UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2015~~2018

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

__________________

Commission file number 1-15759

CLECO ~~CORPORATION~~CORPORATE HOLDINGS LLC

(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

__________________

Commission file number 1-05663

CLECO POWER LLC

(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: None

~~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 ox No xo

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 xo Noox

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~~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”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer xo Accelerated filer o Non-accelerated filer ox ~~(Do not check if a smaller reporting company)~~ Smaller reporting companyo 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, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” accelerated ~~filer”~~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 companyo 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~~2018 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 (this “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~~Annual Report on Form 10-K 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~~Annual Report on Form 10-K are combined.



TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		56

PART I
ITEM 1.	Business
	General	78
	Operations	8
	Regulatory Matters, Industry Developments, and Franchises	11
	Environmental Matters	12
ITEM 1A.	Risk Factors	16
ITEM 1B.	Unresolved Staff Comments	2425
ITEM 2.	Properties	2425
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	4547
ITEM 8.	Financial Statements and Supplementary Data	4849
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	99107
ITEM 9A.	Controls and Procedures	~~100~~107
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~~127

PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	~~133~~128
ITEM 16.	Form 10-K Summary	132
	Signatures	~~144~~140



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



GLOSSARY OF TERMS

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
2016 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
2016 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
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
ADIT	Accumulated Deferred Income Tax
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
BCI	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 Cajun	Cleco Cajun LLC, formerly Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings
Cleco Cajun Transaction	The transaction between Cleco Cajun and NRG Energy in which Cleco Cajun acquired all the membership interest in NRG South Central which closed on February 4, 2019.
Cleco Corporation	Pre-2016 Merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016
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, BCI, 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, a wholly owned subsidiary of Cleco Cajun. Prior to the closing of the Cleco Cajun Transaction on February 4, 2019, Cottonwood Energy was an indirect subsidiary of NRG South Central.
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~~
~~Dodd-Frank Act~~	~~Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010~~
~~DOE~~	~~U.S. Department of Energy~~Holdings
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



CLECO
CLECO POWER		2018 FORM 10-K



ABBREVIATION OR ACRONYM	DEFINITION
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
Fitch	Fitch Ratings, a credit rating agency
FTR	Financial Transmission Right
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the U.S.
GO Zone	Gulf Opportunity Zone Act of 2005 (Public Law 109-135)
~~Interconnection Agreement~~IRC	~~One of two Interconnection and Real Estate Agreements, one between Attala and Entergy Mississippi, and the other between Perryville and Entergy Louisiana~~

Internal Revenue Code
IRP
~~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~~
~~Merger~~ Agreement	Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation relating to the 2016 Merger
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 2016 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
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~~Projects. This fund was dissolved effective January 25, 2019.
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
Other Benefits	Includes medical, dental, vision, and life insurance for Cleco’s retirees
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~~
~~PPA~~	~~Power Purchase Agreement~~
~~PPACA~~	~~Patient Protection and Affordable Care Act, as amended~~Holdings
ppb	Parts per billion
~~PRP~~Predecessor	~~Potentially Responsible Party~~Pre-merger activity of Cleco. Cleco has accounted for the 2016 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 Cajun
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



CLECO
CLECO POWER		2018 FORM 10-K



ABBREVIATION OR ACRONYM	DEFINITION
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
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 2016 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 legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
Teche Unit 3	A 359-MW generating unit at Cleco Power’s plant site in Baldwin, Louisiana
USBCDC	US Bancorp Community Development Corporation
VaR	Value-at-Risk
~~VIE~~	~~Variable Interest Entity~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This 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 on Form 10-K 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~~the effects of the Cleco Cajun Transaction and ~~uncertainties associated with~~ the 2016 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 successfully integrate the assets acquired in the Cleco Cajun Transaction 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~~Cleco’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 for seasonal operations 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~~Cleco’s 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, 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 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 2016 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,~~



CLECO
CLECO POWER		2018 FORM 10-K

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,

Cleco Holdings’ and Cleco Power’s ability to remain in compliance with their respective 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 unavailability of skilled employees.

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,~~2018, and ~~2014~~2017 — Cleco Power — Significant Factors Affecting Cleco Power” in this Annual ~~Report.~~Report on Form 10-K.

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 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~~2018 FORM 10-K



PART I



ITEM 1. BUSINESS



GENERAL

Cleco ~~Corporation was incorporated on October 30, 1998, under the laws of the state of Louisiana. Cleco Corporation~~Holdings is a public utility holding company ~~which~~that holds investments in several subsidiaries, including Cleco Power. ~~Substantially~~Prior to the Cleco Cajun Transaction, substantially all of ~~its~~Cleco Holdings’ operations ~~are~~were 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.

Cleco Holdings’ predecessor was incorporated on October 30, 1998, under the laws of the state of Louisiana. 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 2016 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 2016 Merger, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 204 — ~~Agreement~~Business Combinations.”

Cleco Power is a regulated electric utility engaged principally in the generation, transmission, distribution, and ~~Plan~~sale of ~~Merger.”~~

electricity within Louisiana. Cleco Power owns nine generating units with a total nameplate capacity of 3,310 MW and serves approximately 291,000 customers in Louisiana through its retail business. Additionally, Cleco Power supplies wholesale power in Louisiana and Mississippi. Cleco Power was organized as a limited liability company under the laws of the state of Louisiana on December 12, 2000. Cleco Power’s predecessor was incorporated on January 2, 1935, under the laws of the state of Louisiana.

Cleco ~~Power~~Cajun 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 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 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,~~28, 2017, 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,Louisiana. On February 4, 2019, the 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~~Cajun Transaction 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.completed. For more information on the ~~transfer of Coughlin to~~ Cleco ~~Power,~~Cajun Transaction, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1721 — ~~Coughlin Transfer.~~Cleco Cajun Transaction.”

At December 31, ~~2015,~~2018, Cleco had ~~1,207~~1,212 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 Advocacy at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Office of Investor 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 management 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~~,2018, Cleco Power had ~~1,005~~996 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).

Because the Cleco Cajun Transaction closed after December 31, 2018, the Registrants’ respective consolidated financial statements and the notes thereto do not include or take into account the closing and the effects of the Cleco Cajun Transaction. For more information on the Cleco Cajun Transaction, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 21 — Cleco Cajun Transaction.”



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



OPERATIONS

Cleco Power

~~Segment Financial Information~~

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

(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, and 2014 — 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,~~2018, and ~~2014~~2017 — Cleco Power — Significant Factors Affecting Cleco Power.”

Power Generation

As of December 31, ~~2015~~2018, Cleco Power’s aggregate net electric generating capacity was ~~3,190~~3,162 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~~Beginning March 1, 2019, Cleco Power intends to operate Dolet Hills Power Station from June through September of each year; however, Dolet Hills Power Station will be available to operate in other months, as needed. Cleco Power will continue to ~~be operated in a safe~~evaluate the cost of operating the Dolet Hills Power Station compared with other alternatives and ~~reliable manner. Additionally, in July 2015, Teche Unit 4 replaced~~decide the ~~Franklin Gas Turbine as Cleco Power’s official blackstart unit.~~best course of action for the Dolet Hills Power Station within the LPSC regulatory requirements and recovery mechanism. The following table sets forth certain information with respect to Cleco Power’s generating ~~facilities:~~facilities as of December 31, 2018:

GENERATING STATION 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
Rodemacher Unit 2 1982 157
⁽³⁾
149
⁽³⁾
coal steam
Madison Unit 3 2010 641
631
petroleum coke/coal steam
Acadia Unit 1 2002 580
566
natural gas combined cycle
Coughlin Unit 6 2000 264
242
natural gas combined cycle
Coughlin Unit 7 2000 511
481
natural gas combined cycle
Teche Unit 1 1953 23
15
natural gas steam
Teche Unit 3 1971 359
331
natural gas steam
Teche Unit 4 2011 33
35
natural gas combustion
Dolet Hills Power Station 1986 325
⁽⁴⁾
321
⁽⁴⁾
lignite steam
Total generating capability 3,333
3,190



CLECO
CLECO POWER		2018 FORM 10-K



GENERATING STATION	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		416		natural gas	steam
Rodemacher Unit 2	1982	157	⁽³⁾	148	⁽³⁾	coal	steam
Madison Unit 3	2010	641		627		petroleum coke/coal	steam
Acadia Unit 1	2002	580		555		natural gas	combined cycle
Coughlin Unit 6	2000	264		246		natural gas	combined cycle
Coughlin Unit 7	2000	511		484		natural gas	combined cycle
Teche Unit 3	1971	359		331		natural gas	steam
Teche Unit 4	2011	33		34		natural gas	combustion
Dolet Hills Power Station	1986	325	⁽⁴⁾	321	⁽⁴⁾	lignite	steam
Total generating capability		3,310		3,162

⁽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~~between May ~~June, July,~~and August ~~and December 2015.~~2018. 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
2015 12,564
100.2
2014 9,858
74.9
2013 9,736
83.8
2012 9,143
81.3
2011 10,025
86.5



YEAR	THOUSAND MWh	PERCENT OF TOTAL ENERGY REQUIREMENTS
2018	11,848	94.6	%
2017	10,864	91.1	%
2016	12,759	103.6	%
2015	12,564	100.2	%
2014	9,858	74.9	%

~~In December 2013,~~ Cleco ~~Power integrated its~~Power’s generation dispatch and transmission operations are integrated 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~~

“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.”

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
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

2015 $ 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
2013 $ 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



			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		WEIGHTED AVERAGE COST PER MWh
2018	$	93.88	6.9	%	$	22.55	16.7	%	$	26.81		52.6	%	$	26.54	23.8	%	$	30.66
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
2014	$	44.79	14.6	%	$	27.34	15.6	%	$	37.00		35.0	%	$	21.52	34.8	%	$	31.19

Power Purchases

~~In December 2013,~~ Cleco Power ~~integrated its generation dispatch and transmission operations with MISO. Consequently,~~is a participant in the MISO ~~now~~market. MISO makes economic and routine dispatch decisions regarding Cleco Power’s generating units. ~~Since joining MISO, power~~Power purchases ~~have been~~are 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.~~LMPs. 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 2018, 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.~~contracts or based on market indexes. For 2019, Cleco Power ~~actively manages~~intends to meet its ~~inventory levels throughout~~coal needs through short-term spot coal agreements which are expected to be fixed-price contracts or based on market indexes. For the ~~year with spot purchases, if necessary. With respect to~~ transportation of coal, Cleco Power has an agreement with Union Pacific Railroad Company ~~for transportation of~~to transport coal from Wyoming’s Powder



CLECO
CLECO POWER		2018 FORM 10-K

River Basin to Rodemacher Unit ~~2 through~~2. The transportation agreement is for three years, expiring December 31, ~~2016.~~2019. Cleco Power expects to renegotiate with Union Pacific Railroad Company to continue this transportation agreement. 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,~~2018, Cleco Power’s coal inventory at Rodemacher Unit 2 was approximately ~~255,000~~77,000 tons (approximately a ~~106-day~~32-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,~~2018, Cleco received its petroleum coke supply

from multiple 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 million~~900,000 tons of petroleum coke during ~~2015, the majority~~2018, all of which ~~was in accordance with existing contracts ranging in terms~~were either an evergreen extension of a previous agreement or a negotiated agreement for one ~~to two years~~year ending December 31, ~~2015,~~2018. For 2019, Cleco has contracted for 650,000 tons of petroleum coke from multiple refineries located along the upper and lower Mississippi River through one-year agreements ending December 31, ~~2016, respectively. All existing contracts have been extended and newly negotiated contracts have been completed for petroleum coke supply in 2016. Petroleum coke spot purchases~~2019. 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,~~2018, Cleco purchased approximately ~~305,000~~525,000 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~~Inland Marine is Cleco Power’s exclusive transportation coordinator and provider. ~~The amended and restated~~From September 2017 until April 2, 2018, Cleco Power had a logistics agreement ~~dated December 28, 2012,~~ with Savage Services continues through August 31, 2017. The term 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 containsthat renewed on a ~~provision for early termination with a three month prior written notice upon the occurrence of specified cancellation events. In September 2014,~~month-to-month basis. On April 2, 2018, Cleco Power ~~gained the option~~entered into a new logistics agreement with Savage Inland Marine that is set 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.~~expire in March 2033. At December 31, ~~2015,~~2018, Cleco Power’s petroleum coke inventory at Madison Unit 3 was approximately ~~521,000~~366,000 tons and Cleco Power’s Illinois Basin coal inventory at Madison Unit 3 was approximately ~~153,000~~126,000 tons. The total fuel inventory was ~~674,000~~492,000 tons (approximately a ~~135-day~~98-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 for seasonal operations until at least 2036. At December 31, ~~2015,~~2018, 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 35 — Regulatory Assets and Liabilities — Mining Costs,” Note 1416 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — ~~On-Balance~~Off-Balance Sheet Commitments and 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 1214 — 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. During 2018, the cost of lignite per MWh increased primarily due to the mine continuing to incur fixed costs, despite fewer tons of lignite mined compared to prior years. At December 31, ~~2015,~~2018, Cleco Power’s lignite inventory at Dolet Hills was approximately ~~300,000~~239,000 tons (approximately a ~~48-day~~38-day supply).

Natural Gas Supply

During ~~2015,~~2018, Cleco Power purchased ~~49.7~~36.1 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		2018 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	%	10,087,891	27,638	28.0	%
Shell Energy North America	5,190,717	14,221	10.4	%	5,107,793	13,994	14.2	%
Iberdrola Renewables	4,183,152	11,461	8.4	%
Range Resources-Appalachia, LLC	3,263,850	8,942	6.5	%
DTE Energy Trading, Inc.					4,439,000	12,162	12.3	%
Sequent Energy Management					4,323,600	11,845	12.0	%
BP Energy Company	2,626,100	7,195	5.3	%	2,506,778	6,868	7.0	%
Range Resources					2,302,930	6,309	6.4	%
Spire Marketing, Inc.					1,600,108	4,384	4.4	%
Mansfield Power and Gas					1,199,400	3,286	3.3	%
Others	4,354,696	11,931	8.8	%	4,487,609	12,295	12.4	%
Total	49,736,183	136,264	100.0	%	36,055,109	98,781	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~~.2018. 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,~~2018, in order to partially address potential natural gas

fuel curtailments and interruptions, Cleco contracted for natural gas firm transportation with several interstate pipelines



CLECO
CLECO POWER		2018 FORM 10-K

for a period of one year ending in late ~~2016. In~~2019. Additionally, the Coughlin Pipeline project, expected to be completed in the third quarter of 2019, is expected to increase reliability for natural gas delivery and mitigate exposure to transportation cost increases. For more information on the Coughlin Pipeline project see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Cleco Power — Coughlin Pipeline Project.”

Cleco uses gas storage 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.~~units. 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,~~2018, Cleco Power had ~~1.6~~1.7 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~~2018 and ~~2014~~2017 system peak demands, which occurred on ~~August 10, 2015,~~January 17, 2018, and ~~August 24, 2014,~~July 20, 2017, were ~~2,700~~2,879 MW and ~~2,612~~2,508 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,~~2018, Cleco Power experienced warmer than normal summer weather conditions and warmer than normal winter weather conditions. In ~~2014,~~2017, Cleco Power experienced warmer than normal summer weather conditions and ~~cooler~~warmer 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 1920 — 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~~,2018, Cleco Power’s reserve margin was ~~21.3%~~21.2%, which was above MISO’s unforced planning reserve margin benchmark of ~~7.1%~~8.4%. During ~~2014~~,2017, Cleco Power’s reserve margin was ~~25.2%~~17.9%, which was above MISO’s unforced planning reserve margin benchmark of ~~7.3%~~7.8%. Cleco Power expects to meet or exceed MISO’s unforced planning reserve margin benchmark of ~~7.6%~~7.9% in ~~2016~~.2019. 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.”

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~~St. Mary Clean Energy Center Project,” “— ~~Cenla~~ Terrebonne to Bayou Vista

Transmission ~~Expansion~~ Project,” “— ~~Cabot Waste Heat Recovery~~Coughlin Pipeline Project,” “— Bayou Vista to Segura Transmission Project,” “— START Project,” and “— ~~Bayou Vista.~~DSMART Project.”

~~Midstream~~



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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.”

Customers

No single customer accounted for 10% or more of Cleco or Cleco Power’s consolidated revenue in ~~2015, 2014,~~2018, 2017, or ~~2013. In 2014,~~2016. Cleco Power ~~added~~has a significant wholesale customer that accounted for ~~9.2%~~9.9% of Cleco and Cleco Power’s consolidated revenue in ~~2015~~2018, 9.3% in 2017, and ~~averaged~~ 9.2% ~~of Cleco and Cleco Power’s consolidated revenue during the months that it was a customer~~ in ~~2014.~~2016. 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, 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~~that was approved 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~~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~~2014. Under the terms of the FRP, ~~extension,~~ Cleco ~~Power’s retail rates were adjusted based on~~Power is allowed to earn 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 expects to ~~request recovery of additional capital project costs during its four-year term.~~file an application with the LPSC for a new FRP by July 1, 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 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”



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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 ongoing environmental audit covering January 1, 2016, through December 31, 2017, see ~~“Environmental Matters~~Part II, Item 8, “Financial Statements and Supplementary Data — ~~Air Quality.~~Notes to the Financial Statements — Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

~~On February 3, 2016,~~For more information on the LPSC ~~initiated an audit of~~Staff’s FRP reviews, amounts accrued 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~~TCJA, and information on the ~~results of operations, financial condition, or cash flows~~



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oftax dockets, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the ~~Registrants. The most recent EAC audit completed by the LPSC, for the period October 2009 through October 2010, did not result in any refunds to customers.~~Financial Statements — Note 13 — Regulation and Rates — FRP” and “— TCJA.”

For more information on Cleco Power’s retail and wholesale rates, including Cleco Power’s FRP, see Item 1A, “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 and 2015:~~agreements:



RENEWAL DATE	CITY/TOWN/VILLAGE	TERM	NUMBER OF CUSTOMERS
~~May 2014~~April 2017	~~Dry Prong~~Slidell	3035 years	~~255~~13,823
~~June 2014~~July 2017	~~Mansura~~	~~30 years~~	~~1,029~~
~~September 2014~~	~~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⁽¹⁾	3415 years	~~598~~7
~~August 2015~~January 2019	~~Pleasant Hill~~Jeanerette	3022 years	~~382~~
~~September 2015~~	~~Noble~~	~~30 years~~	~~108~~
~~September 2015~~	~~Plaucheville~~	~~30 years~~	~~147~~2,849

⁽¹⁾This 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 impact of the TCJA on regulated public utilities,

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,

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, and

FERC’s increased ability to impose financial ~~penalties, and~~penalties.

~~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



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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



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those costs directly. Such a decision could negatively impact ~~perhaps significantly,~~ the results of operations, financial condition, or cash flows of the Registrants. For Cleco Power’s expected capital expenditures ~~including AFUDC,~~ related to environmental compliance ~~were $7.1 million during 2015~~in 2019, see Part II, Item 7, “Management’s Discussion and ~~are estimated to be $9.3 million in 2016.~~Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — Cash Generation and Cash Requirements — Capital Expenditures.”

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. The EPA issued a final approval of the Louisiana SIP in December 2017 and it is currently on appeal to the U.S. Court of Appeals for the Fifth Circuit by the Sierra Club and the National Parks Conservation Association. Because the Louisiana SIP 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~~2019 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~~season. Cleco is in compliance

with the rule. This rule did not have a material impact on the results of operations, financial condition, or cash flows of the ~~months~~Registrants.

In October 2015, the EPA promulgated a revision to the 2015 ozone NAAQS, lowering the level of ~~May through September. Public comments on~~both the ~~proposed rule were received~~primary and secondary standards to 70 ppb. Under the CAA, each state is required to submit a state implementation plan (SIP) that provides for the implementation, maintenance and enforcement of each primary and secondary NAAQS. In particular, each SIP must contain adequate provisions prohibiting emissions activity within the state which will contribute significantly to non-attainment or interfere with maintenance by ~~February 1, 2016. Management~~any other state with respect to any such primary or secondary ambient air quality standard. This “good neighbor” SIP is ~~currently evaluating~~to be submitted to the ~~effect~~EPA by thestate within three years of promulgation of a new or revised NAAQS. But until the ~~proposed rule~~EPA has approved the Louisiana submission and the final information is ~~not able to predict~~published, Cleco cannot determine if the ~~proposed rule~~SIP 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. In 2017, this project was completed 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. In January 2018, the 19th Judicial District Court affirmed the LPSC ruling in the Cleco MATS cost recovery case. Consequently, that same month, the Sierra Club filed an appeal seeking reversal by the Louisiana Supreme Court of the District Court’s and the LPSC’s rulings approving Cleco’s decision to install the MATS controls equipment. In March 2018, the Sierra Club filed a request to abandon their appeal and the District Court executed an order dismissing the Sierra Club’s appeal. Cleco Power ~~began recovery of~~has since recovered the ~~revenue requirement associated with the MATS equipment,~~eligible capital costs through its FRP, which is subject to ~~refund, on July 1, 2015, and as of December 31, 2015, had recovered $7.3 million~~periodic review by the LPSC.

For more information on the project. As of December 31, 2015, Cleco Power had spent $106.4 million 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 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)~~Financial Statements — Note 16 — 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



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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~~remain in place until the



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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 CO₂ emission limits.

In March 2017, the President signed a broad executive order. Among other measures, the order directed the EPA to review the CPP, the proposed FIP 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. In April 2017, the Court began the postponement of the litigation. In October 2017, following a review as directed by the President, the EPA published a proposed rule to repeal the CPP. In December 2017, the EPA published Advance Notice of Proposed Rulemaking (ANPR), soliciting information as it considers a potential future rule under CAA section 111(d) to reduce GHG emissions from existing EGUs. On August 31, 2018, the EPA published in the Federal Register a proposed rule to replace the CPP. The Proposed Rule, titled Emission Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emission Guideline Implementing Regulations, Revision to New Source Review Program, would establish emission guidelines for states to address CO₂ emissions from existing fossil fuel-fired electric generating units. The Proposed Rule is informally named the Affordable Clean Energy (ACE) Rule. Whether the EPA will finalize its proposed rule to repeal the CPP is uncertain. In addition, the date for finalizing the ACE rule is also 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.

In December 2018, following a review as directed by the President, the EPA published proposed rules to replace the August 2015 NSPS rules for CO₂ emissions from new, modified, or reconstructed units. As with the current NSPS rules, the proposed rules set requirements and conditions with respect to CO₂ emission standards for new, modified, or reconstructed units. Cleco does not anticipate a future modification or future reconstruction of its existing units, as defined in the proposal, that would trigger the application of the proposed CO₂ emission limits. Until the EPA finalizes the rule, management cannot state what the final standards will entail or if the new rule will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

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 for existing units. 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~~became effective 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,~~In April 2018, the ~~LDEQ expects to operate new monitors at two portions~~EPA published, following the required review of ~~highways in~~ the ~~Baton Rouge and New Orleans areas.~~NAAQS, a final action that retains the ambient air standards for NO₂. 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 facilities 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



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CLECO POWER		2018 FORM 10-K

a 45-month period and then comply with the rule as soon as 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. In April 2017, the EPA Administrator indicated that it is appropriate and in the public interest to reconsider the rule.

In September 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. In September 2017, the EPA Administrator indicated that it is appropriate and in the public interest to reconsider the provisions of the final CCR rule. On August 21, 2018, the Court of Appeals for the D.C. Circuit vacated several requirements in the CCR regulation. As a result, 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

~~Prior to~~

on the ~~publication~~results of ~~this federal regulation,~~ 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,~~In March 2018, Cleco Power recorded a ~~$1.0~~$1.5 million ~~increase~~decrease to its ARO ~~for the retirement of~~related to certain ash ~~disposal facilities.~~management areas. 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, 2018, 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 WIIN 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 WIIN 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.

Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

The CERCLA imposes liability on parties responsible for, in whole or in part, the presence of hazardous substances at a site. In 2007, Cleco received a Special Notice for Remedial Investigation and Feasibility Study (RI/FS) from the EPA for a facility known as the Devil’s Swamp Lake site located just



CLECO
CLECO POWER		2018 FORM 10-K

northwest of Baton Rouge, Louisiana. The notice requested that Cleco and Cleco Power, along with many other listed potentially responsible parties (PRP), enter into negotiations with the EPA for the performance of an RI/FS at the Devil’s Swamp Lake site. In 2008 the EPA identified Cleco as one of many companies that sent PCB wastes for disposal to the site. The EPA proposed to add the Devil’s Swamp Lake site to the National Priorities List, based on the release of PCBs to fisheries and wetlands located on the site, but no final listing decision has been made. The EPA issued a Unilateral Administrative Order to two PRP’s, Clean Harbors, Inc. and Baton Rouge Disposal, to conduct an RI/FS in 2009. The Tier 1 part of the study was completed in June 2012. The tier 2 remedial investigation report, that fish and crawfish from the area should not be eaten, was made public in December 2015. Currently, the study/remedy selection task continues, and there is no record of a decision. Therefore, management is unable to determine how significant Cleco’s share of the costs associated with the RI/FS and possible response action at the site, if any, may be and whether this will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

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 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~~Cleco Cajun Transaction

The success of the Cleco Cajun Transaction depends, in part, on Cleco’s ability to realize anticipated benefits and ~~Plan~~conduct an effective integration process.

On February 4, 2019, Cleco acquired all of ~~Merger~~the membership interests of NRG South Central upon the closing of the Cleco Cajun Transaction. The success of the Cleco Cajun Transaction will depend, in part, on Cleco’s ability to realize the expected benefits in the anticipated timeframe, including operating efficiencies, growth opportunities, cost savings and customer retention, from integrating Cleco’s and NRG South Central’s businesses, while at the same time continuing to provide consistent, high quality services. The integration process could be complex, costly and time consuming, including the diversion of significant management time and resources thereto, and may result in the following challenges, among others:

unanticipated delays, disruptions, issues or costs in integrating operations, financial and accounting, information technology, communications and other systems;

potential inconsistencies in procedures, practices, policies, controls, and standards;

possible differences in compensation arrangements, management perspectives and corporate culture; and

loss of or difficulties retaining valuable employees or third-party relationships.

Even with the successful integration of the businesses, Cleco may not achieve the expected results or economic benefits. Any of the factors addressed above could decrease

or delay the projected neutral or accretive effect of the Cleco Cajun Transaction. Failure to fully realize the anticipated benefits could adversely affect Cleco’s results of operations, financial condition and cash flows.

From time to time, Cleco may continue to make acquisitions or divestitures of businesses and assets, form joint ventures or undertake restructurings. If Cleco is unable to make acquisitions or if those acquisitions do not perform as anticipated, Cleco’s future growth may be adversely affected.

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 ~~unable~~restricted by their obligations to ~~obtain~~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 ~~required governmental, regulatory,~~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 ~~other approvals required to complete the Merger, or such approvals may require Cleco to comply with material restrictions or conditions.~~

~~Consummation~~any indebtedness of the ~~Merger remains~~subsidiary senior to that held by Cleco Holdings. Moreover, Cleco Power is subject to the satisfaction or waiver of specified closing conditions, including (i) the absence of any temporary restraining order or injunction preventing, prohibiting, restraining, enjoining, or rendering illegal the consummation of the Merger; (ii) approval from the LPSC; and (iii) other customary closing conditions. On February 24, 2016,regulation by the LPSC, ~~denied~~which may impose limits on the amount of dividends that Cleco Power may pay Cleco Holdings. The 2016 Merger Commitments also provide for limitations on the amount of



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CLECO POWER		2018 FORM 10-K

distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s ~~application~~common equity ratio and its corporate credit/issuer ratings. As a result, Cleco Power may be prohibited from making distributions to ~~approve the Merger. Consequently, LPSC approval required to consummate the Merger may not be obtained at all, may not be obtained on the proposed terms~~Cleco Holdings.

Regulatory Compliance

Cleco operates in a highly regulated environment and ~~schedules as contemplated by the parties, and/~~adverse regulatory decisions or ~~may impose terms, conditions, obligations, or commitments that constitute a “burdensome effect” (as defined~~changes in the Merger Agreement). In the event that the LPSC approval includes any such burdensome effect or if any of the conditions to the closing are not satisfied prior to the termination date specified in the Merger Agreement, Cleco Partners will not be obligated to consummate the Merger. These conditionsapplicable 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 are also 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 U.S. Department of Energy, 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.

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.

As a result of the 2016 Merger, Cleco Holdings and Cleco Power made 2016 Merger Commitments to the LPSC including but 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.

In April 2016, the ~~event~~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 those that do not exceed the ~~Merger Agreement~~utility’s share of the actual taxes paid to those federal and state taxing authorities. Cleco Power filed a motion to intervene in this proceeding along with other Louisiana utilities. In October 2016, Cleco received the first set

of data requests from the LPSC Staff for each of the above mentioned dockets. Cleco has filed responses to the non-confidential requests and is ~~terminated prior to~~waiting on the completion of ~~the Merger, Cleco could incur significant transaction costs that could materially impact its financial performance and results of operations.~~

~~Cleco will incur significant transaction costs, including legal, accounting, financial advisory, filing, printing, and other costs relating~~a confidentiality agreement to respond to the ~~Merger. The Merger Agreement provides that upon termination~~confidential requests. Cleco is unable to determine if or when the completion of this confidentiality agreement will occur. If the ~~Merger Agreement under certain specified circumstances, Cleco will~~LPSC were to disallow such costs incurred by the utility to be ~~required to pay Cleco Partners a termination fee of $120.0 million. Any fees due as a result of termination~~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.

Commodity Prices

Cleco ~~will~~Power and Cleco Cajun may be exposed to fluctuations in commodity prices and other factors.

Cleco Power

Cleco Power may enter into fuel cost hedge positions to mitigate the volatility in fuel costs passed through to its retail customers. As a transmission owner in the MISO market, Cleco Power receives Auction Revenue Rights, which can be converted to FTRs. FTRs provide a financial hedge to manage the risk of transmission congestion costs in the day-ahead energy market. Cleco Power may purchase additional FTRs to further hedge its residual congestion cost risk.

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, ~~business uncertainties~~ and ~~contractual restrictions while the Merger is pending that could adversely affect Cleco’s financial results.~~

Uncertainty about the effects of the Merger on employees or vendors and others may have an adverse effect on Cleco. These uncertainties may impair Cleco’s 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~~disallowed as part of, a prudency review or a periodic fuel audit conducted by the LPSC.

Cleco Cajun

Cleco Cajun may be exposed to 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 subsidiariesmarket price fluctuations due to generation and customer load uncertainty, unexpected plant outages, changes in fuel costs or changes in load driven by weather or other factors.

Cleco Cajun may also enter into commercial or hedging transactions that introduce locational basis exposure, transmission or transportation risks, counterparty credit risk, or do not perfectly match the ~~uncertainty~~price or volumetric exposure of hourly demand and ~~difficulty of integration or a desire~~prices.

Cleco Power and Cleco Cajun may not ~~to remain~~

~~with~~be adequately hedged against changes in commodity prices, which could materially affect Cleco ~~Cleco’s~~Power and Cleco Cajun’s results of operations, financial condition, ~~or cash flows could be adversely affected.~~and liquidity.

Cleco ~~expects that matters relating~~may enter into transactions to hedge portions of customer supply agreements, natural gas, solid fuel requirements (coal), and other commodities within established risk management guidelines to manage the ~~Merger,~~financial exposure related to uncertainty in commodity prices. As part of this strategy, Cleco may utilize fixed and ifvariable price forward physical purchase and sales contracts, FTRs, firm transportation for fuels, futures, financial swaps, and physical or financial option contracts traded bilaterally with counterparties, in the ~~Merger closes, integration-related issues,~~over-the-counter markets, or on exchanges.

Additionally, Cleco may be able to only cover a portion of the exposure of its assets and commodities exposed to market price volatility, and the coverage 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 couldvary over time. To the extent Cleco has unhedged exposure, fluctuating commodity prices can materially affect Cleco’s results of operations and 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.position.

~~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.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~Failure~~Cleco may guarantee the performance of a portion of the obligations relating to ~~complete the Merger could negatively impact~~hedging and risk management activities. Reductions in Cleco or Cleco Power’s credit quality or changes in the market ~~price~~prices of ~~Cleco Corporation’s common stock.~~

~~Failure~~transaction related energy commodities could increase the cash (margining) or letter of credit collateral required 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~~posted in connection with hedging and ~~attention of management. A failure to complete the Merger may also result in negative publicity, litigation against~~risk management activities, which could materially affect Cleco or ~~its directors~~Cleco Power’s liquidity and ~~officers, and a negative impression of Cleco in the investment community. The occurrence of any of these events individually or in combination~~financial position.

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 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 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 additional fuel costs associated with congestion is ordered by the LPSC resulting in a refund to Cleco ~~Corporation.~~Power’s customers, 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, 2016, the LPSC initiated an audit of~~ Cleco ~~Power’s fuel~~Power has FAC filings for 2018 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 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 to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

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

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.

Cleco Power has EAC filings for 2016 and thereafter subject to audit. On ~~February 3, 2016,~~May 22, 2018, Cleco Power received notice of an EAC audit from the LPSC ~~initiated an audit of Cleco Power’s environmental costs~~ for the period ~~November 2010 through~~of January 1, 2016, to December ~~2015.~~31, 2017, and Cleco Power has responded to several sets of data requests. The total amount of environmental ~~costs~~expense included in ~~this~~the audit is ~~$81.2~~$30.7 million. 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 to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

~~Transmission Constraints~~FERC Audit

~~Transmission constraints~~FERC conducts audits that could ~~have a material adverse effect on the results~~result in Cleco Power making refunds of ~~operations, financial condition, or cash flows~~previously recorded revenue.

Generally, Cleco Power records wholesale transmission revenue through Attachment O of the ~~Registrants.~~

~~Energy prices in the~~ MISO ~~market~~tariff and certain grandfathered agreements. These formulas are based on ~~LMP, which includes~~inputs from Cleco Power’s FERC Form 1. These rates and regulatory filings are subject to periodic audits by FERC. On March 13, 2018, the Division of Audits and Accounting within the Office of Enforcement of FERC initiated an audit of Cleco Power for the period of January 1, 2014, to the present. Cleco has responded to several sets of data requests. Management is unable to predict or give a ~~component directly~~reasonable estimate of the possible range of the refund, if any, 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, anythis audit. 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~~and Cleco Cajun are exposed to ~~market~~the 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,~~counterparties may not meet their obligations, which may materially affect Cleco Power ~~receives Auction Revenue Rights, which~~and Cleco Cajun’s operating and financial performance.

The supply, commercial, and hedging transaction activities of Cleco Power and Cleco Cajun can be ~~converted~~exposed to ~~FTRs. FTRs provide a financial hedge to manage~~ the risk that counterparties may not perform on their physical or financial obligations. Currently, some master agreements contain provisions that require the counterparties to provide credit support to secure all or part of ~~congestion cost~~their obligations to Cleco, or specifically to Cleco Power or Cleco Cajun. If the counterparties to these arrangements fail to perform, Cleco may enforce and recover the proceeds from the credit support provided and acquire alternative hedging arrangements; however, credit support may not always be adequate to cover the related obligations. In such event, Cleco may incur losses in excess of amounts, if any, already paid to the ~~Day-Ahead Energy Market. FTRs represent rights to congestion credits or charges along a path during a given time frame~~counterparties. In addition, the credit commitments of Cleco’s lenders under its bank facilities may not be honored for a ~~certain MW quantity. Cleco may purchase additional FTRs to further hedge~~variety of reasons, including unexpected periods of financial distress affecting such lenders, which could materially affect the adequacy of 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.

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.liquidity sources.

~~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~~2018 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~~The accounting for Cleco’s hedging activities may increase the ~~cost of producing power.~~volatility in the Registrants’ quarterly and annual financial results.

Cleco ~~Power~~engages in transactions to economically hedge forward commodity market price risk exposure utilizing both physical and financial commodity purchases ~~natural gas, petroleum coke, lignite, coal,~~ and ~~limestone under long-term~~sales commitments. Some of these contracts ~~and~~are accounted for as derivatives, which requires Cleco to record the fair value of the commitment on the ~~spot market. Historically, the markets for natural gas and petroleum coke have been volatile and are likely to remain volatile~~balance sheet with changes in the ~~future.~~fair value of all derivatives reflected within current period earnings. As a result, Cleco ~~Power’s retail~~is unable to accurately predict the effect that its risk management decisions may have on quarterly and ~~wholesale rates include an FAC that enables it to adjust rates for monthly fluctuations in~~annual financial results, which could materially adversely affect the ~~cost~~results of ~~fuel and purchased power. However, recovery~~operations 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.~~Registrants.

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%~~2% during the three years ended December 31, ~~2015. Cleco believes inflation at this~~

~~level does not materially affect its results of operations or financial condition. However, under~~2018. 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~~the Registrants’ respective ~~ability~~abilities 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.~~increase materially.

~~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~~adverse macroeconomic conditions.

Adverse macroeconomic conditions resulting in low economic ~~conditions.~~

~~General economic conditions~~growth 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.

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



CLECO
CLECO POWER		2018 FORM 10-K

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 in rates 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/~~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.~~areas. 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 in rates 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.~~costs in rates. 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 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, Moody’s, or Fitch were to downgrade Cleco Holdings’ or Cleco Power’s long-term ratings, particularly below investment grade, the value of their debt securities would be adversely affected. Downgrades of either Cleco Holdings’ or Cleco Power’s credit ratings could 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 2016 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 in the event of a ratings downgrade.

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~~For Cleco Power, the costs of such capacity may not be recoverable in its rates 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~~323 MW of capacity in excess of its peak, coincident to MISO’s peak, in ~~2015.~~2018.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

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 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 and 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 and those of Cleco’s vendors are vulnerable to inoperability or impaired operations or failures due to cyber 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 or its vendor’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, or harm Cleco’s reputation. In addition, new laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs,

and any failure to comply with these laws and regulations could result in significant penalties and legal liability.

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 may 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. Proposed rulemakings issued in 2018 by the IRS subsequent to the TCJA could have a material adverse effect on the results of operations, financial conditions, or cash flows of the Registrants. The Registrants continue to assess the regulatory treatment of the TCJA, which could also have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

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~~increased 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~~SERC RE conducts a NERC Reliability Standards audit and a NERC Critical Infrastructure Protection audit every three years. ~~Cleco’s~~Cleco Power’s next NERC Reliability Standards audit is scheduled to begin in ~~April 2016.~~October 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, 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
CLECO POWER		2018 FORM 10-K

~~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 are significant. The costs~~funding sources, and a restriction 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 ~~compliance with new environmental laws~~time or that one or more of its debt ratings will not be lowered or withdrawn entirely by a rating agency. If S&P, Moody’s, or Fitch were to downgrade Cleco Holdings’ or Cleco Power’s long-term ratings, particularly below investment grade, the value of their debt securities would be adversely affected. Downgrades of either Cleco Holdings’ or Cleco Power’s credit ratings could result in additional fees and ~~regulations, as well~~higher interest rates for borrowings under their respective credit facilities. In addition, Cleco Holdings or Cleco Power, as the ~~incurrence~~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 ~~incremental environmental liabilities,~~potential investors and funding sources could decrease. In addition, the 2016 Merger Commitments provide for limitations on the amount of distributions that may be ~~significant~~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 in the event of a ratings downgrade.

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 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 ~~Registrants.~~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, 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 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~~a significant amount of CO₂ emissions. These changes in environmental regulations governing power plant emissions will be effective beginning 2022, with final emission goals required by 2030, 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.forced outages, Cleco may ~~incur significant capital expenditures or additional operating costs~~not possess sufficient planning reserves to ~~comply with these revisions, reinterpretations,~~serve its needs 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~~purchase capacity from ~~its facilities. Cleco cannot predict~~ the ~~timing or the outcome of pending or future legislative and rulemaking proposals.~~

MISO resource adequacy auction. For Cleco Power, the costs of such capacity may ~~request from~~not be recoverable in its ~~customers recovery of its costs to comply with new environmental laws~~rates and

~~regulations. If the LPSC were to deny Cleco Power’s request to recover all or part of its environmental compliance costs, there~~ could behave 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 323 MW of capacity in excess of its peak, coincident to MISO’s peak, in 2018.

~~Regulatory Compliance~~

Cleco operates in a highly regulated environment 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~~

~~The LPSC and FERC regulate the retail rates and 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 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 ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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 to the ROE component of the transmission rates, there could be 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~~Technology 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 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~~Terrorism Threats

The ~~operating results~~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 ~~Power~~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 ~~affected by weather conditions~~becoming extremely complex as new technologies and ~~may fluctuate~~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 ~~seasonal basis.~~

~~Weather conditions directly influence~~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 ~~demand for electricity, particularly kWh sales~~public or employees; result in outages or reduced generating output; result in damage to ~~residential customers. In~~Cleco’s assets or operations, or those of third parties; and subject 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~~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.

~~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 and ~~additional capital restoration costs. Extreme drought conditions can impact~~ the ~~availability~~diversion of ~~cooling water~~management’s and employees’ attention and resources, and could adversely affect the effectiveness of 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 and those of Cleco’s vendors are vulnerable to inoperability or impaired operations or failures due to cyber 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 or its vendor’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.

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 ~~Registrants recognize that certain groups associate severe weather~~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, or harm Cleco’s reputation. In addition, new laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs,

and any failure to comply with ~~global climate change~~these laws 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, itregulations could result in ~~one or more physical risks, such as an increase in sea level, wind~~significant penalties 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.legal liability.

~~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.

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.

As these standards continue to be adopted and modified, they may impose additional compliance requirements on Cleco Power, which may result in increased 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 SERC RE conducts a NERC Reliability Standards audit and a NERC Critical Infrastructure Protection audit every three years. Cleco Power’s next NERC Reliability Standards audit is scheduled to begin in October 2019 and the next NERC Critical Infrastructure Protection audit is scheduled to begin in 2020. Management is unable to predict the outcome of 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
CLECO POWER		2018 FORM 10-K

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 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,~~If S&P, 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 Power taking into consideration the results of the merger transaction. If Moody’s

~~or S&P~~Fitch 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 could 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.

~~Holding Company~~

~~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 available 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 limits2016 Merger Commitments provide for limitations 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 in the event of a ratings downgrade.

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 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, 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 is subject to a significant amount of forced outages, Cleco may not possess sufficient planning reserves to serve its needs and could be forced to purchase capacity from the MISO resource adequacy auction. For Cleco Power, the costs of such capacity may not be recoverable in its rates 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 323 MW of capacity in excess of its peak, coincident to MISO’s peak, in 2018.



CLECO
CLECO POWER		2018 FORM 10-K

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.

Despite implementation of security and mitigation measures, all of Cleco’s technology systems and those of Cleco’s vendors 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 or its vendor’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 ~~subject Cleco to~~and claims from third parties, ~~and/~~or harm Cleco’s reputation. In addition, new laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs,

and any failure to comply with these laws and regulations could result in significant penalties and legal liability.

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.

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.



CLECO
CLECO POWER		2018 FORM 10-K

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.

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 CO₂emissions from existing EGUs by 32% from 2005 levels of CO₂emissions; however, on February 9, 2016, the U.S. Supreme Court issued orders staying implementation of the CPP pending resolution of challenges to the rule. 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 remains uncertain; however, the EPA has proposed a draft rule called the Affordable Clean Energy (ACE) rule to replace the CPP. These proposed actions by the EPA could also be subject to future legal challenges. As a result, there is currently no regulation 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 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
CLECO POWER		2018 FORM 10-K

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’s next triennial market power analysis is expected to be filed in 2020. In the future, 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 with respect 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, 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 climate changes could have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

If climate changes occur that result in warmer temperatures in Cleco’s service territories, 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.

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 2016 Merger.

In connection with the 2016 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 2016 Merger at a price that allegedly undervalues Cleco, and failing to disclose material information about the 2016 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. On March 2, 2018, the Louisiana Supreme Court denied the writ. Cleco filed writs of exception of res judicata and no cause of action in the District Court seeking dismissal of the case. On January 14, 2019, the District Court denied the writs.

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.

The Registrants are party to various litigation matters arising out of the ordinary operations of their business. The ultimate



CLECO
CLECO POWER		2018 FORM 10-K

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, these matters may 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.

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.~~deductibles. Insurance coverage may not be available in the future at current costs, or on commercially reasonable terms, or at all, 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 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 Power 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 Power 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 Power 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,~~2018, Cleco Power LLC had an aggregate of ~~$1.17~~$1.36 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 LLC 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,~~2018, 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.



CLECO
CLECO POWER		2018 FORM 10-K

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,~~2018, Cleco Katrina/Rita had ~~$84.2~~$31.3 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.



ITEM 2. PROPERTIES



~~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 more information on Cleco Power’s generating facilities, see Item 1, “Business — Operations — Cleco Power — Power Generation.”

Electric Generating Stations

As of December 31, ~~2015~~2018, 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~~3,162 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,~~2018, 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,~~2018, Cleco Power owned 8286 active transmission substations and ~~219~~238 active distribution substations.

Electric Lines

As of December 31, ~~2015~~2018, 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~~3,680 circuit miles of 34.5-kV lines and ~~8,291~~8,381 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~~,2018, 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 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,1, “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 1416 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”



CLECO POWER

For information on legal proceedings affecting Cleco Power, see Item I,1, “Business — Environmental Matters — ~~Environmental Quality” and “—~~ Air Quality” and Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1416 — 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.Not applicable.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



PART II



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 2016 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 2016 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 of retained earnings was unrestricted.~~

~~On January 28~~, ~~2016, Cleco Corporation’s Board of Directors declared a quarterly~~capitalization in order to declare 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 of dividend payments is at the Board 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. Inpayments. Additionally, in accordance with the 2016 Merger ~~Agreement, until~~Commitments, Cleco Holdings is subjected to certain provisions limiting the ~~completion~~amount of ~~the Merger,~~distributions that may be paid from Cleco ~~Corporation’s Board~~Holdings to Cleco Group or Cleco Partners, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings.

Cleco Holdings made $71.4 million, $84.1 million, and $88.8 million of ~~Directors may continue the declaration~~distribution payments to Cleco Group in 2018, 2017, and ~~payment~~2016, respectively.

Cleco Holdings received no equity contributions in 2018 and 2017 from Cleco Group. In 2016, Cleco Holdings received $100.7 million of ~~regular~~

equity contributions from Cleco 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 2016 Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 204 — 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 2016 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~~,2018, 2017, and ~~2013~~2016, Cleco Power made ~~$135.0~~$121.4 million,, ~~$115.0~~ $135.0 million,, and ~~$105.0~~$110.0 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,~~2018 and 2017. Cleco Power received ~~a $138.1~~$50.0 million ~~non-cash contribution relating to the transfer~~ of ~~Coughlin~~equity contributions from Cleco ~~Corporation.~~

Holdings in 2016.



~~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.~~


Five-Year Selected Financial Data
																				SUCCESSOR									PREDECESSOR
(THOUSANDS, EXCEPT PER SHARE AND PERCENTAGES)	2015			2014				2013				2012				2011				FOR THE YEAR ENDED DEC. 31, 2018			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
Operating revenue, net (excluding intercompany revenue)
Cleco Power	$	1,207,325		$	1,267,323			$	1,094,621			$	991,695			$	1,096,093			$	1,240,722		$	1,184,345		$	859,006		$	299,283		$	1,207,325		$	1,267,323
Midstream ⁽¹⁾	—			5,467				31,672				25,562				19,013				—			—			—			—			—			5,467
Other	2,077			(3,305		)		(29,579		)		(23,560		)		2,207				(9,678		)	(8,699		)	(6,001		)	587			2,077			(3,305		)
Total	$	1,209,402		$	1,269,485			$	1,096,714			$	993,697			$	1,117,313			$	1,231,044		$	1,175,646		$	853,005		$	299,870		$	1,209,402		$	1,269,485
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																				$	123,819		$	145,159		$	(46,935	)	$	(492	)	$	211,373		$	221,855
Net income (loss)																				$	94,437		$	138,080		$	(24,113	)	$	(3,960	)	$	133,669		$	154,739
Capitalization
Common shareholders’ equity	56.92		%	54.86		%		54.89		%		54.67		%		51.80		%
Long-term debt ⁽²⁾	43.08		%	45.14		%		45.11		%		45.33		%		48.20		%
Common shareholders’ equity	$	1,674,841		$	1,627,270			$	1,586,197			$	1,499,213			$	1,419,857
Long-term debt, net ⁽²⁾	$	1,267,703		$	1,338,998		⁽³⁾	$	1,303,786		⁽³⁾	$	1,243,266		⁽³⁾	$	1,321,346		⁽³⁾
Member’s equity/Common shareholders’ equity																				42.50		%	42.50		%	42.77		%				56.92		%	54.86		%
Long-term debt and capital leases ⁽²⁾																				57.50		%	57.50		%	57.23		%				43.08		%	45.14		%
Member’s equity/Common shareholders’ equity																				$	2,124,740		$	2,096,357		$	2,046,764					$	1,674,841		$	1,627,270
Long-term debt and capital leases ⁽²⁾																				$	2,874,485		$	2,836,105		$	2,738,571					$	1,267,703		$	1,338,998
Total assets	$	4,323,354		$	4,368,418			$	4,203,548			$	4,133,357			$	4,034,492			$	6,436,814		$	6,278,382		$	6,343,144					$	4,323,354		$	4,368,418
Cash dividends declared per common share	$	1.60		$	1.5625			$	1.425			$	1.30			$	1.1225			N/A			N/A			N/A			$	0.40		$	1.60		$	1.5625
⁽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⁾Excludes long-term debt and capital leases due within one year. There were no capital lease obligations at December 31, 2017.



CLECO
CLECO POWER		2018 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~~prior to the close of the Cleco Cajun Transaction, conducted 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~~291,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. ~~Prior~~

Cleco Cajun Transaction

On February 4, 2019, the Cleco Cajun Transaction was completed. For the Registrants’ Combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, Cleco Cajun is expected to March 15, 2014, Cleco also conducted wholesale business operations through its Midstream subsidiary. Midstream owns Evangeline (which owned and operated Coughlin). On March 15, 2014, the Coughlin generating assets were transferred to Cleco Power. Coughlin consists of two generating units withbecome a ~~total nameplate capacity of 775 MW.~~

new reportable segment. For more information on the ~~transfer of Coughlin to Cleco Power,~~transaction, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1721 — ~~Coughlin Transfer.~~Cleco Cajun Transaction.”

~~Merger~~

~~On October 17, 2014,~~Because the Cleco ~~Corporation entered~~Cajun Transaction closed after December 31, 2018, the Registrants’ respective consolidated financial statements and the notes thereto do not include or take into account the ~~Merger Agreement with~~closing and the effects of the Cleco Partners and Merger Sub providing for the merger of Merger Sub with and into Cleco Corporation, with Cleco Corporation surviving the Merger as 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.Cajun Transaction. For more information on the ~~Merger,~~Cleco Cajun Transaction, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2021 — ~~Agreement and Plan of Merger.” 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.~~Cajun Transaction.”



~~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. Key~~competition. Cleco Power’s current key initiatives ~~on which Cleco Power is working include completing~~are continuing construction on the ~~Layfield/Messick~~St. Mary Clean Energy Center project, the Terrebonne to Bayou Vista Transmission project, and the Coughlin Pipeline project; ~~initiating and ultimately completing~~beginning construction on the ~~Cenla Transmission Expansion, Cabot Waste Heat Recovery, and~~ Bayou Vista ~~projects;~~to Segura Transmission project; continuing the START project; initiating the DSMART project; and maintaining and growing its

wholesale and retail business. These initiatives are discussed below.

~~Layfield/Messick~~St. Mary Clean Energy Center Project

The ~~Layfield/Messick project, or Northwest Louisiana Transmission Expansion~~St. Mary Clean Energy Center 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~~constructing, owning, and operating 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 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. As of December 31, 2015, Cleco Power had spent $3.6 million on the project.

~~Cabot Waste Heat Recovery Project~~

~~On March 24, 2015, Cleco Power filed an application with the LPSC requesting a certificate of public convenience and necessity authorizing Cleco Power to construct, own, and operate a proposed 40-MW~~47.6 net 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 quarter of ~~2018.~~2019 at an estimated cost of $128.2 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,~~2018, Cleco Power had spent ~~$1.9~~$111.4 million on the project. Legal proceedings have been filed in connection with the St. Mary Clean Energy Center project. For more information about the ongoing litigation, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees— Litigation — Dispute with Saulsbury Industries.”

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. Cleco Power’s portion of the joint project with Entergy Louisiana is expected to cost $64.5 million. Construction began in July 2018 and is expected to be completed in the second quarter of 2019. As of December 31, 2018, Cleco Power had spent $51.9 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. In June 2017, the LPSC approved a regulatory asset to be established upon the completion of the Coughlin Pipeline project for the revenue requirement associated with the project until Cleco Power seeks recovery in the new FRP, which is anticipated to be effective July 1, 2020. Construction on the Coughlin Pipeline project began in September 2018. The project is expected to be completed in the third quarter of 2019 with an estimated cost of $32.5 million. As of December 31, 2018, Cleco Power had spent $20.3 million on the project.

Bayou Vista to Segura Transmission Project

The Bayou Vista to Segura Transmission project includes the construction of 47 miles of 230kV transmission line, a 230/138kV substation and three substation expansions in south Louisiana. The project ~~was approved by MISO on December 10, 2015. Routing, permitting, and right-of-way acquisition~~ is expected to ~~take place during 2016~~cost approximately $142.7 million. The project is expected to increase reliability,



CLECO
CLECO POWER		2018 FORM 10-K

provide transmission system redundancy, and provide hurricane hardening for customers in south Louisiana. Cleco Power received MISO approval for the project in December 2017. The project is currently in the early planning and engineering phase and is expected to begin construction in the fourth quarter of 2019, with ~~construction~~the northern phase expected to be ~~complete~~completed in the fourth quarter of 2020 and the southern phase expected to be completed in the fourth quarter of 2021. As of December 31, 2018, Cleco Power had spent $1.0 million on the project.

START 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. The project is in the testing phase. Management expects the project to be completed in the second quarter of 2019. The total estimated project cost is $147.5 million. As of December 31, 2018, Cleco had spent $113.1 million on the project.

DSMART Project

The DSMART project includes modernization of Cleco Power’s distribution system by replacing or upgrading distribution line equipment utilizing new and emerging technologies to facilitate automatic fault isolation, service restoration, and fault location. The project is expected to provide savings through a reduction in outage restoration time, time to locate faults, and improved operational efficiencies. The project is also expected to improve safety and reliability of Cleco Power’s distribution assets by minimizing outage patrols and improving situational awareness in the distribution operations center. The total estimated project cost is $90.2 million. The project implementation will be completed in phases and management expects the total project will be completed by the end of 2025. In January 2019, Cleco Power began the first ~~quarter~~phase of ~~2019.~~the project.

Other

Cleco Power is working to secure 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

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 FORM 10-K~~

Comparison of the Years Ended December 31, ~~2015,~~2018, and ~~2014~~

~~Cleco Consolidated~~

~~Cleco Consolidated Results of Operations~~2017


Cleco
			FOR THE YEAR ENDED DEC. 31,							FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/(UNFAVORABLE)											FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2015		2014		VARIANCE			CHANGE		2018			2017			VARIANCE			CHANGE
Operating revenue, net	$	1,209,402	$	1,269,485	$	(60,083	)	(4.7	)%	$	1,231,044		$	1,175,646		$	55,398		4.7	%
Operating expenses	922,063		983,453		61,390			6.2	%	986,487			910,419			$	(76,068	)	(8.4	)%
Operating income	$	287,339	$	286,032	$	1,307		0.5	%	$	244,557		$	265,227		$	(20,670	)	(7.8	)%
Interest income										$	6,073		$	1,424		$	4,649		326.5	%
Allowance for equity funds used during construction	$	3,063	$	5,380	$	(2,317	)	(43.1	)%	$	14,159		$	8,320		$	5,839		70.2	%
Other income	$	1,443	$	4,790	$	(3,347	)	(69.9	)%
Other expense	$	3,368	$	2,509	$	(859	)	(34.2	)%
Interest charges	$	77,991	$	73,606	$	(4,385	)	(6.0	)%
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	)%
Other expense, net										$	(14,328	)	$	(6,899	)	$	(7,429	)	(107.7	)%
Federal and state income tax expense										$	29,382		$	7,079		$	(22,303	)	(315.1	)%
Net income										$	94,437		$	138,080		$	(43,643	)	(31.6	)%

Operating revenue, net increased $55.4 million during 2018 compared to the 2017 primarily due to $56.6 million of higher fuel cost recovery revenue at Cleco Power, and $27.7 million higher base revenue at Cleco Power, partially offset by $31.6 million of higher 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~~increased $76.1 million ~~in 2015~~during 2018 compared to ~~2014~~2017 primarily due to ~~lower~~$56.7 million of higher 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 due to the expiration 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 taxesexpenses at Cleco Power and $14.4 million of expenses associated with the Cleco Cajun Transaction at Cleco Holdings.

Interest income increased $4.6 million during 2018 compared to 2017 primarily due to $2.7 million of higher ~~depreciation~~interest rates and ~~amortization expense~~balances on temporary investments and $1.2 million of interest on a note receivable at Cleco Power.

Allowance for equity funds used during construction ~~decreased $2.3~~increased $5.8 million ~~in 2015~~during 2018 compared to ~~2014~~2017 primarily due to ~~lower~~higher construction costs related to ~~the completion of the MATS project at Cleco Power.~~various projects.

Other ~~income decreased $3.3~~expense, net increased $7.4 million ~~in 2015~~during 2018 compared to ~~2014~~2017 primarily due to ~~the absence~~$6.4 million of ~~an increase~~change in ~~the cash surrender~~ value of life insurance policies ~~and the absence~~as a result 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.~~conditions at Cleco Holdings.

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~~tax expense increased ~~$10.6~~$22.3 million ~~in 2015~~during 2018 compared to ~~2014. Tax expense increased~~2017 primarily due to $46.3 million for the absence of ~~favorable settlements with taxing authorities, tax returns filed,~~adjustments related to the TCJA and $3.7 million for the flowthrough of state tax benefits. ~~These~~The increases were partially offset by $15.2 million for the reduction in the federal statutory tax rate as prescribed by the TCJA and $10.5 million for the change in pretax income, excluding ~~AFUDC~~AFDUC equity. The effective income tax rate ~~is 36.8%, which is higher than~~for the ~~federal statutory rate~~

~~primarily due to permanent tax differences,~~year ended December 31, 2018, was 23.7%. For more information on the ~~flowthrough of benefits associated with AFUDC equity, adjustments for tax returns as filed, tax credits,~~TCJA, see Item 8, “Financial Statements 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~~Supplementary Data — Notes to the ~~absence of favorable settlements with taxing authorities, tax returns as filed,~~Financial Statements — Note 11 — Income Taxes — TCJA” and ~~the flowthrough of state tax benefits, partially offset by the change in pretax income, excluding AFUDC equity.~~“Note 13 — Regulation and Rates — TCJA.”

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



CLECO
CLECO POWER		2018 FORM 10-K

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 — TCJA.”

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 energy used in the 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~~Cleco Power may experience increases in the retail industrial class ~~Cleco Power expects new industrial load~~in 2019, due to ~~be added in 2017, 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~~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



CLECO
CLECO POWER		2018 FORM 10-K

of the facilities. Taxes other than income taxes generally include payroll taxes, franchise taxes, and property taxes. Cleco Power anticipates certain non-fuel cost recovery expenses to be higher in ~~2016~~2019 compared to ~~2015.~~2018. These expenses include higher ~~generation maintenance~~depreciation and amortization expense, higher ~~generation operations~~interest expense, ~~higher taxes other than income taxes,~~and higher customer relations expense, ~~and higher distribution maintenance expense. These increases are~~ partially offset by lower ~~income tax~~administration and general operations 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.”



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

~~Cleco Power’s Results of Operations~~generation maintenance expense.


	FOR THE YEAR ENDED DEC. 31,											FOR THE YEAR ENDED DEC. 31,
							FAVORABLE/(UNFAVORABLE)											FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2015			2014			VARIANCE			CHANGE		2018			2017			VARIANCE			CHANGE
Operating revenue
Base	$	670,530		$	683,565		$	(13,035	)	(1.9	)%	$	678,378		$	651,732		$	26,646		4.1	%
Fuel cost recovery	471,859			542,395			(70,536		)	(13.0	)%	513,209			456,657			56,552			12.4	%
Electric customer credits	(2,173		)	(23,530		)	21,357			90.8	%	(33,195		)	(1,566		)	(31,629		)	*
Other operations	67,109			64,893			2,216			3.4	%	82,330			77,522			4,808			6.2	%
Affiliate revenue	1,142			1,326			(184		)	(13.9	)%	874			851			23			2.7	%
Operating revenue, net	$	1,208,467		$	1,268,649		$	(60,182	)	(4.7	)%	$	1,241,596		$	1,185,196		$	56,400		4.8	%
Operating expenses
Recoverable fuel and power purchased	471,864			542,397			70,533			13.0	%	513,206			456,509			(56,697		)	(12.4	)%
Non-recoverable fuel and power purchased	31,348			27,985			(3,363		)	(12.0	)%	37,530			35,750			(1,780		)	(5.0	)%
Other operations	128,697			116,664			(12,033		)	(10.3	)%
Maintenance	87,416			96,054			8,638			9.0	%
Other operations and maintenance												202,556			202,738			182			0.1	%
Depreciation and amortization	147,839			144,026			(3,813		)	(2.6	)%	162,069			158,415			(3,654		)	(2.3	)%
Taxes other than income taxes	47,102			41,812			(5,290		)	(12.7	)%	47,267			46,539			(728		)	(1.6	)%
Gain on sale of assets	—			(4		)	(4		)	(100.0	)%
Gain on sale of asset												(4		)	—			4			—
Total operating expenses	914,266			968,934			54,668			5.6	%	962,624			899,951			(62,673		)	(7.0	)%
Operating income	$	294,201		$	299,715		$	(5,514	)	(1.8	)%	$	278,972		$	285,245		$	(6,273	)	(2.2	)%
Interest income												$	5,052		$	1,283		$	3,769		293.8	%
Allowance for equity funds used during construction	$	3,063		$	5,380		$	(2,317	)	(43.1	)%	$	14,159		$	8,320		$	5,839		70.2	%
Interest charges	$	76,560		$	74,673		$	(1,887	)	(2.5	)%	$	71,303		$	69,362		$	(1,941	)	(2.8	)%
Federal and state income taxes	$	79,294		$	76,974		$	(2,320	)	(3.0	)%
Federal and state income tax expense												$	55,924		$	67,331		$	11,407		16.9	%
Net income	$	141,350		$	154,316		$	(12,966	)	(8.4	)%	$	162,257		$	150,738		$	11,519		7.6	%
*Not Meaningful

Cleco Power’s net income for ~~2015~~ ~~decreased$13.0~~2018 increased $11.5 million compared to ~~2014. Contributing factors include:~~2017 primarily as a result of the following factors:

~~lower~~higher base revenue,

~~higher other operations~~lower federal and state income tax 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,

higher other operations revenue, and

higher interest income.

These increases were partially offset by:

higher electric customer credits,

higher depreciation and amortization, and

higher interest charges.

~~These were partially offset by lower electric customer credits, lower maintenance, and higher other operations 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 )%

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,

FAVORABLE/
(THOUSANDS) 2015
2014
(UNFAVORABLE)
Electric sales
Residential $ 296,846
$ 293,871
1.0 %
Commercial 191,202
188,012
1.7 %
Industrial 84,988
86,823
(2.1 )%
Other retail 10,558
10,215
3.4 %
Surcharge 21,597
15,833
36.4 %
Total retail $ 605,191
$ 594,754
1.8 %
Sales for resale 62,768
81,371
(22.9 )%
Unbilled 2,571
7,440
(65.4 )%
Total retail and wholesale customer sales $ 670,530
$ 683,565
(1.9 )%



	FOR THE YEAR ENDED DEC. 31,
			FAVORABLE/
(MILLION kWh)	2018	2017	(UNFAVORABLE)
Electric sales
Residential	3,780	3,526	7.2	%
Commercial	2,731	2,650	3.1	%
Industrial	2,243	2,078	7.9	%
Other retail	133	131	1.5	%
Total retail	8,887	8,385	6.0	%
Sales for resale	2,991	2,959	1.1	%
Total retail and wholesale customer sales	11,878	11,344	4.7	%

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



	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/
(THOUSANDS)	2018		2017		(UNFAVORABLE)
Electric sales
Residential	$	304,708	$	286,587	6.3	%
Commercial	192,781		188,431		2.3	%
Industrial	90,291		87,528		3.2	%
Other retail	10,918		10,592		3.1	%
Storm surcharge	23,138		20,965		10.4	%
Total retail	621,836		594,103		4.7	%
Sales for resale	56,542		57,629		(1.9	)%
Total base revenue	$	678,378	$	651,732	4.1	%

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							2018 CHANGE
	2015	2014	NORMAL	PRIOR YEAR		NORMAL		2018	2017	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	3,272	2,780	2,780	17.7	%	17.7	%	3,311	3,044	2,779	8.8	%	19.1	%
Heating degree-days	1,271	1,833	1,546	(30.7	)%	(17.8	)%	1,470	1,029	1,546	42.9	%	(4.9	)%

Base

Base revenue ~~decreased $13.0~~increased $26.6 million in ~~2015~~2018 compared to ~~2014~~2017 primarily due to ~~lower net sales~~$22.6 million of higher usage from warmer summer weather and colder winter weather and $4.1 million due to ~~wholesale customers, including the expiration of a wholesale contract in December 2014, and lower rates that began July 1, 2014, related to the FRP extension. These decreases were partially offset by~~ higher ~~revenue related to MATS and higher retail revenue related to usage.~~rates.

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 additionalincreased base revenue of ~~$2.0~~

$13.0 million in ~~2017~~2019 and an additional ~~$0.8~~$11.7 million in ~~2018. Cleco Power expects wholesale revenue to decrease by $1.0 million in 2016 and~~2020 through an ~~additional $2.1 million in 2017 primarily due to~~FRP rider associated with the ~~restructuring~~recovery of ~~contracts, partially offset by the addition of new contracts. In 2018, Cleco Power expects $1.2 million of additional wholesale revenue.~~expenditures for capital projects. For more 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



CLECO
CLECO POWER		2018 FORM 10-K

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. Fuel and purchased power expenses were also impacted by the interruption of the continuous supply of lignite due to adverse weather conditions and other factors that disrupted mining operations and transportation to Dolet Hills Power Station. For more information on the accounting for MISO transactions, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Accounting for MISO Transactions.” For more information on Cleco Power’s fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Electric Customer Credits

Electric customer credits increased $31.6 million in 2018 compared to 2017 primarily due to accrued estimated refunds for the tax-related benefits of the TCJA. For more information on the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — TCJA,” and “Note 13 — Regulation and Rates — TCJA.”

Other Operations Revenue

Other operations revenue increased $4.8 million in 2018 compared to 2017 primarily due to $2.3 million of higher revenue from wholesale customers due to the absence of the 2017 customer credits relating to the MISO ROE complaints, $1.6 million of higher net transmission and distribution revenue, and $0.2 million of higher generation revenue from the Teche Unit 3 SSR. The $0.2 million of Teche Unit 3 SSR revenue consisted of $1.8 million higher revenue, partially offset by $1.6 million of expected refunds to MISO as a result of the SSR settlement agreement. For more information on the SSR, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — SSR.”

Other Operations and Maintenance Expense

Other operations and maintenance expense decreased $0.2 million in 2018 compared to 2017 primarily due to $7.6 million of higher deferrals of production operations and maintenance

expenses to a regulatory asset, $7.5 million of lower compensation expense, and the absence of $1.9 million for the write-off of an uncollectible account. These decreases were

partially offset by $5.6 million of higher fees for outside services, $3.4 million of higher employee benefits expenses, $2.9 million of higher net generating station outage and routine maintenance expenses, $2.8 million of higher customer service expenses, $1.7 million of higher distribution operations expenses, and $1.5 million of higher generation operations expenses.

Depreciation and Amortization

Depreciation and amortization expense increased $3.7 million in 2018 compared to 2017 primarily due to $4.2 million of normal recurring additions to fixed assets and $3.8 million of higher amortization of storm damages which is based on

collections from customers. These increases were partially offset by $2.7 million of higher deferrals of corporate franchise taxes to a regulatory asset and $1.4 million of lower amortization of the production operations and maintenance regulatory asset.

Interest Income

Interest income increased $3.8 million in 2018 compared to 2017 primarily due to $1.7 million of higher interest rates and balances on temporary investments and $1.2 million of interest on a note receivable.

Allowance for Equity Funds Used During Construction

Allowance for equity funds used during construction increased $5.8 million in 2018 compared to 2017 primarily due to higher construction costs related to the St. Mary Clean Energy Center project, the Coughlin Pipeline project, the START project, the Terrebonne to Bayou Vista Transmission project, and the Bayou Vista to Segura Transmission project.

Interest Charges

Interest charges increased $1.9 million in 2018 compared to 2017 primarily due to $4.9 million of interest on senior notes issued in December 2017 and March 2018. This increase was partially offset by $2.4 million of higher allowance for borrowed funds used during construction and $1.0 million of lower interest on Cleco Katrina/Rita storm recovery bonds.

Income Taxes

Federal and state income taxes decreased $11.4 million in 2018 compared to 2017. Tax expense decreased primarily due to $26.9 million related to the reduction in the federal statutory tax rate as prescribed by the TCJA, $2.2 million for the change in pretax income, excluding AFUDC equity, and $1.3 million for adjustments for permanent tax differences. These decreases were partially offset by $14.3 million for the absence of adjustments related to the TCJA and $3.7 million for the flowthrough of state tax benefits. The effective income tax rate is 25.6%, which is different than the federal statutory rate 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. For more information on the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — TCJA” and “Note 13 — Regulation and Rates — TCJA.”

Comparison of the Years Ended December 31, 2017, and 2016



Cleco
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating revenue, net	$	1,175,646		$	853,005		$	299,870
Operating expenses	910,419			808,096			276,060
Operating income	$	265,227		$	44,909		$	23,810
Interest income	1,424			840			265
Allowance for equity funds used during construction	8,320			3,735			723
Other expense, net	(6,899		)	(6,653		)	(3,167		)
Interest charges	122,913			89,766			22,123
Federal and state income tax expense (benefit)	7,079			(22,822		)	3,468
Net income (loss)	$	138,080		$	(24,113	)	$	(3,960	)



CLECO
CLECO POWER		2018 FORM 10-K

Cleco’s net income attributable to the 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 $46.3 million tax benefit for an adjustment related to the TCJA. The effective income tax rate for 2017 was 4.9%. For more information on the TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — TCJA” and “Note 13 — Regulation and Rates — TCJA.”

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:

$174.7 million of merger transaction and commitment costs relating to the 2016 Merger,

$34.0 million of interest costs related to debt obtained as a result of the 2016 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 2016 Merger, and

$6.4 million of amortization of the fair value adjustment made as a result of the 2016 Merger to record the stepped-up basis for the Coughlin assets.

The effective income tax rate for the successor period April 13, 2016, through December 31, 2016, 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 relating to the 2016 Merger. The effective income tax rate for the predecessor period January 1, 2016, through April 12, 2016, was (704.9)%.

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



Cleco Power
	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 and maintenance	202,738			203,452			714			0.4	%
Depreciation and amortization	158,415			153,393			(5,022		)	(3.3	)%
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	899,951			1,021,644			121,693			11.9	%
Operating income	$	285,245		$	137,529		$	147,716		107.4	%
Allowance for equity funds used during construction	$	8,320		$	4,458		$	3,862		86.6	%
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 2016 Merger commitment costs,

higher other operations revenue,

lower interest charges, and

higher allowance for equity funds used during construction.

These increases were partially offset by:

higher income taxes,

lower base revenue, and

higher depreciation and amortization.



CLECO
CLECO POWER		2018 FORM 10-K

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,
			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 base revenue:



	FOR THE YEAR ENDED DEC. 31,
					FAVORABLE/
(THOUSANDS)	2017		2016		(UNFAVORABLE)
Electric sales
Residential	$	286,587	$	292,397	(2.0	)%
Commercial	188,431		191,440		(1.6	)%
Industrial	87,528		86,299		1.4	%
Other retail	10,592		10,589		—	%
Surcharge	20,965		21,175		(1.0	)%
Total retail	594,103		601,900		(1.3	)%
Sales for resale	57,629		59,074		(2.4	)%
Total base revenue	$	651,732	$	660,974	(1.4	)%



			FOR THE YEAR ENDED DEC. 31,
				2017 CHANGE
	2017	2016	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	3,044	3,309	2,779	(8.0	)%	9.5	%
Heating degree-days	1,029	1,145	1,546	(10.1	)%	(33.4	)%

Base

Base revenue decreased $9.2 million in 2017 compared to 2016 primarily due to $5.8 million of lower rates to a site specific industrial customer and $4.3 million of lower usage as a result of milder weather and lower sales to wholesale customers.

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 76% of Cleco Power’s total fuel costs during 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,MISO transactions, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 112 — ~~Regulation and Rates.~~Summary of Significant Accounting Policies — Accounting for MISO Transactions.” For more information on ~~the transmission ROE dispute,~~Cleco Power’s fuel audit, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1416 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — ~~Transmission ROE.~~LPSC Audits — Fuel Audit.”

Other Operations Revenue

Other operations revenue increased ~~$2.2~~$8.9 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to ~~$3.5~~$9.4 million of generation revenue from the Teche Unit 3 SSR and $1.7 million of higher ~~transmission and distribution revenue, partially offset by $0.4 million of lower~~ forfeited discounts ~~$0.3 million of lower reconnection~~and reconnect fees ~~$0.3 million~~mostly due to the absence of the 2016 customer rate credits as a ~~gain associated with the extinguishment~~result of the ~~asbestos ARO,~~2016 Merger and ~~$0.3~~the absence of LPSC executive orders relating to 2016 flooding, which allowed impacted customers to defer utility payments. These increases were partially offset by $2.3 million of lower ~~miscellaneous revenue.~~transmission revenue from wholesale customers as a result of issuing customer credits relating to the MISO ROE complaints. For more information on the SSR, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and Rates — SSR.”

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 in 2017 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 13 — Regulation and ~~$0.6 million for a one-time facility credit.~~Rates — SSR.”

Other Operations and Maintenance Expense

Other operations and maintenance expense ~~increased $12.0~~decreased $0.7 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to $5.4 million of lower net generating station outage and routine maintenance expenses, $2.1 million of higher ~~customer service expense, higher~~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, and $1.3 million for lower provision for other uncollectible accounts. These decreases were partially offset by ~~higher pension expense, and higher generation expense.~~

~~Maintenance~~

~~Maintenance expense decreased $8.6 million in 2015 compared to 2014 primarily due to lower generating station outage expenses.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization expense increased $3.8 million in 2015 compared to 2014 primarily due to $6.0~~$6.8 million of lower deferrals of production operations and maintenance expenses to a regulatory asset, ~~$3.9~~$4.0 million of ~~normal recurring~~higher salaries, and $1.2 million for higher fees for outside services.

Depreciation and Amortization

Depreciation and amortization expense increased $5.0 million in 2017 compared to 2016 primarily due to higher depreciation due to additions to fixed assets, and $3.2 million for the amortization of new regulatory assets related to the FRP extension. The increase was also due to $1.9 million 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.

assets.

~~Taxes Other than Income Taxes~~Merger Commitment Costs

~~Taxes other than income taxes increased $5.3~~Merger commitment costs decreased $151.5 million in ~~2015~~2017 compared to ~~2014 primarily~~2016 due to the ~~absence~~close of ~~favorable settlements with taxing authorities.~~the 2016 Merger which resulted in $136.0 million one-time customer rate credits.



CLECO
CLECO POWER		2018 FORM 10-K

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.

Interest Charges

Interest charges ~~increased $1.9~~decreased $7.1 million in ~~2015~~2017 compared to ~~2014~~2016 primarily due to ~~$5.0 million related to the absence~~lower interest of favorable settlements with taxing authorities and $0.7 million related to lower allowance for borrowed funds used during construction primarily related to the completion of the MATS project. These increases were partially offset by $2.1 million related to the absence of the customer surcredit, $1.6$7.1 million due to ~~the retirement of~~ long-term debt redeemed and ~~$0.1 million~~replaced with lower interest rate debt in the fourth quarter of ~~lower miscellaneous interest charges.~~2016.

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. This increase was partially offset by $14.3 million for adjustments related to the TCJA. The effective income tax rate ~~is 35.9%,~~for 2017 was 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~~

~~Significant Factors Affecting 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 segment reporting disclosures were not retrospectively adjusted to reflect the transfer. For more information on the ~~transfer of Coughlin to Cleco Power,~~TCJA, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — ~~Note 17 — Coughlin Transfer.”~~



~~CLECO CORPORATION~~
~~CLECO POWER~~		~~2015 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. The effective income tax rate is 30.3%, which is different than 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 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.

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

~~Cleco Power~~

~~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 million~~ ~~compared to~~ ~~2013. Contributing factors include:~~

~~higher base revenue,~~

~~higher other operations revenue,~~

~~lower interest charges,~~

~~lower taxes other than income taxes,~~

~~lower income taxes,~~

~~lower other expense, and~~

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

~~These were partially offset by:~~

~~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~~

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 %

FOR THE YEAR ENDED DEC. 31,

FAVORABLE/
(THOUSANDS) 2014
2013
(UNFAVORABLE)
Electric sales
Residential $ 293,871
$ 297,158
(1.1 )%
Commercial 188,012
189,807
(0.9 )%
Industrial 86,823
91,093
(4.7 )%
Other retail 10,215
10,590
(3.5 )%
Storm surcharge 15,833
14,978
5.7 %
Other —
(4,694 ) 100.0 %
Total retail $ 594,754
$ 598,932
(0.7 )%
Sales for resale 81,371
51,922
56.7 %
Unbilled 7,440
3,161
135.4 %
Total retail and wholesale customer sales $ 683,565
$ 654,015
4.5 %

FOR THE YEAR ENDED DEC. 31,

2014 CHANGE
2014
2013
NORMAL
PRIOR YEAR
NORMAL
Cooling degree-days 2,780
2,954
2,776
(5.9 )% 0.1 %
Heating degree-days 1,833
1,559
1,589
17.6 % 15.4 %

~~Base~~

~~Base revenue increased $29.6 million during 2014 compared to 2013. The increase was primarily due to sales to a new wholesale customer that began in April 2014.~~

~~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% of Cleco Power’s total fuel cost during 2014 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 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, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — TCJA” and “Note 13 — Regulation and ~~Rates.~~Rates — TCJA.”

~~Other Operations Revenue~~

Other operations revenue increased $16.0 million in 2014 compared to 2013 primarily due to $12.4 million of higher wholesale transmission revenue, $2.5 million of higher transmission and distribution charges revenue, and $1.1 million of higher miscellaneous revenue.

~~Non-Recoverable Fuel and Power Purchased~~

~~Non-recoverable fuel and power purchased increased~~ ~~$14.7 million~~ ~~in 2014 compared to 2013 primarily due to Cleco’s participation in the energy market through MISO, partially offset by transmission reimbursements and lower capacity charges.~~

~~Other Operations Expense and Maintenance~~

~~Other operations and maintenance expenses increased $12.2 million during 2014 compared to~~ ~~2013~~ ~~primarily due to the transfer of Coughlin to Cleco Power as well as higher planned generating station maintenance outage expenses.~~

~~Depreciation and Amortization~~

Depreciation and amortization expense increased $8.3 million during 2014 compared to 2013 primarily due to $5.2 million related to 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 amortization expense related to Evangeline PPA capacity costs and the establishment of a regulatory asset to recover corporate franchise taxes, partially offset by the amortization of new regulatory assets related to the FRP extension.

~~Taxes Other Than Income Taxes~~

Taxes other than income taxes decreased $4.4 million during 2014 compared to 2013 primarily due to favorable settlements with taxing authorities, partially offset by higher property taxes as a result of the transfer of Coughlin to Cleco Power.

~~Allowance for Equity Funds Used During Construction~~

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

~~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 million during 2014 compared to 2013. Tax expense decreased primarily due to settlements with taxing authorities and tax returns filed. These decreases were partially offset by the change in pretax income, excluding AFUDC equity, lower permanent tax differences, and a decrease in tax credits. The effective income tax rate is 33.3%, which is lower than 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.



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,~~2018, and the year ended December 31, ~~2014,~~2017, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2015,~~2018, and ~~2014~~2017 — 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,~~2017, and the year ended December 31, ~~2013,~~2016, see “— Results of Operations — Comparison of the Years Ended December 31, ~~2014,~~2017, and ~~2013~~2016 — Cleco Power.”

The narrative analysis referenced above should be read in combination with Cleco Power’s Financial Statements and the Notes contained in this Annual Report on 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 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~~2018 return on plan assets was ~~(2.90)~~(7.31)% compared to an expected long-term return of ~~6.15%~~5.86%. For ~~2014~~2017, the return on plan assets was ~~11.70%~~16.32% compared to an expected long-term return of ~~6.76%~~6.08%. For the calculation of the ~~2016~~2019 periodic expense, Cleco ~~is increasing~~decreased the expected long-term return on plan assets to ~~6.21%~~6.55%.

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 from ~~4.21%~~3.73% to ~~4.62%~~4.35% for the December 31, ~~2015,~~2018, 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 109 years as of December 31, ~~2015,~~2018, 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,~~2016, the Society of Actuaries released ~~a new set of mortality tables and a new~~an updated mortality improvement scale which indicated ~~significant increases to life~~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



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~expectancies. As a result, in December 2014, Cleco updated its mortality assumptions using~~released by the ~~new base table and an adjusted mortality improvement scale.~~Society of Actuaries. The ~~updates~~update resulted in ~~an increase~~a decrease of ~~$28.1~~$6.8 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.~~2016.

In October ~~2015,~~2017, the Society of Actuaries released another updated mortality improvement scale which indicated lower mortality improvements than previously indicated in the ~~2014~~2016 mortality improvement scale. As a result, in December ~~2015,~~2017, Cleco updated its mortality assumptions using the new data released by the Society of Actuaries. The update resulted in a decrease of ~~$7.2~~$3.1 million in the pension plan obligation at December 31, ~~2015.~~2017.

In October 2018, the Society of Actuaries released another updated mortality improvement scale which indicated lower mortality improvements than previously indicated in the 2017 mortality improvement scale. As a result, in December 2018, Cleco updated its mortality assumptions using the new data released by the Society of Actuaries. The update resulted in a decrease of $1.4 million in the pension plan obligation at December 31, 2018.

