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 ~~June~~September 30, 2023

☐ 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 no 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						2023 ~~2ND~~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						2023 ~~2ND~~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 SOFR 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.~~2014

Acadia Unit 1			Cleco Power’s 580-MW, natural gas-fired, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2			Entergy Louisiana’s 580-MW, natural gas-fired, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power

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



Big Cajun II			Cleco Cajun’s generating facility located in New Roads, Louisiana consisting of Unit 1, Unit 2, and Unit 3. Cleco Cajun has a 58% ownership interest in the capacity of Unit 3.3






CCR			Coal combustion by-products or residual


CEO			Chief Executive Officer
CFO			Chief Financial Officer
CIP			Critical Infrastructure Protection
Cleco			Cleco Holdings and its subsidiaries
Cleco Cajun			Cleco Cajun LLC, a wholly owned subsidiary of Cleco Holdings, and its subsidiaries
Cleco Cajun Sale Group			Cleco Cajun’s business for which Cleco Holdings’ management and Board of Managers have committed to a plan to divest through a sale to one or more parties, subject to Board of Managers approval

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 Partners			Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by 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, and its subsidiaries
Cleco Securitization I			Cleco Securitization I LLC, a special-purpose, wholly owned subsidiary of Cleco Power

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.~~Generating
Cottonwood Plant			Cleco Cajun’s 1,263-MW, natural gas-fired, combined cycle 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.~~2025
Coughlin			Cleco Power’s 775-MW, natural gas-fired, combined cycle power plant located in St. Landry, Louisiana
COVID-19			Coronavirus disease 2019, including any variant thereof, and the related global outbreak that was subsequently declared a pandemic by the World Health Organization in March 2020



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


Dolet Hills			A facility consisting of Dolet Hills Power Station, the Dolet Hills mine, and the Oxbow mine
Dolet Hills Power Station			A 650-MW lignite-fired, steam generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of the Dolet Hills Power Station. The Dolet Hills Power Station was retired on December 31, ~~2021.~~2021
EAC			Environmental Adjustment Clause

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



Entergy Gulf States			Entergy Gulf States Louisiana, LLC


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


ABBREVIATION OR ACRONYM			DEFINITION
Entergy Louisiana			Entergy Louisiana, LLC
EPA			U.S. Environmental Protection Agency

ESG			Environmental, Social, and Governance

FAC			Fuel Adjustment Clause
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
Fitch			Fitch Ratings, a credit rating agency
FTR			Financial Transmission Right
FRP			Formula Rate Plan
GAAP			Generally Accepted Accounting Principles in the U.S.
GHG			Greenhouse gas

IRA of 2022			Federal tax legislation commonly referred to as the Inflation Reduction Act of 2022


IRS			Internal Revenue Service

kWh			Kilowatt-hour(s)



LIBOR			London Interbank Offered Rate


LPSC			Louisiana Public Service Commission


Madison Unit 3			A 641-MW petroleum coke/coal-fired, steam generating unit at Cleco Power’s plant site in Boyce, Louisiana

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

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)


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.







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. Perryville Energy Partners, L.L.C. was dissolved effective September 8, ~~2021.~~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

Rodemacher Unit 2			A 523-MW coal-fired, steam generating unit at Cleco Power’s plant site in Boyce, Louisiana. Cleco Power has a 30% ownership interest in the capacity of Rodemacher Unit 2.2
ROE			Return on Equity


RTO			Regional Transmission Organization
S&P			S&P Global Ratings, a division of S&P Global Inc, a credit rating agency

SEC			U.S. Securities and Exchange Commission


SERC			SERC Reliability Corporation
SERP			Supplemental Executive Retirement Plan


SOFR			Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York
South Central Generating			South Central Generating LLC, formerly NRG South Central Generating LLC, a wholly owned subsidiary of Cleco Cajun






Storm Recovery Property			Storm Recovery Property as defined in the financing order issued by the LPSC in April 2022, which includes the right to impose, bill, charge, collect, and receive unamortized storm recovery costs from Cleco Power’s retail ~~customers.~~customers
Support Group			Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO			Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
TCJA			Federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
Teche Unit 3			A 359-MW natural gas-fired, steam generating unit at Cleco Power’s plant site in Baldwin, Louisiana


CLECO
CLECO POWER						2023 ~~2ND~~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:

•the uncertainty in the timing and ultimate outcome of the divestiture of the Cleco Cajun Sale Group,

•resolution of pending, upcoming, or future rate cases and related litigation, formula rate proceedings, and related negotiations, as well as delays in cost recovery resulting from these proceedings,

•changes in environmental laws, regulations, decisions and policies, including present and potential environmental remediation costs, restrictions on GHG emissions, possible effects on Cleco’s generation resources, or prohibitions or restrictions on new or existing services, and Cleco’s compliance with these matters,

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

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

•economic, regulatory, or workforce impacts related to pandemics, epidemics, or other outbreaks,

•economic impacts related to conflicts and hostilities, including the current armed conflict in Ukraine and the Middle East,

•the possibility of stranded costs with respect to assets that may be retired as a result of new climate legislation or regulations, technological advances, a shift in demand, or legal action, and Cleco Power’s ability to recover stranded costs associated with these events,

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

•the ability of Cleco’s customers to pay their utility bills on time due to costs related to volatile fuel prices, severe weather recoveries, or the costs of other events that are passed through to Cleco Power’s customers,

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

•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 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 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 and/or key initiatives, 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,

•adverse developments affecting financial institutions, including bank failures,

•changes to federal income tax laws, regulations, and interpretive guidance, including the IRA of 2022,

•failure to meet expectations and report progress on ESG initiatives and GHG targets, as well as the increased focus on and activism related to ESG, which could limit Cleco’s access to capital and/or financing,

•declining energy demand related to customer energy efficiency, conservation measures, technological advancements, or increased distributed generation, or changes in customers’ operating or business models,


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

•industry and geographic concentrations of Cleco’s counterparties, suppliers, and 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 fuel, or with whom Cleco enters into derivative contracts,


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

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

•the outcome of legal and regulatory 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 costs, 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, and

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

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

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 II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and Part I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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						2023 ~~2ND~~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, 2022. 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						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Statements of Income (Unaudited)	Condensed Consolidated Statements of Income (Unaudited)					Condensed Consolidated Statements of Income (Unaudited)
		FOR THE THREE MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Operating revenue	Operating revenue					Operating revenue
Electric operations	Electric operations	$	260,789	$	366,194	Electric operations	$	361,838	$	478,733
Other operations	Other operations	24,742		18,688		Other operations	31,984		24,759

Gross operating revenue	Gross operating revenue	285,531		384,882		Gross operating revenue	393,822		503,492
Electric customer credits	Electric customer credits	(736)		(129)		Electric customer credits	24		(6,728)
Operating revenue, net	Operating revenue, net	284,795		384,753		Operating revenue, net	393,846		496,764
Operating expenses	Operating expenses					Operating expenses
Fuel used for electric generation	Fuel used for electric generation	62,800		149,658		Fuel used for electric generation	125,372		107,633
Purchased power	Purchased power	40,845		51,412		Purchased power	44,803		111,764
Other operations and maintenance	Other operations and maintenance	60,754		55,856		Other operations and maintenance	62,985		62,213
Depreciation and amortization	Depreciation and amortization	45,768		46,253		Depreciation and amortization	50,055		46,323
Taxes other than income taxes	Taxes other than income taxes	15,249		12,307		Taxes other than income taxes	16,746		15,611

Regulatory disallowance						Regulatory disallowance	—		13,841
Total operating expenses	Total operating expenses	225,416		315,486		Total operating expenses	299,961		357,385
Operating income	Operating income	59,379		69,267		Operating income	93,885		139,379
Interest income	Interest income	673		1,066		Interest income	1,283		1,766
Allowance for equity funds used during construction	Allowance for equity funds used during construction	1,574		808		Allowance for equity funds used during construction	1,617		965

Other expense, net	Other expense, net	(789)		(8,470)		Other expense, net	(2,404)		(4,952)
Interest charges	Interest charges					Interest charges
Interest charges, net	Interest charges, net	41,317		35,501		Interest charges, net	42,212		38,169
Allowance for borrowed funds used during construction	Allowance for borrowed funds used during construction	(549)		(354)		Allowance for borrowed funds used during construction	(178)		(463)
Total interest charges	Total interest charges	40,768		35,147		Total interest charges	42,034		37,706
Income from continuing operations before income taxes	Income from continuing operations before income taxes	20,069		27,524		Income from continuing operations before income taxes	52,347		99,452
Federal and state income tax benefit		(2,989)		(3,577)
Federal and state income tax (benefit) expense						Federal and state income tax (benefit) expense	(246,494)		9,220
Income from continuing operations, net of income taxes	Income from continuing operations, net of income taxes	23,058		31,101		Income from continuing operations, net of income taxes	298,841		90,232
Income (loss) from discontinued operations, net of income taxes		24,272		(29,738)
Loss from discontinued operations, net of income taxes						Loss from discontinued operations, net of income taxes	(142,729)		(21,860)
Net income	Net income	$	47,330	$	1,363	Net income	$	156,112	$	68,372
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)	Condensed Consolidated Statements of Comprehensive Income (Unaudited)					Condensed Consolidated Statements of Comprehensive Income (Unaudited)
		FOR THE THREE MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Net income	Net income	$	47,330	$	1,363	Net income	$	156,112	$	68,372
Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax					Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $156 in 2023 and tax expense of $2 in 2022)		(423)		7
Postretirement benefits (loss) gain (net of tax benefit of $156 in 2023 and tax expense of $4 in 2022)						Postretirement benefits (loss) gain (net of tax benefit of $156 in 2023 and tax expense of $4 in 2022)	(422)		10

Total other comprehensive (loss) income, net of tax	Total other comprehensive (loss) income, net of tax	(423)		7		Total other comprehensive (loss) income, net of tax	(422)		10
Comprehensive income, net of tax	Comprehensive income, net of tax	$	46,907	$	1,370	Comprehensive income, net of tax	$	155,690	$	68,382
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Statements of Income (Unaudited)	Condensed Consolidated Statements of Income (Unaudited)					Condensed Consolidated Statements of Income (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Operating revenue	Operating revenue					Operating revenue
Electric operations	Electric operations	$	554,717	$	659,871	Electric operations	$	916,554	$	1,138,604
Other operations	Other operations	52,046		37,774		Other operations	84,030		62,533

Gross operating revenue	Gross operating revenue	606,763		697,645		Gross operating revenue	1,000,584		1,201,137
Electric customer credits	Electric customer credits	(1,386)		(265)		Electric customer credits	(1,362)		(6,992)
Operating revenue, net	Operating revenue, net	605,377		697,380		Operating revenue, net	999,222		1,194,145
Operating expenses	Operating expenses					Operating expenses
Fuel used for electric generation	Fuel used for electric generation	181,411		250,239		Fuel used for electric generation	389,216		191,985
Purchased power	Purchased power	81,283		101,822		Purchased power	126,086		213,586
Other operations and maintenance	Other operations and maintenance	118,275		108,022		Other operations and maintenance	181,260		170,233
Depreciation and amortization	Depreciation and amortization	98,557		93,451		Depreciation and amortization	148,612		139,774
Taxes other than income taxes	Taxes other than income taxes	32,036		25,677		Taxes other than income taxes	48,782		41,288

Regulatory disallowance						Regulatory disallowance	—		13,841
Total operating expenses	Total operating expenses	511,562		579,211		Total operating expenses	893,956		770,707
Operating income	Operating income	93,815		118,169		Operating income	105,266		423,438
Interest income	Interest income	1,940		1,809		Interest income	3,223		3,575
Allowance for equity funds used during construction	Allowance for equity funds used during construction	2,806		1,740		Allowance for equity funds used during construction	4,423		2,704

Other expense, net	Other expense, net	(252)		(8,747)		Other expense, net	(2,656)		(13,699)
Interest charges	Interest charges					Interest charges
Interest charges, net	Interest charges, net	81,322		68,525		Interest charges, net	123,533		106,694
Allowance for borrowed funds used during construction	Allowance for borrowed funds used during construction	(1,066)		(737)		Allowance for borrowed funds used during construction	(1,244)		(1,200)
Total interest charges	Total interest charges	80,256		67,788		Total interest charges	122,289		105,494
Income from continuing operations before income taxes		18,053		45,183
Federal and state income tax benefit		(3,154)		(11,110)
(Loss) income from continuing operations before income taxes						(Loss) income from continuing operations before income taxes	(12,033)		310,524
Federal and state income tax (benefit) expense						Federal and state income tax (benefit) expense	(121,160)		30,472
Income from continuing operations, net of income taxes	Income from continuing operations, net of income taxes	21,207		56,293		Income from continuing operations, net of income taxes	109,127		280,052
(Loss) income from discontinued operations, net of income taxes		(77,899)		100,814
Net (loss) income		$	(56,692)	$	157,107
Loss from discontinued operations, net of income taxes						Loss from discontinued operations, net of income taxes	(9,707)		(54,573)
Net income						Net income	$	99,420	$	225,479
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)	Condensed Consolidated Statements of Comprehensive Income (Unaudited)					Condensed Consolidated Statements of Comprehensive Income (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Net (loss) income		$	(56,692)	$	157,107
Net income						Net income	$	99,420	$	225,479
Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax					Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $311 in 2023 and tax expense of $8 in 2022)		(845)		21
Postretirement benefits (loss) gain (net of tax benefit of $466 in 2023 and tax expense of $11 in 2022)						Postretirement benefits (loss) gain (net of tax benefit of $466 in 2023 and tax expense of $11 in 2022)	(1,267)		31

Total other comprehensive (loss) income, net of tax	Total other comprehensive (loss) income, net of tax	(845)		21		Total other comprehensive (loss) income, net of tax	(1,267)		31
Comprehensive (loss) income, net of tax		$	(57,537)	$	157,128
Comprehensive income, net of tax						Comprehensive income, net of tax	$	98,153	$	225,510
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Balance Sheets (Unaudited)	Condensed Consolidated Balance Sheets (Unaudited)					Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	71,857	$	48,041	Cash and cash equivalents	$	181,908	$	54,541
Restricted cash and cash equivalents	Restricted cash and cash equivalents	22,671		23,549		Restricted cash and cash equivalents	6,356		23,549
Customer accounts receivable (less allowance for credit losses of $1,252 in 2023 and $1,147 in 2022)		43,622		72,646
Customer accounts receivable (less allowance for credit losses of $2,248 in 2023 and $1,147 in 2022)						Customer accounts receivable (less allowance for credit losses of $2,248 in 2023 and $1,147 in 2022)	72,778		72,646
Accounts receivable - affiliate	Accounts receivable - affiliate	19,964		14,611		Accounts receivable - affiliate	22,306		14,613
Other accounts receivable	Other accounts receivable	30,625		35,406		Other accounts receivable	28,975		38,332

Taxes receivable						Taxes receivable	80,273		—
Unbilled revenue	Unbilled revenue	50,856		46,040		Unbilled revenue	43,642		46,040
Fuel inventory, at average cost	Fuel inventory, at average cost	106,734		57,078		Fuel inventory, at average cost	63,128		57,078
Materials and supplies, at average cost	Materials and supplies, at average cost	134,636		116,943		Materials and supplies, at average cost	133,842		116,943
Energy risk management assets	Energy risk management assets	7,672		2,570		Energy risk management assets	27,107		49,321
Accumulated deferred fuel	Accumulated deferred fuel	5,050		57,881		Accumulated deferred fuel	20,241		57,881
Cash surrender value of company-/trust-owned life insurance policies	Cash surrender value of company-/trust-owned life insurance policies	54,728		52,859		Cash surrender value of company-/trust-owned life insurance policies	52,926		52,859
Prepayments	Prepayments	20,500		16,623		Prepayments	17,785		16,623
Regulatory assets	Regulatory assets	47,888		47,173		Regulatory assets	35,477		47,173
Assets held for sale - discontinued operations	Assets held for sale - discontinued operations	222,548		191,609		Assets held for sale - discontinued operations	196,399		135,430
Other current assets	Other current assets	876		838		Other current assets	897		838
Total current assets	Total current assets	840,227		783,867		Total current assets	984,040		783,867
Property, plant, and equipment	Property, plant, and equipment					Property, plant, and equipment
Property, plant, and equipment	Property, plant, and equipment	4,694,757		4,601,977		Property, plant, and equipment	4,732,687		4,604,039
Accumulated depreciation	Accumulated depreciation	(838,302)		(752,184)		Accumulated depreciation	(879,236)		(752,376)
Net property, plant, and equipment	Net property, plant, and equipment	3,856,455		3,849,793		Net property, plant, and equipment	3,853,451		3,851,663
Construction work in progress	Construction work in progress	132,628		114,310		Construction work in progress	151,502		114,310
Total property, plant, and equipment, net	Total property, plant, and equipment, net	3,989,083		3,964,103		Total property, plant, and equipment, net	4,004,953		3,965,973
Equity investment in investee	Equity investment in investee	2,072		2,072		Equity investment in investee	1,992		2,072
Goodwill	Goodwill	1,490,797		1,490,797		Goodwill	1,490,797		1,490,797
Prepayments	Prepayments	1,509		1,512		Prepayments	1,469		1,512
Operating lease right of use assets	Operating lease right of use assets	21,441		22,636		Operating lease right of use assets	20,761		22,636
Restricted cash and cash equivalents	Restricted cash and cash equivalents	111,109		109,415		Restricted cash and cash equivalents	112,018		109,415
Note receivable	Note receivable	12,460		12,908		Note receivable	12,228		12,908
Regulatory assets - deferred taxes, net	Regulatory assets - deferred taxes, net	33,983		8,803		Regulatory assets - deferred taxes, net	45,463		8,803
Regulatory assets	Regulatory assets	604,567		611,917		Regulatory assets	601,923		611,917
Intangible asset - securitization	Intangible asset - securitization	407,571		413,123		Intangible asset - securitization	402,444		413,123
Intangible assets - other	Intangible assets - other	15,279		20,086		Intangible assets - other	12,956		20,086
Assets held for sale - discontinued operations	Assets held for sale - discontinued operations	611,449		787,925		Assets held for sale - discontinued operations	558,964		727,160

Energy risk management assets						Energy risk management assets	10,085		58,895
Other deferred charges	Other deferred charges	30,000		24,585		Other deferred charges	32,006		24,585
Total assets	Total assets	$	8,171,547	$	8,253,749	Total assets	$	8,292,099	$	8,253,749
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)	(Continued on next page)					(Continued on next page)


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Balance Sheets (Unaudited)	Condensed Consolidated Balance Sheets (Unaudited)					Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Liabilities and member’s equity	Liabilities and member’s equity					Liabilities and member’s equity
Liabilities	Liabilities					Liabilities
Current liabilities	Current liabilities					Current liabilities
Short-term debt	Short-term debt	$	120,000	$	109,000	Short-term debt	$	105,000	$	109,000
Long-term debt and finance leases due within one year	Long-term debt and finance leases due within one year	371,758		340,867		Long-term debt and finance leases due within one year	372,246		340,867
Accounts payable	Accounts payable	108,261		131,627		Accounts payable	100,284		132,778
Accounts payable - affiliate	Accounts payable - affiliate	13,122		13,092		Accounts payable - affiliate	20,926		13,092
Customer deposits	Customer deposits	57,924		57,851		Customer deposits	57,137		57,851
Provision for rate refund	Provision for rate refund	3,399		3,074		Provision for rate refund	1,988		3,074
Taxes payable	Taxes payable	56,120		16,905		Taxes payable	50,173		16,905
Interest accrued	Interest accrued	22,132		25,540		Interest accrued	40,205		25,540

Energy risk management liabilities	Energy risk management liabilities	1,519		4,864		Energy risk management liabilities	5,221		7,274
Regulatory liabilities - deferred taxes, net	Regulatory liabilities - deferred taxes, net	41,389		42,890		Regulatory liabilities - deferred taxes, net	31,215		42,890
Deferred compensation	Deferred compensation	13,190		12,162		Deferred compensation	13,071		12,162
Storm reserves	Storm reserves	9,639		9,409		Storm reserves	—		9,409
Liabilities held for sale - discontinued operations	Liabilities held for sale - discontinued operations	69,676		76,102		Liabilities held for sale - discontinued operations	61,229		72,541
Other current liabilities	Other current liabilities	31,658		29,314		Other current liabilities	35,830		29,314
Total current liabilities	Total current liabilities	919,787		872,697		Total current liabilities	894,525		872,697
Long-term liabilities and deferred credits	Long-term liabilities and deferred credits					Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	Accumulated deferred federal and state income taxes, net	796,243		820,300		Accumulated deferred federal and state income taxes, net	817,801		820,300

Postretirement benefit obligations	Postretirement benefit obligations	200,093		200,665		Postretirement benefit obligations	200,705		200,665

Storm reserves	Storm reserves	109,637		109,353		Storm reserves	106,789		109,353

Asset retirement obligations	Asset retirement obligations	11,578		15,429		Asset retirement obligations	10,145		15,429
Operating lease liabilities	Operating lease liabilities	18,557		19,790		Operating lease liabilities	17,916		19,790
Liabilities held for sale - discontinued operations	Liabilities held for sale - discontinued operations	75,978		94,467		Liabilities held for sale - discontinued operations	75,848		94,467
Customer advances for construction						Customer advances for construction	25,265		9,783
Other deferred credits	Other deferred credits	47,937		34,887		Other deferred credits	34,002		25,104
Total long-term liabilities and deferred credits	Total long-term liabilities and deferred credits	1,260,023		1,294,891		Total long-term liabilities and deferred credits	1,288,471		1,294,891
Long-term debt and finance leases, net	Long-term debt and finance leases, net	3,102,207		3,139,094		Long-term debt and finance leases, net	3,093,883		3,139,094
Total liabilities	Total liabilities	5,282,017		5,306,682		Total liabilities	5,276,879		5,306,682
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)
Member’s equity	Member’s equity	2,889,530		2,947,067		Member’s equity	3,015,220		2,947,067
Total liabilities and member’s equity	Total liabilities and member’s equity	$	8,171,547	$	8,253,749	Total liabilities and member’s equity	$	8,292,099	$	8,253,749
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO						CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)	Condensed Consolidated Statements of Cash Flows (Unaudited)						Condensed Consolidated Statements of Cash Flows (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023			2022		(THOUSANDS)	2023			2022
Operating activities	Operating activities						Operating activities
Net (loss) income		$	(56,692)		$	157,107
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Net income							Net income	$	99,420		$	225,479
Adjustments to reconcile net income to net cash provided by operating activities							Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	127,002			154,322		Depreciation and amortization	181,672			220,591
Provision for credit losses	Provision for credit losses	2,146			1,210		Provision for credit losses	3,243			2,143

Regulatory disallowance							Regulatory disallowance	—			13,841
Electric customer credits							Electric customer credits	—			6,577
Unearned compensation expense	Unearned compensation expense	4,641			2,380		Unearned compensation expense	6,676			3,688
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(2,806)			(1,740)		Allowance for equity funds used during construction	(4,423)			(2,704)
Loss (gain) on energy risk management assets and liabilities, net	Loss (gain) on energy risk management assets and liabilities, net	69,469			(89,991)		Loss (gain) on energy risk management assets and liabilities, net	76,748			(112,077)
Loss on classification as held for sale	Loss on classification as held for sale	116,000			—		Loss on classification as held for sale	154,000			—
Deferred lease revenue	Deferred lease revenue	(2,301)			(4,603)		Deferred lease revenue	(2,301)			(6,904)
Deferred income taxes	Deferred income taxes	(51,559)			17,522		Deferred income taxes	(51,894)			21,578
Cash surrender value of company-/trust-owned life insurance	Cash surrender value of company-/trust-owned life insurance	(889)			3,092		Cash surrender value of company-/trust-owned life insurance	690			5,775
Changes in assets and liabilities	Changes in assets and liabilities						Changes in assets and liabilities
Accounts receivable	Accounts receivable	29,310			(49,606)		Accounts receivable	1,045			(98,826)
Accounts receivable, affiliate	Accounts receivable, affiliate	(5,351)			(3,808)		Accounts receivable, affiliate	(7,693)			(10,069)
Unbilled revenue	Unbilled revenue	(4,816)			(11,002)		Unbilled revenue	2,398			(2,897)
Fuel inventory and materials and supplies	Fuel inventory and materials and supplies	(129,183)			(39,802)		Fuel inventory and materials and supplies	(86,598)			(61,518)
Prepayments	Prepayments	(11,332)			(8,494)		Prepayments	(12,805)			(10,908)
Accounts payable	Accounts payable	(31,200)			51,850		Accounts payable	(40,162)			8,164
Accounts payable - affiliate	Accounts payable - affiliate	30			(40,664)		Accounts payable - affiliate	7,834			(38,206)
Customer deposits	Customer deposits	2,219			6,034		Customer deposits	3,607			6,139

Postretirement benefit obligations							Postretirement benefit obligations	(1,607)			(746)
Regulatory assets and liabilities, net	Regulatory assets and liabilities, net	1,716			1,815		Regulatory assets and liabilities, net	4,677			(9,498)
Asset retirement obligation	Asset retirement obligation	(4,520)			505		Asset retirement obligation	(6,115)			(449)
Deferred fuel recoveries	Deferred fuel recoveries	46,502			(38,992)		Deferred fuel recoveries	34,801			(23,185)
Other deferred accounts	Other deferred accounts	(5,240)			(3,248)		Other deferred accounts	516			(4,885)
Taxes accrued	Taxes accrued	40,297			32,616		Taxes accrued	(45,700)			45,144
Interest accrued	Interest accrued	(3,408)			465		Interest accrued	14,666			29,673
Energy risk management collateral	Energy risk management collateral	(6,500)			42,500		Energy risk management collateral	(6,500)			36,400

Other operating	Other operating	824			(4,961)		Other operating	(5,022)			2,805
Net cash provided by operating activities	Net cash provided by operating activities	124,359			174,507		Net cash provided by operating activities	321,173			245,125
Investing activities	Investing activities						Investing activities
Additions to property, plant, and equipment	Additions to property, plant, and equipment	(115,159)			(101,673)		Additions to property, plant, and equipment	(165,750)			(145,514)

Return of investment in company-owned life insurance	Return of investment in company-owned life insurance	417			15,671		Return of investment in company-owned life insurance	417			15,671
Other investing	Other investing	1,177			891		Other investing	1,651			1,293
Net cash used in investing activities	Net cash used in investing activities	(113,565)			(85,111)		Net cash used in investing activities	(163,682)			(128,550)
Financing activities	Financing activities						Financing activities
Draws on revolving credit facilities	Draws on revolving credit facilities	96,000			55,000		Draws on revolving credit facilities	107,000			127,000
Payments on revolving credit facilities	Payments on revolving credit facilities	(85,000)			—		Payments on revolving credit facilities	(111,000)			(40,000)
Issuances of long-term debt	Issuances of long-term debt	—			424,946		Issuances of long-term debt	—			424,946
Repayment of long-term debt	Repayment of long-term debt	(3,204)			(325,000)		Repayment of long-term debt	(9,574)			(325,000)
Payment of financing costs	Payment of financing costs	—			(6,913)		Payment of financing costs	(498)			(6,964)

Distributions to member	Distributions to member	—			(132,838)		Distributions to member	(30,000)			(219,588)
Other financing	Other financing	(443)			(367)		Other financing	(618)			(559)
Net cash provided by financing activities		7,353			14,828
Net cash used in financing activities							Net cash used in financing activities	(44,690)			(40,165)
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	18,147			104,224		Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	112,801			76,410
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	191,572		(1)	150,982		Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	191,572		(1)	150,982
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	209,719	(2)	$	255,206	Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	304,373	(2)	$	227,392
(1) Includes cash and cash equivalents of $48,041, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,415. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $10,567. (2) Includes cash and cash equivalents of $71,857, current restricted cash and cash equivalents of $22,671, and non-current restricted cash and cash equivalents of $111,109. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,082.
(1) Includes cash and cash equivalents of $54,541, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,415. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,067. (2) Includes cash and cash equivalents of $181,908, current restricted cash and cash equivalents of $6,356, and non-current restricted cash and cash equivalents of $112,018. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,091.							(1) Includes cash and cash equivalents of $54,541, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,415. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,067. (2) Includes cash and cash equivalents of $181,908, current restricted cash and cash equivalents of $6,356, and non-current restricted cash and cash equivalents of $112,018. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,091.

