UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the fiscal year ended December 31, ~~2015~~2017

(Exact name of registrant as specified in its charter)



Louisiana (State or other jurisdiction of incorporation or organization)		72-1445282 (I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)		71360-5226 (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400
Securities registered pursuant to Section 12(b) of the Act:
~~Title of each class~~		~~Name of each exchange on which registered~~
~~Common Stock, $1.00 par value, and associated rights to purchase Preferred Stock~~		~~New York Stock Exchange~~ None
Securities registered pursuant to Section 12(g) of the Act: None

(Exact name of registrant as specified in its charter)



Louisiana (State or other jurisdiction of incorporation or organization)		72-0244480 (I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)		71360-5226 (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400
Securities registered pursuant to Section 12(b) of the Act:
~~Title of each class~~		~~Name of each exchange on which registered~~
~~6.50% Senior Notes due 2035~~		~~New York Stock Exchange~~ None
Securities registered pursuant to Section 12(g) of the Act:

Title of each class
Membership Interests

Cleco Power LLC, a wholly owned subsidiary of Cleco ~~Corporation,~~Corporate Holdings LLC, meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.

Indicate by check mark if Cleco ~~Corporation~~Corporate Holdings LLC is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes xo No ox

Indicate by check mark if Cleco Power LLC is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the Registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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 x No o

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of each of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether Cleco Corporation is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): ~~Large accelerated filer~~ x ~~Accelerated filer~~ o ~~Non-accelerated filer~~ o ~~(Do not check if a smaller reporting company) Smaller reporting company~~ o

~~Indicate by check mark whether Cleco Power~~Corporate Holdings LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” ~~accelerated filer”~~“accelerated filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o Emerging growth company o 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 revise accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o Emerging growth company o 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 revise accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

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 ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

~~(Continuation of cover page)~~

The aggregate market value of the Cleco Corporation voting stock held by non-affiliates was $3,210,376,042 as of the last business day of Cleco Corporation’s most recently completed second fiscal quarter, based on a price of $53.85 per common share, the closing price of Cleco Corporation’s common stock as reported on the NYSE on such date. Cleco Corporation’s Cumulative Preferred Stock is not listed on any national securities exchange, nor are prices for the Cumulative Preferred Stock quoted on any national automated quotation system; therefore, its market value is not readily determinable and is not included in the foregoing amount. As of February 19, 2016, there were no outstanding shares of Cleco Corporation’s preferred stock.

As of February 19, 2016, there were 60,547,639 outstanding shares of Cleco Corporation’s Common Stock, par value $1.00 per share. As of February 19, 2016, all of Cleco Power’s membership interest was owned by Cleco Corporation.

This ~~combined~~Combined Annual Report on Form 10-K is separately filed by Cleco ~~Corporation~~Corporate Holdings LLC and Cleco ~~Power.~~Power LLC. Information in this filing relating to Cleco Power LLC is filed by Cleco ~~Corporation~~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 ~~Corporation~~Corporate Holdings LLC (except as it may relate to Cleco ~~Power)~~Power LLC) or any other affiliate or subsidiary of Cleco ~~Corporation.~~Corporate Holdings LLC.

This report should be read in its entirety as it pertains to each respective Registrant. The Notes to the Financial Statements for the Registrants and certain other sections of this report are combined.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

References in Part III, Item 11 in this filing including all items in Parts I, II, III, and IV, to “Cleco” mean Cleco Corporation and its subsidiaries, including Cleco Power, and references to “Cleco Power” mean Cleco Power LLC and its subsidiaries, unless the context clearly indicates otherwise. References in Part III, Items 10, 11, and 14 to “we,~~” “us,~~” “our,” and “the Company” mean Cleco ~~Corporation,~~Corporate Holdings LLC, unless the context clearly indicates otherwise. Additional abbreviations or acronyms used in this filing, including all items in Parts I, II, III, and IV are defined below:



ABBREVIATION OR ACRONYM	DEFINITION
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 ~~the~~ LIBOR 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, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2	Entergy Louisiana’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power
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
ARRA	American Recovery and Reinvestment Act of 2009
Attala	Attala Transmission LLC, a wholly owned subsidiary of Cleco Holdings
bcIMC	British Columbia Investment Management Corporation
Brame Energy Center	A facility consisting of Nesbitt Unit 1, Rodemacher Unit 2, and Madison Unit 3
CAA	Clean Air Act
CCR	Coal combustion by-products or residual
~~CERCLA~~CEO	~~Comprehensive Environmental Response, Compensation, and Liability Act of 1980~~Chief Executive Officer
~~CPP~~CFO	~~Clean Power Plan~~Chief Financial Officer
Cleco	Cleco Holdings and its subsidiaries
Cleco Corporation	Pre-merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016
Cleco Energy	Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings
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 Katrina/Rita	Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Cleco Partners	Cleco Partners L.P., a Delaware limited partnership that ~~prior to the closing of the Merger will be~~is owned by a consortium of investors, including funds or investment vehicles managed by ~~Macquarie Infrastructure and Real Assets, British Columbia Investment Management Corporation,~~MIRA, bcIMC, John Hancock Financial, and other infrastructure ~~investors.~~investors
Cleco Power	Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings
CO₂	Carbon dioxide
Cottonwood Energy	Cottonwood Energy Company LP, an indirect subsidiary of NRG South Central. Upon closing of the Purchase and Sale Agreement, Cottonwood Energy will become an indirect subsidiary of Cleco Holdings.
Coughlin	Cleco Power’s 775-MW, combined-cycle power plant located in St. Landry, ~~Louisiana. Coughlin was transferred to Cleco~~Louisiana
CPP	Clean Power ~~on March 15, 2014.~~Plan
CSAPR	Cross-State Air Pollution Rule
DHLC	Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands	Diversified Lands LLC, a wholly owned subsidiary of Cleco ~~Corporation~~Holdings
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOE	U.S. Department of Energy
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 generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of Dolet Hills.
EAC	Environmental Adjustment Clause
EBITDA	Earnings before interest, taxes, depreciation, and amortization
EGU	Electric Generating Unit
Entergy Gulf States	Entergy Gulf States Louisiana, ~~L.L.C.~~LLC
Entergy Louisiana	Entergy Louisiana, LLC
~~Entergy Mississippi~~	~~Entergy Mississippi, Inc.~~
EPA	U.S. Environmental Protection Agency
ERO	Electric Reliability Organization
ESPP	~~Cleco Corporation~~ Employee Stock Purchase Plan
Evangeline	Cleco Evangeline LLC, a wholly owned subsidiary of Midstream
FAC	Fuel Adjustment Clause
FASB	Financial Accounting Standards Board
~~FCC~~	~~Federal Communications Commission~~
FERC	Federal Energy Regulatory Commission
FTR	Financial Transmission Right



CLECO
CLECO POWER		2017 FORM 10-K



ABBREVIATION OR ACRONYM	DEFINITION
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the U.S.
~~GO Zone~~IRC	~~Gulf Opportunity Zone Act of 2005 (Public Law 109-135)~~Internal Revenue Code
~~Interconnection Agreement~~IRP	~~One of two Interconnection and Real Estate Agreements, one between Attala and Entergy Mississippi, and the other between Perryville and Entergy Louisiana~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~



~~ABBREVIATION OR ACRONYM~~	~~DEFINITION~~Integrated Resource Plan
IRS	Internal Revenue Service
ISO	Independent System Operator
kWh	Kilowatt-hour(s)
LDEQ	Louisiana Department of Environmental Quality
LED	Louisiana Economic Development
LIBOR	London ~~Inter-Bank Offer~~Interbank Offered Rate
~~Lignite Mining Agreement~~	~~Dolet Hills Mine Lignite Mining Agreement, dated as of May 31, 2001~~
LMP	Locational Marginal Price
LPSC	Louisiana Public Service Commission
LTIP	~~Cleco Corporation~~ Long-Term Incentive Compensation Plan
Madison Unit 3	A 641-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana
MATS	Mercury and Air Toxics Standards
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
Merger Agreement	Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation
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 of which a performance report must be filed annually by October 31 for the 12 months ending June 30
Merger Sub	Cleco ~~Merger Sub,~~MergerSub Inc., ~~a Louisiana corporation and~~previously an indirect ~~wholly-owned~~wholly owned subsidiary of Cleco Partners that was merged with and into Cleco Corporation, with Cleco Corporation surviving the 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 ~~Corporation~~Holdings
MIP	Macquarie Infrastructure Partners Inc.
MIRA	Macquarie Infrastructure and Real Assets Inc.
MISO	Midcontinent Independent System Operator, Inc.
MMBtu	Million British thermal units
Moody’s	Moody’s Investors Service, a credit rating agency
~~MSCI EAFE Index~~	~~Morgan Stanley Capital International Europe, Australia, Far East Index~~
MW	Megawatt(s)
MWh	Megawatt-hour(s)
N/A	Not Applicable
NAAQS	National Ambient Air Quality Standards
NERC	North American Electric Reliability Corporation
NMTC	New Markets Tax Credit
NMTC Fund	USB NMTC Fund 2008-1 LLC was formed to invest in projects qualifying for New Markets Tax Credits and Solar Projects
NOAA	National Oceanic and Atmospheric Administration
~~Not Meaningful~~	~~A percentage comparison of these items is not statistically meaningful because the percentage difference is greater than 1,000%~~
NO₂	Nitrogen dioxide
NO_x	Nitrogen ~~oxides~~oxide
~~NYSE~~NRG Energy	~~New York Stock Exchange~~NRG Energy, Inc.
NRG South Central	NRG South Central Generating LLC
Oxbow	Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO
PCB	Polychlorinated biphenyl
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco ~~Corporation~~Holdings
PPA	Power Purchase Agreement
PPACA	Patient Protection and Affordable Care Act, as amended
ppb	Parts per billion
~~PRP~~Predecessor	~~Potentially Responsible Party~~Pre-merger activity of Cleco. Cleco has accounted for the merger transaction by applying the acquisition method of accounting. The predecessor period is not comparable to the successor period.
Purchase and Sale Agreement	Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, NRG South Central, and Cleco Energy
RE	Regional Entity
Registrant(s)	Cleco ~~Corporation~~Holdings and/or Cleco Power
~~RFP~~	~~Request for Proposal~~
Rodemacher Unit 2	A 523-MW 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	Standard & Poor’s Ratings Services, a credit rating agency
SEC	U.S. Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
SERP	~~Cleco Corporation~~ Supplemental Executive Retirement Plan
SO₂	Sulfur dioxide



CLECO
CLECO POWER		2017 FORM 10-K



ABBREVIATION OR ACRONYM	DEFINITION
SPP	Southwest Power Pool
SPP RE	Southwest Power Pool Regional Entity
SSR	System Support Resource
START	Strategic Alignment and Real-Time Transformation
STIP	Short-Term Incentive Plan
Successor	Post-merger activity of Cleco. Cleco has accounted for the merger transaction by applying the acquisition method of accounting. The successor period is not comparable to the predecessor period.
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco ~~Corporation~~Holdings
SWEPCO	Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
TCJA	Federal Tax Cuts and Jobs Act of 2017
Teche Unit 3	A 359-MW generating unit at Cleco Power’s plant site in Baldwin, Louisiana
VaR	Value-at-Risk
~~VIE~~	~~Variable Interest Entity~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Combined Annual Report on Form 10-K includes “forward-looking statements” about future events, circumstances, and results. All statements other than statements of historical fact included in this Annual Report are forward-looking statements, including, without limitation, ~~results of the Merger;~~ future capital expenditures; ~~projections, including those with respect to base revenue;~~ 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, 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:

~~certain risks and uncertainties associated with~~the effects of the Merger ~~without limitation:~~


▪	~~the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the failure of the Merger to close;~~


▪	~~the failure to obtain regulatory approvals required for the Merger, or required regulatory approvals delaying the Merger or causing the parties to abandon the Merger;~~


▪	~~the failure to obtain any financing necessary to complete the Merger;~~


▪	~~risks related to disruption of management’s attention from Cleco’s ongoing business operations due to the Merger;~~


▪	~~the outcome of any legal proceeding, regulatory proceeding, or enforcement matter that may be instituted against Cleco and others relating to the Merger;~~


▪	~~the risk that the pendency of the Merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the pendency of the Merger;~~


▪	~~the effect of the Merger on Cleco’s relationships with its customers, operating results, and business;~~


▪	~~the amount of the costs, fees, expenses, and charges related to the Merger;~~


▪	~~the receipt of an unsolicited offer from another party to acquire assets or capital stock of Cleco Corporation that could interfere with the Merger; and~~


▪	~~future regulatory or legislative actions that could adversely affect Cleco’s participation in the Merger.~~

on Cleco Holdings’ and Cleco Power’s business relationships, operating results, and business generally,

regulatory factors such as changes in rate-setting practices or policies; the unpredictability in political actions of

governmental regulatory bodies; adverse regulatory ratemaking actions; recovery of investments made under traditional regulation; recovery of storm restoration costs; the frequency, timing, and amount of rate increases or decreases; the impact that rate cases or requests for FRP extensions may have on operating decisions of Cleco Power; the results of periodic NERC, LPSC, and ~~LPSC~~FERC audits; participation in MISO and the related operating challenges and uncertainties, including increased wholesale competition relative to ~~more~~additional suppliers; and compliance with the ERO reliability standards for bulk power systems by Cleco Power,

the ability to recover fuel costs through the FAC,

the ability to close the proposed transaction with NRG Energy and NRG South Central, including the related financings,

the ability to successfully integrate the assets to be acquired in the proposed transaction with NRG Energy and NRG South Central, if completed, into Cleco’s operations,

factors affecting utility operations, such as unusual weather conditions or other natural phenomena; catastrophic weather-related damage caused by hurricanes and other storms or severe drought conditions; unscheduled generation outages; unanticipated maintenance or repairs; unanticipated changes to fuel costs or fuel supply costs, shortages, transportation problems, or other developments; fuel mix of Cleco’s ~~generation~~generating facilities; decreased customer

load; environmental incidents and compliance costs; and power transmission system constraints,

reliance on third parties for determination of Cleco Power’s commitments and obligations to markets for generation resources and reliance on third-party transmission services,

global and domestic economic conditions, including the ability of customers to continue paying their utility bills, related growth and/or down-sizing of businesses in Cleco’s service area, monetary fluctuations, changes in commodity prices, and inflation rates,

political uncertainty in the U.S., including the ongoing debates related to the U.S. federal government budget and debt ceiling, and volatility and disruption in global capital and credit markets,

the ability of the lignite reserves at Dolet Hills to provide sufficient fuel to the Dolet Hills Power Station until at least 2036,

Cleco Power’s ability to maintain its right to sell wholesale ~~generation~~power at market-based rates within its control area,

Cleco Power’s dependence on energy from sources other than its facilities and future sources of such additional energy,

reliability of Cleco Power’s generating facilities,

the imposition of energy efficiency requirements or increased conservation efforts of customers,

the impact of current or future environmental laws and regulations, including those related to CCRs, greenhouse gases, and energy efficiency that could limit or terminate the operation of certain generating units, increase costs, or reduce customer demand for electricity,

the ability ~~of Cleco Power~~ to recover ~~from its customers the~~ costs of compliance with environmental laws and regulations, including those through the EAC,

financial or regulatory accounting principles or policies imposed by FASB, the SEC, FERC, the LPSC, or similar entities with regulatory or accounting oversight,



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

changing market conditions and a variety of other factors associated with physical energy, financial transactions, and energy service activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rates, and warranty risks,

legal, environmental, and regulatory delays and other obstacles associated with acquisitions (including the NRG South Central acquisition), reorganizations, investments in joint ventures, or other capital projects,

costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters,

the availability and use of alternative sources of energy and technologies, such as wind, solar, battery storage, and distributed generation,

changes in federal, state, or local laws (including the TCJA and other tax laws), changes in tax rates, disallowances of



CLECO
CLECO POWER		2017 FORM 10-K

tax positions, or changes in other regulating policies that may result in a change to tax benefits or expenses,

the restriction on the ability of Cleco ~~Corporation’s holding company structure and its~~Power to make distributions to Cleco Holdings in certain instances, as a result of the Merger Commitments,

Cleco Holdings’ dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations, ~~and pay dividends to its shareholders,~~

acts of terrorism, cyber attacks, data security breaches or other attempts to disrupt Cleco’s business or the business of third parties, or other man-made disasters,

nonperformance by and creditworthiness of the guarantor counterparty of the NMTC Fund,

credit ratings of Cleco ~~Corporation~~Holdings and Cleco Power,

the ability to remain in compliance with debt covenants,

the availability or cost of capital resulting from changes in global markets, Cleco’s business or financial condition, interest rates, or market perceptions of the electric utility industry and energy-related industries, and

employee ~~work force~~workforce factors, including ~~work stoppages,~~ aging workforce, ~~and~~ changes in ~~key executives.~~management, and inadequate resources.

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” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Comparison of the Years Ended December 31, ~~2015,~~2017, and ~~2014~~2016 — Cleco Power — Significant Factors Affecting Cleco Power” in this Annual Report.

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.

~~The~~Any forward-looking statement is considered only as of the date of this Combined Annual Report on Form 10-K 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 ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



GENERAL

Cleco ~~Corporation~~Holdings’ predecessor was incorporated on October 30, 1998, under the laws of the state of Louisiana. Cleco ~~Corporation~~Holdings is a public utility holding company which holds investments in several subsidiaries, including Cleco Power. Substantially all of its operations are conducted through Cleco Power. Cleco ~~Corporation,~~Holdings, subject to certain limited exceptions, is exempt from regulation as a public utility holding company pursuant to provisions of the Public Utility Holding Company Act of 2005.

On ~~October 17, 2014,~~April 13, 2016, Cleco Holdings completed its merger with Merger Sub whereby Merger Sub merged with and into Cleco Corporation, ~~entered into an agreement~~ with Cleco ~~Partners~~Corporation surviving the Merger, and ~~Merger Sub~~Cleco Corporation converting to ~~be acquired.~~a limited liability company and changing its name to Cleco Holdings, as a direct, wholly owned subsidiary of Cleco Group and an indirect, wholly owned subsidiary of Cleco Partners. For more information on the Merger, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations.”

Cleco Energy was organized on December 28, 2017, under the laws of the state of Louisiana. On February 6, 2018, Cleco Energy entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central. For more information on the Purchase and Sale Agreement and related transactions, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 20 — ~~Agreement and~~Subsequent Event - Plan of ~~Merger.~~Acquisition.”

Cleco Power’s predecessor was incorporated on January 2, 1935, under the laws of the state of Louisiana. Cleco Power was organized on December 12, 2000. Cleco Power is an electric utility engaged principally in the generation, transmission, distribution, and sale of electricity within Louisiana. In December 2012, Cleco Power and Evangeline executed definitive agreements to transfer ownership and control of Coughlin from Evangeline to Cleco Power. The transfer was completed in March 2014. Coughlin consists of two generating units with a total nameplate capacity of 775 MW.

In 2013, Cleco Power integrated its generation dispatch and transmission operations with MISO. Cleco Power is regulated by the LPSC and FERC, along with other governmental authorities. The rates Cleco Power can charge its retail customers are determined by the LPSC, and its transmission tariffs are regulated by FERC. The rates Cleco Power charges its wholesale customers are subject to FERC’s triennial market power analysis. Cleco Power serves approximately ~~287,000~~290,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. Cleco Power’s operations are described below. For more information on 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 of Cleco Power.”

Midstream, which was organized on September 1, 1998, under the laws of the state of Louisiana, is a merchant energy subsidiary that prior to March 15, 2014, owned and operated a merchant power plant (Coughlin). Prior to April 29, 2011, Midstream also owned an indirect interest in a merchant power plant (Acadia). During 2009, Cleco Power and Entergy Louisiana executed definitive agreements whereby Cleco Power and Entergy Louisiana would each acquire one 580-MW unit of the Acadia Power Station. The transaction with Cleco Power was completed in February 2010, and the transaction with Entergy Louisiana was completed in April 2011. In October 2012, Cleco Power announced that Evangeline was the winning bidder in Cleco Power’s 2012 long-term RFP. In December 2012, Cleco Power and Evangeline executed definitive agreements to transfer ownership and control of Coughlin from Evangeline to Cleco Power. The transfer was completed on March 15, 2014. Coughlin consists of two generating units with a total nameplate capacity of 775 MW. For more information on the transfer of Coughlin to Cleco Power, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Coughlin Transfer.”

At December 31, ~~2015,~~2017, Cleco had ~~1,207~~1,204 employees.

Cleco’s mailing address is P.O. Box 5000, Pineville, Louisiana 71361-5000, and its telephone number is (318) 484-7400.

Cleco’s website is located at https://www.cleco.com. Cleco ~~Corporation’s~~

and Cleco Power’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the SEC are available, free of charge, through Cleco’s website after those reports or filings are filed electronically with or furnished to the SEC. Cleco’s filings also can be obtained at the SEC’s Office of Investor Education and Advocacy at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Office of Investor Education and Advocacy may be obtained by calling the SEC at 1-800-SEC-0330. Cleco’s electronically filed reports can also ~~can~~ be obtained on the SEC’s website located at ~~http:~~https://www.sec.gov. Cleco’s ~~corporate~~ governance guidelines, code of conduct for financial managers, ethics and business standards, and the charters of its ~~board~~boards of ~~directors’~~managers’ audit, leadership development and compensation, ~~finance,~~business planning and ~~nominating/~~budget review, governance and public affairs, and asset committees are available on its website and available in print ~~to any shareholder~~ upon request. Information on Cleco’s website or any other website is not incorporated by reference into this Annual Report on Form 10-K and does not constitute a part of this ~~Report.~~Annual Report on Form 10-K.

At December 31, ~~2015~~,2017, Cleco Power had ~~1,005~~1,015 employees. Cleco Power’s mailing address is P.O. Box 5000, Pineville, Louisiana, 71361-5000, and its telephone number is (318) 484-7400.

Cleco Power meets the conditions specified in General Instructions I(1)(a) and (b) to Form 10-K and, therefore, is permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Cleco Power has omitted from this Annual Report on Form

10-K the information called for by the following Part II items of Form 10-K: Item 6 (Selected Financial Data) and Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations); and the following Part III items of Form 10-K: Item 10 (Directors, Executive Officers, and Corporate Governance of the Registrants), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), and Item 13 (Certain Relationships and Related Transactions, and Director Independence).



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



OPERATIONS

Cleco Power

Segment Financial Information

Summary financial results of the Cleco Power segment for years ~~2015, 2014,~~2017, 2016, and ~~2013~~2015 are presented in the following table:



(THOUSANDS)	2017			2016			2015
Revenue
Electric operations	$	1,108,389		$	1,091,229		$	1,142,389
Other operations	77,522			68,573			67,109
Electric customer credits	(1,566		)	(1,513		)	(2,173		)
Affiliate revenue	851			884			1,142
Operating revenue, net	$	1,185,196		$	1,159,173		$	1,208,467
Depreciation and amortization	$	157,999		$	146,142		$	147,839
Interest charges	$	69,362		$	76,446		$	76,560
Interest income	$	1,283		$	860		$	725
Federal and state income tax expense	$	67,331		$	18,369		$	79,294
Net income	$	150,738		$	39,128		$	141,350
Additions to property, plant, and equipment	$	235,252		$	186,143		$	156,357
Equity investment in investee	$	18,172		$	18,672		$	16,822
Goodwill	$	1,490,797		$	1,490,797		$	—
Segment assets	$	5,679,538		$	5,758,245		$	4,233,337

(THOUSANDS) 2015
2014
2013
Revenue
Electric operations $ 1,142,389
$ 1,225,960
$ 1,047,548
Other operations 67,109
64,893
48,909
Electric customer credits (2,173 ) (23,530 ) (1,836 )
Affiliate revenue 1,142
1,326
1,338
Operating revenue, net $ 1,208,467
$ 1,268,649
$ 1,095,959
Depreciation and amortization $ 147,839
$ 144,026
$ 135,717
Interest charges $ 76,560
$ 74,673
$ 82,677
Interest income $ 725
$ 1,707
$ 1,100
Federal and state income taxes $ 79,294
$ 76,974
$ 79,381
Net income $ 141,350
$ 154,316
$ 150,410
Additions to property, plant, and equipment $ 156,357
$ 206,607
$ 184,684
Equity investment in investee $ 16,822
$ 14,532
$ 14,532
Segment assets $ 4,233,337
$ 4,232,942
$ 3,932,717

For more information on Cleco Power’s results of operations, see Part II, Item 7, “Management’s Discussion and

Analysis of Financial Condition and Results of Operations — Results of Operations — Comparison of the Years Ended December 31, ~~2015,~~2017, and ~~2014~~2016 — Cleco Power.”

Certain Factors Affecting Cleco Power

As an electric utility, Cleco Power is affected, to varying degrees, by a number of factors influencing the electric utility industry in general. For more information on these factors, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Comparison of the Years Ended December 31, ~~2015,~~2017, and ~~2014~~2016 — Cleco Power — Significant Factors Affecting Cleco Power.”

Power Generation

As of December 31, ~~2015~~2017, Cleco Power’s aggregate net electric generating capacity was ~~3,190~~3,181 MW. This amount reflects the maximum production capacity these units can sustain over a specified period of time. In October 2015, the Franklin Gas Turbine, a 7-MW natural gas generating unit, was retired. The 42-year-old unit had outlived its 30-year design life and would have required significant investment to continue to be operated in a safe and reliable manner. Additionally, in July 2015, Teche Unit 4 replaced the Franklin Gas Turbine as Cleco Power’s official blackstart unit. The following table sets forth certain information with respect to Cleco Power’s generating facilities:

⁽¹⁾Nameplate capacity is the capacity at the start of commercial operations.

⁽²⁾Based on capacity testing of the generating units and operational tests performed during May, June, and July ~~August, and December 2015.~~2017. These amounts do not represent generating unit capacity for MISO planning reserve margins.

⁽³⁾Represents Cleco Power’s 30% ownership interest in the capacity of Rodemacher Unit 2, a 523-MW generating unit.

⁽⁴⁾Represents Cleco Power’s 50% ownership interest in the capacity of Dolet Hills, a 650-MW generating unit.

The following table sets forth the amounts of power generated by Cleco Power for the years indicated:


PERIOD	THOUSAND MWh	PERCENT OF TOTAL ENERGY REQUIREMENTS
YEAR			THOUSAND MWh	PERCENT OF TOTAL ENERGY REQUIREMENTS
2017			10,864	91.1	%
2016			12,759	103.6	%
2015	12,564	100.2	12,564	100.2	%
2014	9,858	74.9	9,858	74.9	%
2013	9,736	83.8	9,736	83.8	%
2012	9,143	81.3
2011	10,025	86.5

In ~~December~~ 2013, Cleco Power integrated its generation dispatch and transmission operations with MISO. The amount of power generated by Cleco Power is dictated by the availability of Cleco Power’s generating fleet and the manner in which MISO dispatches each generating unit. Depending on

how generating units are dispatched by MISO, the amount of power generated may be greater than or less than total energy requirements. Generating units are dispatched by referencing

each unit’s economic efficiency as it relates to the overall MISO market. For more information on 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 of Cleco Power.”

Fuel and Purchased Power

Changes in fuel expenses reflect fluctuations in the amount, type, and pricing of fuel used for electric generation; fuel transportation and delivery costs; and deferral of expenses for recovery from customers through the FAC in subsequent months. Changes in purchased power expenses are a result of the quantity and price of economic power purchased from the



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

MISO market. These quantity changes can be affected by Cleco plant outages and plant performance. For a discussion of certain risks associated with changes in fuel costs and their impact on utility customers, see Item 1A, “Risk Factors — ~~LPSC Audits”~~Transmission Constraints” and “— ~~Transmission Constraints.~~LPSC Audits.”



CLECO
CLECO POWER		2017 FORM 10-K

The following table sets forth the percentages of power generated from various fuels at Cleco Power’s electric generating plants, the cost of fuel used per MWh attributable

to each such fuel, and the weighted average fuel cost per MWh:


			LIGNITE			COAL			NATURAL GAS				BIOMASS	PETROLEUM COKE							LIGNITE				COAL				NATURAL GAS			PETROLEUM COKE				WEIGHTED AVERAGE COST PER MWh
YEAR	COST PER MWh		PERCENT OF GENERATION	COST PER MWh		PERCENT OF GENERATION	COST PER MWh			PERCENT OF GENERATION	COST PER MWh		PERCENT OF GENERATION	COST PER MWh		PERCENT OF GENERATION	WEIGHTED AVERAGE COST PER MWh		COST PER MWh		PERCENT OF GENERATION		COST PER MWh		PERCENT OF GENERATION		COST PER MWh			PERCENT OF GENERATION		COST PER MWh		PERCENT OF GENERATION		WEIGHTED AVERAGE COST PER MWh
2017																			$	44.70	8.9	%	$	24.75	12.4	%	$	27.19		51.3	%	$	22.50	27.4	%	$	27.16
2016																			$	50.39	13.0	%	$	28.13	9.3	%	$	20.84		52.9	%	$	18.77	24.8	%	$	24.86
2015	$	46.87	16.9	$	28.68	9.7	$	21.37		50.6	$	—	—	$	19.80	22.8	$	26.04	$	46.87	16.9	%	$	28.68	9.7	%	$	21.37		50.6	%	$	19.80	22.8	%	$	26.04
2014	$	44.79	14.6	$	27.34	15.6	$	37.00		35.0	$	—	—	$	21.52	34.8	$	31.19	$	44.79	14.6	%	$	27.34	15.6	%	$	37.00		35.0	%	$	21.52	34.8	%	$	31.19
2013	$	42.44	15.6	$	29.42	18.2	$	34.60		34.4	$	—	—	$	21.54	31.8	$	30.72	$	42.44	15.6	%	$	29.42	18.2	%	$	34.60		34.4	%	$	21.54	31.8	%	$	30.72
2012	$	36.36	25.2	$	33.03	17.0	$	27.81		45.8	$	17.74	*	$	23.54	12.0	$	30.37
2011	$	30.99	23.6	$	29.48	15.6	$	46.39		33.8	$	65.06	*	$	31.70	27.0	$	36.12
* Not meaningful

Power Purchases

In ~~December~~ 2013, Cleco Power integrated its generation dispatch and transmission operations with MISO. Consequently, MISO now makes economic and routine dispatch decisions regarding Cleco Power’s generating units. Since joining MISO, power purchases have been made at prevailing market prices, also referred to as LMP, which are highly correlated to natural gas prices. LMP includes a component directly related to congestion on the transmission system. Pricing zones with greater transmission congestion ~~will~~may have a higher LMP. Physical transmission constraints present in the MISO market could increase energy costs within Cleco Power’s pricing ~~zone.~~zones. For information on Cleco Power’s ability to pass on to its customers substantially all of its fuel and purchased power expenses, see “— Regulatory Matters, Industry Developments, and Franchises — Rates.” For information on the cost benefit analysis of Cleco Power’s MISO membership, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Retail Rates of Cleco Power — MISO Cost Benefit Analysis.”

Coal, Petroleum Coke, and Lignite Supply

Cleco Power uses coal for generation at Rodemacher Unit 2. During 2017, Cleco Power ~~has an agreement~~contracted with ~~Peabody~~Cloud Peak Energy, Arch Coal Sales, and Coal Network LLC to provide ~~the majority of~~ Cleco Power’s coal needs at Rodemacher Unit 2, ~~through 2016.~~utilizing short-term spot coal agreements. The coal supply ~~agreement is a~~agreements were fixed-price contract and provided for the full requirements to support Cleco Power’s minimum planned dispatch of Rodemacher Unit 2 for 2015 and provides for partial requirements for 2016. Cleco Power actively manages its inventory levels throughout the year with spot purchases, if necessary.contracts. With respect to transportation of coal, Cleco Power has an agreement with Union Pacific Railroad Company for transportation of coal from Wyoming’s Powder River Basin to Rodemacher Unit ~~2 through~~2. The agreement is for a term of three years and expires on December 31, ~~2016.~~2019. Cleco Power leases ~~231~~200 railcars to transport its coal under two ~~long-term leases, one expiring in~~leases. One lease expires on March ~~2017, under which management is evaluating future options,~~31, 2021, and the ~~other expiring in~~newest lease, which was entered into on April 1, 2017, expires on March ~~2021.~~31, 2020.

The continuous supply of coal may be subject to interruption due to adverse weather conditions or other factors that may disrupt transportation to the plant site. At December 31, ~~2015,~~2017, Cleco Power’s coal inventory at Rodemacher Unit 2 was approximately ~~255,000~~55,000 tons (approximately a ~~106-day~~23-day supply).

Cleco Power uses a combination of petroleum coke and Illinois Basin coal for generation at Madison Unit 3. Petroleum coke is a by-product of the oil refinery process and is not considered a fuel specifically produced for a market; however, ample petroleum coke supplies are produced from refineries each year throughout the world, particularly in the Gulf Coast region. During ~~2015,~~2017, Cleco received its petroleum coke supply

from refineries located along the upper and lower Mississippi ~~River with some spot cargo purchases being delivered from upper Mississippi refineries.~~River. Cleco purchased slightly ~~less~~more than ~~1.2~~one million tons of

petroleum coke during ~~2015, the majority~~2017, all of which ~~was in accordance with existing contracts ranging in terms~~were either an evergreen extension of a previous agreement or a newly negotiated agreement for one ~~to two years~~year ending December 31, ~~2015, and December 31, 2016, respectively.~~2017. All existing contracts have been extended and newly negotiated contracts have been completed for petroleum coke supply in ~~2016. Petroleum coke spot purchases~~2018. The agreements are ~~typically short-term in nature, ranging from one-~~priced according to ~~six-month terms. Each of the agreements is either fixed price spot purchases or priced per~~ the Jacobs Consultancy Petroleum Coke Quarterly Monthly Price Index or the “PACE” Monthly Index.

During ~~2015,~~2017, Cleco purchased approximately ~~305,000~~323,000 tons of Illinois Basin coal. Cleco Power uses Louisiana waterways, such as the Mississippi River and the Red River, to deliver both petroleum coke and Illinois Basin coal to the Madison Unit 3 plant site. The continuous supply of petroleum coke and Illinois Basin coal may be subject to interruption due to adverse weather conditions or other factors that may disrupt transportation to the plant site. Savage Services is Cleco Power’s exclusive transportation coordinator and provider. The amended and restated logistics agreement dated December 28, 2012, with Savage Services ~~continues through~~renews monthly beyond the original expiration date of August 31, 2017. ~~The term~~A new agreement is expected to be completed during the first quarter of this agreement will automatically renew for successive periods of two years each unless written notice is provided by either party at least four months prior to the expiration of the term in effect. The amended agreement contains a provision for early termination with a three month prior written notice upon the occurrence of specified cancellation events. In September 2014, Cleco Power gained the option to purchase any or all of the dedicated barges. Management is evaluating this option. As of December 31, 2015, Cleco Power had not purchased any of the dedicated barges.2018. At December 31, ~~2015,~~2017, Cleco Power’s petroleum coke inventory at Madison Unit 3 was approximately ~~521,000~~452,000 tons and Cleco Power’s Illinois Basin coal inventory at Madison Unit 3 was approximately ~~153,000~~63,000 tons. The total fuel inventory was ~~674,000~~515,000 tons (approximately a ~~135-day~~103-day supply).

Cleco Power uses lignite for generation at the Dolet Hills Power Station. Cleco Power and SWEPCO each own an undivided 50% interest in the other’s leased and owned lignite reserves within the Dolet Hills mine in northwestern Louisiana. Additionally, through Oxbow, which is owned 50% by Cleco Power and 50% by SWEPCO, Cleco Power and SWEPCO control 74 million tons of estimated recoverable lignite reserves also located in northwestern Louisiana. Cleco Power and



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

SWEPCO have entered into a long-term agreement with DHLC for the mining and delivery of lignite reserves at both mines, ~~the operations of~~ which are ~~conducted~~operated by SWEPCO. The Amended Lignite Mining Agreement requires Cleco Power and SWEPCO to purchase the lignite mined and delivered by DHLC at cost plus a specified management fee. The term of this contract runs until all economically mineable lignite has been mined. The reserves from these mines are expected to be sufficient to fuel the Dolet Hills Power Station until at least 2036. At December 31, ~~2015,~~2017, Cleco Power’s investment in Oxbow was ~~$16.8~~$18.2 million. For information regarding deferred mining costs and obligations associated with this mining agreement see, Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 34 — Regulatory Assets and Liabilities — Mining Costs,” Note 1415 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — ~~On-Balance~~Off-Balance Sheet Commitments and



CLECO
CLECO POWER		2017 FORM 10-K

Guarantees,” and “— Long-Term Purchase Obligations.” For more information on Oxbow, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1213 — Variable Interest ~~Entities.~~Entities.”

The continuous supply of lignite may be subject to interruption due to adverse weather conditions or other factors that may disrupt mining operations or transportation to the plant site. At December 31, ~~2015,~~2017, Cleco Power’s lignite inventory at Dolet Hills was approximately ~~300,000~~437,000 tons (approximately a ~~48-day~~70-day supply). Lignite inventory was higher at December 31, 2017, than prior years due to lower plant run-time at Dolet Hills Power Station.

Natural Gas Supply

During ~~2015,~~2017, Cleco Power purchased ~~49.7~~28.0 million MMBtu of natural gas for the generation of electricity. The annual and average per-day quantities of gas purchased by Cleco Power from each supplier are shown in the following table:


NATURAL GAS SUPPLIER	2015 PURCHASES (MMBtu)	AVERAGE AMOUNT PURCHASED PER DAY (MMBtu)	PERCENT OF TOTAL NATURAL GAS USED		2017 PURCHASES (MMBtu)	AVERAGE AMOUNT PURCHASED PER DAY (MMBtu)	PERCENT OF TOTAL NATURAL GAS USED
South Jersey Resources Group	16,262,430	44,555	32.7	%
Anadarko Energy Service Company	8,085,575	22,152	16.3	%
Tenaska Marketing Ventures	5,769,663	15,807	11.6	%	7,774,729	21,301	27.8	%
ENSTOR Energy Services					6,620,134	18,137	23.7	%
DTE Energy Trading, Inc.					5,176,000	14,181	18.5	%
CIMA Energy Ltd					2,150,700	5,892	7.7	%
Shell Energy North America	5,190,717	14,221	10.4	%	1,994,199	5,464	7.1	%
Iberdrola Renewables	4,183,152	11,461	8.4	%
Range Resources-Appalachia, LLC	3,263,850	8,942	6.5	%
BP Energy Company	2,626,100	7,195	5.3	%	1,527,700	4,185	5.5	%
Sequent Energy Management					583,395	1,598	2.1	%
Others	4,354,696	11,931	8.8	%	2,123,506	5,818	7.6	%
Total	49,736,183	136,264	100.0	%	27,950,363	76,576	100.0	%

Cleco Power owns natural gas pipelines and interconnections at all of its generating facilities ~~which~~that allow it to access various natural gas supply markets and maintain a ~~more~~reliable, economical fuel supply for Cleco Power’s customers.

Natural gas was available without interruption throughout ~~2015~~.2017. Cleco Power expects to continue to meet its natural gas requirements with purchases on the spot market through daily, monthly, and seasonal contracts with various natural gas suppliers. However, future supplies to Cleco Power remain vulnerable to disruptions due to weather events and transportation issues. Large industrial users of natural gas, including electric utilities, generally have low priority among gas users in the event pipeline suppliers are forced to curtail deliveries due to inadequate supplies. As a result, prices may increase rapidly in response to temporary supply interruptions. During ~~2015,~~2017, in order to partially address potential natural gas

fuel curtailments and interruptions, Cleco contracted for natural gas firm transportation with several interstate pipelines for a period of one year ending in late ~~2016.~~2018. In order to supply gas to Cleco Power’s generating facilities in the event of an interruption of supply due to events of force majeure and to operationally balance gas supply to the units, gas storage will continue to be used. The storage volume is contracted by paying a capacity reservation charge at a fixed rate. There are also variable charges incurred to withdraw and inject gas from storage. At December 31, ~~2015,~~2017, Cleco Power had ~~1.6~~1.3 million MMBtu of gas in storage. Currently, Cleco Power anticipates that its diverse supply options and gas storage, ~~and alternative fuel capability,~~ combined with its solid-fuel generation resources, are adequate to meet its generation needs during any temporary interruption of natural gas supplies.

Sales

Cleco Power’s ~~2015~~2017 and ~~2014~~2016 system peak demands, which occurred on ~~August 10, 2015,~~July 20, 2017, and August ~~24, 2014,~~2, 2016, were ~~2,700~~2,508 MW and ~~2,612~~2,490 MW, respectively. Sales and system peak demand are affected by weather and are typically highest during the summer air-conditioning season; however, peaks may occur during the winter season as well. In ~~2015,~~2017 and 2016, Cleco Power experienced warmer than normal summer weather conditions and warmer ~~than normal winter weather conditions. In 2014, Cleco Power experienced normal summer weather conditions and cooler~~ than normal winter weather conditions. For information on the effects of future energy sales on Cleco Power’s results of operations, financial ~~position,~~condition, and cash flows, see Item 1A, “Risk Factors — Future Electricity Sales” and “— Weather Sensitivity.” For information on the financial effects of seasonal demand on Cleco Power’s quarterly operating results, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 19 — Miscellaneous Financial Information (Unaudited).”

Reserve margin is the net capacity resources (either owned or purchased) less native load demand, divided by native load demand. Members of MISO submit their forecasted native load demand to MISO each year. During ~~2015~~,2017, Cleco Power’s reserve margin was ~~21.3%~~17.9%, which was above MISO’s unforced planning reserve margin benchmark of ~~7.1%~~7.8.%. During ~~2014~~,2016, Cleco Power’s reserve margin was ~~25.2%~~23.8%, which was above MISO’s unforced planning reserve margin benchmark of ~~7.3%~~7.6%. Cleco Power expects to meet or exceed MISO’s unforced planning reserve margin benchmark of ~~7.6%~~8.4% in ~~2016~~.2018.

Capital Investment Projects

For a discussion of certain Cleco ~~Power’s~~Power major capital investment projects, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — ~~Overview —~~ Cleco Power — ~~MATS,” “— Layfield/Messick Project,” “—~~ Cenla Transmission Expansion Project,” “— ~~Cabot Waste Heat Recovery~~St. Mary Clean Energy Center Project,” “— Terrebonne to Bayou Vista Transmission Project,” “— Coughlin Pipeline Project,” and “— ~~Bayou Vista.”~~

~~Midstream~~

The transfer of Coughlin to Cleco Power occurred on March 15, 2014. As a result of this transfer, the operating activity and operating earnings at Midstream are minimal. The Coughlin transfer changed the structure of Cleco’s internal organization and as a result, Midstream is no longer disclosed as a separate reportable segment. Management determined the retrospective application of this transfer to be quantitatively and qualitatively immaterial when taken as a whole in relation to Cleco Power’s financial statements. As a result, Cleco’s



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

segment reporting disclosures were not retrospectively adjusted to reflect the transfer. At December 31, 2015, Midstream had no employees. For more information on the transfer of Coughlin to Cleco Power, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Coughlin Transfer.START Project.”

Customers

No single customer accounted for 10% or more of Cleco or Cleco Power’s consolidated revenue in ~~2015, 2014,~~2017, 2016, or ~~2013. In 2014,~~2015. Cleco Power ~~added~~has a significant wholesale customer that accounted for ~~9.2%~~9% of Cleco and Cleco Power’s consolidated revenue in ~~2015~~2017, 2016, and ~~averaged 9.2% of Cleco and Cleco Power’s consolidated revenue during the months that it was a customer in 2014.~~2015. For more information regarding Cleco’s sales and revenue, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Capital Expenditures and Financing

For information on Cleco’s capital expenditures, financing, and related matters, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Cash Generation and Cash Requirements — Capital Expenditures.”



REGULATORY MATTERS, INDUSTRY DEVELOPMENTS, AND FRANCHISES

Rates

Cleco Power’s electric operations are subject to the jurisdiction of the LPSC with respect to retail rates, standards of service, accounting, and other matters. Also, Cleco Power is subject to the jurisdiction of FERC with respect to transmission tariffs,



CLECO
CLECO POWER		2017 FORM 10-K

accounting, interconnections with other utilities, reliability, and the transmission of ~~power and reliability.~~power. Periodically, Cleco Power has sought and received from both the LPSC and FERC increases in retail rates and transmission tariffs, respectively, to cover increases in operating costs and costs associated with additions to generation, transmission, and distribution facilities. The rates Cleco Power charges its wholesale customers are subject to FERC’s triennial market power analysis.

Cleco Power’s annual retail earnings are subject to the terms of an FRP established by the LPSC. Prior to July 1, 2014, Cleco Power’s FRP allowed a target ROE of 10.7%, while providing the opportunity to earn up to 11.3%. Additionally, 60.0% of retail earnings between 11.3% and 12.3% and all retail earnings over 12.3% were required to be refunded to customers. In April 2013, Cleco Power filed an application with the LPSC to extend its current FRP and to seek rate recovery of the Coughlin transfer. In June 2014, the LPSC approved Cleco Power’s FRP extension, finalized the rate treatment of Coughlin, and issued the implementing order. Effective July 1, 2014, under the terms of the FRP extension, Cleco Power’s retail rates were adjusted based on a target ROE of 10.0%, while providing the opportunity to earn up to 10.9%. Additionally, 60% of retail earnings between 10.9% and 11.75% and all retail earnings over 11.75% 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. Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds isare ultimately subject to LPSC approval. The capital structure

assumes an equity ratio of 51%. The FRP extension includes a mechanism that allows for the recovery of revenue requirements related to excess amounts of surcredits refunded for storm costs and uncertain tax positions, MISO transition and administration charges, Louisiana state corporate franchise taxes, incremental production operations and maintenance costs, LPSC renewable project costs, and certain capacity costs. It also includes recovery of deferred costs for the previous LPSC fuel audit, biomass pilot project costs, and costs related to filing the FRP extension. The FRP extension also includes a mechanism allowing for recovery of incremental capacity costs above the level included in base rates and allows Cleco Power to request recovery of additional capital project ~~costs during its four-year term.~~costs. Cleco Power will file an application with the LPSC for a new FRP by June 30, 2019, with anticipated new rates being effective on July 1, 2020.

Generally, the cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through the LPSC-established FAC ~~which~~that enables Cleco Power to pass on to its customers substantially all such ~~expenses.~~charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997 in Docket No. U-21497 provides that an audit will be performed at least every other year. In November 2014, the LPSC initiated an audit of Cleco Power’s fuel and purchased power expenses for the years 2009 through 2013. The total amount of fuel expense included in the audit was $1.73 billion. On August 17, 2015, the LPSC Staff issued its audit report which recommended no disallowance of fuel costs. On October 28, 2015, the LPSC approved the audit report. On February 3, 2016, the LPSC initiated an audit of Cleco Power’s fuel and purchased power expenses for the period January 2014 through December 2015. The total amount of fuel expense included in this audit is $582.6 million. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to this audit. If a disallowance of fuel costs is ordered, resulting in a refund, any such refund could have a material adverse effect

For more information on the ~~results of operations, financial condition, or cash flows of~~FAC and the ~~Registrants.~~most recent fuel audit, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

In ~~July~~ 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides for an EAC to recover from customers certain costs of environmental compliance. The costs eligible for recovery are 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 began incurring additional environmental compliance expenses in the second quarter of 2015 for reagents associated with compliance with MATS. These expenses are eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. For more information on ~~MATS,~~the EAC and the most recent environmental audit, see ~~“Environmental Matters~~Part II, Item 8, “Financial Statements and Supplementary Data — ~~Air Quality.~~Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

~~On February 3,~~In April 2016, the LPSC ~~initiated an audit of~~issued Docket No. R-34026 to investigate double leveraging issues for all LPSC-jurisdictional utilities. Also, in April 2016, the LPSC issued Docket No. R-34029 to investigate tax structure issues for all LPSC-jurisdictional utilities.

