cnl-20240331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

☐ 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						2024 1ST 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.


TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		6

PART I	Financial Information
ITEM 1.	Cleco — Condensed Consolidated Financial Statements (Unaudited)	8
	Cleco Power — Condensed Consolidated Financial Statements (Unaudited)	15
	Notes to the Unaudited Condensed Consolidated Financial Statements	22
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	53
ITEM 4.	Controls and Procedures	54

PART II	Other Information
ITEM 1.	Legal Proceedings	55
ITEM 1A.	Risk Factors	55


ITEM 5.	Other Information	55
ITEM 6.	Exhibits	55
	Signatures	56


CLECO
CLECO POWER						2024 1ST 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
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
ALJ			Administrative Law Judge
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
Brame Energy Center			A facility consisting of Nesbitt Unit 1, Rodemacher Unit 2, and Madison Unit 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 Acquisition			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 Cleco Cajun Acquisition Purchase and Sale Agreement, which includes the Cottonwood Sale Leaseback
Cleco Cajun Acquisition 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
Cleco Cajun Divestiture			The sale of the Cleco Cajun Sale Group in which the Cleco Cajun Sellers entered into the Cleco Cajun Divestiture Purchase and Sale Agreement with the Cleco Cajun Purchasers
Cleco Cajun Divestiture Purchase and Sale Agreement			Purchase and Sale Agreement, dated as of November 22, 2023, by and among the Cleco Cajun Purchasers and the Cleco Cajun Sellers
Cleco Cajun Purchasers			Big Pelican LLC and Pelican South Central LLC, affiliates of Atlas Capital Resources IV LP
Cleco Cajun Sale Group			Cleco Cajun’s unregulated utility business for which the Cleco Cajun Sellers entered into the Cleco Cajun Divestiture Purchase and Sale Agreement with the Cleco Cajun Purchasers
Cleco Cajun Sellers			Cleco Cajun and South Central Generating
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, 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
Cottonwood Energy			Cottonwood Energy Company LP, a wholly owned subsidiary of Cleco Cajun. Prior to the closing of the Cleco Cajun Acquisition on February 4, 2019, Cottonwood Energy was an indirect subsidiary of South Central Generating
Cottonwood Plant			Cleco Cajun’s 1,263-MW, natural-gas-fired, 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
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


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


ABBREVIATION OR ACRONYM			DEFINITION
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
EAC			Environmental Adjustment Clause
EBITDA			Earnings before interest, income taxes, depreciation, and amortization
Entergy Gulf States			Entergy Gulf States Louisiana, LLC
Entergy Louisiana			Entergy Louisiana, LLC
EPA			U.S. Environmental Protection Agency
ESG			Environmental, Social, and Governance
FAC			Fuel Adjustment Clause
FASB			Financial Accounting Standards Board
FEED			Front End Engineering Design
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)
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

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
Project Diamond Vault			Cleco Power's project to construct a carbon capture and sequestration facility at the Brame Energy Center
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
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
St. Mary Clean Energy Center			A 47-MW waste-heat steam generating unit located in Franklin, Louisiana
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
Support Group			Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO			Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


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


CLECO
CLECO POWER						2024 1ST 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:

•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,

•the ability to close the Cleco Cajun Divestiture according to the terms of the Cleco Cajun Divestiture Purchase and Sale Agreement in the expected time frame or at all,

•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 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,

•the ability of Cleco to raise capital or secure funding, such as debt financing, private equity investment, tax credits, U.S. Department of Energy grants or loans, or partnerships, to execute its renewables and electrification initiatives,

•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, increased distributed generation, or changes in customers’ operating or business models,

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


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

•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 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 Acquisition 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 I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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						2024 1ST 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, 2023. 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						2024 1ST QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Operating revenue
Electric operations	$	251,471	$	293,928
Other operations	27,218		27,304

Gross operating revenue	278,689		321,232
Electric customer credits	(1,847)		(651)
Operating revenue, net	276,842		320,581
Operating expenses
Fuel used for electric generation	80,737		195,977
Purchased power	37,791		40,438
Other operations and maintenance	60,540		57,518
Depreciation and amortization	96,052		52,789
Taxes other than income taxes	16,099		16,787



Total operating expenses	291,219		363,509
Operating loss	(14,377)		(42,928)
Interest income	1,408		1,267
Allowance for equity funds used during construction	134		1,231
Equity income from investee before income tax	677		—
Other income, net	1,398		536
Interest charges
Interest charges, net	42,792		40,005
Allowance for borrowed funds used during construction	(2,030)		(517)
Total interest charges	40,762		39,488
Loss from continuing operations before income taxes	(51,522)		(79,382)
Federal and state income tax expense	37,671		43,693
Loss from continuing operations, net of income taxes	(89,193)		(123,075)
Income from discontinued operations, net of income taxes	31,962		19,053
Net loss	$	(57,231)	$	(104,022)
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Net loss	$	(57,231)	$	(104,022)
Other comprehensive loss, net of income tax
Postretirement benefits loss (net of tax benefit of $108 in 2024 and $156 in 2023)	(299)		(422)

Total other comprehensive loss, net of income tax	(299)		(422)
Comprehensive loss, net of tax	$	(57,530)	$	(104,444)
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Assets
Current assets
Cash and cash equivalents	$	190,830	$	122,576
Restricted cash and cash equivalents	7,684		15,818
Customer accounts receivable (less allowance for credit losses of $1,822 in 2024 and $3,012 in 2023)	42,473		48,949
Accounts receivable - affiliate	24,247		24,216
Other accounts receivable	23,124		30,518

Unbilled revenue	35,978		42,856
Fuel inventory, at average cost	61,241		68,387
Materials and supplies, at average cost	147,307		141,688
Energy risk management assets	5,429		8,129
Accumulated deferred fuel	9,382		11,627
Cash surrender value of company-/trust-owned life insurance policies	60,290		56,922
Prepayments	22,779		24,269
Regulatory assets	289,853		34,280
Assets held for sale - discontinued operations	148,796		159,514
Other current assets	2,056		918
Total current assets	1,071,469		790,667
Property, plant, and equipment
Property, plant, and equipment	4,906,368		4,838,994
Accumulated depreciation	(977,933)		(924,624)
Net property, plant, and equipment	3,928,435		3,914,370
Construction work in progress	96,512		119,572
Total property, plant, and equipment, net	4,024,947		4,033,942

Goodwill	1,490,797		1,490,797

Operating lease right of use assets	19,380		20,070
Restricted cash and cash equivalents	114,977		113,573
Note receivable	11,747		11,990
Regulatory assets - deferred taxes, net	44,157		43,866
Regulatory assets	316,335		615,495
Intangible asset - securitization	395,331		398,658
Intangible assets - other	8,309		10,633
Assets held for sale - discontinued operations	536,215		546,218



Other deferred charges	23,298		24,484
Total assets	$	8,056,962	$	8,100,393
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Liabilities and member’s equity
Liabilities
Current liabilities
Short-term debt	$	95,000	$	110,000
Long-term debt and finance leases due within one year	257,298		256,811
Accounts payable	77,758		119,801
Accounts payable - affiliate	10,688		10,683
Customer deposits	57,545		56,982
Provision for rate refund	22,068		60,768
Taxes payable	88,088		19,963
Interest accrued	41,120		22,209

Energy risk management liabilities	13,043		15,786
Regulatory liabilities - deferred taxes, net	12,531		21,939
Deferred compensation	15,241		14,277

Post retirement benefit obligations	35,520		35,520
Liabilities held for sale - discontinued operations	41,096		39,019
Other current liabilities	22,822		24,378
Total current liabilities	789,818		808,136
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	800,802		801,397

Postretirement benefit obligations	196,009		196,321


Storm reserves	112,906		111,509




Asset retirement obligations	12,559		13,723
Operating lease liabilities	16,634		17,276
Provision for rate refund	40,000		—
Customer advances for construction	26,255		26,815
Liabilities held for sale - discontinued operations	76,287		75,933
Other deferred credits	37,732		34,186
Total long-term liabilities and deferred credits	1,319,184		1,277,160
Long-term debt and finance leases, net	3,132,317		3,141,924
Total liabilities	5,241,319		5,227,220
Commitments and contingencies (Note 13)
Member’s equity	2,815,643		2,873,173
Total liabilities and member’s equity	$	8,056,962	$	8,100,393
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024			2023
Operating activities
Net loss	$	(57,231)		$	(104,022)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	100,558			75,265
Provision for credit losses	142			1,240

Electric customer credits	1,300			—
Return on equity investment in investee	(677)			—
Unearned compensation expense	1,594			1,631
Allowance for equity funds used during construction	(134)			(1,231)
Loss on energy risk management assets and liabilities, net	4,686			63,300
Loss on classification as held for sale	17,000			96,000
Deferred lease revenue	—			(2,301)
Deferred income taxes	(10,750)			(48,775)
Cash surrender value of company-/trust-owned life insurance	(2,333)			(608)
Changes in assets and liabilities
Accounts receivable	37,027			45,141

Unbilled revenue	6,878			5,407
Fuel inventory and materials and supplies	(11,263)			(69,708)
Prepayments	(1,619)			437
Accounts payable	(51,854)			(38,070)

Customer deposits	2,460			565


Regulatory assets and liabilities, net	3,106			2,115
Asset retirement obligation	(1,202)			(3,522)
Deferred fuel recoveries	1,328			56,887
Other deferred accounts	8,471			1,434
Taxes accrued	68,396			21,501
Interest accrued	18,910			15,849
Energy risk management assets and liabilities, net	(4,882)			(6,500)

Other operating	(8,751)			406
Net cash provided by operating activities	121,160			112,441
Investing activities
Additions to property, plant, and equipment	(36,964)			(60,099)













Other investing	564			496
Net cash used in investing activities	(36,400)			(59,603)
Financing activities
Draws on revolving credit facilities	—			41,000
Payments on revolving credit facilities	(15,000)			(63,000)

Repayment of long-term debt	(7,844)			(3,204)



Other financing	(219)			(241)
Net cash used in financing activities	(23,063)			(25,445)
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	61,697			27,393
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	256,067		(1)	191,572
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	317,764	(2)	$	218,965








Supplementary cash flow information
Interest paid, net of amount capitalized	$	23,275		$	24,358

Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	13,363		$	5,839





(1) Includes cash and cash equivalents of $122,576, current restricted cash and cash equivalents of $15,818, and non-current restricted cash and cash equivalents of $113,573. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,100. (2) Includes cash and cash equivalents of $190,830, current restricted cash and cash equivalents of $7,684, and non-current restricted cash and cash equivalents of $114,977. Also includes cash, cash equivalents, and restricted cash equivalents in assets held for sale of $4,273.
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO

