On September 22, 2021, the LPSC approved

Cleco Power continued to accrue the annual cost of service savings resulting from the 2016 Merger Commitments through June 30, 2021. Beginning July 1, 2021, the annual cost of service savings are included in Cleco Power’s new retail rate plan. In September ~~2015,~~2021, Cleco Power refunded $1.2 million for the period of July 1, 2019, through June 30, 2020. At September 30, 2021, Cleco Power had $1.2 million accrued for the period July 1, 2020, through June 30, 2021, which is expected to be refunded to customers in September 2022.

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. As a ~~potential customer sued~~result of the tax rate reduction, on January 1, 2018, Cleco Power began accruing an estimated reserve for ~~failure~~the reduction in the federal statutory corporate income tax rate. In February 2018, the LPSC directed utilities, including Cleco Power, to ~~fully perform an alleged verbal agreement~~provide considerations of the appropriate manner to ~~lend or otherwise fund~~flow through to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. In July 2019, the LPSC approved Cleco Power’s rate refund of $79.2 million, plus interest, for the reduction in the statutory federal tax rate for the period from January 2018 to June 2020. The refund was credited to customers over 12 months beginning August 1, 2019.

As a result of the delay in the rate case, on July 15, 2020, the LPSC approved Cleco Power’s application to extend the TCJA bill credits at the same rate as determined in the initial TCJA refund of approximately $7.0 million per month. The extension was for the period of August 2020 through November 2020. On November 13, 2020, Cleco Power again received approval for its ~~startup costs~~application to extend the ~~extent~~TCJA bill credits from December 1, 2020, until such a time that the rate case was completed. The $7.0 million monthly refund consisted 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~~$4.4 million, which ~~Gulf Coast needed~~was to ~~construct a cotton spinning facility near Bunkie, Louisiana. According to~~be funded by the ~~petition filed by Gulf Coast~~unprotected excess ADIT, and approximately $2.6 million, which is the change in the 12th ~~Judicial District Court~~federal statutory corporate income tax rate from 35% to 21%. At September 30, 2021, Cleco Power had $2.1 million accrued for ~~Avoyelles Parish, Louisiana (the “District Court”),~~the estimated federal tax-related benefits from the TCJA.

On June 16, 2021, the LPSC approved Cleco ~~made such promises~~Power’s new retail rate plan which includes the settlement of ~~funding assistance~~the TCJA protected and unprotected excess ADIT. Effective July 1, 2021, all retail customers will continue receiving bill credits resulting from the TCJA. The target retail portion of the unprotected excess ADIT is approximately $2.5 million monthly and will be credited over a period of three years concluding on June 30, 2024. The retail portion of the protected excess ADIT will be credited until the full amount of the protected excess ADIT has been returned to Cleco Power’s customers through bill credits. At September 30, 2021, Cleco Power had $313.9 million accrued for the excess ADIT, of which $39.5 million is reflected 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.current regulatory liabilities.

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Transmission ROE

NaN complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco Power, may collect under the MISO tariff. The complaints covered the period December 2013 through May 2016. As of September 30, 2021, the overcollection due to the change in ROE was fully refunded. For more information on the ROE complaints, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

SSR

In September 2016, Cleco Power filed an ~~Exception~~Attachment Y with MISO requesting retirement of ~~No Cause~~Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of ~~Action arguing~~Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution could be implemented to mitigate reliability issues. One mitigating factor identified was Cleco Power’s Terrebonne to Bayou Vista Transmission project, which was completed in April 2019. Cleco Power received a termination notice, effective April 30, 2019, and filed paperwork to withdraw the ~~case should be dismissed. The District Court denied Cleco’s exception~~filed Attachment Y. While operating as an SSR unit, Cleco Power received monthly payments that included recovery of expenses, including capital expenditures, related to the operations of Teche Unit 3. Additionally, MISO allocated SSR costs to the load serving entities that required the operation of the SSR unit, including Cleco Power. These payments and cost allocations were finalized as part of a MISO SSR settlement approved in December ~~2015, after considering briefs and arguments. In January 2016,~~2018. Cleco ~~appealed the District Court’s denial of its exception by~~Power operated Teche Unit 3 as an SSR unit from April 2017 until April 2019.

