Regulation and Rates

6 Months Ended

Jun. 30, 2025


Note 12 — Regulation and Rates

Dolet Hills Regulatory Refund

On April 19, 2024, the LPSC approved an uncontested settlement for recovery of costs associated with the retirement of the Dolet Hills Power Station and the closure of the Oxbow mine. As a result of this settlement, Cleco Power issued $20.0 million of refunds in the third quarter of 2024 and will issue refunds of $20.0 million in each of the third quarters of 2025 and 2026 for a total refund of $60.0 million. For more information about the settlement, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Dolet Hills Securitization.”

FRP

Effective July 1, 2024, and as approved by the LPSC under the terms of the current FRP, Cleco Power is allowed to earn a target ROE of 9.7%, while providing the opportunity to earn up to 10.3%. Additionally, 60.0% of retail earnings between 10.3% and 10.9%, and all retail earnings over 10.9%, are required to be refunded to customers. Cleco Power’s next base rate case is required to be filed with the LPSC on or before June 30, 2026. The amount of credits due to customers, if any, is determined by Cleco Power’s monitoring report, which is filed

with the LPSC annually. Additionally, as approved in Cleco Power’s FRP, a residential revenue decoupling mechanism was implemented through its infrastructure and IICR that provides a charge or credit to residential customers for up to $3.0 million per year of residential base revenue. Beginning July 1, 2025, Cleco Power will provide a $3.0 million credit to its residential customers over a 12-month period.

On October 31, 2024, Cleco Power filed its monitoring report for the 12-month period ending June 30, 2024, indicating no refund to Cleco Power’s retail customers. Cleco Power has received the LPSC Staff’s draft report indicating no refund and no material findings. Due to the nature of the regulatory process, management is not able to determine the timing of the approval of this report. Cleco Power anticipates filing its monitoring report for the 12-month period ending June 30, 2025, by October 31, 2025.

Other Deferred Costs

Cleco Power defers other 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. At June 30, 2025, and December 31, 2024, Cleco Power had $0.2 million and $4.0 million, respectively, recorded for deferred costs it anticipates to recover from its customers, subject to approval by the LPSC.

TCJA

The provisions of the TCJA reduced the top federal statutory corporate income tax rate from 35% to 21%. Cleco Power’s retail customers are continuing to receive bill credits resulting from the TCJA. The retail portion of the protected excess ADIT will be credited until the full amount of the protected excess ADIT has been returned to Cleco Power’s customers through bill credits. At June 30, 2024, all amounts for the TCJA unprotected excess ADIT had been returned to Cleco Power’s retail customers. At June 30, 2025, Cleco Power had $186.1 million accrued for the excess ADIT, of which $6.4 million is reflected in current regulatory liabilities on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets.

Wholesale Rates

Wholesale customers are charged market-based rates that are subject to FERC’s triennial market power analysis. Cleco filed its most recent triennial power analysis in December 2023 and received FERC approval on December 13, 2024. The next triennial market power analysis is expected to be filed in December 2026.