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














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


Net loss	—		(104,022)		—		(104,022)
Other comprehensive loss, net of tax	—		—		(422)		(422)
Balances, Mar. 31, 2023	$	2,454,276	$	388,710	$	(363)	$	2,842,623

Balances, Dec. 31, 2023	$	2,454,276	$	424,009	$	(5,112)	$	2,873,173

Net loss	—		(57,231)		—		(57,231)

Other comprehensive loss, net of tax	—		—		(299)		(299)
Balances, Mar. 31, 2024	$	2,454,276	$	366,778	$	(5,411)	$	2,815,643


CLECO
CLECO POWER						2024 1ST 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, 2023. 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						2024 1ST QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Operating revenue
Electric operations	$	253,794	$	296,348
Other operations	27,218		27,303
Affiliate revenue	8,869		1,688
Gross operating revenue	289,881		325,339
Electric customer credits	(1,847)		(651)
Operating revenue, net	288,034		324,688
Operating expenses
Fuel used for electric generation	69,791		118,611
Purchased power	37,791		40,438
Other operations and maintenance	56,797		53,988
Depreciation and amortization	94,004		50,733
Taxes other than income taxes	15,646		15,995



Total operating expenses	274,029		279,765
Operating income	14,005		44,923
Interest income	1,288		1,185
Allowance for equity funds used during construction	134		1,231
Equity income from investee before income tax	677		—
Other (expense) income, net	(228)		1,306
Interest charges
Interest charges, net	25,514		24,855
Allowance for borrowed funds used during construction	(2,030)		(517)
Total interest charges	23,484		24,338
(Loss) income before income taxes	(7,608)		24,307
Federal and state income tax (benefit) expense	(960)		1,490
Net (loss) income	$	(6,648)	$	22,817
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Net (loss) income	$	(6,648)	$	22,817
Other comprehensive income, net of income tax
Postretirement benefits gain (net of tax expense of $70 in 2024 and $36 in 2023)	190		96
Amortization of interest rate derivatives to earnings (net of tax expense of $23 in 2024 and 2023)	64		63
Total other comprehensive income, net of income tax	254		159
Comprehensive (loss) income, net of tax	$	(6,394)	$	22,976
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Assets
Utility plant and equipment
Property, plant, and equipment	$	6,037,997	$	5,969,355
Accumulated depreciation	(2,295,667)		(2,244,217)
Net property, plant, and equipment	3,742,330		3,725,138
Construction work in progress	94,986		118,249
Total utility plant and equipment, net	3,837,316		3,843,387
Current assets
Cash and cash equivalents	71,092		49,211
Restricted cash and cash equivalents	7,684		15,818
Customer accounts receivable (less allowance for credit losses of $1,822 in 2024 and $3,012 in 2023)	42,473		48,949
Accounts receivable - affiliate	4,083		4,543
Other accounts receivable	22,420		27,768

Unbilled revenue	35,978		42,856
Fuel inventory, at average cost	61,241		68,387
Materials and supplies, at average cost	147,307		141,688
Energy risk management assets	5,333		3,087
Accumulated deferred fuel	9,382		11,627
Cash surrender value of company-owned life insurance policies	9,875		9,792
Prepayments	18,436		17,375
Regulatory assets	282,118		26,545
Other current assets	2,229		918
Total current assets	719,651		468,564


Operating lease right of use assets	19,380		20,070
Restricted cash and cash equivalents	114,953		113,549
Note receivable	11,747		11,990
Regulatory assets - deferred taxes, net	44,157		43,866
Regulatory assets	208,980		505,623
Intangible asset - securitization	395,331		398,658



Other deferred charges	22,748		23,835
Total assets	$	5,374,263	$	5,429,542
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Liabilities and member’s equity
Member’s equity	$	2,016,843	$	2,063,237
Long-term debt and finance leases, net	1,689,187		1,697,152
Total capitalization	3,706,030		3,760,389
Current liabilities

Long-term debt and finance leases due within one year	190,679		190,314
Accounts payable	68,541		95,565
Accounts payable - affiliate	10,661		13,200
Customer deposits	57,545		56,982
Provision for rate refund	22,068		60,768

Taxes payable	45,360		23,709
Interest accrued	23,836		11,752

Energy risk management liabilities	13,004		15,112
Regulatory liabilities - deferred taxes, net	12,531		21,939

Post retirement benefit obligations	30,777		30,777
Other current liabilities	14,159		14,617
Total current liabilities	489,161		534,735
Commitments and contingencies (Note 13)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	805,573		806,560

Postretirement benefit obligations	132,169		132,321


Storm reserves	112,906		111,509



Asset retirement obligations	12,433		13,598
Operating lease liabilities	16,634		17,276
Provision for rate refund	40,000		—
Customer advances for construction	26,255		26,815
Other deferred credits	33,102		26,339
Total long-term liabilities and deferred credits	1,179,072		1,134,418
Total liabilities and member’s equity	$	5,374,263	$	5,429,542
The accompanying notes are an integral part of the condensed consolidated financial statements.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO POWER

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024			2023
Operating activities
Net (loss) income	$	(6,648)		$	22,817
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation and amortization	95,358			52,194

Provision for credit losses	142			1,240

Electric customer credits	1,300			—

Return on equity investment in investee	(677)			—
Allowance for equity funds used during construction	(134)			(1,231)
Deferred income taxes	(11,344)			(7,380)

Changes in assets and liabilities
Accounts receivable	11,770			33,064
Accounts receivable - affiliate	956			1,813
Unbilled revenue	6,878			5,407
Fuel inventory and materials and supplies	1,521			(46,325)
Prepayments	(203)			2,930
Accounts payable	(33,251)			(14,768)
Accounts payable - affiliate	(2,513)			(1,291)
Customer deposits	2,460			565


Regulatory assets and liabilities, net	2,609			1,618
Asset retirement obligation	(1,197)			(3,505)
Deferred fuel recoveries	1,328			56,887
Other deferred accounts	8,078			5,613
Taxes accrued	21,223			19,249
Interest accrued	12,084			7,557
Energy risk management assets and liabilities, net	(4,882)			—
Other operating	(2,714)			688
Net cash provided by operating activities	102,144			137,142
Investing activities
Additions to property, plant, and equipment	(39,494)			(58,066)








Other investing	564			413
Net cash used in investing activities	(38,930)			(57,653)
Financing activities

Payments on revolving credit facility	—			(45,000)

Repayment of long-term debt	(7,844)			(3,204)



Distributions to member	(40,000)			—
Other financing	(219)			(217)
Net cash used in financing activities	(48,063)			(48,421)
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	15,151			31,068
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	178,578		(1)	147,644
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	193,729	(2)	$	178,712

Supplementary cash flow information
Interest paid, net of amount capitalized	$	12,152		$	16,005

Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	8,836		$	5,459





(1) Includes cash and cash equivalents of $49,211, current restricted cash and cash equivalents of $15,818, and non-current restricted cash and cash equivalents of $113,549. (2) Includes cash and cash equivalents of $71,092, current restricted cash and cash equivalents of $7,684, and non-current restricted cash and cash equivalents of $114,953.

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


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


CLECO POWER

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














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


Net income	22,817		—		22,817
Other comprehensive income, net of tax	—		159		159
Balances, Mar. 31, 2023	$	2,054,094	$	(8,206)	$	2,045,888

Balances, Dec. 31, 2023	$	2,073,588	$	(10,351)	$	2,063,237

Net loss	(6,648)		—		(6,648)
Distributions to member	(40,000)		—		(40,000)
Other comprehensive income, net of tax	—		254		254
Balances, Mar. 31, 2024	$	2,026,940	$	(10,097)	$	2,016,843


CLECO
CLECO POWER						2024 1ST 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	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 9	Income Taxes	Cleco and Cleco Power
Note 10	Segment Disclosures	Cleco
Note 11	Regulation and Rates	Cleco and Cleco Power
Note 12	Variable Interest Entities	Cleco and Cleco Power
Note 13	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 14	Affiliate Transactions	Cleco and Cleco Power
Note 15	Intangible Assets	Cleco and Cleco Power
Note 16	Accumulated Other Comprehensive Loss	Cleco and Cleco Power
Note 17	Storm Restoration	Cleco and Cleco Power


Notes to the Unaudited Condensed Consolidated Financial Statements


Note 1 — Summary of Significant Accounting Policies

Discontinued Operations

In 2022, Cleco Holdings began 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. 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 the 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. On November 22, 2023, the Cleco Cajun Divestiture Purchase and Sale Agreement was entered into between the Cleco Cajun Sellers and the Cleco Cajun Purchasers whereby the Cleco Cajun Sellers have agreed to sell the Cleco Cajun Sale Group to the Cleco Cajun Purchasers. The financial information for the three months ended March 31, 2023, provided in this Quarterly Report on Form 10-Q has been recast as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments relating to the Cleco Cajun Sale Group. For more information, see Note 3 — “Discontinued Operations.”

Principles of Consolidation

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

Basis of Presentation

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed

consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements 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, 2023.

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 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


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current

Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	$	7,684	$	15,818
Total current	7,684		15,818
Non-current
Diversified Lands’ mitigation escrow	24		24
Cleco Power’s future storm restoration costs	114,953		113,549


Total non-current	114,977		113,573
Total restricted cash and cash equivalents	$	122,661	$	129,391


Cleco Power
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current

Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	$	7,684	$	15,818
Total current	7,684		15,818
Non-current
Future storm restoration costs	114,953		113,549


Total non-current	114,953		113,549
Total restricted cash and cash equivalents	$	122,637	$	129,367

Reserves for Credit Losses

Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts receivable are generally considered 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, these past events have not significantly impacted Cleco’s credit loss rates.