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	$	(34,289	)	$	(3,452	)
	0.5% decrease	$	36,570		$	3,504		0.5% decrease	$	38,295		$	3,794
Salary scale	0.5% increase	$	7,962		$	1,533		0.5% increase	$	7,412		$	1,481
	0.5% decrease	$	(7,226	)	$	(1,386	)	0.5% decrease	$	(6,776	)	$	(1,351	)
Expected return on assets	0.5% increase	$	—		$	(1,935	)	0.5% increase	$	—		$	(2,022	)
	0.5% decrease	$	—		$	1,935		0.5% decrease	$	—		$	2,022

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.~~2018, 2017, or 2016. Based on ~~current~~ funding assumptions at December 31, 2018, management estimates that ~~$25.3~~$95.5 million in pension contributions will be required through ~~2019.~~2023. 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 810 — 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, 2018, Cleco Power had $134.8 million in regulatory assets, net. As a result of the 2016 Merger, Cleco Holdings recognized regulatory assets. At December 31, 2018, Cleco Holdings had $172.6 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 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 5 — 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 911 — 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 1416 — 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 2016 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 2016 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



CLECO
CLECO POWER		2018 FORM 10-K

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 2016 Merger, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 18 — 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~~2018, the carrying value of Cleco Power’s long-lived assets was $~~3.12~~3.21 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, 2016, the LPSC initiated an audit of~~ Cleco ~~Power’s fuel~~Power has FAC filings for January 2018 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 1416 — 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,~~2018, and ~~2014~~2017 — Cleco Power — Significant Factors Affecting Cleco ~~Power’s Results of Operations~~Power — Fuel Cost Recovery/Recoverable Fuel and Power Purchased.”



FINANCIAL CONDITION

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 companies with comparable credit ratings. The following table presents the credit ratings of Cleco ~~Corporation~~Holdings and Cleco Power at December 31, ~~2015~~:2018:



	SENIOR UNSECURED DEBT				~~CORPORATE CREDIT~~CORPORATE/LONG-TERM ISSUER
	S&P	MOODY’S	FITCH		S&P	MOODY’S	~~S&P~~FITCH
Cleco ~~Corporation~~Holdings	~~Baa1~~BBB-	Baa3	BBB-		~~N/A~~BBB-	Baa3		~~BBB+~~BBB-
Cleco Power	BBB+	A3		BBB+		BBB+	A3	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 Power taking into consideration the results of the merger transaction.

~~Cleco notes that credit~~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.

Taking into consideration the Cleco ~~Corporation~~Cajun Transaction, Moody’s completed its review on January 10, 2019, and updated its credit opinion of Cleco Holdings to Baa3 (stable) and affirmed Cleco Power at A3 (stable). On January 24, 2019, taking into consideration the Cleco Cajun Transaction, Fitch affirmed Cleco Holdings’ and Cleco Power’s long-term issuer default ratings at BBB- and BBB, respectively. Also on January 24, 2019, taking into consideration the Cleco Cajun Transaction, Fitch affirmed Cleco Holdings’ and Cleco Power’s senior unsecured ratings at BBB- (stable) and BBB+ (stable), respectively. On February 5, 2019, after the completion of the Cleco Cajun Transaction, S&P affirmed Cleco Holdings’ and Cleco Power’s credit ratings at BBB- (stable) and BBB+ (stable), respectively. On February 11, 2019, after the completion of the Cleco Cajun Transaction, Fitch affirmed Cleco Holdings’ long-term issuer default ratings at BBB-.

Cleco 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 and/~~Holdings or Cleco Power, ~~would~~respectively, could 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 may initiate in the future, Cleco may be required to provide credit support or pay liquidated damages. The amount of credit support that Cleco 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. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.

Cleco Power ~~is integrated into~~and Cleco Cajun participate 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,~~2018, 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~~year. In anticipation of the Cleco ~~Power’s~~Cajun Transaction, Cleco was required to provide credit ~~facility capacity.~~support for MISO related to Cleco Cajun’s participation in MISO. On January 11, 2019, Cleco provided a $34.5 million letter of credit to MISO pursuant to energy market requirements. This letter of credit decreases availability under



CLECO
CLECO POWER		2018 FORM 10-K

the Cleco Holdings’ credit facility. 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.

TCJA

The TCJA was signed into law on December 22, 2017. The provisions of the law reduce the top federal 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. 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.

As a result of a request by the LPSC, Cleco Power began accruing an estimated reserve for the change in the tax rates beginning January 1, 2018. At December 31, 2018, Cleco Power had $31.6 million accrued for the estimated tax-related benefits from the TCJA. On October 26, 2018, the LPSC Staff approved a final rule that would require utilities to adjust formula rates on the earlier of January 31, 2019, or the next date required for implementation of compliance rate changes under the normal operation of the FRP. Cleco Power filed its report with the LPSC on December 3, 2018, describing its methodology for TCJA refunds and related items, including the allocation of such refunds among jurisdictional customers. On January 31, 2019, Cleco Power filed an application with the LPSC requesting the implementation of rate reductions and modifications of certain tariffs resulting from TCJA to be effective July 1, 2019. Cleco Power also requested to reduce the annual FRP rate, effective July 1, 2019, by the amount accrued for the change in tax rates as of June 30, 2019. Cleco Power recommended that the revenue reduction due to the change in the statutory corporate tax rate be allocated to only residential customers. Cleco Power also requested to address

the regulatory liability for excess ADIT resulting from the enactment of the TCJA in Cleco Power’s application for its new FRP, which is expected to be filed by July 1, 2019, with anticipated new rates being effective July 1, 2020. All items requested in the January 31, 2019, application are subject to LPSC review and approval.

At December 31, 2017, Cleco reduced net ADIT liability due to the reduction in the income tax rate from 35% to 21%. During the fourth quarter of 2018, Cleco finalized the remeasurement and accounting for the effects of the TCJA. While activities not subject to cost of service rate regulation recognize the reduction in ADIT liability 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 following tables summarize the effects on Cleco and Cleco Power for the TCJA:



Cleco
(THOUSANDS)	NET REDUCTION TO ADIT			RECOGNIZED AS REGULATORY LIABILITY			RECOGNIZED IN INCOME TAX EXPENSE
Provisional at Dec. 31, 2017	$	(394,881	)	$	(348,590	)	$	(46,291	)
TCJA adjustments recorded in 2018	(26,390		)	(26,371		)	(19		)
Final at Dec. 31, 2018	$	(421,271	)	$	(374,961	)	$	(46,310	)



Cleco Power
(THOUSANDS)	NET REDUCTION TO ADIT			RECOGNIZED AS REGULATORY LIABILITY			RECOGNIZED IN INCOME TAX EXPENSE
Provisional at Dec. 31, 2017	$	(362,882	)	$	(348,590	)	$	(14,292	)
TCJA adjustments recorded in 2018	(26,390		)	(26,371		)	(19		)
Final at Dec. 31, 2018	$	(389,272	)	$	(374,961	)	$	(14,311	)

Due to the uncertainty around the regulatory treatment, the entire regulatory liability is reflected in non-current liabilities.

As a result of the TCJA, Cleco’s current and deferred income tax expense in future periods is expected to be lower than in past periods. Cleco also expects to pay lower cash taxes for federal income taxes; however, higher income taxes are expected to be paid for state income taxes because of the lower federal income tax deduction.

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 57 — 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



CLECO
CLECO POWER		2018 FORM 10-K

intended purposes and/or general ~~corporate~~company purposes. ~~Cleco’s~~For more information on Cleco and Cleco Power’s restricted cash and cash equivalents, ~~consisted of:~~ see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.”

AT DEC. 31,
(THOUSANDS) 2015
2014
Current:
Cleco Katrina/Rita’s storm recovery bonds $ 9,263
$ 8,986
Non-current:
Diversified Lands’ mitigation escrow 21
21
Cleco Power’s future storm restoration costs 16,174
14,915
Cleco Power’s building renovation escrow —
194
Total non-current 16,195
15,130
Total restricted cash and cash equivalents $ 25,458
$ 24,116

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 ~~2015, Cleco Katrina/Rita collected $21.2 million net of administration fees. In March and September~~ ~~2015~~, Cleco Katrina/Rita used $8.1 million and $7.7 million, respectively, for scheduled storm recovery bond principal payments and $2.6 million and $2.5 million, respectively, for related interest payments.

In connection with Cleco Power’s building modernization project, Cleco Power was required to establish an escrow account with a qualified financial institution and deposit all retainage monies as they accrued under the construction contract. On July 16, 2015, the final funds held in the escrow account were released and paid to the construction contractor for the completion of building renovations.

Debt

Cleco Consolidated

Cleco had no short-term debt outstanding at December 31, ~~2015~~2018, or ~~2014~~2017. 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~~,2018, Cleco’s long-term debt outstanding was ~~$1.29~~$2.90 billion,, of which ~~$19.4~~$21.1 million was due within one year. The long-term debt due within one year at December 31, ~~2015~~,2018, represents ~~$16.8~~$20.6 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and ~~$2.6~~$0.5 million of capital lease payments. For Cleco, long-term debt ~~decreased$70.1~~increased by $40.3 million from December 31, ~~2014~~,2017, primarily due to athe March 2018 issuance of $50.0 million ~~repayment~~principal amount of senior notes due in ~~July 2015,~~December 2024, a ~~$43.0~~$16.8 million ~~net decrease~~increase in ~~Cleco Corporation~~capital lease obligations, and ~~Cleco Power’s credit facility borrowings outstanding, a $35.0~~$1.5 million ~~repayment of a bank term loan in April 2015, $15.8~~related to debt discount and expense. These increases were partially offset by $19.2 million of scheduled payments on Cleco Katrina/Rita storm recovery ~~bond principal payments made in March~~bonds, $8.4 million for amortization of long-term debt fair value adjustments related to the 2016 Merger, and ~~September 2015, and a $2.4~~$0.4 million ~~decrease in~~of capital lease ~~obligations. These decreases were partially offset by~~principal payments.

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

notes. For more information, see “— Cleco Power” below.

On April 2, 2018, Cleco entered into a capital lease agreement for use of 42 dedicated barges to transport petroleum coke and limestone to Madison Unit 3. For more information on the capital lease agreement, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — Fuel Transportation Agreement.”

~~unsecured notes in the fourth quarter of 2015, debt expense amortization of $0.7 million, and debt discount amortization of $0.4 million.~~

Cash and cash equivalents available at December 31, ~~2015~~,2018, were ~~$68.2~~$110.2 million combined with ~~$514.0~~$400.0 million available credit facility capacity (~~$216.0~~($100.0 million from Cleco ~~Corporation~~Holdings and ~~$298.0~~$300.0 million from Cleco Power) for total liquidity of ~~$582.2 million~~.$510.2 million.

At December 31, ~~2015~~,2018, 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 57 — Fair Value Accounting.”

At December 31, ~~2015~~,2018, and ~~2014~~,2017, Cleco had a working capital surplus of ~~$242.3~~$185.9 million and ~~$262.8~~$271.4 million,, respectively. The ~~$20.5~~$85.5 milliondecrease in working capital is primarily due to:

a ~~$77.2~~$31.6 million ~~net~~increase in provision for rate refund primarily due to estimated refunds for the tax-related benefits of the TCJA,

a $21.0 million increase in taxes payable primarily due to higher provisions for income taxes and higher corporate franchise taxes,

a $10.1 million decrease in ~~net current tax assets and related interest charges~~customer accounts receivable primarily due to the ~~reclassification~~timing of a payment received from a wholesale customer and payments received on deferred ~~taxes from~~agreements

a $9.6 million increase in other current liabilities primarily due to ~~long-term~~the timing of LTIP accruals, higher accruals for the refund of the SSR capital portion, and higher accruals for hydroelectric power purchases as a result of a contract that began in ~~accordance with new accounting guidance~~April 2018,

an $8.9 million decrease in cash and cash equivalents,

a $6.4 million increase in accounts payable, excluding FTR purchases, primarily due to the timing of payables, higher accruals of capital projects, and an increase in fuel costs, partially offset by lower accruals for STIP,

a $4.7 million decrease in fuel inventory primarily due to lower lignite deliveries and lower coal purchases, partially offset by higher per unit lignite costs, and

a ~~$7.5~~$3.6 million decrease in ~~accumulated deferred fuel~~other accounts receivable primarily ~~related~~due to the ~~loss~~receipt of an insurance reimbursement and lower receivables from joint owners, partially offset by a ~~wholesale customer,~~NMTC receivable for the ~~timing of collections of fuel expenses,~~difference between guaranteed benefits and ~~a decrease in fuel costs and power purchases.~~actual benefits received.

These decreases in working capital were partially offset by:

a ~~$29.7~~$19.4 million ~~decrease~~increase in ~~accounts payable (excluding FTR purchases)~~accumulated deferred fuel, excluding FTRs, primarily due to ~~the~~additional deferrals through a fuel surcharge and timing of ~~property taxes~~collections and ~~other vendor payments,~~

a ~~$23.8~~$7.3 million increase in ~~unrestricted cash~~material and ~~cash equivalents,~~

~~an $8.1 million increase in fuel~~supplies inventory primarily due to higher ~~petcoke reserves as a result~~purchases.

At December 31, 2018, Cleco’s Consolidated Balance Sheets reflected $4.31 billion of ~~the increased use of natural gas, and~~

~~a $5.6~~total liabilities compared to $4.18 billion at December 31, 2017. The $130.0 million increase in ~~materials and supplies~~total liabilities during 2018 was primarily ~~to address potential system restoration events and purchases for planned outages.~~due to:

an increase in long-term debt of $40.3 million, as previously discussed,

a higher provision for rate refund of $31.6 million due to the estimated refunds for the tax-related benefits of the TCJA,

an increase in taxes payable of $21.0 million primarily due to higher provisions for income taxes and higher corporate franchise taxes, and

an increase in net deferred taxes regulatory liability of $15.1 million primarily due to the finalization of the TCJA.



CLECO
CLECO POWER		2018 FORM 10-K

Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to the company’s senior debt rating (as defined in the applicable agreement). Cleco Holdings anticipates that some or all of the variable rate debt may be replaced or repaid with long-term financing, markets permitting, within 12 months of the closing of the Cleco Cajun Transaction. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

Cleco Holdings (Holding Company Level)

Cleco Holdings had no short-term debt outstanding at December 31, 2018, or 2017. 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, 2018, Cleco Holding’s long-term debt outstanding was $1.34 billion, none of which was due within one year.

At December 31, 2018, and 2017, 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 Holdings at December 31, 2018, were $76.9 million, combined with $100.0 million credit facility capacity for a total liquidity of $176.9 million.

Cleco Power

There was no short-term debt outstanding at Cleco Power at December 31, 2018, or 2017. 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, 2018, Cleco Power’s long-term debt outstanding was $1.41 billion, of which $21.1 million was due within one year. The long-term debt due within one year at December 31, 2018, represents $20.6 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $0.5 million of capital lease payments. For Cleco Power, long-term debt increased $48.2 million from December 31, 2017, primarily due to the March 2018 issuance of $50.0 million principal amount of senior notes due in December 2024, a $16.8 million increase in capital obligations, and $1.0 million related to debt discount and expense. These increases were partially offset by $19.2 million of scheduled payments on Cleco Katrina/Rita storm recovery bonds and a $0.4 million in capital lease principal payments.

At December 31, 2018, and 2017, Cleco Power had no borrowings outstanding under its $300.0 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.

On December 18, 2017, Cleco Power entered into an agreement for the issuance and sale in a private placement of an aggregate principal amount of $175.0 million of senior notes. The senior notes were issued in two tranches. The first tranche was issued on December 18, 2017, with a principal amount 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 in December 2022 and 2023, respectively. The second tranche was issued on March 26, 2018, with a principal amount of $50.0 million at an interest rate of 3.17%, with a final maturity date in December 2024. The proceeds from the issuance and sale were used for capital investments and general utility purposes.

On April 2, 2018, Cleco entered into a capital lease agreement for use of 42 dedicated barges to transport petroleum coke and limestone to Madison Unit 3. For more information on ~~recent authoritative guidance relating to~~ the ~~reclassification of deferred taxes,~~capital lease agreement, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 216 — ~~Summary~~Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — Fuel Transportation Agreement.”

Cash and cash equivalents available at December 31, 2018, were $32.0 million combined with $300.0 million credit facility capacity for total liquidity of ~~Significant Accounting Policies — Recent Authoritative Guidance.”~~$332.0 million.

At December 31, ~~2015, Cleco’s Consolidated Balance Sheets reflected~~ ~~$2.65 billion~~2018, and 2017, Cleco Power had a working capital surplus of ~~total liabilities compared to~~ ~~$2.74 billion~~ at ~~December 31, 2014~~.$62.3 million and $169.6 million, respectively. The ~~$92.6~~$107.3 milliondecrease in ~~total liabilities was~~working capital is primarily due to:

a $37.8 million decrease in cash and cash equivalents,

a $31.6 million increase in provision for rate refund primarily due to ~~decreases~~estimated refunds for the tax-related benefits of the TCJA,

a $16.6 million increase in ~~long-term debt~~taxes payable primarily due to higher provisions for income taxes and higher corporate franchise taxes,

a $10.1 million decrease in customer accounts receivable primarily due to the timing of a payment received from a wholesale customer and payments received on deferred agreements,

a $9.4 million increase in accounts payable, excluding FTR purchases, primarily due to the timing of payables, higher accruals of capital projects, and an increase in fuel costs, partially offset by ~~increases~~lower accruals for STIP,

a $6.4 million increase in ~~postretirement benefit obligations. During~~ ~~2015, long-term debt~~ ~~decreased$70.1 million, as discussed above,~~other current liabilities primarily due to the timing of LTIP accruals, higher accruals for the refund of the SSR capital portion, and ~~accounts payable decreased $33.4 million~~higher accruals for hydroelectric power purchases as a result of ~~the timing of property taxes and~~a contract that began in April 2018,

a $6.1 million decrease in other ~~vendor payments. Postretirement benefit obligations increased $7.4 million~~accounts receivable primarily due to the receipt of an insurance reimbursement and lower receivables from joint owners, and

a $4.7 million decrease in fuel inventory primarily due to lower ~~than expected return on plan assets,~~lignite deliveries and lower coal purchases, partially offset by higher ~~discount rates.~~per unit lignite costs.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~Cleco Corporation (Holding Company Level)~~

~~Cleco Corporation had no short-term debt outstanding at December 31, 2015, 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. This facility provides for working capital and other needs.~~

~~Cleco Corporation 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.~~

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

~~Cleco Power~~

~~There was~~ no ~~short-term debt outstanding at Cleco Power at~~ ~~December 31, 2015, or~~ ~~2014~~.

At ~~December 31, 2015, Cleco Power’s long-term debt outstanding was~~ ~~$1.25 billion, of which~~ ~~$19.4 million~~ ~~was due within one year. The long-term debt due within one year at~~ ~~December 31, 2015, represents $16.8 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $2.6 million~~ ~~of capital lease payments. For Cleco Power, long-term debt decreased $47.4 million from December 31,~~ ~~2014~~, primarily due to a $50.0 million repayment of senior notes in July 2015, a $35.0 million repayment of a bank term loan in April 2015, a $20.0 million net decrease in Cleco Power’s credit facility borrowings outstanding, $15.8 million of scheduled Cleco Katrina/Rita storm recovery bond principal payments made in March and September 2015, and a $2.4 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 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~~, Cleco Power had no borrowings outstanding under its $300.0 million credit facility. This facility provides for working capital and other financing needs. At December 31, 2015, Cleco Power had a $2.0 million letter of credit to MISO pursuant to the credit requirements of FTRs. This letter of credit automatically renews each year and reduces Cleco Power’s credit facility capacity.

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

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

~~a $26.5 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 million increase in fuel inventory primarily due to higher petcoke reserves 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.~~

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

a ~~$21.7~~$19.4 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 million net decrease in net current tax assets and related interest charges primarily due to the reclassification of deferred taxes from current to long-term in accordance with new accounting guidance, and

~~a $7.5 million decrease~~increase in accumulated deferred fuel, excluding FTRs, primarily ~~related~~due to ~~the loss of~~additional deferrals through a ~~wholesale customer, the~~fuel surcharge and timing of collections ~~of fuel expenses,~~and

a $7.3 million increase in material and ~~a decrease in fuel costs and power~~supplies inventory primarily due to higher purchases.

For information on recent authoritative guidance relating to the reclassification of deferred taxes, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

At December 31, ~~2015~~,2018, Cleco Power’s Consolidated Balance Sheets reflected ~~$2.68~~$2.75 billion of total liabilities compared to ~~$2.69~~$2.64 billion at December 31, ~~2014~~.2017. The ~~$6.2~~$116.5 million~~decrease~~ increase in total liabilities during ~~2015~~2018 was primarily due ~~to decreases~~to:

an increase in long-term debt of $48.2 million, as previously discussed,

a higher provision for rate refund of $31.6 million due to the estimated refunds for the tax-related benefits of the TCJA,

an increase in taxes payable of $16.6 million primarily due to higher provisions for income taxes and higher corporate franchise taxes,

an increase in net deferred taxes regulatory liability of $15.1 million primarily due to the finalization of the TCJA, and

an increase in accounts payable of $11.9 million primarily due to the timing of payables, higher accruals of capital projects, and an increase in fuel costs, partially offset by lower accruals for STIP.

These increases were partially offset by a decrease of $25.6 million 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~~

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.~~adjustments related to the TCJA.

Credit Facilities

At December 31, ~~2015,~~2018, 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,~~2018, 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~~includes restricted financial covenants and expires in 2021. Under covenants contained in Cleco Holdings’ credit facility, ~~expires~~Cleco is required to maintain total indebtedness less than or equal to 65% of total capitalization. At December 31, 2018, Cleco Holdings was in ~~2018.~~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, 2018, 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. In connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total credit facility of $175.0 million. All other terms remained the same. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

At December 31, 2018, Cleco Power had a $300.0 million credit facility. The credit facility includes restricted financial covenants and expires in 2021. Under covenants contained in Cleco Power’s credit facility, Cleco Power is required to maintain total indebtedness less than or equal to 65% of total capitalization. At December 31, 2018, 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, 2018, 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 2016 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. Cleco Holdings may not make any distribution unless, after giving effect to such distribution, Cleco Holdings’ debt to EBITDA ratio is equal to or less than 6.50 to 1.00 and Cleco Holdings’ corporate credit rating is investment grade with one or more of the three credit rating agencies. Additionally, in accordance with the 2016 Merger Commitments, Cleco Power is subject 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. Cleco Power may not make any distribution unless, after giving effect to such distribution, Cleco Power’s common equity ratio would not be less than 48% and Cleco Power’s corporate credit rating is investment grade with two of the three credit rating agencies. The 2016 Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. At December 31, 2018 and 2017, Cleco Holdings and Cleco Power were in compliance with the provisions of the 2016 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 ~~Consolidated~~ Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was ~~$361.0~~$317.8 million ~~during 2015, $335.2~~and $265.4 million ~~during 2014,~~for the years ended December 31, 2018, and ~~$341.7 million during 2013.~~2017, respectively. Net cash provided by operating activities during ~~2015~~2018 increased ~~$25.8~~$52.4 million from ~~2014~~2017 primarily due to:

higher collections from customers of $25.3 million due to lower 2016 Merger credits used in 2018 and the timing of collections of accounts receivables,

lower payments for fuel purchases of $23.6 million primarily due to ~~the following items:~~lower deliveries of lignite and petroleum coke,

lower payments for affiliate settlements of $18.1 million

lower payments of $18.0 million due to timing of property tax payments, and



CLECO
CLECO POWER		2018 FORM 10-K

higher receipts of $8.1 million primarily due to timing of receipts of joint owners’ portion of generating station expenditures.

These increases were partially offset by:

lower net fuel and power ~~purchases~~purchase collections of ~~$21.5~~$30.4 million primarily due to ~~the absence of a plant outage, the loss of a wholesale customer,~~ timing of collections and

higher payments for employee benefits of $8.2 million.

For the year ended December 31, 2017, 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 $69.9 million. There were no significant changes in the underlying trends impacting cash provided by operating activities with the exception of the following:

lower ~~per unit gas prices,~~collections from customers of $121.5 million due to 2016 Merger credits used in 2016 and

$23.7 million related to payments for 2016 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

Net cash used in investing activities was $288.2 million and$203.6 million during the years ended December 31, 2018, and 2017, respectively. Net cash used in investing activities increased $84.6 million primarily due to:

higher additions to property, plant, and equipment, net of AFUDC, of $48.3 million,

issuance of a $16.8 million note receivable, and

the absence of proceeds from the sale of transmission assets of $16.7 million.

For more information about the note receivable, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — Fuel Transportation Agreement.”

For the year ended December 31, 2017, there were no significant changes in the underlying trends impacting cash provided by investing activities with the exception of $16.7 million of proceeds from the sale of transmission assets sold by Cleco on December 20, 2017.

Cleco’s net cash used in investing activities for the successor period April 13, 2016, through December 31, 2016, was $135.3 million. There were no significant changes in the underlying trends impacting cash used in investing activities.

Cleco’s net cash used in investing activities for the predecessor period January 1, 2016, through April 12, 2016, was $41.7 million. There were no significant changes in the underlying trends impacting cash used in investing activities.

Net Financing Cash Flow

Net cash used in financing activities was $41.7 million for the year ended December 31, 2018. Net cash provided by financing activities was $20.8 million for the year ended December 31, 2017. Net cash used in financing activities increased $62.5 million primarily due to:

absence of draws on Cleco’s credit facilities of $179.0 million and

lower issuances issuances of senior notes of $75.0 million.

These increases were partially offset by:

absence of payments on Cleco’s credit facility of $179.0 million and

lower distributions to Cleco Group of $12.7 million.

For the year ended December 31, 2017, there were no significant changes in the underlying trends impacting cash provided by financing activities.

Cleco’s net cash used in financing activities for the successor period April 13, 2016, through December 31, 2016, was $6.0 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 $339.7 million during 2018, $287.1 million during 2017, and $234.3 million during 2016. Net cash provided by operating activities during 2018 increased $52.6 million from 2017 primarily due to:

higher collections from customers of $25.3 million due to lower 2016 Merger credits used in 2018 and the timing of collections of accounts receivables,

lower payments ~~to gas vendors~~for fuel purchases of ~~$18.4~~$23.6 million primarily due to lower ~~per unit prices,~~deliveries of lignite and petroleum coke,

lower payments ~~for~~of $18.0 million due to timing of property tax payments,

higher receipts of $8.1 million primarily due to timing of receipts of joint owners’ portion of generating station ~~outage expenses of $15.9 million,~~expenditures, and

lower ~~income tax payments~~payment for affiliate settlements of ~~$13.9~~$5.3 million.

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

lower net fuel and power purchase collections of $30.4 million primarily due to timing of collections and

higher payments ~~to vendors~~for employee benefits of ~~$49.9 million primarily related to the timing of property tax payments and other vendor payments.~~$6.4 million.

Net cash provided by operating activities during ~~2014 decreased $6.5~~2017 increased $52.8 million from ~~2013~~2016 primarily due ~~to the following items:~~to:

~~lower income tax refunds of $47.4 million and higher income tax payments of $15.3 million, for a net decrease of $62.7 million,~~

~~higher payments for fuel and power purchases of $30.4 million, primarily as a result 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.~~

~~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~~$109.9 million due to lower 2016 Merger credits used,

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

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



CLECO
CLECO POWER		2018 FORM 10-K

~~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~~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 primarily~~$8.2 million due to long-term debt redeemed and replaced with lower ~~per unit prices, and~~

~~lower payments for generating station outage expenses~~interest rate debt in the fourth quarter of ~~$15.9 million.~~2016.

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

higher payments ~~to vendors~~for fuel inventory of ~~$46.2~~$59.9 million ~~primarily related to the timing of property tax payments and other vendor payments.~~



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

~~Net cash provided by operating activities during 2014 increased $67.7 million from 2013~~ primarily due to ~~the following items:~~higher per unit lignite and petroleum coke costs and higher coal purchases and

higher payments for affiliate settlements of $23.4 million.

Net Investing Cash Flow

Net cash used in investing activities was $289.0 million during 2018, $222.2 million during 2017, and $177.6 million during 2016. Net cash used in investing activities during 2018 increased$66.8 million from 2017 primarily due to:

higher additions to property, plant, and equipment, net of AFUDC, of $48.1 million and

issuance of a $16.8 million note receivable.

Net cash used in investing activities during 2017increased$44.6 million from 2016 primarily due to higher payments for additions to property, plant, and equipment, net of AFUDC, of $45.2 million.

Net Financing Cash Flow

Net cash used in financing activities was $91.7 million during 2018, $29.9 million during 2017, and $79.9 million during 2016. Net cash used in financing activities during 2018 increased $61.8 million from 2017 primarily due to:

the absence of ~~pension plan contributions~~draws on Cleco Power’s credit facilities 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~~$106.0 million and

~~higher receipts for deposits from customers~~lower issuances of ~~$2.7~~senior notes of $75.0 million.

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

the absence of payments ~~for fuel and power purchases of $30.4 million, primarily as a result of extended plant outages, the addition of a wholesale customer, and the timing difference in collections.~~

~~For information~~ on Cleco Power’s ~~investing~~credit facility of $106.0 million and

lower distributions to Cleco Holdings of $13.6 million.

Net cash used in financing activities ~~see Item 8, “Financial Statements and Supplementary Data — Cleco Power — Consolidated Statements of Cash Flows.”~~during 2017 decreased $50.0 million from 2016 primarily due to:

lower repayments of long-term debt of $308.9 million and

the absence of an $18.6 million make-whole payment made in connection with the redemption of $250.0 million of 6.65% senior notes in 2016.

These decreases in net financing activities were 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.

Capital Expenditures

Prior to the Cleco Cajun Transaction, Cleco’s capital expenditures ~~are~~were primarily incurred ~~in its major first-tier subsidiary,~~at 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~~2018, ~~2014~~,2017, and ~~2013~~,2016, Cleco Power had capital expenditures, excluding AFUDC, of ~~$153.3~~$275.0 million, ~~$201.2~~$226.9 million,~~, and~~ ~~$177.1~~ $181.7 million,, respectively. In ~~2015~~, ~~2014~~,2018, 2017, and ~~2013~~,2016, 100% of Cleco Power’s capital expenditure requirements were funded internally.

~~Other~~During the years ended December 31, 2018, December 31, 2017, and the successor period April 13, 2016, through December 31, 2016, other subsidiaries had capital expenditures of ~~$0.5~~$1.9 million, ~~$1.0~~$1.7 million,, and ~~$7.5~~$0.7 million, ~~during~~ respectively. During the ~~years ended~~ ~~December 31, 2015~~, ~~2014, and~~ ~~2013, respectively.~~predecessor period January 1, 2016, through April 12, 2016, other subsidiaries had capital expenditures of less than $0.1 million.

In ~~2016~~2019 and for the five-year period ending ~~2020,~~2023, 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 aits stipulated regulatory capital ~~structure with a debt ratio of 49%.~~structure. All computations of internally funded capital expenditures exclude AFUDC.

~~Cleco’s~~Cleco and Cleco Power’s estimated capital expenditures and debt maturities for ~~2016~~2019 and for the five-year period ending ~~2020~~December 31, 2023 are presented in the following tables. All amounts exclude ~~AFUDC.~~AFUDC and Cleco Cajun estimated capital expenditures. Following the Cleco Cajun Transaction, Cleco expects to incur capital expenditures at Cleco Cajun. Cleco Cajun’s estimated capital expenditures are expected to be included in the Registrants’ Combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.


Cleco
PROJECT (THOUSANDS)	2016		%		2016-2020		%		2019		%		2019-2023		%
Environmental	$	9,000	3	%	$	44,000	4	%	$	1,000	—	%	$	20,000	1	%
New business	36,000		14	%	158,000		16	%	38,000		16	%	166,000		12	%
Transmission reliability	44,000		17	%	99,000		10	%	33,000		14	%	157,000		12	%
Fuel optimization	50,000		19	%	119,000		12	%	22,000		9	%	287,000		22	%
General ⁽¹⁾	121,000		47	%	590,000		58	%	144,000		61	%	704,000		53	%
Total capital expenditures	$	260,000	100	%	$	1,010,000	100	%	$	238,000	100	%	$	1,334,000	100	%
Debt payments	17,000				370,000				21,000				622,000
Total capital expenditures and debt payments	$	277,000			$	1,380,000			$	259,000			$	1,956,000
⁽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)	2019		%		2019-2023		%
Environmental	$	1,000	—	%	$	20,000	2	%
New business	38,000		16	%	166,000		12	%
Transmission reliability	33,000		14	%	157,000		12	%
Fuel optimization	22,000		9	%	287,000		22	%
General ⁽¹⁾	142,000		61	%	698,000		52	%
Total capital expenditures	$	236,000	100	%	$	1,328,000	100	%
Debt payments	21,000				157,000
Total capital expenditures and debt payments	$	257,000			$	1,485,000
⁽¹⁾Primarily consists of rehabilitation projects of older transmission, distribution, and generation assets and hardware and software upgrades.



CLECO
CLECO POWER		2018 FORM 10-K

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, excluding Cleco Cajun, in ~~2016~~2019 are estimated to total ~~$3.0~~$2.0 million. For the five-year period ending ~~2020,~~December 31, 2023, capital expenditures for other subsidiaries, excluding Cleco Cajun, are estimated to total ~~$11.0~~$6.0 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

Prior to the Cleco Cajun Transaction, Cleco Power’s regulated operations ~~are~~were Cleco’s primary source of internally generated funds. These funds, along with Cleco Cajun’s operation and 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.~~

~~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~~

service.

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. Additionally, the obligations listed in the following table do not include amounts related to Cleco Cajun; however, as a result of the Cleco Cajun Transaction, Cleco expects to incur contractual obligations at Cleco Cajun. 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~~2018, and represent only the projected future payments that Cleco was contractually obligated to make as of December 31, ~~2015~~2018.


							PAYMENTS DUE BY PERIOD										PAYMENTS DUE BY PERIOD
CONTRACTUAL OBLIGATIONS (THOUSANDS)	TOTAL		LESS THAN ONE YEAR		1-3 YEARS		3-5 YEARS		MORE THAN 5 YEARS		TOTAL		LESS THAN ONE YEAR		1-3 YEARS		3-5 YEARS		MORE THAN 5 YEARS
Cleco Corporation
Cleco
Long-term debt obligations ⁽¹⁾	$	35,339	$	34,445	$	894	$	—	$	—	$	4,497,965	$	142,937	$	547,327	$	506,722	$	3,300,979
Capital lease obligations ⁽²⁾											36,710		2,611		5,222		5,222		23,655
Operating lease obligations ⁽³⁾	943		315		628		—		—		20,517		4,150		6,679		2,453		7,235
Purchase obligations ⁽⁴⁾	25,566		9,388		9,408		4,492		2,278		215,712		148,229		41,787		9,254		16,442
Other long-term liabilities ⁽⁵⁾	14,559		2,242		3,235		2,850		6,232		17,128		5,321		4,778		1,694		5,335
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
Postretirement benefits obligations ⁽⁶⁾											368,559		8,863		52,888		77,012		229,796
Total Cleco											$	5,156,591	$	312,111	$	658,681	$	602,357	$	3,583,442
Cleco Power
Long-term debt obligations ⁽¹⁾	$	2,480,999	$	88,066	$	417,550	$	133,103	$	1,842,280	$	2,443,296	$	87,964	$	143,619	$	256,136	$	1,955,577
Capital lease obligations ⁽²⁾	6,278		3,722		2,556		—		—		36,710		2,611		5,222		5,222		23,655
Operating lease obligations ⁽³⁾	29,293		8,642		9,263		5,639		5,749		20,397		4,030		6,679		2,453		7,235
Purchase obligations ⁽⁴⁾	200,300		146,011		46,081		7,474		734		182,789		126,846		33,013		8,159		14,771
Other long-term liabilities ⁽⁵⁾	98,153		16,200		32,946		33,651		15,356		3,600		1,800		1,800		—		—
Postretirement benefits obligations ⁽⁶⁾											167,501		—		35,393		60,093		72,015
Total Cleco Power	$	2,815,023	$	262,641	$	508,396	$	179,867	$	1,864,119	$	2,854,293	$	223,251	$	225,726	$	332,063	$	2,073,253
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

⁽¹⁾ ~~Long-term debt existing as of December 31, 2015, is debt that has a final maturity of January 1, 2017, or later (current maturities of~~For individual 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~~ maturities, ~~of debt total $16.8 million for 2016 and $1.28 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 68 — ~~Debt”~~Debt.” For Cleco, the amount above excludes the fair value adjustments related to the 2016 Merger. Cleco’s anticipated interest payments related to long-term debt also are included in this category and ~~“— Debt” above.~~do not reflect anticipated future refinancing, early redemptions, or debt issuances.

⁽²⁾ Capital leases are maintained in the ordinary course of Cleco’s business activities, including leases for barges. Cleco’s anticipated interest payments and operating fees related to capital lease obligations are also included in this category. For more information regarding these leases, see Item 8, “Financial ~~Statement~~Statements and Supplementary Data — Notes to the Financial Statements — Note 1416 — 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, and 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 1315 — Operating Leases.”

⁽⁴⁾ 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⁾Other long-term liabilities primarily consist of obligations for ~~franchise payments,~~ deferred compensation ~~facilities use,~~ and various operating and maintenance agreements.

⁽⁶⁾ ~~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 810 — 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~~the Registrants 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 1416 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet ~~Commitments”~~Commitments and ~~“— On-Balance Sheet~~ Guarantees.”

Cybersecurity

The operation of Cleco’s electrical systems relies on evolving operational and information technology systems and network infrastructures that are complex. The failure of Cleco’s operational and information technology systems and networks and those of Cleco’s vendors due to a physical or cyberattack,



CLECO
CLECO POWER		2018 FORM 10-K

or other event could 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; result in damage to Cleco’s reputation; 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. In addition, Cleco’s recent acquisition of NRG South Central could increase the risk associated with cybersecurity that could have a material adverse effect on Cleco’s results of operations, financial condition, or cash flows including phishing attacks, denial of service attacks, and employee insider attacks. Cleco continues to assess its cybersecurity tools and processes and has taken a variety of actions to monitor and address cyber-related risks. Cleco’s Chief Administrative Officer leads Cleco’s cybersecurity team and oversees Cleco’s cybersecurity maturity plan. Each quarter, management provides cybersecurity updates to Cleco’s Board of Managers. For more information on risks related to Cleco’s cybersecurity, see Part I, Item 1A, “Risk Factors — Technology and Terrorism Threats” in this Annual Report on Form 10-K.

Regulatory and Other Matters

Inflation

Annual inflation rates, as measured by the U.S. Consumer Price Index, have averaged ~~1.07%~~2% during the three years ended December 31, ~~2015. Cleco believes inflation at this level does not materially affect its results of operations or financial condition. However, under~~2018. 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%~~86% of Cleco Power’s ~~2015~~2018 revenue and ~~2014~~ ~~revenue, respectively.~~85% of Cleco Power’s 2017 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 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, see Part I, Item 1, “Business — Environmental Matters — Air Quality.”~~

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 1, 2014, Cleco~~

~~Power’s FRP allowed a target ROE of 10.7%, while providing~~on 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 PowerEAC 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 fuelongoing environmental 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. For information concerning amounts accrued and refunded by Cleco Power as a result of the FRP and information on the LPSC Staff’s FRP reviews,covering January 1, 2016, through December 31, 2017, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 1116 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

Base Rates

Cleco Power’s annual retail earnings are subject to an FRP that was approved by the LPSC in June 2014. For more information on the LPSC’s regulation of Cleco Power’s base rates, see Part I, Item 1, “Business — Regulatory Matters, Industry Developments, and Franchises — Rates.”

For more information on the LPSC Staff’s FRP reviews, amounts accrued by Cleco Power as a result of the TCJA, and information on the tax dockets, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 13 — Regulation and ~~Rates.~~Rates — FRP” and “— TCJA.”

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. The order addressed two energy efficiency programs, Phase I and Phase II. Phase I, known as the Quick Start program, was a three-year program to expedite the energy efficiency implementation and was expected to develop into Phase II, a more detailed and comprehensive program. Cleco Power ~~subsequently~~participated in the Phase I program beginning in November 2014 for three years and designed several energy efficiency programs for customers. In January 2017, the LPSC amended the third year of the Phase I program to allocate no less than 50% of its annual program budgets to applicable government and state agencies. Beginning in November 2014, Cleco Power recovered approximately $3.3 million annually for each of the three program years through an approved rate tariff.

In September 2017, the LPSC extended Phase I for an additional year. Cleco Power began recovery of approximately $3.3 million for estimated costs for the fourth program year beginning January 1, 2018. Also 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 (political subdivision). The recovery of approximately $3.3 million annually for estimated costs for the political subdivision program began on January 1, 2018.



CLECO
CLECO POWER		2018 FORM 10-K

On December 19, 2018, the LPSC extended Phase I for an additional year.

Utility companies are allowed to recover from customers the accumulated decrease in revenues associated with the energy efficiency programs. In December 2018, Cleco Power filed ~~its formal~~a letter of intent with the LPSC to ~~participate~~recover the accumulated decrease in revenues. Beginning March 1, 2019, this amount will be recovered over approximately four years, subject to LPSC review and approval.

In November 2017, the ~~Phase I - Quick Start portion~~LPSC initiated an audit on the first two program years to consider all program costs. Cleco Power has responded to the two sets of data requests on the energy efficiency audit. On December 6, 2018, Cleco Power received the LPSC’s preliminary audit report, which concluded that the costs were reasonable and prudent, and eligible for recovery consistent with the Energy Efficiency Rules.

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 ~~LPSC’s energy efficiency initiative, which runs November 1, 2014, through July 31, 2017.~~costs and benefits of its membership in MISO. During ~~Phase I,~~the second quarter of 2017, Cleco Power ~~designed several energy efficiency programs~~submitted an analysis with both a backward-looking, historical analysis and ~~began offering these programs~~a forward-looking, prospective analysis of the costs and benefits of operating in MISO, as compared to ~~customers on November 1, 2014. In November 2014,~~a scenario where Cleco Power ~~began recovering approximately $3.3 million annually~~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 several sets of ~~estimated~~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, ~~for the program through an approved rate tariff.~~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 ~~on January 23, 2015. The comment period has passed with no interventions, and~~in December 2017. On November 8, 2018, FERC determined that Cleco Power ~~is currently waiting on an order from FERC. If FERC determines Cleco Power possesses generation~~has satisfied the requirements for market-based rate authority. Cleco’s next triennial market power ~~in excess~~analysis is expected to be filed during the fourth quarter 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.2020.

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 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~~generation dispatch and transmission ~~assets to~~operations are integrated 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. For more information about the risks associated with Cleco Power’s participation in MISO, see Part I, Item 1A, “Risk Factors — MISO.”

In ~~December 2013,~~May 2017, Cleco Power ~~integrated its generation dispatch and transmission operations~~filed a MISO Schedule 2 rate increase request with ~~MISO. The LPSC authorized~~FERC. MISO Schedule 2 provides for compensation to Cleco Power for providing reactive power to ~~defer and collect the retail portion of its~~ MISO ~~integration costs from LPSC jurisdictional customers through the FRP.~~customers. On July 1, 2017, Cleco Power ~~deferred $3.7~~began collecting revenue at the requested rate, subject to refund. On December 1, 2017, a new rate in pursuance with interveners became effective. FERC approved this rate through a settlement agreement on February 1, 2018. In April 2018, Cleco refunded $0.1 million, ~~of integration costs and began recovering these costs over a four-year period beginning July 1, 2014.~~including accrued interest, for the amount over-collected in 2017.

~~In November 2013, a group of industrial customers from the northern region of MISO and other stakeholders~~Two complaints were filed ~~a complaint at~~with 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 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

Transmission and Generation Projects

Cleco Power is currently involved in ~~several~~the Terrebonne to Bayou Vista and Bayou Vista to Segura transmission projects, ~~including~~as well as the ~~Layfield/Messick project, the Cenla Transmission Expansion project, and the Bayou Vista~~DSMART project. Cleco Power is also ~~currently~~ involved in the ~~Cabot Waste Heat Recovery~~St. Mary 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~~Power’s generation dispatch and transmission operations are integrated with ~~MISO in December 2013.~~MISO. 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.

In July 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. On February 8, 2018, NERC approved Cleco Power’s proposed RE. On July 1, 2018, SERC assumed the delegated authority as the new RE for Cleco Power, which replaced the SPP RE. Management does not expect the movement to SERC to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.



CLECO
CLECO POWER		2018 FORM 10-K

A NERC Reliability Standards audit is conducted every three years. Cleco Power’s next NERC Reliability Standards audit is scheduled to begin in October 2019.

A NERC Critical Infrastructure Protection audit is also conducted every three years. A NERC Critical Infrastructure Protection audit was conducted in February 2017. There were three violations associated with the February 2017 audit. Cleco Power has completed the mitigation plans for the violations. The SPP RE ~~conducts a~~has approved two of the mitigation plans. The third mitigation plan has been transferred to SERC due to the dissolution of the SPP RE. SERC continues to analyze Cleco Power’s mitigation plan.

Cleco Power’s next NERC ~~Reliability Standard audit every three years. Cleco’s next~~Critical Infrastructure Protection audit is ~~expected~~scheduled to begin in ~~April 2016.~~2020. Management is unable to predict the final outcome of the remaining violation, 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,~~2018, and ~~2014,~~2017, Cleco Power had ~~$8.9~~$1.3 million and ~~$11.5~~$3.8 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~~process. On February 20, 2018, Cleco Power filed the data assumptions to be used in ~~October 2013.~~its IRP analysis. The IRP process ~~included the conduct of~~includes conducting stakeholder meetings and ~~consideration~~receiving feedback from stakeholders. The first stakeholder meeting was held on April 5, 2018. Comments from the stakeholders were filed on June 5, 2018. Cleco Power has responded to multiple sets of ~~feedback provided by stakeholders.~~data requests. Cleco Power filed ~~its~~a draft 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 report on January 29, 2019, and expects to file the final report no later than August 30, 2019, with final LPSC ~~ruling.~~approval expected in early 2020.

Service Quality ~~Program~~Plan (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.

~~AMI Project~~

~~In October 2009,~~ 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 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.~~March 29, 2018.

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.”



CLECO
CLECO POWER		2018 FORM 10-K



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



RISK OVERVIEW

Cleco Power 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~~For more information, see Item 7, “Management’s Discussion and Analysis of ~~the Merger, Moody’s~~Financial Condition and ~~S&P placed Cleco Corporation~~Results of Operations — Financial Condition — Liquidity and ~~Cleco Power on negative outlook~~Capital Resources — General Considerations 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 Cleco Corporation or Cleco Power’s credit ratings were to be downgraded by Moody’s or S&P, Cleco Corporation 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.Credit-Related Risks.”

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~~,2018, 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, 2018, 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, 2018, the all-in rate was 3.08%. 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~~ 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. In June 2015,~~2018. Cleco Power is currently working with the LPSC ~~approved~~to establish a ~~long-term~~ natural gas hedging pilot program. For more information on the 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 submittedsee Item 8, “Financial Statements and Supplementary Data — Notes to the ~~LPSC by June 30, 2018.~~Financial Statements — Note 2 — Summary of Significant Accounting Policies — Risk Management.”

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.



CLECO
CLECO POWER		2018 FORM 10-K

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~~2018, Cleco Power’s Consolidated Balance Sheets reflected open FTR positions of ~~$7.7~~

$23.4 million in Energy risk management assets and ~~$0.3~~$0.5 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 57 — 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~~,2018, Cleco Power had no ~~short-term variable rate~~variable-rate debt ~~or long-term variable-rate debt.~~outstanding.

At December 31, ~~2015~~,2018, 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~~2018 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 and “the Company”) as of December 31, ~~2015,~~2018 and ~~2014,~~2017, and the related consolidated statements of income, comprehensive income, changes in ~~common shareholders’~~ equity, and cash flows for ~~each of~~ the ~~three~~ years ~~in the period~~ ended December 31, ~~2015.~~2018 and 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 Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended December 31, 2018 and 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 26, 2019

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2018 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 at~~index appearing under Item ~~15.~~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 ~~audits.~~

audit. We conducted our ~~audits~~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. An audit also includes~~statements, assessing the accounting principles used and significant estimates made by management, ~~as well as~~and evaluating the overall financial statement presentation. We 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~~PricewaterhouseCoopers LLP

New Orleans, Louisiana

February ~~26, 2016~~22, 2017



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K


CLECO CORPORATION
CLECO

Consolidated Statements of Income
	FOR THE YEAR ENDED DEC. 31,									SUCCESSOR									PREDECESSOR
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2015			2014			2013
(THOUSANDS)										FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating revenue
Electric operations	$	1,142,389		$	1,225,960		$	1,047,548		$	1,181,907		$	1,097,632		$	802,592		$	281,154
Other operations	69,186			67,055			51,002			82,332			79,580			51,562			19,080
Gross operating revenue	1,211,575			1,293,015			1,098,550			1,264,239			1,177,212			854,154			300,234
Electric customer credits	(2,173		)	(23,530		)	(1,836		)	(33,195		)	(1,566		)	(1,149		)	(364		)
Operating revenue, net	1,209,402			1,269,485			1,096,714			1,231,044			1,175,646			853,005			299,870
Operating expenses
Fuel used for electric generation	373,117			322,696			329,874			382,556			339,346			250,142			96,378
Power purchased for utility customers	130,095			242,219			45,292			168,180			152,913			92,337			27,249
Other operations	127,410			117,369			121,646
Maintenance	88,137			98,999			97,441
Other operations and maintenance										197,038			197,610			138,298			59,929
Depreciation and amortization	149,579			146,505			142,860			170,414			166,854			116,990			44,076
Taxes other than income taxes	49,134			43,924			50,469			48,791			48,546			35,543			14,611
Merger transaction costs	4,591			17,848			—
(Gain) loss on sale of assets	—			(6,107		)	800
Merger transaction and commitment costs										19,514			5,152			174,786			34,912
Gain on sale of assets										(6		)	(2		)	—			(1,095		)
Total operating expenses	922,063			983,453			788,382			986,487			910,419			808,096			276,060
Operating income	287,339			286,032			308,332			244,557			265,227			44,909			23,810
Interest income	895			1,768			1,105			6,073			1,424			840			265
Allowance for equity funds used during construction	3,063			5,380			4,081			14,159			8,320			3,735			723
Equity loss from investees, before tax	(8		)	—			—
Other income	1,443			4,790			13,857			1,515			6,474			3,350			870
Other expense	(3,368		)	(2,509		)	(2,861		)	(15,843		)	(13,373		)	(10,003		)	(4,037		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	78,877			75,186			85,570			131,348			125,200			90,852			22,330
Allowance for borrowed funds used during construction	(886		)	(1,580		)	(1,316		)	(4,706		)	(2,287		)	(1,086		)	(207		)
Total interest charges	77,991			73,606			84,254			126,642			122,913			89,766			22,123
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.
Income (loss) before income taxes										123,819			145,159			(46,935		)	(492		)
Federal and state income tax expense (benefit)										29,382			7,079			(22,822		)	3,468
Net income (loss)										$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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

Consolidated Statements of Comprehensive Income
	SUCCESSOR								PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Net income (loss)	$	94,437	$	138,080		$	(24,113	)	$	(3,960	)
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $1,868, tax benefit of $2,764, and tax expense of $938 and $367, respectively)	5,296		(4,421		)	1,500			587
Amortization of interest rate derivatives to earnings (net of tax expense of $0, $0, $0, and $37, respectively)	—		—			—			60
Total other comprehensive income (loss), net of tax	5,296		(4,421		)	1,500			647
Comprehensive income (loss), net of tax	$	99,733	$	133,659		$	(22,613	)	$	(3,313	)
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K


CLECO CORPORATION
CLECO							CLECO
													Consolidated Balance Sheets
	AT DEC. 31,						AT DEC. 31,
(THOUSANDS)	2015			2014			2018			2017
Assets
Current assets
Cash and cash equivalents	$	68,246		$	44,423		$	110,175		$	119,040
Restricted cash and cash equivalents	9,263			8,986			11,241			13,081
Customer accounts receivable (less allowance for doubtful accounts of $2,674 in 2015 and $922 in 2014)	43,255			41,500
Customer accounts receivable (less allowance for doubtful accounts of $814 in 2018 and $1,457 in 2017)							50,043			60,117
Other accounts receivable	27,677			28,098			27,196			30,806
Unbilled revenue	33,995			38,475			35,314			36,398
Fuel inventory, at average cost	72,838			64,747			82,836			87,520
Materials and supplies, at average cost	76,731			71,124			92,671			85,404
Energy risk management assets	7,673			10,776			23,355			7,396
Accumulated deferred federal and state income taxes, net	—			76,785
Accumulated deferred fuel	12,910			21,554			20,112			13,980
Cash surrender value of company-/trust-owned life insurance policies	73,823			71,167			80,391			83,117
Prepayments	7,883			10,284			7,911			9,050
Regulatory assets	14,117			12,212			22,461			24,670
Other current assets	448			473			1,256			1,146
Total current assets	448,859			500,604			564,962			571,725
Property, plant, and equipment
Property, plant, and equipment	4,661,212			4,508,960			3,728,477			3,594,525
Accumulated depreciation	(1,536,158		)	(1,442,960		)	(303,727		)	(192,348		)
Net property, plant, and equipment	3,125,054			3,066,000			3,424,750			3,402,177
Construction work in progress	66,509			99,458			354,045			186,629
Total property, plant, and equipment, net	3,191,563			3,165,458			3,778,795			3,588,806
Equity investment in investees	16,822			14,540
Equity investment in investee							18,172			18,172
Goodwill							1,490,797			1,490,797
Prepayments	4,542			4,891			2,251			1,887
Restricted cash and cash equivalents	16,195			15,130			18,670			20,081
Regulatory assets - deferred taxes, net	236,941			234,370
Note receivable							15,829			—
Regulatory assets	284,689			311,867			425,330			432,358
Net investment in direct financing lease	13,464			13,498
Intangible asset	74,963			90,642
Intangible assets							84,307			114,850
Tax credit fund investment, net	13,741			7,251			—			4,355
Other deferred charges	21,575			10,167			37,701			35,351
Total assets	$	4,323,354		$	4,368,418		$	6,436,814		$	6,278,382
The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K


CLECO CORPORATION
CLECO							CLECO
												Consolidated Balance Sheets
	AT DEC. 31,						AT DEC. 31,
(THOUSANDS)	2015			2014			2018		2017
Liabilities and shareholders’ equity
Liabilities and member’s equity
Liabilities
Current liabilities
Long-term debt due within one year	$	19,421		$	18,272
Long-term debt and capital leases due within one year							$	21,128	$	19,193
Accounts payable	93,822			127,268			156,589		147,562
Customer deposits	55,233			53,411			61,736		58,582
Provision for rate refund	2,696			2,264			35,842		4,206
Taxes payable	2,573			2,197
Taxes payable, net							43,674		22,698
Interest accrued	7,814			8,669			15,828		14,703
Energy risk management liabilities	275			827			468		352
Regulatory liabilities - other	312			312			2,496		—
Deferred compensation	10,156			11,374			10,753		12,132
Other current liabilities	14,277			13,176			30,536		20,926
Total current liabilities	206,579			237,770			379,050		300,354
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	925,103			918,858			608,030		614,812
Accumulated deferred investment tax credits	3,245			4,161			1,853		2,089
Postretirement benefit obligations	205,036			197,623			249,264		242,135
Regulatory liabilities - other	—			312			2,496		—
Regulatory liabilities - deferred taxes, net							155,537		140,426
Restricted storm reserve	16,177			14,916			15,485		14,469
Other deferred credits	24,670			28,510			25,874		31,635
Total long-term liabilities and deferred credits	1,174,231			1,164,380			1,058,539		1,045,566
Long-term debt, net	1,267,703			1,338,998
Long-term debt and capital leases, net							2,874,485		2,836,105
Total liabilities	2,648,513			2,741,148			4,312,074		4,182,025
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
Commitments and contingencies (Note 16)
Member’s equity
Membership interest							2,069,376		2,069,376
Retained earnings	1,245,014			1,208,712			53,578		29,902
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.
Accumulated other comprehensive income (loss)							1,786		(2,921		)
Total member’s equity							2,124,740		2,096,357
Total liabilities and member’s equity							$	6,436,814	$	6,278,382
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K


CLECO CORPORATION
CLECO

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,									SUCCESSOR									PREDECESSOR
(THOUSANDS)	2015			2014			2013			FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating activities
Net income	$	133,669		$	154,739		$	160,685
Adjustments to reconcile net income to net cash provided by operating activities
Net income (loss)										$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	156,211			156,590			161,047			187,426			186,326			141,544			45,869
(Gain) loss on sale of assets	—			(6,224		)	885
Gain on sales of assets										(6		)	(2		)	—			(1,095		)
Provision for doubtful accounts										797			2,778			4,473			1,212
Unearned compensation expense	6,344			6,545			6,446			5,837			3,745			1,147			3,276
Allowance for equity funds used during construction	(3,063		)	(5,380		)	(4,081		)	(14,159		)	(8,320		)	(3,735		)	(723		)
Net deferred income taxes	74,103			63,597			65,989
Deferred income taxes										6,543			(41,966		)	(21,053		)	2,219
Deferred fuel costs	9,899			(11,558		)	5,630			(18,549		)	11,909			(8,192		)	977
Cash surrender value of company-/trust-owned life insurance	950			(3,616		)	(3,669		)	2,726			(5,892		)	(2,561		)	(840		)
Changes in assets and liabilities
Accounts receivable	(13,656		)	11,556			(26,357		)	3,123			(25,584		)	(21,537		)	(1,865		)
Unbilled revenue	4,481			(7,310		)	(2,504		)	1,084			(2,129		)	(837		)	563
Fuel inventory and materials and supplies	(13,698		)	(12,147		)	(18,626		)	(2,981		)	(44,995		)	2,880			19,312
Prepayments	2,750			27			(3,502		)	153			2,852			(2,514		)	2,395
Accounts payable	(25,294		)	4,481			(1,656		)	18,898			14,705			5,183			8,348
Customer deposits	12,162			14,960			12,213			13,757			12,381			7,333			3,342
Provision for merger commitments										(3,273		)	(12,971		)	21,964			—
Postretirement benefit obligations	14,173			8,864			(24,541		)	4,646			4,884			3,750			9,746
Regulatory assets and liabilities, net	18,793			(777		)	(30,524		)	3,032			12,531			13,750			5,178
Other deferred accounts	(17,454		)	(14,691		)	(5,547		)	(9,748		)	(8,380		)	(9,441		)	6,878
Taxes accrued	(831		)	(22,685		)	53,197			20,976			23,118			(24,210		)	10,820
Interest accrued	(1,024		)	(3,519		)	(768		)	1,124			(582		)	(11,104		)	17,909
Deferred compensation										(1,521		)	308			(799		)	(793		)
Other operating	2,507			1,717			(2,627		)	3,439			2,632			(2,038		)	1,012
Net cash provided by operating activities	361,022			335,169			341,690			317,761			265,428			69,890			129,780
Investing activities
Additions to property, plant, and equipment	(156,819		)	(207,636		)	(188,614		)	(291,061		)	(236,932		)	(144,444		)	(42,392		)
Allowance for equity funds used during construction	3,063			5,380			4,081			14,159			8,320			3,735			723
Property, plant, and equipment grants	—			—			729
Proceeds from sale of property, plant, and equipment	—			9,316			1,145			995			17,499			766			1,932
Reimbursement for property loss	—			191			1,306			1,375			187			3,159			53
Contributions to equity investment in investee	(2,290		)	—			—			—			—			—			(2,450		)
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			2,775			7,502			901			476
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
Issuance of note receivable										(16,800		)	—			—			—
Other investing	881			(697		)	(1		)	397			(130		)	622			—
Net cash used in investing activities	(167,951		)	(246,514		)	(236,216		)	(288,160		)	(203,554		)	(135,261		)	(41,658		)
The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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

Consolidated Statements of Cash Flows
	SUCCESSOR											PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018				FOR THE YEAR ENDED DEC. 31, 2017				APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Financing activities
Draws on credit facilities	—				179,000				15,000			3,000
Payments on credit facilities	—				(179,000		)		(15,000		)	(10,000		)
Issuances of long-term debt	50,000				125,000				1,680,000			—
Repayments of long-term debt	(19,193		)		(17,896		)		(1,668,268		)	(8,546		)
Payments for long-term debt prepayment costs	—				—				(18,569		)	—
Payment of financing costs	(791		)		(463		)		(8,655		)	(43		)
Dividends paid on common stock	—				—				(572		)	(24,579		)
Contribution from member	—				—				100,720			—
Distributions to member	(71,350		)		(84,065		)		(88,765		)	—
Other financing	(383		)		(1,819		)		(1,890		)	(717		)
Net cash (used in) provided by financing activities	(41,717		)		20,757				(5,999		)	(40,885		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(12,116		)		82,631				(71,370		)	47,237
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	152,202			⁽¹⁾	69,571				140,941			93,704
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	140,086		⁽²⁾	$	152,202		⁽¹⁾	$	69,571		$	140,941

Supplementary cash flow information
Interest paid, net of amount capitalized	$	124,154			$	118,009			$	97,927		$	2,478
Income taxes paid (refunded), net	$	272			$	(6	)		$	4,263		$	(481	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	56,450			$	31,083			$	17,599		$	10,619
Non-cash additions to property, plant, and equipment	$	1,224			$	3,015			$	—		$	—
Incurrence of capital lease obligation - barges	$	16,800			$	—			$	—		$	—
⁽¹⁾ Includes cash and cash equivalents of $119,040, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,081. ⁽²⁾ Includes cash and cash equivalents of $110,175, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,670. The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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

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, 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
Distributions to member	—			(71,350		)	—			(71,350		)
Net income	—			94,437			—			94,437
Other comprehensive income, net of tax	—			—			5,296			5,296
Reclassification of effect of tax rate change	—			589			(589		)	—
Balances, Dec. 31, 2018	$	2,069,376		$	53,578		$	1,786		$	2,124,740
⁽¹⁾At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included $61.1 million of common stock. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included premium on common stock of $414.6 million and $418.5 million, respectively. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included treasury stock of $20.5 million and $23.2 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 2016 Merger.
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



Report of Independent Registered Public Accounting Firm

To the ~~Member and~~ Board of Managers and Member of

Cleco Power LLC

~~Pineville, Louisiana~~

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco Power LLC and its subsidiaries ~~(the “Company”~~(“the Company”) as of December 31, ~~2015,~~2018 and ~~2014,~~2017, and the related consolidated statements of income, comprehensive income, changes in member’s equity, and cash flows for each of the three years ended December 31, 2018, 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 Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2015. Our audits also included the financial statement schedule listed~~2018 in conformity with accounting principles generally accepted in the ~~Index at Item 15.~~ United States of America.

Basis for Opinion

These consolidated financial statements ~~and the financial statement schedule~~ are the responsibility of the Company’s management. Our responsibility is to express an opinion on ~~these~~the Company’s consolidated financial statements ~~and financial statement schedule~~ 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 ~~Public Company Accounting Oversight Board (United States).~~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. An~~misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit ~~includes~~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 ~~supporting~~regarding the amounts and disclosures in the consolidated financial statements. ~~An audit~~Our audits also ~~includes assessing~~included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial ~~statement presentation.~~statements. 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 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 schedule, 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~~PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 26, ~~2016~~2019

We have served as the Company’s auditor since 2016.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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			2018			2017			2016
Operating revenue
Electric operations	$	1,142,389		$	1,225,960		$	1,047,548		$	1,191,587		$	1,108,389		$	1,091,229
Other operations	67,109			64,893			48,909			82,330			77,522			68,573
Affiliate revenue	1,142			1,326			1,338			874			851			884
Gross operating revenue	1,210,640			1,292,179			1,097,795			1,274,791			1,186,762			1,160,686
Electric customer credits	(2,173		)	(23,530		)	(1,836		)	(33,195		)	(1,566		)	(1,513		)
Operating revenue, net	1,208,467			1,268,649			1,095,959			1,241,596			1,185,196			1,159,173
Operating expenses
Fuel used for electric generation	373,117			322,696			329,874			382,556			339,346			346,520
Power purchased for utility customers	130,095			247,686			76,962			168,180			152,913			119,586
Other operations	128,697			116,664			114,884
Maintenance	87,416			96,054			85,638
Other operations and maintenance										202,556			202,738			203,452
Depreciation and amortization	147,839			144,026			135,717			162,069			158,415			153,393
Taxes other than income taxes	47,102			41,812			46,203			47,267			46,539			48,287
Gain on sale of assets	—			(4		)	—
Merger commitment costs										—			—			151,501
Gain on sale of asset										(4		)	—			(1,095		)
Total operating expenses	914,266			968,934			789,278			962,624			899,951			1,021,644
Operating income	294,201			299,715			306,681			278,972			285,245			137,529
Interest income	725			1,707			1,100			5,052			1,283			860
Allowance for equity funds used during construction	3,063			5,380			4,081			14,159			8,320			4,458
Other income	1,764			1,483			4,883			2,742			2,990			1,601
Other expense	(2,549		)	(2,322		)	(4,277		)	(11,441		)	(10,407		)	(10,505		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	77,446			76,253			83,993			76,009			71,649			77,739
Allowance for borrowed funds used during construction	(886		)	(1,580		)	(1,316		)	(4,706		)	(2,287		)	(1,293		)
Total interest charges	76,560			74,673			82,677			71,303			69,362			76,446
Income before income taxes	220,644			231,290			229,791			218,181			218,069			57,497
Federal and state income tax expense	79,294			76,974			79,381			55,924			67,331			18,369
Net income	$	141,350		$	154,316		$	150,410		$	162,257		$	150,738		$	39,128
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~~2018 FORM 10-K


CLECO POWER	CLECO POWER

Consolidated Statements of Comprehensive Income
	FOR THE YEAR ENDED DEC. 31,								FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015			2014			2013		2018		2017			2016
Net income	$	141,350		$	154,316		$	150,410	$	162,257	$	150,738		$	39,128
Other comprehensive income (loss), net of tax:
Postretirement benefits (loss) gain (net of tax benefit of $9 in 2015, tax benefit of $1,453 in 2014, and tax expense of $2,355 in 2013)	(15		)	(2,323		)	3,766
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	196			(2,111		)	5,244
Other comprehensive (loss) income, net of tax:
Postretirement benefits gain (loss) (net of tax expense of $968, tax benefit of $296, and tax expense of $2,163, respectively)									2,743		(472		)	3,459
Amortization of interest rate derivatives to earnings (net of tax expense of $90, $132, and $132, respectively)									254		211			211
Total other comprehensive (loss) income, net of tax									2,997		(261		)	3,670
Comprehensive income, net of tax	$	141,546		$	152,205		$	155,654	$	165,254	$	150,477		$	42,798
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~~2018 FORM 10-K

													CLECO POWER
Consolidated Balance Sheets
	AT DEC. 31,						AT DEC. 31,
(THOUSANDS)	2015			2014			2018			2017
Assets
Utility plant and equipment
Property, plant, and equipment	$	4,645,698		$	4,495,490		$	5,015,004		$	4,893,484
Accumulated depreciation	(1,525,298		)	(1,433,206		)	(1,804,563		)	(1,712,590		)
Net property, plant, and equipment	3,120,400			3,062,284			3,210,441			3,180,894
Construction work in progress	66,069			96,702			351,828			185,507
Total utility plant, net	3,186,469			3,158,986
Total utility plant and equipment, net							3,562,269			3,366,401
Current assets
Cash and cash equivalents	65,705			39,162			31,987			69,816
Restricted cash and cash equivalents	9,263			8,986			11,241			13,081
Customer accounts receivable (less allowance for doubtful accounts of $2,674 in 2015 and $922 in 2014)	43,255			41,500
Customer accounts receivable (less allowance for doubtful accounts of $814 in 2018 and $1,457 in 2017)							50,043			60,117
Accounts receivable - affiliate	1,908			23,621			3,318			1,355
Other accounts receivable	27,553			27,949			24,523			30,680
Unbilled revenue	33,995			38,475			35,314			36,398
Fuel inventory, at average cost	72,838			64,747			82,836			87,520
Materials and supplies, at average cost	76,731			71,124			92,671			85,404
Energy risk management assets	7,673			10,776			23,355			7,396
Accumulated deferred federal and state income taxes, net	—			6,725
Accumulated deferred fuel	12,910			21,554			20,112			13,980
Cash surrender value of company-owned life insurance policies	20,003			19,678			20,497			20,278
Prepayments	6,309			7,283			6,143			7,236
Regulatory assets	14,117			12,212			13,603			15,812
Other current assets	337			368			1,162			475
Total current assets	392,597			394,160			416,805			449,548
Equity investment in investees	16,822			14,532
Equity investment in investee							18,172			18,172
Prepayments	4,542			4,891			2,251			1,887
Restricted cash and cash equivalents	16,174			15,109			18,649			20,060
Regulatory assets - deferred taxes, net	236,941			234,370
Note receivable							15,829			—
Regulatory assets	284,689			311,867			261,569			257,408
Intangible asset	74,963			90,642			21,093			41,701
Other deferred charges	20,140			8,385			32,419			33,564
Total assets	$	4,233,337		$	4,232,942		$	4,349,056		$	4,188,741
The accompanying notes are an integral part of the consolidated financial statements.
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

									CLECO POWER
Consolidated Balance Sheets
	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2015		2014		2018		2017
Liabilities and member’s equity
Member’s equity	$	1,552,404	$	1,545,858	$	1,594,533	$	1,550,679
Long-term debt, net	1,234,039		1,282,609
Long-term debt and capital leases, net					1,387,774		1,341,475
Total capitalization	2,786,443		2,828,467		2,982,307		2,892,154
Current liabilities
Long-term debt due within one year	19,421		18,272
Long-term debt and capital leases due within one year					21,128		19,193
Accounts payable	88,235		116,925		146,314		134,374
Accounts payable - affiliate	6,598		7,760		7,843		8,697
Customer deposits	55,233		53,411		61,736		58,582
Provision for rate refund	2,696		2,264		35,842		4,206
Taxes payable	17,045		3,115
Taxes payable, net					48,177		31,611
Interest accrued	7,813		9,224		8,252		7,083
Energy risk management liabilities	275		827		468		352
Regulatory liabilities - other	312		312		2,496		—
Other current liabilities	10,078		9,380		22,263		15,820
Total current liabilities	207,706		221,490		354,519		279,918
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 16)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	1,043,531		1,001,332		630,765		656,362
Accumulated deferred investment tax credits	3,245		4,161		1,853		2,089
Postretirement benefit obligations	152,152		135,825		182,721		173,747
Regulatory liabilities - other	—		312		2,496		—
Regulatory liabilities - deferred taxes, net					155,537		140,426
Restricted storm reserve	16,177		14,916		15,485		14,469
Other deferred credits	24,083		26,439		23,373		29,576
Total long-term liabilities and deferred credits	1,239,188		1,182,985		1,012,230		1,016,669
Total liabilities and member’s equity	$	4,233,337	$	4,232,942	$	4,349,056	$	4,188,741
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~~2018 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)	2018			2017			2016
Operating activities
Net income	$	162,257		$	150,738		$	39,128
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	168,248			165,200			152,978
Gain on sales of asset	(4		)	—			(1,095		)
Provision for doubtful accounts	797			2,677			5,512
Unearned compensation expense	1,873			1,972			1,572
Allowance for equity funds used during construction	(14,159		)	(8,320		)	(4,458		)
Deferred income taxes	(11,545		)	(34,191		)	20,492
Deferred fuel costs	(18,549		)	11,909			(7,215		)
Changes in assets and liabilities
Accounts receivable	3,967			(25,696		)	(23,306		)
Accounts receivable, affiliate	426			1,865			2,612
Unbilled revenue	1,084			(2,129		)	(274		)
Fuel inventory and materials and supplies	(2,981		)	(44,995		)	22,192
Prepayments	107			2,745			228
Accounts payable	22,419			11,005			9,140
Accounts payable, affiliate	(4,700		)	1,349			(3,639		)
Customer deposits	13,757			12,381			10,675
Provision for merger commitments	(3,273		)	(12,971		)	21,964
Postretirement benefit obligations	4,252			4,849			5,076
Regulatory assets and liabilities, net	1,044			10,544			17,506
Other deferred accounts	(5,421		)	(8,137		)	(3,249		)
Taxes accrued	16,566			44,101			(29,535		)
Interest accrued	1,169			(59		)	(671		)
Other operating	2,354			2,241			(1,308		)
Net cash provided by operating activities	339,688			287,078			234,325
Investing activities
Additions to property, plant, and equipment	(289,153		)	(235,252		)	(186,143		)
Allowance for equity funds used during construction	14,159			8,320			4,458
Proceeds from sale of property, plant, and equipment	995			4,078			2,698
Reimbursement for property loss	1,375			187			3,212
Issuance of note receivable	(16,800		)	—			—
Contributions to equity investment in investee	—			—			(2,450		)
Other investing	397			500			622
Net cash used in investing activities	(289,027		)	(222,167		)	(177,603		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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)	2018				2017				2016
Financing activities
Draws on credit facility	—				106,000				15,000
Payments on credit facility	—				(106,000		)		(15,000		)
Issuances of long-term debt	50,000				125,000				330,000
Repayments of long-term debt	(19,193		)		(17,896		)		(326,814		)
Payments for long-term debt prepayment costs	—				—				(18,569		)
Contribution from member	—				—				50,000
Distributions to member	(121,400		)		(135,000		)		(110,000		)
Other financing	(1,148		)		(2,013		)		(4,526		)
Net cash used in financing activities	(91,741		)		(29,909		)		(79,909		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(41,080		)		35,002				(23,187		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	102,957			⁽¹⁾	67,955				91,142
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	61,877		⁽²⁾	$	102,957		⁽¹⁾	$	67,955

Supplementary cash flow information
Interest paid, net of amount capitalized	$	70,357			$	65,984			$	74,016
Income taxes refunded, net	$	—			$	—			$	(485	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	55,718			$	30,883			$	16,755
Non-cash additions to property, plant, and equipment	$	1,224			$	3,015			$	—
Incurrence of capital lease obligation - barges	$	16,800			$	—			$	—
⁽¹⁾ Includes cash and cash equivalents of $69,816, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,060. ⁽²⁾ Includes cash and cash equivalents of $31,987, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,649. The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 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, 2015	$	1,569,496		$	(17,092	)	$	1,552,404
Contribution from member	50,000			—			50,000
Distributions to member	(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 member	(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
Distributions to member	(121,400		)	—			(121,400		)
Net income	162,257			—			162,257
Other comprehensive income, net of tax	—			2,997			2,997
Reclassification of effect of tax rate change	2,496			(2,496		)	—
Balances, Dec. 31, 2018	$	1,607,715		$	(13,182	)	$	1,594,533
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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	~~Regulatory Assets and Liabilities~~Revenue Recognition	Cleco ~~Corporation~~ and Cleco Power
Note 4	~~Jointly Owned Generation Units~~Business Combinations	Cleco ~~Corporation and Cleco Power~~
Note 5	~~Fair Value Accounting~~Regulatory Assets and Liabilities	Cleco ~~Corporation~~ and Cleco Power
Note 6	~~Debt~~Jointly Owned Generation Units	Cleco ~~Corporation~~ and Cleco Power
Note 7	~~Common Stock~~Fair Value Accounting	Cleco ~~Corporation~~ and Cleco Power
Note 8	Debt	Cleco and Cleco Power
Note 9	Common Stock	Cleco and Cleco Power
Note 10	Pension Plan and Employee Benefits	Cleco ~~Corporation~~ and Cleco Power
Note 911	Income Taxes	Cleco ~~Corporation and Cleco Power~~
~~Note 10~~	~~Disclosures about Segments~~	~~Cleco Corporation~~
~~Note 11~~	~~Regulation and Rates~~	~~Cleco Corporation~~ and Cleco Power
Note 12	~~Variable Interest Entities~~Disclosures about Segments	Cleco ~~Corporation~~
Note 13	Regulation and Rates	Cleco and Cleco Power
Note 1314	~~Operating Leases~~Variable Interest Entities	Cleco ~~Corporation~~ and Cleco Power
Note 1415	Operating Leases	Cleco and Cleco Power
Note 16	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~~	~~Cleco Corporation~~ and Cleco Power
Note 17	~~Coughlin Transfer~~Affiliate Transactions	Cleco ~~Corporation~~ and Cleco Power
Note 18	~~Accumulated Other Comprehensive Loss~~Intangible Assets and Goodwill	Cleco ~~Corporation~~ and Cleco Power
Note 19	~~Miscellaneous Financial Information (Unaudited)~~Accumulated Other Comprehensive Loss	Cleco ~~Corporation~~ and Cleco Power
Note 20	~~Agreement and Plan of Merger~~Miscellaneous Financial Information (Unaudited)	Cleco ~~Corporation~~and Cleco Power
Note 21	Cleco Cajun Transaction	Cleco



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~~291,000 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.


◦	Cleco Cajun, a subsidiary formed to facilitate the Cleco Cajun Transaction. For more information on the transaction, see Note 21 — “Cleco Cajun Transaction.”

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 2016 Merger, and Cleco Corporation converting to 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~~wholly owned subsidiary of Cleco Partners. ~~For more information on~~As a result, Cleco Corporation is presented as the ~~Merger, see Note 20 — “Agreement~~predecessor entity and ~~Plan of Merger.”~~

Cleco Holdings is presented as the successor entity.



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.

Reclassifications

Certain reclassifications have been made to the 2017 and 2016 financial statements to conform to the presentation used in the 2018 financial statements. These reclassifications had no effect on Cleco and Cleco Power’s net income, financial condition, or cash flows.

Cleco and Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2017, and 2016, have been retrospectively adjusted by $0.4 million and $7.3 million, respectively, for the reclassification of deferred expenses from Depreciation and amortization to Other operations and maintenance.

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



CLECO
CLECO POWER		2018 FORM 10-K

an event occurs or circumstances change that would indicate the carrying amount may be impaired. For more information on goodwill, see Note 18 — “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 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 18 — “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 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 35 — “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 2018, Cleco Power recorded a ~~$1.0~~$1.5 million ~~increase~~decrease to its ARO ~~for~~related to 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, 2018, 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 35 — “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 46 — “Jointly Owned Generation Units.”

Most of the carrying values of Cleco’s assets were determined to be stated at fair value at the 2016 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, because Cleco Power is able to earn a return on and recover these costs from customers. At the date of the 2016 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 2016 Merger. Since pushdown accounting was not elected at the Cleco Power level, Cleco Power retained its accumulated depreciation. For more information about 2016 Merger related adjustments to property, plant, and equipment, see Note 4 — “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~~2018, and ~~2014~~2017 were ~~$12.5~~$7.2 million and $~~11.0~~7.9 million, respectively. The amounts of unamortized computer



CLECO
CLECO POWER		2018 FORM 10-K

software costs on Cleco Power’s Consolidated Balance Sheets at December 31, 2018, and 2017 were $5.8 million and $6.6 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~~,2018, 2017, and ~~2013~~ ~~was~~ ~~$2.2 million~~, ~~$1.4 million, and~~ ~~$1.4 million, respectively.~~2016 is shown in the following tables:



Cleco
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Amortization	$	2,154	$	2,367	$	2,351	$	921



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017		2016
Amortization	$	1,607	$	1,887	$	2,405

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~~2018, 2017, and 2016 was 2.80%, ~~2014~~2.72%, and ~~2013,were~~ 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~~,2018, and ~~2014~~,2017, Cleco and Cleco Power’s property, plant, and equipment consisted of the following:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018			2017
Utility plants
Generation	$	1,949,042		$	1,908,344
Distribution	1,081,650			1,015,472
Transmission	519,269			512,428
Other utility plant	174,010			153,900
Other property, plant, and equipment	4,506			4,381
Total property, plant, and equipment	3,728,477			3,594,525
Accumulated depreciation	(303,727		)	(192,348		)
Net property, plant, and equipment	$	3,424,750		$	3,402,177

AT DEC. 31,
(THOUSANDS) 2015
2014
Regulated utility plants $ 4,645,698
$ 4,495,490
Other 15,514
13,470
Total 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



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018			2017
Regulated utility plants
Generation	$	2,476,733		$	2,442,987
Distribution	1,523,885			1,462,193
Transmission	731,432			725,199
Other utility plant	282,954			263,105
Total property, plant, and equipment	5,015,004			4,893,484
Accumulated depreciation	(1,804,563		)	(1,712,590		)
Net property, plant, and equipment	$	3,210,441		$	3,180,894

During ~~2015, Cleco’s investment in~~2018, Cleco Power’s regulated utility property, plant, and equipment increased primarily due to ~~the Layfield/Messick project, or Northwest Louisiana Transmission Expansion project~~general installation 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



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

~~depreciation on Cleco Power’s Consolidated Balance Sheets at~~ ~~December 31, 2015, and~~ ~~2014~~ ~~are shown in the following table:~~

AT DEC. 31,
(THOUSANDS) 2015
2014
Acadia Unit 1
Plant acquisition adjustment $ 95,578
$ 95,578
Less: accumulated amortization 18,567
15,384
Net plant acquisition adjustment $ 77,011
$ 80,194
Teche and other

Plant acquisition adjustment $ 5,271
⁽¹⁾
$ 5,359
Less: accumulated amortization 4,655
4,488
Net plant acquisition adjustment $ 616
$ 871
⁽¹⁾ In October 2015, the Franklin Gas Turbine, a 7-MW natural gas generating unit, was retired.

Deferred Project Costs

Cleco Power defers costs related to the initial stage of a construction project during which time the feasibility of the construction of property, plant, and equipment is being investigated. At December 31, ~~2015~~2018, and ~~2014,~~2017, Cleco Power had deferred ~~$4.6~~$1.4 million and ~~$1.4~~$3.2 million,, respectively, for projects that are in the initial stages of development. These amounts are classified as Other deferred charges on ~~Cleco’s~~Cleco Power’s Consolidated Balance Sheets.

Fuel Inventory and Materials and Supplies

Fuel inventory consists primarily of petroleum coke, coal, limestone, lignite, and natural gas used to generate electricity.

Materials and supplies consists of transmission and distribution line construction and repair materials. It also consists of generating station and transmission and distribution substation repair materials.

Both fuel inventory and materials and supplies are ~~stated~~recorded at the lower of cost or market value using the average cost method and are issued from stock using the average cost of existing stock. Materials and supplies are recorded when purchased and subsequently charged to expense or capitalized to property, plant, and equipment when installed.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. It is the policy of management to review the outstanding accounts receivable monthly, as well as the bad debt write-offs experienced in the past, and establish an allowance for doubtful accounts. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered. ~~At December 31,~~ ~~2015, and~~ ~~2014, the balance of the allowance for doubtful accounts was~~ ~~$2.7 million~~ ~~and~~ ~~$0.9 million, respectively. There was no off-balance sheet credit exposure related to Cleco’s customers.~~

~~Financing Receivables~~

At ~~December 31, 2015~~, Cleco, through Perryville and Attala, had a combined net investment in direct financing lease long-term assets of $13.5 million. The net investment at December 31, 2014, was also $13.5 million. Each subsidiary leases its respective transmission assets to a single counterparty. Both counterparties are considered credit worthy and are expected to pay their obligations when due, thus, no allowance for credit loss has been recognized. Management bases this assessment on the following common factors of each counterparty:

~~both counterparties use the respective transmission facilities to move electricity from its power plants to the regional transmission grid,~~

~~neither counterparty has another avenue to move electricity from its respective power plants to the regional transmission grid,~~

~~the stream of payments was approved by FERC through respective rate orders, and~~

both counterparties serve retail and wholesale customers in their respective service territories under LPSC oversight that allows recovery of prudent costs, of which, the stream of payments under the direct financing leases appear to be prudent.

