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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2025

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. As a result, Cleco Holdings’ management determined that the criteria under GAAP for the Cleco Cajun Sale Group to be classified as held for sale were met, and the sale represents 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 have been presented as discontinued operations since March 31, 2023. On June 1, 2024, the Cleco Cajun Divestiture closed. 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.

On March 12, 2025, following the formation of Cleco Securitization II and the completion of the securitization financing 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, Cleco Power became the primary beneficiary of Cleco Securitization II, and as a result, the financial statements of Cleco Securitization II are consolidated with the financial statements of Cleco Power. For more information on Cleco Securitization II, see Note 13 — “Variable Interest Entities — Securitization Entities — Cleco Securitization II.”

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, 2024.

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.

Revision of Previously Issued Financial Information

In the second quarter of 2025, Cleco identified errors in its previously filed consolidated annual and interim financial statements. Specifically, management identified errors (collectively, the “Q2 2025 CF Errors”) in the Consolidated Statements of Cash Flows included in the previously filed consolidated financial statements of Cleco and Cleco Power for the years ended December 31, 2024, 2023, and 2022 and interim periods in 2025 and 2024.

Management assessed the materiality of the Q2 2025 CF Errors on the previously filed consolidated financial statements in accordance with the SEC’s Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108 and determined that the Q2 2025 CF Errors were not material to the prior period financial statements, individually or in the aggregate; however, for comparability purposes, the comparative amounts presented in the third quarter 2025 Form 10-Q have been revised.

The Q2 2025 CF Errors primarily relate to an error in the classification of accrued capital expenditures in the Consolidated Statements of Cash Flows, which resulted in errors to the Net cash provided by operating activities and Net cash provided by (used in) investing activities lines. The revisions had no impact on the consolidated balance sheets, consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in member’s equity, or notes to the financial statements included in the previously filed financial statements.

Restricted Cash and Cash Equivalents

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

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 21 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-off as well as current and forecasted economic conditions, to establish a credit loss estimate.

Cleco’s credit losses at September 30, 2025, are within normal levels and historical trends.

Recent Authoritative Guidance

In November 2024, FASB issued guidance to improve the presentation and disclosures of certain expenses. This guidance enhances annual and interim disclosure requirements by requiring registrants to disclose purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. This update should be applied either prospectively or retrospectively to all prior periods presented. Management expects to have additional disclosures upon adoption of this guidance, but does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.

In September 2025, FASB issued guidance to change the capitalization criteria concerning software costs. This guidance removes the current references to software development project stages in determining when eligible costs are capitalized. Once implemented, eligible costs will be

capitalized when management has authorized and committed to funding the project and it is probable that the project will be completed and used for its intended use. The guidance is effective for fiscal years beginning after December 15, 2027, with early adoption permitted at the beginning of a fiscal year. This update may be applied either prospectively, a modified approach that is based on the project status, or retrospectively. Management is currently evaluating the potential impacts of this guidance on the results of operations, financial condition and cash flows of the Registrants.

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.

Pension Plan and Employee Benefits

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Based on the funding assumptions at December 31, 2024, management estimates that $76.1 million in pension contributions will be required through 2029, of which $16.5 million is required in 2025. In January 2025, Cleco made an $11.5 million required contribution payment towards the 2025 plan year and a $5.0 million required contribution towards the 2024 plan year. Cleco expects to make a $16.8 million required contribution to the pension plan in 2026.

The service costs are included in Other operations and maintenance within Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. The non-service components of periodic pension costs, such as interest, expected return on plan assets, amortization of prior service costs and/or actuarial gains or losses, are included in Other income (expense), net within Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. The service costs are included in Other operations and maintenance within Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income. The non-service components of periodic benefit cost related to SERP, such as interest, expected return on plan assets, amortization of prior service costs and/or actuarial gains or losses, are included in Other income (expense), net within Cleco’s and Cleco Power’s Condensed Consolidated Statements of Income.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.

Income Taxes

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense.Cleco records income tax penalties in Other Expense on its Condensed Consolidated Statement of Income.

Variable Interest Entities

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.

Equity Method Investments