Cleco’s credit losses at March 31, 2024, were 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

(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER		TOTAL
Balances, Dec. 31, 2023	$	3,012	$	1,638	$	4,650

Current period provision	142		—		142
Charge-offs	(1,662)		—		(1,662)
Recovery	330		—		330
Balances, Mar. 31, 2024	$	1,822	$	1,638	$	3,460



(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER		TOTAL
Balances, Dec. 31, 2022	$	1,147	$	1,638	$	2,785

Current period provision	1,240		—		1,240
Charge-offs	(1,637)		—		(1,637)
Recovery	377		—		377
Balances, Mar. 31, 2023	$	1,127	$	1,638	$	2,765


Cleco Power

(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, Dec. 31, 2023	$	3,012

Current period provision	142
Charge-offs	(1,662)
Recovery	330
Balances, Mar. 31, 2024	$	1,822



(THOUSANDS)	ACCOUNTS RECEIVABLE
Balances, Dec. 31, 2022	$	1,147

Current period provision	1,240
Charge-offs	(1,637)
Recovery	377
Balances, Mar. 31, 2023	$	1,127


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, including interim periods within those fiscal years. Cleco has arrangements between entities under common control. The implementation of this guidance did not have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

In November 2023, FASB issued guidance to improve reportable segment disclosure requirements. The guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. Disclosure requirements include disclosing significant segment expenses by reportable segment if they are regularly provided to the chief operating decision maker and included in each reported measure of segment profit or loss. Disclosures are required on both an annual and an interim basis. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Management does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


Note 3 — Discontinued Operations

The Cleco Cajun Sellers and the Cleco Cajun Purchasers have each made customary representations, warranties, and covenants in the Cleco Cajun Divestiture Purchase and Sale Agreement. The closing of the Cleco Cajun Divestiture is subject to customary closing conditions and customary conditions regarding the accuracy of the representations and warranties and compliance by the parties with their respective obligations under the Cleco Cajun Divestiture Purchase and Sale Agreement. The Cleco Cajun Divestiture Purchase and Sale Agreement includes customary termination provisions, including if the closing of the Cleco Cajun Divestiture does not occur within nine months of November 22, 2023. The parties expect to receive the last pending regulatory approval and close the Cleco Cajun Divestiture in the second quarter of 2024.

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 the 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. The financial information for the three months ended March 31, 2023, provided in this Quarterly Report on Form 10-Q has been recast as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments relating to the Cleco Cajun Sale Group. 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 Acquisition, Cleco made commitments to the LPSC that included the repayment of $400.0 million of Cleco Holdings’ debt by December 31, 2024. If this commitment was not satisfied prior to the closing of the Cleco Cajun Divestiture, proceeds from the Cleco Cajun Divestiture must be used to satisfy the LPSC commitment. At March 31, 2024, $66.7 million of that debt remained outstanding, which was paid on April 26, 2024. This payment satisfied the LPSC commitment. Interest expense on that debt is included in discontinued operations.

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. As a result, the Cleco Cajun Sale Group had an impairment of $173.0 million at December 31, 2023. During the three months ended March 31, 2024, an additional impairment charge of $17.0 million was recorded, which resulted in a total impairment charge of $190.0 million. The additional impairment recognized during the three months ended March 31, 2024, was primarily due to changes in assumptions related to the remaining cash flows prior to the closing of the Cleco Cajun Divestiture based on the expected closing date and the expected sale proceeds. The impairment charge reduced the carrying value of the Cleco Cajun Sale Group to its estimated fair value less estimated cost to sell and is recorded in Loss from discontinued operations, net of income taxes on Cleco's Condensed Consolidated Statement of Income. The estimated fair value was determined using the income approach. 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 net working capital adjustment to the sale proceeds from the Cleco Cajun Divestiture Purchase and Sale Agreement, 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 months ended March 31, 2024, and 2023:


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Operating revenue, net
Electric operations	$	128,828	$	108,761
Other operations	31,534		34,714
Operating revenue, net	160,362		143,475
Operating expenses
Fuel used for electric generation*	15,196		10,232
Purchased power	61,940		60,625
Other operations and maintenance	23,291		23,370
Depreciation and amortization	356		14,513

Total operating expenses	100,783		108,740
Operating income	59,579		34,735
Other income, net	126		134
Interest, net	(80)		(1,786)
Loss on classification as held for sale	(17,000)		(96,000)
Income (loss) from discontinued operations before income taxes	42,625		(62,917)
Federal and state income tax expense (benefit)*	10,663		(81,970)
Income from discontinued operations, net of income taxes	$	31,962	$	19,053

* The amounts for the three months ended March 31, 2023, have been recast to exclude net losses, net of income tax benefit associated with Cleco Cajun’s natural gas derivatives of $56.5 million as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments; therefore, net losses and the related income tax benefit associated with natural gas derivative instruments relating to the Cleco Cajun Sale Group are no longer presented in discontinued operations. As a result of this recast, an additional adjustment of $64.7 million was made to record tax expense at the projected annual effective income tax rate.

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 March 31, 2024, and December 31, 2023:


(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Cash, cash equivalents, and restricted cash equivalents	$	4,273	$	4,100

Accounts receivable	47,015		70,001



Fuel inventory, at average cost	59,380		47,243
Materials and supplies, at average cost	36,929		36,283
Energy risk management assets	432		1,066




Property, plant, and equipment, net	651,433		648,676
Prepayments	22,595		18,587



Intangible assets - other	32,569		32,569

Other assets	20,385		20,207
Accumulated loss recognized on classification as held for sale	(190,000)		(173,000)

Total assets held for sale - discontinued operations	$	685,011	$	705,732

Accounts payable	$	31,753	$	30,442










Deferred lease revenue	19,945		19,945
Intangible liabilities	12,695		12,695
Asset retirement obligations	46,678		46,165

Other liabilities	6,312		5,705

Total liabilities held for sale - discontinued operations	$	117,383	$	114,952

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 months ended March 31, 2024, and 2023:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Net cash (used in) provided by operating activities - discontinued operations	$	(4,780)	$	1,696
Net cash provided by (used in) investing activities - discontinued operations	$	4,953	$	(1,689)


Note 4 — Revenue Recognition

Disaggregated Revenue

Operating revenue, net for the three months ended March 31, 2024, and 2023 was as follows:


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


	FOR THE THREE MONTHS ENDED MAR. 31, 2024
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	92,012		$	—		$	—	92,012
Commercial (1)	68,146			—			—		68,146
Industrial (1)	39,401			—			—		39,401
Other retail (1)	3,732			—			—		3,732
Electric customer credits	(1,847)			—			—		(1,847)
Total retail revenue	201,444			—			—		201,444
Wholesale, net	49,855		(1)	(2,323)		(2)	—		47,532
Transmission	13,894			—			—		13,894
Other	5,249			—			—		5,249
Affiliate (3)	8,869			29,667			(38,536)		—
Total revenue from contracts with customers	279,311			27,344			(38,536)		268,119
Revenue unrelated to contracts with customers
Securitization revenue	8,074			—			—		8,074
Other	649		(4)	—			—		649
Total revenue unrelated to contracts with customers	8,723			—			—		8,723
Operating revenue, net	$	288,034		$	27,344		$	(38,536)	$	276,842

(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 MAR. 31, 2023
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS		TOTAL
Revenue from contracts with customers
Retail revenue
Residential (1)	$	107,196		$	—		$	—	$	107,196
Commercial (1)	77,657			—			—		77,657
Industrial (1)	49,410			—			—		49,410
Other retail (1)	4,574			—			—		4,574
Electric customer credits	(651)			—			—		(651)
Total retail revenue	238,186			—			—		238,186
Wholesale, net	56,683		(1)	(2,420)		(2)	—		54,263
Transmission	12,530			—			—		12,530
Other	5,549			—			—		5,549
Affiliate (3)	1,688			27,514			(29,202)		—
Total revenue from contracts with customers	314,636			25,094			(29,202)		310,528
Revenue unrelated to contracts with customers
Securitization revenue	9,226			—			—		9,226
Other	826		(4)	1			—		827
Total revenue unrelated to contracts with customers	10,052			1			—		10,053
Operating revenue, net	$	324,688		$	25,095		$	(29,202)	$	320,581

(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 wholesale and retail customers with durations between 2 and 11 years that primarily relate to stand-ready obligations as part of fixed capacity minimums. At March 31, 2024, Cleco and Cleco Power had $311.0 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.


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. If in the future, as a result of regulatory changes or competition,


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

Cleco Power’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. In addition, potential deregulation of the industry, or possible future

changes in the method of rate regulation of Cleco Power, could require discontinuance of the application of the authoritative guidance on regulated operations.

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


Cleco Power
					REMAINING RECOVERY PERIOD (YRS.)
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Regulatory assets
Acadia Unit 1 acquisition costs	$	1,675	$	1,701	15.75
Accumulated deferred fuel (1)	9,382		11,627		Various
Affordability study	9,992		10,337		7.25
AFUDC equity gross-up	59,606		60,381		Various	(2)
AMI deferred revenue requirement	818		954		2
AROs (8)	8,526		20,094

Coughlin transaction costs	776		784		25.25
COVID-19 executive order (8)	3,071		3,039
Deferred lignite and mine closure costs (7)	134,739		136,076
Deferred storm restoration costs - Hurricane Delta (6)	88		88

Deferred storm restoration costs - Hurricane Laura (6)	367		367
Deferred storm restoration costs - Hurricane Zeta (6)	7		7

Deferred taxes, net	44,157		43,866		Various
Dolet Hills Power Station closure costs (7)	122,495		147,323


Financing costs (1)	5,994		6,087		Various	(3)
Interest costs	2,899		2,961		Various	(2)
Madison Unit 3 property taxes	13,372		13,297		Various	(9)
Non-service cost of postretirement benefits	14,482		14,526		Various	(2)
Other	9,268		10,483		Various
Postretirement costs	64,399		64,399		Various	(4)
Production operations and maintenance expenses	5,980		7,002		Various	(5)
Rodemacher Unit 2 deferred costs (8)	21,264		19,282

St. Mary Clean Energy Center	2,722		3,705		1.25

Training costs	5,579		5,618		35.75
Tree trimming costs	2,979		3,657		1
Total regulatory assets	544,637		587,661
Regulatory liabilities


Deferred taxes, net	(12,531)		(21,939)		Various

Storm reserves	(112,906)		(111,509)
Total regulatory liabilities	(125,437)		(133,448)
Total regulatory assets, net	$	419,200	$	454,213
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at March 31, 2024, and December 31, 2023. 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. In the second quarter of 2024, Cleco Power intends to file an application with the LPSC for a financing order for securitization of these costs. For more information, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Dolet Hills Prudency Review.” (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						2024 1ST QUARTER FORM 10-Q

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


Cleco
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Total Cleco Power regulatory assets, net	$	419,200	$	454,213
2016 Merger adjustments (1)
Fair value of long-term debt	95,493		97,345
Postretirement costs	8,952		9,448
Financing costs	6,474		6,560
Debt issuance costs	4,171		4,254
Total Cleco regulatory assets, net	$	534,290	$	571,820

(1) Cleco regulatory assets include acquisition accounting adjustments as a result of the 2016 Merger.

Deferred Lignite and Mine Closure Costs and Dolet Hills Power Station Closure Costs

In 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. In 2021, the LPSC approved the establishment of a regulatory asset for certain lignite costs that would otherwise be billed through Cleco Power’s FAC and any reasonable incremental third-party professional costs related to the closure of the mine.

In 2020, Cleco Power revised depreciation rates for the Dolet Hills Power Station to utilize the December 31, 2021, expected end-of-life and early retirement of the Dolet Hills Power Station and defer depreciation expense to a regulatory asset for the amount in excess of the previously approved depreciation rates by the LPSC. The Dolet Hills Power Station was retired on December 31, 2021.

