Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

12 Months Ended

Dec. 31, 2025

Commitments and Contingencies Disclosure [Abstract]

Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

Gulf Coast Spinning

In September 2015, Gulf Coast Spinning Company, LLC (Gulf Coast Spinning) initiated a lawsuit against Cleco, claiming that Cleco failed to meet obligations under an alleged verbal agreement. According to Gulf Coast Spinning, Cleco promised to provide $6.5 million in startup funding and assist it in raising approximately $60.0 million for the construction of a cotton spinning facility near Bunkie, Louisiana. Diversified Lands loaned $2.0 million, secured by a mortgage on the Bunkie

project site, to Gulf Coast Spinning for the project. In February 2020, Diversified Lands foreclosed on the Bunkie property and asserted additional claims against the former owner of Gulf Coast Spinning. These claims are based on contractual and credit documents executed by Gulf Coast Spinning, with the former owner of Gulf Coast Spinning personally guaranteeing the obligations. Diversified Lands is seeking to recover the outstanding debt after the foreclosure. This action has been consolidated with the litigation originally filed by Gulf Coast Spinning in the 12th Judicial District Court for Avoyelles Parish, Louisiana. Mediation efforts conducted in August 2025 did not resolve these matters. The trial in this matter is scheduled to commence on March 30, 2026.

Cleco maintains that all allegations made by Gulf Coast Spinning are contradicted by the written documents executed by Gulf Coast Spinning and are without merit. Cleco believes it has substantial meritorious defenses to these claims.

Dispute with Saulsbury Industries, Inc.

In October 2018, Cleco Power filed suit against Saulsbury Industries, Inc. (Saulsbury), the former general contractor for the St. Mary Clean Energy Center project. Cleco Power seeks damages for Saulsbury’s failure to complete the project on time and for additional costs incurred to hire a replacement general contractor. The action was filed in the Ninth Judicial District Court for Rapides Parish. In October 2019, Saulsbury filed a counterclaim alleging that Cleco Power owed the remaining balance under the contract, as well as additional costs from an accelerated recovery attempt and costs incurred during an extended delay period. Both parties are involved in ongoing discovery, and a trial date is expected to be set in 2027. Cleco Power believes that it has substantial meritorious claims and defenses to the counterclaims asserted by Saulsbury.

LPSC Audits and Reviews

Cleco Power is subject to routine audits and reviews by the LPSC. Management is unable to reasonably estimate the possible range of disallowance, if any, related to these filings. Historically, disallowances resulting from such audits have not been material. However, if a disallowance of an audited cost is ordered resulting in a refund, it could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Fuel Audits

Cleco Power’s fuel costs for electric generation and purchased power are typically recovered through the LPSC-established FAC, which allows Cleco Power to pass on most of these expenses to its customers. The recovery of FAC costs is subject to periodic audits by the LPSC, conducted at least every other year.

On December 17, 2025, the LPSC approved the final audit report for Cleco Power’s fuel costs for 2020 through 2022 totaling $1.10 billion. The report indicated that the fuel costs were prudently incurred and that Cleco Power was compliant with the FAC order. Cleco Power’s FAC filings for January 2023 onward remain subject to audit.

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.

Energy Efficiency Audit

Following a 2013 LPSC General Order, Cleco Power began participating in energy efficiency programs in November 2014. Through its approved rate tariff, Cleco Power recovered $10.2 million in both program years 2024 and 2023. These amounts are subject to LPSC audit.

In January 2024, the LPSC shifted administrative control of energy efficiency programs to an independent, third-party administrator, removing a utility’s ability to recover lost revenues from reduced electricity sales. On April 16, 2025, the LPSC approved termination of the third-party administrator, and on May 19, 2025, the LPSC established the Louisiana Energy Efficiency Program (LEEP). LEEP incorporates aspects of the previous programs with revised rules and modifications, including the ability to recover lost revenues from reduced electricity sales, that were formally approved by the LPSC on August 20, 2025. LEEP launched on January 1, 2026 and new energy efficiency rates will be effective June 1, 2026. Cleco Power remains subject to audit for program years 2023 onward.

Dolet Hills Securitization

Cleco Power sought 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 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,

•an additional $20.0 million refund 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 was not complete by September 1, 2024, Cleco Power was allowed to accrue a carrying charge through the earlier of the completion of the securitization or January 31, 2025.