Management monitors both entities for indication of adverse actions by their respective public service commissions and market conditions which would indicate an inability to pay their obligations under the direct financing leases when due. Since the inception of the agreements, each counterparty has paid their respective obligations when due, and at December 31, ~~2015, and~~ ~~2014, no amounts were past due.~~

Reserves

Cleco maintains property insurance on generating stations, buildings and contents, and substations. Cleco is self-insured for any damage to transmission and distribution lines. To mitigate the exposure to potential financial loss for damage to lines, Cleco maintains an LPSC-approved funded storm reserve.

Cleco Power also maintains liability and workers’ compensation insurance to mitigate financial losses due to injuries and damages to the property of others. Cleco’s insurance covers claims that exceed certain self-insured limits. For claims that do not meet the limits to be covered by



CLECO
CLECO POWER		2018 FORM 10-K

insurance, Cleco Power maintains reserves. At December 31, ~~2015~~2018, and ~~2014,~~2017, the general liability and workers compensation reserves together were ~~$5.5~~$4.8 million and ~~$6.0~~$4.5 million, respectively.

Additionally, Cleco maintains directors and officers insurance to protect managers from claims which may arise from their decisions and actions taken within the scope of their regular duties.

Cash Equivalents

Cleco considers highly liquid, marketable securities, and other similar instruments with original maturity dates of three months or less to be cash equivalents.

Restricted Cash and Cash Equivalents

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,505	$	8,597
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	536		3,284
Total current	11,241		13,081
Non-current
Diversified Lands’ mitigation escrow	21		21
Cleco Power’s future storm restoration costs	15,391		14,456
Cleco Power’s charitable contributions	2,753		3,575
Cleco Power’s rate credit escrow	505		2,029
Total non-current	18,670		20,081
Total restricted cash and cash equivalents	$	29,911	$	33,162



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



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,505	$	8,597
Charitable contributions	1,200		1,200
Rate credit escrow	536		3,284
Total current	11,241		13,081
Non-current
Future storm restoration costs	15,391		14,456
Charitable contributions	2,753		3,575
Rate credit escrow	505		2,029
Total non-current	18,649		20,060
Total restricted cash and cash equivalents	$	29,890	$	33,141

AT DEC. 31,
(THOUSANDS) 2015
2014
Current:
Cleco Katrina/Rita’s storm recovery bonds $ 9,263
$ 8,986
Non-current:
Diversified Lands’ mitigation escrow 21
21
Cleco Power’s future storm restoration costs 16,174
14,915
Cleco Power’s building renovation escrow —
194
Total non-current 16,195

15,130
Total restricted cash and cash equivalents $ 25,458

$ 24,116

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~~ ~~2015~~,The change from December 31, 2017, to December 31, 2018, was due to Cleco Katrina/Rita ~~collected $21.2~~collecting $22.7 million net of administration ~~fees. In March and September 2015, Cleco Katrina/Rita used $8.1~~fees, partially offset by $19.2 million ~~and $7.7 million, respectively,~~ for scheduled storm recovery bond principal payments and $2.6 million ~~and $2.5 million, respectively,~~ for related interest payments.

Equity Investments

Cleco and Cleco Power account for investments in unconsolidated affiliated companies using the equity method of accounting. The amounts reported on Cleco and Cleco Power’s Consolidated Balance Sheets represent assets contributed by Cleco ~~Corporation~~ or Cleco Power, plus their share of the net income of the affiliate, less any distributions of earnings (dividends) received from the affiliate. The revenues and expenses (excluding income taxes) of these affiliates are netted and reported on one line item as equity income from investees on Cleco and Cleco Power’s Consolidated Statements of Income.

Cleco evaluates for impairments of equity method investments at each balance sheet date ~~whether~~to determine if events and circumstances have occurred that indicate a possible other-than-temporary decline in the fair value of the investment and the possible inability to recover the carrying value through operations. Cleco uses estimates of the future cash flows from the investee and observable market transactions in order to calculate fair value and recoverability. An impairment is recognized when an other-than-temporary decline in market value occurs and recovery of the carrying value is not probable. There were no impairments recorded for ~~2015~~, ~~2014~~,2018, 2017, or ~~2013~~.2016. For more information on Cleco’s equity investments, see Note 1214 — “Variable Interest Entities.”

Income Taxes

liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. ~~Beginning with the December 31, 2015, reporting period, deferred~~Deferred tax assets and liabilities are classified as ~~noncurrent~~non-current on Cleco and Cleco Power’s Consolidated Balance Sheets due to the early adoption of new accounting guidance. Prior periods were not retrospectively adjusted. For more information on the new accounting guidance, see “— Recent Authoritative Guidance.”Sheets. Cleco’s income tax expense and related regulatory assets and liabilities could be affected by changes in its assumptions and estimates and by ultimate resolution of assumptions and estimates with taxing authorities. Cleco Group files a federal ~~consolidated~~ income tax return for all wholly owned subsidiaries. Cleco Power computes its federal and state income taxes as if it were a stand-alone taxpayer. The LPSC generally requires Cleco Power to flow the effects of state income taxes to customers immediately. The LPSC specifically requires that the state tax benefits associated with the deductions related to certain storm damages be normalized. For more information on income taxes, see Note 911 — “Income Taxes.”

~~Investment Tax Credits~~Recent Authoritative Guidance

~~Investment tax credits, which were deferred for financial statement purposes, are amortized as~~For a ~~reduction to income tax expense over the estimated service lives~~discussion of ~~the properties that gave rise~~recent authoritative guidance, see Item 8, “Financial Statements and Supplementary Data — Notes to the ~~credits.~~Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

~~NMTC Fund~~

In 2008, Cleco Corporation and U.S. Bancorp Community Development Corporation (USBCDC) formed the NMTC Fund. The purpose of the NMTC Fund is to invest in projects located in qualified active low-income communities that are underserved by typical debt capital markets. These investments are designed to generate NMTCs and Historical Rehabilitation tax credits. The NMTC Fund was later amended to include renewable energy investments. The majority of the energy investments qualify for grants under Section 1603 of the ARRA. The gross investment amortization expense of the NMTC Fund will be recognized over a nine-year period, with two years remaining under the new amendment, using the cost method. The grants received under Section 1603, which allow certain projects to receive a federal grant in lieu of tax credits, and other cash reduce the basis of the investment. Periodic amortization of the investment and the deferred taxes generated by the basis reduction temporary difference are included as components of income tax expense.

~~For more information, see Note 14 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — NMTC Fund.”~~

~~Accounting for Renewable Energy Tax Credits and Grants Under the ARRA~~

Cleco and the NMTC Fund have elected to receive cash grants under the ARRA for investments in various projects. Cleco has elected to reduce the carrying value of the qualifying assets as cash grants are received, which will reduce the amount of depreciation expense recognized after the underlying assets are placed in service. Certain of the cash grants also reduce the tax basis of the underlying assets. Grants received via the NMTC Fund reduce the carrying value



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~of the investment for GAAP, but do not reduce the income tax basis of the investment.~~

~~Debt Issuance Costs, Premiums, and Discounts~~

Issuance costs, premiums, and discounts applicable to debt securities are amortized to income ratably over the lives of the related issues. Expenses and call premiums related to refinanced Cleco Power debt are deferred and amortized over the life of the new issue. Premiums and discounts are presented as a direct deduction from the carrying value of the related debt liability. In accordance with accounting guidance issued in April 2015, debt issuance costs are now presented as a direct deduction from the carrying value of the related debt liability. As a result of the adoption of this guidance, debt issuance costs at December 31, 2014, on Cleco and Cleco Power’s Consolidated Balance Sheets of $10.7 million and $10.0 million, respectively, were reclassified from Other deferred charges to Long-term debt, net. For more information on the new accounting guidance, see “— Recent Authoritative Guidance.”

~~Revenue and Fuel Costs~~

~~Utility Revenue~~

Revenue from sales of electricity is recognized when the service is provided. The costs of fuel and purchased power used for retail customers currently are recovered from customers through the FAC. These costs are subject to audit and final determination by regulators. Excise taxes and pass-through fees collected on the sale of electricity are not recorded in utility revenue.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Unbilled Revenue~~



RISK OVERVIEW

Cleco Power accrues estimated revenue monthly for energy used by customers but not yet billed. The monthly estimated unbilled revenue amounts are recorded as unbilled revenue and a receivable. During the third quarter of 2014, Cleco Power began using actual customer energy consumption data available from AMI to calculate unbilled revenues.

~~Other Operations Revenue~~

~~Other operations revenue is recognized at the time products or services are provided to and accepted by customers.~~

~~Sales/Excise Taxes~~

Cleco Power collects a sales and use tax on the sale of electricity that subsequently is remitted to the state in accordance with state law. These amounts are not recorded as income or expense on Cleco’s Consolidated Statements of Income but are reflected at gross amounts on Cleco’s Consolidated Balance Sheets as a receivable until the tax is collected and as a payable until the liability is paid. Cleco currently does not have any excise taxes reflected on its income statement.

~~Franchise Fees~~

Cleco Power collects a consumer fee for one of its franchise agreements. This fee is not recorded on Cleco’s Consolidated Statements of Income as revenue and expense, but is reflected at gross amounts on Cleco’s Consolidated Balance Sheets as a receivable until it is collected and as a payable until the liability is paid.

~~AFUDC~~

The capitalization of AFUDC by Cleco Power is a utility accounting practice prescribed by FERC and the LPSC. AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance construction of new and existing facilities. While cash is not realized currently from such allowance, AFUDC increases the revenue requirement over the same life of the plant through a higher rate base and higher depreciation. Under regulatory practices, a return on and recovery of AFUDC is permitted in setting rates charged for utility services. The composite AFUDC rate, including borrowed and other funds, was 11.46% on a pretax basis (7.09% net of tax) for ~~2015~~, ~~10.46%~~ ~~on a pretax basis (6.47%~~ ~~net of tax) for~~ ~~2014, and~~ ~~11.61%~~ ~~on a pretax basis (7.19%~~ ~~net of tax) for~~ ~~2013~~.

~~Fair Value Measurements and Disclosures~~

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 and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes. For more information about fair value levels, see Note 5 — “Fair Value Accounting.”

~~Risk Management~~

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’s Energy Market Risk Management Policy authorizes the use of various derivative instruments, including exchange traded futures and option contracts, forward purchase and sales contracts, and swap transactions to reduce exposure to fluctuations in the price of power, FTRs, and natural gas.

Cleco Power 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.

Cleco Power may also enter into risk mitigating positions that would not meet the requirements of a normal-purchase, normal-sale transaction in order to attempt to mitigate the volatility in customer fuel costs. These positions are marked-to-market with the resulting gain or loss recorded on Cleco and Cleco Power’s Consolidated Balance Sheets as a component of energy risk management assets or liabilities. Such gain or loss is deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. When ~~these~~ positions close, actual gains or losses are included in the FAC and reflected on customers’ bills as a component of the ~~fuel cost adjustment. There were no open natural gas positions at December 31, 2015, or 2014. In June 2015, the LPSC approved a long-term natural gas hedging pilot program that requires Cleco Power~~FAC.

Cleco’s exposure to ~~establish a proposal for a long-term natural gas procurement program that will be designed to provide gas price stability for a minimum~~market risk, as discussed below, represents an estimate of ~~five years. This~~



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

~~proposal is required to be submitted to the LPSC by June 30, 2018.~~

~~Cleco Power purchases the majority of its FTRs~~possible changes in annual auctions facilitated by MISO during the second quarter of each year and may also purchase additional FTRs in monthly auctions facilitated by MISO. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. They are not designated as hedging instruments for accounting purposes. Cleco Power initially records FTRs at their estimated fair value and subsequently adjusts the carrying value 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 for utility customers on Cleco and Cleco Power’s Consolidated Statements of Income. At ~~December 31, 2015, Cleco and Cleco Power’s Consolidated Balance Sheets reflected~~ the fair value or future earnings that would occur, assuming possible future movements in the interest rates and commodity prices of ~~open FTR positions~~power, FTRs, and natural gas. Management’s views on market risk are not necessarily indicative of ~~$7.7 million in Energy risk~~actual results, nor do they represent the maximum possible gains or losses. The views do represent, within the parameters disclosed, what management assets and $0.3 million in Energy risk management liabilities, compared to $10.8 million in Energy risk management assets and $0.8 million in Energy risk management liabilities at December 31, 2014. For more information on FTRs, see Note 5 — “Fair Value Accounting — Commodity Contracts.”estimates may happen.

Cleco ~~and Cleco Power maintain~~maintains a master netting agreement policy and ~~monitor~~monitors credit risk exposure through ~~review~~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 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 Holdings and Cleco Power pay fees and interest under their respective credit facilities based on the highest rating held. For more information, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Liquidity and Capital Resources — General Considerations and Credit-Related Risks.”

Interest Rate Risks

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, 2018, Cleco Holdings had no debt outstanding under its $100.0 million credit facility. The borrowing costs under Cleco Holdings’ credit facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%.

At December 31, 2018, 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, 2018, the all-in rate was 3.08%. Each 1% increase in the interest rate applicable to such debt would result in a decrease in Cleco Holdings’ pretax earnings of $3.0 million.

For information on variable-rate debt related to Cleco Power, see “— Cleco Power.”

Commodity Price Risks

Cleco Power provides fuel for generation and purchases power to meet the power demands of customers. Cleco Power may enter into ~~contracts~~positions to mitigate the volatility in ~~interest rate risk.~~customer fuel costs, as encouraged by various LPSC orders. These ~~contracts include,~~positions 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 would be included in the FAC and reflected in customers’ bills as a component of the fuel charge. There were no open natural gas positions at December 31, 2018. Cleco Power is currently working with the LPSC to establish a natural gas hedging pilot program. For more information on the program, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Risk Management.”

Cleco Power purchases FTRs in auctions facilitated by MISO. The majority of its FTRs are purchased in annual auctions during the second quarter, but Cleco Power may purchase additional FTRs in monthly auctions. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. FTRs are not ~~limited~~designated as hedging instruments for accounting purposes. Cleco Power records FTRs at their estimated fair value when purchased. Each accounting period, Cleco Power adjusts the carrying value of FTRs to their estimated fair value 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 Power’s Consolidated Balance Sheets.



CLECO
CLECO POWER		2018 FORM 10-K

Realized gains or losses on settled FTRs are recorded in Fuel used for electric generation on Cleco Power’s Consolidated Statements of Income. At December 31, 2018, Cleco Power’s Consolidated Balance Sheets reflected open FTR positions of

$23.4 million in Energy risk management assets and $0.5 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 7 — 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. 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 ~~rate swaps~~expense of its debt obligations.

At December 31, 2018, Cleco Power had no variable-rate debt outstanding.

At December 31, 2018, Cleco Power had no debt outstanding under its $300.0 million credit facility. The borrowing costs under the Cleco Power credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%.

Please refer to “— Commodity Price Risks” for a discussion of controls, transactions, VaR, and ~~treasury rate locks. For~~market value maturities associated with Cleco Power’s energy commodity activities.



CLECO
CLECO POWER		2018 FORM 10-K



ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Report of Independent Registered Public Accounting Firm

To the Board of Managers and Member of

Cleco Corporate Holdings LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco Corporate Holdings LLC and its subsidiaries (Successor and “the Company”) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the years ended December 31, ~~2015,~~2018 and ~~2014,~~ 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 Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended December 31, 2018 and 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

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

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 26, 2019

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2018 FORM 10-K



Report of Independent Registered Public Accounting Firm

To the Board of Managers and Member of

Cleco ~~did not enter into any contracts~~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 ~~mitigate~~April 12, 2016 in conformity with accounting principles generally accepted in the ~~volatility~~United States of America. In addition, in ~~interest rate risk.~~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		2018 FORM 10-K



CLECO

Consolidated Statements of Income
	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating revenue
Electric operations	$	1,181,907		$	1,097,632		$	802,592		$	281,154
Other operations	82,332			79,580			51,562			19,080
Gross operating revenue	1,264,239			1,177,212			854,154			300,234
Electric customer credits	(33,195		)	(1,566		)	(1,149		)	(364		)
Operating revenue, net	1,231,044			1,175,646			853,005			299,870
Operating expenses
Fuel used for electric generation	382,556			339,346			250,142			96,378
Power purchased for utility customers	168,180			152,913			92,337			27,249
Other operations and maintenance	197,038			197,610			138,298			59,929
Depreciation and amortization	170,414			166,854			116,990			44,076
Taxes other than income taxes	48,791			48,546			35,543			14,611
Merger transaction and commitment costs	19,514			5,152			174,786			34,912
Gain on sale of assets	(6		)	(2		)	—			(1,095		)
Total operating expenses	986,487			910,419			808,096			276,060
Operating income	244,557			265,227			44,909			23,810
Interest income	6,073			1,424			840			265
Allowance for equity funds used during construction	14,159			8,320			3,735			723
Other income	1,515			6,474			3,350			870
Other expense	(15,843		)	(13,373		)	(10,003		)	(4,037		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	131,348			125,200			90,852			22,330
Allowance for borrowed funds used during construction	(4,706		)	(2,287		)	(1,086		)	(207		)
Total interest charges	126,642			122,913			89,766			22,123
Income (loss) before income taxes	123,819			145,159			(46,935		)	(492		)
Federal and state income tax expense (benefit)	29,382			7,079			(22,822		)	3,468
Net income (loss)	$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Statements of Comprehensive Income
	SUCCESSOR								PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Net income (loss)	$	94,437	$	138,080		$	(24,113	)	$	(3,960	)
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $1,868, tax benefit of $2,764, and tax expense of $938 and $367, respectively)	5,296		(4,421		)	1,500			587
Amortization of interest rate derivatives to earnings (net of tax expense of $0, $0, $0, and $37, respectively)	—		—			—			60
Total other comprehensive income (loss), net of tax	5,296		(4,421		)	1,500			647
Comprehensive income (loss), net of tax	$	99,733	$	133,659		$	(22,613	)	$	(3,313	)
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018			2017
Assets
Current assets
Cash and cash equivalents	$	110,175		$	119,040
Restricted cash and cash equivalents	11,241			13,081
Customer accounts receivable (less allowance for doubtful accounts of $814 in 2018 and $1,457 in 2017)	50,043			60,117
Other accounts receivable	27,196			30,806
Unbilled revenue	35,314			36,398
Fuel inventory, at average cost	82,836			87,520
Materials and supplies, at average cost	92,671			85,404
Energy risk management assets	23,355			7,396
Accumulated deferred fuel	20,112			13,980
Cash surrender value of company-/trust-owned life insurance policies	80,391			83,117
Prepayments	7,911			9,050
Regulatory assets	22,461			24,670
Other current assets	1,256			1,146
Total current assets	564,962			571,725
Property, plant, and equipment
Property, plant, and equipment	3,728,477			3,594,525
Accumulated depreciation	(303,727		)	(192,348		)
Net property, plant, and equipment	3,424,750			3,402,177
Construction work in progress	354,045			186,629
Total property, plant, and equipment, net	3,778,795			3,588,806
Equity investment in investee	18,172			18,172
Goodwill	1,490,797			1,490,797
Prepayments	2,251			1,887
Restricted cash and cash equivalents	18,670			20,081
Note receivable	15,829			—
Regulatory assets	425,330			432,358
Intangible assets	84,307			114,850
Tax credit fund investment, net	—			4,355
Other deferred charges	37,701			35,351
Total assets	$	6,436,814		$	6,278,382
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018		2017
Liabilities and member’s equity
Liabilities
Current liabilities
Long-term debt and capital leases due within one year	$	21,128	$	19,193
Accounts payable	156,589		147,562
Customer deposits	61,736		58,582
Provision for rate refund	35,842		4,206
Taxes payable, net	43,674		22,698
Interest accrued	15,828		14,703
Energy risk management liabilities	468		352
Regulatory liabilities - other	2,496		—
Deferred compensation	10,753		12,132
Other current liabilities	30,536		20,926
Total current liabilities	379,050		300,354
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	608,030		614,812
Accumulated deferred investment tax credits	1,853		2,089
Postretirement benefit obligations	249,264		242,135
Regulatory liabilities - other	2,496		—
Regulatory liabilities - deferred taxes, net	155,537		140,426
Restricted storm reserve	15,485		14,469
Other deferred credits	25,874		31,635
Total long-term liabilities and deferred credits	1,058,539		1,045,566
Long-term debt and capital leases, net	2,874,485		2,836,105
Total liabilities	4,312,074		4,182,025
Commitments and contingencies (Note 16)
Member’s equity
Membership interest	2,069,376		2,069,376
Retained earnings	53,578		29,902
Accumulated other comprehensive income (loss)	1,786		(2,921		)
Total member’s equity	2,124,740		2,096,357
Total liabilities and member’s equity	$	6,436,814	$	6,278,382
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Statements of Cash Flows
	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating activities
Net income (loss)	$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	187,426			186,326			141,544			45,869
Gain on sales of assets	(6		)	(2		)	—			(1,095		)
Provision for doubtful accounts	797			2,778			4,473			1,212
Unearned compensation expense	5,837			3,745			1,147			3,276
Allowance for equity funds used during construction	(14,159		)	(8,320		)	(3,735		)	(723		)
Deferred income taxes	6,543			(41,966		)	(21,053		)	2,219
Deferred fuel costs	(18,549		)	11,909			(8,192		)	977
Cash surrender value of company-/trust-owned life insurance	2,726			(5,892		)	(2,561		)	(840		)
Changes in assets and liabilities
Accounts receivable	3,123			(25,584		)	(21,537		)	(1,865		)
Unbilled revenue	1,084			(2,129		)	(837		)	563
Fuel inventory and materials and supplies	(2,981		)	(44,995		)	2,880			19,312
Prepayments	153			2,852			(2,514		)	2,395
Accounts payable	18,898			14,705			5,183			8,348
Customer deposits	13,757			12,381			7,333			3,342
Provision for merger commitments	(3,273		)	(12,971		)	21,964			—
Postretirement benefit obligations	4,646			4,884			3,750			9,746
Regulatory assets and liabilities, net	3,032			12,531			13,750			5,178
Other deferred accounts	(9,748		)	(8,380		)	(9,441		)	6,878
Taxes accrued	20,976			23,118			(24,210		)	10,820
Interest accrued	1,124			(582		)	(11,104		)	17,909
Deferred compensation	(1,521		)	308			(799		)	(793		)
Other operating	3,439			2,632			(2,038		)	1,012
Net cash provided by operating activities	317,761			265,428			69,890			129,780
Investing activities
Additions to property, plant, and equipment	(291,061		)	(236,932		)	(144,444		)	(42,392		)
Allowance for equity funds used during construction	14,159			8,320			3,735			723
Proceeds from sale of property, plant, and equipment	995			17,499			766			1,932
Reimbursement for property loss	1,375			187			3,159			53
Contributions to equity investment in investee	—			—			—			(2,450		)
Return of equity investment in tax credit fund	2,775			7,502			901			476
Issuance of note receivable	(16,800		)	—			—			—
Other investing	397			(130		)	622			—
Net cash used in investing activities	(288,160		)	(203,554		)	(135,261		)	(41,658		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Statements of Cash Flows
	SUCCESSOR											PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018				FOR THE YEAR ENDED DEC. 31, 2017				APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Financing activities
Draws on credit facilities	—				179,000				15,000			3,000
Payments on credit facilities	—				(179,000		)		(15,000		)	(10,000		)
Issuances of long-term debt	50,000				125,000				1,680,000			—
Repayments of long-term debt	(19,193		)		(17,896		)		(1,668,268		)	(8,546		)
Payments for long-term debt prepayment costs	—				—				(18,569		)	—
Payment of financing costs	(791		)		(463		)		(8,655		)	(43		)
Dividends paid on common stock	—				—				(572		)	(24,579		)
Contribution from member	—				—				100,720			—
Distributions to member	(71,350		)		(84,065		)		(88,765		)	—
Other financing	(383		)		(1,819		)		(1,890		)	(717		)
Net cash (used in) provided by financing activities	(41,717		)		20,757				(5,999		)	(40,885		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(12,116		)		82,631				(71,370		)	47,237
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	152,202			⁽¹⁾	69,571				140,941			93,704
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	140,086		⁽²⁾	$	152,202		⁽¹⁾	$	69,571		$	140,941

Supplementary cash flow information
Interest paid, net of amount capitalized	$	124,154			$	118,009			$	97,927		$	2,478
Income taxes paid (refunded), net	$	272			$	(6	)		$	4,263		$	(481	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	56,450			$	31,083			$	17,599		$	10,619
Non-cash additions to property, plant, and equipment	$	1,224			$	3,015			$	—		$	—
Incurrence of capital lease obligation - barges	$	16,800			$	—			$	—		$	—
⁽¹⁾ Includes cash and cash equivalents of $119,040, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,081. ⁽²⁾ Includes cash and cash equivalents of $110,175, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,670. The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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, 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
Distributions to member	—			(71,350		)	—			(71,350		)
Net income	—			94,437			—			94,437
Other comprehensive income, net of tax	—			—			5,296			5,296
Reclassification of effect of tax rate change	—			589			(589		)	—
Balances, Dec. 31, 2018	$	2,069,376		$	53,578		$	1,786		$	2,124,740
⁽¹⁾At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included $61.1 million of common stock. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included premium on common stock of $414.6 million and $418.5 million, respectively. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included treasury stock of $20.5 million and $23.2 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 2016 Merger.
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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 (“the Company”) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in member’s equity, and cash flows for each of the three years ended December 31, 2018, 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 Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 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 26, 2019

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017			2016
Operating revenue
Electric operations	$	1,191,587		$	1,108,389		$	1,091,229
Other operations	82,330			77,522			68,573
Affiliate revenue	874			851			884
Gross operating revenue	1,274,791			1,186,762			1,160,686
Electric customer credits	(33,195		)	(1,566		)	(1,513		)
Operating revenue, net	1,241,596			1,185,196			1,159,173
Operating expenses
Fuel used for electric generation	382,556			339,346			346,520
Power purchased for utility customers	168,180			152,913			119,586
Other operations and maintenance	202,556			202,738			203,452
Depreciation and amortization	162,069			158,415			153,393
Taxes other than income taxes	47,267			46,539			48,287
Merger commitment costs	—			—			151,501
Gain on sale of asset	(4		)	—			(1,095		)
Total operating expenses	962,624			899,951			1,021,644
Operating income	278,972			285,245			137,529
Interest income	5,052			1,283			860
Allowance for equity funds used during construction	14,159			8,320			4,458
Other income	2,742			2,990			1,601
Other expense	(11,441		)	(10,407		)	(10,505		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	76,009			71,649			77,739
Allowance for borrowed funds used during construction	(4,706		)	(2,287		)	(1,293		)
Total interest charges	71,303			69,362			76,446
Income before income taxes	218,181			218,069			57,497
Federal and state income tax expense	55,924			67,331			18,369
Net income	$	162,257		$	150,738		$	39,128
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Comprehensive Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017			2016
Net income	$	162,257	$	150,738		$	39,128
Other comprehensive (loss) income, net of tax:
Postretirement benefits gain (loss) (net of tax expense of $968, tax benefit of $296, and tax expense of $2,163, respectively)	2,743		(472		)	3,459
Amortization of interest rate derivatives to earnings (net of tax expense of $90, $132, and $132, respectively)	254		211			211
Total other comprehensive (loss) income, net of tax	2,997		(261		)	3,670
Comprehensive income, net of tax	$	165,254	$	150,477		$	42,798
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018			2017
Assets
Utility plant and equipment
Property, plant, and equipment	$	5,015,004		$	4,893,484
Accumulated depreciation	(1,804,563		)	(1,712,590		)
Net property, plant, and equipment	3,210,441			3,180,894
Construction work in progress	351,828			185,507
Total utility plant and equipment, net	3,562,269			3,366,401
Current assets
Cash and cash equivalents	31,987			69,816
Restricted cash and cash equivalents	11,241			13,081
Customer accounts receivable (less allowance for doubtful accounts of $814 in 2018 and $1,457 in 2017)	50,043			60,117
Accounts receivable - affiliate	3,318			1,355
Other accounts receivable	24,523			30,680
Unbilled revenue	35,314			36,398
Fuel inventory, at average cost	82,836			87,520
Materials and supplies, at average cost	92,671			85,404
Energy risk management assets	23,355			7,396
Accumulated deferred fuel	20,112			13,980
Cash surrender value of company-owned life insurance policies	20,497			20,278
Prepayments	6,143			7,236
Regulatory assets	13,603			15,812
Other current assets	1,162			475
Total current assets	416,805			449,548
Equity investment in investee	18,172			18,172
Prepayments	2,251			1,887
Restricted cash and cash equivalents	18,649			20,060
Note receivable	15,829			—
Regulatory assets	261,569			257,408
Intangible asset	21,093			41,701
Other deferred charges	32,419			33,564
Total assets	$	4,349,056		$	4,188,741
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018		2017
Liabilities and member’s equity
Member’s equity	$	1,594,533	$	1,550,679
Long-term debt and capital leases, net	1,387,774		1,341,475
Total capitalization	2,982,307		2,892,154
Current liabilities
Long-term debt and capital leases due within one year	21,128		19,193
Accounts payable	146,314		134,374
Accounts payable - affiliate	7,843		8,697
Customer deposits	61,736		58,582
Provision for rate refund	35,842		4,206
Taxes payable, net	48,177		31,611
Interest accrued	8,252		7,083
Energy risk management liabilities	468		352
Regulatory liabilities - other	2,496		—
Other current liabilities	22,263		15,820
Total current liabilities	354,519		279,918
Commitments and contingencies (Note 16)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	630,765		656,362
Accumulated deferred investment tax credits	1,853		2,089
Postretirement benefit obligations	182,721		173,747
Regulatory liabilities - other	2,496		—
Regulatory liabilities - deferred taxes, net	155,537		140,426
Restricted storm reserve	15,485		14,469
Other deferred credits	23,373		29,576
Total long-term liabilities and deferred credits	1,012,230		1,016,669
Total liabilities and member’s equity	$	4,349,056	$	4,188,741
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017			2016
Operating activities
Net income	$	162,257		$	150,738		$	39,128
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	168,248			165,200			152,978
Gain on sales of asset	(4		)	—			(1,095		)
Provision for doubtful accounts	797			2,677			5,512
Unearned compensation expense	1,873			1,972			1,572
Allowance for equity funds used during construction	(14,159		)	(8,320		)	(4,458		)
Deferred income taxes	(11,545		)	(34,191		)	20,492
Deferred fuel costs	(18,549		)	11,909			(7,215		)
Changes in assets and liabilities
Accounts receivable	3,967			(25,696		)	(23,306		)
Accounts receivable, affiliate	426			1,865			2,612
Unbilled revenue	1,084			(2,129		)	(274		)
Fuel inventory and materials and supplies	(2,981		)	(44,995		)	22,192
Prepayments	107			2,745			228
Accounts payable	22,419			11,005			9,140
Accounts payable, affiliate	(4,700		)	1,349			(3,639		)
Customer deposits	13,757			12,381			10,675
Provision for merger commitments	(3,273		)	(12,971		)	21,964
Postretirement benefit obligations	4,252			4,849			5,076
Regulatory assets and liabilities, net	1,044			10,544			17,506
Other deferred accounts	(5,421		)	(8,137		)	(3,249		)
Taxes accrued	16,566			44,101			(29,535		)
Interest accrued	1,169			(59		)	(671		)
Other operating	2,354			2,241			(1,308		)
Net cash provided by operating activities	339,688			287,078			234,325
Investing activities
Additions to property, plant, and equipment	(289,153		)	(235,252		)	(186,143		)
Allowance for equity funds used during construction	14,159			8,320			4,458
Proceeds from sale of property, plant, and equipment	995			4,078			2,698
Reimbursement for property loss	1,375			187			3,212
Issuance of note receivable	(16,800		)	—			—
Contributions to equity investment in investee	—			—			(2,450		)
Other investing	397			500			622
Net cash used in investing activities	(289,027		)	(222,167		)	(177,603		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018				2017				2016
Financing activities
Draws on credit facility	—				106,000				15,000
Payments on credit facility	—				(106,000		)		(15,000		)
Issuances of long-term debt	50,000				125,000				330,000
Repayments of long-term debt	(19,193		)		(17,896		)		(326,814		)
Payments for long-term debt prepayment costs	—				—				(18,569		)
Contribution from member	—				—				50,000
Distributions to member	(121,400		)		(135,000		)		(110,000		)
Other financing	(1,148		)		(2,013		)		(4,526		)
Net cash used in financing activities	(91,741		)		(29,909		)		(79,909		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(41,080		)		35,002				(23,187		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	102,957			⁽¹⁾	67,955				91,142
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	61,877		⁽²⁾	$	102,957		⁽¹⁾	$	67,955

Supplementary cash flow information
Interest paid, net of amount capitalized	$	70,357			$	65,984			$	74,016
Income taxes refunded, net	$	—			$	—			$	(485	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	55,718			$	30,883			$	16,755
Non-cash additions to property, plant, and equipment	$	1,224			$	3,015			$	—
Incurrence of capital lease obligation - barges	$	16,800			$	—			$	—
⁽¹⁾ Includes cash and cash equivalents of $69,816, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,060. ⁽²⁾ Includes cash and cash equivalents of $31,987, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,649. The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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, 2015	$	1,569,496		$	(17,092	)	$	1,552,404
Contribution from member	50,000			—			50,000
Distributions to member	(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 member	(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
Distributions to member	(121,400		)	—			(121,400		)
Net income	162,257			—			162,257
Other comprehensive income, net of tax	—			2,997			2,997
Reclassification of effect of tax rate change	2,496			(2,496		)	—
Balances, Dec. 31, 2018	$	1,607,715		$	(13,182	)	$	1,594,533
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



Index to Applicable Notes to the Financial Statements of Registrants



Note 1	The Company	Cleco and Cleco Power
Note 2	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 3	Revenue Recognition	Cleco and Cleco Power
Note 4	Business Combinations	Cleco
Note 5	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 6	Jointly Owned Generation Units	Cleco and Cleco Power
Note 7	Fair Value Accounting	Cleco and Cleco Power
Note 8	Debt	Cleco and Cleco Power
Note 9	Common Stock	Cleco and Cleco Power
Note 10	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 11	Income Taxes	Cleco and Cleco Power
Note 12	Disclosures about Segments	Cleco
Note 13	Regulation and Rates	Cleco and Cleco Power
Note 14	Variable Interest Entities	Cleco and Cleco Power
Note 15	Operating Leases	Cleco and Cleco Power
Note 16	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 17	Affiliate Transactions	Cleco and Cleco Power
Note 18	Intangible Assets and Goodwill	Cleco and Cleco Power
Note 19	Accumulated Other Comprehensive Loss	Cleco and Cleco Power
Note 20	Miscellaneous Financial Information (Unaudited)	Cleco and Cleco Power
Note 21	Cleco Cajun Transaction	Cleco



Notes to the Financial Statements



Note 1 — The Company

Cleco is composed of the following:

Cleco Power, a regulated electric utility subsidiary, which owns nine generating units with a total nameplate capacity of 3,310 MW and serves approximately 291,000 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.

Cleco’s other operations consist of 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.


◦	Cleco Cajun, a subsidiary formed to facilitate the Cleco Cajun Transaction. For more information on the transaction, see Note 21 — “Cleco Cajun Transaction.”



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.

Reclassifications

Goodwill



CLECO
CLECO POWER		2018 FORM 10-K

an event occurs or circumstances change that would indicate the carrying amount may be impaired. For more information on goodwill, see Note 18 — “Intangible Assets and Goodwill.”

Intangible Assets

Statements of Cash Flows

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 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 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 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 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 5 — “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

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 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.

In March 2018, Cleco Power recorded a $1.5 million decrease to its ARO related to the retirement of certain ash 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, 2018, 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 5 — “Regulatory Assets and Liabilities — AROs.”

Property, Plant, and Equipment

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, 2018, and 2017 were $7.2 million and $7.9 million, respectively. The amounts of unamortized computer



CLECO
CLECO POWER		2018 FORM 10-K

software costs on Cleco Power’s Consolidated Balance Sheets at December 31, 2018, and 2017 were $5.8 million and $6.6 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, 2018, 2017, and 2016 is shown in the following tables:



Cleco
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Amortization	$	2,154	$	2,367	$	2,351	$	921



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017		2016
Amortization	$	1,607	$	1,887	$	2,405

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 2018, 2017, and 2016 was 2.80%, 2.72%, and 2.68%, respectively.

Depreciation on property, plant, and equipment is calculated primarily on a straight-line basis over the useful lives of the assets, 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, 2018, and 2017, Cleco and Cleco Power’s property, plant, and equipment consisted of the following:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018			2017
Utility plants
Generation	$	1,949,042		$	1,908,344
Distribution	1,081,650			1,015,472
Transmission	519,269			512,428
Other utility plant	174,010			153,900
Other property, plant, and equipment	4,506			4,381
Total property, plant, and equipment	3,728,477			3,594,525
Accumulated depreciation	(303,727		)	(192,348		)
Net property, plant, and equipment	$	3,424,750		$	3,402,177



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018			2017
Regulated utility plants
Generation	$	2,476,733		$	2,442,987
Distribution	1,523,885			1,462,193
Transmission	731,432			725,199
Other utility plant	282,954			263,105
Total property, plant, and equipment	5,015,004			4,893,484
Accumulated depreciation	(1,804,563		)	(1,712,590		)
Net property, plant, and equipment	$	3,210,441		$	3,180,894

During 2018, Cleco Power’s regulated utility property, plant, and equipment increased primarily due to general installation and rehabilitation of transmission, distribution, and generation assets.

Deferred Project Costs

Cleco Power defers costs related to the initial stage of a construction project during which time the feasibility of the construction of property, plant, and equipment is being investigated. At December 31, 2018, and 2017, Cleco Power had deferred $1.4 millionand $3.2 million, respectively, for projects that are in the initial stages of development. These amounts are classified as Other deferred charges on Cleco Power’s Consolidated Balance Sheets.

Fuel Inventory and Materials and Supplies

Fuel inventory consists primarily of petroleum coke, coal, limestone, lignite, and natural gas used to generate electricity.

Both fuel inventory and materials and supplies are recorded at the lower of cost or market value using the average cost method and are issued from stock using the average cost of existing stock. Materials and supplies are recorded when purchased and subsequently charged to expense or capitalized to property, plant, and equipment when installed.

Accounts Receivable

Reserves



CLECO
CLECO POWER		2018 FORM 10-K

insurance, Cleco Power maintains reserves. At December 31, 2018, and 2017, the general liability and workers compensation reserves together were $4.8 million and $4.5 million, respectively.

Additionally, Cleco maintains directors and officers insurance to protect managers from claims which may arise from their decisions and actions taken within the scope of their regular duties.

Cash Equivalents

Cleco considers highly liquid, marketable securities, and other similar instruments with original maturity dates of three months or less to be cash equivalents.

Restricted Cash and Cash Equivalents

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,505	$	8,597
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	536		3,284
Total current	11,241		13,081
Non-current
Diversified Lands’ mitigation escrow	21		21
Cleco Power’s future storm restoration costs	15,391		14,456
Cleco Power’s charitable contributions	2,753		3,575
Cleco Power’s rate credit escrow	505		2,029
Total non-current	18,670		20,081
Total restricted cash and cash equivalents	$	29,911	$	33,162



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,505	$	8,597
Charitable contributions	1,200		1,200
Rate credit escrow	536		3,284
Total current	11,241		13,081
Non-current
Future storm restoration costs	15,391		14,456
Charitable contributions	2,753		3,575
Rate credit escrow	505		2,029
Total non-current	18,649		20,060
Total restricted cash and cash equivalents	$	29,890	$	33,141

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. The change from December 31, 2017, to December 31, 2018, was due to Cleco Katrina/Rita collecting $22.7 million net of administration fees, partially offset by $19.2 million for scheduled storm recovery bond principal payments and $2.6 million for related interest payments.

Equity Investments

Cleco and Cleco Power account for investments in unconsolidated affiliated companies using the equity method of accounting. The amounts reported on Cleco and Cleco Power’s Consolidated Balance Sheets represent assets contributed by Cleco or Cleco Power, plus their share of the net income of the affiliate, less any distributions of earnings (dividends) received from the affiliate. The revenues and expenses (excluding income taxes) of these affiliates are netted and reported on one line item as equity income from investees on Cleco and Cleco Power’s Consolidated Statements of Income.

Cleco evaluates for impairments of equity method investments at each balance sheet date to determine if events and circumstances have occurred that indicate a possible other-than-temporary decline in the fair value of the investment and the possible inability to recover the carrying value through operations. Cleco uses estimates of the future cash flows from the investee and observable market transactions in order to calculate fair value and recoverability. An impairment is recognized when an other-than-temporary decline in market value occurs and recovery of the carrying value is not probable. There were no impairments recorded for 2018, 2017, or 2016. For more information on Cleco’s equity investments, see Note 14 — “Variable Interest Entities.”

Income Taxes

Cleco accounts for income taxes under the asset and liability method. Cleco provides for federal and state income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are classified as non-current on Cleco and Cleco Power’s Consolidated Balance Sheets. Cleco’s income tax expense and related regulatory assets and liabilities could be affected by changes in its assumptions and estimates and by ultimate resolution of assumptions and estimates with taxing authorities. Cleco Group files a federal income tax return for all wholly owned subsidiaries. Cleco Power computes its federal and state income taxes as if it were a stand-alone taxpayer. The LPSC generally requires Cleco Power to flow the effects of state income taxes to customers immediately. The LPSC specifically requires that the state tax benefits associated with the deductions related to certain storm damages be normalized. For more information on income taxes, see Note 11 — “Income Taxes.”

Recent Authoritative Guidance

~~The Registrants adopted, or will adopt, the~~For a discussion of recent authoritative guidance, ~~listed below on their respective effective dates.~~

In May 2014, FASB amended the accounting guidance for revenue recognition. The amended guidance affects entities that enter into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity must identify the performance obligations in a contractsee Item 8, “Financial Statements and the transaction price, and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing, and uncertainty of revenue and cash flow arising from contracts. In

August 2015, FASB amended the guidance to provide for a one-year deferral of the effective date. The standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Cleco does not plan to early adopt the amended guidance. Reporting entities have the option of using either a full retrospective or a modified retrospective approach. Management will evaluate the advantages and disadvantages of each transition method before selecting the method of adoption. Management is assessing the potential areas of impact, including the identification of specific contracts that would fall under the scope of this guidance. Management will continue evaluating the impact that the adoption of this guidance will have on the results of operations, financial condition, and cash flows of the Registrants.

In February 2015, FASB amended the accounting guidance for the consolidation analysis. All legal entities are subject to re-evaluation under this revised consolidation model. The adoption of this guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted, including adoption in an interim period. Reporting entities may apply these amendments using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. This guidance will not have an impact on the results of operations, financial condition, or cash flows of the Registrants.

In April 2015, FASB amended the accounting guidance to simplify the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The adoption of this guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. Entities should apply these amendments on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. PriorSupplementary Data — Notes to the ~~application~~Financial Statements — Note 2 — Summary of the new guidance, Cleco recorded debt issuance costs in Other deferred charges on Cleco’s Consolidated Balance Sheets. Cleco early adopted the revisions to this amendment beginning with the December 31, 2015, reporting period. The adoption of this guidance did not have an impact on the results of operations, financial condition, or cash flows of the Registrants. For more information on debt issuance costs, see “— Debt Issuance Costs, Premiums, and Discounts” and Note 6Significant Accounting Policies — ~~“Debt.~~Recent Authoritative Guidance.”

In April 2015, FASB issued accounting guidance for a customer’s accounting for fees paid in a cloud computing arrangement. This amendment provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The adoption of this guidance is effective for annual periods beginning after December 15, 2015, including interim



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~periods within that reporting period. Early adoption is permitted. Entities can elect~~



RISK OVERVIEW

Cleco Power evaluates derivatives and hedging activities to ~~adopt~~determine whether market risk-sensitive instruments and positions are required to be marked-to-market. When positions close, actual gains or losses are included in the amendments either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The adoption of this guidance will not impact the results of operations, financial condition, or cash flowsFAC and reflected on customers’ bills as a component of the ~~Registrants.~~FAC.

~~In April 2015, FASB amended the accounting guidance for fair value measurements. This guidance permits entities,~~Cleco’s exposure to market risk, as ~~a practical expedient, to measure~~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 ~~certain investments using~~power, FTRs, and natural gas. Management’s views on market risk are not necessarily indicative of actual results, nor do they represent the ~~net asset value per share~~maximum possible gains or losses. The views do represent, within the parameters disclosed, what management estimates may happen.

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 ~~investment. These investments are currently categorized within~~federal government, including a failure to increase the ~~fair value hierarchy~~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 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 Holdings and Cleco Power pay fees and interest under their respective credit facilities based on the basis of whether the investment is redeemable at net asset value on the measurement date, never redeemable at net asset value, or redeemable at net asset value at a future date. This amendment removed the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendment also removed the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The adoption of this guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. These amendments should be applied retrospectively to all periods presented. The retrospective approach requires that an investment for which fair value is measured using the net asset value per share practical expedient be removed from the fair value hierarchy in all periods presented. Cleco early adopted the revisions to this amendment beginning with the December 31, 2015, reporting period. The adoption of this guidance did not have an impact on the results of operations, financial condition, or cash flows of the Registrants.highest rating held. For more information, see ~~Note 8~~Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — ~~“Pension Plan~~Financial Condition — Liquidity and ~~Employee Benefits~~Capital Resources — ~~Fair Value Disclosures.~~General Considerations and Credit-Related Risks.”

~~In July 2015, FASB issued the accounting guidance~~

Interest Rate Risks

Cleco monitors its mix of fixed- and variable-rate debt obligations in light of changing market conditions and from time to simplify the measurement of inventory. This guidance requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this guidance is effectivetime may alter that mix, for ~~annual periods beginning after December 15, 2016, including interim periods within that reporting period. These amendments should be applied prospectively~~example, refinancing balances outstanding under its variable-rate credit facility with ~~earlier application permitted as~~fixed-rate debt. Calculations of the beginning of an interim or annual reporting period. Management is currently evaluating this guidance, but does not expect it to have an impact on the results of operations, financial condition, or cash flows of the Registrants.

In August 2015, FASB amended the derivatives and hedging accounting guidance to allow the application of the normal-purchases and normal-sales scope exception to certain electricity contracts within nodal energy markets. The amendments specify that purchases and sales of electricity on a forward basis within nodal energy markets do not constitute net settlement of a contract. The adoption of this guidance is effective immediately and should be applied prospectively. This amended guidance preserves Cleco Power’s current accounting elections; therefore, the adoption of this guidancechanges in fair market

~~did not have an impact on the results of operations, financial condition, or cash flows~~value and interest expense of the ~~Registrants.~~debt securities are made over a one-year period.

~~In September 2015, FASB amended~~Sensitivity to changes in interest rates for variable-rate obligations is computed by assuming a 1% change in the business combinations guidance to simplify the accounting for measurement-period adjustments. This guidance eliminates the requirement to retrospectively account for these adjustments. The adoption of this guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. These amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted. Currently, this guidance is notcurrent interest rate applicable to such debt.

At December 31, 2018, Cleco ~~and as~~Holdings had no debt outstanding under its $100.0 million credit facility. The borrowing costs under Cleco Holdings’ credit facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%.

At December 31, 2018, Cleco Holdings had a ~~result, will not have an impact on~~$300.0 million long-term variable rate bank term loan outstanding. Amounts outstanding under the ~~results of operations, financial condition, or cash flows of~~bank term loan bear interest at LIBOR plus 1.625%. At December 31, 2018, the ~~Registrants. However, if~~all-in rate was 3.08%. Each 1% increase in the ~~Merger is completed, this guidance will be adopted by the Registrants.~~

~~In November 2015, FASB amended the income taxes guidance~~interest rate applicable to ~~simplify the balance sheet classification of deferred taxes. This guidance requires that deferred tax liabilities and assets be classified as non-current~~such debt would result in a ~~classified statement~~decrease in Cleco Holdings’ pretax earnings of $3.0 million.

For information on variable-rate debt related to Cleco Power, see “— Cleco Power.”

Commodity Price Risks

Management believes Cleco has controls in place to minimize the risks involved in its financial ~~position. The adoption~~and energy commodity activities. Independent controls over energy commodity functions consist of ~~this guidance is effective~~a middle office (risk management), a back office (accounting), and regulatory compliance staff. All forward commodity positions have established risk limits and are monitored through a daily market report that identifies the VaR, current market conditions, and concentration of energy market positions.

Cleco Power provides fuel for ~~annual periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted.~~generation and purchases power to meet the power demands of customers. Cleco ~~early adopted this amended guidance beginning~~Power may enter into positions to mitigate the volatility in customer fuel costs, as encouraged by various LPSC orders. These positions would be marked-to-market with the ~~December 31, 2015, reporting period, with prospective application. The adoption of this guidance did not have an impact on the results of operations, financial condition,~~resulting gain or ~~cash flows of the Registrants.~~

In January 2016, FASB amended the guidance for recognition and measurement of financial assets and liabilities. These amendments address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of this guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. Management does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.

In February 2016, FASB amended the guidance to account for leases. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilitiesloss recorded on the balance sheet as a component of the accumulated deferred fuel asset or liability and ~~disclosing key~~a component of the energy risk management assets or liabilities. When these positions close, actual gains or losses would be included in the FAC and reflected in customers’ bills as a component of the fuel charge. There were no open natural gas positions at December 31, 2018. Cleco Power is currently working with the LPSC to establish a natural gas hedging pilot program. For more information ~~about leasing arrangements.~~on the program, see Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 2 — Summary of Significant Accounting Policies — Risk Management.”

Cleco Power purchases FTRs in auctions facilitated by MISO. The ~~adoption~~majority of ~~this guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption~~its FTRs are purchased in annual auctions during the second quarter, but Cleco Power may purchase additional FTRs in monthly auctions. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be ~~permitted. Management is evaluating~~incurred in serving Cleco Power’s customer load. FTRs are not designated as hedging instruments for accounting purposes. Cleco Power records FTRs at their estimated fair value when purchased. Each accounting period, Cleco Power adjusts the ~~impact that the adoption~~carrying value of ~~this guidance will have~~FTRs to their estimated fair value based on the ~~results of operations, financial condition, and cash flows of the Registrants.~~most recent MISO FTR auction prices. Unrealized gains or losses on FTRs held by Cleco Power are included in Accumulated deferred fuel on Cleco Power’s Consolidated Balance Sheets.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



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. 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.

At December 31, 2018, Cleco Power had no variable-rate debt outstanding.

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
CLECO POWER		2018 FORM 10-K

~~Earnings per Average Common Share~~

~~The following table shows the calculation of basic and diluted earnings per share:~~

FOR THE YEAR ENDED DEC. 31,

2015

2014

2013
(THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS) INCOME
SHARES

PER SHARE
AMOUNT

INCOME
SHARES

PER SHARE
AMOUNT

INCOME
SHARES

PER SHARE
AMOUNT

Basic net income applicable to common stock $ 133,669
60,476,066
$ 2.21
$ 154,739
60,406,001
$ 2.56
$ 160,685
60,434,510
$ 2.66
Effect of dilutive securities

Add: restricted stock (LTIP) 213,203
195,457
285,580

Diluted net income applicable to common stock $ 133,669
60,689,269
$ 2.20
$ 154,739
60,601,458
$ 2.55
$ 160,685
60,720,090
$ 2.65



ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Report of Independent Registered Public Accounting Firm

To the Board of Managers and Member of

Cleco Corporate Holdings LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleco Corporate Holdings LLC and its subsidiaries (Successor and “the Company”) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2018 and 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 Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended December 31, 2018 and 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

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

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 26, 2019

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2018 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		2018 FORM 10-K



CLECO

Consolidated Statements of Income
	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating revenue
Electric operations	$	1,181,907		$	1,097,632		$	802,592		$	281,154
Other operations	82,332			79,580			51,562			19,080
Gross operating revenue	1,264,239			1,177,212			854,154			300,234
Electric customer credits	(33,195		)	(1,566		)	(1,149		)	(364		)
Operating revenue, net	1,231,044			1,175,646			853,005			299,870
Operating expenses
Fuel used for electric generation	382,556			339,346			250,142			96,378
Power purchased for utility customers	168,180			152,913			92,337			27,249
Other operations and maintenance	197,038			197,610			138,298			59,929
Depreciation and amortization	170,414			166,854			116,990			44,076
Taxes other than income taxes	48,791			48,546			35,543			14,611
Merger transaction and commitment costs	19,514			5,152			174,786			34,912
Gain on sale of assets	(6		)	(2		)	—			(1,095		)
Total operating expenses	986,487			910,419			808,096			276,060
Operating income	244,557			265,227			44,909			23,810
Interest income	6,073			1,424			840			265
Allowance for equity funds used during construction	14,159			8,320			3,735			723
Other income	1,515			6,474			3,350			870
Other expense	(15,843		)	(13,373		)	(10,003		)	(4,037		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	131,348			125,200			90,852			22,330
Allowance for borrowed funds used during construction	(4,706		)	(2,287		)	(1,086		)	(207		)
Total interest charges	126,642			122,913			89,766			22,123
Income (loss) before income taxes	123,819			145,159			(46,935		)	(492		)
Federal and state income tax expense (benefit)	29,382			7,079			(22,822		)	3,468
Net income (loss)	$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Statements of Comprehensive Income
	SUCCESSOR								PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Net income (loss)	$	94,437	$	138,080		$	(24,113	)	$	(3,960	)
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $1,868, tax benefit of $2,764, and tax expense of $938 and $367, respectively)	5,296		(4,421		)	1,500			587
Amortization of interest rate derivatives to earnings (net of tax expense of $0, $0, $0, and $37, respectively)	—		—			—			60
Total other comprehensive income (loss), net of tax	5,296		(4,421		)	1,500			647
Comprehensive income (loss), net of tax	$	99,733	$	133,659		$	(22,613	)	$	(3,313	)
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018			2017
Assets
Current assets
Cash and cash equivalents	$	110,175		$	119,040
Restricted cash and cash equivalents	11,241			13,081
Customer accounts receivable (less allowance for doubtful accounts of $814 in 2018 and $1,457 in 2017)	50,043			60,117
Other accounts receivable	27,196			30,806
Unbilled revenue	35,314			36,398
Fuel inventory, at average cost	82,836			87,520
Materials and supplies, at average cost	92,671			85,404
Energy risk management assets	23,355			7,396
Accumulated deferred fuel	20,112			13,980
Cash surrender value of company-/trust-owned life insurance policies	80,391			83,117
Prepayments	7,911			9,050
Regulatory assets	22,461			24,670
Other current assets	1,256			1,146
Total current assets	564,962			571,725
Property, plant, and equipment
Property, plant, and equipment	3,728,477			3,594,525
Accumulated depreciation	(303,727		)	(192,348		)
Net property, plant, and equipment	3,424,750			3,402,177
Construction work in progress	354,045			186,629
Total property, plant, and equipment, net	3,778,795			3,588,806
Equity investment in investee	18,172			18,172
Goodwill	1,490,797			1,490,797
Prepayments	2,251			1,887
Restricted cash and cash equivalents	18,670			20,081
Note receivable	15,829			—
Regulatory assets	425,330			432,358
Intangible assets	84,307			114,850
Tax credit fund investment, net	—			4,355
Other deferred charges	37,701			35,351
Total assets	$	6,436,814		$	6,278,382
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018		2017
Liabilities and member’s equity
Liabilities
Current liabilities
Long-term debt and capital leases due within one year	$	21,128	$	19,193
Accounts payable	156,589		147,562
Customer deposits	61,736		58,582
Provision for rate refund	35,842		4,206
Taxes payable, net	43,674		22,698
Interest accrued	15,828		14,703
Energy risk management liabilities	468		352
Regulatory liabilities - other	2,496		—
Deferred compensation	10,753		12,132
Other current liabilities	30,536		20,926
Total current liabilities	379,050		300,354
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	608,030		614,812
Accumulated deferred investment tax credits	1,853		2,089
Postretirement benefit obligations	249,264		242,135
Regulatory liabilities - other	2,496		—
Regulatory liabilities - deferred taxes, net	155,537		140,426
Restricted storm reserve	15,485		14,469
Other deferred credits	25,874		31,635
Total long-term liabilities and deferred credits	1,058,539		1,045,566
Long-term debt and capital leases, net	2,874,485		2,836,105
Total liabilities	4,312,074		4,182,025
Commitments and contingencies (Note 16)
Member’s equity
Membership interest	2,069,376		2,069,376
Retained earnings	53,578		29,902
Accumulated other comprehensive income (loss)	1,786		(2,921		)
Total member’s equity	2,124,740		2,096,357
Total liabilities and member’s equity	$	6,436,814	$	6,278,382
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Statements of Cash Flows
	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating activities
Net income (loss)	$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	187,426			186,326			141,544			45,869
Gain on sales of assets	(6		)	(2		)	—			(1,095		)
Provision for doubtful accounts	797			2,778			4,473			1,212
Unearned compensation expense	5,837			3,745			1,147			3,276
Allowance for equity funds used during construction	(14,159		)	(8,320		)	(3,735		)	(723		)
Deferred income taxes	6,543			(41,966		)	(21,053		)	2,219
Deferred fuel costs	(18,549		)	11,909			(8,192		)	977
Cash surrender value of company-/trust-owned life insurance	2,726			(5,892		)	(2,561		)	(840		)
Changes in assets and liabilities
Accounts receivable	3,123			(25,584		)	(21,537		)	(1,865		)
Unbilled revenue	1,084			(2,129		)	(837		)	563
Fuel inventory and materials and supplies	(2,981		)	(44,995		)	2,880			19,312
Prepayments	153			2,852			(2,514		)	2,395
Accounts payable	18,898			14,705			5,183			8,348
Customer deposits	13,757			12,381			7,333			3,342
Provision for merger commitments	(3,273		)	(12,971		)	21,964			—
Postretirement benefit obligations	4,646			4,884			3,750			9,746
Regulatory assets and liabilities, net	3,032			12,531			13,750			5,178
Other deferred accounts	(9,748		)	(8,380		)	(9,441		)	6,878
Taxes accrued	20,976			23,118			(24,210		)	10,820
Interest accrued	1,124			(582		)	(11,104		)	17,909
Deferred compensation	(1,521		)	308			(799		)	(793		)
Other operating	3,439			2,632			(2,038		)	1,012
Net cash provided by operating activities	317,761			265,428			69,890			129,780
Investing activities
Additions to property, plant, and equipment	(291,061		)	(236,932		)	(144,444		)	(42,392		)
Allowance for equity funds used during construction	14,159			8,320			3,735			723
Proceeds from sale of property, plant, and equipment	995			17,499			766			1,932
Reimbursement for property loss	1,375			187			3,159			53
Contributions to equity investment in investee	—			—			—			(2,450		)
Return of equity investment in tax credit fund	2,775			7,502			901			476
Issuance of note receivable	(16,800		)	—			—			—
Other investing	397			(130		)	622			—
Net cash used in investing activities	(288,160		)	(203,554		)	(135,261		)	(41,658		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO

Consolidated Statements of Cash Flows
	SUCCESSOR											PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018				FOR THE YEAR ENDED DEC. 31, 2017				APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Financing activities
Draws on credit facilities	—				179,000				15,000			3,000
Payments on credit facilities	—				(179,000		)		(15,000		)	(10,000		)
Issuances of long-term debt	50,000				125,000				1,680,000			—
Repayments of long-term debt	(19,193		)		(17,896		)		(1,668,268		)	(8,546		)
Payments for long-term debt prepayment costs	—				—				(18,569		)	—
Payment of financing costs	(791		)		(463		)		(8,655		)	(43		)
Dividends paid on common stock	—				—				(572		)	(24,579		)
Contribution from member	—				—				100,720			—
Distributions to member	(71,350		)		(84,065		)		(88,765		)	—
Other financing	(383		)		(1,819		)		(1,890		)	(717		)
Net cash (used in) provided by financing activities	(41,717		)		20,757				(5,999		)	(40,885		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(12,116		)		82,631				(71,370		)	47,237
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	152,202			⁽¹⁾	69,571				140,941			93,704
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	140,086		⁽²⁾	$	152,202		⁽¹⁾	$	69,571		$	140,941

Supplementary cash flow information
Interest paid, net of amount capitalized	$	124,154			$	118,009			$	97,927		$	2,478
Income taxes paid (refunded), net	$	272			$	(6	)		$	4,263		$	(481	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	56,450			$	31,083			$	17,599		$	10,619
Non-cash additions to property, plant, and equipment	$	1,224			$	3,015			$	—		$	—
Incurrence of capital lease obligation - barges	$	16,800			$	—			$	—		$	—
⁽¹⁾ Includes cash and cash equivalents of $119,040, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,081. ⁽²⁾ Includes cash and cash equivalents of $110,175, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,670. The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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, 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
Distributions to member	—			(71,350		)	—			(71,350		)
Net income	—			94,437			—			94,437
Other comprehensive income, net of tax	—			—			5,296			5,296
Reclassification of effect of tax rate change	—			589			(589		)	—
Balances, Dec. 31, 2018	$	2,069,376		$	53,578		$	1,786		$	2,124,740
⁽¹⁾At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included $61.1 million of common stock. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included premium on common stock of $414.6 million and $418.5 million, respectively. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included treasury stock of $20.5 million and $23.2 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 2016 Merger.
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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

Basis for Opinion

/s/ PricewaterhouseCoopers LLP

New Orleans, Louisiana

February 26, 2019

We have served as the Company’s auditor since 2016.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017			2016
Operating revenue
Electric operations	$	1,191,587		$	1,108,389		$	1,091,229
Other operations	82,330			77,522			68,573
Affiliate revenue	874			851			884
Gross operating revenue	1,274,791			1,186,762			1,160,686
Electric customer credits	(33,195		)	(1,566		)	(1,513		)
Operating revenue, net	1,241,596			1,185,196			1,159,173
Operating expenses
Fuel used for electric generation	382,556			339,346			346,520
Power purchased for utility customers	168,180			152,913			119,586
Other operations and maintenance	202,556			202,738			203,452
Depreciation and amortization	162,069			158,415			153,393
Taxes other than income taxes	47,267			46,539			48,287
Merger commitment costs	—			—			151,501
Gain on sale of asset	(4		)	—			(1,095		)
Total operating expenses	962,624			899,951			1,021,644
Operating income	278,972			285,245			137,529
Interest income	5,052			1,283			860
Allowance for equity funds used during construction	14,159			8,320			4,458
Other income	2,742			2,990			1,601
Other expense	(11,441		)	(10,407		)	(10,505		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	76,009			71,649			77,739
Allowance for borrowed funds used during construction	(4,706		)	(2,287		)	(1,293		)
Total interest charges	71,303			69,362			76,446
Income before income taxes	218,181			218,069			57,497
Federal and state income tax expense	55,924			67,331			18,369
Net income	$	162,257		$	150,738		$	39,128
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Comprehensive Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017			2016
Net income	$	162,257	$	150,738		$	39,128
Other comprehensive (loss) income, net of tax:
Postretirement benefits gain (loss) (net of tax expense of $968, tax benefit of $296, and tax expense of $2,163, respectively)	2,743		(472		)	3,459
Amortization of interest rate derivatives to earnings (net of tax expense of $90, $132, and $132, respectively)	254		211			211
Total other comprehensive (loss) income, net of tax	2,997		(261		)	3,670
Comprehensive income, net of tax	$	165,254	$	150,477		$	42,798
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018			2017
Assets
Utility plant and equipment
Property, plant, and equipment	$	5,015,004		$	4,893,484
Accumulated depreciation	(1,804,563		)	(1,712,590		)
Net property, plant, and equipment	3,210,441			3,180,894
Construction work in progress	351,828			185,507
Total utility plant and equipment, net	3,562,269			3,366,401
Current assets
Cash and cash equivalents	31,987			69,816
Restricted cash and cash equivalents	11,241			13,081
Customer accounts receivable (less allowance for doubtful accounts of $814 in 2018 and $1,457 in 2017)	50,043			60,117
Accounts receivable - affiliate	3,318			1,355
Other accounts receivable	24,523			30,680
Unbilled revenue	35,314			36,398
Fuel inventory, at average cost	82,836			87,520
Materials and supplies, at average cost	92,671			85,404
Energy risk management assets	23,355			7,396
Accumulated deferred fuel	20,112			13,980
Cash surrender value of company-owned life insurance policies	20,497			20,278
Prepayments	6,143			7,236
Regulatory assets	13,603			15,812
Other current assets	1,162			475
Total current assets	416,805			449,548
Equity investment in investee	18,172			18,172
Prepayments	2,251			1,887
Restricted cash and cash equivalents	18,649			20,060
Note receivable	15,829			—
Regulatory assets	261,569			257,408
Intangible asset	21,093			41,701
Other deferred charges	32,419			33,564
Total assets	$	4,349,056		$	4,188,741
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018		2017
Liabilities and member’s equity
Member’s equity	$	1,594,533	$	1,550,679
Long-term debt and capital leases, net	1,387,774		1,341,475
Total capitalization	2,982,307		2,892,154
Current liabilities
Long-term debt and capital leases due within one year	21,128		19,193
Accounts payable	146,314		134,374
Accounts payable - affiliate	7,843		8,697
Customer deposits	61,736		58,582
Provision for rate refund	35,842		4,206
Taxes payable, net	48,177		31,611
Interest accrued	8,252		7,083
Energy risk management liabilities	468		352
Regulatory liabilities - other	2,496		—
Other current liabilities	22,263		15,820
Total current liabilities	354,519		279,918
Commitments and contingencies (Note 16)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	630,765		656,362
Accumulated deferred investment tax credits	1,853		2,089
Postretirement benefit obligations	182,721		173,747
Regulatory liabilities - other	2,496		—
Regulatory liabilities - deferred taxes, net	155,537		140,426
Restricted storm reserve	15,485		14,469
Other deferred credits	23,373		29,576
Total long-term liabilities and deferred credits	1,012,230		1,016,669
Total liabilities and member’s equity	$	4,349,056	$	4,188,741
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017			2016
Operating activities
Net income	$	162,257		$	150,738		$	39,128
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	168,248			165,200			152,978
Gain on sales of asset	(4		)	—			(1,095		)
Provision for doubtful accounts	797			2,677			5,512
Unearned compensation expense	1,873			1,972			1,572
Allowance for equity funds used during construction	(14,159		)	(8,320		)	(4,458		)
Deferred income taxes	(11,545		)	(34,191		)	20,492
Deferred fuel costs	(18,549		)	11,909			(7,215		)
Changes in assets and liabilities
Accounts receivable	3,967			(25,696		)	(23,306		)
Accounts receivable, affiliate	426			1,865			2,612
Unbilled revenue	1,084			(2,129		)	(274		)
Fuel inventory and materials and supplies	(2,981		)	(44,995		)	22,192
Prepayments	107			2,745			228
Accounts payable	22,419			11,005			9,140
Accounts payable, affiliate	(4,700		)	1,349			(3,639		)
Customer deposits	13,757			12,381			10,675
Provision for merger commitments	(3,273		)	(12,971		)	21,964
Postretirement benefit obligations	4,252			4,849			5,076
Regulatory assets and liabilities, net	1,044			10,544			17,506
Other deferred accounts	(5,421		)	(8,137		)	(3,249		)
Taxes accrued	16,566			44,101			(29,535		)
Interest accrued	1,169			(59		)	(671		)
Other operating	2,354			2,241			(1,308		)
Net cash provided by operating activities	339,688			287,078			234,325
Investing activities
Additions to property, plant, and equipment	(289,153		)	(235,252		)	(186,143		)
Allowance for equity funds used during construction	14,159			8,320			4,458
Proceeds from sale of property, plant, and equipment	995			4,078			2,698
Reimbursement for property loss	1,375			187			3,212
Issuance of note receivable	(16,800		)	—			—
Contributions to equity investment in investee	—			—			(2,450		)
Other investing	397			500			622
Net cash used in investing activities	(289,027		)	(222,167		)	(177,603		)
The accompanying notes are an integral part of the Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 FORM 10-K



CLECO POWER

Consolidated Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018				2017				2016
Financing activities
Draws on credit facility	—				106,000				15,000
Payments on credit facility	—				(106,000		)		(15,000		)
Issuances of long-term debt	50,000				125,000				330,000
Repayments of long-term debt	(19,193		)		(17,896		)		(326,814		)
Payments for long-term debt prepayment costs	—				—				(18,569		)
Contribution from member	—				—				50,000
Distributions to member	(121,400		)		(135,000		)		(110,000		)
Other financing	(1,148		)		(2,013		)		(4,526		)
Net cash used in financing activities	(91,741		)		(29,909		)		(79,909		)
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(41,080		)		35,002				(23,187		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	102,957			⁽¹⁾	67,955				91,142
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	61,877		⁽²⁾	$	102,957		⁽¹⁾	$	67,955

Supplementary cash flow information
Interest paid, net of amount capitalized	$	70,357			$	65,984			$	74,016
Income taxes refunded, net	$	—			$	—			$	(485	)
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	55,718			$	30,883			$	16,755
Non-cash additions to property, plant, and equipment	$	1,224			$	3,015			$	—
Incurrence of capital lease obligation - barges	$	16,800			$	—			$	—
⁽¹⁾ Includes cash and cash equivalents of $69,816, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,060. ⁽²⁾ Includes cash and cash equivalents of $31,987, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,649. The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 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, 2015	$	1,569,496		$	(17,092	)	$	1,552,404
Contribution from member	50,000			—			50,000
Distributions to member	(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 member	(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
Distributions to member	(121,400		)	—			(121,400		)
Net income	162,257			—			162,257
Other comprehensive income, net of tax	—			2,997			2,997
Reclassification of effect of tax rate change	2,496			(2,496		)	—
Balances, Dec. 31, 2018	$	1,607,715		$	(13,182	)	$	1,594,533
The accompanying notes are an integral part of the Consolidated Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



Index to Applicable Notes to the Financial Statements of Registrants



Note 1	The Company	Cleco and Cleco Power
Note 2	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 3	Revenue Recognition	Cleco and Cleco Power
Note 4	Business Combinations	Cleco
Note 5	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 6	Jointly Owned Generation Units	Cleco and Cleco Power
Note 7	Fair Value Accounting	Cleco and Cleco Power
Note 8	Debt	Cleco and Cleco Power
Note 9	Common Stock	Cleco and Cleco Power
Note 10	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 11	Income Taxes	Cleco and Cleco Power
Note 12	Disclosures about Segments	Cleco
Note 13	Regulation and Rates	Cleco and Cleco Power
Note 14	Variable Interest Entities	Cleco and Cleco Power
Note 15	Operating Leases	Cleco and Cleco Power
Note 16	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 17	Affiliate Transactions	Cleco and Cleco Power
Note 18	Intangible Assets and Goodwill	Cleco and Cleco Power
Note 19	Accumulated Other Comprehensive Loss	Cleco and Cleco Power
Note 20	Miscellaneous Financial Information (Unaudited)	Cleco and Cleco Power
Note 21	Cleco Cajun Transaction	Cleco



Notes to the Financial Statements



Note 1 — The Company

Cleco is composed of the following:

Cleco’s other operations consist of 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.


◦	Cleco Cajun, a subsidiary formed to facilitate the Cleco Cajun Transaction. For more information on the transaction, see Note 21 — “Cleco Cajun Transaction.”



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.

Reclassifications

Goodwill



CLECO
CLECO POWER		2018 FORM 10-K

an event occurs or circumstances change that would indicate the carrying amount may be impaired. For more information on goodwill, see Note 18 — “Intangible Assets and Goodwill.”

Intangible Assets

Statements of Cash Flows

Regulation

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 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 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 5 — “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

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 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.

Property, Plant, and Equipment

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, 2018, and 2017 were $7.2 million and $7.9 million, respectively. The amounts of unamortized computer



CLECO
CLECO POWER		2018 FORM 10-K

software costs on Cleco Power’s Consolidated Balance Sheets at December 31, 2018, and 2017 were $5.8 million and $6.6 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, 2018, 2017, and 2016 is shown in the following tables:



Cleco
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Amortization	$	2,154	$	2,367	$	2,351	$	921



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017		2016
Amortization	$	1,607	$	1,887	$	2,405

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 2018, 2017, and 2016 was 2.80%, 2.72%, and 2.68%, respectively.

Depreciation on property, plant, and equipment is calculated primarily on a straight-line basis over the useful lives of the assets, 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, 2018, and 2017, Cleco and Cleco Power’s property, plant, and equipment consisted of the following:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018			2017
Utility plants
Generation	$	1,949,042		$	1,908,344
Distribution	1,081,650			1,015,472
Transmission	519,269			512,428
Other utility plant	174,010			153,900
Other property, plant, and equipment	4,506			4,381
Total property, plant, and equipment	3,728,477			3,594,525
Accumulated depreciation	(303,727		)	(192,348		)
Net property, plant, and equipment	$	3,424,750		$	3,402,177



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018			2017
Regulated utility plants
Generation	$	2,476,733		$	2,442,987
Distribution	1,523,885			1,462,193
Transmission	731,432			725,199
Other utility plant	282,954			263,105
Total property, plant, and equipment	5,015,004			4,893,484
Accumulated depreciation	(1,804,563		)	(1,712,590		)
Net property, plant, and equipment	$	3,210,441		$	3,180,894

During 2018, Cleco Power’s regulated utility property, plant, and equipment increased primarily due to general installation and rehabilitation of transmission, distribution, and generation assets.

Deferred Project Costs

Cleco Power defers costs related to the initial stage of a construction project during which time the feasibility of the construction of property, plant, and equipment is being investigated. At December 31, 2018, and 2017, Cleco Power had deferred $1.4 millionand $3.2 million, respectively, for projects that are in the initial stages of development. These amounts are classified as Other deferred charges on Cleco Power’s Consolidated Balance Sheets.

Fuel Inventory and Materials and Supplies

Fuel inventory consists primarily of petroleum coke, coal, limestone, lignite, and natural gas used to generate electricity.

Accounts Receivable

Reserves



CLECO
CLECO POWER		2018 FORM 10-K

insurance, Cleco Power maintains reserves. At December 31, 2018, and 2017, the general liability and workers compensation reserves together were $4.8 million and $4.5 million, respectively.

Additionally, Cleco maintains directors and officers insurance to protect managers from claims which may arise from their decisions and actions taken within the scope of their regular duties.

Cash Equivalents

Cleco considers highly liquid, marketable securities, and other similar instruments with original maturity dates of three months or less to be cash equivalents.

Restricted Cash and Cash Equivalents

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,505	$	8,597
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	536		3,284
Total current	11,241		13,081
Non-current
Diversified Lands’ mitigation escrow	21		21
Cleco Power’s future storm restoration costs	15,391		14,456
Cleco Power’s charitable contributions	2,753		3,575
Cleco Power’s rate credit escrow	505		2,029
Total non-current	18,670		20,081
Total restricted cash and cash equivalents	$	29,911	$	33,162



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	9,505	$	8,597
Charitable contributions	1,200		1,200
Rate credit escrow	536		3,284
Total current	11,241		13,081
Non-current
Future storm restoration costs	15,391		14,456
Charitable contributions	2,753		3,575
Rate credit escrow	505		2,029
Total non-current	18,649		20,060
Total restricted cash and cash equivalents	$	29,890	$	33,141

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. The change from December 31, 2017, to December 31, 2018, was due to Cleco Katrina/Rita collecting $22.7 million net of administration fees, partially offset by $19.2 million for scheduled storm recovery bond principal payments and $2.6 million for related interest payments.

Equity Investments

Cleco and Cleco Power account for investments in unconsolidated affiliated companies using the equity method of accounting. The amounts reported on Cleco and Cleco Power’s Consolidated Balance Sheets represent assets contributed by Cleco or Cleco Power, plus their share of the net income of the affiliate, less any distributions of earnings (dividends) received from the affiliate. The revenues and expenses (excluding income taxes) of these affiliates are netted and reported on one line item as equity income from investees on Cleco and Cleco Power’s Consolidated Statements of Income.

Cleco evaluates for impairments of equity method investments at each balance sheet date to determine if events and circumstances have occurred that indicate a possible other-than-temporary decline in the fair value of the investment and the possible inability to recover the carrying value through operations. Cleco uses estimates of the future cash flows from the investee and observable market transactions in order to calculate fair value and recoverability. An impairment is recognized when an other-than-temporary decline in market value occurs and recovery of the carrying value is not probable. There were no ~~anti-dilutive shares during the years ended~~ ~~2015~~, ~~2014, and 2013.~~

~~Stock-Based Compensation~~

impairments recorded for 2018, 2017, or 2016. For more information on Cleco’s ~~stock-based compensation,~~equity investments, see Note 14 — “Variable Interest Entities.”

Income Taxes

Investment Tax Credits

Investment tax credits, which were deferred for financial statement purposes, are amortized as a reduction to income tax expense over the estimated service lives of the properties that gave rise to the credits.

NMTC Fund

In 2008, Cleco Holdings and the USBCDC formed the NMTC Fund. The purpose of the NMTC Fund was to invest in projects



CLECO
CLECO POWER		2018 FORM 10-K

located in qualified active low-income communities that are underserved by typical debt capital markets. These investments were designed to generate NMTCs and Historical Rehabilitation tax credits. The NMTC Fund was later amended to include renewable energy investments. The majority of the energy investments qualified for grants under Section 1603 of the ARRA. By using the cost method for investments, the gross investment amortization expense of the NMTC Fund was recognized over a ten-year period, which ended in 2018. The grants received under Section 1603, which allowed certain projects to receive a federal grant in lieu of tax credits, and other cash reduced the basis of the investment. Periodic amortization of the investment and the deferred taxes generated by the basis reduction temporary difference were included as components of income tax expense.

For more information, see Note 16 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — NMTC Fund.”

Accounting for Renewable Energy Tax Credits and Grants Under the ARRA

Cleco and the NMTC Fund elected to receive cash grants under the ARRA for investments in various projects. Cleco elected to reduce the carrying value of the qualifying assets as cash grants were received, which reduced the amount of depreciation expense recognized after the underlying assets were placed in service. Certain cash grants also reduced the tax basis of the underlying assets. Grants received via the NMTC Fund reduced the carrying value of the investment for GAAP, but did not reduce the income tax basis of the investment.

Debt Issuance Costs, Premiums, and Discounts

Issuance costs, premiums, and discounts applicable to debt securities are amortized to interest expense ratably over the lives of the related issuances. Expenses and call premiums related to refinanced Cleco Power debt are deferred and amortized over the life of the new issuance. Debt issuance costs, premiums, and discounts are presented as a direct deduction from the carrying value of the related debt liability.

Revenue and Fuel Costs

Utility Revenue

Unbilled Revenue

Cleco Power accrues estimated revenue monthly for energy used by customers but not yet billed. The monthly estimated unbilled revenue amounts are recorded as unbilled revenue and a receivable. Cleco Power uses actual customer energy consumption data available from AMI to calculate unbilled revenues.

Other Operations Revenue

Other operations revenue is recognized at the time products or services are provided to and accepted by customers, and collectability is reasonably assured.

Sales/Excise Taxes

Franchise Fees

AFUDC

The capitalization of AFUDC by Cleco Power is a utility accounting practice prescribed by FERC and the LPSC. AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance construction of new and existing facilities. While cash is not realized currently from such allowance, AFUDC increases the revenue requirement over the same life of the plant through a higher rate base and higher depreciation. Under regulatory practices, a return on and recovery of AFUDC is permitted in setting rates charged for utility services. The composite AFUDC rate, including borrowed and other funds, was 9.58% on a pretax basis (7.08% net of tax) for 2018, 11.07% on a pretax basis (6.81% net of tax) for 2017, and 11.94% on a pretax basis (7.39% net of tax) for 2016.

Fair Value Measurements and Disclosures

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 the date of acquisition or debt issuance. Cleco and Cleco Power disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes. For more information about fair value levels, see Note 7 — ~~“Common Stock — Stock-Based Compensation.~~“Fair Value Accounting.”

Risk Management



CLECO
CLECO POWER		2018 FORM 10-K

marked-to-market with the resulting gain or loss recorded on Cleco and Cleco Power’s Consolidated Balance Sheets as a component of energy risk management assets or liabilities. Such gain or loss would be deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. When these positions close, actual gains or losses would be included in the FAC and reflected on customers’ bills as a component of the fuel charge. There were no open natural gas positions at December 31, 2018, or 2017.

In 2015, the LPSC approved a long-term natural gas hedging pilot program that required Cleco Power to establish a proposal for a program that is designed to provide gas price stability for a minimum of five years. This proposal was submitted to the LPSC in July 2017. An ALJ was assigned to the docket and a status conference was held in October 2017. In February 2018, Cleco Power responded to LPSC data requests for the gas hedging docket. Cleco Power is currently awaiting a new procedural schedule to be established for the gas hedging docket.

Cleco Power records FTRs at their estimated fair value when purchased. Each accounting period, Cleco Power adjusts the carrying value of FTRs to their estimated fair value 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 Power’s Consolidated Balance Sheets. Realized gains or losses on settled FTRs are recorded in Fuel used for electric generation on Cleco Power’s Consolidated Statements of Income. For more information on FTRs, see Note 7 — “Fair Value Accounting — Commodity Contracts.”

Cleco and Cleco Power maintain a master netting agreement policy and monitor credit risk exposure through review 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.

Cleco and Cleco Power may enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For the years ended December 31, 2018, and 2017, Cleco did not enter into any contracts to mitigate the volatility in interest rate risk.

Accounting for MISO Transactions

Cleco Power participates in MISO’s Energy and Operating Reserve market where sales and purchases are netted hourly. If the hourly activity nets to sales, the result is reported in Electric operations on Cleco and Cleco Power’s Consolidated Statements of Income. If the hourly activity nets to purchases,

the result is reported in Power purchased for utility customers on Cleco and Cleco Power’s Consolidated Statements of Income.

Recent Authoritative Guidance

In February 2016, FASB amended the guidance to account for leases. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Cleco adopted this new standard on January 1, 2019, using the optional transition method, which allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption and apply the new disclosure requirements beginning in the period of adoption. The new standard provides a number of optional practical expedients. Cleco has elected the following:

Transition Elections - Cleco elected the package of practical expedients that permits entities to not reassess prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits entities to not assess existing land easements under the new standard;

Lessee Accounting Policy Elections - Cleco elected the short-term lease recognition exemption whereby right-of-use (ROU) assets and lease liabilities will not be recognized for leasing arrangements with terms one year or less, and the practical expedient to not separate lease and non-lease components for all classes of underlying assets other than the marine transportation asset class, which includes barges and towboats; and

Lessor Accounting Policy Election - Cleco elected the practical expedient to account for lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Cleco does not currently have lessor marine transportation agreements, but if any are entered into in the future then the practical expedient to not separate lease and non-lease components will not be elected for this class of underlying asset.

Adoption of this standard resulted in the recognition of ROU assets and lease liabilities for operating leases of $16.6 million and $16.0 million, respectively, as of January 1, 2019. There was no impact to retained earnings as a result of adopting this standard. Adoption of this standard did not materially impact the results of operations, financial condition, or cash flows of the Registrants.