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

(Continued on next page)	(Continued on next page)						(Continued on next page)


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO					CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)	Condensed Consolidated Statements of Cash Flows (Unaudited)					Condensed Consolidated Statements of Cash Flows (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Supplementary cash flow information	Supplementary cash flow information					Supplementary cash flow information
Interest paid, net of amount capitalized	Interest paid, net of amount capitalized	$	85,393	$	64,035	Interest paid, net of amount capitalized	$	109,997	$	72,772
Income taxes paid, net	Income taxes paid, net	$	2,162	$	—	Income taxes paid, net	$	2,162	$	—
Supplementary non-cash investing and financing activities	Supplementary non-cash investing and financing activities					Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	Accrued additions to property, plant, and equipment	$	6,558	$	5,626	Accrued additions to property, plant, and equipment	$	3,506	$	7,098

Reduction in property, plant, and equipment due to regulatory disallowance						Reduction in property, plant, and equipment due to regulatory disallowance	$	—	$	13,841
Reduction in property, plant, and equipment due to securitization of capitalized storm costs	Reduction in property, plant, and equipment due to securitization of capitalized storm costs	$	—	$	197,689	Reduction in property, plant, and equipment due to securitization of capitalized storm costs	$	—	$	197,689

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


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO	CLECO									CLECO

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)	Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)									Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS		AOCI		TOTAL MEMBER’S EQUITY		(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS		AOCI		TOTAL MEMBER’S EQUITY

Balances, Mar. 31, 2022		$	2,454,276	$	669,253	$	(23,615)	$	3,099,914
Balances, June 30, 2022										Balances, June 30, 2022	$	2,454,276	$	547,778	$	(23,608)	$	2,978,446

Distributions to member	Distributions to member	—		(122,838)		—		(122,838)		Distributions to member	—		(86,750)		—		(86,750)
Net income	Net income	—		1,363		—		1,363		Net income	—		68,372		—		68,372
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		7		7		Other comprehensive income, net of tax	—		—		10		10
Balances, June 30, 2022		$	2,454,276	$	547,778	$	(23,608)	$	2,978,446
Balances, Sept. 30, 2022										Balances, Sept. 30, 2022	$	2,454,276	$	529,400	$	(23,598)	$	2,960,078

Balances, Mar. 31, 2023		$	2,454,276	$	388,710	$	(363)	$	2,842,623

Balances, June 30, 2023										Balances, June 30, 2023	$	2,454,276	$	436,040	$	(786)	$	2,889,530

Net income	Net income	—		47,330		—		47,330		Net income	—		156,112		—		156,112
Distributions to member										Distributions to member	—		(30,000)		—		(30,000)
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—		(423)		(423)		Other comprehensive loss, net of tax	—		—		(422)		(422)
Balances, June 30, 2023		$	2,454,276	$	436,040	$	(786)	$	2,889,530
Balances, Sept. 30, 2023										Balances, Sept. 30, 2023	$	2,454,276	$	562,152	$	(1,208)	$	3,015,220


Balances, Dec. 31, 2021	Balances, Dec. 31, 2021	$	2,454,276	$	523,509	$	(23,629)	$	2,954,156	Balances, Dec. 31, 2021	$	2,454,276	$	523,509	$	(23,629)	$	2,954,156

Distributions to member	Distributions to member	—		(132,838)		—		(132,838)		Distributions to member	—		(219,588)		—		(219,588)
Net income	Net income	—		157,107		—		157,107		Net income	—		225,479		—		225,479
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		21		21		Other comprehensive income, net of tax	—		—		31		31
Balances, June 30, 2022		$	2,454,276	$	547,778	$	(23,608)	$	2,978,446
Balances, Sept. 30, 2022										Balances, Sept. 30, 2022	$	2,454,276	$	529,400	$	(23,598)	$	2,960,078

Balances, Dec. 31, 2022	Balances, Dec. 31, 2022	$	2,454,276	$	492,732	$	59	$	2,947,067	Balances, Dec. 31, 2022	$	2,454,276	$	492,732	$	59	$	2,947,067

Net loss		—		(56,692)		—		(56,692)
Net income										Net income	—		99,420		—		99,420
Distributions to member										Distributions to member	—		(30,000)		—		(30,000)
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—		(845)		(845)		Other comprehensive loss, net of tax	—		—		(1,267)		(1,267)
Balances, June 30, 2023		$	2,454,276	$	436,040	$	(786)	$	2,889,530
Balances, Sept. 30, 2023										Balances, Sept. 30, 2023	$	2,454,276	$	562,152	$	(1,208)	$	3,015,220
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.									The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~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, 2022. 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						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)	Condensed Consolidated Statements of Income (Unaudited)					Condensed Consolidated Statements of Income (Unaudited)
		FOR THE THREE MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Operating revenue	Operating revenue					Operating revenue
Electric operations	Electric operations	$	263,176	$	368,614	Electric operations	$	364,161	$	481,153
Other operations	Other operations	24,741		18,686		Other operations	31,984		24,757
Affiliate revenue	Affiliate revenue	1,635		1,628		Affiliate revenue	1,645		1,657
Gross operating revenue	Gross operating revenue	289,552		388,928		Gross operating revenue	397,790		507,567
Electric customer credits	Electric customer credits	(736)		(129)		Electric customer credits	24		(6,728)
Operating revenue, net	Operating revenue, net	288,816		388,799		Operating revenue, net	397,814		500,839
Operating expenses	Operating expenses					Operating expenses
Fuel used for electric generation	Fuel used for electric generation	62,800		149,658		Fuel used for electric generation	117,175		192,010
Purchased power	Purchased power	40,845		51,412		Purchased power	44,803		111,764
Other operations and maintenance	Other operations and maintenance	57,386		52,277		Other operations and maintenance	59,452		58,581
Depreciation and amortization	Depreciation and amortization	43,722		44,299		Depreciation and amortization	48,012		44,368
Taxes other than income taxes	Taxes other than income taxes	14,342		11,547		Taxes other than income taxes	15,818		14,940

Regulatory disallowance						Regulatory disallowance	—		13,841

Total operating expenses	Total operating expenses	219,095		309,193		Total operating expenses	285,260		435,504
Operating income	Operating income	69,721		79,606		Operating income	112,554		65,335
Interest income	Interest income	579		1,035		Interest income	1,215		1,726
Allowance for equity funds used during construction	Allowance for equity funds used during construction	1,574		808		Allowance for equity funds used during construction	1,617		965
Other expense, net	Other expense, net	(1,005)		(2,225)		Other expense, net	(103)		(1,591)
Interest charges	Interest charges					Interest charges
Interest charges, net	Interest charges, net	24,732		21,659		Interest charges, net	25,099		24,303
Allowance for borrowed funds used during construction	Allowance for borrowed funds used during construction	(549)		(354)		Allowance for borrowed funds used during construction	(178)		(463)
Total interest charges	Total interest charges	24,183		21,305		Total interest charges	24,921		23,840
Income before income taxes	Income before income taxes	46,686		57,919		Income before income taxes	90,362		42,595
Federal and state income tax expense		3,247		3,214
Federal and state income tax (benefit) expense						Federal and state income tax (benefit) expense	(552)		1,862
Net income	Net income	$	43,439	$	54,705	Net income	$	90,914	$	40,733
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)	Condensed Consolidated Statements of Comprehensive Income (Unaudited)					Condensed Consolidated Statements of Comprehensive Income (Unaudited)
		FOR THE THREE MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Net income	Net income	$	43,439	$	54,705	Net income	$	90,914	$	40,733
Other comprehensive income, net of tax	Other comprehensive income, net of tax					Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $36 in 2023 and $113 in 2022)		96		307
Postretirement benefits gain (net of tax expense of $35 in 2023 and $113 in 2022)						Postretirement benefits gain (net of tax expense of $35 in 2023 and $113 in 2022)	97		307
Amortization of interest rate derivatives to earnings (net of tax expense of $23 in 2023 and 2022)	Amortization of interest rate derivatives to earnings (net of tax expense of $23 in 2023 and 2022)	63		63		Amortization of interest rate derivatives to earnings (net of tax expense of $23 in 2023 and 2022)	62		63
Total other comprehensive income, net of tax	Total other comprehensive income, net of tax	159		370		Total other comprehensive income, net of tax	159		370
Comprehensive income, net of tax	Comprehensive income, net of tax	$	43,598	$	55,075	Comprehensive income, net of tax	$	91,073	$	41,103
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)	Condensed Consolidated Statements of Income (Unaudited)					Condensed Consolidated Statements of Income (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Operating revenue	Operating revenue					Operating revenue
Electric operations	Electric operations	$	559,524	$	664,711	Electric operations	$	923,685	$	1,145,864
Other operations	Other operations	52,044		37,771		Other operations	84,028		62,528
Affiliate revenue	Affiliate revenue	3,323		3,087		Affiliate revenue	4,967		4,744
Gross operating revenue	Gross operating revenue	614,891		705,569		Gross operating revenue	1,012,680		1,213,136
Electric customer credits	Electric customer credits	(1,386)		(265)		Electric customer credits	(1,362)		(6,992)
Operating revenue, net	Operating revenue, net	613,505		705,304		Operating revenue, net	1,011,318		1,206,144
Operating expenses	Operating expenses					Operating expenses
Fuel used for electric generation	Fuel used for electric generation	181,411		250,239		Fuel used for electric generation	298,586		442,249
Purchased power	Purchased power	81,283		101,822		Purchased power	126,086		213,586
Other operations and maintenance	Other operations and maintenance	111,377		101,006		Other operations and maintenance	170,827		159,588
Depreciation and amortization	Depreciation and amortization	94,454		89,538		Depreciation and amortization	142,467		133,907
Taxes other than income taxes	Taxes other than income taxes	30,337		24,178		Taxes other than income taxes	46,155		39,117

Regulatory disallowance						Regulatory disallowance	—		13,841

Total operating expenses	Total operating expenses	498,862		566,783		Total operating expenses	784,121		1,002,288
Operating income	Operating income	114,643		138,521		Operating income	227,197		203,856
Interest income	Interest income	1,764		1,775		Interest income	2,979		3,501
Allowance for equity funds used during construction	Allowance for equity funds used during construction	2,806		1,740		Allowance for equity funds used during construction	4,423		2,704
Other income (expense), net	Other income (expense), net	301		(4,261)		Other income (expense), net	198		(5,852)
Interest charges	Interest charges					Interest charges
Interest charges, net	Interest charges, net	49,587		40,845		Interest charges, net	74,686		65,147
Allowance for borrowed funds used during construction	Allowance for borrowed funds used during construction	(1,066)		(737)		Allowance for borrowed funds used during construction	(1,244)		(1,200)
Total interest charges	Total interest charges	48,521		40,108		Total interest charges	73,442		63,947
Income before income taxes	Income before income taxes	70,993		97,667		Income before income taxes	161,355		140,262
Federal and state income tax expense	Federal and state income tax expense	4,737		3,938		Federal and state income tax expense	4,185		5,800
Net income	Net income	$	66,256	$	93,729	Net income	$	157,170	$	134,462
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)	Condensed Consolidated Statements of Comprehensive Income (Unaudited)					Condensed Consolidated Statements of Comprehensive Income (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Net income	Net income	$	66,256	$	93,729	Net income	$	157,170	$	134,462
Other comprehensive income, net of tax	Other comprehensive income, net of tax					Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $71 in 2023 and $226 in 2022)		192		613
Amortization of interest rate derivatives to earnings (net of tax expense of $46 in 2023 and 2022)		126		126
Postretirement benefits gain (net of tax expense of $106 in 2023 and $339 in 2022)						Postretirement benefits gain (net of tax expense of $106 in 2023 and $339 in 2022)	289		920
Amortization of interest rate derivatives to earnings (net of tax expense of $69 in 2023 and 2022)						Amortization of interest rate derivatives to earnings (net of tax expense of $69 in 2023 and 2022)	188		189
Total other comprehensive income, net of tax	Total other comprehensive income, net of tax	318		739		Total other comprehensive income, net of tax	477		1,109
Comprehensive income, net of tax	Comprehensive income, net of tax	$	66,574	$	94,468	Comprehensive income, net of tax	$	157,647	$	135,571
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)	Condensed Consolidated Balance Sheets (Unaudited)					Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Assets	Assets					Assets
Utility plant and equipment	Utility plant and equipment					Utility plant and equipment
Property, plant, and equipment	Property, plant, and equipment	$	5,828,485	$	5,736,526	Property, plant, and equipment	$	5,863,553	$	5,736,526
Accumulated depreciation	Accumulated depreciation	(2,163,184)		(2,082,153)		Accumulated depreciation	(2,201,179)		(2,082,153)
Net property, plant, and equipment	Net property, plant, and equipment	3,665,301		3,654,373		Net property, plant, and equipment	3,662,374		3,654,373
Construction work in progress	Construction work in progress	131,539		113,470		Construction work in progress	150,302		113,470
Total utility plant and equipment, net	Total utility plant and equipment, net	3,796,840		3,767,843		Total utility plant and equipment, net	3,812,676		3,767,843
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	30,518		14,703		Cash and cash equivalents	107,961		14,703
Restricted cash and cash equivalents	Restricted cash and cash equivalents	22,671		23,549		Restricted cash and cash equivalents	6,356		23,549
Customer accounts receivable (less allowance for credit losses of $1,252 in 2023 and $1,147 in 2022)		43,622		72,646
Customer accounts receivable (less allowance for credit losses of $2,248 in 2023 and $1,147 in 2022)						Customer accounts receivable (less allowance for credit losses of $2,248 in 2023 and $1,147 in 2022)	72,778		72,646
Accounts receivable - affiliate	Accounts receivable - affiliate	2,435		3,771		Accounts receivable - affiliate	2,140		3,771
Other accounts receivable	Other accounts receivable	28,765		33,444		Other accounts receivable	25,551		33,444

Unbilled revenue	Unbilled revenue	50,856		46,040		Unbilled revenue	43,642		46,040
Fuel inventory, at average cost	Fuel inventory, at average cost	106,734		57,078		Fuel inventory, at average cost	63,128		57,078
Materials and supplies, at average cost	Materials and supplies, at average cost	134,636		116,943		Materials and supplies, at average cost	133,842		116,943
Energy risk management assets	Energy risk management assets	7,672		2,570		Energy risk management assets	4,899		2,570
Accumulated deferred fuel	Accumulated deferred fuel	5,050		57,881		Accumulated deferred fuel	20,241		57,881
Cash surrender value of company-owned life insurance policies	Cash surrender value of company-owned life insurance policies	9,630		9,471		Cash surrender value of company-owned life insurance policies	9,711		9,471
Prepayments	Prepayments	13,199		11,765		Prepayments	11,816		11,765
Regulatory assets	Regulatory assets	40,152		39,438		Regulatory assets	27,742		39,438
Other current assets	Other current assets	876		838		Other current assets	897		838
Total current assets	Total current assets	496,816		490,137		Total current assets	530,704		490,137
Equity investment in investee	Equity investment in investee	2,072		2,072		Equity investment in investee	1,992		2,072
Prepayments	Prepayments	1,422		1,493		Prepayments	1,386		1,493
Operating lease right of use assets	Operating lease right of use assets	21,438		22,628		Operating lease right of use assets	20,761		22,628
Restricted cash and cash equivalents	Restricted cash and cash equivalents	111,086		109,392		Restricted cash and cash equivalents	111,995		109,392
Note receivable	Note receivable	12,460		12,908		Note receivable	12,228		12,908
Regulatory assets - deferred taxes, net	Regulatory assets - deferred taxes, net	33,983		8,803		Regulatory assets - deferred taxes, net	45,463		8,803
Regulatory assets	Regulatory assets	489,661		491,978		Regulatory assets	489,534		491,978
Intangible asset - securitization	Intangible asset - securitization	407,571		413,123		Intangible asset - securitization	402,444		413,123

Other deferred charges	Other deferred charges	29,312		23,796		Other deferred charges	31,456		23,796
Total assets	Total assets	$	5,402,661	$	5,344,173	Total assets	$	5,460,639	$	5,344,173
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)	(Continued on next page)					(Continued on next page)


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)	Condensed Consolidated Balance Sheets (Unaudited)					Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Liabilities and member’s equity	Liabilities and member’s equity					Liabilities and member’s equity
Member’s equity	Member’s equity	$	2,064,486	$	2,022,912	Member’s equity	$	2,130,559	$	2,022,912
Long-term debt and finance leases, net	Long-term debt and finance leases, net	1,654,151		1,786,447		Long-term debt and finance leases, net	1,647,593		1,786,447
Total capitalization	Total capitalization	3,718,637		3,809,359		Total capitalization	3,778,152		3,809,359
Current liabilities	Current liabilities					Current liabilities
Short-term debt	Short-term debt	25,000		45,000		Short-term debt	—		45,000
Long-term debt and finance leases due within one year	Long-term debt and finance leases due within one year	239,904		110,344		Long-term debt and finance leases due within one year	240,271		110,344
Accounts payable	Accounts payable	98,740		119,435		Accounts payable	86,702		119,435
Accounts payable - affiliate	Accounts payable - affiliate	13,352		12,448		Accounts payable - affiliate	21,334		12,448
Customer deposits	Customer deposits	57,924		57,851		Customer deposits	57,137		57,851
Provision for rate refund	Provision for rate refund	3,399		3,074		Provision for rate refund	1,988		3,074

Taxes payable	Taxes payable	50,770		15,277		Taxes payable	50,485		15,277
Interest accrued	Interest accrued	11,628		15,276		Interest accrued	22,912		15,276

Energy risk management liabilities	Energy risk management liabilities	1,519		4,864		Energy risk management liabilities	4,609		4,864
Regulatory liabilities - deferred taxes, net	Regulatory liabilities - deferred taxes, net	41,389		42,890		Regulatory liabilities - deferred taxes, net	31,215		42,890
Storm reserves	Storm reserves	9,639		9,409		Storm reserves	—		9,409
Other current liabilities	Other current liabilities	20,799		18,360		Other current liabilities	23,416		18,360
Total current liabilities	Total current liabilities	574,063		454,228		Total current liabilities	540,069		454,228
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)
Long-term liabilities and deferred credits	Long-term liabilities and deferred credits					Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	Accumulated deferred federal and state income taxes, net	790,265		770,127		Accumulated deferred federal and state income taxes, net	817,218		770,127

Postretirement benefit obligations	Postretirement benefit obligations	137,501		137,754		Postretirement benefit obligations	137,704		137,754

Storm reserves	Storm reserves	109,637		109,353		Storm reserves	106,789		109,353

Asset retirement obligations	Asset retirement obligations	11,452		15,301		Asset retirement obligations	10,019		15,301
Operating lease liabilities	Operating lease liabilities	18,557		19,790		Operating lease liabilities	17,916		19,790
Customer advances for construction						Customer advances for construction	25,265		9,783
Other deferred credits	Other deferred credits	42,549		28,261		Other deferred credits	27,507		18,478
Total long-term liabilities and deferred credits	Total long-term liabilities and deferred credits	1,109,961		1,080,586		Total long-term liabilities and deferred credits	1,142,418		1,080,586
Total liabilities and member’s equity	Total liabilities and member’s equity	$	5,402,661	$	5,344,173	Total liabilities and member’s equity	$	5,460,639	$	5,344,173
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.					The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER						CLECO POWER

Condensed Consolidated Statements of Cash Flows (Unaudited)	Condensed Consolidated Statements of Cash Flows (Unaudited)						Condensed Consolidated Statements of Cash Flows (Unaudited)
		FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023			2022		(THOUSANDS)	2023			2022
Operating activities	Operating activities						Operating activities
Net income	Net income	$	66,256		$	93,729	Net income	$	157,170		$	134,462
Adjustments to reconcile net income to net cash provided by operating activities	Adjustments to reconcile net income to net cash provided by operating activities						Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	97,305			93,589		Depreciation and amortization	146,703			139,356

Provision for credit losses	Provision for credit losses	2,146			1,210		Provision for credit losses	3,243			2,143

Regulatory disallowance							Regulatory disallowance	—			13,841
Electric customer credits							Electric customer credits	—			6,577
Unearned compensation expense							Unearned compensation expense	1,059			570
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(2,806)			(1,740)		Allowance for equity funds used during construction	(4,423)			(2,704)
Deferred income taxes	Deferred income taxes	(7,792)			4,334		Deferred income taxes	(3,117)			918

Changes in assets and liabilities	Changes in assets and liabilities						Changes in assets and liabilities
Accounts receivable	Accounts receivable	29,659			(23,192)		Accounts receivable	396			(70,688)
Accounts receivable - affiliate	Accounts receivable - affiliate	2,286			11,978		Accounts receivable - affiliate	3,056			13,488
Unbilled revenue	Unbilled revenue	(4,816)			(11,002)		Unbilled revenue	2,398			(2,897)
Fuel inventory and materials and supplies	Fuel inventory and materials and supplies	(66,595)			(39,493)		Fuel inventory and materials and supplies	(24,115)			(52,099)
Prepayments	Prepayments	(1,093)			404		Prepayments	238			(2,428)
Accounts payable	Accounts payable	(19,923)			29,774		Accounts payable	(27,286)			(7,505)
Accounts payable - affiliate	Accounts payable - affiliate	663			(58,837)		Accounts payable - affiliate	9,076			(58,462)
Customer deposits	Customer deposits	2,219			6,034		Customer deposits	3,607			6,139

Postretirement benefit obligations							Postretirement benefit obligations	(1,080)			353
Regulatory assets and liabilities, net							Regulatory assets and liabilities, net	3,187			(10,989)
Asset retirement obligation	Asset retirement obligation	(4,361)			234		Asset retirement obligation	(5,923)			(1,656)
Deferred fuel recoveries	Deferred fuel recoveries	46,502			(38,992)		Deferred fuel recoveries	34,801			(23,185)
Other deferred accounts	Other deferred accounts	755			1,340		Other deferred accounts	6,291			(81)
Taxes accrued	Taxes accrued	34,574			23,668		Taxes accrued	33,824			40,394
Interest accrued	Interest accrued	(3,648)			456		Interest accrued	7,636			21,464
Other operating	Other operating	2,906			(2,824)		Other operating	(4,808)			(12)
Net cash provided by operating activities	Net cash provided by operating activities	174,237			90,670		Net cash provided by operating activities	341,933			146,999
Investing activities	Investing activities						Investing activities
Additions to property, plant, and equipment	Additions to property, plant, and equipment	(110,480)			(98,162)		Additions to property, plant, and equipment	(159,947)			(139,726)

Other investing	Other investing	1,497			869		Other investing	1,971			1,271
Net cash used in investing activities	Net cash used in investing activities	(108,983)			(97,293)		Net cash used in investing activities	(157,976)			(138,455)
Financing activities	Financing activities						Financing activities
Draws on revolving credit facility	Draws on revolving credit facility	25,000			55,000		Draws on revolving credit facility	25,000			117,000
Payments on revolving credit facility	Payments on revolving credit facility	(45,000)			—		Payments on revolving credit facility	(70,000)			(40,000)
Issuances of long-term debt	Issuances of long-term debt	—			424,946		Issuances of long-term debt	—			424,946
Repayment of long-term debt	Repayment of long-term debt	(3,204)			(325,000)		Repayment of long-term debt	(9,574)			(325,000)

Payment of financing costs	Payment of financing costs	—			(6,906)		Payment of financing costs	(97)			(6,957)

Distributions to member	Distributions to member	(25,000)			(52,000)		Distributions to member	(50,000)			(105,500)
Other financing	Other financing	(419)			(367)		Other financing	(618)			(559)
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(48,623)			95,673		Net cash (used in) provided by financing activities	(105,289)			63,930
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	16,631			89,050		Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	78,668			72,474
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	147,644		(1)	87,341		Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	147,644		(1)	87,341
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	164,275	(2)	$	176,391	Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	226,312	(2)	$	159,815

Supplementary cash flow information	Supplementary cash flow information						Supplementary cash flow information
Interest paid, net of amount capitalized	Interest paid, net of amount capitalized	$	50,692		$	35,480	Interest paid, net of amount capitalized	$	63,204		$	37,198

Supplementary non-cash investing and financing activities	Supplementary non-cash investing and financing activities						Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	Accrued additions to property, plant, and equipment	$	5,908		$	5,345	Accrued additions to property, plant, and equipment	$	2,825		$	7,025

Reduction in property, plant, and equipment due to regulatory disallowance							Reduction in property, plant, and equipment due to regulatory disallowance	$	—		$	13,841
Reduction in property, plant, and equipment due to securitization of capitalized storm costs	Reduction in property, plant, and equipment due to securitization of capitalized storm costs	$	—		$	197,689	Reduction in property, plant, and equipment due to securitization of capitalized storm costs	$	—		$	197,689

(1) Includes cash and cash equivalents of $14,703, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,392. (2) Includes cash and cash equivalents of $30,518, current restricted cash and cash equivalents of $22,671, and non-current restricted cash and cash equivalents of $111,086.
(1) Includes cash and cash equivalents of $14,703, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,392. (2) Includes cash and cash equivalents of $107,961, current restricted cash and cash equivalents of $6,356, and non-current restricted cash and cash equivalents of $111,995.							(1) Includes cash and cash equivalents of $14,703, current restricted cash and cash equivalents of $23,549, and non-current restricted cash and cash equivalents of $109,392. (2) Includes cash and cash equivalents of $107,961, current restricted cash and cash equivalents of $6,356, and non-current restricted cash and cash equivalents of $111,995.

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


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


CLECO POWER	CLECO POWER					CLECO POWER

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)	Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)					Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	(THOUSANDS)	MEMBERSHIP INTEREST		AOCI			TOTAL MEMBER’S EQUITY		(THOUSANDS)	MEMBERSHIP INTEREST		AOCI		TOTAL MEMBER’S EQUITY

Balances, Mar. 31, 2022		$	2,005,744	$	(17,814)		$	1,987,930
Balances, June 30, 2022									Balances, June 30, 2022	$	2,008,449	$	(17,444)	$	1,991,005

Distributions to member	Distributions to member	(52,000)		—			(52,000)		Distributions to member	(53,500)		—		(53,500)
Net income	Net income	54,705		—			54,705		Net income	40,733		—		40,733
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		370			370		Other comprehensive income, net of tax	—		370		370
Balances, June 30, 2022		$	2,008,449	$	(17,444)		$	1,991,005
Balances, Sept. 30, 2022									Balances, Sept. 30, 2022	$	1,995,682	$	(17,074)	$	1,978,608

Balances, Mar. 31, 2023		$	2,054,094	$	(8,206)		$	2,045,888
Balances, June 30, 2023									Balances, June 30, 2023	$	2,072,533	$	(8,047)	$	2,064,486

Net income	Net income	43,439		—			43,439		Net income	90,914		—		90,914
Distributions to member	Distributions to member	(25,000)		—			(25,000)		Distributions to member	(25,000)		—		(25,000)
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		159			159		Other comprehensive income, net of tax	—		159		159
Balances, June 30, 2023		$	2,072,533	$	(8,047)		$	2,064,486
Balances, Sept. 30, 2023									Balances, Sept. 30, 2023	$	2,138,447	$	(7,888)	$	2,130,559


Balances, Dec. 31, 2021	Balances, Dec. 31, 2021	$	1,966,720	$	(18,183)	$	1,948,537	Balances, Dec. 31, 2021	$	1,966,720	$	(18,183)	$	1,948,537

Distributions to member	Distributions to member	(52,000)		—		(52,000)		Distributions to member	(105,500)		—		(105,500)
Net income	Net income	93,729		—		93,729		Net income	134,462		—		134,462
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		739		739		Other comprehensive income, net of tax	—		1,109		1,109
Balances, June 30, 2022		$	2,008,449	$	(17,444)	$	1,991,005
Balances, Sept. 30, 2022								Balances, Sept. 30, 2022	$	1,995,682	$	(17,074)	$	1,978,608

Balances, Dec. 31, 2022	Balances, Dec. 31, 2022	$	2,031,277	$	(8,365)	$	2,022,912	Balances, Dec. 31, 2022	$	2,031,277	$	(8,365)	$	2,022,912

Net income	Net income	66,256		—		66,256		Net income	157,170		—		157,170
Distributions to member	Distributions to member	(25,000)		—		(25,000)		Distributions to member	(50,000)		—		(50,000)
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		318		318		Other comprehensive income, net of tax	—		477		477
Balances, June 30, 2023		$	2,072,533	$	(8,047)	$	2,064,486
Balances, Sept. 30, 2023								Balances, Sept. 30, 2023	$	2,138,447	$	(7,888)	$	2,130,559
The accompanying notes are an integral part of the condensed consolidated financial statements.	The accompanying notes are an integral part of the condensed consolidated financial statements.							The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2023 ~~2ND~~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	Discontinued Operations	Cleco
Note 4	Revenue Recognition	Cleco and Cleco Power
Note 5	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 6	Fair Value Accounting Instruments	Cleco and Cleco Power
Note 7	Derivative Instruments	Cleco and Cleco Power
Note 8	Debt	Cleco and Cleco Power
Note 9	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 10	Income Taxes	Cleco and Cleco Power
Note 11	Segment Disclosures	Cleco
Note 12	Regulation and Rates	Cleco and Cleco Power
Note 13	Variable Interest Entities	Cleco and Cleco Power
Note 14	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 15	Affiliate Transactions	Cleco and Cleco Power
Note 16	Intangible Assets and Goodwill	Cleco and Cleco Power
Note 17	Accumulated Other Comprehensive Loss	Cleco and Cleco Power


Notes to the Unaudited Condensed Consolidated Financial Statements


Note 1 — Summary of Significant Accounting Policies

Discontinued Operations

In 2022, Cleco Holdings engaged in a strategic review process related to its investment in Cleco Cajun. In March 2023, Cleco Holdings’ management, with the support of its Board of Managers, committed to a plan of action for the disposition of the Cleco Cajun Sale Group, with a sale probable and subject to customary regulatory and Board of Managers approvals. As a result, Cleco Holdings’ management determined that the criteria under GAAP for the Cleco Cajun Sale Group to be classified as held for sale were met and a sale will represent a strategic shift that will have a major effect on Cleco’s future operations and financial results. Therefore, the Cleco Cajun Sale Group is presented as discontinued operations. The financial information for historical periods provided in this report has been recast to present the results of operations and financial position of the Cleco Cajun Sale Group as discontinued operations. Cleco has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these condensed consolidated financial statements exclude amounts related to discontinued operations, assets held for sale, and liabilities held for sale for all periods presented. For more information, see Note 3 — “Discontinued Operations.”

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.

Following the formation of Cleco Securitization I and the closing of the storm recovery securitization financing on June 22, 2022, Cleco Power became the primary beneficiary of Cleco Securitization I, and as a result, the financial statements of Cleco Securitization I are consolidated with the financial statements of Cleco Power. For additional information about

Cleco Securitization I, see Note 13 — “Variable Interest Entities.”

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 and adjusted for discontinued operations. 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, 2022.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary for a fair statement of the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco’s 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


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q

estimates. For information on recent authoritative guidance and its effect on financial results, see Note 2 — “Recent Authoritative Guidance.” For information on discontinued operations, see Note 3 — “Discontinued Operations.”

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.

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


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Current	Current					Current
Cleco Power’s storm restoration costs - Hurricane Ida	Cleco Power’s storm restoration costs - Hurricane Ida	$	9,639	$	9,409	Cleco Power’s storm restoration costs - Hurricane Ida	$	—	$	9,409
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	13,032		14,140		Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	6,356		14,140
Total current	Total current	22,671		23,549		Total current	6,356		23,549
Non-current	Non-current					Non-current
Diversified Lands’ mitigation escrow	Diversified Lands’ mitigation escrow	23		23		Diversified Lands’ mitigation escrow	23		23
Cleco Power’s future storm restoration costs	Cleco Power’s future storm restoration costs	104,886		103,306		Cleco Power’s future storm restoration costs	111,995		103,306
Cleco Power’s storm restoration costs - Hurricane Ida	Cleco Power’s storm restoration costs - Hurricane Ida	6,200		6,086		Cleco Power’s storm restoration costs - Hurricane Ida	—		6,086

Total non-current	Total non-current	111,109		109,415		Total non-current	112,018		109,415
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	$	133,780	$	132,964	Total restricted cash and cash equivalents	$	118,374	$	132,964


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Current	Current					Current
Storm restoration costs - Hurricane Ida	Storm restoration costs - Hurricane Ida	$	9,639	$	9,409	Storm restoration costs - Hurricane Ida	$	—	$	9,409
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs	Cleco Securitization I’s operating expenses and storm recovery bond issuance costs	13,032		14,140		Cleco Securitization I’s operating expenses and storm recovery bond issuance costs	6,356		14,140
Total current	Total current	22,671		23,549		Total current	6,356		23,549
Non-current	Non-current					Non-current
Future storm restoration costs	Future storm restoration costs	104,886		103,306		Future storm restoration costs	111,995		103,306
Storm restoration costs - Hurricane Ida	Storm restoration costs - Hurricane Ida	6,200		6,086		Storm restoration costs - Hurricane Ida	—		6,086

Total non-current	Total non-current	111,086		109,392		Total non-current	111,995		109,392
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	$	133,757	$	132,941	Total restricted cash and cash equivalents	$	118,351	$	132,941

On September 20, 2023, the LPSC approved a settlement for the prudency review of the remaining unrecovered Hurricane Ida storm restoration costs deferred as a regulatory asset. The settlement allowed Cleco Power to withdraw the remaining unrecovered Hurricane Ida storm restoration costs,

plus a carrying charge through September 2023, from the Hurricane Ida storm reserve. The settlement also approved the transfer of the remaining balance of the Hurricane Ida storm reserve to the restricted reserve for future storm restoration costs. As a result of the settlement, the corresponding Hurricane Ida restricted cash and cash equivalents was reduced by $10.3 million and the remaining balance was transferred to the restricted cash and cash equivalents account for future storm restoration costs. For more information about the regulatory asset and storm reserves, see Note 5 — “Regulatory Assets and Liabilities — Storm Reserves.”

Reserves for Credit Losses

Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts 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.

As a result of the market price volatility of natural gas throughout 2022, ~~and during the first and second quarters of 2023,~~ Cleco ~~has~~ experienced significant increases to the pass-through fuel component of retail customer energy bills. Due to these increased customer ~~fuel~~ costs, along with the impacts of a 40-year high inflation rate, Cleco ~~has~~ experienced increases in credit loss reserves. These factors have not been and are not expected to be material to Cleco’s results of operations, financial condition, or cash flows.