As a result of the settlement, the following was recorded in Cleco’s and Cleco Power’s Consolidated Financial Statements as of 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 bringing the reserve for refund to $60.0 million.

For more information on the regulatory asset activity related to the uncontested settlement, see Note 6 — “Regulatory Assets and Liabilities.”

Cleco Power began billing its retail customers on April 1, 2025, for the required amounts to service Cleco Securitization II's energy transition bonds.

MISO Load Shed Event

On May 25, 2025, MISO experienced a transmission system emergency due to transmission system constraints, including an ongoing forced outage on a 500 kilovolt line due to prior storm damage. To maintain grid stability, MISO directed temporary service interruptions for certain customers in Cleco Power’s service territory. Immediately following the event, an after-action review was initiated by the LPSC. On October 23, 2025, the LPSC completed its after-action review and did not issue penalties regarding the event. SERC, on behalf of NERC,

has also opened a formal investigation. Cleco Power has responded to SERC’s requests for information and expects to

receive the final report by June 2026. Cleco Power believes its response to this event was reasonable under the circumstances and does not expect to be issued a penalty.

FERC Audits and Reviews

In 2024, FERC ruled as part of Docket EL14-12-016 that the MISO transmission owners’ base ROE should be lowered to 9.98%, with a total or maximum ROE including incentives not to exceed 12.58%. The effective date of the change was September 28, 2016, for the MISO Attachment O rates. As a result, Cleco Power estimated and recorded a refund of $0.5 million to be refunded by May 2026.

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 December 31, 2025, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters for Cleco and Cleco Power are $16.5 million and $16.0 million, respectively. Cleco and Cleco Power have accrued these

amounts in Other deferred credits on their respective Consolidated Balance Sheets.

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 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 a sale of a 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 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 retired and partially demolished Dolet Hills Power Station, have agreed to pay the 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 obligations to be incurred by DHLC, primarily for reclamation obligations. As of December 31, 2025, Cleco Power does not expect any payments to be made under this guarantee. Cleco Power has the right to dispute the incurrence of such obligations through the review of the mining reclamation plan before the incurrence of such obligations. The Amended Lignite Mining Agreement expires after 2026 and does not affect the amount the Registrants can borrow under their credit facilities.

Cleco Power has a letter of credit to MISO pursuant to energy market requirements, and Cleco Holdings has a parent guarantee on behalf of Cleco Power. These agreements 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.

Long-Term Purchase Obligations

Cleco Holdings has several unconditional long-term purchase obligations primarily related to information technology

outsourcing, network monitoring, and software maintenance. Cleco Power has several unconditional long-term purchase obligations primarily related to the purchase of fuel, energy delivery facilities, information technology outsourcing, natural gas storage, network monitoring, and software maintenance. The aggregate amount of payments required under such obligations at December 31, 2025, is as follows:

(THOUSANDS)	CLECO POWER		CLECO
For the year ending Dec. 31,
2026	$	98,991	$	100,504
2027	99,178		100,622
2028	36,992		37,304
2029	35,837		35,837
2030	31,372		31,372
Thereafter	631,350		631,350
Total long-term purchase obligations	$	933,720	$	936,989

Cleco’s payments under these agreements for the years ended December 31, 2025, 2024, and 2023 were $22.4 million, $55.7 million, and $79.2 million, respectively. Cleco Power’s payments under these agreements for the years ended December 31, 2025, 2024, and 2023 were $20.9 million, $48.6 million, and $70.5 million, respectively.

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 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 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 submitted to the EPA specifying its intended course of action for the ash disposal facilities at Rodemacher Unit 2 and the Dolet Hills Power Station in order to comply with the final CCR Rule. In January 2022, Cleco Power 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 remaining demonstration is still subject to EPA approval based on pending technical review.

In September 2025, Cleco Power recorded an increase of $8.6 million in its ARO balance due to revised cost estimates related to the clean up and closure work at the Dolet Hills Power Station landfill.

Risks and Uncertainties

Cleco faces potential adverse consequences if Cleco’s counterparties fail to perform their contractual obligations or if Cleco or its affiliates are not in compliance with loan agreements or bond indentures.

Access to capital markets is a key source of funding for short- and long-term capital requirements not satisfied by operating cash flows.

Significant changes in the regulatory environment or market conditions could require Cleco to evaluate if its assets have suffered an other-than-temporary decline in value, which

could result in impairment charges and could materially affect Cleco’s financial condition.