For more information about amounts accrued and refunded by Cleco Power’s environmental costs for the period November 2010 through December 2015. The total amount of environmental costs included in this audit is $81.2 million, Management is unable to predict or givePower as a ~~reasonable estimate~~result of the ~~possible range of the disallowance, if any, related to this audit. If a disallowance of environmental costs is ordered resulting in a refund, any such refund could have a material adverse effect~~FRP, information on the ~~results of operations, financial condition, or cash flows~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

ofLPSC Staff’s FRP reviews, and information on the ~~Registrants. The most recent EAC audit completed by~~double leveraging and tax dockets, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the ~~LPSC, for the period October 2009 through October 2010, did not result in any refunds to customers.~~Financial Statements — Note 12 — Regulation and Rates — FRP” and “— Other.”

For more information on Cleco Power’s retail and wholesale rates, including Cleco Power’s FRP, see Item 1A, ~~“Risk~~

“Risk Factors — LPSC Audits,” “— Cleco Power’s Rates,” “— Retail Electric Service,” and “— Wholesale Electric Service” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Retail Rates of Cleco Power,” and ~~— “Wholesale~~“— Wholesale Rates of Cleco Power.”

Franchises

Cleco Power operates under nonexclusive franchise rights granted by governmental units, such as municipalities and parishes (counties), and enforced by state law. These franchises are for fixed terms, which vary from 10 years to more than 50 years. Historically, Cleco Power has been substantially successful in the timely renewal of franchises as each neared the end of its term. Cleco Power’s next municipal franchise expires in ~~February 2017.~~July 2021.

Franchise Renewals

Cleco Power renewed the following franchise agreements during ~~2014~~2016 and ~~2015:~~2017:



DATE	CITY/TOWN/VILLAGE	TERM	NUMBER OF CUSTOMERS
May ~~2014~~2016	~~Dry Prong~~Elizabeth	10 years⁽¹⁾	219
July 2016	McNary	30 years	~~255~~89
~~June 2014~~April 2017	~~Mansura~~Slidell	3035 years	~~1,029~~13,823
~~September 2014~~July 2017	~~Marksville~~	~~30 years~~	30
~~October 2014~~	~~Woodworth~~	~~30 years~~	~~750~~
~~December 2014~~	~~Pineville~~	~~30 years~~	~~9,363~~
~~March 2015~~	~~Zwolle~~	~~30 years~~	~~914~~
~~May 2015~~	~~Merryville~~	~~30 years~~	~~454~~
~~June 2015~~	~~Eunice~~Rosepine	33 years	~~5,190~~916
July ~~2015~~2017	~~Converse~~Cheneyville	3033 years	~~233~~356
~~July 2015~~October 2017	~~Madisonville~~ New Llano⁽²⁾	3415 years	~~598~~
~~August 2015~~	~~Pleasant Hill~~	~~30 years~~	~~382~~
~~September 2015~~	~~Noble~~	~~30 years~~	~~108~~
~~September 2015~~	~~Plaucheville~~	~~30 years~~	~~147~~7

⁽¹⁾Effective date May 2018, expiring May 2028

⁽²⁾This new franchise agreement provides Cleco Power the opportunity to compete for future growth opportunities in the town.

Industry Developments

For information on industry developments, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring.”

Wholesale Electric Competition

For a discussion of wholesale electric competition, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Wholesale Electric Markets.”

Retail Electric Competition

For a discussion of retail electric competition, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Retail Electric Markets.”

Legislative and Regulatory Changes and Matters

Various federal and state legislative and regulatory bodies are considering a number of issues that could shape the future of the electric utility industry. Such issues include, among others:

the ability of electric utilities to recover stranded costs,

the role of electric utilities, independent power producers, and competitive bidding in the purchase, construction, and operation of new generating capacity,

the role of electric utilities and independent transmission providers in competitive bidding in the construction of new transmission facilities,



CLECO
CLECO POWER		2017 FORM 10-K

the pricing of transmission service on an electric utility’s transmission system, or the cost of transmission services provided by an RTO/ISO,

FERC’s assessment of market power and a utility’s ability to buy generation assets,

mandatory transmission reliability standards,

~~FERC rulemakings encouraging migration of utility operations to RTOs,~~

NERC’s imposition of additional reliability and cybersecurity standards,

the authority of FERC to grant utilities the power of eminent domain,

increasing requirements for renewable energy sources,

demand response and energy efficiency standards,

comprehensive multi-emissions environmental regulation in the areas of air, water, and waste,

regulation of greenhouse gas emissions,

regulation of the disposal and management of CCRs from coal-fired power plants,

FERC’s increased ability to impose financial penalties, and

the Dodd-Frank Act.

~~Management~~At this time, management is unable ~~at this time,~~ to predict the outcome of such issues or the effects thereof on the results of operations, financial condition, or cash flows of the Registrants.

For information on certain regulatory matters and regulatory accounting 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.”



ENVIRONMENTAL MATTERS

Environmental Quality

Cleco is subject to federal, state, and local laws and regulations governing the protection of the environment. Violations of these laws and regulations may result in substantial fines and penalties. Cleco has obtained the environmental permits necessary for its operations, and management believes Cleco is in compliance in all material respects with these permits, as well as all applicable environmental laws and regulations. Environmental requirements affecting electric power generating facilities are complex, change frequently, and have become more stringent over time as a result of new legislation, administrative actions, and judicial interpretations. Therefore, the capital costs and other expenditures necessary to comply with existing and new environmental requirements are difficult to determine. Cleco Power may request recovery of the costs to comply with certain environmental laws and regulations from its retail customers. If revenue relief were to be approved by the LPSC, then Cleco Power’s retail rates could increase. If the LPSC were to deny Cleco Power’s request to recover all or part of its environmental compliance costs, then Cleco Power would bear



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

those costs directly. Such a decision could negatively impact ~~perhaps significantly,~~ the results of operations, financial condition, or cash flows of the Registrants. Cleco Power’s capital expenditures, including AFUDC, related to environmental compliance were ~~$7.1~~$6.2 million during ~~2015~~2017 and are estimated to be ~~$9.3~~$1.8 million in ~~2016.~~2018.

Air Quality

Air emissions from each of Cleco’s generating units are strictly regulated by the EPA and the LDEQ. The LDEQ has authority over and implements certain air quality programs established by the EPA under the federal CAA, as well as its own air quality

regulations. The LDEQ establishes standards of performance and requires permits for EGUs in Louisiana. All of Cleco’s generating units are subject to these requirements.

The EPA has proposed and adopted rules under the authority of the CAA relevant to the emissions of SO₂ and NO_xfrom Cleco’s generating units. The CAA contains a regional haze program with the goal of returning certain areas of the nation to natural visibility by 2064. States are required to develop regional haze State Implementation Plans (SIP) and revise them every ten years. A SIP must include requirements for the installation of Best Available Retrofit Technology (BART) for applicable EGUs in Louisiana. Because the Louisiana SIP, approved by the EPA, mandates use of existing controls and participation in the Cross State Air Pollution rule as BART, Cleco does not believe the Louisiana SIP will have a material impact on the results of operations, financial condition, or cash flows of the Registrants. The CAA also established the Acid Rain Program to address the effects of acid rain and imposed restrictions on acid rain-causing SO₂ emissions from certain generating units.

The CAA requires these EGUs to possess a regulatory ~~“allowance”~~allowance for each ton of SO₂ emitted beginning in the year 2000. The EPA allocates a set number of allowances to each affected unit based on its historic emissions. ~~As of December 31, 2015,~~ Cleco ~~had sufficient allowances for operations in 2015 and~~ expects to have sufficient allowances for ~~2016~~2018 operations under the Acid Rain Program.

The Acid Rain Program also established emission rate limits on NO_x emissions for certain generating units. Cleco Power is able to achieve compliance with the acid rain permit limits for NO_x at all of its affected facilities.

In July 2011, the EPA finalized a rule titled “Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone” known as CSAPR that would require significant reductions in SO₂ ~~and NO~~_x emissions from EGUs in 28 states, including Louisiana. Under CSAPR, the EPA set total emissions limits for each state, allowing limited interstate trading (and unlimited intrastate trading) of emission allowances among power plants to comply with these limits beginning May 1, 2012. Specifically for Louisiana, CSAPR limited NO_x emissions for the ozone season, which consisted of the months of May through September. After several years of litigation over the rule, in October 2014, the D.C. Circuit Court of Appeals granted the EPA’s request that the court lift the stay on CSAPR. On January 1, 2015, the EPA implemented CSAPR on an interim basis. In May 2015, Cleco began complying with the rule’s requirements for limiting NO_x ~~emissions during annual ozone seasons.~~

On December 3, 2015, the EPA published the proposed CSAPR update for the 2008 ozone NAAQS in the Federal Register. The EPA ~~expects to finalize~~finalized the ~~proposed~~ rule in October 2016, with publication in the ~~summer of 2016.~~Federal Register. The EPA proposed Federal Implementation Plans ~~(FIPs)~~(FIP) that update the existing EGU CSAPR NO_x ~~ozone-season~~ozone season emission budgets and implement the budgets through the existing CSAPR NO_x ozone-season allowance trading program. The ~~proposed~~ FIP ~~requires~~required implementation ~~beginning~~began with the 2017 ozone ~~season, which consists of~~season. Cleco is in compliance with the ~~months of May through September. Public comments on the proposed~~rule. This rule ~~were received by February 1, 2016. Management is currently evaluating the effect of the proposed rule and is~~did not ~~able to predict if the proposed rule will~~ have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

In February 2012, the EPA finalized the MATS ruling that requires affected EGUs to meet ~~specific emissions standards and work practices standards to address hazardous air pollutants. MATS imposes~~ strict emission limits on new and existing coal- and liquid oil-fired EGUs for mercury, acid gases, and non-mercury metallic pollutants. Cleco Power units impacted by the rule ~~include~~included Rodemacher Unit 2, Madison Unit 3, and Dolet Hills. MATS controls equipment including dry sorbent injection for acid gas control, activated carbon injection systems for mercury control, and fabric filters (baghouses) for metal particulate control were installed at Dolet Hills and Rodemacher Unit 2. In addition, activated carbon injection for mercury control was installed, ~~at Madison Unit 3. As a result of the installation of the MATS equipment,~~and Cleco Power’s three EGUs affected by the MATS rule were compliant by the April 16, 2015, deadline. OnIn February 1, 2016, the LPSC approved Cleco Power’s request for authorization to recover the revenue requirements associated with the MATS equipment. ~~Cleco Power began recovery of the revenue requirement associated with the MATS equipment, subject to refund, on July 1, 2015, and as of December 31, 2015, had recovered $7.3 million on the project.~~ As of December 31, ~~2015,~~2017, this project was complete at a cost of $106.2 million. In March 2016, the Sierra Club filed a petition for judicial review in the 19th Judicial District Court, state of Louisiana, requesting that the LPSC’s approval of MATS be vacated. Cleco ~~Power had spent $106.4 million~~believes the LPSC’s approval was neither arbitrary nor capricious and, as such, believes the Sierra Club’s request to be without merit. On January 8, 2018, the Court affirmed the LPSC ruling in the Cleco MATS cost recovery case.

For more information on the project. Cleco Power’s final project cost is expected to be $108.0 million, with the remaining costs being related to post-construction refinements. On June 29, 2015, the U.S. Supreme Court remanded the MATS rule to the D.C. Circuit Court of Appeals. The U.S. Supreme Court held that the EPA had not demonstrated that the promulgationlegal proceedings of the MATS ~~rule was “appropriate~~ruling, see Part II, Item 8, “Financial Statements and ~~necessary” due~~Supplementary Data — Notes to the ~~EPA’s failure to consider costs. On December~~Financial Statements —



CLECO
CLECO POWER		2017 FORM 10-K

Note 15 ~~2015, the D.C. Circuit Court of Appeals remanded the rule to the EPA; however, the D.C. Circuit Court of Appeals did not vacate the rule.~~

~~Greenhouse gases (GHG)~~— Litigation, Other Commitments and ~~their role in climate change have been the focus of extensive study~~Contingencies, and legal action. Fossil fuel-fired EGUs emit a significant amount of GHG in the combustion process. Congress has attempted to craft specific legislation that would reduce emissions of GHG by utilities, industrial facilities, and other manufacturing sectors of the economy. While congressional attempts have not been successful, it is possible that federal GHG legislation may be enacted within the next several years.Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

In the absence of federal legislation, the EPA adopted a series of rules under the CAA that, taken together, regulate GHG emissions from both mobile and stationary sources. As a result, since July 2011, new major stationary sources of GHG emissions and major modifications of existing stationary sources have been required to obtain a permit for their GHG emissions. In its May 2010, Prevention of Significant Deterioration (PSD) and Title V GHG “Tailoring Rule,” the EPA set the threshold for new major sources and major modifications of existing sources of GHG emissions and CO₂ equivalents at 100,000 tons per year and 75,000 tons per year, respectively. The U.S. Supreme Court partially invalidated the Tailoring Rule in June 2014, holding that the EPA does not have the authority to regulate GHG emissions from all sources, but only from sources that would otherwise be subject to PSD permitting based on exceeding the emissions limits for other pollutants. Cleco does not anticipate a modification at any of its existing sources that would trigger PSD and an associated Best Available Control Technology demonstration for GHG.

On August 3, 2015, the EPA released the final guidelines referred to as the CPP. These guidelines provide each state with standards for CO₂ emissions from the state’s utility



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

industry. The EPA derived the limits for each state through a strategy involving a combination of unit efficiency improvements, dispatching away from boilers to combined cycle units, and applying renewable energy. The CPP requires significant reductions of CO₂ emissions. The CPP sets interim and final CO₂ emission goals for each state. The interim emission goals begin in 2022, with final emission goals required by 2030. The states have been asked to finalize state implementation plans by September 6, 2016, or apply for a two-year extension. The rule is currently under review by electric utilities and state regulators. OnIn February 9, 2016, the U.S. Supreme Court issued a stay of the CPP, which will stay in place until the D.C. Circuit Court of Appeals rules on the merits, followed by a U.S. Supreme Court ruling. Until the U.S. Supreme Court issues a ruling and the State of Louisiana releases an implementation plan, management cannot predict what the final standards will entail for Cleco or what controls the EPA and the state of Louisiana may require in a final state plan. However, any new rules that require significant reductions of CO₂ ~~emissions could require potentially significant capital expenditures or modifications or curtailment of operations of certain EGUs to maintain or achieve compliance.~~

OnIn August ~~18,~~ 2015, the EPA released the New Source Performance Standards (NSPS) rules for CO₂ emissions from new, modified, or reconstructed units. The rules set requirements and conditions with respect to CO₂ emission standards for new units and those that are modified or reconstructed. Cleco does not anticipate a modification or reconstruction of its existing sources that would trigger the application of the ~~proposed~~ CO₂ emission limits.

On March 28, 2017, the President signed a broad executive order. Among other measures, the order directed the EPA to review the CPP, the proposed Federal Implementation Plan for the CPP, and the greenhouse gas new source performance standards (GHG NSPS). The executive order also gave the U.S. Department of Justice discretion to request that the U.S. Court of Appeals of the D.C. Circuit stay or otherwise delay the litigation challenging the CPP and the GHG NSPS while the administrative review is underway. On April 28, 2017, the Court began the postponement of the litigation. On October 16, 2017, following a review as directed by the President, the EPA published a proposed rule to repeal the CPP. Whether the EPA will finalize its proposed rule to repeal the CPP or proceed with a rulemaking to replace the CPP with different rules regulating greenhouse gas emissions from existing EGUs remains uncertain. As a result, the CPP rule is not currently in force and the future regulation of greenhouse gas emissions from existing EGUs is uncertain.

Until all directions of the executive order are carried out, management cannot predict what the final standards will entail or what controls the EPA and the state of Louisiana may require of Cleco in a final state implementation plan. However, any new rules that require significant reductions of CO₂ emissions could require significant capital expenditures or curtailment of operations of certain EGUs to achieve compliance.

The enactment of federal or state renewable portfolio standards (RPS) mandating the use of renewable and alternative fuel sources such as wind, solar, biomass, and geothermal energy could result in certain changes in Cleco’s business or its competitive position. These changes could include additional costs for renewable energy credits, alternate compliance payments, or capital expenditures for renewable generation resources. RPS legislation has been enacted in many states, and Congress is considering various bills that would create a national RPS. Cleco continues to evaluate the impacts of potential RPS legislation on its business based on the RPS programs in other states.

~~As part of its periodic re-evaluation of the protectiveness of the NAAQS, the EPA has adopted rules that strengthen the NAAQS for specific criteria pollutants including ozone, NO~~₂~~, and SO~~₂. In 2008, the EPA issued a NAAQS for ozone of 75 ppb. The EPA designated the five-parish area around Baton Rouge as a non-attainment area for ozone under the 2008 NAAQS, which required that Louisiana establish a state implementation plan to bring those areas back into attainment by 2015. The state plan for implementing the 2008 NAAQS did not impact Cleco’s generating units.

On October 1, 2015, the EPA released a final rule to strengthen the 2008 8-hour ozone standard by decreasing the current value of 75 ppb to a value of 70 ppb. However, since the State of Louisiana has not released an implementation plan, Cleco cannot predict what the compliance requirements may be or if the new rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

A revised primary NAAQS for NO₂ promulgated by the EPA took effect in April 2010. The EPA established a new one-hour standard at a level of 100 ppb to supplement the existing

annual standard. In January 2012, the EPA determined that no area in the country was violating the standard. ~~However, the LDEQ expects to operate new monitors at two portions of highways in the Baton Rouge and New Orleans areas.~~ The EPA may redesignate areas based on new data it receives from states. Due to the fact that fossil fuel-fired EGUs are a significant source of NO₂ emissions in the country, a non-attainment designation could result in utilities such as Cleco being required to substantially reduce their NO₂ emissions. However, because the EPA has not yet completed any new designations, Cleco cannot predict the likelihood or potential impacts of such a rule on its generating units at this time.

The EPA revised the NAAQS for SO₂ in June 2010. The new standard is now a one-hour health standard of 75 ppb, designed to reduce short-term exposures to SO₂ ranging from five minutes to 24 hours. An important aspect of the new SO₂ standard is a revised emission monitoring network combined with a new ambient air modeling approach to determine compliance with the new standard. The EPA ~~designated St. Bernard Parish as a non-attainment area. The EPA~~ expects to use monitoring or modeling data developed in the future to confirm the status of areas that currently have no monitoring data. Classification of those areas ~~currently~~ without adequate data will be deferred until adequate data has been developed. ~~In November 2015, the LDEQ notified~~On January 9, 2018, the EPA ~~that DeSoto Parish was in compliance with the NAAQS SO~~₂~~requirement and recommended~~published a ~~designation of attainment. In February 2016, the EPA responded, indicating that it intends~~final rule designating all areas containing Cleco generation as either attainment/unclassifiable or unclassifiable. Therefore, there is no adverse impact to classify a portion of DeSoto Parish as non-attainment. However, the EPA will also be accepting information and comments from the LDEQ and the public to weigh in on its final designation, which is expected by July 2, 2016. Utilities could be required to substantially reduce their SO₂emissions to comply with this NAAQS. However, because the EPA has not yet completed all the area designations, Cleco is unable to determine the likelihood or potential future impacts of this rule on itsCleco’s generating units.

In the past, Cleco Power received notices from the EPA requesting information relating to the Brame Energy Center and the Dolet Hills Power Station. The purpose of the data requests was to determine whether Cleco Power complied with the New Source Review permitting program and NSPS requirements under the CAA in connection with capital expenditures, modifications, or operational changes made at these facilities. Cleco Power has completed its responses to the initial data requests. Cleco Power is unable to predict whether the EPA will take further action as a result of the information provided.

Water Quality

Cleco’s facilities ~~also~~ are subject to federal and state laws and regulations regarding wastewater discharges. Cleco has received, from the EPA and the LDEQ, permits required under the federal Clean Water Act (CWA) for wastewater discharges from its generating stations. Wastewater discharge permits have fixed dates of expiration, and Cleco applies for renewal of these permits within the applicable time periods.

In March 2011, the EPA proposed regulations which would establish standards for cooling water intake structures at existing power plants and other facilities pursuant to Section 316(b) of the CWA. The EPA published its final rule onin August ~~15,~~ 2014. The standards are intended to protect fish and other aquatic wildlife by minimizing capture, both in screens attached to intake structures (impingement mortality), and in the actual



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

intake structures themselves (entrainment mortality). The proposed standards would (1) set a performance standard, dealing with fish impingement mortality or reduce the flow velocity at cooling water intakes to less than 0.5 feet per second and (2) require entrainment standards to be determined on a case-by-case basis by state-delegated permitting authorities. Facilities subject to the proposed standards are required to complete a number of studies within a 45-month period and then comply with the rule as soon as



CLECO
CLECO POWER		2017 FORM 10-K

possible after the next discharge permit renewal, by a date determined by the permitting authorities. Portions of the final rule could apply to a number of Cleco’s fossil fuel steam electric generating stations. Until the required studies are conducted, including technical and economic evaluations of the control options available, and regulatory agency officials have reviewed the studies and made determinations, Cleco remains uncertain as to which technology options or retrofits will be required to be installed on its affected facilities. The costs of required technology options and retrofits may be significant, particularly if closed cycle cooling is required.

The CWA requires the EPA to periodically review and, if appropriate, revise technology-based effluent limitations guidelines for categories of industrial facilities, including power generating facilities. OnIn September ~~30,~~ 2015, the EPA released the revised steam electric effluent limitation guidelines. The rule is focused on reducing the discharge of metals in wastewater from generating facilities to surface waters. On April 12, 2017, the EPA Administrator indicated that it is appropriate and in the public interest to reconsider the rule.

On September 18, 2017, the EPA published a rule postponing for a two year period the earliest compliance dates for some of the wastewater streams that fall under the rule. The EPA intends to conduct a rulemaking to potentially revise certain effluent limitations for those particular wastewater streams. The rule may require costly technological upgrades at Cleco’s facilities, particularly if additional wastewater treatment systems are required to be installed or if waste streams must be eliminated. ~~Management is currently evaluating~~Until the ~~effect of~~EPA finalizes the rule, management cannot predict what the final ~~rule~~standards will entail, what controls the EPA and ~~is not able to predict~~the state of Louisiana may require of Cleco, or if the new rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Solid Waste Disposal

In the course of operations, Cleco’s facilities generate solid and hazardous waste materials requiring eventual disposal. The Solid Waste Division of the LDEQ has adopted a permitting system for the management and disposal of solid waste generated by power stations. Cleco has received all required permits from the LDEQ for the on-site disposal of solid waste from its generating stations.

OnIn April ~~17,~~ 2015, the EPA published a final rule in the

Federal Register for regulating the disposal and management of CCRs from coal-fired power plants. The federal regulation classifies CCRs as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act and allows beneficial use of CCRs with some restrictions. The rule establishes extensive requirements for existing and new CCR landfills and surface impoundments and all lateral expansions consisting of location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements and post closure care, and recordkeeping, notification, and Internet posting requirements. Management is currently evaluating the effect of the final rule requirements and is not able to predict if the rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

~~Prior~~On September 13, 2017, the EPA Administrator indicated that it is appropriate and in the public interest to reconsider the ~~publication~~provisions of ~~this federal regulation,~~ the final CCR rule. However, until the EPA has completed its evaluation of the CCR rule and made a decision on revising the provisions of the final rule,

Cleco cannot determine if the rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power ~~was~~continues to be subject to state regulations pertaining to the disposal of coal ash. As a result, Cleco Power ~~had~~has an ARO for the retirement of certain ash disposal facilities. At December 31, 2015, based on management’s best estimate of the retirement costs related to the CCR ruling, Cleco Power recorded a $1.0 million increase to its ARO for the retirement of certain ash disposal facilities. All costs of the

CCR rule are expected to be recovered from customers in future rates. The actual asset retirement costs related to the CCR rule requirements may vary substantially from the estimates used to record the increased obligation due to the uncertainty about the compliance strategies that will be used and the preliminary nature of available data used to estimate costs. Cleco Power will continue to gather additional data in future periods and will make decisions about compliance strategies and the timing of closure activities. As additional information becomes available and management makes decisions about compliance strategies and the timing of closure activities, Cleco Power will update the ARO balance to reflect these changes in estimates. However, management does not expect any required adjustment to the ARO to have a material effect on the results of operations, financial condition, or cash flows of the Registrants. At December 31, 2017, management’s analysis confirmed that no additional adjustments were needed to update Cleco Power’s ARO balance.

In December 2016, the Water Infrastructure Improvements for the Nation Act (WIIN Act), including the WIIN Act’s provisions regarding CCRs was signed into law. The Act’s CCR provisions allow for implementation of the federal CCR rule through a state-based permit program. However, until the state of Louisiana has evaluated the Act and made a decision on implementing a state-based option, Cleco cannot determine if the rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Cleco produces certain wastes that are classified as hazardous at its electric generating stations and at other locations. Cleco does not treat, store long-term, or dispose of these wastes on-site; therefore, no permits are required. Hazardous wastes produced by Cleco are properly disposed of at permitted hazardous waste disposal sites.

Toxic Substances Control Act (TSCA)

The TSCA directs the EPA to regulate the marketing, disposing, manufacturing, processing, distributing in commerce, and usage of various toxic substances, including PCBs. Cleco operates and may continue to operate equipment containing PCBs under the TSCA. Once the equipment reaches the end of its useful life, the EPA regulates handling and disposing of the equipment and fluids containing PCBs. Within these regulations, handling and disposing is allowed only through facilities approved and permitted by the EPA. Cleco properly disposes of its PCB waste material at TSCA-permitted disposal facilities.

Emergency Planning and Community Right-to-Know Act (EPCRA)

Section 313 of the EPCRA requires certain facilities that manufacture, process, or otherwise use minimum quantities of listed toxic chemicals to file an annual report with the EPA called a Toxic Release Inventory (TRI) report. The TRI report requires industrial facilities to report on approximately 650 substances that the facilities release into the air, water, and land. The TRI report ranks companies based on the amount of



CLECO
CLECO POWER		2017 FORM 10-K

a particular substance they release on a state and parish (county) level. Annual reports are due to the EPA on July 1 following the reporting year-end. Cleco has submitted required TRI reports on its activities, and the TRI rankings are available to the public. The rankings do not result in any federal or state penalties.

Electric and Magnetic Fields (EMFs)

The possibility that exposure to EMFs emanating from electric power lines, household appliances, and other electric devices

may result in adverse health effects and damage to the environment has been a subject of some public attention. Lawsuits alleging that the presence of electric power transmission and distribution lines has an adverse effect on health and/or property values have arisen in several states. Cleco Power is not a party in any lawsuits related to EMFs.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~



ITEM 1A. RISK FACTORS

The following risk factors could have a material adverse effect on results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrants.

~~Agreement and Plan of Merger~~Holding Company

Cleco ~~Partners~~Holdings is a holding company and its ability to meet its debt obligations is dependent on the cash generated by its subsidiaries.

Cleco Holdings is a holding company and conducts its operations primarily through its subsidiaries. Accordingly, Cleco Holdings’ ability to meet its debt obligations is largely dependent upon the cash generated by these subsidiaries. Cleco Holdings’ subsidiaries are separate and distinct entities and have no obligations to pay any amounts due on Cleco Holdings’ debt or to make any funds available for such payment. In addition, Cleco Holdings’ subsidiaries’ ability to make dividend payments or other distributions to Cleco Holdings may be restricted by their obligations to holders of their outstanding securities and to other general business creditors. Substantially all of Cleco’s consolidated assets are held by Cleco Power. Cleco Holdings’ right to receive any assets of any subsidiary, and therefore the right of its creditors to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors. In addition, even if Cleco Holdings were a creditor of any subsidiary, its rights as a creditor would be subordinated to any security interest in the assets of that subsidiary and any indebtedness of the subsidiary senior to that held by Cleco Holdings. Moreover, Cleco Power, Cleco Holdings’ principal subsidiary, is subject to regulation by the LPSC, which may impose limits on the amount of dividends that Cleco Power may pay Cleco Holdings. The Merger Commitments provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit/issuer ratings. As a result, Cleco Power may be prohibited from making distributions to Cleco Holdings.

Purchase and Sale Agreement

Cleco Energy and Cleco may be unable to obtain the required governmental, regulatory and other approvals required to complete the ~~Merger, or such approvals may require~~Purchase and Sale Agreement.

On February 6, 2018, Cleco Energy entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central to ~~comply with material restrictions or conditions.~~

~~Consummation~~acquire all the outstanding membership interests in NRG South Central for approximately $1.0 billion, subject to customary working capital and other adjustments (the NRG Acquisition). The completion of the ~~Merger remains~~NRG Acquisition is subject to ~~the satisfaction or waiver of specified~~certain closing conditions and regulatory approvals, including (i) the ~~absence of any temporary restraining order~~expiration or ~~injunction preventing, prohibiting, restraining, enjoining, or rendering illegal the consummation~~termination of the ~~Merger;~~applicable

waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and (ii) ~~approval from the LPSC; and (iii) other customary closing conditions. On February 24, 2016,~~receipt of required regulatory approvals, including approvals by FERC, the LPSC, ~~denied Cleco Power’s application to approve~~ the ~~Merger. Consequently, LPSC approval required to consummate~~Committee on Foreign Investment in the ~~Merger~~United States, and the Public Utility Commission of Texas. If these conditions and regulatory approvals are not satisfied or waived, the NRG Acquisition may not be ~~obtained~~completed. If the closing of the NRG Acquisition is substantially delayed or does not occur at all, or if the terms of the NRG Acquisition are required to be modified substantially due to regulatory concerns, Cleco may not ~~be obtained on~~realize the proposed terms and schedules as contemplated by the parties, and/or may impose terms, conditions, obligations, or commitments that constitute a “burdensome effect” (as defined in the Merger Agreement). In the event that the LPSC approval includes any such burdensome effect or if anyanticipated benefits of the ~~conditions to the closing are not satisfied prior to the termination date specified~~acquisition fully or at all.

Regulatory Compliance

Cleco operates in ~~the Merger Agreement, Cleco Partners will not be obligated to consummate the Merger. These conditions~~a highly regulated environment and adverse regulatory decisions or changes in applicable regulations could ~~delay or~~ have a material adverse effect on the ~~results~~Registrants’ business or result in significant additional costs.

Cleco’s business is subject to extensive federal, state, and local energy, environmental, and other laws and regulations. The LPSC regulates Cleco’s retail operations and FERC regulates Cleco’s wholesale operations. The construction, planning, and siting of ~~operations, financial condition, or cash flows~~Cleco’s power plants and transmission lines also are subject to the jurisdiction of the ~~Registrants.~~LPSC and FERC. Additional regulatory authorities have jurisdiction over some of Cleco’s operations and construction projects including the EPA, the U.S. Bureau of Land Management, the U.S. Fish and Wildlife Services, the DOE, the U.S. Coast Guard, the U.S. Army Corps of Engineers, the U.S. Department of Homeland Security, the Occupational Safety and Health Administration, the U.S. Department of Transportation, the U.S. Department of Agriculture, the U.S. Bureau of Economic Analysis, the Federal Communications Commission, the LDEQ, the Louisiana Department of Health and Hospitals, the Louisiana Department of Natural Resources, the Louisiana Department of Public Safety, the Louisiana Department of Agriculture, the Louisiana Bureau of Economic Analysis, regional water quality boards, and various local regulatory districts.

Cleco must periodically apply for licenses and permits from these various regulatory authorities and abide by their respective orders. Should Cleco be unsuccessful in obtaining necessary licenses or permits or should these regulatory authorities initiate any investigations or enforcement actions or impose penalties or disallowances on Cleco, Cleco’s business could be adversely affected. Existing regulations may be revised or reinterpreted and new laws and regulations may be adopted or become applicable to Cleco or Cleco’s facilities in a manner that may have a material adverse effect on the Registrants’ business or result in significant additional costs due to Cleco’s need to comply with those requirements.

~~In the event that the Merger Agreement is terminated prior to the completion~~As a result of the Merger, Cleco ~~could incur significant transaction costs that could materially impact its financial performance~~Holdings and ~~results of operations.~~

Cleco ~~will incur significant transaction costs, including legal, accounting, financial advisory, filing, printing, and other costs relating~~Power made Merger Commitments to the ~~Merger. The Merger Agreement provides that upon termination~~LPSC including but



CLECO
CLECO POWER		2017 FORM 10-K

not limited to the extension of Cleco Power’s current FRP for an additional two years, maintaining employee headcount, salaries, and benefits for ten years, and a limitation from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. A report on the status of the Merger ~~Agreement under certain specified circumstances,~~Commitments must be filed annually by October 31 for the 12-month period ended June 30.

In April 2016, the LPSC issued Docket No. R-34026 to investigate the double leveraging issues for all LPSC-jurisdictional utilities whereby double leveraging is utilized to fund a utility’s capital structure, and to consider whether any costs associated with such double leveraging should be included in the rates paid by the utility’s retail ratepayers. Cleco Power has intervened in this proceeding, along with other Louisiana utilities. In April 2016, the LPSC also issued Docket No. R-34029 to investigate the tax structure issues for all LPSC-jurisdictional utilities to consider whether only the state and federal taxes included in a utility’s retail rate will be ~~required~~those that do not exceed the utility’s share of the actual taxes paid to ~~pay~~those federal and state taxing authorities. Cleco ~~Partners~~Power filed a ~~termination fee~~motion to intervene in this proceeding along with other Louisiana utilities. In October 2016, Cleco received the first set of ~~$120.0 million. Any fees due as~~data requests from the LPSC Staff for each of the above mentioned dockets. Cleco has filed responses to the non-confidential requests and is waiting on the completion of a ~~result~~confidentiality agreement to respond to the confidential requests. Cleco is unable to determine if or when the completion of ~~termination~~this confidentiality agreement will occur. If the LPSC were to disallow such costs incurred by the utility to be included in retail rates, such disallowance could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Hedging and Risk Management Activities

Cleco ~~will be~~Power is subject to ~~business uncertainties~~market risk associated with fuel cost hedges and ~~contractual restrictions while~~FTRs.

Annually, Cleco Power receives Auction Revenue Rights, which can be converted to FTRs. FTRs provide a financial hedge to manage the ~~Merger~~risk of congestion cost in the Day-Ahead Energy Market. FTRs represent rights to congestion credits or charges along a path during a given timeframe for a certain MW quantity. Cleco Power may purchase additional FTRs to further hedge its congestion cost risk.

Cleco Power manages its exposure to energy commodity activities by maintaining risk management policies and establishing and enforcing risk limits and risk management procedures. However, these risk limits and risk management procedures cannot eliminate all risk associated with these activities.

Financial derivative reform could increase the liquidity needs and costs of Cleco Power’s commercial trading operations.

In July 2010, Congress enacted the Dodd-Frank Act to reform financial markets. This legislation significantly altered the regulation of over-the-counter (OTC) derivatives, including

commodity swaps that could ~~adversely affect Cleco’s financial results.~~

~~Uncertainty about~~be used by Cleco Power to hedge and mitigate commodities risk. The Dodd-Frank Act increases regulatory oversight of OTC energy derivatives, including (1) requiring standardized OTC derivatives to be traded on registered exchanges regulated by the ~~effects~~Commodity Futures Trading Commission (CFTC), (2) imposing new and potentially higher capital and margin requirements, and (3) authorizing the establishment of ~~the Merger on employees or vendors~~overall volume and ~~others may~~position limits. These requirements could cause Cleco Power’s future OTC transactions to be more costly and have an adverse effect on ~~Cleco. These uncertainties may impair Cleco’s~~its liquidity due to additional capital requirements. In addition, by standardizing OTC products, these reforms could limit the effectiveness of Cleco Power’s hedging programs because Cleco Power would have less ability to tailor OTC derivatives to match the precise risk it is seeking to protect. The law gives the CFTC authority to exempt end users of energy commodities. Cleco Power would qualify for the end-user exemption which reduces but does not eliminate the applicability of these measures. Management continues to monitor this law and its subsidiaries’ ability to attract, retain, and motivate key personnel and could cause vendors and others that deal with Cleco to seek to change existing business relationships. Employee retention and recruitment may be particularly challenging prior topossible impacts on the completion of the Merger, as current and prospective employees may experience uncertainty about their future roles with Cleco. If key employees depart or fail to accept employment with Cleco or its subsidiaries due to the uncertainty and difficulty of integration or a desire not to remain

~~with Cleco, Cleco’s results of operations, financial condition, or cash flows could be adversely affected.~~

Cleco expects that matters relating to the Merger, and if the Merger closes, integration-related issues, will place a significant burden on management, employees, and internal resources, which could otherwise have been devoted to other business opportunities. The diversion of management’s time on Merger-related issues could affect Cleco’s financial results. In addition, the Merger Agreement restricts Cleco and its subsidiaries, without Cleco Partners’ consent, from taking specified actions until the Merger occurs or the Merger Agreement is terminated, including, without limitation: (i) making certain acquisitions and dispositions of assets or property; (ii) exceeding certain capital spending limits; (iii) incurring certain forms of indebtedness; (iv) issuing equity or equity equivalents; and (v) increasing the dividend rates on its stock. These restrictions may prevent Cleco from pursuing otherwise attractive business opportunities or making other changes to its business prior to consummation of the Merger or termination of the Merger Agreement.Registrants.

~~Cleco is subject to litigation related to the proposed Merger.~~

In connection with the proposed Merger, four actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and three actions were filed in the Civil District Court for Orleans Parish, Louisiana. One of the actions filed in Rapides Parish has been dismissed. The remaining three actions in Rapides Parish have been consolidated. The three actions in Orleans Parish have been transferred to Rapides Parish and consolidated with the other litigation in Rapides Parish. The actions were filed against Cleco Corporation and, among others, Cleco Partners, Merger Sub, and members of the Board of Directors of Cleco Corporation. The petitions generally allege, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the Merger at a price that allegedly undervalues Cleco, and failing to disclose material information about the Merger. The petitions also allege that Cleco Partners, Cleco, and Merger Sub and, in some cases, certain of the investors in Cleco Partners, either aided and abetted or entered into a civil conspiracy to advance those supposed breaches of duty. The petitions seek various remedies, including an injunction against the Merger and monetary damages, including attorneys’ fees and expenses.

It is possible that additional claims beyond those that have already been filed will be brought by the current plaintiffs or by others in an effort to enjoin the Merger or seek monetary relief from Cleco. Cleco is not able to predict the outcome of these actions, or others, nor can Cleco predict the amount of time and expense that will be required to resolve the actions. An unfavorable resolution of any such litigation surrounding the proposed Merger could delay or prevent the consummation of the Merger. In addition, the cost to Cleco of defending the actions, even if resolved in Cleco’s favor, could be substantial. Such actions could also divert the attention of Cleco’s management and resources from day-to-day operations.Transmission Constraints



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

~~Failure to complete the Merger could negatively impact the market price of Cleco Corporation’s common stock.~~

Failure to complete the Merger may negatively impact the future trading price of Cleco Corporation’s common stock. If the Merger is not completed, the market price of Cleco Corporation’s common stock may decline to the extent that the current market price of Cleco Corporation’s stock reflects a market assumption that the Merger will be completed. Additionally, if the Merger is not completed, Cleco will have incurred significant costs, as well as the diversion of the time and attention of management. A failure to complete the Merger may also result in negative publicity, litigation against Cleco or its directors and officers, and a negative impression of Cleco in the investment community. The occurrence of any of these events individually or in combinationTransmission constraints could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Energy prices in the MISO market are based on LMP, which includes a component directly related to congestion on the transmission system. Pricing zones with greater transmission congestion may have a higher LMP. Physical transmission constraints present in the MISO market could increase energy costs within Cleco Power’s pricing zones. Cleco Power purchases FTRs to mitigate the transmission congestion price risks. However, insufficient FTR allocations or ~~stock price~~increased FTR costs due to negative congestion flows may result in an unexpected increase in energy costs to Cleco Power’s customers. If a disallowance of ~~Cleco Corporation.~~additional fuel costs associated with congestion 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.

LPSC Audits

The LPSC conducts fuel audits that could result in Cleco Power making substantial refunds of previously recorded revenue.

Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, ~~which~~that enables Cleco Power to pass on to its customers substantially all such ~~expenses.~~charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997, in Docket No. U-21497 provides that an audit will be performed at least every other year.

~~On February 3,~~Cleco Power has FAC filings for 2016 ~~the LPSC initiated an audit of Cleco Power’s fuel~~ and ~~purchased power expenses for the period January 2014 through December 2015. The total amount of fuel expense included in this audit is $582.6 million.~~thereafter that are subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to ~~this audit.~~these filings. If a disallowance of fuel costs 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.



CLECO
CLECO POWER		2017 FORM 10-K

The LPSC conducts audits of environmental costs that could result in Cleco Power making substantial refunds of previously recorded revenue.

In ~~July~~ 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides for an EAC to recover from customers certain costs of environmental compliance. The costs eligible for recovery are 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 began incurring additional environmental compliance expenses beginning in ~~the second quarter of~~ 2015 for reagents associated with compliance with MATS. These expenses are eligible for recovery through Cleco Power’s EAC and subject to periodic review by the LPSC.

~~On February 3,~~Cleco Power has EAC filings for 2016 ~~the LPSC initiated an audit of Cleco Power’s environmental costs for the period November 2010 through December 2015. The total amount of environmental costs included in this audit is $81.2 million.~~and thereafter that are subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to ~~this audit.~~these filings. If a

disallowance of environmental costs 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.~~

~~Transmission Constraints~~

~~Transmission constraints could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

Energy prices in the MISO market are based on LMP, which includes a component directly related to power flow congestion on the transmission system. Pricing zones with congested power delivery will typically incur a higher LMP. Physical transmission constraints present in the MISO market could increase energy costs within Cleco Power’s pricing zones. Cleco Power purchases FTRs to mitigate the transmission congestion price risks. However, insufficient FTR allocations or increased FTR costs due to negative congestion flows may result in an unexpected increase in energy costs to Cleco Power’s customers. If a disallowance of additional fuel costs associated with congestion 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.

~~Hedging and Risk Management Activities~~

Cleco Power is subject to market risk associated with fuel cost hedges relating to FTRs and any future open natural gas contracts. Cleco has risk management policies that cannot eliminate all risk involved in its energy commodity activities.

Annually, Cleco Power receives Auction Revenue Rights, which can be converted to FTRs. FTRs provide a financial hedge to manage the risk of congestion cost in the Day-Ahead Energy Market. FTRs represent rights to congestion credits or charges along a path during a given time frame for a certain MW quantity. Cleco may purchase additional FTRs to further hedge its congestion cost risk.

Cleco Power may enter into fuel cost hedge positions to mitigate the volatility in fuel costs passed through to its retail customers. When these positions close, actual gains or losses are deferred and included in the FAC in the month the physical contract settles. Recovery of any of these FAC costs is subject to, and may be disallowed as part of, a prudency review or a periodic fuel audit conducted by the LPSC. In June 2015, the LPSC approved a long-term natural gas hedging pilot program that requires Cleco Power to establish a proposal for a long-term natural gas procurement program that will be designed to provide gas price stability for a minimum of five years.

~~Financial derivatives reforms could increase the liquidity needs and costs of Cleco Power’s commercial trading operations.~~

In July 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) to reform financial markets. This legislation significantly altered the regulation of over-the-counter (OTC) derivatives, including commodity swaps that could be used by Cleco



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Power to hedge and mitigate commodities risk. The Dodd-Frank Act increases regulatory oversight of OTC energy derivatives, including (1) requiring standardized OTC derivatives to be traded on registered exchanges regulated by the Commodity Futures Trading Commission (CFTC), (2) imposing new and potentially higher capital and margin requirements, and (3) authorizing the establishment of overall volume and position limits. These requirements could cause Cleco Power’s future OTC transactions to be more costly and have an adverse effect on its liquidity due to additional capital requirements. In addition, by standardizing OTC products, these reforms could limit the effectiveness of Cleco Power’s hedging programs because Cleco Power would have less ability to tailor OTC derivatives to match the precise risk it is seeking to protect. The law gives the CFTC authority to exempt end users of energy commodities. The end user exemption reduces but does not eliminate the applicability of these measures. Cleco Power would qualify for the end user exemption which reduces but does not eliminate the applicability of these measures. Management continues to review the final rules that have been issued or will be issued under the Dodd-Frank Act and will continue to monitor this law and its possible impacts on the Registrants.

Commodity Prices

Cleco Power is subject to the fluctuation in the market prices of fuel or reagent commodities which may increase the cost of producing power.

Cleco Power purchases natural gas, petroleum coke, lignite, coal, and limestone under ~~long-term~~fuel supply contracts and on the spot market. Historically, the markets for natural gas and petroleum coke have been volatile and are likely to remain volatile in the future. Cleco Power’s retail and wholesale rates include an FAC that enables it to adjust rates for monthly fluctuations in the cost of fuel and purchased power. However, recovery of any of these LPSC FAC costs is subject to, and may be disallowed as part of, a prudency review or a periodic fuel audit conducted by the LPSC.

Global Economic Environment and Uncertainty; Access to Capital

Adverse capital market performance could result in reductions in the fair value of benefit plan assets and increase the Registrant’s liabilities related to such plans. Sustained declines in the fair value of the plan’s assets or sustained increases in plan liabilities could result in significant increases in funding requirements, which could adversely affect the Registrant’s liquidity and results of operations.

Performance of the capital markets affects the value of assets that are held in trust to satisfy future obligations under Cleco’s defined benefit pension plan. Sustained adverse market performance could result in lower rates of return for these assets than projected by Cleco and could increase Cleco’s funding requirements related to the pension plan. Additionally, changes in interest rates affect the present value of Cleco’s liabilities under the pension plan. As interest rates decrease, Cleco’s liabilities increase, potentially requiring additional funding. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions.

Inflation

Annual inflation rates, as measured by the U.S. Consumer

Price Index, have averaged ~~1.07%~~1% during the three years ended December 31, ~~2015.~~2017. Cleco believes inflation at this

level does not materially affect its results of operations or financial condition. However, 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.

Disruptions in the capital and credit markets may adversely affect the Registrants’ cost of capital and ability to meet liquidity needs or access capital to operate and grow the business.

The Registrants’ business is capital intensive and dependent upon ~~their~~its respective ability to access capital at reasonable rates and other terms. The Registrants’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster or when there are spikes in the price for natural gas and other commodities. The occurrence of one or more contingencies, including a delay in regulatory recovery of fuel, purchased power, or storm restoration ~~costs,~~costs; higher than expected required pension ~~contributions,~~contributions; an acceleration of payments or decreased credit ~~lines,~~lines; less cash flow from operations than ~~expected,~~expected; or other unexpected events, could cause the financing needs of the Registrants to increase.

~~The Merger Agreement restricts Cleco and its subsidiaries from incurring certain forms of indebtedness without Cleco Partners’ consent. In addition, events~~Events beyond the Registrants’ control, such as political uncertainty in the U.S. (including the ongoing debates related to the U.S. federal government budget and debt ceiling), volatility and disruption in global capital and credit markets, may create uncertainty that could increase their cost of capital or impair their ability to access the capital markets, including the ability to draw on their respective bank credit facilities. The Registrants are unable to predict the degree of success they will have in renewing or replacing their respective credit facilities as they come up for renewal. Moreover, the size, terms, and covenants of any new credit facilities may not be comparable to, and may be more restrictive than, existing facilities. If the Registrants are unable to access the credit and capital markets on terms that are reasonable, they may have to delay raising capital, issue shorter-term securities, and/or bear an unfavorable cost of capital, which, in turn, could have a material adverse effect on the Registrants’ ability to fund capital expenditures or to service debt, or on the Registrants’ flexibility to react to changing economic and business conditions.

Future Electricity Sales

Cleco Power’s future electricity sales and corresponding base revenue and cash flows could be adversely affected by general economic conditions.

General economic conditions can negatively impact the businesses of Cleco Power’s residential, industrial, and commercial customers resulting in decreased power consumption, which causes a corresponding decrease in base revenue. Reduced production or the shutdown of any of these customers’ facilities could substantially reduce Cleco Power’s base revenue.