In August 2016, FASB amended the guidance for certain cash flow issues with the objective of reducing existing diversity in practice. This guidance affects the cash flow classification related to certain types of transactions including debt, contingent consideration, proceeds from the settlement of insurance claims, and distributions from equity method investees. The amended guidance was adopted by the Registrants at January 1, 2018. This amendment was applied using a retrospective transition method to each period presented. This guidance impacted the presentation of Cleco and Cleco Power’s cash flow statements for the year ended December 31, 2016, by moving make-whole payments of $18.6 million, which were made in connection with the redemption of $250.0 million of 6.65% senior notes in 2016,



CLECO
CLECO POWER		2018 FORM 10-K

from Other deferred accounts to Payments for long-term debt prepayment costs. Also, this amount was removed from Interest paid, net of amount capitalized, in the supplementary cash flow information. This guidance did not impact the results of operations or financial condition of the Registrants.

In November 2016, FASB amended guidance for certain cash flow issues. The amended guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash and cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amended guidance was adopted by the Registrants at January 1, 2018, by moving the presentation of restricted cash and restricted cash equivalents in the statement of cash flows to net cash flows of total cash, cash equivalents, restricted cash, and restricted cash equivalents. This amendment was applied using a retrospective transition method to each period presented. This guidance impacted the presentation of the cash flows statement, as noted above, but did not have an impact on the results of operations or financial condition of the Registrants.

In January 2017, FASB amended the accounting guidance to simplify the measurement of a goodwill impairment loss. The amended guidance eliminates step two of the goodwill impairment test, which requires a hypothetical purchase price allocation to measure goodwill impairment. Under the new guidance, a goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Cleco elected to early adopt this guidance effective January 1, 2018. Adoption of this guidance did not impact the results of operations, financial condition, or cash flows of the Registrants.

In March 2017, FASB amended guidance related to defined benefit pension and other postretirement benefit plans. The new amendment requires an entity to present service cost in the same line item as other current employee compensation costs and to present the remaining components of net benefit cost in a separate line item outside of operating items. The amendment also allows only the service cost component of net benefit cost to be eligible for capitalization within property, plant, and equipment. The non-service costs capitalized for ratemaking purposes will be reflected as a regulatory asset or liability for GAAP. Cleco adopted this guidance as of January 1, 2018. This amendment was applied retrospectively for the presentation of the service cost in the income statement while the capitalization of the service cost was applied prospectively. This guidance did not have a significant impact on the results of operations, financial condition, or cash flows of the Registrants. The change in presentation for Cleco and Cleco Power was as follows:



Cleco
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Other operations and maintenance	$	(11,071	)	$	(8,618	)	$	(3,447	)
Other expense	$	11,071		$	8,618		$	3,447



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2017			2016
Other operations and maintenance	$	(7,612	)	$	(8,529	)
Other expense	$	7,612		$	8,529

In February 2018, FASB amended guidance that permits, but does not require, companies to reclassify stranded tax effects from the TCJA from AOCI to retained earnings. The adoption of this guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Management has elected to early adopt. On December 31, 2018, Cleco and Cleco Power reclassed $0.6 million and $2.5 million, respectively, of stranded tax effects associated with the TCJA from AOCI to retained earnings.

In March 2018, FASB issued clarifying guidance regarding a company’s ability to comply with the accounting requirements for the income tax effects of the TCJA in the period of enactment. The guidance clarifies accounting for income taxes if information is not yet available or complete. In December 2018, Cleco recorded its final adjustments related to the TCJA.

In August 2018, FASB issued guidance that allows for the deferral of certain implementation costs incurred in a cloud computing arrangement. The adoption of this guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those years. Early adoption is permitted. Management does not expect this guidance to have significant impact on the results of operations, financial condition, or cash flows of the Registrants.

In August 2018, FASB issued guidance updating the disclosure framework for Defined Benefit Plans. Under the new guidance, entities will no longer be required to disclose the amount in other comprehensive income expected to be recognized as a component of net periodic benefit cost of the next fiscal year or the impact of a one-percentage point increase and a one-percentage point decrease in the assumed health care cost trend. The new framework will require additional disclosure including a narrative description of the reasons for significant gains/losses affecting the benefit obligation. The adoption of this guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. Management does not expect this guidance to have a significant impact on the result of operations, financial condition, or cash flows of Registrants.

In August 2018, FASB issued guidance updating the disclosure framework for Fair Value Measurement. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between level 1 and level 2 of the fair value hierarchy, the policy of timing of transfers between levels, or the valuation policies and procedures for level 3 fair value measurements. The new framework will require additional disclosures around level 3 fair value measurements, including the range, weighted average, and time period used to develop significant unobservable inputs. The adoption of this guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. Management does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.



CLECO
CLECO POWER		2018 FORM 10-K

In October 2018, FASB issued guidance that requires indirect interest held through related parties under common control to be considered on a proportional basis when determining whether fees paid to decision makers and service providers are variable interest. The adoption of this guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Early adoption is permitted. Management does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.

In November 2018, FASB issued amendments clarifying that transactions in a collaborative arrangement should be accounted for using the Revenue Recognition standards when the counterparty is a customer for a direct good or service. The guidance precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The adoption of this guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Early adoption is permitted. Management does not expect this guidance to have a significant impact on the results of operations, financials condition, or cash flows of the registrants.



Note 3 — Revenue Recognition

Cleco adopted the accounting guidance for revenue recognition and all related amendments on January 1, 2018, using the modified retrospective method. The guidance affects entities that enter into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Application of the new revenue standard did not result in a cumulative effect adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of the adoption of the new standard is not material to the results of operations, financial condition, or cash flows of the Registrants.

Revenue from Contracts with Customers

Retail Revenue

Cleco’s revenue from contracts with customers is generated primarily from Cleco Power’s regulated revenue to retail residential, commercial, and industrial customers. Cleco recognizes retail revenue from these contracts as a series, and progress towards satisfaction of the performance obligation is measured using an output method based on kWh delivered. Accordingly, revenue from electricity sales is recognized as energy is delivered to the customer. Cleco bills retail customers, based on rates regulated by the LPSC, on a monthly basis with payments generally due within 20 days of the invoice date. Cleco records retail revenue under the invoice practical expedient, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount that the entity has a right to invoice.

Included in Cleco’s retail revenue is unbilled electric revenue, which represents the amount customers will be billed for services rendered from the last meter reading to the end of the respective accounting period. Cleco uses actual customer energy consumption data available from AMI to calculate unbilled revenue. Also included in Cleco’s retail revenue is electric customer credits, which primarily represents the accrued estimated refunds for the tax-related benefits of the TCJA.

Wholesale Revenue

Wholesale revenue is generated primarily through the sale of energy and capacity to cooperatives, municipalities, and the MISO transmission provider. Cleco also enters into transactions through MISO for spot energy sales which are transacted in the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. The electricity revenue performance obligations, representing both energy and capacity, are satisfied as a series of performance obligations, and progress towards satisfaction of the performance obligations are measured using an output method. The energy performance obligation measure of progress is based on kWh delivered. The capacity performance obligation measure of progress is based on time elapsed and will be recognized each month as Cleco’s generating units stand ready to deliver electricity to the customer. Cleco charges its wholesale customers market based rates that are subject to FERC’s triennial market power analysis. Cleco recognizes wholesale revenue, inclusive of both performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice.

Transmission Revenue

Transmission revenue is earned under a tariff with MISO. The performance obligation of transmission service is satisfied as service is provided. Revenue is recognized upon delivery of the transmission service. Cleco’s revenue from the transmission of electricity is recorded based on a FERC-approved annual formula rate mechanism. This mechanism provides for an annual filing of revenue requirements with rates effective June 1 of each year.

Other Revenue

Other revenue from contracts with customers, which is not a significant source of Cleco’s revenue, includes Teche Unit 3 SSR revenue and connection or other fees. The performance obligation under these contracts is satisfied and revenue is recognized as control of the products is delivered or services are rendered.

Revenue Unrelated to Contracts with Customers

Cleco Power’s energy-related transactions with the following characteristics, qualify as derivative contracts and are recorded pursuant to derivatives and hedging accounting guidance: a) their value is based on the notional amount or payment provisions of an underlying asset; b) they require no or a diminutive initial net investment; and c) their terms require or permit net settlement.

Pursuant to the rules of the Energy Efficiency General Order issued by the LPSC, Cleco Power intends to recover from customers the accumulated decrease in revenues associated with energy efficiency programs, also known as the Lost Contribution to Fixed Cost (LCFC). This revenue is



CLECO
CLECO POWER		2018 FORM 10-K

recorded in accordance with accounting guidance for alternative revenue programs.

Disaggregated Revenue

Operating revenue, net for the year ended December 31, 2018, was as follows:



	FOR THE TWELVE MONTHS ENDED DEC. 31, 2018
(THOUSANDS)	CLECO POWER			OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential ⁽¹⁾	$	435,610		$	—			$	—		$	435,610
Commercial ⁽¹⁾	288,791			—				—			288,791
Industrial ⁽¹⁾	167,001			—				—			167,001
Other retail ⁽¹⁾	15,582			—				—			15,582
Surcharge	23,138			—				—			23,138
Electric customer credits	(33,195		)	—				—			(33,195		)
Total retail revenue	896,927			—				—			896,927
Wholesale, net ⁽¹⁾	219,598			(9,680		)	⁽²⁾	—			209,918
Transmission	54,531			—				—			54,531
Other ⁽³⁾	27,800			2				—			27,802
Affiliate ⁽⁴⁾	874			74,591				(75,465		)	—
Total revenue from contracts with customers	1,199,730			64,913				(75,465		)	1,189,178
Revenue unrelated to contracts with customers
Other ⁽⁵⁾	41,866			—				—			41,866
Total revenue unrelated to contracts with customers	41,866			—				—			41,866
Operating revenue, net	$	1,241,596		$	64,913			$	(75,465	)	$	1,231,044

⁽¹⁾Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $18.2 million of other miscellaneous fee revenue and $9.6 million of Teche Unit 3 SSR revenue.

⁽⁴⁾Affiliate revenue from contracts with customers includes interdepartmental rents and support services. This revenue is eliminated upon consolidation.

⁽⁵⁾Includes realized gains associated with FTRs of $39.3 million and LCFC of $2.6 million.

Transaction Price Allocated to Remaining Performance Obligations

For contracts that are greater than one year, the following table discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2018, and (2) when Cleco expects to recognize this revenue:



REMAINING PERFORMANCE OBLIGATIONS	(THOUSANDS)
Years ending Dec. 31,
2019	$	35,970
2020	7,068
2021	7,068
2022	6,468
2023	5,268
Thereafter	4,942
Total remaining performance obligations	$	66,784

Unsatisfied performance obligations primarily relate to stand-ready obligations as part of fixed capacity minimums.



Note 4 — Business Combinations

On April 13, 2016, Cleco Holdings completed its merger with Merger Sub whereby Merger Sub merged with and into Cleco Corporation, with Cleco Corporation surviving the 2016 Merger, and Cleco Corporation converting to 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. At the effective time of the 2016 Merger, each outstanding share of Cleco Corporation common stock, par value $1.00 per share (other than shares that were owned by Cleco Corporation, Cleco Partners, Merger Sub, or any other direct or indirect wholly owned subsidiary of Cleco Partners or Cleco Corporation), were cancelled and converted into the right to receive $55.37 per share in cash,

without interest, with all dividends payable before the effective time of the 2016 Merger.

Regulatory Matters

On March 28, 2016, the LPSC approved the 2016 Merger. The LPSC’s written order approving the 2016 Merger was issued on April 7, 2016. Approval of the 2016 Merger was conditioned upon certain commitments, including $136.0 million of customer rate credits, a $7.0 million one-time contribution for economic development in Cleco Power’s service territory to be administered by the LED, $6.0 million of charitable contributions to be disbursed over five years, and $2.5 million of contributions for economic development for Louisiana state and local organizations to be disbursed over five years. These commitment costs were accrued on April 13, 2016, and are included in Merger transaction and commitment costs and Merger commitment costs on Cleco and Cleco Power’s Consolidated Statements of Income, respectively. In addition, the 2016 Merger Commitments also included $1.2 million of annual refunds to customers representing cost savings due to the 2016 Merger. For more information, see Note 13 — “Regulation and Rates.”

Accounting for the 2016 Merger Transaction

The total purchase price consideration was approximately $3.36 billion, which consisted of cash paid to Cleco Corporation shareholders of $3.35 billion and cash paid for Cleco LTIP equity awards of $9.5 million. There were no remaining LTIP equity awards as of the close of the 2016 Merger.

Pushdown accounting was applied to Cleco, and accordingly, the Cleco consolidated assets acquired and liabilities assumed were recorded on April 13, 2016, at their fair values as follows:



CLECO
CLECO POWER		2018 FORM 10-K



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’s assets and liabilities were recorded at historical cost since Cleco did not elect pushdown accounting at the Cleco Power level.

The following tables present the fair value adjustments to Cleco’s balance sheet and recognition of goodwill:



(THOUSANDS)	AT APR. 13, 2016
Property, plant, and equipment	$	(1,334,932	)
Accumulated depreciation	$	(1,565,776	)
Goodwill	$	1,490,797
Intangible assets	$	91,826
Regulatory assets	$	250,409
Deferred income tax liabilities	$	126,853
Other deferred credits	$	21,175
Long-term debt	$	198,599

Most of the carrying values of Cleco’s assets and liabilities were determined to be stated at fair value at the 2016 Merger date, considering that most of these assets are subject to regulation by the LPSC and FERC. Under such regulation, rates charged to customers are established by a regulator to provide for recovery of costs and a fair return on rate base and are generally measured at historical cost. As such, a market participant would not expect to recover any more or less than the carrying value of the assets. Prior to the 2016 Merger, the Coughlin step-up value was not recorded on Cleco’s Consolidated Balance Sheet due to the accounting treatment for the transfer of that asset in March 2014. However, the recovery of the step-up value of the Coughlin asset was approved by the LPSC for recovery in base rates, including a return on rate base. On the date of the 2016 Merger, the step-up value for the Coughlin asset was recognized on Cleco’s Consolidated Balance Sheet since Cleco Power is able to earn a return on and recover these costs from its customers. The beginning balance of fixed depreciable assets was shown net at the date of the 2016 Merger, as no accumulated depreciation existed on the date of the 2016 Merger.

The excess of the purchase price over the estimated fair value of assets acquired and the liabilities assumed was $1.49 billion, which was recognized as goodwill by Cleco at the 2016 Merger date. The goodwill represents the potential long-term return of Cleco to its member. Management has assigned goodwill to Cleco’s reportable segment, Cleco Power.

A fair value adjustment was recorded on Cleco’s Consolidated Balance Sheet to reflect the valuation of the Cleco trade name. This adjustment is included in Intangible assets on Cleco’s Consolidated Balance Sheet. The valuation of the trade name was estimated by applying the relief-from-royalty method under the income approach. This valuation method is based on the premise that, in lieu of ownership of

the asset, a company would be willing to pay a royalty to a third-party for the use of that asset. The owner of the asset is spared this cost, and the value of the asset is estimated by the cost savings. The projected revenue attributed to the trade name was based on projections of the value of Cleco’s wholesale contracts. The trade name is being amortized over 20 years. The amortization of the Cleco trade name is included in Depreciation and amortization on Cleco’s Consolidated Statement of Income.

On the date of the 2016 Merger, fair value adjustments were recorded on Cleco’s Consolidated Balance Sheet for the difference between the contract price and the market price of long-term wholesale power supply agreements. These adjustments are classified as Intangible assets on Cleco’s Consolidated Balance Sheet. The valuation of the power supply agreements was estimated using the income approach. The income approach is based upon discounted projected future cash flows associated with the underlying contracts. The intangible assets for the power supply agreements will be amortized over the remaining term of the applicable contract. The amortization of the power supply agreements is included in Electric operations on Cleco’s Consolidated Statement of Income.

The net increase in deferred tax liabilities on Cleco’s Consolidated Balance Sheet represents the differences between the assigned fair values of assets acquired and their related income tax basis, net of a deferred tax asset representing the net operating loss carryforward that will be utilized in future periods. As the underlying asset assigned fair values are amortized, the related deferred tax liabilities will be included in income tax expense. Goodwill is not deductible for income tax purposes; therefore, no deferred income tax assets or liabilities were recognized for goodwill.

Other fair value adjustments were recorded for long-term debt, postretirement benefit remeasurements and deferred losses, and interest rate derivative settlement gains and losses. These fair value adjustments are subject to rate regulation, but do not earn a return. In these instances, a corresponding regulatory asset was established, as the underlying utility asset or liability amounts are recoverable from or refundable to customers at historical cost through the rate setting process. These regulatory assets established to offset fair value adjustments are amortized in amounts and over time frames consistent with the realization or settlement of the fair value adjustments.

The valuations performed in the second quarter of 2016 to estimate the fair value of assets acquired and liabilities assumed were considered preliminary as a result of the short time period between the closing of the 2016 Merger and the end of the second quarter of 2016. During the third quarter of 2016, valuations were performed for the valuation and assessment of the postretirement benefit plans as of April 13, 2016, and the economic useful life of the Cleco trade name. Cleco completed its evaluation and determination of the fair value of certain assets and liabilities acquired as of December 31, 2016. There were no adjustments to those amounts during the year ended December 31, 2017. While management believes the positions reflected on the income tax returns are reasonable, see Note 11 — “Income Taxes — Uncertain Tax Positions” for a discussion on the status of tax audits.



Note 5 — Regulatory Assets and Liabilities

Cleco ~~Power~~ capitalizes or defers certain costs for recovery from customers and recognizes a liability for amounts expected to



CLECO
CLECO POWER		2018 FORM 10-K

be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

Under the current regulatory environment, Cleco ~~Power~~ believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, ~~Cleco Power’s~~Cleco’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco ~~Power~~ would be required to write-down such assets. In addition, potential deregulation of the industry or possible future changes in the method of rate regulation of Cleco ~~Power~~ could require discontinuance of the application of ~~these~~the authoritative ~~guidelines.~~guidance of regulated operations.

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


Cleco Power
	AT DEC. 31,						REMAINING RECOVERY PERIOD	AT DEC. 31,						REMAINING RECOVERY PERIOD (YRS.)
(THOUSANDS)	2015			2014			REMAINING RECOVERY PERIOD	2018			2017			REMAINING RECOVERY PERIOD (YRS.)
Total federal regulatory asset — income taxes	$	5,614		$	124
Regulatory (liabilities) assets - deferred taxes, net
Total federal regulatory liability — income taxes								$	(55,922	)	$	(64,205	)
Total state regulatory asset — income taxes	105,868			106,964				141,136			142,788
TCJA								(374,961		)	(348,590		)
AFUDC	127,092			129,545				134,369			129,953
Total investment tax credit	(1,633		)	(2,263		)		(159		)	(372		)
Total regulatory assets — deferred taxes, net	236,941			234,370			*
Total regulatory (liabilities) assets — deferred taxes, net								$	(155,537	)	$	(140,426	)	*
Regulatory liabilities - other								(4,992		)	—			*
Regulatory Assets
Mining costs	8,921			11,470			3.5 yrs.	1,274			3,823			0.5
Interest costs	5,221			5,582			*	4,208			4,499			*
AROs ⁽¹⁾	2,462			1,029			*	3,099			2,762			*
Postretirement costs ⁽¹⁾	150,274			160,903			*	140,245			142,764			*
Tree trimming costs	6,318			8,066			2.5 yrs.	9,069			7,193			*
Training costs	6,863			7,019			44 yrs.	6,396			6,552			41
Surcredits, net ⁽²⁾	9,661			13,587			2.5 yrs.	289			2,173			*
Amended lignite mining agreement contingency ⁽¹⁾	3,781			3,781			*
AMI deferred revenue requirement	5,318			5,863			10 yrs.	3,681			4,227			7
Emergency declarations								2,980			4,131			1.5
Production operations and maintenance expenses	12,436			14,761			*	12,245			8,625			*
AFUDC equity gross-up ⁽²⁾	71,444			72,859			*	71,952			71,205			*
Acadia Unit 1 acquisition costs	2,548			2,653			24 yrs.	2,230			2,336			21
Financing costs	9,032			9,402			*	7,923			8,293			*
Biomass costs	50			82			1.5 yrs.
MISO integration costs	2,340			3,275			2.5 yrs.	—			468			—
Coughlin transaction costs	1,030			1,060			33.5 yrs.	938			968			30.5
Corporate franchise tax	373			1,223			*
Acadia FRP true-up	377			754			0.5 yrs.
Energy efficiency	—			114			—
Corporate franchise tax, net								1,416			153			*
MATS Costs								—			2,564			—
Non-service cost of postretirement benefits								4,629			—			*
Energy Efficiency								2,585			—			*
Other	357			596			1.5 yrs.	13			484			*
Total regulatory assets	298,806			324,079				275,172			273,220
PPA true-up	(312		)	(624		)	0.5 yrs.
Fuel and purchased power	12,910			21,554			*
Accumulated deferred fuel								20,112			13,980			*
Total regulatory assets, net	$	548,345		$	579,379			$	134,755		$	146,774
⁽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, 2018, and 2017, respectively. 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, 2018, and 2017, respectively. 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.

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



Cleco
	AT DEC. 31,
(THOUSANDS)	2018		2017
Total Cleco Power regulatory assets, net	$	134,755	$	146,774
Cleco 2016 Merger adjustments ⁽¹⁾
Fair value of long-term debt	138,701		147,145
Postretirement costs	19,387		21,375
Financing costs	8,279		8,623
Debt issuance costs	6,252		6,665
Total Cleco regulatory assets, net	$	307,374	$	330,582

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

Income Taxes

The regulatory ~~asset~~assets and liabilities recorded for deferred income taxes ~~represents~~represent the effect of tax benefits or detriments that must be flowed through to customers as they are received or paid. The amounts deferred are attributable to differences between book and tax recovery periods.



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

On December 22, 2017, the President signed the TCJA. Changes in the IRC, as amended, from the TCJA, had a material impact on the Registrants’ financial statements in 2017. Tax effects of changes in tax laws must be recognized in the period in which the law is enacted. Also, deferred tax assets and liabilities must be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. At December 31, 2017, Cleco and Cleco Power made an estimate for the remeasurement of ADIT based upon the new tax rate, which resulted in a provisional regulatory liability of $348.6 million. During the fourth quarter of 2018, Cleco Power recorded the final remeasurements, which resulted in an additional regulatory liability of $26.4 million. At December 31, 2018, the final regulatory liability for the remeasurement of accumulated deferred income taxes was $375.0 million. For more information on the TCJA, see Note 11 — “Income Taxes.”

Regulatory Liabilities - Other

On July 1, 2018, Cleco Power began collecting the revenue requirement related to the St. Mary Clean Energy Center project based on an expected commercial operation date in the third quarter of 2018. The project is now expected to be commercially operational in the second quarter of 2019. Cleco Power recorded a regulatory liability for the over collections and will continue to increase the regulatory liability until the project is in service. Cleco Power expects to return the total over collection as part of the July 1, 2019, FRP rate adjustment.

Mining Costs

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~~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



CLECO
CLECO POWER		2018 FORM 10-K

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.

Interest Costs

Cleco Power’s deferred interest costs include additional deferred capital construction financing costs authorized by the LPSC. These costs are being amortized over the estimated lives of the respective ~~assets constructed.~~assets.

AROs

Cleco Power ~~has~~ recorded an ARO liability for the retirement of certain ash disposal facilities. The ARO regulatory asset represents the accretion of the ARO liability and the depreciation of the related assets. For more information on the accounting treatment of Cleco Power’s AROs, see Note 2 — “Summary of Significant Accounting Policies — AROs.”

Postretirement Costs

Cleco Power recognizes the funded status of its postretirement benefit plans as a net liability or asset. The net liability or asset is defined as the difference between the benefit obligation and the fair market value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. Historically, the LPSC has allowed Cleco Power to recover pension plan expense. Cleco Power, therefore, recognizes a regulatory asset based on its determination that these costs can be collected from customers. These costs are amortized to pension expense over the average service life of the remaining plan participants (approximately 10nine years as of December 31, ~~2015,~~2018, for Cleco’s plan) when it exceeds certain thresholds. The amount and timing of the recovery will be based on the changing funded status of the pension plan in future periods. For more information on Cleco’s pension plan and adoption of these authoritative guidelines, see Note 810 — “Pension Plan and Employee Benefits.”

Tree Trimming Costs

In ~~January 2008,~~April 2013, the LPSC approved Cleco Power’s request to establish a regulatory asset for costs incurred to trim, cut, or remove trees that were damaged by Hurricanes Katrina and Rita, but were not addressed as part of the restoration efforts. The regulatory asset was capped at ~~$12.0 million~~ ~~in actual expenditures, plus a~~ ~~12.4%~~ ~~grossed-up rate of return.~~

~~Recovery of these expenditures was approved by the LPSC in October 2009. The regulatory asset for the initial tree trimming project was completely amortized in January 2015.~~

~~In January 2013, Cleco Power requested~~ to expend and defer up to $8.0 million in ~~additional~~ tree management costs. Cleco Power ~~requested similar accounting treatment as authorized in the initial tree extraction request and~~ requested authorization to defer actual expenditures as a regulatory asset through the completion date of the tree extraction effort. ~~The LPSC approved this request in April 2013.~~ In February 2015, Cleco Power completed the tree extraction and began amortizing the additional charges over a 3.5-year period. As of April 30, 2018, these costs were fully amortized.

As a result of increased vegetation growth and to remain in compliance with regulatory requirements, Cleco Power anticipates the need to spend $20.8 million through December 2020 in tree and vegetation management costs. In September 2016, Cleco Power requested approval from the LPSC to defer a portion of these costs utilizing the same accounting treatment of similar costs approved in previous dockets. In October 2016, the LPSC approved Cleco Power to defer an additional amount up to $10.9 million. Of the remaining costs, $4.0 million will be expensed to Operations and maintenance on Cleco Power’s Consolidated Statements of Income, and

$5.9 million will be deferred and recovered in current base rates through June 2020.

Training Costs

In ~~February~~ 2008, the LPSC approved Cleco Power’s request to establish a regulatory asset for training costs associated with existing processes and technology for new employees at Madison Unit 3. Recovery of these expenditures was approved by the LPSC in ~~October~~ 2009. In ~~February~~ 2010, Cleco Power began amortizing the regulatory asset over a 50-year period.

Surcredits, Net

Cleco Power has recorded surcredits as the result of a settlement with the LPSC that addressed, among other things, the recovery of the storm damages related to hurricanes and uncertain tax positions. In the settlement, Cleco Power was required to implement surcredits to provide ratepayers with the economic benefit of the carrying charges of certain accumulated deferred income tax liabilities at a rate of return which was set by the LPSC. The settlement, through a true-up mechanism, allows the surcredits to be adjusted to reflect the actual tax deductions allowed by the IRS.

Cleco Power also was allowed to record a corresponding regulatory asset in an amount representing the flow back of the carrying charges to ratepayers. This amount is being amortized over various terms of the established surcredits.

~~As a result of a settlement with the LPSC, Cleco Power is required to implement a surcredit when funds are withdrawn from the restricted storm reserve. In March 2014, Cleco Power withdrew~~ ~~$4.0 million~~ from the restricted storm reserve to pay for storm damages, resulting in the establishment of a new surcredit. This surcredit will be utilized to partially replenish the storm reserve. These amounts are being collected and amortized over a four-year period.

~~In the third quarter of 2013 and the first quarter of 2014, Cleco Power~~ recorded a true-up to the surcredits to reflect the actual tax deductions allowed by the IRS for storm damages and uncertain tax positions. As a result of the true-ups, Cleco Power ~~has~~ recorded a regulatory asset that represents excess surcredits refunded to customers that ~~will be~~were collected from ratepayers ~~in future periods. These amounts are being collected~~ and amortized over a four-year ~~period.~~

Inperiod, through June ~~2014,~~2018. Cleco Power expects to collect the ~~LPSC approved Cleco Power’s FRP extension. A provision~~balance as part of the July 1, 2019, FRP ~~extension was to reduce base rates by the amount of the surcredits beginning in July 2014. For more information on the FRP extension, see Note 11 — “Regulation and Rates.”~~

~~Amended Lignite Mining Agreement Contingency~~

In April 2009, Cleco Power and SWEPCO entered into a series of transactions to acquire additional lignite reserves and mining equipment from the North American Coal Corporation (NAC), each agreeing to purchase a ~~50%~~ ~~ownership interest in Oxbow from NAC for a combined price of~~ ~~$25.7 million. Cleco~~



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

Power, SWEPCO, and DHLC entered into the Amended Lignite Mining Agreement which requires DHLC to mine lignite at the existing Dolet Hills Mine along with the Oxbow Mine and deliver the lignite to the Dolet Hills Power Station at cost plus a specified management fee. The mining areas are expected to be sufficient to provide the Dolet Hills Power Station with lignite fuel until at least 2036.

~~Among the provisions of the Amended Lignite Mining Agreement is a requirement that if DHLC is unable to pay for loans and lease payments when due, Cleco Power will pay~~ ~~50%~~ of the amounts due. Any payments under this provision will be considered a prepayment of lignite to be delivered in the future and will be credited to future invoices from DHLC. This provision meets the recognition requirements as a guarantee to an unrelated third party. Cleco Power recognized a liability of ~~$3.8 million~~ upon the closing of the transactions. A regulatory asset of $3.8 million was also recognized due to Cleco Power’s ability to recover prudent fuel costs from customers through the FAC. The liability and related regulatory asset will be derecognized when the Amended Lignite Mining Agreement terminates. The maximum projected payment by Cleco Power under this guarantee is estimated to be $106.5 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations.rate adjustment.

AMI Deferred Revenue Requirement

In February 2011, the LPSC approved Cleco Power’s stipulated settlement in Docket No. U-31393 allowing Cleco Power to defer, as a regulatory asset, the estimated revenue requirements for the AMI project. The amount of the regulatory asset, including carrying charges, is capped by the LPSC at $20.0 million. In June 2014, the LPSC approved Cleco Power’s FRP extension and the AMI regulatory asset and project capital costs were included in rate base. Cleco Power is recovering the AMI deferred revenue requirement over 11 years beginning July 2014.

Emergency Declarations

In August 2016, the LPSC issued emergency declaration executive orders following flooding events in south Louisiana which prohibited public utilities from disconnecting or charging late fees to customers for non-payment in affected parishes. In January 2017, the LPSC issued an order terminating those executive orders effective March 1, 2017. The January 2017 order also provided that public utilities were entitled to formally petition the LPSC to recover lost revenues as a result of the executive orders issued in August 2016. Beginning in July 2017, Cleco Power’s lost revenues are being recovered and amortized over a three-year period.

Production Operations and Maintenance Expenses

~~In September 2009, the LPSC authorized~~Annually, Cleco Power is allowed to defer, as a regulatory asset, production operations and maintenance expenses, net of fuel and payroll, above the retail jurisdictional portion of ~~$25.6~~$45.0 million, adjusted annually for a growth factor (deferral threshold). ~~On June 18, 2014, the LPSC approved Cleco Power’s FRP extension, which increased the operations and maintenance deferral threshold to $45.0 million annually.~~ The amount of the regulatory asset is capped at $23.0 million. ~~Also, as part of the FRP extension, the~~The LPSC ~~allowed~~allows Cleco Power to recover the amount deferred in any calendar year over the following ~~three-year~~three



CLECO
CLECO POWER		2018 FORM 10-K

year regulatory period, beginning on July 1, when the annual rates are set. In December ~~2013,~~2018 and 2017, Cleco Power deferred ~~$8.5~~$8.0 million and $0.4 million, respectively, as a regulatory asset and began recovering this amount in July 2014. In December 2014, Cleco Power deferred an additional $7.7 million as a regulatory asset and began recovering this amount in July 2015. In December 2015, Cleco Power deferred an additional $1.8 million as a regulatory asset and will begin recovering this amount on July 1, 2016.asset.

AFUDC Equity Gross-Up

Cleco Power capitalizes equity AFUDC as a cost component of construction projects. Cleco Power has recorded a regulatory asset to recover the tax gross-up related to the equity component of AFUDC. These costs are being amortized over the estimated lives of the respective assets constructed.

Acadia Unit 1 Acquisition Costs

In ~~October~~ 2009, the LPSC approved Cleco Power’s request to establish a regulatory asset for costs incurred as a result of the acquisition by Cleco Power of Acadia Unit 1 and half of Acadia Power Station’s related common facilities. The Acadia Unit 1 acquisition costs are being recovered over a 30-year period beginning February 2010.

Financing Costs

In 2011, Cleco Power entered into and settled two treasury rate locks. Of the $26.8 million in settlements, $7.4 million was deferred as a regulatory asset relating to ineffectiveness of the hedge relationships. Also in 2011, Cleco Power entered into a forward starting swap contract. These derivatives were entered into in order to mitigate the interest rate exposure on coupon payments related to forecasted debt issuances. In May 2013, the forward starting interest rate swap was settled at a loss of $3.3 million. Cleco Power deferred $2.9 million of the losses as a regulatory asset, which is being amortized over the terms of the related debt issuances.

~~Biomass Costs~~

In November 2011, the LPSC approved Cleco Power’s request to establish a regulatory asset for the non-fuel, non-capital portion of costs incurred to conduct a test burn of biomass fuel at Madison Unit 3. In August 2012, Cleco Power began amortizing these costs over a five-year period.

MISO Integration Costs

In June 2014, the LPSC approved Cleco Power’s request to recover the non-capital integration costs associated with Cleco Power joining MISO. ~~The~~In July 2014, Cleco Power began recovering these MISO integration costs ~~are being recovered~~ over a four-year ~~period beginning July 2014.~~period. As of June 30, 2018, these costs were fully recovered.

Coughlin Transaction Costs

In January 2014, the LPSC authorized Cleco Power to create a regulatory asset for the transaction costs related to the transfer of Coughlin ~~transfer transaction costs.~~from Evangeline to Cleco Power. The Coughlin transaction costs are being recovered over a 35-year period beginning July 2014.

Corporate Franchise Tax, Net

As part of the FRP extension approved by the LPSC in June 2014, Cleco Power was authorized to recover through a rider the retail portion of state corporate franchise taxes paid. ~~In 2015 and 2014, Cleco Power’s net retail portion of franchise taxes paid was $1.7 million and $2.4 million, respectively.~~ The retail portion of state corporate franchise taxes paid each year will be recovered over 12 months beginning July 1 of the following year.

~~Acadia FRP True-up~~MATS Costs

~~For the FRP period July 1, 2013 through June 30, 2014, Cleco Power was authorized by~~In February 2016, the LPSC approved Cleco Power’s request to recover the ~~estimated~~ revenue ~~requirement~~requirements associated with the installation of ~~$58.3~~MATS equipment. The MATS rule required affected EGUs to meet specific emission standards and work practice standards to address hazardous air pollutants by April 2015. The LPSC approval also allowed Cleco Power to record a regulatory asset of $7.1 million representing the unrecovered revenue requirements of MATS equipment placed in service in

the years prior to the LPSC review and approval. As of June 30, 2018, these costs were fully amortized.

Non-service Cost of Postretirement Benefits

On January 1, 2018, FASB’s amended guidance related to ~~Acadia Unit 1. In June 2014, Cleco Power determined that it had under-recovered $0.8 million in revenue from customers based~~defined benefit pension and other postretirement plans became effective. The amendment allows only the service cost component of net benefit cost to be eligible for capitalization within property, plant, and equipment. Beginning January 1, 2018, the non-service cost previously eligible for capitalization into property, plant, and equipment are being deferred to a regulatory asset and will be amortized over the estimated lives of the respective assets. For more information on ~~the actual revenue requirement for Acadia Unit 1. The amount~~



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

~~representing the under-collection was deferred~~FASB’s guidance related to defined benefit pension and ~~is being recovered from customers over 12 months beginning July 1, 2015.~~other postretirement plans, see Note 2 — “Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

Energy Efficiency

In ~~September~~ 2013, the LPSC issued a General Order adopting rules promoting energy efficiency ~~programs by jurisdictional electric and natural gas utilities.~~programs. Cleco Power ~~subsequently filed with the LPSC its intent to participate~~participated in the Phase I Quick Start portion of the LPSC’s energy efficiency initiative, which runs November 1, 2014, through July 31, 2017. During Phase I, Cleco Power designed several energy efficiency programs and began offering these programs to customersprogram beginning in November 2014. ~~The incremental costs incurred by~~Pursuant to the rules of the Energy Efficiency General Order, utility companies are allowed to recover from customers the accumulated decrease in revenues associated with the energy efficiency programs. In December 2018, Cleco Power filed a letter of intent with the LPSC to ~~design~~recover the accumulated decrease in revenues, also known as the Lost Contribution to Fixed Cost (LCFC). Beginning March 1, 2019, this amount will be recovered over approximately four years, subject to LPSC review and ~~implement the programs were recorded as a regulatory asset and recovered from customers over the initial year of Phase I.~~approval.

Other

In ~~June 2014,~~2015, the LPSC approved ~~Cleco Power’s FRP extension which authorized~~ the recovery of ~~previously deferred~~ costs incurred as a result of Cleco Power’s ~~FRP extension filing, the 2003~~2009 through ~~2008~~2013 fuel audit. The 2009 through 2013 fuel audit costs and ~~a biomass study. Cleco Power is recovering these~~the IRP costs are being recovered over a three-year period beginning in July ~~2014.~~2016.

In March 2016, flooding occurred at the Toledo Bend Dam where Cleco Power receives capacity from the hydroelectric generators through a long-term contract. As part of the contract, Cleco Power is responsible for its allocated portion of the insurance deductible for flood damages. In July 2017, Cleco Power began amortizing the retail portion of $0.9 million over a 12-month period. As of June 30, 2018, these costs were fully amortized.

~~PPA True-up~~Accumulated Deferred Fuel

In preparing the FRP monitoring report for the year ended June 30, 2014, Cleco Power determined it had recovered $0.6 million above the actual PPA capacity costs. Cleco Power recorded the overcollection as a regulatory liability and began returning this amount to the customers over 12 months beginning July 1, 2015.

~~Fuel and Purchased Power~~

The cost of fuel used for electric generation and power purchased for utility customers are recovered through the LPSC-established FAC or related wholesale contract provisions, which enable Cleco Power to pass on to its customers substantially all such charges. For ~~2015~~,2018, approximately ~~74%~~76% of Cleco Power’s total fuel cost was regulated by the LPSC.

~~Fuel and purchased power decreased $8.6~~Accumulated deferred fuel increased$6.1 million from December 31, ~~2014. Of this amount, $7.4 million~~2017. This increase was primarily due to ~~the loss of a wholesale customer and the lower per unit costs due to the price volatility of natural gas, and a $1.2~~$22.4 million ~~decrease in~~for fuel surcharges, partially offset by $13.3 million for the mark-to-market value on FTRs and $4.3 million due to the ~~FTRs.~~timing of collections.

Cleco Holdings’ 2016 Merger Adjustments

As a result of the 2016 Merger, Cleco implemented acquisition accounting, which eliminated AOCI at the Cleco consolidated level on the date of the 2016 Merger. Cleco will continue to recover expenses related to certain postretirement costs;



CLECO
CLECO POWER		2018 FORM 10-K

therefore, Cleco recognized a regulatory asset based on its determination that these costs can continue to be collected from customers. These costs will be amortized to Other operations expense over the average remaining service period of participating employees. Cleco will also continue to recover financing costs associated with the settlement of two treasury rate locks and a forward starting swap contract that were previously recognized in AOCI. Additionally, as a result of the 2016 Merger, a regulatory asset was recorded for debt issuance costs that were eliminated at Cleco and a regulatory asset was recorded for the difference between the carrying value and the fair value of long-term debt. These regulatory assets are being amortized over the terms of the related debt issuances, unless the debt is redeemed prior to maturity, at which time any unamortized related regulatory asset will be derecognized.



Note 46 — Jointly Owned Generation Units

Cleco Power operates electric generation units that are jointly owned with other utilities. The joint-owners are responsible for their own share of the capital and the operating and maintenance costs of the respective units. Cleco Power’s share of the direct expenses of the jointly owned generation units is included in the operating expenses of the consolidated statements of income.

At the date of the 2016 Merger, the gross balance of jointly owned generation units at Cleco ~~Power’s~~was adjusted to be net of accumulated depreciation, as no accumulated depreciation existed on the date of the 2016 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, see Note 4 — “Business Combinations.”

At December 31, 2018, the investment in and accumulated depreciation for each generating unit on Cleco and Cleco Power’s Consolidated Balance Sheets were as follows:


Cleco
				AT DEC. 31, 2015								AT DEC. 31, 2018
(THOUSANDS, EXCEPT PERCENTAGES AND MW)	RODEMACHER UNIT 2			DOLET HILLS			TOTAL		RODEMACHER UNIT 2			DOLET HILLS			TOTAL
Utility plant in service	$	142,648		$	390,162		$	532,810	$	71,962		$	176,935		$	248,897
Accumulated depreciation	$	73,591		$	215,829		$	289,420	$	5,309		$	12,385		$	17,694
Construction work in progress	$	148		$	2,075		$	2,223	$	317		$	5,463		$	5,780
Ownership interest percentage	30		%	50		%			30		%	50		%
Nameplate capacity (MW)	523			650					523			650
Ownership interest (MW)	157			325					157			325



Cleco Power
				AT DEC. 31, 2018
(THOUSANDS, EXCEPT PERCENTAGES AND MW)	RODEMACHER UNIT 2			DOLET HILLS			TOTAL
Utility plant in service	$	146,142		$	394,431		$	540,573
Accumulated depreciation	$	79,489		$	229,882		$	309,371
Construction work in progress	$	317		$	5,463		$	5,780
Ownership interest percentage	30		%	50		%
Nameplate capacity (MW)	523			650
Ownership interest (MW)	157			325



Note 57 — Fair Value Accounting

The amounts reflected in Cleco and Cleco Power’s Consolidated Balance Sheets at December 31, ~~2015~~2018, and ~~December 31, 2014~~2017, for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, short-term debt, and accounts payable approximate fair value because of their short-term nature. Cleco applies the provisions of the fair value measurement standard to its non-recurring, non-financial measurements including business combinations as well as impairment related to goodwill and other long-lived assets.

The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments not measured at fair value inon Cleco and Cleco Power’s Consolidated Balance Sheets:


Cleco
					AT DEC. 31,				AT DEC. 31,
			2015				2014		2018				2017
(THOUSANDS)	CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Cash equivalents	$	64,200	$	64,200	$	39,700	$	39,700
Restricted cash equivalents	$	25,384	$	25,384	$	24,001	$	24,001
Long-term debt	$	1,299,529	$	1,463,989	$	1,368,354	$	1,601,816	$	2,889,631	$	2,859,924	$	2,866,955	$	2,921,325

* The carrying value of long-term debt does not include deferred issuance costs of $10.3 million in 2018 and $11.6 million in 2017.


Cleco Power
					AT DEC. 31,				AT DEC. 31,
			2015				2014		2018				2017
(THOUSANDS)	CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Cash equivalents	$	62,000	$	62,000	$	34,700	$	34,700
Restricted cash equivalents	$	25,363	$	25,363	$	23,980	$	23,980
Long-term debt	$	1,265,529	$	1,429,989	$	1,311,354	$	1,544,816	$	1,400,930	$	1,517,152	$	1,369,810	$	1,535,234

* The carrying value of long-term debt does not include deferred issuance costs of $8.3 million in 2018 and $9.1 million in 2017.



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

Long-term debt liability consists of a single class. In order to fund capital requirements, Cleco issues fixed and variable rate long-term debt with various tenors. The fair value of this class fluctuates as the market interest rates for fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the debt could also change from period to period due to changes in credit rating of the Cleco entity by which the debt was issued. The fair value of long-term debt is classified as Level 2 in the fair value hierarchy.

Fair Value Measurements and Disclosures

Cleco classifies assets and liabilities that are ~~either~~ measured ~~or disclosed~~ at their fair value according to three different levels depending on the inputs used in determining fair value.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured ~~or disclosed~~ on a recurring basis:

Cleco
CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(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)

Asset Description
Institutional money market funds $ 89,584
$ —
$ 89,584
$ —
$ 63,701
$ —
$ 63,701
$ —
FTRs 7,673
—
—
7,673
10,776
—
—
10,776
Total assets $ 97,257
$ —
$ 89,584
$ 7,673
$ 74,477
$ —
$ 63,701
$ 10,776
Liability Description

Long-term debt $ 1,463,989
$ —
$ 1,463,989
$ —
$ 1,601,816
$ —
$ 1,601,816
$ —
FTRs 275
—
—
275
827
—
—
827
Total liabilities $ 1,464,264
$ —
$ 1,463,989
$ 275
$ 1,602,643
$ —
$ 1,601,816
$ 827

Cleco Power
CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(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)

Asset Description
Institutional money market funds $ 87,363
$ —
$ 87,363
$ —
$ 58,680
$ —
$ 58,680
$ —
FTRs 7,673
—
—
7,673
10,776
—
—
10,776
Total assets $ 95,036
$ —
$ 87,363
$ 7,673
$ 69,456
$ —
$ 58,680
$ 10,776
Liability Description

Long-term debt $ 1,429,989
$ —
$ 1,429,989
$ —
$ 1,544,816
$ —
$ 1,544,816
$ —
FTRs 275
—
—
275
827
—
—
827
Total liabilities $ 1,430,264
$ —
$ 1,429,989
$ 275
$ 1,545,643
$ —
$ 1,544,816
$ 827



CLECO
CLECO POWER		2018 FORM 10-K



Cleco
	FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT DEC. 31, 2018		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)
Asset Description
Institutional money market funds	$	133,722	$	—	$	133,722	$	—	$	144,302	$	—	$	144,302	$	—
FTRs	23,355		—		—		23,355		7,396		—		—		7,396
Total assets	$	157,077	$	—	$	133,722	$	23,355	$	151,698	$	—	$	144,302	$	7,396
Liability Description
FTRs	$	468	$	—	$	—	$	468	$	352	$	—	$	—	$	352
Total liabilities	$	468	$	—	$	—	$	468	$	352	$	—	$	—	$	352



Cleco Power
	FAIR VALUE MEASUREMENTS AT REPORTING DATE:
(THOUSANDS)	AT DEC. 31, 2018		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)
Asset Description
Institutional money market funds	$	55,900	$	—	$	55,900	$	—	$	95,681	$	—	$	95,681	$	—
FTRs	23,355		—		—		23,355		7,396		—		—		7,396
Total assets	$	79,255	$	—	$	55,900	$	23,355	$	103,077	$	—	$	95,681	$	7,396
Liability Description
FTRs	$	468	$	—	$	—	$	468	$	352	$	—	$	—	$	352
Total liabilities	$	468	$	—	$	—	$	468	$	352	$	—	$	—	$	352

The following ~~tables summarize~~table summarizes the net changes in the net fair value of FTR assets and liabilities classified as Level 3 in the fair value ~~hierarchy:~~hierarchy for Cleco and Cleco Power:


	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015			2014			2018			2017
Beginning balance	$	9,949		$	8,638		$	7,044		$	7,683
Unrealized losses*	(1,476		)	(2,651		)
Unrealized gains (losses)*							11,865			(1,392		)
Purchases	20,319			51,200			28,185			23,941
Settlements	(21,394		)	(47,238		)	(24,207		)	(23,188		)
Ending balance	$	7,398		$	9,949		$	22,887		$	7,044
* Unrealized losses are reported in Accumulated deferred fuel on Cleco and Cleco Power's Consolidated Balance Sheets.
* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco and Cleco Power's Consolidated Balance Sheets.							* Unrealized gains (losses) are reported through Accumulated deferred fuel on Cleco and Cleco Power's Consolidated Balance Sheets.

The following table quantifies the significant unobservable inputs used in developing the fair value of Level 3 positions for Cleco and Cleco Power as of December 31, ~~2015~~2018:

(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



	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT DOLLAR PER MWh)	Assets		Liabilities				Low			High
FTRs at December 31, 2018	$	23,355	$	468	RTO auction pricing	FTR price - per MWh	$	(4.40	)	$	15.10
FTRs at December 31, 2017	$	7,396	$	352	RTO auction pricing	FTR price - per MWh	$	(2.95	)	$	6.33

Cleco utilizes different valuation techniques for fair value calculations. In order to measure the fair value for Level 1 assets and liabilities, Cleco obtains the closing price from published indices in active markets for the various instruments and multiplies this price by the appropriate number of

instruments held. Level 2 fair values are determined by obtaining the closing price of similar assets and liabilities from published indices in active markets and then discounting the price to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. ~~Cleco has~~



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

~~consistently applied the Level 2 fair value technique from fiscal period to fiscal period.~~ Level 3 fair values occur in situations in which there is little, if any, market activity for the asset or liability at the measurement ~~date~~date. Cleco’s Level 3 assets and ~~therefore~~liabilities are valued using RTO auction ~~prices are used.~~prices. Cleco has consistently applied the Level 2 and Level 3 fair value techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in

isolation would result in a significantly different fair value measurement.

The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability.

At December 31, ~~2015~~2018, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The institutional money market funds were reported on Cleco’s Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of ~~$64.2~~$103.8 million,, ~~$9.3~~ $11.2 million,, and ~~$16.1~~$18.7 million,, respectively, at December 31, ~~2015~~2018., and $111.1 million, $13.1 million, and $20.1 million, respectively, at December 31, 2017. At Cleco Power, the institutional money market funds were



CLECO
CLECO POWER		2018 FORM 10-K

reported on Cleco Power’s Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of ~~$62.0~~$26.1 million,, ~~$9.3~~ $11.2 million,, and ~~$16.1~~$18.6 million,, respectively, at December 31, ~~2015~~2018., and $62.5 million, $13.1 million, and $20.1 million, respectively, at December 31, 2017. If the money market funds failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by either Cleco or Cleco Power. The Level 2 institutional money market funds asset consists of a single class. In order to capture interest income and minimize risk, cash is invested in money market funds that invest primarily in short-term securities issued by the U. S. Treasury to maintain liquidity and achieve the goal of a net asset value of a dollar. The risks associated with this class are counterparty risk of the fund manager and risk of price volatility associated with the underlying securities of the fund.

Cleco Power’s FTRs were priced using MISO’s monthly auction prices. Forward seasonal periods are not included in

every monthly auction; therefore, the average of the most recent seasonal auction prices is used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from MISO auctions, which occur monthly in the Multi-Period Monthly Auction.

The Level 2 long-term debt liability consists of a single class. In order to fund capital requirements, Cleco issues fixed and variable rate long-term debt with various tenors. The fair value of this class fluctuates as the market interest rates for fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the debt could also change from period to period due to changes in the credit rating of the Cleco entity by which the debt was issued.

During the years ended December 31, ~~2015~~2018, and ~~2014~~,2017, Cleco did not experience any transfers between levels within the fair value hierarchy.

Commodity Contracts

The following table presents the fair values of derivative instruments and their respective line items as recorded on Cleco and Cleco Power’s Consolidated Balance Sheets at December 31, ~~2015~~2018, and ~~2014~~:2017:


	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS					DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT DEC. 31, 2015		AT DEC. 31, 2014		BALANCE SHEET LINE ITEM	AT DEC. 31, 2018		AT DEC. 31, 2017
Commodity-related contracts	Commodity-related contracts					Commodity-related contracts
FTRs:
Current	Energy risk management assets	$	7,673	$	10,776	Energy risk management assets	$	23,355	$	7,396
Current	Energy risk management liabilities	275		827		Energy risk management liabilities	468		352
Commodity-related contracts, net	Commodity-related contracts, net	$	7,398	$	9,949	Commodity-related contracts, net	$	22,887	$	7,044

The following table presents the effect of derivatives not designated as hedging instruments on Cleco and Cleco Power’s Consolidated Statements of Income for the years December 31, ~~2015~~2018, ~~2014~~2017, and ~~2013:~~2016:


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, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Commodity contracts
FTRs⁽¹⁾	Electric operations	$	50,594		74,454			$	243		Electric operations	$	39,659		$	23,826		$	17,506		$	3,012
FTRs⁽¹⁾	Power purchased for utility customers	(27,509		)	(46,386		)	(19		)	Power purchased for utility customers	(4,566		)	(5,509		)	(2,112		)	(582		)
Total		$	23,085		$	28,068		$	224			$	35,093		$	18,317		$	15,394		$	2,430

⁽¹⁾ AtFor the years ended December 31, ~~2015, 2014,~~2018 and ~~2013,~~2017, unrealized gains (losses) associated with FTRs of $11.9 million and $(1.4) million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the predecessor period January 1, 2016 - April 12, 2016, and the successor period April 13, 2016 - December 31, 2016, unrealized (losses) gains associated with FTRs of ~~($1.5 million), ($2.7 million),~~$(1.0) million and ~~$8.6~~$3.1 million, respectively, were reported inthrough Accumulated deferred fuel on the balance sheet.



Cleco Power
		AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	DERIVATIVES LINE ITEM	2018			2017			2016
Commodity contracts
FTRs⁽¹⁾	Electric operations	$	39,659		$	23,826		$	20,518
FTRs⁽¹⁾	Power purchased for utility customers	(4,566		)	(5,509		)	(2,694		)
Total		$	35,093		$	18,317		$	17,824

⁽¹⁾ For the years ended December 31, 2018, 2017, and 2016, unrealized gains (losses) associated with FTRs of $11.9 million, $(1.4) million, and $2.1 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

At December 31, 2015, and 2014, Cleco Power had no open positions hedged for natural gas. 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 submitted to the LPSC by June 30, 2018.

Cleco Power purchases the majority of its FTRs in annual auctions facilitated by MISO during the second quarter of each year and may also purchase additional FTRs in monthly auctions facilitated by MISO. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. FTRs represent rights to congestion credits or

~~charges along a path during a given time frame for a certain MW quantity. They are not designated as hedging instruments for accounting purposes.~~ The total volume of FTRs that Cleco Power had outstanding at December 31, ~~2015,~~2018, and ~~2014~~2017 was ~~8.4~~8.7 million MWh and ~~8.9~~9.0 million MWh, respectively.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



Note 68 — Debt

Cleco Power’s total indebtedness as of December 31, 2018, and 2017 was as follows:

~~Cleco~~



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018			2017
Bonds
Senior notes, 2.94%, due 2022	$	25,000		$	25,000
Senior notes, 3.08%, due 2023	100,000			100,000
Senior notes, 3.17%, due 2024	50,000			—
Senior notes, 3.68%, due 2025	75,000			75,000
Senior notes, 3.47%, due 2026	130,000			130,000
Senior notes, 4.33%, due 2027	50,000			50,000
Senior notes, 3.57%, due 2028	200,000			200,000
Senior notes, 6.50%, due 2035	295,000			295,000
Senior notes, 6.00%, due 2040	250,000			250,000
Senior notes, 5.12%, due 2041	100,000			100,000
Series A GO Zone bonds, 2.00%, due 2038, mandatory tender in 2020	50,000			50,000
Series B GO Zone bonds, 4.25%, due 2038	50,000			50,000
Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023	31,625			50,819
Total bonds	1,406,625			1,375,819
Other long-term debt
Barge lease obligations	16,418			—
Gross amount of long-term debt	1,423,043			1,375,819
Less: long-term debt due within one year	20,571			19,193
Less: capital lease obligations classified as long-term debt due within one year	557			—
Unamortized debt discount	(5,695		)	(6,010		)
Unamortized debt issuance costs	(8,446		)	(9,141		)
Total long-term debt and capital leases, net	$	1,387,774		$	1,341,475

Cleco’s total indebtedness as of December 31, ~~2015~~,2018, and ~~2014~~2017 was as follows:

AT DEC. 31,
(THOUSANDS) 2015
2014

Bonds
Cleco Power’s senior notes, 4.95%, due 2015 $ —
$ 50,000

Cleco Power’s senior notes, 6.65%, due 2018 250,000
250,000

Cleco Power’s senior notes, 3.68%, due 2025 75,000
—

Cleco Power’s senior notes, 4.33%, due 2027 50,000
50,000

Cleco Power’s senior notes, 6.50%, due 2035 295,000
295,000

Cleco Power’s senior notes, 6.00%, due 2040 250,000
250,000

Cleco Power’s senior notes, 5.12%, due 2041 100,000
100,000

Cleco Power’s Series A GO Zone bonds, 2.00%, due 2038, mandatory tender in 2020 50,000
50,000

Cleco Power’s Series B GO Zone bonds, 4.25%, due 2038 50,000
50,000

Cleco Power’s solid waste disposal facility bonds, 4.70%, due 2036, callable after November 1, 2016 60,000
60,000

Cleco Katrina/Rita’s storm recovery bonds, 4.41%, due 2020 17,929
33,754

Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023 67,600
67,600

Total bonds 1,265,529
1,256,354

Other long-term debt

Cleco Corporation’s credit facility draws 34,000
57,000

Cleco Power’s credit facility draws —
20,000

Cleco Power’s bank term loan, due 2015 —
35,000

Barge lease obligations, ending 2017 4,425
6,873

Gross amount of long-term debt 1,303,954
1,375,227

Less: long-term debt due within one year 16,814
15,824

Less: lease obligations classified as long-term debt due within one year 2,607
2,448

Unamortized debt discount (6,885 ) (7,302 )
Unamortized debt issuance costs (9,945 ) (10,655 )
⁽¹⁾
Total long-term debt, net $ 1,267,703
$ 1,338,998



Cleco
	AT DEC. 31,
(THOUSANDS)	2018			2017
Total Cleco Power long-term debt and capital leases, net	$	1,387,774		$	1,341,475
Cleco Holdings’ long-term debt, net
Senior notes, 3.250%, due 2023	165,000			165,000
Senior notes, 3.743%, due 2026	535,000			535,000
Senior notes, 4.973%, due 2046	350,000			350,000
Bank term loan, variable rate, due 2021	300,000			300,000
Unamortized debt issuance costs⁽¹⁾	(1,989		)	(2,516		)
Fair value adjustment	138,700			147,146
Total Cleco long-term debt and capital leases, net	$	2,874,485		$	2,836,105

⁽¹⁾~~Amounts for 2014 were adjusted to reflect 2015 accounting guidance that requires~~For December 31, 2018, and 2017, this amount includes unamortized debt issuance costs ~~to be presented~~for Cleco Holdings of $8.2 million and $9.2 million, respectively, partially offset by deferred debt issuance costs eliminated as a ~~direct deduction from the carrying value~~result of the ~~related debt.~~2016 Merger of $6.3 million and $6.7 million, respectively. For more information, see Note 25 — ~~“Summary of Significant Accounting Policies~~“Regulatory Assets and Liabilities — ~~Recent Authoritative Guidance.~~Cleco Holdings’ 2016 Merger Adjustments.”

The principal amounts payable under long-term debt agreements for each year through ~~2020~~2023 and thereafter are as follows:

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



(THOUSANDS)	CLECO		CLECO POWER
For the year ending Dec. 31,
2019	$	20,571	$	20,571
2020	$	11,054	$	11,054
2021	$	300,000	$	—
2022	$	25,000	$	25,000
2023	$	265,000	$	100,000
Thereafter	$	2,135,000	$	1,250,000

The ~~principal~~ amounts payable under the capital lease agreements for each year through ~~2017~~2023 and thereafter are as follows:

YEAR ENDING DEC. 31, (THOUSANDS)
Amounts payable under capital lease agreements
2016 $ 2,607
2017 $ 1,818



(THOUSANDS)	CLECO		CLECO POWER
For the year ending Dec. 31,
2019	$	557	$	557
2020	$	617	$	617
2021	$	682	$	682
2022	$	755	$	755
2023	$	836	$	836
Thereafter	$	12,971	$	12,971

Cleco Power Debt

Cleco Power had no short-term debt outstanding at December 31, ~~2015,~~2018, and ~~2014.~~2017.

At December 31, ~~2015, Cleco’s long-term debt outstanding was~~ ~~$1.29 billion, of which~~ ~~$19.4 million~~ ~~was due within one year. The long-term debt due within one year at~~ ~~December 31, 2015, represents $16.8 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $2.6 million~~ ~~of capital lease payments.~~

~~Cleco Power~~

~~Cleco Power’s total indebtedness as of~~ ~~December 31, 2015, and~~ ~~2014~~ ~~was as follows:~~

AT DEC. 31,
(THOUSANDS) 2015
2014

Bonds
Senior notes, 4.95%, due 2015 $ —
$ 50,000

Senior notes, 6.65%, due 2018 250,000
250,000

Senior notes, 3.68%, due 2025 75,000
—

Senior notes, 4.33%, due 2027 50,000
50,000

Senior notes, 6.50%, due 2035 295,000
295,000

Senior notes, 6.00%, due 2040 250,000
250,000

Senior notes, 5.12%, due 2041 100,000
100,000

Series A GO Zone bonds, 2.00%, due 2038, mandatory tender in 2020 50,000
50,000

Series B GO Zone bonds, 4.25%, due 2038 50,000
50,000

Solid waste disposal facility bonds, 4.70%, due 2036, callable after November 1, 2016 60,000
60,000

Cleco Katrina/Rita’s storm recovery bonds, 4.41%, due 2020 17,929
33,754

Cleco Katrina/Rita’s storm recovery bonds, 5.61%, due 2023 67,600
67,600

Total bonds 1,265,529
1,256,354

Other long-term debt

Bank term loan, due 2015 —
35,000

Credit facility draws —
20,000

Barge lease obligations, ending 2017 4,425
6,873

Gross amount of long-term debt 1,269,954
1,318,227

Less: long-term debt due within one year 16,814
15,824

Less: lease obligations classified as long-term debt due within one year 2,607
2,448

Unamortized debt discount (6,885 ) (7,302 )
Unamortized debt issuance costs (9,609 ) (10,044 )
⁽¹⁾
Total long-term debt, net $ 1,234,039
$ 1,282,609

⁽¹⁾Amounts for 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 Note 2 — “Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

~~The principal amounts payable under long-term debt agreements for each year through~~ ~~2020~~ ~~and thereafter are as follows:~~

YEAR ENDING DEC. 31, (THOUSANDS)
Amounts payable under long-term debt agreements
2016 $ 16,814
2017 $ 17,896
2018 $ 269,193
2019 $ 20,571
2020 $ 11,055
Thereafter $ 930,000



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

~~The principal amounts payable under the capital lease agreements for each year through 2017 are as follows:~~

YEAR ENDING DEC. 31, (THOUSANDS)
Amounts payable under capital lease agreements
2016 $ 2,607
2017 $ 1,818

~~Cleco Power had~~ no ~~short-term debt outstanding at December 31, 2015, and 2014.~~

At ~~December 31, 2015~~2018, Cleco Power’s long-term debt outstanding was ~~$1.25~~$1.41 billion,, of which ~~$19.4~~$21.1 million was due within one year. The long-term debt due within one year at December 31, ~~2015~~2018, represents ~~$16.8~~$20.6 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and ~~$2.6~~$0.5 million of capital lease payments.

On ~~April 30, 2015,~~December 18, 2017, Cleco Power ~~repaid~~entered into an agreement for the issuance and sale in a private placement of an aggregate principal amount of $175.0 million of senior notes. The senior notes were issued in two tranches. The first tranche was issued on December 18, 2017, with a principal amount 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 in December 2022 and 2023, respectively. The second tranche was issued on March 26, 2018, with a principal amount of $50.0 million at an interest rate of 3.17%, with a final maturity date in December 2024. The proceeds from the issuance and sale were used for capital investments and general utility purposes.

On April 2, 2018, Cleco Power entered into a capital lease agreement for use of 42 dedicated barges to transport petroleum coke and limestone to Madison Unit 3. For more information on the capital lease agreement, see Note 16 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — Fuel Transportation Agreement.”

Cleco Debt

Cleco had no short-term debt outstanding at December 31, 2018, and 2017.

At December 31, 2018, Cleco’s long-term debt outstanding was $2.90 billion, of which $21.1 million was due within one year. The long-term debt due within one year at December 31, 2018, represents $20.6 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $0.5 million of capital lease payments.



CLECO
CLECO POWER		2018 FORM 10-K

On July 31, 2018, Cleco Holdings amended its ~~$35.0~~$300.0 million ~~outstanding~~ bank term loan ~~that was due May 29, 2015. At December 31, 2014,~~agreement and its $100.0 million revolving credit facility agreement to release any and all collateral from all of its debt obligations under those agreements. As a result of the release of collateral, Moody’s and Fitch replaced Cleco Power had the intent 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~~Holdings’ senior secured debt rating with a ~~mandatory tender date of April 30, 2020.~~ senior unsecured debt rating. For more information on Cleco’s credit ratings and their impacts, see Note 16 — “Litigation, Other Commitment and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings issued $300.0 million under a new ~~interest~~bridge loan agreement and $100.0 million under a new term loan agreement. Both loan agreements are variable rate ~~period,~~debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the ~~interest rate is at~~applicable agreement) below 65% and (ii) a ~~fixed rate of 2.0% per annum.~~

~~On July 15, 2015,~~rating applicable to the Company’s senior debt rating (as defined in the applicable agreement). Cleco ~~Power repaid its $50.0 million 4.95% senior notes. As part~~Holdings anticipates that some or all 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 werevariable rate debt may be replaced or repaid with ~~$25.0 million~~long-term financing, markets permitting, within 12 months of ~~cash and $25.0 million from~~the closing of the Cleco ~~Power’s credit facility.~~Cajun Transaction.

In connection with Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a capacity agreement customer and a gas transport company. These letters of credit automatically renew each year and have no impact on the ~~fourth quarter of 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.Holdings’ credit facility.

Credit Facilities

At December 31, ~~2015~~,2018, Cleco Holdings had ~~two separate revolving credit facilities, one for Cleco Corporation and one for Cleco Power, with~~ a ~~maximum aggregate capacity of~~ ~~$550.0 million~~.

At ~~December 31, 2015, Cleco Corporation had $34.0 million of borrowings outstanding under its $250.0~~$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 restrictive financial covenants and expires in ~~2018.~~2021. The borrowing costs under ~~this~~Cleco Holdings’ credit 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%. If Cleco Holding’s credit ratings were to be downgraded one level, Cleco Holdings could be required to pay higher fees and additional interest of 0.075% and 0.50%, respectively, under the pricing levels of its credit facility. Under covenants contained in Cleco ~~Corporation’s~~Holdings’ credit facility, Cleco is required to maintain total indebtedness less than or equal to ~~or less than~~ 65% of total capitalization. At December 31, ~~2015, $1.01 billion~~2018, $655.0 million of Cleco’s ~~retained earnings~~member’s equity was unrestricted.

At December 31, ~~2015~~,2018, Cleco Holdings was in compliance with the covenants of its credit facility. In connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total credit facility of $175.0 million. All other terms remained the same. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

At December 31, 2018, Cleco Power had ~~no borrowings outstanding under its~~a $300.0 million credit ~~facility; however, Cleco Power has issued a $2.0 million letter of~~facility. The credit ~~to MISO, leaving an available borrowing capacity of $298.0 million.~~facility includes restrictive financial covenants and expires in 2021. The borrowing costs under ~~this~~Cleco Power’s credit facility are equal to LIBOR plus ~~0.9%~~1.125% or ABR plus ~~facility~~0.125%, plus commitment fees of ~~0.1%~~0.125%. ~~The letter of credit issued to MISO is pursuant to the credit requirements of FTRs. This letter of credit automatically renews each year and reduces~~If Cleco Power’s credit ~~facility capacity.~~ratings were to be downgraded one level, Cleco Power could be required to pay higher fees and additional interest of 0.05% and 0.125%, respectively, under the pricing levels of its credit facility. Under covenants contained in Cleco Power’s credit facility, Cleco Power is required to maintain total indebtedness less than or equal to ~~or less than~~ 65% of total capitalization. At December 31, ~~2015~~, ~~$884.3~~2018, $831.9 million of Cleco Power’s

member’s equity was unrestricted. If Cleco Power were to default under its credit facility ~~then~~or any other debt agreements, Cleco ~~Corporation~~Holdings would be considered to be in default under its facility. At December 31, ~~2015~~,2018, Cleco Power was in compliance with the covenants in its credit facility.



Note 79 — Common Stock

Stock-Based Plan Descriptions and Share Information

~~At December 31,~~ ~~2015, and~~ ~~2014~~,Prior to the completion of the 2016 Merger, Cleco had two stock-based compensation plans: the ESPP and the LTIP. ~~In accordance with~~As a result of the completion of the 2016 Merger, ~~Agreement,~~ the ESPP ~~has been suspended~~ and ~~will be terminated if the Merger is completed. If the Merger closes, all unvested shares outstanding under~~ the LTIP ~~that~~ were granted prior to January 1, 2015, will vest at target and be paid out in cash to plan participants in accordance with the terms of the Merger Agreement. Unvested shares granted in 2015 will be prorated to the target amount and be paid out in cash to plan participants in accordance with the terms of the Merger Agreement.terminated. For more information about the 2016 Merger, see Note 204 — ~~“Agreement and Plan of Merger.~~“Business Combinations.”

~~Employee Stock Purchase Plan~~LTIP

Prior to October 17, 2014, regular, full-time, and part-time employees of Cleco Corporation and its participating subsidiaries, except officers, general managers, and employees who owned 5% or more of Cleco Corporation’s stock, were eligible to participate in the ESPP. No trust or other fiduciary account was established in connection with the ESPP. Shares of common stock were purchased at a 5% ~~discount of the fair market value as of the last trading day of each calendar quarter. A participant could purchase a maximum of~~ ~~125~~ ~~shares per offering period. Dividends received on shares were automatically reinvested as required by the dividend reinvestment plan (DRIP) provisions of the ESPP.~~

~~A maximum of~~ ~~734,000~~ shares of common stock could be purchased under the ESPP, subject to adjustment for changes in the capitalization of Cleco Corporation. The Compensation Committee of Cleco Corporation’s Board of Directors monitors the ESPP. The Compensation Committee and the Board of Directors possess the authority to amend the ESPP, but shareholder approval is required for any amendment that increases the number of shares covered by the ESPP. As of December 31, 2015, there were 392,704 shares of common stock available for purchase under the ESPP. As stated above, the ESPP plan has been suspended pending the completion of the ~~Merger.~~

~~Long-Term Incentive Compensation Plan~~

~~Stock~~2016 Merger, stock options, restricted stock, also known as non-vested stock, common stock equivalent units, and stock appreciation



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

rights ~~may~~were available to be granted or awarded to certain officers, key employees, or directors of Cleco Corporation and its affiliates under the LTIP. On December 31, 2009, the 2000 LTIP expired and no further grants or awards were made under this plan. The grants and awards that had been made under the 2000 LTIP were to remain outstanding and in effect until exercised, matured, expired, or forfeited in accordance with their existing terms. During 2015, all restrictions on non-vested shares previously awarded pursuant to the 2000 LTIP had lapsed. As of December 31, 2015, no ~~shares of non-vested Cleco Corporation common stock remained outstanding under the 2000 LTIP. There were~~ no ~~stock options or common stock equivalent units outstanding under this plan at December 31, 2015.~~

~~With shareholder approval, the 2010 LTIP became effective January 1, 2010. Under this plan, a maximum of~~ ~~2,250,000~~ shares of Cleco Corporation common stock can be granted or awarded. During 2015, Cleco granted 9,611 shares of stock to directors of Cleco pursuant to the LTIP. All of these shares vested immediately upon award and were issued from shares previously purchased through Cleco’s common stock repurchase program. At December 31, 2015, there were ~~1,207,560~~ ~~shares available for future grants or awards under the 2010 LTIP.~~

~~Non-Vested Stock and Common Stock Equivalent Units~~

~~In 2015, 2014, and 2013, Cleco granted non-vested stock to certain officers, key employees, and directors.~~ Because it ~~can~~was only to be settled in shares of Cleco Corporation common stock, non-vested stock iswas classified as equity. Recipients of non-vested stock ~~have~~had full voting rights of a stockholder. At the time restrictions ~~lapse,~~lapsed, the accrued dividend equivalent units ~~are~~were paid to the recipient only to the extent that target shares ~~vest.~~vested.

In order to vest, the non-vested stock ~~requires~~required the satisfaction of a service requirement and a market-based requirement. Recipients of non-vested stock ~~are~~were eligible to receive opportunity instruments if certain market-based measures ~~are~~were exceeded. Cleco also ~~awards~~awarded non-vested stock with only a service period requirement to certain employees and directors. These awards ~~require~~required the satisfaction of a ~~pre-determined~~predetermined service period in order for the shares to vest.

During ~~2015~~,the predecessor period January 1, 2016, through April 12, 2016, Cleco granted ~~90,050~~no shares of non-vested stock ~~to certain officers and key employees of Cleco~~ pursuant to the LTIP. ~~All~~As a result of ~~these~~the 2016 Merger on April 13, 2016, all unvested shares ~~of non-vested stock~~outstanding under the LTIP that were granted ~~from shares previously purchased through Cleco’s common stock repurchase program.~~

~~At December 31,~~ prior to January 1, 2015,~~, there were~~ ~~392,954~~ ~~non-vested~~ vested at target and ~~opportunity shares for which restrictions had not lapsed. At December 31,~~ ~~2015, there~~ were ~~73,511~~ ~~shares of non-vested stock granted with only a service period requirement that had not yet been completed.~~

~~Under the 2010 LTIP plan, common stock equivalent units are also available to be awarded. Because they are settled~~paid out in cash ~~awarded common stock equivalent units are classified as a liability. Recipients~~to plan participants. Unvested shares that were granted during 2015 were prorated to the target amount and paid out in cash to plan participants in accordance with the terms of ~~common stock equivalent units receive dividend equivalent units under~~ the same terms as the dividends paid on non-vested stock. Also like non-vested stock, common stock equivalent units require the satisfaction of a service requirement and a market-based requirement. Recipients of common stock equivalent units are eligible to receive opportunity instruments if certain market-based measures are exceeded.Merger Agreement.

~~During January 2013, restrictions on all previously awarded common stock equivalent units had lapsed. There~~

~~were~~ no ~~common stock equivalent units granted in~~ ~~2015~~, ~~2014, or~~ ~~2013~~.

~~A summary of non-vested stock activity during the year ended December 31,~~ ~~2015, is presented in the following table:~~

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

The fair value of shares of non-vested stock ~~which~~that vested during the ~~years ended December 31,~~ ~~2015~~, ~~2014, and~~ ~~2013~~predecessor period January 1, 2016, through April 12, 2016, was ~~$3.3 million~~, ~~$5.6 million, and~~ ~~$5.2 million, respectively.~~

~~The fair value of shares of non-vested stock granted during~~ ~~2015~~, ~~2014, and~~ ~~2013~~ ~~under the LTIP is estimated on the date of grant and the expense is calculated using the Monte Carlo simulation model with the assumptions listed in the following table:~~

AT DEC. 31,
2015
2014
2013
Expected term (in years) ⁽¹⁾
3.0
3.0
3.0
Volatility of Cleco stock ⁽²⁾
15.8 % 17.3 % 18.1 %
Correlation between Cleco stock volatility and peer group 63.1 % 66.5 % 69.7 %
Expected dividend yield 2.92 % 3.0 % 3.2 %
Weighted average fair value (Monte Carlo model) $ 45.60
$ 54.58
$ 42.66

⁽¹⁾~~The expected term was based on the service period of the award.~~

⁽²⁾~~The volatility rate is based on historical stock prices over an appropriate period, generally equal to the expected term.~~$10.1 million.

Stock-Based Compensation

During ~~the years ended December 31,~~ ~~2015~~, ~~2014, and~~ ~~2013~~,2016, Cleco did not modify any of the terms of outstanding awards. Cleco ~~has~~ recognized stock-based compensation expense for these provisions in accordance with the non-substantive vesting period approach.

Prior to the completion of the 2016 Merger, Cleco recorded compensation expense for all non-vested ~~stock during the years ended December 31,~~ ~~2015~~, ~~2014, and~~ ~~2013~~.stock. Assuming achievement of vesting requirements iswas probable, stock-based compensation expense of non-vested stock iswas recorded during the service periods, which ~~are~~were generally three ~~years, after which the restrictions lapse.~~years. All stock-based compensation cost iswas measured at the grant date based on the fair value of the award and iswas recognized as an expense in the income statement over the requisite service period of the award. Awards that vest pro rata during the requisite service period that contain only a service



CLECO
CLECO POWER		2018 FORM 10-K

condition ~~are~~were defined as having a graded vesting schedule and could behave been treated as multiple awards with separate vesting schedules. However, Cleco ~~has~~ elected to treat grants with graded vesting schedules as one award and ~~recognize~~recognized the related compensation expense on a straight-line basis over the requisite service period.



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

~~The ESPP does not contain optionality features beyond those listed by~~During the ~~authoritative guidance on stock-based compensation. Therefore,~~predecessor period January 1, 2016, through April 12, 2016, Cleco ~~is not required to recognize a fair-value expense related to the ESPP.~~

~~Pretax~~reported pretax compensation expense ~~reported by~~of $3.2 million on non-vested stock with a related tax benefit of $1.2 million. In April 2016, Cleco ~~and Cleco Power relating~~incurred $2.3 million of merger expense due to ~~their share-based compensation plans is shown in the following table:~~

CLECO CLECO POWER
FOR THE YEAR ENDED DEC. 31, FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
2015
2014
2013
Equity classification
Non-vested stock ⁽¹⁾
$ 6,110
$ 6,308
$ 6,147
$ 2,000
$ 2,004
$ 1,754
Total equity classification 6,110
6,308
6,147
2,000
2,004
1,754
Liability classification

Common stock equivalent units —
—
1
—
—
—
Total pretax compensation expense $ 6,110
$ 6,308
$ 6,148
$ 2,000
$ 2,004
$ 1,754
Tax benefit $ 2,351
$ 2,427
$ 2,366
$ 770
$ 771
$ 675

⁽¹⁾ ~~For~~ ~~each~~accelerated vesting of the ~~years ended~~ ~~December 31, 2015~~, ~~2014, and~~ ~~2013~~,LTIP shares.

For the predecessor period January 1, 2016, through April 12, 2016, compensation expense included in Cleco’s Consolidated Statements of Income related to non-forfeitable dividends paid on non-vested stock that iswas not expected to vest ~~and~~was less than $0.1 million.

During the year ended December 31, 2016, Cleco Power reported pretax compensation expense of $1.0 million on non-vested stock ~~options was~~ ~~$0.1 million~~.with a related tax benefit of $0.4 million.

The amount of stock-based compensation capitalized in property, plant, and equipment on Cleco’s Consolidated Balance Sheets for ~~each of~~ the ~~years ended December 31,~~ ~~2015, and~~ ~~2014~~predecessor period January 1, 2016, through April 12, 2016, was ~~$0.8 million~~.$0.6 million. The amount of stock-based compensation capitalized in property, plant, and equipment on Cleco Power’s Consolidated Balance Sheets for the ~~years ended December 31,~~ ~~2015, and~~ ~~2014~~ ~~was~~ ~~$0.7 million~~ ~~and~~ ~~$0.8 million, respectively.~~

~~At December 31,~~ ~~2015, there were~~ ~~145,979~~ ~~non-vested share-based compensation arrangements granted under the LTIP that were expected to vest over an average period of 1.4 years. The total unrecognized pretax compensation cost was~~ ~~$6.7 million~~ ~~for non-vested stock-based compensation arrangements granted under the LTIP.~~

~~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. Under this program, purchases may be made on a discretionary basis at times and in amounts as determined by management, subject to market conditions, legal requirements, and other factors. Purchases under the program are not announced in advance and may be made in the open market or through privately negotiated transactions. During the years ended December 31, 2015, and 2013, no ~~shares of common stock were repurchased by Cleco Corporation. During the~~ year ended December 31, ~~2014,~~ ~~250,000~~ ~~shares of common stock were repurchased~~2016, was $0.6 million.

The ESPP did not contain optionality features beyond those listed by the authoritative guidance on stock-based compensation. Therefore, Cleco ~~Corporation. In accordance with~~was not required to recognize a fair-value expense related to 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 about the Merger, see Note 20 — “Agreement and Plan of Merger.”ESPP.



Note 810 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Benefits under the

plan reflect an employee’s years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last ten years of employment with Cleco. Cleco’s policy is to base its contributions to the

employee pension plan upon actuarial computations utilizing the projected unit credit method, subject to the IRS’s full funding limitation. Cleco did not make any required or discretionary contributions to the pension plan in ~~2015~~2018 and ~~2014.~~2017, nor does it expect to make any in 2019. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. Based on funding assumptions at December 31, 2018, management estimates that $95.5 million in pension contributions will be required through 2023. 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. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is ~~considered~~ the plan sponsor and Support Group is ~~considered~~ the plan administrator.

Cleco’s retirees ~~and their dependents~~ may be eligible to receive ~~medical, dental, vision, and~~Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance ~~benefits (other benefits).~~benefits. Cleco recognizes the expected cost of ~~these other benefits~~Other Benefits during the periods in which the benefits are earned.