In 2022, Cleco Power filed an application with the LPSC requesting approval of the regulatory treatment and recovery of stranded and decommissioning costs associated with the retirement of the Dolet Hills Power Station over 20 years as well as recovery of deferred fuel and mine-related costs. On April 19, 2024, the LPSC approved an uncontested settlement that contains a provision for a $40.0 million reduction in the regulatory asset associated with the Dolet Hills Power Station. Therefore, at March 31, 2024, this amount was recorded as a reduction to the associated regulatory asset on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets and an increase to Depreciation and amortization on Cleco’s and Cleco Power’s Statements of Income. For more information about the settlement, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Dolet Hills Prudency Review.”


Note 6 — Fair Value Accounting Instruments

Fair value is a market-based measurement based on assumptions market participants would use in pricing an asset or a liability. Cleco’s valuation techniques maximize the use of observable market-based inputs and 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.

Cleco utilizes a three-tier fair value hierarchy that prioritizes inputs that may be used to measure fair value. The fair value hierarchy gives the highest priority to unadjusted quoted prices 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 measurement date.

•Level 2 — observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets, quoted market prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market 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 March 31, 2024, and December 31, 2023, 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						2024 1ST QUARTER FORM 10-Q


Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT MAR. 31, 2024		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Short-term investments	$	286,707	$	286,707	$	—	$	—	$	242,596	$	242,596	$	—	$	—
FTRs	881		—		—		881		3,087		—		—		3,087
Natural gas derivatives	4,548		—		4,548		—		5,042		—		5,042		—
Total assets	$	292,136	$	286,707	$	4,548	$	881	$	250,725	$	242,596	$	5,042	$	3,087
Liability description
FTRs	$	435	$	—	$	—	$	435	$	781	$	—	$	—	$	781
Natural gas derivatives	12,608		—		12,608		—		15,005		—		15,005		—
Total liabilities	$	13,043	$	—	$	12,608	$	435	$	15,786	$	—	$	15,005	$	781


Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT MAR. 31, 2024		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2023		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Short-term investments	$	172,080	$	172,080	$	—	$	—	$	169,606	$	169,606	$	—	$	—
FTRs	881		—		—		881		3,087		—		—		3,087
Natural gas derivatives	4,452		—		4,452		—		—		—		—		—
Total assets	$	177,413	$	172,080	$	4,452	$	881	$	172,693	$	169,606	$	—	$	3,087
Liability description
FTRs	$	435	$	—	$	—	$	435	$	781	$	—	$	—	$	781
Natural gas derivatives	12,570		—		12,570		—		14,331		—		14,331		—
Total liabilities	$	13,005	$	—	$	12,570	$	435	$	15,112	$	—	$	14,331	$	781

Cleco has consistently applied the Level 2 and Level 3 fair value techniques between comparative fiscal periods. During the three months ended March 31, 2024, and the year ended December 31, 2023, Cleco did not experience any transfers into or out of Level 3 of the fair value hierarchy.

Short-term Investments

At March 31, 2024, and December 31, 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.

The following tables present the short-term investments as recorded on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets at March 31, 2024, and December 31, 2023:


Cleco
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Cash and cash equivalents	$	164,047	$	113,207
Current restricted cash and cash equivalents	$	7,684	$	15,818
Non-current restricted cash and cash equivalents	$	114,976	$	113,571


Cleco Power
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Cash and cash equivalents	$	49,444	$	40,240
Current restricted cash and cash equivalents	$	7,684	$	15,818
Non-current restricted cash and cash equivalents	$	114,952	$	113,548

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:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Balances, beginning of period	$	2,306	$	2,276
Unrealized losses*	(418)		(24)
Purchases	(33)		(64)
Settlements	(1,409)		(1,555)
Balances, end of period	$	446	$	633
*Unrealized losses are reported through Accumulated deferred fuel on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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 March 31, 2024, and December 31, 2023:


	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW		HIGH
FTRs at Mar. 31, 2024	$	881	$	435	RTO auction pricing	FTR price - per MWh	$	(1.98)	$	7.34
FTRs at Dec. 31, 2023	$	3,087	$	781	RTO auction pricing	FTR price - per MWh	$	(3.51)	$	7.07

Natural Gas Derivatives

Cleco may enter into physical and financial fixed price forward 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
	AT MAR. 31, 2024				AT DEC. 31, 2023
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	3,390,677	$	3,147,971	$	3,400,293	$	3,177,654

* The carrying value of long-term debt does not include deferred issuance costs of $13.5 million at March 31, 2024, and $14.2 million at December 31, 2023.


Cleco Power
	AT MAR. 31, 2024				AT DEC. 31, 2023
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	1,878,482	$	1,844,789	$	1,886,248	$	1,867,559

* The carrying value of long-term debt does not include deferred issuance costs of $11.1 million at March 31, 2024, and $11.5 million at December 31, 2023.

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 March 31, 2024, and December 31, 2023, 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 contracts 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 bilateral transactions and contracts that Cleco has entered into or may enter into in the future. The amount of credit support required may change based on margining formulas, changes in credit agency ratings, or 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.

Cleco has not elected to designate any of its current instruments as an accounting hedge. Generally, Cleco’s derivative positions are subject to netting agreements that provide for offsetting of asset and liability positions as well as related collateral with the same counterparty. At March 31, 2024, and December 31, 2023, there were no fair value amounts offset on the balance sheets and no collateral posted with or received from counterparties. The following tables present 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 March 31, 2024, and at December 31, 2023:


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT MAR. 31, 2024		AT DEC. 31, 2023
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	881	$	3,087
Current	Energy risk management liabilities	(435)		(781)
Natural gas derivatives
Current	Energy risk management assets	4,548		5,042

Current	Energy risk management liabilities	(12,608)		(15,005)
Commodity-related contracts, net		$	(7,614)	$	(7,657)


Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT MAR. 31, 2024		AT DEC. 31, 2023
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	881	$	3,087
Current	Energy risk management liabilities	(435)		(781)
Natural gas derivatives
Current	Energy risk management assets	4,452		—

Current	Energy risk management liabilities	(12,570)		(14,331)
Commodity-related contracts, net		$	(7,672)	$	(12,025)

The following tables present the effect of derivatives not designated as hedging instruments on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income for the three months ended March 31, 2024, and 2023:


Cleco
	AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
		FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2024		2023
Commodity-related contracts
FTRs(1)	Electric operations	$	726	$	859
FTRs(1)	Purchased power	(1,371)		(596)
Natural gas derivatives(2)	Fuel used for electric generation	(18,701)		(83,906)		(3)
Total		$	(19,346)	$	(83,643)

(1) For the three months ended March 31, 2024, and 2023, unrealized losses associated with FTRs of $(0.4) million and less than $(0.1) million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

(2) For the three months ended March 31, 2024, unrealized gains and realized losses associated with natural gas derivatives for Cleco Power of $1.3 million and $(3.2) million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three months ended March 31, 2023, unrealized losses and realized losses associated with natural gas derivatives for Cleco Power of $(4.5) million and $(1.8) million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

(3) Recast as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments relating to the Cleco Cajun Sale Group.


Cleco Power
	AMOUNT OF GAIN(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
		FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	INCOME STATEMENT LINE ITEM	2024		2023
Commodity-related contracts
FTRs(1)	Electric operations	$	726	$	859
FTRs(1)	Purchased power	(1,371)		(596)
Natural gas derivatives(2)	Fuel used for electric generation	(7,756)		(6,540)
Total		$	(8,401)	$	(6,277)

(2) For the three months ended March 31, 2024, unrealized gains and realized losses associated with natural gas derivatives of $1.3 million and $(3.2) million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three months ended March 31, 2023, unrealized losses and realized losses associated with natural gas derivatives of $(4.5) million and $(1.8) million, respectively, were reported through Accumulated deferred fuel on the balance sheet.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

The following tables present the volume of commodity-related derivative contracts outstanding at March 31, 2024, and December 31, 2023, for Cleco and Cleco Power:

Cleco

UNIT OF MEASURE

TOTAL VOLUME OUTSTANDING

(THOUSAND)

AT MAR. 31, 2024

AT DEC. 31, 2023

Commodity-related contracts

FTRs

MWh

2,686

9,611

Natural gas derivatives

MMBtus

48,490

61,119

Cleco Power

UNIT OF MEASURE

TOTAL VOLUME OUTSTANDING

(THOUSAND)

AT MAR. 31, 2024

AT DEC. 31, 2023

Commodity-related contracts

FTRs

MWh

2,686

9,611

Natural gas derivatives

MMBtus

23,990

19,915


Note 8 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Based on the

funding assumptions at December 31, 2023, management estimates that pension contributions totaling $94.2 million will be required through 2028, of which $25.7 million will be required in 2024. In April 2024, Cleco made a $3.5 million payment towards its 2024 contribution requirement. Cleco was not required to make any contributions to the pension plan in 2023.

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 months ended March 31, 2024, and 2023 were as follows:


	PENSION BENEFITS				OTHER BENEFITS
	FOR THE THREE MONTHS ENDED MAR. 31,				FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023		2024		2023
Components of periodic benefit costs
Service cost	$	1,189	$	1,173	$	479	$	365
Interest cost	6,535		6,606		583		566
Expected return on plan assets	(7,607)		(7,386)		—		—
Amortizations

Net loss (gain)	—		—		164		(13)
Net periodic benefit cost	$	117	$	393	$	1,226	$	918

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 months ended March 31, 2024, and 2023 was $0.5 million and $0.4 million, respectively.

The current and non-current portions of the pension benefits liability for Cleco and Cleco Power at December 31, 2023, and 2022 are as follows:


(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current	$	25,685	$	25,685
Non-current	$	91,752	$	91,638

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 months ended March 31, 2024, and 2023, was $1.1 million and $0.9 million, respectively. The current and non-current portions of the Other Benefits liability for Cleco and

Cleco Power at March 31, 2024, and December 31, 2023, were as follows:


Cleco
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current	$	5,241	$	5,241
Non-current	$	41,665	$	41,815


Cleco Power
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current	$	4,479	$	4,479
Non-current	$	32,110	$	32,289

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 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, therefore, receives the proceeds upon the death of the insured participants. The life insurance policies may be used to


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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 months ended March 31, 2024, and 2023, were as follows:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Components of periodic benefit costs
Service cost	$	34	$	35
Interest cost	836		901
Amortizations
Prior period service credit	(54)		(54)
Net gain	(21)		(15)
Net periodic benefit cost	$	795	$	867

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for both the three months ended March 31, 2024, and 2023, was $0.1 million.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at March 31, 2024, and December 31, 2023, were as follows:


Cleco
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current	$	4,593	$	4,593
Non-current	$	62,592	$	62,868


Cleco Power
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Current	$	613	$	613
Non-current	$	8,308	$	8,394

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 months ended March 31, 2024, and 2023, was as follows:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
401(k) Plan expense	$	3,075	$	2,154

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 months ended March 31, 2024, and 2023, was as follows:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
401(k) Plan expense	$	1,601	$	902


Note 9 — 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 months ended March 31, 2024, and 2023:


Cleco
	FOR THE THREE MONTHS ENDED MAR. 31,
	2024		2023
Effective tax rate	(73.1)	%	(55.0)	%


Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31,
	2024		2023
Effective tax rate	12.6	%	6.1	%

For Cleco and Cleco Power, the effective income tax rates for the three months ended March 31, 2024, and 2023, 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, flow through of state tax benefits, and state tax expense.