CLECO
CLECO POWER		2017 FORM 10-K

Energy conservation, energy efficiency efforts, and other factors that reduce energy demand could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Regulatory and legislative bodies have proposed or introduced requirements and incentives to reduce peak energy



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

consumption. Conservation and energy efficiency programs are designed to reduce energy demand. Future electricity sales could be impacted by customers switching to alternative sources of energy, such as solar and wind, on-site power generation, and retail customers purchasing less electricity due to increased conservation efforts or expanded energy efficiency measures. Declining usage could result in an under-recovery of fixed costs at Cleco Power’s rate regulated business. Macroeconomic factors resulting in low economic growth or contraction within Cleco’s service territories could also reduce energy demand. An increase in energy conservation, energy efficiency efforts, and other efforts that reduce energy demand could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power’s Generation, Transmission, and Distribution Facilities

Cleco Power’s generation facilities are susceptible to unplanned outages, significant maintenance requirements, and interruption of fuel deliveries.

The operation of power generation facilities involves many risks, including breakdown or failure of equipment, fuel supply interruption, and performance below expected levels of output or efficiency. Approximately 25% of Cleco Power’s net capacity was constructed before 1980. Aging equipment, even if maintained in accordance with good engineering practices, may require significant expenditures to operate at peak efficiency, or to comply with environmental permits. Newer equipment can also be subject to unexpected failures. Accordingly, in the event of such failures, Cleco Power may incur more frequent unplanned outages, higher than anticipated operating and maintenance expenditures, higher replacement costs of purchased power, increased fuel costs, MISO related costs, and the loss of potential revenue related to competitive opportunities. The costs of such repairs, maintenance, and purchased power may not be fully recoverable and could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power’s generating facilities are fueled primarily by coal, natural gas, petroleum coke, and lignite. The deliverability of these fuel sources may be constrained due to such factors as higher demand, decreased regional supply, production shortages, weather-related disturbances, railroad constraints, waterway levels, labor strikes, or lack of transportation capacity. If the suppliers are unable to deliver the contracted volume of fuel and associated inventories are depleted, Cleco Power may be unable to operate generating units which may cause Cleco Power to operate at higher overall energy costs, which would increase the cost to customers. Fuel and MISO procured/settled energy expenses, which are recovered from customers through the FAC, are subject to refund until either a prudency review or a periodic fuel audit is conducted by the LPSC.

Competition for access to other natural resources, particularly oil and natural gas, could negatively impact Cleco Power’s ability to access its lignite reserves. Placement of drilling rigs and pipelines for developing oil and gas reserves

can preclude access to lignite in the same areas, making the right of first access critical with respect to extracting lignite. Additionally, Cleco Power could be indirectly liable for the impacts of other companies’ activities on lands that have been mined and reclaimed by Cleco Power. Access to lignite

reserves or the liability for impacts on reclaimed lands may not be recoverable and could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The construction of, and capital improvements to, power generation and transmission and distribution facilities involve substantial risks. Should construction or capital improvement efforts be significantly more expensive than planned, the financial condition, results of operations, or liquidity of Cleco Power could be materially affected.

Cleco Power’s ability to complete construction of capital improvements to power generation and transmission and distribution facilities in a timely manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, engineering and project execution risk and escalating costs for materials, labor, and environmental compliance. Delays in obtaining permits, shortages in materials and qualified labor, suppliers and contractors not performing as set forth under their contracts, changes in the scope and timing of projects, ~~poor quality initial~~inaccurate cost estimates, the inability to raise capital on favorable terms, changes in commodity prices affecting revenue, fuel or material costs, changes in the economy, changes in laws or regulations, including environmental compliance requirements, and other events beyond the control of Cleco Power may materially affect the schedule and cost of these projects. If these projects are significantly delayed or become subject to cost overruns or cancellation, Cleco Power could incur additional costs including termination payments, face increased risk of potential write-off of the investment in the project, or may not be able to recover such costs. Furthermore, failure to maintain various levels of generating unit availability or transmission and distribution reliability may result in various disallowances of Cleco Power’s investments.

Cleco Credit Ratings

A downgrade in Cleco Holdings’ or Cleco Power’s credit ratings could result in an increase in their respective borrowing costs, a reduced pool of potential investors and funding sources, and a restriction could be placed on Cleco Power making distributions to Cleco Holdings.

Neither Cleco Holdings nor Cleco Power can assure that its current debt ratings will remain in effect for any given period of time or that one or more of its debt ratings will not be lowered or withdrawn entirely by a rating agency. If S&P or Moody’s were to downgrade Cleco Holdings’ or Cleco Power’s long-term ratings, particularly below investment grade, the value of their debt securities would likely be adversely affected. Downgrades of either Cleco Holdings’ or Cleco Power’s credit ratings would result in additional fees and higher interest rates for borrowings under their respective credit facilities. In addition, Cleco Holdings or Cleco Power, as the case may be, would likely be required to pay higher interest rates in future debt financings, may be subject to more onerous debt covenants, and their pool of potential investors and funding sources could decrease. In addition, the Merger Commitments



CLECO
CLECO POWER		2017 FORM 10-K

provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit/issuer ratings. As a result, Cleco Power may be prohibited from making distributions to Cleco Holdings.

MISO

MISO market operations could have a material adverse effect on

the results of operations, generation revenues, energy supply costs, financial condition, or cash flows of the Registrants.

Cleco Power is a member of the MISO market region referred to as “MISO South,” which encompasses parts of Arkansas, Louisiana, Mississippi, and Texas. Dispatch of generation resources and generation volumes to the market is determined by MISO. Costs in the MISO South region are heavily influenced by commodity fuel prices, transmission congestion, dispatch of the generating assets owned not only by Cleco Power, but by all market participants in the MISO South region, and the overall demand and generation availability in the region.

MISO evaluates forced outage rates to assess generating unit capacity for planning reserve margins. If Cleco Power is subject to ~~an inordinate~~a significant amount of forced outages, Cleco Power may not possess sufficient planning reserves to serve its needs and could be forced to purchase capacity from the MISO resource adequacy auction. The costs of such capacity may not be recoverable and could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. Using MISO’s unforced capacity method for determining generating unit capacity, Cleco Power’s fleet provided for ~~536MW~~251 MW of capacity in excess of its peak, coincident to MISO’s peak, in ~~2015.~~2017.

Technology and Terrorism Threats

The operational and information technology systems on which Cleco relies to conduct its business and serve customers could fail to function properly due to technological problems, cyber attacks, physical attacks on Cleco’s assets, acts of terrorism, severe weather, solar events, electromagnetic events, natural disasters, the age and condition of information technology assets, human error, or other reasons that could disrupt Cleco’s operations and cause Cleco to incur unanticipated losses and expense.

The operation of Cleco’s extensive electrical systems relies on evolving operational and information technology systems and network infrastructures that are becoming extremely complex as new technologies and systems are implemented to more safely and reliably deliver electric services. Cleco’s business is highly dependent on its ability to process and monitor, on a real-time daily basis, a large number of tasks and transactions, many of which are highly complex. The failure of Cleco’s operational and information technology systems and networks due to a physical or cyber attack, or other event would significantly disrupt operations; cause harm to the public or employees; result in outages or reduced generating output; result in damage to Cleco’s assets or operations, or those of third parties; and subject Cleco to claims by customers or third parties, any of which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco’s systems, including its financial information, operational systems, advanced metering, and billing systems, require constant maintenance, monitoring, security patches, modification or configuration of systems, and update and

19upgrade of systems, which can be costly and increase the risk of errors and malfunction. Any disruptions or deficiencies in existing systems, or disruptions, delays, or deficiencies in the modification or implementation of new systems, could result in increased costs, the inability to track or collect revenues, the diversion of management’s and employees’ attention and resources, and could adversely affect the effectiveness of Cleco’s control environment, and/or its ability to accurately or timely file required regulatory reports.

Despite implementation of security and mitigation measures, all of Cleco’s technology systems are vulnerable to inoperability and/or impaired operations or failures due to cyber and/or physical attacks on the facilities and equipment needed to operate the technology systems, viruses, human errors, acts of war or terrorism, and other events. If Cleco’s information technology systems or network infrastructure were to fail, Cleco might be unable to fulfill critical business functions and serve its customers, which could have a material adverse effect on the financial conditions, results of operations, or cash flows of the Registrants.

In addition, in the ordinary course of its business, Cleco collects and retains sensitive information including personal identification information about customers and employees, customer energy usage, and other confidential information. The theft, damage, or improper disclosure of sensitive electronic data could subject Cleco to both penalties for violation of applicable privacy laws and claims from third parties, and/or harm Cleco’s reputation.

Taxes

Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The Registrants make judgments regarding the utilization of existing income tax credits and the potential tax effects of various financial transactions and results of operations to estimate their obligations to taxing authorities. Tax obligations include income, franchise, real estate, sales and use, and employment-related taxes. These judgments include reserves for potential adverse outcomes regarding tax positions that have been taken. Changes in federal, state, or local tax laws, adverse tax audit results, or adverse tax rulings on positions taken by the Registrants could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Changes in taxation due to uncertain effects of the TCJA could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The budget reconciliation act commonly referred to as the TCJA was signed into law on December 22, 2017, and is expected to have an impact on the Registrants’ effective income tax rate and net income as reported under generally accepted accounting principles both in the first fiscal quarter of 2018 and subsequent reporting periods to which the TCJA is effective. The Registrants are assessing the regulatory treatment of the TCJA, which could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

Reliability and Infrastructure Protection Standards Compliance

Cleco is subject to mandatory reliability and critical infrastructure protection standards. Fines and civil penalties are imposed on those who fail to comply with these standards.

NERC serves as the ERO with authority to establish and enforce mandatory reliability and infrastructure protection standards, subject to FERC approval, for users of the nation’s transmission system. FERC enforces compliance with these standards. New standards are being developed and existing standards are continuously being modified.

As these standards continue to be adopted and modified, they may impose additional compliance requirements on Cleco Power, which may result in an increase in capital expenditures and operating expenses. Failure to comply with these standards can result in the imposition of material fines and civil penalties. Furthermore, failure to maintain various levels of generating unit availability or transmission and distribution reliability may result in various disallowances of Cleco Power’s investments.

The SPP RE conducts a NERC Reliability Standards audit and a NERC Critical Infrastructure Protection audit every three years. ~~Cleco’s~~On July 23, 2017, the SPP RTO’s board of directors and members committee voted to authorize the SPP’s President and CEO to terminate the delegation agreement between the SPP and NERC, which will effectively dissolve the SPP RE by the end of 2018. On February 8, 2018, NERC approved Cleco Power’s proposed RE. The selection must now be approved by FERC. Cleco Power anticipates the transfer to a new RE to be complete by January 2019.

Cleco Power’s next NERC Reliability Standards audit is scheduled to begin in ~~April 2016.~~2019 and the next NERC Critical Infrastructure Protection audit is scheduled to begin in 2020. Management is unable to predict the outcome of ~~this audit,~~these audits, or 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.

~~Environmental Compliance~~Cleco Credit Ratings

~~Cleco’s~~A downgrade in Cleco Holdings’ or Cleco Power’s credit ratings could result in an increase in their respective borrowing costs, a reduced pool of ~~compliance with environmental laws~~potential investors and ~~regulations~~funding sources, and a restriction could be placed on Cleco Power making distributions to Cleco Holdings.



CLECO
CLECO POWER		2017 FORM 10-K

MISO

MISO market operations could have a material adverse effect on the results of operations, generation revenues, energy supply costs, financial condition, or cash flows of the Registrants.

Cleco Power is a member of the MISO market region referred to as “MISO South,” which encompasses parts of Arkansas, Louisiana, Mississippi, and Texas. Dispatch of generation resources and generation volumes to the market is determined by MISO. Costs in the MISO South region are ~~significant.~~heavily influenced by commodity fuel prices, transmission congestion, dispatch of the generating assets owned not only by Cleco Power, but by all market participants in the MISO South region, and the overall demand and generation availability in the region.

MISO evaluates forced outage rates to assess generating unit capacity for planning reserve margins. If Cleco Power is subject to a significant amount of forced outages, Cleco Power may not possess sufficient planning reserves to serve its needs and could be forced to purchase capacity from the MISO resource adequacy auction. The costs of ~~compliance with new environmental laws and regulations, as well as the incurrence of incremental environmental liabilities, could~~such capacity may not be ~~significant to the Registrants.~~

Cleco is subject to extensive environmental oversight by federal, state, and local authorities and is required to comply with numerous environmental laws and regulations related to air quality, water quality, waste management, natural resources, and health and safety. Cleco also is required to obtain and comply with numerous governmental permits in operating its facilities. Existing environmental laws, regulations, and permits could be revised or reinterpreted, and new laws and regulations could be adopted or become applicable to Cleco. For example, the EPA has issued the CPP to reduce CO₂ ~~emissions from existing EGUs by 32% from 2005 levels of CO~~₂ ~~emissions. These changes in environmental regulations governing power plant emissions will be effective beginning 2022, with final emission goals required by 2030,~~recoverable and could render some of Cleco’s EGUs uneconomical to maintain or operate and could prompt early retirement of certain generation units. Any legal obligation that would require Cleco to substantially reduce its emissions beyond present levels could require extensive mitigation efforts and could raise uncertainty about the future viability of some fossil fuels as fuel for new and existing electric generating facilities. Cleco will evaluate potential solutions to comply with such regulations and monitor rulemaking and any legal matters impacting the proposed regulations. Cleco may incur significant capital expenditures or additional operating costs to comply with these revisions, reinterpretations, and new requirements. If Cleco fails to comply, it could be subject to civil or criminal liabilities and fines or may be forced to shut down or reduce production from its facilities. Cleco cannot predict the timing or the outcome of pending or future legislative and rulemaking proposals.

~~Cleco Power may request from its customers recovery of its costs to comply with new environmental laws and~~

~~regulations. If the LPSC were to deny Cleco Power’s request to recover all or part of its environmental compliance costs, there could be~~have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. Using MISO’s unforced capacity method for determining generating unit capacity, Cleco Power’s fleet provided for 251 MW of capacity in excess of its peak, coincident to MISO’s peak, in 2017.

~~Regulatory Compliance~~

~~Cleco operates in a highly regulated environment~~Technology and ~~adverse regulatory decisions or changes in applicable regulations could have a material adverse effect on the Registrants’ business or result in significant additional costs.~~

Cleco’s business is subject to extensive federal, state, and local energy, environmental, and other laws and regulations. The LPSC regulates Cleco’s retail operations and FERC regulates Cleco’s wholesale operations. The construction, planning, and siting of Cleco’s power plants and transmission lines also are subject to the jurisdiction of the LPSC and FERC. Additional regulatory authorities have jurisdiction over some of Cleco’s operations and construction projects including the EPA, the U.S. Bureau of Land Management, the U.S. Fish and Wildlife Services, the DOE, the U.S. Army Corps of Engineers, the U.S. Department of Homeland Security, the Occupational Safety and Health Administration, the U.S. Department of Transportation, the Federal Communications Commission, the LDEQ, the Louisiana Department of Health and Hospitals, the Louisiana Department of Natural Resources, the Louisiana Department of Public Safety, regional water quality boards, and various local regulatory districts.

Cleco must periodically apply for licenses and permits from these various regulatory authorities and abide by their respective orders. Should Cleco be unsuccessful in obtaining necessary licenses or permits or should these regulatory authorities initiate any investigations or enforcement actions or impose penalties or disallowances on Cleco, Cleco’s business could be adversely affected. Existing regulations may be revised or reinterpreted and new laws and regulations may be adopted or become applicable to Cleco or Cleco’s facilities in a manner that may have a detrimental effect on the Registrants’ business or result in significant additional costs due to Cleco’s need to comply with those requirements.

~~Cleco Power’s Rates~~Terrorism Threats

The ~~LPSC~~operational and ~~FERC regulate~~information technology systems on which Cleco relies to conduct its business and serve customers could fail to function properly due to technological problems, cyber attacks, physical attacks on Cleco’s assets, acts of terrorism, severe weather, solar events, electromagnetic events, natural disasters, the ~~retail rates~~age and ~~transmission tariffs, respectively,~~condition of information technology assets, human error, or other reasons that could disrupt Cleco’s operations and cause Cleco ~~Power can charge its customers.~~to incur unanticipated losses and expense.

~~Cleco Power’s ongoing financial viability depends~~The operation of Cleco’s extensive electrical systems relies on evolving operational and information technology systems and network infrastructures that are becoming extremely complex as new technologies and systems are implemented to more safely and reliably deliver electric services. Cleco’s business is highly dependent on its ability to ~~recover its costs in~~process and monitor, on a ~~timely manner from its LPSC-jurisdictional customers through LPSC-approved rates~~real-time daily basis, a large number of tasks and ~~its ability~~transactions, many of which are highly complex. The failure of Cleco’s operational and information technology systems and networks due to recover its FERC-authorized revenue requirements from its FERC-jurisdictional transmission customers. Cleco Power’s financial viability also depends on its ability to recover in rates an adequate return on capital, including long-term debt and equity. If Cleco Power is unable to recover any material amount of its costs in rates in a ~~timely manner~~physical or ~~recover an adequate return on capital, the results of operations, financial condition,~~cyber attack, or ~~cash flows of the Registrants could be materially adversely affected.~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

~~instances, the outcome of a rate case or request for extension of an FRP may impact wholesale decisions of Cleco Power. These proceedings may examine, among~~ other things, the prudence of Cleco Power’s operation and maintenance practices, level of subject expenditures, allowed rates of return, and previously incurred capital expenditures. The LPSC has the authority to disallow costs found not to have been prudently incurred. Rate cases generally have timelines of approximately one year, and decisions are typically subject to appeal, potentially leading to additional uncertainty. The transmission tariffs of Cleco Power are regulated by FERC with its own regulatory proceedings. Both the LPSC and FERC regulatory proceedings can involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, all of whom have differing concerns but who have the common objective of limiting rate increases or reducing rates.

~~Transmission rates that MISO transmission owners may collect are regulated by FERC. If there is a reduction~~event would significantly disrupt operations; cause harm to the ~~ROE component of the transmission rates, there could be a material adverse effect on the results of operations, financial condition,~~public or ~~cash flows of the Registrants.~~

~~Retail Electric Service~~

~~Cleco Power’s retail electric rates and business practices are regulated by the LPSC and reviews may~~employees; result in ~~refunds to customers.~~

Cleco Power’s retail rates for residential, commercial, and industrial customers and other retail sales are regulated by the LPSC, which conducts an annual review of Cleco Power’s earnings and regulatory ROE. Cleco Power could be required to make a substantial refund of previously recorded revenue as a result of the LPSC review and such refund couldoutages or reduced generating output; result in ~~a material adverse effect on the results~~damage to Cleco’s assets or operations, or those of ~~operations, financial condition,~~third parties; and subject Cleco to claims by customers or ~~cash flows~~third parties, any of ~~the Registrants.~~

~~Wholesale Electric Service~~

~~Cleco Power’s business practices are regulated by FERC, and its wholesale rates are subject to FERC’s triennial market power analysis. Cleco could lose the right to sell at market-based rates.~~

FERC conducts a review of Cleco Power’s generation market power every three years in addition to each time generation capacity changes. Cleco filed its most recent triennial market power analysis with FERC on January 23, 2015. If FERC determines Cleco Power possesses generation market power in excess of certain thresholds, Cleco Power could lose the right to sell wholesale generation at market-based rates, which ~~could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

~~Weather Sensitivity~~

~~The operating results of Cleco Power are affected by weather conditions and may fluctuate on a seasonal basis.~~

Weather conditions directly influence the demand for electricity, particularly kWh sales to residential customers. In Cleco Power’s service territory, demand for power typically peaks during the hot summer months. As a result, Cleco Power’s financial results may fluctuate on a seasonal basis. In addition, Cleco Power has sold less power and, consequently, earned less income when weather conditions were milder.

~~Unusually mild weather in the future~~ could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

~~Severe weather,~~Cleco’s systems, including ~~hurricanes~~its financial information, operational systems, advanced metering, and ~~winter storms, can affect transportation~~billing systems, require constant maintenance, monitoring, security patches, modification or configuration of ~~fuel to plant sites~~systems, and update and

upgrade of systems, which can be ~~destructive, causing outages~~costly and ~~property damage that can potentially~~increase the risk of errors and malfunction. Any disruptions or deficiencies in existing systems, or disruptions, delays, or deficiencies in the modification or implementation of new systems, could result in ~~additional expenses, lower revenue,~~increased costs, the inability to track or collect revenues, the diversion of management’s and ~~additional capital restoration costs. Extreme drought conditions can impact~~employees’ attention and resources, and could adversely affect the ~~availability~~effectiveness of ~~cooling water~~Cleco’s control environment, and/or its ability to ~~support~~accurately or timely file required regulatory reports.

Despite implementation of security and mitigation measures, all of Cleco’s technology systems are vulnerable to inoperability and/or impaired operations or failures due to cyber and/or physical attacks on the ~~operations~~facilities and equipment needed to operate the technology systems, viruses, human errors, acts of ~~generating plants,~~war or terrorism, and other events. If Cleco’s information technology systems or network infrastructure were to fail, Cleco might be unable to fulfill critical business functions and serve its customers, which ~~can also result in additional expenses and lower revenue.~~

~~The physical risks associated with global climate change~~ could have a material adverse effect on the financial conditions, results of operations, ~~financial condition,~~ or cash flows of the Registrants.

~~The Registrants recognize that certain groups associate severe weather with global climate change~~In addition, in the ordinary course of its business, Cleco collects and ~~forecast the possibility that these weather events could have a material impact on future results of operations should they occur more frequently~~retains sensitive information including personal identification information about customers and with greater severity. If there is an actual occurrence of such global climate change, it could result in one or more physical risks, such as an increase in sea level, wind and storm surge damages, wetland and barrier island erosion, risks of flooding, and changes in weather conditions, such as changes in temperature and precipitation patterns, and potential increased impacts of extreme weather conditions or storms, or could affect the Registrants’ operations. The Registrants’ assets are in and serve communities that are at risk from sea level rise, changes in weather conditions, storms, and loss of the protection offered by coastal wetlands. A significant portion of the nation’s oil and gas infrastructure is located in these areas and is susceptible to storm damage that could be aggravated by wetland and barrier island erosion, which could give rise to fuel supply interruptions and price spikes.

~~These~~employees, customer energy usage, and other ~~physical changes~~confidential information. The theft, damage, or improper disclosure of sensitive electronic data could ~~result in changes in customer demand, increased costs associated with repairing~~subject Cleco to both penalties for violation of applicable privacy laws and maintaining generating facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on Cleco Power’s ability to meet peak customer demand, increased regulatory oversight, and lower customer satisfaction. Also, to the extent that climate change would adversely impact the economic health of a region claims from third parties, and/or result in energy conservation or demand side management programs, it may adversely impact customer demand and revenues. Such physical or operational risks could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.harm Cleco’s reputation.

~~Litigation~~

~~The outcome of legal proceedings cannot be predicted. An adverse finding could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

The Registrants are party to various litigation matters arising out of the ordinary operations of their business. The ultimate outcome of these matters cannot presently be determined, nor, in many cases, can the liability that could potentially result from a negative outcome in each case presently be reasonably estimated. The liability that the Registrants may ultimately incur with respect to any of these cases in the event of a negative outcome may be in excess of amounts currently reserved and insured against with respect to such matters and, as a result,



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

~~these matters may have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

~~Alternative Generation Technology~~

~~Changes in technology may have a material adverse effect on the value of Cleco Power’s generating facilities.~~

A basic premise of Cleco’s business is that generating electricity at central power plants achieves economies of scale and produces electricity at a relatively low price. There are alternative technologies to produce electricity, most notably fuel cells, wind turbines, photovoltaic cells, and other solar generated power. Many companies and organizations conduct research and development activities to seek improvements in alternative technologies. It is possible that advances will reduce the cost of alternative methods of electricity production to a level that is equal to or below that of most central station production. In addition, as new technologies are developed and become available, the quantity and pattern of electricity purchased by customers could decline, with a corresponding decline in revenues derived by generating assets. Also, the current presidential administration and certain members of the Congress have voiced support for such alternative energy sources. As a result, the value of Cleco Power’s generating facilities could be reduced.

Taxes

Changes in taxation due to uncertain effects of the TCJA could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.



CLECO
CLECO POWER		2017 FORM 10-K

Reliability and Infrastructure Protection Standards Compliance

Cleco is subject to mandatory reliability and critical infrastructure protection standards. Fines and civil penalties are imposed on those who fail to comply with these standards.

The SPP RE conducts a NERC Reliability Standards audit and a NERC Critical Infrastructure Protection audit every three years. On July 23, 2017, the SPP RTO’s board of directors and members committee voted to authorize the SPP’s President and CEO to terminate the delegation agreement between the SPP and NERC, which will effectively dissolve the SPP RE by the end of 2018. On February 8, 2018, NERC approved Cleco Power’s proposed RE. The selection must now be approved by FERC. Cleco Power anticipates the transfer to a new RE to be complete by January 2019.

Cleco Power’s next NERC Reliability Standards audit is scheduled to begin in 2019 and the next NERC Critical Infrastructure Protection audit is scheduled to begin in 2020. Management is unable to predict the outcome of these audits, or 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.

Cleco Credit Ratings

A downgrade in Cleco ~~Corporation’s~~Holdings’ or Cleco Power’s credit ratings could result in an increase in their respective borrowing costs, ~~and~~ a reduced pool of potential investors and funding ~~sources.~~sources, and a restriction could be placed on Cleco Power making distributions to Cleco Holdings.

Neither Cleco ~~Corporation~~Holdings nor Cleco Power can assure that its current debt ratings will remain in effect for any given period of time or that one or more of its debt ratings will not be lowered or withdrawn entirely by a rating agency. ~~Upon announcement of the Merger, Moody’s and~~If S&P placed Cleco Corporation and Cleco Power on negative outlook and CreditWatch negative, respectively. On February 25, 2016, S&P changed the outlook for Cleco Corporation and Cleco Power from CreditWatch negative to CreditWatch developing. Prior to close of the Merger or upon termination of the Merger Agreement, it is expected that the credit rating agencies will update their ratings on both Cleco Corporation and Cleco Power taking into consideration the results of the merger transaction. If Moody’s

~~or S&P~~ were to downgrade Cleco ~~Corporation’s~~Holdings’ or Cleco Power’s long-term ratings, particularly below investment grade, the value of their debt securities would likely be adversely affected. Downgrades of either Cleco Holdings’ or Cleco Power’s credit ratings would result in additional fees and higher interest rates for borrowings under their respective credit facilities. In addition, Cleco ~~Corporation~~Holdings or Cleco Power, as the case may be, would likely be required to pay higher interest rates in future debt financings, ~~and~~may be subject to more onerous debt covenants, and their pool of potential investors and funding sources could decrease. In addition, the Merger Commitments



CLECO
CLECO POWER		2017 FORM 10-K

~~Cleco Corporation is a holding company and its ability to meet its debt obligations and pay dividends to its shareholders is dependent on the cash generated by its subsidiaries.~~

Cleco Corporation is a holding company and conducts its operations primarily through its subsidiaries. Accordingly, Cleco Corporation’s ability to meet its debt obligations and to pay dividends to its shareholders is largely dependent upon the cash generated by these subsidiaries. Cleco Corporation’s subsidiaries are separate and distinct entities and have no obligations to pay any amounts due on Cleco Corporation’s debt or to make any funds availableprovide for such payment. In addition, Cleco Corporation’s subsidiaries’ ability to make dividend payments or other distributions to Cleco Corporation may be restricted by their obligations to holders of their outstanding securities and to other general business creditors. Substantially all of Cleco’s consolidated assets are held by Cleco Power. Cleco Corporation’s right to receive any assets of any subsidiary, and therefore the right of its creditors to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors. In addition, even if Cleco Corporation were a creditor of any subsidiary, its rights as a creditor would be subordinated to any security interest in the assets of that subsidiary and any indebtedness of the subsidiary senior to that held by Cleco Corporation. Moreover, Cleco Power, Cleco Corporation’s principal subsidiary, is subject to regulation by the LPSC, which may impose limitslimitations on the amount of ~~dividends~~distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit/issuer ratings. As a result, Cleco Power may ~~pay~~be prohibited from making distributions to Cleco ~~Corporation.~~Holdings.

MISO market operations could have a material adverse effect on the results of operations, generation revenues, energy supply costs, financial condition, or cash flows of the Registrants.

MISO evaluates forced outage rates to assess generating unit capacity for planning reserve margins. If Cleco Power is subject to a significant amount of forced outages, Cleco Power may not possess sufficient planning reserves to serve its needs and could be forced to purchase capacity from the MISO resource adequacy auction. The costs of such capacity may not be recoverable and could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants. Using MISO’s unforced capacity method for determining generating unit capacity, Cleco Power’s fleet provided for 251 MW of capacity in excess of its peak, coincident to MISO’s peak, in 2017.

Technology and Terrorism Threats



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

parties, any of which could have a material adverse effect on the ~~financial condition,~~ results of operations, financial condition, or cash flows of the Registrants.

upgrade of systems, which can be costly and increase the risk of errors and malfunction. Any disruptions or deficiencies in existing systems, or disruptions, delays, or deficiencies in the modification or implementation of new systems, could result in increased costs, the inability to track or collect revenues, the diversion of management’s and employees’ attention and resources, and could adversely affect the effectiveness of Cleco’s control environment, and/or its ability to accurately or timely file required regulatory reports.

In addition, in the ordinary course of its business, Cleco collects and retains sensitive information including personal identification information about customers and employees, customer energy usage, and other confidential information. The theft, damage, or improper disclosure of sensitive electronic data could subject Cleco to both penalties for violation of applicable privacy laws ~~subject Cleco to~~and claims from third parties, and/or harm Cleco’s reputation.

Taxes

Changes in taxation due to uncertain effects of the TCJA could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.



CLECO
CLECO POWER		2017 FORM 10-K

Reliability and Infrastructure Protection Standards Compliance

Cleco is subject to mandatory reliability and critical infrastructure protection standards. Fines and civil penalties are imposed on those who fail to comply with these standards.

Environmental Compliance

Cleco’s costs of compliance with environmental laws and regulations are significant. The costs of compliance with new environmental laws and regulations, as well as the incurrence of incremental environmental liabilities, could be significant to the Registrants.

also be subject to future legal challenges. As a result, the CPP rule is not currently in force and the future regulation of greenhouse gas emissions from existing EGUs is uncertain. Changes under the stayed CPP would have environmental regulations governing power plant emissions effective beginning 2022, with final emission goals required by 2030, and, if implemented, could render some of Cleco’s EGUs uneconomical to maintain or operate and could prompt early retirement of certain generation units. Any legal obligation that would require Cleco to substantially reduce its emissions beyond present levels could require extensive mitigation efforts and could raise uncertainty about the future viability of some fossil fuels as fuel for new and existing electric generating facilities. Cleco will evaluate potential solutions to comply with such regulations and monitor rulemaking and any legal matters impacting the proposed regulations. Cleco may incur significant capital expenditures or additional operating costs to comply with such revisions, reinterpretations, and new requirements. If Cleco were to fail to comply, it could be subject to civil or criminal liabilities and fines or may be forced to shut down or reduce production from its facilities. Cleco cannot predict the timing or the outcome of pending or future legislative and rulemaking proposals.

Cleco Power may request from its customers recovery of its costs to comply with new environmental laws and regulations. If the LPSC were to deny Cleco Power’s request to recover all or part of its environmental compliance costs, there could be a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power’s Rates

The LPSC and FERC regulate the retail rates and wholesale transmission tariffs, respectively, that Cleco Power can charge its customers.

Cleco Power’s ongoing financial viability depends on its ability to recover its costs in a timely manner from its LPSC-jurisdictional customers through LPSC-approved rates and its ability to recover its FERC-authorized revenue requirements from its FERC-jurisdictional wholesale transmission customers. Cleco Power’s financial viability also depends on its ability to recover in rates an adequate return on capital, including long-term debt and equity. If Cleco Power is unable to recover any material amount of its costs in rates in a timely manner or recover an adequate return on capital, the results of operations, financial condition, or cash flows of the Registrants could be materially adversely affected.

Cleco Power’s revenues and earnings are substantially affected by regulatory proceedings known as rate cases or, in some cases, a request for extension of an FRP. During those cases, the LPSC determines Cleco Power’s rate base, depreciation rates, operation and maintenance costs, and administrative and general costs that Cleco Power may recover from its retail customers through its rates. In some instances, the outcome of a rate case or request for extension of an FRP may impact wholesale decisions of Cleco Power. These proceedings may examine, among other things, the prudence of Cleco Power’s operation and maintenance practices, level of subject expenditures, allowed rates of return, and previously incurred capital expenditures. The LPSC has the authority to disallow costs found not to have been prudently incurred. Rate cases generally have timelines of approximately one year, and decisions are typically subject to



CLECO
CLECO POWER		2017 FORM 10-K

appeal, potentially leading to additional uncertainty. The transmission tariffs of Cleco Power are regulated by FERC with its own regulatory proceedings. Both the LPSC and FERC regulatory proceedings can involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, all of whom have differing concerns but who have the common objective of limiting rate increases or reducing rates.

Transmission rates that MISO transmission owners may collect are regulated by FERC. Two complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. There is one complaint currently open. Any reduction to the ROE component of the transmission rates could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Retail Electric Service

Cleco Power’s retail electric rates and business practices are regulated by the LPSC and reviews may result in refunds to customers.

Cleco Power’s retail rates for residential, commercial, and industrial customers and other retail sales are regulated by the LPSC, which conducts an annual review of Cleco Power’s earnings and regulatory ROE. Cleco Power could be required to make a substantial refund of previously recorded revenue as a result of the LPSC review and such refund could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Wholesale Electric Service

Cleco Power’s business practices are regulated by FERC, and its wholesale rates are subject to FERC’s triennial market power analysis. Cleco could lose the right to sell wholesale generation at market-based rates.

FERC conducts a review of Cleco Power’s generation market power every three years in addition to each time generation capacity changes. Cleco filed its triennial market power analysis with FERC on December 22, 2017. Cleco Power expects a determination from FERC in the second quarter of 2018. Management is unable to predict the outcome of this ruling. If FERC determines Cleco Power possesses generation market power in excess of certain thresholds, Cleco Power could lose the right to sell wholesale generation at market-based rates, which could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Weather Sensitivity

The operating results of Cleco Power are affected by weather conditions and may fluctuate on a seasonal basis.

Severe weather, including hurricanes and winter storms, can affect transportation of fuel to plant sites and can be destructive, causing outages and property damage that can potentially result in additional expenses, lower revenue, and additional capital restoration costs. Extreme drought conditions can impact the availability of cooling water to support the operations of generating plants, which can also result in additional expenses and lower revenue.

The physical risks associated with global climate change could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The Registrants recognize that certain groups associate severe weather with the concept of global climate change and forecast the possibility that these weather events could have a material impact on future results of operations should they occur more frequently and with greater severity. If there is an actual occurrence of such global climate change, it could result in one or more physical risks, such as an increase in sea level, wind and storm surge damages, wetland and barrier island erosion, risks of flooding, and changes in weather conditions, such as changes in temperature and precipitation patterns, and potential increased impacts of extreme weather conditions or storms, or could affect the Registrants’ operations. The Registrants’ assets are in and serve communities that are at risk from sea level rise, changes in weather conditions, storms, and loss of the protection offered by coastal wetlands. A significant portion of the nation’s oil and gas infrastructure is located in these areas and is susceptible to storm damage that could be aggravated by wetland and barrier island erosion, which could give rise to fuel supply interruptions and price spikes.

These and other physical changes could result in changes in customer demand, increased costs associated with repairing and maintaining generating facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on Cleco Power’s ability to meet peak customer demand, increased regulatory oversight, and lower customer satisfaction. Also, to the extent that climate change would adversely impact the economic health of a region or result in energy conservation or demand side management programs, it may adversely impact customer demand and revenues. Such physical or operational risks could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Litigation

Cleco is subject to litigation related to the Merger.

In connection with the Merger, four actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and three actions were filed in the Civil District Court for Orleans Parish, Louisiana. One of the actions filed in Rapides Parish has been dismissed. The remaining three actions in Rapides Parish have been consolidated. The three actions in Orleans Parish have been transferred to Rapides Parish and consolidated with the other litigation in Rapides Parish. The actions were filed against Cleco Corporation and, among others, Cleco Partners, Merger Sub, and members of the Board of Directors of Cleco Corporation. The petitions generally allege, among other things, that the members of



CLECO
CLECO POWER		2017 FORM 10-K

Cleco Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the Merger at a price that allegedly undervalues Cleco, and failing to disclose material information about the Merger. The petitions also allege that Cleco Partners, Cleco, and Merger Sub and, in some cases, certain of the investors in Cleco Partners, either aided and abetted or entered into a civil conspiracy to advance those supposed breaches of duty. The petitions seek various remedies, including monetary damages, which includes attorneys’ fees and expenses. In September 2016, the District Court granted the exceptions filed by Cleco and dismissed all claims asserted by the former shareholders. The plaintiffs appealed the District Court’s ruling and on December 13, 2017, the Third Circuit Court of Appeal issued an order reversing and remanding the case back to the District Court for further proceedings. On January 12, 2018, Cleco filed a writ with the Louisiana Supreme Court seeking review of the Third Circuit Court of Appeal’s decision.

It is possible that additional claims beyond those that have already been filed will be brought by the current plaintiffs or by others in an effort to seek monetary relief from Cleco. Cleco is not able to predict the outcome of these actions, or others, nor can Cleco predict the amount of time and expense that will be required to resolve the actions. In addition, the cost to Cleco of defending the actions, even if resolved in Cleco’s favor, could be substantial. Such actions could also divert the attention of Cleco’s management and resources from day-to-day operations.

The outcome of legal proceedings cannot be predicted. An adverse finding could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Government Reform

Changes in environmental, fiscal, and tax policies could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

The current Administration has called for substantial changes to environmental, fiscal, and tax policies. It is possible that these changes could adversely affect Cleco’s business. Until changes are enacted, management is unable to determine the impact of the changes on the Registrants’ business, results of operations, financial condition, or cash flows.

Cleco may experience increased costs arising from health care reform.

The PPACA, enacted in 2010, has had a significant impact on health care providers, insurers, and others associated with the health care industry. Cleco continues to evaluate the impact of this comprehensive law on its business and has made the required changes to its health plan. Congress and state governments may propose other health care initiatives and

revisions to the health care and health insurance systems. It is uncertain what legislative programs, if any, will be adopted in the future, or what action Congress or state legislatures may take regarding other health care reform proposals or legislation. Management is unable to estimate the comprehensive effects of the PPACA or any future health care reform and their impact on the Registrants’ business, results of operations, financial condition, or cash flows.

Workforce

Failure to attract and retain an appropriately qualified workforce could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Certain events, such as an aging workforce without appropriate replacements, matching of skill set or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge, and a lengthy time period associated with skill development. In this case, costs, including costs for contractors to replace employees, productivity costs, and safety costs, may rise. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or the future availability and cost of contract labor may adversely affect the ability to manage and operate the Registrants’ businesses. If the Registrants are unable to successfully attract and retain an appropriately qualified workforce, the results of operations, financial condition, or cash flows of the Registrants could be materially adversely affected.

Alternative Generation Technology

Changes in technology may have a material adverse effect on the value of Cleco Power’s generating facilities.

Insurance

Cleco’s insurance coverage may not be sufficient.

Cleco currently has property, casualty, cyber security and liability insurance policies in place to protect its employees, directors, and assets in amounts that it considers appropriate. Such policies are subject to certain limits and deductibles and do not include business interruption coverage. Insurance coverage may not be available in the future at current costs or on commercially reasonable terms, and the insurance proceeds received for any loss of, or any damage to, any of Cleco’s facilities may not be sufficient to restore the loss or



CLECO
CLECO POWER		2017 FORM 10-K

damage without a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Like other utilities that serve coastal regions, Cleco does not have insurance covering its transmission and distribution system, other than substations, because it believes such insurance to be cost prohibitive. In the future, Cleco may not be able to recover the costs incurred in restoring transmission and distribution properties following hurricanes or other natural disasters through issuance of storm recovery bonds or a change in Cleco Power’s regulated rates or otherwise, or any such recovery may not be timely granted. Therefore, Cleco may not be able to restore any loss of, or damage to, any of its transmission and distribution properties without a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power LLC’s Unsecured and Unsubordinated Obligations

Cleco Power LLC’s unsecured and unsubordinated obligations, including, without limitation, its senior notes, will be effectively subordinated to any secured debt of Cleco Power LLC, certain unsecured debt of Cleco Power LLC, and any preferred equity of any of Cleco Power LLC’s subsidiaries.

Some of Cleco Power LLC’s senior notes and its obligations under various loan agreements and refunding agreements with the Rapides Finance Authority, the Louisiana Public Facilities Authority, and other issuers of tax-exempt bonds for the benefit of Cleco Power LLC are unsecured and rank equally with all of Cleco Power LLC’s existing and future unsecured and unsubordinated indebtedness. As of December 31, ~~2015,~~ 2017,

Cleco Power LLC had an aggregate of ~~$1.17~~$1.31 billion of unsecured and unsubordinated ~~indebtedness.~~indebtedness net of debt discount and debt expense. The unsecured and unsubordinated indebtedness of Cleco Power LLC will be effectively subordinated to, and thus have a junior position to, any secured debt that Cleco Power LLC may have outstanding from time to time (including any mortgage bonds) with respect to the assets securing such debt. Certain agreements entered into by Cleco Power LLC with other lenders that are unsecured provide that if Cleco Power LLC issues secured debt, Cleco Power is obligated to grant these lenders the same security interest in certain assets of Cleco Power LLC. If such a security interest were to arise, it would further subordinate Cleco Power LLC’s unsecured and unsubordinated obligations.

As of December 31, ~~2015,~~2017, Cleco Power LLC had no secured indebtedness outstanding. Cleco Power LLC may issue mortgage bonds in the future under ~~its current or~~ any future Indenture of Mortgage, and holders of mortgage bonds would have a prior claim on certain Cleco Power LLC material assets upon dissolution, winding up, liquidation, or reorganization. Additionally, Cleco Power LLC’s ability (and the ability of Cleco Power LLC’s creditors, including holders of its senior notes) to participate in the assets of Cleco Power LLC’s subsidiary, Cleco Katrina/Rita, is subject to the prior claims of the subsidiary’s creditors. As of December 31, ~~2015,~~2017, Cleco Katrina/Rita had ~~$84.2~~$50.4 million of indebtedness outstanding, net of debt ~~discount.~~

~~Health Care Reform~~

~~Cleco may experience increased costs arising from health care reform.~~

~~In 2010, the President of the U.S. signed the PPACA, a comprehensive health care law. This law has had a significant impact on health care providers, insurers,~~discount and others associated with the health care industry. Cleco continues to evaluate the impact of this comprehensive law on its business and has made the required changes to its health plan. Federal and state governments may propose other health care initiatives and revisions to the health care and health insurance systems. It is uncertain what legislative programs, if any, will be adopted in the future, or what action Congress or state legislatures may take regarding other health care reform proposals or legislation. The complexities and ramifications of the legislation are significant and are being implemented through a phased-in approach concluding in 2020. Management is unable to estimate the comprehensive effects of health care reform and its impact on the Registrants’ business, results of operations, financial condition, or cash flows. Accordingly, the PPACA could adversely affect the cost of providing health care coverage generally and could have adebt expense.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

~~material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

~~Workforce~~

~~Failure to attract and retain an appropriately qualified workforce could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.~~

lengthy time period associated with skill development. In this case, costs, including costs for contractors to replace employees, productivity costs, and safety costs, may rise. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or the future availability and cost of contract labor may adversely affect the ability to manage and operate the Registrants’ businesses. If the Registrants are unable to successfully attract and retain an appropriately qualified workforce, the results of operations, financial condition, or cash flows of the Registrants could be materially adversely affected.



ITEM 1B. UNRESOLVED STAFF COMMENTS

None.



~~CLECO CORPORATION~~

~~Electric Transmission Substations~~

~~As of~~ ~~December 31, 2015, Cleco Corporation, through two wholly owned subsidiaries, owned one transmission substation in Louisiana and one transmission substation in Mississippi.~~



~~CLECO POWER~~

All of Cleco Power’s electric generating stations and all other electric operating properties are located in Louisiana. Cleco Power considers all of its properties to be well maintained, in good operating condition, and suitable for their intended purposes. ~~For information on Cleco Power’s generating facilities, see Item 1, “Business — Operations — Cleco Power — Power Generation.”~~

Electric Generating Stations

As of December 31, ~~2015~~2017, Cleco Power either owned or had an ownership interest in ~~six~~five steam electric generating stations, three combined cycle units, and one gas turbine with a combined nameplate capacity of ~~3,333~~3,310 MW, and a combined electric net generating capacity of ~~3,190~~3,181 MW. The nameplate capacity is the capacity at the start of commercial operations, and the net generating capacity is the result of capacity tests and operational tests performed during ~~2015,~~2017, as required by ~~MISO criteria.~~MISO. This amount reflects the maximum production capacity these units can sustain over a specified period of time. For more information on Cleco Power’s generating facilities, see Item 1, “Business — Operations — Cleco Power — Power Generation.”

Electric Substations

As of December 31, ~~2015,~~2017, Cleco Power owned 8286 active transmission substations and ~~219~~239 active distribution substations.

Electric Lines

As of December 31, ~~2015~~2017, Cleco Power’s transmission system consisted of 67 circuit miles of 500-kiloVolt (kV) lines; ~~539~~ 549

circuit miles of 230-kV lines; ~~671~~672 circuit miles of 138 kV lines; and 2829 circuit miles of 69-kV lines. Cleco Power’s distribution system consisted of ~~3,640~~3,658 circuit miles of 34.5-kV lines and ~~8,291~~8,337 circuit miles of other lines.

General Properties

Cleco Power owns various properties throughout Louisiana, which include a headquarters office building, regional offices, service centers, telecommunications equipment, and other general-purpose facilities.

Title

Cleco Power’s electric generating plants and certain other principal properties are owned in fee simple. Electric transmission and distribution lines are located either on private rights-of-way or along streets or highways by public consent.

Substantially all of Cleco Power’s property, plant, and equipment are subject to a lien of Cleco Power’s Indenture of Mortgage, which does not impair the use of such properties in the operation of its business. As of December 31, ~~2015~~,2017, no mortgage bonds were outstanding under the Indenture of Mortgage. Some of the unsecured and unsubordinated indebtedness of Cleco Power will be effectively subordinated to, and thus have a junior position to, any mortgage bonds that Cleco Power may have outstanding from time to time with respect to the assets subject to the lien of the Indenture of Mortgage. Cleco Power may issue mortgage bonds in the future under its Indenture of Mortgage, and holders of mortgage bonds would have a prior claim on certain Cleco



CLECO
CLECO POWER		2017 FORM 10-K

Power material assets upon dissolution, winding up, liquidation, or reorganization.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~



ITEM 3. LEGAL PROCEEDINGS



CLECO ~~CORPORATION~~

For information on legal proceedings affecting Cleco, see Item I, “Business — Environmental Matters — ~~Environmental Quality” and “—~~ Air Quality,” Item 1A, “Risk Factors — ~~Agreement and Plan of Merger,~~Litigation,” and Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1415 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”



CLECO POWER

For information on legal proceedings affecting Cleco Power, see Item I, “Business — Environmental Matters — ~~Environmental Quality” and “—~~ Air Quality” and Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1415 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”



ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95 of this Annual Report on Form 10-K.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ~~CLECO CORPORATION’S~~ISSUER PURCHASES OF EQUITY SECURITIES



CLECO ~~CORPORATION~~HOLDINGS

On April 13, 2016, upon completion of the Merger, Cleco Corporation’s common stock ~~is listed for~~was delisted from trading on the ~~NYSE. During the years ended December 31, 2015, and 2013,~~New York Stock Exchange. There is no established public trading market for Cleco ~~Corporation did not repurchase any shares of common stock. During the year ended December 31, 2014, 250,000 shares of common stock were repurchased.~~ Holdings’ membership interests.