During the third quarter of 2023, Cleco's service territory experienced sustained record high temperatures resulting in an increase in usage by its customers. In anticipation of higher customer costs and high heat conditions, Cleco temporarily suspended disconnections and the utilization of collection agencies for the month of August and most of September 2023, resulting in no additional charge-offs during these months. On September 25, 2023, Cleco resumed disconnection and collection activities.

Although Cleco’s service territory experienced various external impacts, Cleco’s credit losses at September 30, 2023, were still within range of its historical credit loss analysis.

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


Cleco	Cleco													Cleco
		FOR THE THREE MONTHS ENDED JUNE 30, 2023						FOR THE SIX MONTHS ENDED JUNE 30, 2023							FOR THE THREE MONTHS ENDED SEPT. 30, 2023						FOR THE NINE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL		(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, beginning of period	Balances, beginning of period	$	1,127	$	1,638	$	2,765	$	1,147	$	1,638	$	2,785	Balances, beginning of period	$	1,252	$	1,638	$	2,890	$	1,147	$	1,638	$	2,785

Current period provision	Current period provision	906		—		906		2,146		—		2,146		Current period provision	1,106		—		1,106		3,252		—		3,252
Charge-offs	Charge-offs	(1,108)		—		(1,108)		(2,746)		—		(2,746)		Charge-offs	(325)		—		(325)		(3,071)		—		(3,071)
Recovery	Recovery	327		—		327		705		—		705		Recovery	215		—		215		920		—		920
Balances, June 30, 2023		$	1,252	$	1,638	$	2,890	$	1,252	$	1,638	$	2,890
Balances, Sept. 30, 2023														Balances, Sept. 30, 2023	$	2,248	$	1,638	$	3,886	$	2,248	$	1,638	$	3,886

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


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


		FOR THE THREE MONTHS ENDED JUNE 30, 2022						FOR THE SIX MONTHS ENDED JUNE 30, 2022							FOR THE THREE MONTHS ENDED SEPT. 30, 2022						FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL		(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Balances, beginning of period	Balances, beginning of period	$	1,002	$	1,638	$	2,640	$	1,302	$	1,638	$	2,940	Balances, beginning of period	$	1,190	$	1,638	$	2,828	$	1,302	$	1,638	$	2,940

Current period provision	Current period provision	819		—		819		1,210		—		1,210		Current period provision	939		—		939		2,149		—		2,149
Charge-offs	Charge-offs	(916)		—		(916)		(2,005)		—		(2,005)		Charge-offs	(894)		—		(894)		(2,899)		—		(2,899)
Recovery	Recovery	285		—		285		683		—		683		Recovery	263		—		263		946		—		946
Balances, June 30, 2022		$	1,190	$	1,638	$	2,828	$	1,190	$	1,638	$	2,828
Balances, Sept. 30, 2022														Balances, Sept. 30, 2022	$	1,498	$	1,638	$	3,136	$	1,498	$	1,638	$	3,136

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


Cleco Power	Cleco Power					Cleco Power
		FOR THE THREE MONTHS ENDED JUNE 30, 2023		FOR THE SIX MONTHS ENDED JUNE 30, 2023			FOR THE THREE MONTHS ENDED SEPT. 30, 2023		FOR THE NINE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	(THOUSANDS)	ACCOUNTS RECEIVABLE				(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, beginning of period	Balances, beginning of period	$	1,127	$	1,147	Balances, beginning of period	$	1,252	$	1,147

Current period provision	Current period provision	906		2,146		Current period provision	1,106		3,252
Charge-offs	Charge-offs	(1,108)		(2,746)		Charge-offs	(325)		(3,071)
Recovery	Recovery	327		705		Recovery	215		920
Balances, June 30, 2023		$	1,252	$	1,252
Balances, Sept. 30, 2023						Balances, Sept. 30, 2023	$	2,248	$	2,248


		FOR THE THREE MONTHS ENDED JUNE 30, 2022		FOR THE SIX MONTHS ENDED JUNE 30, 2022			FOR THE THREE MONTHS ENDED SEPT. 30, 2022		FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	(THOUSANDS)	ACCOUNTS RECEIVABLE				(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, beginning of period	Balances, beginning of period	$	1,002	$	1,302	Balances, beginning of period	$	1,190	$	1,302

Current period provision	Current period provision	819		1,210		Current period provision	939		2,149
Charge-offs	Charge-offs	(916)		(2,005)		Charge-offs	(894)		(2,899)
Recovery	Recovery	285		683		Recovery	263		946
Balances, June 30, 2022		$	1,190	$	1,190
Balances, Sept. 30, 2022						Balances, Sept. 30, 2022	$	1,498	$	1,498


Note 2 — Recent Authoritative Guidance

In March 2023, FASB issued guidance that applies to leases between entities under common control. The guidance provides a practical expedient for determining whether an arrangement between entities under common control is a lease as well as the classification of the lease. In addition, the leasehold improvements amortization period is to be determined by the useful life to the common group rather than the term of the lease. The new guidance is effective for fiscal years beginning after December 15, ~~2023.~~2023, including interim periods within those fiscal years. Cleco has arrangements between entities under common control and management is evaluating the impacts of this guidance on the results of operations, financial condition, and cash flows of the Registrants.


Note 3 — Discontinued Operations

In March 2023, Cleco Holdings’ management, with the support of its Board of Managers, committed to a plan of action for the disposition of the Cleco Cajun Sale Group, with a sale probable and subject to customary regulatory and Board of Managers approvals. As a result, Cleco Holdings’ management determined that the criteria under GAAP for the Cleco Cajun Sale Group to be classified as held for sale were met and a sale will represent a strategic shift that will have a major effect on Cleco’s future operations and financial results. Therefore, the results of operations and financial position of the Cleco Cajun Sale Group are presented as discontinued operations, and the financial information for historical periods

provided in this report has been recast to reflect this presentation. Certain expenses incurred by the Cleco Cajun Sale Group as a result of common services provided by Support Group are reflected in Cleco’s results of continuing operations due to the expected ongoing nature of those expenses. In addition, revenue recognized by Cleco Power from transmission services provided to the Cleco Cajun Sale Group is no longer eliminated upon consolidation of Cleco's financial statements and is reflected in Cleco’s results of continuing operations due to the expected ongoing nature of these services.

In February 2019 in connection with the approval of the Cleco Cajun Transaction, Cleco made commitments to the LPSC that included the repayment of $400.0 million of Cleco Holdings’ debt by December 31, 2024. Proceeds from the divestiture of the Cleco Cajun Sale Group must be used to satisfy the LPSC commitment. At ~~June~~September 30, 2023, $132.3 million of that debt remains outstanding. Interest expense on that debt is included in discontinued operations.

~~As a result of Cleco’s determination that the held for sale criteria for the Cleco Cajun Sale Group were met,~~ Cleco determined that the estimated fair value less the estimated cost to sell the Cleco Cajun Sale Group was less than the carrying value of the Cleco Cajun Sale ~~Group. This~~Group at March 31, 2023, June 30, 2023, and September 30, 2023. These determinations resulted in an impairment charge of ~~$96.0~~$154.0 million in the ~~first quarter~~nine months ended September 30, 2023, of ~~2023 and an additional impairment charge of $20.0~~which $38.0 million was recognized in the ~~second quarter of~~three months ended September 30, 2023. The impairment ~~charges~~charge recognized in the three months ended September 30, 2023, was primarily due to changes in assumptions related to the expected sale proceeds, probabilities assigned to potential sale scenarios, and the expected closing date. The impairment charge recognized in the nine months ended September 30, 2023, reduced the carrying value of the Cleco Cajun Sale Group to its estimated fair value less estimated cost to sell.

The ~~additional~~ impairment charge ~~was primarily due to changes in assumptions related to the expected sale proceeds and closing date. The impairment charges are~~is recognized in Loss from discontinued operations, net of income taxes on Cleco's Condensed Consolidated Statement of Income. The estimated fair value was based on a weighted average of potential sale scenarios that were determined through the income and market approaches. The fair value estimates involved a number of judgments and assumptions including the future performance of the Cleco Cajun Sale Group through the expected divestiture date, the expected sale proceeds and the timing of such proceeds, replacement interconnection value, and the weighted average cost of capital or discount rate. The fair value measurement of the Cleco Cajun Sale Group is classified as Level 3 in the fair value hierarchy.

The following table presents the amounts that have been reclassified from continuing operations and included in discontinued operations within Cleco’s Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022:


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Operating revenue, net	Operating revenue, net									Operating revenue, net
Electric operations	Electric operations	$	123,462	$	126,089	$	232,223	$	229,722	Electric operations	$	153,025	$	140,767	$	385,249	$	370,489
Other operations	Other operations	26,469		36,712		61,182		72,324		Other operations	34,231		39,573		95,413		111,897

Operating revenue, net	Operating revenue, net	149,931		162,801		293,405		302,046		Operating revenue, net	187,256		180,340		480,662		482,386
Operating expenses	Operating expenses									Operating expenses
Fuel used for electric generation		23,548		18,954		111,147		(84,134)
Fuel used for electric generation *										Fuel used for electric generation *	41,339		59,435		70,053		141,189
Purchased power	Purchased power	47,962		95,522		108,587		163,630		Purchased power	67,297		111,901		175,884		275,531
Other operations and maintenance	Other operations and maintenance	23,945		21,942		47,313		41,000		Other operations and maintenance	28,611		20,727		75,926		61,726
Depreciation and amortization	Depreciation and amortization	502		21,929		15,015		43,819		Depreciation and amortization	433		12,046		15,448		55,866

Total operating expenses	Total operating expenses	95,957		158,347		282,062		164,315		Total operating expenses	137,680		204,109		337,311		534,312
Operating income		53,974		4,454		11,343		137,731

Operating income (loss)										Operating income (loss)	49,576		(23,769)		143,351		(51,926)
Other (expense) income, net	Other (expense) income, net	(3)		(4)		131		84		Other (expense) income, net	(7)		12		125		96

Interest, net	Interest, net	(1,924)		(1,085)		(3,710)		(1,951)		Interest, net	(1,835)		(1,712)		(5,545)		(3,663)
Loss on classification as held for sale	Loss on classification as held for sale	(20,000)		—		(116,000)		—		Loss on classification as held for sale	(38,000)		—		(154,000)		—
Income (loss) from discontinued operations before income taxes	Income (loss) from discontinued operations before income taxes	32,047		3,365		(108,236)		135,864		Income (loss) from discontinued operations before income taxes	9,734		(25,469)		(16,069)		(55,493)

Federal and state income tax expense (benefit)		7,775		33,103		(30,337)		35,050
Income (loss) from discontinued operations, net of income taxes		$	24,272	$	(29,738)	$	(77,899)	$	100,814
Federal and state income tax expense (benefit)*										Federal and state income tax expense (benefit)*	152,463		(3,609)		(6,362)		(920)
Loss from discontinued operations, net of income taxes										Loss from discontinued operations, net of income taxes	$	(142,729)	$	(21,860)	$	(9,707)	$	(54,573)

*For the six months ended June 30, 2023, and 2022, net (losses) gains associated with Cleco Cajun’s natural gas derivatives of $(82.4) million and $165.9 million, respectively, and the related income tax benefit (expense) of $22.2 million and $(44.7) million, respectively, were included in discontinued operations. As a result of the determination that potential buyers are no longer expected to acquire the natural gas derivative instruments in any of the potential sale scenarios, the net (losses) gains and related income tax benefit (expense) associated with the natural gas derivative instruments are no longer presented in discontinued operations.

The following table presents the assets and liabilities of the Cleco Cajun Sale Group that have been reclassified as held for sale within Cleco’s Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2023, and December 31, 2022:


(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Cash, cash equivalents, and restricted cash equivalents	Cash, cash equivalents, and restricted cash equivalents	$	4,082	$	10,567	Cash, cash equivalents, and restricted cash equivalents	$	4,091	$	4,067

Accounts receivable	Accounts receivable	61,986		60,750		Accounts receivable	58,733		57,822

Fuel inventory, at average cost	Fuel inventory, at average cost	95,147		33,153		Fuel inventory, at average cost	93,971		33,153
Materials and supplies, at average cost	Materials and supplies, at average cost	34,790		34,195		Materials and supplies, at average cost	35,860		34,195
Energy risk management assets	Energy risk management assets	42,752		106,164		Energy risk management assets	1,398		518

Property, plant, and equipment, net	Property, plant, and equipment, net	637,165		650,936		Property, plant, and equipment, net	636,523		649,067
Prepayments	Prepayments	20,515		23,601		Prepayments	24,655		23,601

Intangible assets - other	Intangible assets - other	32,569		36,548		Intangible assets - other	32,569		36,548

Other assets	Other assets	20,991		23,620		Other assets	21,563		23,619
Loss recognized on classification as held for sale	Loss recognized on classification as held for sale	(116,000)		—		Loss recognized on classification as held for sale	(154,000)		—

Total assets held for sale - discontinued operations	Total assets held for sale - discontinued operations	$	833,997	$	979,534	Total assets held for sale - discontinued operations	$	755,363	$	862,590

Accounts payable	Accounts payable	$	52,455	$	60,586	Accounts payable	$	46,209	$	59,434

Deferred lease revenue	Deferred lease revenue	19,945		22,246		Deferred lease revenue	19,945		22,246
Intangible liabilities	Intangible liabilities	12,695		13,956		Intangible liabilities	12,695		13,956
Asset retirement obligations	Asset retirement obligations	45,212		63,725		Asset retirement obligations	45,702		63,725

Other liabilities	Other liabilities	15,347		10,056		Other liabilities	12,526		7,647

Total liabilities held for sale - discontinued operations	Total liabilities held for sale - discontinued operations	$	145,654	$	170,569	Total liabilities held for sale - discontinued operations	$	137,077	$	167,008

Balances associated with natural gas derivative instruments are no longer presented as held for sale on Cleco’s Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022, as a result of the determination that potential buyers are no longer expected to acquire the natural gas derivative instruments in any of the potential sale scenarios.

Cleco has elected to present cash flows of discontinued operations combined with cash flows of continuing operations.

The following table presents the cash flows from discontinued operations related to the Cleco Cajun Sale Group for the ~~three and six~~nine months ended ~~June~~September 30, 2023, and 2022:


		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Net cash (used in) provided by operating activities - discontinued operations		$	(2,454)	$	2,865
Net cash provided by operating activities - discontinued operations						Net cash provided by operating activities - discontinued operations	$	5,425	$	4,849
Net cash used in investing activities - discontinued operations	Net cash used in investing activities - discontinued operations	$	(4,031)	$	(2,839)	Net cash used in investing activities - discontinued operations	$	(5,401)	$	(4,844)


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


Note 4 — Revenue Recognition

~~Revenue from Contracts with Customers~~

On September 1, 2022, Cleco Power began billing and collecting a storm recovery surcharge from its retail customers. This surcharge represents the recovery of costs incurred by Cleco Power as a result of Hurricanes Laura, Delta, Zeta, and Ida and Winter Storms Uri and Viola, as well as interest and associated expenses. Cleco Power remits the collected storm recovery surcharge to Cleco Securitization I to service Cleco Securitization I’s storm recovery bonds. The storm recovery surcharge will continue to be billed and collected from Cleco Power’s retail customers through the life of the Cleco Securitization I storm recovery bonds.

Disaggregated Revenue

Operating revenue, net for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022 was as follows:


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~


		FOR THE THREE MONTHS ENDED JUNE 30, 2023								FOR THE THREE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			TOTAL		(THOUSANDS)	CLECO POWER			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)	$	103,144		$	—		$	—		$	103,144	Residential (1)	$	166,638		$	—		$	—	$	166,638
Commercial (1)	Commercial (1)	68,067			—			—			68,067		Commercial (1)	85,137			—			—		85,137
Industrial (1)	Industrial (1)	37,615			—			—			37,615		Industrial (1)	45,214			—			—		45,214
Other retail (1)	Other retail (1)	4,070			—			—			4,070		Other retail (1)	4,126			—			—		4,126

Electric customer credits	Electric customer credits	(736)			—			—			(736)		Electric customer credits	24			—			—		24
Total retail revenue	Total retail revenue	212,160			—			—			212,160		Total retail revenue	301,139			—			—		301,139
Wholesale, net	Wholesale, net	48,481		(1)	(2,387)		(2)	—			46,094		Wholesale, net	60,844		(1)	(2,323)		(2)	(1)		58,520
Transmission	Transmission	13,955			—			—			13,955		Transmission	17,077			—			—		17,077
Other	Other	4,551			—			—			4,551		Other	4,923			—			—		4,923
Affiliate (3)	Affiliate (3)	1,635			28,902			(30,537)			—		Affiliate (3)	1,645			30,253			(31,898)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	280,782			26,515			(30,537)			276,760		Total revenue from contracts with customers	385,628			27,930			(31,899)		381,659
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers												Revenue unrelated to contracts with customers
Securitization		6,236			—			—			6,236
Securitization revenue													Securitization revenue	9,984			—			—		9,984
Other	Other	1,798		(4)	1			—			1,799		Other	2,202		(4)	—			1		2,203
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	8,034			1			—			8,035		Total revenue unrelated to contracts with customers	12,186			—			1		12,187
Operating revenue, net	Operating revenue, net	$	288,816		$	26,516		$	(30,537)		$	284,795	Operating revenue, net	$	397,814		$	27,930		$	(31,898)	$	393,846

(1) Includes fuel recovery revenue.

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

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

(4) Realized gains associated with FTRs.


		FOR THE THREE MONTHS ENDED JUNE 30, 2022											FOR THE THREE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL		(THOUSANDS)	CLECO POWER			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)	$	131,813		$	—		$	—	$	131,813	Residential (1)	$	190,023		$	—		$	—	$	190,023
Commercial (1)	Commercial (1)	84,336			—			—		84,336		Commercial (1)	113,176			—			—		113,176
Industrial (1)	Industrial (1)	50,188			—			—		50,188		Industrial (1)	64,486			—			—		64,486
Other retail (1)	Other retail (1)	4,297			—			—		4,297		Other retail (1)	5,213			—			—		5,213

Storm recovery surcharge												Storm recovery surcharge	5,025			—			—		5,025
Electric customer credits	Electric customer credits	(129)			—			—		(129)		Electric customer credits	(6,728)			—			—		(6,728)
Total retail revenue	Total retail revenue	270,505			—			—		270,505		Total retail revenue	371,195			—			—		371,195
Wholesale, net	Wholesale, net	91,934		(1)	(2,420)		(2)	—		89,514		Wholesale, net	97,933		(1)	(2,420)		(2)	—		95,513
Transmission	Transmission	13,688			—			—		13,688		Transmission	18,664			—			—		18,664
Other	Other	4,998			—			—		4,998		Other	6,094			—			—		6,094
Affiliate (3)	Affiliate (3)	1,628			25,752			(27,380)		—		Affiliate (3)	1,657			29,583			(31,240)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	382,753			23,332			(27,380)		378,705		Total revenue from contracts with customers	495,543			27,163			(31,240)		491,466
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers											Revenue unrelated to contracts with customers
Other	Other	6,046		(4)	2			—		6,048		Other	5,296		(4)	1			1		5,298
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	6,046			2			—		6,048		Total revenue unrelated to contracts with customers	5,296			1			1		5,298
Operating revenue, net	Operating revenue, net	$	388,799		$	23,334		$	(27,380)	$	384,753	Operating revenue, net	$	500,839		$	27,164		$	(31,239)	$	496,764

(1) Includes fuel recovery revenue.

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

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

(4) Realized gains associated with FTRs.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


		FOR THE SIX MONTHS ENDED JUNE 30, 2023									FOR THE NINE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS				TOTAL		(THOUSANDS)	CLECO POWER			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)	$	210,340		$	—		$	—			$	210,340	Residential (1)	$	376,978		$	—		$	—	$	376,978
Commercial (1)	Commercial (1)	145,724			—			—				145,724		Commercial (1)	230,861			—			—		230,861
Industrial (1)	Industrial (1)	87,025			—			—				87,025		Industrial (1)	132,239			—			—		132,239
Other retail (1)	Other retail (1)	8,644			—			—				8,644		Other retail (1)	12,770			—			—		12,770
Electric customer credits	Electric customer credits	(1,386)			—			—				(1,386)		Electric customer credits	(1,362)			—			—		(1,362)
Total retail revenue	Total retail revenue	450,347			—			—				450,347		Total retail revenue	751,486			—			—		751,486
Wholesale, net	Wholesale, net	105,164		(1)	(4,807)		(2)	—				100,357		Wholesale, net	166,008		(1)	(7,131)		(2)	—		158,877
Transmission, net	Transmission, net	26,485			—			—				26,485		Transmission, net	43,562			—			—		43,562
Other	Other	10,100			—			—				10,100		Other	15,023			—			—		15,023
Affiliate (3)	Affiliate (3)	3,323			56,416			(59,739)				—		Affiliate (3)	4,967			86,669			(91,636)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	595,419			51,609			(59,739)				587,289		Total revenue from contracts with customers	981,046			79,538			(91,636)		968,948
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers													Revenue unrelated to contracts with customers
Securitization		15,462			—			—				15,462
Securitization revenue														Securitization revenue	25,444			—			—		25,444
Other	Other	2,624		(4)	2			—				2,626		Other	4,828		(4)	1			1		4,830
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	18,086			2			—				18,088		Total revenue unrelated to contracts with customers	30,272			1			1		30,274
Operating revenue, net	Operating revenue, net	$	613,505		$	51,611		$	(59,739)			$	605,377	Operating revenue, net	$	1,011,318		$	79,539		$	(91,635)	$	999,222
(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.	(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.									(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.


		FOR THE SIX MONTHS ENDED JUNE 30, 2022									FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS				TOTAL		(THOUSANDS)	CLECO POWER			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)	$	244,236		$	—		$	—			$	244,236	Residential (1)	$	434,259		$	—		$	—	$	434,259
Commercial (1)	Commercial (1)	160,870			—			—				160,870		Commercial (1)	274,046			—			—		274,046
Industrial (1)	Industrial (1)	96,462			—			—				96,462		Industrial (1)	160,948			—			—		160,948
Other retail (1)	Other retail (1)	8,426			—			—				8,426		Other retail (1)	13,639			—			—		13,639

Storm recovery surcharge														Storm recovery surcharge	5,025			—			—		5,025
Electric customer credits	Electric customer credits	(265)			—			—				(265)		Electric customer credits	(6,992)			—			—		(6,992)
Total retail revenue	Total retail revenue	509,729			—			—				509,729		Total retail revenue	880,925			—			—		880,925
Wholesale, net	Wholesale, net	147,298		(1)	(4,840)		(2)	—				142,458		Wholesale, net	245,231		(1)	(7,260)		(2)	—		237,971
Transmission, net	Transmission, net	27,580		(4)	—			—				27,580		Transmission, net	46,244			—			—		46,244
Other	Other	10,191			1			—				10,192		Other	16,285			1			—		16,286
Affiliate ~~(6)~~(3)	Affiliate ~~(6)~~(3)	3,087			53,145			(56,232)				—		Affiliate ~~(6)~~(3)	4,744			82,728			(87,472)		—
Total revenue from contracts with customers	Total revenue from contracts with customers	697,885			48,306			(56,232)				689,959		Total revenue from contracts with customers	1,193,429			75,469			(87,472)		1,181,426
Revenue unrelated to contracts with customers	Revenue unrelated to contracts with customers													Revenue unrelated to contracts with customers
Other	Other	7,419		(4)	2			—				7,421		Other	12,715		(4)	4			—		12,719
Total revenue unrelated to contracts with customers	Total revenue unrelated to contracts with customers	7,419			2			—				7,421		Total revenue unrelated to contracts with customers	12,715			4			—		12,719
Operating revenue, net	Operating revenue, net	$	705,304		$	48,308		$	(56,232)			$	697,380	Operating revenue, net	$	1,206,144		$	75,473		$	(87,472)	$	1,194,145
(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.	(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.									(1) Includes fuel recovery revenue. (2) Amortization of intangible assets related to Cleco Power’s wholesale power supply agreements. (3) Includes interdepartmental rents and support services. This revenue is eliminated upon consolidation. (4) Realized gains associated with FTRs.

Cleco and Cleco Power have unsatisfied performance obligations under contracts with electric cooperatives, retail customers, and municipalities with remaining durations ranging between 23 and 12 years that primarily relate to stand-ready obligations as part of fixed capacity minimums. At ~~June~~September 30, 2023, Cleco and Cleco Power had ~~$300.1~~$297.7 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						2023 3RD QUARTER FORM 10-Q


Note 5 — Regulatory Assets and Liabilities

Cleco Power recognizes an asset for certain costs capitalized or deferred for recovery from customers and recognizes a liability for amounts expected to be returned to customers or collected for future expected costs. Cleco Power records these assets and liabilities 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


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

competition, Cleco ~~Power’s ability~~Power may be required to ~~recover~~write down 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.~~recoverable. 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	Cleco Power								Cleco Power
						REMAINING RECOVERY PERIOD (YRS.)												REMAINING RECOVERY PERIOD (YRS.)
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022			(THOUSANDS)	AT SEPT. 30, 2023				AT DEC. 31, 2022
Regulatory assets	Regulatory assets								Regulatory assets
Acadia Unit 1 acquisition costs	Acadia Unit 1 acquisition costs	$	1,754	$	1,807		16.5				Acadia Unit 1 acquisition costs	$	1,728			$	1,807		16.25
Accumulated deferred fuel (1)	Accumulated deferred fuel (1)	5,050		57,881		Various			Accumulated deferred fuel (1)	20,241				57,881				Various
Affordability study	Affordability study	11,026		11,715		8			Affordability study	10,682				11,715				7.75
AFUDC equity gross-up	AFUDC equity gross-up	61,929		63,477		Various	(2)		AFUDC equity gross-up	61,155				63,477				Various	(2)
AMI deferred revenue requirement	AMI deferred revenue requirement	1,227		1,499		2.75			AMI deferred revenue requirement	1,090				1,499				2.5
AROs (8)	AROs (8)	18,636		17,218					AROs (8)	19,368				17,218
Bayou Vista to Segura transmission project deferred revenue requirement	Bayou Vista to Segura transmission project deferred revenue requirement	—		2,510					Bayou Vista to Segura transmission project deferred revenue requirement	—				2,510
Coughlin transaction costs	Coughlin transaction costs	799		815		26			Coughlin transaction costs	792				815				25.75
COVID-19 executive order (8)	COVID-19 executive order (8)	2,953		2,953					COVID-19 executive order (8)	3,007				2,953
Deferred lignite and mine closure costs (7)	Deferred lignite and mine closure costs (7)	135,104		133,587					Deferred lignite and mine closure costs (7)	135,624				133,587
Deferred storm restoration costs - Hurricane Delta (6)	Deferred storm restoration costs - Hurricane Delta (6)	88		109					Deferred storm restoration costs - Hurricane Delta (6)	88				109
Deferred storm restoration costs - Hurricane Ida ~~(7)~~	Deferred storm restoration costs - Hurricane Ida ~~(7)~~	9,639		9,409					Deferred storm restoration costs - Hurricane Ida ~~(7)~~	—				9,409
Deferred storm restoration costs - Hurricane Laura (6)	Deferred storm restoration costs - Hurricane Laura (6)	367		457					Deferred storm restoration costs - Hurricane Laura (6)	367				457
Deferred storm restoration costs - Hurricane Zeta (6)	Deferred storm restoration costs - Hurricane Zeta (6)	7		9					Deferred storm restoration costs - Hurricane Zeta (6)	7				9

Deferred taxes, net	Deferred taxes, net	33,983		8,803		Various			Deferred taxes, net	45,463				8,803				Various
Dolet Hills Power Station closure costs (7)	Dolet Hills Power Station closure costs (7)	147,238		147,082					Dolet Hills Power Station closure costs (7)	147,306				147,082

Energy efficiency	Energy efficiency	—		235					Energy efficiency	—				235
Financing costs (1)	Financing costs (1)	6,272		6,456		Various	(3)		Financing costs (1)	6,179				6,456				Various	(3)
Interest costs	Interest costs	3,085		3,210		Various	(2)		Interest costs	3,023				3,210				Various	(2)
Madison Unit 3 property taxes	Madison Unit 3 property taxes	13,150		13,038		Various	(9)		Madison Unit 3 property taxes	13,139				13,038				Various	(9)
Non-service cost of postretirement benefits	Non-service cost of postretirement benefits	14,878		14,810		Various	(2)		Non-service cost of postretirement benefits	14,692				14,810				Various	(2)
Other	Other	15,508		14,114		Various			Other	13,345				14,114				Various
Postretirement costs	Postretirement costs	47,317		47,317		Various	(4)		Postretirement costs	47,317				47,317				Various	(4)
Production operations and maintenance expenses	Production operations and maintenance expenses	9,010		10,443		Various	(5)		Production operations and maintenance expenses	8,012				10,443				Various	(5)
Rodemacher Unit 2 deferred costs (8)	Rodemacher Unit 2 deferred costs (8)	15,635		12,645					Rodemacher Unit 2 deferred costs (8)	17,317				12,645

St. Mary Clean Energy Center	St. Mary Clean Energy Center	3,480		4,350		2			St. Mary Clean Energy Center	3,045				4,350				1.75

Training costs	Training costs	5,696		5,774		36.5			Training costs	5,657				5,774				36.25
Tree trimming costs	Tree trimming costs	5,015		6,377		1.75			Tree trimming costs	4,336				6,377				1.5
Total regulatory assets	Total regulatory assets	568,846		598,100					Total regulatory assets	582,980				598,100
Regulatory liabilities	Regulatory liabilities								Regulatory liabilities

Deferred taxes, net	Deferred taxes, net	(41,389)		(42,890)		Various			Deferred taxes, net	(31,215)				(42,890)				Various

Storm reserves	Storm reserves	(119,276)		(118,762)					Storm reserves	(106,789)				(118,762)
Total regulatory liabilities	Total regulatory liabilities	(160,665)		(161,652)					Total regulatory liabilities	(138,004)				(161,652)
Total regulatory assets, net	Total regulatory assets, net	$	408,181	$	436,448				Total regulatory assets, net	$	444,976			$	436,448
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at June 30, 2023, and December 31, 2022. All other assets are earning a return on investment. (2) Amortized over the estimated lives of the respective assets. (3) Amortized over the terms of the related debt issuances. (4) Amortized over the average service life of the remaining plan participants. (5) Deferral is recovered over the following three-year regulatory period. (6) From June 1, 2021, through August 31, 2022, these were being recovered through the interim storm recovery rate. The storm recovery surcharge became effective on September 1, 2022. (7) Currently not in a recovery period. The balance remaining represents amounts under a prudency review by the LPSC. (8) Currently not in a recovery period. (9) Beginning July 1, 2021, property taxes paid for the year ended December 31, are being amortized over the subsequent 12 months beginning July 1.
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 30, 2023, and December 31, 2022. All other assets are earning a return on investment. (2) Amortized over the estimated lives of the respective assets. (3) Amortized over the terms of the related debt issuances. (4) Amortized over the average service life of the remaining plan participants. (5) Deferral is recovered over the following three-year regulatory period. (6) From June 1, 2021, through August 31, 2022, these were being recovered through the interim storm recovery rate. The storm recovery surcharge became effective on September 1, 2022. (7) Currently not in a recovery period. The balance remaining represents amounts under a prudency review by the LPSC. (8) Currently not in a recovery period. (9) Beginning July 1, 2021, property taxes paid for the year ended December 31, are being amortized over the subsequent 12 months beginning July 1.									(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 30, 2023, and December 31, 2022. All other assets are earning a return on investment. (2) Amortized over the estimated lives of the respective assets. (3) Amortized over the terms of the related debt issuances. (4) Amortized over the average service life of the remaining plan participants. (5) Deferral is recovered over the following three-year regulatory period. (6) From June 1, 2021, through August 31, 2022, these were being recovered through the interim storm recovery rate. The storm recovery surcharge became effective on September 1, 2022. (7) Currently not in a recovery period. The balance remaining represents amounts under a prudency review by the LPSC. (8) Currently not in a recovery period. (9) Beginning July 1, 2021, property taxes paid for the year ended December 31, are being amortized over the subsequent 12 months beginning July 1.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q

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


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Total Cleco Power regulatory assets, net	Total Cleco Power regulatory assets, net	$	408,181	$	436,448	Total Cleco Power regulatory assets, net	$	444,976	$	436,448
2016 Merger adjustments *	2016 Merger adjustments *					2016 Merger adjustments*
Fair value of long-term debt	Fair value of long-term debt	101,047		104,748		Fair value of long-term debt	99,196		104,748
Postretirement costs	Postretirement costs	10,442		11,436		Postretirement costs	9,945		11,436
Financing costs	Financing costs	6,732		6,904		Financing costs	6,646		6,904
Debt issuance costs	Debt issuance costs	4,421		4,587		Debt issuance costs	4,337		4,587
Total Cleco regulatory assets, net	Total Cleco regulatory assets, net	$	530,823	$	564,123	Total Cleco regulatory assets, net	$	565,100	$	564,123

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

Accumulated Deferred Fuel

Cleco Power is allowed to recover the cost of fuel used for electric generation and power purchased for utility customers through the LPSC established FAC or related wholesale contract provisions, which enable Cleco Power to pass on to its customers substantially all such expenses.