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. For the three months ended March 31, 2024, and 2023, Cleco and Cleco Power had no interest expense related to uncertain tax positions. At March 31, 2024, and December 31, 2023, Cleco and Cleco Power had no liability for uncertain tax positions or interest payable related to uncertain tax positions.

Income Tax Audits

Cleco and Cleco Power are party to the consolidated income tax return filed by Cleco Group. Cleco Group 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 2020, 2021, and 2022, the IRS has placed Cleco in the Bridge phase of the Compliance Assurance Process for the 2020 and 2021 tax years. In this phase, the IRS will not


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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 Group’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 2020, 2021, and 2022 remain subject to examination by the Louisiana Department of Revenue.

Cleco Group classifies income tax penalties as a component of other expense. For the three months ended March 31, 2024, and 2023, no penalties were recognized.


Note 10 — 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 Quarterly Report on Form 10-Q has been recast as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments relating to the Cleco Cajun Sale Group. 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 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 MAR. 31, 2024 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	253,794
Other operations	27,218
Affiliate revenue	8,869
Electric customer credits	(1,847)
Operating revenue, net	$	288,034
Net loss	$	(6,648)
Add: Depreciation and amortization	94,004
Less: Interest income	1,288
Add: Interest charges	23,484
Add: Federal and state income tax benefit	(960)



EBITDA	$	108,592


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


FOR THE THREE MONTHS ENDED MAR. 31, 2024 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	253,794	$	(2,323)		$	—	$	251,471
Other operations	27,218		—			—		27,218
Affiliate revenue	8,869		29,667			(38,536)		—
Electric customer credits	(1,847)		—			—		(1,847)
Operating revenue, net	$	288,034	$	27,344		$	(38,536)	$	276,842
Depreciation and amortization	$	94,004	$	4,371	(1)	$	—	$	98,375
Interest income	$	1,288	$	293		$	(173)	$	1,408
Interest charges	$	23,484	$	17,452		$	(174)	$	40,762

Federal and state income tax (benefit) expense	$	(960)	$	38,631		$	—	$	37,671
Loss from continuing operations, net of income taxes	$	(6,648)	$	(82,545)		$	—	$	(89,193)
Income from discontinued operations, net of income taxes	—		31,962			—		31,962
Net loss	$	(6,648)	$	(50,583)		$	—	$	(57,231)
Additions to property, plant, and equipment	$	39,494	$	(2,530)		$	—	$	36,964
Equity investment in investee (2)	$	1,916	$	(507,329)		$	507,329	$	1,916
Goodwill (2)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (2)	$	6,865,060	$	822,793		$	369,109	$	8,056,962
(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. (2) Balances at March 31, 2024.


FOR THE THREE MONTHS ENDED MAR. 31, 2023 (THOUSANDS)	CLECO POWER
Revenue
Electric operations	$	296,348
Other operations	27,303
Affiliate revenue	1,688
Electric customer credits	(651)
Operating revenue, net	$	324,688
Net income	$	22,817
Add: Depreciation and amortization	50,733
Less: Interest income	1,185
Add: Interest charges	24,338
Add: Federal and state income tax expense	1,490
EBITDA	$	98,193


FOR THE THREE MONTHS ENDED MAR. 31, 2023 (THOUSANDS)	CLECO POWER		OTHER			ELIMINATIONS		TOTAL
Revenue
Electric operations	$	296,348	$	(2,420)		$	—	$	293,928
Other operations	27,303		1			—		27,304
Affiliate revenue	1,688		27,514			(29,202)		—
Electric customer credits	(651)		—			—		(651)
Operating revenue, net	$	324,688	$	25,095		$	(29,202)	$	320,581
Depreciation and amortization	$	50,733	$	4,476	(1)	$	—	$	55,209
Interest income	$	1,185	$	143		$	(61)	$	1,267
Interest charges	$	24,338	$	15,211		$	(61)	$	39,488
Federal and state income tax expense	$	1,490	$	42,203		$	—	$	43,693
Income (loss) from continuing operations, net of income taxes	$	22,817	$	(145,892)		$	—	$	(123,075)
Income from discontinued operations, net of income taxes	—		19,053			—		19,053
Net income (loss)	$	22,817	$	(126,839)		$	—	$	(104,022)
Additions to property, plant, and equipment	$	58,066	$	2,033		$	—	$	60,099
Equity investment in investees (2)	$	1,992	$	(467,329)		$	467,329	$	1,992
Goodwill (2)	$	1,490,797	$	—		$	—	$	1,490,797
Total segment assets (2)	$	6,920,339	$	870,743		$	309,311	$	8,100,393
(1) Includes $2.4 million of amortization of intangible assets related to Cleco Power’s wholesale power supply agreements as a result of the 2016 Merger. (2) Balances at December 31, 2023.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Net loss	$	(57,231)	$	(104,022)
Less: income from discontinued operations, net of income taxes	31,962		19,053
Loss from continuing operations, net of income taxes	$	(89,193)	$	(123,075)
Add: Depreciation and amortization	98,375		55,209

Less: Interest income	1,408		1,267
Add: Interest charges	40,762		39,488
Add: Federal and state income tax expense	37,671		43,693
Add: Other corporate costs and noncash items (1) (2)	22,385		84,145
Total segment EBITDA	$	108,592	$	98,193
(1) Adjustments made for Other and Elimination totals not allocated to total segment EBITDA. (2) Includes loss on Cleco Cajun’s natural gas derivatives of $(10.9) million and $(77.4) million, respectively, for the three months ended March 31, 2024, and 2023.


Note 11 — Regulation and Rates

Deferred Operations and Maintenance Costs

Cleco Power defers operations and maintenance costs that it believes are prudently incurred and probable of recovery from its retail customers. These costs are recorded in Other deferred charges on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets. As part of the filed application for Cleco Power’s current rate case, Cleco Power is seeking approval from the LPSC to recover these costs through its new rates, which are anticipated to be effective on July 1, 2024. At March 31, 2024, and December 31, 2023, Cleco Power had $10.4 million and $9.9 million, respectively, recorded for these costs.

FRP

Effective July 1, 2021, and as approved by the LPSC, under the terms of the current 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.

In October 2023, Cleco Power filed its monitoring report for the 12 months ended June 30, 2023, with the LPSC, indicating no refund was due. On January 31, 2024, Cleco Power received the LPSC Staff’s draft report indicating no refund and no material findings. Cleco Power anticipates LPSC approval of the report in the second quarter of 2024.

On June 30, 2023, Cleco Power filed an application with the LPSC through the rate case process for a new FRP, with anticipated new rates being effective July 1, 2024. Cleco Power has responded to multiple sets of LPSC data requests. On February 5, 2024, and February 9, 2024, the intervenors and LPSC Staff filed direct testimony, respectively. Cleco Power filed rebuttal testimony on April 3, 2024, in accordance with the revised procedural schedule. Pre-hearing statements with the LPSC are due on May 10, 2024.

Dolet Hills Regulatory Refund

Management estimated that a loss resulting from a potential disallowance was probable, and as a result, Cleco Power accrued an estimated contingent loss of $58.7 million at December 31, 2023. On April 19, 2024, the LPSC approved an uncontested settlement that contains a provision for refunding $20.0 million per year to Cleco Power’s retail customers as a credit to their bills during the third quarters of 2024, 2025, and 2026 for a total of $60.0 million. Therefore, at March 31, 2024, an additional $1.3 million was recorded in Provision for rate refund on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets and Electric customer credits on Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. For more information about the settlement, see Note 13 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Dolet Hills Prudency Review.”

TCJA

Effective July 1, 2021, under Cleco Power’s current retail rate plan, 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 is 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 March 31, 2024, Cleco Power had $200.4 million accrued for the excess ADIT, of which $12.5 million is reflected in current regulatory liabilities.

Teche Unit 3

In May 2023, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3, barring any violations of specific applicable reliability standards. In January 2024, Cleco Power filed a notice with the LPSC to retire Teche Unit 3 in June 2024. Cleco Power has no outstanding financial obligations to MISO for operating Teche Unit 3 as a system support resource unit.


Note 12— 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 assets cannot be used to settle Cleco Power’s obligations and


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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 MAR. 31, 2024		AT DEC. 31, 2023
Restricted cash - current	$	7,684	$	15,818
Accounts receivable - affiliate	2,472		3,492
Intangible asset - securitization	395,331		398,658
Total assets	$	405,487	$	417,968
Long-term debt due within one year	$	14,790	$	14,499
Accounts payable	15		—
Accounts payable - affiliate	62		176
Interest accrued	1,522		6,191
Long-term debt, net	386,965		394,944
Total liabilities	403,354		415,810
Member’s equity	2,133		2,158
Total liabilities and member’s equity	$	405,487	$	417,968

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 MAR. 31,
(THOUSANDS)	2024		2023
Operating revenue	$	8,036	$	9,177
Operating expenses	(3,466)		(4,354)
Interest income	228		158
Interest charges, net	(4,773)		(4,956)
Income before taxes	$	25	$	25

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 March 31, 2024, consisted of its equity investment of approximately $1.9 million.

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


INCEPTION TO DATE (THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Purchase price	$	12,873	$	12,873
Cash contributions	6,399		6,399
Distributions	(18,034)		(17,280)
Equity income from investee	678		—
Total equity investment in investee	$	1,916	$	1,992

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


(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023
Oxbow’s net assets/liabilities	$	3,832	$	3,985
Cleco Power’s 50% equity	$	1,916	$	1,992
Cleco Power’s maximum exposure to loss	$	1,916	$	1,992

The following table contains summarized financial information for Oxbow:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Operating revenue	$	184	$	124
Operating expenses	(87)		(124)
Gain on sale of property	1,356		—
Interest income	(97)		—
Income before taxes	$	1,356	$	—

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


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

Litigation

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 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 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


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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 the trial date has been 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. 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. Cleco Power and Saulsbury 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 multiple sets 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 such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.


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Environmental Audit

In 2009, the LPSC approved Cleco Power to recover 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. 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 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.