In ~~accordance~~connection with the Merger, ~~Agreement, until the completion of the Merger, no additional common stock will be repurchased under this program without the prior written consent of~~ Cleco ~~Partners. For information on~~Holdings replaced its credit facility. Cleco Corporation’s common stock repurchase program, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 7 — Common Stock — Common Stock Repurchase Program.”

Dividends, as determined by the Board of Directors of Cleco Corporation, may be declared and paid on the common stock from time to time out of funds legally available, subject to prior rights to dividends on any outstanding series of preferred stock. The provisions of Cleco Corporation’s amended and restated articles of incorporation applicable to preferred stock and certain provisions contained in the debt instruments of Cleco under certain circumstances restrict the amount of retained earnings available for the payment of dividends by Cleco Corporation. The most restrictive covenant, which is in Cleco Corporation’sHoldings’ new credit facility still requires ~~Cleco Corporation’s~~a total indebtedness ~~to be~~of less than or equal to 65% of total ~~capitalization. At December 31, 2015, $1.01 billion~~capitalization in order to declare dividend payments. Additionally, in accordance with the Merger Commitments, Cleco Holdings is subjected to certain provisions limiting the amount of ~~retained earnings was unrestricted.~~distributions that may be paid from Cleco Holdings to Cleco Group or Cleco Partners, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings.

On January 28,, 2016, Cleco Corporation’s Board of Directors declared a quarterly dividend of $0.40 per share of common stock payable on February 16, 2016, to common shareholders of record at the close of business on February 8, 2016. ~~The declaration~~

Cleco made $84.1 million and $88.8 million of ~~dividend~~distribution payments ~~is at the Board~~to Cleco Group in 2017 and 2016, respectively.

Cleco received no equity contributions in 2017, and $100.7 million of Directors’ sole discretion, and future dividends are subject to numerous factors that ordinarily affect the dividend policy, including the result of Cleco’s operations and its financial position, as well as general economic and business conditions. In accordance with the Merger Agreement, until the completion of the Merger,equity contributions in 2016 from Cleco ~~Corporation’s Board of Directors may continue the declaration and payment of regular~~Group.

~~quarterly cash dividends to its shareholders, not to exceed $0.40 per share of common stock, with usual record and payment dates for such dividends in accordance with past dividend practices.~~ For more information about the Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 203 — Agreement and Plan of Merger.” As of February 19, 2016, there were 5,027 holders of record of Cleco Corporation’s common stock and the closing price of Cleco Corporation’s common stock as reported on the NYSE Composite Tape was $52.88 per share. For information on the high and low sales prices for Cleco Corporation’s common stock as reported on the NYSE Composite Tape and dividends paid per share during each calendar quarter of 2015 and 2014, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 19 — Miscellaneous Financial Information (Unaudited)Business Combinations.”



CLECO POWER

There is no market for Cleco Power’s membership interests. All of Cleco Power’s outstanding membership interests are owned by Cleco ~~Corporation.~~Holdings. Distributions on Cleco Power’s membership interests are paid when and if declared by Cleco Power’s Board of Managers. Any future distributions also may be restricted by any credit or loan agreements into which Cleco Power may enter.

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco ~~Corporation~~Holdings by Cleco Power ~~under specified circumstances. The most restrictive covenant requires~~by requiring Cleco Power’s total indebtedness to be less than or equal to 65% of total capitalization. ~~At December 31, 2015, $884.3 million~~In addition, the Merger Commitments provide for limitations on the amount of ~~member’s~~distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ~~was unrestricted.~~ratio and its corporate credit ratings.

During ~~2015~~, ~~2014~~,2017, 2016, and ~~2013~~2015, Cleco Power made ~~$135.0~~$135.0 million,, ~~$115.0~~ $110.0 million,, and ~~$105.0~~$135.0 million, respectively, of distribution payments to Cleco ~~Corporation, respectively.~~Holdings.

Cleco Power received no equity contributions from Cleco ~~Corporation~~Holdings in ~~2015 or 2013. In 2014, Cleco Power received a $138.1~~2017, $50.0 million ~~non-cash contribution relating to the transfer of Coughlin from Cleco Corporation.~~

in 2016, and none in 2015.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~



ITEM 6. SELECTED FINANCIAL DATA



CLECO ~~CORPORATION~~

The information set forth in the following table should be read in conjunction with the Consolidated Financial Statements and the related Notes in Item 8, “Financial Statements and Supplementary Data.”

~~Cleco’s consolidated financial results for 2011 include the gain related to the disposition of Acadia Unit 2 and the remaining half of Acadia Power Station’s related common facilities.~~

Long-term debt ⁽²⁾

Long-term debt, net ⁽²⁾

⁽¹⁾ Effective March 15, 2014, upon the transfer of Coughlin to Cleco Power, Midstream had minimal operations.

⁽²⁾Long-term debt includes obligations for capital leases and excludes debt due within one year.

⁽³⁾Amounts for 2011 through 2014 were adjusted to reflect 2015 accounting guidance that requires debt issuance costs to be presented as a direct deduction from the carrying value of the related debt. For more information, see Item 8, “Financial Statements and Supplementary Data — Notes to Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

⁽¹⁾ Effective March 15, 2014, upon the transfer of Coughlin to Cleco Power, Midstream had minimal operations.

⁽²⁾For 2017, long-term debt excludes debt due within one year. For 2016, 2015, 2014, and 2013, long-term debt includes obligations for capital leases and excludes debt due within one year.



CLECO
CLECO POWER		2017 FORM 10-K



CLECO POWER

The information called for by Item 6 with respect to Cleco Power is omitted pursuant to General Instruction I(2)(a) to Form 10-K (Omission of Information by Certain Wholly Owned Subsidiaries).



ITEM 7. 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 ~~financial information,~~ and ~~merger~~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 ~~the information of investors~~informational purposes and does not intend for the address to be an active link. The contents of the website are not incorporated into this Annual Report on Form 10-K.



OVERVIEW

Cleco is a regional energy company that conducts substantially all of its business operations through its primary subsidiary, Cleco Power. Cleco Power is a regulated electric utility company that owns 10nine generating units with a total nameplate capacity of ~~3,333~~3,310 MW and serves approximately ~~287,000~~290,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. ~~Prior~~

Recent Developments

On February 6, 2018. Cleco Energy entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central. Pursuant to ~~March 15, 2014,~~the terms of the Purchase and Sale Agreement, Cleco ~~also conducted wholesale business operations through its Midstream subsidiary. Midstream~~Energy agreed to acquire from NRG Energy all of the outstanding membership interests in NRG South Central, which indirectly owns ~~Evangeline (which owned~~(i) a 176-MW natural-gas-fired generating station located in Sterlington, Louisiana, (ii) a 220-MW natural-gas-fired facility and ~~operated Coughlin)~~a 210-MW natural-gas-fired peaking facility both located in Jarreau, Louisiana, (iii) a 580-MW coal-fired generating facility, a 540-MW natural-gas-fired generating station, and 58% of a 588-MW coal-fired generating station all located in New Roads, Louisiana, (iv) 75% of a 300-MW natural-gas-fired peaking facility located in Jennings, Louisiana, and (v) a 1,263-MW natural-gas-fired generating station located in Deweyville, Texas (the Cottonwood Plant), for approximately $1.0 billion, subject to customary working capital and other adjustments (the NRG Acquisition). ~~On March 15, 2014,~~Cleco expects to fund the ~~Coughlin generating assets were transferred~~NRG Acquisition with proceeds from the Debt Financing (as defined below), equity contributions, and cash on hand.

Cleco Energy, NRG Energy, and NRG South Central have each made customary representations, warranties and covenants in the Purchase and Sale Agreement, which includes customary indemnification provisions. The transaction is subject to customary closing conditions, including (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and (ii) receipt of required regulatory approvals, including approvals by FERC, the LPSC, the Committee on Foreign Investment in the United States, and the Public Utility Commission of Texas. Cleco ~~Power. Coughlin consists~~Holdings has agreed to guarantee the obligations of ~~two generating units with~~Cleco Energy, subject to certain limitations. In addition, the closing is conditioned upon the execution and delivery of a ~~total nameplate capacity~~lease agreement between Cottonwood Energy and a special-purpose entity that is a subsidiary of ~~775 MW.~~NRG Energy pursuant to which NRG Energy will

~~For more information on~~lease back the ~~transfer~~Cottonwood Plant and will operate it until May 2025. Upon closing, Cottonwood Energy will become a subsidiary of ~~Coughlin~~Cleco Energy.

The Purchase and Sale Agreement also contains certain customary termination rights for both Cleco Energy and NRG Energy, including a termination right for each if the closing does not occur by February 6, 2019. The parties expect the transaction to close before the end of 2018.

In connection with the Purchase and Sale Agreement, Cleco ~~Power, see Item 8, “Financial Statements~~Holdings entered into a debt commitment letter, dated as of February 6, 2018, with Mizuho Bank, Ltd. (Mizuho), Credit Agricole Corporate and ~~Supplementary Data — Notes~~Investment Bank (CA-CIB) and The Bank of Nova Scotia (Scotiabank), pursuant to which Mizuho, CA-CIB, and Scotiabank have committed to provide (a) an acquisition loan facility in the ~~Financial Statements — Note 17 — Coughlin Transfer.”~~aggregate principal amount of up to $300.0 million (the Acquisition Loan Facility), (b) a term loan facility in the aggregate principal amount of up to $300.0 million (the Term Loan Facility), and (c) an incremental revolving facility under Cleco Holding’s existing bank credit agreement with availability of $75.0 million (and together with the Acquisition Loan Facility and the Term Loan Facility, the Debt Financing). The Debt Financing is subject to various conditions, including the execution of definitive documentation and other customary closing conditions.

Merger

On ~~October 17, 2014,~~April 13, 2016, Cleco ~~Corporation entered into the Merger Agreement~~Holdings completed its merger with ~~Cleco Partners and~~ Merger Sub ~~providing for the merger of~~whereby Merger Sub merged with and into Cleco Corporation, with Cleco Corporation surviving the Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings, as ~~an indirect, wholly-owned~~a direct, wholly owned subsidiary of Cleco Group and an indirect, wholly owned subsidiary of Cleco Partners. ~~On February 24, 2016, the LPSC denied the application to approve the Merger. Management is currently evaluating options relating to the Merger.~~ For more information on the Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 203 — ~~Agreement and Plan of Merger.~~Business Combinations.” For additional information regarding the terms of the Merger, including a copy of the Merger Agreement, see Cleco Corporation’s Current Reports on Form 8-K filed with the SEC and its Proxy Statement related to the Merger.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Cleco Power

Many factors affect Cleco Power’s primary business of generating, delivering, and selling electricity. These factors include weather and the presence of a stable regulatory environment, which impacts cost recovery and the ROE, as well as the recovery of costs related to growing energy demand and rising fuel prices; the ability to increase energy sales while containing costs; the ability to reliably deliver power to its jurisdictional customers; the ability to ~~meet~~comply with increasingly stringent regulatory and environmental standards; and the ability to successfully perform in MISO ~~and~~while subject to the related operating challenges and uncertainties, including increased wholesale ~~competition relative to more suppliers.~~competition. Key initiatives on which Cleco Power is currently working include ~~completing~~continuing construction on the ~~Layfield/Messick~~St. Mary Clean Energy Center project; initiating ~~and ultimately completing~~ construction onof the ~~Cenla Transmission Expansion, Cabot Waste Heat Recovery, and~~Terrebonne to Bayou Vista ~~projects;~~Transmission project and the Coughlin Pipeline project; continuing the START project; and maintaining and growing its



CLECO
CLECO POWER		2017 FORM 10-K

wholesale and retail business. These initiatives are discussed below.

~~Layfield/Messick Project~~

The Layfield/Messick project, or Northwest Louisiana Transmission Expansion project, includes the construction of the new Layfield transmission substation and the construction of additional transmission interconnection facilities near the Dolet Hills Power Station. The project is anticipated to reduce congestion and increase reliability for customers in northwest Louisiana. Cleco Power’s portion of the joint project with SWEPCO is expected to cost $32.0 million. As of December 31, 2015, Cleco Power had spent $22.5 million on the project. Construction is expected to be complete by the end of 2016.

Cenla Transmission Expansion Project

The Cenla Transmission Expansion project includes the construction of transmission lines and a transmission substation within the central Louisiana area. The project is expected to improve reliability to customers by relieving forecasted overloads and mitigating potential load shedding events while providing flexibility to allow routine maintenance outages and serve future growth in the central Louisiana area. ~~Right-of-way acquisition is substantially complete and right-of-way clearing has begun with construction expected to begin~~The final phase of the project was placed into service in ~~March 2016. The project is expected to be complete by the end of 2017 with an estimated cost to Cleco Power of $38.0 million.~~December 2017. As of December 31, ~~2015,~~2017, Cleco Power had spent ~~$3.6~~$30.9 million on the project.

~~Cabot Waste Heat Recovery~~St. Mary Clean Energy Center Project

~~On March 24, 2015,~~The St. Mary Clean Energy Center project includes Cleco Power ~~filed an application with the LPSC requesting~~constructing, owning, and operating a ~~certificate of public convenience and necessity authorizing Cleco Power to construct, own, and operate a proposed 40-MW~~50-MW generating unit to be fueled by waste heat from Cabot Corporation’s carbon black manufacturing plant in Franklin, Louisiana. ~~The project was approved by~~Construction began in October 2016 and the ~~LPSC on December 16, 2015, and~~unit is ~~projected~~expected to be commercially operational byin the ~~second~~third quarter of ~~2018.~~2018 at an estimated cost of $104.1 million. The project ~~is estimated to cost $81.0 million, and upon achieving commercial operations,~~ is expected to generate more than ~~250,000~~300,000 MWh of zero additional carbon emitting energy each year. As of December 31, ~~2015,~~2017, Cleco Power had spent ~~$1.9~~$72.6 million on the project.

Terrebonne to Bayou Vista Transmission Project

The Terrebonne to Bayou Vista Transmission project includes the construction of additional transmission interconnection facilities south of Teche Power Station. ~~Cleco Power’s portion of the joint project with Entergy Louisiana will cost approximately $47.7 million.~~ The project is expected to increase reliability, reduce congestion, and provide hurricane hardening of the 230 kilovolt transmission system for customers in ~~southeast~~south Louisiana. The project ~~was approved by MISO~~team is continuing negotiations on ~~December 10, 2015. Routing, permitting,~~the right-of-way and ~~right-of-way~~land acquisition isagreements. Cleco Power’s portion of the joint project with Entergy Louisiana was expected to ~~take place during 2016 with~~cost $48.0 million. However, line construction proposals were higher than originally estimated, and the total project cost has increased to $61.5 million. Construction is expected to be complete byin the ~~first~~fourth quarter of 2018. As of December 31, 2017, Cleco Power had spent $13.0 million on the project.

Coughlin Pipeline Project

The Coughlin Pipeline project includes construction of a pipeline directly connecting the Pine Prairie Energy Center to Cleco’s Coughlin Power Station. The project is expected to increase reliability for fuel delivery and mitigate exposure to transportation cost increases. On June 28, 2017, the LPSC approved the establishment of a regulatory asset for the revenue requirement associated with the Coughlin Pipeline project until Cleco Power seeks recovery in its next rate case. The project is expected to be complete in the second quarter of 2019 with an estimated cost of $30.1 million. As of December 31, 2017, Cleco Power had spent $0.4 million on the project.

START Project (formerly Enterprise Business Applications Project)

The START project includes replacement of and improvement to Cleco’s enterprise business applications. The project’s objectives are to gain efficiencies through consistent, industry leading work processes and practices; enable better decision making through data transparency across business functions;

mitigate risk through knowledge transfer and better process documentation; provide a modernized, flexible platform to support future growth and changing business models; and provide customer-centric focus through technology and flexibility. Management expects the project to be complete in the third quarter of 2019. The total estimated project cost is $130.0 million. As of December 31, 2017, Cleco had spent $31.6 million on the project.

Other

Cleco Power is working ~~to secure~~on securing load growth opportunities that include ~~renewal of existing load through~~renewing existing franchises and wholesale contracts, pursuing new wholesale contracts and franchises, and adding new retail load opportunities with large industrial, commercial, and residential load. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government and military, wood and paper, health care, information technology, transportation, and other manufacturing.

~~MATS~~

Prior to February 1, 2016, a key initiative on which Cleco Power had been working was requesting authorization to recover the revenue requirements associated with the MATS equipment. The MATS rule was finalized in February 2012 and requires affected EGUs to meet specific emission standards and work practice standards to address hazardous air pollutants. MATS imposes strict emission limits on new and existing coal- and liquid oil-fired EGUs for mercury, acid gases, and non-mercury metallic pollutants. Cleco Power units impacted by the rule include Rodemacher Unit 2, Madison Unit 3, and Dolet Hills. Cleco Power’s three EGUs affected by the MATS rule were compliant by the April 16, 2015, deadline. On February 1, 2016, the LPSC approved Cleco Power’s request for authorization to recover the revenue requirements associated with the MATS equipment. For more information, see Part I, Item 1, “Business — Environmental Matters — Air Quality.”

~~Midstream~~

On March 15, 2014, Coughlin was transferred from Midstream to Cleco Power. As a result of this transfer, the operating activity and operating earnings at Midstream are minimal. The Coughlin transfer changed the structure of Cleco’s internal organization and as a result, Midstream is no longer disclosed as a separate reportable segment. For more information, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Coughlin Transfer.”



RESULTS OF OPERATIONS

All of Cleco’s financial information is presented such that pre-merger activity is shown as “Predecessor” and post-merger activity is shown as “Successor.” The purchase price of the Merger was allocated to the related assets and liabilities based on their respective estimated fair values on the Merger date, with the remaining consideration recorded as goodwill. The fair values of assets are being amortized over their estimated useful lives in a manner that best reflects the economic benefits derived from such assets. Goodwill is not amortized, but is subject to annual impairment testing during the third quarter. Such adjustments to fair value and the allocation of purchase price between identifiable intangibles and goodwill will have an impact on Cleco’s expenses and profitability. For more information on Goodwill, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Intangible Assets and Goodwill.”

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

Comparison of the Years Ended December 31, ~~2015,~~2017, and ~~2014~~

~~Cleco Consolidated~~

~~Cleco Consolidated Results of Operations~~2016


			FOR THE YEAR ENDED DEC. 31,
Cleco										Cleco
					FAVORABLE/(UNFAVORABLE)					SUCCESSOR					PREDECESSOR
(THOUSANDS)	2015		2014		VARIANCE			CHANGE		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating revenue, net	$	1,209,402	$	1,269,485	$	(60,083	)	(4.7	)%	$	1,175,646	$	853,005		$	299,870
Operating expenses	922,063		983,453		61,390			6.2	%	921,357		816,714			279,507
Operating income	$	287,339	$	286,032	$	1,307		0.5	%	$	254,289	$	36,291		$	20,363
Allowance for equity funds used during construction	$	3,063	$	5,380	$	(2,317	)	(43.1	)%	$	8,320	$	3,735		$	723
Other income	$	1,443	$	4,790	$	(3,347	)	(69.9	)%
Other expense	$	3,368	$	2,509	$	(859	)	(34.2	)%
Other income, net										$	4,039	$	1,965		$	280
Interest income										$	1,424	$	840		$	265
Interest charges	$	77,991	$	73,606	$	(4,385	)	(6.0	)%	$	122,913	$	89,766		$	22,123
Federal and state income taxes	$	77,704	$	67,116	$	(10,588	)	(15.8	)%
Net income applicable to common stock	$	133,669	$	154,739	$	(21,070	)	(13.6	)%
Federal and state income tax expense (benefit)										$	7,079	$	(22,822	)	$	3,468
Net income (loss)										$	138,080	$	(24,113	)	$	(3,960	)

~~Operating revenue,~~Cleco’s net of electric customer credits decreased $60.1 million in 2015 compared to 2014 largely as a result of lower fuel cost recovery and lower base revenue, partially offset by lower electric customer credits and higher other operations revenue at Cleco Power.

Operating expenses decreased $61.4 million in 2015 compared to 2014 primarily due to lower recoverable fuel and power purchased at Cleco Power, lower merger transaction costs incurred at Cleco Corporation, and lower generation maintenance expense at Cleco Power. Partially offsetting these decreases were higher non-recoverable fuel and power purchased dueincome attributable to the ~~expiration~~successor year ended December 31, 2017, was $138.1 million. There were no significant changes in the underlying trends impacting net income with the exception of the impact of a PPA when Coughlin was transferred to Cleco Power in March 2014, higher other operations expense at Cleco Power, the absence of the gain on the sale of property at Cleco Corporation, higher taxes other than income taxes at Cleco Power, and higher depreciation and amortization expense at Cleco Power.

~~Allowance~~$46.3 million tax benefit for ~~equity funds used during construction decreased $2.3 million in 2015 compared to 2014 primarily due to lower construction costs~~an adjustment related to the ~~completion of the MATS project at Cleco Power.~~

Other income decreased $3.3 million in 2015 compared to 2014 primarily due to the absence of an increase in the cash surrender value of life insurance policies and the absence of the contractual expiration of underlying indemnifications resulting from the disposition of Acadia Unit 2.

~~Other expense increased $0.9 million in 2015 compared to 2014 primarily due to a decrease in the cash surrender value of life insurance policies due to unfavorable market conditions.~~

Interest charges increased $4.4 million in 2015 compared to 2014 primarily due to the absence of favorable settlements with taxing authorities and lower allowance for borrowed funds used during construction primarily related to the MATS project. These increases were partially offset by the absence of the customer surcredit and the retirement of long-term debt.

Federal and state income taxes increased $10.6 million in 2015 compared to 2014. Tax expense increased primarily due to the absence of favorable settlements with taxing authorities, tax returns filed, and the flowthrough of state tax benefits. These increases were partially offset by the change in pretax income, excluding AFUDC equity.TCJA. The effective income tax rate ~~is 36.8%, which is higher than~~for the ~~federal statutory rate~~

period was 4.9%.

~~primarily due to permanent tax differences, the flowthrough of benefits associated with AFUDC equity, adjustments for tax returns as filed, tax credits, and state tax expense.~~

~~The effective tax rate of 36.8% for 2015 was higher than the effective tax rate of 30.3% for 2014 due~~Cleco’s net loss attributable to the ~~absence~~successor period April 13, 2016, through December 31, 2016, was $24.1 million. There were no significant changes in the underlying trends impacting net loss with the exception of ~~favorable settlements with taxing authorities, tax returns as filed, and the flowthrough of state tax benefits, partially offset by~~ the change in pretax loss primarily related to:

$174.7 million of merger transaction and commitment costs,

$34.0 million of interest costs related to debt obtained as a result of the Merger,

$7.5 million of an offset to operating revenue related to the amortization of the intangible asset recorded for the fair value adjustment of wholesale power supply agreements as a result of the Merger, and

$6.4 million of amortization of the fair value adjustment made as a result of the Merger to record the stepped-up basis for the Coughlin assets.

The effective income ~~excluding AFUDC equity.~~tax rate for the period was 48.6%.

Cleco’s net loss attributable to the predecessor period January 1, 2016, through April 12, 2016, was $4.0 million. There were no significant changes in the underlying trends impacting net loss with the exception of the change in pretax loss primarily related to $34.9 million of merger transaction costs. The effective income tax rate for the period was (704.9)%.

Results of operations for Cleco Power are more fully described below.

Cleco Power

Significant Factors Affecting Cleco Power

Revenue is primarily affected by the following factors:

As an electric utility, Cleco Power is affected, to varying degrees, by a number of factors influencing the electric utility industry. These factors include, among others, an increasingly competitive business environment; the ability to recover costs through rate-setting proceedings; the ability to successfully perform in MISO and the related operating challenges; the cost of compliance with environmental and reliability

regulations; conditions in the credit markets and global economy; changes in the federal and state regulation of generation, transmission, and the sale of electricity; the regulatory treatment of the TCJA, and the increasing uncertainty of future federal and state regulatory and environmental policies. For a discussion of various regulatory changes and competitive forces affecting Cleco Power and other electric utilities, see “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises,” and “— Financial Condition — Regulatory and Other Matters — Market Restructuring.” For a discussion of risk factors affecting Cleco Power’s business, see Part I, Item 1A, “Risk ~~Factors~~Factors.” For more information about the TCJA, see “— Financial Condition — ~~LPSC Audits,” “—Transmission Constraints,” “— Hedging~~Liquidity and ~~Risk Management Activities,” “— Commodity Prices,” “— Global Economic Environment~~Capital Resources — General Considerations and Uncertainty; Access to Capital,” “— Future Electricity Sales,” “— Cleco Power’s Generation, Transmission, and Distribution Facilities,” “— MISO,” “— Reliability and Infrastructure Protection Standards Compliance,” “— Environmental Compliance,” “— Regulatory Compliance,” “— Cleco Power’s Rates,” “— Retail Electric Service,” “— Wholesale Electric Service,” “— Weather Sensitivity,” “— Litigation,” “— Alternative Generation Technology,” “— Taxes,” “— Cleco Credit Ratings,” “— Technology and Terrorism Threats,” “— Insurance,” “— Cleco Power LLC’s Unsecured and Unsubordinated Obligations,” “— Health Care Reform,” and “— Workforce.Credit-Related Risks — 2017 Tax Reform.”

Cleco Power’s residential customers’ demand for electricity is affected largely by weather. Weather is generally is measured in cooling degree-days and heating degree-days. A cooling degree-day is an indication of the likelihood that a consumer will use air conditioning, while a heating degree-day is an indication of the likelihood that a consumer will use 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.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Over the last five years, Cleco Power has experienced moderate growth in retail non-industrial sales and anticipates the same over the next five years. For the retail industrial class, Cleco Power expects new industrial load to be added in ~~2017,~~2018, principally driven by developments in the oil and gas ~~industry, chemical industry, and manufacturing~~ industry. In addition, Cleco Power expects to begin providing service to expansions of current customers’ operations, as well as service to new retail customers. Cleco Power’s expectations and projections regarding retail sales are dependent upon factors such as weather conditions, natural gas prices, customer conservation efforts, retail marketing and business development programs, and the economy of Cleco Power’s service area. Cleco Power is pursuing load growth opportunities that include renewal of existing franchises and wholesale contracts as well as adding new wholesale customers and franchises. For more information on other expectations of future energy sales on Cleco Power, see “— Base,” “Cautionary Note Regarding Forward-Looking Statements,” and Part I, Item 1A, “Risk Factors — Future Electricity Sales.”

Other issues facing the electric utility industry that could affect sales include:

imposition of federal and/or state renewable portfolio standards,

imposition of energy efficiency mandates,

legislative and regulatory changes,

increases in environmental regulations and compliance costs,

cost of power impacted by the price movement of fuels and the addition of new generation capacity,

transmission congestion costs,

~~increase~~



CLECO
CLECO POWER		2017 FORM 10-K

increases in capital and operations and maintenance costs due to higher construction and labor costs,

changes in electric rates compared to customers’ ability to pay, and

changes in the credit markets and local and global economies.

For more information on energy legislation in regulatory matters that could affect Cleco, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Legislative and Regulatory Changes and Matters.”

Cleco Power’s revenues and earnings are substantially affected by regulatory proceedings known as rate cases, or in some cases, a request for extension of an FRP. During those cases, the LPSC determines Cleco Power’s rate base, depreciation rates, operation and maintenance costs, and administrative and general costs that Cleco Power may recover from its retail customers through its rates. In some instances, the outcome of a rate case or request for extension of an FRP may impact wholesale decisions of Cleco Power. These proceedings may examine, among other things, the prudence of Cleco Power’s operation and maintenance practices, level of ~~subject~~ expenditures, allowed rates of return, and previously incurred capital expenditures. The LPSC has the authority to disallow costs found not to have been prudently incurred. Rate cases generally have timelines of approximately one year, and decisions are typically subject to appeal, potentially leading to additional uncertainty. The transmission tariffs of Cleco Power are regulated by FERC with its own regulatory proceedings. Both the LPSC and FERC regulatory proceedings can involve multiple parties, including governmental bodies and officials, consumer advocacy

groups, and various consumers of energy, all of whom have differing concerns but who have the common objective of limiting rate increases or reducing rates.

Other expenses are primarily affected by the following factors:

The majority of Cleco Power’s non-fuel cost recovery expenses consist of other operations, maintenance, depreciation and amortization, and taxes other than income taxes. Other operations expenses are affected by, among other things, the cost of employee benefits, insurance expense, and the costs associated with energy delivery and customer service. Annual maintenance expenses associated with Cleco Power’s plants generally depend upon their physical characteristics, maintenance practices, and the effectiveness of their preventive maintenance programs. Transmission and distribution maintenance expenses are generally affected by the level of repair and rehabilitation of lines to maintain reliability. Depreciation and amortization expense is primarily is affected by the cost of the facilities in service, the time the facilities were placed in service, and the estimated useful life of the facilities. Taxes other than income taxes generally ~~include~~includes payroll taxes, franchise taxes, and property taxes. Cleco Power anticipates certain non-fuel cost recovery expenses to be higher in ~~2016~~2018 compared to ~~2015.~~2017. These expenses include higher generation operations and maintenance expense, higher ~~generation~~miscellaneous expense, higher interest expense, higher customer relations expense, higher transmission maintenance expense, higher administration and general maintenance expense, and higher other taxes, partially offset by lower administration and general operations expense and lower amortization expense.



	FOR THE YEAR ENDED DEC. 31,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2017			2016			VARIANCE			CHANGE
Operating revenue
Base	$	651,732		$	660,974		$	(9,242	)	(1.4	)%
Fuel cost recovery	456,657			430,255			26,402			6.1	%
Electric customer credits	(1,566		)	(1,513		)	(53		)	(3.5	)%
Other operations	77,522			68,573			8,949			13.1	%
Affiliate revenue	851			884			(33		)	(3.7	)%
Operating revenue, net	$	1,185,196		$	1,159,173		$	26,023		2.2	%
Operating expenses
Recoverable fuel and power purchased	456,509			430,422			(26,087		)	(6.1	)%
Non-recoverable fuel and power purchased	35,750			35,684			(66		)	(0.2	)%
Other operations	123,192			125,892			2,700			2.1	%
Maintenance	87,574			93,340			5,766			6.2	%
Depreciation and amortization	157,999			146,142			(11,857		)	(8.1	)%
Taxes other than income taxes	46,539			48,287			1,748			3.6	%
Merger commitment costs	—			151,501			151,501			100.0	%
Gain on sale of asset	—			(1,095		)	(1,095		)	(100.0	)%
Total operating expenses	907,563			1,030,173			122,610			11.9	%
Operating income	$	277,633		$	129,000		$	148,633		115.2	%
Allowance for equity funds used during construction	$	8,320		$	4,458		$	3,862		86.6	%
Other income (expense), net	$	195		$	(375	)	$	570		152.0	%
Interest charges	$	69,362		$	76,446		$	7,084		9.3	%
Federal and state income tax expense	$	67,331		$	18,369		$	(48,962	)	(266.5	)%
Net income	$	150,738		$	39,128		$	111,610		285.2	%

Cleco Power’s net income for 2017 increased $111.6 million compared to 2016 primarily as a result of the following factors:

the absence of merger commitment costs,

higher other operations revenue,

lower interest charges,

lower maintenance expense,

higher allowance for equity funds used during construction,

lower other operations expense, and

lower taxes other than income taxes, higher customer relations expense, and higher distribution maintenance expense. These increases are partially offset by lower income tax expense and lower depreciation. In addition, Cleco Power expects its postretirement benefit expenses to be affected by changes in discount rates, actual returns on plan assets, level of benefits provided, and actuarial assumptions used in the calculations. For more information on Cleco’s pension plan, see “— Critical Accounting Policies.”taxes.

These increases were partially offset by:

higher income taxes,

higher depreciation and amortization,

lower base revenue, and

the absence of a gain on sale of asset.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

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

FOR THE YEAR ENDED DEC. 31,

FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2015
2014
VARIANCE
CHANGE
Operating revenue
Base $ 670,530
$ 683,565
$ (13,035 ) (1.9 )%
Fuel cost recovery 471,859
542,395
(70,536 ) (13.0 )%
Electric customer credits (2,173 ) (23,530 ) 21,357
90.8 %
Other operations 67,109
64,893
2,216
3.4 %
Affiliate revenue 1,142
1,326
(184 ) (13.9 )%
Operating revenue, net $ 1,208,467
$ 1,268,649
$ (60,182 ) (4.7 )%
Operating expenses

Recoverable fuel and power purchased 471,864
542,397
70,533
13.0 %
Non-recoverable fuel and power purchased 31,348
27,985
(3,363 ) (12.0 )%
Other operations 128,697
116,664
(12,033 ) (10.3 )%
Maintenance 87,416
96,054
8,638
9.0 %
Depreciation and amortization 147,839
144,026
(3,813 ) (2.6 )%
Taxes other than income taxes 47,102
41,812
(5,290 ) (12.7 )%
Gain on sale of assets —
(4 ) (4 ) (100.0 )%
Total operating expenses 914,266
968,934
54,668
5.6 %
Operating income $ 294,201
$ 299,715
$ (5,514 ) (1.8 )%
Allowance for equity funds used during construction $ 3,063
$ 5,380
$ (2,317 ) (43.1 )%
Interest charges $ 76,560
$ 74,673
$ (1,887 ) (2.5 )%
Federal and state income taxes $ 79,294
$ 76,974
$ (2,320 ) (3.0 )%
Net income $ 141,350
$ 154,316
$ (12,966 ) (8.4 )%



	FOR THE YEAR ENDED DEC. 31,
			FAVORABLE/
(MILLION kWh)	2017	2016	(UNFAVORABLE)
Electric sales
Residential	3,526	3,671	(3.9	)%
Commercial	2,650	2,724	(2.7	)%
Industrial	2,078	1,988	4.5	%
Other retail	131	133	(1.5	)%
Total retail	8,385	8,516	(1.5	)%
Sales for resale	2,959	3,143	(5.9	)%
Total retail and wholesale customer sales	11,344	11,659	(2.7	)%

The following table shows the components of Cleco Power’s ~~net income for 2015~~ ~~decreased$13.0 million~~ ~~compared to 2014. Contributing factors include:~~

~~lower~~ base ~~revenue,~~

~~higher other operations expense,~~

~~higher taxes other than income taxes,~~

~~higher depreciation and amortization,~~

~~higher non-recoverable fuel and power purchased,~~

~~higher income taxes,~~

~~lower allowance for equity funds used during construction, and~~

~~higher interest charges.~~

~~These were partially offset by lower electric customer credits, lower maintenance, and higher other operations revenue.~~revenue:

FOR THE YEAR ENDED DEC. 31,

FAVORABLE/
(MILLION kWh) 2015
2014
(UNFAVORABLE)
Electric sales
Residential 3,789
3,783
0.2 %
Commercial 2,763
2,689
2.8 %
Industrial 1,927
2,212
(12.9 )%
Other retail 134
130
3.1 %
Total retail 8,613
8,814
(2.3 )%
Sales for resale 3,353
3,412
(1.7 )%
Unbilled (95 ) 171
(155.6 )%
Total retail and wholesale customer sales 11,871
12,397
(4.2 )%


	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/						FAVORABLE/
(THOUSANDS)	2015		2014		(UNFAVORABLE)		2017		2016		(UNFAVORABLE)
Electric sales
Residential	$	296,846	$	293,871	1.0	%	$	286,587	$	292,397	(2.0	)%
Commercial	191,202		188,012		1.7	%	188,431		191,440		(1.6	)%
Industrial	84,988		86,823		(2.1	)%	87,528		86,299		1.4	%
Other retail	10,558		10,215		3.4	%	10,592		10,589		—	%
Surcharge	21,597		15,833		36.4	%	20,965		21,175		(1.0	)%
Total retail	$	605,191	$	594,754	1.8	%	594,103		601,900		(1.3	)%
Sales for resale	62,768		81,371		(22.9	)%	57,629		59,074		(2.4	)%
Unbilled	2,571		7,440		(65.4	)%
Total retail and wholesale customer sales	$	670,530	$	683,565	(1.9	)%
Total base revenue							$	651,732	$	660,974	(1.4	)%

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 NOAA to determine cooling and heating degree-days.


			FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
				2015 CHANGE							2017 CHANGE
	2015	2014	NORMAL	PRIOR YEAR		NORMAL		2017	2016	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	3,272	2,780	2,780	17.7	%	17.7	%	3,044	3,309	2,779	(8.0	)%	9.5	%
Heating degree-days	1,271	1,833	1,546	(30.7	)%	(17.8	)%	1,029	1,145	1,546	(10.1	)%	(33.4	)%

Base

Base revenue decreased ~~$13.0~~$9.2 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to $5.8 million of lower ~~net~~rates to a site specific industrial customer, $4.3 million of lower usage as a result of milder weather and lower sales to wholesale customers, ~~including the expiration of a wholesale contract in December 2014, and~~$0.8 million due to lower ~~rates that began July 1, 2014,~~revenue related to ~~the FRP extension.~~MATS, and $0.1 million of lower other revenue. These decreases were partially offset by ~~higher revenue related to MATS and higher retail revenue related to usage.~~$1.8 million for annual rate adjustments.

Cleco Power expects to begin providing service to expansions of current customers’ operations, as well as service to new retail customers. These expansions of current customers’ operations and service to new retail customers are expected to contribute additional base revenue of ~~$2.0~~$3.2 million in ~~2017~~2018 and an additional ~~$0.8~~$1.9 million in ~~2018.~~2019. Cleco Power also expects increased base revenue of $7.1 million in 2018 and an additional $8.5 million in 2019 through an FRP rider associated with the recovery of expenditures for capital projects. In 2018, Cleco Power expects wholesale revenue to decrease by ~~$1.0~~$0.9 million ~~in 2016 and an additional $2.1 million in 2017~~ primarily due to the restructuring of ~~contracts, partially offset by the addition of new~~ contracts. ~~In 2018,~~ Cleco Power expects $1.7 million of additional

wholesale revenue in 2019 and an additional $1.2 million of ~~additional~~ wholesale ~~revenue.~~revenue in 2020 due to contractual increases and normal growth. For information on other expectations of future energy sales on Cleco Power, see “— Significant Factors Affecting Cleco Power,” “Cautionary Note Regarding Forward-Looking Statements,” and Part I, Item 1A, “Risk Factors — Future Electricity Sales.”

Fuel Cost Recovery/Recoverable Fuel and Power Purchased

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 charges. Approximately ~~74%~~76% of Cleco Power’s total fuel ~~cost~~costs during ~~2015~~2017 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. For more information on the accounting for MISO transactions, see Item 8, “Financial Statements and



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Accounting for MISO Transactions.”

~~Electric Customer Credits~~

Electric customer credits decreased $21.4 million in 2015 compared to 2014 primarily due to the absence of $22.3 million of provisions for refunds included in the June 2014 FRP extension and $1.6 million related to lower accruals for site-specific customers. These amounts were partially offset by $2.5 million related to accruals for anticipated refunds related to the transmission ROE dispute. For more information on ~~the FRP extension and the accrual of electric customer credits,~~Cleco Power’s fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1115 — ~~Regulation~~Litigation, Other Commitments and ~~Rates.~~Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Other Operations Revenue

Other operations revenue increased $8.9 million in 2017 compared to 2016 primarily due to $9.4 million of generation revenue from SSR payments, $1.7 million of higher forfeited discounts and reconnect fees mostly due to the absence of the 2016 customer rate credits as a result of the Merger and the absence of LPSC executive orders relating to 2016 flooding, and $0.5 million of higher miscellaneous revenue. These increases were partially offset by $2.3 million of lower transmission revenue from wholesale customers as a result of issuing customer credits relating to the MISO ROE complaints and $0.4 million of lower net transmission revenue. For more information on the ~~transmission ROE dispute,~~SSR, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1412 — ~~Litigation, Other Commitments~~Regulation and ~~Contingencies, and Disclosures about Guarantees~~ Rates — ~~Litigation — Transmission ROE.~~SSR.”

~~Other Operations Revenue~~

Other operations revenue increased $2.2 million in 2015 compared to 2014 primarily due to $3.5 million of higher transmission and distribution revenue, partially offset by $0.4 million of lower forfeited discounts, $0.3 million of lower reconnection fees, $0.3 million due to the absence of a gain associated with the extinguishment of the asbestos ARO, and $0.3 million of lower miscellaneous revenue.

Non-recoverable Fuel and Power Purchased

Non-recoverable fuel and power purchased increased ~~$3.4~~$0.1 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to $4.1 million of MISO SSR transmission expenses, $0.8 million related to ~~$4.5~~higher MISO administrative fees, and $0.6 million of ~~higher~~expenses related to flood damages. These increases were partially offset by a $2.3 million refund from MISO for wholesale customers relating to the MISO ROE complaints, $1.8 million of lower MISO transmission expenses, and ~~administrative fees~~$1.3 million due to the absence of expenses related to fuel accounting software. For more information on the SSR, see Item 8, “Financial Statements and ~~$0.1 million of higher miscellaneous expenses, partially offset by $0.6 million of lower capacity charges~~Supplementary Data — Notes to the Financial Statements — Note 12 — Regulation and ~~$0.6 million for a one-time facility credit.~~Rates — SSR.”

Other Operations Expense

Other operations expense ~~increased $12.0~~decreased $2.7 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to $2.1 million of higher ~~customer service expense, higher~~



CLECO
CLECO POWER		2017 FORM 10-K

capitalized administrative and general expenses, ~~driven~~$1.5 million for flood related uncollectible accounts deferred to regulatory assets, $1.5 million of lower employee benefits expenses, $1.3 million for lower provision for other uncollectible accounts, $0.9 million of higher company use of electricity, and $0.6 million of lower other operations expenses. These decreases were partially offset by $4.0 million of higher ~~pension expense,~~salaries and $1.2 million for higher ~~generation expense.~~fees for outside services.

Maintenance

Maintenance expense decreased ~~$8.6~~$5.8 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to $5.4 million of lower net generating station outage and routine maintenance expenses and $0.5 million of lower transmission and distribution routine maintenance expenses, partially offset by $0.1 million of higher miscellaneous maintenance expenses.

Depreciation and Amortization

Depreciation and amortization expense increased ~~$3.8~~$11.9 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to ~~$6.0~~$6.8 million of lower deferrals of production operations and maintenance expenses to a regulatory asset, ~~$3.9~~$4.5 million of ~~normal recurring~~higher depreciation due to additions to fixed assets, $2.0 million of lower deferrals of corporate franchise taxes, and ~~$3.2~~$0.3 million ~~for the~~of higher amortization of ~~new regulatory assets related~~storm damages which is based on collections from customers. Theses increases were partially offset by $1.7 million due to the ~~FRP extension. The increase was also due to $1.9 million~~absence of amortization related to a regulatory asset for state corporate franchise taxes, $1.2 million for the absence of the deferral of AMI revenue requirements to a regulatory asset, and $1.1 million of higher miscellaneous amortization. These amounts were partially offset by $13.5 million for the absence of amortization of the Evangeline PPA capacity costs.

applicable income tax guidance transition assets.

Taxes Other than Income Taxes

Taxes other than income taxes ~~increased $5.3~~decreased $1.7 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to $2.0 million of lower corporate franchise taxes and $0.4 million of lower property taxes. These decreases were partially offset by higher payroll taxes of $0.7 million.

Merger Commitment Costs

Merger commitment costs decreased $151.5 million in 2017 compared to 2016 due to the ~~absence~~close of ~~favorable settlements with taxing authorities.~~the Merger in April 2016.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction ~~decreased $2.3~~increased $3.9 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to ~~lower construction~~higher costs related to the St. Mary Clean Energy Center and other capital projects, partially offset by the completion of the ~~MATS~~Cenla Transmission Expansion project.

Other Income (Expenses), Net

Other income, net increased $0.6 million in 2017 compared to 2016 primarily due to $0.7 million of higher royalty income, $0.4 million of higher mutual assistance income, and $0.3 million due to the absence of a decrease in cash surrender value of life insurance policies. These increases were partially offset by $0.4 million due to the absence of a death benefit recognized on life insurance policies, $0.3 million of higher mutual assistance expenses, and $0.1 million due to higher miscellaneous expenses.

Interest Charges

Interest charges ~~increased $1.9~~decreased $7.1 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to ~~$5.0~~lower interest of $7.1 million ~~related~~due to long-term debt redeemed and replaced with lower interest rate debt in the ~~absence~~fourth quarter of ~~favorable settlements with taxing authorities and $0.7~~2016, $1.0 million ~~related to lower~~of higher allowance for borrowed funds used during construction, ~~primarily related~~and $0.9 million

due to ~~the completion~~scheduled repayments of ~~the MATS project.~~Cleco Katrina/Rita storm recovery bonds. These ~~increases~~decreases were partially offset by ~~$2.1~~a $1.9 million ~~related to the absence~~increase of ~~the customer surcredit, $1.6 million due to the retirement of long-term~~ debt ~~and $0.1 million of lower miscellaneous interest charges.~~expense amortizations.

Income Taxes

Federal and state income taxes increased ~~$2.3~~$49.0 million in ~~2015~~2017 compared to ~~2014. Tax expense increased~~2016 primarily due to ~~the absence of favorable settlements with taxing authorities and the flowthrough of state tax benefits. These increases were partially offset by~~$62.5 million for the change in pretax income, excluding AFUDC ~~equity.~~equity and $2.4 million for adjustments for tax returns filed. These increases were partially offset by $14.3 million for adjustments related to TCJA, $1.3 million for the flowthrough of state tax benefits, and $0.3 million for adjustments for permanent tax differences. The effective income tax rate is ~~35.9%,~~30.9% which is ~~higher~~different than the federal statutory rate primarily due to the TCJA, permanent tax differences, the flowthrough of benefits associated with AFUDC equity, adjustments for tax returns as filed, ~~tax credits,~~ and state tax expense.

~~Midstream~~Comparison of the Years Ended December 31, 2016, and 2015



Cleco
	SUCCESSOR			PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Operating revenue, net	$	853,005		$	299,870		$	1,209,402
Operating expenses	816,714			279,507			922,063
Operating income	$	36,291		$	20,363		$	287,339
Allowance for equity funds used during construction	$	3,735		$	723		$	3,063
Other income (expense), net	$	1,965		$	280		$	(1,933	)
Interest charges	$	89,766		$	22,123		$	77,991
Federal and state income tax (benefit) expense	$	(22,822	)	$	3,468		$	77,704
Net (loss) income	$	(24,113	)	$	(3,960	)	$	133,669

~~Significant Factors Affecting Midstream~~Cleco’s net loss attributable to the successor period April 13, 2016, through December 31, 2016, was $24.1 million. There were no significant changes in the underlying trends impacting net loss with the exception of the change in pretax loss primarily related to:

~~The transfer~~

$174.7 million of ~~Coughlin~~merger transaction and commitment costs,

$34.0 million of interest costs related to ~~Cleco Power occurred on March 15, 2014. As~~debt obtained as a result of ~~this transfer,~~ the Merger,

$7.5 million of an offset to operating ~~activity and operating earnings at Midstream are minimal. The Coughlin transfer changed~~revenue related to the ~~structure~~amortization of ~~Cleco’s internal organization and~~the intangible asset recorded for the fair value adjustment of wholesale power supply agreements as a result ~~Midstream is no longer disclosed~~of the Merger, and

$6.4 million of amortization of the fair value adjustment made as a ~~separate reportable segment. Management determined~~result of the ~~retrospective application of this transfer~~Merger to ~~be quantitatively and qualitatively immaterial when taken as a whole in relation to Cleco Power’s financial statements. As a result,~~ record the stepped-up basis for the Coughlin assets.

The effective income tax rate for the period was 48.6%.