The employee pension plan and other benefits plan obligation, plan assets, and funded status at December 31, ~~2015~~2018, and ~~2014~~2017 are presented in the following table:

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 )



	PENSION BENEFITS						OTHER BENEFITS
	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017			2018			2017
Change in benefit obligation
Benefit obligation at beginning of period	$	567,215		$	512,785		$	43,203		$	44,136
Service cost	9,507			9,039			1,320			1,446
Interest cost	20,860			21,648			1,465			1,569
Plan participants’ contributions	—			—			1,224			1,149
Actuarial (gain) loss	(42,935		)	46,686			(1,106		)	437
Expenses paid	(2,786		)	(3,020		)	—			—
Benefits paid	(20,925		)	(19,923		)	(5,651		)	(5,534		)
Benefit obligation at end of period	530,936			567,215			40,455			43,203
Change in plan assets
Fair value of plan assets at beginning of period	444,089			403,715			—			—
Actual return on plan assets	(28,884		)	63,317			—			—
Expenses paid	(2,786		)	(3,020		)	—			—
Adjustment	439			—			—			—
Benefits paid	(20,925		)	(19,923		)	—			—
Fair value of plan assets at end of period	391,933			444,089			—			—
Unfunded status	$	(139,003	)	$	(123,126	)	$	(40,455	)	$	(43,203	)



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

The employee pension plan accumulated benefit obligation at December 31, ~~2015~~2018, and ~~2014~~2017 is presented in the following table:


					PENSION BENEFITS
	PENSION BENEFITS				AT DEC. 31,
(THOUSANDS)	2015		2014		2018		2017
Accumulated benefit obligation	$	440,876	$	452,991	$	491,522	$	520,612

The following table presents the net actuarial gains/losses ~~transition obligations/assets,~~ and prior ~~period~~ service ~~costs~~costs/credits included in other comprehensive income for other benefits and in regulatory assets for pension related to current year gains and losses as a result of being included ~~as a component of~~in net periodic benefit costs for the employee pension plan and other benefits plan atfor December 31, ~~2015~~2018, and ~~2014~~:2017:

PENSION BENEFITS OTHER BENEFITS
(THOUSANDS) 2015
2014
2015
2014
Net actuarial loss (gain) occurring during year $ 3,128
$ 74,242
$ (1,039 ) $ 1,228
Net actuarial loss amortized during year $ 13,828
$ 6,743
$ 866
$ 670
Transition obligation amortized during year $ —
$ —
$ —
$ 16
Prior service (credit) cost amortized during year $ (71 ) $ (71 ) $ 119
$ 119



	PENSION BENEFITS						OTHER BENEFITS
	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017			2018			2017
Net actuarial loss (gain) occurring during period	$	9,722		$	7,434		$	(1,106	)	$	437
Net actuarial loss (gain) amortized during period	$	12,313		$	10,008		$	135		$	(50	)
Prior service (credit) cost amortized during period	$	(71	)	$	(71	)	$	—		$	—

The following table presents net actuarial gains/losses and prior ~~period~~ service costs/credits in accumulated other comprehensive income for other benefits and in regulatory assets for pension that have not been recognized as

components of net periodic benefit costs and the amounts expected to be recognized in ~~2016~~2019 for the employee pension plan and other benefits plans ~~for~~at December 31, ~~2016~~, ~~2015~~,2019, 2018, and ~~2014~~:2017:

PENSION BENEFITS
OTHER BENEFITS
(THOUSANDS) 2016
2015
2014
2016
2015
2014
Net actuarial loss $ 8,935
$ 150,620
$ 161,320
$ 666
$ 8,805
$ 10,710
Prior service (credit) cost $ (71 ) $ (345 ) $ (417 ) $ 119

$ 363
$ 482



				PENSION BENEFITS									OTHER BENEFITS
	AT DEC. 31,									AT DEC. 31,
(THOUSANDS)	2019			2018			2017			2019			2018		2017
Net actuarial loss (gain)	$	7,496		$	140,377		$	142,967		$	(151	)	$	1,814	$	2,779
Prior service credit	$	(71	)	$	(131	)	$	(203	)	$	—		$	—	$	—

The non-service components of net periodic pension and Other Benefits cost are included in Other expense within Cleco and Cleco Power’s Consolidated Statements of Income. The

components of net periodic pension and other benefits costs for ~~2015~~, ~~2014~~,2018, 2017, and ~~2013~~2016 are as follows:


																						PENSION BENEFITS											OTHER BENEFITS
				PENSION BENEFITS								OTHER BENEFITS				SUCCESSOR									PREDECESSOR			SUCCESSOR							PREDECESSOR
(THOUSANDS)	2015			2014			2013			2015		2014		2013		FOR THE YEAR ENDED DEC. 31, 2018			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, 2018		FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Components of periodic benefit costs:
Components of periodic benefit costs
Service cost	$	10,419		$	8,050		$	9,889		$	1,635	$	1,542	$	1,656	$	9,507		$	9,039		$	6,909		$	2,563		$	1,320	$	1,446		$	1,112	$	431
Interest cost	20,795			19,851			17,940			1,607		1,809		1,568		20,860			21,648			15,088			6,242			1,465		1,569			1,237		476
Expected return on plan assets	(23,382		)	(24,507		)	(23,446		)	—		—		—		(23,773		)	(24,064		)	(17,310		)	(6,812		)	—		—			—		—
Amortizations:
Transition obligation	—			—			—			—		16		20
Prior period service (credit) cost	(71		)	(71		)	(71		)	119		119		—
Net loss	13,828			6,743			13,218			866		670		1,131
Amortizations
Prior service (credit) cost																(71		)	(71		)	(51		)	(20		)	—		—			—		34
Net loss (gain)																12,312			10,008			8,138			2,798			135		(50		)	—		181
Net periodic benefit cost	$	21,589		$	10,066		$	17,530		$	4,227	$	4,156	$	4,375	$	18,835		$	16,560		$	12,774		$	4,771		$	2,920	$	2,965		$	2,349	$	1,122

During the third quarter of 2016, management finalized its remeasurement of the pension plan as of April 13, 2016, associated with the 2016 Merger. On the date of the remeasurement, the discount rate decreased from 4.62% to 4.21%. Prior to the remeasurement, Cleco’s 2016 net periodic benefit cost for the pension plan was expected to be $15.9 million. Due to the remeasurement of the pension plan, Cleco’s 2016 net periodic benefit cost increased to $17.5 million.

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the years ended December 31, ~~2015~~, ~~2014~~,2018, and ~~2013~~2017 was $2.0 millionand$~~2.1~~1.8 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the predecessor period January 1, 2016, through April 12, 2016, was $0.5 million. The expense of the pension plan related to Cleco’s other subsidiaries for the, ~~$1.7 million, and~~ ~~$2.5 million, respectively.~~

successor period April 13, 2016, through December 31, 2016, was $1.3 million.

Cleco ~~Corporation~~Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Consolidated Statements of Income for the years ended December 31, ~~2015~~, ~~2014~~,2018, 2017, and ~~2013~~2016 was ~~$3.6~~$3.3 million,, ~~$3.6~~ $3.3 million,, and $~~3.8~~3.5 million, respectively. The current and non-current portions of the other benefits liability for Cleco and Cleco Power at December 31, ~~2015,~~2018, and ~~2014~~2017 are as follows:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current	$	4,130	$	4,061
Non-current	$	36,325	$	39,142

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

In March 2010, the President signed the PPACA, a comprehensive health care law. While all provisions of the PPACA are not effective immediately and the law has been amended since original enactment, management does not expect the provisions to materially impact the Registrants’ retiree medical unfunded liability and related expenses. Management will continue to monitor this law and its possible impact on the Registrants.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current	$	3,584	$	3,525
Non-current	$	31,694	$	34,033

The measurement date used to determine the pension and other postretirement benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows:

PENSION BENEFITS OTHER BENEFITS
2015
2014
2015
2014
Weighted-average assumptions used to determine the benefit obligation as of Dec. 31:
Discount rate 4.62 % 4.21 % 4.08 % 3.76 %
Rate of compensation increase 3.08 % 3.17 % N/A
N/A


			PENSION BENEFITS						OTHER BENEFITS				PENSION BENEFITS				OTHER BENEFITS
	2015		2014		2013		2015		2014		2013		AT DEC. 31,				AT DEC. 31,
Weighted-average assumptions used to determine the net benefit cost for the year ended Dec. 31:
													2018		2017		2018		2017
Weighted-average assumptions used to determine the benefit obligation
Discount rate	4.21	%	5.14	%	4.19	%	3.76	%	4.46	%	3.54	%	4.35	%	3.73	%	4.16	%	3.47	%
Expected return on plan assets	6.15	%	6.76	%	6.78	%	N/A		N/A		N/A
Rate of compensation increase	3.08	%	3.17	%	3.26	%	N/A		N/A		N/A		2.93	%	2.98	%	N/A		N/A



					PENSION BENEFITS								OTHER BENEFITS
	SUCCESSOR						PREDECESSOR		SUCCESSOR						PREDECESSOR
	FOR THE YEAR ENDED DEC. 31, 2018		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, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Weighted-average assumptions used to determine the net benefit cost
Discount rate	3.73	%	4.27	%	4.21	%	4.62	%	3.47	%	3.81	%	4.08	%	4.08	%
Expected return on plan assets	5.86	%	6.08	%	6.21	%	6.21	%	N/A		N/A		N/A		N/A
Rate of compensation increase	2.93	%	2.98	%	3.03	%	3.03	%	N/A		N/A		N/A		N/A

The expected return on plan assets was determined by examining the risk profile of each target category as compared to the expected return on that risk, within the parameters determined by the retirement committee. The result was also compared to the expected rate of return of other comparable plans. In assessing the risk as compared to return profile, historical returns as compared to risk were considered. The historical risk compared to returns was adjusted for the expected future long-term relationship between risk and return. The adjustment for the future risk compared to returns was, in part, subjective and not based on any measurable or observable events. For the calculation of the ~~2016~~2019 periodic expense, Cleco increased the expected long-term return on plan assets to ~~6.21%~~6.55%. Cleco expects pension expense to decrease in 2019 by approximately $7.2 million due to an increase in the discount rate and an increase in expected return on plan assets.

Employee pension plan assets ~~may be~~are invested in ~~publicly traded domestic common stocks, including Cleco Corporation common stock;~~accordance with the Pension Plan’s Investment Policy Statement. At December 31, 2018, allowable investments included U.S. ~~Government, federal agency,~~Equity Portfolios, International Equity - Developed Markets Portfolios, Emerging Markets Equity Portfolios, Multi-Asset Credits, Treasury Separate Trading of Registered Interest and

~~corporate obligations; an international equity fund, commercial real estate funds; a hedge fund~~ Principal of ~~funds;~~Securities (STRIPS), Fixed Income Portfolios, Fixed Income Portfolios - Long Credit, and pooled temporary investments. Investments in securities (obligations of U.S. Government, U.S. Government Agencies, and state and local governments, corporate debt, common/collective trust funds, mutual funds, common stocks, and preferred stock) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year.Real Estate Portfolios.

Real estate funds and the pooled separate accounts are stated at estimated market value based on appraisal reports

prepared annually by independent real estate appraisers (members of the American Institute of Real Estate Appraisers). The estimated market value of recently acquired properties is assumed to approximate cost.

The hedge fund of funds is stated at fair value based upon financial statements and other financial information reported by the management of the underlying funds. In January 2009, the relationship with the hedge fund of funds manager was restructured to redemption status only.

Fair Value Disclosures

Cleco classifies assets and liabilities measured at their fair value according to three different levels, depending on the inputs used in determining fair value.

Level 1 – unadjusted quoted prices in active, liquid markets for the identical asset or liability,

Level 2 – quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, including inputs that can be corroborated by observable market data, observable interest rate yield curves and volatilities, and

Level 3 – unobservable inputs based upon the entities’ own assumptions.

There have been no changes in the methodologies for determining fair value at December 31, ~~2015,~~2018, and ~~December 31, 2014.~~2017. The following tables disclose the pension plan’s fair value of financial assets measured on a recurring basis:

(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



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K


(THOUSANDS)		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, 2018		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		$	5,180	$	—	$	5,180	$	—
Cash equivalents											$	2,471	$	—	$	2,471	$	—
Common stock		13,967		13,967		—		—			13,111		13,111		—		—
Preferred stock		968		968		—		—
Obligations of U.S. Government, U.S. Government Agencies, and state and local governments		49,942		—		49,942		—
Obligations of Government, Government Agencies, and state and local governments										Obligations of Government, Government Agencies, and state and local governments	19,831		—		19,831		—
Mutual funds										Mutual funds
Domestic		55,005		55,005		—		—			79,210		79,210		—		—
International		25,096		25,096		—		—			43,418		43,418		—		—
Real estate funds		18,792		—		—		18,792			20,298		—		—		20,298
Corporate debt		202,253		—		202,253		—			138,391		—		138,391		—
Total		$	371,203	$	95,036	$	257,375	$	18,792		$	316,730	$	135,739	$	160,693	$	20,298

	Investments measured at net asset value⁽¹⁾	38,770								Investments measured at net asset value*	73,100
	Interest accrual	2,830								Interest accrual	2,103
	Total net assets	$	412,803							Total net assets	$	391,933
										*Investments measured at net asset value consist of Common/collective trust.

⁽¹⁾



(THOUSANDS)		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)
Asset Description
Cash equivalents		$	4,825	$	—	$	4,825	$	—
Common stock		17,655		17,655		—		—
Obligations of Government, Government Agencies, and state and local governments		50,852		—		50,852		—
Mutual funds
Domestic		58,617		58,617		—		—
International		36,970		36,970		—		—
Real estate funds		19,195		—		—		19,195
Corporate debt		204,835		—		204,835		—
Total		$	392,949	$	113,242	$	260,512	$	19,195

	Investments measured at net asset value*	48,103
	Interest accrual	3,037
	Total net assets	$	444,089
	*Investments measured at net asset value consist of Common/collective trust.

Amounts for 2014 were adjusted to reflect 2015 accounting guidance that no longer requires investments for which fair value is measured using the net asset value per share practical expedient to be categorized within the fair value hierarchy. For more information, see Note 2 — “Summary of Significant Accounting Policies — Recent Authoritative Guidance.”

Level 3 valuations are derived from other valuation methodologies including pricing models, discounted cash flow models, and similar techniques. Level 3 valuations incorporate subjective judgments and consider assumptions including capitalization rates, discount rates, cash flows, and other factors that are not observable in the market. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The following is a reconciliation of the beginning and ending balances of the pension plan’s real estate funds measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, ~~2015~~2018, and ~~2014~~:2017:

(THOUSANDS)
Balance, Dec. 31, 2013 $ 17,928
Unrealized gains 570
Purchases 294
Balance, Dec. 31, 2014 $ 18,792
Realized gains 9
Unrealized gains (148 )
Purchases 679
Sales (1,442 )
Balance, Dec. 31, 2015 $ 17,890



(THOUSANDS)
Balance, Dec. 31, 2016	$	18,668
Realized losses	(2,365		)
Unrealized gains	2,674
Purchases	649
Sales	(431		)
Balance, Dec. 31, 2017	$	19,195
Realized gains	29
Unrealized gains	391
Purchases	710
Sales	(27		)
Balance, Dec. 31, 2018	$	20,298

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. For ~~2015~~,2018, the return on plan assets was ~~(2.90)~~(7.31)% compared to an expected long-term return of ~~6.15%~~5.86%. The ~~2014~~2017 return on pension plan assets was ~~11.70%~~16.32% compared to an expected long-term return of ~~6.76%~~6.08%.

As of



CLECO
CLECO POWER		2018 FORM 10-K

December 31, ~~2015~~2018, none of the pension ~~plan held no shares of Cleco Corporation common stock. None of the~~ plan participants’ future annual benefits isare covered by insurance contracts. In December 2008, Cleco became aware that, through its hedge fund of funds manager, a portion of its pension plan assets were invested in the Madoff feeder fund investment, Ascot Fund Limited. In January 2009, Cleco Power

~~elected to liquidate the holdings of the hedge fund of funds manager. At~~ ~~December 31, 2015~~, the fund had $1.0 million remaining to be liquidated. Proceeds from the hedge fund of funds manager will be reallocated to the plan’s other investment managers. The hedge fund of funds investment is measured at fair value using the net asset value per share as a practical expedient (or its equivalent) and has not been classified in the fair value hierarchy.

Pension Plan Investment Objectives

~~Cleco Corporation’s~~Cleco’s retirement committee has established investment performance objectives of the pension plan assets. Over a three- to five-year period, the objectives are for the pension plan’s annualized total return to:

Exceed the (FAS) actuarial assumed rate of return on plan assets, and

Exceed the annualized total return of athe following customized index (based on the target allocation in the glide path) consisting of a mixture of S&P 500 Index, Russell 2500 Index, ~~MSCI EAFE~~Morgan Stanley Capital International All Country World ex U.S. Index, Morgan Stanley Capital International Emerging Markets Index, Customer Index related to Multi-Asset Credit asset class, Bloomberg Barclays Capital Long Credit Index, Bloomberg Barclays ~~Capital Long Government/Credit Index,~~15+ Year Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS), and National Council of Real Estate Investment Fiduciaries ~~Index, and U.S. Treasury Bills plus 5%.~~Index.

Risk characteristics of the portfolio (annualized standard deviation of returns) should be similar to or less than the custom index.

In order to meet the objectives and to control risk, the retirement committee has established the following guidelines that the investment managers must follow:

U.S. Domestic Equity Portfolios

Equity holdings of a single company (including common stock and convertible securities) must not exceed 10% of the manager’s ~~portfolio.~~portfolio measured at market value.

A minimum of 25 stocks should be ~~owned.~~owned in the portfolio.

Equity holdings in a single sector should not exceed the lesser of three times the sector’s weighting in the S&P 500 Index or 35% of the portfolio.

Equity holdings should represent at least 90% of the portfolio.

Marketable common stocks, preferred stocks convertible into common stocks, and fixed income securities convertible into common stocks are the only permissible equity investments.



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

Securities in foreign entities denominated in U.S. dollars are limited to 10%. Securities denominated in currencies other than U.S. dollars are not permitted.

The purchase of securities on margin and short sales is prohibited.

International Equity ~~Portfolios~~

- Developed Markets Portfolio

Equity holdings of a single company (including common stock and convertible securities) should not exceed 5% of the manager’s ~~portfolio.~~portfolio measured at market value.

A minimum of 30 stocks should be owned.

Equity holdings in a single sector should not exceed 35%.

A minimum of 50% of the countries within the ~~MSCI EAFE~~Morgan Stanley Capital International All Country World ex U.S. Index should be represented within the portfolio. The allocation to an individual country should not exceed the lesser of 30% or 5 times the country’s weighting within the ~~MSCI EAFE~~Morgan Stanley Capital International All Country World ex U.S. Index.

Currency hedging decisions are at the discretion of the investment manager.

Emerging Markets Portfolio

Equity holdings in any single company should not exceed 10% of the manager’s portfolio.

A minimum of 30 individual stocks should be owned.

Equity holdings of a single industry should not exceed 25%.

Equity investments must represent at least 75% of the manager’s portfolio.

A minimum of three countries should be represented within the manager’s portfolio.

Illiquid securities which are not readily marketable may represent no more than 10% of the manager’s portfolio.

Currency hedging decisions are at the discretion of the investment manager.

~~Fixed Income Portfolio - Long Government/~~Multi-Asset Credit

~~Only U.S. dollar denominated assets permitted, including U.S. government~~Assets can include, but would not be limited to, high yield debt, emerging market debt, global investment grade credit and ~~agency securities, corporate securities, structured securities, other interest bearing securities, and short-term investments.~~bank loans, as well as fixed income strategies.

~~At least 85%~~Currency hedging decisions are the discretion of the ~~debt securities should be~~ investment ~~grade securities (BBB-~~manager.

Treasury STRIPS

The STRIPS are synthetic zero-coupon bonds that are created by ~~S&P or Baa3 by Moody’s) or higher.~~

~~Debt holdings~~separating each coupon and principal payment of a ~~single issue or issuer must not exceed 5%~~treasury bond into a separate security. STRIPS take the form of a zero-coupon bond which is sold at a discount to face value and mature at par. They are backed by US Treasury securities.

Implementation of the ~~manager’s portfolio.~~

~~Aggregate net notional exposure~~portfolio is either through Treasury Futures or purchase of ~~futures, options, and swaps must not exceed 30% of the manager’s portfolio. Manager will only execute swaps with counterparties whose credit rating is A2/A or better.~~

~~Margin purchases or leverage is prohibited.~~Treasury STRIPS through an investment manager.

The ~~average weighted duration of portfolio security holdings, including derivative exposure, is expected to range within +/- 20% of the~~benchmark would be Bloomberg Barclays ~~Long Gov/Credit Index duration.~~15+ Year Treasury STRIPS.

Fixed Income Portfolio - Long Credit

Permitted assets include U.S. government and agency securities, corporate securities, mortgage-backed securities, investment-grade private placements, surplus notes, trust preferred, e-caps and hybrids, money-market securities, and senior and subordinated debt.

At least 90% of securities must be U.S. dollar denominated.

At least 70% of the securities must be investment-grade credit.

Securities must have a maximum position size of 5% for A rated securities and 3% for BBB rated securities.

The duration of the portfolio must be within +/- 1 year of benchmark.

Treasury STRIPS managers will have the discretion to utilize U.S. treasury futures and STRIPS as needed to adjust the portfolio duration.

Real Estate Portfolios

Real estate funds should be invested primarily in direct equity positions, with debt and other investments representing less than 25% of the fund.

Leverage should be no more than 70% of the market value of the fund.

Investments should be focused on existing income-producing properties, with land and development properties representing less than 40% of the fund.

~~Hedge Fund of Funds~~

~~The fund should be invested in a minimum of 20 individual partnerships.~~

~~No individual partnership should exceed 10% of the fund of funds.~~

The fund should be diversified across several different “styles” of partnerships, including event-driven strategies, fixed income arbitrage and trading, and other arbitrage strategies. The fund generally should not be invested in emerging markets, short-term only, traditional Commodity Trading Advisor’s, or derivative-only strategies.

The use of futures and options positions which leverage portfolio positions through borrowing, short sales, or other encumbrances of the Plan’s assets is ~~prohibited:~~prohibited. The Long



CLECO
CLECO POWER		2018 FORM 10-K

~~Debt portfolios~~

Duration fixed income managers and ~~hedge fund of funds~~Treasury STRIPS manger(s) are exempt from the prohibition on ~~derivative use.~~derivatives use, due to the nature of long duration fixed income management. Currency hedging is permitted for international investing.

~~Execution~~The investment manager of ~~target allocation rebalancing may be implemented through short- to intermediate-term use of derivatives overlay strategies. The notional value of derivative positions~~affiliated securities shall not ~~exceed~~ ~~20%~~purchase any securities of ~~the total pension fund’s value at any given time.~~

its organization or affiliated entities.

The following chart shows the dynamic asset allocation based on the funded ratio at December 31, ~~2015:~~2018:

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, 2018
	MINIMUM		TARGET		MAXIMUM
Return-seeking
Domestic equity			20	%
International equity			20	%
Multi-asset credit			6	%
Real estate			4	%
Total return-seeking	45	%	50	%	55	%
Liability hedging*	45	%	50	%	55	%
*Liability hedging has no target subcategories.



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

The assumed health care cost trend rates used to measure the expected cost of other benefits is 5.0% for ~~2016~~2019 and remains at 5.0% thereafter. The rate used for ~~2015~~2018 was also 5.0%. Assumed health care cost trend rates have a limited effect on the amount reported for Cleco’s health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects on other benefits:


	ONE-PERCENTAGE POINT					ONE-PERCENTAGE POINT
(THOUSANDS)	INCREASE		DECREASE			INCREASE		DECREASE
Effect on total of service and interest cost components	$	19	$	(22	)	$	13	$	(15	)
Effect on postretirement benefit obligation	$	258	$	(288	)	$	194	$	(215	)

The projected benefit payments for the employee pension plan and other benefits obligation plan for each year through ~~2020~~2023 and the next five years thereafter are listed in the following table:


(THOUSANDS)	PENSION BENEFITS		OTHER BENEFITS, GROSS		PENSION BENEFITS		OTHER BENEFITS, GROSS
2016	$	18,509	$	3,686
2017	$	19,651	$	3,714
2018	$	20,787	$	3,779
For the year ending Dec. 31,
2019	$	22,048	$	3,866	$	22,868	$	4,215
2020	$	23,424	$	3,897	$	24,042	$	4,071
2021					$	25,180	$	3,936
2022					$	26,373	$	3,856
2023					$	27,512	$	3,716
Next five years	$	136,165	$	18,598	$	154,047	$	16,615

SERP

Certain Cleco officers are covered by SERP. In 2014, SERP was closed to new participants; however, with regard to current SERP participants, including former employees or their beneficiaries, all terms of SERP will continue, other than as described below. SERP is a non-qualified, non-contributory, defined benefit pension plan. ~~Benefits~~Generally, benefits under the plan reflect an employee’s years of service, age at retirement, and the sum of (a) the highest base salary paid out over the last five calendar years and (b) the average of the ~~three~~five highest cash bonuses paid during the 60 months prior to ~~retirement, which sum is~~retirement. SERP benefits are reduced by retirement benefits received from any other defined benefit pension plan, supplemental executive retirement plan, or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed

the ~~limits~~amount the employee would have received under the terms of the original 401(k) Plan. In accordance with the SERP plan document and the Merger Agreement, four executive officers received enhanced benefits, and upon termination of employment, two of these executive officers received accelerated vesting. Another executive officer received enhanced SERP benefits, net of other postretirement benefits, as part of a separation agreement. Two executive officers’ SERP benefits were capped as of December 31, 2017, with regard to final compensation; however, adjustments will continue with regard to age and tenure with Cleco. Additionally, these executive officers had their annual bonuses set at target rather than actual awards for years 2016 and 2017 for the average incentive award portion of their SERP benefit calculation. A third executive officer’s SERP benefit amount will be set at a specified amount based upon the year of separation. Management reviews current market trends as it evaluates Cleco’s future compensation strategy.

Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a rabbi ~~trust designated as the beneficiary for~~trust. The life insurance policies issued on SERP ~~participants.~~participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies ~~from which~~that employed the ~~officer retired.~~officer. Cleco Power is ~~considered~~ the plan sponsor and Support Group is ~~considered~~ the plan administrator. In July 2014, the Board of Directors of Cleco voted to close SERP to new participants; however, with regard to current SERP participants, including former employees or their beneficiaries, all terms of SERP will continue. Management will review current market trends as it evaluates Cleco’s future compensation strategy.

In accordance with the SERP plan document and the Merger Agreement, executives are entitled to enhancement of benefits and accelerated vesting upon terminations of employment that may occur in connection with or following the Merger.

SERP’s funded status at December 31, ~~2015~~2018, and ~~2014~~2017 is presented in the following table:


										SERP BENEFITS
	SERP BENEFITS						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015			2014			2018			2017
Change in benefit obligation
Benefit obligation at beginning of year	$	73,902		$	57,865
Benefit obligation at beginning of period							$	84,339		$	78,045
Service cost	2,705			2,278			542			494
Interest cost	3,056			3,028			3,077			3,239
Actuarial (gain) loss	(4,488		)	13,436			(5,163		)	6,442
Benefits paid	(2,860		)	(2,705		)	(4,381		)	(4,376		)
Benefit obligation at end of year	$	72,315		$	73,902
Plan amendments							—			180
Special/contractual termination benefits							—			315
Benefit obligation at end of period							$	78,414		$	84,339

SERP’s accumulated benefit obligation at December 31, ~~2015~~2018, and ~~2014~~2017 is presented in the following table:


					SERP BENEFITS
	SERP BENEFITS				AT DEC. 31,
(THOUSANDS)	2015		2014		2018		2017
Accumulated benefit obligation	$	65,840	$	67,126	$	78,414	$	84,339

The following table presents net actuarial gains/losses and prior ~~period~~ service ~~costs~~costs/credits included in other comprehensive income or regulatory assets related to current year gains and losses as a result of being amortized as a component of net periodic benefit costs for ~~the~~ SERP atfor December 31, ~~2015~~2018, and 2017:~~2014~~:

SERP BENEFITS
(THOUSANDS) 2015
2014
Net actuarial (gain) loss occurring during year $ (4,487 ) $ 13,436
Net actuarial loss amortized during year $ 2,973
$ 1,876
Prior service cost amortized during year $ 54
$ 54



CLECO
CLECO POWER		2018 FORM 10-K



				SERP BENEFITS
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018			2017
Net actuarial (gain) loss occurring during year	$	(5,163	)	$	6,622
Net actuarial loss amortized during year	$	2,913		$	2,105
Prior service credit amortized during year	$	(160	)	$	(190	)

The following table presents net ~~gains/~~actuarial losses and prior ~~period~~ service ~~costs/~~credit in accumulated other comprehensive income and regulatory assets that have not been recognized as components of net periodic benefit costs and the amounts expected to be recognized in ~~2016~~2019 for SERP ~~for~~at December 31, ~~2016~~, ~~2015~~,2019, 2018, and ~~2014~~:2017:

SERP BENEFITS
(THOUSANDS) 2016
2015
2014
Net actuarial loss $ 2,033
$ 23,763
$ 31,224
Prior service cost $ 59
$ 120
$ 173



				SERP BENEFITS
	AT DEC. 31,
(THOUSANDS)	2019			2018			2017
Net actuarial loss	$	1,729		$	17,261		$	25,336
Prior service credit	$	(160	)	$	(1,837	)	$	(1,997	)

The non-service components of net periodic benefit cost related to SERP are included in Other expense within Cleco and Cleco Power’s Consolidated Statements of Income. The components of the net SERP costs for ~~2015~~, ~~2014~~,2018, 2017, and ~~2013~~2016 are as follows:


													SERP BENEFITS
			SERP BENEFITS				SUCCESSOR									PREDECESSOR
(THOUSANDS)	2015		2014		2013		FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Components of periodic benefit costs:
Components of periodic benefit costs
Service cost	$	2,705	$	2,278	$	2,055	$	542		$	494		$	571		$	702
Interest cost	3,056		3,028		2,578		3,077			3,239			2,275			900
Amortizations:
Prior period service cost	54		54		54
Amortizations
Prior service (credit) cost							(160		)	(190		)	(50		)	17
Net loss	2,973		1,875		2,305		2,913			2,105			1,651			574
Net periodic benefit cost	$	8,788	$	7,235	$	6,992	6,372			5,648			4,447			2,193
Curtailment charge							—			—			—			3,602
Special/contractual termination benefits							—			315			—			3,222
Total benefit cost							$	6,372		$	5,963		$	4,447		$	9,017



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

There was a remeasurement of SERP at April 13, 2016, to reflect change in control benefits as a result of the 2016 Merger. On the date of the remeasurement, the discount rate decreased from 4.60% to 4.15%. This remeasurement resulted in a $3.6 million curtailment charge and $3.2 million of special/contractual termination benefits. The curtailments and special/contractual termination benefits are included in 2016 Merger transaction and commitment costs on Cleco’s Consolidated Statements of Income. There was an additional remeasurement of SERP at August 31, 2016, to reflect changes to the plan relating to three executive officers’ SERP benefits being capped as of December 31, 2017, with regard to final compensation. On the date of the remeasurement, the discount rate decreased from 4.15% to 3.47%.

There was a remeasurement of SERP at March 30, 2017, to reflect a special termination benefit resulting from an

executive officer’s separation agreement. On the date of the remeasurement, the discount rate decreased from 4.22% to 4.08%. This remeasurement resulted in a special termination benefit for the executive officer of $0.3 million.

The measurement date used to determine the SERP benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows:



	SERP BENEFITS
	AT DEC. 31,
	2018		2017
Weighted-average assumptions used to determine the benefit obligation
Discount rate	4.34	%	3.70	%
Rate of compensation increase	5.00	%	5.00	%

SERP
2015
2014
Weighted-average assumptions used to determine the benefit obligation as of Dec. 31:
Discount rate 4.60 % 4.20 %
Rate of compensation increase 5.00 % 5.00 %


			SERP												SERP BENEFITS
	2015		2014		2013		SUCCESSOR										PREDECESSOR
Weighted-average assumptions used to determine the net benefit cost for the year ended Dec. 31:
							JAN. 1, 2018 - DEC. 31, 2018		MAR. 31, 2017 - DEC. 31, 2017		JAN. 1, 2017 - MAR. 30, 2017		SEPT. 1, 2016 - DEC. 31, 2016		APR. 13, 2016 - AUG. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Weighted-average assumptions used to determine the net benefit cost
Discount rate	4.20	%	5.09	%	4.17	%	3.70	%	4.08	%	4.22	%	3.47	%	4.15	%	4.60	%
Rate of compensation increase	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%

The expense related to SERP reflected on Cleco Power’s Consolidated Statements of Income for the years ended December 31, ~~2015~~2018, ~~2014~~,2017, and ~~2013~~2016 was ~~$2.2~~$1.4 million, $~~1.7~~1.3 million,, and ~~$1.5~~$1.4 million,, respectively.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial ~~statements.The~~statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at December 31, ~~2015,~~2018, and ~~2014~~2017 are as follows:



Cleco
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current	$	4,478	$	4,471
Non-current	$	73,936	$	79,868

SERP LIABILITY
(THOUSANDS) 2015
2014
Cleco
Current $ 3,238
$ 3,031
Non-current $ 69,049
$ 70,871
Cleco Power
Current $ 1,000
$ 813
Non-current $ 21,321
$ 19,006



CLECO
CLECO POWER		2018 FORM 10-K



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018		2017
Current	$	930	$	929
Non-current	$	12,025	$	16,589

The projected benefit payments for ~~the~~ SERP for each year through ~~2020~~2023 and the next five years thereafter are shown in the following table:


(THOUSANDS)	2016		2017		2018		2019		2020		NEXT FIVE YEARS		2019		2020		2021		2022		2023		NEXT FIVE YEARS
SERP	$	3,311	$	3,366	$	3,562	$	3,734	$	4,061	$	23,519	$	4,574	$	4,670	$	4,755	$	4,754	$	4,755	$	24,717

401(k)

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions ~~can be~~are made in the form of ~~Cleco Corporation stock or~~ cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. ~~Plan participants are allowed to choose whether to have dividends on Cleco Corporation common stock distributed in cash or reinvested in additional shares of Cleco Corporation common stock.~~ Participation in the Plan is voluntary and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan expense for the years ended December 31, ~~2015~~2018, ~~2014~~,2017, and ~~2013~~ is2016 was as follows:



	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
401(k) Plan expense	$	5,884	$	5,386	$	3,554	$	1,593

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
401(k) Plan expense $ 5,029
$ 4,730
$ 4,422

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries ~~was~~ ~~$0.9 million~~, ~~$0.9 million, and~~ ~~$1.0 million~~for the years ended December 31, ~~2015~~2018, ~~2014~~,2017, and ~~2013, respectively.~~2016 was as follows:



	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
401(k) Plan expense	$	1,066	$	888	$	554	$	319



Note 911 — Income Taxes

Cleco

For the year ended December 31, ~~2015,~~2018 and for the predecessor period January 1, 2016, through April 12, 2016, income tax expense was higher than the amount computed by applying the statutory federal rate. For the ~~years~~year ended December 31, ~~2014,~~2017, and ~~2013,~~for the successor period April 13, 2016, through December 31, 2016, income tax expense was lower than the amount computed by applying the statutory federal ~~rate to income before tax.~~rate. The differences are as follows:

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, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Income (loss) before tax	$	123,819		$	145,159		$	(46,935	)	$	(492	)
Statutory rate	21.0		%	35.0		%	35.0		%	35.0		%
Tax expense (benefit) at federal statutory rate	$	26,002		$	50,806		$	(16,427	)	$	(172	)
Increase (decrease)
Plant differences, including AFUDC flowthrough	(401		)	743			(881		)	823
Amortization of investment tax credits	(236		)	(662		)	(371		)	(124		)
State income taxes, net of federal benefit	6,288			5,047			1,844			(3,078		)
Nondeductible merger costs	—			2			(844		)	4,282
Return to accrual adjustment	(193		)	(608		)	(2,943		)	—
TCJA	(19		)	(46,291		)	—			—
NMTC	(1,578		)	313			(181		)	(158		)
Other	(481		)	(2,271		)	(3,019		)	1,895
Total tax expense (benefit)	$	29,382		$	7,079		$	(22,822	)	$	3,468
Effective rate	23.7		%	4.9		%	48.6		%	(704.9		)%



CLECO
CLECO POWER		2018 FORM 10-K

Information about current and deferred income tax expense is as follows:

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Current federal income tax expense $ 1,284
$ 11,082
$ 15,672
Deferred federal income tax expense 76,219
71,061
65,237
Amortization of accumulated deferred investment tax credits (916 ) (983 ) (1,108 )
Total federal income tax expense $ 76,587
$ 81,160
$ 79,801
Current state income tax expense (benefit) 3,233
(6,580 ) (978 )
Deferred state income tax (benefit) expense (2,116 ) (7,464 ) 752
Total state income tax expense (benefit) $ 1,117
$ (14,044 ) $ (226 )
Total federal and state income tax expense $ 77,704
$ 67,116
$ 79,575
Items charged or credited directly to shareholders’ equity

Federal deferred 3,274
(3,656 ) 3,497
State deferred 528
(590 ) 565
Total tax expense (benefit) from items charged directly to shareholders’ equity $ 3,802
$ (4,246 ) $ 4,062
Total federal and state income tax expense $ 81,506
$ 62,870
$ 83,637



	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENBDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Current federal income tax expense (benefit)	$	15,304		$	46,520		$	(1,062	)	$	1,373
Deferred federal income tax expense (benefit)	5,863			(47,329		)	(16,715		)	5,297
Amortization of accumulated deferred investment tax credits	(236		)	(662		)	(371		)	(124		)
Total federal income tax expense (benefit)	$	20,931		$	(1,471	)	$	(18,148	)	$	6,546
Current state income tax expense (benefit)	7,771			3,187			(337		)	—
Deferred state income tax expense (benefit)	680			5,363			(4,337		)	(3,078		)
Total state income tax expense (benefit)	$	8,451		$	8,550		$	(4,674	)	$	(3,078	)
Total federal and state income tax expense (benefit)	$	29,382		$	7,079		$	(22,822	)	$	3,468
Items charged or credited directly to member’s/shareholders’ equity
Federal deferred	1,408			(2,380		)	808			348
State deferred	460			(384		)	130			56
Total tax expense (benefit) from items charged directly to member’s/shareholders’ equity	$	1,868		$	(2,764	)	$	938		$	404
Total federal and state income tax expense (benefit)	$	31,250		$	4,315		$	(21,884	)	$	3,872

~~The~~ ~~$8.0 million~~ ~~increase in total tax expense from items charged directly to shareholders’ equity in~~ ~~2015~~ ~~compared to 2014 was primarily due to the tax effect of SERP and other post-employment benefit adjustments booked to accumulated other comprehensive income and interest rate derivatives.~~



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

Cleco recognizes the amortization of the NMTC Fund investment and the related interest on the liability as a component of current tax expense. The amount of amortization and interest recognized as of December 31, ~~2015, 2014, and 2013 was~~ ~~$1.1 million~~, ~~$3.4 million, and~~ ~~$13.3 million, respectively.~~

The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, ~~2015~~,2018, and ~~2014~~2017 was comprised of the following:


	AT DEC. 31,						AT DEC. 31,
(THOUSANDS)	2015			2014			2018			2017
Depreciation and property basis differences	$	(948,597	)	$	(892,725	)	$	(664,996	)	$	(596,824	)
Net operating loss carryforward	12,092			56,315			—			12,873
NMTC	87,544			84,504			86,673			96,917
Fuel costs	(7,833		)	(11,686		)	(8,339		)	(3,283		)
Other comprehensive income	15,774			19,576			640			(490		)
Regulated operations regulatory liability, net	(90,122		)	(90,135		)	39,808			(54,471		)
Postretirement benefits other than pension	11,561			812
Postretirement benefits							19,580			23,642
Merger fair value adjustments							(56,725		)	(58,251		)
Other	(5,522		)	(8,734		)	(24,671		)	(34,925		)
Accumulated deferred federal and state income taxes	$	(925,103	)	$	(842,073	)
Accumulated deferred federal and state income taxes, net							$	(608,030	)	$	(614,812	)

Valuation Allowance

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. As of December 31, ~~2015,~~2018, and ~~2014,~~2017, Cleco had a deferred tax asset resulting from NMTC carryforwards of ~~$96.5~~$86.9 million and ~~$95.4~~$97.5 million, respectively. If the NMTC carryforwards are not utilized, they will begin to expire in 2029. Management considers it more likely than not that all deferred tax assets related to NMTC carryforwards will be realized; therefore, no valuation allowance has been recorded.

Net Operating Losses

As of December 31, ~~2015,~~2018, Cleco had ano federal net operating loss carryforward ~~of $15.8 million~~ and ano state net operating loss carryforward of $127.7 million. If the carryforwards are not utilized, the federal carryforward will expire in 2026 and the state carryforward will begin to expire in 2031. Cleco considers it more likely than not that these income tax losses will be utilized to reduce future payments of income taxes and Cleco expects to utilize the entire net operating loss carryforward within the statutory deadlines.carryforward.

Cleco Power

For the year ended December 31, ~~2015,~~2018, income tax expense was higher than the amount computed by applying the statutory rate. For the years ended December 31, ~~2014,~~2017 and

~~2013,~~ 2016, income tax expense was lower than the amount computed by applying the statutory federal rate to income before tax. The differences are as follows:


	FOR THE YEAR ENDED DEC. 31,									FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT FOR %)	2015			2014			2013
(THOUSANDS, EXCEPT PERCENTAGES)										2018			2017			2016
Income before tax	$	220,644		$	231,290		$	229,791		$	218,181		$	218,069		$	57,497
Statutory rate	35.0		%	35.0		%	35.0		%	21.0		%	35.0		%	35.0		%
Tax at federal statutory rate	$	77,225		$	80,952		$	80,427
Increase (decrease):
Tax expense at federal statutory rate										$	45,818		$	76,324		$	20,124
Increase (decrease)
Plant differences, including AFUDC flowthrough	1,875			462			427			(401		)	743			(58		)
Amortization of investment tax credits	(916		)	(983		)	(1,108		)	(236		)	(662		)	(494		)
State income taxes	1,501			351			730
Settlement with taxing authorities	—			(2,320		)	—
State income taxes, net of federal benefit										11,080			7,583			1,999
Return to accrual adjustment										483			(284		)	(2,646		)
TCJA										(19		)	(14,292		)	—
Other	(391		)	(1,488		)	(1,095		)	(801		)	(2,081		)	(556		)
Total taxes	$	79,294		$	76,974		$	79,381		$	55,924		$	67,331		$	18,369
Effective Rate	35.9		%	33.3		%	34.5		%
Effective rate										25.6		%	30.9		%	31.9		%



CLECO
CLECO POWER		2018 FORM 10-K

Information about current and deferred income tax expense is as follows:


	FOR THE YEAR ENDED DEC. 31,									FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015			2014			2013			2018			2017			2016
Current federal income tax expense (benefit)	$	33,138		$	(197	)	$	(33	)	$	44,411		$	87,433		$	(1,211	)
Deferred federal income tax expense	45,572			83,676			81,188
Deferred federal income tax (benefit) expense										(9,033		)	(29,190		)	22,647
Amortization of accumulated deferred investment tax credits	(916		)	(983		)	(1,108		)	(236		)	(662		)	(494		)
Total federal income tax expense	$	77,794		$	82,496		$	80,047		$	35,142		$	57,581		$	20,942
Current state income tax expense (benefit)	3,397			(4,161		)	(1,012		)	23,293			14,751			(418		)
Deferred state income tax (benefit) expense	(1,897		)	(1,361		)	346
Deferred state income tax benefit										(2,511		)	(5,001		)	(2,155		)
Total state income tax expense (benefit)	$	1,500		$	(5,522	)	$	(666	)	$	20,782		$	9,750		$	(2,573	)
Total federal and state income taxes	$	79,294		$	76,974		$	79,381		$	55,924		$	67,331		$	18,369
Items charged or credited directly to members’ equity
Federal deferred	106			(1,137		)	2,824			797			(141		)	1,976
State deferred	17			(184		)	456			261			(23		)	319
Total tax expense (benefit) from items charged directly to member’s equity	$	123		$	(1,321	)	$	3,280		$	1,058		$	(164	)	$	2,295
Total federal and state income tax expense	$	79,417		$	75,653		$	82,661		$	56,982		$	67,167		$	20,664

~~The $1.4 million increase in total tax expense from items charged directly to member’s equity in~~ ~~2015~~ ~~compared to 2014 was primarily due to the tax effect of other post-employment benefit adjustments booked to accumulated other comprehensive income and interest rate derivatives.~~



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

The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, ~~2015~~,2018, and ~~2014~~2017 was comprised of the following:


	AT DEC. 31,						AT DEC. 31,
(THOUSANDS)	2015			2014			2018			2017
Depreciation and property basis differences	$	(944,675	)	$	(890,030	)	$	(666,224	)	$	(597,838	)
Net operating loss carryforward	18			12,323			—			470
Fuel costs	(7,833		)	(11,686		)	(8,339		)	(3,282		)
Other comprehensive income	9,878			10,002			4,192			5,250
Regulated operations regulatory liability, net	(90,122		)	(90,135		)	39,808			(54,471		)
Postretirement benefits other than pension	(3,853		)	(14,346		)
Postretirement benefits							11,081			6,266
Other	(6,944		)	(10,735		)	(11,283		)	(12,757		)
Accumulated deferred federal and state income taxes	$	(1,043,531	)	$	(994,607	)
Accumulated deferred federal and state income taxes, net							$	(630,765	)	$	(656,362	)

Valuation Allowance

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Management considers it more likely than not that all deferred tax assets will be realized; therefore, no valuation allowance has been recorded.

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. At December 31, ~~2015,~~2018, and ~~December 31, 2014,~~2017, Cleco and Cleco Power had no interest payable related to uncertain tax positions. The interest payable reflects the amount of interest anticipated to be paid to or received from taxing authorities. These amounts do not include any offset for amounts that may be recovered from customers under the existing rate orders. The amounts expected to be recoverable from Cleco Power’s customers under existing rate orders for settled positions at December 31, 2015, and 2014, are $1.3 million and $5.2 million, respectively. For the years ended December 31, ~~2015,~~2018, 2017, and ~~December 31, 2014,~~2016, Cleco and Cleco Power had no interest expense related to uncertain tax positions. ~~For the year ended~~

At December 31, ~~2013,~~2018, and 2017, Cleco and Cleco Power had ~~$0.2 million and less than $0.1 million, respectively, of interest expense related to uncertain tax positions.~~

~~The total~~no liability for unrecognized tax ~~benefits for~~positions. Cleco and Cleco Power ~~at December 31,~~ ~~2015~~, ~~2014, and~~ ~~2013~~estimate that it is ~~shown~~reasonably possible that there will be no liability for unrecognized tax positions in the ~~following table:~~next 12 months. The settlement of open tax years could involve the payment of additional taxes, and/or the recognition of tax

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 $ —

benefits, which may have an effect on Cleco’s effective income tax rate.



~~Cleco Power~~
~~(THOUSANDS)~~	~~LIABILITY FOR UNRECOGNIZED~~ ~~TAX BENEFITS~~
~~Balance, Jan. 1, 2013~~	$	~~248~~
~~Reduction for tax positions of current period~~	—
~~Additions for tax positions of prior years~~	—
~~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~~	$	—
~~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, 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~~	$	—

The federal income tax years that remain subject to examination by the IRS are ~~2012,~~ ~~2013~~,2015, 2016, and ~~2014. The IRS has concluded its audit for the years 2010 through 2013.~~2017.

Beginning with the 2013 tax year, Cleco entered into the IRS’s Compliance Assurance Process which allows taxpayers to work collaboratively with an IRS team to identify and resolve potential tax issues before the federal tax return is filed each year. Cleco must apply for admission to the program each year. Cleco has been approved for the Compliance Assurance Process through the ~~2016~~2019 tax year.

The state income tax ~~year~~years that ~~remains~~remain subject to examination by the Louisiana Department of Revenue ~~is 2014. In August 2014, Cleco reached a settlement for tax years 2001 through 2010. In August~~are 2015, ~~Cleco reached a settlement for tax years 2011 through 2013. The favorable impact from the~~



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

~~settlement was reflected in various line items in the financial statements.~~2016, and 2017.

~~At December 31, 2015, Cleco had no liability for uncertain tax positions. Cleco estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31,~~ ~~2015~~, for Cleco and Cleco Power would be unchanged in the next 12 months as a result of reaching a settlement with taxing authorities. The settlement of open tax years could involve the payment of additional taxes, the adjustment of deferred taxes, and/or the recognition of tax benefits, which may have an effect on Cleco’s effective tax rate.

Cleco classifies income tax penalties as a component of other expenses. For the years ended December 31, ~~2015,~~2018, 2017, and ~~2013,~~ 2016, no penalties were recognized.

TCJA

On December 22, 2017, the President signed into law the TCJA. The TCJA includes significant changes to the IRC, as amended, including amendments which significantly change the taxation of business entities and includes specific provisions related to rate regulated activities, including Cleco Power. The most significant change that impacts Cleco is the reduction of the corporate federal income tax rate from 35% to 21%.

The SEC Staff recognized the complexity of reflecting the impacts of the TCJA and issued guidance which clarified accounting for income taxes and allowed for up to one year to complete the required analysis and accounting (the measurement period). During the fourth quarter of 2018, Cleco finalized the remeasurement of and accounting for the effects of the TCJA.

For the year ended December 31, ~~2014, $0.1~~2017, the Registrants recorded provisional estimates for the effects of the TCJA that decreased deferred income tax expense for Cleco and Cleco Power by $46.3 million and $14.3 million, respectively. At December 31, 2017, the provisional impacts of the TCJA decreased the ADIT liability for Cleco and Cleco Power by $394.9 million and $362.9 million, respectively.

During the fourth quarter of 2018, Cleco and Cleco Power increased the ADIT liability by $26.4 million for the final remeasurement. For more information on the regulatory treatment, see Note 13 — “Regulation and Rates — TCJA.”

Additionally, as a result of the TCJA, effective for tax years beginning after December 31, 2017, corporations are no longer subject to the alternative minimum tax (AMT). For companies with unused AMT credits, the credits may be carried forward and used as refundable credits for tax years beginning after 2017, but before 2022. Cleco expects its unused AMT credits will be fully utilized by December 31, 2021. During 2018, Cleco’s $7.6 million of ~~penalties was recognized.~~unused tax credits were reclassed from Accumulated deferred federal and state income taxes, net to Taxes payable, net and Other deferred charges on Cleco’s Consolidated Balance Sheet. Of this amount, the $3.8 million of AMT credits expected to be utilized in 2019 were reported in Taxes payable, net on Cleco’s Consolidated Balance Sheet, and the remaining $3.8 million are classified as Other deferred charges on Cleco’s Consolidated Balance Sheet.



CLECO
CLECO POWER		2018 FORM 10-K



Note 1012 — Disclosures about Segments

Cleco

Cleco’s reportable ~~segments are~~segment is based on its method of internal reporting, which disaggregates business units by its first-tier subsidiary. ~~As a result of the Coughlin transfer from Evangeline to~~

Cleco Power, ~~in March 2014, Midstream no longer meets~~ the requirements to be 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 segment reporting disclosures were not retrospectively

adjusted to reflect the transfer. For more information, see Note 17 — “Coughlin Transfer.” For the reporting period beginning April 1, 2014, the remaining operations of Midstream are included as Other in the following table, along with the holding company, a shared services subsidiary, two transmission interconnection facility subsidiaries, and an investment subsidiary.

~~The~~ reportable segment, engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s ~~Chief Executive Officer (the chief operating decision-maker)~~CEO with discrete financial information and, at least quarterly, present discrete financial information to Cleco ~~Corporation’s Board~~and Cleco Power’s Boards of ~~Directors.~~Managers. The reportable segment ~~prepared~~prepares budgets ~~for 2015~~ that ~~were~~are presented to and approved by Cleco ~~Corporation’s Board~~and Cleco Power’s Boards of ~~Directors.~~Managers. The column shown as Other in the chart below includes the holding company, a shared services subsidiary, two transmission interconnection facility subsidiaries, an investment subsidiary, and a subsidiary formed to facilitate the Cleco Cajun

Transaction. On December 29, 2017, Cleco sold the transmission assets owned by Attala and Perryville, the two subsidiaries that owned and operated the transmission interconnection facilities. After December 29, 2017, the remaining operations of Attala and Perryville were minimal. On February 4, 2019, the Cleco Cajun Transaction was closed. For the Registrants’ Combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, Cleco Cajun is expected to become a new reportable segment. For more information on the transaction, see Note 21 — “Cleco Cajun Transaction”.

The financial results of Cleco’s ~~segments~~segment are presented on an accrual basis. Management evaluates the performance of its segment and allocates resources to it based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. Prior to March 15, 2014, these intercompany transactions related primarily to the PPA between Cleco Power and Evangeline that began in 2012 and joint and common administrative support services provided by Support Group. Subsequent to March 15, 2014, theseThese intercompany transactions relate primarily to joint and common administrative support ~~services provided by Support Group.~~services.


SEGMENT INFORMATION
2015 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
													SUCCESSOR FOR THE YEAR ENDED DEC. 31, 2018
(THOUSANDS)													CLECO POWER			OTHER			ELIMINATIONS			TOTAL
Revenue
Electric operations	$	1,142,389		$	—		$	—		$	1,142,389		$	1,191,587		$	(9,680	)	$	—		$	1,181,907
Other operations	67,109			2,078			(1		)	69,186			82,330			2			—			82,332
Affiliate revenue													874			74,591			(75,465		)	—
Electric customer credits	(2,173		)	—			—			(2,173		)	(33,195		)	—			—			(33,195		)
Affiliate revenue	1,142			57,323			(58,465		)	—
Operating revenue, net	$	1,208,467		$	59,401		$	(58,466	)	$	1,209,402		$	1,241,596		$	64,913		$	(75,465	)	$	1,231,044
Depreciation and amortization	$	147,839		$	1,739		$	1		$	149,579		$	162,069		$	8,344		$	1		$	170,414
Merger transaction costs	$	—		$	4,592		$	(1	)	$	4,591
Merger transaction and commitment costs													$	—		$	19,514		$	—		$	19,514
Interest income													$	5,052		$	1,338		$	(317	)	$	6,073
Interest charges	$	76,560		$	1,149		$	282		$	77,991		$	71,303		$	55,659		$	(320	)	$	126,642
Interest income	$	725		$	(111	)	$	281		$	895
Equity loss from investees, before tax	$	—		$	(8	)	$	—		$	(8	)
Federal and state income tax expense (benefit)	$	79,294		$	(1,590	)	$	—		$	77,704		$	55,924		$	(26,541	)	$	(1	)	$	29,382
Net income	$	141,350		$	(7,681	)	$	—		$	133,669
Net income (loss)													$	162,257		$	(67,819	)	$	(1	)	$	94,437
Additions to property, plant, and equipment	$	156,357		$	462		$	—		$	156,819		$	289,153		$	1,908		$	—		$	291,061
Equity investment in investees	$	16,822		$	—		$	—		$	16,822
Equity investment in investee													$	18,172		$	—		$	—		$	18,172
Goodwill													$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets	$	4,233,337		$	21,471		$	68,546		$	4,323,354		$	5,839,853		$	633,756		$	(36,795	)	$	6,436,814



	SUCCESSOR FOR THE YEAR ENDED DEC. 31, 2017
(THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			TOTAL
Revenue
Electric operations	$	1,108,389		$	(10,757	)	$	—		$	1,097,632
Other operations	77,522			2,058			—			79,580
Affiliate revenue	851			57,168			(58,019		)	—
Electric customer credits	(1,566		)	—			—			(1,566		)
Operating revenue, net	$	1,185,196		$	48,469		$	(58,019	)	$	1,175,646
Depreciation and amortization	$	158,415		$	8,439		$	—		$	166,854
Merger transaction and commitment costs	$	—		$	5,445		$	(293	)	$	5,152
Interest income	$	1,283		$	316		$	(175	)	$	1,424
Interest charges	$	69,362		$	53,725		$	(174	)	$	122,913
Federal and state income tax expense (benefit)	$	67,331		$	(60,252	)	$	—		$	7,079
Net income (loss)	$	150,738		$	(12,659	)	$	1		$	138,080
Additions to property, plant, and equipment	$	235,252		$	1,680		$	—		$	236,932
Equity investment in investee	$	18,172		$	—		$	—		$	18,172
Goodwill	$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets	$	5,679,538		$	619,943		$	(21,099	)	$	6,278,382



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

2014 (THOUSANDS) CLECO POWER
OTHER
ELIMINATIONS
CONSOLIDATED
Revenue
Electric operations $ 1,225,960
$ —
$ —
$ 1,225,960
Tolling operations —
5,467
(5,467 ) —
Other operations 64,893
2,163
(1 ) 67,055
Electric customer credits (23,530 ) —
—
(23,530 )
Affiliate revenue 1,326
56,031
(57,357 ) —
Operating revenue, net $ 1,268,649
$ 63,661
$ (62,825 ) $ 1,269,485
Depreciation and amortization $ 144,026
$ 2,479
$ —
$ 146,505
Merger transaction costs $ —
$ 17,848
$ —
$ 17,848
Interest charges $ 74,673
$ (1,538 ) $ 471
$ 73,606
Interest income $ 1,707
$ (410 ) $ 471
$ 1,768
Federal and state income tax expense (benefit) $ 76,974
$ (9,858 ) $ —
$ 67,116
Net income $ 154,316
$ 424
$ (1 ) $ 154,739
Additions to property, plant, and equipment $ 206,607
$ 1,029
$ —
$ 207,636
Equity investment in investees $ 14,532
$ 8
$ —
$ 14,540
Total segment assets $ 4,232,942
$ 248,043
$ (112,567 ) $ 4,368,418


2013 (THOUSANDS)	CLECO POWER			MIDSTREAM			OTHER			ELIMINATIONS			CONSOLIDATED
																SUCCESSOR APR. 13, 2016 - DEC. 31, 2016												PREDECESSOR JAN. 1, 2016 - APR. 12, 2016
(THOUSANDS)																CLECO POWER			OTHER			ELIMINATIONS			TOTAL			CLECO POWER			OTHER			ELIMINATIONS			TOTAL
Revenue
Electric operations	$	1,047,548		$	—		$	—		$	—		$	1,047,548		$	810,075		$	(7,482	)	$	(1	)	$	802,592		$	281,154		$	—		$	—		$	281,154
Tolling operations	—			31,670			—			(31,670		)	—
Other operations	48,909			2			2,091			—			51,002			50,080			1,482			—			51,562			18,493			587			—			19,080
Affiliate revenue																621			35,602			(36,223		)	—			263			15,024			(15,287		)	—
Electric customer credits	(1,836		)	—			—			—			(1,836		)	(1,149		)	—			—			(1,149		)	(364		)	—			—			(364		)
Affiliate revenue	1,338			—			55,145			(56,483		)	—
Operating revenue, net	$	1,095,959		$	31,672		$	57,236		$	(88,153	)	$	1,096,714		$	859,627		$	29,602		$	(36,224	)	$	853,005		$	299,546		$	15,611		$	(15,287	)	$	299,870
Depreciation and amortization	$	135,717		$	6,043		$	1,100		$	—		$	142,860		$	109,695		$	7,296		$	(1	)	$	116,990		$	43,698		$	377		$	1		$	44,076
Merger transaction and commitment costs																$	151,501		$	23,285		$	—		$	174,786		$	—		$	34,928		$	(16	)	$	34,912
Interest income																$	652		$	275		$	(87	)	$	840		$	208		$	69		$	(12	)	$	265
Interest charges	$	82,677		$	(331	)	$	1,274		$	634		$	84,254		$	54,606		$	35,246		$	(86	)	$	89,766		$	21,840		$	295		$	(12	)	$	22,123
Interest income	$	1,100		$	—		$	(628	)	$	633		$	1,105
Federal and state income tax expense (benefit)	$	79,381		$	7,110		$	(6,917	)	$	1		$	79,575		$	5,376		$	(28,198	)	$	—		$	(22,822	)	$	12,993		$	(9,525	)	$	—		$	3,468
Net income	$	150,410		$	4,372		$	5,903		$	—		$	160,685
Net income (loss)																$	17,580		$	(41,692	)	$	(1	)	$	(24,113	)	$	21,548		$	(25,508	)	$	—		$	(3,960	)
Additions to property, plant, and equipment	$	184,684		$	4,106		$	3,086		$	—		$	191,876		$	143,790		$	654		$	—		$	144,444		$	42,353		$	39		$	—		$	42,392
Equity investment in investees	$	14,532		$	—		$	8		$	—		$	14,540
Equity investment in investee																$	18,672		$	—		$	—		$	18,672
Goodwill																$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets	$	3,932,717		$	225,832		$	87,515		$	(42,516	)	$	4,203,548		$	5,758,245		$	614,959		$	(30,060	)	$	6,343,144

Cleco Power

Cleco Power is a vertically integrated, regulated electric utility operating within Louisiana and Mississippi and is viewed as one unit by management. Discrete financial reports are prepared only at the company level.



Note 1113 — Regulation and Rates

AtAt December 31, ~~2015, Cleco Power’s provision~~2018, Provision for rate refund on Cleco and Cleco Power’s Consolidated Balance Sheets consisted primarily of ~~$2.5~~$31.6 million for ~~a proposed ROE reduction of transmission rates that Cleco Power was allowed to collect under~~ the ~~MISO tariff and $0.2 million related to Cleco Power’s monitoring report~~estimated refund for the ~~12-month period ended June 30, 2015.~~

~~At December 31, 2014, Cleco Power’s provision~~tax-related benefits from the TCJA, $1.9 million for ~~rate refund consisted of $2.3~~potential reductions to the transmission ROE, and $1.8 million ~~related to Cleco Power’s monitoring reports~~ for the ~~12-months ended June 30, 2015, and June 30, 2014.~~cost of service savings refunds.

Transmission ROE

complaint, see Note 1416 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

FRP

~~Prior to July 1, 2014,~~ Cleco Power’s annual retail earnings ~~were~~are subject to ~~the terms of~~ an FRP ~~established~~that was approved by the LPSC effective February 12, 2010. The 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.~~ Inin 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~~2014. Under the terms of the FRP, ~~extension,~~ Cleco Power is allowed to earn 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. Cleco Power will file an application with the LPSC for a new FRP by July 1, 2019, with anticipated new rates being effective July 1, 2020.

Cleco Power must file annual monitoring reports no later than October 31 for the 12-month period



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

ending June 30. ~~The next FRP extension must be filed by June 30, 2017.~~

InOn October ~~2014,~~31, 2017, Cleco Power filed its monitoring report for the 12 months ended June 30, 2014, indicating that $1.6 million was due to be returned to customers. On May 4, 2015, the LPSC Staff issued their report indicating agreement with Cleco Power’s refund calculation for the 12 months ended June 30, 2014. In September 2015, Cleco Power issued refunds of $1.6 million relating to its annual monitoring repo~~rt for~~

the 12-month period ended June 30, ~~2014.~~2017, which indicated that no refund was due as a result of the FRP, and $1.2 million was due as a result of the cost of service savings from the 2016 Merger Commitments. Cleco Power expects the LPSC to approve the 2017 FRP monitoring report in the first half of 2019. The $1.2 million cost of service savings from the 2016 Merger Commitments were refunded in September 2018.

On October 31, 2018, Cleco Power filed its monitoring report for the 12-month period ended June 30, ~~2015, on October 31, 2015,~~2018, which indicated that ~~$0.2~~no refund was due as a result of the FRP and $1.2 million isof cost of service savings refunds are due to be returned to eligible customers. ~~A review~~On December 21, 2018, Cleco Power responded to the first set of ~~this~~data requests for the 2018 monitoring report. At December 31, 2018, Cleco Power had $1.8 million accrued for the cost of service savings refund.

TCJA

On February 21, 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flowthrough to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. As a result of the tax rate reduction, Cleco Power began accruing an estimated reserve on January 1, 2018. At December 31, 2018, Cleco Power had $31.6 million accrued for the estimated tax-related benefits from the TCJA.

On October 26, 2018, the LPSC Staff approved a final rule that would require utilities to adjust formula rates the earlier of January 31, 2019, or the next date required for implementation of compliance rate changes under the normal operation of the FRP. Cleco Power filed its report with the LPSC on December 3, 2018, describing its methodology for TCJA refunds and related items, including the allocation of such refunds among jurisdictional customers. On January 31, 2019, Cleco Power filed an application with the LPSC requesting the implementation of rate reductions and modifications of certain tariffs resulting from TCJA to be effective July 1, 2019. Cleco Power also requested to reduce the annual FRP rate, effective July 1, 2019, by the amount accrued for the change in tax rates at June 30, 2019. Cleco Power recommended a rate redesign, allowing the change in the statutory corporate tax rate to be applied only to residential customers in order to



CLECO
CLECO POWER		2018 FORM 10-K

reduce customer bills. Cleco Power also requested to address the regulatory liability for excess ADIT resulting from the enactment of the TCJA in Cleco Power’s application for its next FRP, which will be filed by July 1, 2019, with anticipated new rates being effective July 1, 2020. All items requested in the January 31, 2019, application are subject to LPSC review and approval.

2016 Merger Commitments

On March 28, 2016, the LPSC approved the 2016 Merger. The LPSC’s written order approving the 2016 Merger was issued on April 7, 2016. Approval of the 2016 Merger was conditioned upon certain commitments, including $136.0 million of customer rate credits. On April 28, 2016, the LPSC voted to issue credits equally to eligible customers with service as of June 30, 2016, beginning in July 2016. As of December 31, 2018, Cleco Power had issued $135.1 million of customer rate credits. Also included in the 2016 Merger Commitments were $2.5 million of contributions for economic development for Louisiana state and local organizations to be disbursed over five years, an additional $7.0 million one-time contribution in 2016 for economic development in Cleco Power’s service territory to be administered by the LED, and $6.0 million of charitable contributions to be disbursed over five years.

In addition, the 2016 Merger Commitments included $1.2 million of annual estimated cost of service savings expected as a result of the 2016 Merger. The cost of service savings are not subject to the target ROE or any sharing mechanism in the current FRP and will continue until Cleco Power’s anticipated new rates begin on July 1, 2020. The cost of service savings are included in the annual monitoring reports and are refunded to customers annually. A report on the status of the 2016 Merger Commitments must be filed annually by October 31 for the 12-month period ended June 30. On October 31, 2018, Cleco Power filed the annual 2016 Merger Commitment status report for the period ended June 30, 2018. For more information on the cost of service savings, see “— FRP.”

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. One mitigating factor that has been identified is Cleco Power’s Terrebonne to Bayou Vista Transmission project. The Terrebonne to Bayou Vista project is expected to be completed in the second quarter of 2019. Cleco Power has operated Teche Unit 3 as an SSR unit since April 2017. The first SSR agreement was for the period April 2017 to March 2018, and the second SSR agreement is for the period April 2018 until March 2019; and in January 2019, MISO approved the SSR designation for the third SSR period April 2019, until the sooner of the in-service date of the Terrebonne to Bayou Vista Transmission project or July 2019.

In the second quarter of 2017, Cleco Power began receiving the monthly SSR payments from MISO, subject to refund, and MISO began allocating SSR costs to the load serving entities that require the operation of the SSR unit for reliability purposes, including Cleco Power. The SSR payments include recovering operations and maintenance expenses,

administrative and general expenses, taxes, depreciation, capital expenditures, and carrying charges, all of which are related to Teche Unit 3 for the period of the SSR agreements. If Teche Unit 3 is not ~~been completed.~~retired, at the end of the final SSR Cleco Power must refund any SSR payments received from MISO for capital expenditures paid by third parties.

Cleco Power filed with FERC for its approval to collect $20.3 million and $11.8 million annually in SSR payments from MISO for the first and second SSR agreements, respectively. On December 31, 2018, FERC issued an Order certifying the settlement of Cleco Power’s first two SSR agreements. The MISO settlement included a reduction to the expenses and capital Cleco Power was allowed to recover. For the year ended December 31, 2018, Cleco Power recorded a $1.6 million decrease in Other operations revenue for expected refunds to MISO for a reduction in SSR payments related to the operating costs and a $0.9 million decrease in Power purchased for utility customers for Cleco Power’s portion of allocated SSR operating costs.

At the end of the third SSR agreement, Cleco Power expects Teche Unit 3 to be available to run until the estimated 2021 in-service date of Bayou Vista to Segura Transmission project; at which time, Cleco Power does not expect to offer the unit into MISO, barring any grid or customer reliability issues or other similar reasons. At December 31, 2018, Cleco Power had $5.9 million accrued for the net capital refund. As part of the settlement, one of the load serving entities agreed to reimburse Cleco Power for their portion of the capital refund.



Note 1214 — Variable Interest Entities

Cleco and Cleco Power apply the equity method of accounting to report the investment in Oxbow in the consolidated financial statements. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in ~~investees~~investee on Cleco and Cleco Power’s Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Consolidated Statements of Income.

~~Equity investment in investees at~~ ~~December 31, 2015, represents Cleco Power’s $16.8 million investment in Oxbow.~~

Equity investment in investees at December 31, 2014, primarily represented Cleco Power’s $14.5 million investment in Oxbow. Equity investments that were less than 100% owned by Diversified Lands represented less than $0.1 million of the total balance.

Oxbow is owned 50% by Cleco Power and 50% by ~~SWEPCO and is accounted for as an equity method investment.~~SWEPCO. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco Power’s current assessment of its maximum exposure to loss related to Oxbow at December 31, ~~2015~~2018, consisted of its equity investment of ~~$16.8~~$18.2 million. ~~During 2015, Cleco Power made $2.3 million of cash contributions to its equity investment in Oxbow as a result of the expected transition from the Dolet Hills mine to the Oxbow mine.~~

The following table presents the components of Cleco Power’s equity investment in Oxbow:


	AT DEC. 31,				AT DEC. 31,
INCEPTION TO DATE (THOUSANDS)	2015		2014		2018			2017
Purchase price	$	12,873	$	12,873	$	12,873		$	12,873
Cash contributions	3,949		1,659		6,399			6,399
Dividend received					(1,100		)	(1,100		)
Total equity investment in investee	$	16,822	$	14,532	$	18,172		$	18,172



CLECO
CLECO POWER		2018 FORM 10-K

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco Power’s maximum exposure to loss related to its investment in Oxbow:


	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2015		2014		2018		2017
Oxbow’s net assets/liabilities	$	33,645	$	29,065	$	36,345	$	36,345
Cleco Power’s 50% equity	$	16,822	$	14,532	$	18,172	$	18,172
Cleco Power’s maximum exposure to loss	$	16,822	$	14,532	$	18,172	$	18,172

The following tables contain summarized financial information for Oxbow:


	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2015		2014		2018		2017
Current assets	$	2,794	$	2,792	$	4,128	$	2,318
Property, plant, and equipment, net	23,749		22,457		25,186		25,656
Other assets	7,220		3,847		9,405		10,186
Total assets	$	33,763	$	29,096	$	38,719	$	38,160
Current liabilities	$	118	$	31	$	2,374	$	1,815
Partners’ capital	33,645		29,065		36,345		36,345
Total liabilities and partners’ capital	$	33,763	$	29,096	$	38,719	$	38,160


	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015		2014		2013		2018		2017		2016
Operating revenue	$	3,991	$	2,248	$	2,558	$	6,992	$	4,189	$	5,459
Operating expenses	3,991		2,248		2,558		6,992		4,189		5,459
Income before taxes	$	—	$	—	$	—	$	—	$	—	$	—

~~Oxbow’s property, plant, and equipment, net consists of land and~~DHLC mines lignite ~~reserves.~~reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station. ~~DHLC mines the lignite reserves at Oxbow through the Amended Lignite Mining Agreement.~~

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.



Note 1315 — Operating Leases

Cleco maintains operating leases in its ordinary course of business activities. For the years ended December 31, ~~2015, 2014,~~2018, 2017, and ~~2013,~~2016, operating lease expense of ~~$9.4~~$6.6 million, ~~$9.4~~$9.9 million, and ~~$9.2~~$9.0 million, respectively, was ~~recognized, respectively.~~recognized. The following table is a summary of expected operating lease payments for Cleco and Cleco Power:


(THOUSANDS)	CLECO CORPORATION		CLECO POWER		TOTAL		CLECO HOLDINGS		CLECO POWER		TOTAL
Year ending Dec. 31,
2016	$	315	$	8,642	$	8,957
2017	315		6,358		6,673
2018	313		2,905		3,218
2019	—		2,820		2,820		$	120	$	4,030	$	4,150
2020	—		2,819		2,819		—		3,890		3,890
2021							—		2,789		2,789
2022							—		1,239		1,239
2023							—		1,214		1,214
Thereafter	—		5,749		5,749		—		7,235		7,235
Total operating lease payments	$	943	$	29,293	$	30,236	$	120	$	20,397	$	20,517

Cleco Power leases utility systems from two municipalities and one non-municipal public body. The first municipal lease has a term of 10 years and expires on August 11, 2021. The second municipal lease has a term of 10 years and expires on May 13, ~~2018.~~2028. The non-municipal lease has a term of 27 years and expires on July 31, 2039. Each utility system lease contains provisions for extensions.

Cleco Power has leases for ~~231~~200 railcars for coal transportation. One lease for 115 railcars expires on March 31, ~~2021 and the other~~2021. One lease for ~~116~~85 railcars expires on March 31, ~~2017.~~2020. Cleco Power pays a monthly rental fee per car. The railcar leases do not contain contingent rent payments.

From September 2017 until April 2, 2018, Cleco Power ~~leases~~had an operating lease that automatically renewed on a month-to-month basis for use of 42 barges and three towboats to ~~push~~transport petroleum coke and limestone to Madison Unit 3. On April 2, 2018, Cleco Power entered into new agreements for the use of the barges and towboats that ~~deliver solid fuels to the plant site.~~expire in March 2033. The ~~lease~~new agreement for ~~these~~the barges meets the accounting definition of a capital lease and the new agreement for the towboats ~~expires on August 31, 2017.~~meets the accounting definition of an operating lease. Cleco Power pays a fixed amount for the towboats that is adjusted annually. For more information about the capital lease, see Note 16 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Other Commitments — Fuel Transportation Agreement.”



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

Cleco and Cleco Power’s remaining leases provide for office and operating facilities, office equipment, and tower ~~rentals, and vehicles.~~rentals.



Note 1416 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

~~Devil’s Swamp~~

In October 2007, Cleco received a Special Notice for Remedial Investigation and Feasibility Study (RI/FS) from the EPA pursuant to CERCLA (also known as the Superfund statute) for a facility known as the Devil’s Swamp Lake site located just northwest of Baton Rouge, Louisiana. The special notice requested that Cleco Corporation and Cleco Power, along with many other listed PRPs, enter into negotiations with the EPA for the performance of an RI/FS at the Devil’s Swamp Lake site. The EPA identified Cleco as one of many companies that sent PCB wastes for disposal to the site. The EPA proposed to add the Devil’s Swamp Lake site to the National Priorities List on March 8, 2004, based on the release of PCBs to fisheries and wetlands located on the site, but no final listing decision has yet been made. The PRPs began discussing a potential proposal to the EPA in February 2008. The EPA issued a Unilateral Administrative Order to two PRP’s, Clean Harbors, Inc. and Baton Rouge Disposal, to conduct an RI/FS in December 2009. The Tier 1 part of the study was completed in June 2012. Field activities for the Tier 2 investigation were completed in July 2012. The draft Tier 2 remedial investigation report was submitted in December 2014. In 2015, remedial investigation activities included the collection and analysis of sediment, crawfish, and fish tissue samples. After reviewing the sample analysis, in August 2015, the Louisiana Department of Health and Hospitals updated the advisory for the area to advise that fish and crawfish from the area should not be eaten. The final Tier 2 remedial investigation report was made public in December 2015. Currently, the study/remedy selection task continues, and there is no record of a decision. Therefore, management is unable to determine how significant Cleco’s share of the costs associated with the RI/FS and possible response action at the site, if any, may be and whether this will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

~~Discrimination Complaints~~

In December 2009, a complaint was filed in the U.S. District Court for the Western District of Louisiana (the Court) on behalf of eight current employees and four former employees alleging that Cleco discriminated against each of them on the basis of race. Each was seeking various remedies provided under applicable statutes prohibiting racial discrimination in the workplace and together, the plaintiffs sought monetary compensation exceeding $35.0 million. In July 2010, the plaintiffs moved to add an additional current employee alleging that Cleco had discriminated on the basis of race. The additional plaintiff sought compensation of no less than $2.5 million and became the thirteenth plaintiff. In April 2011, Cleco entered into a settlement with one of the current employees which resulted in a dismissal of one of the thirteen cases with prejudice. In September 2011, the Court ruled on Cleco’s summary judgment motions, resulting in eleven of the twelve remaining plaintiffs having at least one claim remaining. In

February 2013, the Court ruled on the second motion for summary judgment in each of the eleven cases and each such case was dismissed with prejudice. Appeals were filed in ten of the eleven dismissed cases to the U.S. Court of Appeals for the Fifth Circuit (the Fifth Circuit). In June 2013, the Fifth Circuit clerk dismissed the appeals of two of the current employees due to their failure to file a brief in support of their respective appeals. On various dates in August through November 2013, the Fifth Circuit affirmed the trial court judgments in favor of Cleco in seven of the eight remaining cases. The last case has been settled and was dismissed with prejudice by order entered on May 28, 2015.

2016 Merger

In connection with the ~~proposed~~2016 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. The petitions in each action generally ~~allege,~~alleged, among other things, that the members of the Cleco ~~Corporation~~Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the 2016 Merger at a price that allegedly ~~undervalues~~undervalued Cleco, and failing to disclose material information about the 2016 Merger. The petitions also ~~allege~~alleged that Cleco Partners, Cleco Corporation, 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~~which includes attorneys’ fees and expenses.

The four actions filed in the Ninth Judicial District Court for Rapides Parish are captioned as follows:

Braunstein v. Cleco Corporation, No. 251,383B (filed October 27, 2014),

Moore v. Macquarie Infrastructure and Real Assets, No. 251,417C (filed October 30, 2014),

Trahan v. Williamson, No. 251,456C (filed November 5, 2014), and

L’Herisson v. Macquarie Infrastructure and Real Assets, No. 251,515F (filed November 14, 2014).

OnIn November ~~14,~~ 2014, the plaintiff in the Braunstein action moved for a dismissal of the action without prejudice, and that motion was granted onin November ~~19,~~ 2014. OnIn December 3, 2014, the Court consolidated the remaining three actions and appointed interim co-lead counsel. OnIn December ~~18,~~ 2014, the plaintiffs in the consolidated action filed a Consolidated Amended Verified Derivative and Class Action Petition for Damages and



CLECO
CLECO POWER		2018 FORM 10-K

Preliminary and Permanent Injunction (the Consolidated Amended Petition). The consolidated action names Cleco Corporation, its directors, Cleco Partners, and Merger Sub as defendants. The Consolidated Amended Petition alleges, among other things, that ~~the~~Cleco Corporation’s directors breached their fiduciary duties to Cleco’s shareholders and grossly mismanaged Cleco by approving the 2016 Merger Agreement because it allegedly ~~does~~did not value Cleco adequately, failing to structure a process through which shareholder value would be maximized, engaging in self-dealing by ignoring conflicts of interest, and failing to disclose material information about the 2016 Merger. The Consolidated Amended Petition further alleges that all defendants conspired to commit the breaches of fiduciary duty. Cleco believes that



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

the allegations of the Consolidated Amended Petition are without merit and that it has substantial meritorious defenses to the claims set forth in the Consolidated Amended Petition.

The three actions filed in the Civil District Court for Orleans Parish are captioned as follows:

Butler v. Cleco Corporation, No. 2014-10776 (filed November 7, 2014),

Creative Life Services, Inc. v. Cleco Corporation, No. 2014-11098 (filed November 19, 2014), and

Cashen v. Cleco Corporation, No. 2014-11236 (filed November 21, 2014).

Both the Butler and Cashen actions name Cleco Corporation, its directors, Cleco Partners, Merger Sub, ~~Macquarie Infrastructure and Real Assets Inc. (MIRA), British Columbia Investment Management Corporation,~~MIRA, BCI, and John Hancock Financial as defendants. The Creative Life Services action names Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, and Macquarie Infrastructure Partners III, L.P., as defendants. OnIn December ~~11,~~ 2014, the plaintiff in the Butler action filed an Amended Class Action Petition for Damages. Each petition alleges, among other things, that ~~the directors~~members of Cleco Corporation’s Board of Directors breached their fiduciary duties to Cleco’s shareholders by approving the Merger Agreement because it allegedly does not value Cleco adequately, failing to structure a process through which shareholder value would be maximized and engaging in self-dealing by ignoring conflicts of interest. The Butler and Creative Life Services petitions also allege that the directors breached their fiduciary duties by failing to disclose material information about the 2016 Merger. Each petition further ~~alleges~~alleged that Cleco, Cleco Partners, Merger Sub, and certain of the investors in Cleco Partners aided and abetted the directors’ breaches of fiduciary duty. OnIn December ~~23,~~ 2014, the directors and Cleco filed declinatory exceptions in each action on the basis that each action was improperly brought in Orleans Parish and should either be transferred to the Ninth Judicial District Court for Rapides Parish or dismissed. OnIn December ~~30,~~ 2014, the plaintiffs in each action jointly filed a motion to consolidate the three actions pending in Orleans Parish and to appoint interim co-lead plaintiffs and co-lead counsel. OnIn January ~~23,~~ 2015, the Court in the Creative Life Services case sustained the defendants’ declinatory exceptions and dismissed the case so that it could be transferred to the Ninth Judicial District Court for Rapides Parish. OnIn February 5, 2015, the plaintiffs in Butler and Cashen also consented to the dismissal of their cases from Orleans Parish so they could be transferred to the Ninth Judicial District Court for Rapides Parish. On

In February ~~25,~~ 2015, the Ninth Judicial District Court for Rapides Parish held a hearing on a motion for preliminary

injunction filed by plaintiffs Moore, L’Herisson, and Trahan seeking to enjoin the shareholder vote at the Special Meeting of Shareholders ~~scheduled for~~held in February ~~26,~~ 2015, for approval of the Merger Agreement. Following the hearing, the Court denied the plaintiffs’ motion. OnIn June ~~19,~~ 2015, three of the plaintiffs filed their Second Consolidated Amended Verified Derivative and Class Action Petition. This will be considered according to a schedule established by the Ninth Judicial District Court for Rapides Parish. Cleco filed exceptions seeking dismissal of the amended petition onin July ~~24,~~ 2015. ~~Cleco’s~~

In March 2016, the plaintiffs filed their Third Consolidated Amended Verified Derivative Petition for Damages and Preliminary and Permanent Injunction. In May 2016, the plaintiffs filed their Fourth Verified Consolidated Amended Class Action Petition. This petition eliminated the request for preliminary and permanent injunction and also named an additional executive officer as a defendant. Cleco filed exceptions ~~have been fully briefed~~seeking dismissal of the amended Petition. A hearing was held in September 2016. In September 2016, the District Court granted the exceptions filed by Cleco and ~~will be set~~dismissed all claims asserted by the former shareholders. The plaintiffs appealed the District Court’s ruling to the Louisiana Third Circuit Court of Appeal. The Third Circuit Court of Appeal heard oral arguments in the case in September 2017. On December 13, 2017, the Third Circuit Court of Appeal issued an order reversing and remanding the case to the District Court for ~~hearing at~~further proceedings. In January 2018, Cleco filed a ~~later date.~~writ with the Louisiana Supreme Court seeking review of the Third Circuit Court of Appeal’s decision. The writ was denied in March 2018 and the parties are engaged in discovery in the District Court. Cleco believes that the allegations of the petitions in each action are without merit and that it has substantial

meritorious defenses to the claims set forth in each of the petitions. On November 2, 2018, Cleco filed exceptions of no cause of action and res judicata, seeking to dismiss all claims. The District Court denied the exceptions on January 14, 2019.

Gulf Coast Spinning

OnIn September ~~11,~~ 2015, a potential customer sued Cleco for failure to fully perform an alleged verbal agreement to lend or otherwise fund its startup costs to the extent of $6.5 million. Gulf Coast Spinning Company, LLC (Gulf Coast), the primary plaintiff, alleges that Cleco promised to assist it in raising approximately $60.0 million, which Gulf Coast needed to construct a cotton spinning facility near Bunkie, Louisiana. According to the petition filed by Gulf Coast in the 12^th Judicial District Court for Avoyelles Parish, Louisiana (the “District Court”), Cleco made such promises of funding assistance in order to cultivate a new industrial electric customer which would increase its revenues under a power supply agreement that it executed with Gulf Coast. Gulf Coast seeks unspecified damages arising from its inability to raise sufficient funds to complete the project, including lost profits.

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The District Court denied Cleco’s exception onin December ~~22,~~ 2015, after considering briefs and arguments. OnIn January ~~21,~~ 2016, Cleco appealed the District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal ~~for~~denied the ~~State~~request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of ~~Louisiana.~~the District Court’s denial of Cleco’s



CLECO
CLECO POWER		2018 FORM 10-K

exception. In November 2016, the Louisiana Supreme Court denied Cleco’s writ application.

In February 2016, the parties agreed to a stay of all proceedings pending discussions concerning settlement. In May 2016, the District Court lifted the stay at the request of Gulf Coast. The parties are currently participating in discovery. Cleco believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast and are otherwise without merit and that it has substantial meritorious defenses to the claims alleged by Gulf Coast.