At ~~June~~September 30, 2023, ~~Cleco Power recorded a decrease of $52.8~~Accumulated deferred fuel decreased $37.4 million ~~in the associated regulatory asset~~ as a result of lower fuel costs.

Deferred Storm Restoration Costs and Storm Reserves

At December 31, 2022, Cleco Power had $15.5 million recorded for the Hurricane Ida storm reserve and a regulatory asset of $9.4 million for non-capital expenses associated with Hurricane Ida that were under a prudency review by the LPSC. On September 20, 2023, the LPSC approved a settlement allowing Cleco Power to withdraw the remaining unrecovered Hurricane Ida storm restoration costs, plus a carrying charge through September 2023, totaling $10.3 million from the Hurricane Ida storm reserve. The settlement also approved the transfer of the remaining balance of the Hurricane Ida storm reserve to the restricted reserve for future storm restoration costs.


Note 6 — Fair Value Accounting Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement ~~that is determined~~ based on ~~inputs, which refer broadly to~~ assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable inputs. Cleco makes certain assumptions it believes that market participants would use in pricing ~~assets~~an asset or ~~liabilities, including assumptions about risks such as the risks inherent in~~a liability. Cleco’s valuation techniques maximize the use of observable market-based inputs and ~~risks associated with inputs to those valuation techniques.~~minimize the use of unobservable inputs. Credit risk of Cleco and its counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which were immaterial at June 30, 2023, and December 31, 2022. Cleco’s valuation techniques maximize the use of observable market-based inputs and minimize the use of unobservable inputs.reserves.

ACleco utilizes a three-tier fair value hierarchy ~~has been established~~ that prioritizes ~~the~~ inputs ~~to valuation techniques~~that may be used to measure fair ~~value in three broad levels.~~value. The fair value hierarchy gives the highest priority to unadjusted quoted prices ~~unadjusted,~~ in active markets for

identical assets or liabilities

and the lowest priority to unobservable inputs. In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. Significant increases or decreases in any of those inputs in isolation could result in a significantly different fair value measurement. Cleco classifies fair value balances based on the fair value hierarchy defined as follows:

•Level 1 — observable inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that Cleco can observe as of the ~~reporting~~measurement date.

•Level 2 — observable inputs other than Level 1 prices, such as quoted prices ~~included within Level 1~~for similar assets or liabilities in active markets, quoted market prices in markets that are ~~similar and directly~~not active, or other inputs that are observable ~~for the asset~~ or ~~liability or indirectly observable through corroboration with~~can be corroborated by observable market ~~data.~~data for substantially the full term of the assets or liabilities.

•Level 3 — unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

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. For information on the impairment related to discontinued operations, see Note 3 — “Discontinued Operations.”

Fair Value Measurements on a Recurring Basis

The amounts reflected in Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at ~~June~~September 30, 2023, and December 31, 2022, 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.

The following tables disclose the fair value of financial assets and liabilities measured on a recurring basis on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. These amounts are presented on a gross basis.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


Cleco	Cleco																	Cleco
		FAIR VALUE MEASUREMENTS AT REPORTING DATE																	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		(THOUSANDS)	AT SEPT. 30, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description	Asset description																	Asset description
Short-term investments	Short-term investments	$	199,672	$	199,672	$	—	$	—	$	172,741	$	172,741	$	—	$	—	Short-term investments	$	290,974	$	290,974	$	—	$	—	$	179,241	$	179,241	$	—	$	—
FTRs	FTRs	7,330		—		—		7,330		2,570		—		—		2,570		FTRs	4,814		—		—		4,814		2,570		—		—		2,570
Natural gas derivatives	Natural gas derivatives	916		—		916		—		—		—		—		—		Natural gas derivatives	32,379		—		32,379		—		105,646		—		105,646		—
Total assets	Total assets	$	207,918	$	199,672	$	916	$	7,330	$	175,311	$	172,741	$	—	$	2,570	Total assets	$	328,167	$	290,974	$	32,379	$	4,814	$	287,457	$	179,241	$	105,646	$	2,570
Liability description	Liability description																	Liability description
FTRs	FTRs	$	871	$	—	$	—	$	871	$	294	$	—	$	—	$	294	FTRs	$	671	$	—	$	—	$	671	$	294	$	—	$	—	$	294
Natural gas derivatives	Natural gas derivatives	648		—		648		—		4,570		—		4,570		—		Natural gas derivatives	4,550		—		4,550		—		6,980		—		6,980		—
Total liabilities	Total liabilities	$	1,519	$	—	$	648	$	871	$	4,864	$	—	$	4,570	$	294	Total liabilities	$	5,221	$	—	$	4,550	$	671	$	7,274	$	—	$	6,980	$	294


Cleco Power	Cleco Power																	Cleco Power
		FAIR VALUE MEASUREMENTS AT REPORTING DATE																	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		(THOUSANDS)	AT SEPT. 30, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description	Asset description																	Asset description
Short-term investments	Short-term investments	$	158,483	$	158,483	$	—	$	—	$	139,752	$	139,752	$	—	$	—	Short-term investments	$	217,384	$	217,384	$	—	$	—	$	139,752	$	139,752	$	—	$	—
FTRs	FTRs	7,330		—		—		7,330		2,570		—		—		2,570		FTRs	4,814		—		—		4,814		2,570		—		—		2,570
Natural gas derivatives	Natural gas derivatives	916		—		916		—		—		—		—		—		Natural gas derivatives	166		—		166		—		—		—		—		—
Total assets	Total assets	$	166,729	$	158,483	$	916	$	7,330	$	142,322	$	139,752	$	—	$	2,570	Total assets	$	222,364	$	217,384	$	166	$	4,814	$	142,322	$	139,752	$	—	$	2,570
Liability description	Liability description																	Liability description
FTRs	FTRs	$	871	$	—	$	—	$	871	$	294	$	—	$	—	$	294	FTRs	$	671	$	—	$	—	$	671	$	294	$	—	$	—	$	294
Natural gas derivatives	Natural gas derivatives	648		—		648		—		4,570		—		4,570		—		Natural gas derivatives	3,938		—		3,938		—		4,570		—		4,570		—
Total liabilities	Total liabilities	$	1,519	$	—	$	648	$	871	$	4,864	$	—	$	4,570	$	294	Total liabilities	$	4,609	$	—	$	3,938	$	671	$	4,864	$	—	$	4,570	$	294

Cleco has consistently applied the Level 2 and Level 3 fair value techniques between comparative fiscal periods. During the ~~six~~nine months ended ~~June~~September 30, 2023, and the year ended December 31, 2022, Cleco did not experience any transfers into or out of Level 3 of the fair value hierarchy.

Short-term Investments

At ~~June~~September 30, 2023, Cleco and Cleco Power had short-term investments in money market funds and treasury bills that have a maturity of three months or less when purchased. At December 31, 2022, Cleco and Cleco Power had short-term investments in money market funds that had a maturity of three months or less when purchased.

The following tables present the short-term investments as recorded on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at ~~June~~September 30, 2023, and December 31, 2022:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	65,894	$	39,779	Cash and cash equivalents	$	172,601	$	46,279
Current restricted cash and cash equivalents	Current restricted cash and cash equivalents	$	22,671	$	23,548	Current restricted cash and cash equivalents	$	6,356	$	23,548
Non-current restricted cash and cash equivalents	Non-current restricted cash and cash equivalents	$	111,107	$	109,414	Non-current restricted cash and cash equivalents	$	112,017	$	109,414


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	24,727	$	6,813	Cash and cash equivalents	$	99,034	$	6,813
Current restricted cash and cash equivalents	Current restricted cash and cash equivalents	$	22,671	$	23,548	Current restricted cash and cash equivalents	$	6,356	$	23,548
Non-current restricted cash and cash equivalents	Non-current restricted cash and cash equivalents	$	111,085	$	109,391	Non-current restricted cash and cash equivalents	$	111,994	$	109,391

FTRs

FTRs are financial instruments used to provide a financial hedge to manage the risk of transmission congestion charges between MISO nodes in MISO’s Day-Ahead Energy Market. Cleco is awarded and/or purchases FTRs in auctions facilitated by MISO. FTRs are derivatives not designated as hedging instruments for accounting purposes.

FTRs are valued using MISO’s monthly auction prices as a price index reference (Level 3). Unrealized gains or losses are deferred as a component of Accumulated deferred fuel on the balance sheet in accordance with regulatory policy, and at settlement, realized gains or losses are included in Cleco Power’s FAC and reflected on customers’ bills as a component of the fuel charge.

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


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Balances, beginning of period	Balances, beginning of period	$	633	$	567	$	2,276	$	4,918	Balances, beginning of period	$	6,459	$	10,138	$	2,276	$	4,918
Unrealized (losses) gains*	Unrealized (losses) gains*	(211)		4,267		(211)		4,267		Unrealized (losses) gains*	114		(1,363)		(186)		189
Purchases	Purchases	8,087		6,577		8,023		6,869		Purchases	12		168		8,035		7,037
Settlements	Settlements	(2,050)		(1,273)		(3,629)		(5,916)		Settlements	(2,442)		(4,205)		(5,982)		(7,406)
Balances, June 30, 2023		$	6,459	$	10,138	$	6,459	$	10,138
* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheet.
Balances, end of period										Balances, end of period	$	4,143	$	4,738	$	4,143	$	4,738
* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets.										* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets.

The following table quantifies the significant unobservable inputs used in developing the fair value of Level 3 positions for Cleco and Cleco Power as of ~~June~~September 30, 2023, and December 31, 2022:


		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 June 30, 2023		$	7,330	$	871	RTO auction pricing	FTR price - per MWh	$	(5.40)	$	8.06
FTRs at Sept. 30, 2023												FTRs at Sept. 30, 2023	$	4,814	$	671	RTO auction pricing	FTR price - per MWh	$	(5.11)	$	7.02
FTRs at Dec. 31, 2022	FTRs at Dec. 31, 2022	$	2,570	$	294	RTO auction pricing	FTR price - per MWh	$	(5.11)	$	13.65	FTRs at Dec. 31, 2022	$	2,570	$	294	RTO auction pricing	FTR price - per MWh	$	(5.11)	$	13.65

Natural Gas Derivatives

Cleco may enter into physical and financial fixed price or options contracts that financially settle or are physically delivered at a future date. Management has not elected to apply hedge accounting to these contracts as allowed under applicable accounting standards. Cleco Power’s natural gas derivative contracts are marked-to-market with the resulting unrealized gain or loss recorded as a component of Accumulated deferred fuel on the balance sheet. At settlement, realized gains or losses are included in Cleco Power’s FAC and reflected on customer’s bills as a component of the fuel charge. Cleco Cajun’s unrealized gains or losses as well as realized gains or losses at settlement are recorded on the income statements as a component of fuel expense.

Fair Value Measurements on a Nonrecurring Basis

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


Cleco	Cleco									Cleco
		AT JUNE 30, 2023				AT DEC. 31, 2022					AT SEPT. 30, 2023				AT DEC. 31, 2022
(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	$	3,475,808	$	3,185,371	$	3,482,556	$	3,180,208	Long-term debt	$	3,467,666	$	3,064,760	$	3,482,556	$	3,180,208

* The carrying value of long-term debt does not include deferred issuance costs of ~~$15.0~~$14.4 million at ~~June~~September 30, 2023, and $16.2 million at December 31, 2022.


Cleco Power	Cleco Power									Cleco Power
		AT JUNE 30, 2023				AT DEC. 31, 2022					AT SEPT. 30, 2023				AT DEC. 31, 2022
(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	$	1,892,462	$	1,834,453	$	1,895,508	$	1,825,192	Long-term debt	$	1,886,170	$	1,750,841	$	1,895,508	$	1,825,192

* The carrying value of long-term debt does not include deferred issuance costs of ~~$11.6~~$11.2 million at ~~June~~September 30, 2023, and $12.3 million at December 31, 2022.

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

Concentrations of Credit Risk

At ~~June~~September 30, 2023, and December 31, 2022, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. If the short-term investments 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. In order to capture interest income and minimize risk, cash is invested primarily in short-term securities issued by the U.S. government to maintain liquidity and achieve the goal of a net asset value of a dollar.

When Cleco enters into commodity derivative or physical commodity transactions directly with market participants, Cleco may be exposed to counterparty credit risk. Cleco is exposed to counterparty credit risk when a counterparty fails to meet their financial obligations causing Cleco to potentially incur replacement cost losses. Cleco enters into long-form contract and master agreements with counterparties that govern the risk of counterparty credit default and allow for collateralization above prenegotiated thresholds to help mitigate potential losses. Alternatively, Cleco may be required to provide credit support with respect to ~~any open trading~~bilateral transactions and contracts that Cleco has entered into or may enter into in the future. The amount of credit support ~~that Cleco~~required may ~~be required to provide at any point in the future is dependent~~change based on ~~the amount of the initial contract,~~margining formulas, changes in the market price, changes in open contracts, changes in the amounts counterparties owe to Cleco, and any prenegotiated unsecured thresholds agreed to in the master contract. Changes in any of these factors could cause the amount of requested credit ~~support to increase~~agency ratings, or ~~decrease.~~liquidity ratios.

Note 7 — Derivative Instruments

In the normal course of business, Cleco utilizes derivative instruments, such as natural gas derivatives and FTRs, to mitigate volatility of overall fuel and purchased power costs. ~~For~~

Cleco ~~Power, recovery~~has not elected to designate any of ~~these costs is included in~~ its ~~FAC~~current instruments as an accounting hedge. At September 30, 2023, there was no collateral posted with or received from counterparties that was netted on Cleco’s and ~~reflected on customers’ bills as a component~~Cleco Power’s Condensed Consolidated Balance Sheets. The following table presents the fair values of ~~the fuel charge.~~derivative instruments and their


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q

Cleco has not elected to designate any of its current instruments as an accounting hedge. At June 30, 2023, there was no collateral posted with or received from counterparties that was netted on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. At December 31, 2022, cash collateral received from counterparties by Cleco Cajun was $6.5 million, all of which is included in Assets held for sale on Cleco’s Condensed Consolidated Balance Sheet. The following table presents the fair values of derivative instruments and their respective line items as recorded on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at ~~June~~September 30, 2023, and at December 31, 2022:


Cleco							Cleco
								DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
									AT SEPT. 30, 2023		AT DEC. 31, 2022
		DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS											GROSS AMOUNTS OFFSET ON THE BALANCE SHEET				GROSS AMOUNTS NOT OFFSET ON THE BALANCE SHEET (1)
(THOUSANDS)	(THOUSANDS)	BALANCE SHEET LINE ITEM	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	BALANCE SHEET LINE ITEM	NET ASSET (LIABILITY) ON THE BALANCE SHEET		GROSS ASSET (LIABILITY)		CASH COLLATERAL		NET ASSET (LIABILITY) ON THE BALANCE SHEET		COLLATERAL		NET AMOUNT
Commodity-related contracts	Commodity-related contracts						Commodity-related contracts
FTRs	FTRs						FTRs
Current	Current	Energy risk management assets	$	7,330	$	2,570	Current	Energy risk management assets	$	4,814	$	2,570	$	—	$	2,570	$	—	$	2,570
Current	Current	Energy risk management liabilities	(871)		(294)		Current	Energy risk management liabilities	(671)		(294)		—		(294)		—		(294)
Natural gas derivatives	Natural gas derivatives						Natural gas derivatives
Current	Current	Energy risk management assets	342		—		Current	Energy risk management assets	22,293		53,251		(6,500)		46,751		(32,578)		14,173
Non-current	Non-current	Energy risk management assets	574		—		Non-current	Energy risk management assets	10,086		58,895		—		58,895		(20,422)		38,473
Current	Current	Energy risk management liabilities	(648)		(4,570)		Current	Energy risk management liabilities	(4,550)		(6,980)		—		(6,980)		—		(6,980)
Commodity-related contracts, net	Commodity-related contracts, net		$	6,727	$	(2,294)	Commodity-related contracts, net		$	31,972	$	107,442	$	(6,500)	$	100,942	$	(53,000)	$	47,942

(1) Represents letters of credit by counterparties.


Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2023		AT DEC. 31, 2022
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	4,814	$	2,570
Current	Energy risk management liabilities	(671)		(294)
Natural gas derivatives
Current	Energy risk management assets	85		—
Non-current	Energy risk management assets	81		—
Current	Energy risk management liabilities	(3,938)		(4,570)
Commodity-related contracts, net		$	371	$	(2,294)

The following table presents the effect of derivatives not designated as hedging instruments on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022:


Cleco											Cleco
		AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME										AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
			FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	INCOME STATEMENT LINE ITEM	2023		2022		2023		2022		(THOUSANDS)	INCOME STATEMENT LINE ITEM	2023		2022		2023		2022
Commodity-related contracts	Commodity-related contracts										Commodity-related contracts
FTRs(1)	FTRs(1)	Electric operations	$	1,835	$	6,080	$	2,694	$	7,663	FTRs(1)	Electric operations	$	2,227	$	5,297	$	4,920	$	12,960
FTRs(1)	FTRs(1)	Purchased power	(1,499)		(1,846)		(2,096)		(3,083)		FTRs(1)	Purchased power	(1,690)		(2,575)		(3,786)		(5,658)
Natural gas derivatives(2) (3)	Natural gas derivatives(2) (3)	Fuel used for electric generation	(11,284)		—		(17,823)		—		Natural gas derivatives(2) (3)	Fuel used for electric generation	(10,250)		84,377		(110,506)		250,264
Total	Total		$	(10,948)	$	4,234	$	(17,225)	$	4,580	Total		$	(9,713)	$	87,099	$	(109,372)	$	257,566

(1) For the three and ~~six~~nine months ended ~~June~~September 30, 2023, unrealized ~~losses~~gains (losses) associated with FTRs of ~~$0.2~~$0.1 million and $(0.2) million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, unrealized (losses) gains associated with FTRs of ~~$4.3~~$(1.4) million and $0.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

(2) For the three and ~~six~~nine months ended ~~June~~September 30, 2023, unrealized (losses) gains associated with natural gas derivatives for Cleco Power of ~~$8.2~~$(4.0) million and ~~$3.7~~$0.8 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. ~~Cleco Power had no~~For the three and nine months ended September 30, 2022, unrealized losses associated with natural gas derivatives ~~during~~for Cleco Power of less than $0.1 million were reported through Accumulated deferred fuel on the ~~six months ended June 30, 2022.~~balance sheet.

(3) For the three and ~~six~~nine months ended ~~June~~September 30, 2023, realized losses associated with natural gas derivatives for Cleco Power of ~~$0.6~~$(0.3) million were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2022, Cleco Power had no realized gains (losses) associated with natural gas derivatives ~~during~~reported through Accumulated deferred fuel on the ~~six~~balance sheet.


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


Cleco Power
	AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
		FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2023		2022		2023		2022
Commodity-related contracts
FTRs(1)	Electric operations	$	2,227	$	5,297	$	4,920	$	12,960
FTRs(1)	Purchased power	(1,690)		(2,575)		(3,786)		(5,658)
Natural gas derivatives(2) (3)	Fuel used for electric generation	(2,053)		—		(19,876)		—
Total		$	(1,516)	$	2,722	$	(18,742)	$	7,302

(1) For the three and nine months ended ~~June~~September 30, ~~2022.~~2023, unrealized gains (losses) associated with FTRs of $0.1 million and $(0.2) million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2022, unrealized (losses) gains associated with FTRs of $(1.4) million and $0.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

(2) For the three and nine months ended September 30, 2023, unrealized (losses) gains associated with natural gas derivatives of $(4.0) million and $0.8 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2022, unrealized losses associated with natural gas derivatives of less than $0.1 million were reported through Accumulated deferred fuel on the balance sheet.

(3) For the three and nine months ended September 30, 2023, realized losses associated with natural gas derivatives of $(0.3) million were reported through Accumulated deferred fuel on the balance sheet. For the three and nine months ended September 30, 2022, Cleco Power had no realized gains (losses) associated with natural gas derivatives reported through Accumulated deferred fuel on the balance sheet.

The following table presents the volume of commodity-related derivative contracts outstanding at ~~June~~September 30, 2023, and December 31, 2022, for Cleco and Cleco Power:

Cleco

TOTAL VOLUME OUTSTANDING

UNIT OF MEASURE

TOTAL VOLUME OUTSTANDING

(THOUSAND)

UNIT OF MEASURE

AT JUNE 30, 2023

AT DEC. 31, 2022

(THOUSAND)

AT SEPT. 30, 2023

AT DEC. 31, 2022

Commodity-related contracts

FTRs

MWh

20,554

9,085

FTRs

MWh

15,326

9,085

Natural gas derivatives

MMBtus

31,615

4,840

Natural gas derivatives

MMBtus

71,935

85,350

Cleco Power

UNIT OF MEASURE

TOTAL VOLUME OUTSTANDING

(THOUSAND)

AT SEPT. 30, 2023

AT DEC. 31, 2022

Commodity-related contracts

FTRs

MWh

15,326

9,085

Natural gas derivatives

MMBtus

26,315

4,840


Note 8 — Debt

On February 17, 2023, Cleco Holdings and Cleco Power amended their respective revolving credit facilities and bank term loans to transition the benchmark interest rate from LIBOR to SOFR.

On May 1, 2023, Cleco Holdings amended certain terms of the supplemental indenture governing its $165.0 million senior notes due in 2023. As a result, the interest rate of the

senior notes changed to a floating interest rate equal to SOFR plus 1.725% and the maturity date was extended from May 1, 2023, to May 1, 2025.

At ~~June~~September 30, 2023, and December 31, 2022, Cleco’s long-term debt and finance leases outstanding due within one year was ~~$371.8~~$372.2 million and $340.9 million, respectively. The increase of ~~$30.9~~$31.4 million is primarily due to the reclassification of $125.0 million of Cleco Power’s bank term loan due in May 2024, $66.7 million of Cleco Holdings’ bank term loan due in May 2024, and an additional ~~$4.6~~$4.9 million of scheduled principal payments on Cleco Securitization I’s storm recovery

bonds. These increases are partially offset by the reclassification of Cleco Holdings’ $165.0 million senior notes due in 2023 to long-term debt as a result of the extension of the maturity date of such senior notes to May 1, 2025.

At ~~June~~September 30, 2023, and December 31, 2022, Cleco Power’s long-term debt and finance leases outstanding due within one year was ~~$239.9~~$240.3 million and $110.3 million, respectively. The increase of ~~$129.6~~$129.9 million is primarily due to the reclassification of Cleco Power’s $125.0 million bank term loan due in May


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

2024 and an additional ~~$4.6~~$4.9 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds.


Note 9 — 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. Based on the funding assumptions at December 31, 2022, management estimates that pension contributions totaling $74.5 million will be required through 2027. Cleco expects to make a $25.7 million minimum required contribution to the pension plan in 2024. Cleco is not required to make any contributions to the pension plan in 2023.

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’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’s and Cleco Power’s Condensed Consolidated Statements of Income. The components of net periodic pension and Other Benefits cost for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022 were as follows:

PENSION BENEFITS OTHER BENEFITS
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS) 2023 2022 2023 2022
Components of periodic benefit costs
Service cost $ 1,173 $ 2,040 $ 365 $ 546
Interest cost 6,606 4,960 566 368
Expected return on plan assets (7,386) (6,177) — —
Amortizations
Net loss (gain) — 3,083 (13) 298
Net periodic benefit cost $ 393 $ 3,906 $ 918 $ 1,212


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


	PENSION BENEFITS				OTHER BENEFITS
	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs
Service cost	$	1,173	$	2,043	$	365	$	546
Interest cost	6,606		4,960		566		368
Expected return on plan assets	(7,386)		(6,177)		—		—
Amortizations

Net loss (gain)	—		3,083		(13)		298
Net periodic benefit cost	$	393	$	3,909	$	918	$	1,212


		PENSION BENEFITS				OTHER BENEFITS					PENSION BENEFITS				OTHER BENEFITS
		FOR THE SIX MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs	Components of periodic benefit costs									Components of periodic benefit costs
Service cost	Service cost	$	2,347	$	4,086	$	729	$	1,092	Service cost	$	3,520	$	6,130	$	1,094	$	1,639
Interest cost	Interest cost	13,211		9,920		1,132		736		Interest cost	19,817		14,881		1,698		1,103
Expected return on plan assets	Expected return on plan assets	(14,772)		(12,354)		—		—		Expected return on plan assets	(22,158)		(18,531)		—		—
Amortizations	Amortizations									Amortizations

Net loss (gain)	Net loss (gain)	—		6,168		(25)		596		Net loss (gain)	—		9,252		(39)		894
Net periodic benefit cost	Net periodic benefit cost	$	786	$	7,820	$	1,836	$	2,424	Net periodic benefit cost	$	1,179	$	11,732	$	2,753	$	3,636

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 ~~six~~nine months ended ~~June~~September 30, 2023, was $0.4 million and ~~$0.8~~$1.2 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and ~~six~~nine months ended ~~June~~September 30, 2022, was $0.7 million and ~~$1.4~~$2.1 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023, was $0.9 million and ~~$1.7~~$2.6 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2022, was $1.1 million and ~~$2.2~~$3.3 million, respectively. The current and non-current portions of

the Other Benefits liability for Cleco and Cleco Power at ~~June~~September 30, 2023, and December 31, 2022, were as follows:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Current	Current	$	5,017	$	5,017	Current	$	5,017	$	5,017
Non-current	Non-current	$	37,172	$	38,366	Non-current	$	37,236	$	38,366


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Current	Current	$	4,310	$	4,310	Current	$	4,310	$	4,310
Non-current	Non-current	$	29,082	$	30,082	Non-current	$	29,110	$	30,082

SERP

Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out

of cash available of the respective company of the employed officer. Because the SERP is a non-qualified plan, Cleco has purchased life insurance policies on certain SERP participants as a mechanism to provide a source of funding. These policies are held in a rabbi trust formed by Cleco Power. The rabbi trust is the named beneficiary of the life insurance policies and,


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

therefore, receives the proceeds upon the death of the insured participants. The life insurance policies may be used to reimburse Cleco for benefits paid from general funds, pay the SERP participants’ death benefits, or pay future SERP payments. Market conditions could have a significant impact on the cash surrender value of these life insurance policies. 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. 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’s and Cleco Power’s Condensed Consolidated Statements of Income. The components of the net periodic benefit cost related to SERP for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022 were as follows:


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Components of periodic benefit costs	Components of periodic benefit costs									Components of periodic benefit costs
Service cost	Service cost	$	35	$	57	$	71	$	113	Service cost	$	35	$	57	$	106	$	170
Interest cost	Interest cost	901		670		1,802		1,340		Interest cost	901		670		2,703		2,009
Amortizations	Amortizations									Amortizations
Prior period service credit	Prior period service credit	(54)		(54)		(107)		(107)		Prior period service credit	(54)		(54)		(161)		(161)
Net (gain) loss	Net (gain) loss	(15)		262		(32)		524		Net (gain) loss	(16)		262		(47)		787
Net periodic benefit cost	Net periodic benefit cost	$	867	$	935	$	1,734	$	1,870	Net periodic benefit cost	$	866	$	935	$	2,601	$	2,805

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023, was $0.1 million and ~~$0.2~~$0.4 million, respectively. The expense related to SERP


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2022, was $0.1 million and ~~$0.3~~$0.4 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 ~~June~~September 30, 2023, and December 31, 2022, were as follows:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Current	Current	$	4,713	$	4,713	Current	$	4,713	$	4,713
Non-current	Non-current	$	63,409	$	63,714	Non-current	$	63,270	$	63,714


Cleco Power	Cleco Power					Cleco Power
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Current	Current	$	672	$	672	Current	$	672	$	672
Non-current	Non-current	$	8,907	$	9,087	Non-current	$	8,817	$	9,087

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 ~~six~~nine months ended ~~June~~September 30, 2023, and 2022 was as follows:


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
401(k) Plan expense	401(k) Plan expense	$	1,926	$	1,522	$	4,080	$	3,702	401(k) Plan expense	$	1,741	$	1,838	$	5,821	$	5,540

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 ~~six~~nine months ended ~~June~~September 30, 2023, and 2022 was as follows:


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
401(k) Plan expense	401(k) Plan expense	$	670	$	539	$	1,572	$	1,449	401(k) Plan expense	$	592	$	643	$	2,164	$	2,092


Note 10 — Income Taxes

Effective Tax Rates

The following tables summarize the effective income tax rates from continuing operations for Cleco and Cleco Power for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022:


Cleco	Cleco									Cleco
		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Effective tax rate	Effective tax rate	(14.9)	%	(13.0)	%	(17.5)	%	(24.6)	%	Effective tax rate	(470.9)	%	9.3	%	1,006.9	%	9.8	%


Cleco Power	Cleco Power									Cleco Power
		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Effective tax rate	Effective tax rate	7.0	%	5.5	%	6.7	%	4.0	%	Effective tax rate	(0.6)	%	4.4	%	2.6	%	4.1	%

For Cleco and Cleco Power, the effective income tax rates for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022, were different than the federal statutory rate primarily due to the amortization of excess ADIT, the adjustment to record tax expense at the projected annual effective tax rate, ~~and state~~adjustments for tax ~~expense.~~

For Cleco, the effective income tax rates for the three and six months ended June 30, 2022, were different than the federal statutory rate primarily due to the adjustment to record tax expense at the projected annual effective tax rate, the amortization of excess ADIT, thereturns as filed, flow through of state tax benefits, permanent deductions, and state tax expense.

For Cleco Power, the effective income tax rate for the three months ended June 30, 2022, was different than the federal statutory rate primarily due to the adjustment to record tax expense at the projected annual effective tax rate, the amortization of excess ADIT, the flow through of state tax benefits, and state tax expense.