Cleco’s segment reporting disclosures were not retrospectively adjusted to reflect the transfer. For information on the transfer of Coughlin to Cleco Power, see Item 8, “Financial Statements and Supplementary Data — Notesnet loss attributable to the ~~Financial Statements — Note 17 — Coughlin Transfer.”~~predecessor period January 1, 2016, through April 12, 2016, was $4.0 million. There were no significant changes in the underlying trends impacting net loss with the exception of the change in pretax loss primarily related to $34.9 million of merger transaction costs. The effective income tax rate for the period was (704.9%).

Cleco’s net income attributable to the predecessor year ended December 31, 2015, was $133.7 million. There were no significant changes in the underlying trends impacting net



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

~~Comparison of the Years Ended December 31, 2014, and 2013~~

~~Cleco Consolidated~~

~~Cleco Consolidated Results of Operations~~

FOR THE YEAR ENDED DEC. 31,

FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2014
2013
VARIANCE
CHANGE
Operating revenue, net $ 1,269,485
$ 1,096,714
$ 172,771
15.8 %
Operating expenses 983,453
788,382
(195,071 ) (24.7 )%
Operating income $ 286,032
$ 308,332
$ (22,300 ) (7.2 )%
Allowance for other funds used during construction $ 5,380
$ 4,081
$ 1,299
31.8 %
Other income $ 4,790
$ 13,857
$ (9,067 ) (65.4 )%
Interest charges $ 73,606
$ 84,254
$ 10,648
12.6 %
Federal and state income taxes $ 67,116
$ 79,575
$ 12,459
15.7 %
Net income applicable to common stock $ 154,739
$ 160,685
$ (5,946 ) (3.7 )%

Operating revenue, net of electric customer credits increased $172.8 million in 2014 compared to 2013 largely as a result of higher base revenue, higher fuel cost recovery revenue, and higher other operations revenue, partially offset by higher electric customer credits at Cleco Power.

Operating expenses increased $195.1 million in 2014 compared to 2013 primarily due to higher recoverable fuel and power purchased at Cleco Power, higher non-recoverable fuel and power purchased due to the expiration of a PPA when Coughlin was transferred to Cleco Power in March 2014, and Cleco’s participation in the energy market through MISO. Also contributing to this increase are Cleco Corporation merger transaction costs incurred in 2014, partially offset by the gain on the sale of property and favorable settlements with taxing authorities.

~~Allowance for equity funds used during construction increased $1.3 million in 2014 compared to 2013 primarily due to higher costs related to the MATS project.~~

Other income decreased $9.1 million in 2014 compared to 2013 primarily due to lower income related to the contractual expiration of underlying indemnifications resulting from the disposition of Acadia Unit 2 and the absence of a death benefit recognized on company-owned life insurance policies at Cleco Power.

Federal and state income taxes decreased $12.5 million in 2014 compared to 2013. Tax expense decreased primarily due to the change in pretax income, excluding AFUDC equity, settlements with taxing authorities, and tax returns filed. These decreases were partially offset by lower permanent tax differences and a decrease in tax credits.income. The effective income tax rate ~~is 30.3%, which is different than~~for the federal statutory rate primarily due to permanent tax differences, the flowthrough of state tax benefits, including AFUDC equity, settlements with taxing authorities, adjustments for tax returns as filed, tax credits, and state tax expense.

~~The effective tax rate of 30.3% for 2014~~period was lower than the effective tax rate of 33.1% for 2013 primarily due to settlements with taxing authorities, partially offset by permanent tax differences and lower tax credits. The current effective tax rate may not be indicative of future effective tax rates.36.8%.

Results of operations for Cleco Power are more fully described below.

~~Cleco Power~~



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2016			2015			VARIANCE			CHANGE
Operating revenue
Base	$	660,974		$	670,530		$	(9,556	)	(1.4	)%
Fuel cost recovery	430,255			471,859			(41,604		)	(8.8	)%
Electric customer credits	(1,513		)	(2,173		)	660			30.4	%
Other operations	68,573			67,109			1,464			2.2	%
Affiliate revenue	884			1,142			(258		)	(22.6	)%
Operating revenue, net	$	1,159,173		$	1,208,467		$	(49,294	)	(4.1	)%
Operating expenses
Recoverable fuel and power purchased	430,422			471,864			41,442			8.8	%
Non-recoverable fuel and power purchased	35,684			31,348			(4,336		)	(13.8	)%
Other operations	125,892			128,697			2,805			2.2	%
Maintenance	93,340			87,416			(5,924		)	(6.8	)%
Depreciation and amortization	146,142			147,839			1,697			1.1	%
Taxes other than income taxes	48,287			47,102			(1,185		)	(2.5	)%
Merger commitment costs	151,501			—			(151,501		)	—	%
Gain on sale of asset	(1,095		)	—			1,095			—	%
Total operating expenses	1,030,173			914,266			(115,907		)	(12.7	)%
Operating income	$	129,000		$	294,201		$	(165,201	)	(56.2	)%
Allowance for equity funds used during construction	$	4,458		$	3,063		$	1,395		45.5	%
Federal and state income tax expense	$	18,369		$	79,294		$	60,925		76.8	%
Net income	$	39,128		$	141,350		$	(102,222	)	(72.3	)%

~~Cleco Power’s Results of Operations~~

FOR THE YEAR ENDED DEC. 31,

FAVORABLE/(UNFAVORABLE)
(THOUSANDS) 2014
2013
VARIANCE
CHANGE
Operating revenue
Base $ 683,565
$ 654,015
$ 29,550
4.5 %
Fuel cost recovery 542,395
393,533
148,862
37.8 %
Electric customer credits (23,530 ) (1,836 ) (21,694 ) *
Other operations 64,893
48,909
15,984
32.7 %
Affiliate revenue 1,326
1,338
(12 ) (0.9 )%
Operating revenue, net $ 1,268,649
$ 1,095,959
$ 172,690
15.8 %
Operating expenses

Recoverable fuel and power purchased 542,397
393,534
(148,863 ) (37.8 )%
Non-recoverable fuel and power purchased 27,985
13,302
(14,683 ) (110.4 )%
Other operations 116,664
114,884
(1,780 ) (1.5 )%
Maintenance 96,054
85,638
(10,416 ) (12.2 )%
Depreciation and amortization 144,026
135,717
(8,309 ) (6.1 )%
Taxes other than income taxes 41,812
46,203
4,391
9.5 %
Gain on sale of assets (4 ) —
4
— %
Total operating expenses 968,934
789,278
(179,656 ) (22.8 )%
Operating income $ 299,715
$ 306,681
$ (6,966 ) (2.3 )%
Allowance for equity funds used during construction $ 5,380
$ 4,081
$ 1,299
31.8 %
Other income $ 1,483
$ 4,883
$ (3,400 ) (69.6 )%
Other expense $ 2,322
$ 4,277
$ 1,955
45.7 %
Interest charges $ 74,673
$ 82,677
$ 8,004
9.7 %
Federal and state income taxes $ 76,974
$ 79,381
$ 2,407
3.0 %
Net income $ 154,316
$ 150,410
$ 3,906
2.6 %
* Not meaningful

Cleco Power’s net income for ~~2014~~ ~~increased~~ ~~$3.9~~2016 decreased $102.2 million compared to ~~2013. Contributing factors include:~~2015 primarily as a result of the following factors:

higher merger commitment costs,

lower base revenue,

higher ~~other operations revenue,~~maintenance expense,

~~lower interest charges,~~higher non-recoverable fuel and power purchased, and

~~lower~~higher taxes other than income ~~taxes,~~taxes.

These decreases were partially offset by:

lower income taxes,

lower other operations expense,

lower depreciation and amortization,

higher other operations revenue,

higher allowance for equity funds used during ~~construction.~~

~~These were partially offset by:~~

construction, and

higher ~~electric customer credits,~~

~~higher non-recoverable fuel and power purchased,~~

~~higher other operations expense and maintenance,~~

~~higher depreciation and amortization, and~~

~~lower other income.~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

gain on sale of an asset.

FOR THE YEAR ENDED DEC. 31,

FAVORABLE/
(MILLION kWh) 2014
2013
(UNFAVORABLE)
Electric sales
Residential 3,783
3,714
1.9 %
Commercial 2,689
2,672
0.6 %
Industrial 2,212
2,322
(4.7 )%
Other retail 130
134
(3.0 )%
Total retail 8,814
8,842
(0.3 )%
Sales for resale 3,412
2,057
65.9 %
Unbilled 171
61
180.3 %
Total retail and wholesale customer sales 12,397
10,960
13.1 %

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


	FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
						FAVORABLE/				FAVORABLE/
(THOUSANDS)	2014		2013			(UNFAVORABLE)
(MILLION kWh)								2016	2015	(UNFAVORABLE)
Electric sales
Residential	$	293,871	$	297,158		(1.1	)%	3,671	3,745	(2.0	)%
Commercial	188,012		189,807			(0.9	)%	2,724	2,732	(0.3	)%
Industrial	86,823		91,093			(4.7	)%	1,988	1,916	3.8	%
Other retail	10,215		10,590			(3.5	)%	133	133	—	%
Storm surcharge	15,833		14,978			5.7	%
Other	—		(4,694		)	100.0	%
Total retail	$	594,754	$	598,932		(0.7	)%	8,516	8,526	(0.1	)%
Sales for resale	81,371		51,922			56.7	%	3,143	3,345	(6.0	)%
Unbilled	7,440		3,161			135.4	%
Total retail and wholesale customer sales	$	683,565	$	654,015		4.5	%	11,659	11,871	(1.8	)%

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



	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/
(THOUSANDS)	2016		2015		(UNFAVORABLE)
Electric sales
Residential	$	292,397	$	298,172	(1.9	)%
Commercial	191,440		192,389		(0.5	)%
Industrial	86,299		85,675		0.7	%
Other retail	10,589		10,637		(0.5	)%
Storm surcharge	21,175		21,121		0.3	%
Total retail	601,900		607,994		(1.0	)%
Sales for resale	59,074		62,536		(5.5	)%
Total base revenue	$	660,974	$	670,530	(1.4	)%


	FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
				2014 CHANGE							2016 CHANGE
	2014	2013	NORMAL	PRIOR YEAR		NORMAL		2016	2015	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	2,780	2,954	2,776	(5.9	)%	0.1	%	3,309	3,272	2,779	1.1	%	19.1	%
Heating degree-days	1,833	1,559	1,589	17.6	%	15.4	%	1,145	1,271	1,546	(9.9	)%	(25.9	)%

Base

Base revenue ~~increased $29.6~~decreased $9.6 million ~~during 2014~~in 2016 compared to ~~2013. The increase was~~2015 primarily due to $6.4 million of lower sales due to usage, including warmer winter weather and lower sales to ~~a new~~ wholesale ~~customer that began~~customers and $3.2 million driven by lower revenue related to the absence of additional MATS revenue recognized in ~~April 2014.~~2015.

Fuel Cost Recovery/Recoverable Fuel and Power Purchased

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 charges. Approximately ~~74%~~75% of Cleco Power’s total fuel cost during ~~2014~~2016 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. For more information on the accounting for MISO transactions, see Item 8, “Financial Statements and



CLECO
CLECO POWER		2017 FORM 10-K

Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Accounting for MISO Transactions.”

~~Electric Customer Credits~~

~~Electric customer credits increased $21.7 million in 2014 compared to 2013 primarily due to provisions for refunds as a result of the FRP extension approved on June 18, 2014.~~ For more information on ~~the FRP extension and the accrual of electric customer credits,~~Cleco Power’s fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1115 — ~~Regulation~~Litigation, Other Commitments and ~~Rates.~~Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Other Operations Revenue

Other operations revenue increased ~~$16.0~~$1.5 million in ~~2014~~2016 compared to ~~2013~~2015 primarily due to ~~$12.4 million of higher wholesale transmission revenue, $2.5~~$2.8 million of higher transmission revenue from a wholesale customer and ~~distribution charges revenue, and $1.1~~$0.6 million of higher pole attachment rentals. These increases were partially offset by $1.7 million of lower forfeited discounts mostly due to customer rate credits in the third quarter of 2016 as a result of the Merger and $0.2 million of lower miscellaneous revenue.

Non-Recoverable Fuel and Power Purchased

Non-recoverable fuel and power purchased increased ~~$14.7~~$4.3 million in ~~2014~~2016 compared to ~~2013~~2015 primarily ~~due~~related to ~~Cleco’s participation in the energy market through~~$3.1 million of higher expenses related to MISO transmission costs and $1.3 million of expenses related to fuel accounting software, partially offset by ~~transmission reimbursements and~~$0.1 million of lower ~~capacity charges.~~miscellaneous expenses.

Other Operations Expense ~~and Maintenance~~

Other operations ~~and maintenance expenses increased $12.2~~expense decreased $2.8 million ~~during 2014~~in 2016 compared to ~~2013~~2015 primarily due to $5.4 million of lower administrative and general expenses driven by lower salaries and benefits expense and $0.1 million of lower miscellaneous expense. These decreases were partially offset by $1.6 million of higher generation expense and $1.1 million of higher customer service expense primarily related to an increase in the ~~transfer of Coughlin~~provision for uncollectible accounts.

Maintenance

Maintenance expense increased $5.9 million in 2016 compared to ~~Cleco Power as well as~~2015 primarily due to higher ~~planned~~ generating station ~~maintenance~~ outage expenses.

Depreciation and Amortization

Depreciation and amortization expense ~~increased $8.3~~decreased $1.7 million ~~during 2014~~in 2016 compared to ~~2013~~2015 primarily due to ~~$5.2~~$5.5 million ~~related~~of higher deferrals of production operations and maintenance expenses to a regulatory asset, $1.3 million of higher deferrals of corporate franchise taxes to a regulatory asset, and $0.5 million of lower amortization of the corporate franchise taxes regulatory asset. These decreases were partially offset by $3.1 million of normal recurring additions to fixed assets, ~~and $4.7 million related to the transfer of Coughlin to Cleco Power. These amounts were partially offset by~~ $1.6 million of ~~lower~~higher amortization ~~expense related to Evangeline PPA capacity costs~~of the production operations and ~~the establishment of a~~maintenance regulatory asset, ~~to recover corporate franchise taxes, partially offset by the~~$0.8 million of higher amortization of ~~new regulatory assets related to the FRP extension.~~storm damages which is based on collections from customers, and $0.1 million of miscellaneous amortizations.

Taxes Other Than Income Taxes

Taxes other than income taxes ~~decreased $4.4~~increased $1.2 million ~~during 2014~~in 2016 compared to ~~2013~~2015 primarily due to ~~favorable settlements with taxing authorities, partially offset by~~ higher property ~~taxes as~~taxes.

Merger Commitment Costs

Merger commitment costs increased $151.5 million in 2016 compared to 2015 due to $136.0 million of customer rate

credits, a ~~result~~$7.0 million one-time contribution for economic development in Cleco Power’s service territory to be administered by the LED, a $6.0 million accrual of ~~the transfer~~charitable contributions to be disbursed over five years, and $2.5 million of ~~Coughlin~~contributions for economic development for Louisiana state and local organizations to ~~Cleco Power.~~be disbursed over five years.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction increased ~~$1.3~~$1.4 million ~~during 2014~~in 2016 compared to ~~2013~~2015 primarily due to higher construction costs related to ~~the MATS project.~~various projects.

~~Other Income~~

Other income decreased $3.4 million during 2014 compared to 2013 primarily due to the absence of $2.3 million of a death benefit recognized on company-owned life insurance policies in 2013, $0.8 million of lower royalty income, and $0.6 million of lower revenue from mutual assistance to other utilities for restoration efforts. These amounts were partially offset by $0.3 million of higher miscellaneous income.

~~Other Expense~~

~~Other expense decreased $2.0 million during 2014 compared to 2013 primarily due to the absence of a decrease in the cash surrender value of company-owned life insurance policies of~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

$1.9 million related to a death benefit recognized and $0.6 million of lower expenses from mutual assistance to other utilities for restoration efforts. These amounts were partially offset by $0.5 million of higher miscellaneous expenses.

~~Interest Charges~~

Interest charges decreased $8.0 million during 2014 compared to 2013 primarily due to $3.8 million related to favorable settlements with taxing authorities, $3.8 million related to the customer surcredit, and $1.3 million due to the retirement of senior notes, partially offset by $0.9 million related to GO Zone bonds.

Income Taxes

Federal and state income taxes decreased ~~$2.4~~$60.9 million ~~during 2014~~in 2016 compared to ~~2013.~~2015. Tax expense decreased primarily due to ~~settlements with taxing authorities~~$64.5 million for the change in pretax income, excluding AFUDC equity and $2.3 million for adjustments for tax returns filed. These decreases were partially offset by $4.5 million for the ~~change in pretax income, excluding AFUDC equity, lower~~flowthrough of state tax benefits, $0.9 million for tax credits, $0.3 million for miscellaneous tax items, and $0.2 million for adjustments for permanent tax ~~differences, and a decrease in tax credits.~~differences. The effective income tax rate is ~~33.3%~~32.0%, which is lower than the federal statutory rate primarily due to permanent tax differences, the flowthrough of ~~state tax~~ benefits ~~including~~associated with AFUDC equity, ~~settlements with taxing authorities,~~ adjustments for tax returns as filed, tax credits, and state tax expense.



CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

For a narrative analysis of the results of operations explaining the reasons for material changes in the amount of revenue and expense items of Cleco Power between the year ended December 31, ~~2015,~~2017, and the year ended December 31, ~~2014,~~2016, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2015,~~2017, and ~~2014~~2016 — Cleco Power.”

For a narrative analysis of the results of operations explaining the reasons for material changes in the amount of revenue and expense items of Cleco Power between the year ended December 31, ~~2014,~~2016, and the year ended December 31, ~~2013,~~2015, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2014,~~2016, and ~~2013~~2015 — Cleco Power.”

The narrative analysis referenced above should be read in combination with Cleco Power’s Financial Statements and the Notes contained in this Form 10-K.



CRITICAL ACCOUNTING POLICIES

Cleco’s critical accounting policies include accounting policies that are important to Cleco’s financial condition and results of operations and that require management to make difficult, subjective, or complex judgments about future events, which could result in a material impact to the financial statements of Cleco. The preparation of financial statements contained in this report requires management to make estimates and assumptions. Estimates and assumptions about future events and their effects cannot be made with certainty. These estimates involve judgments regarding many factors that in and of themselves could materially affect the financial statements and disclosures. On an ongoing basis, these estimates and assumptions are evaluated and, if necessary, adjustments are made when warranted by new or updated information or by a change in circumstances or environment. Actual results may differ significantly from these estimates under different assumptions or conditions. For more information on Cleco’s accounting policies, see Item 8, ~~“Financial~~



CLECO
CLECO POWER		2017 FORM 10-K

“Financial Statements and Supplementary Data — Notes to the

Financial Statements — Note 2 — Summary of Significant Accounting ~~Policies.~~Policies.”

Cleco believes that the following are the most significant critical accounting policies:

To determine assets, liabilities, and expenses relating to pension and other postretirement benefits, management must make assumptions about future trends. Assumptions and estimates include, but are not limited to, discount ~~rate,~~rates, expected return on plan assets, mortality rates, future rate of compensation increases, and medical inflation trend rates. These assumptions are reviewed and updated on an annual basis. Changes in the rates from year-to-year and newly-enacted laws could have a material effect on Cleco’s financial condition and results of operations by changing the recorded assets, liabilities, expense, or required funding of the pension plan obligation. One component of pension expense is the expected return on plan assets. It is an assumed percentage return on the market-related value of plan assets. The market-related value of plan assets differs from the fair value of plan assets by the amount of deferred asset gains or losses. Actual asset returns that differ from the expected return on plan assets are deferred and recognized in the market-related value of assets on a straight-line basis over a five-year period. The ~~2015~~2017 return on plan assets was ~~(2.90)%~~16.32% compared to an expected long-term return of ~~6.15%~~6.08%. For ~~2014~~2016, the return on plan assets was ~~11.70%~~10.90% compared to an expected long-term return of ~~6.76%~~6.21%. For the calculation of the ~~2016~~2018 periodic expense, Cleco ~~is increasing~~decreased the expected long-term return on plan assets to ~~6.21%~~5.86%.

Management uses a theoretical bond portfolio in order to calculate the discount rate for the measurement of liabilities. As a result of the annual review of assumptions, the pension plan discount rate ~~increased~~decreased from ~~4.21%~~4.27% to ~~4.62%~~3.73% for the December 31, ~~2015,~~2017, measurement of liabilities. Pension expense is expected to decrease by approximately $4.8 million in 2016 compared to 2015, primarily due to the increase in the discount rate. Because the assumption is evaluated yearly, the decrease may not extend beyond 2016.

A change in the assumed discount rate creates a deferred actuarial gain or loss. Generally, when the assumed discount rate decreases compared to the prior measurement date, a deferred actuarial loss is created. When the assumed discount rate increases compared to the prior measurement date, a deferred actuarial gain is created. Actuarial gains and losses also are created when actual results, such as compensation increases, differ from assumptions. Historically, Cleco Power has been allowed to recover pension plan expenses; therefore, deferred actuarial gains and losses are recorded as a regulatory asset or liability. The net of the deferred gains and losses is amortized to pension expense over the average service life of the remaining plan participants (approximately 10 years as of December 31, ~~2015,~~2017, for Cleco’s plan) when it exceeds certain thresholds. This approach of amortizing gains and losses has the effect of reducing the volatility of pension expense. Over time, it is not expected to reduce or increase the pension expense relative to an approach that immediately recognizes losses and gains.

In October ~~2014, the Society of Actuaries released a new set of mortality tables and a new mortality improvement scale which indicated significant increases to life~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

expectancies. As a result, in December 2014, Cleco updated its mortality assumptions using the new base table and an adjusted mortality improvement scale. The updates resulted in an increase of $28.1 million in the pension plan obligation at December 31, 2014. Also, these updated mortality assumptions increased pension expense by approximately $5.3 million in 2015 compared to 2014.

~~In October~~ 2015, the Society of Actuaries released ~~another~~an updated mortality improvement scale which indicated lower mortality improvements than previously indicated in the 2014 mortality ~~improvement~~ scale. As a result, in December 2015, Cleco updated its mortality assumptions using the new data released by the Society of Actuaries. The update resulted in

a decrease of $7.2 million in the pension plan obligation at December 31, 2015.

In October 2016, the Society of Actuaries released another updated mortality improvement scale which indicated lower mortality improvements than previously indicated in the 2015 mortality improvement scale. As a result, in December 2016, Cleco updated its mortality assumptions using the new data released by the Society of Actuaries. The update resulted in a decrease of $6.8 million in the pension plan obligation at December 31, 2016.

In October 2017, the Society of Actuaries released another updated mortality improvement scale which indicated lower mortality improvements than previously indicated in the 2016 mortality improvement scale. As a result, in December 2017, Cleco updated its mortality assumptions using the new data released by the Society of Actuaries. The update resulted in a decrease of $3.1 million in the pension plan obligation at December 31, 2017.

The following table shows the impact of a 0.5% change in Cleco’s pension plan discount rate, salary scale, and rate of return on plan assets:


ACTUARIAL ASSUMPTION (THOUSANDS)	CHANGE IN ASSUMPTION	CHANGE IN PROJECTED BENEFIT OBLIGATION			CHANGE IN ESTIMATED BENEFIT COST			CHANGE IN ASSUMPTION	CHANGE IN PROJECTED BENEFIT OBLIGATION			CHANGE IN ESTIMATED BENEFIT COST
Discount rate	0.5% increase	$	(32,611	)	$	(3,178	)	0.5% increase	$	(39,325	)	$	(3,630	)
	0.5% decrease	$	36,570		$	3,504		0.5% decrease	$	44,193		$	4,005
Salary scale	0.5% increase	$	7,962		$	1,533		0.5% increase	$	8,992		$	1,678
	0.5% decrease	$	(7,226	)	$	(1,386	)	0.5% decrease	$	(8,199	)	$	(1,532	)
Expected return on assets	0.5% increase	$	—		$	(1,935	)	0.5% increase	$	—		$	(2,030	)
	0.5% decrease	$	—		$	1,935		0.5% decrease	$	—		$	2,030

Cleco Power did not make any required or discretionary contributions to the pension plan in ~~2015 and 2014. In 2013, Cleco Power made $34.0 million in discretionary contributions to the pension plan designated for the 2012 plan year.~~2017, 2016, or 2015. Based on current funding assumptions, management estimates that ~~$25.3~~$8.3 million in pension contributions will be required through ~~2019.~~2022. Future discretionary contributions may be made depending on changes in assumptions, the ability to utilize the contribution as a tax deduction, and requirements concerning recognizing a minimum pension liability. Future required contributions are driven by liability funding target percentages set by law which could cause the required contributions to change from ~~year to year.~~year-to-year. The ultimate amount and timing of the contributions will be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions.

For more information on pension and other postretirement benefits, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 89 — Pension Plan and Employee ~~Benefits.~~Benefits.”

Cleco has concluded it is probable that regulatory assets can be recovered from ratepayers in future rates. At December 31, 2017, Cleco Power had $146.8 million in regulatory assets, net. As a result of the Merger, Cleco Holdings recognized regulatory assets. At December 31, 2017, Cleco Holdings had $183.8 million of regulatory assets. Actions by the LPSC could limit the recovery of Cleco’s regulatory assets, causing Cleco to record a loss on some or all of the regulatory assets. If future recovery of costs ceases to be probable, Cleco Holdings could be



CLECO
CLECO POWER		2017 FORM 10-K

required to record a loss of its regulatory assets associated with acquisition adjustments. For more information on the LPSC and regulatory assets, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Regulation,” and “Note 4 — Regulatory Assets and Liabilities.”

Income tax expense and related balance sheet amounts are comprised of a “current” portion and a “deferred” portion. The current portion represents Cleco’s estimate of the income taxes payable or receivable for the current year. The deferred portion represents Cleco’s estimate of the future income tax effects of events that have been recognized in the financial statements or income tax returns in the current or prior years. Cleco makes assumptions and estimates when it records income taxes, such as its ability to deduct items on its tax returns, the timing of the deduction, and the

effect of regulation ~~by the LPSC~~ on income taxes. Cleco’s income tax expense and related assets and liabilities could be affected by changes in its assumptions and estimates and by ultimate resolution of assumptions and estimates with taxing authorities. The actual results may differ from the estimated results based on these assumptions and may have a material effect on Cleco’s results of operations.

For more information on income taxes, see Item 8, “Financial Statements and ~~Supplemental~~Supplementary Data — Notes to the Financial Statements — Note 910 — Income ~~Taxes.~~Taxes.”

Cleco is currently involved in certain legal proceedings and management has estimated the probable costs for the resolution of these claims. These estimates are based on an analysis of potential results, assuming a combination of litigation and settlement assumptions. For more information on legal proceedings affecting Cleco, see Part I, Item 1, “Business — Environmental Matters — Air Quality,” Item 1A, “Risk Factors — ~~Agreement and Plan of Merger,” and “—~~Litigation,” and Item 8, “Financial Statements and ~~Supplemental~~Supplementary Data — Notes to the Financial Statements — Note 1415 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

Assets acquired and liabilities assumed in an acquired business are recorded at their estimated fair values on the date of acquisition. The difference between the purchase price amount and the net fair value of assets acquired and liabilities assumed is recognized as goodwill on the balance sheet if it exceeds the estimated fair value. On April 13, 2016, in connection with the completion of the Merger, Cleco recognized goodwill of $1.49 billion. Goodwill is required to be tested for impairment at the reporting segment level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting segment below its carrying value. Additionally, on the date of the Merger, intangible assets were recognized for fair value adjustments of the Cleco trade name and long-term wholesale power supply contracts. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment, often utilizing independent valuation experts, and involves the use of significant estimates and assumptions. Management’s judgments and estimates can materially impact the financial statements in periods after acquisition, such as through depreciation, amortization, and goodwill

impairment. For more information on intangible assets and goodwill recorded in connection with the Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 17 — Intangible Assets and Goodwill.”

Cleco Power

Cleco Power’s retail rates are regulated by the LPSC. Future rate changes could have a material impact on the results of operations, financial condition, or cash flows of Cleco Power. Areas that could be materially impacted by future actions of regulators are described below:

The LPSC determines the ability of Cleco Power to recover prudent costs incurred in developing long-lived assets. If the LPSC were to rule that the cost of current or future long-lived assets was imprudent and not recoverable, Cleco Power could be required to write down the imprudent cost and incur a corresponding impairment loss. At December 31, ~~2015~~2017, the carrying value of Cleco Power’s long-lived assets was $~~3.12~~3.18 billion. Currently, Cleco Power has concluded that none of its long-lived assets are impaired.

~~Cleco Power has concluded it is probable that regulatory assets can be recovered from ratepayers in future rates. At~~ ~~December 31, 2015, Cleco Power had~~ ~~$548.3 million~~ in regulatory assets, net of regulatory liabilities. Actions by the LPSC could limit the recovery of these regulatory assets, causing Cleco Power to record a loss on some or all of the regulatory assets. For more information on the LPSC and regulatory assets, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Regulation,” “Note 3 — Regulatory Assets and Liabilities,” and “— Financial Condition — Regulatory and Other Matters — Lignite Deferral.”

The LPSC determines the amount and type of fuel and purchased power expenses that Cleco Power can charge customers through the FAC. Changes in the determination of allowable costs already incurred by Cleco Power could cause material changes in fuel revenue. ~~On February 3,~~Cleco Power has FAC filings for 2016 ~~the LPSC initiated an audit of Cleco Power’s fuel~~ and ~~purchased power expenses for the period January 2014 through December 2015. The total amount of fuel expense~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

~~included in this audit is $582.6 million.~~thereafter that are subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to ~~this audit.~~these filings. For more information on LPSC fuel audits, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1415 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees —Litigation — LPSC Audits.” For information on fuel revenue, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2015,~~2017, and ~~2014~~2016 — Cleco Power — Cleco Power’s Results of Operations — Fuel Cost Recovery/Recoverable Fuel and Power Purchased.”

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 ~~Corporation’s~~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 ~~Corporation~~Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for



CLECO
CLECO POWER		2017 FORM 10-K

companies with comparable credit ratings. The following table presents the credit ratings of Cleco ~~Corporation~~Holdings and Cleco Power at December 31, ~~2015~~2017:



	SENIOR UNSECURED DEBT		CORPORATE CREDIT
	MOODY’S	S&P	S&P
Cleco ~~Corporation~~Holdings	~~Baa1~~Baa3	~~N/A~~BBB-	~~BBB+~~BBB-
Cleco Power	A3	BBB+	BBB+

~~Upon announcement of the Merger, Moody’s and S&P placed Cleco Corporation and Cleco Power on negative outlook and CreditWatch negative, respectively.~~ On February 25, 2016, S&P changed the outlook for Cleco Corporation and Cleco Power from CreditWatch negative to CreditWatch developing. Prior to close of the Merger or upon termination of the Merger Agreement, it is expected that the credit rating agencies will update their ratings on both Cleco Corporation and Cleco Power7, 2018, taking into consideration the ~~results of the merger transaction.~~pending NRG South Central acquisition, Moody’s placed Cleco Holdings’ Baa3 credit rating on review for downgrade and affirmed Cleco Power at A3 (stable). Also on February 7, 2018, S&P affirmed Cleco Holdings’ and Cleco Power’s credit ratings at BBB- (stable) and BBB+ (stable), respectively.

Cleco notes that 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.

Cleco ~~Corporation~~Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest rating held. Savings are dependent upon the level of borrowings. If Cleco ~~Corporation~~Holdings or Cleco Power’s credit ratings were to be downgraded by Moody’s or S&P, Cleco ~~Corporation~~Holdings and/or Cleco Power would be required to pay

additional fees and incur higher interest rates for borrowings under their respective credit facilities. Cleco Power’s collateral for derivatives is based on the lowest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s or S&P, Cleco Power would be required to post additional collateral for derivatives.

With respect to any open power or natural gas trading positions that Cleco Power may initiate in the future, Cleco Power may be required to provide credit support or pay liquidated damages. The amount of credit support that Cleco Power may be required to provide at any point in the future is dependent on the amount of the initial transaction, changes in the market price of power and natural gas, changes in open power and gas positions, and changes in the amount counterparties owe ~~Cleco.~~Cleco Power. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

Cleco Power ~~is integrated into~~participates in the MISO ~~market. MISO~~market, which operates a fully functioning RTO market with two major market processes: the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. Both use market-based mechanisms to manage transmission congestion across the MISO market area. MISO requires Cleco Power to provide credit support which may increase or decrease due to the timing of the settlement schedules. At December 31, ~~2015,~~2017, Cleco Power had a $2.0 million letter of credit to MISO pursuant to the credit requirements of FTRs. The letter of credit automatically renews each ~~year and reduces Cleco Power’s credit facility capacity.~~year. For more information about MISO, see “— Regulatory and Other Matters — Transmission Rates of Cleco Power.”

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 lower interest rates to which the Registrants have been exposed have been beneficial to debt issuances; however, these rates have negatively affected interest income for the Registrants’ short-term investments.

2017 Tax Reform

The TCJA was signed into law on December 22, 2017. The provisions of the law reduce the top statutory corporate income tax rate from 35% to 21%, generally allow for 100% bonus depreciation for new and used equipment purchased after September 27, 2017, generally restrict deduction of interest expense to 30% of adjusted taxable EBITDA, and repeal the corporate alternative minimum tax. The regulatory treatment for the change in the statutory corporate income tax rate could decrease Cleco Power’s future retail rates, resulting in lower cash flows. As defined by the TCJA, rate regulated activities are not allowed to utilize 100% bonus depreciation and are not subject to the restricted interest deduction. At December 31, 2017, Cleco reduced net accumulated deferred income tax assets and liabilities (ADIT) because of the reduction in the income tax rate from 35% to 21%. While activities not subject to cost of service rate regulation record the reduction in accumulated deferred income tax assets and liabilities in income tax expense, Cleco Power is required to recognize a regulatory liability for the portion of the net reduction subject to regulatory treatment. The table below summarizes the effects on Cleco and Cleco Power for the TCJA:



Cleco												(THOUSANDS)
ADIT BEFORE INCOME TAX REFORM			ADIT AFTER INCOME TAX REFORM			NET REDUCTION			RECOGNIZED AS REGULATORY LIABILITY			RECOGNIZED IN INCOME TAX EXPENSE
$	(801,692	)	$	(406,811	)	$	(394,881	)	$	(348,590	)	$	(46,291	)



Cleco Power												(THOUSANDS)
ADIT BEFORE INCOME TAX REFORM			ADIT AFTER INCOME TAX REFORM			NET REDUCTION			RECOGNIZED AS REGULATORY LIABILITY			RECOGNIZED IN INCOME TAX EXPENSE
$	(811,079	)	$	(448,197	)	$	(362,882	)	$	(348,590	)	$	(14,292	)

Cleco expects current and deferred income tax expense in future periods will be lower than in past periods. Cleco also expects lower cash taxes to be paid for federal income taxes; however, higher income taxes may be paid for state income taxes because of the lower federal income tax deduction.

The reduction to ADIT discussed above, including the effects on income tax expense, regulatory liabilities, and effects on future periods are provisional and subject to change. The accounting is not complete due to the timing of the final passage of the TCJA, the complexity of the TCJA, the complexity of remeasuring ADIT, and the uncertainty of regulatory treatment. Additional analysis of the TCJA, the inventory of items that give rise to temporary differences, and additional analysis of items requiring normalization is required before accounting for the TCJA is considered complete under the authoritative guidance for income taxes. Cleco expects any final adjustments to the provisional amounts to be recorded by the fourth quarter of 2018, which could have a material



CLECO
CLECO POWER		2017 FORM 10-K

adverse effect on the results of operations of Cleco. Due to the uncertainty around the regulatory treatment, the entire regulatory liability is reflected in non-current liabilities.

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally at the date of acquisition or debt issuance. Cleco ~~Corporation~~ and Cleco Power are required to disclose the fair value of certain assets and liabilities by one of three levels. Other financial assets and liabilities, such as long-term debt, are reported at their carrying values at their date of issuance on the consolidated balance



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

sheets with their fair values as of the balance sheet date disclosed within the three levels. For more information about fair value levels, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 56 — Fair Value ~~Accounting.~~Accounting .”

Cash Generation and Cash Requirements

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~~company purposes. ~~Cleco’s~~Cleco and Cleco Power’s restricted cash and cash equivalents consisted of:


Cleco
	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2015		2014		2017		2016
Current:
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,263	$	8,986	$	8,597	$	9,213
Non-current:
Cleco Power’s charitable contributions					1,200		1,200
Cleco Power’s rate credit escrow					3,284		12,671
Total current					13,081		23,084
Non-current
Diversified Lands’ mitigation escrow	21		21		21		21
Cleco Power’s future storm restoration costs	16,174		14,915		14,456		17,379
Cleco Power’s building renovation escrow	—		194
Cleco Power’s charitable contributions					3,575		4,179
Cleco Power’s rate credit escrow					2,029		1,831
Total non-current	16,195		15,130		20,081		23,410
Total restricted cash and cash equivalents	$	25,458	$	24,116	$	33,162	$	46,494



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2017		2016
Current
Cleco Katrina/Rita’s storm recovery bonds	$	8,597	$	9,213
Charitable contributions	1,200		1,200
Rate credit escrow	3,284		12,671
Total current	13,081		23,084
Non-current
Future storm restoration costs	14,456		17,379
Charitable contributions	3,575		4,179
Rate credit escrow	2,029		1,831
Total non-current	20,060		23,389
Total restricted cash and cash equivalents	$	33,141	$	46,473

Cleco Katrina/Rita has the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of administration fees, interest, and principal on storm recovery bonds. ~~During~~The change from December 31, 2016, to December 31, ~~2015~~2017, was due to Cleco Katrina/Rita ~~collected $21.2~~using $9.1 million ~~net of administration fees. In~~and $8.8 million in March and September ~~2015, Cleco Katrina/Rita used $8.1 million and $7.7 million,~~2017, respectively, for scheduled storm recovery bond principal payments and ~~$2.6~~$1.9 million and ~~$2.5~~$1.7 million, respectively, for related interest ~~payments.~~payments, partially offset by collecting $20.9 million net of administration fees.

In ~~connection~~April 2016, in accordance with ~~Cleco Power’s building modernization project,~~the Merger Commitments, Cleco Power ~~was required~~established a $6.0 million charitable contribution fund to ~~establish~~be disbursed over five years and deposited $136.0 million of rate credit funds into an escrow ~~account~~account. In April 2016, the LPSC voted to issue the rate credits equally to customers with ~~a qualified financial institution~~service as of June 30, 2016, beginning in July 2016. As of December 31, 2017, $1.3 million of the charitable contributions and ~~deposit all retainage monies as they accrued under~~$130.8 million of the ~~construction contract. On July 16, 2015, the final funds held in the escrow account were~~rate credits had been released ~~and paid to the construction contractor for the completion of building renovations.~~from restricted cash.

Debt

Cleco Consolidated

Cleco had no short-term debt outstanding at December 31, ~~2015~~2017, or ~~2014~~2016. Cleco Holdings and Cleco Power have uncommitted lines of credit with a bank that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in aggregate, to support their working capital needs.

At December 31, ~~2015~~2017, Cleco’s long-term debt outstanding was $~~1.29~~2.86 billion, of which ~~$19.4~~$19.2 million was due within one year. The long-term debt due within one year at December 31, ~~2015~~2017, represents ~~$16.8 million of~~ principal payments for the Cleco Katrina/Rita storm recovery ~~bonds and~~ ~~$2.6 million~~ ~~of capital lease payments.~~bonds. For Cleco, long-term debt ~~decreased$70.1~~increased by $97.0 million from December 31, ~~2014~~,2016, primarily due to ~~a $50.0~~the issuance of $125.0 million ~~repayment of~~ senior notes in ~~July 2015, a $43.0 million net decrease in Cleco Corporation~~December 2017 and ~~Cleco Power’s credit facility borrowings outstanding, a $35.0 million repayment~~debt discount amortizations of ~~a bank term loan in April 2015, $15.8~~$0.3 million. These increases were partially offset by $17.9 million of scheduled payments on Cleco Katrina/Rita storm recovery ~~bond principal payments made in March and September 2015,~~bonds, $8.6 million for amortization of long-term debt fair value adjustments related to the Merger, and a ~~$2.4~~$1.8 million decrease in capital lease obligations. ~~These decreases~~

In May 2016, Cleco Holdings completed the private sale of $535.0 million aggregate principal amount of 3.743% senior notes due May 1, 2026, and $350.0 million aggregate principal amount of 4.973% senior notes due May 1, 2046. On April 28, 2017, Cleco Holdings completed an exchange offer for all of its then outstanding 3.743% and 4.973% senior notes, which were ~~partially offset by~~not registered under the Securities Act, for an equal principal amount of newly issued 3.743% senior notes due May 1, 2026, and 4.973% senior notes due May 1, 2046, that were registered under the Securities Act. Cleco Holdings did not receive any proceeds from the exchange offer.

On March 1, 2017, Cleco completed the repayment of the first of two tranches of its Cleco Katrina/Rita storm recovery bonds issued in March 2008. For more information, see “—Cleco Power” below.

On December 18, 2017, Cleco entered into a note purchase agreement for the issuance and sale in a private placement of ~~$75.0~~$175.0 million ~~senior~~

~~unsecured notes in the fourth quarter~~aggregate principal amount of ~~2015, debt expense amortization of $0.7 million, and debt discount amortization of $0.4 million.~~senior notes. For more information, see “— Cleco Power” below.

Cash and cash equivalents available at December 31, ~~2015~~,2017, were ~~$68.2~~$119.0 million combined with $~~514.0~~400.0 million available credit facility capacity ($~~216.0~~100.0 million from Cleco ~~Corporation~~



CLECO
CLECO POWER		2017 FORM 10-K

Holdings and $~~298.0~~300.0 million from Cleco Power) for total liquidity of $~~582.2~~519.0 million.

At December 31, ~~2015~~2017, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents. In order to mitigate potential credit risk, Cleco and Cleco Power have established guidelines for short-term investments. For more information on the concentration of credit risk through short-term investments classified as cash equivalents, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 56 — Fair Value Accounting.”

At December 31, ~~2015~~,2017, and ~~2014~~,2016, Cleco had a working capital surplus of ~~$242.3~~$271.4 million and ~~$262.8~~$174.9 million,, respectively. The ~~$20.5~~$96.5 million~~decrease~~ increase in working capital is primarily due to:

a ~~$77.2~~$96.0 million ~~net decrease~~increase in ~~net current tax assets~~cash and ~~related interest charges~~cash equivalents,

a $41.1 million increase in fuel inventory primarily due to higher per unit lignite and petroleum coke costs, partially offset by lower coal volumes due to higher plant run-times,

an $11.8 million decrease in Merger Commitments,

a $11.0 million increase in other accounts receivable primarily due to higher receivables for an insurance reimbursement, SSR payments, and higher receivables from joint owners for maintenance expenses,

a $5.9 million increase in the ~~reclassification~~cash surrender value of ~~deferred taxes from current~~company and trust owned life insurance policies primarily due to ~~long-term in accordance with new accounting guidance~~favorable market conditions, and

a ~~$7.5~~$5.5 million ~~decrease~~increase in ~~accumulated~~customer accounts receivable and unbilled revenue primarily due to additional deferred ~~fuel primarily related~~arrangements due to the ~~loss of a wholesale customer, the timing of collections of fuel expenses, and a decrease in fuel costs and power purchases.~~LPSC executive orders.

These ~~decreases~~increases in working capital were partially offset by:

a ~~$29.7~~$32.6 million increase in accounts payable, excluding FTR purchases, primarily due to an increase in fuel costs and higher accruals for capital projects,

an $18.8 million increase in net current tax liabilities primarily due to an increase in pretax income,

a $10.3 million decrease in ~~accounts payable (excluding FTR purchases)~~accumulated deferred fuel primarily due to the timing of ~~property taxes~~fuel revenue collections, partially offset by a fuel surcharge, and ~~other vendor payments,~~

a ~~$23.8~~$10.0 million ~~increase~~decrease in ~~unrestricted~~restricted cash and cash ~~equivalents,~~equivalents.

At December 31, 2017, Cleco’s Consolidated Balance Sheets reflected $4.18 billion of total liabilities compared to $4.30 billion at December 31, 2016. The $114.4 million decrease in total liabilities during 2017 was primarily due to:

a decrease in net accumulated deferred federal and state income taxes of $418.2 million,

Partially offsetting this decrease was:

an ~~$8.1~~increase in net deferred taxes regulatory liability of $140.4 million,

an increase in long-term debt of $97.0 million, and

an increase in accounts payable of $35.5 million primarily due to an increase in fuel ~~inventory primarily due to~~costs and higher ~~petcoke reserves~~accruals for capital projects.

During 2017, the effects of the TCJA decreased net accumulated deferred federal and state income taxes. A

portion of the change in deferred taxes was recognized as a ~~result of the increased use of natural gas, and~~

~~a $5.6 million increase in materials and supplies primarily to address potential system restoration events and purchases for planned outages.~~

regulatory liability. For more information on ~~recent authoritative guidance relating to~~ the ~~reclassification of deferred taxes,~~TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 210 — ~~Summary of Significant Accounting Policies~~Income Taxes” and “— General Considerations and Credit-Related Risks — ~~Recent Authoritative Guidance.~~2017 Tax Reform.”

~~At December 31, 2015, Cleco’s Consolidated Balance Sheets reflected~~ ~~$2.65 billion~~ ~~of total liabilities compared to~~ ~~$2.74 billion~~ at ~~December 31, 2014. The~~ ~~$92.6 milliondecrease~~ ~~in total liabilities was primarily due to decreases in long-term debt and accounts payable, partially offset by increases in postretirement benefit obligations. During~~ ~~2015, long-term debt~~ ~~decreased$70.1 million, as discussed above, and accounts payable decreased $33.4 million as a result~~ For more information on the effects of the ~~timing of property taxes~~TCJA on Cleco’s regulatory assets and ~~other vendor payments. Postretirement benefit obligations increased $7.4 million primarily due~~liabilities, see Item 8, “Financial Statements and Supplementary Data — Notes to ~~a lower than expected return on plan assets, partially offset by higher discount rates.~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

the Financial Statements — Note 4 — Regulatory Assets and Liabilities — Income Taxes.”

Cleco ~~Corporation~~Holdings (Holding Company Level)

Cleco ~~Corporation~~Holdings had no short-term debt outstanding at December 31, ~~2015,~~2017, or ~~2014~~.

~~At December 31, 2015, Cleco Corporation had~~ ~~$34.0 million~~ ~~draws outstanding under its~~ ~~$250.0 million~~ ~~credit facility compared to~~ ~~$57.0 million~~ ~~outstanding at~~ ~~December 31, 2014~~2016. ~~This facility provides for working capital and other needs.~~

Cleco ~~Corporation~~Holdings and Cleco Power have uncommitted lines of credit with a bank that allow up to ~~$10.0~~$10.0 million each in ~~short term~~short-term borrowings, but no more than ~~$10.0~~$10.0 million in aggregate, to support their working capital needs.

At December 31, 2017, Cleco Holding’s long-term debt outstanding was $1.34 billion, none of which was due within one year.

At December 31, 2017, and 2016, Cleco Holdings had no borrowings outstanding under its $100.0 million credit facility. This credit facility provides for working capital and other financing needs. The credit facility includes restricted financial covenants and expires in 2021.

Cash and cash equivalents available at Cleco ~~Corporation~~Holdings at December 31, ~~2015~~,2017, were ~~$2.2~~$48.7 million,, combined with ~~$216.0~~$100.0 million credit facility capacity for a total liquidity of ~~$218.2~~$148.7 million.

Cleco Power

There was no short-term debt outstanding at Cleco Power at December 31, ~~2015~~,2017, or ~~2014~~.2016. Cleco Holdings and Cleco Power have uncommitted lines of credit with a bank that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in aggregate, to support their working capital needs.