Sabine River Flood

In March 2017, Cleco was served with a summons in Perry Bonin, Ace Chandler, and Michael Manuel, et al v. Sabine River Authority of Texas and Sabine River Authority of Louisiana, No. B-160173-C. The action was filed in the 163rd Judicial District Court for Orange County, Texas, and relates to flooding that occurred in Texas and Louisiana in March 2016. The plaintiffs have alleged that the flooding was the result of the release of water from the Toledo Bend spillway gates into the Sabine River. While the plaintiffs have made numerous allegations, they have specifically alleged that Cleco Power, included as one of several companies and governmental bodies, failed to repair one of the two hydroelectric generators at the Toledo Bend Dam, which in turn contributed to the flooding. Cleco Power does not operate the hydroelectric generator.

The suit has been removed to federal court in Texas. The new federal case is Perry Bonin, et al. v. Sabine River Authority of Texas et al., No. 17-cv-134, U.S. District Court for the Eastern District of Texas (Bonin Case). The plaintiffs moved to remand the case to state court, but the district court found that the case raises a substantial federal question and denied the motion to remand. Cleco Power, along with its co-defendants, filed a motion to dismiss on various grounds, primarily arguing that the plaintiffs’ claims are preempted because they infringe on FERC’s exclusive control of dam operations. The district court granted the motion to dismiss in part, declining to rule on some of the arguments raised by the defendants, and granted the plaintiffs leave to amend their complaint. The plaintiffs filed a Fifth Amended Complaint in March 2018. Cleco Power filed a new motion to dismiss the plaintiffs’ claims. The briefing on Cleco Power’s motion is now complete, but the district court has not ruled on the motion or set a hearing date.

On March 7, 2018, approximately 26 other individual plaintiffs filed a petition against Cleco Power and other defendants in Larry Addison, et al. v. Sabine River Authority of Texas, et al., No. D180096-C. The action was filed in the 260th Judicial District Court for Orange County, Texas. The defendants removed the case to federal court on April 6, 2018. The new federal case is Larry Addison, et al. v. Sabine River Authority of Texas, et al., No. 18-cv-153, U.S. District Court for the Eastern District of Texas. The allegations are essentially identical to those in the BoninCase. On April 13, 2018, Cleco Power filed a motion to dismiss on the same grounds that previously were successful in the Bonin Case. The briefing on Cleco Power’s motion is complete, but the district court has not ruled on the motion or set a hearing date. On July 20, 2018, the district court entered an order consolidating the AddisonCase with the BoninCase. Management believes that both cases, as they relate to Cleco Power, have no merit. On August 28, 2018, the Judge entered an order requiring the Plaintiffs to file a more definitive statement to clarify the Plaintiffs’ claims. In response thereto, the Plaintiffs filed a Sixth Amended Petition on September 11, 2018. Cleco Power filed a response on

October 3, 2018. The Judge has not yet ruled on Cleco’s Motion to Dismiss.

Dispute with Saulsbury Industries

In October 2018, Cleco Power sued Saulsbury Industries, Inc., the former general contractor for the St. Mary Clean Energy Center project, seeking damages for Saulsbury Industries, Inc.’s failure to complete the St. Mary Clean Energy Center project on time and for costs incurred by Cleco Power in hiring a replacement general contractor. The action was filed in the 9th Judicial District Court for Rapides Parish, No. 263339. Saulsbury Industries, Inc. has not filed responsive pleadings in the case.

In January 2019, Cleco Power was served with a summons in Saulsbury Industries, Inc. v. Cabot Corporation and Cleco Power LLC, No. 6:19-CV-00007, U.S. District Court for the Western District of Louisiana. Saulsbury Industries, Inc. alleges that Cleco Power and Cabot Corporation caused the delays in the St. Mary Clean Energy Center project, resulting in significant impact to Saulsbury Industries, Inc.’s direct and indirect costs. Cleco Power has not filed responsive pleadings in the case.

LPSC Audits

Fuel Audit

~~The~~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 that enables Cleco Power to pass on to its customers substantially all such 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 of FAC filings will be performed at least every other year. ~~In November 2014,~~On March 13, 2018, Cleco Power received notice of an FAC audit from the LPSC ~~initiated an audit of Cleco Power’s fuel and purchased power expenses~~ for the ~~years 2009 through 2013.~~period of January 1, 2016, to December 31, 2017. The total amount of fuel expense ~~included in the~~subject to audit ~~was $1.73 billion.~~is $536.2 million. On August ~~17, 2015,~~31, 2018, the LPSC Staff issued its audit report which recommended no disallowance of fuel costs. ~~On October 28, 2015,~~The report is expected to be approved by 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 the ~~audit is $582.6 million.~~first quarter of 2019. Cleco Power currently has FAC filings for January 2018 and thereafter that remain 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. Historically, the disallowances have not been material. If a disallowance of fuel ~~costs~~cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the results of operations, financial condition or cash ~~flows~~flow of the Registrants.

Environmental Audit



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

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. On May 22, 2018, Cleco Power ~~began incurring additional~~received notice of an EAC audit from the LPSC for the period of January 1, 2016, to December 31, 2017, and Cleco Power has responded to



CLECO
CLECO POWER		2018 FORM 10-K

several sets of data requests. The total amount of environmental expense included in this audit was $30.7 million. Periods subsequent to December 31, 2017, are also subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings. Historically, the disallowance cost is ordered resulting in a refund to Cleco Power’s customers, any such refund could have a material adverse effect on the result of operations, financial condition, or cash flows of the Registrants.

Cleco Power incurs environmental compliance expenses ~~in the second quarter of 2015~~ for reagents associated with the compliance ~~with~~standards of MATS. OnIn June ~~29,~~ 2015, the U.S. Supreme Court remanded the MATS rule to the D.C. Circuit Court of Appeals. OnIn December ~~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 this rule. ~~Although~~In April 2016, the ~~full effect~~EPA released a final supplemental finding that, even considering costs, it is appropriate and necessary to regulate hazardous air pollutants. By the June 2016 deadline, six petitions were filed with the U.S. Court of ~~this remand is unknown at this time, it could result~~Appeals for the D.C. Circuit Court of Appeals for review of the EPA’s findings. At the request of the EPA, in ~~lower annual operating costs to Cleco Power as~~April 2017, the ~~MATS equipment may be operated at a lower level and result~~court issued an order holding the cases in ~~less reagent use.~~abeyance pending the EPA’s review of its supplemental finding. These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC.

FERC Audit

Generally, Cleco Power records wholesale transmission revenue through Attachment O of the MISO tariff and certain grandfathered agreements. These rates are subject to periodic audits by FERC. On ~~February 3, 2016,~~March 13, 2018, the ~~LPSC~~Division of Audits and Accounting, within the Office of Enforcement of FERC, initiated an audit of Cleco ~~Power’s environmental costs~~Power for the period ~~November 2010 through December 2015. The total amount~~ of ~~environmental costs included in this audit is $81.2 million.~~January 1, 2014, to the present. Cleco Power has responded to several sets of data requests. Management is unable to ~~predict~~determine the outcome or ~~give a reasonable estimate~~timing 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. The most recent EAC audit completed by the LPSC for the period October 2009 through October 2010 did not result in any refunds to customers.

Transmission ROE

~~In November 2013, a group of industrial customers from the northern region of MISO and other stakeholders~~Two complaints were filed ~~a complaint~~ with 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~~complaints sought to reduce the ~~current~~ 12.38% ROE used in MISO’s transmission rates to a proposed 6.68%. ~~A group of MISO transmission owners~~The first complaint, filed ~~responses~~in November 2013, was for the period November 2013 through February 2015. In September 2016, FERC issued a Final Order in response to the first complaint ~~defending the current ROE and seeking dismissal~~establishing a 10.32% ROE. In February 2017, $1.2 million 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~~refunds relating to the ~~outcome of settlement discussion. On December 22,~~first complaint were submitted to MISO.

The second complaint, filed February 2015, was for the period February 2015 through May 2016. In June 2016, an ALJ issued an initial decision in ~~this docket. Subject~~the second rate case docket recommending a 9.70% base ROE. On November 15, 2018, the ALJ ordered supplemental briefs and additional written evidence due to ~~review by~~new ROE calculation methodologies pursuant to Emera Maine v. FERC ~~on exceptions, the initial decision recommends the MISO transmission owners be able~~. Cleco Power is unable to ~~collect~~determine when a ~~10.32% ROE. A~~ binding FERC order ~~is expected to~~will be issued ~~during~~on the second ~~half of 2016.~~ ROE complaint.

In November 2014, the MISO transmission owners committee, in which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by ~~0.5%~~50 basis points for RTO participation as allowed by the MISO tariff. OnIn January 5, 2015, FERC granted the request. The collection of the

adder is delayed until the resolution of the ROE complaint ~~proceeding. A second ROE case was filed in February 2015 and is pending litigation.~~ proceedings.

As of December 31, ~~2015,~~2018, Cleco Power had ~~$2.5~~$1.9 million accrued for ~~a possible reduction~~potential reductions to the ~~ROE for the period December 2013 through December 2015.~~ROE. Management believes a reduction in the ROE, as well as any ~~resulting~~additional refund, will not have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of December 31, ~~2015~~,2018, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters is ~~$5.5~~$4.8 million and has accrued this amount.

Off-Balance Sheet Commitments and 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 the Registrants to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees.

Cleco ~~Corporation~~Holdings entered into these off-balance sheet commitments in order to entice desired counterparties to contract with its affiliates by providing some measure of credit assurance to the counterparty in the event Cleco’s affiliates do not fulfill certain contractual obligations. If Cleco ~~Corporation~~Holdings had not provided the off-balance sheet commitments, the desired counterparties may not have contracted with Cleco’s affiliates, or may have contracted with them at terms less favorable to its affiliates.

The off-balance sheet commitments are not recognized on Cleco and Cleco Power’s Consolidated Balance Sheets because management has determined that Cleco and Cleco Power’s affiliates are able to perform these obligations under their contracts and that it is not probable that payments by Cleco or Cleco Power will be required.

Cleco ~~Corporation~~Holdings provided guarantees and indemnities to Entergy Louisiana and Entergy Gulf States as a result of the sale of the Perryville facility in 2005. ~~At December 31, 2015, the~~The remaining indemnifications relate to environmental matters that may have been present prior to closing. These remaining indemnifications have no limitations to time. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. ~~Currently, management~~Management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under these guarantees.

On behalf of Acadia, Cleco ~~Corporation~~Holdings provided guarantees and indemnifications as a result of the sales of Acadia Unit 1 to Cleco Power and Acadia Unit 2 to Entergy Louisiana in 2010 and 2011, respectively. ~~At December 31, 2015, the~~The remaining indemnifications relate to the fundamental organizational structure of Acadia. These remaining indemnifications have no limitations as to time or maximum potential future payments. ~~Currently, management~~Management does not



CLECO
CLECO POWER		2018 FORM 10-K

expect to be required to pay Cleco Power or Entergy Louisiana under these guarantees.

Cleco ~~Corporation~~Holdings provided indemnifications to Cleco Power as a result of the transfer of Coughlin to Cleco Power in March 2014. Cleco Power also provided indemnifications to Cleco ~~Corporation~~Holdings and Evangeline as a result of the transfer of Coughlin to Cleco Power. The maximum amount of the potential payment to Cleco Power, Cleco ~~Corporation,~~Holdings, and



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

Evangeline for their respective indemnifications is $40.0 million, except for indemnifications relating to the fundamental organizational structure of each respective entity, of which the maximum amount is $400.0 million. ~~Currently, management~~Management does not expect to be required to make any payments under these indemnifications.

~~On-Balance Sheet Guarantees~~

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of Dolet Hills Power Station, have agreed to pay the loan and lease principal obligations of the lignite miner, DHLC, when due if ~~they do~~DHLC does not have sufficient funds or credit to pay. Any amounts paid on behalf of the miner would be credited by the lignite miner against future invoices for lignite delivered. ~~At December 31, 2015, Cleco Power had a liability of $3.8 million related to the amended agreement.~~ The maximum projected payment by Cleco Power under this guarantee is estimated to be ~~$106.5~~$91.4 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement is not expected to terminate pursuant to its terms until 2036 and does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under ~~the~~this guarantee.

Generally, neither Cleco ~~Corporation~~Holdings nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. There are no assets held as collateral for third parties that either Cleco ~~Corporation~~Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Long-Term Purchase Obligations

Cleco ~~Corporation~~Holdings had no unconditional long-term purchase obligations at December 31, ~~2015~~.2018. Cleco Power has several unconditional long-term purchase obligations primarily related to the purchase of petroleum coke, limestone, ~~and~~ energy delivery ~~facilities.~~facilities, information technology outsourcing, natural gas storage, network monitoring, and software maintenance. The aggregate amount of payments required under such obligations at December 31, ~~2015~~,2018, is as follows:

YEAR ENDING DEC. 31, (THOUSANDS)
2016 $ 40,643
2017 17,230
2018 14,905
2019 3,688
Total long-term purchase obligations $ 76,466



FUTURE PAYMENTS UNDER LONG-TERM PURCHASE OBLIGATIONS	(THOUSANDS)
For the year ending Dec. 31,
2019	$	40,980
2020	24,092
2021	17,695
2022	4,620
2023	4,646
Thereafter	16,442
Total long-term purchase obligations	$	108,475

Payments under these agreements for the years ended December 31, ~~2015~~, ~~2014~~,2018, 2017, and ~~2013~~2016 were ~~$89.7~~$70.5 million, $~~90.4~~47.0 million, and $~~105.3~~72.9 million, respectively.

Other Commitments

~~General Electric Services Corporation~~

Cleco Power entered into an operating lease agreement that expires in March 2017 with General Electric Equipment Services Corporation for leasing railcars in order to transport coal to Rodemacher Unit 2. For information on the railcar lease, see Note 13 — “Operating Leases.”

NMTC Fund

In 2008, Cleco ~~Corporation~~Holdings and ~~US Bancorp Community Development (USBCDC)~~the USBCDC formed the NMTC Fund. Cleco ~~Corporation~~Holdings has a 99.9% membership interest in the NMTC Fund and USBCDC has a 0.1% interest. The purpose of the NMTC Fund iswas to invest in projects located in qualified active low-income communities that are underserved by typical debt capital markets. These investments ~~are~~were designed to generate NMTCs and Historical Rehabilitation tax credits. The NMTC Fund was later amended to include renewable energy investments. The majority of the energy investments ~~qualify~~qualified for grants under Section 1603 of the ARRA. The tax benefits received from the NMTC Fund ~~reduce~~reduced the federal income tax obligations of Cleco ~~Corporation.~~Holdings. In total, Cleco ~~Corporation~~Holdings contributed ~~$283.7~~$285.5 million of equity contributions to the NMTC Fund and ~~will receive at least~~ ~~$302.0~~received $303.8 million in the form of tax credits, tax losses, capital gains/losses, earnings, and cash over the 10-year life of the ~~investment, which ends in 2017.~~investment. The~~$18.3 million~~ difference between equity contributions and total benefits received ~~will be~~were recognized over the life of the NMTC Fund as net tax benefits ~~are~~were delivered.

Due to the right of offset, the investment and associated debt are presented on Cleco’s Consolidated Balance Sheets in the line item titled Tax credit fund investment, net. The amount of tax benefits delivered in excess of capital contributions asAs of December 31, ~~2015, was $16.7 million. The amount of tax benefits delivered but not utilized as of December 31, 2015, was $116.8 million and is reflected as a deferred tax asset.~~

~~By using~~2018, the cost method for investments, the gross investment amortization expense will be recognized over a nine-year period, with two years remaining under the new amendment. The basis of the investment is reduced by the grants received under Section 1603 of the ARRA, which allow certain projects to receive a federal grant in lieu of tax credits, and other cash. Periodic amortization of the investment and the deferred taxes generated by the basis reduction temporary difference are included as components ofNMTC Fund filed its final income tax ~~expense.~~return and in January 2019, Cleco Holdings received the final $1.6 million of cash receipts from the NMTC Fund. Effective January 25, 2019, the NMTC Fund was dissolved.

Fuel Transportation Agreement

In ~~October 2007,~~2012, Cleco Power entered into an amended agreement ~~that~~with Savage Services for 42 dedicated barges used to transport petroleum met the accounting definition of a capital lease until its expiration on August 31, 2017. From September 2017 until April 2, 2018, Cleco Power had an operating lease that automatically renewed on a month-to-month basis for ~~barges in order~~use of the 42 barges. On April 2, 2018, Cleco Power loaned Savage Inland Marine $16.8 million to ~~transport petroleum coke and limestone to Madison Unit 3. On December 28, 2012,~~purchase the barges. Also on April 2, 2018, Cleco Power entered into ~~an amended~~a new agreement with Savage Inland Marine for continued use of the 42 ~~dedicated barges.~~barges through March 2033. The ~~amended~~new agreement ~~continues to meet~~meets the accounting definition of a capital lease.

Under the ~~amended~~2018 agreement, the barge lease rate contains both fixed and variable components, of which the latter iswas adjusted ~~annually per~~every third anniversary of the ~~Producer Price Index (PPI)~~new agreement for estimated executory costs. The initial term of this agreement is from the date of the amendment until August 31, 2017. The term of this agreement will automatically renew for successive periods of two years each unless written notice is provided by either party. In September 2014, Cleco Power gained the option to purchase any or all of the dedicated barges. Management is evaluating this option. The amended agreement contains a provision for early termination upon the occurrence of any one of four specified cancellation events.

~~Under both the original agreement and the amended agreement, if~~If the barges are idle, the lessor is required to attempt to sublease the barges to third parties, with the revenue reducing Cleco Power’s lease payment.

During the year ended December 31, ~~2015,~~2018, Cleco Power paid ~~approximately $3.7~~$2.0 million in capital lease payments and received



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

~~$0.5~~ $0.5 million in revenue from subleases. During the ~~year~~years ended December 31, ~~2014,~~2017, and 2016, Cleco Power paid ~~approximately~~ ~~$3.7~~$2.5 million and $3.7 million, respectively, in capital lease payments and received $~~0.4~~$0.3 million and less than $0.1 million, respectively, in revenue from subleases.

This agreement contains a provision for early termination upon the occurrence of any one of four cancellation events.

The following is an analysis of leased property under capital leases by major classes:



	AT DEC. 31,
CLASSES OF PROPERTY (THOUSANDS)	2018		2017
Barges	$	16,800	$	—
Less: accumulated amortization	840		—
Capital lease assets, net	$	15,960	$	—

AT DEC. 31,
CLASSES OF PROPERTY (THOUSANDS) 2015
2014
Barges $ 11,350
$ 11,350
Less: accumulated amortization 7,296
4,864
Net capital leases $ 4,054
$ 6,486



CLECO
CLECO POWER		2018 FORM 10-K

The following is a schedule by years of future minimum lease payments under the capital ~~leases~~lease together with the present value of the net minimum lease payments as of December 31, ~~2015~~:2018:

(THOUSANDS)
Years ending December 31,
2016 $ 3,735
2017 2,480
Total minimum lease payments $ 6,215
Less: executory costs 1,554
Net minimum lease payments $ 4,661
Less: amount representing interest 236
Present value of net minimum lease payments $ 4,425
Current liabilities $ 2,607
Non-current liabilities $ 1,818

~~During the years ended December 31,~~ ~~2015, and~~ ~~2014, Cleco Power incurred immaterial amounts of contingent rent under the barge agreement related to the increase in the PPI.~~



	(THOUSANDS)
Years ending Dec. 31,
2019	$	2,611
2020	2,611
2021	2,611
2022	2,611
2023	2,611
Thereafter	23,655
Total minimum lease payments	36,710
Less: executory costs	5,817
Net minimum lease payments	30,893
Less: amount representing interest	14,475
Present value of net minimum lease payments	$	16,418
Current liabilities	$	557
Non-current liabilities	$	15,861

Other

Cleco has accrued for liabilities related to third parties, employee medical benefits, and AROs. For more information on AROs, see Note 2 — “Summary of Significant Accounting Policies — AROs” and Note 35 — “Regulatory Assets and Liabilities — AROs.”

Risks and Uncertainties

Cleco ~~Corporation~~

~~Cleco Corporation~~ could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their obligations or if Cleco ~~Corporation~~ or its affiliates are not in compliance with loan agreements or bond indentures.

~~Other~~

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Upon announcement of the Merger, Moody’s and S&P changed Cleco Corporation’s outlook to negative 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 Cleco Power and Cleco Corporation taking into consideration the results of the merger transaction. If either Cleco Power’s or Cleco Corporation’s credit ratings were to be downgraded by Moody’s or S&P, the respective company would be required to pay additional fees

~~and higher interest rates under its bank credit and, potentially, other debt agreements.~~

Changes in the regulatory environment or market forces could cause Cleco to determine its assets have suffered an other-than-temporary decline in value, whereby an impairment would be required and Cleco’s financial condition could be materially adversely affected.

~~Cleco Power~~

Cleco Power ~~began participating~~is a participant in the MISO ~~market in December 2013.~~market. 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.~~LMPs. Physical transmission constraints present in the MISO market could increase energy costs within Cleco Power’s pricing zones. Cleco Power uses FTRs to mitigate transmission congestion ~~risk.~~price risks. Changes to anticipated transmission paths may result in an unexpected increase in energy costs to Cleco Power.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Cleco Power pays fees and interest under its bank credit agreements based on the highest rating held. Upon announcement of the Merger, Moody’s and S&P changed Cleco Power’s outlook to negative 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 Cleco Power taking into consideration the results of the merger transaction. If Cleco Power’s credit ratings were to be downgraded by Moody’s or S&P, Cleco Power would be required to pay additional fees and higher interest rates under its bank credit agreements. 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.



Note 1517 — Affiliate Transactions

Cleco

Cleco has entered into service agreements with affiliates to receive and to provide goods and professional services. Goods and services received by Cleco primarily involve services provided by Support Group. Support Group provides joint and common administrative support services in the areas of information technology; finance, cash management, accounting, tax, and auditing; human resources; ~~investor~~public relations; project consulting; risk management; strategic and

corporate development; legal, ethics, and regulatory compliance; facilities management; supply chain and inventory management; and other administrative services. ~~In March, 2014, Coughlin was transferred to Cleco Power. Until the transfer in 2014, Midstream provided electric power plant operations and maintenance expertise, primarily to Evangeline.~~

Cleco is charged the higher of management’s estimated fair market value or fully loaded costs for goods and services provided by Cleco Power. Cleco, with the exception of Support Group, charges Cleco Power the lower of management’s estimated fair market value or fully loaded costs for goods and



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

services provided in accordance with service agreements. Support Group charges only fully loaded costs.

All charges and revenues from consolidated affiliates were eliminated in Cleco’s Consolidated Statements of Income for the years ending December 31, ~~2015, 2014,~~2018, 2017, and ~~2013.~~2016.

At December 31, ~~2015, and 2014,~~2018, Cleco Holdings had no ~~affiliate balances that were~~accounts receivable due from Cleco Group. At December 31, 2017, Cleco Holdings had accounts receivable of $0.6 million due from Cleco Group in relation to merger costs paid on behalf of Cleco Group. At December 31, 2018, and 2017, Cleco Holdings had no accounts payable due to ~~or receivable~~Cleco Group.

During the years ended December 31, 2018, and 2017, Cleco Holdings made $71.4 million, and $84.1 million, respectively, of distribution payments to Cleco Group.

During the successor period April 13, 2016, through December 31, 2016, Cleco Holdings received $100.7 million of equity contributions from ~~its non-consolidated affiliates.~~Cleco Group and made $88.8 million of distribution payments to Cleco Group.

Cleco Power

Cleco Power has entered into service agreements with affiliates to receive and to provide goods and professional services. Charges from affiliates included in Cleco Power’s Consolidated Statements of Income primarily involve services provided by Support Group in accordance with service agreements. ~~In March 2014, Coughlin was transferred to Cleco Power. Prior to the transfer, charges from affiliates also included power purchased from Evangeline.~~ Support Group provides joint and common administrative support services in the areas of information technology; finance, cash management, accounting, tax, and auditing; human resources; ~~investor~~public relations; project consulting; risk management; strategic and corporate development; legal, ethics, and regulatory compliance; facilities management; supply chain and inventory management; and other administrative services. ~~For information on the transfer of Coughlin, see Note 17 — “Coughlin Transfer.”~~

With the exception of Support Group, affiliates charge Cleco Power the lower of management’s estimated fair market value or fully loaded costs for goods and services provided in accordance with service agreements. Support Group charges only fully loaded costs. The following table is a summary of charges from each affiliate included in Cleco Power’s Consolidated Statements of Income:

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Support Group
Other operations $ 53,079
$ 50,801
$ 48,694
Maintenance $ 1,807
$ 2,091
$ 1,263
Taxes other than income taxes $ (3 ) $ (9 ) $ (6 )
Other expenses $ 403
$ 339
$ 306
Evangeline
Purchased power expense $ —
$ 5,467
$ 31,670
Other expenses $ —
$ —
$ 42
Diversified Lands

Other expenses $ —
$ —
$ 3



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017			2016
Support Group
Other operations and maintenance	$	56,669	$	50,572		$	48,371
Taxes other than income taxes	$	6	$	(13	)	$	10
Other expense	$	290	$	255		$	106
Cleco Holdings
Other expense	$	1,007	$	361		$	—

The majority of the services provided by Cleco Power relates to the lease of office space to Support Group. Cleco Power charges affiliates the higher of management’s estimated fair market value or fully loaded costs for goods and services provided in accordance with service agreements.



CLECO
CLECO POWER		2018 FORM 10-K

The following table is a summary of revenue received from affiliates included in Cleco Power’s Consolidated Statements of Income:


	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2015		2014		2013		2018		2017		2016
Affiliate revenue
Support Group	$	1,142	$	1,322	$	1,318	$	874	$	851	$	884
Evangeline	—		4		20
Total affiliate revenue	$	1,142	$	1,326	$	1,338	$	874	$	851	$	884
Other income
Cleco Corporation	$	3	$	30	$	26
Support Group	—		10		—
Evangeline	—		9		68
Diversified Lands	10		14		45
Perryville	—		5		10
Attala	—		5		8
Cleco Holdings							$	1,092	$	494	$	19
Other⁽¹⁾							$	—	$	—	$	12
Total other income	$	13	$	73	$	157	$	1,092	$	494	$	31
Total	$	1,155	$	1,399	$	1,495	$	1,966	$	1,345	$	915
⁽¹⁾ Represents Attala and Perryville in 2016.							⁽¹⁾ Represents Attala and Perryville in 2016.

Cleco Power had the following affiliate receivable and payable balances associated with the service agreements:


					AT DEC. 31,				AT DEC. 31,
			2015				2014		2018				2017
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Corporation	$	653	$	564	$	22,994	$	525
Cleco Holdings									$	699	$	88	$	743	$	113
Support Group	1,254		6,034		626		7,235		2,619		7,755		608		8,582
Other⁽¹⁾	1		—		1		—		—		—		4		2
Total	$	1,908	$	6,598	$	23,621	$	7,760	$	3,318	$	7,843	$	1,355	$	8,697
⁽¹⁾ Represents Attala, Diversified Lands, and Perryville for 2015
⁽¹⁾ Represents Attala, Diversified Lands, Midstream, and Perryville for 2014
⁽¹⁾ Represents Attala and Perryville.									⁽¹⁾ Represents Attala and Perryville.

The decrease in affiliate accounts receivable from Cleco Corporation is the result of a partial utilization of Cleco Corporation’s net operating loss due to Cleco Power’s estimated taxable income exceeding its net operating loss carryforward.

During ~~2015~~, ~~2014~~,2018, 2017, and ~~2013~~,2016, Cleco Power made $121.4 million, $135.0 million, ~~$115.0 million,~~ and ~~$105.0~~$110.0 million of distribution payments to Cleco ~~Corporation,~~Holdings, respectively. Cleco Power received no equity contributions from Cleco ~~Corporation~~Holdings in ~~2015~~.2018 and 2017. During ~~2014,~~2016, Cleco Power received ~~a $138.1 million non-cash equity contribution from Cleco Corporation relating to the transfer of Coughlin. Cleco Power received no~~ equity contributions from Cleco ~~Corporation in~~ ~~2013~~. Holdings of $50.0 million cash.

Cleco Power is the pension plan sponsor and the related trust holds the assets. The net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco Power’s affiliates is transferred with a like amount of assets to Cleco Power monthly. The following table shows the expense of the pension plan related to Cleco Power’s affiliates for the years ended ~~2015~~2018 and ~~2014~~:2017:

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
Support Group $ 2,055
$ 1,638
Midstream —
49
Total $ 2,055
$ 1,687



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



Note 1618 — Intangible ~~Asset~~Assets and Goodwill

During 2008, Cleco Katrina/Rita acquired a $177.5 million intangible asset which includes $176.0 million for the right to bill and collect storm recovery charges from customers of Cleco Power and $1.5 million of financing costs. This intangible asset is expected to have a life of 12 years, but ~~may~~could have a life of up to 15 years depending on the time period required to collect the required amount from Cleco Power’s customers. The intangible asset’s expected amortization expense is based on the estimated collections from Cleco Power’s customers. At the end of its life, the asset will have no residual value. ~~During~~At the ~~years ended~~ ~~December 31, 2015, 2014, and 2013,~~date of the 2016 Merger, the gross balance of the Cleco Katrina/Rita ~~recognized~~intangible asset for Cleco was adjusted to be net of accumulated amortization, ~~expense~~as no accumulated amortization existed on the date of ~~$15.7 million,~~ the 2016 Merger.~~$15.4 million~~,

As a result of the 2016 Merger, fair value adjustments were recorded on Cleco’s Consolidated Balance Sheet for the valuation of the Cleco trade name and ~~$14.5 million, respectively, based on actual collections.~~long-term wholesale power supply agreements. At the end of their life, these intangible assets will have no residual value. The trade name intangible asset is being amortized over its estimated economic useful life of 20 years. The intangible assets related to the power supply agreements are amortized over the remaining life of each applicable contract ranging between 4 years and 16 years.

The following tables present Cleco and Cleco Power’s

amortization of intangible assets:



Cleco
	FOR THE YEAR ENDED DEC. 31,
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	2018		2017		2016		Jan. 1, 2016 - Apr. 12, 2016
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	20,608	$	16,772	$	12,121	$	4,369
Trade name	255		255		183		—
Power supply agreements	9,680		10,757		7,482		—
Total amortization of intangible assets	$	30,543	$	27,784	$	19,786	$	4,369
No impairments for intangibles in the table above for 2018, 2017, and 2016.



Cleco Power
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2018		2017		2016
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	20,608	$	16,772	$	16,490

The following ~~table summarizes~~tables summarize the balances for intangible ~~asset balance~~assets subject to amortization for Cleco and Cleco Power as of December 31, ~~2015~~2018, and ~~2014:~~2017:


Cleco
	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2015		2014		2018			2017
Cleco Katrina/Rita right to bill and collect storm recovery charges					$	70,594		$	70,594
Power supply agreements					85,104			85,104
Trade name					5,100			5,100
Gross carrying amount	$	177,537	$	177,537	160,798			160,798
Accumulated amortization	102,574		86,895		(76,491		)	(45,948		)
Intangible asset	$	74,963	$	90,642
Net intangible assets subject to amortization					$	84,307		$	114,850



Cleco Power
	AT DEC. 31,
(THOUSANDS)	2018			2017
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	177,537		$	177,537
Accumulated amortization	(156,444		)	(135,836		)
Net intangible assets subject to amortization	$	21,093		$	41,701



CLECO
CLECO POWER		2018 FORM 10-K

The following table summarizes the amortization expense related to intangible assets expected to be recognized ~~during each year through 2019:~~in Cleco’s Consolidated Statements of Income:

YEAR ENDING DEC. 31, (THOUSANDS)
Expected amortization expense
2016 $ 16,864
2017 $ 18,009
2018 $ 19,312
2019 $ 20,778



Cleco
EXPECTED AMORTIZATION EXPENSE	(THOUSANDS)
For the year ending Dec. 31,
2019	$	29,414
2020	$	11,549
2021	$	9,935
2022	$	9,935
2023	$	9,935
Thereafter	$	13,539

Cleco Power expects to recognize $19.5 million and $1.6 million of amortization expense related to intangible assets on its Consolidated Statement of Income in the years 2019 and 2020, respectively.

Goodwill

On April 13, 2016, in connection with the completion of the 2016 Merger, Cleco recognized goodwill of $1.49 billion. Management assigned goodwill to Cleco’s reportable segment, Cleco Power. 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. Application of the goodwill impairment test requires significant judgments, including the identification of reporting segments, assignments of assets and liabilities to reporting segments, assignment of goodwill to reporting segments, and the determination of the fair value of the reporting segments. Management has determined that Cleco Power is Cleco’s only reporting segment.

Cleco conducted its 2018 annual impairment test using an August 1, 2018, measurement date. The fair value of Cleco’s reporting segment, Cleco Power, was estimated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries. Significant assumptions used in these fair value estimates include estimation of future cash flows, long-term rate of growth, the

selection of comparable companies, and weighted-average cost of capital (WACC) or discount rate. Changes in these assumptions could materially affect the determination of fair value and goodwill impairment at Cleco Power. Based on the tests performed, management has determined that there was no impairment of Cleco Power’s goodwill for 2018.

Management estimated the fair value of Cleco Power’s equity to be $3.55 billion at the August 1, 2018, measurement date. The carrying value of Cleco Power’s equity was approximately $3.30 billion with the excess of the fair value over the carrying value representing 7.5% or $247.4 million. There were no accumulated impairment charges.

The fair value estimate is particularly sensitive to WACC. WACC takes into account both the after-tax cost of debt and the cost of equity. WACC used for calculating the fair values as of August 1, 2018, was 5.7%. A downgrade in Cleco Power’s debt ratings could increase Cleco Power’s after-tax cost of debt. In addition, an increase in interest rates or return required by investors in equity markets could increase Cleco Power’s cost of equity. Any increase in the cost of equity or the cost of debt could materially impact Cleco Power’s fair value estimate. A WACC of 5.6% or 5.8% would have resulted in fair value calculations of $3.63 billion and $3.47 billion, respectively.

The fair value estimate is also sensitive to long-term cash flow growth rates applicable to periods beyond management’s five-year business plan. Management assumed a long-term cash flow growth rate of 2.5% based on historical and projected consumer price inflation, economic indicators, and projected industry growth. Any change in the expected terminal cash flow growth rate could materially impact Cleco Power’s fair value estimate. A terminal cash flow growth rate of 2.4% or 2.6% would have resulted in a fair value calculation of $3.48 billion and $3.62 billion, respectively.

For more information about the 2016 Merger related adjustments, see Note 4 — “Business Combinations.”



Note ~~17 — Coughlin Transfer~~

In October 2012, Cleco Power announced that Evangeline was the winning bidder in Cleco Power’s 2012 long-term RFP for up to 800 MW to meet long-term capacity and energy needs. In December 2012, Cleco Power and Evangeline executed definitive agreements to transfer ownership and control of Coughlin from Evangeline to Cleco Power. In March 2014, Coughlin was transferred to Cleco Power with a net book value of $176.0 million. Cleco Power finalized the rate treatment of Coughlin as part of its FRP extension proceeding before the LPSC in June 2014.



~~Note 18~~19 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are summarized in the following tables for Cleco and Cleco Power. All amounts are reported net of income taxes. Amounts in parentheses indicate debits.

Cleco
(THOUSANDS) POSTRETIREMENT BENEFIT NET (LOSS) GAIN
NET (LOSS) GAIN ON CASH FLOW HEDGES
TOTAL AOCI
Balances, Dec. 31, 2012 $ (24,741 ) $ (7,629 ) $ (32,370 )
Other comprehensive income before reclassifications:
Postretirement benefit adjustments incurred during the year 2,857
—
2,857
Net derivative gain —
1,355
1,355
Amounts reclassified from accumulated other comprehensive loss:
Amortization of postretirement benefit net loss 2,159
—
2,159
Reclassification of net loss to interest charges —
154
154
Reclassification of ineffectiveness to regulatory asset —
(31 ) (31 )
Net current-period other comprehensive income 5,016
1,478
6,494
Balances, Dec. 31, 2013 $ (19,725 ) $ (6,151 ) $ (25,876 )
Other comprehensive loss before reclassifications:
Postretirement benefit adjustments incurred during the year (9,022 ) —
(9,022 )
Amounts reclassified from accumulated other comprehensive loss:
Amortization of postretirement benefit net loss 2,021
—
2,021
Reclassification of net loss to interest charges —
212
212
Net current-period other comprehensive (loss) income (7,001 ) 212
(6,789 )
Balances, Dec. 31, 2014 $ (26,726 ) $ (5,939 ) $ (32,665 )
Other comprehensive income before reclassifications:
Postretirement benefit adjustments incurred during the year 2,790
—
2,790
Amounts reclassified from accumulated other comprehensive loss:
Amortization of postretirement benefit net loss 3,079
—
3,079
Reclassification of net loss to interest charges —
211
211
Net current-period other comprehensive income 5,869
211
6,080
Balances, Dec. 31, 2015 $ (20,857 ) $ (5,728 ) $ (26,585 )



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

Cleco Power
(THOUSANDS) POSTRETIREMENT BENEFIT NET (LOSS) GAIN
NET (LOSS) GAIN ON CASH FLOW HEDGES
TOTAL AOCI
Balances, Dec. 31, 2012 $ (12,792 ) $ (7,629 ) $ (20,421 )
Other comprehensive income before reclassifications:
Postretirement benefit adjustments incurred during the year 2,796
—
2,796
Net derivative gain —
1,355
1,355
Amounts reclassified from accumulated other comprehensive loss:
Amortization of postretirement benefit net loss 970
—
970
Reclassification of net loss to interest charges —
154
154
Reclassification of ineffectiveness to regulatory asset —
(31 ) (31 )
Net current-period other comprehensive income 3,766
1,478
5,244
Balances, Dec. 31, 2013 $ (9,026 ) $ (6,151 ) $ (15,177 )
Other comprehensive loss before reclassifications:
Postretirement benefit adjustments incurred during the year (3,344 ) —
(3,344 )
Amounts reclassified from accumulated other comprehensive loss:
Amortization of postretirement benefit net loss 1,021
—
1,021
Reclassification of net loss to interest charges —
212
212
Net current-period other comprehensive (loss) income (2,323 ) 212
(2,111 )
Balances, Dec. 31, 2014 $ (11,349 ) $ (5,939 ) $ (17,288 )
Other comprehensive income before reclassifications:
Postretirement benefit adjustments incurred during the year (1,232 ) —
(1,232 )
Amounts reclassified from accumulated other comprehensive loss:
Amortization of postretirement benefit net loss 1,217
—
1,217
Reclassification of net loss to interest charges —
211
211
Net current-period other comprehensive income (15 ) 211
196
Balances, Dec. 31, 2015 $ (11,364 ) $ (5,728 ) $ (17,092 )



Cleco
(THOUSANDS)	POSTRETIREMENT BENEFIT NET (LOSS) GAIN			NET (LOSS) GAIN ON CASH FLOW HEDGES			TOTAL AOCI
PREDECESSOR
Balances, Dec. 31, 2015	$	(20,857	)	$	(5,728	)	$	(26,585	)
Amounts reclassified from accumulated other comprehensive loss
Amortization of postretirement benefit net loss	587			—			587
Reclassification of net loss to interest charges	—			60			60
Balances, Apr. 12, 2016	$	(20,270	)	$	(5,668	)	$	(25,938	)
SUCCESSOR⁽¹⁾
Balances, Apr. 13, 2016	$	—		$	—		$	—
Other comprehensive income before reclassifications
Postretirement benefit adjustments incurred during the year	2,304						2,304
Amounts reclassified from accumulated other comprehensive income
Amortization of postretirement benefit net gain	(804		)	—			(804		)
Balances, Dec. 31, 2016	$	1,500		$	—		$	1,500
Other comprehensive income before reclassifications
Postretirement benefit adjustments incurred during the year	(3,898		)	—			(3,898		)
Amounts reclassified from accumulated other comprehensive income
Amortization of postretirement benefit net gain	(523		)	—			(523		)
Balances, Dec. 31, 2017	$	(2,921	)	$	—		$	(2,921	)
Other comprehensive income before reclassifications
Postretirement benefit adjustments incurred during the year	3,681			—			3,681
Amounts reclassified from accumulated other comprehensive income
Amortization of postretirement benefit net loss	1,615			—			1,615
Reclassification of effect of tax rate change	(589		)	—			(589		)
Balances, Dec. 31, 2018	$	1,786		$	—		$	1,786
⁽¹⁾As a result of the 2016 Merger, AOCI was reduced to zero on April 13, 2016, as required by acquisition accounting.



Cleco Power
(THOUSANDS)	POSTRETIREMENT BENEFIT NET (LOSS) GAIN			NET (LOSS) GAIN ON CASH FLOW HEDGES			TOTAL AOCI
Balances, Dec. 31, 2015	$	(11,364	)	$	(5,728	)	$	(17,092	)
Other comprehensive loss before reclassifications
Postretirement benefit adjustments incurred during the year	3,913			—			3,913
Amounts reclassified from accumulated other comprehensive loss
Amortization of postretirement benefit net gain	(454		)	—			(454		)
Reclassification of net loss to interest charges	—			211			211
Balances, Dec. 31, 2016	$	(7,905	)	$	(5,517	)	$	(13,422	)
Other comprehensive loss before reclassifications
Postretirement benefit adjustments incurred during the year	(948		)	—			(948		)
Amounts reclassified from accumulated other comprehensive loss
Amortization of postretirement benefit net loss	476			—			476
Reclassification of net loss to interest charges	—			211			211
Balances, Dec. 31, 2017	$	(8,377	)	$	(5,306	)	$	(13,683	)
Other comprehensive loss before reclassifications
Postretirement benefit adjustments incurred during the year	954			—			954
Amounts reclassified from accumulated other comprehensive loss
Amortization of postretirement benefit net loss	1,789			—			1,789
Reclassification of net loss to interest charges	—			254			254
Reclassification of effect of tax rate change	(1,426		)	(1,070		)	(2,496		)
Balances, Dec. 31, 2018	$	(7,060	)	$	(6,122	)	$	(13,182	)



CLECO
CLECO POWER		2018 FORM 10-K



Note 1920 — Miscellaneous Financial Information (Unaudited)

Cleco

Quarterly information for Cleco for ~~2015~~2018 and ~~2014~~2017 is shown in the following tables:

2015
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1ST
QUARTER

2ND
QUARTER

3RD
QUARTER

4TH
QUARTER

Operating revenue, net $ 295,457
$ 289,074
$ 345,468
$ 279,403
Operating income $ 62,722
$ 69,884
$ 102,572
$ 52,162
Net income applicable to common stock $ 26,922
$ 30,234
$ 54,663
$ 21,850
Basic earnings per average common share outstanding $ 0.45
$ 0.50
$ 0.90
$ 0.36
Diluted earnings per average common share outstanding $ 0.44
$ 0.50
$ 0.90
$ 0.36
Dividends on common stock $ 0.40
$ 0.40
$ 0.40
$ 0.40
Market sales price per share

High $ 55.24
$ 54.88
$ 54.76
$ 53.75
Low $ 53.69
$ 53.59
$ 53.02
$ 48.47



							2018
(THOUSANDS)	1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER
Operating revenue, net	$	276,760	$	299,261	$	358,256	$	296,767
Operating income	$	44,734	$	63,709	$	86,110	$	50,004
Net income	$	10,861	$	25,839	$	47,360	$	10,377
Distributions to member	$	19,500	$	20,400	$	20,600	$	10,850

2014
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1ST
QUARTER

2ND
QUARTER

3RD
QUARTER

4TH
QUARTER

Operating revenue, net $ 284,387
$ 309,070
$ 371,386
$ 304,643
Operating income $ 57,338
$ 66,721
$ 107,242
$ 54,729
Net income applicable to common stock $ 25,924
$ 36,633
$ 70,835
$ 21,347
Basic earnings per average common share outstanding $ 0.43
$ 0.61
$ 1.17
$ 0.35
Diluted earnings per average common share outstanding $ 0.43
$ 0.60
$ 1.17
$ 0.35
Dividends on common stock $ 0.3625
$ 0.40
$ 0.40
$ 0.40
Market sales price per share

High $ 50.99
$ 59.13
$ 59.21
$ 55.36
Low $ 45.52
$ 49.32
$ 48.06
$ 46.11

Cleco Corporation’s common stock is listed for trading on the NYSE under the ticker symbol “CNL.” On December 31, 2015, Cleco had 5,047 common shareholders and no preferred shareholders, as determined from the records of the transfer agent.

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

In accordance with the Merger Agreement, until the completion of the Merger, Cleco Corporation’s Board of Directors may continue the declaration and payment of regular 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 Note 20 — “Agreement and Plan of Merger.”



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



							2017
(THOUSANDS)	1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER
Operating revenue, net	$	250,501	$	308,661	$	338,499	$	277,985
Operating income	$	41,462	$	73,270	$	97,790	$	52,702
Net income	$	6,292	$	25,444	$	45,304	$	61,040
Distributions to member	$	28,955	$	26,700	$	28,300	$	110

Cleco Power

Quarterly information for Cleco Power for ~~2015~~2018 and ~~2014~~2017 is shown in the following tables:


							2015								2018
(THOUSANDS)	1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER		1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER
Operating revenue, net	$	295,271	$	288,885	$	345,189	$	279,122	$	279,387	$	301,901	$	360,899	$	299,409
Operating income	$	65,670	$	70,243	$	103,966	$	54,321	$	50,521	$	72,602	$	96,063	$	59,786
Net income	$	28,605	$	31,813	$	58,661	$	22,270	$	26,004	$	43,020	$	63,336	$	29,897
Distribution to Cleco Corporation (as sole member)	$	25,000	$	35,000	$	40,000	$	35,000
Distributions to member									$	28,000	$	43,000	$	50,400	$	—


							2014								2017
(THOUSANDS)	1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER		1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER
Operating revenue, net	$	284,180	$	308,859	$	371,178	$	304,432	$	253,703	$	310,787	$	340,614	$	280,093
Operating income	$	58,188	$	67,032	$	108,303	$	66,189	$	46,424	$	76,667	$	101,357	$	60,798
Net income	$	26,307	$	32,658	$	65,544	$	29,806	$	17,854	$	35,733	$	54,852	$	42,299
Contributions from Cleco Corporation	$	138,080	$	—	$	—	$	—
Distribution to Cleco Corporation (as sole member)	$	35,000	$	35,000	$	15,000	$	30,000
Distributions to member									$	35,000	$	25,000	$	15,000	$	60,000



Note 2021 — ~~Agreement and Plan of Merger~~Cleco Cajun Transaction

On ~~October 17, 2014,~~February 4, 2019, Cleco ~~Corporation entered into~~Cajun acquired from NRG Energy all of the ~~Merger Agreement with~~ outstanding membership interests in NRG South Central, which indirectly owns:


i.	a 176-MW natural-gas-fired generating station located in Sterlington, Louisiana,


ii.	a 220-MW natural-gas-fired facility and 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.	225-MW of a 300-MW natural-gas-fired peaking facility located in Jennings, Louisiana,


v.	a 1,263-MW natural-gas-fired generating station located in Deweyville, Texas (the Cottonwood Plant),


vi.	wholesale contracts to provide electricity and capacity to nine Louisiana cooperatives, five municipalities across Arkansas, Louisiana, and Texas, and one investor-owned utility,


vii.	transmission assets, which consist of equipment and land required to connect the generation stations and the wholesale customers to the transmission grid, and


viii.	current assets consisting of cash, inventory, receivables, and other miscellaneous assets.

Cleco ~~Partners~~Cajun, NRG Energy, and ~~Merger Sub providing for~~NRG South Central have each made customary representations, warranties and covenants in the ~~merger~~Cleco Cajun Transaction, which includes customary indemnification provisions. Cleco Holdings has agreed to guarantee the obligations of ~~Merger Sub with~~Cleco Cajun, subject to certain limitations. In addition, upon closing, a lease agreement was executed and ~~into Cleco Corporation, with Cleco Corporation surviving~~delivered between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the ~~Merger as an indirect, wholly-owned~~Cottonwood Plant and will operate it no later than May 2025. Upon closing, Cottonwood Energy became a subsidiary of Cleco ~~Partners. Pursuant~~Cajun.

As consideration for all of the outstanding membership interest in NRG South Central, Cleco paid cash of approximately $962.2 million, which represents the $1.0 billion acquisition price net of working capital adjustments of $37.8 million. In addition, Cleco assumed liabilities consisting of asset retirement obligations connected with the coal fueled generation stations and current liabilities, such as accounts payable.

In connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings issued $300.0 million under a new bridge loan agreement and $100.0 million under a new term loan agreement. Both loan agreements are variable rate debt and have a three-year term. Both loan agreements contain certain financial covenants, including requiring Cleco Holdings to maintain (i) a debt to capital ratio (as defined in the applicable agreement) below 65% and (ii) a rating applicable to the ~~Merger Agreement, at~~Company’s senior debt rating (as defined in the ~~effective time~~applicable agreement). Cleco Holdings anticipates that some or all of the ~~Merger each outstanding share of Cleco Corporation common stock, par value $1.00 per share (other than Shares that are owned by Cleco Corporation, Cleco Partners, Merger Sub,~~variable rate debt may be replaced or ~~any other direct or indirect wholly-owned subsidiary of Cleco Partners or Cleco Corporation), will be converted into the right to receive $55.37 per share in cash, without interest,~~repaid with ~~all dividends payable before the effective time of the Merger.~~

A Special Meeting of Shareholders of Cleco Corporation was held on February 26, 2015, in Pineville, Louisiana to obtain shareholder approval of the Merger Agreement. Cleco Corporation received approval of the Merger Agreement by a vote of approximately 77% of shares of common stock of Cleco Corporation entitled to be cast.

~~The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired on May 4, 2015. On June~~long-term financing, markets permitting, within 12 2015, the Committee on Foreign Investment in the U.S. cleared the Merger to proceed without further review. On July 17, 2015, Cleco Power, Perryville, Attala, and Cleco Partners received approval of the Merger from FERC. On July 28, 2015, the FCC’s consent to Cleco Corporation’s request to transfer certain licenses to Cleco Power became final. On December 1, 2015, the FCC granted Cleco Corporation’s request for an extension to transfer the licenses until June 11, 2016.

On February 10, 2015, Cleco Power filed an application with the LPSC seeking approval of the Merger. An ALJ hearing on the proposed Merger was held in November 2015, and on February 17, 2016, the ALJ issued a recommendation stating that the transaction as structured at the time of the hearing was not in the public interest. However, the ALJ ruled that, if the LPSC, within its broad discretion over mergers and acquisitions, determined that the transaction was in the public interest, approval should be conditioned on (1) the regulatory commitments made by Cleco Power and Cleco Partners be made a part of the transaction; and (2) consideration of double leveraging and tax issues be deferred for consideration in a future ratemaking proceeding, no later than 2017. On February 24, 2016, the LPSC denied the application to approve the Merger. Management is currently evaluating options relating to the Merger.

~~As prescribed in the Merger Agreement, the deadline for completing the Merger was automatically extended to April 17, 2016, to enable satisfaction~~months of the closing condition related to obtaining regulatory approvals. If the Merger is completed, Cleco Corporation will pay an additional $12.0 million in contingency fees to its financial advisors. The Merger Agreement provides for certain termination rights for both Cleco Corporation and Cleco Partners, and further provides that, upon termination of the ~~Merger Agreement under certain specified circumstances,~~ Cleco ~~Corporation will be~~Cajun Transaction. Also in connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total credit facility of $175.0 million. All other terms remained the same. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

The remaining cash required to ~~pay~~finance the transaction consisted of an equity contribution from Cleco ~~Partners~~Group of $384.9 million and $102.3 million from cash on hand at Cleco Holdings.

In connection with the Cleco Cajun Transaction, Cleco Holdings, on behalf of Cleco Cajun, issued three letters of credit totaling $1.1 million to a ~~termination fee~~capacity agreement customer and a gas transport company. These letters of ~~$120.0 million. If~~credit automatically renew each year and have no impact on the ~~Merger Agreement~~Cleco Holdings’ credit facility.

Because the initial accounting for the transaction is ~~terminated under certain specified circumstances,~~not complete, Cleco ~~Partners will~~is unable to disclose the valuation and determination of the fair value of assets and liabilities acquired. Cleco expects the final valuation and purchase price allocation, including finalization of acquired liabilities, to be completed within one year of the date of acquisition as required to pay a termination fee to Cleco Corporation equal to $180.0 million. If the Merger Agreement is terminated due to lack of regulatory approval, neither Cleco Corporation nor Cleco Partners would be required to pay a termination fee.by accounting guidance.



CLECO
CLECO POWER		2018 FORM 10-K



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.



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



ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~As of December 31, 2015, evaluations were performed under~~Under the supervision and with the participation of Cleco ~~Corporation~~Holdings and Cleco Power (individually, “Registrant” and collectively, the “Registrants”) management, including the ~~Chief Executive Officer (CEO)~~CEO and ~~Chief Financial Officer (CFO). The evaluations assessed~~CFO, the Registrants have evaluated the effectiveness of ~~the Registrants’~~their disclosure controls and ~~procedures.~~procedures as of December 31, 2018. Based on the evaluations, the CEO and CFO have concluded that the Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms; and that the Registrants’ disclosure controls and procedures are also effective in ensuring that such information is accumulated and communicated to the Registrants’ management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There ~~has~~have been no ~~change~~changes in the Registrants’ internal control over financial reporting that occurred during the quarter ended December 31, ~~2015,~~2018, that ~~has~~have materially affected, or isare reasonably likely to materially affect, the Registrants’ internal control over financial reporting. In fiscal year 2019, the Registrants plan to implement a new enterprise business application. Implementation of this system is expected to necessitate changes in policies and procedures and the related internal controls and the Registrants’ method of application.

Management’s Reports on Internal Control Over Financial Reporting

The management of Cleco Holdings and Cleco Power is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Cleco Holdings and Cleco Power’s internal control over financial reporting is a process designed by, or under the supervision of, each of Cleco Holdings and Cleco Power’s principal executive and financial officers and effected by Cleco Holdings and Cleco Power’s board of ~~directors or~~ managers, ~~as the case may be,~~ management, and other personnel, to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.

Management has designed its internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. Management’s assessments included

review and testing of both the design effectiveness and operating effectiveness of controls over relevant assertions related to significant accounts and disclosures in the financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness toin future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The management of Cleco Holdings and Cleco Power, under the supervision of each of the Registrants’ principal executive officer and principal financial officer, conducted an assessment of the effectiveness of Cleco Holdings and Cleco Power’s respective internal control over financial reporting as of December 31, ~~2015.~~2018. In making this assessment, management used the criteria in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, the management of Cleco Holdings and Cleco Power concluded that, as of December 31, ~~2015,~~2018, the Registrants’ internal control over financial reporting was effective.

The effectiveness of Cleco and Cleco Power’s internal control over financial reporting as of December 31, 2015, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports which appear on pages 48 and 56, respectively, of this Annual Report on Form 10-K.

Certifications

The certifications of the Registrants’ CEO and CFO required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as Exhibits 31.1, 31.2, 31.3, and 31.4 to this Annual Report on Form 10-K. Additionally, as required by Section 303A.12(a) of the NYSE Listed Company Manual, Cleco’s CEO filed a certification with the NYSE on December 18, 2015, reporting that he was not aware of any violation by Cleco of the NYSE’s Corporate Governance listing standards.

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



~~Report of Independent Registered Public Accounting Firm~~

~~To the Board of Directors and Shareholders of~~

~~Cleco Corporation~~

~~Pineville, Louisiana~~

We have audited the internal control over financial reporting of Cleco Corporation and subsidiaries (the “Company”) as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s reports on internal control over financial reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions

and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective 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.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2015, of the Company and our report dated February 26, 2016, expressed an unqualified opinion on those financial statements and financial statement schedules.

~~/s/ Deloitte & Touche LLP~~

~~New Orleans, Louisiana~~

~~February 26, 2016~~

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~~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 internal control over financial reporting of Cleco Power LLC and subsidiaries (the “Company”) as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

In our opinion, the Company maintained, in all material respects, effective 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.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2015, of the Company and our report dated February 26, 2016 expressed an unqualified opinion on those financial statements and financial statement schedule.

~~/s/ Deloitte & Touche LLP~~

~~New Orleans, Louisiana~~

~~February 26, 2016~~

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



ITEM 9B. OTHER INFORMATION

~~None.~~None



CLECO
CLECO POWER		2018 FORM 10-K



PART III

Cleco Power

The information called for by Items 10, 11, 12 and 13 with respect to Cleco Power is omitted pursuant to General Instruction I(2)(c) to Form 10-K (Omission of Information by Certain Wholly Owned Subsidiaries).



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANTS

~~Board~~Boards of ~~Directors~~Managers of Cleco

As of February 26, ~~2016,~~2019, the Board of Managers of Cleco ~~Corporation’s Board~~Holdings is comprised of ~~8 directors,~~12 managers, as set forth below. Cleco Power’s Board of Managers is comprised of 13 managers, including the same 12 managers that comprise the Board of Managers of Cleco Holdings, plus one additional manager, Melissa Stark. The ~~directors’~~Board of Managers of Cleco Holdings and the Board of Managers of Cleco Power are collectively referred to below as “the Boards.” The managers’ ages, dates of election, employment history, and committee assignments as of February 26, ~~2016,~~2019, are also set forth below. An amendment to declassify Cleco’s Board became effective October 25, 2014. Messrs. King and Stewart were elected for a three-year term at the 2012 annual meeting to serve until the 2015 annual meeting, or until their successors are elected and qualified. Because the Company anticipated closing the Merger, as discussed below, in 2015, the Company did not hold an annual meeting in 2015. Unless and until the closingEach of the Merger, as discussed below, Messrs. King and Stewart will serve until the Company’s next annual meeting, should an annual meeting be required. Unless and until the closing of the Merger, as discussed below, Messrs. Marks,Ms. Scott and ~~Walker, who were elected for a three-year term at the 2014 annual meeting, will~~Messrs. Gallot, Gilchrist, and Wainer serve until the 2017 annual meeting; Ms. Bailey and Messrs. Kruger and Williamson, who were elected for a three-year term at the 2013 annual meeting, will serve until the 2016 annual meeting. Unless and until the closing of the Merger, as discussed below, all directors will be elected annually beginning with the 2017 annual meeting.

~~As previously announced, the Company entered into the Merger Agreement,~~ pursuant to one-year agreements which ~~Cleco Partners’ subsidiary will be merged with and into~~are considered for renewal annually by the ~~Company~~Boards. Mr. Fontenot serves by virtue of his position as the CEO, and the Company will cease to be a publicly traded company. If the Merger is completed, upon closing, the Company’s directors will cease to serve as such and the directors of Cleco Partners’ subsidiary will become the directors of the Company.other managers are designated for membership by BCI, John Hancock, or MIRA.

~~Vicky A. Bailey~~Andrew Chapman ~~has served~~joined MIRA in 2006 and currently acts as ~~the president~~Head of ~~Anderson Stratton International, LLC, a strategic consulting~~Asset Management for Macquarie Infrastructure Partners I, II and ~~government relations~~III and Asset Director for utility company ~~since 2005. She also is a partner in BHMM~~Puget Energy Services, LLC, a certified minority-owned energy facilities management group. Ms. Bailey has served on the Blue Ribbon Commission on America’s Nuclear Future since 2010. From 2004 to 2005, she was a partner in Johnston & Associates, LLC, a firm representing clients before the federal government in the fields of energy, education, environment, defense and other issue areas. Ms. Bailey(Puget). Mr. Chapman is 63 years old and became a ~~director of Cleco in 2013. She is a~~ member of the ~~Audit and Nominating/Governance Committees.~~

~~Ms. Bailey has an extensive understanding~~Boards in 2016. He is the chair of the ~~energy sector. In addition to her experience described above, she served as a commissioner with the Federal Energy Regulatory Commission from 1993 through 2000~~Business Planning and ~~was the Assistant Secretary for Policy and International Affairs from 2001 through~~

~~2004. Ms. Bailey was a member of the Board of Trustees of the North American Electric Reliability Corporation from 2010 until 2013. She was the president~~Budget Review Committee and a member of the Leadership Development and Compensation Committee, the Governance and Public Affairs Committee and the Audit Committee. Mr. Chapman serves on the board of ~~directors~~Puget.

Mr. Chapman held executive positions with Elizabethtown Water Company, E-town Corporation, American Water Works and the State of ~~PSI Energy Inc.,~~New Jersey prior to joining MIRA in 2006.

Mr. Chapman earned his Masters of Business Administration from the ~~Indiana electric~~Yale School of Management.

Richard Dinneny is the Senior Portfolio Manager, Infrastructure and Renewable Resources for BCI, where he has responsibility for all aspects of investing in infrastructure transactions. He is 56 years old and became a member of the Boards in 2016. Mr. Dinneny is the chair of the Audit Committee and a member of the Business Planning and Budget Review Committee. Mr. Dinneny has reviewed and completed a number of infrastructure and utility ~~subsidiary of Cinergy Corporation, which is now part of Duke Energy, from 2000 until 2001. Ms. Bailey~~investments. He currently serves as a director of ~~EQT Corporation,~~Vier Gas Services GmbH & Co. KG, Essen, the owner of Open Grid Europe (GmbH), and an ~~integrated energy company, and Cheniere Energy, Inc., a company primarily engaged in~~alternate director on the liquefied natural gas-related business. She also serves as a director of Battelle Memorial Institute, a nonprofit research and development organization that serves the national security, health and life sciences, and energy and environmental industries. Ms. Bailey’s valuable utility leadership background, knowledge of the utility sector, broad understanding of public policy and corporate governance, and longstanding energy and corporate board experience make her an asset to Cleco’s board of ~~directors.~~Puget.

Mr. Dinneny earned his Masters of Business Administration from York University in Toronto and was awarded the Chartered Financial Analyst designation in 1998.

~~Elton R. King~~,William “Bill” Fontenot ~~who~~serves as CEO of Cleco Holdings and Cleco Power. Mr. Fontenot is ~~retired,~~56 years old and was ~~employed~~appointed to the Boards in 2018. He is a member of the Asset Management Committee, the Business Planning and Budget Review Committee, and the Governance and Public Affairs

Committee. During Mr. Fontenot’s 30 years of service, he managed the development and restructuring efforts of generation projects valued at over $900.0 million, as ~~president~~well as led the development and ~~chief executive officer (“CEO”)~~construction of ~~Visual Networks, Inc.,~~the $1.0 billion power plant, Madison Unit 3. His previous background was in marketing and the development of merchant power businesses.

Mr. Fontenot serves on the boards of the Council for a ~~company engaged~~Better Louisiana, Association of Edison Illuminating Companies, Southeastern Electric Exchange, and the Central Louisiana Community Foundation. He is a member of the Association of Edison Illuminating Companies Power Generation Committee, Central Louisiana Manufacturing Managers Council, St. Rita Catholic Church, and the Knights of Columbus.

Mr. Fontenot holds a B.S. degree in ~~providing application performance~~electrical engineering from Louisiana State University.

Richard “Rick” Gallot, Jr. is the President of Grambling State University. He is 52 years old and ~~network management solutions, from June 2001 until August 2002~~became a member of the Boards in 2016. Mr. Gallot is a member of the Leadership Development and ~~also~~Compensation Committee and the Governance and Public Affairs Committee.

Mr. Gallot recently served as a Louisiana state senator for District 29, where he held the position of Vice-chair of the Commerce Committee and was a member of the Agriculture, Forestry, Aquaculture, and Rural Development Committee and the Revenue and Fiscal Affairs Committee. He previously served as a member of ~~its board~~the Louisiana House of directors during that time. Mr. King retired from BellSouth Telecommunications, Inc. (“BellSouth”) in 1999, serving most recently as the president of its network and carrier services group. He alsoRepresentatives for District 11, where he served as Chair of the House and Governmental Affairs Committee and was a ~~director~~member of ~~Hibernia Corporation~~the Executive Committee.

Mr. Gallot obtained his Juris Doctorate from Southern University School of Law.

David Randall “Randy” Gilchrist is the President and ~~Hibernia National Bank until November 2005. Mr. King~~CEO of Gilchrist Construction Company (GCC), a central Louisiana-based infrastructure contractor specializing in road and bridge construction. He is 6959 years old and became a ~~director of Cleco in 1999. He is chairman~~member of the ~~Finance Committee and~~Boards in 2016. Mr. Gilchrist is a member of the ~~Nominating/Governance~~Asset Management Committee and the Audit Committee.

Under Mr. ~~King joined BellSouth in 1968 after graduating~~Gilchrist’s leadership, GCC has grown since 1985 from ~~Mississippi State University with~~ a ~~degree in electrical engineering.~~small site work contractor to one of Louisiana’s leading highway contractors. Mr. Gilchrist has served as President of Associated General Contractors, Chair of Driving Louisiana Forward, Chair of the Central Louisiana Chamber of Commerce, and Vice Chair of Central Louisiana Economic Development Alliance. He ~~worked his way up through~~has also served on the ~~organization~~boards of The Rapides Foundation and Rapides Healthcare System.

Gerald Hanrahan is a Senior Industry Advisor to the ~~leadership of the 35,000-employee network~~Power and ~~carrier services group. During his 31-year career with BellSouth, Mr. King served~~Infrastructure Team at John Hancock. The Power and Infrastructure Team is responsible for transactions in various leadership positions in company operations in Alabama, Louisiana and Mississippi. While serving as BellSouth’s Louisiana state president, Mr. King played a major role in the economic development of the New Orleans area. He led the effort to create the MetroVision Economic Development Partnership, which promotes economic growth in nine southeastern Louisiana parishes. Mr. King’s business acumen and drive for innovation and growth make him a valuable member of Cleco’s board of directors.public

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CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~Logan W. Kruger, who~~utility, independent power project and infrastructure financing areas for John Hancock and manages a portfolio of over $21 billion in assets spanning over 300 individual investments. He is retired, served as the president and CEO of SUN Gold Limited, a privately-held company based in the Channel Islands, between March 2012 and December 31, 2014. During Mr. Kruger’s employment SUN Gold Limited was engaged as an entity for discovery, development and conversion of natural resources outside the United States. Mr. Kruger served as the president, CEO and a director of Century Aluminum Company (“Century”), a publicly held company owning primary aluminum capacity in the United States and Iceland, from December 2005 until November 2011. Prior to that time, Mr. Kruger was employed by Inco Limited, a publicly held company engaged in the mining, processing and marketing of nickel and nickel-related products, where he served as executive vice president of technical services from September 2003 until September 2005 and as president, Inco Asia Pacific, from September 2005 until November 2005. Mr. Kruger is 6559 years old and became a member of the Boards in 2018. Mr. Hanrahan is the Chair of the Asset Management Committee.

Mr. Hanrahan joined John Hancock as a director in 2001, served as managing director from 2003 to 2011, and served as Team Leader - Vice President from 2011 until 2016. He has worked in the financing area of the power industry since 1990. Before joining John Hancock, Mr. Hanrahan worked for four years in the Boston and London offices of InterGen, where he coordinated all financing activities on $2.7 billion in power projects in Turkey, Colombia and Egypt. Before that, he spent nine years in the structured finance and financial advisory divisions of Bank of Tokyo Capital Corporation in Boston.

Mr. Hanrahan holds an MBA from Babson College and a B.S. from Northeastern University.

Christopher Leslieis Executive Chairman of MIRA Americas. Prior to taking that role in July 2016, Mr. Leslie was the CEO of Macquarie Infrastructure Partners Inc., the manager of MIRA’s U.S.-based private infrastructure funds, Macquarie Infrastructure Partners I, II and III, which collectively manage more than $7 billion in U.S. and Canadian infrastructure investments. Mr. Leslie is 54 years old and became a member of the Boards in 2016. He is the Chair of the Leadership Development and Compensation Committee.

Mr. Leslie joined Macquarie in 1992 in Australia. He has been instrumental in expanding Macquarie’s infrastructure business globally, having launched Macquarie offices in Southeast Asia, India and North America.

Mr. Leslie holds a Bachelor of Commerce degree from the University of Melbourne.

Jon Perryis a Senior Principal within the Infrastructure & Renewable Resources Department at BCI, where he is responsible for sourcing, executing and managing infrastructure investments. He is 42 years old and became a member of the Boards in 2018. Mr. Perry is a member of the Asset Management Committee.

Mr. Perry serves on the board of Noverco Inc., an investment holding company, which through its subsidiaries, distributes natural gas. Noverco also offers power generation, gas storage, and marketing services. He has over 10 years of experience in the utility and energy sectors. Prior to working with BCI, he held positions as Manager, Mergers and Acquisitions at TransAlta, a leading Canadian independent power producer and Manager, Regulatory and Financial Reporting at FortisAlberta, a regulated distribution utility. Before then, Mr. Perry held financial and investor relations positions in Canadian junior and mid-cap oil and gas companies.

Mr. Perry holds a Bachelor of Medical Laboratory Sciences from University of British Columbia. He is also a Chartered Accountant in the Province of Alberta and is a Chartered Financial Analyst charter holder.

Aaron Rubinis a Managing Director at MIRA, where he is responsible for MIRA’s North American power and utilities investment team. He is 41 years old and became a member of the Boards in 2018. Mr. Rubin is a member of the Business Planning and Budget Review Committee.

Since joining MIRA in 2008, Mr. Rubin has had extensive responsibility for investment origination and execution as well as for management of portfolio investments. He has also served as the CEO of the Moscow-based Macquarie Russia & CIS Infrastructure Fund, and has been a director of a number of MIRA portfolio companies in the energy, transportation, and communications sectors. Mr. Rubin is currently a director of Lordstown Energy Center, a 940 MW gas-fired power plant construction project in Ohio. Prior to joining MIRA, Mr. Rubin was a Vice President in JPMorgan’s North American mergers and acquisitions team.

Mr. Rubin holds a Bachelor of Commerce and a Bachelor of Laws degree from the University of Queensland.

Peggy Scott currently serves as the Chair of the Boards. She served as Chairperson and Interim CEO of Cleco Holdings from February 9, 2017, through December 31, 2017. She also serves on Cleco’s Audit Committee and Governance and Public Affairs Committee. Presently, Ms. Scott advises diverse industries, including healthcare and technology. She is 67 years old and became a member of the Boards in ~~2008.~~2016.

Previously, Ms. Scott served as the Executive Vice President, Chief Operating Officer and Chief Financial Officer of Blue Cross Blue Shield of Louisiana (BCBS) and as Chief Strategy Officer. Prior to BCBS, Ms. Scott was an office Managing Partner with Deloitte and held executive positions in U.S. and International companies where she led transformations, growth strategies, and operations in eight foreign countries.

Ms. Scott was named one of the ten Outstanding Young Women of America, featured in the Wall Street Journal as National Financial Executive of the year, and inducted into the American Institute of CPAs’ Hall of Fame. She is in the Louisiana State University’s Alumni Hall of Distinction, named a Tulane Outstanding Alumnus and holds a Ronald Reagan presidential citation.

Ms. Scott is a CPA and certified in Valuations/Forensics. She holds an MBA from Tulane University and a B.S. in accounting from Louisiana State University.

Melissa Stark currently serves as the managing principal and owner of Co Issuer Corporate Staffing, LLC, which she established in 2003 to provide independent directors and officers for special purpose entities. She is 56 years old and was appointed in 2016 as a special independent manager of Cleco Power, whose sole purpose is to vote on any bankruptcy-related matters, as specified in Cleco Power’s Second Amended and Restated Operating Agreement. From 2001 to 2017, Ms. Stark concurrently served as a principal and co-founder of Water Tower Capital, LLC, a Chicago based investment advisory firm. From 1994 to 1996 she was Vice President - Fixed Income Research at Duff & Phelps (now known as Fitch) where she covered high yield bonds in the retail industry. She served as Vice President - Special Investments at PPM America, Inc. from 1991 to 1994.

Ms. Stark holds a Masters of Business Administration in Finance from New York University Stern School of Business.

Steven Turner is a Portfolio Manager within the Infrastructure & Renewable Resources Department at BCI, where he is responsible for sourcing, executing, and managing infrastructure investments. He is ~~chairman~~46 years old and became a member of the ~~Compensation~~Boards in 2016. Mr. Turner is the Chair of the Governance and Public Affairs Committee and a member of ~~the Audit Committee.~~

Mr. Kruger has spent over 30 years in the commodities business, including his early career with Anglo American’s gold, uranium and coal companies. He served in various positions of increasing responsibility over mining operations and technical services, which contributed to his deep understanding of the energy business. With his years of managerial experience, Mr. Kruger brings to the board of directors demonstrated management ability at senior levels and a strong operations-oriented perspective. In his role as CEO at Century, he gained valuable experience evaluating the results of a public corporation, which contributes to his service as a member of Cleco’s board of directors.

~~William L. Marks~~, who is retired, was CEO and chairman of the board of directors of Whitney Holding Corporation (“Whitney”), a bank holding company engaged in commercial, retail and international banking services, as well as brokerage, investment, trust and mortgage services, and Whitney National Bank for more than five years before retiring in March 2008. He also has served as a director of Adtran, Inc. (“Adtran”), a global provider of networking and communications equipment, since 1993. Mr. Marks is a member of Adtran’s audit committee. He also serves as a Life Trustee of Wake Forest University in North Carolina. Mr. Marks is 72 years old and became a director of Cleco in 2001. He serves as the Board’s lead director and also is a member of the Finance Committee and the Compensation Committee.

Mr. Marks spent over 40 years in the banking business where he held various positions of increasing responsibility, including his position as CEO and chairman of the board of directors of Whitney. Mr. Marks oversaw the implementation of Whitney’s compliance with the Sarbanes-Oxley Act of 2002. The depth and breadth of his exposure to complex financial issues during his career make him a skilled advisor as the board’s lead director.

~~Peter M. Scott III~~, who is retired, was employed by Progress Energy, Inc., a publicly held utility company headquartered in Raleigh, North Carolina, where he served as executive vice president and chief financial officer (“CFO”) from 2000 to 2003 and 2005 to 2008. He also served as president and CEO of Progress Energy Service Company, LLC from 2004 until September 2008. Mr. Scott is 66 years old and became a director of Cleco in 2009. He is chairman of the Audit Committee and a member of the Compensation Committee.

Mr. Scott received his master’s degree in business administration from the University of North Carolina at Chapel Hill in 1977. During his career with Progress Energy, Mr. Scott’s focus was on finance, accounting, risk management, human resources and corporate governance. He also has served on the audit and finance committees of Nuclear Electric Insurance Limited, and he currently serves as vice chairman of the Board of Governors of Research Triangle Institute International and also serves as chairman of the audit committee. Mr. Scott is a member of the board of directors of Duke Realty Corporation, where he serves on the audit and finance committees. He serves on the Board of Visitors of the Kenan-Flagler School of Business at the University of North Carolina at Chapel Hill. Mr. Scott’s financial, audit and corporate governance experience enables him to provide critical insight as the chairman of Cleco’s Audit Committee.

~~Shelley Stewart, Jr.~~ has served as vice president - sourcing & logistics and chief procurement officer for E.I. du Pont de Nemours & Company since June 2012. From 2003 to 2012, he was senior vice president, operational excellence & chief procurement officer of Tyco International Limited (“Tyco”), a publicly held company headquartered in Princeton, New Jersey. Mr. Stewart also served as vice president of Tyco’s supply chain management from 2003 until 2006. Prior to joining Tyco, he was senior vice president of supply chain for Invensys PLC, a global technology group, from 2001 until 2003. Mr. Stewart is 62 years old and became a director of Cleco in April 2010. He is chairman of the Nominating/Governance Committee and a member of the Audit Committee.

Mr. Stewart received his master’s degree in business administration from the University of New Haven in 1990. Throughout his career, Mr. Stewart has held numerous positions of increasing responsibility, including senior-level supply chain and operational duties with leading industrial companies. He formerly served as the chairman of the board of directors of the Institute for Supply Management, the world’s largest supply management association. Mr. Stewart’s global experience in developing and managing highly effective, cross-functional teams, as well as his extensive supply chain and operational experience, position him well to serve on the board of directors and as chairman of the Nominating/Governance Committee and a member of the Audit Committee.

~~William H. Walker, Jr.~~, who is retired, was the president and a director of Howard Weil, Inc. (“Howard Weil”), an investment banking firm, for more than five years before retiring in 2005. Mr. Walker is 70 years old and became a director of Cleco in 1996. He is a member of the Compensation Committee and the Finance Committee.

Mr. Walker is a 1967 graduate of Mississippi State University. He has a variety of experience, including a background in sales and systems engineering with International Business Machines Corporation, as well as service in the United States Army, where he was an officer in the Adjutant General’s Corps and a teacher at the Army War College. Mr. Walker began his career in the securities business in New York in 1972. He has since been involved in many aspects of the securities business, including sales, trading, research and investment banking with respect to both debt- and equity-related instruments. Mr. Walker joined Howard Weil in 1976 and was named president in 1990. This experience

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CLECO POWER		~~2015~~2018 FORM 10-K

~~enables him to be a valuable contributor to~~the Business Planning and Budget Review Committee and the Leadership Development and Compensation Committee.

Mr. Turner serves on the board of ~~directors, especially~~Corix Infrastructure Inc., a privately-held waste/wastewater and utility holding company based in ~~his role~~Vancouver, British Columbia. He is also a past director of Macquarie Utilities Inc. and Aquarion Water Company (Aquarion), the parent companies to a suite of New England-based water utilities.

Mr. Turner has over 11 years of experience in equity capital markets. Prior to joining BCI, he held positions as an Associate with Ventures West Management, a ~~member~~leading Canadian venture capital firm and as an Associate Equity Analyst with Raymond James Ltd., a full service brokerage firm.

Mr. Turner has a B.S. in Environmental Engineering from Montana Tech of the ~~Compensation Committee~~University of Montana and holds a Masters of Business Administration from the ~~Finance Committee.~~University of Victoria. He is also a registered Professional Engineer in the Province of British Columbia, a Chartered Financial Analyst charter holder and holds the ICD.D designation.

Bruce ~~A. Williamson~~Wainer~~has served as chairman, president and~~ is the CEO of ~~Cleco Corporation since April 2014.~~Wainer Enterprises, a family-owned commercial development company on Louisiana’s Northshore

and in New Orleans. He joined Cleco in July 2011 as its president and CEO. Prior to joining Cleco, Mr. Williamson was chairman, president and CEO of Dynegy, Inc. (“Dynegy”) from 2004 until 2011, and was president and CEO of Dynegy from 2002 to 2004. Mr. Williamson is 5659 years old and became a ~~director of Cleco in July 2011.~~

~~Mr. Williamson serves as a~~ member of the ~~board of directors for Questar Corporation, where he~~Boards in 2016. Mr. Wainer is a member of the ~~finance~~Business Planning and ~~audit committee~~Budget Review Committee, the Asset Management Committee, and the ~~management performance committee.~~Governance and Public Affairs Committee. He ~~also serves on~~is the ~~board~~developer of ~~Southcross Energy Partners, L.P., where he serves on the audit, compensation and conflicts committees. Mr. Williamson~~

~~is a member~~some of the ~~University of Houston Dean’s Advisory Board. He earned his master’s degree~~most successful commercial developments in ~~business administration from~~ the ~~University of Houston in 1995. Mr. Williamson has held numerous positions of increasing responsibility in finance~~New Orleans area and ~~corporate development. His 30+ years of broad energy industry and financial experience position him well to serve as the~~past chairman of the ~~board~~Northshore Business Council. His business affiliations include partner at Wainer Brothers, All State Financial Company and Circle West Trailer Park Company; president of ~~directors~~Quality Properties, Inc., Regent Lands, Inc., Flowers, Inc., Upside Down Cajun Brands, Inc., Louisiana Properties, Inc., Tamco, Inc., Riverhill, Inc., Metro Credit Services, Inc. and ~~as the Company’s chairman, president~~Pan American Investors, Inc., and ~~CEO.~~manager of Advance Mortgage Company, LLC.

Executive Officers of Cleco

The names of the executive officers of Cleco and certain subsidiaries, their positions held, five-year employment history, ages, and years of service as of February 26, ~~2016,~~2019, are as follows. Executive officers are appointed annually to serve for the ensuing year or until their successors have been appointed.