On September 7, 2021, Cleco Power made a filing with the ~~Third Circuit Court~~LPSC giving notice of ~~Appeal. In June 2016,~~its intent to consider retiring Teche Unit 3, barring any violations of specific applicable reliability standards. Assuming no violations are found, Teche Unit 3 could be retired in 2022. At September 30, 2021, Cleco Power had $4.3 million accrued for the ~~Third Circuit Court of Appeal denied~~net capital refund for capital expenditures paid for by third parties while operating under the ~~request~~SSR agreement. The capital refund is expected 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 participatingbe paid 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.early 2022.

~~Dispute with Saulsbury Industries~~

~~In October 2018,~~


Note 12 — Variable Interest Entities

Cleco and Cleco Power ~~sued Saulsbury Industries, Inc.,~~apply the ~~former general contractor for~~equity method of accounting to report the ~~St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries, Inc.’s failure to complete~~investment in Oxbow in the ~~St. Mary Clean Energy Center project~~consolidated financial statements. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in investee on ~~time~~Cleco and ~~for costs incurred~~Cleco Power’s Condensed Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Oxbow is owned 50% by Cleco Power and 50% by SWEPCO. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco Power’s current assessment of its maximum exposure to loss related to Oxbow at September 30, 2021, consisted of its equity investment of $3.8 million. During the nine months ended September 30, 2021, Cleco Power had a return of equity investment from Oxbow of $5.3 million.

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


INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Distributions	(15,450)		(10,200)
Total equity investment in investee	$	3,822	$	9,072

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco Power’s maximum exposure to loss related to its investment in Oxbow:


(THOUSANDS)	AT SEPT. 30, 2021		AT DEC. 31, 2020
Oxbow’s net assets/liabilities	$	7,645	$	18,145
Cleco Power’s 50% equity	$	3,822	$	9,072
Cleco Power’s maximum exposure to loss	$	3,822	$	9,072

The following table contains summarized financial information for Oxbow:


	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2021		2020		2021		2020
Operating revenue	$	1,486	$	2,275	$	5,113	$	33,266
Operating expenses	1,486		2,275		5,113		33,266
Income before taxes	$	—	$	—	$	—	$	—

Prior to June 30, 2020, DHLC mined lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves were intended to be used to provide fuel to the Dolet Hills Power Station. Under the Amended Lignite Mining Agreement, DHLC bills Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs. Oxbow bills Cleco Power its proportionate share of incurred costs related to mineral rights and land leases. In June 2020, management decided to retire the Dolet Hills Power Station. On October 6, 2020, Cleco Power and SWEPCO made a ~~replacement general contractor. The action was~~joint filing with the LPSC seeking authorization to close the Oxbow mine. As of September 30, 2021, Cleco Power estimates $1.8 million of its proportionate share of costs will be billed by Oxbow prior to the closure of the Dolet Hills Power Station. For more information on DHLC and the Oxbow mine, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

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


Note 13 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, 4 actions were filed in the Ninth Judicial District Court for Rapides Parish, ~~No. 263339. Saulsbury Industries, Inc. removed~~Louisiana and 3 actions were filed in the ~~case to the U.S.~~Civil 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~~Orleans Parish, Louisiana. The petitions 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.~~each action generally 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 Judgeamong other things, that the ~~case instituted~~members of Cleco Corporation’s Board of Directors breached their fiduciary duties 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 Corporationand Cleco Power LLC~~ ~~in the 16~~th 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 16~~th 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~~

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. In March 2020, Cleco Power received a notice of audit from the LPSC for the period of January 2018 to December 2019. The total amount of fuel expense included in the audit is $565.8 million. Cleco Power has responded to several sets of data requests from the LPSC. Cleco Power has FAC filings for January 2020 and thereafter that remain subject to audit. 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.

~~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. In March 2020, Cleco Power received notice from the LPSC of the EAC audit for the period of January 2018 to December 2019. The total amount of environmental expense included in the audit is $26.2 million. Cleco Power has responded to several sets of data requests from the LPSC. Cleco Power has EAC filings for January 2020 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of environmental cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

~~Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of Mercury and Air Toxics Standards (MATS). These expenses~~things, conducting an

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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.