For Cleco Power, the effective income tax rate for the six months ended June 30, 2022, was different than the federal statutory rate primarily due to the amortization of excess ADIT, the flow through of state tax benefits, and state tax expense.


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022, Cleco and Cleco Power had no interest expense related to uncertain tax positions. At ~~June~~September 30, 2023, and December 31, 2022, Cleco and Cleco Power had no liability for uncertain tax positions or interest payable related to uncertain tax positions.

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 tax return. While the statute of limitations remains open for tax years ~~2019,~~ 2020, 2021, and ~~2021,~~2022, the ~~IRS has completed its review of tax years 2019 and 2020, and these tax returns were filed consistent with the IRS’s review. The~~ IRS has placed Cleco in the Bridge phase of the Compliance Assurance Process for the 2020 and 2021 tax ~~year.~~years. In this phase, the IRS will not accept any disclosures, conduct any reviews, or provide any assurances. These tax returns were filed consistent with the IRS’s review. The IRS has accepted Cleco’s application for the Compliance Assurance Process for the 2022 tax year and the Compliance Assurance Maintenance phase for the 2023 tax year. In this maintenance phase, the IRS typically will, at its discretion, reduce the level of its review of the tax year relative to the regular Compliance Assurance Process phase.

The state income tax years ~~2019,~~ 2020, 2021, and ~~2021~~2022 remain subject to examination by the Louisiana Department of Revenue.

Cleco classifies income tax penalties as a component of other expense. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022, no penalties were recognized.


Note 11 — Segment Disclosures

Segment disclosures are based on Cleco’s method of internal reporting, which disaggregates business units by first-tier subsidiary. The financial information for historical periods

provided in this report has been recast to reflect the presentation of the Cleco Cajun Sale Group as discontinued operations within the Other column. Cleco’s segment structure and its allocation of corporate expenses were updated to reflect how management measures performance and allocates resources. Cleco has recast data from prior periods to reflect this change to conform to the current year presentation. For more information, see Note 3 — “Discontinued Operations.”

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
CLECO POWER						2023 3RD QUARTER FORM 10-Q

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, an investment subsidiary, natural gas derivatives at Cleco Cajun, and discontinued operations.

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 segment. Management evaluates the

performance of Cleco’s segment and allocates resources to it 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 recorded for the fair value adjustment of wholesale power supply agreements as a result of the 2016 Merger. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.


Segment Information
FOR THE THREE MONTHS ENDED ~~JUNE~~SEPT. 30, 2023 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	~~263,176~~364,161
Other operations	~~24,741~~31,984
Affiliate revenue	~~1,635~~1,645
Electric customer credits	~~(736)~~24
Operating revenue, net	$	~~288,816~~397,814
Net income	$	~~43,439~~90,914
Add: Depreciation and amortization	~~43,722~~48,012
Less: Interest income	~~579~~1,215
Add: Interest charges	~~24,183~~24,921
Add: Federal and state income tax ~~expense~~benefit	~~3,247~~(552)



EBITDA	$	~~114,012~~162,080


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~


FOR THE THREE MONTHS ENDED JUNE 30, 2023 (THOUSANDS)		CLECO POWER		OTHER			ELIMINATIONS		TOTAL
FOR THE THREE MONTHS ENDED SEPT. 30, 2023 (THOUSANDS)											FOR THE THREE MONTHS ENDED SEPT. 30, 2023 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue	Revenue										Revenue
Electric operations	Electric operations	$	263,176	$	(2,387)		$	—	$	260,789	Electric operations	$	364,161	$	(2,323)		$	—	$	361,838
Other operations	Other operations	24,741		1			—		24,742		Other operations	31,984		—			—		31,984
Affiliate revenue	Affiliate revenue	1,635		28,902			(30,537)		—		Affiliate revenue	1,645		30,253			(31,898)		—
Electric customer credits	Electric customer credits	(736)		—			—		(736)		Electric customer credits	24		—			—		24
Operating revenue, net	Operating revenue, net	$	288,816	$	26,516		$	(30,537)	$	284,795	Operating revenue, net	$	397,814	$	27,930		$	(31,898)	$	393,846
Depreciation and amortization	Depreciation and amortization	$	43,722	$	4,433	(1)	$	—	$	48,155	Depreciation and amortization	$	48,012	$	4,365	(1)	$	1	$	52,378
Interest income	Interest income	$	579	$	133		$	(39)	$	673	Interest income	$	1,215	$	81		$	(13)	$	1,283
Interest charges	Interest charges	$	24,183	$	16,624		$	(39)	$	40,768	Interest charges	$	24,921	$	17,125		$	(12)	$	42,034

Federal and state income tax expense (benefit)	Federal and state income tax expense (benefit)	$	3,247	$	(6,236)		$	—	$	(2,989)	Federal and state income tax expense (benefit)	$	(552)	$	(245,942)		$	—	$	(246,494)
Income (loss) from continuing operations, net of income taxes		$	43,439	$	(20,380)		$	(1)	$	23,058
Income from discontinued operations, net of income taxes		—		24,272			—		24,272
Income from continuing operations, net of income taxes											Income from continuing operations, net of income taxes	$	90,914	$	207,927		$	—	$	298,841
Loss from discontinued operations, net of income taxes											Loss from discontinued operations, net of income taxes	—		(142,729)			—		(142,729)
Net income	Net income	$	43,439	$	3,892		$	(1)	$	47,330	Net income	$	90,914	$	65,198		$	—	$	156,112

(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.
(1) Includes $2.3 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.											(1) Includes $2.3 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 ~~JUNE~~SEPT. 30, 2022 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	~~368,614~~481,153
Other operations	~~18,686~~24,757
Affiliate revenue	~~1,628~~1,657
Electric customer credits	~~(129)~~(6,728)
Operating revenue, net	$	~~388,799~~500,839
Net income	$	~~54,705~~40,733
Add: Depreciation and amortization	~~44,299~~44,368
Less: Interest income	~~1,035~~1,726
Add: Interest charges	~~21,305~~23,840
Add: Federal and state income tax expense	~~3,214~~1,862
EBITDA	$	~~122,488~~109,077

FOR THE THREE MONTHS ENDED JUNE 30, 2022 (THOUSANDS) CLECO POWER OTHER ELIMINATIONS TOTAL
Revenue
Electric operations $ 368,614 $ (2,420) $ — $ 366,194
Other operations 18,686 2 — 18,688
Affiliate revenue 1,628 25,752 (27,380) —
Electric customer credits (129) — — (129)
Operating revenue, net $ 388,799 $ 23,334 $ (27,380) $ 384,753
Depreciation and amortization $ 44,299 $ 4,373 (1) $ 1 $ 48,673
Interest income $ 1,035 $ 53 $ (22) $ 1,066
Interest charges $ 21,305 $ 13,863 $ (21) $ 35,147
Federal and state income tax expense (benefit) $ 3,214 $ (6,791) $ — $ (3,577)
Income (loss) from continuing operations, net of income taxes $ 54,705 $ (23,603) $ (1) $ 31,101
Loss from discontinued operations, net of income taxes — (29,738) — (29,738)
Net income $ 54,705 $ (53,341) $ (1) $ 1,363
(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.


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


FOR THE THREE MONTHS ENDED SEPT. 30, 2022 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	481,153	$	(2,420)		$	—	$	478,733
Other operations	24,757		1			1		24,759
Affiliate revenue	1,657		29,583			(31,240)		—
Electric customer credits	(6,728)		—			—		(6,728)
Operating revenue, net	$	500,839	$	27,164		$	(31,239)	$	496,764
Depreciation and amortization	$	44,368	$	4,375	(1)	$	—	$	48,743
Interest income	$	1,726	$	58		$	(18)	$	1,766
Interest charges	$	23,840	$	13,884		$	(18)	$	37,706
Federal and state income tax expense	$	1,862	$	7,358		$	—	$	9,220
Income from continuing operations, net of income taxes	$	40,733	$	49,499		$	—	$	90,232
Loss from discontinued operations, net of income taxes	—		(21,860)			—		(21,860)
Net income	$	40,733	$	27,639		$	—	$	68,372




(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 ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPT. 30, 2023 (THOUSANDS)

CLECO POWER

Revenue

Electric operations

~~559,524~~923,685

Other operations

~~52,044~~84,028

Affiliate revenue

~~3,323~~4,967

Electric customer credits

~~(1,386)~~(1,362)

Operating revenue, net

~~613,505~~1,011,318

Net income

~~66,256~~157,170

Add: Depreciation and amortization

~~94,454~~142,467

Less: Interest income

~~1,764~~2,979

Add: Interest charges

~~48,521~~73,442

Add: Federal and state income tax expense

~~4,737~~4,185

EBITDA

~~212,204~~374,285


FOR THE SIX MONTHS ENDED JUNE 30, 2023 (THOUSANDS)		CLECO POWER		OTHER			ELIMINATIONS		TOTAL
FOR THE NINE MONTHS ENDED SEPT. 30, 2023 (THOUSANDS)											FOR THE NINE MONTHS ENDED SEPT. 30, 2023 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue	Revenue										Revenue
Electric operations	Electric operations	$	559,524	$	(4,807)		$	—	$	554,717	Electric operations	$	923,685	$	(7,131)		$	—	$	916,554
Other operations	Other operations	52,044		2			—		52,046		Other operations	84,028		1			1		84,030
Affiliate revenue	Affiliate revenue	3,323		56,416			(59,739)		—		Affiliate revenue	4,967		86,669			(91,636)		—
Electric customer credits	Electric customer credits	(1,386)		—			—		(1,386)		Electric customer credits	(1,362)		—			—		(1,362)
Operating revenue, net	Operating revenue, net	$	613,505	$	51,611		$	(59,739)	$	605,377	Operating revenue, net	$	1,011,318	$	79,539		$	(91,635)	$	999,222
Depreciation and amortization	Depreciation and amortization	$	94,454	$	8,910	(2)	$	—	$	103,364	Depreciation and amortization	$	142,467	$	13,276	(2)	$	—	$	155,743
Interest income	Interest income	$	1,764	$	277		$	(101)	$	1,940	Interest income	$	2,979	$	357		$	(113)	$	3,223
Interest charges	Interest charges	$	48,521	$	31,836		$	(101)	$	80,256	Interest charges	$	73,442	$	48,961		$	(114)	$	122,289
Federal and state income tax expense (benefit)	Federal and state income tax expense (benefit)	$	4,737	$	(7,891)		$	—	$	(3,154)	Federal and state income tax expense (benefit)	$	4,185	$	(125,345)		$	—	$	(121,160)
Income (loss) from continuing operations, net of income taxes	Income (loss) from continuing operations, net of income taxes	$	66,256	$	(45,047)		$	(2)	$	21,207	Income (loss) from continuing operations, net of income taxes	$	157,170	$	(48,043)		$	—	$	109,127
Loss from discontinued operations, net of income taxes	Loss from discontinued operations, net of income taxes	—		(77,899)			—		(77,899)		Loss from discontinued operations, net of income taxes	—		(9,707)			—		(9,707)
Net income (loss)	Net income (loss)	$	66,256	$	(122,946)		$	(2)	$	(56,692)	Net income (loss)	$	157,170	$	(57,750)		$	—	$	99,420
Additions to property, plant, and equipment	Additions to property, plant, and equipment	$	110,480	$	4,679		$	—	$	115,159	Additions to property, plant, and equipment	$	159,947	$	5,803		$	—	$	165,750
Equity investment in investees (1)	Equity investment in investees (1)	$	2,072	$	(345,348)		$	345,348	$	2,072	Equity investment in investees (1)	$	1,992	$	370,348		$	(370,348)	$	1,992
Goodwill (1)	Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797	Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (1)	Total segment assets (1)	$	6,893,458	$	1,081,729		$	196,360	$	8,171,547	Total segment assets (1)	$	6,951,436	$	1,154,811		$	185,852	$	8,292,099
(1) Balances as of June 30, 2023. (2) Includes $4.8 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.
(1) Balances as of September 30, 2023. (2) Includes $7.1 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.											(1) Balances as of September 30, 2023. (2) Includes $7.1 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						2023 3RD QUARTER FORM 10-Q

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPT. 30, 2022 (THOUSANDS)

CLECO POWER

Revenue

Electric operations

~~664,711~~1,145,864

Other operations

~~37,771~~62,528

Affiliate revenue

~~3,087~~4,744

Electric customer credits

~~(265)~~(6,992)

Operating revenue, net

~~705,304~~1,206,144

Net income

~~93,729~~134,462

Add: Depreciation and amortization

~~89,538~~133,907

Less: Interest income

~~1,775~~3,501

Add: Interest charges

~~40,108~~63,947

Add: Federal and state income tax expense

~~3,938~~5,800

EBITDA

~~225,538~~334,615


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~


FOR THE SIX MONTHS ENDED JUNE 30, 2022 (THOUSANDS)		CLECO POWER		OTHER			ELIMINATIONS		TOTAL
FOR THE NINE MONTHS ENDED SEPT. 30, 2022 (THOUSANDS)											FOR THE NINE MONTHS ENDED SEPT. 30, 2022 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue	Revenue										Revenue
Electric operations	Electric operations	$	664,711	$	(4,840)		$	—	$	659,871	Electric operations	$	1,145,864	$	(7,260)		$	—	$	1,138,604
Other operations	Other operations	37,771		3			—		37,774		Other operations	62,528		5			—		62,533
Affiliate revenue	Affiliate revenue	3,087		53,145			(56,232)		—		Affiliate revenue	4,744		82,728			(87,472)		—
Electric customer credits	Electric customer credits	(265)		—			—		(265)		Electric customer credits	(6,992)		—			—		(6,992)
Operating revenue, net	Operating revenue, net	$	705,304	$	48,308		$	(56,232)	$	697,380	Operating revenue, net	$	1,206,144	$	75,473		$	(87,472)	$	1,194,145
Depreciation and amortization	Depreciation and amortization	$	89,538	$	8,752	(2)	$	1	$	98,291	Depreciation and amortization	$	133,907	$	13,127	(2)	$	—	$	147,034
Interest income	Interest income	$	1,775	$	83		$	(49)	$	1,809	Interest income	$	3,501	$	141		$	(67)	$	3,575
Interest charges	Interest charges	$	40,108	$	27,730		$	(50)	$	67,788	Interest charges	$	63,947	$	41,614		$	(67)	$	105,494
Federal and state income tax expense (benefit)		$	3,938	$	(15,048)		$	—	$	(11,110)
Income (loss) from continuing operations, net of income taxes		$	93,729	$	(37,436)		$	—	$	56,293
Federal and state income tax expense											Federal and state income tax expense	$	5,800	$	24,672		$	—	$	30,472
Income from continuing operations, net of income taxes											Income from continuing operations, net of income taxes	$	134,462	$	145,591		$	(1)	$	280,052
Loss from discontinued operations, net of income taxes	Loss from discontinued operations, net of income taxes	—		100,814			—		100,814		Loss from discontinued operations, net of income taxes	—		(54,573)			—		(54,573)
Net income	Net income	$	93,729	$	63,378		$	—	$	157,107	Net income	$	134,462	$	91,018		$	(1)	$	225,479
Additions to property, plant, and equipment	Additions to property, plant, and equipment	$	98,162	$	3,511		$	—	$	101,673	Additions to property, plant, and equipment	$	139,726	$	5,788		$	—	$	145,514
Equity investment in investees (1)	Equity investment in investees (1)	$	2,072	$	(320,348)		$	320,348	$	2,072	Equity investment in investees (1)	$	2,072	$	(320,348)		$	320,348	$	2,072
Goodwill (1)	Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797	Goodwill (1)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (1)	Total segment assets (1)	$	6,834,970	$	1,237,096		$	181,683	$	8,253,749	Total segment assets (1)	$	6,834,970	$	1,237,096		$	181,683	$	8,253,749
(1) Balances as of December 31, 2022. (2) Includes $4.8 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger.
(1) Balances as of December 31, 2022. (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.											(1) Balances as of December 31, 2022. (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 JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Net income (loss)		$	47,330	$	1,363	$	(56,692)	$	157,107
Net income										Net income	$	156,112	$	68,372	$	99,420	$	225,479
Less: income (loss) from discontinued operations, net of income taxes	Less: income (loss) from discontinued operations, net of income taxes	24,272		(29,738)		(77,899)		100,814		Less: income (loss) from discontinued operations, net of income taxes	(142,729)		(21,860)		(9,707)		(54,573)
Income (loss) from continuing operations, net of income taxes		$	23,058	$	31,101	$	21,207	$	56,293
Income from continuing operations, net of income taxes										Income from continuing operations, net of income taxes	$	298,841	$	90,232	$	109,127	$	280,052
Add: Depreciation and amortization	Add: Depreciation and amortization	48,155		48,673		103,364		98,291		Add: Depreciation and amortization	52,378		48,743		155,743		147,034

Less: Interest income	Less: Interest income	673		1,066		1,940		1,809		Less: Interest income	1,283		1,766		3,223		3,575
Add: Interest charges	Add: Interest charges	40,768		35,147		80,256		67,788		Add: Interest charges	42,034		37,706		122,289		105,494
Add: Federal and state income tax benefit		(2,989)		(3,577)		(3,154)		(11,110)
Add: Federal and state income tax (benefit) expense										Add: Federal and state income tax (benefit) expense	(246,494)		9,220		(121,160)		30,472
Add: Other corporate costs and noncash items (1)	Add: Other corporate costs and noncash items (1)	5,693		12,210		12,471		16,085		Add: Other corporate costs and noncash items (1)	16,604		(75,058)		111,509		(224,862)
Total segment EBITDA	Total segment EBITDA	$	114,012	$	122,488	$	212,204	$	225,538	Total segment EBITDA	$	162,080	$	109,077	$	374,285	$	334,615
(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA.	(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA.									(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA.


Note 12 — Regulation and Rates

FRP

On June 16, 2021, the LPSC approved Cleco Power’s current FRP. Effective July 1, 2021, under the terms of the 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. On June 30, 2023, Cleco Power filed an application with the LPSC for a

new FRP, with anticipated new rates being effective July 1, 2024. Cleco Power has responded to its first set of LPSC data requests.

~~On October 31, 2022, a~~In September 2023, the LPSC approved Cleco Power’s monitoring report ~~was filed~~ for the 12 months ~~ending~~ended June 30, 2022, indicating no material refund was due. ~~In May~~On October 31, 2023, Cleco Power ~~received~~filed its monitoring report for the ~~LPSC Staff’s draft report~~12 months ended June 30, 2023, indicating no ~~material findings. Cleco Power anticipates the approval of the draft report in the third quarter of 2023.~~refund was due.

TCJA

On June 16, 2021, the LPSC approved Cleco Power’s current retail rate plan which includes the settlement of the TCJA protected and unprotected excess ADIT. Effective July 1,


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CLECO POWER						2023 3RD QUARTER FORM 10-Q

2021, all retail customers continued 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 ~~June~~September 30, 2023, Cleco Power had ~~$236.6~~$222.3 million accrued for the excess ADIT, of which ~~$41.4~~$31.2 million is reflected in current regulatory liabilities.

Teche Unit 3

In July 2022, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3, barring any violations of specific applicable reliability standards. On January 31, 2023, Cleco Power filed a notice with the LPSC to retire Teche Unit 3 in May 2023. However, in April 2023, Cleco Power filed notices with MISO and the LPSC to delay the retirement of Teche Unit 3. Management continues to monitor regulatory capacity requirements and customer needs to determine the appropriate timing of the retirement of Teche Unit 3.


Note 13 — Variable Interest Entities

Cleco Securitization I

Cleco Securitization I is a special-purpose, wholly owned subsidiary of Cleco Power that was formed for the purpose of issuing storm recovery bonds to finance the securitization of Storm Recovery Property at Cleco Power. On June 22, 2022, the securitized financing was complete. Cleco Securitization I’s


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~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

assets cannot be used to settle Cleco Power’s obligations and the holders of the storm recovery bonds have no recourse against Cleco Power.

Because Cleco Securitization I’s equity at risk is less than 1% of its total assets, it is considered to be a variable interest entity. Through its equity ownership interest and role as servicer, Cleco Power has the power to direct the most significant financial and operating activities of Cleco Securitization I, including billing, collections, and remittance of retail customer cash receipts to enable Cleco Securitization I to pay the principal and interest payments on the storm recovery bonds. Cleco Power also has the obligation to absorb losses up to its equity investment and rights to receive returns from Cleco Securitization I. Therefore, management has determined that Cleco Power is the primary beneficiary of Cleco Securitization I, and as a result, Cleco Securitization I is included in the consolidated financial statements of Cleco Power. No gain or loss was recognized upon initial consolidation.

The following table summarizes the impact of Cleco Securitization I on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets:

(THOUSANDS) AT JUNE 30, 2023 AT DEC. 31, 2022
Restricted cash - current $ 13,032 $ 14,139
Accounts receivable - affiliate 3,475 3,348
Intangible asset - securitization 407,571 413,123
Total assets $ 424,078 $ 430,610
Long-term debt due within one year $ 14,214 $ 9,574
Accounts payable - affiliate 146 165
Interest accrued 6,276 9,953
Long-term debt, net 401,284 408,741
Member’s equity 2,158 2,177
Total liabilities and member’s equity $ 424,078 $ 430,610


(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Restricted cash - current	$	6,356	$	14,139
Accounts receivable - affiliate	4,262		3,348
Intangible asset - securitization	402,444		413,123
Total assets	$	413,062	$	430,610
Long-term debt due within one year	$	14,499	$	9,574

Accounts payable - affiliate	95		165
Interest accrued	1,548		9,953
Long-term debt, net	394,787		408,741
Total liabilities	410,929		428,433
Member’s equity	2,133		2,177
Total liabilities and member’s equity	$	413,062	$	430,610

The following table summarizes the impact of Cleco Securitization I on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income:


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Operating revenue	Operating revenue	$	6,206	$	—	$	15,383	$	—	Operating revenue	$	9,946	$	5,025	$	25,329	$	5,025
Operating expenses	Operating expenses	1,399		—		5,753		—		Operating expenses	(5,264)		(90)		(11,017)		(90)
Interest income	Interest income	85		—		242		—		Interest income	188		10		430		10
Interest charges, net	Interest charges, net	4,867		—		9,823		—		Interest charges, net	(4,845)		(4,861)		(14,668)		(5,342)
Income before taxes		$	25	$	—	$	49	$	—
Income (loss) before taxes										Income (loss) before taxes	$	25	$	84	$	74	$	(397)

Oxbow

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’s 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’s 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 ~~June~~September 30, 2023, consisted of its equity investment of ~~$2.1~~approximately $2.0 million.

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


INCEPTION TO DATE (THOUSANDS)	INCEPTION TO DATE (THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		INCEPTION TO DATE (THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
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
Distributions	Distributions	(17,200)		(17,200)		Distributions	(17,280)		(17,200)
Total equity investment in investee	Total equity investment in investee	$	2,072	$	2,072	Total equity investment in investee	$	1,992	$	2,072

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 JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Oxbow’s net assets/liabilities	Oxbow’s net assets/liabilities	$	4,145	$	4,145	Oxbow’s net assets/liabilities	$	3,985	$	4,145
Cleco Power’s 50% equity	Cleco Power’s 50% equity	$	2,072	$	2,072	Cleco Power’s 50% equity	$	1,992	$	2,072
Cleco Power’s maximum exposure to loss	Cleco Power’s maximum exposure to loss	$	2,072	$	2,072	Cleco Power’s maximum exposure to loss	$	1,992	$	2,072


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CLECO POWER						2023 3RD QUARTER FORM 10-Q

The following table contains summarized financial information for Oxbow:


		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Operating revenue	Operating revenue	$	108	$	85	$	233	$	151	Operating revenue	$	78	$	65	$	311	$	215
Operating expenses	Operating expenses	(108)		(85)		(233)		(151)		Operating expenses	(78)		(65)		(311)		(215)
Income before taxes	Income before taxes	$	—	$	—	$	—	$	—	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 billed Cleco Power its proportionate share of incurred lignite extraction and associated mining-related costs. Oxbow billed Cleco Power its proportionate share of incurred costs related to mineral rights and land leases. On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine. At December 31, 2021, the Dolet Hills Power Station was retired, and all of Cleco Power’s proportionate share of lignite-related costs had been billed by DHLC and Oxbow. For more information on DHLC and the Oxbow mine, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — ~~Risks~~Off-Balance Sheet Commitments and ~~Uncertainties.~~Guarantees.”

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


Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

2016 Merger

In connection with the 2016 Merger, four actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and three 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


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~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

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 four 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 three 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 three 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 three 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


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CLECO POWER						2023 3RD QUARTER FORM 10-Q

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 two former executives filed motions for summary judgment in June 2023, which the ~~allegations~~District Court denied in September 2023. In October 2023, the two former executives and plaintiffs, after mediation, entered into a memorandum of understanding for a class action settlement under which all disputes and claims asserted against the two former executives would be dismissed. The District Court’s final approval of the ~~petitions in each action are without merit and that it has substantial meritorious defenses to~~settlement is required before the ~~claims set forth in each of the petitions.~~settlement becomes effective.

Gulf Coast Spinning

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


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~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

damages arising from its inability to raise sufficient funds to complete the project, including lost profits.

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The 12th Judicial District Court denied Cleco’s exception in December 2015, after considering briefs and arguments. In January 2016, Cleco appealed the 12th Judicial District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal denied the request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of the 12th Judicial 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 12th Judicial District Court lifted the stay at the request of Gulf Coast. The parties are currently participating in discovery.

Diversified Lands loaned $2.0 million to Gulf Coast for the Bunkie project. The loan was secured by a mortgage on the Bunkie project site. Diversified Lands foreclosed on the Bunkie property in February 2020 and has also asserted claims personally against the former owner of Gulf Coast. These claims are based on contracts and credit documents executed by Gulf Coast, the obligations and performance of which were personally guaranteed by the former owner of Gulf Coast. Diversified Lands is seeking recovery of the indebtedness still owed by Gulf Coast to Diversified Lands following the February 2020 foreclosure, which action has been consolidated with the litigation filed by Gulf Coast in the 12th Judicial District Court for Avoyelles Parish, Louisiana. Discovery is ongoing and nothe trial date has been ~~set.~~set for October 2024.

Cleco believes all allegations made by Gulf Coast 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.

Dispute with Saulsbury Industries

In October 2018, Cleco Power sued Saulsbury Industries, Inc., the former general contractor for the St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries, Inc.’s failure to complete the St. Mary Clean Energy Center project on time and for costs incurred by Cleco Power in hiring a replacement general contractor. The action was filed in the Ninth Judicial District Court for Rapides Parish. Saulsbury Industries, Inc. removed the case to the U.S. District Court for the Western District of Louisiana, on March 1, 2019. On September 14, 2020, Cabot Corporation was allowed to join the case pending in the Ninth Judicial District Court for Rapides Parish.

In January 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC, in the U.S. District Court for the Western District of Louisiana. Saulsbury Industries, Inc. alleged that Cleco Power and Cabot Corporation caused delays in the St. Mary Clean Energy Center project, resulting in alleged impacts to Saulsbury Industries, Inc.’s direct and indirect costs. On June 5, 2019, Cleco Power and Cabot Corporation each filed separate motions to dismiss. On October 24, 2019, the District Court denied Cleco Power’s motion as premature and ruled that Saulsbury Industries, Inc. had six weeks to conduct discovery on specified jurisdictional issues. The Magistrate Judge presiding over the Western District of Louisiana

consolidated cases issued a report and recommendation to the District Judge that the case instituted by Saulsbury Industries, Inc. be dismissed without prejudice and the case initiated by Cleco Power be remanded to the Ninth Judicial District Court for Rapides Parish. Saulsbury Industries, Inc. did not oppose the Magistrate Judge’s report and recommendation, and the District Judge issued a ruling that adopted the Magistrate Judge’s report and recommendation, which included reasoning consistent with Cleco Power’s arguments. Thus, the federal consolidated cases are now closed.

On October 10, 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC in the 16th Judicial District Court for St.


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CLECO POWER						2023 3RD QUARTER FORM 10-Q

Mary Parish. 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 Power moved to stay the case, arguing that the Rapides Parish suit should proceed. On February 14, 2020, the court granted Cleco Power’s motion. The 16th Judicial District Court for the St. Mary Parish case held a hearing on October 16, 2020, and the judge granted Cleco Power’s declinatory exceptions of lis pendens. Thus, the St. Mary’s Parish case has been dismissed. Saulsbury appealed this decision.

On May 17, 2022, the Court of Appeal, First Circuit, ruled in favor of Cleco Power and affirmed the decision of the 16th Judicial District Court for St. Mary Parish with respect to Cleco Power. However, the First Circuit Court reversed the 16th Judicial District Court for St. Mary Parish’s decision dismissing Cabot Corporation from the St. Mary Parish case. All parties filed applications for rehearing, which were denied on June 29, 2022.

Cabot Corporation applied for review by the Louisiana Supreme Court of the portion of the First Circuit Court's ruling that denied Cabot Corporation’s exception seeking dismissal from the St. Mary Parish litigation. On November 1, 2022, the Louisiana Supreme Court rendered a decision in favor of Cabot Corporation. The Louisiana Supreme Court’s decision reversed the First Circuit Court’s decision and reinstated the decision of the 16th Judicial District Court granting Cabot Corporation’s declinatory exceptions of lis pendens. The St. Mary Parish case has been dismissed in full.

The stay was lifted in the Rapides Parish case and the Rapides Parish case is proceeding. The parties are currently participating in discovery.

LPSC Audits and Reviews

Fuel Audits

Generally, Cleco Power’s cost of fuel used for electric generation and the cost of purchased power are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such expenses. Recovery of FAC costs is subject to periodic fuel audits by the LPSC, which are performed at least every other year.

In January 2023, Cleco Power received a notice of audit from the LPSC for the period of January 2020 to December 2022. The total amount of fuel expense included in the audit is $1.10 billion. Cleco Power has responded to the first set of LPSC data requests. Cleco Power has FAC filings for January 2023 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


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~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

OnIn March ~~29,~~ 2021, Cleco Power received approval from the LPSC to recover $50.0 million of incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola over a period of 12 months beginning with the May 2021 bills. OnIn May ~~11,~~ 2021, Cleco Power received notice of an audit from the LPSC for the fuel costs incurred during the time period required to restore services to Cleco Power’s customers during Winter Storms Uri and Viola. On March 27, 2023, Cleco Power received a draft audit report from the LPSC

indicating no material findings. Management expects the draft audit report to be approved in the ~~third~~fourth quarter of 2023.