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. On February 20, 2024, Cleco Power received the draft audit report from the LPSC Staff, which indicated no material findings. Cleco Power anticipates LPSC approval of the report in the second quarter of 2024.

On January 24, 2024, the LPSC voted to shift control of energy efficiency programs from utilities to an independent, third-party administrator selected by and accountable to the LPSC. This action will remove the provision whereby utilities were allowed to recover any lost revenues associated with unsold electricity. Cleco Power is subject to audits for program years 2023 and thereafter until the time these programs are shifted to the third-party administrator, which is expected in January 2026.

Dolet Hills 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. On February 2, 2024, the ALJ released a final recommendation indicating a partial disallowance of the recovery of fuel costs and a refund of related costs previously recovered from customers. Management estimated that a loss resulting from a potential disallowance was probable, and as a result, an estimated contingent loss of $58.7 million was accrued in provision for rate refund at December 31, 2023.

On April 19, 2024, the LPSC approved an uncontested settlement containing the following provisions:

•a $40.0 million reduction in the regulatory asset associated with the Dolet Hills Power Station,

•refunding $20.0 million per year to Cleco Power’s retail customers as a credit to their bills during the third quarters of 2024, 2025, and 2026 for a total of $60.0 million, and

•allowing securitization of $305.0 million. If the securitization is not complete by September 1, 2024, Cleco Power is allowed to accrue a carrying charge through the earlier of the completion of the securitization or January 31, 2025.

In the second quarter of 2024, Cleco Power intends to file an application with the LPSC for a financing order for the securitization.

As a result of the settlement, the following was recorded in Cleco’s and Cleco Power’s Condensed Consolidated Financial Statements at March 31, 2024:

•a $40.0 million reduction in regulatory assets with an offsetting increase recorded as depreciation expense and

•a $1.3 million increase in the provision for rate refund and electric customer credits.

South Central Generating

Prior to the Cleco Cajun Acquisition, 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. Management is unable to estimate any potential losses regarding matters arising out of the ordinary course of business. 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


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Acquisition, NRG Energy indemnified Cleco for losses as of the closing date associated with some matters that existed as of the closing date, including pending litigation.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of March 31, 2024, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters for Cleco and Cleco Power are $7.7 million and $7.0 million, respectively. Cleco and Cleco Power have accrued these amounts.

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 March 31, 2024, 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 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 LPSC prudency review associated with the mine closure costs, see “— LPSC Audits and Reviews — Dolet Hills 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). 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


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submitted to the EPA specifying its 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 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.

As part of the Cleco Cajun Acquisition, 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 March 31, 2024, Cleco Cajun had an indemnification asset totaling $18.6 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 14 — Affiliate Transactions

At March 31, 2024, and December 31, 2023, Cleco Holdings had an affiliate receivable of $24.2 million, primarily for estimated income taxes paid on behalf of Cleco Group. At March 31, 2024, and December 31, 2023, Cleco Holdings had an affiliate payable of $10.7 million 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 MAR. 31, 2024				AT DEC. 31, 2023
(THOUSANDS)	AFFILIATE RECEIVABLE		AFFILIATE PAYABLE		AFFILIATE RECEIVABLE		AFFILIATE PAYABLE
Cleco Holdings	$	19	$	526	$	14	$	367
Support Group	837		10,135		1,104		12,833
Cleco Cajun	3,227		—		3,425		—
Total	$	4,083	$	10,661	$	4,543	$	13,200

Note 15 — Intangible Assets

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 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 months ended March 31, 2024, and 2023, amortization expense of $3.3 million and $4.2 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)	AT MAR. 31, 2024		AT DEC. 31, 2023
Storm Recovery Property intangible asset	$	415,946	$	415,946
Accumulated amortization	(20,615)		(17,288)
Net intangible asset subject to amortization	$	395,331	$	398,658

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 remaining intangible asset related to the power supply agreement is amortized over the estimated life of its contract of 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 months ended March 31, 2024, and 2023:


Cleco
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023
Amortization expense
Power supply agreements	$	2,323	$	2,420

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


Cleco
(THOUSANDS)	AT MAR. 31, 2024		AT DEC. 31, 2023

Power supply agreements	$	14,238	$	85,104






Accumulated amortization	(5,929)		(74,471)
Net intangible assets subject to amortization	$	8,309	$	10,633

Note 16 — 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.


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Cleco
	FOR THE THREE MONTHS ENDED MAR. 31, 2024
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS
Balance, Dec. 31, 2023	$	(5,112)


Amounts reclassified from AOCI
Amortization of postretirement benefit net gain	(299)


Balance, Mar. 31, 2024	$	(5,411)


	FOR THE THREE MONTHS ENDED MAR. 31, 2023
(THOUSANDS)	POSTRETIREMENT BENEFIT NET GAIN (LOSS)
Balance, Dec. 31, 2022	$	59



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


Balance, Mar. 31, 2023	$	(363)


Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31, 2024
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, Dec. 31, 2023	$	(5,555)	$	(4,796)	$	(10,351)



Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	190		—		190
Reclassification of net loss to interest charges	—		64		64

Balances, Mar. 31, 2024	$	(5,365)	$	(4,732)	$	(10,097)


	FOR THE THREE MONTHS ENDED MAR. 31, 2023
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS		NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, Dec. 31, 2022	$	(3,318)	$	(5,047)	$	(8,365)


Amounts reclassified from AOCI
Amortization of postretirement benefit net loss	96		—		96
Reclassification of net loss to interest charges	—		63		63

Balances, Mar. 31, 2023	$	(3,222)	$	(4,984)	$	(8,206)

Note 17 — Storm Restoration

On April 10, 2024, Cleco’s service territory was impacted by severe weather causing power outages for approximately 45,000 of Cleco Power’s electric customers. By April 15, 2024, power was restored to all affected customers. Cleco Power’s total storm restoration costs related to this weather event is estimated to be between $9.0 million and $11.0 million, which Cleco Power anticipates funding through its existing storm reserve.


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, 2023, 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 months ended March 31, 2024, and 2023.


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 295,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana.

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 Cajun Divestiture


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Cajun Sale Group are presented as discontinued operations. On November 22, 2023, the Cleco Cajun Divestiture Purchase and Sale Agreement was entered into between the Cleco Cajun Sellers and the Cleco Cajun Purchasers whereby the Cleco Cajun Sellers have agreed to sell the Cleco Cajun Sale Group to the Cleco Cajun Purchasers for the purchase price of $600.0 million. The financial information for the three months ended March 31, 2023, provided in this Quarterly Report on Form 10-Q has been recast as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments relating to the Cleco Cajun Sale Group. For more information, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

Dolet Hills

Cleco Power is seeking 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. On February 2, 2024, the ALJ released a final recommendation indicating a partial disallowance of the recovery of fuel costs and a refund of related costs previously recovered from customers. Management estimated that a loss resulting from a potential disallowance was probable, and as a result, an estimated contingent loss of $58.7 million was accrued in provision for rate refund at December 31, 2023.

On April 19, 2024, the LPSC approved an uncontested settlement containing the following provisions:

•a $40.0 million reduction in the regulatory asset associated with the Dolet Hills Power Station,

•refunding $20.0 million per year to Cleco Power’s retail customers as a credit to their bills during the third quarters of 2024, 2025, and 2026 for a total of $60.0 million, and

In the second quarter of 2024, Cleco Power intends to file an application with the LPSC for a financing order for the securitization. For more information on the prudency review, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 13 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — LPSC Audits and Reviews — Dolet Hills 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. 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, 2023. For more information about Cleco’s environmental initiatives, see “— Decarbonization Initiatives” and “— Renewable and Electrification Initiatives.”

On March 24, 2024, the SEC issued a rule requiring certain registrants to provide climate-related disclosures in their annual reports and registration statements. This rule is effective for Cleco’s Annual Report on Form 10-K for the year ending December 31, 2027. In April 2024, the SEC issued a voluntary stay on the implementation of the rule amidst pending litigation, which delayed the rule indefinitely pending completion of a judicial review. Management is currently assessing the impact this rule will have on the Registrants. Management is also unable to predict the outcome and timing of the stay and pending litigation and the effect it may have on this rule.

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 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.

Decarbonization Initiatives

Cleco Power is exploring multiple decarbonization initiatives predominantly associated with Madison Unit 3, with the primary initiative currently being Project Diamond Vault.

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


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CLECO POWER						2024 1ST QUARTER FORM 10-Q

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.

Total development costs for Project Diamond Vault are expected to be approximately $58.0 million, of which the FEED study is projected to cost approximately $13.0 million. The FEED study has begun, and a $9.0 million congressional appropriation has been secured to help offset costs of this study. As of March 31, 2024, Cleco Power has incurred $14.3 million for Project Diamond Vault development efforts, including the FEED study and received $4.2 million of the congressional appropriation from the U.S. Department of Energy to partially offset these costs. The FEED study is expected to be completed in the first quarter of 2025, and major permitting is expected to be completed in the first half of 2026. Construction of the project is expected to begin late in the second half of 2026. Management expects the total project will be completed in mid-2031. After the cost of the FEED study, the remaining project cost is currently estimated to be between $1.70 billion and $2.00 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, U.S. Department of Energy grants or loans, debt financing, private equity investment, and partnership interests.

Renewable and Electrification Initiatives

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 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 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 March 31, 2024, Cleco Power had spent $56.1 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 customers. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government, military, wood, paper, health care, information technology, transportation, and other manufacturing.

On March 31, 2024, a contract with a significant wholesale customer expired and was not renewed with Cleco Power. Cleco Power’s failure to recontract this agreement is expected to affect jurisdictional retail rates that are subject to review by the LPSC in conjunction with Cleco Power’s current rate case. Cleco Power anticipates new rates, resulting from its current rate case, to be effective July 1, 2024.


RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2024, and 2023


Cleco
	FOR THE THREE MONTHS ENDED MAR. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2024		2023		VARIANCE		CHANGE
Operating revenue, net	$	276,842	$	320,581	$	(43,739)	(13.6)	%
Operating expenses	291,219		363,509		72,290		19.9	%
Operating loss	(14,377)		(42,928)		28,551		66.5	%
Interest income	1,408		1,267		141		11.1	%
Allowance for equity funds used during construction	134		1,231		(1,097)		(89.1)	%
Equity income from investee before income tax	677		$	—	$	677	100.0	%
Other income, net	1,398		536		862		160.8	%
Interest charges	40,762		39,488		(1,274)		(3.2)	%
Federal and state income tax expense	37,671		43,693		6,022		13.8	%
Loss from continuing operations, net of income taxes	(89,193)		(123,075)		33,882		27.5	%
Income from discontinued operations, net of income taxes	31,962		19,053		12,909		67.8	%
Net loss	$	(57,231)	$	(104,022)	$	46,791	45.0	%

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

•lower losses on gas-related derivative contracts, net of income taxes, at Cleco Cajun of $48.5 million included in continuing operations.