At December 31, ~~2015~~2017, Cleco Power’s long-term debt outstanding was $~~1.25~~1.36 billion, of which ~~$19.4~~$19.2 million was due within one year. The long-term debt due within one year at December 31, ~~2015~~2017, represents ~~$16.8 million of~~ principal payments for the Cleco Katrina/Rita storm recovery ~~bonds and $2.6 million~~ ~~of capital lease payments.~~bonds. For Cleco Power, long-term debt ~~decreased $47.4~~increased $105.9 million from December 31, ~~2014~~,2016, primarily due to ~~a $50.0~~the issuance of $125.0 million ~~repayment~~ of senior notes in ~~July 2015, a $35.0~~December 2017, debt discount amortizations of $0.3 million, ~~repayment of a bank term loan~~and $0.3 million in ~~April 2015, a $20.0 million net decrease in Cleco Power’s credit facility borrowings outstanding, $15.8~~debt expense amortization. These increases were partially offset by $17.9 million of scheduled payments on Cleco Katrina/Rita storm recovery ~~bond principal payments made in March and September 2015,~~bonds and a ~~$2.4~~$1.8 million decrease in capital lease obligations. These decreases were partially offset by the issuance of $75.0 million senior unsecured notes in the fourth quarter of 2015, debt expense amortization of $0.4 million, and debt discount amortization of $0.4 million.

~~On April 30, 2015, Cleco Power repaid its $35.0 million outstanding bank term loan that was due May 29, 2015.~~ At December 31, ~~2014, Cleco Power had the intent~~2017, and ability to refinance this outstanding bank term loan with other long-term debt; however, due to a temporary increase in cash balances, Cleco Power repaid the bank term loan early, with the intent to include it in a new financing in the fourth quarter of 2015.

On May 1, 2015, Cleco Power repriced at a mandatory tender date its $50.0 million 2008 Series A GO Zone bonds and entered into a new interest rate period with a mandatory tender date of April 30, 2020. In connection with the new interest rate period, the interest rate is at a fixed rate of 2.0% per annum.

On July 15, 2015, Cleco Power repaid its $50.0 million 4.95% senior notes. As part of the redemption, Cleco Power paid $1.2 million of accrued interest. At December 31, 2014, Cleco Power had the intent and ability to refinance these outstanding senior notes with other long-term debt; however, due to available cash on July 15, 2015, the senior notes were repaid with $25.0 million of cash and $25.0 million from Cleco Power’s credit facility.

On November 13, 2015, Cleco Power issued $75.0 million of 10-year bonds in a private placement with an interest rate of 3.68%. The debt proceeds were received in two tranches. On November 13, 2015, Cleco Power received $30.0 million of these debt proceeds, and on December 15, 2015, Cleco Power received the remaining $45.0 million. The maturity date

~~of the notes is November 15, 2025. The proceeds partially replenished funds used to repay debt that matured in May and July 2015 as described above.~~

~~At December 31, 2015, and~~ ~~2014~~,2016, Cleco Power had no borrowings outstanding under its $300.0 million credit facility. This credit facility provides for working capital and other financing needs. AtThe credit facility includes restricted financial covenants and expires in 2021.

On December ~~31, 2015,~~18, 2017, Cleco Power ~~had~~entered into a ~~$2.0~~note purchase agreement for the issuance and sale in a private placement of $175.0 million ~~letter~~aggregate principal amount of ~~credit~~senior notes. The senior notes will be issued in two tranches. The first tranche was issued on December 18, 2017, with principal amounts of $25.0 million at an interest rate of 2.94% and $100.0 million at an interest rate of 3.08%, with final maturity dates of December 16, 2022, and 2023, respectively. The second tranche is anticipated to ~~MISO pursuant to the credit requirements~~be issued on March 26,



CLECO
CLECO POWER		2017 FORM 10-K

2018, for $50.0 million at an interest rate of ~~FTRs. This letter of credit automatically renews each year and reduces Cleco Power’s credit facility capacity.~~

~~Cleco Corporation and Cleco Power have uncommitted lines of credit~~3.17%, with a ~~bank that allow up~~final maturity date of December 16, 2024. The proceeds from the issuance and sale were used and are anticipated to ~~$10.0 million~~ ~~each in short term borrowings, but no more than~~ ~~$10.0 million~~ ~~in aggregate, to support their working~~be used for capital ~~needs.~~investments and general utility purposes.

Cash and cash equivalents available at December 31, ~~2015~~,2017, were ~~$65.7~~$69.8 million combined with ~~$298.0~~$300.0 million credit facility capacity for total liquidity of ~~$363.7 million~~.$369.8 million.

At December 31, ~~2015~~,2017, and ~~2014~~,2016, Cleco Power had a working capital surplus of ~~$184.9~~$169.6 million and ~~$172.7~~$149.1 million,, respectively. The ~~$12.2~~$20.5 millionincrease in working capital is primarily due to:

a ~~$26.5~~$48.3 million increase in ~~unrestricted~~ cash and cash equivalents,

a ~~$25.0 million decrease in accounts payable (excluding FTR purchases) primarily related to the timing of property taxes and other vendor payments,~~

~~an $8.1~~$41.1 million increase in fuel inventory primarily due to higher ~~petcoke reserves as a result of the increased use of natural gas,~~per unit lignite and petroleum coke costs, partially offset by lower coal volumes due to higher plant run-times,

an $11.8 million decrease in Merger Commitments,

an $11.2 million increase in other accounts receivable primarily due to higher receivables for an insurance reimbursement, SSR payments, and higher receivables from joint owners for maintenance expenses, and

a ~~$5.6~~$5.5 million increase in ~~materials~~customer accounts receivable and ~~supplies primarily~~unbilled revenue due to ~~address potential system restoration events and purchases for planned outages.~~additional deferred arrangements due to the LPSC executive orders.

These increases in working capital were partially offset by:

a $21.7 million decrease in affiliate accounts receivable primarily due to a partial utilization of Cleco Corporation’s net operating loss due to Cleco Power’s estimated taxable income exceeding its net operating loss carryforward,

~~a $20.2~~$44.1 million net ~~decrease~~increase in net current tax ~~assets and related interest charges~~liabilities primarily due to ~~the reclassification of deferred taxes from current to long-term~~an increase in ~~accordance with new accounting guidance, and~~pretax income,

a ~~$7.5~~$29.7 million increase in accounts payable, excluding FTR purchases, primarily due to an increase in fuel costs and higher accruals for capital projects,

a $10.3 million decrease in accumulated deferred fuel primarily ~~related~~due to ~~the loss of a wholesale customer,~~ the timing of fuel revenue collections, partially offset by a fuel surcharge, and

a $10.0 million decrease in restricted cash and cash equivalents.

At December 31, 2017, Cleco Power’s Consolidated Balance Sheets reflected $2.64 billionof ~~fuel expenses, and~~ total liabilities compared to $2.73 billion at December 31, 2016. The $94.2 milliondecrease in total liabilities during 2017 was primarily due to:

a decrease in net accumulated deferred federal and state income taxes of $412.2 million,

Partially offsetting this decrease was:

an increase in net deferred taxes regulatory liability of $140.4 million,

an increase in long-term debt of $105.9 million,

an increase in accounts payable of $32.5 million primarily due to an increase in fuel costs and ~~power purchases.~~higher accruals for capital projects, and

an increase in current taxes payable of $31.6 million primarily due to the increase in pretax income.

During 2017, the effects of the TCJA decreased net accumulated deferred federal and state income taxes. A portion of the change in deferred taxes was recognized as a regulatory liability. For more information on ~~recent authoritative guidance relating to~~ the ~~reclassification of deferred taxes,~~TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 210 — ~~Summary~~Income Taxes” and “—

General Considerations and Credit-Related Risks — 2017 Tax Reform.” For more information on the effects of ~~Significant Accounting Policies — Recent Authoritative Guidance.”~~

At ~~December 31, 2015~~,the TCJA on Cleco Power’s ~~Consolidated Balance Sheets reflected~~ ~~$2.68 billion~~ ~~of total~~regulatory assets and liabilities, ~~compared~~see Item 8, “Financial Statements and Supplementary Data — Notes to ~~$2.69 billion~~ at ~~December 31, 2014. The~~ ~~$6.2 milliondecrease~~ ~~in total liabilities during~~ ~~2015~~ ~~was primarily due to decreases in long-term debt~~the Financial Statements — Note 4 — Regulatory Assets and accounts payable, partially offset by increases in accumulated deferred federal and state income taxes and postretirement benefit obligations. During 2015, long-term debt decreased $47.4 million, as previously discussed, and accounts payable decreased $28.7 million as a result of the timing of property taxes and other



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Liabilities — Income Taxes.”

vendor payments. The increase in net accumulated deferred federal and state income taxes and taxes payable of $56.1 million was the result of the utilization of the tax net operating loss and tax depreciation. Postretirement benefit obligations also increased $16.3 million primarily due to a lower than expected return on plan assets, partially offset by higher discount rates.

Credit Facilities

At December 31, ~~2015,~~2017, Cleco had two separate revolving credit facilities, one for Cleco ~~Corporation~~Holdings and one for Cleco Power, with a maximum aggregate capacity of ~~$550.0~~$400.0 million.

At December 31, ~~2015,~~2017, Cleco ~~Corporation~~Holdings had ~~$34.0 million of borrowings outstanding under its $250.0~~a $100.0 million credit ~~facility at an all-in interest rate of 1.465%, leaving an available borrowing capacity of~~ ~~$216.0 million~~.facility. The ~~borrowings under the~~ credit facility ~~are considered to be long-term because the credit facility~~includes restricted financial covenants and expires in ~~2018.~~2021. At December 31, 2017, Cleco Holdings was in compliance with the covenants of its credit facility. The borrowing costs under the facility are equal to LIBOR plus ~~1.075%~~1.75% or ABR plus ~~0.075%~~0.75%, plus ~~facility~~commitment fees of ~~0.175%~~0.275%. At December 31, 2017, Cleco Holdings had no borrowings outstanding under its $100.0 million credit facility. If Cleco ~~Corporation’s~~Holdings’ credit ratings were to be downgraded one level by either agency, Cleco ~~Corporation~~Holdings would be required to pay higher fees and additional interest of 0.075% and 0.50%, respectively, under the pricing levels for its credit facility.

At December 31, 2017, Cleco Power had a $300.0 million credit facility. The credit facility includes restricted financial covenants and expires in 2021. At December 31, 2017, Cleco Power was in compliance with the covenants of its credit facility. The borrowing costs under the facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%. At December 31, 2017, Cleco Power had no borrowings outstanding under its $300.0 million credit facility. If Cleco Power’s credit ratings were to be downgraded one level by either agency, Cleco Power would be required to pay higher fees and additional interest of 0.05% and ~~0.20%, respectively, under the pricing levels for its credit facility.~~

At December 31, 2015, Cleco Power had no borrowings outstanding under its $300.0 million credit facility; however, Cleco Power has issued a $2.0 million letter of credit to MISO, leaving an available borrowing capacity of $298.0 million. The borrowing costs under the facility are equal to LIBOR plus 0.9% or ~~ABR, plus facility fees of~~ ~~0.1%. If Cleco Power’s credit ratings were to be downgraded one level, Cleco Power would be required to pay higher fees and additional interest of~~ ~~0.075%~~ ~~and 0.175%~~0.125%, respectively, under the pricing levels of its credit facility. The letter of credit issued to MISO is pursuant to the credit requirements of FTRs. The letter of credit automatically renews each year and reduces Cleco Power’s credit facility capacity. If the Merger is completed, upon closing, the current credit facilities will be replaced with facilities of similar terms and extended maturities.

At ~~December 31, 2015, Cleco Corporation and Cleco Power were in compliance with the covenants in their credit facilities.~~ If Cleco ~~Corporation~~Holdings or Cleco Power were to default under the covenants in their respective credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities, and the lenders could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its credit facility or other debt agreements, Cleco ~~Corporation~~Holdings would be considered ~~to be~~ in default under its credit facility.

Debt Limitations

The Merger Commitments include provisions for limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group or Cleco Partners, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings. Additionally, in accordance with the Merger Commitments, Cleco Power is subjected 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. The Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. At December 31, 2017 and 2016, Cleco Holdings and Cleco Power were in compliance with the provisions of the Merger Commitments that would restrict the amount of distributions available. For more information on additional merger commitments, see Part I, Item 1A, “Risk Factors — Holding Company.”



CLECO
CLECO POWER		2017 FORM 10-K

Cleco ~~Consolidated~~ Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities for the successor year ended December 31, 2017, was ~~$361.0~~$265.4 million. There were no significant changes in the underlying trends impacting cash provided by operating activities.

Net cash provided by operating activities for the successor period April 13, 2016, through December 31, 2016, was $51.3 million. There were no significant changes in the underlying trends impacting cash provided by operating activities with the exception of the following:

lower collections from customers of $121.5 million due to Merger credits issued in 2016 and

$23.7 million related to payments for merger transaction costs.

Net cash provided by operating activities for the predecessor period January 1, 2016, through April 12, 2016, was $129.8 million. There were no significant changes in the underlying trends impacting cash provided by operating activities.

Net Investing Cash Flow

Cleco’s net cash used in investing activities for the successor year ended December 31, 2017, was $190.2 million. There were no significant changes in the underlying trends impacting cash used in investing activities with the exception of $16.7 million of proceeds from the sale of transmission assets sold by Cleco on December 29, 2017.

Cleco’s net cash used in investing activities for the successor period April 13, 2016, through December 31, 2016, was $161.1 million. There were no significant changes in the underlying trends impacting cash used in investing activities with the exception of the following:

$142.0 million transferred into restricted cash and cash equivalents due to the funding of customer rate credits and charitable contributions as a result of the Merger Commitments and

$122.2 million transferred out of restricted cash and cash equivalents to pay for a portion of the Merger Commitments.

Cleco’s net cash used in investing activities for the predecessor period January 1, 2016, through April 12, 2016, was $36.8 million. There were no significant changes in the underlying trends impacting cash used in investing activities.

Net Financing Cash Flow

Cleco’s net cash provided by financing activities for the successor year ended December 31, 2017, was $20.8 million. There were no significant changes in the underlying trends impacting cash provided by financing activities.

Cleco’s net cash provided by financing activities for the successor period April 13, 2016, through December 31, 2016, was $12.6 million. There were no significant changes in the underlying trends impacting cash provided by financing activities with the exception of $100.7 million in contributions from Cleco Group.

Cleco’s net cash used in financing activities for the predecessor period January 1, 2016, through April 12, 2016, was $40.9 million. There were no significant changes in the underlying trends impacting cash used in financing activities.

Cleco Power Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was $287.1 million during ~~2015, $335.2~~2017, $215.8 million during ~~2014,~~2016, and ~~$341.7~~$366.5 million during ~~2013.~~2015. Net cash provided by operating activities during ~~2015~~2017 increased ~~$25.8~~$71.3 million from ~~2014~~2016 primarily due to the following items:

~~lower~~higher collections from customers of $109.9 million due to the absence of the Merger credits issued in 2016,

higher net fuel and power ~~purchases~~purchase collections of ~~$21.5~~$19.1 million primarily due to the ~~absence of a plant outage, the loss of a wholesale customer,~~ timing of collections, ~~and lower per unit gas prices,~~

lower interest payments ~~to gas vendors~~ of ~~$18.4~~$18.6 million ~~primarily~~ due to ~~lower per unit prices,~~

~~lower payments for generating station outage expenses~~the absence of ~~$15.9~~the make-whole payment made in connection with the redemption of $250.0 million of 6.65% senior notes in 2016, and

lower ~~income tax~~interest payments of ~~$13.9 million.~~$8.2 million due to long-term debt redeemed and replaced with lower interest rate debt in the fourth quarter of 2016.

These increases in net operating cash were partially offset by by:

higher payments ~~to vendors~~for fuel inventory of ~~$49.9~~$59.9 million primarily ~~related~~due to ~~the timing~~higher per unit lignite and petroleum coke costs and higher coal purchases and

higher payments for affiliate settlements of ~~property tax payments and other vendor payments.~~$23.4 million.

Net cash provided by operating activities during ~~2014~~2016 decreased ~~$6.5~~$150.7 million from ~~2013~~2015 primarily due to the following items:

lower ~~income tax refunds~~collections from customers of ~~$47.4~~$121.5 million ~~and higher income tax payments of $15.3 million, for a net decrease of $62.7 million,~~due to Merger credits issued in 2016,

higher payments for affiliate settlements of $34.0 million, and

lower net fuel and power ~~purchases~~purchase collections of ~~$30.4~~$17.1 million primarily ~~as a result~~due to timing of ~~extended plant outages, the addition of a wholesale customer, and the timing difference in collections, and~~

~~higher corporate franchise tax payments of $3.7 million.~~recovery.

These decreases in net operating cash were partially offset by:

~~the absence of pension plan contributions of $34.0 million,~~

lower payments to vendors of ~~$29.3 million,~~

~~higher collections from customers of $18.9 million,~~

~~lower payments for fuel inventory and materials and supplies of $6.4 million, and~~

~~higher receipts for deposits from customers of $2.7 million.~~

~~For information on Cleco’s investing and financing activities, see Item 8, “Financial Statements and Supplementary Data — Cleco Corporation — Consolidated Statements of Cash Flows.”~~

~~Cleco Power Cash Flows~~

~~Net Operating Cash Flow~~

Net cash provided by operating activities was $366.5 million during 2015, $347.1 million during 2014, and $279.4 million during 2013. Net cash provided by operating activities during 2015 increased $19.4 million from 2014 primarily due to the following items:

~~lower net fuel and power purchases of $21.5 million primarily due to the absence of a plant outage, the loss of a wholesale customer, timing of collections, and lower per unit gas prices,~~

~~lower payments to gas vendors of $18.4 primarily due to lower per unit prices, and~~

~~lower payments for generating station outage expenses of $15.9 million.~~

~~These increases in net operating cash were partially offset by higher payments to vendors of $46.2~~$28.9 million primarily related to the timing of property tax payments and other vendor ~~payments.~~payments and

lower payments for fuel inventory of $26.8 million primarily due to lower lignite deliveries and lower petroleum coke purchases.

Net Investing Cash Flow

Net cash used in investing activities was $208.8 million during 2017, $198.6 million during 2016, and $156.0 million during 2015. Net cash used in investing activities during 2017 increased$10.2 million from 2016 primarily due to higher payments for additions to property, plant, and equipment, net of AFUDC, of $45.2 million, partially offset by higher net transfers of cash from restricted accounts of $34.4 million.

Net cash used in investing activities during 2016increased$42.6 million from 2015 primarily due to the following items:

higher payments for additions to property, plant, and equipment, net of AFUDC, of $28.4 million and



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

higher net transfers of cash to restricted accounts of $19.7 million.

Net Financing Cash Flow

Net cash ~~provided by operating~~used in financing activities was $29.9 million during 2017, $61.3 million during 2016, and $184.0 million during 2015. Net cash used in financing activities during ~~2014 increased $67.7~~2017 decreased $31.4 million from ~~2013~~2016 primarily due to lower repayments of long-term debt of $308.9 million.

This decrease in net financing activities was partially offset by:

lower issuances of long-term debt of $205.0 million,

the absence of contributions from Cleco Holdings of $50.0 million, and

higher distributions to Cleco Holdings of $25.0 million.

Net cash used in financing activities during 2016 decreased $122.7 million from 2015 primarily due to the following items:

~~the absence~~higher issuances of ~~pension plan~~ long-term debt of $255.0 million,

contributions from Cleco Holdings of ~~$34.0~~$50.0 million,

lower ~~payments~~distributions to ~~vendors~~Cleco Holdings of ~~$29.3 million,~~

~~higher collections from customers of $18.9 million,~~

~~lower payments for fuel inventory and materials and supplies of $6.4~~$25.0 million, and

~~higher receipts for deposits from customers~~lower net credit facility activity of ~~$2.7 million.~~$20.0 million, which consisted of $68.0 million lower payments and $48.0 million lower draws.

These ~~increases~~decreases in net ~~operating cash~~financing activities were partially offset by higher ~~payments for fuel and power purchases~~repayments of ~~$30.4 million, primarily as a result~~long-term debt of ~~extended plant outages, the addition of a wholesale customer, and the timing difference in collections.~~

~~For information on Cleco Power’s investing and financing activities, see Item 8, “Financial Statements and Supplementary Data — Cleco Power — Consolidated Statements of Cash Flows.”~~$226.0 million.

Capital Expenditures

Cleco’s capital expenditures are primarily incurred in its major first-tier subsidiary, Cleco Power. Cleco Power’s capital expenditures relate primarily to assets that may be included in Cleco Power’s rate base and, if considered prudent by the LPSC, can be recovered from its customers. Those assets also earn a rate of return authorized by the LPSC and are subject to the FRP. Such assets primarily consist of improvements to Cleco Power’s distribution system, transmission system, and generating ~~stations.~~stations as well as hardware and software upgrades.

During the years ended December 31, ~~2015~~2017, ~~2014~~,2016, and ~~2013~~,2015, Cleco Power had capital expenditures, excluding AFUDC, of $226.9 million, $181.7 million, and $153.3 million, ~~$201.2 million, and~~ ~~$177.1 million~~, respectively. In ~~2015~~, ~~2014~~,2017, 2016, and ~~2013~~,2015, 100% of Cleco Power’s capital expenditure requirements were funded internally.

~~Other~~During the successor year ended December 31, 2017, and the successor period April 13, 2016, through December 31, 2016, other subsidiaries had capital expenditures of ~~$0.5~~$1.7 million ~~$1.0~~and $0.7 million,, respectively. During the predecessor period January 1, 2016, through April 12, 2016, and the predecessor year ended December 31, 2015, other subsidiaries had capital expenditures of less than $0.1 million and $~~7.5~~0.5 million ~~during the years ended~~ ~~December 31, 2015~~, ~~2014, and~~ ~~2013~~, respectively.

In ~~2016~~2018 and for the five-year period ending ~~2020,~~2022, Cleco Power expects to ~~internally~~materially fund ~~100% of~~ its capital expenditure ~~requirements.~~requirements with internally generated funds. However, Cleco Power may choose to issue debt in order to achieve a capital structure with a debt ratio of 49%. All computations of internally funded capital expenditures exclude AFUDC.

~~Cleco’s~~

Cleco and Cleco Power’s estimated capital expenditures and debt maturities for ~~2016~~2018 and for the five-year period ending ~~2020~~December 31, 2022 are presented in the following tables. All amounts exclude AFUDC.


Cleco
PROJECT (THOUSANDS)	2016		%		2016-2020		%		2018		%		2018-2022		%
Environmental	$	9,000	3	%	$	44,000	4	%	$	2,000	1	%	$	26,000	2	%
New business	36,000		14	%	158,000		16	%	41,000		13	%	154,000		15	%
Transmission reliability	44,000		17	%	99,000		10	%	46,000		14	%	159,000		15	%
Fuel optimization	50,000		19	%	119,000		12	%	54,000		16	%	57,000		6	%
General ⁽¹⁾	121,000		47	%	590,000		58	%	185,000		56	%	656,000		62	%
Total capital expenditures	$	260,000	100	%	$	1,010,000	100	%	$	328,000	100	%	$	1,052,000	100	%
Debt payments	17,000				370,000				19,000				376,000
Total capital expenditures and debt payments	$	277,000			$	1,380,000			$	347,000			$	1,428,000
⁽¹⁾ Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades at Cleco Power.	⁽¹⁾ Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades at Cleco Power.								⁽¹⁾ Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades at Cleco Power.



Cleco Power
PROJECT (THOUSANDS)	2018		%		2018-2022		%
Environmental	$	2,000	1	%	$	26,000	2	%
New business	41,000		12	%	154,000		15	%
Transmission reliability	46,000		14	%	159,000		15	%
Fuel optimization	54,000		17	%	57,000		6	%
General ⁽¹⁾	184,000		56	%	640,000		62	%
Total capital expenditures	$	327,000	100	%	$	1,036,000	100	%
Debt payments	19,000				76,000
Total capital expenditures and debt payments	$	346,000			$	1,112,000
⁽¹⁾ Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades.

Cleco Power
PROJECT (THOUSANDS) 2016
%
2016-2020
%
Environmental $ 9,000
4 % $ 44,000
4 %
New business 36,000
14 % 158,000
16 %
Transmission reliability 44,000
17 % 99,000
10 %
Fuel optimization 50,000
19 % 119,000
12 %
General ⁽¹⁾
118,000
46 % 579,000
58 %
Total capital expenditures $ 257,000
100 % $ 999,000
100 %
Debt payments 17,000
336,000

Total capital expenditures and debt payments $ 274,000
$ 1,335,000

⁽¹⁾ Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades.

Capital expenditures for other subsidiaries in ~~2016~~2018 are estimated to total ~~$3.0~~$1.0 million. For the five-year period ending ~~2020,~~December 31, 2022, capital expenditures for other subsidiaries are estimated to total ~~$11.0~~$16.0 million. Cleco expects cash and cash equivalents on hand in addition to cash generated from operations, borrowings from credit facilities, and the net proceeds of any issuances of ~~equity or~~ debt securities to be adequate to fund normal ongoing capital expenditures, working capital, and debt service requirements for the foreseeable future.

Other Cash Requirements

Cleco Power’s regulated operations are Cleco’s primary source of internally generated funds. These funds, along with the issuance of additional debt ~~and equity~~ in future years, will be used for general ~~corporate~~company purposes, capital expenditures, and ~~repayment of corporate debt.~~debt service.

~~Shelf Registrations~~

On October 29, 2015, a registration statement (No. 333-207681) was declared effective by the SEC and registered the offer and sale of up to $500.0 million of debt and equity securities for Cleco Corporation. At December 31, ~~2015, this registration statement had remaining capacity allowing for the issuance of up to $500.0 million in debt and equity securities.~~

On October 29, 2015, a registration statement (No. 333-207673) was declared effective by the SEC and registered the offer and sale of up to $400.0 million of debt securities for Cleco Power. At December 31, ~~2015, this registration statement had remaining capacity allowing for the issuance of up to $400.0 million in debt securities.~~

~~Common Stock Repurchase Program~~

Cleco Corporation has a common stock repurchase program that authorizes management to repurchase shares of common stock so that Cleco’s diluted average shares of common stock outstanding remain approximately equal to its diluted average shares of common stock outstanding at December 31, 2010. In accordance with the Merger Agreement, until the completion of the Merger, no additional common stock will be repurchased under this program without the prior written consent of Cleco Partners. For more information, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 7 — Common Stock — Common Stock Repurchase Program.”



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Contractual Obligations

Cleco, in the course of normal business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the

consolidated financial statements. The obligations listed in the following table do not include amounts for ongoing needs for which no contractual obligation existed as of December 31, ~~2015~~2017, and represent only the projected future payments that Cleco was contractually obligated to make as of December 31, ~~2015~~2017.

PAYMENTS DUE BY PERIOD
CONTRACTUAL OBLIGATIONS (THOUSANDS) TOTAL

LESS THAN
ONE YEAR

1-3
YEARS

3-5
YEARS

MORE THAN
5 YEARS

Cleco Corporation
Long-term debt obligations ⁽¹⁾
$ 35,339
$ 34,445
$ 894
$ —
$ —
Operating lease obligations ⁽³⁾
943
315
628
—
—
Purchase obligations ⁽⁴⁾
25,566
9,388
9,408
4,492
2,278
Other long-term liabilities ⁽⁵⁾
14,559
2,242
3,235
2,850
6,232
Pension and other benefits obligations ⁽⁶⁾
215,118
6,990
14,316
15,164
178,648
Total Cleco Corporation $ 291,525
$ 53,380
$ 28,481
$ 22,506
$ 187,158
Cleco Power

Long-term debt obligations ⁽¹⁾
$ 2,480,999
$ 88,066
$ 417,550
$ 133,103
$ 1,842,280
Capital lease obligations ⁽²⁾
6,278
3,722
2,556
—
—
Operating lease obligations ⁽³⁾
29,293
8,642
9,263
5,639
5,749
Purchase obligations ⁽⁴⁾
200,300
146,011
46,081
7,474
734
Other long-term liabilities ⁽⁵⁾
98,153
16,200
32,946
33,651
15,356
Total Cleco Power $ 2,815,023
$ 262,641
$ 508,396
$ 179,867
$ 1,864,119
Total long-term debt obligations ⁽¹⁾
$ 2,516,338
$ 122,511
$ 418,444
$ 133,103
$ 1,842,280
Total capital lease obligations ⁽²⁾
$ 6,278
$ 3,722
$ 2,556
$ —
$ —
Total operating lease obligations ⁽³⁾
$ 30,236
$ 8,957
$ 9,891
$ 5,639
$ 5,749
Total purchase obligations ⁽⁴⁾
$ 225,866
$ 155,399
$ 55,489
$ 11,966
$ 3,012
Total other long-term liabilities ⁽⁵⁾
$ 112,712
$ 18,442
$ 36,181
$ 36,501
$ 21,588
Total pension and other benefits obligations ⁽⁶⁾
$ 215,118
$ 6,990
$ 14,316
$ 15,164
$ 178,648
Total $ 3,106,548
$ 316,021
$ 536,877
$ 202,373
$ 2,051,277



CLECO
CLECO POWER		2017 FORM 10-K



							PAYMENTS DUE BY PERIOD
CONTRACTUAL OBLIGATIONS (THOUSANDS)	TOTAL		LESS THAN ONE YEAR		1-3 YEARS		3-5 YEARS		MORE THAN 5 YEARS
Cleco Holdings
Long-term debt obligations ⁽¹⁾	$	2,101,019	$	52,428	$	104,857	$	390,539	$	1,553,195
Operating lease obligations ⁽²⁾	413		413		—		—		—
Purchase obligations ⁽³⁾	22,662		9,964		10,414		1,180		1,104
Other long-term liabilities ⁽⁴⁾	13,947		3,222		2,810		2,334		5,581
Postretirement benefits obligations ⁽⁵⁾	237,444		8,684		17,307		17,012		194,441
Total Cleco Holdings	$	2,375,485	$	74,711	$	135,388	$	411,065	$	1,754,321
Cleco Power
Long-term debt obligations ⁽¹⁾	$	2,583,409	$	85,193	$	160,439	$	152,375	$	2,185,402
Operating lease obligations ⁽²⁾	14,343		3,317		5,941		1,981		3,104
Purchase obligations ⁽³⁾	80,623		53,914		25,294		1,091		324
Other long-term liabilities ⁽⁴⁾	97,562		16,698		33,855		31,105		15,904
Postretirement benefits obligations ⁽⁵⁾	92,108		—		—		8,326		83,782
Total Cleco Power	$	2,868,045	$	159,122	$	225,529	$	194,878	$	2,288,516
Total long-term debt obligations ⁽¹⁾	$	4,684,428	$	137,621	$	265,296	$	542,914	$	3,738,597
Total operating lease obligations ⁽²⁾	$	14,756	$	3,730	$	5,941	$	1,981	$	3,104
Total purchase obligations ⁽³⁾	$	103,285	$	63,878	$	35,708	$	2,271	$	1,428
Total other long-term liabilities ⁽⁴⁾	$	111,509	$	19,920	$	36,665	$	33,439	$	21,485
Total postretirement benefits obligations ⁽⁵⁾	$	329,552	$	8,684	$	17,307	$	25,338	$	278,223
Total	$	5,243,530	$	233,833	$	360,917	$	605,943	$	4,042,837

⁽¹⁾ Long-term debt existing as of December 31, ~~2015,~~2017, is debt that has a final maturity of January 1, ~~2017,~~2019, or later (current maturities of long-term debt are due within one-year). Cleco’s anticipated interest payments related to long-term debt also are included in this category. ~~Scheduled~~Cleco’s scheduled maturities of debt total ~~$16.8~~$19.2 million for ~~2016~~2018 and ~~$1.28~~$2.71 billion for the years thereafter. For more information regarding Cleco’s long-term debt, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 67 — ~~Debt”~~Debt” and “— Debt” above.

⁽²⁾ Capital leases are maintained in the ordinary course of Cleco’s business activities, including leases for barges. For more information regarding these leases, see Item 8, “Financial Statement and Supplementary Data — Notes to the Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — Fuel Transportation Agreement.”

⁽³⁾ Operating leases are maintained in the ordinary course of Cleco’s business activities. These leases include utility systems, railcars, towboats, office space, operating facilities, office equipment, tower rentals, and vehicles and have various terms and expiration dates from 1 to 27 years. For more information regarding Cleco’s operating leases, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1314 — Operating Leases.”

⁽⁴⁾⁽³⁾ Significant purchase obligations for Cleco are:

Fuel Contracts: To supply a portion of the fuel requirements for Cleco Power’s generating plants, Cleco has entered into various commitments to obtain and deliver coal, lignite, petroleum coke, and natural gas. Some of these contracts contain provisions for price escalation and minimum purchase commitments. Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to customers substantially all such charges. For more information regarding fuel contracts, see Part I, Item 1, “Business — Operations — Cleco Power — Fuel and Purchased Power.”

PPAs: Cleco Power has entered into agreements with energy suppliers for purchased power to meet system load and energy requirements, replace generation from Cleco Power owned units under maintenance and during outages, and meet operating reserve obligations.

Purchase orders: Cleco has entered into purchase orders in the course of normal business activities.

⁽⁵⁾⁽⁴⁾Other long-term liabilities primarily consist of obligations for franchise payments, deferred compensation, facilities use, and various operating and maintenance agreements.

⁽⁶⁾⁽⁵⁾ ~~Pension and other~~Postretirement benefits obligations consist of the expected required contributions for the Pension Plan and the estimated present value of obligations for SERP and other postretirement obligations. For more information regarding Cleco’s defined benefit pension plan, SERP, and other postretirement obligations, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 89 — Pension Plan and Employee Benefits.”

For purposes of this table, it is assumed that all terms and rates related to the above obligations will remain the same and all franchises will be renewed according to the rates used in the table.

Off-Balance Sheet Commitments and On-Balance Sheet Guarantees

Cleco ~~Corporation~~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 ~~Corporation’s~~Holdings’ subsidiaries and equity investees (affiliates). Cleco ~~Corporation~~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 on-balance sheet guarantees, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1415 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet ~~Commitments”~~Commitments and ~~“— On-Balance Sheet~~ Guarantees.”

Regulatory and Other Matters

Inflation

Annual inflation rates, as measured by the U.S. Consumer Price Index, have averaged ~~1.07%~~1% during the three years ended December 31, ~~2015~~.2017. Cleco believes inflation at this level does not materially affect its results of operations or financial condition. However, under established regulatory practice, historical costs have traditionally formed the basis for recovery from customers. As a result, Cleco Power’s cash flows designed to provide recovery of historical plant costs may not

be adequate to replace property, plant, and equipment in future years.

Environmental Matters

For information on environmental matters, see Part I, Item 1, “Business — Environmental Matters.”



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

Retail Rates of Cleco Power

Retail rates (comprised of base revenue, ~~the~~ FAC revenue, and ~~the~~ EAC revenue) regulated by the LPSC accounted for approximately 85% ~~and 82%~~ of Cleco Power’s ~~2015~~2017 and ~~2014~~2016 ~~revenue, respectively.~~revenue.

Fuel Rates

Environmental Rates

In July 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides for an EAC to recover from customers



CLECO
CLECO POWER		2017 FORM 10-K

certain costs of environmental compliance. The costs eligible for recovery are 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 began incurring additional environmental compliance expenses in the second quarter of 2015 for reagents associated with compliance with MATS. These expenses are eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. For more information on ~~MATS,~~the EAC and the most recent environmental audit, see Part I,II, Item ~~1, “Business~~8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental ~~Matters — Air Quality.~~Audit.”

On February 3, 2016, the LPSC initiated an audit of Cleco Power’s environmental costs for the period November 2010 through December 2015. The total amount of environmental costs included in this audit is $81.2 million. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance if, any related to this audit. If a disallowance of environmental costs 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.

Base Rates

Cleco Power’s annual retail earnings are subject to the terms of an FRP established by the LPSC. ~~Prior to July~~For more information on the LPSC’s regulation of Cleco Power’s base rates, see Part I, Item 1, ~~2014, Cleco~~

“Business — Regulatory Matters, Industry Developments, and Franchises — Rates.”

Power’s FRP allowed a target ROE of 10.7%, while providing the opportunity to earn up to 11.3%. Additionally, 60.0% of retail earnings between 11.3% and 12.3% and all retail earnings over 12.3% were required to be refunded to customers. In April ~~2013, Cleco Power filed an application with~~2016, the LPSC issued Docket No. R-34026 to ~~extend its current FRP and to seek rate recovery of the Coughlin transfer. In June 2014,~~investigate double leveraging issues for all LPSC-jurisdictional utilities. Also, in April 2016, the LPSC ~~approved Cleco Power’s FRP extension, finalized the rate treatment of Coughlin, and~~ issued ~~the implementing order. Effective July 1, 2014, under the terms of the FRP extension, Cleco Power’s retail rates were adjusted based on a target ROE of 10.0%, while providing the opportunity~~Docket No. R-34029 to ~~earn up to 10.9%. Additionally, 60% of retail earnings between 10.9% and 11.75% and~~investigate tax structure issues for all retail earnings over 11.75% 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. Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds is ultimately subject to LPSC approval. The capital structure assumes an equity ratio of 51%. The FRP extension includes a mechanism that allows for the recovery of revenue requirements related to excess amounts of surcredits refunded for storm costs and uncertain tax positions, MISO transition and administration charges, Louisiana state corporate franchise taxes, incremental production operations and maintenance costs, LPSC renewable project costs, and certain capacity costs. It also includes recovery of deferred costs for the previous LPSC fuel audit, biomass pilot project costs, and costs related to filing the FRP extension. The FRP extension also includes a mechanism allowing for recovery of incremental capacity costs above the level included in base rates and allows Cleco Power to request recovery of additional capital project costs during its four-year term. LPSC-jurisdictional utilities.

For more information ~~concerning~~about amounts accrued and refunded by Cleco Power as a result of the FRP, ~~and~~ information on the LPSC Staff’s FRP reviews, and information on the double leveraging and tax dockets, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1112 — Regulation and ~~Rates.~~Rates — FRP” and “— Other.”

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution can be implemented to mitigate reliability issues. For more information on the MISO SSR designation of Teche Unit 3, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 12 — Regulation and Rates — SSR.”

Energy Efficiency

In ~~August~~ 2009, the LPSC opened a docket to study the promotion of energy efficiency by jurisdictional electric and natural gas utilities. In ~~September~~ 2013, the LPSC issued a General Order adopting rules promoting energy efficiency programs. Cleco Power subsequently filed its formal intent with the LPSC to participate in the Phase I - Quick Start portion of the LPSC’s energy efficiency initiative, which ~~runs November 1,~~began in 2014, and has been extended through ~~July 31, 2017.~~the start of Phase II, which is anticipated to be in 2019. During Phase I, Cleco Power designed several energy efficiency programs and began offering these programs to customers onin November 1, 2014. In November 2014, Cleco Power began recovering approximately $3.3 million annually of estimated costs for the program through an approved rate tariff. In January 2017, the LPSC amended its Phase I — Quick Start program to allocate no less than 50% of its annual program budgets to applicable government and state agencies. Cleco Power’s participation in the amended program is also projected to be $3.3 million annually as approved by the LPSC in September 2017.

In September 2017, the LPSC approved a motion for additional energy efficiency program funds for the exclusive benefit of school districts, local governments, state agencies, and higher education institutions or any other public entities. The recovery of approximately $3.3 million annually for estimated costs for the program began January 1, 2018.

On November 17, 2017, the LPSC initiated the Phase I audit for the first two program years to consider all program costs. On February 5, 2018, Cleco Power responded to the first set of data requests on the audit. Management is unable to predict or give a reasonable estimate of the outcome of the audit.

MISO Cost Benefit Analysis

Cleco Power entered into MISO in 2013. Within five years of joining MISO, the LPSC required Cleco Power to conduct a study of the costs and benefits of its membership in MISO. During the second quarter of 2017, Cleco Power submitted an analysis with both a backward-looking, historical analysis and a forward-looking, prospective analysis of the costs and benefits of operating in MISO, as compared to a scenario where Cleco Power and Entergy Louisiana exit MISO and operate independently. Cleco Power’s analysis indicated that continued MISO membership would best serve the public interest. Cleco Power has responded to four sets of data requests on the analysis. Management is unable to predict the outcome of this analysis or give a reasonable estimate of the possible range of disallowance of costs, if any.

Wholesale Rates of Cleco Power

The rates Cleco Power charges its wholesale customers are subject to FERC’s triennial market power analysis. FERC requires a utility to pass a screening test as a condition for securing and/or retaining approval to sell electricity in wholesale markets at market-based rates. An updated market power analysis is to be filed with FERC every three years or upon the occurrence of a change in status as defined by FERC regulation. ~~In February 2014, FERC issued an order to accept Cleco’s substitute market power analysis and grant the power~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

~~marketing entities the authority to continue to charge market-based rates for wholesale power.~~ Cleco filed its triennial market power analysis with FERC in January 2015. On March 1, 2016, FERC issued an order finding Cleco’s submittal satisfied its requirements for market-based rate authority regarding both horizontal and vertical market power. Cleco filed its next triennial market power analysis with FERC on ~~January 23, 2015. The comment period has passed with no interventions, and~~December 22, 2017. Cleco Power expects a determination from FERC in the second quarter of 2018. Management is ~~currently waiting on an order from FERC.~~unable to predict the outcome of this ruling. If FERC determines Cleco Power possesses generation market power in excess of certain thresholds, Cleco Power could lose the right to sell wholesale generation at market-based rates, which could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Transmission Rates of Cleco Power

In July 2011, FERC issued Order No. 1000 that reforms the electric transmission planning and cost allocation requirements for public utility transmission providers. The rule builds on the reforms of Order No. 890 and corrects remaining deficiencies with respect to transmission planning processes and cost allocation methods. In 2015, MISO and the SPP made separate filings containing different metrics to meet specific requirements. A compliance determination for both filings has not been made and no timetable is available for when a determination will be ~~addressed later this year at the MISO/SPP Interconnection Process Task Force meetings. Management~~made. Until a determination is made, Cleco is unable ~~at this time,~~ to determine if this order will have a material



CLECO
CLECO POWER		2017 FORM 10-K

adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

In ~~June~~ 2013, ~~the LPSC unanimously approved~~ Cleco ~~Power’s MISO change of control request to transfer functional control of certain~~Power integrated its generation dispatch and transmission ~~assets to~~operations with MISO. MISO operates a fully functioning RTO market with two major market processes: the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. ~~These markets~~Both use market-based mechanisms to manage transmission congestion across the MISO market area. ~~In December 2013,~~

For more information about the risks associated with Cleco ~~Power integrated its generation dispatch and transmission operations~~Power’s participation in MISO, see Part I, Item 1A, “Risk Factors — MISO.”

Two complaints were filed with MISO. The LPSC authorized Cleco Power to defer and collect the retail portion of its MISO integration costs from LPSC jurisdictional customers through the FRP. Cleco Power deferred $3.7 million of integration costs and began recovering these costs over a four-year period beginning July 1, 2014.

~~In November 2013, a group of industrial customers from the northern region of MISO and other stakeholders filed a complaint at~~ FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complainants are seeking to reduce the current 12.38% ROE used in MISO’s transmission rates to a proposed 6.68%. A group of MISO transmission owners filed responses to the complaint, defending the current ROE and seeking dismissal of the complaint. In October 2014, FERC issued an order finding that the current MISO ROE may be unjust and unreasonable and set the issue for hearing, subject to the outcome of settlement discussions. On December 22, 2015, an ALJ issued an initial decision in this docket. Subject to review by the LPSC on exceptions, the initial decision authorizes the MISO transmission owners to collect a 10.32% ROE. A binding FERC order is expected to be issued during the second half of 2016. In November 2014, the MISO transmission owners committee, of which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by 0.5% for RTO participation as allowed by the MISO tariff. On January 5, 2015, FERC granted the request. The collection of the adder is delayed until the resolution of the ROE complaint proceeding. As of December 31, 2015, Cleco Power had $2.5 million

accrued for a possible reduction to the ROE for the period December 2013 through December 2015. Management believes a reduction in the ROE, as well as any resulting refund, will not have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

For more information about the ~~risks associated with Cleco Power’s integration into MISO,~~ROE complaints, see ~~Part I,~~ Item ~~1A, “Risk Factors~~8, “Financial Statements and Supplementary Data — ~~MISO.~~Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

Transmission and Generation Projects

Cleco Power is involved in several transmission projects, including the ~~Layfield/Messick project, the~~ Cenla Transmission Expansion project and the Terrebonne to Bayou Vista Transmission project. Cleco Power is also currently involved in the ~~Cabot Waste Heat Recovery~~St. Mary’s Clean Energy Center project, which is a ~~proposed~~ waste heat generating ~~unit.~~unit, and the Coughlin Pipeline project. For information on these projects, ~~please read~~see “— Overview — Cleco Power.”

Market Restructuring

Wholesale Electric Markets

RTO

In 1999, FERC issued Order No. 2000, which established a general framework for all transmission-owning entities in the nation to voluntarily place their transmission facilities under the control of an appropriate RTO. Cleco Power integrated its generation dispatch and transmission operations with MISO in ~~December~~ 2013. For more information about Cleco Power’s integration into MISO, see “— Transmission Rates of Cleco Power.”

ERO

The Energy Policy Act of 2005 added Section 215 to the Federal Power Act, which provides for a uniform system of mandatory, enforceable reliability standards. In 2006, FERC named NERC as the ERO that will be required to develop and enforce the mandatory reliability standards.

The SPP RE conducts a NERC Reliability ~~Standard~~Standards audit and a NERC Critical Infrastructure Protection audit every three years. ~~Cleco’s~~On July 23, 2017, the SPP RTO’s board of directors and members committee voted to authorize the SPP’s President and CEO to terminate the delegation agreement between the SPP and NERC, which will effectively dissolve the SPP RE by the end of 2018. On February 8, 2018, NERC approved Cleco Power’s proposed RE. The selection must now be approved by FERC. Cleco Power anticipates the transfer to a new RE to be complete by January 2019. Management does not expect this termination to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.

Cleco Power’s next NERC Reliability Standards audit is ~~expected~~scheduled to begin in ~~April 2016.~~2019 and the next NERC Critical

Infrastructure Protection audit is scheduled to begin in 2020. Management is unable to predict the outcome of these audits, or any future audits, or whether any findings ~~in future audits~~ 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 — Reliability and Infrastructure Protection Standards Compliance.”

Retail Electric Markets

Currently, the LPSC does not provide exclusive service territories for electric utilities under its jurisdiction. Instead, retail service is obtained through a long-term nonexclusive franchise. The LPSC uses a “300-foot rule” for determining the supplier for new customers. The “300-foot rule” requires a customer to take service from the electric utility that is within 300 feet of the respective customer. If the customer is beyond 300 feet from any existing utility service, they may choose their electric supplier. The “300-foot rule” is currently under review by the LPSC in Docket No. R-32763. Management is unable to predict the time of completion and cannot determine the impact any potential rulemaking may have on the results of operations, financial condition, or cash flows of Cleco Power.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

The application of the current rule has led to competition with neighboring utilities for retail customers at the borders of Cleco Power’s service areas. Such competition has led to complaints by competitors that Cleco Power has violated the 300-foot rule. Several complaints have been made by competitors who operate as rural electric cooperatives and, if the LPSC were to rule in favor of such competitors, Cleco Power may be fined. Management does not believe any such fines, if imposed, would have a material impact on the results of operations, financial condition, or cash flows of the Registrants. Cleco Power also competes in its service area with suppliers of alternative forms of energy, some of which may be less costly than electricity for certain applications. Cleco Power could experience some competition for electric sales to industrial customers in the form of cogeneration or from independent power producers.

Lignite Deferral

Cleco Power operates a generating unit jointly owned with SWEPCO that uses lignite as its primary fuel source.

Cleco Power, along with SWEPCO, maintains a lignite mining agreement with DHLC, the operator of the Dolet Hills Mine. As ordered by the LPSC, Cleco Power’s retail customers ~~began receiving~~received fuel cost savings through the year 2011, while actual mining costs ~~incurred~~ above a certain percentage of the benchmark price were deferred. These deferred ~~and can~~costs could be recovered from retail customers through the FAC only when the actual mining costs ~~are~~were below a certain percentage of the benchmark price.