Environmental Audit

In 2009, the LPSC approved Cleco Power to recover ~~from its customers~~ certain costs of environmental compliance through an EAC. 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 April 2023, Cleco Power received a notice of audit from the LPSC for the period of January 2020 to December 2022. The total amount of environmental fuel expense ~~to be~~ included in the audit is $38.3 million. In October 2023, Cleco Power ~~has responded to~~received a draft audit report from the ~~first set of~~ LPSC ~~data requests.~~indicating no material findings. Cleco Power has EAC filings for January 2023 and thereafter that remain subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowances have not been material. If a disallowance of environmental cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of MATS. These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. In May 2020, the EPA finalized a rule that concluded that it is not appropriate and necessary to regulate hazardous air pollutants from coal- and oil-fired electric generating units. However, the EPA concluded that coal- and oil-fired electric generating units would not be removed from the list of regulated sources of hazardous air pollutants and would remain subject to MATS. The EPA also determined that the results of its risk and technology review did not require any revisions to the emissions standards. Several petitions for review of the rule’s findings were filed between May and July 2020 in the D.C. Circuit Court of Appeals. On January 20, 2021, the Presidential Administration issued an executive order, which directs federal agency heads to review regulations and other actions ~~over~~from the past four years to determine if they are inconsistent with the policies announced in the executive order. The order specifically directed the EPA to consider issuing a proposed rule to suspend, revise, or rescind the rule. The EPA determined the most environmentally protective course is to implement the rules in the executive order. On March 6, 2023, the EPA published in the Federal Register a final rule that reinstates the April 25, 2016, finding

that it is appropriate and necessary to regulate hazardous air pollutants from coal and oil-fired electric generating units through MATS. On April 24, 2023, the EPA published in the Federal Register proposed amendments to MATS that are the result of the EPA’s review of the May 2020 residual risk and technology review of MATS. Management is unable to determine whether the outcome of the D.C. Circuit Court of Appeals’ review or the EPA’s review of the rule as a result of the executive order will result in changes to the MATS standards.


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CLECO POWER						2023 3RD QUARTER FORM 10-Q

Energy Efficiency Audit

In 2013, the LPSC issued a General Order adopting rules promoting energy efficiency programs. Cleco Power began participating in energy efficiency programs in November 2014. Through an approved rate tariff, Cleco Power recovered $8.5 million and $6.8 million for the 2022 and 2021 program years, respectively.

In September 2023, Cleco Power received a notice of audit from the LPSC for the program years 2021 and 2022. Cleco Power has received the first set of LPSC data requests. Program years ~~2021~~2023 and thereafter are subject to audit. Management is unable to predict or give a reasonable estimate of the outcome of this or any future audits.

~~Prudency Reviews~~

Dolet Hills ~~Power Station and Mine Closure Costs and Deferred Lignite Costs~~Prudency Review

Cleco Power is seeking recovery for stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station as well as deferred fuel and other mine-related closure costs. Recovery of these costs is subject to a prudency review by the LPSC, which is currently in progress. Cleco Power believes these costs are prudent and recoverable. However, initial testimony filed by the LPSC Staff advisors ~~filed~~ in August 2022 indicates disagreement with the ~~prudency~~recoverability of these incurred ~~costs.~~costs, quantifying up to $217.0 million of related costs as potentially imprudent. Cleco Power filed rebuttal testimony onin September ~~23,~~ 2022 rebutting the LPSC Staff’s testimony. A hearing was held in May 2023, with the outcome pending. Due to the nature of the regulatory process, Cleco Power is currently unable to determine the timing of this process and if any portion of the incurred costs will be disallowed for recovery. Cleco Power continues to assert that recovery of those costs is ~~probable.~~probable; however, management is seeking a potential settlement to resolve this matter and move forward with the securitization process.

South Central Generating

Prior to the Cleco Cajun Transaction, South Central Generating was involved in various litigation matters, including environmental and contract proceedings, before various courts regarding matters arising out of the ordinary course of business. As of June 30, 2023, management has reserved $1.5 million with respect to one of these matters and the amounts are recorded in Liabilities held for sale on Cleco’s Condensed Consolidated Balance Sheet. Management is unable to estimate any potential losses Cleco may be ultimately responsible for with respect to any of the remaining matters. As part of the Cleco Cajun Transaction, NRG Energy indemnified Cleco for losses as of the closing date associated with certain matters that existed as of the closing date, including pending litigation.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

incur with respect to any one of these matters may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of ~~June~~September 30, 2023, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters are ~~$6.3 million and~~$8.1 million. Cleco has accrued this amount.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and

the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require the Registrants to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees.

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

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

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

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

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

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of the Dolet Hills Power Station, have agreed to pay the loan and lease principal

obligations of the lignite miner, DHLC, when due if DHLC does not have sufficient funds or credit to pay. Any amounts projected to be paid would be based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for reclamation obligations. As of ~~June~~September 30, 2023, Cleco Power does not expect any payments to be made under this guarantee. Cleco Power has the right to dispute the incurrence of such loan and lease obligations through the review of the mining reclamation plan before the incurrence of such obligations. The Amended Lignite Mining Agreement does not


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

affect the amount the Registrants can borrow under their credit facilities.

In April 2020, Cleco Power and SWEPCO mutually agreed not to develop additional mining areas for future lignite extraction and subsequently provided notice to the LPSC of the intent to cease mining at the Dolet Hills and Oxbow mines by June 2020. The mine closures are subject to LPSC review and approval. As of June 30, 2020, all lignite reserves intended to be extracted from the mines had been extracted. On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine and to include and defer certain accelerated mine closing costs in fuel and related ratemaking treatment. ~~For more information on the joint filing, see “— Risks and Uncertainties.”~~ For more information on the LPSC prudency review associated with the mine closure costs, see “— LPSC Audits and Reviews — ~~Prudency Reviews —~~ Dolet Hills ~~Power Station and Mine Closure Costs and Deferred Lignite Costs.~~Prudency Review.”

Cleco has letters of credit to MISO pursuant to energy market requirements. The letters of credit automatically renew each year and have no impact on Cleco Holdings’ or Cleco Power’s revolving credit facility.

Generally, neither Cleco Holdings nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. There are no assets held as collateral for third parties that either Cleco Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

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

In April 2015, the EPA published a final rule in the Federal Register for regulating the disposal and management of CCRs from coal-fired power plants (CCR Rule). The CCR Rule established extensive requirements for existing and new CCR landfills and surface impoundments and all lateral expansions consisting of location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements and post closure care, and recordkeeping, notification, and internet posting requirements. In August 2018, the D.C. Court of Appeals vacated several requirements in the CCR regulation, which included eliminating the previous acceptability of compacted clay material as a liner for impoundments. As a result, in August 2020, the EPA published a final rule in the Federal Register that would set deadlines for costly modifications including retrofitting of clay-lined impoundments with compliant liners or closure of the impoundments. In November 2020, demonstrations were submitted to the EPA specifying an intended course of action for the ash disposal facilities at Big Cajun II, Rodemacher Unit 2, and the Dolet Hills Power Station in order to comply with the final CCR Rule. On January 11, 2022, Cleco Power and Cleco


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Cajun received communication from the EPA that the demonstrations had been deemed complete. Cleco Power withdrew the Dolet Hills demonstration due to the cessation of receiving waste. The two remaining demonstrations are still subject to EPA approval based on pending technical review.

At March 31, 2023, Cleco Cajun recorded a decrease of $19.5 million in its ARO balance due to revised cost ~~estimates, which~~estimates. Cleco Cajun’s ARO is recorded in Liabilities held for sale on Cleco’s Condensed Consolidated Balance Sheet.

As part of the Cleco Cajun Transaction, NRG Energy agreed to indemnify Cleco for certain environmental costs up to $25.0 million associated with the CCR Rule, for both ARO

and non-ARO related expenses. At ~~June~~September 30, 2023, Cleco Cajun had an indemnification asset totaling ~~$17.8~~$18.0 million, which was substantially related to AROs associated with ash pond remediation. This asset is recorded in Assets held for sale on Cleco’s Condensed Consolidated Balance Sheet. As additional periodic expenses related to covered costs are incurred, the associated indemnification asset will be recognized. The indemnification asset is expected to be collected as indemnified costs, either recognized in the ARO or as periodic expenses, are incurred.

Risks and Uncertainties

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

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

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


Note 15 — Affiliate Transactions

At ~~June~~September 30, 2023, and December 31, 2022, Cleco Holdings had an affiliate receivable of ~~$20.0~~$22.3 million and $14.6 million, respectively, primarily for income taxes paid on behalf of Cleco Group. At ~~June~~September 30, 2023, and December 31, 2022, Cleco Holdings had an affiliate payable of $20.9 million and $13.1 million, respectively, to Cleco Group primarily for settlement of taxes payable.

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


		AT JUNE 30, 2023				AT DEC. 31, 2022					AT SEPT. 30, 2023				AT DEC. 31, 2022
(THOUSANDS)	(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	Cleco Holdings	$	24	$	1,194	$	5	$	1,138	Cleco Holdings	$	9	$	9,429	$	5	$	1,138
Support Group	Support Group	1,150		11,647		2,299		11,305		Support Group	1,101		11,903		2,299		11,305
Cleco Cajun	Cleco Cajun	1,261		511		1,467		5		Cleco Cajun	1,030		2		1,467		5
Total	Total	$	2,435	$	13,352	$	3,771	$	12,448	Total	$	2,140	$	21,334	$	3,771	$	12,448

Cleco Power’s affiliate payable to Support Group at both ~~June~~September 30, 2023, and December 31, 2022, primarily consisted of amounts due for intercompany services. Of the affiliate payable balances at September 30 2023, Cleco Power had $9.1 million payable to Cleco Holdings for the settlement of income taxes.

Note 16 — Intangible Assets and Goodwill

Securitized Intangible Asset

On June 22, 2022, Cleco Securitization I acquired the Storm Recovery Property from Cleco Power for a purchase price of $415.9 million. The Storm Recovery Property is classified as a securitized intangible asset on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. This securitized intangible asset is being amortized ratably each period consistent with actual collections of the asset’s portion of the


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

revenue requirement billed to Cleco Power’s customers. Amortization is included in Depreciation and amortization on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, amortization expense of ~~$1.3~~$5.1 million and ~~$5.6~~$10.7 million, respectively, was recognized. At the end of its life, this securitized intangible asset will have no residual value.

The following table summarizes the balance of the securitized intangible asset subject to amortization included on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets:


(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022
Storm Recovery Property intangible asset	Storm Recovery Property intangible asset	$	415,946	$	415,946	Storm Recovery Property intangible asset	$	415,946	$	415,946
Accumulated amortization	Accumulated amortization	(8,375)		(2,823)		Accumulated amortization	(13,502)		(2,823)
Net intangible asset subject to amortization	Net intangible asset subject to amortization	$	407,571	$	413,123	Net intangible asset subject to amortization	$	402,444	$	413,123

Other Intangible Assets

As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the valuation of finite intangible assets relating to long-term wholesale power supply agreements. At the end of their lives, these power supply agreement intangible assets will have no residual value. The intangible assets related to the power supply agreements are amortized over the estimated life of each applicable contract ranging between 78 and 19 years, and the amortization is included in Electric operations on Cleco’s Condensed Consolidated Statements of Income.

The following table presents the amortization expense recognized during the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022:


Cleco	Cleco									Cleco
		FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		2023		2022		(THOUSANDS)	2023		2022		2023		2022
Amortization expense	Amortization expense									Amortization expense
Power supply agreements	Power supply agreements	$	2,387	$	2,420	$	4,807	$	4,840	Power supply agreements	$	2,323	$	2,420	$	7,131	$	7,260

The following table summarizes the balance of other intangible assets subject to amortization included in Cleco’s Condensed Consolidated Balance Sheets:


Cleco	Cleco					Cleco
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		AT DEC. 31, 2022		(THOUSANDS)	AT SEPT. 30, 2023		AT DEC. 31, 2022

Power supply agreements	Power supply agreements	$	85,104	$	85,104	Power supply agreements	$	85,104	$	85,104

Accumulated amortization	Accumulated amortization	(69,825)		(65,018)		Accumulated amortization	(72,148)		(65,018)
Net intangible assets subject to amortization	Net intangible assets subject to amortization	$	15,279	$	20,086	Net intangible assets subject to amortization	$	12,956	$	20,086

Goodwill

On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion. Management assigned the recognized goodwill to the Cleco Power reporting unit. Goodwill is required to be tested for impairment at the reporting unit level on an annual basis or whenever events or circumstances indicate that the value of goodwill may be impaired.

In performing the impairment test, Cleco compares the fair value of the reporting unit to its carrying value including goodwill. If the carrying value including goodwill were to exceed the fair value of a reporting unit, an impairment loss

would be recognized. A goodwill impairment loss is measured as the amount by which a reporting unit's carrying value exceeds fair value, not to exceed the carrying amount of goodwill.

Cleco estimates the reporting unit's fair value using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries. The income approach cash flow valuations involve a number of estimates that require broad assumptions and significant judgment by management regarding future performance, including estimation of future cash flows related to capital expenditures, the weighted average cost of capital or discount rate and the assumed long-term growth rate approach, which incorporates management's assumptions regarding sustainable long-term growth. The market approach includes significant assumptions around the implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of the test date.

Cleco performs an annual impairment test each August. In between annual tests, Cleco monitors its estimates and assumptions regarding estimated future cash flows, including the impact of movements in market indicators in future quarters, and will update the impairment analyses if a triggering event occurs. While Cleco believes the assumptions are reasonable, actual results may differ from projections. To the extent cash flows, long-term growth rates, U.S. Treasury rates, or other factors outside of Cleco’s control may impact Cleco’s projected results, Cleco may be required to reduce all or a portion of the carrying value of goodwill.

Cleco conducted its 2023 annual impairment test using an August 1, 2023, measurement date and determined that the estimated fair value of the reporting unit exceeded its carrying value, and no impairment existed.


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Note 17 — Accumulated Other Comprehensive Loss

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

Cleco
FOR THE THREE MONTHS ENDED JUNE 30, 2023 FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS) POSTRETIREMENT BENEFIT NET GAIN (LOSS)
Balances, beginning of period $ (363) $ 59
Amounts reclassified from AOCI
Amortization of postretirement benefit net gain (423) (845)
Balances, June 30, 2023 $ (786) $ (786)

FOR THE THREE MONTHS ENDED JUNE 30, 2022 FOR THE SIX MONTHS ENDED JUNE 30, 2022
(THOUSANDS) POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period $ (23,615) $ (23,629)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss 7 21
Balances, June 30, 2022 $ (23,608) $ (23,608)


Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30, 2023		FOR THE NINE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN (LOSS)
Balances, beginning of period	$	(786)	$	59


Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(422)		(1,267)


Balances, Sept. 30, 2023	$	(1,208)	$	(1,208)

Cleco Power
FOR THE THREE MONTHS ENDED JUNE 30, 2023 FOR THE SIX MONTHS ENDED JUNE 30, 2023
(THOUSANDS) POSTRETIREMENT
BENEFIT
NET LOSS NET LOSS
ON CASH FLOW
HEDGES TOTAL AOCI POSTRETIREMENT
BENEFIT
NET LOSS NET LOSS
ON CASH FLOW
HEDGES TOTAL AOCI
Balances, beginning of period $ (3,222) $ (4,984) $ (8,206) $ (3,318) $ (5,047) $ (8,365)
Amounts reclassified from AOCI
Amortization of postretirement benefit net loss 96 — 96 192 — 192
Reclassification of net loss to interest charges — 63 63 — 126 126
Balances, June 30, 2023 $ (3,126) $ (4,921) $ (8,047) $ (3,126) $ (4,921) $ (8,047)


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED SEPT. 30, 2022		FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balances, beginning of period	$	(23,608)	$	(23,629)



Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	10		31


Balances, Sept. 30, 2022	$	(23,598)	$	(23,598)


Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30, 2023						FOR THE NINE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI		POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, beginning of period	$	(3,126)	$	(4,921)	$	(8,047)	$	(3,318)	$	(5,047)	$	(8,365)



Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	97		—		97		289		—		289
Reclassification of net loss to interest charges	—		62		62		—		188		188

Balances, Sept. 30, 2023	$	(3,029)	$	(4,859)	$	(7,888)	$	(3,029)	$	(4,859)	$	(7,888)


		FOR THE THREE MONTHS ENDED JUNE 30, 2022						FOR THE SIX MONTHS ENDED JUNE 30, 2022							FOR THE THREE MONTHS ENDED SEPT. 30, 2022						FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI		POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI		(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI		POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, beginning of period	Balances, beginning of period	$	(12,579)	$	(5,235)	$	(17,814)	$	(12,885)	$	(5,298)	$	(18,183)	Balances, beginning of period	$	(12,272)	$	(5,172)	$	(17,444)	$	(12,885)	$	(5,298)	$	(18,183)

Amounts reclassified from AOCI	Amounts reclassified from AOCI													Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	Amortization of postretirement benefit net loss	307		—		307		613		—		613		Amortization of postretirement benefit net loss	307		—		307		920		—		920
Reclassification of net loss to interest charges	Reclassification of net loss to interest charges	—		63		63		—		126		126		Reclassification of net loss to interest charges	—		63		63		—		189		189

Balances, June 30, 2022		$	(12,272)	$	(5,172)	$	(17,444)	$	(12,272)	$	(5,172)	$	(17,444)
Balances, Sept. 30, 2022														Balances, Sept. 30, 2022	$	(11,965)	$	(5,109)	$	(17,074)	$	(11,965)	$	(5,109)	$	(17,074)


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

Cleco uses its website, https://www.cleco.com, as a routine channel for distribution of important information, including news releases and financial information. Cleco’s website is the primary source of publicly disclosed news about Cleco. Cleco is providing the address to its website solely for informational purposes and does not intend for the address to be an active link. The contents of the website are not incorporated into this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in combination with the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and Cleco’s and Cleco Power’s Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022.


OVERVIEW

Cleco is a regional energy company that conducts substantially all of its business operations through its principal operating business segment, Cleco Power. Cleco Power is a

regulated electric utility company that owns nine generating units with a total rated capacity of 3,035 MW and serves approximately 293,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi.

Many factors affect Cleco’s primary business of generating, delivering, and selling electricity. These factors include the ability to increase energy sales while containing

costs and the ability to successfully perform in MISO while subject to the related operating challenges and uncertainties, including increased wholesale competition. In addition, factors affecting Cleco Power include weather and the presence of a stable regulatory environment, which impacts the ROE and the current rate case, as well as the recovery of costs related to storms, growing energy demand, and volatile fuel prices; the ability to reliably deliver power to its jurisdictional customers; and the ability to comply with increasingly stringent regulatory and environmental standards. Significant events and major initiatives impacting Cleco and Cleco Power are discussed below.


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Cleco Cajun Divestiture

In 2022, Cleco Holdings engaged in a strategic review process related to its investment in Cleco Cajun. In March 2023, Cleco Holdings’ management, with the support of its Board of Managers, committed to a plan of action for the disposition of the Cleco Cajun Sale Group, with a sale probable and subject to customary regulatory and Board of Managers approvals. As a result, Cleco Holdings’ management determined that the criteria under GAAP for the Cleco Cajun Sale Group to be classified as held for sale were met and a sale will represent a strategic shift that will have a major effect on Cleco’s future operations and financial results. Therefore, the Cleco Cajun Sale Group is presented as discontinued operations, and the results of operations and financial position for historical periods provided in this report have been recast to reflect this presentation. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Dolet Hills ~~Securitization~~

On October 6, 2020, Cleco Power and SWEPCO made a joint filing with the LPSC seeking authorization to close the Oxbow mine. At December 31, 2021, the Dolet Hills Power Station was retired, and all of Cleco Power’s proportionate share of lignite-related costs had been billed by DHLC and Oxbow. On January 31, 2022, Cleco Power filed an application with the LPSC requesting recovery of stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station as well as deferred fuel and other costs associated with the closure of the Oxbow mine. These costs are currently under a prudency review by the LPSC. Pending the ~~outcome~~completion of the prudency review, Cleco Power intends to seek a financing order to securitize the unrecovered Dolet Hills Power Station closure costs and Oxbow mine closure costs as well as deferred fuel costs. Due to the nature of the regulatory process, Cleco Power is currently unable to determine the timing of this process and if any portion of the incurred costs will be disallowed for recovery. Cleco Power continues to assert that recovery of those costs is ~~probable.~~probable; however, management is seeking a potential settlement to resolve this matter and move forward with the securitization process. For more information on the prudency review, ~~of the deferred fuel and other mine-related closure costs,~~ see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — LPSC Audits and Reviews — ~~Prudency Reviews —~~ Dolet Hills ~~Power Station and Mine Closure Costs and Deferred Lignite Costs.~~Prudency Review.”

ESG

Cleco is accelerating its efforts to protect the environment, manage social relationships, govern responsibly, and ensure accountability. To protect the environment, Cleco is increasing its renewable and electrification ~~initiatives and~~initiatives. Cleco is also aiming to reduce GHG emissions in ways such as incorporating renewable energy resources into its generating fleet, as it replaces coal-fired generation units retired after serving their useful lives. Cleco aims to sustainably reduce its GHG emissions by approximately 60.0% by 2030, with aspirations of net zero emissions by 2050. To manage social relationships, Cleco plans to ensure that the electricity that it generates is affordable, reliable, and sustainable. Cleco also continues to support community investment opportunities across its service territory and has created a workforce culture that rewards inclusion, safety, and innovation. To govern responsibly, Cleco plans to continue operating according to policies and practices that support the governance framework. To ensure

accountability, Cleco has created an ESG Steering Committee and appointed a Chief Sustainability Officer to oversee the continued implementation of ESG initiatives. Currently, management is unable to predict the impact of implementing these ESG initiatives on the Registrants. For more information on these ESG initiatives, see Part I, Item 1, “Business — Human Capital — Diversity and Inclusion,” “— Communities,” and “— Oversight and Governance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For more information about Cleco’s environmental initiatives, see “— Renewable and Electrification Initiatives.”

Tax Reform

On August 16, 2022, the IRA of 2022 became law. The IRA of 2022 seeks to lower gasoline and electricity prices, increase energy security, and help consumers afford emissions-cutting technologies. In addition, the IRA of 2022 provides tax credits

for clean electricity sources and energy storage, as well as creates programs to enable states and electric utilities to transition to clean power. There are several tax and renewables provisions in this legislation that could have a material effect on the results of operations, financial condition, or cash flows of the Registrants. These include provisions related to direct pay and credit transferability, enhanced carbon capture and sequestration credits, new technology-neutral clean energy investment credits, and new technology-neutral clean energy production credits. These credits are expected to help fund Cleco Power’s Project Diamond Vault as well as future renewable and electrification projects. Management continues to monitor any potential impact the IRA of 2022 could have on the Registrants. In addition, the IRA of 2022 could increase business growth in Cleco’s service territory.

Renewable and Electrification Initiatives

Project Diamond Vault

On April 11, 2022, Cleco Power announced Project Diamond Vault, a carbon capture and sequestration facility that is anticipated to be constructed at the Brame Energy Center. This facility is expected to capture and compress carbon dioxide produced by the combustion of fuel at Madison Unit 3 and store the compressed gas permanently in deep geological formations located beneath the Brame Energy Center. Cleco Power expects to reduce the carbon dioxide output of Madison Unit 3 by up to 95% with the implementation of this technology. Through this project, Cleco Power plans to leverage technology advancements and Louisiana’s natural resources to create a clean power solution.

The Front End Engineering Design (FEED) study for Project Diamond Vault has begun and is projected to cost approximately $12.0 million. A $9.0 million congressional appropriation has been secured, subject to the U.S. Department of Energy’s grant process, to help offset costs of this study. The FEED study is expected to be completed in mid-2024 and major permitting is expected to be completed in the second half of 2025. Construction of the project is expected to begin byin the ~~end~~first quarter of ~~2025.~~2026. Management expects the total project will be completed ~~by the end of 2028.~~in early 2029. After the cost of the FEED study, the remaining project cost is currently estimated to be between $1.40 billion and $1.70 billion. This estimate will be refined throughout the FEED study process as additional information and cost estimates become available. Cleco anticipates funding this project through one or more sources including tax credits provided by the IRA of 2022,


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Department of Energy grants, debt financing, private equity investment, and partnership interests.

Other

On July 22, 2022, Cleco Power entered into a long-term agreement to purchase, among other things, the output capacity, and current and future environmental resource credits of a 240-MW solar electric generation facility to be constructed in DeSoto Parish, Louisiana and owned by a third party. The agreement is subject to LPSC approval and other conditions precedent. If approved, Cleco Power expects to begin receiving output from this facility in ~~2025.~~2026.

Cleco Power is also pursuing electrification initiatives such as gas compression, e-trucking, green tariffs, residential heating programs, and increasing the supply of light duty electric vehicles and forklifts, among others.


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Cleco Power is seeking available funds from the U.S. government for funding of these electrification initiatives. Cleco Power cannot predict the likelihood that any funding from the U.S. government ultimately will be approved.

DSMART Project

The DSMART project includes modernization of Cleco Power’s distribution system by replacing or upgrading distribution line equipment to utilize new and emerging technologies to facilitate automatic fault isolation, service restoration, and fault location. The project is expected to provide savings through a reduction in outage restoration time and improve operational efficiencies and time to locate faults. The project is also expected to improve safety and reliability of Cleco Power’s distribution assets by minimizing outage patrols and improving situational awareness in the distribution operations center. The total estimated project cost is $90.2 million. The project implementation will be completed in phases, and management expects the total project will be completed by the end of 2028. Cleco Power is currently in the second phase of the project. As of ~~June~~September 30, 2023, Cleco Power had spent ~~$48.2~~$51.8 million on the project.

Other

Cleco Power is working to secure load growth opportunities that include renewing existing franchises, pursuing new franchises, and adding new retail load opportunities with large industrial, commercial, and residential loads. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government and military, wood and paper, health care, information technology, transportation, and other manufacturing.

In 2021 through a request for proposal process, a significant wholesale customer currently under contract with Cleco Power informed Cleco Power that it was not selected as a provider of capacity and energy after the first quarter of 2024, and on October 19, 2022, the LPSC certified these results. Cleco Power’s failure to recontract this agreement is expected to affect jurisdictional retail rates that will be subject to review by the LPSC in conjunction with Cleco Power’s next rate case. On June 30, 2023, Cleco Power filed an application with the LPSC for its next rate case, with anticipated new rates being effective July 1, 2024.


RESULTS OF OPERATIONS

Comparison of the Three Months Ended ~~June~~September 30, 2023, and 2022


Cleco	Cleco									Cleco
		FOR THE THREE MONTHS ENDED JUNE 30,									FOR THE THREE MONTHS ENDED SEPT. 30,
						FAVORABLE/(UNFAVORABLE)									FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	(THOUSANDS)	2023		2022		VARIANCE		CHANGE		(THOUSANDS)	2023		2022		VARIANCE		CHANGE
Operating revenue, net	Operating revenue, net	$	284,795	$	384,753	$	(99,958)	(26.0)	%	Operating revenue, net	$	393,846	$	496,764	$	(102,918)	(20.7)	%
Operating expenses	Operating expenses	225,416		315,486		90,070		28.5	%	Operating expenses	299,961		357,385		57,424		16.1	%
Operating income	Operating income	59,379		69,267		(9,888)		(14.3)	%	Operating income	93,885		139,379		(45,494)		(32.6)	%
Interest income	Interest income	673		1,066		(393)		(36.9)	%	Interest income	1,283		1,766		(483)		(27.3)	%
Allowance for equity funds used during construction	Allowance for equity funds used during construction	1,574		808		766		94.8	%	Allowance for equity funds used during construction	1,617		965		652		67.6	%

Other expense, net	Other expense, net	(789)		(8,470)		7,681		90.7	%	Other expense, net	(2,404)		(4,952)		2,548		51.5	%
Interest charges	Interest charges	40,768		35,147		(5,621)		(16.0)	%	Interest charges	42,034		37,706		(4,328)		(11.5)	%
Federal and state income tax benefit		(2,989)		(3,577)		(588)		(16.4)	%
Federal and state income tax (benefit) expense										Federal and state income tax (benefit) expense	(246,494)		9,220		255,714		2,773.5	%
Income from continuing operations, net of income taxes	Income from continuing operations, net of income taxes	23,058		31,101		(8,043)		(25.9)	%	Income from continuing operations, net of income taxes	298,841		90,232		208,609		231.2	%
Income (loss) from discontinued operations, net of income taxes		24,272		(29,738)		54,010		181.6	%
Loss from discontinued operations, net of income taxes										Loss from discontinued operations, net of income taxes	(142,729)		(21,860)		(120,869)		(552.9)	%
Net income	Net income	$	47,330	$	1,363	$	45,967	*		Net income	$	156,112	$	68,372	$	87,740	128.3	%
* Not meaningful

The increase in Cleco’s results of operations ~~are~~is primarily attributable to the following:

•activity of its reportable segment, Cleco Power. For detailed discussions of those impacts, see “— Cleco Power.”