NAME OF EXECUTIVE	POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
William G. Fontenot Cleco Holdings Cleco Power	President and Chief Executive Officer since January 2018. Chief Executive Officer since February 2019; President and Chief Executive Officer from January 2018 to February 2019; Interim Chief Executive Officer from February 2017 to December 2017; Chief Operating Officer from April 2016 to February 2017; Senior Vice President - Utility Operations from March 2012 to April 2016. (Age 56; 32 years of service)
Kazi K. Hasan Cleco Holdings Cleco Power	Chief Financial Officer since October 2018; Chief Risk Officer, AES Corporation from late 2014 to May 2018; Chief Financial Officer, AES Corporation Asia from late 2012 to late 2014. (Age 48; <1 year of service)
Julia E. Callis Cleco Holdings Cleco Power	Chief Compliance Officer and General Counsel since April 2016; Associate General Counsel and Corporate Secretary from November 2011 to April 2016. (Age 50; 11 years of service)
Anthony L. Bunting Cleco Holdings Cleco Power	Chief Transformation Officer since February 2019; Chief Administrative Officer from April 2016 to February 2019; Vice President - Transmission & Distribution Operations from March 2012 to April 2016. (Age 59; 27 years of service)
F. Tonita Laprarie Cleco Holdings Cleco Power	Controller & Chief Accounting Officer since July 2016; General Manager Audit & Risk from March 2014 to July 2016; Manager Accounting Services from December 2007 to March 2014. (Age 54; 18 years of service)
Robert R. LaBorde, Jr. Cleco Holdings Cleco Power	Chief Operations Officer since February 2019; Vice President Generation Operations & Environmental Services from April 2016 to February 2019. Vice President - Generation Operations from November 2012 to April 2016. (Age 51; 27 years of service)
Kristin L. Guillory Cleco Holdings Cleco Power	Treasurer since February 2018; General Manager Finance and Assistant Treasurer from May 2016 to February 2018; Manager Finance, Risk and Analytics & Assistant Treasurer from December 2013 to May 2016. (Age 36; 14 years of service)
Normanique G. Preston Cleco Holdings Cleco Power	Vice President - Human Resources since September 2018; Vice President - Human Resources, Dynegy, Inc. from November 2015 to June 2018; Managing Director, Human Resources, Consulting, Services, and Labor Relations, Dynegy, Inc. from March 2013 to November 2015. (Age 52; <1 year of service)
Dean C. Sikes Cleco Holdings Cleco Power	Vice President Engineering, Construction & Project Management since April 2016; General Manager Generation Engineering & Construction from March 2013 to April 2016. (Age 55; 31 years of service)



CLECO
CLECO POWER		2018 FORM 10-K



NAME OF EXECUTIVE	POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
~~Bruce~~Gregory A. ~~Williamson~~Coco Cleco ~~Corporation~~Holdings Cleco Power	Vice President Transmission & Distribution Operations since April 2016; General Manager Brame Energy Center from March 2013 to April 2016. (Age 59; 37 years of service)
Joel M. Prevost Cleco Holdings Cleco Power	~~Chairman,~~Vice President ~~and Chief Executive Officer~~Asset Management since April ~~2014; President and Chief Executive Officer~~2016; General Manager T&D Engineering & Construction from ~~July 2011~~March 2012 to April ~~2014; Chairman, President and Chief Executive Officer, Dynegy, Inc. from 2004 to 2011.~~ ~~Chief Executive Officer since July 2011.~~2016. (Age ~~56; 4~~58; 37 years of service)
J. Robert Cleghorn Cleco Holdings Cleco Power	Vice President Regulatory Strategy since April 2016; General Manager Regulatory Strategy & Planning from March 2012 to April 2016. (Age 60; 31 years of service)
~~Darren J. Olagues~~Justin S. Hilton Cleco Power Cleco ~~Corporation~~Holdings Cleco Power	President since ~~August 2013.~~February 2019. ~~Senior~~ Vice President ~~Chief Financial Officer~~MISO Operations from ~~July~~April 2016 to February 2019; General Manager Transmission Strategy from March 2012 to ~~August 2013; Senior Vice President, Chief Financial Officer and Treasurer from November 2011 to July 2012; Senior Vice President and Chief Financial Officer from May 2009 to November 2011.~~April 2016. (Age ~~45; 8~~49; 29 years of service)
~~Thomas R. Miller~~Shirley J. Turner Cleco ~~Corporation~~ Holdings Cleco Power	~~Senior~~ Vice President ~~- Chief Financial Officer & Treasurer~~Customer Experience since ~~September 2014; Senior Vice President - Chief Financial Officer~~April 2016; General Manager Customer Experience Management from ~~August 2013 to September 2014; Vice President - Treasurer from July~~March 2012 to ~~August 2013; Senior Vice President & Treasurer, Solar Trust of America LLC from October 2010 to July 2012.~~April 2016. (Age ~~55; 3~~65; 43 years of service)
~~Wade~~Marty A. ~~Hoefling~~Smith Cleco ~~Corporation~~ ~~Cleco Power~~	~~Senior Vice President, General Counsel & Director - Regulatory Compliance since April 2008.~~ ~~(Age 60; 9 years of service)~~
~~Judy P. Miller~~ ~~Cleco Corporation~~ ~~Cleco Power~~	Senior Vice President - Corporate Services and Information Technology since August 2013; Senior Vice President - Corporate Services and Internal Audit from November 2011 to August 2013; Corporate Secretary from January 2004 to November 2011. ~~(Age 58; 31 years of service)~~
~~Keith D. Crump~~ ~~Cleco Power~~	~~Senior Vice President - Commercial Operations since March 2012; Group Vice President from March 2010 to March 2012.~~ ~~(Age 54; 26 years of service)~~
~~William G. Fontenot~~ ~~Cleco Power~~	~~Senior Vice President - Utility Operations since March 2012; Group Vice President from March 2010 to March 2012.~~ ~~(Age 53; 29 years of service)~~
~~Anthony L. Bunting~~ ~~Cleco Power~~	~~Vice President - Transmission & Distribution Operations since October 2012; Vice President - Customer Services and Energy Delivery from October 2004 to October 2012.~~ ~~(Age 56; 24 years of service)~~
~~Robert R. LaBorde, Jr.~~Holdings Cleco Power ~~Cleco Corporation~~	Vice President - ~~Generation Operations~~Marketing North since ~~November 2012.~~January 2017; General Manager Corporate Safety from April 2016 to January 2017; General Manager Distribution Engineering & Real Estate from February 2013 to April 2016. (Age 57; 27 years of service)
Eric A. Schouest Cleco Cajun Cleco Holdings Cleco Power	President since February 2019; Interim President from May 2018 to February 2019. Vice President - ~~Strategic Planning, Development and Environmental Policy~~Governmental Affairs from ~~November 2011~~March 2018 to ~~November 2012;~~May 2018; Vice President - Marketing South from August 2016 to March 2018; General Manager ~~- Environmental Services~~Governmental Affairs/Regulatory Sales from February 2013 to August ~~2006 to November 2011.~~ 2016. (Age ~~48; 24~~53; 17 years of service)
~~Terry L. Taylor~~Robert E. Adrian Cleco ~~Corporation~~ ~~Cleco Power~~Cajun	~~Controller and~~ Chief ~~Accounting~~Operating Officer since November ~~2011; Assistant Controller~~2018; CEO, eServices, LLC from ~~August 2006~~January 2012 to November ~~2011.~~2018. (Age ~~61; 15 years~~59; <1 year of service)
~~Julia E. Callis~~ ~~Cleco Corporation~~ ~~Cleco Power~~	~~Associate General Counsel and Corporate Secretary since November 2011; Senior Attorney from August 2007 to November 2011.~~ ~~(Age 47; 8 years of service)~~

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

Audit Committee

Cleco has a separately-designated standing audit ~~committee established in accordance with section 3(a)(58)(A) of the Exchange Act.~~committee. The members of Cleco’s Audit Committee are ~~Peter M. Scott III, Vicky A. Bailey, Logan W. Kruger~~Andrew Chapman, Richard Dinneny (who serves as Chair of the committee), Randy Gilchrist, and ~~Shelley Stewart, Jr. Cleco’s board of directors has~~Peggy Scott. The Boards have determined that ~~Mr. Peter M. Scott III, who serves as the chairman of~~Andrew Chapman is the Audit Committee ~~fulfills the requirements for an independent audit committee~~ financial ~~expert for Cleco Corporation as required by the NYSE Listing Standards.~~

~~Section 16(a) Beneficial Ownership Reporting Compliance~~

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Cleco’s executive officers and directors, and persons who beneficially own more than 10% of a registered class of Cleco’s equity securities, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of Cleco’s equity securities. To Cleco’s knowledge, based solely on review of the copies of such reports furnished to Cleco, for the fiscal year ended December 31, 2015, all Section 16(a) filing requirements applicable to its executive officers, directors and greater-than-10% shareholders were satisfied.expert.

Code of Business Conduct & Ethics and Related Party Transactions

Cleco has adopted a Code of Conduct that applies to its principal executive officer, principal financial officer, principal accounting officer, and treasurer. Cleco also has adopted Ethics & Business Standards applicable to all employees and the ~~board of directors.~~Boards. In addition, the ~~board of directors has~~Boards have adopted Conflicts of Interest and Related Policies to prohibit certain conduct and to reflect the expectation of the ~~board of directors~~Boards that ~~its~~their members engage in and promote honest and ethical conduct in carrying out their duties and responsibilities,

including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships and corporate opportunities. Under the Conflicts of Interest and Related Policies, Cleco considers transactions that are reportable under the SEC’s rules for transactions with related parties to be conflicts of interest and prohibits them. Any request, waiver, interpretation or other administration of the

policy shall be referred to the ~~Nominating/~~Governance and Public Affairs Committee. Any recommendations by the ~~Nominating/~~Governance and Public Affairs Committee to implement a waiver shall be referred to the full ~~board of directors~~Boards for a final determination. The Code of Conduct for Financial Managers, Ethics & Business Standards, and

Conflicts of Interest and Related Policies are posted on Cleco’s ~~web site~~website at ~~www.cleco.com; Investors-Codes~~https://cleco.com; About Us-Leadership-Codes of Conduct. Each of these documents is also available free of charge by request sent to: ~~Shareholder Services,~~Public Relations, Cleco, P.O. Box 5000, Pineville, LA 71361-5000.

Communications with the ~~Board~~Boards

The Corporate Governance Guidelines provide for communications with the ~~board of directors~~Boards by ~~shareholders and other~~ interested persons. In order for ~~shareholders,~~ employees and other interested persons to make their concerns known to the ~~board,~~Boards, Cleco has established a procedure for communications with the ~~board~~Boards through the ~~board’s independent lead director.~~Board’s Chair. The procedure is intended to provide a method for confidential communication, while at the same time protecting the privacy of the members of the ~~board.~~Boards. Any ~~shareholder or other~~ interested person wishing to communicate with the ~~board of directors,~~Boards, or the non-management members of the ~~board,~~Boards, may do so by addressing such communication as follows:

~~Lead Director~~Chair of the ~~Board~~Boards of ~~Directors~~Managers

c/o Corporate Secretary

Cleco ~~Corporation~~Holdings

P. O. Box 5000

Pineville, LA 71361-5000

Upon receipt, Cleco’s ~~corporate secretary~~Corporate Secretary will forward the communication, unopened, directly to the ~~lead director.~~Chair of the Boards. The ~~lead director~~Chair will, upon review of the communication, make a determination as to whether it should be brought to the attention of the other non-management members and/or the management member of the ~~board of directors~~Boards and whether any



CLECO
CLECO POWER		2018 FORM 10-K

response should be made to the person sending the communication, unless the communication was made anonymously.



ITEM 11. EXECUTIVE COMPENSATION

Leadership Development and Compensation Committee Interlocks and Insider Participation

The members of the Leadership Development and Compensation Committee (Committee) of the Boards who served during 2018 are named in the Report of the Leadership Development and Compensation Committee. No members of the Committee were officers or employees of the Company or any of its subsidiaries during 2018, were formerly Company officers or had any relationship otherwise requiring disclosure.

Compensation Discussion and Analysis ~~(“CD&A”)~~(CD&A)

This section provides information about the compensation program in place for the Company’s named executive officers who are included in the Summary Compensation Table. It includes a discussion and analysis of the overall objectives of our compensation program and each element of compensation the Company provides.

Executive Summary

~~Cleco’s executive compensation~~

2018 Business Highlights

In 2018, the Company performed well operationally and benefits philosophy is to provide market-based programs that pay or award our executive officers at levels approximating the competitive market. We believe in paying above the market for superior performancefinancially and below the market for underperformance unless extraordinary circumstances compel us otherwise. Our overall executive compensation design philosophy reflects our Compensation Committee’s desire to align management’s actions with the interests of our shareholders. Our executive benefits philosophy is to offer plans and programs that allow us to consistently attract and retain executive talent.

~~2015 Results and Our Compensation Philosophy~~

~~Cleco had a productive year in 2015. Although we fell slightly short of meeting all of our financial goals, we completed or~~

~~made significant progress toward completion of several~~initiated transformational strategic ~~initiatives.~~

~~Highlights for 2015 include:~~

~~Shareholder and other approvals of the Merger.~~

~~A total shareholder return (“TSR”) of 43% for the three-year period ended December 31, 2015.~~

~~MATS and CSAPR compliance across Cleco Power’s generating fleet.~~

~~An effective cost-reduction program that significantly contributed to the achievement of operational earnings per share (“EPS”) of $2.29.~~

~~A quarterly dividend of $0.40 per share to shareholders.~~

~~LPSC approval of the Cabot Waste Heat Recovery Project, a 40-MW generating unit that is expected to generate more than 250,000 MWh of renewable energy annually beginning in the second quarter of 2018.~~

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

~~Notwithstanding our success in 2015, performance on~~projects. Below are some of our incentive measures failed to meet our targets. Performance related to each of these measures is explained further in “Details Related to Corporate Performance Metrics Established to Determine 2015 PFP Plan Award Levels.” Based on operational EPS of $2.29 and our three-year TSR performance (the primary performance metrics in our annual and long-term incentive plans), actual incentive compensation for our named executive officers — 2015 cash incentive and long-term incentive awardaccomplishments for the 2013 to 2015 performance cycle — was under target by approximately 15% and 35%, respectively. Our Compensation Committee, in reviewing and approving the 2015 award levels, concluded that this attained compensation level was consistent with our performance results described above, as well as with progress made on our major strategic initiatives. Overall, we believe the Company’s executive compensation program is working as intended, remains consistent with practices within our Comparator Group, as defined under “Market Data and Comparator Group,” and is aligned with shareholder outcomes.

As previously disclosed, at a special meeting of shareholders held on February 26, 2015, our shareholders approved the Merger Agreement. For more information on the Merger, see Part II, Item 8, “Financial Statements and Supplementary Date — Notes to the Financial Statements — Note 20 — Agreement and Plan of Merger.” As a result of the pending transaction, this CD&A addresses historical executive compensation decisions and references the definitive proxy statement filed in connection with the Merger. The Merger proxy statement is dated January 13, 2015 and includes details regarding the effect of the Merger on our executive compensation philosophy.

~~Our 2015 Compensation Objectives~~

To align our compensation practices with our philosophy of providing competitive market-based programs that allow for pay opportunities above the market for superior performance and below the market for underperformance, we seek to provide our executive officers with total compensation opportunities that:year:

Key Strategic Initiatives


1.◦	~~are competitive~~Entered into the Purchase and Sale Agreement with ~~those~~NRG Energy and NRG South Central in which Cleco Cajun agreed to acquire from NRG Energy all of ~~comparable electric utilities and energy service companies where we compete for talent;~~the outstanding membership interest in NRG South Central


2.◦	~~deliver a majority~~Continued the $147.5 million START project which includes replacement of ~~compensation that is contingent on performance;~~and improvement to Cleco’s enterprise business applications


3.◦	~~ensure there is~~Implemented several key elements of the safety strategy focused on improving employee and contractor safety to build a ~~direct link between compensation and our financial and operational performance; and~~stronger safety culture


4.◦	~~align our officers’ long-term compensation opportunities~~Continued capture of potential cost savings identified in the 2017 benchmarking opportunity assessment

Effective Utility Operations


◦	Effectively restored power following four storms with ~~shareholder outcomes.~~a total cost of $9.3 million

Key Capital Investments and Regulatory Outcomes


◦	Continuing construction on the St. Mary Clean Energy Center project, the Terrebonne to Bayou Vista Transmission project, and the Bayou Vista to Segura Transmission project


◦	Initiated construction on the Coughlin Pipeline project


◦	Initiated the DSMART project

~~Pay for Performance~~Compensation Philosophy

~~We define performance-based pay as pay that is dependent upon our performance against pre-established measures and/or our performance compared to~~The compensation principles and philosophy of the performance of companies in our Proxy Peer Group, as defined under “Market Data and Comparator Group.” The pie charts below demonstrate our commitment to the delivery of a pay for performance compensation program, as the only fixed element of our ongoing compensation program is base salary. Our annual and long-term incentive plans are fully performance-based. Time-based restricted stock is occasionally awarded in special circumstances to address retention concerns, attract external new hires or reward outstanding individual performance.Committee are:

Executives should be rewarded on performance, and incentives should align interests between management and the Company;

~~107~~Total remuneration (the sum of base salary, annual incentives, long-term incentives, and retirement benefits) should be aligned with the market median;



~~CLECO CORPORATION~~◦
~~CLECO POWER~~		~~2015 FORM 10-K~~Newly hired and/or promoted executives should be transitioned to median over time as they become more proficient in their roles;

The mix of fixed compensation (base salary and retirement benefits) and variable/at-risk compensation (annual incentive and long-term incentive) should align with market by emphasizing variable/at-risk compensation; and

The competitive market for an executive’s compensation will be based on comparable utilities and will not be adjusted for Cleco’s privately held status or location.

Compensation ~~Governance~~Program Elements

~~Clawback Policy~~:The formal recoupment policy, applicable to officer incentive compensation awards, authorizes our Compensation Committee to recover officer incentive payouts if those payouts are based on financial performance results that are subsequently revised or restated to levels that would have produced lower incentive plan payouts. The recoupment policy is intended to reduce potential risks associated with our incentive plans, and thus more closely align the long-term interests of our named executive officers and our shareholders.

~~Stock Ownership Guidelines~~: Our officer stock ownership requirements strengthen the alignment of the financial interests of our executive officers with those of shareholders and provide an additional basis for sharing in the Company’s success or failure as measured by overall shareholder returns. For 2015, 10 out of 11 of our officers had achieved their established ownership levels based on the requirements, and the other officer is on track to meet the required ownership level.

~~Performance-based Incentive Programs~~: The Company’s total compensation program does not provide for guaranteed bonuses and has multiple performance measures. Annual cash incentive components focus on both the actual results and the quality of those results. The annual cash incentive plan for employees and executives contains

both economic and qualitative components. The plan also focuses on system reliability, generation fleet availability, safety results and individual performance through Cleco Corporation’s Pay for Performance Plan (the “PFP Plan”).

~~Anti-hedging Policy~~: The “anti-hedging” policy in the Company’s insider trading policy states that all directors, officers and employees are prohibited from hedging the economic interest in the Company shares they hold.

~~No Excise Tax Gross-ups: No change in control arrangement includes an Internal Revenue Code (“IRC”) Section 280G excise tax gross-up provision.~~

~~Use of Independent Consultants~~: The Compensation Committee has a formalized process to ensure the independence of the executive compensation consultant plus other advisors and reviews and affirms the independence of advisors annually.

~~Pay Elements~~

~~Our Compensation~~ Committee targets total compensation (made up of the elements described below) to be competitive with the median of ~~our~~the Comparator Group, but individual positioning may vary above or below the median depending on each executive’s experience, performance, and contribution to the Company. For ~~2015,~~2018, we believe that we accomplished our philosophy through the following compensation and benefit components:

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



~~2015~~2018 Pay Element	Description
Base Salary	• Fixed pay element • Delivered in cash
Annual Cash Incentive ~~(PFP Plan)~~ (STIP)	• Performance-based annual incentive plan that pays out in cash • ~~EPS~~EBITDA is primary measure for ~~our~~the named executive officers • Additional metrics include safety, system reliability, ~~and~~customer service, generation fleet availability, ~~• Quality Performance Factor allows for payout to be adjusted up or down by 10% of the target award based on quality of earnings or other performance~~ and milestone measures
Long-Term Incentives	• ~~Annual equity grant is delivered~~Performance-based incentive paid in ~~the form of performance shares~~cash currently with a three-year cycle • Payout ~~of performance shares~~ is contingent on ~~TSR relative to a group of peers, measured during a three-year performance cycle~~ ~~• Time-based restricted stock is occasionally awarded in special circumstances to address retention concerns, attract external new hires or reward outstanding individual performance~~ROE and EBITDA, each weighted at 50%
Benefits	• Broad-based benefits such as group medical, dental, vision, and prescription drug coverage; basic life insurance; supplemental life insurance; dependent life insurance; accidental death and dismemberment insurance; a defined benefit pension plan (for those employees hired prior to August 1, 2007); and a 401(k) ~~Savings~~ Plan with a Company match for those employees hired before August 1, 2007, as well as a 401(k) ~~Savings~~ Plan with an enhanced benefit for those employees hired on or after August 1, 2007; same as those provided to all employees
Executive Benefits	• Supplemental Executive Retirement Plan (closed to new participants in 2014) • Nonqualified Deferred Compensation Plan
Perquisites	• Limited to executive physicals, spousal/companion travel, and relocation assistance

~~The Executive Compensation Process~~



CLECO
CLECO POWER		2018 FORM 10-K

~~Our~~

Roles and Responsibilities

Leadership Development and Compensation Committee

~~Our Compensation~~The Committee, which consists of one independent Board Manager and three investor Board Managers, is responsible for developing and overseeing the Company’s executive compensation program. The Committee met five times during ~~2015,~~2018, including ~~two~~three telephone meetings. ~~Our Compensation Committee’s meetings in January, July, October~~Either the Chief Administrative Officer or the General Counsel and December are devoted to issues analysis, market analysis and performance tracking of our compensation and benefit programs. Our CEO and senior vice president - corporate services and information technology attend our Compensation Committee’sChief Compliance Officer attended the Committee meetings on behalf of management but dodid not participate in the ~~Compensation~~ Committee’s executive sessions.

~~Our Compensation~~The Committee’s responsibilities, which are more fully described in ~~our Compensation Committee’s~~its charter, include:

establishing and overseeing the Company’s executive compensation philosophy and ~~benefit programs;~~goals and the programs which align with those;

engaging and evaluating an independent compensation consultant;

determining if the Company’s executive compensation and benefit programs are achieving their intended purpose, being properly administered and creating proper incentives in light of the Company’s risk factors;

analyzing the executive compensation and benefits practices of peer companies and annually reporting to the ~~board of directors~~Board or recommending for approval by the ~~board of directors~~Board the overall design of the Company’s executive compensation and benefit programs;

annually evaluating the performance of the CEO and recommending to the ~~board of directors~~Board adjustments in the CEO’s compensation and benefits;

annually reporting and recommending to the ~~board of directors~~Board pay adjustments for the non-CEO executive officers (including new hires), which includes base salary and incentive plan targets;

overseeing the administrative committees and periodically reviewing the Company’s benefit plans, including retirement plans;

annually reviewing the ~~Compensation~~ Committee’s charter and revising as ~~necessary.~~necessary; and

annually ensuring there is a process for talent and succession management for executives.

The Compensation Consultant

~~In 2010, our Compensation~~The Committee engaged ~~Frederic W. Cook & Co., Inc. (“Cook & Co.”)~~Pay Governance to consult on matters concerning executive officers’ compensation and benefits. All executive compensation adjustments and award calculations for ~~2015~~2018 were reviewed by ~~Cook & Co.~~Pay Governance on behalf of ~~our Compensation~~the Committee. ~~Cook & Co.~~Pay Governance acted at the direction of

~~our Compensation~~ the Committee and was independent of management. ~~Our Compensation Committee determined Cook & Co.’s ongoing engagement activities,~~Pay Governance was responsible for:

recommending a group of peer companies to use for market comparisons;

reviewing the Company’s executive compensation program, including compensation levels in relation to Company performance, pay opportunities relative to those at comparable companies, short- and ~~Cook & Co. endeavored to keep our Compensation Committee informed~~long-term incentive

targets and metrics, executive retirement benefits, and other executive benefits;

reviewing the Company’s Board of Manager compensation program;

reporting on emerging trends and best practices in the area of executive ~~officers’ compensation trends~~ and ~~regulatory compliance developments throughout 2015. Cook & Co. was responsible~~Board of Manager compensation; and

attending the Committee meetings.

The Committee reviewed the firm’s qualifications as well as its independence and the potential for ~~providing market data~~conflicts of interest. The Committee concluded that Pay Governance is independent, and ~~analysis~~its services to the Committee do not create any conflicts of ~~2015~~interest. The Committee has the sole authority to approve Pay Governance’s compensation and ~~benefits~~determine the nature and scope of its services. Pay Governance does not perform any other services for ~~our executive officers.~~

~~Our Compensation Committee has assessed~~or receive any other fees from the independence of Cook & Co. pursuant to SEC rules and concluded that its work did not raise any conflict of interest that would prevent Cook & Co. from independently representing our Compensation Committee.Company.

CEO

The ~~Role of the Chief Executive Officer~~

~~Our~~ CEO ~~annually reviews the performance of our named executives (other than himself) and~~ makes recommendations to ~~our Compensation~~the Committee regarding base salary adjustments, cash incentives, and long-term incentive ~~awards. Our~~awards for executives other than himself. The CEO participates in meetings of ~~our Compensation~~the Committee to discuss executive compensation, including measures and performance targets but is subsequently excused to allow the independent members of ~~our Compensation~~the Committee to meet in executive session. ~~For 2015, the measures and performance targets also were reviewed by Cook & Co. prior to adoption by our Compensation Committee.~~

Our Compensation Committee also has delegated limited authority to our CEO to extend employment offers to officers at the level of vice president or lower. The CEO may make such offers without prior approval of the board of directors provided no compensation component falls outside our Compensation Committee’s approved policy limits as described in “Decisions Made in 2015 with Regard to Each Compensation and Benefit Component.” Our Compensation Committee still approves any grant of Cleco common stock or other equity award made pursuant to this delegation of authority prior to issuance of the grant. No such employment offers were made under this delegation of authority during 2015.

~~Shareholder Advisory Vote~~

At Cleco’s last annual meeting held in 2014, shareholders strongly supported (approximately 97% of votes cast at the annual meeting voted for) our “say-on-pay” proposal. This “say-on-pay” vote is not binding on Cleco, our Compensation

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

Committee or our board of directors; however, our board of directors and our Compensation Committee review the voting results and consider them, along with any specific insight gained from Cleco’s shareholders, when making decisions regarding executive compensation.

Evaluation and Design of ~~Our~~the Compensation and Benefit Programs

~~Market Data and Comparator Group~~

~~Our Compensation~~The Committee believes that compensation and benefits for our executive officers who successfully enhance ~~shareholder~~investors’ value should be competitive with the compensation and benefits offered by similar ~~publicly held~~ companies in our industry to attract and retain the high quality executive talent required by the Company. ~~Our Compensation~~The Committee examines ~~our~~ executive officers’ compensation against comparable positions using publicly available proxy data for a group of 1614 industry peers ~~(the “Proxy Peer Group”)~~(Peer Group) and utility industry survey data to help design and benchmark our executive officer compensation. This evaluation includes base salary, annual and long-term incentive plan targets, other potential ~~equity~~ awards, retirement benefits, and target total compensation. The ~~Proxy~~ Peer Group ~~approved by the Compensation Committee in July 2014,~~ is ~~also~~ used to track comparable performance of ~~our~~the long-term incentive plan. The combination of the ~~Proxy~~ Peer Group and the utility industry survey data is referred to as ~~“our Comparator~~the “Comparator Group.”

Three companies were removed from the Peer Group in 2018: MGE Energy, Great Plains Energy Incorporated, and Westar Energy. Four companies were added to the Peer Group in 2018: Pinnacle West Capital Corporation, Alliant Energy Corporation, Vectren Corporation, and Hawaiian Electric Industries, Inc. The ~~Compensation~~ Committee ~~periodically examines~~will continue to evaluate the ~~Proxy~~Peer Group annually as companies are often acquired, taken private, or grow at a rate that renders them inappropriate for comparison purposes. The Committee evaluates the Peer Group to ensure that peer companies ~~continue~~are of similar scope in relation to

~~meet the criteria of our model portfolio. The general criteria examined in developing our Proxy Peer Group include:~~

~~Operational fit: companies in the same industry with similar business operations~~ revenues, assets, and ~~energy portfolio (e.g., companies that derive a majority of their revenues from a state regulated utility~~employee count and have ~~no large scale nuclear operations);~~

~~Financial scope: companies of similar size and scale. Size is measured on~~ a number of criteria relevant to this industry (e.g., market capitalization, enterprise value, assets and revenues). Most of the peer companies are within one to three times the size of Cleco’s market capitalization, which is the principle measure of scale in this industry. Revenues, used most frequently in general industry, may not lend itself as the most appropriate measure of scale in the utilities industry due to significant volatility in annual revenues. In limited circumstances, the small number of direct competitors in our industry may require the inclusion of one or more companies that are outside of this range if they are a direct competitor for business or talent. Cleco’s market capitalization is positioned at or near the median against the Proxy Peer Group;

~~Competitors for talent: companies with whom Cleco competes for executive talent or those that employ similar labor or talent pools; and~~

~~Competitors for investor capital.~~good operational fit.



~~The Proxy~~CLECO
CLECO POWER		2018 FORM 10-K



2018 Peer Group Companies
~~AGL Resources Inc.~~	~~El Paso Electric Company~~	~~PNM Resources, Inc.~~
ALLETE, Inc.	~~Great Plains Energy Incorporated~~Hawaiian Electric Industries, Inc.	~~Portland General Electric Company~~Pinnacle West Capital Corporation
Alliant Energy Corporation	IDACORP, Inc.	~~TECO Energy,~~PNM Resources, Inc.
Avista Corporation	NorthWestern Corporation	~~Vectren Corporation~~Portland General Electric Company
Black Hills Corporation	OGE Energy Corp.	Vectren Corporation
~~Calpine Corporation~~El Paso Electric Company	~~Pinnacle West Capital~~Otter Tail Corporation

In setting executive compensation levels in ~~2015, our Compensation~~2018, the Committee also used utility industry survey data from the ~~2014~~most recent Willis Towers Watson Energy Services Executive Compensation Database. Survey data provides a broader energy industry perspective. This survey data is used in conjunction with the ~~Proxy~~ Peer Group data as a competitive market reference point for the ~~Compensation~~ Committee to consider in determining pay levels.

Decisions Made in ~~2015~~2018 with Regard to Each Compensation and Benefit Component

Base Salary

~~We strive~~The Committee strives to set base salary levels for ~~our~~the executive officers as a group, including the named executive officers, at a level approximating +/~~-15%~~-10% of ~~our~~the Comparator Group market median for ~~base pay. For 2015, actual base salaries for our executive officers as a group were 92% of the Comparator Group median.~~

In 2015, base salary increases for our named executive officers, averaged 2.4%. Typically, the amount of a base salary increase is based on an appraisal of individual performance by the named executive officer’s supervisor and, in the case of our CEO, by our board of directors and the terms of his employment agreement, as well as position-specific market data provided by Cook & Co. to our Compensation Committee.

For additional details regarding the effect of the Merger on base salary for our named executive officers, see “Interests of Our Directors and Executive Officers in the Merger” beginning on page 52 of the definitive proxy statement dated January 13, 2015.total remuneration.

Base salaries for ~~our~~the named executive officers in ~~2015~~2018 are shown in the table below:

Name 2015 Base Salary
2015 % Change
Mr. Williamson $ 745,000
0 %
Mr. Miller $ 309,000
3.0 %
Mr. Olagues $ 401,700
3.0 %
Ms. Miller $ 298,700
3.0 %
Mr. Hoefling $ 298,700
3.0 %
Average % Change 2.4 %



Name	2018 Base Salary		2018 % Change
Mr. Fontenot⁽¹⁾	$	575,000	34.8	%
Mr. Hasan	$	400,000	N/A
Ms. Callis	$	270,000	5.6	%
Mr. Bunting	$	246,000	3.2	%
Mr. LaBorde	$	240,000	4.2	%
Ms. Taylor	$	257,500	2.9	%

⁽¹⁾ Mr. Fontenot was promoted to CEO in January 2018.

~~Our Compensation Committee approved these adjustments based on the following:~~

~~Mr. Williamson — received no base salary increase in 2015 under the terms of the Merger Agreement.~~

~~Mr. Miller — favorable overall performance in his role as senior vice president & CFO, including oversight of the Company’s cost-reduction program and investor relations initiatives.~~

~~110~~



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

Mr. Olagues — favorable overall performance in his role as president - Cleco Power, including oversight of capital expenditures required for compliance with MATS and CSAPR environmental regulations.

Ms. Miller — favorable overall performance in 2014 in her position as senior vice president - corporate services and information technology over the following functions: human resources; health, safety & environmental services; and telecommunications/facilities/information technology support.

Mr. Hoefling — favorable overall performance in 2014, especially related to cost cutting efforts in connection with external legal services, as well as supply chain and vehicle fleet functions, in his role as senior vice president, general counsel & director - regulatory compliance.

Annual Cash Incentive

~~We maintain~~The Company maintains the STIP, an annual, performance-based cash incentive ~~plan called the Cleco Corporation Pay for Performance Plan or PFP Plan.~~plan. The ~~PFP Plan became effective January 1, 2012, and it superseded the Company’s Annual Incentive Plan (“AIP”) and Employee Incentive Plan. The PFP Plan~~STIP applies to all regular, full-time employees, and it includes weighting for corporate and individual performance goals. ~~Our executive officers have 100% of their PFP Plan targets weighted on corporate goals, since they have more influence over corporate-level results. As mentioned, the Compensation~~The Committee targets ~~PFP Plan~~STIP award opportunities for executive officers to approximate the median of the annual cash incentive target award of ~~our~~the Comparator Group. Payouts are capped at 200% of target.

The table below presents the target ~~PFP Plan~~STIP opportunities for the named executive officers in ~~2015:~~2018:



Name	Target as % of Base Salary
Mr. ~~Williamson~~Fontenot	~~100%~~80%
Mr. ~~Miller~~Hasan⁽¹⁾	50%
Ms. Callis	50%
Mr. ~~Olagues~~	~~65%~~
~~Ms. Miller~~Bunting	50%
Mr. ~~Hoefling~~LaBorde	50%
Ms. Taylor	50%

⁽¹⁾ Mr. Hasan will begin participation in the STIP in 2019.

The ~~2015 PFP Plan~~2018 STIP award for ~~our~~the named executive officers was based ~~entirely~~ on the corporate and individual performance measures described below. The ~~2015 PFP Plan~~2018 corporate performance measures consisted of the six ~~metrics~~elements listed below (weighting):

~~EPS (70%~~Safety (10%)

Customer Satisfaction (10%)

System Average Interruption Duration Index or SAIDI ~~(5%~~(10%)

Equivalent ~~Availability Factor~~Forced Outage Rate (demand) or ~~EAF (5%)~~

~~Safety~~EFORd (10%)

~~- Personal Injuries (5%~~EBITDA (35%)

~~- Vehicle Accidents (5%)~~

~~Quality Performance Factor (10%~~Milestone Measures (25%)

~~In establishing~~The Committee included Milestone Measures (Measures) in the ~~2015 PFP Plan~~2018 STIP corporate metrics ~~the Compensation Committee believed it was most important to reward senior executives~~ for the ~~overall~~Executive Management Team (EMT) and other corporate officers weighted at 25%. These Measures were associated with progress milestones on key strategic corporate projects related to safety, the START project, and the Cleco Cajun Transaction. The Committee put the greatest emphasis on financial performance ~~of the Company, and therefore weighted EPS most heavily~~with EBITDA at ~~70%~~35%. In addition, to continually focus the executives and the entire organization on the importance of safety, customer satisfaction, system reliability, and generation fleet availability, ~~20%~~40% of the bonus opportunity was attributable to these operational measures.

Management recommended the ~~corporate measures was contingent on safety and operational performance. Finally, in 2011, the Compensation Committee established the “Quality~~

Performance Factor” with a 10% weighting. This factor permits the Compensation Committee to assess how performance was achieved during the year and to adjust the payout using a number of subjective factors based on its discretion and management input.

~~Typically, in December of each fiscal year, our CEO recommends the PFP Plan~~STIP financial performance and other measures to ~~our Compensation Committee for~~ the ~~upcoming year.~~Committee. Based on ~~our~~the historical performance relative to target and ~~our~~the relative historical performance versus ~~our Comparator~~the Peer Group, ~~our Compensation~~the Committee reviews, revises as appropriate, and approves the ~~PFP Plan~~STIP measures for the upcoming year.

Details Related to Corporate Performance Metrics Established to Determine ~~2015 PFP Plan~~2018 STIP Award Levels

Metric # ~~1: EPS~~1: Safety— For ~~2015,~~2018, the Company included both the frequency of incidents represented by the Total Recordable Incident Rate (TRIR) and the severity of incidents represented by the Days Away, Restricted or Transferred (DART) rate for its safety measure. Each of these measures represents 5% of the overall STIP award for the corporate measures. The targets for both safety measures were based on the average rates of the companies in the Southeastern Electric Exchange, of which Cleco is a member, over the period 2016-2017.



SAFETY - TRIR MATRIX (5%)
Performance Level	% of TRIR Target Award Paid
At or below 0.655	0%
0.586 - 0.655	50%
0.515 - 0.585	100%
0.444 - 0.514	150%
Above 0.443	200%
2018 Result (0.941)	0%



CLECO
CLECO POWER		2018 FORM 10-K



SAFETY - DART MATRIX (5%)
Performance Level	% of DART Target Award Paid
Below 0.359	0%
0.301 - 0.359	50%
0.242 - 0.300	100%
0.183 - 0.241	150%
Above 0.182	200%
2018 Result (0.342)	50%

Metric # 2: Customer Satisfaction— The Company included Customer Satisfaction in its performance measures in 2018 using the JD Power South Midsize segment (JD Power study) for comparison. For the STIP metric, the Company used the 2017 performance of the JD Power study to set the target. In addition, the Company compared its overall performance against the other companies in the JD Power study and allowed a payout only if the Company’s performance improved more than that of the other companies in the JD Power study. This metric represents 10% of the overall STIP award for the corporate measures.



CUSTOMER SATISFACTION MATRIX (10%)
Performance Level	% of Customer Satisfaction Target Award Paid
Below 687	0%
687 - 705	50%
706 - 723	100%
724 - 735	150%
Above 736	200%
2018 Result (722)	100%

Metric # 3: SAIDI— SAIDI measures the average amount of time a customer’s service is interrupted during the year and is measured in hours per customer per year. The 2018 SAIDI goal was based on the Company’s long-term goal of consistent performance improvement. This metric represents 10% of the overall STIP award for the corporate measures.



SAIDI MATRIX (10%)
Performance Level	% of SAIDI Target Award Paid
Above 2.55	0%
2.45 to 2.55	50%
2.34 to 2.44	100%
2.23 to 2.33	150%
Below 2.22	200%
2018 Result (2.87)	0%

Metric # 4: EFORd— This metric represents the probability a generator will fail either completely or in part when its operation is required and is 10% of the overall STIP award for the corporate measures. The 2018 target was based on the Company’s weighted average performance over the three-year period 2015-2017.



EFORd MATRIX (10%)
Performance Level	% of EFORd Target Award Paid
Above 5.71%	0%
5.48% - 5.71%	50%
5.23% - 5.47%	100%
4.98% - 5.22%	150%
Below 4.97%	200%
2018 Result (7.58%)	0%

Metric # 5: EBITDA— The following ~~EPS~~EBITDA matrix was developed to determine performance and payout ranges related to ~~EPS performance.~~EBITDA performance in 2018. This measure represents ~~70%~~60% of the overall ~~PFP Plan~~STIP award for the corporate ~~measures.~~

~~EPS MATRIX (70%)~~

Performance Level Fully DilutedEarnings Per Share *

% of Financial
Target Award Paid

<$ 2.155
0 %
Threshold $ 2.155
50 %
Target $ 2.330
100 %
Maximum $ 2.563
200 %
2015 Result $ 2.29
90 %

* Consolidated EPS (operational earnings)

~~Metric # 2~~: ~~SAIDI~~ — ~~The average amount of time a customer’s service is interrupted during the year. Measured in hours per customer per year~~measures for non-EMT and ~~based on a ten-year rolling average of Cleco Power’s performance. This metric represents 5%~~35% of the overall ~~PFP Plan~~STIP award for the corporate ~~measures.~~

~~SAIDI MATRIX (5%)~~



~~Performance Level~~	~~Hours Per Customer~~ ~~Per Year~~	~~% of SAIDI~~ ~~Target Award~~ ~~Paid~~
	~~>2.48~~	0%
~~Threshold~~	~~2.42 to 2.48~~	~~50%~~
~~Target~~	~~2.35 to 2.41~~	~~100%~~
	~~2.28 to 2.34~~	~~150%~~
~~Maximum~~	~~<2.28~~	~~200%~~
~~2015 Result~~	~~2.66 Hours~~	0%

~~Metric # 3: EAF~~ — ~~Measures the~~measures for EMT. The final percentage of ~~time that a generation unit~~the financial target award is ~~available to generate electricity after all types of outages are taken into account. Measured as a percentage~~interpolated based on ~~a three-year MISO equivalent forced outage rate, demand and Cleco Power’s planned maintenance for~~ the ~~year. This metric represents 5% of the overall PFP Plan award for the corporate measures.~~

~~111~~



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

~~EAF MATRIX (5%)~~

Performance Level
% Generation
Fleet Availability

% of EAF
Target Award
Paid
<81.83%
0%
Threshold 81.83% to 83.93%
50%
Target 83.94% to 86.06%
100%
86.07% to 88.22%
150%
Maximum >88.22%
200%
2015 Result 85.41 % 100%

~~Metric # 4: Personal Injury Safety~~ — ~~Compares Cleco’s avoidable personal injuries in the current year against the Company’s~~ performance the prior year. For 2015, the Company’s target goal with respect to avoidable personal injuries was a 20% reduction over the number of avoidable injuries sustained in 2014. This metric represents 5% of the overall PFP Plan award for the corporate measures.level.

~~SAFETY - PERSONAL INJURIES MATRIX (5%)~~



EBITDA MATRIX (35%)
Performance Level	~~Performance~~ ~~Relative to 2014~~	% of ~~Safety -~~Financial ~~Injuries~~ Target Award Paid
	~~Worse than or a fatality~~	0%
~~Threshold~~At or below $418.7 million	~~No change~~0	~~50%~~%
~~Target~~$452.7 million	~~20% reduction (5 injuries)~~100	~~100%~~%
At or above $486.7 million	~~1 to 4 injuries~~200	~~150%~~%
~~Maximum~~2018 Result - $458.0 million	~~0 injuries~~115.6	~~200%~~
~~2015 Result~~	~~6 injuries~~	~~50%~~%

Metric # ~~5: Vehicle Accident Safety~~6: Milestone Measures —EMT had an additional STIP metric for 2018Compares Cleco’s avoidable vehicle accidents in the current year against the Company’s performance the prior best year. For 2015, the Company’s target goal with respect to avoidable vehicle accidents was a 20% reduction over the number of avoidable accidents in 2013, since the number of avoidable vehicle accidents in 2014 exceeded those in 2013. . This metric represents 5%25% of the overall ~~PFP Plan~~STIP award for the corporate ~~measures.~~

~~SAFETY - VEHICLE ACCIDENTS MATRIX~~measures for EMT and measures progress on certain strategic initiatives. The three broad initiatives included safety (5%), the business application strategy (10%), and the Cleco Cajun Transaction (10%). The Committee evaluated the performance of each initiative and determined the 2018 result for the Milestone Measures to be 100%.



MILESTONE MEASURES (25%)
~~Performance Level~~	~~Performance~~ ~~Relative to 2013~~	% of ~~Safety -~~Milestone ~~Accidents~~ Target Award Paid
	~~Worse than or a fatality~~	0%
~~Threshold~~	~~No change~~	~~50%~~
~~Target~~	~~20% reduction (7 accidents)~~2018 Result	100%
	~~1 to 6 accidents~~	~~150%~~
~~Maximum~~	~~0 accidents~~	~~200%~~
~~2015 Result~~	~~15 accidents~~	0%

~~Metric # 6: Quality Performance Factor~~— Our Compensation Committee reviewed and considered 2015 results and determined that continued cost-reduction measures implemented by management and the completion of several other major initiatives contributed to the achievement of 2015 EPS of $2.29. Our Compensation Committee further considered the Company’s efforts in working to achieve approvals of the Merger, as well as the successful completion of work related to MATS and CSAPR environmental regulations. Based on these considerations, input from the CEO and through its use of discretion, our Compensation Committee decided that a payout of 150% related to the Quality

~~Performance Factor was appropriate. This metric represents 10% of the overall PFP Plan award~~Total Payout for ~~the corporate measures.~~

~~Total Payout~~EMT: ~~Our Compensation~~The calculated STIP payout for EMT was 78.0% of target. However, the Committee ~~determined that a total PFP Plan payout at 85.5%~~used discretion to increase the payouts to 83.5% of target ~~for the corporate measures was reasonable~~ based on its review of the Company’s performance in ~~2015.~~2018. The resulting total ~~PFP Plan~~STIP corporate payout for ~~2015~~2018 was calculated as follows:

% of Target x Award Level = % of Payout
EPS 70% 90 % 63.0 %
SAIDI 5% 0 % 0 %
EAF 5% 100 % 5.0 %
Safety-Personal Injuries 5% 50 % 2.5 %
Safety-Vehicle Accidents 5% 0 % 0 %
Quality Performance Factor 10% 150 % 15.0 %
Total 100% 85.5 %



	% of Target		x	Award Level		=	% of Payout
Safety	10	%		25.0	%		2.5	%
Customer Satisfaction	10	%		100.0	%		10.0	%
SAIDI	10	%		0.0	%		0.0	%
EFORd	10	%		0.0	%		0.0	%
EBITDA	35	%		115.6	%		40.5	%
Milestone Measures	25	%		100	%		25.0	%
Total	100	%					78.0	%
Committee Discretion							5.5	%
Resulting Total Payout							83.5	%

~~Our Compensation Committee may adjust the PFP Plan targets to more closely align incentive targets and awards with investor concerns.~~

~~Our Compensation~~The Committee also has the authority to adjust the amount of any individual ~~PFP Plan award with respect to the total award or the corporate or individual component of the~~STIP award upon recommendation by ~~our~~the CEO. Adjustments for ~~PFP Plan~~the STIP participants, except for ~~our named executives, may be made by~~ the ~~CEO in his discretion. Adjustments are based on our annual performance review process. No adjustments were made to the 2015 PFP Plan awards for our named executive officers.~~

Additional details on the 2015 PFP Plan measures and target levels regarding our named executives may be found in “Non-Equity Incentive Plan Compensation” and “Estimated Future Payments under Non-Equity Incentive Plan Awards (PFP Plan).”

~~Equity Incentives~~

Our executive officers and other key employees are eligible to receive performance-based and other grants of restricted stock, common stock equivalent units (“CEUs”), stock options and stock appreciation rights. These grants are made pursuant to the Cleco Corporation 2010 Long-Term Incentive Compensation Plan or LTIP. A grant gives the recipient the right to receive or purchase shares of our common stock under specified circumstances or to receive cash awards based on the appreciation of our common stock price or the achievement of pre-established long-term performance goals. Taxes on equity incentives awarded pursuant to our LTIP are borne by the executive officer.

If the Merger is completed, upon closing, unvested performance-based equity grants for the three-year performance cycle beginning January 1, 2014 will vest at target based on a price per share equal to $55.37. For the three-year performance period beginning January 1, 2015, unvested performance-based equity grants will vest at target based on a price per share equal to $55.37, and the equity grant target shares will be prorated based upon the number of days lapsed in the 2015 cycle. Outstanding time-based equity awards also will vest based on a price per share equal to $55.37 upon closing of the Merger. Pending the Merger’s closing, no equity grants have been made for the three-year performance cycle beginning January 1, 2016. For additional details regarding the effect of the Merger on equity incentives,

~~112~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~see “Interests of Our Directors and Executive Officers in the Merger” beginning on page 52 of the definitive proxy statement dated January 13, 2015.~~

~~Performance-Based Restricted Stock~~

~~Historically, our primary equity incentive tool has been an~~

named executive officers and other members of EMT, may be made by the CEO at his discretion. Adjustments are based on the annual ~~award of performance-based restricted stock under the LTIP. We commonly refer to these awards as the “LTIP award.”~~performance review process.

~~2015~~Long-Term Compensation

In 2018, the Committee continued a cash-based LTIP ~~Award~~

~~Each LTIP award performance cycle is three years. For 2015, the performance cycle covers January 1, 2015 to December 31, 2017. The LTIP has a minimum award of 0% of target~~ and ~~a maximum possible award of 200%. The performance measure used~~issued grants for the three-year ~~LTIP performance~~ cycle ~~is Cleco’s TSR relative to the Proxy Peer Group.~~

~~The table below presents the TSR performance and payout range established to determine payouts~~ for the ~~2015~~performance period ending December 31, 2020. The metrics for the LTIP ~~award:~~



~~Performance Level~~	~~TSR~~ ~~Percent Rank~~	~~Payout~~
	~~<30~~^th~~%ile~~	0	%
~~Threshold~~	30^th~~%ile~~	30	%
~~Target~~	50^th~~%ile~~	~~100~~	%
~~Maximum~~	~~100~~^th~~%ile~~	~~200~~	%

Each year the Compensation Committee approves an LTIP award to eligible executives. The target number of LTIP shares is a function of the grant date value, set as a percentage of base salary, divided by the price of our stockare weighted 50% on the ~~date of grant calculated as the~~three-year average ~~of the high~~ROE and ~~low price of our stock~~50% on the ~~date of grant rounded to the nearest eighth.~~

~~Example: Base Salary = $100,000; LTIP Value = $50,000 (50% of base salary); Stock Price = $50/share; Target LTIP Shares = 1,000 shares~~

three-year cumulative EBITDA.

Each executive officer’s target LTIP award level is set, so in combination with other pay elements, it will deliver a total compensation opportunity comparable to that ~~approximates the median~~ of our ~~Comparator~~Peer Group. The chart below details the targeted opportunity for each of the named executives expressed as a percentage of base salary:



Name	~~2015 LTIP~~ Target as % of Base Salary
~~Mr. Williamson~~	~~235%~~
Mr. ~~Miller~~Fontenot	~~75%~~217	%
Mr. Hasan⁽¹⁾	110	%
Ms. Callis	110	%
Mr. ~~Olagues~~Bunting	~~110%~~110	%
Mr. LaBorde	80	%
Ms. ~~Miller~~Taylor	~~75%~~
~~Mr. Hoefling~~110	~~75%~~%

⁽¹⁾ Mr. Hasan will begin participation in the LTIP in 2019.

~~2013 - 2015~~

2017-2018 LTIP Award

~~Our~~The Leadership Development & Compensation Committee approved an overall award level of ~~65%~~133.5% of target for the LTIP two-year performance cycle that ended on December 31, ~~2015.~~2018. This award level ~~reflects our TSR~~represents an average ROE of 9.804% and a cumulative EBITDA of $935.2 million over the two-year performance period. This award will be paid in ~~the 40th percentile~~cash and is included in column G of the ~~Proxy Peer Group as defined above under “Market Data and Comparator Group — The Proxy Peer Group Companies”~~Summary Compensation Table for ~~the three-year period ended December 31, 2015. Dividends accrued during the three-year period ended December 31, 2015 were paid at the award level of 65%.~~

~~The table below summarizes our recent LTIP award history:~~

LTIP Historical Performance 2013
2014
2015
TSR for the Three-Year Performance Period ended December 31 65 % 62 % 41 %
Percentile Rank in the Proxy Peer Group (100% is highest; 0% is lowest) 81 % 60 % 40 %
LTIP Award Percentage 163 % 120 % 65 %

~~TSR for purposes of the 2013 - 2015 LTIP performance cycle was calculated using the quarterly return method.~~

Our Compensation Committee may adjust our LTIP award if it determines that circumstances warrant. Any adjustment applies to all participants equally. No such adjustment was made for the LTIP award approved for the cycle ended December 31, 2015. There are no provisions in the LTIP for individual award adjustments. Details on how our LTIP grants and awards are calculated are included in “Stock Awards.”

~~Time-Based Restricted Stock~~

Time-based restricted stock typically is not an element of our annual long-term incentive award opportunity. The Compensation Committee will and has awarded grants of time-based restricted stock that are typically associated with mid-year promotions, at the time of an external executive hiring or to reward our named executive officers for extraordinary performance above that which can be rewarded through the PFP Plan. Our Compensation Committee uses such awards to increase ownership and encourage retention. For an external executive hiring, an award may be made to offset comparable awards or other value forfeited as a result of the executive’s leaving the former employer. The award of time-based restricted shares or unrestricted shares of our common stock is recommended by the CEO and approved by our Compensation Committee and our board of directors, or in the case of a grant to the CEO, is recommended jointly by our Compensation Committee and Nominating/Governance Committee to our board of directors. The award is conditioned upon continued employment at the time of vesting, which is typically three years after the award date. Taxes on time-based restricted stock are borne by the executive officer.

~~No time-based restricted stock awards were made to our named executive officers in 2015.~~

~~Stock Options~~

~~Our Compensation Committee did not approve any stock option grants during 2015.~~2018.

~~Stock Appreciation Rights~~

~~We have not granted any stock appreciation rights under the terms of the LTIP since its adoption.~~

Retirement Plans - Nonqualified Deferred Compensation Plan

~~We maintain~~The Company maintains a Deferred Compensation Plan so that ~~directors,~~members of the Boards, executive officers, and certain key employees may defer receipt and taxation of certain forms of compensation. ~~Directors~~Members of the Boards may defer up to 100% of their compensation; executive officers and other key employees may defer up to 50% of their base salary and up to 100% of their annual cash incentive. ~~We find the~~The use of deferred compensation plans is prevalent within our industry and within the companies in ~~our Proxy~~the Peer Group. ~~Cleco~~The Company does not match deferrals or contribute to the plan. Actual participation in the plan is voluntary. The notional investment options made available to

~~113~~



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

participants are selected by ~~our~~the CFO. The allocation of deferrals among investment options is made by individual participants. The notional investment options include money market, fixed income, and equity funds. ~~Cleco common stock is not currently an investment option under the plan, except for directors.~~ No changes were made to the plan during ~~2015.~~

In connection with the Merger, payment of deferred compensation plan balances that accrued after December 31, 2004 may be accelerated by means of an election made pursuant to the terms of our compensation plans triggered by a change in control involving the Company. One director, Mr. Walker, has made such an election. If the Merger is completed, accelerated payment of any deferred compensation plan balance accrued after December 31, 2004 will be made in the form of a single lump sum payment as soon as practicable following the effective date of the Merger. For additional details regarding the effect of the Merger on our deferred compensation plan, see “Interests of Our Directors and Executive Officers in the Merger” beginning on page 52 of the definitive proxy statement dated January 13, 2015.2018.

~~Supplemental Executive~~ Retirement ~~Plan (“SERP”)~~Plans - SERP

~~We maintain~~The Company maintains a SERP for the benefit of ~~our~~the executive officers who are designated as participants by ~~our Compensation~~the Committee. ~~The~~ SERP was designed to attract and retain executive officers who have contributed and will continue to contribute to our overall success by ensuring that adequate compensation will be provided or ~~“replaced”~~replaced during retirement.

Benefits under ~~our~~ SERP vest after ten years of service or upon death or disability while a participant is employed by ~~Cleco. Our Compensation~~the Company. The Committee may reduce the vesting period, ~~to less than ten years,~~

which typically would occur in association with recruiting efforts. Benefits, whether or not vested, are forfeited in the event a participant is terminated for cause.

~~Benefits~~Generally, benefits are based upon a participant’s attained age at the time of separation from service. The maximum benefit is payable at age 65 and is 65% of final compensation. Payments from the Company’s defined benefit pension plan ~~(“Pension Plan”)~~(Pension Plan), certain employer contributions to ~~our~~the 401(k) ~~Savings~~ Plan and payments paid or payable from prior and subsequent employers’ defined benefit retirement or similar supplemental plans reduce or offset ~~our~~ SERP benefits. If a participant has not attained age 55 at the time of separation and receives SERP benefits before attaining age 65, SERP benefits are actuarially reduced to reflect early payment. The “Pension Benefits” table lists the present value of accumulated SERP benefits for ~~our~~the named ~~executives~~executive officers as of December 31, ~~2015.~~2018.

In 2011, ~~our Compensation~~the Committee amended ~~the~~ SERP to eliminate the business transaction benefit previously included in ~~the~~ SERP, as well as the requirement that a SERP participant be a party to an employment agreement to receive change in control benefits.

In July 2014, ~~our board~~the Cleco Corporation Board of ~~directors~~Directors voted to close ~~the~~ SERP to new participants. With regard to current SERP participants, ~~including former employees or~~two participants have agreed to fix the base compensation portion of their ~~beneficiaries, all terms~~SERP calculation as of December 31, 2018. Additionally, they have agreed to use target rather than actual awards under the annual incentive plan for years 2016 and 2018 for the average incentive award portion of the SERP calculation. A third participant’s SERP benefit will ~~continue.~~be set at a specified amount based upon the year of separation.

In ~~connection with~~ the ~~Merger, if~~event a SERP participant’s employment is involuntarily terminated by the Company without cause, or the participant terminates his or her employment on account of good reason, ~~either~~ occurring within ~~the 60-day period preceding, or~~ the 36-month period following ~~the Merger~~a change in control event for all participants who commenced participation in ~~the~~ SERP prior to October 28, 2011, or ~~within~~ the ~~60-day period preceding, or the~~

24-month period following ~~the Merger~~a change in control event for all participants who commenced participation in ~~the~~ SERP on or after October 28, 2011, such participant’s ~~SERP benefits~~benefit shall: (i) become fully vested; (ii) be increased by adding three years to an affected participant’s age, subject to a minimum benefit of 50% of final compensation; and (iii) be subject to a modified reduction determined by increasing the executive’s age by three years. For additional details regarding the effect of the pending Merger on our SERP, see “Interests of Our Directors and Executive Officers in the Merger” beginning on page 52 of the definitive proxy statement dated January 13, 2015.

Change in Employment Status and Change in Control Events

During ~~2011, in conjunction~~2018, the Company had no employment agreements with ~~his being hired as CEO, we entered into an employment~~named executives other than the agreement with Mr. ~~Williamson (the “Williamson Agreement”). This agreement is further discussed in “Mr. Williamson’s Employment Agreement.”~~

~~Generally in connection with recruiting efforts, the~~Fontenot as President & Chief Executive Officer. The Company may enter into employment agreements with its ~~executives. Our~~executives generally in connection with recruiting efforts. The standard agreement provides for a non-renewing term, generally two years, and does not contain a change in control tax gross-up provision. Our Compensation Committee approved other revisions to our standard executive employment agreement based on input from Cook & Co., which we believe are consistent with current market trends while allowing us to maintain a competitive executive officer recruiting process. The Company has no executive employment agreements other than the Williamson Agreement.

See the section titled “Potential Payments at Termination or Change in Control” for a quantification and discussion of the material terms, potential payments and benefits associated with the Williamson Agreement, as well as the value of accelerated compensation and benefits under various separation scenarios for our named executives who do not have executive employment agreements.

The Cleco Corporation Executive Severance Plan

In recognition of the non-renewal of executive employment contracts, the ~~board~~Cleco Corporation Board of ~~directors~~Directors adopted the Cleco Corporation Executive Severance Plan (the ~~“Executive~~Executive Severance ~~Plan”)~~Plan) on October 28, 2011. The Executive Severance Plan provides ~~our~~the executive officers and other key employees with cash severance benefits in the event



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of a termination of employment, including involuntary termination in connection with a change in control.

In October 2014, our Compensation Committee, with the approval of the full board of directors, approved an amendment to the Executive Severance Plan to provide that an officer cannot trigger “Good Reason” under the Executive Severance Plan based on the fact the Company is no longer publicly traded. In December 2014, our Compensation Committee, with the approval of the full board of directors, approved additional amendments to the Executive Severance Plan expanding the definition of “Committee,” removing the authority of the Compensation Committee to continue making determinations of “Good Reason,” and clarifying that a potential acquirer of the Company cannot terminate the Executive Severance Plan during a change in control period without the consent of the “Covered Executive.” In July 2015, our Compensation Committee, with the approval of the full board of directors, approved an amendment to the Executive Severance Plan to expand the definition of waiver, release and covenants to include covenants prohibiting competition and to revise the definition of participants who are eligible to receive

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~~benefits to mean those who have satisfied the conditions included in the waiver, release and covenants agreement.~~

Perquisites and Other Benefits

WeThe Company may make available the following perquisites to ~~our~~its executive officers:

Executive officer physicals —- as a condition of receiving their ~~PFP Plan~~STIP award, we require and pay for an annual physical for ~~our~~the executive officers and their spouses;

Spousal/companion travel —- in connection with the various industry, governmental, civic, and entertainment activities of ~~our~~the executive officers, we pay for spousal/companion travel associated with such events;

Relocation program —- in addition to ~~our~~the standard relocation policy available to all employees, we maintain a policy whereby ~~our~~the executive officers and other key employees may request that wethe Company pay real estate agent and certain other closing fees should the officer or key employee sell his/her primary residence or that wethe Company purchase the executive officer’s or key employee’s primary residence at the greater of its documented cost (not to exceed 120% of the original purchase price) or average appraised value. Typically, this occurs when an executive officer or key employee relocates at the Company’s request; and

Purchase program —- under ~~our~~the Executive Severance Plan, a covered executive officer may request the Company to purchase his/her primary residence in the event he or she is involuntarily terminated without cause or separates for good reason, either in connection with a change in control and further provided the executive officer relocates more than 100 miles from the residence to be purchased. Limits on the purchase amount are the same as ~~our~~the relocation program described above.

~~Our Compensation~~The Committee approves the perquisites based on what it believes is prevailing market practice, as well as specific Company needs. ~~Cook & Co. assists our Compensation Committee in this regard. We believe~~The Company believes the relocation program is an important element in attracting executive ~~talent to the central Louisiana area.~~talent. Perquisite expenses related to business and spousal/companion travel for ~~our~~the executive officers are reviewed by internal audit and any exceptions are reported to ~~our~~the Audit Committee.

See the section titled “All Other Compensation” for details of these perquisites and their value for ~~our~~the named ~~executives.~~executive officers.

~~Our~~The executive officers, including the named ~~executives, also~~executive officers, participate in ~~our~~the other benefit plans on the same terms as other employees. These plans include paid time off for vacation, sick leave, and bereavement; group medical, dental, vision, and prescription drug coverage (including ~~our~~the annual wellness program); basic life insurance; supplemental life insurance; dependent life insurance; accidental death and dismemberment insurance; defined benefit pension plan (for those hired prior to August 1, 2007); and the 401(k) ~~Savings~~ Plan with a Company match for those employees hired before August 1, 2007, as well as a 401(k) ~~Savings~~ Plan with an enhanced benefit for those employees hired on or after August 1, ~~2007, including Messrs. Williamson~~2007.

Board Compensation

The Governance and ~~Miller.~~

Public Affairs Committee may engage the Committee’s independent consultant from time to time to conduct market competitive reviews of the Board

compensation program. Details of the Boards’ compensation are shown in the “Board of Manager Compensation” table.

Other Tools and Analyses to Support Compensation Decisions

Tally Sheets

At least annually, ~~our Compensation~~the Committee reviews tally sheets that set forth the items listed below. This review is conducted as part of the comparison of the compensation and benefit components that are prevalent within ~~our~~the Comparator Group. The comparison facilitates discussion with ~~our Compensation~~the Committee’s outside independent consultant as to the use and amount of each compensation and benefit component versus the applicable ~~peer group.~~Peer Group.

Annual compensation expense for each named executive —officer - this includes the rate of change in total cash compensation from year-to-year; ~~the value of equity awards;~~ the annual periodic cost of providing retirement benefits; and the annual cost of providing other benefits such as health insurance, as well as the status of any deferred compensation.

Reportable compensation —- to further evaluate total compensation; to evaluate total compensation of ~~our~~the CEO compared to the other executive officers; and to otherwise evaluate internal equity among ~~our~~the named ~~executives.~~

Company stock ownership — for each executive officer expressed as a multiple of base salary compared to industry standards provided by Cook & Co. Outstanding stock options and the in-the-money value of those options, if any, also are reviewed, as are each executive’s Cleco common stock purchases and sales history.officers.

Post-employment payments —- reviewed pursuant to the potential separation events discussed in “Potential Payments at Termination or Change in Control.”

Trends and Regulatory Updates

As needed, and generally at least annually, ~~our Compensation~~the Committee reviews reports related to industry trends, legislative and regulatory developments, and compliance requirements based on management’s analysis and guidance provided by ~~Cook & Co.,~~Pay Governance, as applicable. Plan revisions and compensation program design changes are implemented as needed.

Risk Assessment

~~Our Compensation~~The Committee also seeks to structure compensation that will provide sufficient incentives for ~~our~~the executive officers to drive results while avoiding unnecessary or excessive risk taking that could harm the long-term value of the Company. ~~Our Compensation~~The Committee believes that the following actions and/or measures help achieve this goal:

~~our Compensation~~the Committee reviews the design of ~~our~~the executive compensation program to ensure an appropriate balance between business risk and resulting compensation;

~~our Compensation~~the Committee allocates pay mix between base salary and performance-based pay to provide a balance of incentives;

the design of ~~our~~the incentive measures ~~including the interrelation between our PFP Plan and LTIP,~~ is structured to align management’s actions with the interests of ~~our shareholders;~~the investors;

incentive payments are dependent on ~~our~~the Company’s performance measured against pre-established targets and goals and/or compared to the performance of companies in ~~our Proxy~~the Peer Group;

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the range and sensitivity of potential payouts relative to target performance are reasonable;

~~our Compensation~~the Committee imposes checks and balances on the payment of compensation discussed herein;

~~our Recovery Policy discussed in the section entitled “Recoupment of Prior Awards Paid” below;~~

detailed processes establish ~~Cleco’s~~the Company’s financial performance measures under ~~our~~its incentive plans; and



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incentive targets are designed to be challenging, yet achievable, to mitigate the potential for excessive risk-taking behaviors.

During 2015, our Compensation Committee, with the assistance of Cook & Co., reviewed the Company’s assessment of compensation risk of the Company’s incentive plans. Our Compensation Committee concluded that our compensation policies do not create risks that are reasonably likely to have a material adverse effect on the Company.

~~Stock Ownership Requirements for Executive Officers~~

Our Compensation Committee has adopted an executive stock ownership policy requiring our CEO to own Cleco common stock in an amount equaling five times base salary; senior vice presidents in an amount equaling three times base salary; and vice presidents in an amount equaling one times base salary. The policy also contains a retention requirement as a means of achieving the specified common stock ownership multiple. Until an executive reaches his or her required ownership level, he or she must retain a minimum of 50% of the after-tax shares received from restricted stock awards made under the LTIP.

~~Anti-hedging Policy~~

We have a policy prohibiting directors, officers and employees from engaging in privately-negotiated or other structured hedging transactions or any other forms of hedging or monetization transactions related to Cleco common stock. The board believes this policy aligns the interests of the Company’s directors, officers and employees with those of its long-term shareholders.

~~Recoupment of Prior Awards Paid~~

We have a Recovery Policy providing that if the Company is required to restate its financial statements or other financial results, our Compensation Committee is authorized to adjust or otherwise recover an executive officer’s award, provided that the amount of the award is based on financial performance and our Compensation Committee determines the executive officer engaged in intentional misconduct or in an intentional act or omission related to the cause for the restatement. Awards subject to the policy include any payment, accrual or other benefit paid or earned on or after January 1, 2008. Each of our executive officers has signed a notice acknowledging application of this policy, and we have conditioned their annual cash incentive agreements and restricted stock grants on the policy.

~~Board of Directors Compensation~~

Our Nominating/Governance Committee also engages our Compensation Committee’s independent consultants to consult on matters concerning director compensation. In its analysis of director compensation, our Nominating/Governance Committee reviews competitive market information from our Proxy Peer Group, including information

related to the payment of annual retainer fees for directors, annual retainer fees for committee chairs, and equity award levels. Details of director compensation are shown in the “Director Compensation” table.

~~U.S. Federal Income Tax Considerations~~

~~Restricted Stock~~

A participant who receives an award of restricted stock or CEUs under our LTIP generally does not recognize taxable income at the time the award is granted. Instead, the participant recognizes income when:

performance-based shares vest, which occurs at the end of a performance cycle when our Compensation Committee determines whether the designated performance goals have been attained and to what degree; or

~~forfeiture and transfer restrictions on time-based restricted stock lapse, upon the completion of a specified service period.~~

The amount of income recognized by a participant is equal to the fair market value of our common stock on the vesting or lapse date, less the cash, if any, paid for the shares, and the cash received on the settlement of any CEUs. A participant may elect to accelerate the recognition of income with respect to restricted stock by making an IRC Section

83(b) election, which causes income to be recognized at the time of the award in an amount equal to the current fair market value of the stock on the award date, less the cash, if any, paid for the shares.

~~Stock Options~~

~~All options granted under our LTIP are nonqualified or non-statutory options. Cleco currently does not grant or have outstanding incentive stock options within the meaning of IRC Section 422.~~

~~IRC Section 162(m)~~

IRC Section 162(m) limits to $1,000,000 the amount Cleco can deduct in a tax year for compensation paid to our CEO and each of the three other most highly compensated executive officers (other than our CFO). Performance-based compensation paid under a plan approved by our shareholders that satisfies certain other conditions may be excluded from the calculation of the limit.

We have taken the action we consider appropriate to preserve the deductibility of compensation paid to our executive officers, but our Compensation Committee has not adopted a formal policy that requires all compensation to be fully deductible. As a result, our Compensation Committee may pay or award compensation that it deems necessary or appropriate to achieve our business goals and to align the interests of our executives with those of our shareholders, whether or not the compensation is performance-based within the meaning of IRC Section 162(m) or otherwise fully deductible.

Our LTIP was approved by our shareholders, permitting grants and awards made under that plan to be treated as performance-based. Generally, options, performance-based restricted stock and performance-based CEUs are intended to satisfy the performance-based requirements of IRC Section 162(m) and are intended to be fully deductible.

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~~Amounts paid under the PFP Plan count toward the $1,000,000 limit.~~

IRC Section 409A

IRC Section 409A generally was effective as of January 1, 2005. The section substantially modified the rules governing the taxation of nonqualified deferred compensation. The consequences of a violation of IRC Section 409A, unless

corrected, are the immediate taxation of amounts deferred, the imposition of an excise tax and the assessment of interest on the amount of the income inclusion, each of which is imposed upon the recipient of the compensation. ~~Our~~The plans, agreements and incentives subject to IRC Section 409A have been operated pursuant to and are in compliance with IRC Section 409A.

IRC Section 162(m)

IRC Section 162(m) limits to $1,000,000 the amount Cleco may deduct in a tax year for compensation paid to the CEO and each of the three other most highly compensated executive officers (other than the CFO).

The Committee took actions considered appropriate to preserve the deductibility of compensation paid to executive officers, but the Committee did not adopt a formal policy that required all compensation to be fully deductible. As a result, the Committee may have paid or awarded compensation that it deemed necessary or appropriate to achieve our business goals and to align the interests of our executives with those of Cleco’s investors, whether or not the compensation was performance-based within the meaning of IRC Section 162(m) or otherwise fully deductible.

Executive Officers’ Compensation

Summary Compensation Table

Name and Principal Position Year Salary($)
Bonus($)
Stock Awards ($)⁽¹⁾

Option Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) ⁽²⁾

All Other
Compensation
($)

Total ($)
A B C
D
E
F
G
H
I
J
Bruce A. Williamson, 2015 $ 745,000
$ 0
$ 1,461,526
$ 0
$ 636,975
$ 0
$ 256,805
$ 3,100,306
President & CEO 2014 $ 743,846
$ 0
$ 2,077,315
$ 0
$ 819,500
$ 2,709,379
$ 260,481
$ 6,610,521
2013 $ 735,000
$ 0
$ 2,151,171
$ 0
$ 808,500
$ 484,966
$ 18,784
$ 4,198,421

Thomas R. Miller, 2015 $ 308,308
$ 0
$ 193,481
$ 0
$ 131,802
$ 117,859
$ 16,730
$ 768,180
SVP-CFO & Treasurer 2014 $ 299,231
$ 0
$ 267,005
$ 0
$ 165,000
$ 1,372,794
$ 11,872
$ 2,115,902
2013 $ 243,077
$ 0
$ 138,218
$ 0
$ 135,942
$ 1,000,014
$ 14,804
$ 1,532,055

Darren J. Olagues, 2015 $ 400,800
$ 0
$ 368,904
$ 0
$ 222,745
$ 14,921
$ 39,223
$ 1,046,593
President-Cleco Power 2014 $ 389,423
$ 0
$ 509,068
$ 0
$ 278,850
$ 1,205,650
$ 42,809
$ 2,425,800
2013 $ 359,615
$ 0
$ 432,077
$ 0
$ 256,033
$ 0
$ 37,541
$ 1,085,266

Judy P. Miller, 2015 $ 298,301
$ 0
$ 187,051
$ 0
$ 127,409
$ 36,402
$ 34,145
$ 683,308
SVP-Corporate Services 2014 $ 289,423
$ 0
$ 258,109
$ 0
$ 159,500
$ 859,654
$ 26,209
$ 1,592,895
& Information Technology 2013 $ 275,000
$ 0
$ 270,670
$ 0
$ 151,250
$ 36,832
$ 24,669
$ 758,421

Wade A. Hoefling, 2015 $ 298,301
$ 0
$ 187,051
$ 0
$ 127,409
$ 53,154
$ 33,821
$ 699,736
SVP-General 2014 $ 289,615
$ 0
$ 258,109
$ 0
$ 159,500
$ 887,456
$ 35,432
$ 1,630,112
Counsel & Director Regulatory Compliance 2013 $ 280,000
$ 0
$ 219,870
$ 0
$ 154,000
$ 27,240
$ 34,920
$ 716,030



Name and Principal Position	Year	Salary($)		Bonus($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)⁽³⁾		All Other Compensation ($)		Total ($)
A	B	C		D		E		F		G		H
William G. Fontenot,	2018	$	552,885	$	0	$	819,412	$	0	$	12,921	$	1,385,218
President & CEO	2017	$	362,904	$	0	$	475,460	$	2,552,193	$	13,681	$	3,404,238
	2016	$	279,625	$	0	$	186,907	$	308,118	$	351,738	$	1,126,388

Kazi K. Hasan,⁽¹⁾	2018	$	46,155	$	0	$	0	$	0	$	942	$	47,097
CFO

Julia E. Callis,	2018	$	268,846	$	0	$	486,712	$	0	$	13,616	$	769,174
Chief Compliance Officer & General Counsel	2017	$	253,462	$	0	$	285,550	$	439,225	$	20,292	$	998,529

Anthony L. Bunting,	2018	$	245,389	$	0	$	452,027	$	886,982	$	18,806	$	1,603,204
Chief Administrative Officer	2017	$	237,431	$	0	$	293,520	$	562,686	$	11,712	$	1,105,349
	2016	$	225,627	$	0	$	137,127	$	698,496	$	240,627	$	1,301,877

Robert R. LaBorde, Jr.,	2018	$	239,231	$	0	$	356,506	$	0	$	28,490	$	624,227
Vice President - Generation Operations & Environmental Services	2017	$	229,385	$	0	$	197,844	$	374,676	$	13,705	$	815,610


FORMER EXECUTIVE OFFICER:
Terry L. Taylor,⁽²⁾	2018	$	256,923	$	0	$	474,391	$	375,791	$	271,666	$	1,378,771
Former CFO	2017	$	248,462	$	0	$	280,452	$	770,627	$	17,057	$	1,316,598
	2016	$	219,051	$	0	$	129,353	$	202,970	$	219,872	$	771,246


⁽¹⁾	~~See Note 7 to the financial statements for a discussion of the valuation of these stock awards.~~Mr. Hasan was hired as CFO on November 5, 2018.


⁽²⁾	Ms. Taylor served as CFO until November 5, 2018 at which time she became Sr. Vice President - Special Projects. Ms. Taylor retired from the Company on December 31, 2018.


⁽³⁾	Amounts in this column include the change in pension value year over year. For ~~2015,~~2018, this amount includes the change in pension value from ~~2014~~2017 to ~~2015.~~2018. Negative changes in the pension value year over year are reported as $0. ~~Excluding the change in pension value, total compensation for the named executive officers would have changed as follows:~~

Total Compensation excluding Change in Pension Value
Name 2013
2014
2015
Mr. Williamson $ 3,713,455
$ 3,901,142
$ 3,100,306
Mr. Miller $ 532,041
$ 743,108
$ 650,321
Mr. Olagues $ 1,085,266
$ 1,220,150
$ 1,031,672
Ms. Miller $ 721,589
$ 733,241
$ 646,906
Mr. Hoefling $ 688,790
$ 742,656
$ 646,582

General

The Summary Compensation Table sets forth individual compensation information for the CEO, the CFO, and the three other most highly compensated executive officers of Cleco and its affiliates for services rendered in all capacities to Cleco and its affiliates during the fiscal years ended December 31, ~~2015,~~2018, December 31, ~~2014~~2017, and December 31, ~~2013~~2016 (the “named executives” or “named executive officers”). Compensation components represent both payments made to the named ~~executives~~executive officers during the year and other forms of compensation, as follows:

Column C, “Salary;” Column D, “Bonus;” Column G,E, “Non-Equity Incentive Plan Compensation;” and Column I,G, “All Other Compensation” represent cash compensation earned by the named executive in ~~2015, 2014~~2018, 2017, or ~~2013.~~

Awards shown in Column E, “Stock Awards” and Column F, “Option Awards” represent non-cash compensation items which may or may not result in an actual award being received by the named executive, depending on the nature and timing of the grant and until certain performance objectives are achieved.2016.

The amounts shown in Column H,F, “Change in Pension Value and Nonqualified Deferred Compensation Earnings,” represent changes in the actuarial value of accrued benefits during ~~2015, 2014~~2018, 2017, and ~~2013~~2016 under the Pension Plan and ~~the SERP.~~SERP, as applicable. Actuarial value computations are based on assumptions discussed in ~~Note~~Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the ~~financial statements.~~Financial Statements — Note 10 — Pension Plan and Employee Benefits.” The ~~2015~~2018 changes shown in Column H F



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CLECO POWER		2018 FORM 10-K

are due in part to the actuarial impact from an increase in the discount rate used to calculate future benefits under the Pension Plan and ~~the~~ SERP. Negative changes, if any, are reported as ~~$0.~~zero. Mr. Bunting’s and Ms. Taylor’s increases were due to the significant increase in the final average earnings portion of their benefit calculation as the result of the 2017 bonus paid in 2018, as neither of their final average earnings calculations was frozen. This compensation will be payable to the named executive in future years, generally as post-employment retirement payments.

~~Mr. Williamson’s Employment Agreement~~

The compensation of Mr. Williamson, our CEO, was based largely on the terms of the employment agreement negotiated with Mr. Williamson at the time of his hiring in 2011. Because of his substantial experience as a public company CEO, his

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experience in the energy, utility and regulated industries, and the opportunity to recruit executive talent of his caliber to the central Louisiana area, our Compensation Committee believed it was important to document the terms of his employment in an employment agreement effective July 5, 2011. The components of his compensation are base salary, annual cash incentives, equity incentives, the SERP, change in control events and payments, perquisites and other benefits. The components of Mr. Williamson’s compensation are further discussed below.

Salary

Data in Column C includes pay for time worked, as well as pay for time not worked, such as vacation, sick leave, jury duty, bereavement, and holidays. The salary level of each of the named executives is determined by a review of market data for companies comparable in size and scope to Cleco, as discussed under ~~“Decisions~~“— Compensation Discussion and Analysis — Decisions Made in ~~2015~~2018 with Regard to Each Compensation and Benefit Component — Base ~~Salary” in the CD&A.~~Salary.” In some instances, merit lump sum payments are used to recognize positive performance when base pay has reached or exceeded the Company’s base pay policy target, and are included in the salary column. Deferral of ~~2015, 2014~~2018, 2017, and ~~2013~~2016 base pay made by ~~Ms. Miller~~Mr. LaBorde pursuant to the Deferred Compensation Plan also is included in the salary column and is further detailed in the “Nonqualified Deferred Compensation” table. Adjustments to base pay are recommended to ~~our Compensation~~the Committee typically on an annual basis, and if approved, usually are implemented in January. Base salary changes made in ~~2015~~2018 for our named executives and the reasons for those changes are discussed in ~~“Decisions~~“— Compensation Discussion and Analysis — Decisions Made in ~~2015~~2018 with Regard to Each Compensation and Benefit Component — Base ~~Salary” in the CD&A.~~Salary.”

Bonus

Column D, “Bonus” includes non-plan-based, discretionary incentives earned during ~~2015, 2014~~2018, 2017, or ~~2013.~~2016. No such awards were earned in ~~2015, 2014~~2018, 2017, or ~~2013~~2016 by the named executive officers.

~~Stock Awards~~

Column E reflects grants and awards of Cleco common stock made to our named executive officers. Such grants and awards include annual performance-based restricted stock, as well as time-based service award grants. For 2015, Column E includes the grant date fair value calculated under United States Generally Accepted Accounting Principles (“GAAP”) for the three-year performance cycle beginning January 1, 2015 and ending December 31, 2017. For 2014, Column E includes the grant date fair value calculated under GAAP for the performance-based award covering the three-year performance cycle beginning January 1, 2014 and ending December 31, 2016. For 2013, amounts include the grant date fair value calculated under GAAP for the performance-based grant for the three-year cycle beginning January 1, 2013 and ended December 31, 2015. This amount does not represent the value to be received by each of the named executives, as that amount can only be determined at the completion of the three-year performance cycle.

The dollar value of the LTIP grants in Column E is based on the grant date fair value as required by Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation

(“FASB ASC Topic 718”), formerly Statement of Financial Accounting Standards No. 123R, Share-based Payment, and does not represent cash compensation received by the named executives during 2015, 2014 or 2013. The FASB ASC Topic 718 value is determined by the Company’s actuary (Towers Watson) and reflects a “fair value” estimate using a Monte Carlo simulation over the requisite performance cycle based on Cleco’s historical stock price volatility and dividend yield data compared to each company in the Proxy Peer Group. For the three performance-based cycles applicable to Column E, the grant date fair value of Cleco common stock was $45.60 for the 2015 to 2017 cycle; $54.58 for the 2014 to 2016 cycle; and $42.66 per share for the 2013 to 2015 cycle.

~~The potential award values applicable to our named executives for the three-year LTIP performance cycle that commenced in January 2015 are shown below:~~

2015 LTIP
Name Threshold Value
Target Value
(Column E)

Maximum Value
Mr. Williamson $ 526,178
$ 1,461,526
$ 2,923,051
Mr. Miller $ 69,677
$ 193,481
$ 386,962
Mr. Olagues $ 132,833
$ 368,904
$ 737,808
Ms. Miller $ 67,351
$ 187,051
$ 374,102
Mr. Hoefling $ 67,351
$ 187,051
$ 374,102

The number of target shares that corresponds to the dollar value listed in Column E is listed in the “Grants of Plan-Based Awards” table. Further detail of the threshold and maximum award levels is provided in the “Grants of Plan-Based Awards” table, as well as the discussion that follows. An explanation of why we use the LTIP award and its relationship to other compensation elements can be found in “Performance-Based Restricted Stock.”

~~Option Awards~~

Column F, “Option Awards” reflects the grant date fair value for grants made to executive officers in 2015. Such grants provide our executive officers the opportunity to purchase shares of Cleco common stock at some future date at the fair market value of the stock on the date of the grant. No stock options were granted to our named executive officers during 2015, 2014 or 2013.

Non-Equity Incentive Plan Compensation

Column G,E, “Non-Equity Incentive Plan Compensation” contains cash awards earned during ~~2015~~2018 that will be paid in March 2019 under the STIP; earned during 2017 and paid in March 2018 under the STIP; and earned during 2016 and paid in December ~~2015~~2016 and/or March ~~2016; earned during 2014 and paid in December 2014 and/or March 2015; and earned during 2013 and paid in March 2014~~2017 under the ~~PFP Plan.~~Pay for Performance Plan (PFP). Deferral of ~~2014 and 2013~~ annual cash incentive payments made by Mr. ~~Hoefling~~Fontenot and Mr. LaBorde pursuant to the Deferred Compensation Plan also is included in Column GE and is further detailed in the “Nonqualified Deferred Compensation” table. Column E also includes cash awards earned during 2018 that will be paid in February 2019 for the LTIP performance period ended December 31, 2018.

Change in Pension Value and Nonqualified Deferred Compensation Earnings

The values in Column HF represent the aggregate increase in the actuarial present value of benefits earned by each named executive officer during ~~2015, 2014~~2018, 2017, and ~~2013~~2016 under the Pension Plan and ~~the~~ SERP, including ~~the~~ SERP’s supplemental death benefit provision. These values do not represent cash received by the named executives in ~~2015, 2014 or 2013;~~2018, 2017, and 2016; rather, these amounts represent the present value of future retirement payments we project will be made to each named

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executive.

~~executive.~~ Changes in the present value of the Pension Plan and ~~the~~ SERP benefits from December 31, ~~2014~~2017 to December 31, ~~2015;~~2018; from December 31, ~~2013~~2016 to December 31, ~~2014;~~2017; and from December 31, ~~2012~~2015 to December 31, ~~2013~~2016 result from an additional year of earned service, compensation changes and the increase (or decrease) in value caused by the change in the discount rate used to compute present value. (Generally, a decrease in the discount rate will increase the present value of benefits and an increase in the discount rate will decrease the present value.) If the discount rate increases by a large enough amount, it can cause the accrued pension and SERP liability to decline versus the prior year. When this occurs, the values reported for Column HF are zero.

