In August 2005, Cleco Power LLC (“Cleco Power”), a wholly owned subsidiary of Cleco Corporation, entered into an Engineering, Procurement, and Construction contract (“EPC Contract”) with Shaw Contractors, Inc. (“Shaw”) to construct Madison Unit 3. Construction of Madison Unit 3 began in May 2006. In May 2006, Cleco Power and Shaw entered into an Amended EPC Contract, which contract has subsequently been amended by the parties. Madison Unit 3 achieved commercial operations on February 12, 2010, whereby Cleco Power accepted care, custody, and control of the unit. Cleco Power and Shaw have submitted various claims relating to the Amended EPC Contract to arbitration. On April 30, 2010, Shaw filed a demand for arbitration asserting claims of $32.0 million including impacts due to the 2008 hurricane force majeure, alleged excess fuel moisture, intake water quality and a river embankment slope failure, and the associated recovery of schedule related liquidated damages withheld by Cleco Power. On June 24, 2011, Cleco Power and Shaw each submitted their proposed resolutions to all of the matters in dispute in this arbitration proceeding. Shaw submitted that Cleco Power owed $32.5 million in satisfaction of all of such matters. Cleco Power submitted that it owed Shaw $4.0 million. On, August 5, 2011, the arbitrator announced his decision in favor of Shaw’s claims of Cleco Power owing Shaw $32.5 million. The $32.5 million will be included as a cost of Madison Unit 3 and reflected as property, plant and equipment. |