In 2006, Cleco Power recognized that there was a possibility it may not recover all or part of the lignite mining costs it had deferred and sought relief from the LPSC. In December 2007, the LPSC approved a settlement agreement between Cleco Power, SWEPCO, and the LPSC Staff authorizing Cleco Power to recover the existing deferred mining cost balance, including interest, over 11.5 years. In connection with its 2009 approval of the Oxbow Lignite Mine acquisition, ~~in 2009~~ the LPSC agreed to discontinue benchmarking and the corresponding potential to defer future lignite mining costs while preserving the previously authorized recovery of the legacy deferred fuel ~~balance previously authorized.~~balance. At December 31, ~~2015,~~2017, and ~~2014,~~2016, Cleco Power had ~~$8.9~~$3.8 million and ~~$11.5~~$6.4 million, respectively, in deferred ~~costs remaining uncollected.~~as a regulatory asset.

~~Integrated Resource Plan (IRP)~~IRP

In accordance with the General Order in LPSC Docket No. R-30021, on October 20, 2017, Cleco Power filed a request with the LPSC to initiate an IRP ~~process in October 2013.~~process. The IRP process ~~included the conduct of~~



CLECO
CLECO POWER		2017 FORM 10-K

includes conducting stakeholder meetings and ~~consideration of~~receiving feedback ~~provided by~~from stakeholders. The schedule outlined in the General Order calls for Cleco Power to file a draft IRP in January 2019, and a final report filed ~~its IRP~~

~~with the LPSC~~ in September 2015. Stakeholders filed comments in November 2015. The LPSC Staff filed its comments in December 2015, which included a recommendation that the LPSC accept Cleco Power’s IRP as filed. Cleco Power is currently waiting for the final LPSC ruling.August 2019.

Service Quality Program (SQP)

In October 2015, the LPSC proposed ~~a Service Quality Program~~an SQP containing 21 requirements for Cleco Power. The ~~Service Quality Program~~SQP has provisions relating to employee headcount, customer service, reliability, vegetation management, and reporting. ~~On February 1,~~In April 2016, the ~~Service Quality Program~~SQP was approved by the LPSC. The SQP will remain in effect until 2021. Prior to the expiration of the SQP, a new five-year program must be negotiated and submitted to the LPSC for

~~AMI Project~~

~~In October 2009,~~approval. Cleco Power ~~received notification of~~filed its selection to receive a $20.0 million grant from the DOE to deploy advanced metering infrastructure technology for Cleco Power’s customers. Advanced metering technology allows Cleco Power to better manage its electric system and provides remote meter reading through the meter’s communicating capabilities. The primary benefit is savings gained through operational efficiencies. The project was approved by the LPSC in February 2011, and the initial installation of the advanced meters was completed in May 2013. The total project cost was $71.4 million, of which $20.0 million was reimbursed by the DOE.

As part of the LPSC approval of Cleco Power’s AMI project, Cleco Power is required to conduct a demand response pilot program following the AMI system implementation. The pilot program test reduced rates during times of the day when power usage is typically lower. By choosing off-peak times to use appliances and equipment that consume the most energy, customers can save moneyannual monitoring report on ~~electric bills. Cleco Power is in the final analysis and reporting stage of the pilot program and expects completion in~~ April ~~2016.~~1, 2017.

Franchises

For information on franchises, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Franchises.”

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Authoritative Guidance.”



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



RISK OVERVIEW

Market risk inherent in Cleco’s market risk-sensitive instruments and positions includes potential changes in value arising from changes in interest rates and the commodity market prices of power, FTRs, and natural gas in the industry on different energy exchanges.

Cleco evaluates derivatives and hedging activities to determine whether market risk-sensitive instruments and positions are required to be marked-to-market. ~~With the exception of FTRs, Cleco Power’s market risk-sensitive~~

instruments and positions qualify for the normal-purchase, normal-sale exception to mark-to-market accounting because Cleco Power takes physical delivery and the instruments and positions are used to satisfy customer requirements. When positions close, actual gains or losses are included in the FAC and reflected on customers’ bills as a component of the FAC.

Cleco’s exposure to market risk, as discussed below, represents an estimate of possible changes in the fair value or future earnings that would occur, assuming possible future movements in the interest rates and commodity prices of power, FTRs, and natural gas. Management’s views on market risk are not necessarily indicative of actual results, nor do they



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

represent the maximum possible gains or losses. The views do represent, within the parameters disclosed, what management estimates may happen.

Cleco maintains a master netting agreement policy and monitors credit risk exposure through reviews of counterparty credit quality, aggregate counterparty credit exposure, and aggregate counterparty concentration levels. Cleco manages these risks by establishing appropriate credit and concentration limits on transactions with counterparties and requiring contractual guarantees, cash deposits, or letters of credit from counterparties or their affiliates, as deemed necessary. Cleco Power has agreements in place with various counterparties that authorize the netting of financial buys and sells and contract payments to mitigate credit risk for transactions entered into for risk management purposes.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Future actions or inactions of the federal government, including a failure to increase the government debt limit, could increase the actual or perceived risk that the U.S. may not pay its obligations when due and may disrupt financial markets, including capital markets, potentially limiting availability and increasing costs of capital. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain and expand its businesses. After assessing the current operating performance, liquidity, and credit ratings of Cleco ~~Corporation~~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. Cleco ~~Corporation~~ Holdings

and Cleco Power pay fees and interest under their respective credit facilities based on the highest rating held. ~~Upon announcement of the Merger, Moody’s and S&P placed Cleco Corporation and Cleco Power on negative outlook and CreditWatch negative, respectively.~~ On February 25, 2016, S&P changed the outlook for Cleco Corporation and Cleco Power from CreditWatch negative to CreditWatch developing. Prior to close of the Merger or upon termination of the Merger Agreement, it is expected that the credit rating agencies will update their ratings on both Cleco Corporation and Cleco Power7, 2018, taking into consideration the ~~results of the merger transaction.~~pending NRG South Central acquisition, Moody’s placed Cleco Holdings’ Baa3 credit rating on review for downgrade and affirmed Cleco Power at A3 (stable). Also, on February 7, 2018, S&P affirmed Cleco Holdings’ and Cleco Power’s credit ratings at BBB- (stable) and BBB+ (stable), respectively. If Cleco ~~Corporation~~Holdings or Cleco Power’s credit ratings were to be downgraded by ~~Moody’s or~~ S&P or Moody’s, Cleco ~~Corporation~~Holdings and/or Cleco Power would be required to pay additional fees and incur higher interest rates for borrowings under their respective credit facilities. Cleco Power’s collateral for derivatives is based on the lowest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s or S&P, Cleco Power would be required to post additional collateral for derivatives.

Interest Rate Risks

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 credit facility with fixed-rate debt. ~~For details, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 6 — Debt.”~~ 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 December 31, ~~2015, the carrying value of Cleco’s long-term fixed-rate debt was~~ ~~$1.27 billion, with a fair market value of~~ ~~$1.43 billion. The~~ ~~$164.5 million~~ difference between the carrying value of the debt and the market value is driven by the spread between the stated rate of Cleco’s debt as compared to the current market yield for debt with similar risk profiles, maturities, and terms as Cleco’s debt. Fair value was determined using quoted market prices. A 1% increase in the average interest rates would result in a corresponding decrease of approximately ~~$133.6 million~~ ~~in the fair value of these instruments. If these instruments are held to maturity, no change in stated value will be realized.~~

At ~~December 31, 2015~~,2017, Cleco Holdings had no ~~short-term variable rate~~ debt ~~and $34.0~~outstanding under its $100.0 million ~~in long-term variable-rate debt~~credit facility. The borrowing costs under Cleco ~~Corporation’s~~ ~~$250.0 million~~ ~~credit facility at an all-in interest rate of 1.465%, leaving an available borrowing capacity of $216.0 million. The borrowings under the~~Holdings’ credit facility are ~~considered to be long-term because the credit facility expires in 2018. The rate for the current borrowings under the facility is~~ equal to LIBOR plus ~~1.075%~~1.75% or ABR plus 0.75%, plus ~~facility~~commitment fees of ~~0.175%~~0.275%.

At December 31, 2017, Cleco Holdings had a $300.0 million long-term variable rate bank term loan outstanding. Amounts outstanding under the bank term loan bear interest at LIBOR plus 1.625%. At December 31, 2017, the all-in rate was 3.09%. Each 1% increase in the ~~all-in~~ interest rate applicable to such debt would result in a decrease in ~~Cleco’s~~Cleco Holdings’ pretax earnings of ~~$0.3~~$3.0 million.

~~At December 31, 2015,~~For information on variable-rate debt related to Cleco Power, ~~had no long-term variable rate debt. See below for more details.~~see “— Cleco Power.”

Commodity Price Risks

Management believes Cleco has controls in place to minimize the risks involved in its financial and energy commodity activities. Independent controls over energy commodity functions consist of a middle office (risk management), a back office (accounting), and regulatory compliance ~~staff, as well as monitoring by a~~staff. All forward commodity positions have established risk ~~management committee comprised of officers, who~~limits and are ~~approved by Cleco Corporation’s Board of Directors. Risk limits are recommended by the Risk Management Committee and~~ monitored through a daily ~~risk~~market report that identifies the ~~current~~



CLECO
CLECO POWER		2017 FORM 10-K

VaR, current market conditions, and concentration of energy market positions.

Cleco Power provides fuel for generation and purchases power to meet the power demands of customers. Cleco Power may enter into positions to mitigate the volatility in customer fuel costs, as encouraged by various LPSC orders. These positions ~~are~~would be marked-to-market with the resulting gain or loss recorded on the balance sheet as a component of the accumulated deferred fuel asset or liability and a component of the energy risk management assets or liabilities. When these positions close, actual gains or losses ~~are~~would be included in the FAC and reflected in customers’ bills as a component of the fuel ~~cost adjustment.~~charge. There were no open natural gas positions at December 31, ~~2015~~.2017. In June 2015, the LPSC approved a long-term natural gas hedging pilot program that requires Cleco Power to establish a proposal for a ~~long-term natural gas procurement~~ program that will be designed to provide gas price stability for a minimum of five years. This proposal ~~is required to be~~was submitted to the LPSC on July 28, 2017. An ALJ was assigned to the docket and a status conference was held on October 3, 2017. A procedural schedule was determined and on January 23, 2018, Cleco Power filed to suspend the procedural schedule. Cleco Power expects a new procedural schedule to be established by ~~June 30,~~the end of the first quarter of 2018. On February 14, 2018, Cleco Power received data requests from the LPSC for the gas hedging docket with responses due March 1, 2018.

Cleco Power purchases ~~the~~FTRs in auctions facilitated by MISO. The majority of its FTRs are purchased in annual auctions ~~facilitated by MISO~~ during the second quarter, ~~of each year and~~but Cleco Power may ~~also~~ purchase additional FTRs in monthly ~~auctions facilitated by MISO.~~auctions. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. ~~They~~FTRs are not designated as hedging instruments for accounting purposes. Cleco Power ~~initially~~ records FTRs at their estimated fair value ~~and subsequently~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

when purchased.

Each accounting period, Cleco Power adjusts the carrying value of FTRs to their estimated fair value ~~at the end of each accounting period~~ based on the most recent MISO FTR auction prices. Unrealized gains or losses on FTRs held by Cleco Power are included in Accumulated deferred fuel on Cleco ~~and Cleco~~ Power’s Consolidated Balance Sheets. Realized gains or losses on settled FTRs are recorded in ~~Electric operations or Power purchased~~Fuel used for ~~utility customers~~electric generation on ~~Cleco and~~ Cleco Power’s Consolidated Statements of Income. At December 31, ~~2015, Cleco and~~2017, Cleco Power’s Consolidated Balance Sheets reflected open FTR positions of ~~$7.7~~$7.4 million in Energy risk management assets and ~~$0.3~~$0.4 million in Energy risk management liabilities. For more information on FTRs, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 56 — Fair Value Accounting — Commodity Contracts.”



CLECO POWER

Please refer to “— Risk Overview” for a discussion of market risk inherent in Cleco Power’s market risk-sensitive instruments.

Cleco Power may enter into various fixed- and variable-rate debt obligations. ~~For details, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 6 — Debt.”~~ Please refer to “— Interest Rate Risks” for a discussion of how Cleco Power monitors its mix of fixed- and variable-rate debt obligations and the manner of

calculating changes in fair market value and interest expense of its debt obligations.

~~As of~~ At December 31, ~~2015, the carrying value of Cleco Power’s long-term fixed-rate debt was~~ ~~$1.27 billion, with a fair market value of~~ ~~$1.43 billion. The~~ ~~$164.5 million~~ difference between the carrying value of the debt and the market value of such debt is driven by the spread between the stated rate of Cleco Power’s debt as compared to the current market yield for debt with similar risk profiles, maturities, and terms as Cleco Power’s debt. Fair value was determined using quoted market prices. A 1% increase in the average interest rates applicable to such debt would result in a corresponding decrease of approximately ~~$133.6 million~~ ~~in the fair value of these instruments. If these instruments are held to maturity, no change in stated value will be realized.~~

At ~~December 31, 2015~~,2017, Cleco Power had no ~~short-term variable rate~~variable-rate debt ~~or long-term variable-rate debt.~~outstanding.

At December 31, ~~2015~~,2017, Cleco Power had no ~~borrowings~~debt outstanding under its ~~$300.0~~$300.0 million credit ~~facility; however,~~facility. The borrowing costs under the Cleco Power ~~has issued a $2.0 million letter~~credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of ~~credit to MISO, leaving an available borrowing capacity of $298.0 million.~~0.125%.

Please refer to “— Commodity Price Risks” for a discussion of controls, transactions, VaR, and market value maturities associated with Cleco Power’s energy commodity activities.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Report of Independent Registered Public Accounting Firm

To the Board of ~~Directors~~Managers and ~~Shareholders~~Member of

Cleco ~~Corporation~~

~~Pineville, Louisiana~~Corporate Holdings LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco ~~Corporation~~Corporate Holdings LLC and its subsidiaries ~~(the “Company”)~~(Successor) as of December 31, ~~2015,~~2017 and ~~2014,~~2016, and the related consolidated statements of income, comprehensive income, changes in ~~common shareholders’~~ equity, and cash flows for ~~each~~the year ended December 31, 2017 and for the period April 13, 2016 to December 31, 2016, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the ~~three years~~Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the year ended December 31, 2017 and for the period April 13, 2016 to December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 21, 2018

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2017 FORM 10-K



Report of Independent Registered Public Accounting Firm

To the Board of Managers and Member of

Cleco Corporate Holdings LLC

In our opinion, the accompanying consolidated statements of income, comprehensive income, changes in equity and cash flows present fairly, in all material respects, the results of operations and cash flows of Cleco Corporation and its subsidiaries (Predecessor) for the period January 1, 2016 to April 12, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) for the period January 1, 2016 to April 12, 2016 present fairly, in all material respects, the information set forth therein when read in conjunction with the consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit. We conducted our audit of these financial statements in

accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 22, 2017



CLECO
CLECO POWER		2017 FORM 10-K



Report of Independent Registered Public Accounting Firm

To the Board of Managers of

Cleco Corporate Holdings LLC

Pineville, Louisiana

We have audited the accompanying consolidated statements of income, comprehensive income, cash flows, and changes in equity of Cleco Corporate Holdings LLC (formerly Cleco Corporation) and subsidiaries (the “Company”) for the year ended December 31, 2015. Our ~~audits~~audit also included the financial statement schedules for the year ended December 31, 2015, listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of Cleco Corporate Holdings LLC and subsidiaries for the year ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules for the year ended December 31, 2015, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

New Orleans, Louisiana

February 26,2016



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Statements of Income
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Operating revenue
Electric operations	$	1,097,632		$	802,592		$	281,154		$	1,142,389
Other operations	79,580			51,562			19,080			69,186
Gross operating revenue	1,177,212			854,154			300,234			1,211,575
Electric customer credits	(1,566		)	(1,149		)	(364		)	(2,173		)
Operating revenue, net	1,175,646			853,005			299,870			1,209,402
Operating expenses
Fuel used for electric generation	339,346			250,142			96,378			373,117
Power purchased for utility customers	152,913			92,337			27,249			130,095
Other operations	125,699			90,313			33,563			127,410
Maintenance	88,129			63,944			29,813			88,137
Depreciation and amortization	166,439			109,739			44,076			149,579
Taxes other than income taxes	48,546			35,543			14,611			49,134
Merger transaction and commitment costs	287			174,696			34,912			4,591
Gain on sale of assets	(2		)	—			(1,095		)	—
Total operating expenses	921,357			816,714			279,507			922,063
Operating income	254,289			36,291			20,363			287,339
Interest income	1,424			840			265			895
Allowance for equity funds used during construction	8,320			3,735			723			3,063
Other income	6,474			3,350			870			1,443
Other expense	(2,435		)	(1,385		)	(590		)	(3,376		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	125,200			90,852			22,330			78,877
Allowance for borrowed funds used during construction	(2,287		)	(1,086		)	(207		)	(886		)
Total interest charges	122,913			89,766			22,123			77,991
Income (loss) before income taxes	145,159			(46,935		)	(492		)	211,373
Federal and state income tax expense (benefit)	7,079			(22,822		)	3,468			77,704
Net income (loss)	$	138,080		$	(24,113	)	$	(3,960	)	$	133,669
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Statements of Comprehensive Income
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Net income (loss)	$	138,080		$	(24,113	)	$	(3,960	)	$	133,669
Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $2,764 and tax expense of $938, $367, and $3,670, respectively)	(4,421		)	1,500			587			5,869
Amortization of interest rate derivatives to earnings (net of tax expense of $0, $0, $37, and $132, respectively)	—			—			60			211
Total other comprehensive (loss) income, net of tax	(4,421		)	1,500			647			6,080
Comprehensive income (loss), net of tax	$	133,659		$	(22,613	)	$	(3,313	)	$	139,749
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2017			2016
Assets
Current assets
Cash and cash equivalents	$	119,040		$	23,077
Restricted cash and cash equivalents	13,081			23,084
Customer accounts receivable (less allowance for doubtful accounts of $1,457 in 2017 and $7,199 in 2016)	60,117			56,780
Other accounts receivable	30,806			19,778
Unbilled revenue	36,398			34,268
Fuel inventory, at average cost	87,520			46,410
Materials and supplies, at average cost	85,404			81,818
Energy risk management assets	7,396			7,884
Accumulated deferred fuel	13,980			20,787
Cash surrender value of company-/trust-owned life insurance policies	83,117			77,225
Prepayments	9,050			7,813
Regulatory assets	24,670			26,803
Other current assets	1,146			1,315
Total current assets	571,725			427,042
Property, plant, and equipment
Property, plant, and equipment	3,594,525			3,476,581
Accumulated depreciation	(192,348		)	(75,816		)
Net property, plant, and equipment	3,402,177			3,400,765
Construction work in progress	186,629			78,577
Total property, plant, and equipment, net	3,588,806			3,479,342
Equity investment in investee	18,172			18,672
Goodwill	1,490,797			1,490,797
Prepayments	1,887			4,731
Restricted cash and cash equivalents	20,081			23,410
Regulatory assets - deferred taxes, net	—			237,449
Regulatory assets	432,358			454,644
Net investment in direct financing lease	—			13,420
Intangible assets	114,850			142,634
Tax credit fund investment, net	4,355			11,888
Other deferred charges	35,351			39,115
Total assets	$	6,278,382		$	6,343,144
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2017			2016
Liabilities and member’s equity
Liabilities
Current liabilities
Long-term debt due within one year	$	19,193		$	19,715
Accounts payable	147,562			112,087
Customer deposits	58,582			56,599
Provision for rate refund	4,206			3,974
Provision for merger commitments	2,582			14,371
Taxes payable, net	22,698			3,942
Interest accrued	14,703			14,783
Energy risk management liabilities	352			201
Deferred compensation	12,132			11,654
Other current liabilities	18,344			14,850
Total current liabilities	300,354			252,176
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	614,812			1,033,055
Accumulated deferred investment tax credits	2,089			2,751
Postretirement benefit obligations	242,135			223,003
Regulatory liabilities - deferred taxes, net	140,426			—
Restricted storm reserve	14,469			17,385
Other deferred credits	31,635			29,440
Total long-term liabilities and deferred credits	1,045,566			1,305,634
Long-term debt, net	2,836,105			2,738,571
Total liabilities	4,182,025			4,296,381
Commitments and contingencies (Note 15)
Member’s equity
Membership interest	2,069,376			2,069,376
Retained earnings (Accumulated deficit)	29,902			(24,113		)
Accumulated other comprehensive (loss) income	(2,921		)	1,500
Total member’s equity	2,096,357			2,046,763
Total liabilities and member’s equity	$	6,278,382		$	6,343,144
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Statements of Cash Flows
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Operating activities
Net income (loss)	$	138,080		$	(24,113	)	$	(3,960	)	$	133,669
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	186,326			141,544			45,869			156,211
Gain on sales of assets	(2		)	—			(1,095		)	—
Provision for doubtful accounts	2,778			4,473			1,212			3,464
Unearned compensation expense	3,745			1,147			3,276			6,344
Allowance for equity funds used during construction	(8,320		)	(3,735		)	(723		)	(3,063		)
Deferred income taxes	(41,966		)	(21,053		)	2,219			74,103
Deferred fuel costs	11,909			(8,192		)	977			9,899
Cash surrender value of company-/trust-owned life insurance	(5,892		)	(2,561		)	(840		)	950
Changes in assets and liabilities
Accounts receivable	(25,584		)	(21,537		)	(1,865		)	(13,656		)
Unbilled revenue	(2,129		)	(837		)	563			4,481
Fuel inventory and materials and supplies	(44,995		)	2,880			19,312			(13,698		)
Prepayments	2,852			(2,514		)	2,395			2,750
Accounts payable	14,705			5,183			8,348			(25,294		)
Customer deposits	12,381			7,333			3,342			12,162
Provision for merger commitments	(12,971		)	21,964			—			—
Postretirement benefit obligations	4,884			3,750			9,746			14,173
Regulatory assets and liabilities, net	12,531			13,750			5,178			18,793
Other deferred accounts	(8,380		)	(28,010		)	6,878			(17,454		)
Taxes accrued	23,118			(24,210		)	10,820			(831		)
Interest accrued	(582		)	(11,104		)	17,909			(1,024		)
Deferred compensation	308			(799		)	(793		)	(1,166		)
Other operating	2,632			(2,037		)	1,012			209
Net cash provided by operating activities	265,428			51,322			129,780			361,022
Investing activities
Additions to property, plant, and equipment	(236,932		)	(144,444		)	(42,392		)	(156,819		)
Allowance for equity funds used during construction	8,320			3,735			723			3,063
Proceeds from sale of property, plant, and equipment	17,499			766			1,932			—
Reimbursement for property loss	187			3,159			53			—
Contributions to equity investment in investee	—			—			(2,450		)	(2,290		)
Premiums paid on trust-owned life insurance	—			—			—			(3,607		)
Return of equity investment in tax credit fund	7,502			901			476			2,128
Contributions to tax credit fund	(630		)	—			—			(9,966		)
Transfer of cash from (to) restricted accounts, net	13,332			(25,884		)	4,847			(1,341		)
Other investing	500			622			—			881
Net cash used in investing activities	(190,222		)	(161,145		)	(36,811		)	(167,951		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Statements of Cash Flows
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Financing activities
Draws on credit facilities	179,000			15,000			3,000			120,000
Payments on credit facilities	(179,000		)	(15,000		)	(10,000		)	(163,000		)
Issuances of long-term debt	125,000			1,680,000			—			75,000
Repayments of long-term debt	(17,896		)	(1,668,268		)	(8,546		)	(100,824		)
Payment of financing costs	(463		)	(8,655		)	(43		)	(693		)
Dividends paid on common stock	—			(572		)	(24,579		)	(97,283		)
Contribution from member	—			100,720			—			—
Distributions to member	(84,065		)	(88,765		)	—			—
Other financing	(1,819		)	(1,890		)	(717		)	(2,448		)
Net cash provided by (used in) financing activities	20,757			12,570			(40,885		)	(169,248		)
Net increase (decrease) in cash and cash equivalents	95,963			(97,253		)	52,084			23,823
Cash and cash equivalents at beginning of period	23,077			120,330			68,246			44,423
Cash and cash equivalents at end of period	$	119,040		$	23,077		$	120,330		$	68,246

Supplementary cash flow information
Interest paid, net of amount capitalized	$	118,009		$	116,496		$	2,478		$	74,349
Income taxes (refunded) paid, net	$	(6	)	$	4,263		$	(481	)	$	1,434
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	31,083		$	17,599		$	10,619		$	7,313
Non-cash additions to property, plant, and equipment	$	3,015		$	—		$	—		$	184
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2017 FORM 10-K



CLECO

Consolidated Statements of Changes in Equity
(THOUSANDS)	COMMON STOCK/⁽¹⁾ MEMBERSHIP INTEREST			RETAINED EARNINGS/ (ACCUMULATED DEFICIT)			AOCI			TOTAL SHAREHOLDERS’/ MEMBER’S EQUITY
PREDECESSOR
Balances, Dec. 31, 2014	$	451,223		$	1,208,712		$	(32,665	)	$	1,627,270
Common stock issued for compensatory plans	5,189			—			—			5,189
Dividends on common stock, $1.60 per share	—			(97,367		)	—			(97,367		)
Net income	—			133,669			—			133,669
Other comprehensive income, net of tax	—			—			6,080			6,080
Balances, Dec. 31, 2015	$	456,412		$	1,245,014		$	(26,585	)	$	1,674,841
Common stock issued for compensatory plans	(1,277		)	—			—			(1,277		)
Dividends on common stock, $0.40 per share	—			(24,190		)	—			(24,190		)
Net loss	—			(3,960		)	—			(3,960		)
Other comprehensive income, net of tax	—			—			647			647
Balances, Apr. 12, 2016	$	455,135		$	1,216,864		$	(25,938	)	$	1,646,061
SUCCESSOR
Balances, Apr. 13, 2016⁽²⁾	$	2,158,141		$	—		$	—		$	2,158,141
Distributions to member	(88,765		)	—			—			(88,765		)
Net loss	—			(24,113		)	—			(24,113		)
Other comprehensive income, net of tax	—			—			1,500			1,500
Balances, Dec. 31, 2016	$	2,069,376		$	(24,113	)	$	1,500		$	2,046,763
Distributions to member	—			(84,065		)	—			(84,065		)
Net income	—			138,080			—			138,080
Other comprehensive loss, net of tax	—			—			(4,421		)	(4,421		)
Balances, Dec. 31, 2017	$	2,069,376		$	29,902		$	(2,921	)	$	2,096,357
⁽¹⁾At April 12, 2016, December 31, 2015, and December 31, 2014, shareholders’ equity of the predecessor company included $61.1 million of common stock. At April 12, 2016, December 31, 2015, and December 31, 2014, shareholders’ equity of the predecessor company included premium on common stock of $414.6 million, $418.5 million, and $415.5 million, respectively. At April 12, 2016, December 31, 2015, and December 31, 2014, shareholders’ equity of the predecessor company included treasury stock of $20.5 million, $23.2 million, and $25.3 million, respectively. ⁽²⁾The April 13, 2016, beginning balance of the successor company differs from the April 12, 2016, ending balances of the predecessor company due to acquisition accounting adjustments related to the Merger.
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2017 FORM 10-K



Report of Independent Registered Public Accounting Firm

To the Board of Managers and Member of

Cleco Power LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco Power LLC and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in member’s equity, and cash flows for the years then ended, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 21, 2018

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2017 FORM 10-K



Report of Independent Registered Public Accounting Firm

To the Member and Board of Managers of

Cleco Power LLC

Pineville, Louisiana

We have audited the accompanying consolidated statements of income, comprehensive income, changes in equity, and cash flows of Cleco Power LLC and subsidiaries (the “Company”) for the year ended December 31, 2015. Our audit also included the financial statement schedule for the year ended December 31, 2015, listed in the Index at Item 15. These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit.

believe that our ~~audits provide~~audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the ~~financial position of Cleco Corporation and subsidiaries as of December 31, 2015, and 2014, and the~~ results of ~~their~~ operations and ~~their~~ cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2016, expressed an unqualified opinion on the Company’s internal control over financial reporting.

~~/s/ Deloitte & Touche LLP~~

~~New Orleans, Louisiana~~

~~February 26, 2016~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Statements of Income
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 2015
2014
2013
Operating revenue
Electric operations $ 1,142,389
$ 1,225,960
$ 1,047,548
Other operations 69,186
67,055
51,002
Gross operating revenue 1,211,575
1,293,015
1,098,550
Electric customer credits (2,173 ) (23,530 ) (1,836 )
Operating revenue, net 1,209,402
1,269,485
1,096,714
Operating expenses

Fuel used for electric generation 373,117
322,696
329,874
Power purchased for utility customers 130,095
242,219
45,292
Other operations 127,410
117,369
121,646
Maintenance 88,137
98,999
97,441
Depreciation and amortization 149,579
146,505
142,860
Taxes other than income taxes 49,134
43,924
50,469
Merger transaction costs 4,591
17,848
—
(Gain) loss on sale of assets —
(6,107 ) 800
Total operating expenses 922,063
983,453
788,382
Operating income 287,339
286,032
308,332
Interest income 895
1,768
1,105
Allowance for equity funds used during construction 3,063
5,380
4,081
Equity loss from investees, before tax (8 ) —
—
Other income 1,443
4,790
13,857
Other expense (3,368 ) (2,509 ) (2,861 )
Interest charges

Interest charges, including amortization of debt issuance costs, premiums, and discounts, net 78,877
75,186
85,570
Allowance for borrowed funds used during construction (886 ) (1,580 ) (1,316 )
Total interest charges 77,991
73,606
84,254
Income before income taxes 211,373
221,855
240,260
Federal and state income tax expense 77,704
67,116
79,575
Net income applicable to common stock $ 133,669
$ 154,739
$ 160,685

Basic average number of common shares outstanding 60,476,066
60,406,001
60,434,510
Diluted average number of common shares outstanding 60,689,269
60,601,458
60,720,090
Basic earnings per average common share outstanding $ 2.21
$ 2.56
$ 2.66
Diluted earnings per average common share outstanding $ 2.20
$ 2.55
$ 2.65
The accompanying notes are an integral part of the consolidated financial statements.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Statements of Comprehensive Income
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Net income $ 133,669
$ 154,739
$ 160,685
Other comprehensive income (loss), net of tax:

Postretirement benefits gain (loss) (net of tax expense of $3,670 in 2015, tax benefit of $4,378 in 2014, and tax expense of $3,137 in 2013) 5,869
(7,001 ) 5,016
Net gain on cash flow hedges (net of tax expense of $132 in 2015, $132 in 2014, and $925 in 2013) 211
212
1,478
Total other comprehensive income (loss), net of tax 6,080
(6,789 ) 6,494
Comprehensive income, net of tax $ 139,749
$ 147,950
$ 167,179
The accompanying notes are an integral part of the consolidated financial statements.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Balance Sheets
AT DEC. 31,
(THOUSANDS) 2015
2014
Assets
Current assets
Cash and cash equivalents $ 68,246
$ 44,423
Restricted cash and cash equivalents 9,263
8,986
Customer accounts receivable (less allowance for doubtful accounts of $2,674 in 2015 and $922 in 2014) 43,255
41,500
Other accounts receivable 27,677
28,098
Unbilled revenue 33,995
38,475
Fuel inventory, at average cost 72,838
64,747
Materials and supplies, at average cost 76,731
71,124
Energy risk management assets 7,673
10,776
Accumulated deferred federal and state income taxes, net —
76,785
Accumulated deferred fuel 12,910
21,554
Cash surrender value of company-/trust-owned life insurance policies 73,823
71,167
Prepayments 7,883
10,284
Regulatory assets 14,117
12,212
Other current assets 448
473
Total current assets 448,859
500,604
Property, plant, and equipment
Property, plant, and equipment 4,661,212
4,508,960
Accumulated depreciation (1,536,158 ) (1,442,960 )
Net property, plant, and equipment 3,125,054
3,066,000
Construction work in progress 66,509
99,458
Total property, plant, and equipment, net 3,191,563
3,165,458
Equity investment in investees 16,822
14,540
Prepayments 4,542
4,891
Restricted cash and cash equivalents 16,195
15,130
Regulatory assets - deferred taxes, net 236,941
234,370
Regulatory assets 284,689
311,867
Net investment in direct financing lease 13,464
13,498
Intangible asset 74,963
90,642
Tax credit fund investment, net 13,741
7,251
Other deferred charges 21,575
10,167
Total assets $ 4,323,354
$ 4,368,418
The accompanying notes are an integral part of the consolidated financial statements.

(Continued on next page)



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Balance Sheets
AT DEC. 31,
(THOUSANDS) 2015
2014
Liabilities and shareholders’ equity
Liabilities
Current liabilities
Long-term debt due within one year $ 19,421
$ 18,272
Accounts payable 93,822
127,268
Customer deposits 55,233
53,411
Provision for rate refund 2,696
2,264
Taxes payable 2,573
2,197
Interest accrued 7,814
8,669
Energy risk management liabilities 275
827
Regulatory liabilities - other 312
312
Deferred compensation 10,156
11,374
Other current liabilities 14,277
13,176
Total current liabilities 206,579
237,770
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net 925,103
918,858
Accumulated deferred investment tax credits 3,245
4,161
Postretirement benefit obligations 205,036
197,623
Regulatory liabilities - other —
312
Restricted storm reserve 16,177
14,916
Other deferred credits 24,670
28,510
Total long-term liabilities and deferred credits 1,174,231
1,164,380
Long-term debt, net 1,267,703
1,338,998
Total liabilities 2,648,513
2,741,148
Commitments and contingencies (Note 14)

Shareholders’ equity
Common shareholders’ equity
Common stock, $1 par value, authorized 100,000,000 shares, issued 61,058,918 and 61,051,286 shares and outstanding 60,482,468 and 60,421,467 shares at December 31, 2015, and 2014, respectively 61,059
61,051
Premium on common stock 418,518
415,482
Retained earnings 1,245,014
1,208,712
Treasury stock, at cost, 576,450 and 629,819 shares at December 31, 2015, and 2014, respectively (23,165 ) (25,310 )
Accumulated other comprehensive loss (26,585 ) (32,665 )
Total shareholders’ equity 1,674,841
1,627,270
Total liabilities and shareholders’ equity $ 4,323,354
$ 4,368,418
The accompanying notes are an integral part of the consolidated financial statements.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Statements of Cash Flows
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Operating activities
Net income $ 133,669
$ 154,739
$ 160,685
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 156,211
156,590
161,047
(Gain) loss on sale of assets —
(6,224 ) 885
Unearned compensation expense 6,344
6,545
6,446
Allowance for equity funds used during construction (3,063 ) (5,380 ) (4,081 )
Net deferred income taxes 74,103
63,597
65,989
Deferred fuel costs 9,899
(11,558 ) 5,630
Cash surrender value of company-/trust-owned life insurance 950
(3,616 ) (3,669 )
Changes in assets and liabilities

Accounts receivable (13,656 ) 11,556
(26,357 )
Unbilled revenue 4,481
(7,310 ) (2,504 )
Fuel inventory and materials and supplies (13,698 ) (12,147 ) (18,626 )
Prepayments 2,750
27
(3,502 )
Accounts payable (25,294 ) 4,481
(1,656 )
Customer deposits 12,162
14,960
12,213
Postretirement benefit obligations 14,173
8,864
(24,541 )
Regulatory assets and liabilities, net 18,793
(777 ) (30,524 )
Other deferred accounts (17,454 ) (14,691 ) (5,547 )
Taxes accrued (831 ) (22,685 ) 53,197
Interest accrued (1,024 ) (3,519 ) (768 )
Other operating 2,507
1,717
(2,627 )
Net cash provided by operating activities 361,022
335,169
341,690
Investing activities

Additions to property, plant, and equipment (156,819 ) (207,636 ) (188,614 )
Allowance for equity funds used during construction 3,063
5,380
4,081
Property, plant, and equipment grants —
—
729
Proceeds from sale of property, plant, and equipment —
9,316
1,145
Reimbursement for property loss —
191
1,306
Contributions to equity investment in investee (2,290 ) —
—
Premiums paid on trust-owned life insurance (3,607 ) (2,831 ) (3,705 )
Return of equity investment in tax credit fund 2,128
2,579
1,619
Contributions to tax credit fund (9,966 ) (55,315 ) (51,011 )
Transfer of cash (to) from restricted accounts, net (1,341 ) (10,097 ) 201
Purchase of restricted investments —
—
(8,782 )
Sale of restricted investments —
11,138
—
Maturity of restricted investments —
1,458
6,816
Other investing 881
(697 ) (1 )
Net cash used in investing activities (167,951 ) (246,514 ) (236,216 )
The accompanying notes are an integral part of the consolidated financial statements.

(Continued on next page)



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Statements of Cash Flows
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Financing activities
Draws on credit facility 120,000
254,000
228,000
Payments on credit facility (163,000 ) (202,000 ) (228,000 )
Issuance of long-term debt 75,000
—
160,000
Repayment of long-term debt (100,824 ) (14,876 ) (113,969 )
Repurchase of long-term debt —
—
(60,000 )
Repurchase of common stock —
(12,449 ) —
Settlement of interest rate swap —
—
(3,269 )
Dividends paid on common stock (97,283 ) (95,044 ) (86,376 )
Other financing (3,141 ) (2,519 ) (4,224 )
Net cash used in financing activities (169,248 ) (72,888 ) (107,838 )
Net increase (decrease) in cash and cash equivalents 23,823
15,767
(2,364 )
Cash and cash equivalents at beginning of period 44,423
28,656
31,020
Cash and cash equivalents at end of period $ 68,246
$ 44,423
$ 28,656

Supplementary cash flow information

Interest paid, net of amount capitalized $ 74,349
$ 74,515
$ 77,296
Income taxes paid (refunded), net $ 1,434
$ 15,286
$ (47,374 )
Supplementary non-cash investing and financing activities

Accrued additions to property, plant, and equipment $ 7,313
$ 12,325
$ 18,627
Issuance of common stock – ESPP $ —
$ 220
$ 318
Decreases in property, plant, and equipment $ 234
$ 47
$ 1,280
Non-cash additions to property, plant, and equipment - ARO $ 184
$ 4,400
$ —
Non-cash donation of property $ 373
$ —
$ —
The accompanying notes are an integral part of the consolidated financial statements.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

CLECO CORPORATION

Consolidated Statements of Changes in Common Shareholders’ Equity
COMMON STOCK TREASURY STOCK PREMIUM ON COMMON STOCK
RETAINED EARNINGS
AOCI

TOTAL COMMON SHAREHOLDERS’
EQUITY

(THOUSANDS, EXCEPT SHARE AMOUNTS) SHARES
AMOUNT
SHARES
COST

Balances, Dec. 31, 2012 60,961,570
$ 60,962
(606,025 ) $ (21,072 ) $ 416,619
$ 1,075,074
$ (32,370 ) $ 1,499,213
Common stock issued for compensatory plans 85,436
85
13,539
471
6,005
—
—
6,561
Dividends on common stock, $1.425 per share —
—
—
—
—
(86,756 ) —
(86,756 )
Net income —
—
—
—
—
160,685
—
160,685
Other comprehensive income, net of tax —
—
—
—
—
—
6,494
6,494
Balances, Dec. 31, 2013 61,047,006
$ 61,047
(592,486 ) $ (20,601 ) $ 422,624
$ 1,149,003
$ (25,876 ) $ 1,586,197
Common stock issued for compensatory plans 4,280
4
212,667
7,740
(7,142 ) —
—
602
Repurchase of common stock —
—
(250,000 ) (12,449 ) —
—
—
(12,449 )
Dividends on common stock, $1.5625 per share —
—
—
—
—
(95,030 ) —
(95,030 )
Net income —
—
—
—
—
154,739
—
154,739
Other comprehensive loss, net of tax —
—
—
—
—
—
(6,789 ) (6,789 )
Balances, Dec. 31, 2014 61,051,286
$ 61,051
(629,819 ) $ (25,310 ) $ 415,482
$ 1,208,712
$ (32,665 ) $ 1,627,270
Common stock issued for compensatory plans 7,632
8
53,369
2,145
3,036
—
—
5,189
Dividends on common stock, $1.60 per share —
—
—
—
—
(97,367 ) —
(97,367 )
Net income —
—
—
—
—
133,669
—
133,669
Other comprehensive income, net of tax —
—
—
—
—
—
6,080
6,080
Balances, Dec. 31, 2015 61,058,918
$ 61,059
(576,450 ) $ (23,165 ) $ 418,518
$ 1,245,014
$ (26,585 ) $ 1,674,841
The accompanying notes are an integral part of the consolidated financial statements.



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~



~~Report of Independent Registered Public Accounting Firm~~

~~To the Member and Board of Managers of~~

~~Cleco Power LLC~~

~~Pineville, Louisiana~~

~~We have audited the accompanying consolidated balance sheets~~ of Cleco Power LLC and subsidiaries ~~(the “Company”) as of December 31, 2015, and 2014, and~~for the related consolidated statements of income, comprehensive income, changes in member’s equity, and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Cleco Power LLC and subsidiaries as of December 31, 2015, and 2014, and the results of their operations and their cash flows for each of the three years in the periodyear ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule for the year ended December 31, 2015, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

New Orleans, Louisiana

February 26, 2016



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K


CLECO POWER	CLECO POWER

Consolidated Statements of Income
	FOR THE YEAR ENDED DEC. 31,									FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015			2014			2013			2017			2016			2015
Operating revenue
Electric operations	$	1,142,389		$	1,225,960		$	1,047,548		$	1,108,389		$	1,091,229		$	1,142,389
Other operations	67,109			64,893			48,909			77,522			68,573			67,109
Affiliate revenue	1,142			1,326			1,338			851			884			1,142
Gross operating revenue	1,210,640			1,292,179			1,097,795			1,186,762			1,160,686			1,210,640
Electric customer credits	(2,173		)	(23,530		)	(1,836		)	(1,566		)	(1,513		)	(2,173		)
Operating revenue, net	1,208,467			1,268,649			1,095,959			1,185,196			1,159,173			1,208,467
Operating expenses
Fuel used for electric generation	373,117			322,696			329,874			339,346			346,520			373,117
Power purchased for utility customers	130,095			247,686			76,962			152,913			119,586			130,095
Other operations	128,697			116,664			114,884			123,192			125,892			128,697
Maintenance	87,416			96,054			85,638			87,574			93,340			87,416
Depreciation and amortization	147,839			144,026			135,717			157,999			146,142			147,839
Taxes other than income taxes	47,102			41,812			46,203			46,539			48,287			47,102
Gain on sale of assets	—			(4		)	—
Merger commitment costs										—			151,501			—
Gain on sale of asset										—			(1,095		)	—
Total operating expenses	914,266			968,934			789,278			907,563			1,030,173			914,266
Operating income	294,201			299,715			306,681			277,633			129,000			294,201
Interest income	725			1,707			1,100			1,283			860			725
Allowance for equity funds used during construction	3,063			5,380			4,081			8,320			4,458			3,063
Other income	1,764			1,483			4,883			2,990			1,601			1,764
Other expense	(2,549		)	(2,322		)	(4,277		)	(2,795		)	(1,976		)	(2,549		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	77,446			76,253			83,993			71,649			77,739			77,446
Allowance for borrowed funds used during construction	(886		)	(1,580		)	(1,316		)	(2,287		)	(1,293		)	(886		)
Total interest charges	76,560			74,673			82,677			69,362			76,446			76,560
Income before income taxes	220,644			231,290			229,791			218,069			57,497			220,644
Federal and state income tax expense	79,294			76,974			79,381			67,331			18,369			79,294
Net income	$	141,350		$	154,316		$	150,410		$	150,738		$	39,128		$	141,350
The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

									CLECO POWER
Consolidated Balance Sheets
	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2015		2014		2017		2016
Liabilities and member’s equity
Member’s equity	$	1,552,404	$	1,545,858	$	1,550,679	$	1,535,202
Long-term debt, net	1,234,039		1,282,609		1,341,475		1,235,056
Total capitalization	2,786,443		2,828,467		2,892,154		2,770,258
Current liabilities
Long-term debt due within one year	19,421		18,272		19,193		19,715
Accounts payable	88,235		116,925		134,374		101,874
Accounts payable - affiliate	6,598		7,760		8,697		7,190
Customer deposits	55,233		53,411		58,582		56,599
Provision for rate refund	2,696		2,264		4,206		3,974
Taxes payable	17,045		3,115
Provision for merger commitments					2,582		14,371
Taxes payable, net					31,611		—
Interest accrued	7,813		9,224		7,083		7,141
Energy risk management liabilities	275		827		352		201
Regulatory liabilities - other	312		312
Other current liabilities	10,078		9,380		13,238		9,951
Total current liabilities	207,706		221,490		279,918		221,016
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 15)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	1,043,531		1,001,332		656,362		1,068,592
Accumulated deferred investment tax credits	3,245		4,161		2,089		2,751
Postretirement benefit obligations	152,152		135,825		173,747		159,107
Regulatory liabilities - other	—		312
Regulatory liabilities - deferred taxes, net					140,426		—
Restricted storm reserve	16,177		14,916		14,469		17,385
Other deferred credits	24,083		26,439		29,576		28,339
Total long-term liabilities and deferred credits	1,239,188		1,182,985		1,016,669		1,276,174
Total liabilities and member’s equity	$	4,233,337	$	4,232,942	$	4,188,741	$	4,267,448
The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

CLECO POWER

Consolidated Statements of Cash Flows
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Operating activities
Net income $ 141,350
$ 154,316
$ 150,410
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 152,833
151,252
147,452
Allowance for equity funds used during construction (3,063 ) (5,380 ) (4,081 )
Net deferred income taxes 43,675
82,315
81,534
Deferred fuel costs 9,899
(11,558 ) 5,630
Changes in assets and liabilities

Accounts receivable (13,681 ) 11,689
(26,491 )
Accounts and notes receivable, affiliate 6,195
709
2,113
Unbilled revenue 4,481
(7,310 ) (2,504 )
Fuel inventory and materials and supplies (13,698 ) (12,114 ) (18,539 )
Accounts payable (20,575 ) 5,459
(848 )
Accounts and notes payable, affiliate (3,990 ) (2,749 ) (3,403 )
Customer deposits 12,162
14,960
12,213
Postretirement benefit obligations 7,405
4,963
(28,306 )
Regulatory assets and liabilities, net 18,793
(777 ) (30,524 )
Other deferred accounts (15,991 ) (10,798 ) (8,212 )
Taxes accrued 36,287
(26,373 ) 5,372
Interest accrued (1,412 ) (4,364 ) (304 )
Other operating 5,868
2,832
(2,108 )
Net cash provided by operating activities 366,538
347,072
279,404
Investing activities

Additions to property, plant, and equipment (156,357 ) (206,607 ) (181,154 )
Allowance for equity funds used during construction 3,063
5,380
4,081
Property, plant, and equipment grants —
—
729
Contributions to equity investment in investee (2,290 ) —
—
Transfer of cash (to) from restricted accounts, net (1,341 ) (10,097 ) 125
Purchase of restricted investments ��
—
(8,782 )
Sale of restricted investments —
11,138
—
Maturity of restricted investments —
1,458
6,816
Other investing 881
2,153
2,367
Net cash used in investing activities (156,044 ) (196,575 ) (175,818 )
Financing activities
Draws on credit facility 63,000
157,000
180,000
Payments on credit facility (83,000 ) (157,000 ) (160,000 )
Issuance of long-term debt 75,000
—
160,000
Repayment of long-term debt (100,824 ) (14,876 ) (113,969 )
Repurchase of long-term debt —
—
(60,000 )
Settlement of interest rate swap —
—
(3,269 )
Distribution to parent (135,000 ) (115,000 ) (105,000 )
Other financing (3,127 ) (2,514 ) (3,661 )
Net cash used in financing activities (183,951 ) (132,390 ) (105,899 )
Net increase (decrease) in cash and cash equivalents 26,543
18,107
(2,313 )
Cash and cash equivalents at beginning of period 39,162
21,055
23,368
Cash and cash equivalents at end of period $ 65,705
$ 39,162
$ 21,055

Supplementary cash flow information
Interest paid, net of amount capitalized $ 74,219
$ 74,326
$ 77,079
Income taxes (refunded) paid, net $ (27 ) $ 257
$ (456 )
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment $ 7,249
$ 12,225
$ 18,414
Decreases in property, plant, and equipment $ 234
$ 47
$ 1,280
Non-cash additions to property, plant, and equipment - ARO $ 184
$ 4,400
$ —
Non-cash additions to property, plant, and equipment - Coughlin $ —
$ 176,244
$ —
Non-cash donation of property $ 373
$ —
$ —
The accompanying notes are an integral part of the consolidated financial statements.