•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.”

•changes in federal and state income taxes. For more information on Cleco’s effective income tax rates on


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

continuing operations, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 9 — Income Taxes — Effective Tax Rates.”


Cleco Power
			FOR THE THREE MONTHS ENDED MAR. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2024		2023			VARIANCE		CHANGE
Operating revenue
Base	$	154,028	$	144,286		$	9,742	6.8	%
Fuel cost and purchased power recovery	99,766		152,062			(52,296)		(34.4)	%
Electric customer credits	(1,847)		(651)			(1,196)		(183.7)	%

Other operations	27,218		27,303			(85)		(0.3)	%
Affiliate revenue	8,869		1,688			7,181		425.4	%
Operating revenue, net	288,034		324,688			(36,654)		(11.3)	%
Operating expenses
Recoverable fuel and purchased power	99,788		151,824			52,036		34.3	%
Non-recoverable fuel and purchased power	7,794		7,225			(569)		(7.9)	%
Other operations and maintenance	56,797		53,988			(2,809)		(5.2)	%
Depreciation and amortization	94,004		50,733			(43,271)		(85.3)	%
Taxes other than income taxes	15,646		15,995			349		2.2	%



Total operating expenses	274,029		279,765			5,736		2.1	%
Operating income	14,005		44,923			(30,918)		(68.8)	%
Interest income	1,288		1,185			103		8.7	%
Allowance for equity funds used during construction	134		1,231			(1,097)		(89.1)	%
Equity income from investee before income tax	677		—			677		100.0	%
Other (expense) income, net	(228)		1,306			(1,534)		(117.5)	%
Interest charges	23,484		24,338			854		3.5	%
Federal and state income tax (benefit) expense	(960)		1,490			2,450		164.4	%
Net (loss) income	$	(6,648)	$	22,817		$	(29,465)	(129.1)	%

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


	FOR THE THREE MONTHS ENDED MAR. 31,
(MILLION kWh)	2024	2023	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	808	754		7.2	%
Commercial	586	580		1.0	%
Industrial	540	526		2.7	%
Other retail	30	30		—	%
Total retail	1,964	1,890		3.9	%
Sales for resale	616	644		(4.3)	%
Total retail and wholesale customer sales	2,580	2,534		1.8	%

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


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	64,548	$	60,193		7.2	%
Commercial	48,708		46,043			5.8	%
Industrial	22,660		20,587			10.1	%
Other retail	2,728		2,788			(2.2)	%
Total retail	138,644		129,611			7.0	%
Sales for resale	15,384		14,675			4.8	%
Total base revenue	$	154,028	$	144,286		6.8	%

Cleco Power’s residential customers’ demand for electricity is affected largely by weather. Weather is generally 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 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 THREE MONTHS ENDED MAR. 31,
				2024 CHANGE
	2024	2023	NORMAL	PRIOR YEAR		NORMAL
Heating degree-days	770	517	843	48.9	%	(8.7)	%
Cooling degree-days	91	279	100	(67.4)	%	(9.0)	%

Base

Base revenue increased $9.7 million primarily due to $3.3 million of higher usage due to colder winter weather and $2.9 million of higher industrial demand mainly due to new industrial customers in the third quarter of 2023. Also contributing to the increase was $2.8 million of higher rates, largely related to the infrastructure and incremental cost recovery rider.

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, 2023.

Fuel Cost and Purchased Power 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 76%


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

of Cleco Power’s total fuel cost during the first quarter of 2024 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 three months ended March 31, 2024, were impacted primarily by lower natural gas costs as compared to the three months ended March 31, 2023. For more information on Cleco Power’s most current fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 13 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Fuel Audits.”

Affiliate Revenue

Affiliate revenue increased $7.2 million primarily due to higher internal software services provided in accordance with service agreements.

Other Operations and Maintenance

Other operations and maintenance increased $2.8 million primarily due to $1.3 million of higher generating outage maintenance expenses, $0.9 million of higher injury and damage expenses as a result of higher general liability reserves, and $0.5 million of higher employee-related expenses.

Depreciation and Amortization

Depreciation and amortization increased $43.3 million primarily due to $40.0 million for a reduction in the regulatory asset associated with the Dolet Hills Power Station as a result of the settlement of the Dolet Hills prudency review and $2.9 million for changes in estimated useful lives of internal software. For more information on the reduction in the regulatory asset associated with the Dolet Hills Power Station and the settlement of the Dolet Hills prudency review, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 5 — Regulatory Assets and Liabilities” — “Deferred Lignite and Mine Closure Costs and Dolet Hills Power Station Closure Costs” and — “Note 13 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Dolet Hills Prudency Review.”

Other (Expense) Income, Net

Other (expense) income, net increased $1.5 million primarily due to $0.7 million for lower royalties and $0.6 million for the change in cash surrender value of certain company owned life insurance policies as a result of unfavorable market conditions.

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 9 — 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 Quarterly Report on Form 10-Q has been recast as a result of the determination during the third quarter of 2023 that the Cleco Cajun Purchasers are not expected to acquire the natural gas derivative instruments relating to the Cleco Cajun Sale Group. 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 Cleco Power reportable segment for the three months ended March 31, 2024, and 2023:


	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023

Net (loss) income	$	(6,648)	$	22,817
Add: Depreciation and amortization	94,004		50,733
Less: Interest income	1,288		1,185
Add: Interest charges	23,484		24,338
Add: Federal and state income tax (benefit) expense	(960)		1,490
EBITDA	$	108,592	$	98,193


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 presents the credit ratings of Cleco Holdings and Cleco Power at March 31, 2024:


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

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.

On December 5, 2023, following the announcement of the proposed sale of the Cleco Cajun Sale Group, S&P placed their ratings for Cleco Holdings and Cleco Power on CreditWatch with positive implications of the expected improvement in business risk from having a fully regulated utility business following the completion of the Cleco Cajun Divestiture.

Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest rating 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 bilateral transactions and contracts that Cleco has entered into or may enter into in the future. The amount of credit support required may change based on margining formulas, changes in credit agency ratings, or liquidity ratios.

Cleco Power and Cleco Cajun participate in the MISO market. MISO requires participants 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, 2023. For more information about credit support see Item 1, “Financial Statements and Supplementary Data — Notes to the Unaudited Condensed Consolidated Financial Statements — Note 13 — 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 higher interest rate environment the Registrants have been exposed to has 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 11 — Regulation and Rates — TCJA.”

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. For more information, 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.”

Working Capital and Debt

Cleco

At March 31, 2024, and December 31, 2023, Cleco had $95.0 million and $110.0 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 March 31, 2024, Cleco’s long-term debt and finance leases outstanding, excluding fair value adjustments resulting from the 2016 merger, was $3.29 billion, of which $257.3 million was due within one year. The long-term debt due within one year at March 31, 2024, primarily represents Cleco Power’s $125.0 million bank term loan due in May 2024; Cleco Holdings’ $66.7 million bank term loan, which was paid on April 26, 2024; $50.0 million of Cleco Power’s senior notes due in December 2024; and $14.8 million of Cleco Securitization I storm recovery bond principal payments scheduled to be paid in September 2024 and March 2025.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

Cleco Holdings paid the remaining $66.7 million satisfying this LPSC commitment. For more information about the Cleco Cajun Divestiture, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Discontinued Operations.”

At March 31, 2024, cash and cash equivalents available of $190.8 million combined with $380.0 million of available revolving credit facility capacity ($80.0 million from Cleco Holdings and $300.0 million from Cleco Power) provided total liquidity of $570.8 million.

At March 31, 2024, and December 31, 2023, Cleco had a working capital surplus of $281.7 million and a deficit of $17.5 million, respectively. The $299.1 million increase in working capital is primarily due to:

•a $255.6 million increase in regulatory assets primarily due to the reclassification of the Dolet Hills and mine-related regulatory assets to short-term due to Cleco Power expecting the securitization of those amounts to be completed by March 2025,

•a $60.1 million net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents,

•a $40.3 million decrease in accounts payable, excluding Cleco Power’s FTRs, primarily due to timing of payments for short-term incentive plan compensation and lower accruals for fuel and purchased power,

•a $38.7 million decrease in provision for rate refund primarily due to the reclassification of the long-term portion of refunds to be made to Cleco Power's retail customers resulting from the settlement of the Dolet Hills prudency review. For more information about the settlement, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 13 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — LPSC Audits and Reviews — Dolet Hills Prudency Review,” and

•a $15.0 million decrease in short-term debt due to payments on Cleco Holdings’ revolving credit facility.

These increases in working capital were partially offset by:

•a $68.1 million increase in taxes payable primarily due to higher provision for federal income taxes and accruals for property taxes,

•an $18.9 million increase in accrued interest primarily due to the accrual of interest on long-term debt, and

•a $12.8 million decrease in net assets and liabilities held for sale. For more information about assets and liabilities held for sale, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements —Note 3 — Discontinued Operations.”

Cleco Holdings

At March 31, 2024, and December 31, 2023, Cleco Holdings had $95.0 million and $110.0 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.”

At March 31, 2024, Cleco Holdings’ long-term debt outstanding, excluding fair value adjustments, was $1.41 billion, of which $66.6 million was due within one year. The long-term debt due within one year at March 31, 2024, primarily represents the amount due on the bank term loan, which was paid on April 26, 2024. Payment of Cleco Holdings’ bank term loan also satisfied its commitment made to the LPSC

in February 2019 in connection with the approval of the Cleco Cajun Acquisition.

Cleco Holdings has an uncommitted line of credit with no amounts outstanding at March 31, 2024. For more information on Cleco’s uncommitted line of credit, see “— Credit Facilities.”

At March 31, 2024, cash and cash equivalents available at Cleco Holdings of $7.2 million combined with $80.0 million of available revolving credit facility capacity provided a total liquidity of $87.2 million.

Cleco Power

At March 31, 2024, and December 31, 2023, Cleco Power had no outstanding borrowings of short-term debt 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 with no amounts outstanding at March 31, 2024. For more information on Cleco Power’s uncommitted line of credit, see “— Credit Facilities.”

At March 31, 2024, Cleco Power’s long-term debt and finance leases outstanding was $1.88 billion, of which $190.7 million was due within one year. The long-term debt due within one year at March 31, 2024, primarily represents the $125.0 million bank term loan due in May 2024; $50.0 million of senior notes due in December 2024; and $14.8 million of Cleco Securitization I storm recovery bond principal payments scheduled to be paid in September 2024 and March 2025.

