Regulatory Assets and Liabilities

9 Months Ended

Sep. 30, 2025


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 or precedent 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 estimates these regulatory assets are probable of full recovery. If in the future, as a result of regulatory changes, Cleco Power’s ability to recover these regulatory assets would no

longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-down such assets. In addition, potential deregulation of the industry, or possible future changes in the method of rate regulation of Cleco Power, could require discontinuance of the application of the authoritative guidance on regulated operations.

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


Cleco Power
					REMAINING RECOVERY PERIOD (YRS.)
(THOUSANDS)	AT SEPT. 30, 2025		AT DEC. 31, 2024
Regulatory assets
Acadia Unit 1 acquisition costs	$	1,516	$	1,596	14.25
Accumulated deferred fuel(1)	11,688		457		Various	(2)
Affordability study	7,925		8,959		5.75
AFUDC equity gross-up	54,962		57,284		Various	(3)
Advanced metering infrastructure deferred revenue requirement	—		409
AROs	20,861		11,073		Various	(2)

Coughlin transaction costs	730		753		23.75
COVID-19 executive order	2,465		3,372		1.75
Deferred lignite and mine closure costs and Dolet Hills Power Station closure costs	—		258,951





Deferred taxes, net	22,593		2,008		Various	(2)
Dolet Hills carrying charge(4)	4,435		4,729



Financing costs(1)	5,439		5,717		Various	(5)
Interest costs	2,525		2,712		Various	(3)
Madison Unit 3 property taxes	15,023		14,196		Various	(6)
Non-service cost of postretirement benefits	13,393		14,057		Various	(3)
Northlake Transmission Agreement(11)	6,881		2,542		Various	(2)
Postretirement costs	58,089		58,089		Various	(7)
Production operations and maintenance expenses	2,525		4,939		Various	(8)
Rodemacher Unit 2 deferred costs(4)	33,503		27,265

Solar development costs(4)	2,122		2,122
St. Mary Clean Energy Center	—		870

Training costs	5,345		5,462		34.25
Tree trimming costs	—		943
Other	12,676		10,378		Various	(2)
Total regulatory assets	284,696		498,883
Regulatory liabilities


Deferred taxes, net	(6,361)		(6,827)		Various	(2)
Energy transition reserve(9)	(39,123)		—
Interest earned on energy transition reserve(9)	(556)		—

Residential revenue decoupling(10)	(5,250)		(3,000)
Storm reserve	(68,648)		(76,178)
Total regulatory liabilities	(119,938)		(86,005)
Total regulatory assets, net	$	164,758	$	412,878
(1) Represents regulatory assets for past expenditures that were not earning a return on investment at September 30, 2025, and December 31, 2024. All other assets are earning a return on investment. (2) For more information on the remaining recovery period, see Part II, Item 8, “Financial Statements and Supplementary Data — Note 6 — Regulatory Assets and Liabilities” for the disclosures for each specific regulatory asset or liability in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2024. (3) Amortized over the estimated lives of the respective assets. (4) Currently not in a recovery period. (5) Amortized over the terms of the related debt issuances. (6) Beginning July 1, 2021, property taxes paid for the year ended December 31, are being amortized over the subsequent 12 months beginning July 1. (7) Amortized over the average service life of the remaining plan participants. (8) Deferral is recovered over the following three-year regulatory period. (9) Currently not in a refund period. (10) On July 1, 2025, Cleco Power began providing a $3.0 million credit to its residential customers through the IICR. At September 30, 2025, Cleco Power accrued an additional $3.0 million reflecting an expected credit to be provided to residential customers for the 12-month rate period ending June 30, 2027. (11) Previously included in Other but presented as its own line item at September 30, 2025, due to increased materiality of the comparative periods.

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


Cleco
(THOUSANDS)	AT SEPT. 30, 2025		AT DEC. 31, 2024
Total Cleco Power regulatory assets, net	$	164,758	$	412,878
2016 Merger adjustments(1)
Fair value of long-term debt	84,390		89,941
Postretirement costs	5,970		7,461
Financing costs	5,959		6,217
Debt issuance costs	3,660		3,921
Total Cleco regulatory assets, net	$	264,737	$	520,418

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

Accumulated Deferred Fuel

Cleco Power is allowed to recover the cost of fuel used for electric generation and power purchased for utility customers through the LPSC-established FAC or related wholesale contract provisions, which enable Cleco Power to pass on to its customers substantially all fuel charges. As of September 30, 2025, Accumulated deferred fuel increased $11.2 million primarily due to increases in mark-to-market losses on gas-related derivative contracts.

AROs

At September 30, 2025, as a result of changes in the underlying cost estimate, Cleco Power remeasured an ARO liability associated with the closure of the Dolet Hills Power Station landfill, resulting in an increase of $8.6 million to the liability and regulatory asset, which reflects the expected recovery of these costs through the energy transition reserve once these costs are incurred.

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

At December 31, 2024, Cleco Power had $136.8 million recorded for the Deferred lignite and mine closure costs regulatory asset and $122.2 million recorded for the Dolet Hills Power Station closure costs regulatory asset. These regulatory assets are recorded in Regulatory assets - current on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets.

On March 12, 2025, through Cleco Securitization II, Cleco Power completed a securitization financing of Energy Transition Property, which included full recovery of the previously mentioned Dolet Hills Power Station costs that were deferred as regulatory assets, and at March 31, 2025, the balance was reduced to zero on Cleco’s and Cleco Power’s Condensed Consolidated Balance Sheets.

For more information about the securitization financing, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits and Reviews — Dolet Hills Securitization.”

Energy Transition Reserve

On March 12, 2025, in conjunction with the securitization financing and pursuant to the financing order issued by the LPSC on November 20, 2024, a newly funded energy transition reserve for reimbursement of Dolet Hills Power Station energy transition costs and for future energy transition costs was established. Any surplus that remains in the reserve after all Dolet Hills Power Station energy transition costs are prudently incurred will be refunded to Cleco Power’s retail electric customers using its IICR. In addition, Cleco Power established

a regulatory liability for the interest earned on the restricted cash for the newly funded energy transition reserve. Per the financing order, Cleco Power will refund this interest annually through the IICR. For more information on the restricted cash for the energy transition reserve, see Note 1 — “Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

Northlake Transmission Agreement

Annually, as approved in Cleco Power’s prior retail rate plan, Cleco Power is allowed to defer, as a regulatory asset, the undercollection of revenues related to the Northlake Transmission Agreement. This agreement governs Cleco Power’s share of transmission costs for serving load in its Northlake service territory under MISO. The amount recorded annually in the regulatory asset will be amortized over the following rate year, beginning on July 1.

As of September 30, 2025, the Northlake Transmission Agreement regulatory asset increased $4.3 million as a result of higher transmission costs billed by MISO for Cleco Power’s Northlake service territory.

Storm Reserve

Cleco Power has a storm reserve to fund future storm restoration costs. Accumulated storm restoration costs that are probable of recovery from retail customers are netted against the storm reserve. During 2024, Cleco Power’s service territory was impacted by multiple severe weather events resulting in significant storm restoration costs. At December 31, 2024, Cleco Power had a storm reserve balance of $76.2 million, net of $43.3 million of accumulated storm restoration costs. At September 30, 2025, Cleco Power had a storm reserve balance of $68.6 million, net of $37.8 million of unreimbursed accumulated storm restoration costs.