CLECO POWER

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2017			2016			2015
Operating activities
Net income	$	150,738		$	39,128		$	141,350
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	165,200			152,978			152,833
Gain on sales of asset	—			(1,095		)	—
Provision for doubtful accounts	2,677			5,512			2,986
Unearned compensation expense	1,972			1,572			2,000
Allowance for equity funds used during construction	(8,320		)	(4,458		)	(3,063		)
Deferred income taxes	(34,191		)	20,492			43,675
Deferred fuel costs	11,909			(7,215		)	9,899
Changes in assets and liabilities
Accounts receivable	(25,696		)	(23,306		)	(13,681		)
Accounts receivable, affiliate	1,865			2,612			6,195
Unbilled revenue	(2,129		)	(274		)	4,481
Fuel inventory and materials and supplies	(44,995		)	22,192			(13,698		)
Prepayments	2,745			228			1,323
Accounts payable	11,005			9,140			(20,575		)
Accounts payable, affiliate	1,349			(3,639		)	(3,990		)
Customer deposits	12,381			10,675			12,162
Provision for merger commitments	(12,971		)	21,964			—
Postretirement benefit obligations	4,849			5,076			7,405
Regulatory assets and liabilities, net	10,544			17,506			18,793
Other deferred accounts	(8,137		)	(21,818		)	(15,991		)
Taxes accrued	44,101			(29,535		)	36,287
Interest accrued	(59		)	(671		)	(1,412		)
Other operating	2,241			(1,307		)	(441		)
Net cash provided by operating activities	287,078			215,757			366,538
Investing activities
Additions to property, plant, and equipment	(235,252		)	(186,143		)	(156,357		)
Allowance for equity funds used during construction	8,320			4,458			3,063
Proceeds from sale of property, plant, and equipment	4,078			2,698			—
Reimbursement for property loss	187			3,212			—
Contributions to equity investment in investee	—			(2,450		)	(2,290		)
Transfer of cash from (to) restricted accounts, net	13,332			(21,037		)	(1,341		)
Other investing	500			622			881
Net cash used in investing activities	(208,835		)	(198,640		)	(156,044		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K

CLECO POWER

Consolidated Statements of Changes in Member’s Equity
(THOUSANDS) MEMBER’S
EQUITY
AOCI

TOTAL MEMBER’S
EQUITY

Balances, Dec. 31, 2012 $ 1,340,340
$ (20,421 ) $ 1,319,919
Other comprehensive income, net of tax —
5,244
5,244
Distributions to parent (105,000 ) —
(105,000 )
Net income 150,410
—
150,410
Balances, Dec. 31, 2013 1,385,750
(15,177 ) 1,370,573
Other comprehensive loss, net of tax —
(2,111 ) (2,111 )
Non-cash contributions from parent 138,080
—
138,080
Distributions to parent (115,000 ) —
(115,000 )
Net income 154,316
—
154,316
Balances, Dec. 31, 2014 1,563,146
(17,288 ) 1,545,858
Other comprehensive income, net of tax —
196
196
Distributions to parent (135,000 ) —
(135,000 )
Net income 141,350
—
141,350
Balances, Dec. 31, 2015 $ 1,569,496
$ (17,092 ) $ 1,552,404
The accompanying notes are an integral part of the consolidated financial statements.



CLECO POWER

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2017			2016			2015
Financing activities
Draws on credit facility	106,000			15,000			63,000
Payments on credit facility	(106,000		)	(15,000		)	(83,000		)
Issuances of long-term debt	125,000			330,000			75,000
Repayments of long-term debt	(17,896		)	(326,814		)	(100,824		)
Contribution from parent	—			50,000			—
Distributions to parent	(135,000		)	(110,000		)	(135,000		)
Other financing	(2,013		)	(4,526		)	(3,127		)
Net cash used in financing activities	(29,909		)	(61,340		)	(183,951		)
Net increase (decrease) in cash and cash equivalents	48,334			(44,223		)	26,543
Cash and cash equivalents at beginning of period	21,482			65,705			39,162
Cash and cash equivalents at end of period	$	69,816		$	21,482		$	65,705

Supplementary cash flow information
Interest paid, net of amount capitalized	$	65,984		$	92,585		$	74,219
Income taxes refunded, net	$	—		$	(485	)	$	(27	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	30,883		$	16,755		$	7,249
Non-cash additions to property, plant, and equipment	$	3,015		$	—		$	184
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2017 FORM 10-K



CLECO POWER

Consolidated Statements of Changes in Member’s Equity
(THOUSANDS)	MEMBER’S EQUITY			AOCI			TOTAL MEMBER’S EQUITY
Balances, Dec. 31, 2014	$	1,563,146		$	(17,288	)	$	1,545,858
Distributions to parent	(135,000		)	—			(135,000		)
Net income	141,350			—			141,350
Other comprehensive income, net of tax	—			196			196
Balances, Dec. 31, 2015	$	1,569,496		$	(17,092	)	$	1,552,404
Contribution from parent	50,000			—			50,000
Distributions to parent	(110,000		)	—			(110,000		)
Net income	39,128			—			39,128
Other comprehensive income, net of tax	—			3,670			3,670
Balances, Dec. 31, 2016	$	1,548,624		$	(13,422	)	$	1,535,202
Distributions to parent	(135,000		)	—			(135,000		)
Net income	150,738			—			150,738
Other comprehensive loss, net of tax	—			(261		)	(261		)
Balances, Dec. 31, 2017	$	1,564,362		$	(13,683	)	$	1,550,679
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2017 FORM 10-K



Index to Applicable Notes to the Financial Statements of Registrants



Note 1	The Company	Cleco ~~Corporation~~ and Cleco Power
Note 2	Summary of Significant Accounting Policies	Cleco ~~Corporation~~ and Cleco Power
Note 3	Business Combinations	Cleco
Note 4	Regulatory Assets and Liabilities	Cleco ~~Corporation and Cleco Power~~
~~Note 4~~	~~Jointly Owned Generation Units~~	~~Cleco Corporation~~ and Cleco Power
Note 5	~~Fair Value Accounting~~Jointly Owned Generation Units	Cleco ~~Corporation~~ and Cleco Power
Note 6	~~Debt~~Fair Value Accounting	Cleco ~~Corporation~~ and Cleco Power
Note 7	~~Common Stock~~Debt	Cleco ~~Corporation~~ and Cleco Power
Note 8	Common Stock	Cleco and Cleco Power
Note 9	Pension Plan and Employee Benefits	Cleco ~~Corporation and Cleco Power~~
~~Note 9~~	~~Income Taxes~~	~~Cleco Corporation~~ and Cleco Power
Note 10	~~Disclosures about Segments~~Income Taxes	Cleco ~~Corporation~~
~~Note 11~~	~~Regulation and Rates~~	~~Cleco Corporation~~ and Cleco Power
Note 11	Disclosures about Segments	Cleco
Note 12	~~Variable Interest Entities~~Regulation and Rates	Cleco ~~Corporation~~ and Cleco Power
Note 13	~~Operating Leases~~Variable Interest Entities	Cleco ~~Corporation~~ and Cleco Power
Note 14	Operating Leases	Cleco and Cleco Power
Note 15	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco ~~Corporation and Cleco Power~~
~~Note 15~~	~~Affiliate Transactions~~	~~Cleco Corporation~~ and Cleco Power
Note 16	~~Intangible Asset~~Affiliate Transactions	Cleco ~~Corporation~~ and Cleco Power
Note 17	~~Coughlin Transfer~~Intangible Assets and Goodwill	Cleco ~~Corporation~~ and Cleco Power
Note 18	Accumulated Other Comprehensive Loss	Cleco ~~Corporation~~ and Cleco Power
Note 19	Miscellaneous Financial Information (Unaudited)	Cleco ~~Corporation~~ and Cleco Power
Note 20	~~Agreement and~~Subsequent Event - Plan of ~~Merger~~Acquisition	Cleco ~~Corporation~~



Notes to the Financial Statements



Note 1 — The Company

~~General~~

Cleco ~~Corporation~~ is ~~a holding company~~ composed of the following:

Cleco Power, a regulated electric utility subsidiary, which owns ~~ten~~nine generating units with a total nameplate capacity of ~~3,333~~3,310 MW and serves approximately ~~287,000~~290,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. Cleco Power also owns a 50% interest in an entity that owns lignite reserves. Cleco Power owns all of the outstanding membership interests in Cleco Katrina/Rita, a special purpose entity that is consolidated with Cleco Power in its financial statements.

~~Midstream is a wholesale energy subsidiary, regulated by FERC, which owns Evangeline. Prior to March 15, 2014, Evangeline owned Coughlin and its~~ ~~two~~ ~~generating units with a total nameplate capacity of~~ ~~775~~ ~~MW. On March 15, 2014, Coughlin was transferred from Evangeline to Cleco Power.~~

~~Cleco Corporation’s~~Cleco’s other operations consist of ~~a holding company,~~ ~~two~~ ~~transmission interconnection facility subsidiaries, a shared services subsidiary, and an investment subsidiary.~~the following:


◦	Cleco Holdings, a holding company,


◦	Support Group, a shared services subsidiary,


◦	Diversified Lands, an investment subsidiary, and


◦	Attala and Perryville, two subsidiaries that owned and operated transmission interconnection facilities prior to the assets being sold by Cleco on December 29, 2017.

On February 6, 2018, Cleco Energy entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central. For more information on the Purchase and Sale Agreement and related transactions, see Note 20 — ~~“Agreement and~~“Subsequent Event - Plan of ~~Merger.~~Acquisition.”



Note 2 — Summary of Significant Accounting Policies

Use of Estimates

Principles of Consolidation

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

Goodwill

Goodwill is the excess of the purchase price (consideration transferred and liabilities assumed) over the estimated fair value of net assets of the acquired business and is not subject to amortization. Goodwill is assessed annually or more often if an event occurs or circumstances change that would indicate the carrying amount may be impaired. For more information on goodwill, see Note 17 — “Intangible Assets and Goodwill.”

Intangible Assets

Intangible assets include Cleco Katrina/Rita’s right to bill and collect storm recovery charges, fair value adjustments for long-term wholesale power supply agreements, and a fair value adjustment for the valuation of the Cleco trade name. The intangible assets are being amortized over their estimated useful lives in a manner that best reflects the economic benefits derived from such assets. Impairment will be tested if there are events or circumstances that indicate that an impairment analysis should be performed. If such an event or circumstance occurs, intangible impairment testing will be



CLECO
CLECO POWER		2017 FORM 10-K

performed prior to goodwill impairment testing. Impairment is calculated as the excess of the asset’s carrying amount over its fair value. For more information on intangible assets, see Note 17 — “Intangible Assets and Goodwill.”

Statements of Cash Flows

Cleco and Cleco Power’s Consolidated Statements of Cash Flows are prepared using the indirect method. This method requires adjusting net income to remove the effects of all deferrals and accruals of operating cash receipts and payments and to remove items whose cash effects are related to investing and financing cash flows. Derivatives meeting the definition of an accounting hedge are classified in the same category as the item being hedged.

Regulation

Cleco Power is subject to regulation by FERC and the LPSC. Cleco Power complies with the accounting policies and practices prescribed by its regulatory commissions. Cleco Power’s retail rates are regulated by the LPSC and its tariffs for transmission services are regulated by FERC. Rates for wholesale power sales are based on market-based rates, pending FERC review of Cleco Power’s generation market power analysis. Cleco Power capitalizes or defers certain costs for recovery from customers and recognizes a liability for



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 FORM 10-K~~

amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered through the ratemaking process. Regulatory assets and liabilities are amortized consistent with the treatment of the related cost in the ratemaking process. Pursuant to this regulatory approval, Cleco ~~Power~~ has recorded regulatory assets and liabilities.

Any future plan adopted by the LPSC for purposes of transitioning utilities from LPSC regulation to retail competition may affect the regulatory assets and liabilities recorded by Cleco ~~Power~~ if the criteria for the application of the authoritative guidelines for industry regulated operations cannot continue to be met. At this time, Cleco cannot predict whether any legislation or regulation affecting Cleco ~~Power~~ will be enacted or adopted and, if enacted, what form such legislation or regulation may take.

For more information regarding the regulatory assets and liabilities recorded by Cleco Power, see Note 34 — “Regulatory Assets and Liabilities.”

AROs

Cleco Power recognizes an ARO when there is a legal obligation under existing or enacted law, statute, written or oral contract, or by legal construction under the doctrine of promissory estoppel to incur costs to remove an asset when the asset is retired. These guidelines also require an ARO which is conditional on a future event to be recorded even if the event has not yet occurred.

Cleco Power recognizes AROs at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is then accreted to its present value each accounting period. Cleco Power defers this accretion as a regulatory asset based on its determination that these costs can be collected from customers. Concurrent with the recognition of the liability, these costs are capitalized to the related property, plant, and equipment asset. These capitalized costs are depreciated over the same period as the related property asset. Cleco Power

also defers the current depreciation of the asset retirement cost as a regulatory asset.

On April 17, 2015, the EPA published the final rule in the Federal Register for regulating the disposal and management of CCRs from coal-fired power plants under Subtitle D of the Resource Conservation and Recovery Act. The Subtitle D option will regulate CCRs in a manner similar to industrial solid waste. The final rule does not require expensive synthetic lining of existing impoundments. At December 31, 2015, based on management’s best estimate of the retirement costs related to this ruling,In March 2017, Cleco Power recorded a ~~$1.0~~$0.6 million increase to its ARO for the retirement of certain ash disposal facilities. All costs of the CCR rule are expected to be recovered from customers in future rates. The actual asset retirement costs related to the CCR rule requirements may vary substantially from the estimates used to record the increased obligation due to the uncertainty about the compliance strategies that will be used and the preliminary nature of available data used to estimate costs.management areas. Cleco Power will continue to gather additional data in future periods and will make decisions about compliance strategies and the timing of closure activities. As this additional information becomes available, Cleco Power will update the ARO balance for these changes in estimates. At December 31, 2017, management’s analysis confirmed that no additional adjustments were needed to update Cleco Power’s ARO balance.

For more information on Cleco Power’s current AROs, see Note 34 — “Regulatory Assets and Liabilities — AROs.”

Property, Plant, and Equipment

Property, plant, and equipment consists primarily of regulated utility generation and energy transmission and distribution assets. Regulated assets, utilized primarily for retail operations and electric transmission and distribution, are stated at the cost of construction, which includes certain materials, labor, payroll taxes and benefits, administrative and general costs, and the estimated cost of funds used during construction. Jointly owned assets are reflected in property, plant, and equipment at Cleco Power’s share of the cost to construct or purchase the assets. For information on jointly owned assets, see Note 45 — “Jointly Owned Generation Units.”

Most of the carrying values of Cleco’s assets were determined to be stated at fair value at the Merger date, considering that most of these assets are subject to regulation by the LPSC and FERC. A fair value adjustment was made to record the stepped-up basis for the Coughlin assets, since Cleco Power is able to earn a return on and recover these costs from customers. At the date of the Merger, the gross balance of fixed depreciable assets at Cleco was adjusted to be net of accumulated depreciation, as no accumulated depreciation existed on the date of the Merger. Since pushdown accounting was not elected at the Cleco Power level, Cleco Power retained its accumulated depreciation. For more information about merger related adjustments to property, plant, and equipment, see Note 3 — “Business Combinations.”

Cleco’s cost of improvements to property, plant, and equipment is capitalized. Costs associated with repairs and major maintenance projects are expensed as incurred. Cleco capitalizes the cost to purchase or develop software for internal use. The amounts of unamortized computer software costs on Cleco’s Consolidated Balance Sheets at December 31, ~~2015~~2017, and ~~2014~~2016 were $~~12.5~~7.9 million and $~~11.0~~10.0 million, respectively. The amounts of unamortized computer software costs on Cleco Power’s Consolidated Balance Sheets at December 31, 2017, and 2016 were $6.6 million and $8.2 million, respectively. Amortization of capitalized computer software costs charged to expense in Cleco and Cleco Power’s Consolidated Statements of Income for the years ending December 31, ~~2015~~, ~~2014~~,2017, 2016, and 2015 is shown in the following tables:~~2013~~ ~~was~~ ~~$2.2 million~~, ~~$1.4 million, and~~ ~~$1.4 million, respectively.~~



Cleco
	SUCCESSOR				PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016		FOR THE YEAR ENDED DEC. 31, 2015
Amortization	$	2,367	$	2,351	$	921	$	2,194



CLECO
CLECO POWER		2017 FORM 10-K



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2017		2016		2015
Amortization	$	1,887	$	2,405	$	1,718

Upon retirement or disposition, the cost of Cleco Power’s depreciable plant and the cost of removal, net of salvage value, are charged to accumulated depreciation. For Cleco’s other depreciable assets, upon disposition or retirement, the difference between the net book value of the property and any proceeds received for the property is recorded as a gain or loss on asset disposition on Cleco’s Consolidated Statements of Income. Any cost incurred to remove the asset is charged to expense. Annual depreciation provisions expressed as a percentage of average depreciable property for Cleco Power for ~~2015~~, ~~2014~~,2017 was 2.72%. Annual depreciation provisions expressed as a percentage of average depreciable property for Cleco Power for both 2016 and ~~2013,were~~2015 was 2.68%, ~~2.66%, and~~ ~~2.70%, respectively.~~.

Depreciation on property, plant, and equipment is calculated primarily on a straight-line basis over the useful lives of the ~~assets. The estimated useful life of utility plant~~ assets, ~~ranges from 5 years to 95 years. The estimated useful life of other property and equipment ranges from 5 years to 50 years.~~as follows:



CATEGORY	YEARS
Utility Plants
Generation	10	–	95
Distribution	15	–	50
Transmission	5	–	55
Other utility plant	5	–	45
Other property, plant, and equipment	5	–	45

At December 31, ~~2015~~,2017, and ~~2014~~,2016, Cleco and Cleco Power’s property, plant, and equipment consisted of the following:


Cleco
	AT DEC. 31,						AT DEC. 31,
(THOUSANDS)	2015			2014			2017			2016
Regulated utility plants	$	4,645,698		$	4,495,490
Other	15,514			13,470
Utility plants
Generation							$	1,908,344		$	1,866,601
Distribution							1,015,472			955,126
Transmission							512,428			503,996
Other utility plant							153,900			146,976
Other property, plant, and equipment							4,381			3,882
Total property, plant, and equipment	4,661,212			4,508,960			3,594,525			3,476,581
Accumulated depreciation	(1,536,158		)	(1,442,960		)	(192,348		)	(75,816		)
Net property, plant, and equipment	$	3,125,054		$	3,066,000		$	3,402,177		$	3,400,765



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2017			2016
Regulated utility plants
Generation	$	2,442,987		$	2,406,572
Distribution	1,462,193			1,405,703
Transmission	725,199			719,052
Other utility plant	263,105			259,238
Total property, plant, and equipment	4,893,484			4,790,565
Accumulated depreciation	(1,712,590		)	(1,618,241		)
Net property, plant, and equipment	$	3,180,894		$	3,172,324

During ~~2015, Cleco’s investment in~~2017, Cleco Power’s regulated utility property, plant, and equipment increased primarily due to ~~the Layfield/Messick project, or Northwest Louisiana Transmission Expansion project and~~ general rehabilitation of transmission, distribution, and generation assets.

Cleco Power’s property, plant, and equipment includes plant acquisition adjustments related primarily to the acquisition of Acadia Unit 1 in 2010 and Teche in 1997. Accumulated amortization associated with the plant acquisition adjustments are reported in accumulated depreciation on Cleco Power’s Consolidated Balance Sheets. The plant acquisition adjustments and accumulated amortization reported in property, plant, and equipment and accumulated



TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		56

PART I
ITEM 1.	Business
	General	78
	Operations	89
	Regulatory Matters, Industry Developments, and Franchises	11
	Environmental Matters	1213
ITEM 1A.	Risk Factors	16
ITEM 1B.	Unresolved Staff Comments	24
ITEM 2.	Properties	24
ITEM 3.	Legal Proceedings	25
ITEM 4.	Mine Safety Disclosures	25

PART II
ITEM 5.	Market for Registrants’ Common Equity, Related Stockholder Matters, and ~~Cleco Corporation’s~~Issuer Purchases of Equity Securities	26
ITEM 6.	Selected Financial Data	2726
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	4546
ITEM 8.	Financial Statements and Supplementary Data	48
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	99106
ITEM 9A.	Controls and Procedures	~~100~~106
ITEM 9B.	Other Information	~~103~~107

PART III
ITEM 10.	Directors, Executive Officers, and Corporate Governance of the Registrants	~~103~~108
ITEM 11.	Executive Compensation	~~106~~112
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~130~~127
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	~~131~~127
ITEM 14.	Principal Accountant Fees and Services	~~131~~128

PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	129
ITEM 16.	Form 10-K Summary	133
	Signatures	~~144~~141


GENERATING STATION	YEAR OF INITIAL OPERATION	NAMEPLATE CAPACITY (MW)	⁽¹⁾	NET CAPACITY (MW)	⁽²⁾	PRIMARY FUEL USED FOR GENERATION	GENERATION TYPE	YEAR OF INITIAL OPERATION	NAMEPLATE CAPACITY (MW)	⁽¹⁾	NET CAPACITY (MW)	⁽²⁾	PRIMARY FUEL USED FOR GENERATION	GENERATION TYPE
Brame Energy Center
Nesbitt Unit 1	1975	440		419		natural gas	steam	1975	440		422		natural gas	steam
Rodemacher Unit 2	1982	157	⁽³⁾	149	⁽³⁾	coal	steam	1982	157	⁽³⁾	148	⁽³⁾	coal	steam
Madison Unit 3	2010	641		631		petroleum coke/coal	steam	2010	641		630		petroleum coke/coal	steam
Acadia Unit 1	2002	580		566		natural gas	combined cycle	2002	580		559		natural gas	combined cycle
Coughlin Unit 6	2000	264		242		natural gas	combined cycle	2000	264		252		natural gas	combined cycle
Coughlin Unit 7	2000	511		481		natural gas	combined cycle	2000	511		480		natural gas	combined cycle
Teche Unit 1	1953	23		15		natural gas	steam
Teche Unit 3	1971	359		331		natural gas	steam	1971	359		335		natural gas	steam
Teche Unit 4	2011	33		35		natural gas	combustion	2011	33		34		natural gas	combustion
Dolet Hills Power Station	1986	325	⁽⁴⁾	321	⁽⁴⁾	lignite	steam	1986	325	⁽⁴⁾	321	⁽⁴⁾	lignite	steam
Total generating capability		3,333		3,190					3,310		3,181


Five-Year Selected Financial Data
																				SUCCESSOR						PREDECESSOR
(THOUSANDS, EXCEPT PER SHARE AND PERCENTAGES)	2015			2014				2013				2012				2011				FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015			FOR THE YEAR ENDED DEC. 31, 2014			FOR THE YEAR ENDED DEC. 31, 2013
Operating revenue, net (excluding intercompany revenue)
Cleco Power	$	1,207,325		$	1,267,323			$	1,094,621			$	991,695			$	1,096,093			$	1,184,345		$	859,006		$	299,283		$	1,207,325		$	1,267,323		$	1,094,621
Midstream ⁽¹⁾	—			5,467				31,672				25,562				19,013				—			—			—			—			5,467			31,672
Other	2,077			(3,305		)		(29,579		)		(23,560		)		2,207				(8,699		)	(6,001		)	587			2,077			(3,305		)	(29,579		)
Total	$	1,209,402		$	1,269,485			$	1,096,714			$	993,697			$	1,117,313			$	1,175,646		$	853,005		$	299,870		$	1,209,402		$	1,269,485		$	1,096,714
Income before income taxes	$	211,373		$	221,855			$	240,260			$	228,975			$	298,745
Net income applicable to common stock	$	133,669		$	154,739			$	160,685			$	163,648			$	195,710
Basic earnings per average common share outstanding	$	2.21		$	2.56			$	2.66			$	2.71			$	3.24
Diluted earnings per average common share outstanding	$	2.20		$	2.55			$	2.65			$	2.70			$	3.22
Income (loss) before income taxes																				$	145,159		$	(46,935	)	$	(492	)	$	211,373		$	221,855		$	240,260
Net income (loss)																				$	138,080		$	(24,113	)	$	(3,960	)	$	133,669		$	154,739		$	160,685
Capitalization
Common shareholders’ equity	56.92		%	54.86		%		54.89		%		54.67		%		51.80		%
Member’s equity/Common shareholders’ equity																				42.50		%	42.77		%				56.92		%	54.86		%	54.89		%
Long-term debt ⁽²⁾	43.08		%	45.14		%		45.11		%		45.33		%		48.20		%		57.50		%	57.23		%				43.08		%	45.14		%	45.11		%
Common shareholders’ equity	$	1,674,841		$	1,627,270			$	1,586,197			$	1,499,213			$	1,419,857
Member’s equity/Common shareholders’ equity																				$	2,096,357		$	2,046,763					$	1,674,841		$	1,627,270		$	1,586,197
Long-term debt, net ⁽²⁾	$	1,267,703		$	1,338,998		⁽³⁾	$	1,303,786		⁽³⁾	$	1,243,266		⁽³⁾	$	1,321,346		⁽³⁾	$	2,836,105		$	2,738,571					$	1,267,703		$	1,338,998		$	1,303,786
Total assets	$	4,323,354		$	4,368,418			$	4,203,548			$	4,133,357			$	4,034,492			$	6,278,382		$	6,343,144					$	4,323,354		$	4,368,418		$	4,203,548
Cash dividends declared per common share	$	1.60		$	1.5625			$	1.425			$	1.30			$	1.1225			N/A			N/A			$	0.40		$	1.60		$	1.5625		$	1.425
⁽¹⁾ Effective March 15, 2014, upon the transfer of Coughlin to Cleco Power, Midstream had minimal operations. ⁽²⁾Long-term debt includes obligations for capital leases and excludes debt due within one year. ⁽³⁾Amounts for 2011 through 2014 were adjusted to reflect 2015 accounting guidance that requires debt issuance costs to be presented as a direct deduction from the carrying value of the related debt. For more information, see Item 8, “Financial Statements and Supplementary Data — Notes to Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Authoritative Guidance.”



CLECO CORPORATION

Consolidated Statements of Changes in Common Shareholders’ Equity
	COMMON STOCK			TREASURY STOCK					PREMIUM ON COMMON STOCK			RETAINED EARNINGS			AOCI			TOTAL COMMON SHAREHOLDERS’ EQUITY
(THOUSANDS, EXCEPT SHARE AMOUNTS)	SHARES	AMOUNT		SHARES		COST			PREMIUM ON COMMON STOCK			RETAINED EARNINGS			AOCI			TOTAL COMMON SHAREHOLDERS’ EQUITY
Balances, Dec. 31, 2012	60,961,570	$	60,962	(606,025	)	$	(21,072	)	$	416,619		$	1,075,074		$	(32,370	)	$	1,499,213
Common stock issued for compensatory plans	85,436	85		13,539		471			6,005			—			—			6,561
Dividends on common stock, $1.425 per share	—	—		—		—			—			(86,756		)	—			(86,756		)
Net income	—	—		—		—			—			160,685			—			160,685
Other comprehensive income, net of tax	—	—		—		—			—			—			6,494			6,494
Balances, Dec. 31, 2013	61,047,006	$	61,047	(592,486	)	$	(20,601	)	$	422,624		$	1,149,003		$	(25,876	)	$	1,586,197
Common stock issued for compensatory plans	4,280	4		212,667		7,740			(7,142		)	—			—			602
Repurchase of common stock	—	—		(250,000	)	(12,449		)	—			—			—			(12,449		)
Dividends on common stock, $1.5625 per share	—	—		—		—			—			(95,030		)	—			(95,030		)
Net income	—	—		—		—			—			154,739			—			154,739
Other comprehensive loss, net of tax	—	—		—		—			—			—			(6,789		)	(6,789		)
Balances, Dec. 31, 2014	61,051,286	$	61,051	(629,819	)	$	(25,310	)	$	415,482		$	1,208,712		$	(32,665	)	$	1,627,270
Common stock issued for compensatory plans	7,632	8		53,369		2,145			3,036			—			—			5,189
Dividends on common stock, $1.60 per share	—	—		—		—			—			(97,367		)	—			(97,367		)
Net income	—	—		—		—			—			133,669			—			133,669
Other comprehensive income, net of tax	—	—		—		—			—			—			6,080			6,080
Balances, Dec. 31, 2015	61,058,918	$	61,059	(576,450	)	$	(23,165	)	$	418,518		$	1,245,014		$	(26,585	)	$	1,674,841
The accompanying notes are an integral part of the consolidated financial statements.



ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Purchase Price Allocation
(THOUSANDS)	AT APR. 13, 2016
Current assets	$	455,016
Property, plant, and equipment, net	3,432,144
Goodwill	1,490,797
Other long-term assets	1,023,487
Less
Current liabilities	228,515
Net deferred income tax liabilities	1,059,939
Other deferred credits	279,379
Long-term debt, net	1,470,126
Total purchase price	$	3,363,485


Cleco Power
	AT DEC. 31,						REMAINING RECOVERY PERIOD	AT DEC. 31,						REMAINING RECOVERY PERIOD
(THOUSANDS)	2015			2014			REMAINING RECOVERY PERIOD	2017			2016			REMAINING RECOVERY PERIOD
Total federal regulatory asset — income taxes	$	5,614		$	124
Total federal regulatory liability — income taxes								$	(64,205	)	$	(635	)
Total state regulatory asset — income taxes	105,868			106,964				142,788			112,751
2017 tax reform								(348,590		)	—
AFUDC	127,092			129,545				129,953			126,335
Total investment tax credit	(1,633		)	(2,263		)		(372		)	(1,002		)
Total regulatory assets — deferred taxes, net	236,941			234,370			*
Total regulatory (liabilities) assets — deferred taxes, net								(140,426		)	237,449			*
Mining costs	8,921			11,470			3.5 yrs.	3,823			6,372			1.5 yrs.
Interest costs	5,221			5,582			*	4,499			4,860			*
AROs ⁽¹⁾	2,462			1,029			*	2,762			2,096			*
Postretirement costs ⁽¹⁾	150,274			160,903			*	142,764			145,268			*
Tree trimming costs	6,318			8,066			2.5 yrs.	7,193			5,549			*
Training costs	6,863			7,019			44 yrs.	6,552			6,708			42 yrs.
Surcredits, net ⁽²⁾	9,661			13,587			2.5 yrs.	2,173			5,876			*
Amended lignite mining agreement contingency ⁽¹⁾	3,781			3,781			*
AMI deferred revenue requirement	5,318			5,863			10 yrs.	4,227			4,772			8 yrs.
Emergency declarations								4,131			—			2.5 yrs.
Production operations and maintenance expenses	12,436			14,761			*	8,625			13,999			*
AFUDC equity gross-up ⁽²⁾	71,444			72,859			*	71,205			70,423			*
Acadia Unit 1 acquisition costs	2,548			2,653			24 yrs.	2,336			2,442			22 yrs.
Financing costs	9,032			9,402			*	8,293			8,663			*
Biomass costs	50			82			1.5 yrs.	—			18			—
MISO integration costs	2,340			3,275			2.5 yrs.	468			1,404			0.5 yr.
Coughlin transaction costs	1,030			1,060			33.5 yrs.	968			999			31.5 yrs.
Corporate franchise tax	373			1,223			*	153			1,308			*
Acadia FRP true-up	377			754			0.5 yrs.
Energy efficiency	—			114			—
MATS Costs								2,564			4,270			0.5 yr.
Other	357			596			1.5 yrs.	484			710			*
Total regulatory assets	298,806			324,079				273,220			285,737
PPA true-up	(312		)	(624		)	0.5 yrs.
Fuel and purchased power	12,910			21,554			*
Accumulated deferred fuel								13,980			20,787			*
Total regulatory assets, net	$	548,345		$	579,379			$	146,774		$	543,973
⁽¹⁾Represents regulatory assets in which cash has not yet been expended and the assets are offset by liabilities that do not incur a carrying cost. ⁽²⁾Represents regulatory assets for past expenditures that were not earning a return on investment at December 31, 2015. All other assets are earning a return on investment. * For information related to the remaining recovery periods, refer to the following disclosures for each specific regulatory asset.
⁽¹⁾Represents regulatory assets in which cash has not yet been expended and the assets are offset by liabilities that do not incur a carrying cost. ⁽²⁾Represents regulatory assets for past expenditures that were not earning a return on investment at December 31, 2017. All other assets are earning a return on investment. * For information related to the remaining recovery periods, refer to the following disclosures for each specific regulatory asset.								⁽¹⁾Represents regulatory assets in which cash has not yet been expended and the assets are offset by liabilities that do not incur a carrying cost. ⁽²⁾Represents regulatory assets for past expenditures that were not earning a return on investment at December 31, 2017. All other assets are earning a return on investment. * For information related to the remaining recovery periods, refer to the following disclosures for each specific regulatory asset.



				AT DEC. 31, 2015
(THOUSANDS, EXCEPT PERCENTAGES AND MW)	RODEMACHER UNIT 2			DOLET HILLS			TOTAL
Utility plant in service	$	142,648		$	390,162		$	532,810
Accumulated depreciation	$	73,591		$	215,829		$	289,420
Construction work in progress	$	148		$	2,075		$	2,223
Ownership interest percentage	30		%	50		%
Nameplate capacity (MW)	523			650
Ownership interest (MW)	157			325



Cleco
				AT DEC. 31, 2017
(THOUSANDS, EXCEPT PERCENTAGES AND MW)	RODEMACHER UNIT 2			DOLET HILLS			TOTAL
Utility plant in service	$	72,129		$	185,156		$	257,285
Accumulated depreciation	$	3,111		$	15,094		$	18,205
Construction work in progress	$	436		$	4,657		$	5,093
Ownership interest percentage	30		%	50		%
Nameplate capacity (MW)	523			650
Ownership interest (MW)	157			325


Cleco
	CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:																FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT DEC. 31, 2015		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2014		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2017		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2016		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Institutional money market funds	$	89,584	$	—	$	89,584	$	—	$	63,701	$	—	$	63,701	$	—	$	144,302	$	—	$	144,302	$	—	$	66,410	$	—	$	66,410	$	—
FTRs	7,673		—		—		7,673		10,776		—		—		10,776		7,396		—		—		7,396		7,884		—		—		7,884
Total assets	$	97,257	$	—	$	89,584	$	7,673	$	74,477	$	—	$	63,701	$	10,776	$	151,698	$	—	$	144,302	$	7,396	$	74,294	$	—	$	66,410	$	7,884
Liability Description
Long-term debt	$	1,463,989	$	—	$	1,463,989	$	—	$	1,601,816	$	—	$	1,601,816	$	—
FTRs	275		—		—		275		827		—		—		827		352		—		—		352		201		—		—		201
Total liabilities	$	1,464,264	$	—	$	1,463,989	$	275	$	1,602,643	$	—	$	1,601,816	$	827	$	352	$	—	$	—	$	352	$	201	$	—	$	—	$	201



ITEM 1. BUSINESS


Cleco Power
	CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:																FAIR VALUE MEASUREMENTS AT REPORTING DATE:
(THOUSANDS)	AT DEC. 31, 2015		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2014		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2017		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2016		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Institutional money market funds	$	87,363	$	—	$	87,363	$	—	$	58,680	$	—	$	58,680	$	—	$	95,681	$	—	$	95,681	$	—	$	65,089	$	—	$	65,089	$	—
FTRs	7,673		—		—		7,673		10,776		—		—		10,776		7,396		—		—		7,396		7,884		—		—		7,884
Total assets	$	95,036	$	—	$	87,363	$	7,673	$	69,456	$	—	$	58,680	$	10,776	$	103,077	$	—	$	95,681	$	7,396	$	72,973	$	—	$	65,089	$	7,884
Liability Description
Long-term debt	$	1,429,989	$	—	$	1,429,989	$	—	$	1,544,816	$	—	$	1,544,816	$	—
FTRs	275		—		—		275		827		—		—		827		352		—		—		352		201		—		—		201
Total liabilities	$	1,430,264	$	—	$	1,429,989	$	275	$	1,545,643	$	—	$	1,544,816	$	827	$	352	$	—	$	—	$	352	$	201	$	—	$	—	$	201



(THOUSANDS, EXCEPT DOLLAR PER MWh)	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
	Assets		Liabilities				Low			High

FTRs at December 31, 2015	$	7,673	$	275	RTO auction pricing	FTR price - per MWh	$	(3.63	)	$	4.51
FTRs at December 31, 2014	$	10,776	$	827	RTO auction pricing	FTR price - per MWh	$	(4.12	)	$	7.76




	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT DEC. 31, 2017		AT DEC. 31, 2016
Commodity-related contracts
FTRs:
Current	Energy risk management assets	$	7,396	$	7,884
Current	Energy risk management liabilities	352		201
Commodity-related contracts, net		$	7,044	$	7,683


Cleco
					FOR THE YEAR ENDED DEC. 31,							AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		2015			2014			2013				SUCCESSOR						PREDECESSOR
(THOUSANDS)	DERIVATIVES LINE ITEM	AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES									DERIVATIVES LINE ITEM	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Commodity contracts
FTRs⁽¹⁾	Electric operations	$	50,594		74,454			$	243		Electric operations	$	44,181		$	30,915		$	8,563		$	50,594
FTRs⁽¹⁾	Power purchased for utility customers	(27,509		)	(46,386		)	(19		)	Power purchased for utility customers	(26,017		)	(14,941		)	(5,761		)	(27,509		)
Total		$	23,085		$	28,068		$	224			$	18,164		$	15,974		$	2,802		$	23,085



YEAR ENDING DEC. 31,	(THOUSANDS)
Amounts payable under long-term debt agreements
2016	$	16,814
2017	$	17,896
2018	$	303,193
2019	$	20,571
2020	$	11,055
Thereafter	$	930,000



YEAR ENDING DEC. 31,	(THOUSANDS)
Amounts payable under capital lease agreements
2016	$	2,607
2017	$	1,818



	SHARES		WEIGHTED- AVERAGE GRANT-DATE FAIR VALUE
Non-vested at Jan. 1, 2015	301,049		$	43.29
Granted	90,050		$	54.74
Vested	(82,322	)	$	40.26
Forfeited	(38,789	)	$	42.75
Non-vested at Dec. 31, 2015	269,988		$	48.11



	PENSION BENEFITS						OTHER BENEFITS
(THOUSANDS)	2015			2014			2015			2014
Change in benefit obligation
Benefit obligation at beginning of year	$	498,372		$	392,488		$	44,652		$	43,840
Service cost	10,419			8,050			1,635			1,542
Interest cost	20,795			19,851			1,607			1,809
Plan participants’ contributions	—			—			903			872
Actuarial (gain) loss	(30,483		)	95,576			(1,039		)	1,228
Expenses paid	(1,995		)	(1,671		)	—			—
Medicare D	—			—			48			132
Other adjustments	—			—			—			(551		)
Benefits paid	(17,046		)	(15,922		)	(4,736		)	(4,220		)
Benefit obligation at end of year	480,062			498,372			43,070			44,652
Change in plan assets
Fair value of plan assets at beginning of year	412,803			384,555			—			—
Actual return on plan assets	(10,230		)	45,841			—			—
Employer contributions	—			—			—			—
Expenses paid	(1,995		)	(1,671		)	—			—
Benefits paid	(17,046		)	(15,922		)	—			—
Fair value of plan assets at end of year	383,532			412,803			—			—
Unfunded status	$	(96,530	)	$	(85,569	)	$	(43,070	)	$	(44,652	)



	OTHER BENEFITS LIABILITY
(THOUSANDS)	2015		2014
Cleco
Current	$	3,613	$	3,470
Non-current	$	39,457	$	41,182
Cleco Power
Current	$	3,140	$	3,206
Non-current	$	34,300	$	31,250



(THOUSANDS)		AT DEC. 31, 2015		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Cash and cash equivalents		$	4,568	$	—	$	4,568	$	—
Common stock		13,816		13,816		—		—
Obligations of U.S. Government, U.S. Government Agencies, and state and local governments		48,792		—		48,792		—
Mutual funds
Domestic		47,801		47,801		—		—
International		22,853		22,853		—		—
Real estate funds		17,890		—		—		17,890
Corporate debt		182,408		—		182,408		—
Total		$	338,128	$	84,470	$	235,768	$	17,890

	Investments measured at net asset value	42,362
	Interest accrual	3,042
	Total net assets	$	383,532


(THOUSANDS)
Balance, Dec. 31, 2013	$	17,928
Unrealized gains	570
Purchases	294
Balance, Dec. 31, 2014	$	18,792
PREDECESSOR
Balance, Dec. 31, 2015				$	17,890
Realized gains	9			71
Unrealized gains	(148		)	89
Purchases	679			26
Sales	(1,442		)	(205		)
Balance, Dec. 31, 2015	$	17,890
Balance, Apr. 12, 2016				$	17,871
SUCCESSOR
Balance, Apr. 13, 2016				$	17,871
Realized gains				151
Unrealized gains				227
Purchases				570
Sales				(151		)
Balance, Dec. 31, 2016				$	18,668
Realized losses				(2,365		)
Unrealized gains				2,674
Purchases				649
Sales				(431		)
Balance, Dec. 31, 2017				$	19,195



	PERCENT OF TOTAL PLAN ASSETS*
	MINIMUM		TARGET		MAXIMUM
Return-seeking
Domestic equity			16	%
International equity			16	%
Real estate			7	%
Hedge fund of funds			1	%
Total return-seeking	35	%	40	%	45	%
Liability hedging
Fixed income- long government/credit			20	%
Fixed income - long credit			40	%
Total liability hedging	55	%	60	%	65	%
*Minimums and maximums within subcategories not intended to equal total for category.



	PERCENT OF TOTAL PLAN ASSETS
			AT DEC. 31, 2017
	MINIMUM		TARGET		MAXIMUM
Return-seeking
Domestic equity			17	%
International equity			19	%
Real estate			4	%
Total return-seeking	35	%	40	%	45	%
Liability hedging*	55	%	60	%	65	%
*Liability hedging is not target by subcategories.


	ONE-PERCENTAGE POINT					ONE-PERCENTAGE POINT
(THOUSANDS)	INCREASE		DECREASE			INCREASE		DECREASE
Effect on total of service and interest cost components	$	19	$	(22	)	$	16	$	(18	)
Effect on postretirement benefit obligation	$	258	$	(288	)	$	199	$	(222	)


(THOUSANDS)	PENSION BENEFITS		OTHER BENEFITS, GROSS		PENSION BENEFITS		OTHER BENEFITS, GROSS
2016	$	18,509	$	3,686
2017	$	19,651	$	3,714
For the year ending Dec. 31,
2018	$	20,787	$	3,779	$	21,655	$	4,131
2019	$	22,048	$	3,866	$	22,795	$	4,077
2020	$	23,424	$	3,897	$	23,948	$	3,979
2021					$	25,041	$	3,894
2022					$	26,189	$	3,801
Next five years	$	136,165	$	18,598	$	147,475	$	16,842


													SERP BENEFITS
	SERP BENEFITS						SUCCESSOR						PREDECESSOR
(THOUSANDS)	2015			2014			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Change in benefit obligation
Benefit obligation at beginning of year	$	73,902		$	57,865
Benefit obligation at beginning of period							$	78,045		$	79,555		$	72,315
Service cost	2,705			2,278			494			571			702
Interest cost	3,056			3,028			3,239			2,275			900
Actuarial (gain) loss	(4,488		)	13,436
Actuarial loss							6,442			1,152			—
Benefits paid	(2,860		)	(2,705		)	(4,376		)	(2,999		)	(1,186		)
Benefit obligation at end of year	$	72,315		$	73,902
Plan amendments							180			(2,509		)	—
Curtailments							—			—			3,602
Special/contractual termination benefits							315			—			3,222
Benefit obligation at end of period							$	84,339		$	78,045		$	79,555


Cleco
	SERP LIABILITY				AT DEC. 31,
(THOUSANDS)	2015		2014		2017		2016
Cleco
Current	$	3,238	$	3,031	$	4,471	$	4,308
Non-current	$	69,049	$	70,871	$	79,868	$	73,738
Cleco Power
Current	$	1,000	$	813
Non-current	$	21,321	$	19,006



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT FOR %)	2015			2014			2013
Income before tax	$	211,373		$	221,855		$	240,260
Statutory rate	35.0		%	35.0		%	35.0		%
Tax at federal statutory rate	$	73,981		$	77,649		$	84,091
Increase (decrease):
Plant differences, including AFUDC flowthrough	1,875			462			427
Amortization of investment tax credits	(916		)	(983		)	(1,108		)
State income taxes	1,117			23			1,094
Settlement with taxing authorities	—			(9,106		)	—
NMTC	243			(754		)	(4,806		)
Other	1,404			(175		)	(123		)
Total taxes	$	77,704		$	67,116		$	79,575
Effective Rate	36.8		%	30.3		%	33.1		%



	SUCCESSOR						PREDECESSOR
(THOUSANDS, EXCEPT PERCENTAGES)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Income (loss) before tax	$	145,159		$	(46,935	)	$	(492	)	$	211,373
Statutory rate	35.0		%	35.0		%	35.0		%	35.0		%
Tax expense (benefit) at federal statutory rate	$	50,806		$	(16,427	)	$	(172	)	$	73,981
Increase (decrease)
Plant differences, including AFUDC flowthrough	743			(881		)	823			1,875
Amortization of investment tax credits	(662		)	(371		)	(124		)	(916		)
State income taxes	4,254			(4,725		)	(3,078		)	1,117
Nondeductible merger costs	2			(844		)	4,282			—
Return to accrual adjustment	(608		)	(2,943		)	—			—
2017 tax reform	(46,291		)	—			—			—
NMTC	313			(181		)	(158		)	243
Other	(1,478		)	3,550			1,895			1,404
Total tax expense (benefit)	$	7,079		$	(22,822	)	$	3,468		$	77,704
Effective rate	4.9		%	48.6		%	(704.9		)%	36.8		%



Cleco
(THOUSANDS)	LIABILITY FOR UNRECOGNIZED TAX BENEFITS
Balance, Jan. 1, 2013	$	3,126
Reduction for tax positions of current period	—
Additions for tax positions of prior years	2,193
Reduction for tax positions of prior years	(248		)
Reduction for settlement with tax authority	—
Reduction for lapse of statute of limitations	—
Balance, Dec. 31, 2013	$	5,071
Reduction for tax positions of current period	—
Additions for tax positions of prior years	—
Reduction for tax positions of prior years	—
Reduction for settlement with tax authority	(5,071		)
Reduction for lapse of statute of limitations	—
Balance, Dec. 31, 2014	$	—
Reduction for tax positions of current period	—
Additions for tax positions of prior years	—
Reduction for tax positions of prior years	—
Reduction for settlement with tax authority	—
Reduction for lapse of statute of limitations	—
Balance, Dec. 31, 2015	$	—

~~CLECO CORPORATION~~

~~CLECO POWER~~

~~2015 FORM 10-K~~RISK OVERVIEW