At March 31, 2024, cash and cash equivalents available of $71.1 million combined with $300.0 million of available revolving credit facility capacity provided a total liquidity of $371.1 million.

At March 31, 2024, and December 31, 2023, Cleco Power had a working capital surplus of $230.5 million and a working capital deficit of $66.2 million, respectively. The $296.7 million increase in working capital is primarily due to:

•a $25.3 million decrease in accounts payable, excluding FTRs, primarily due to timing of payments for short-term incentive plan compensation and lower accruals for fuel and purchased power, and

•a $13.7 million net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents.


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

These increases in working capital were partially offset by:

•a $21.7 million increase in taxes payable primarily due to higher provision for federal income taxes and accruals for property taxes, and

•a $12.1 million increase in accrued interest primarily due to the accrual of interest on long-term debt.

Credit Facilities

At March 31, 2024, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with $95.0 million of outstanding borrowings and one for Cleco Power in the amount of $300.0 million with no outstanding borrowings. The total of all revolving credit facilities maintains a maximum aggregate capacity of $475.0 million.

Cleco Holdings and Cleco Power each have 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, to support working capital needs. There were no amounts outstanding under the uncommitted lines of credit at March 31, 2024.

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 March 31, 2024, Cleco Holdings was in compliance with the covenants of its revolving credit facility. At March 31, 2024, 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 March 31, 2024, Cleco Power was in compliance with the covenants of its revolving credit facility. At March 31, 2024, 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.

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 March 31, 2024, Cleco Holdings was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. Additionally, in accordance with the 2016 Merger Commitments, Cleco Power is subject to certain provisions limiting the amount of distributions that may be paid to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings. Cleco Power may not make any distribution unless, after giving effect to such distribution, Cleco Power’s common equity ratio would not be less than 48% and Cleco Power’s corporate credit rating is investment grade with two of the three credit rating agencies. At March 31, 2024, 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, 2023.

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 net cash activities are as follows for the three months ended March 31, 2024, and 2023:


	CLECO
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2024		2023		VARIANCE
Net cash provided by operating activities	$	121,160	$	112,441	$	8,719
Net cash used in investing activities	$	(36,400)	$	(59,603)	$	23,203
Net cash used in financing activities	$	(23,063)	$	(25,445)	$	2,382

Cleco - Net Operating Cash Flows

Net cash provided by operating activities increased $8.7 million, which includes net cash used related to discontinued operations of $6.5 million, primarily due to:

•$42.8 million of lower payments for fuel inventory primarily due to lower volume of purchases for petroleum coke at Cleco Power,

•$17.1 million of higher collections from Cleco Cajun’s customers,

•$15.1 million of lower payments for fuel inventory primarily due to lower volume of purchases of coal at Cleco Cajun,

•$14.4 million of lower payments for purchased power costs


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

from MISO at Cleco Cajun and Cleco Power, and

•$6.1 million of lower purchases for materials and supplies inventory at Cleco Power.

These increases were partially offset by:

• $55.6 million of lower recoveries of fuel and purchased power costs primarily due to the timing of collections at a lower fuel rate at Cleco Power,

•$26.7 million of lower collections from Cleco Power’s customers, and

•$4.9 million of higher payments for natural gas derivatives at Cleco Power.

Cleco - Net Investing Cash Flows

Net cash used in investing activities decreased $23.2 million, which includes $6.6 million related to discontinued operations, primarily due to lower additions to property, plant, and equipment, net of AFUDC.

Cleco - Net Financing Cash Flows

Net cash used in financing activities decreased $2.4 million primarily due to lower repayments on credit facilities of $48.0 million, partially offset by lower draws of $41.0 million. This decrease was partially offset by higher repayments on long-term debt of $4.6 million at Cleco Power.

Cleco Power’s net cash activities are as follows for the three months ended March 31, 2024, and 2023:


	CLECO POWER
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)		2024		2023		VARIANCE
Net cash provided by operating activities		$	102,144	$	137,142	$	(34,998)
Net cash used in investing activities		$	(38,930)	$	(57,653)	$	18,723
Net cash used in financing activities		$	(48,063)	$	(48,421)	$	358

Cleco Power - Net Operating Cash Flows

Net cash provided by operating activities decreased $35.0 million primarily due to:

•$55.6 million of lower recoveries of fuel and purchased power costs primarily due to the timing of collections at a lower fuel rate,

•$26.7 million of lower collections from customers, and

•$4.9 million of higher payments for natural gas derivatives.

These decreases were partially offset by:

•$42.8 million of lower payments for fuel inventory primarily due to lower volume of purchases for petroleum coke,

•$6.1 million of lower purchases for materials and supplies inventory, and

•$3.2 million of lower payments for purchased power costs from MISO.

Cleco Power - Net Investing Cash Flows

Net cash used in investing activities decreased $18.7 million primarily due to lower additions to property, plant, and equipment, net of AFUDC.

Cleco Power - Net Financing Cash Flows

Net cash used in financing activities decreased $0.4 million primarily due to lower payments on revolving credit facilities of $45.0 million.

This decrease was partially offset by:

•$40.0 million of higher distributions to Cleco Holdings and

•$4.6 million of higher repayments on long-term debt.

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, 2023.

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

Cybersecurity

For information related to Cleco’s cybersecurity, see Part I, Item 1C, “Cybersecurity,” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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


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CLECO POWER						2024 1ST QUARTER FORM 10-Q

with these revisions, reinterpretations, and requirements, it could be subject to civil or criminal liabilities and fines.

Cleco is currently evaluating possible impacts various proposed environmental rules 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 13 — 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 Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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, 2023.

For information on Cleco Power’s FRP, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 11 — 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 13 — 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 13 — 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 Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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, 2023.

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, 2023.

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, 2023.

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.

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.

NERC Operations and Planning Reliability Standards audits are conducted every three years for Cleco Power and Cleco Cajun, separately. The next Operations and Planning Reliability Standards audits for Cleco Power and Cleco Cajun are scheduled to begin in 2025.

NERC CIP audits are also conducted every three years for Cleco Power and Cleco Cajun, separately. The next audit is scheduled to begin 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, 2023.

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, 2023.

Integrated Resource Plan (IRP)

The IRP process includes conducting stakeholder meetings and receiving feedback from stakeholders. The final IRP was filed with the LPSC in May 2023. On March 21, 2024, the LPSC issued an order acknowledging that Cleco Power’s Final IRP complied with the LPSC’s IRP General Order. The LPSC’s acknowledgement completes this IRP cycle.

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,


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

vegetation management, and reporting. In April 2016, the SQP was approved by the LPSC. The SQP expired in December 2020. A request to renew the conditions of the expired SQP was included in Cleco Power’s application for its current rate case, which was filed with the LPSC in June 2023. On March 28, 2024, Cleco Power filed its annual SQP monitoring report for 2023 based on the expired reporting requirements.

Franchises

Two parish franchises remain expired and Cleco Power is continuing to make efforts in 2024 to renew these contracts. 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, 2023.

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, 2023.


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 Quarterly Report on Form 10-Q 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).


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


RISK OVERVIEW

Cleco is exposed to counterparty credit risk, liquidity risk, interest rate risk, and commodity price risk. Cleco has implemented a governance framework, inclusive of risk policies and procedures to 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 with respect to bilateral transactions and contracts that Cleco has entered into or may enter into in the future. The amount of credit support required may change based on margining formulas, changes in credit agency ratings or liquidity ratios.

Cleco monitors and manages its credit risk exposure through credit risk management policies and procedures that 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 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 March 31, 2024, Cleco Holdings had $95.0 million of short-term debt outstanding under its $175.0 million revolving credit facility at a weighted average all-in interest rate of 7.052%. At March 31, 2024, 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 $0.9 million on an annualized basis.

At March 31, 2024, Cleco Holdings had a $66.7 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 7.055%. 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 $0.6 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Holdings for the three months ended March 31, 2024, was 7.063%.

At March 31, 2024, Cleco Holdings had $165.0 million long-term floating rate senior notes outstanding at an interest rate of SOFR plus 1.725%, for an all-in interest rate of 7.051%. Each 1% increase in the interest rate applicable to Cleco Holdings’ long-term variable rate notes 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 notes at Cleco Holdings for the three months ended March 31, 2024, was 7.061%.

At March 31, 2024, Cleco Power had no short-term debt outstanding under its $300.0 million revolving credit facility. The borrowing costs 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.

At March 31, 2024, 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 6.680%. 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 $1.3 million on an annualized basis. The weighted average rate for the outstanding term loan debt at Cleco Power for the three months ended March 31, 2024, was 6.688%.

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 $4.5 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 Power’s financial performance can be adversely impacted by the uncertainty in future fuel and power prices, which may impact the costs to be recovered through Cleco


CLECO
CLECO POWER						2024 1ST QUARTER FORM 10-Q

Power’s FAC; therefore, Cleco Power has implemented a natural gas hedging program to mitigate this uncertainty. The program includes transacting in financially settled swaps, physical fixed price supply agreements, and options contracts. Cleco Power executes this program within a risk management framework inclusive of risk management policies, procedures, and guidelines, set forth by its Board of Managers and management. 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. Cleco Cajun’s FTRs are included in assets held for sale and liabilities held for sale on Cleco’s Condensed Consolidated Balance Sheets.

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.

During the three months ended March 31, 2024, Cleco Cajun and Cleco Power had natural gas derivative contracts consisting of fixed price physical forwards, financially settled swap transactions, and options contracts. Cleco monitors the Value at Risk (VaR) of its natural gas derivative contracts

requiring derivative accounting treatment. VaR is defined as the minimum 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 MAR. 31, 2024
(THOUSANDS)	AT MAR. 31, 2024		HIGH		LOW		AVERAGE
Cleco	$	8,554	$	13,406	$	8,063	$	10,186
Cleco Power	$	3,203	$	6,303	$	2,840	$	4,052

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.”


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 March 31, 2024. 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 March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.


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CLECO POWER						2024 1ST 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 13 — 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 13 —Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”


ITEM 1A. RISK FACTORS

There have been no 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, 2023. 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 report.


ITEM 5. OTHER INFORMATION

During the three months ended March 31, 2024, 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.


ITEM 6. EXHIBITS

CLECO
	10.1	Form of Eighth Agreement to Extend the Board of Managers Services Agreement, effective May 1, 2024, by and among Cleco Group LLC, Cleco Corporate Holdings LLC, and Cleco Power LLC and Manager
	31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	Inline XBRL Taxonomy Extension Schema
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

CLECO POWER
	10.1	Form of Eighth Agreement to Extend the Board of Managers Services Agreement, effective May 1, 2024, by and among Cleco Group LLC, Cleco Corporate Holdings LLC, and Cleco Power LLC and Manager
	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)


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CLECO POWER						2024 1ST 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: May 8, 2024

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: May 8, 2024