•the effects of the presentation of the Cleco Cajun Sale Group as discontinued operations and, as a result, Cleco Cajun no longer being reflected as a reportable segment. For information on discontinued operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

~~The estimated annual effective income tax rates used during the second quarter of 2023 and 2022 for Cleco may not be indicative of the full-year income tax rates.~~ For more information on Cleco’s effective income tax rates on continuing operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”

5152


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


Cleco Power	Cleco Power										Cleco Power
				FOR THE THREE MONTHS ENDED JUNE 30,										FOR THE THREE MONTHS ENDED SEPT. 30,
						FAVORABLE/(UNFAVORABLE)										FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	(THOUSANDS)	2023		2022			VARIANCE		CHANGE		(THOUSANDS)	2023		2022			VARIANCE		CHANGE
Operating revenue	Operating revenue										Operating revenue
Base	Base	$	170,026	$	178,714		$	(8,688)	(4.9)	%	Base	$	218,566	$	192,560		$	26,006	13.5	%
Fuel cost recovery	Fuel cost recovery	93,150		189,900			(96,750)		(50.9)	%	Fuel cost recovery	145,595		283,568			(137,973)		(48.7)	%
Electric customer credits	Electric customer credits	(736)		(129)			(607)		(470.5)	%	Electric customer credits	24		(6,728)			6,752		100.4	%
Securitization revenue											Securitization revenue	9,984		5,025			4,959		98.7	%
Other operations	Other operations	24,741		18,686			6,055		32.4	%	Other operations	22,000		24,757			(2,757)		(11.1)	%
Affiliate revenue	Affiliate revenue	1,635		1,628			7		0.4	%	Affiliate revenue	1,645		1,657			(12)		(0.7)	%
Operating revenue, net	Operating revenue, net	288,816		388,799			(99,983)		(25.7)	%	Operating revenue, net	397,814		500,839			(103,025)		(20.6)	%
Operating expenses	Operating expenses										Operating expenses
Recoverable fuel and purchased power	Recoverable fuel and purchased power	93,355		189,991			96,636		50.9	%	Recoverable fuel and purchased power	145,664		283,848			138,184		48.7	%
Non-recoverable fuel and purchased power	Non-recoverable fuel and purchased power	10,290		11,079			789		7.1	%	Non-recoverable fuel and purchased power	16,314		19,926			3,612		18.1	%
Other operations and maintenance	Other operations and maintenance	57,386		52,277			(5,109)		(9.8)	%	Other operations and maintenance	59,452		58,581			(871)		(1.5)	%
Depreciation and amortization	Depreciation and amortization	43,722		44,299			577		1.3	%	Depreciation and amortization	48,012		44,368			(3,644)		(8.2)	%
Taxes other than income taxes	Taxes other than income taxes	14,342		11,547			(2,795)		(24.2)	%	Taxes other than income taxes	15,818		14,940			(878)		(5.9)	%

Regulatory disallowance											Regulatory disallowance	—		13,841			13,841		100.0	%
Total operating expenses	Total operating expenses	219,095		309,193			90,098		29.1	%	Total operating expenses	285,260		435,504			150,244		34.5	%
Operating income	Operating income	69,721		79,606			(9,885)		(12.4)	%	Operating income	112,554		65,335			47,219		72.3	%
Interest income	Interest income	579		1,035			(456)		(44.1)	%	Interest income	1,215		1,726			(511)		(29.6)	%
Allowance for equity funds used during construction	Allowance for equity funds used during construction	1,574		808			766		94.8	%	Allowance for equity funds used during construction	1,617		965			652		67.6	%
Other expense, net	Other expense, net	(1,005)		(2,225)			1,220		54.8	%	Other expense, net	(103)		(1,591)			1,488		93.5	%
Interest charges	Interest charges	24,183		21,305			(2,878)		(13.5)	%	Interest charges	24,921		23,840			(1,081)		(4.5)	%
Federal and state income tax expense		3,247		3,214			(33)		(1.0)	%
Federal and state income tax (benefit) expense											Federal and state income tax (benefit) expense	(552)		1,862			2,414		129.6	%
Net income	Net income	$	43,439	$	54,705		$	(11,266)	(20.6)	%	Net income	$	90,914	$	40,733		$	50,181	123.2	%

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


		FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE THREE MONTHS ENDED SEPT. 30,
(MILLION kWh)	(MILLION kWh)	2023	2022	FAVORABLE/ (UNFAVORABLE)			(MILLION kWh)	2023	2022	FAVORABLE/ (UNFAVORABLE)
Electric sales	Electric sales						Electric sales
Residential	Residential	919	973		(5.5)	%	Residential	1,329	1,115		19.2	%
Commercial	Commercial	690	706		(2.3)	%	Commercial	849	780		8.8	%
Industrial	Industrial	554	574		(3.5)	%	Industrial	582	572		1.7	%
Other retail	Other retail	31	31		—	%	Other retail	33	30		10.0	%
Total retail	Total retail	2,194	2,284		(3.9)	%	Total retail	2,793	2,497		11.9	%
Sales for resale	Sales for resale	755	789		(4.3)	%	Sales for resale	973	906		7.4	%
Total retail and wholesale customer sales	Total retail and wholesale customer sales	2,949	3,073		(4.0)	%	Total retail and wholesale customer sales	3,766	3,403		10.7	%

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


		FOR THE THREE MONTHS ENDED JUNE 30,								FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		FAVORABLE/ (UNFAVORABLE)			(THOUSANDS)	2023		2022		FAVORABLE/ (UNFAVORABLE)
Electric sales	Electric sales								Electric sales
Residential	Residential	$	79,915	$	86,831		(8.0)	%	Residential	$	119,697	$	100,964		18.6	%
Commercial	Commercial	49,502		50,873			(2.7)	%	Commercial	55,697		52,457			6.2	%
Industrial	Industrial	22,126		22,181			(0.2)	%	Industrial	25,908		21,519			20.4	%
Other retail	Other retail	3,199		2,746			16.5	%	Other retail	2,983		2,820			5.8	%

Total retail	Total retail	154,742		162,631			(4.9)	%	Total retail	204,285		177,760			14.9	%
Sales for resale	Sales for resale	15,284		16,083			(5.0)	%	Sales for resale	14,281		14,800			(3.5)	%
Total base revenue	Total base revenue	$	170,026	$	178,714		(4.9)	%	Total base revenue	$	218,566	$	192,560		13.5	%

Cleco Power’s residential customers’ demand for electricity is largely affected by weather. Weather generally is measured in cooling degree-days and heating degree-days. A high number of cooling degree-days may indicate consumers will use more air conditioning, while a high number of heating degree-days may indicate consumers will use more heating. An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days because alternative heating sources are more readily available, and winter energy is typically priced below the rate charged for energy used in the summer. Normal heating degree-days and cooling degree-days are calculated for a month by separately calculating the average actual heating and cooling degree-days for that month over a period of 30 years.

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

FOR THE THREE MONTHS ENDED JUNE 30,
2023 CHANGE
2023 2022 NORMAL PRIOR YEAR NORMAL
Cooling degree-days 1,102 1,215 983 (9.3) % 12.1 %


	FOR THE THREE MONTHS ENDED SEPT. 30,
				2023 CHANGE
	2023	2022	NORMAL	PRIOR YEAR		NORMAL

Cooling degree-days	2,023	1,632	1,564	24.0	%	29.3	%

Base

Base revenue ~~decreased $8.7~~increased $26.0 million primarily due to ~~lower~~$20.3 million of higher usage as a result of ~~milder~~warmer summer weather. Also contributing to the increase was $5.1 million of higher industrial and commercial customer usage and demand, partially due to new industrial customers in 2023.

For information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see Part I, Item 1A, “Risk Factors — Operational Risks — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Fuel Cost Recovery/Recoverable Fuel and Purchased Power


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

expenses are impacted by customer usage, the per unit cost of fuel used for electric generation, and the dispatch of Cleco Power’s generating facilities by MISO. Cleco Power’s incremental recoverable fuel and purchased power expenses for the three months ended September 30, 2023, were impacted primarily by lower natural gas costs as compared to the three months ended September 30, 2022. For more information on Cleco Power’s most current fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”

Electric Customer Credits

Electric customer credits decreased $6.8 million primarily due to the absence of a 2022 refund to Cleco Power’s retail customers for costs recovered in periods prior to September 30, 2022. The refund was the result of the LPSC approved settlement disallowing the recovery of a portion of planning and construction costs incurred for the St. Mary Clean Energy Center.

Securitization Revenue

Securitization revenue increased $5.0 million primarily due to the collection of storm recovery charges beginning in September 2022.

Other Operations Revenue

Other operations revenue decreased $2.8 million primarily due to $1.6 million of lower transmission revenue primarily due to the expiration of wholesale contracts in December 2022 and May 2023. Also contributing to the decrease was $0.9 million of lower forfeited discounts due to an adjustment for COVID-19 lost revenue as well as lower customer bills in 2023.

Non-Recoverable Fuel and Purchased Power

Non-recoverable fuel and purchased power decreased $3.6 million primarily due to $1.8 million of lower fuel expense primarily due to the expiration of wholesale contracts in December 2022 and May 2023 and $1.6 million for the timing of recovery of transmission costs.

Depreciation and Amortization

Depreciation and amortization increased $3.6 million primarily due to $5.1 million for the amortization of the securitized intangible asset that began in November 2022 and $2.0 million of higher normal recurring additions to fixed assets. These increases were partially offset by $3.2 million for the absence of the amortization of regulatory assets relating to Hurricanes Laura, Delta, and Zeta.

Regulatory Disallowance

Regulatory disallowance decreased $13.8 million due to the absence of the impairment charge resulting from the LPSC approved settlement disallowing the recovery of a portion of planning and construction costs incurred for the St. Mary Clean Energy Center.

Income Taxes

For more information on Cleco Power’s effective income tax rates, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”

Comparison of the Nine Months Ended September 30, 2023, and 2022


Cleco
	FOR THE NINE MONTHS ENDED SEPT. 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2023		2022		VARIANCE		CHANGE
Operating revenue, net	$	999,222	$	1,194,145	$	(194,923)	(16.3)	%
Operating expenses	893,956		770,707		(123,249)		(16.0)	%
Operating income	105,266		423,438		(318,172)		(75.1)	%
Interest income	3,223		3,575		(352)		(9.8)	%
Allowance for equity funds used during construction	4,423		2,704		1,719		63.6	%
Other expense, net	(2,656)		(13,699)		11,043		80.6	%
Interest charges	122,289		105,494		(16,795)		(15.9)	%
Federal and state income tax (benefit) expense	(121,160)		30,472		151,632		497.6	%
Income from continuing operations, net of income taxes	109,127		280,052		(170,925)		(61.0)	%
Loss from discontinued operations, net of income taxes	(9,707)		(54,573)		44,866		82.2	%
Net income	$	99,420	$	225,479	$	(126,059)	(55.9)	%

The decrease in Cleco’s results of operations is primarily attributable to the following:

•activity of its reportable segment, Cleco Power. For detailed discussions of those impacts, see “— Cleco Power.”

For more information on Cleco’s effective income tax rates on continuing operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


Cleco Power
			FOR THE NINE MONTHS ENDED SEPT. 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2023		2022		VARIANCE		CHANGE
Operating revenue
Base	$	532,878	$	528,298	$	4,580	0.9	%
Fuel cost recovery	390,807		612,541		(221,734)		(36.2)	%
Electric customer credits	(1,362)		(6,992)		5,630		80.5	%
Securitization revenue	25,444		5,025		20,419		406.3	%
Other operations	58,584		62,528		(3,944)		(6.3)	%
Affiliate revenue	4,967		4,744		223		4.7	%
Operating revenue, net	1,011,318		1,206,144		(194,826)		(16.2)	%
Operating expenses
Recoverable fuel and purchased power	390,843		612,791		221,948		36.2	%
Non-recoverable fuel and purchased power	33,829		43,044		9,215		21.4	%
Other operations and maintenance	170,827		159,588		(11,239)		(7.0)	%
Depreciation and amortization	142,467		133,907		(8,560)		(6.4)	%
Taxes other than income taxes	46,155		39,117		(7,038)		(18.0)	%


Regulatory disallowance	—		13,841		13,841		100.0	%
Total operating expenses	784,121		1,002,288		218,167		21.8	%
Operating income	227,197		203,856		23,341		11.4	%
Interest income	2,979		3,501		(522)		(14.9)	%
Allowance for equity funds used during construction	4,423		2,704		1,719		63.6	%
Other income (expense), net	198		(5,852)		6,050		103.4	%
Interest charges	73,442		63,947		(9,495)		(14.8)	%
Federal and state income tax expense	4,185		5,800		1,615		27.8	%
Net income	$	157,170	$	134,462	$	22,708	16.9	%

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


	FOR THE NINE MONTHS ENDED SEPT. 30,
(Million kWh)	2023	2022	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	3,003	2,978		0.8	%
Commercial	2,118	2,084		1.6	%
Industrial	1,661	1,690		(1.7)	%
Other retail	95	91		4.4	%
Total retail	6,877	6,843		0.5	%
Sales for resale	2,372	2,378		(0.3)	%
Total retail and wholesale customer sales	9,249	9,221		0.3	%

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


	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2023		2022		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	259,806	$	257,710		0.8	%
Commercial	151,242		151,595			(0.2)	%
Industrial	68,620		65,057			5.5	%
Other retail	8,970		8,268			8.5	%
Total retail	488,638		482,630			1.2	%
Sales for resale	44,240		45,668			(3.1)	%
Total base revenue	$	532,878	$	528,298		0.9	%

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


			FOR THE NINE MONTHS ENDED SEPT. 30,
				2023 CHANGE
	2023	2022	NORMAL	PRIOR YEAR		NORMAL
Heating degree-days	542	1,099	889	(50.7)	%	(39.0)	%
Cooling degree-days	3,404	2,787	2,647	22.1	%	28.6	%

Base

Base revenue increased $4.6 million primarily due to $3.6 million of higher usage as a result of warmer summer weather. Also contributing to the increase was $3.1 million of higher industrial and commercial customer usage and demand, partially due to new industrial customers in 2023. These increases were partially offset by $1.4 million of lower wholesale customer revenue largely due to the expiration of wholesale contracts in December 2022 and May 2023.

Fuel Cost Recovery/Recoverable Fuel and Purchased Power


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

incremental recoverable fuel and purchased power expenses for the ~~three~~nine months ended ~~June~~September 30, 2023, were impacted primarily by lower natural gas costs as compared to the ~~three~~nine months ended ~~June~~September 30, 2022. For more information on Cleco Power’s most current fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”

Electric Customer Credits

Electric customer credits decreased $5.6 million primarily due to the absence of a 2022 refund to Cleco Power’s retail customers for costs recovered in periods prior to September 30, 2022. The refund was the result of the LPSC approved settlement disallowing the recovery of a portion of planning and construction costs incurred for the St. Mary Clean Energy Center.

Securitization Revenue

Securitization revenue increased $20.4 million primarily due to the collection of storm recovery charges beginning in September 2022.

Other Operations Revenue

Other operations revenue ~~increased $6.1~~decreased $3.9 million primarily due to ~~storm~~$2.5 million of lower transmission revenue. Also contributing to the decrease was $0.7 million of lower forfeited discounts due to an adjustment for COVID-19 lost revenue as well as lower customer bills in 2023. In addition, there was $0.5 million of lower reconnect fees largely due to the suspension of disconnections and collection efforts in August and September 2023 due to high temperatures.

Non-Recoverable Fuel and Purchased Power

Non-recoverable fuel and purchased power decreased $9.2 million primarily due to $4.9 million for the timing of recovery ~~securitization revenue which began~~of transmission costs and $3.7 million of lower fuel expense primarily due to the expiration of wholesale contracts in ~~September 2022.~~December 2022 and May 2023.

Other Operations and Maintenance Expense

Other operations and maintenance expense increased ~~$5.1~~$11.2 million primarily due to ~~$3.7~~$8.5 million of higher employee-related expenses ~~$1.0 million of~~largely related to higher ~~distribution maintenance expense,~~salaries and ~~$0.8~~lower pension non-service costs. Also contributing to the increase was $2.1 million of higher outside service costs ~~largely~~primarily related to information technology support and ~~consulting.~~consulting and $2.0 million of higher materials and supplies expense. These increases were partially offset by $2.0 million of lower routine generation maintenance expense.

Depreciation and Amortization

Depreciation and amortization increased $8.6 million primarily due to $10.7 million for the amortization of the securitized intangible asset that began in November 2022, $4.2 million related to a change in the estimated useful life of internal software, and $3.1 million of higher normal recurring additions to fixed assets. These increases were partially offset by $7.9 million for the absence of amortization of regulatory assets relating to Hurricanes Laura, Delta, and Zeta and $2.0 million for the absence of amortization related to costs associated with lignite mining.

~~Taxes Other Than Income Taxes~~

~~Taxes other than income taxes increased $2.8 million primarily due to the amortization of the Madison Unit 3 property tax regulatory asset that began in July 2022.~~

~~Other Expense, Net~~

Other expense, net decreased $1.2 million primarily due to $2.2 million for the absence of non-service pension costs amortization as a result of an increase in the discount rate which caused actuarial gains.

~~Interest Charges~~

Interest charges increased $2.9 million primarily due to $4.2 million for interest on storm recovery bonds issued in June 2022 by Cleco Securitization I and $1.4 million related to higher interest rates on variable rate debt. These increases were partially offset by $1.6 million for the absence of interest on floating rate senior notes that were redeemed at par in June 2022 and $1.2 million of lower amortization of debt expense.

~~Income Taxes~~

The estimated annual effective income tax rates used during the second quarter of 2023 and 2022 for Cleco Power may not be indicative of the full-year income tax rates. For more information on Cleco Power’s effective income tax rates, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”

~~Comparison of the Six Months Ended June 30, 2023, and 2022~~

Cleco
FOR THE SIX MONTHS ENDED JUNE 30,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2023 2022 VARIANCE CHANGE
Operating revenue, net $ 605,377 $ 697,380 $ (92,003) (13.2) %
Operating expenses 511,562 579,211 67,649 11.7 %
Operating income 93,815 118,169 (24,354) (20.6) %
Interest income 1,940 1,809 131 7.2 %
Allowance for equity funds used during construction 2,806 1,740 1,066 61.3 %
Other expense, net (252) (8,747) 8,495 97.1 %
Interest charges 80,256 67,788 (12,468) (18.4) %
Federal and state income tax benefit (3,154) (11,110) (7,956) (71.6) %
Income from continuing operations, net of income taxes 21,207 56,293 (35,086) (62.3) %
(Loss) income from discontinued operations, net of income taxes (77,899) 100,814 (178,713) (177.3) %
Net (loss) income $ (56,692) $ 157,107 $ (213,799) (136.1) %

~~The decrease in Cleco’s results of operations are primarily attributable to the following:~~

•~~activity of its reportable segment, Cleco Power. For detailed discussions of those impacts, see “— Cleco Power.”~~

The estimated annual effective income tax rates used during the six months ended June 30, 2023, and 2022 for Cleco might not be indicative of the full-year income tax rates. For more information on Cleco’s effective income tax rates on continuing operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Cleco Power
FOR THE SIX MONTHS ENDED JUNE 30,
FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2023 2022 VARIANCE CHANGE
Operating revenue
Base $ 314,313 $ 335,738 $ (21,425) (6.4) %
Fuel cost recovery 245,211 328,973 (83,762) (25.5) %
Electric customer credits (1,386) (265) (1,121) (423.0) %
Other operations 52,044 37,771 14,273 37.8 %
Affiliate revenue 3,323 3,087 236 7.6 %
Operating revenue, net 613,505 705,304 (91,799) (13.0) %
Operating expenses
Recoverable fuel and purchased power 245,179 328,943 83,764 25.5 %
Non-recoverable fuel and purchased power 17,515 23,118 5,603 24.2 %
Other operations and maintenance 111,377 101,006 (10,371) (10.3) %
Depreciation and amortization 94,454 89,538 (4,916) (5.5) %
Taxes other than income taxes 30,337 24,178 (6,159) (25.5) %
Total operating expenses 498,862 566,783 67,921 12.0 %
Operating income 114,643 138,521 (23,878) (17.2) %
Interest income 1,764 1,775 (11) (0.6) %
Allowance for equity funds used during construction 2,806 1,740 1,066 61.3 %
Other income (expense), net 301 (4,261) 4,562 107.1 %
Interest charges 48,521 40,108 (8,413) (21.0) %
Federal and state income tax expense 4,737 3,938 (799) (20.3) %
Net income $ 66,256 $ 93,729 $ (27,473) (29.3) %

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

FOR THE SIX MONTHS ENDED JUNE 30,
(Million kWh) 2023 2022
FAVORABLE/
(UNFAVORABLE)
Electric sales
Residential 1,673 1,863 (10.2) %
Commercial 1,270 1,305 (2.7) %
Industrial 1,079 1,118 (3.5) %
Other retail 62 61 1.6 %
Total retail 4,084 4,347 (6.1) %
Sales for resale 1,399 1,472 (5.0) %
Total retail and wholesale customer sales 5,483 5,819 (5.8) %

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

FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS) 2023 2022
FAVORABLE/
(UNFAVORABLE)
Electric sales
Residential $ 140,109 $ 156,747 (10.6) %
Commercial 95,545 99,137 (3.6) %
Industrial 42,712 43,538 (1.9) %
Other retail 5,987 5,448 9.9 %
Total retail 284,353 304,870 (6.7) %
Sales for resale 29,960 30,868 (2.9) %
Total base revenue $ 314,313 $ 335,738 (6.4) %

FOR THE SIX MONTHS ENDED JUNE 30,
2023 CHANGE
2023 2022 NORMAL PRIOR YEAR NORMAL
Heating degree-days 542 944 888 (42.6) % (39.0) %
Cooling degree-days 1,381 1,309 1,083 5.5 % 27.5 %

~~Base~~

~~Base revenue decreased $21.4 million primarily due to lower usage as a result of milder weather.~~

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

Changes in fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such expenses. Approximately 78% of Cleco Power’s total fuel cost during the first six months of 2023 was regulated by the LPSC. Recovery of FAC costs is subject to periodic fuel audits by the LPSC which may result in a refund to customers. Generally, fuel and purchased power expenses are impacted by customer usage, the per unit cost of fuel used for electric generation, and the dispatch of Cleco Power’s generating facilities by MISO. Cleco Power’s incremental recoverable fuel and purchased power expenses for the six months ended June 30, 2023, were impacted primarily by lower natural gas costs as compared to the six months ended June 30, 2022. For more information on Cleco Power’s most current fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

~~Other Operations Revenue~~

~~Other operations revenue increased $14.3 million primarily due to storm recovery securitization revenue which began in September 2022.~~

~~Non-Recoverable Fuel and Purchased Power~~

Non-recoverable fuel and purchased power decreased $5.6 million primarily due to $3.3 million for the timing of transmission costs and $2.0 million of lower fuel expense primarily due to the expiration of a wholesale contract in December 2022.

~~Other Operations and Maintenance Expense~~

Other operations and maintenance expense increased $10.4 million primarily due to $6.0 million of higher employee-related expenses, $1.6 million of higher distribution maintenance expense, and $1.6 million of higher materials and supplies expense.

~~Depreciation and Amortization~~

Depreciation and amortization increased $4.9 million primarily due to $5.6 million for the amortization of the securitized intangible asset that began in November 2022 and $4.2 million related to a change in the estimated useful life of internal software. These increases were partially offset by $4.7 million for the absence of amortization of regulatory assets relating to Hurricanes Laura, Delta, and Zeta.

Taxes Other Than Income Taxes

Taxes other than income taxes increased ~~$6.2~~$7.0 million primarily due to the amortization of the Madison Unit 3 property tax regulatory asset that began in July 2022.

Regulatory Disallowance

Other Income (Expense), Net

Other income (expense), net increased ~~$4.6~~$6.1 million primarily due to the absence of non-service pension costs amortization as a result of an increase in the discount rate which caused actuarial gains.

Interest Charges

Interest charges increased ~~$8.4~~$9.5 million primarily due to ~~$9.0~~$8.9 million for interest on storm recovery bonds issued in June 2022 by Cleco Securitization I and ~~$3.0~~$3.7 million related to higher interest rates on variable rate debt. These increases were partially offset by ~~$2.4~~$2.7 million for the absence of interest on floating rate senior notes that were redeemed at par in June ~~2022 and $1.2 million of lower amortization of debt expense.~~2022.

Income Taxes

~~The estimated annual effective income tax rates used during the six months ended June 30, 2023, and 2022 for Cleco Power might not be indicative of the full-year income tax rates.~~ For more information on Cleco Power’s effective income tax rates, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Income Taxes — Effective Tax Rates.”

Non-GAAP Measure

The financial results in the following table 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 segment; however, it is not indicative of future performance. Management evaluates the performance of Cleco’s segment and allocates resources to it 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.

The financial information for historical periods provided in this report has been recast to reflect the presentation of the Cleco Cajun Sale Group as discontinued operations. Cleco’s segment structure and its allocation of corporate expenses were updated to reflect how management makes financial decisions and allocates resources. Cleco has recast data from prior periods to reflect this change to conform to the current year presentation. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

The following table sets forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to EBITDA for the three and ~~six~~nine months ended ~~June~~September 30, 2023, and 2022 for the Cleco Power reportable segment:

FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS) 2023 2022
Net income $ 43,439 $ 54,705
Add: Depreciation and amortization 43,722 44,299
Less: Interest income 579 1,035
Add: Interest charges 24,183 21,305
Add: Federal and state income tax expense 3,247 3,214
EBITDA $ 114,012 $ 122,488


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2023		2022

Net income	$	90,914	$	40,733
Add: Depreciation and amortization	48,012		44,368
Less: Interest income	1,215		1,726
Add: Interest charges	24,921		23,840
Add: Federal and state income tax (benefit) expense	(552)		1,862
EBITDA	$	162,080	$	109,077


		FOR THE SIX MONTHS ENDED JUNE 30,					FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		(THOUSANDS)	2023		2022
Net income	Net income	$	66,256	$	93,729	Net income	$	157,170	$	134,462
Add: Depreciation and amortization	Add: Depreciation and amortization	94,454		89,538		Add: Depreciation and amortization	142,467		133,907
Less: Interest income	Less: Interest income	1,764		1,775		Less: Interest income	2,979		3,501
Add: Interest charges	Add: Interest charges	48,521		40,108		Add: Interest charges	73,442		63,947
Add: Federal and state income tax expense	Add: Federal and state income tax expense	4,737		3,938		Add: Federal and state income tax expense	4,185		5,800
EBITDA	EBITDA	$	212,204	$	225,538	EBITDA	$	374,285	$	334,615


FINANCIAL CONDITION

Liquidity and Capital Resources

General Considerations and Credit-Related Risks

Credit Ratings and Counterparties

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


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

presents the credit ratings of Cleco Holdings and Cleco Power at ~~June~~September 30, 2023:

SENIOR UNSECURED DEBT

CORPORATE/LONG-TERM ISSUER

S&P

MOODY’S

FITCH

S&P

MOODY’S

FITCH

Cleco Holdings

BBB-

Baa3

BBB-

Baa3

BBB-

Cleco Power

BBB+

BBB

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

Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest ratings held. If Cleco Holdings’ or Cleco Power’s credit ratings were to be downgraded, Cleco Holdings or Cleco Power, respectively, could be required to pay additional fees and incur higher interest rates for borrowings under their respective revolving credit facilities.

Cleco may be required to provide credit support with respect to ~~any open trading~~bilateral transactions and contracts that Cleco has entered into or may ~~initiate~~enter into in the future. The amount of

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

Cleco Power and Cleco Cajun participate in the MISO market. MISO requires Cleco Power and Cleco Cajun to provide credit support which may increase or decrease due to the timing of the settlement schedules and MISO margining formulas. For more information about MISO, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For more information about credit support see Item 1, “Financial Statements and Supplementary Data — Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees.”

Global and U.S. Economic Environment

Global and domestic economic conditions may have an impact on Cleco’s business and financial condition. Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. During periods of capital market volatility, the availability of capital could be limited and the costs of capital may increase for many companies. Although the Registrants have not experienced restrictions in the financial markets, their ability to access the capital markets may be restricted at a time when the Registrants would like, or need, to do so. Any restrictions could have a material impact on the Registrants’ ability to fund capital expenditures or debt service, or on their flexibility to react to changing economic and business conditions. Credit constraints could have a material negative impact on the Registrants’ lenders or customers, causing them to fail to meet their obligations to the Registrants or to delay payment of such obligations. The rising interest rates the Registrants have recently been exposed to have negatively

affected interest expense on variable rate debt and positively affected interest income for the Registrants’ short-term investments.

In recent years, inflationary pressures have increased substantially. Under established regulatory practice, historical costs have traditionally formed the basis for recovery from customers. As a result, Cleco Power’s future cash flows designed to provide recovery of historical plant costs may not be adequate to replace property, plant, and equipment in future years. For information on the impacts of inflation and market price volatility of natural gas on credit loss reserves related to customer accounts receivable, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Reserves for Credit Losses.”

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. On June 16, 2021, the LPSC approved Cleco Power’s current retail rate plan, which included the settlement of the TCJA protected and unprotected excess ADIT. As a result of this settlement, all retail customers will continue receiving bill credits resulting from the TCJA. For more information on the regulatory impact of the TCJA, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — TCJA.”


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Cleco may be required to provide credit support 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 amounts counterparties owe to Cleco, and any prenegotiated unsecured thresholds agreed to in the master contract. For more information about fair value levels, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 6 — Fair Value Accounting Instruments.”

Cash Generation and Cash Requirements

Restricted Cash and Cash Equivalents

For information on Cleco’s and Cleco Power’s restricted cash and cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

Debt

Cleco

At ~~June~~September 30, 2023, and December 31, 2022, Cleco had ~~$120.0~~$105.0 million and $109.0 million, respectively, of short-term debt for outstanding borrowings under its aggregate $475.0 million revolving credit facilities. For more information on Cleco’s revolving credit facilities, see “— Credit Facilities.”

At ~~June~~September 30, 2023, Cleco’s long-term debt and finance leases outstanding was $3.47 billion, of which ~~$371.8~~$372.2 million was due within one year. The long-term debt due within one year at ~~June~~September 30, 2023, primarily represents $132.3 million of Cleco Holdings’ bank term loan due in May 2024, of which


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

~~$65.6~~ $65.6 million is due by December 2023 as required by the Cleco Cajun Transaction commitments to the LPSC; $125.0 million of Cleco Power’s bank term loan due in May 2024; $100.0 million of Cleco Power’s senior notes due in December 2023; and ~~$14.2~~$14.5 million of Cleco Securitization I storm recovery bond principal payments scheduled to be paid in ~~September 2023~~March and ~~March~~September 2024.

On February 17, 2023, Cleco Holdings and Cleco Power amended their respective bank term loans to transition the benchmark interest rate from LIBOR to SOFR.

On May 1, 2023, Cleco Holdings amended certain terms of the supplemental indenture governing its $165.0 million senior notes due in 2023. As a result, the interest rate of the senior notes changed to a floating interest rate equal to SOFR plus 1.725% and the maturity date was extended from May 1, 2023, to May 1, 2025.

Proceeds from the divestiture of the Cleco Cajun Sale Group, which is subject to customary regulatory and Board of Managers approvals, must be used to satisfy the LPSC commitment related to the debt that funded the Cleco Cajun Transaction. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

At ~~June~~September 30, 2023, cash and cash equivalents available of ~~$71.9~~$181.9 million combined with ~~$355.0~~$370.0 million of available revolving credit facility capacity ($~~80.0~~70.0 million from Cleco Holdings and ~~$275.0~~$300.0 million from Cleco Power) provided a total liquidity of ~~$426.9~~$551.9 million.

At ~~June~~September 30, 2023, and December 31, 2022, Cleco had a working capital surplus of $89.5 million and deficit of ~~$79.6 million and~~ $88.8 million, respectively. The ~~$9.2~~$178.3 million increase in working capital is primarily due to:

•a ~~$49.7~~$110.2 million increase in ~~fuel inventory~~cash, cash equivalents, restricted cash, and restricted cash equivalents,

•an $80.3 million increase in taxes receivable primarily due to an ~~increase in volume of petroleum coke~~accrual to record federal income taxes at ~~a lower price per ton and an increase in volume of coal at a higher price per ton,~~the projected annual effective rate,

•a ~~$37.4~~$72.3 million increase in the net assets and liabilities held for sale primarily due to the reclassification of all assets and liabilities related to the Cleco Cajun Sale Group,

•a ~~$27.3~~$36.4 million decrease in accounts payable, excluding Cleco Power’s FTRs, primarily due to lower accruals for natural gas, solid fuels, and generating station outage maintenance,

•a ~~$23.8 million increase in cash and cash equivalents,~~

•~~a $17.7~~$16.9 million increase in materials and supplies inventory primarily due to higher purchases of transmission and distribution inventory in order to support future needs and mitigate future supply chain uncertainty,

•~~a $5.4 million increase in accounts receivable from affiliates primarily due to estimated tax payments made on behalf of Cleco Group,~~

•~~a $4.8 million increase in unbilled revenue primarily due to higher usage as a result of warmer weather at the end of June 2023,~~

•~~a $3.9 million increase in prepayments primarily due to property insurance premiums paid in June 2023,~~ and

•~~a $3.9~~an $11.7 million decrease in ~~energy risk management~~regulatory liabilities primarily due to the ~~settlement~~reclassification of ~~gas related derivative contracts.~~the short-term portion of the TCJA regulatory liability amortization.

These increases in working capital were partially offset by:

•a ~~$52.5~~$37.4 million decrease in accumulated deferred fuel, excluding Cleco Power’s FTRs, primarily due to lower fuel costs,

•a ~~$39.2~~$33.3 million increase in taxes payable primarily due to an accrual for property tax payments and higher provision for federal and state income taxes,

•a ~~$30.9~~$31.4 million increase in long-term debt and finance leases due within one year primarily due to the reclassification of $125.0 million of Cleco Power’s bank term loan due in May 2024, $66.7 million of Cleco Holdings’ bank term loan due in May 2024, and an additional ~~$4.6~~$4.9 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds, partially offset by the reclassification of Cleco Holdings’ $165.0 million senior notes due in 2023 to long-term debt as a result of the extension of the maturity date of such senior notes to May 1, 2025,

•a ~~$29.0~~$27.0 million decrease in ~~customer accounts receivable~~energy risk management assets primarily due to ~~timing~~market value changes on gas-related derivative contracts,

•a $14.7 million increase in accrued interest primarily due to the accrual of ~~payments received from a wholesale customer~~interest on Cleco Holdings’ and ~~lower accruals for fuel recovery revenue,~~Cleco Power’s bonds, and

•an ~~$11.0~~$11.7 million ~~increase~~decrease in ~~short-term debt~~regulatory assets primarily due to ~~higher outstanding draws on revolving credit facilities.~~withdrawing the remaining balance of the Hurricane Ida regulatory asset from the related storm reserve following the settlement of the prudency review.

Cleco Holdings

At ~~June~~September 30, 2023, and December 31, 2022, Cleco Holdings had ~~$95.0~~$105.0 million and $64.0 million, respectively, of short-term debt for outstanding borrowings under its $175.0 million revolving credit facility. For more information on Cleco Holdings’ revolving credit facility, see “— Credit Facilities.” Cleco Holdings has an uncommitted line of credit that allows up to $10.0 million in short-term borrowings, but no more than $10.0 million in the aggregate with Cleco Power’s similar line of credit, to support its working capital needs. There were no amounts outstanding under the uncommitted line of credit at ~~June~~September 30, 2023.

At ~~June~~September 30, 2023, Cleco Holdings’ long-term debt outstanding was $1.58 billion, of which ~~$131.9~~$132.0 million was due within one year. The long-term debt due within one year at ~~June~~


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

September 30, 2023, primarily represents the $132.3 million bank term loan due in May 2024, of which $65.6 million is due by December 2023 as required by the Cleco Cajun Transaction commitments to the LPSC.

At ~~June~~September 30, 2023, cash and cash equivalents available at Cleco Holdings of ~~$4.2~~$6.6 million combined with ~~$80.0~~$70.0 million of available revolving credit facility capacity provided a total liquidity of ~~$84.2~~$76.6 million.

Cleco Power

At ~~June~~September 30, 2023, ~~and~~Cleco Power had no short-term debt. At December 31, 2022, Cleco Power had ~~$25.0 million and~~ $45.0 million, ~~respectively,~~ of short-term debt for outstanding borrowings under its $300.0 million revolving credit facility. For more information on Cleco Power’s revolving credit facility, see “— Credit Facilities.”

Cleco Power has an uncommitted line of credit that allows up to $10.0 million in short-term borrowings, but no more than $10.0 million in the aggregate with Cleco Holdings’ similar line of credit, to support its working capital needs. There were no amounts outstanding under the uncommitted line of credit at ~~June~~September 30, 2023.

At ~~June~~September 30, 2023, Cleco Power’s long-term debt and finance leases outstanding was $1.89 billion, of which ~~$239.9~~$240.3 million was due within one year. The long-term debt due within


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

one year at ~~June~~September 30, 2023, primarily represents the $125.0 million bank term loan due in May 2024, $100.0 million of senior notes due in December 2023, and ~~$14.2~~$14.5 million of Cleco Securitization I storm recovery bond principal payments scheduled to be paid in ~~September 2023~~March and ~~March~~September 2024.

At ~~June~~September 30, 2023, cash and cash equivalents available of ~~$30.5~~$108.0 million combined with ~~$275.0~~$300.0 million of available revolving credit facility capacity provided a total liquidity of ~~$305.5~~$408.0 million.

At ~~June~~September 30, 2023, Cleco Power had a working capital deficit of ~~$77.2~~$9.4 million. At December 31, 2022, Cleco Power had a working capital surplus of $35.9 million. The ~~$113.1~~$45.3 million decrease in working capital is primarily due to:

•a ~~$129.6~~$129.9 million increase in long-term debt and finance leases due within one year primarily due to the reclassification of Cleco Power’s $125.0 million bank term loan due in May 2024 and an additional ~~$4.6~~$4.9 million of scheduled principal payments on Cleco Securitization I’s storm recovery bonds,

•a ~~$52.5~~$37.4 million decrease in accumulated deferred fuel, excluding FTRs, primarily due to lower fuel costs,

•a ~~$35.5~~$35.2 million increase in taxes payable primarily due to an accrual for property tax payments, and ~~higher provision for federal and state income taxes, and~~

•~~a $29.0~~an $11.7 million decrease in ~~customer accounts receivable~~regulatory assets primarily due to ~~timing~~withdrawing the remaining balance of ~~payments received~~the Hurricane Ida regulatory asset from ~~a wholesale customer and lower accruals for fuel recovery revenue.~~the storm reserve following the completion of the prudency review.

These decreases in working capital were partially offset by:

•a ~~$49.7~~$76.1 million increase in ~~fuel inventory primarily due to an increase in volume of petroleum coke at a lower price per ton~~cash, cash equivalents, restricted cash, and ~~an increase in volume of coal at a higher price per ton,~~restricted cash equivalents,

•a ~~$24.6~~$45.0 million decrease in short-term debt primarily due to lower outstanding draws on the revolving credit facility,

•a $36.6 million decrease in accounts payable, excluding FTRs, primarily due to lower accruals for natural gas, solid fuels, and generating station outage maintenance,

•a ~~$20.0 million decrease in short-term debt primarily due to lower outstanding draws on the revolving credit facility,~~

•~~a $15.8 million increase in cash and cash equivalents,~~ and

•~~a $4.8~~an $11.7 million ~~increase~~decrease in ~~unbilled revenue~~regulatory liabilities primarily due to ~~higher usage as a result~~the reclassification of ~~warmer weather at~~ the ~~end~~short-term portion of ~~June 2023.~~the TCJA regulatory liability amortization.

Credit Facilities

At ~~June~~September 30, 2023, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with ~~$95.0~~$105.0 million of outstanding borrowings and one for Cleco Power in the amount of $300.0 million with ~~$25.0 million~~no outstanding borrowings. On February 17, 2023, Cleco Holdings and Cleco Power amended their respective revolving credit facilities to transition the benchmark interest rate from LIBOR to SOFR. The total of all revolving credit facilities maintains a maximum aggregate capacity of $475.0 million.

Cleco and Cleco Power had no amounts outstanding under their uncommitted lines of credit at ~~June~~September 30, 2023.

Cleco Holdings’ revolving credit facility provides funding for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and matures in May 2026. Under covenants contained in Cleco Holdings’ revolving credit facility, Cleco is required to maintain total indebtedness less than or equal to 65% of total capitalization. At ~~June~~September 30, 2023, Cleco Holdings was in compliance with the covenants of its revolving credit facility. At ~~June~~September 30, 2023, the borrowing costs for amounts drawn under the facility were equal to SOFR plus 1.725% or ABR plus 0.625%, plus commitment fees of 0.275% paid on the unused portion of the facility. 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, under the pricing levels of its revolving credit facility.

Cleco Power’s revolving credit facility provides funding for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and matures in May 2026. Under covenants contained in Cleco Power’s revolving credit facility, Cleco Power is required to maintain total indebtedness less than or equal to 65% of total capitalization. At ~~June~~September 30, 2023, Cleco Power was in compliance with the covenants of its revolving credit facility. At ~~June~~September 30, 2023, the borrowing costs for amounts drawn under the facility were equal to SOFR plus 1.35% or ABR plus 0.25%, plus commitment fees of 0.15% paid on the unused portion of the facility. 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, under the pricing levels of its revolving credit facility.

If Cleco Holdings or Cleco Power were to not comply with certain covenants in their respective revolving credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities, and the lenders under the respective credit facility or debt agreement could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its revolving credit facility or other debt agreements, Cleco Holdings would be considered in default under its revolving credit facility.


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Debt and Distribution Limitations

The 2016 Merger Commitments include provisions for limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings. Cleco Holdings may not make any distribution unless, after giving effect to such distribution, Cleco Holdings’ debt to EBITDA ratio is equal to or less than 6.50 to 1.00 and Cleco Holdings’ corporate credit rating is investment grade with one or more of the three credit rating agencies. At ~~June~~September 30, 2023, Cleco Holdings was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. Additionally, in accordance with the 2016 Merger Commitments, Cleco Power is subject to certain provisions limiting the amount of distributions that may be paid to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings. Cleco Power may not make any distribution unless, after giving effect to such distribution, Cleco Power’s common equity ratio would not be less than 48% and Cleco Power’s corporate credit rating is


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

investment grade with two of the three credit rating agencies.

At ~~June~~September 30, 2023, Cleco Power was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. The 2016 Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. For more information on the 2016 Merger Commitments, see Part I, Item 1A, “Risk Factors — Structural Risks — Holding Company” and “— Regulatory Risks — Regulatory Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Cash Flows

Cleco’s operating, investing, and financing cash flows include both continuing and discontinued operations. For information on the cash flows from discontinued operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

Cleco’s and Cleco Power’s net cash activities are as follows for the ~~six~~nine months ended ~~June~~September 30, 2023, and 2022:


		CLECO						CLECO POWER			CLECO										CLECO POWER
		FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,			FOR THE NINE MONTHS ENDED SEPT. 30,										FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	(THOUSANDS)	2023		2022		VARIANCE			2023			2022		VARIANCE		(THOUSANDS)	2023		2022		VARIANCE		2023		2022		VARIANCE
Net cash provided by operating activities	Net cash provided by operating activities	$	124,359	$	174,507	$	(50,148)		$	174,237		$	90,670	$	83,567	Net cash provided by operating activities	$	321,173	$	245,125	$	76,048	$	341,933	$	146,999	$	194,934
Net cash used in investing activities	Net cash used in investing activities	$	(113,565)	$	(85,111)	$	(28,454)		$	(108,983)		$	(97,293)	$	(11,690)	Net cash used in investing activities	$	(163,682)	$	(128,550)	$	(35,132)	$	(157,976)	$	(138,455)	$	(19,521)
Net cash provided by (used in) financing activities		$	7,353	$	14,828	$	(7,475)		$	(48,623)		$	95,673	$	(144,296)
Net cash (used in) provided by financing activities																Net cash (used in) provided by financing activities	$	(44,690)	$	(40,165)	$	(4,525)	$	(105,289)	$	63,930	$	(169,219)

Cleco - Net Operating Cash ~~Flow~~Flows

Net cash provided by operating activities ~~decreased $50.1~~increased $76.1 million, which includes ~~net cash used~~$0.6 million related to discontinued operations, ~~of $5.3 million,~~ primarily due to:

•$~~136.9~~72.7 million of higher ~~payments for fuel inventory primarily due to higher volume of purchases of coal at~~collections from Cleco Power and Cleco ~~Cajun,~~

•~~the absence of $49.0 million of collateral received from counterparties related to Cleco Cajun’s natural gas derivatives, and~~Cajun's customers,

•$~~25.2 million of higher purchased power at Cleco Power and Cleco Cajun.~~

~~These decreases were partially offset by:~~

•~~$86.6~~58.0 million of higher recoveries of fuel and purchased power costs primarily due to the timing of collections at a higher fuel rate at Cleco Power,

•$~~40.7~~48.4 million of higher receipts of affiliate settlements primarily for income taxes paid on behalf of Cleco Group, and

•$14.1 million of higher collections from ~~Cleco Power’s customers, and~~

•~~the absence of $40.6 million of affiliate intercompany tax settlements.~~

~~Cleco - Net Investing Cash Flow~~

~~Net cash used in investing activities increased $28.5 million, which includes $1.2 million related to discontinued operations, primarily due to:~~

•~~the absence of $15.3 million of life insurance proceeds and~~

•~~$13.5 million for higher additions to property, plant, and equipment, net of AFUDC.~~

~~Cleco - Net Financing Cash Flow~~

~~Net cash provided by financing activities decreased $7.5 million primarily due to:~~

•~~the absence of proceeds of $424.9 million, net of discount, from the issuance of Cleco Securitization I’s senior secured storm recovery bonds and~~

•~~$85.0 million of higher payments on revolving credit facilities.~~

~~These decreases were partially offset by:~~

•~~$321.8 million of lower repayments on long-term debt,~~

•~~the absence of distributions to Cleco Group of $132.8 million, and~~

•~~$41.0 million of higher draws on revolving credit facilities.~~

~~Cleco Power - Net Operating Cash Flow~~

~~Net cash provided by operating activities increased $83.6 million primarily due to:~~

•~~$86.6 million of higher recoveries of fuel and purchased power costs~~joint owners primarily due to the timing of ~~collections at a higher fuel rate,~~

•~~the absence~~receipts for their portions of ~~$59.5 million of affiliate intercompany tax settlements, and~~

•~~$40.7 million of higher collections from customers.~~generating station expenses.

These increases were partially offset by:

•$~~75.1~~87.1 million of higher payments for fuel inventory primarily due to higher volume of purchases of coal

•~~$15.2 million of higher interest paid on debt,~~ and

•$~~9.5~~42.9 million of ~~higher purchases of materials and supplies inventory~~lower collateral received from counterparties related to ~~mitigate future supply chain issues.~~Cleco Cajun’s natural gas derivatives.

Cleco ~~Power~~ - Net Investing Cash ~~Flow~~Flows

Net cash used in investing activities increased ~~$11.7~~$35.2 million, which includes $0.6 million related to discontinued operations, primarily due toto:

•$20.2 million for higher additions to property, plant, and equipment, net of AFUDC ~~of $12.3 million.~~and

•$15.3 million for lower life insurance proceeds received.

Cleco ~~Power~~ - Net Financing Cash ~~Flow~~Flows

Net cash used in financing activities increased ~~$144.3~~$4.5 million primarily due to:

•the absence of proceeds of $424.9 million, net of discount, from the issuance of Cleco Securitization I’s senior secured storm recovery bonds,

•$~~45.0~~71.0 million of higher payments on revolving credit facilities, and

•$~~30.0~~20.0 million of lower draws on credit facilities.

These increases were partially offset by:

•$315.4 million of lower repayments on long-term debt and

•$189.6 million of lower distributions to Cleco Group.

Cleco Power - Net Operating Cash Flows

Net cash provided by operating activities increased $194.9 million primarily due to:

•$59.0 million of higher ~~draws on revolving credit facilities.~~collections from customers,

•$58.0 million of higher recoveries of fuel and purchased power costs primarily due to the timing of collections at a higher fuel rate,

•higher receipts of $57.1 million for affiliate settlements,

•$13.0 million of higher collections from joint owners primarily due to the timing of receipts for their portions of generating station expenses, and

•lower fuel inventory costs of $6.8 million due to purchases at a lower price per unit for petroleum coke and natural gas.

5960


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q

These increases were partially offset by:

•$~~321.8~~13.8 million of higher interest paid on debt and

•$3.5 million of higher purchases of materials and supplies inventory to mitigate future supply chain issues.

Cleco Power - Net Investing Cash Flows

Net cash used in investing activities increased $19.5 million primarily due to higher additions to property, plant, and equipment, net of AFUDC, of $20.2 million.

Cleco Power - Net Financing Cash Flows

Net cash used in financing activities increased $169.2 million primarily due to:

•the absence of proceeds of $424.9 million, net of discount, from the issuance of Cleco Securitization I’s senior secured storm recovery bonds,

•$92.0 million of lower draws on revolving credit facilities, and

•$30.0 million of higher payments on revolving credit facilities.

These increases were partially offset by:

•$315.4 million of lower repayments on long-term debt and

•$~~27.0~~55.5 million of lower distributions to Cleco Holdings.

Capital Expenditures

During the ~~six~~nine months ended ~~June~~September 30, 2023, Cleco and Cleco Cajun had capital expenditures of ~~$115.2~~$165.8 million and ~~$4.0~~$5.4 million, respectively. Cleco’s estimated capital expenditures, excluding the Cleco Cajun Sale Group, and debt maturities for the ~~six~~three months ~~ended~~ending December 31, 2023, and for the remainder of the five-year period ending December 31, 2027, were ~~$317.7~~$235.8 million and ~~$2.91~~$2.69 billion, respectively. All amounts exclude AFUDC.

For more information on the Cleco Cajun Sale Group, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

For more information on Cleco’s and Cleco Power’s estimated capital expenditures for 2023 and the five-year period ending December 31, 2027, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Cash Generation and Cash Requirements — Capital Expenditures” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Contractual Obligations

Cleco, in the normal course of business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Condensed Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the Condensed Consolidated Financial Statements. For more information regarding Cleco’s Contractual Obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —

Financial Condition — Contractual Obligations” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees. For more information about off-balance sheet commitments and guarantees, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.”

Cybersecurity

Cleco's Chief Operations and Sustainability Officer leads cybersecurity teams for Cleco’s transmission and generation operations. Cleco's Chief Information and Services Officer (CISO) leads cybersecurity teams for Cleco’s information technology and distribution operations. The CISO also oversees Cleco’s cybersecurity maturity plans. For information related to Cleco’s cybersecurity, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Cybersecurity” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Regulatory and Other Matters

Environmental Matters

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

On May 23, 2023, the EPA published in the Federal Register a proposed rule targeting carbon emissions from power plants. Cleco is currently evaluating the possible impacts this proposed rule may have on its generating units. For a discussion of other Cleco environmental matters, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Environmental Audit” in this Quarterly Report on Form 10-Q and Part I, Item 1, “Business — Environmental Matters” in the


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Retail and Wholesale Rates

For information on Cleco Power’s base rates, fuel rates, and environmental rates, see Part I, Item 1, “Regulatory Matters, Industry Developments, and Franchises — Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

For information on Cleco Power’s FRP, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Regulation and Rates — FRP.”

For information on Cleco Power’s FAC and the most recent fuel audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”

For information on Cleco Power’s EAC, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Environmental Audit.”

For information on Cleco Power’s and Cleco Cajun’s wholesale rates, see Part I, Item 1, “Regulatory Matters, Industry Developments, and Franchises — Rates” in the


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Transmission Rates

For information about the risks associated with Cleco’s participation in MISO, see Part I, Item 1A, “Risk Factors — Regulatory Risks — MISO” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

For information on transmission rates of Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Market Structure

Wholesale Electric Markets

RTO

For information on Cleco’s operations within MISO and for information on regulatory aspects of wholesale electric markets affecting Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Structure — Wholesale Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Electric Reliability Organization (ERO)

NERC, subject to oversight by FERC, is the ERO responsible for developing and enforcing mandatory reliability standards for users, owners, and operators of the bulk power system. NERC, as the ERO, delegates authority to ~~SERC Reliability Corporation.~~SERC.

A revised NERC reliability standard relating to the winterization of generation assets became effective on April 1, 2023. This revised standard requires the implementation of

cold weather preparedness plans that include geographical based freeze protection measures, annual inspections, unit design temperature basis, and employee training. A new winterization standard requiring additional freeze protection measures has been approved by FERC with an effective date of October 1, 2024, and a targeted implementation period of 60 months from the effective date. Currently, management is unable to determine the impact this new standard will have on Cleco’s results of operations, financial condition, or cash flows.

A NERC Operations and Planning Reliability Standards audit is conducted every three years for Cleco Power and Cleco Cajun. The next Reliability Standards audit for Cleco Power is scheduled to begin in 2025.

A NERC CIP audit is also conducted every three years for Cleco Power and Cleco Cajun. The NERC CIP audits for Cleco Power and Cleco Cajun began in the fourth quarter of 2022 and concluded on February 23, 2023. ~~Management expects the final~~Final reports to SERC were issued in the second quarter of 2023, and are pending to be ~~issued~~affirmed by ~~October 2023.~~NERC. Management does not expect any ~~significant findings.~~financial penalties, and the next audit will be in 2025.

Management is unable to predict the final financial outcome of any future audits or whether any findings will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. For a discussion of risks associated with FERC’s regulation of Cleco Power’s transmission system, see Part I, Item 1A, “Risk Factors —

Regulatory Risks — Reliability and CIP Standards Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Retail Electric Markets

For information on the regulatory aspects of retail electric markets affecting Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Structure — Retail Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Integrated Resource Plan (IRP)

The IRP process includes conducting stakeholder meetings and receiving feedback from stakeholders. The final IRP was filed with the LPSC on May 31, 2023. Disputes and alternative recommendations may be filed by stakeholders through ~~July 31,~~November 30, 2023.

The IRP report describes how Cleco Power plans to meet its forecasted load requirements on a reliable and economic basis, while reducing Cleco Power’s carbon footprint. The IRP is used as a guide in future decision-making and does not represent firm operational commitments.

Service Quality Plan (SQP)

In October 2015, the LPSC proposed an SQP containing 21 requirements for Cleco Power. The SQP has provisions relating to employee headcount, customer service, reliability, vegetation management, and reporting. In April 2016, the SQP was approved by the LPSC. The SQP expired on December 31, 2020. A request to renew the conditions of the expired SQP was included in Cleco Power’s application for its next rate case, which was filed with the LPSC on June 30, 2023. On March 31, 2023, Cleco Power filed its annual SQP monitoring report for 2022 based on the expired reporting requirements.


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

Franchises

For information on franchises, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Franchises” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 2 — Recent Authoritative Guidance.”


CRITICAL ACCOUNTING ESTIMATES

The preparation of Cleco’s and Cleco Power’s Consolidated Financial Statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that could have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

For more information on Cleco’s critical accounting estimates, see Part II, Item 7, “Management’s Discussion and

Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in the Registrant’s Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2022.


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~


CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

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

for by Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


RISK OVERVIEW

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

Counterparty Credit Risk

When Cleco enters into commodity derivative or physical commodity transactions directly with market participants, Cleco may be exposed to counterparty credit risk. Cleco is exposed to counterparty credit risk when a counterparty fails to meet their financial obligations causing Cleco to incur replacement cost losses. Cleco enters into long-form contract and master agreements with counterparties that govern the risk of counterparty credit default and allow for collateralization above prenegotiated thresholds to help mitigate potential losses. Alternatively, Cleco may be required to provide credit support ~~or pay liquidated damages~~ with respect to ~~any open trading~~bilateral transactions and contracts that Cleco has entered into or may enter into in the future. The amount of credit support ~~that Cleco~~required may ~~be required to provide at any point in the future is dependent~~change based on ~~the amount of the initial contract,~~margining formulas, changes in the market price, changes in open contracts, changes in the amounts counterparties owe to Cleco, and any prenegotiated unsecured thresholds agreed to in the master contract. Changes in any of these factors could cause the amount of requested credit ~~support to increase~~agency ratings or ~~decrease.~~liquidity ratios.

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

•~~routine~~require counterparty credit quality review and monitoring, establishment of credit and default terms in bilateral contracts and master agreements, monitoring changing credit exposure as compared to fair value, and collateralization and other methods of counterparty credit ~~quality and credit exposure,~~

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

•~~measuring expected and potential future exposure regularly, and~~

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

For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Liquidity Risk

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

markets may potentially increase the costs of capital and limit

the ability to access the capital markets. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain and expand its business. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. For more information, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Interest Rate Risk

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

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

At ~~June~~September 30, 2023, Cleco Holdings had ~~$95.0~~$105.0 million of short-term debt outstanding under its $175.0 million revolving credit facility at a weighted average all-in interest rate of ~~6.833%~~7.047%. At ~~June~~September 30, 2023, the borrowing costs for amounts drawn under Cleco Holdings’ revolving credit facility were equal to SOFR plus 1.725% or ABR plus 0.625%, plus commitment fees of 0.275% paid on the unused portion of the facility. Each 1% increase in the interest rate applicable to Cleco Holdings’ short-term variable rate debt would result in a decrease in Cleco Holdings’ pretax earnings of $1.0 million on an annualized basis.

At ~~June~~September 30, 2023, Cleco Holdings had a $132.3 million long-term variable rate bank term loan outstanding at an interest rate of SOFR plus 1.725%, for an all-in interest rate of ~~6.827%~~7.041%. Each 1% increase in the interest rate applicable to Cleco Holdings’ long-term variable rate debt would result in a


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q

decrease in Cleco Holdings’ pretax earnings of $1.3 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Holdings for the ~~six~~nine months ended ~~June~~September 30, 2023, was ~~6.453%~~6.629%.

On May 1, 2023, Cleco Holdings amended certain terms of the supplemental indenture governing its $165.0 million senior notes changing the terms to a floating interest rate. At ~~June~~September 30, 2023, the senior notes had an interest rate of SOFR plus 1.725%, for an all-in interest rate of ~~6.885%~~7.043%. Each 1% increase in the interest rate applicable to Cleco Holdings’ long-term variable rate debt would result in a decrease in Cleco Holdings’ pretax earnings of $1.7 million on an annualized basis. The weighted average rate for the outstanding senior


~~CLECO~~
~~CLECO POWER~~						~~2023 2ND QUARTER FORM 10-Q~~

notes at Cleco Power for the period May 1, 2023, through ~~June~~September 30, 2023, was ~~6.800%~~6.908%.

At ~~June~~September 30, 2023, Cleco Power had ~~$25.0 million of~~no short-term debt outstanding under its $300.0 million revolving ~~credit facility at an all-in interest rate of 6.439%.~~credit. The borrowing costs ~~for amounts drawn~~ under Cleco Power’s $300.0 million revolving credit facility are equal to SOFR plus 1.35% or ABR plus 0.25%, plus commitment fees of 0.15% paid on the unused portion of the facility. ~~Each 1% increase in the interest rate applicable to Cleco Power’s short-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of $0.2 million on an annualized basis.~~

At ~~June~~September 30, 2023, Cleco Power had a $125.0 million long-term variable rate bank term loan outstanding, at an interest rate of SOFR plus 1.35%, for an all-in interest rate of ~~6.452%~~6.666%. Each 1% increase in the interest rate applicable to Cleco Power’s long-term variable rate debt would result in a decrease in Cleco Power’s pretax earnings of ~~$1.2~~$1.3 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Power for the ~~six~~nine months ended ~~June~~September 30, 2023, was ~~6.078%~~6.254%.

Each 1% increase in the interest rate applicable to Cleco’s short- and long-term variable rate debt would result in a decrease in Cleco’s consolidated pretax earnings of ~~$5.4~~$5.3 million on an annualized basis.

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

Commodity Price Risk

Cleco’s financial performance can be impacted by changes in commodity prices that can impact fuel costs, generation

revenue, costs to serve its contracted wholesale electricity customers, and revenue from those customers. Cleco’s risk management policies and procedures authorize hedging commodity price risk with physical or financially settled

derivative instruments within approved guidelines and limits of authority. Some of these transactions may qualify for the normal purchase, normal sale (NPNS) exception under derivative accounting guidance. Contracts that do not qualify for NPNS accounting treatment or are not elected for NPNS accounting treatment are marked-to-market and recorded on the balance sheet at their fair value.

Cleco Power and Cleco Cajun, each separately and individually, may be exposed to transmission congestion price risk as a result of physical transmission constraints present between MISO locational marginal price nodes when serving customer load. Cleco Power and Cleco Cajun are awarded and/or purchase FTRs in auctions facilitated by MISO. FTRs are accounted for as derivatives not designated as hedging instruments for accounting purposes.

During the ~~six~~nine months ended ~~June~~September 30, 2023, Cleco Cajun and Cleco Power had natural gas derivative contracts consisting of fixed price physical forwards and financially settled swap transactions.

Cleco monitors the Value at Risk (VaR) of its natural gas derivative contracts requiring derivative accounting treatment. VaR is defined as the maximum expected loss over a given holding period at a given confidence level based on observable market prices and volatilities. Cleco uses a parametric variance-covariance model methodology to estimate VaR. VaR is calculated using a combination of implied and historical volatilities within a 5-day holding period at a 95% confidence interval. Given Cleco’s reliance on historical data, VaR is effective in estimating risk exposures in markets in which there are no sudden fundamental changes or abnormal shifts in market conditions. An inherent limitation of VaR is that past changes in market risk factors, even when weighted toward more recent observations, may not produce accurate predictions of future market risk. VaR should be evaluated in light of this and the methodology’s other limitations. The following table presents the VaR of natural gas derivative contracts based on these assumptions:


				FOR THE THREE MONTHS ENDED JUNE 30, 2023						FOR THE SIX MONTHS ENDED JUNE 30, 2023									FOR THE THREE MONTHS ENDED SEPT. 30, 2023						FOR THE NINE MONTHS ENDED SEPT. 30, 2023
(THOUSANDS)	(THOUSANDS)	AT JUNE 30, 2023		HIGH		LOW		AVERAGE		HIGH		LOW		AVERAGE		(THOUSANDS)	AT SEPT. 30, 2023		HIGH		LOW		AVERAGE		HIGH		LOW		AVERAGE
Cleco																Cleco	$	14,942	$	22,025	$	14,903	$	18,488	$	27,620	$	14,903	$	20,663
Cleco Power	Cleco Power	$	8,498	$	10,329	$	2,576	$	4,635	$	10,329	$	1,628	$	4,543	Cleco Power	$	9,105	$	10,639	$	8,411	$	9,647	$	10,639	$	1,628	$	6,263

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

Statements — Note 6 — Fair Value Accounting Instruments” and “Note 7 — Derivative Instruments.”


CLECO
CLECO POWER						2023 3RD QUARTER FORM 10-Q


ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of Cleco Holdings and Cleco Power (individually, “Registrant” and collectively, the “Registrants”) management, including the CEO and CFO, the Registrants have evaluated the effectiveness of their disclosure controls and procedures as of ~~June~~September 30, 2023. Based on the evaluations, the CEO and CFO have concluded that the Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms; and

that the Registrants’ disclosure

controls and procedures are also effective in ensuring that such information is accumulated and communicated to the Registrants’ management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Registrants’ internal control over financial reporting that occurred during the quarter ended ~~June~~September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.

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CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


PART II — OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


CLECO

For information on legal proceedings affecting Cleco, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


CLECO POWER

For information on legal proceedings affecting Cleco Power, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 14 ~~— Litigation,~~—Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


ITEM 1A. RISK FACTORS

Other than the updates to the risk factors disclosed in Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, there have been no other material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors” of the Registrants’ Combined Annual

Report on Form 10-K for the fiscal year ended December 31, 2022. For risks that could affect actual results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrants, see the risk factors disclosed in the aforementioned reports.


ITEM 5. OTHER INFORMATION

During the three months ended ~~June~~September 30, 2023, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Cleco Holdings or Cleco Power adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


ITEM 6. EXHIBITS

CLECO
*	~~10.1~~	~~Supplemental Agreement, dated May 16, 2023, by and between Cleco Corporate Holdings LLC and Mark Kleehammer~~
	31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	Inline XBRL Taxonomy Extension Schema
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

CLECO POWER
	31.3	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.4	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.3	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	32.4	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	Inline XBRL Taxonomy Extension Schema
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~The Report designated by an asterisk are management contracts and compensatory plans and arrangements required to be filed as Exhibits to this Report.~~

6567


CLECO
CLECO POWER						2023 ~~2ND~~3RD QUARTER FORM 10-Q


SIGNATURES

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


			CLECO CORPORATE HOLDINGS LLC
			(Registrant)

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

Date: ~~August 9,~~November 6, 2023

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


			CLECO POWER LLC
			(Registrant)

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

Date: ~~August 9,~~November 6, 2023

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

PART I	Financial Information
ITEM 1.	Cleco — Condensed Consolidated Financial Statements (Unaudited)	7
	Cleco Power — Condensed Consolidated Financial Statements (Unaudited)	17
	Notes to the Unaudited Condensed Consolidated Financial Statements	26
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4950
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	6263
ITEM 4.	Controls and Procedures	6365

PART II	Other Information
ITEM 1.	Legal Proceedings	6466
ITEM 1A.	Risk Factors	6466


ITEM 5.	Other Information	6466
ITEM 6.	Exhibits	6567
	Signatures	6668