~~Projected annual payments are included in the “Potential Payments at Termination or Change in Control” tables under “Retirement.”~~ The present value of ~~our~~the accumulated benefit obligation for each named executive officer is included in the table, “Pension Benefits.” These values are reviewed by ~~our Compensation~~the Committee in conjunction with ~~their~~its annual tally sheet analysis. An explanation of why ~~we use~~ the Company uses SERP and its relationship to other compensation elements can be found in ~~“Supplemental Executive Retirement Plan (“SERP”).~~“Decisions Made in 2018 With Regard to Each Compensation and Benefit Component.”

Column HF also would include any above-market or preferential earnings on deferred compensation paid by the

Company. There were no such preferential earnings paid by the Company in ~~2015, 2014 or 2013.~~2018, 2017, and 2016.

All Other Compensation

Payments made to or on behalf of our named executive officers in Column I,G, “All Other Compensation,” include the following:

Contributions by Cleco under the 401(k) ~~Savings~~ Plan on behalf of the named executive officers;

Term life insurance premiums paid for the benefit of the named executive officers;

~~Expenses incurred for spousal/companion travel on Company business;~~For 2016, the cash payout of restricted shares settled at the closing in accordance with the terms of the Merger Agreement;

Spousal travel;

For ~~2015, 2014 and 2013,~~2016, accumulated dividends paid for the LTIP three-year performance ~~cycles~~cycle ended December 31, ~~2014, December 31, 2013~~2015, as well as dividends paid on restricted shares settled at the closing of the 2016 Merger;

For 2018, for Ms. Taylor, a cash retention payment for completing the transition of a new CFO prior to her retirement and ~~December 31, 2012, respectively;~~a retirement incentive payment received under a plan for all employees who give a six-month retirement notice; and

Federal Insurance Contributions Act ~~(“FICA”)~~(FICA) tax due currently and paid by the Company on the annual increase in the named executive officers’ future SERP benefits.



CLECO
CLECO POWER		2018 FORM 10-K

The value of the Column IG items for ~~2015~~2018 for each ~~of our~~ named executive ~~officers~~officer is as follows:

Mr. Williamson
Mr. Miller
Mr. Olagues
Ms. Miller
Mr. Hoefling
Cleco Contributions to 401(k) Savings Plan $ 15,135
$ 15,900
$ 10,457
$ 10,600
$ 10,566
Taxable Group Term Life Insurance Premiums 830
830
158
830
0
Spousal/Companion Travel 3,554
0
2,634
0
0
Accumulated Dividends Paid on LTIP 158,483
0
25,974
21,227
23,255
FICA Tax on SERP 78,803
0
0
1,488
0
Total Other Compensation $ 256,805
$ 16,730
$ 39,223
$ 34,145
$ 33,821



	Mr. Fontenot		Mr. Hasan		Ms. Callis		Mr. Bunting		Mr. LaBorde		Ms. Taylor
Cleco Contributions to 401(k) Plan	$	10,481	$	923	$	11,865	$	11,000	$	16,500	$	11,000
Taxable Group Term Life Insurance	791		19		350		830		350		1,382
Spousal Travel	1,649		0		0		0		0		0
Retirement Incentive	0		0		0		0		0		2,500
Retention Payment	0		0		0		0		0		250,000
FICA Tax on SERP	0		0		1,401		6,976		11,640		6,784
Total Other Compensation	$	12,921	$	942	$	13,616	$	18,806	$	28,490	$	271,666

~~Grants of Plan-Based Awards~~

Name Grant Date
Estimated Future Payments
Under Non-Equity Incentive
Plan Awards (PFP Plan)

Estimated Future Payments Under
Equity Incentive Plan Awards (LTIP)
All Other
Stock Awards:
Number of
Shares
of Stock
or Units (#)
All Other
Option Awards:
Number of
Securities
Underlying
Options (#)
Threshold ($)
Target ($)
Maximum ($)
Threshold (#)
Target (#)
Maximum (#)
A B C
D
E
F
G
H
I J
Mr. Williamson $ 0
$ 745,000
$ 1,490,000
11,539
32,051
64,102
0 0
Mr. Miller $ 0
$ 154,500
$ 309,000
1,528
4,243
8,486
0 0
Mr. Olagues $ 0
$ 261,105
$ 522,210
2,913
8,090
16,180
0 0
Ms. Miller $ 0
$ 149,350
$ 298,700
1,477
4,102
8,204
0 0
Mr. Hoefling $ 0
$ 149,350
$ 298,700
1,477
4,102
8,204
0 0



Name	Grant Date	Estimated Future Payments Under Non-Equity Incentive Plan Awards (STIP)⁽¹⁾						Estimated Future Payments Under Non-Equity Incentive Plan Awards (2018-2020 LTIP Grant)
Name	Grant Date	Threshold ($)		Target ($)		Maximum ($)		Threshold ($)		Target ($)		Maximum ($)
A	B	C		D		E		F		G		H
Mr. Fontenot	01/01/18	$	0	$	460,000	$	920,000	$	0	$	1,250,000	$	2,500,000
Mr. Hasan ⁽¹⁾		$	0	$	0	$	0	$	0	$	0	$	0
Ms. Callis	01/01/18	$	0	$	135,000	$	270,000	$	0	$	297,000	$	594,000
Mr. Bunting	01/01/18	$	0	$	123,000	$	246,000	$	0	$	270,600	$	541,200
Mr. LaBorde	01/01/18	$	0	$	120,000	$	240,000	$	0	$	192,000	$	384,000
Ms. Taylor	01/01/17	$	0	$	128,750	$	257,500	$	0	$	283,250	$	566,500

⁽¹⁾ Mr. Hasan was not eligible to participate in the non-equity incentive plans for 2018.

General

The target values for each of ~~our~~the Company’s incentive plans — ~~PFP Plan~~the STIP and the LTIP — are determined as part of ~~our Compensation~~the Committee’s review of executive officer compensation. The ~~Compensation~~ Committee’s review, supported by data prepared by ~~Cook & Co.,~~Pay Governance, includes comparisons of base salary and annual and long-term incentive levels of Cleco executive officers versus ~~our~~the Comparator Group as detailed in ~~“Our 2015~~“— Compensation ~~Objectives” in~~Discussion and Analysis — Evaluation and Design of the ~~CD&A.~~Compensation and Benefit Programs.” Targets for both the ~~PFP Plan~~STIP and the LTIP are set as a percentage of base salary and stated in their ~~dollar/share~~dollar equivalent in the table above.

Estimated Future Payments under Non-Equity Incentive Plan Awards (STIP)

See “— Compensation Discussion and Analysis — Decisions Made in 2018 with Regard to Each Compensation and Benefit Component — Annual Cash Incentive.” for a discussion of our 2018 STIP award calculations.

Estimated Future Payments under Non-Equity Incentive Plan Awards ~~(PFP Plan)~~(LTIP)

See ~~“Decisions~~“— Compensation Discussion and Analysis — Decisions Made in ~~2015~~2018 with Regard to Each Compensation and Benefit Component — ~~Annual Cash~~

~~Incentive” in the CD&A~~Long-Term Compensation.” for a discussion of our ~~2015 PFP Plan award calculations.~~grants made in 2018.

~~Estimated Future Payments under Equity Incentive Plan Awards (LTIP)~~Pension Benefits

~~The shares listed in Columns F, G and H in the “Grants of Plan-Based Awards” table represent the potential payouts under the LTIP for the 2015 through 2017 performance cycle. The chart~~

~~below details the target payout for each of the named executives expressed as a percentage of base salary.~~



~~Name~~	~~2015 LTIP~~ ~~Target as %~~ ~~of Base Salary~~
~~Mr. Williamson~~	~~235%~~
~~Mr. Miller~~	~~75%~~
~~Mr. Olagues~~	~~110%~~
~~Ms. Miller~~	~~75%~~
~~Mr. Hoefling~~	~~75%~~

~~119~~



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

~~Outstanding Equity Awards at 2015 Fiscal Year-End~~

Option Awards Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options - #
Exercisable
Number of
Securities
Underlying
Unexercised
Options - #
Unexercisable
Option
Exercise
Price ($)
Option
Expiration
Date

Number
of Shares
or Units of
Stock That
Have Not
Vested (#)⁽¹⁾

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)⁽²⁾

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)⁽³⁾

Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)⁽²⁾

A B C D E F
G
H
I
Mr. Williamson 0 0 15,000
$ 783,150
110,694
$ 5,779,334
Mr. Miller 0 0 0
$ 0
12,375
$ 646,099
Mr. Olagues 0 0 1,500
$ 78,315
26,006
$ 1,357,773
Ms. Miller 0 0 1,250
$ 65,263
13,893
$ 725,354
Mr. Hoefling 0 0 0
$ 0
13,985
$ 730,157



Name	Plan Name(s)	Number of Years of Credited Service (#)	Present Value of Accumulated Benefit ($)		Payments During Last Fiscal Year ($)
Mr. Fontenot	Cleco Corporate Holdings LLC Pension Plan	32	$	1,572,077	$	0
	Cleco Corporation SERP	32	$	3,605,079	$	0
Mr. Hasan⁽¹⁾	Cleco Corporate Holdings LLC Pension Plan	0	$	0	$	0
	Cleco Corporation SERP	0	$	0	$	0
Ms. Callis	Cleco Corporate Holdings LLC Pension Plan	0	$	0	$	0
	Cleco Corporation SERP	11	$	1,685,374	$	0
Mr. Bunting	Cleco Corporate Holdings LLC Pension Plan	26	$	1,501,655	$	0
	Cleco Corporation SERP	26	$	3,093,942	$	0
Mr. LaBorde⁽²⁾	Cleco Corporate Holdings LLC Pension Plan	16	$	478,852	$	0
	Cleco Corporation SERP	10	$	1,369,911	$	0
Ms. Taylor	Cleco Corporate Holdings LLC Pension Plan	18	$	1,053,492	$	0
	Cleco Corporation SERP	18	$	2,838,284	$	0

⁽¹⁾ Mr. ~~Williamson’s shares will vest on January 24, 2018 (10,000 shares) and on January 1, 2019 (5,000 shares); if~~Hasan is not a participant in the ~~Merger closes, these shares will vest~~SERP or the Pension Plan as ~~of the closing date of the Merger. Mr. Olagues’ and Ms. Miller’s shares vested on February 15, 2016.~~he was hired after both plans were closed to new participants.

⁽²⁾~~Valued at $52.21 per share, the closing price of Cleco common stock on December 31, 2015.~~

⁽³⁾ ~~The shares shown in Column H represent target grants made~~Mr. LaBorde has prior years of service credit under the ~~LTIP for~~Pension Plan. He is not currently a participant in the ~~2015, 2014 and 2013 performance cycles ending on December 31, 2017, December 31, 2016 and December 31, 2015, respectively.~~Plan because he was rehired after the Pension Plan was closed to new participants in 2007.

~~General~~

No grants of time-based restricted stock were made to the named executives in 2015; however, three of the named executives have outstanding grants issued prior to 2015. The table above details the outstanding equity-related awards as of December 31, 2015.

~~Option Awards~~

~~No options have been granted since July 2007, and there were no options outstanding as of December 31, 2015.~~

~~Stock Awards~~

The shares in Column H represent target shares granted under the LTIP for the three-year performance cycles beginning January 1, 2013, January 1, 2014 and January 1, 2015. The market values for these stock awards are based on the closing price of Cleco common stock on December 31, 2015.

~~Option Exercises and Stock Vested~~

Option Awards Stock Awards
Name
Number of Shares
Acquired on
Exercise (#)
Value Realized
on Exercise ($)

Number of Shares
Acquired on
Vesting (#)

Value Realized
on Vesting ($)

A B C
D
E
Mr. Williamson 0 $ 0
7,393
$ 401,883
Mr. Miller 0 $ 0
0
$ 0
Mr. Olagues 0 $ 0
1,212
$ 65,884
Ms. Miller 0 $ 0
991
$ 53,871
Mr. Hoelfing 0 $ 0
1,085
$ 58,981

~~General~~

~~The “Option Exercises and Stock Vested” table details the value received during 2015 by each of the named executives as a result of the exercising of stock options and/or vesting~~

~~(i.e., the lapse of restrictions) of previously awarded restricted stock.~~

~~Option Awards~~

~~There were no options exercised in 2015. All outstanding options were either exercised or expired prior to January 1, 2015.~~

~~Stock Awards~~

The number of stock award shares vested in Column D represents shares of Cleco common stock awarded in January 2015 for the three-year LTIP cycle ended December 31, 2014. The payout on this LTIP cycle was determined by the Company’s relative TSR over the three-year performance period January 1, 2012 through December 31, 2014. In order for an award to be made, the Company had to achieve a relative TSR over the three-year performance cycle above the 30th percentile of companies included in the Proxy Peer Group. After removal of the top and bottom performers, Cleco ranked seventh out of 16 companies in that group for the performance period. Our TSR was 62.32%. This performance resulted in a payout of 120% of target.

The number of shares vested in Column D represents a payout of shares above target resulting from the Company’s above-target performance over the three-year LTIP cycle ended December 31, 2014. Target shares for the three-year cycle ended December 31, 2014 were paid out as of December 31, 2014 and therefore are not included in the shares reported in Column D.

The value of the LTIP award for the performance cycle ended December 31, 2014 included in Column E was determined based on the closing price of Cleco common stock on the first trading date following the approval of the award by our Compensation Committee, or January 30, 2015.

~~120~~



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

~~Pension Benefits~~

Name Plan Name(s)
Number of
Years of
Credited
Service (#)
Present Value of
Accumulated
Benefit ($)

Payments
During Last
Fiscal Year ($)

Mr. Williamson Cleco Corporation Pension Plan 4 $ 0
$ 0
Cleco Corporation SERP 4 $ 11,097,707
$ 0
Mr. Miller Cleco Corporation Pension Plan 3 $ 0
$ 0
Cleco Corporation SERP 3 $ 2,539,572
$ 0
Mr. Olagues Cleco Corporation Pension Plan 8 $ 232,178
$ 0
Cleco Corporation SERP 8 $ 2,596,354
$ 0
Ms. Miller Cleco Corporation Pension Plan 31 $ 1,650,700
$ 0
Cleco Corporation SERP 31 $ 2,124,803
$ 0
Mr. Hoefling Cleco Corporation Pension Plan 8 $ 503,949
$ 0
Cleco Corporation SERP 8 $ 3,588,497
$ 0

General

The Company provides executive officers who meet certain tenure requirements benefits from the Pension Plan and ~~the~~ SERP. Vesting in the Pension Plan requires five years of service with the Company. With the exception of ~~Mr. Williamson and Mr. Miller,~~Ms. Callis, each of the named ~~executives~~executive officers is fully vested in the Pension Plan. ~~Mr. Williamson and Mr. Miller, both~~Ms. Callis having been hired after August 1, 2007, ~~are~~was not

eligible to participate in the Pension Plan and ~~are~~was included in an enhanced 401(k) ~~Savings~~ Plan for those employees hired on or after August 1, 2007. Mr. LaBorde is fully vested in the Pension Plan based on previous service with the Company. Having been rehired after August 1, 2007, he was no longer eligible to participate in the Pension Plan and was included in an



CLECO
CLECO POWER		2018 FORM 10-K

enhanced 401(k) Plan for those employees hired (or rehired) on or after August 1, 2007.

Vesting in ~~the~~ SERP requires ten years of service. AsUnder the terms of SERP, automatic vesting occurs upon a ~~condition of his employment,~~Change in Control if a participating executive is involuntarily terminated from the Company. Mr. ~~Williamson is subject to a shorter vesting period~~Fontenot, Ms. Callis, Mr. Bunting, Mr. Laborde, and Ms. Taylor are all fully vested in the SERP ~~vesting in four years.~~based on years of service. Mr. ~~Williamson and Ms. Miller are the only named executives fully vested~~Hasan is not a participant in the SERP.

The present value of each of the named ~~executive’s~~executive officer’s accumulated benefit values was actuarially calculated and represents the values as of December 31, ~~2015.~~2018. These calculations were made using the projected unit credit method for valuation purposes and a discount rate of ~~4.62%~~4.35%. Other material assumptions relating to the valuation include use of the RP-2006 Employee and Healthy Annuitant gender distinct mortality tables projected generationally using Scale ~~MP-2015,~~MP-2018, assumed retirement at age 65 and retirement payments in the form of joint and 100% survivor with 10 years certain ~~payment.~~payment, with the exception of Ms. Callis whose benefit is payable as a 10-year certain and life annuity.

The sum of the change in actuarial value of the Pension Plan during ~~2015~~2018 and the change in value of ~~the~~ SERP is included in Column H,F, “Change in Pension Value and Nonqualified Deferred Compensation Earnings,” in the Summary Compensation Table. Negative changes, if any, are reported as zero.

Pension Plan

The Cleco ~~Corporation~~Corporate Holdings LLC Pension Plan, restated effective ~~November~~August 1, ~~2010,~~2015, is a defined benefit plan funded entirely by employer contributions. Effective August 1, 2007, the Pension Plan was closed to new participants. Employees hired or rehired on or after August 1, 2007 are eligible to participate in an enhanced 401(k) ~~Savings~~ Plan. ~~With the exception of~~ Mr. ~~Williamson~~Fontenot, Mr. Bunting, and ~~Mr. Miller, each of our named executives was~~Ms. Taylor were hired or rehired prior to August 1, 2007.

Benefits under the Pension Plan are determined by years of service, age at retirement, and ~~the~~highest total average ~~of the highest annual earnings over~~compensation for any consecutive five ~~consecutive~~calendar years during the last ten years of ~~service preceding retirement.~~employment. Earnings include base pay, cash incentives, merit lump sums, imputed income with respect to life insurance premiums paid by the Company, pre-tax contributions to the 401(k) ~~Savings~~ Plan, salary and bonus

deferrals to the Deferred Compensation Plan, and any other form of payment taxable under IRC Section 3401(a). Earnings exclude reimbursement of expenses, gifts, severance pay, moving expenses, outplacement assistance, relocation allowances, welfare benefits, benefits accrued (other than salary and bonus deferrals) or paid pursuant to the Deferred Compensation Plan, the value of benefits accrued or paid (including dividends) under the LTIP, income from the exercise of stock options and income from disqualifying stock dispositions. For ~~2015,~~2018, the amount of earnings was further limited to ~~$265,000~~$275,000 as prescribed by the ~~Internal Revenue Service (“IRS”).~~IRS.

The formula for calculating the defined benefit under the Pension Plan is as follows:

1. Defined Benefit = Annual Benefit + Supplement Benefit

2. Annual Benefit = Final Average Earnings × Years of Service × Pension Factor

3. Supplement Benefit = (Final Average Earnings - Social Security Covered Compensation) × Years of Service × .0065

The pension factor varies with the retirement year. For ~~2015,~~2018, the applicable factor was 1.25%. Social Security-covered income is prescribed by the IRS based on the year of birth.

Benefits from the Pension Plan are generally paid at normal, late or early retirement dates and are subject to a limit prescribed by the IRS, generally ~~$210,000~~$220,000 in ~~2015.~~2018. Normal retirement at age 65 entitles the participant to a full pension. A participant may elect to delay retirement past age 65 as long as he/she is actively employed. Years of service continue to accumulate (up to a maximum of 35) and earnings continue to count toward the final earnings calculation. If a participant chooses to retire after age 55 but before normal retirement age, the amount of the annual pension benefit is reduced by 3% per year between ages 55 and 62. For example, the normal pension benefit at age 55 is reduced by 21%.

SERP

~~The~~ SERP is designed to provide retirement income of 65% of an executive officer’s final compensation at normal retirement, age 65. Final compensation under ~~the~~ SERP is based on the sum of the highest annual salary paid during the five years prior to termination of employment and the average of the three highest ~~AIP~~PFP Plan or ~~PFP Plan~~STIP awards paid to the participant during the preceding 60 months. Final compensation also is determined without regard to the IRS limit on compensation.

~~121~~



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

~~The~~ SERP benefit rate at normal retirement is reduced by 2% per year for each year a participant retires prior to age 65, with a minimum benefit rate of 45% at age 55. The final benefit rate also may be reduced further if a participant separates from service prior to age 55. This actuarially determined reduction factor is equivalent to that used in our Pension Plan, which is 3% for each year from age 55 to 62. For example, if a SERP participant were to terminate service at age 50 and start receiving his or her SERP benefit at age 55, his or her SERP benefit rate would be 35.6%. This is the product of the minimum SERP benefit of 45% reduced by another 21% for early commencement. The actual SERP benefit payments are reduced if a participant is to receive benefit payments from our Pension Plan, has received certain employer contributions related to our 401(k) ~~Savings~~ Plan and/or is eligible to receive retirement-type payments from former employers and subsequent employers, if applicable. ~~Messrs. Williamson, Miller,~~Mr. Olagues ~~and Hoefling~~ will receive reduced payments from ~~our~~ SERP because of retirement-type payments received or to be received from a former ~~employers.~~employer.

~~The~~ SERP provides survivor benefits, which are payable to a participant’s surviving spouse or other beneficiary. ~~The~~ SERP also contains a supplemental death benefit that was added in

1999 to reflect market practice. If a SERP participant dies while actively employed, the amount of the supplemental death benefit is equal to the sum of two times the participant’s annual base salary as of the date of death and the participant’s target bonus payable under the ~~PFP Plan~~annual incentive plan for the year in which death occurs. If a participant dies after termination of employment, the supplemental benefit is equal to the sum of the participant’s final annual base salary and target bonus payable under the ~~AIP or the PFP Plan~~annual incentive plan for the year in which the participant retired or otherwise terminated employment. The supplemental death benefit is not dependent on years of service.

In July 2014, ~~our board~~Cleco Corporation’s Board of ~~directors voted to close the~~Directors closed SERP to new participants. In August 2016, the Company’s Board of Managers voted to freeze salary and bonus components used in the final compensation calculation



CLECO
CLECO POWER		2018 FORM 10-K

as of December 31, 2017, for two current participants including Ms. Callis and Mr. LaBorde. In December 2017, the Company entered into an employment agreement with Mr. Fontenot as its CEO, the terms of which amended the calculation of Mr. Fontenot’s SERP benefit to include a fixed benefit depending upon the year Mr. Fontenot separates from the Company. With regard to other current SERP participants, including former employees or their beneficiaries, all terms of ~~the~~ SERP will continue.

Estimated Annual Payments

The following table shows the estimated annual payments at age 55 (or actual attained age if greater than 55) to each of the named executives under the Pension Plan and ~~the~~ SERP as of

December 31, ~~2015.~~2018. Amounts shown for former executives reflect actual payments.

Estimated Payments at Age 55
(or actual attained age if greater than 55
Pension
SERP
Total
Mr. Williamson⁽¹⁾
$ 0
$ 732,744
$ 732,744
Mr. Miller⁽²⁾
$ 0
$ 0
$ 0
Mr. Olagues $ 23,808
$ 182,208
$ 206,016
Ms. Miller $ 101,532
$ 135,240
$ 236,772
Mr. Hoefling⁽³⁾
$ 34,680
$ 0
$ 34,680



	Estimated Payments at Age 55 (or actual attained age if greater than 55)
	Pension		SERP		Total
Mr. Fontenot	$	102,081	$	97,359	$	199,440
Mr. Hasan	$	0	$	0	$	0
Ms. Callis	$	0	$	110,967	$	110,967
Mr. Bunting	$	90,244	$	117,516	$	207,760
Mr. LaBorde	$	40,020	$	64,566	$	104,586
Ms. Taylor⁽¹⁾	$	66,664	$	169,543	$	236,207

⁽¹⁾ ~~Mr. Williamson is not a participant in the Pension Plan since he was hired after August 1, 2007.~~

⁽²⁾ ~~Mr. Miller is not a participant in the Pension Plan since he was hired after August 1, 2007. He was not vested in the SERP benefit as of~~Actual payments to Ms. Taylor following her retirement on December 31, ~~2015, nor will he be vested by age 55. He will be vested in the SERP at age 62. His accrued but unvested SERP benefit at December 31, 2015 was $138,336.~~2018.

⁽³⁾ Mr. Hoefling was not vested in the SERP benefit at age 55, nor was he vested as of December 31, 2015. He will be vested in the SERP at age 61. His accrued but unvested SERP benefit at December 31, 2015 was $230,736.

Nonqualified Deferred Compensation

Name

Executive officer
contributions in
2015 ($)⁽¹⁾

Company contributions in
2015 ($)

Aggregate earnings in
2015 ($) ⁽²⁾

Aggregate
withdrawals/
distributions in
2015 ($)

Aggregate
balance at
December 31,
2015 ($)⁽³⁾

A B
C
D
E
F
Mr. Williamson $ 0
$ 0
$ 0
$ 0
$ 0
Mr. Miller $ 0
$ 0
$ 0
$ 0
$ 0
Mr. Olagues $ 0
$ 0
$ 0
$ 0
$ 0
Ms. Miller $ 5,000
$ 0
$ 0
$ 0
$ 119,696
Mr. Hoefling $ 46,183
$ 0
$ 0
$ 0
$ 1,186,904



Name	Executive officer contributions in 2018 ($)⁽¹⁾		Company contributions in 2018 ($)		Aggregate earnings in 2018 ($) ⁽²⁾		Aggregate withdrawals/ distributions in 2018 ($)		Aggregate balance at December 31, 2018 ($)⁽³⁾
A	B		C		D		E		F
Mr. Fontenot	$	223,142	$	0	$	0	$	0	$	1,134,574
Mr. Hasan	$	0	$	0	$	0	$	0	$	0
Ms. Callis	$	0	$	0	$	0	$	0	$	0
Mr. Bunting	$	0	$	0	$	0	$	0	$	0
Mr. LaBorde	$	34,303	$	0	$	0	$	0	$	401,571
Ms. Taylor	$	0	$	0	$	0	$	0	$	0

⁽¹⁾The amounts in Column B represent deferrals of salary and non-equity incentive compensation payments made to the named executive officers during ~~2015~~2018 and are included in the amounts shown in Columns C and G, respectively, of the Summary Compensation Table.

⁽²⁾The aggregate earnings shown in Column D are not included in the Summary Compensation Table. Negative returns are reflected as zero.

⁽³⁾The aggregate balances shown in Column F include amounts reported as salary and non-equity incentive compensation payments in the Summary Compensation Table for the current fiscal year, as well as previous years and the earnings on those amounts.

Deferred Compensation

~~Our named~~Named executives and other key employees are eligible to participate in the Company’s Deferred Compensation Plan. Participants are allowed to defer up to 50% of their base salary and up to 100% of their annual cash incentive, as reported in Columns C and G in the Summary Compensation Table. Consequently, the executive officer contributions listed in Column B above are made by the participant and not by Cleco. ~~Ms. Miller~~Mr. Fontenot and Mr. LaBorde elected to participate in the Deferred Compensation Plan during ~~2015. Deferrals made by Mr. Hoefling relate to a 2014 election to defer receipt of his 2014 PFP bonus which was partially paid in 2015. Deferral~~2018. All deferral elections for 2018 were made prior to the beginning of ~~2014~~2018 as required

by the regulations under IRC Section 409A. There are no matching contributions made by the Company.

Deferrals become general funds for use by the Company to be repaid to the participant at a pre-specified date. Short-term deferrals may be paid out as early as five years following the end of the plan year (i.e., the year in which compensation was earned). Retirement deferrals are paid at the later of termination of service or the attainment of an age specified by the participant. A bookkeeping account is maintained for each participant that records deferred salary and/or bonus, as well as earnings on deferred amounts. Earnings are determined by the performance of notional investment alternatives, which are similar to the investments available under the 401(k) ~~Savings~~

~~122~~



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

Plan. Participants select which of these alternatives will be used to determine the earnings on their own accounts. The Deferred Compensation Plan is not intended to provide for the payment of above-market or preferential earnings (as these terms are defined under the SEC regulations) on compensation deferred under the plan. As such, the Deferred Compensation Plan does not provide a guaranteed rate of return.

Potential Payments at Termination or Change in Control

The following tables ~~under~~ “Potential Payments at Termination or Change in Control” detail the estimated value of payments and benefits provided to each of our named executive officers assuming the following separation events occurred as of December 31, ~~2015:~~2018: termination by the executive; disability; death; retirement; constructive termination; termination by the Company for cause; and termination in connection with a change in control. ~~We have~~The Company has selected these events based on long-standing provisions in our employee benefit plans such as the Pension Plan and 401(k) ~~Savings~~ Plan, or because ~~we find~~ their use is common within ~~our~~the industry and ~~our~~ Comparator Group. Some of the potential severance payments are governed by the separate documents establishing the ~~PFP Plan, the~~STIP, LTIP, and ~~the~~ SERP. ~~Mr Williamson’s potential severance payments are also governed by provisions included in the Williamson Agreement.~~

In the definitive proxy statement filed in connection with the Merger and dated January 13, 2015, potential change in control payments to our named executive officers were disclosed. The actual transaction-related estimated payments differ from the payment calculations included in this Form 10-K in the tables under “Potential Payments at Termination or Change in Control,” because the disclosure requirements, time periods and assumptions differ from those set forth in the definitive proxy statement filed in connection with the Merger.

For transaction-related details, assumptions and estimates regarding the Merger, as well as the table of estimated payments which may be made under certain circumstances to our named executive officers in connection with the Merger, see “Potential Change of Control Payments to our Named Executive Officers” on pages 54 and 55 of the definitive proxy statement dated January 13, 2015.

At its October 2011 meeting, ~~our~~Cleco Corporation’s Compensation Committee approved the Executive Severance Plan to provide severance benefits to ~~our~~ executive officers. In October and December 2014 and July 2015, ~~our~~the Cleco Corporation’s Compensation Committee approved amendments to the Executive Severance Plan. At December 31, ~~2015,~~2018, all of the named executive officers, other than the former executive officers, were covered by the Executive Severance Plan, with the exception of Mr. Williamson, who is party to the Williamson Agreement. The values shown in his termination payments table are based on the provisions of that agreement. The terms of the Williamson Agreement are discussed in more detail under “Mr. Williamson’s Employment Agreement.”Plan.

The following narrative describes the type and form of payments and benefits for each separation event. The tables under “Potential Payments at Termination or Change in Control” provide an estimate of potential payments and benefits to each ~~of our~~ named executive ~~officers~~officer under each separation event. Throughout this section, reference to ~~our~~ “executive officers” is inclusive of ~~our~~ named executive officers.



CLECO
CLECO POWER		2018 FORM 10-K

Termination by the Executive

If an executive officer resigns voluntarily, no payments are made or benefits provided other than those required by law.

Disability

Annual disability benefits are payable when a total and permanent disability occurs and are paid until the executive officer’s normal retirement age, which is age 65. This benefit is provided under ~~our~~ SERP and is paid regardless of whether the executive was vested in ~~the~~ SERP at the time of disability. At age 65, a disabled executive is eligible to receive annual retirement benefits under the Pension Plan, for those who are participants, and ~~the~~ SERP as outlined under the headings “Pension Plan” and “SERP,” respectively. The executive officer also is eligible to receive a one-time, prorated share of the current year’s ~~PFP Plan~~STIP award and a prorated award for each LTIP performance cycle in which he/she participates to the extent those performance cycles award at their completion.

Death

A prorated share of the current year’s ~~PFP Plan~~STIP award and a supplemental death benefit provided from ~~the~~ SERP are paid to an executive officer’s designated beneficiary in the event of death in service. Both are one-time payments. The executive officer’s designated beneficiary also is eligible to receive a prorated award for each LTIP performance cycle in which the executive officer participates to the extent those performance cycles award at their completion.

Annual survivor benefits are payable to an executive officer’s surviving spouse for his/her life, or if there is no surviving spouse, to the executive officer’s designated beneficiary for a period of ten years or, if no designated beneficiary is named, to the executive officer’s estate for a period of ten years. Amounts are calculated under the provisions of ~~our~~the Pension Plan and SERP. Please see the discussion under the headings “Pension Plan” and “SERP,” respectively, as well as ~~the~~ SERP provisions relating to death while in service. Survivor benefits are paid from ~~the~~ SERP regardless of vested status in ~~the~~ SERP at the time of death. The SERP supplemental death benefit is paid only to executives who were employed by the Company on or after December 17, 1999. All of our named executives are eligible for the death benefit.

Retirement

In the event of early or normal retirement, the executive officer is eligible to receive a prorated share of the current year’s ~~PFP Plan~~STIP award and at least a prorated award for each LTIP performance cycle in which he/she participates to the extent those performance cycles award at their completion. Retirement benefits are provided pursuant to the Pension Plan and SERP. Payments are made monthly and are calculated using the assumptions described in the discussion following the “Pension Benefits” table.

Constructive Termination

Payments made and benefits provided upon a constructive termination are ordinarily greater than payments made on account of an executive officer’s retirement, death or disability because separation effectively is initiated by the Company. Certain payments are made contingent upon the execution of a waiver, release and covenants agreement in favor of the Company. Constructive termination also may be initiated by an executive officer if there has been (i) a material reduction in ~~his~~

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

or his/her base compensation, other than a reduction uniformly applicable to all executive officers; and (ii) a contemporaneous, material reduction in ~~his or~~ his/her authority, job duties, or responsibilities.

Under the terms of the Executive Severance Plan, an executive would receive constructive termination payments including up to 52 weeks of base compensation, up to $50,000 in lieu of outplacement services and reimbursement of premiums paid to maintain coverage under our medical plan for up to 18 months. The executive also would be eligible for a prorated portion of the current year’s payout under the ~~PFP Plan~~STIP and a prorated award for the LTIP performance cycles in which he/she participates to the extent those performance cycles award at their completion.

If the executive officer has vested retirement benefits and has attained eligible retirement age, he/she would receive retirement benefits as described under “Pension Benefits.”

The Williamson Agreement defines “constructive termination” as (i) a material reduction in the amount of Mr. Williamson’s base salary; (ii) a material reduction in Mr. Williamson’s authority, duties or responsibilities from those contemplated in Mr. Williamson’s employment agreement; (iii) a failure to nominate, elect or re-elect, or a removal of, Mr. Williamson as a member of the Company’s board of directors; (iv) a material breach of Mr. Williamson’s employment agreement by the Company; or (v) Mr. Williamson is required to transfer to an office or business location located more than 60 miles from the primary location to which he was assigned before transfer. In the event of Mr. Williamson’s constructive termination, he will receive the following payments and benefits from the Company: (i) base salary for the remainder of his then-current employment term; (ii) a prorated portion of the current year’s payout under the PFP Plan; (iii) Mr. Williamson’s target payout under the PFP Plan for the year in which he separates, multiplied by the number of whole and fractional years remaining in his then-current employment term; (iv) purchase by the Company of Mr. Williamson’s Louisiana residence and relocation expenses; (v) premium payments at prevailing Consolidated Omnibus Budget Reconciliation Act (“COBRA”) rates for the same type and level of health coverage elected by Mr. Williamson or his spouse or dependents for a period of 18 months; (vi) full vesting in benefits then accrued under the SERP; (vii) at the end of continuation coverage under COBRA, Mr. Williamson and his spouse will be vested in the Company’s retiree medical plan; and (viii) lapse of restrictions on shares of restricted stock awarded under the LTIP, determined at the end of the applicable performance cycle or other designated forfeiture period, prorated through Mr. Williamson’s separation date.

Termination for Cause

“Cause” is defined as an executive’s (i) intentional act of fraud, embezzlement or theft in the course of employment or other intentional misconduct that is materially injurious to the Company’s financial condition or business reputation; (ii) intentional damage to Company property, including the wrongful disclosure of its confidential information; (iii) willful and intentional refusal to perform the essential duties of his/her position; (iv) failure to fully cooperate with government or independent agency investigations; (v) conviction of a felony or crime involving moral turpitude; (vi) willful, reckless, or ~~reckless~~negligent violation of the material provisions of Cleco’s Code of Conduct; or (vii) intentional, reckless, or intentional acts or failures to act in a manner which materially compromises his/her ability to perform the essential duties of his/her position; or (viii) willful, reckless, or ~~reckless~~negligent violation of rules related to the Sarbanes-Oxley Act or rules adopted by the SEC. No

payments, other than those required by law, are made or benefits provided ~~under the terms of the Williamson Agreement or~~ under the Executive Severance Plan if an executive officer is terminated for cause. If an executive officer is vested in ~~the~~ SERP, that benefit is forfeited. The value of that forfeiture is shown as a negative number in the separation payments tables.

Change in Control

The term “Change in Control” is defined in the LTIP. One or more of the following triggering events constitute a Change in Control:

~~An event involving the Company of a nature that the Company would be required to report in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act;~~

Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an Affiliate or any “person” who on the effective date of this Plan is a director, officer, or ~~officer~~is the “beneficial owner” (as determined in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of outstanding securities of the Company or an employee stock ownership plan (within the meaning of ~~IRC~~Code Section 4975(e)(7)) sponsored by the Company or an ~~affiliate,~~Affiliate, is or becomes the “beneficial owner” (as determined in Rule 13d-3 promulgated under the Exchange Act)~~, directly or indirectly,~~ of ~~securities of the Company representing 20%~~80% or more of the combined voting power of the ~~Company’s then~~ outstanding ~~securities;~~

During any period of 24 consecutive months, individuals who at the beginning of such period constitute the board of directors cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period shall have been approved in advance by directors representing at least 80%securities of the ~~directors then in office who were directors at the beginning of such period;~~Company;

The Company ~~shall be~~is party to a merger or consolidation with another ~~corporation~~entity and, as a result of such transaction, ~~less than~~ 80% or more of the ~~then~~combined voting power of outstanding ~~voting~~ securities of the ~~surviving~~Company or ~~resulting corporation shall be~~its successor in the merger (or a direct or



CLECO
CLECO POWER		2018 FORM 10-K

indirect parent company of the Company or its successor in the merger) is owned in the aggregate by persons who were not “beneficial owners” (as determined in Rule 13d-3 promulgated under the ~~former shareholders~~Exchange Act) of securities of the Company ~~other than “affiliates” (as such term is defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of any party to such transaction, as the same shall have existed~~ immediately before such transaction;

The Company sells, leases, or otherwise disposes of, in one transaction or in a series of related transactions, all or substantially all of its assets;

The ~~shareholders~~owners of the Company approve a plan of dissolution or liquidation; or

All or substantially all of the assets or the issued and outstanding membership interests of Cleco Power ~~are~~LLC is sold, leased or otherwise disposed of in one or a series of related transactions to a person, other than the Company or ~~another affiliate.~~an Affiliate.

Except as described below, payments are made and benefits provided only if an executive’s employment is terminated during the 60-day period preceding or the 24-month period following the Change in ~~Control (commonly referred to as a “double-trigger” design).~~Control.

Termination must be involuntary and by the Company without cause or initiated by the executive on account of “Good Reason.” ~~The term “Good Reason”~~Good reason means that ~~the named executive officer~~ (i) ~~suffers~~ a ~~significant reduction in~~

~~124~~



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

Participant’s base compensation in effect immediately before the commencement of a Change in Control Period is materially reduced, or there is a ~~significant~~material reduction or termination of such Participant’s rights to any employee benefit in ~~other benefits;~~effect immediately prior to such period; (ii) ~~experiences~~ a ~~significant reduction~~Participant’s authority, duties or responsibilities are materially reduced from those in effect immediately before the commencement of a Change in Control Period, or such Participant has reasonably determined that, as a result of a change in circumstances that materially affects his or her employment with the Company, he or she is unable to exercise the authority, ~~job~~power, duties and ~~responsibilities;~~responsibilities assigned to him or her immediately before the commencement of such period; or (iii) a Participant is required to ~~be away from his/her~~transfer to an office ~~significantly more in order to perform his/her job duties;~~ or ~~(iv) experiences a change in job~~business location ofthat is more than 60 ~~miles. “Good Reason” may not be initiated by~~miles from the ~~executive based on~~primary location to which he or she was assigned prior to the ~~fact that the Company is no longer publicly traded.~~commencement of a Change in Control Period. No event or condition ~~will~~shall constitute ~~“Good Reason”~~Good Reason hereunder unless (a) a Participant provides to the ~~named executive officer gives the Company~~Committee written notice of his or her objection to such event ~~or condition within~~not later than 60 days after ~~he or she~~such Participant first learns, or should have learned, of ~~it,~~such event; (b) such event ~~or condition~~ is not ~~promptly~~ corrected by the Company promptly after receipt of such notice, but in no event ~~later~~more than 30 days after receipt ~~of such notice,~~thereof; and (c) ~~the executive resigns his or her employment with the Company~~such

Participant Separates from Service not more than 6015 days following the expiration of the 30-day period described in ~~subparagraph~~clause (b). hereof. The executive also must satisfy the conditions included in the waiver, release and covenants agreement defined in the Executive Severance Plan.

If Mr. Williamson’s employment is terminated during the 180-day period preceding or the 24-month period following the Change in Control, one-time payments under the terms of the Williamson Agreement will include an amount equal to the sum of three times his base salary and target PFP Plan award for the current year; the purchase of his primary residence at the higher of its average appraised value or its documented cost (not to exceed 120% of the purchase price) and the reimbursement of relocation expenses. Mr. Williamson must move his primary residence more than 60 miles to qualify for the home purchase and relocation reimbursement. One-time payments also include premium payments at prevailing COBRA rates for the same type and level of health coverage elected by Mr. Williamson or his spouse or dependents for a period of 36 months or until he secures other employment where group health insurance is provided, whichever period is shorter. The Williamson Agreement contains a “best-net” provision whereby his total payments in the event of a Change in Control would either be (a) reduced to the limit imposed under IRC Section 280G minus $1.00 to avoid an excise tax liability or (b) paid in full such that he would incur the excise tax and be in a better position financially than he would have been had the payments been reduced to the 280G limit.

Under the Executive Severance Plan, an executive would receive an amount up to two times the sum of annualized base salary and the average non-equity incentive plan bonus over the last three fiscal years and reimbursement of COBRA premiums for up to 24 months. Payments may also include the purchase of the executive officer’s primary residence and reimbursement of relocation expenses, but only if the executive

relocates his/her primary residence more than 100 miles. No excise tax payments or gross-ups are made; instead, benefits will be reduced to avoid the imposition of the tax. The numbers shown below do not give effect to this reduction.

Subject to the ~~“double-trigger”~~ conditions described above, upon a Change in Control, SERP benefits are: (i) fully vested; (ii) increased by adding three years to an affected executive’s age, subject to a minimum benefit of 50% of compensation; and (iii) subject to a modified actuarial reduction determined by increasing the executive’s age by three years.

For performance cycles beginning in 2013 and subsequent years, awards of restricted stock vest at target when a Change in Control occurs and are settled at the end of the cycle or upon consummation of the Change in Control, subject to forfeiture in the event of an involuntary termination for cause or a voluntary separation.

If an executive officer is vested and of eligible retirement age, he or she may become eligible to begin to receive the annual retirement benefit described above upon a Change in Control.

~~Potential Payments at Termination or Change in Control~~

The following tables set forth the value of post-employment payments and benefits that are not generally made available to all employees. Each separation event is assumed to occur on December 31, ~~2015.~~2018. Retirement is assumed to occur at age 55 or the named executive officer’s actual attained age if greater than 55. Estimated payments under our ~~PFP Plan~~STIP and LTIP for disability, death, retirement and constructive termination are uncertain until the completion of the performance period/cycle. In the case of the ~~PFP Plan,~~STIP, the performance period is the current fiscal year. In the case of the LTIP, the performance cycle is a three-year period comprised of the current and next two fiscal years. The tables reflect awards and the associated LTIP dividends assuming target performance. That value is then prorated for the portion of the performance cycle the executive officer has completed assuming separation on December 31, 2015. The estimated payment for the home purchase and relocation is a projection of the expense to the Company to sell the named executive officer’s principal residence including any loss avoided by the named executive officer by having the right to sell the residence to the Company, plus the projected cost to the Company to relocate the named executive officer.

Pursuant to Item 401(j) of Regulation S-K, the separation events disclosed in this Annual Report on Form 10-K are assumed to occur in the past, as of December 31, ~~2015.~~2018.

~~125~~



Mr. Fontenot
Value of Payment/Benefit	Termination by Executive		Disability		Death		Retirement⁽¹⁾		Constructive Termination		Termination for Cause			Change in Control
Cash Severance	$	0	$	0	$	0	$	0	$	575,000	$	0		$	1,515,931
Annual Cash Bonus	0		378,962		378,962		378,962		378,962		0			0
Long-Term Incentive	0		1,077,217		1,077,217		1,077,217		1,077,217		0			1,910,000
Cash Payment in Lieu of Outplacement Services	0		0		0		0		50,000		0			0
Present Value of Incremental SERP Payments⁽¹⁾	0		770,973		2,644,133		0		0		(1,764,990		)	1,472,858
SERP Supplemental Death Benefit	0		0		1,418,270		0		0		0			0
Purchase of Principal Residence/Relocation	0		0		0		0		0		0			83,500
COBRA Medical Coverage	0		0		0		0		32,787		0			43,716
Total Incremental Value	$	0	$	2,227,152	$	5,518,582	$	1,456,179	$	2,113,966	$	(1,764,990	)	$	5,026,005

⁽¹⁾ As of December 31, 2018, Mr. Fontenot was vested in SERP payments, which would be forfeited upon termination for cause.



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~Mr. Williamson~~

Value of Payment/Benefit
Termination
by Executive

Disability
Death
Retirement
Constructive
Termination

Termination
for Cause

Change in
Control⁽³⁾

Cash Severance $ 0
$ 0
$ 0
$ 0
$ 3,725,000
$ 0
$ 4,470,000
Annual Cash Bonus 0
745,000
745,000
745,000
745,000
0
0
Present Value of Incremental SERP Payments⁽¹⁾
0
535,829
1,416,225
0
0
(12,594,772 ) 2,088,030
SERP Supplemental Death Benefit 0
0
2,235,000
0
0
0
0
Performance-Based Restricted Stock 0
4,001,979
4,001,979
4,001,979
4,001,979
0
5,779,334
Time-Based Restricted Stock 0
783,150
783,150
783,150
783,150
0
783,150
Cash Dividends on Restricted Stock 0
283,548
283,548
283,548
283,548
0
357,821
Purchase of Principal Residence/Relocation Expenses 0
0
0
0
83,500
0
83,500
COBRA Medical Coverage⁽²⁾
0
26,860
26,860
0
26,860
0
53,720
Present Value of Retiree Medical Coverage 0
335,769
127,457
335,769
335,769
0
335,769
Total Incremental Value $ 0
$ 6,712,135
$ 9,619,219
$ 6,149,446
$ 9,984,806
$ (12,594,772 ) $ 13,951,324


⁽¹⁾	~~As of December 31, 2015, Mr. Williamson was vested in SERP payments, which would be forfeited upon termination for cause.~~

⁽²⁾

Mr. Williamson and/or his spouse will receive COBRA coverage paid by the Company in the event of his disability, death or constructive termination for a period of 18 months. Thereafter and until their deaths, the Company will reimburse Mr. Williamson and/or his spouse for the employer portion of the premium for medical coverage plus any tax incurred on such reimbursement. The present values presented for disability, death, retirement and constructive termination represent an estimate of the value of family coverage (or in the event of death, single coverage) under the Company’s current retiree medical plan including the effect of inflation at 6% and the equalization of taxes.

⁽³⁾

Mr. Williamson’s employment agreement contains a best-net provision whereby his total payments in the event of a change in control would either be (a) reduced to the limit imposed under IRC Section 280G minus $1.00 to avoid an excise tax liability or (b) paid in full such that Mr. Williamson would incur the excise tax and be in a better position financially than he would have been had the payments been reduced to the 280G limit.



Mr. Hasan
Value of Payment/Benefit	Termination by Executive		Disability		Death		Retirement⁽¹⁾		Constructive Termination		Termination for Cause		Change in Control
Cash Severance	$	0	$	0	$	0	$	0	$	400,000	$	0	$	800,000
Annual Cash Bonus	0		0		0		0		0		0		0
Long-Term Incentive	0		0		0		0		0		0		0
Cash Payment in Lieu of Outplacement Services	0		0		0		0		25,000		0		0
Present Value of Incremental SERP Payments	0		0		0		0		0		0		0
SERP Supplemental Death Benefit	0		0		0		0		0		0		0
Purchase of Principal Residence/Relocation Expenses	0		0		0		0		0		0		83,500
COBRA Medical Coverage	0		0		0		0		0		0		43,716
Total Incremental Value	$	0	$	0	$	0	$	0	$	425,000	$	0	$	927,216

⁽¹⁾ As of December 31, 2018, Mr. ~~Miller~~Hasan was not eligible for retirement.


Ms. Callis
Value of Payment/Benefit	Termination by Executive		Disability		Death		Retirement		Constructive Termination		Termination for Cause		Change in Control		Termination by Executive		Disability		Death		Retirement⁽¹⁾		Constructive Termination		Termination for Cause			Change in Control
Cash Severance	$	0	$	0	$	0	$	0	$	309,000	$	0	$	851,961	$	0	$	0	$	0	$	0	$	270,000	$	0		$	778,999
Annual Cash Bonus	0		154,500		154,500		154,500		154,500		0		0		0		112,243		112,243		0		112,243		0			0
Long-Term Incentive															0		660,468		660,468		0		660,468		0			858,000
Cash Payment in Lieu of Outplacement Services	0		0		0		0		25,000		0		0		0		0		0		0		25,000		0			0
Present Value of Incremental SERP Payments	0		2,855,722		2,185,711		0		0		0		2,718,844
Present Value of Incremental SERP Payments⁽²⁾															0		1,412,220		321,381		0		0		(1,502,599		)	292,627
SERP Supplemental Death Benefit	0		0		772,500		0		0		0		0		0		0		672,115		0		0		0			0
Performance-Based Restricted Stock	0		413,355		413,355		413,355		413,355		0		646,099
Time-Based Restricted Stock	0		0		0		0		0		0		0
Cash Dividends on Restricted Stock	0		27,445		27,445		27,445		27,445		0		37,123
Purchase of Principal Residence/Relocation Expenses	0		0		0		0		0		0		83,500		0		0		0		0		0		0			83,500
COBRA Medical Coverage	0		0		0		0		16,664		0		22,219		0		0		0		0		20,268		0			27,024
Total Incremental Value	$	0	$	3,451,022	$	3,553,511	$	595,300	$	945,964	$	0	$	4,359,746	$	0	$	2,184,931	$	1,766,207	$	0	$	1,087,979	$	(1,502,599	)	$	2,040,150

⁽¹⁾ As of December 31, 2018, Ms. Callis was not eligible for retirement.

⁽²⁾ As of December 31, 2018, Ms. Callis was vested in SERP payments, which would be forfeited upon termination for cause.



Mr. Bunting
Value of Payment/Benefit	Termination by Executive		Disability		Death		Retirement		Constructive Termination		Termination for Cause			Change in Control
Cash Severance	$	0	$	0	$	0	$	0	$	246,000	$	0		$	726,629
Annual Cash Bonus	0		102,450		102,450		102,450		102,450		0			0
Long-Term Incentive	0		614,347		614,347		614,347		614,347		0			794,310
Cash Payment in Lieu of Outplacement Services	0		0		0		0		25,000		0			0
Present Value of Incremental SERP Payments⁽¹⁾	0		443,976		1,264,688		0		0		(2,116,711		)	554,141
SERP Supplemental Death Benefit	0		0		613,473		0		0		0			0
Purchase of Principal Residence/Relocation Expenses	0		0		0		0		0		0			83,500
COBRA Medical Coverage	0		0		0		0		22,161		0			29,548
Total Incremental Value	$	0	$	1,160,773	$	2,594,958	$	716,797	$	1,009,958	$	(2,116,711	)	$	2,188,128

⁽¹⁾ As of December 31, 2018, Mr. Bunting was vested in SERP payments, which would be forfeited upon termination for cause.



Mr. LaBorde
Value of Payment/Benefit	Termination by Executive		Disability		Death		Retirement⁽¹⁾		Constructive Termination		Termination for Cause			Change in Control
Cash Severance	$	0	$	0	$	0	$	0	$	240,000	$	0		$	724,508
Annual Cash Bonus	0		110,866		110,866		0		110,866		0			0
Long-Term Incentive	0		432,307		432,307		0		432,307		0			560,000
Cash Payment in Lieu of Outplacement Services	0		0		0		0		20,000		0			0
Present Value of Incremental SERP Payments⁽²⁾	0		1,364,345		1,096,173		0		0		(987,287		)	297,056
SERP Supplemental Death Benefit	0		0		574,154		0		0		0			0
Purchase of Principal Residence/Relocation Expenses	0		0		0		0		0		0			83,500
COBRA Medical Coverage	0		0		0		0		20,453		0			40,907
Total Incremental Value	$	0	$	1,907,518	$	2,213,500	$	0	$	823,626	$	(987,287	)	$	1,705,971

⁽¹⁾ As of December 31, 2018, Mr. LaBorde was not eligible for retirement.

⁽²⁾As of December 31, 2018, Mr. Laborde was vested in SERP payments, which would be forfeited upon termination for cause.

~~Mr. Olagues~~

Value of Payment/Benefit
Termination
by Executive

Disability
Death
Retirement
Constructive
Termination

Termination
for Cause

Change in
Control

Cash Severance $ 0
$ 0
$ 0
$ 0
$ 401,700
$ 0
$ 1,296,655
Annual Cash Bonus 0
261,105
261,105
261,105
261,105
0
0
Cash Payment in Lieu of Outplacement Services 0
0
0
0
25,000
0
0
Present Value of Incremental SERP Payments 0
5,356,973
3,263,745
0
0
0
2,517,924
SERP Supplemental Death Benefit 0
0
1,064,505
0
0
0
0
Performance-Based Restricted Stock 0
914,015
914,015
914,015
914,015
0
1,357,773
Time-Based Restricted Stock 0
78,315
78,315
78,315
78,315
0
78,315
Cash Dividends on Restricted Stock 0
63,390
63,390
63,390
63,390
0
81,843
Purchase of Principal Residence/Relocation Expenses 0
0
0
0
0
0
83,500
COBRA Medical Coverage 0
0
0
0
25,144
0
33,525
Total Incremental Value $ 0
$ 6,673,798
$ 5,645,075
$ 1,316,825
$ 1,768,669
$ 0
$ 5,449,535

~~126~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

~~Ms. Miller~~

Value of Payment/Benefit
Termination
by Executive

Disability
Death
Retirement
Constructive
Termination

Termination
for Cause

Change in
Control

Cash Severance $ 0
$ 0
$ 0
$ 0
$ 298,700
$ 0
$ 917,900
Annual Cash Bonus 0
149,350
149,350
149,350
149,350
0
0
Cash Payment in Lieu of Outplacement Services 0
0
0
0
25,000
0
0
Present Value of Incremental SERP Payments⁽¹⁾
0
524,116
1,246,947
0
0
(2,273,647 ) 594,371
SERP Supplemental Death Benefit 0
0
746,750
0
0
0
0
Performance-Based Restricted Stock 0
500,351
500,351
500,351
500,351
0
725,354
Time-Based Restricted Stock 0
65,263
65,263
65,263
65,263
0
65,263
Cash Dividends on Restricted Stock 0
35,385
35,385
35,385
35,385
0
44,741
Purchase of Principal Residence/Relocation Expenses 0
0
0
0
0
0
83,500
COBRA Medical Coverage 0
0
0
0
17,805
0
23,740
Total Incremental Value $ 0
$ 1,274,465
$ 2,744,046
$ 750,349
$ 1,091,854
$ (2,273,647 ) $ 2,454,869


⁽¹⁾	~~As of December 31, 2015, Ms. Miller was vested in SERP payments, which would be forfeited upon termination for cause.~~

~~Mr. Hoefling~~

Value of Payment/Benefit
Termination
by Executive

Disability
Death
Retirement
Constructive
Termination

Termination
for Cause

Change in
Control

Cash Severance $ 0
$ 0
$ 0
$ 0
$ 298,700
$ 0
$ 916,400
Annual Cash Bonus 0
149,350
149,350
149,350
149,350
0
0
Cash Payment in Lieu of Outplacement Services 0
0
0
0
25,000
0
0
Present Value of Incremental SERP Payments 0
3,551,569
2,913,138
0
0
0
3,883,863
SERP Supplemental Death Benefit 0
0
746,750
0
0
0
0
Performance-Based Restricted Stock 0
505,155
505,155
505,155
505,155
0
730,157
Time-Based Restricted Stock 0
0
0
0
0
0
0
Cash Dividends on Restricted Stock 0
35,807
35,807
35,807
35,807
0
45,163
Purchase of Principal Residence/Relocation Expenses 0
0
0
0
0
0
83,500
COBRA Medical Coverage 0
0
0
0
8,182
0
10,909
Total Incremental Value $ 0
$ 4,241,881
$ 4,350,200
$ 690,312
$ 1,022,194
$ 0
$ 5,669,992

~~DIRECTOR~~

BOARD OF MANAGERS COMPENSATION

~~2015 Director~~2018 Board of Managers Compensation

Name⁽¹⁾
Fees Earned
or Paid in
Cash and/
or Stock ($)

Stock
Awards
($)⁽³⁾

Option
Awards
($)⁽⁴⁾
Non-Equity
Incentive Plan
Compensation
($)

Change in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings ($)

All Other
Compensation
($)

Total ($)
A B
C
D E
F
G
H
Vicky A. Bailey $ 75,000
$ 75,000
$ 0
$ 0
$ 0
$ 150,000
Elton R. King ⁽²⁾
$ 89,891
$ 75,000
$ 0
$ 0
$ 11,881
$ 176,772
Logan W. Kruger $ 89,768
$ 75,000
$ 0
$ 0
$ 11,776
$ 176,544
William L. Marks $ 99,768
$ 75,000
$ 0
$ 0
$ 11,776
$ 186,544
Peter M. Scott III $ 92,268
$ 75,000
$ 0
$ 0
$ 11,776
$ 179,044
Shelley Stewart, Jr. $ 89,768
$ 75,000
$ 0
$ 0
$ 8,338
$ 173,106
William H. Walker, Jr. $ 75,000
$ 75,000
$ 0
$ 0
$ 11,893
$ 161,893



Name⁽¹⁾	Fees Earned or Paid in Cash and/ or Stock ($)		Total ($)
A	B		C
Rick Gallot	$	136,676	$	136,676
Randy Gilchrist	$	136,676	$	136,676
Peggy Scott	$	203,365	$	203,365
Melissa Stark	$	3,750	$	3,750
Bruce Wainer	$	136,676	$	136,676

⁽¹⁾ ~~Mr. Williamson is also a named executive officer~~Messrs. Chapman, Dinneny, Leslie, Perry, Rubin, and ~~his compensation is included in~~Turner were appointed to the ~~“Executive Officers’ Compensation-Summary Compensation Table.” He does~~Boards by the Owner Group and do not receive ~~any~~ additional compensation for ~~his~~their service on the ~~board of directors.~~Boards.

⁽²⁾ Mr. King elected to receive all or a portion of his compensation as a member of the board of directors in the form of Cleco common stock. The fair market value of Cleco common stock for purposes of calculating directors’ compensation is computed by averaging the high and low stock price at the close of business on the next to last Monday of the last month in each calendar quarter. This average is rounded to the nearest eighth. Shares issued to the directors are rounded up to a whole share, and the amount of actual compensation expense is the value of the rounded shares.

⁽³⁾ See the 2014 Form 10-K, Note 7 to the financial statements for a discussion of the valuation of these stock awards. Stock award values are being reported for directors in accordance with revised proxy disclosure rules (Item 402 of Regulation S-K) issued December 16, 2009. Shares of Cleco common stock awarded under the LTIP that were restricted as of December 31, 2015 were held by directors as follows: Ms. Bailey, 0; Mr. King, 7,360; Mr. Kruger, 7,360; Mr. Marks, 7,360; Mr. Scott, 7,360; Mr. Stewart, 5,211; and Mr. Walker, 0 (all of Mr. Walker’s remaining restricted stock awards were deferred). Mr. Walker has elected to defer all or some of his restricted stock awards under the Company’s Deferred Compensation Plan. Shares of Cleco common stock awarded under the LTIP, credited to his deferred compensation accounts and restricted as of December 31, 2015 were 7,360.

⁽⁴⁾ ~~No stock options were granted to directors in 2015. There were no option awards held by directors and outstanding as of December 31, 2015.~~

~~127~~



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

General

Column B, “Fees Earned or Paid in Cash and/or ~~Stock;” Column E, “Non-Equity Incentive Plan Compensation;” and Column G, “All Other Compensation” represent~~Stock” represents cash ~~and/or stock~~ compensation earned and/or received in 2015. Amounts shown in Column C, “Stock Awards,” represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for annual stock awards. The amounts shown in Column D, “Option Awards,” represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The amounts shown in Column F, “Change in Pension Value and Nonqualified Deferred Compensation Earnings,” represent any preferential earnings on amounts deferred under the Company’s nonqualified deferred compensation plan.2018.

A non-management ~~director~~Board Manager may elect to participate in the Company’s Deferred Compensation Plan and defer the receipt of all or part of his or her ~~fees, whether payable in cash or Cleco common stock.~~fees. Benefits are equal to the amount credited to each ~~director’s~~Board Manager’s individual account based on compensation deferred plus applicable investment returns as specified by the director upon election to participate in the plan. Investment options are similar to those provided to participants in the 401(k) ~~Savings Plan with the additional option to invest in Cleco common stock for non-management directors.~~Plan. Funds may be reallocated between investments at the discretion of the ~~director.~~Board Manager. Accounts, which may be designated separately by deferral year, are payable in the form of a single-sum payment or in the form of substantially equal annual installments, not to exceed 15, when a ~~director~~Board Manager ceases to serve on the ~~board of directors~~Board or attains a specified age.

Fees Earned or Paid in Cash and/or Stock

Directors who are Cleco employees receive no additional compensation for serving as a director. In 2015, compensation for non-management directors included annual retainer fees, stock awards and insurance benefits under a group accidental death and dismemberment plan.

~~Effective~~Between January 1 ~~2014, directors no longer receive meeting fees. Instead,~~and May 1, 2018, each ~~non-management director~~Board Manager who is not a Cleco employee or appointed by the Owner Group, except Ms. Stark, received an annual cash retainer of ~~$75,000 and~~$130,000. Beginning May 1, 2018, each such Manager was compensated at an annual rate of $140,000. Ms. Stark received an annual cash retainer of $3,750. Each committee chair who is not a Cleco employee or appointed by the Owner Group received an additional annual ~~cash fee~~retainer of ~~$10,000 if~~$20,000. Between January 1 and May 1, the ~~director was a chairman~~non-management Chair of ~~a committee other than~~ the ~~Audit Committee, who~~Boards received an additional ~~fee~~annual retainer of ~~$12,500. The~~$50,000. Beginning May 1, 2018, the non-management ~~chairman of the board or lead director, as the case may be, receives~~Chair was compensated with an additional ~~cash~~ retainer ~~in the amount~~ of ~~$100,000, or $20,000, respectively.~~$75,000.

~~The annual cash retainer and fees paid to committee chairpersons~~Board Managers are ~~paid, at the election of each director, in the form of cash, Cleco common stock, or a combination of both cash and stock. Directors also may elect~~permitted to defer receipt of their fees under the Company’s Deferred Compensation Plan. ~~Prior to 2014, Mr. Walker made elections~~Messrs. Gallot and Gilchrist elected to defer ~~his fees. The amounts~~all or a portion of ~~dividends credited to his deferred~~their fees ~~account balance~~ in ~~2015, with respect to Cleco common stock held in the Company’s Deferred Compensation Plan, was $43,148.~~2018.

Cleco reimburses ~~directors~~Board Managers for travel and related expenses incurred for attending meetings of Cleco’s ~~board of directors~~Boards and ~~board~~Board committees, including travel costs for spouses/companions.

~~Stock Awards~~

~~During 2015, each non-management director received an annual stock award of Cleco common stock valued at $75,000, not to exceed 10,000 shares of stock. The grant date of the~~

annual stock award is the date of the January board meeting each year, and the valuation date of the stock is the first trading day of the year. For 2015, the number of shares to be issued was determined by dividing 100% of the stock price on the valuation date into $75,000. Directors are not required to provide any consideration in exchange for the annual stock award. The stock awarded will not be subject to forfeiture or transfer restrictions, except those restrictions imposed under Rule 144 of the Securities Act.

The dollar value of the stock awards in Column C is based on the grant date fair value computed in accordance with FASB ASC Topic 718 and does not represent cash received by the directors during 2015, nor does it represent the expense recognized for financial statement purposes in 2015. The expense recognized for financial statement purposes may vary by director based on a director’s age and remaining years of service.

~~Option Awards~~

Column D, “Option Awards,” reflects grants made to the Company’s directors, providing them the opportunity to purchase shares of Cleco common stock at some future date at the fair market value of the stock on the date of the grant. The dollar value of stock option grants is based on the grant date fair value computed in accordance with FASB ASC Topic 718. No stock options were granted to directors in 2015. Stock option grants are designed to provide long-term (up to ten years) incentives and rewards linked directly to the price of our common stock. Stock options add value to the recipient only when shareholders benefit from stock price appreciation and, as such, further align directors’ interests with those of our shareholders.

~~Non-Equity Incentive Plan Compensation~~

~~There were no non-equity incentive plan awards to the Company’s directors in 2015.~~

~~Change in Pension Value and Nonqualified Deferred Compensation Earnings~~

Column F would include any above-market or preferential earnings on deferred compensation paid by the Company. There were no such preferential earnings paid by the Company in 2015. Cleco does not provide its directors with a pension plan.

~~All Other Compensation~~

~~Column G, “All Other Compensation,” includes the following:~~

Dividends paid on any restricted stock awards granted under the LTIP and not yet vested. Dividends on restricted stock are paid quarterly and at the same rate as dividends on shares of Cleco common stock. Dividends may be paid in cash or reinvested in additional shares, at the election of each director. Mr. Walker elected to defer his restricted stock awards. Dividends on deferred restricted shares of Cleco common stock are not paid in cash, but instead are credited as units to the director’s deferred compensation account. The value of dividends credited in 2015 is reflected in the “Deferred Units on Deferred Restricted Stock” column below.

~~Expenses incurred~~expenses for spousal/companion travel ~~on Company business.~~

~~128~~



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

~~The values of the two “All Other Compensation” items are summarized in the chart that follows:~~

Name

Dividends on
Restricted Stock

Deferred Units
on Deferred Restricted Stock

Spousal/
Companion
Travel

Total Other
Compensation

Ms. Bailey $ 0
$ 0
$ 0
$ 0
Mr. King $ 11,776
$ 0
$ 105
$ 11,881
Mr. Kruger $ 11,776
$ 0
$ 0
$ 11,776
Mr. Marks $ 11,776
$ 0
$ 0
$ 11,776
Mr. Scott $ 11,776
$ 0
$ 0
$ 11,776
Mr. Stewart $ 8,338
$ 0
$ 0
$ 8,338
Mr. Walker $ 0
$ 11,776
$ 117
$ 11,893

were incurred during 2018.

Cleco also provides its ~~non-management directors~~Board Managers who are not employed by Cleco or appointed by the Owner Group with $200,000 of life insurance and permanent total disability coverage under a group accidental death and dismemberment plan maintained by Cleco ~~Power, a wholly owned subsidiary of Cleco.~~Power. The total ~~2015~~2018 premium for all coverage (exempt employees, officers and ~~directors)~~Board Managers) under this plan was ~~$16,319.~~$6,450.

~~Stock Ownership Requirements~~

In July 2009, the board of directors revised the stock ownership guidelines for its members. Under the guidelines, which were originally adopted by the board of directors in July 2005, Cleco recommends that its current directors beneficially own Cleco common stock having a value equal to at least five times the annual board retainer. New directors have five years following their election to the board to meet this recommended stock ownership level. Since October 24, 2013, the five-year period commences with the first annual meeting following the director’s election to the board. Current directors have three years following each increase in the annual board retainer to meet this recommended stock ownership level. The intent of the guidelines is to encourage stock ownership by directors. Where the guidelines are not met within the applicable time, the matter will be reviewed by the Nominating/Governance Committee, which may determine to waive the guidelines or to make an appropriate recommendation to the board of directors. All current non-management directors meet these guidelines with the exception of Ms. Bailey, who was elected by the board of directors effective June 13, 2013.

Interests of the Board of ~~Directors~~Managers

In ~~2015,~~2018, no non-management member of Cleco’s ~~board~~Boards performed services for or received compensation from Cleco or its affiliates except for those services relating to his or her duty as a member of Cleco’s ~~board.~~Boards.

~~Report of the Compensation Committee~~REPORT OF THE LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE

The Leadership Development and Compensation Committee of the ~~board~~Boards (see “Boards of ~~directors, composed entirely of independent directors (see “Board of~~

~~Directors~~Managers of Cleco” above and “Director Independence and Related Party Transactions” below), includes four ~~directors who also meet~~managers, one of whom meets the additional requirements for independence ~~as defined under~~which were adopted by the ~~rules of the SEC~~Board. The Leadership Development and ~~the NYSE listing standards applicable to compensation committee members. The~~ Compensation Committee operates under a written charter ~~adopted by the board of directors in January 2003 and~~ last revised in ~~July 2014,~~February 2018, a copy of which is posted on Cleco’s web site at ~~www.cleco.com; Investors-Board~~www.cleco.com; About Us; Leadership; Board Committees. A copy of this charter also is available free of charge by request sent to: ~~Shareholder Services,~~Public Relations, Cleco, P.O. Box 5000, Pineville, LA 71361-5000.

The Leadership Development and Compensation Committee is directly responsible for evaluating and establishing Cleco’s compensation and benefits philosophy as it relates to officers and other key employees; for establishing associated compensation and benefit plans and compensation and benefits levels of Cleco’s officers and other key employees; for retaining an independent consultant to advise the Compensation Committee on industry executive officers’ compensation and benefit practices and peer group comparisons; for annually evaluating,was constituted in conjunction with the Nominating/Governance Committee, the performance of the CEO in light of Cleco’s goals and objectives; for reviewing the CD&A with management and approving its content; and for annually evaluating its own performance based upon the procedures recommended by the Nominating/Governance Committee of the board.

The Compensation Committee held five meetings, two of which were telephone meetings, during 2015 at which each of the above listed responsibilities was addressed, including a review and discussion of the CD&A with management. During these meetings, the Compensation Committee also met with its third-party consultant independent of management.April 2016.

Based on the review and discussions referred to above, the Leadership Development and Compensation Committee recommended to ~~Cleco’s board of directors~~the Company’s Boards that the CD&A and related required compensation disclosure tables be included in ~~Cleco’s 2015~~the this Annual Report on Form 10-K and filed with the SEC.

The Leadership Development and Compensation Committee of the ~~Board~~Boards of ~~Directors~~Managers of Cleco ~~Corporation~~Holdings and Cleco Power

Christopher Leslie, Chair

Andrew Chapman

Rick Gallot

Steven Turner

~~Logan W. Kruger, Chairman~~

~~William L. Marks~~

~~Peter M. Scott III~~

~~William H. Walker, Jr.~~

Compensation Committee Interlocks and Insider Participation

The members of the Leadership Development and Compensation Committee are set forth above. There are no matters relating to interlocks or insider participation of the Leadership Development and Compensation Committee members that Cleco is required to report.

CEO Pay Ratio

The aggregate compensation of the executive who served in the CEO role in 2018 (Mr. Fontenot) was $1,409,794. This amount differs from the aggregate amount reflected in the Summary Compensation Table included in this Annual Report on Form 10-K because of the inclusion of the value of the Company’s contribution to health and welfare benefits. The median employee’s annual total compensation for 2018 was $107,854, calculated including the same components of total pay as was used for Mr. Fontenot. As a result, we estimate that the CEO’s 2018 annual total compensation was 13.1 times that of the median employee’s annual total compensation. The median employee was determined based on employees of the Company on December 31, 2018, using the consistently applied compensation measure of target total cash compensation (including base salary and target bonus). Target total cash compensation was annualized for those employees that were not employed for the full year of 2018.

We believe that the above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In addition, because the SEC rules for identifying the median employee allow companies to adopt a

~~129~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported

above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Directors and Management and CertainBeneficial Owners

~~The following table describes~~Upon the Cleco common stock beneficially owned by Cleco directors and nominees, the executive officers named in the Summary Compensation Table above, and the directors and executive officers as a group. Shares of stock are “beneficially owned” by a person if the person directly or indirectly has or shares the power to vote or disposeclosing of the ~~shares, regardless of whether the person has any economic interest in the shares. A person also beneficially owns shares as to which the person has the right to acquire~~

~~beneficial ownership within 60 days, as in the case of the stock options set forth under the “Options Exercisable Within 60 Days” column in the following table.~~

~~All information in the table is as of February 19,~~ 2016 and is based upon information supplied by the directors and officers. Unless otherwise indicated in the footnotes and subject to community property laws where applicable, each of the shareholders named in the table has sole voting and investment power with respect to the shares indicated as beneficially owned.

Amount and Nature of Beneficial Ownership of Common Stock
Direct
⁽¹⁾
Options Exercisable
Within
60 Days

⁽²⁾
Other
⁽³⁾
Percent of Class
Directors and Nominees
Vicky A. Bailey 3,004
0
0
*
Elton R. King 65,576
0
0
*
Logan W. Kruger 12,908
0
0
*
William L. Marks 45,006
0
1,450
*
Peter M. Scott III 10,864
0
1,800
*
Shelley Stewart, Jr. 8,215
0
0
*
William H. Walker, Jr. 61,064
0
50,154
⁽⁴⁾
*
Named Executive Officers

Bruce A. Williamson ⁽⁵⁾
204,078
0
0
*
Thomas R. Miller 11,810
0
0
*
Darren J. Olagues 59,313
0
0
*
Wade A. Hoefling 47,016
0
0
*
Judy P. Miller 33,893
0
0
*
All directors, nominees, and executive officers as a group (18 persons, including those listed above) 763,675
0
58,154
1.35%

* Less than 1% of the outstanding stock of the class.

⁽¹⁾ ~~“Direct” represents shares as to which each named individual has sole voting or dispositive power, including~~Merger on April 13, 2016, all shares of Cleco Corporation common stock ~~allocated under~~were exchanged for consideration of $55.37 per share. Following the 401(k) Savings Plan, the Employee Stock Purchase Plan and shares of common stock granted as restricted stock awards under the LTIP. Shares of common stock under the 401(k) Savings Plan and/or the Employee Stock Purchase Plan were held by the persons in the table above as follows: Mr. Williamson, 4,422; Mr. Miller, 0; Mr. Olagues, 8,082; Mr. Hoefling, 358; and Ms. Miller, 4,650. The other executive officers included in the amount shown for all directors, nominees and executive officers as a group held 33,133 shares of common stock under the 401(k) Savings Plan and/or the Employee Stock Purchase Plan. Shares of common stock awarded under the LTIP that were restricted as of February 19, 2016 were held by the persons in the table above as follows: Mr. Williamson, 85,111; Mr. Miller, 9,135; Mr. Olagues, 17,417; Mr. Hoefling, 8,831; and Ms. Miller, 8,831 and the other executive officers included in the amount shown for all directors, nominees and executive officers as a group, 34,838.

⁽²⁾ “Options Exercisable Within 60 Days” reflects the number of shares of Cleco common stock that could be purchased by exercise of options at February 19, 2016 or within 60 days thereafter under the LTIP.

⁽³⁾ “Other” represents the number of shares of Cleco common stock as to which the named individuals share voting and dispositive power with another person and shares of phantom stock related to shares of restricted stock granted under the LTIP.

⁽⁴⁾ Represents shares of phantom stock related to shares of restricted stock granted under the LTIP. Mr. Walker has elected to defer receipt of these shares of restricted stock granted to him under the LTIP. Each share of phantom stock is the economic equivalent of one share of Cleco common stock.

⁽⁵⁾ ~~Mr. Williamson is also a director of Cleco.~~

~~Security Ownership of Certain Beneficial Owners~~

~~The following table sets forth, as of February 19, 2016, each person known to Cleco to be the beneficial owner of more than 5%~~closing of the ~~outstanding shares of~~2016 Merger, there are no longer any ~~class of Cleco’s voting securities.~~



~~Title of Class~~	~~Name and Address of Beneficial Owner~~	~~Amount and Nature of Beneficial Ownership~~	~~Percent~~ ~~of Class~~
~~Common Stock~~	~~BlackRock, Inc. (“BlackRock”)~~ ~~40 East 52nd Street~~ ~~New York, NY 10022~~	~~7,610,609~~ ⁽¹⁾	~~12.6~~	%
~~Common Stock~~	~~The Vanguard Group~~ ~~100 Vanguard Blvd.~~ ~~Malvem, PA 19355~~	~~4,361,288~~ ⁽²⁾	~~7.21~~	%

⁽¹⁾Based solely on a Schedule 13G/A filed with the SEC on January 8, 2016. BlackRock is a parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G). For purposes of the reporting requirements of the Securities Exchange Act of 1934, BlackRock Fund Advisors, a subsidiary of BlackRock, beneficially owns 5% or greater of the outstanding shares of Cleco Corporation common stock.

⁽²⁾ ~~Based solely on a Schedule 13G/A filed with the SEC on February 11, 2016.~~

~~130~~



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

Equity Compensation Plan Information

Cleco has no compensation plans under which equity securities ~~of Cleco Corporation~~ are authorized for issuance as approved by security holders. Cleco does not have such plans that have not been approved by security holders. In accordance with the Merger Agreement, the ESPP has been suspended and will be terminated if the Merger is completed.

~~The following table provides information about compensation plans under which equity securities of Cleco Corporation were authorized for issuance at December 31, 2015:~~



~~PLAN CATEGORY~~	~~NUMBER OF~~ ~~SECURITIES TO BE~~ ~~ISSUED UPON EXERCISE~~ ~~OF OUTSTANDING~~ ~~OPTIONS, WARRANTS~~ ~~OR RIGHTS~~	~~WEIGHTED-AVERAGE~~ ~~EXERCISE PRICE OF~~ ~~OUTSTANDING~~ ~~OPTIONS,~~ ~~WARRANTS~~ ~~AND RIGHTS~~		~~NUMBER OF~~ ~~SECURITIES REMAINING~~ ~~AVAILABLE FOR FUTURE~~ ~~ISSUANCE UNDER~~ ~~EQUITY COMPENSATION~~ ~~PLANS (EXCLUDING~~ ~~SECURITIES REFLECTED~~ ~~IN COLUMN (a))~~
	~~(a)~~	~~(b)~~		~~(c)~~
~~Equity compensation plans approved by security holders~~
~~ESPP~~	—	$	—	~~392,704~~
~~LTIP~~	—	$	—	~~1,207,560~~	⁽¹⁾
~~Total~~	—	$	—	~~1,600,264~~

⁽¹⁾ Stock options and restricted stock may be issued pursuant to the 2010 LTIP. This plan requires the number of securities available to be issued to be reduced by the number of options and the number of restricted shares previously awarded, net of forfeitures. During the year ended December 31, ~~2015, there were~~ ~~90,050~~ ~~shares of restricted stock awarded pursuant to the 2010 LTIP. At December 31,~~ ~~2015, there were no stock options outstanding under the 2010 LTIP.~~

For more information on compensation plans using equity securities, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 7 — Common Stock.” For more information about the Merger, see Part II, Item 8, “Financial Statements and

Supplementary Data — Notes to the Financial Statements — Note 20 — Agreement and Plan of Merger.” This information should be read in conjunction with the Consolidated Financial Statements and related Notes thereto.awarded.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director Independence and Related Party Transactions

~~In accordance with current listing standards of the NYSE,~~ Cleco’s ~~board of directors has~~Boards have adopted categorical standards to assist itthem in making determinations of ~~director independence that are required by the NYSE.~~managers’ independence. These categorical standards are posted on Cleco’s web site at www.cleco.com; ~~Investors-Governance Guidelines-Independence.~~Leadership-Governance Guidelines. A copy of the standards is also available free of charge by request sent to:

~~Shareholder Services,~~ Public Relations, Cleco, P.O. Box 5000, Pineville, LA 71361-5000. The ~~board of directors has~~Boards have determined that ~~all~~Rick Gallot (member of ~~its directors, except Mr. Williamson, who is~~ the ~~chairman, president and CEO~~Boards of Cleco ~~meet~~Group, Cleco Holdings and

Cleco Power), Randy Gilchrist (member of the ~~categorical standards~~Boards of Cleco Group, Cleco Holdings and Cleco Power), Peggy Scott (member of the Boards of Cleco Group, Cleco Holdings, and Cleco Power), Melissa Stark (member of the Board of Cleco Power), and Bruce Wainer (member of the Boards of Cleco Group, Cleco Holdings and Cleco Power) are independent within the meaning of the ~~current listing~~categorical standards ofadopted by the ~~NYSE.~~Boards.

Cleco has no relationships to report under Item ~~404.~~

407(a)(3)4.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Aggregate fees for professional services rendered ~~for Cleco~~ by ~~Deloitte & Touche~~PricewaterhouseCoopers LLP ~~as of or~~(PwC) for the years ended December 31, ~~2015~~2018, and ~~2014,~~2017, respectively, were as follows:

2015
2014
Audit $ 1,392,621
$ 1,411,447
Audit related 38,425
6,425
Tax —
23,363
Other fees —
—
Total $ 1,431,046
$ 1,441,235



	2018		2017
Audit fees	$	1,801,292	$	1,595,605
Audit related fees	1,376,880		132,000
Tax fees	383,112		219,564
Other fees	4,725		41,212
Total	$	3,566,009	$	1,988,381

The Audit fees include professional fees rendered by PwC for financial statement audits and reviews under statutory or regulatory requirements and services that generally only the ~~years ended December 31, 2015~~auditor reasonably can provide, including issuance of comfort letter and ~~2014, respectively, were~~consents for debt and equity issuances and other asset services required by statute or regulation.

The Audit related fees consist of assurance and related services that are traditionally performed by the auditor such as accounting assistance and due diligence in connection with proposed acquisitions or sales, consulting concerning financial accounting and reporting standards and audits of stand-alone financial statements or other assurance services not required by statute or regulation.

The Tax fees consist of professional services rendered by PwC for ~~the~~tax compliance, tax planning and tax advice, and consulting services, including assistance and representation in connection with tax audits of Cleco’s consolidated financial statements; the audit of the financial statements of certain Cleco subsidiaries; the audit of our internal controls in compliance with Section 404 of the Sarbanes-Oxley Act of 2002; consents and ~~the issuance of comfort letters;~~appeals, tax advice related to proposed acquisitions or sales, employee benefit plans and ~~the review of regulatory documents~~requests for rulings or technical advice from taxing authorities.

The Other fees primarily reflect costs for consulting services and other documents filed with the SEC. The Audit fees for 2015 include $0.4 million associated with the 2014 audit of Cleco’s financial statements. The Audit fees for 2014 include $0.3 million associated with the 2013 audit of Cleco’s financial statements.an accounting research software license.

The Audit Related fees for the year ended December 31, 2015 were for professional services rendered in connection with state-mandated obligations and procedures associated with the new Committee of Sponsoring Organizations (“COSO”) Integrated Framework.

The Audit Related fees for the year ended December 31, 2014 were for professional services rendered in connection with state-mandated obligations and the Department of Energy (“DOE”) audit associated with the terms of the $20.0 million grant received under the DOE’s small grant process to implement smart-grid technology for all of Cleco Power’s

customers; procedures associated with the COSO Integrated Framework; professional fees related to the Coughlin plant transfer and an SEC comfort letter; and fees related to controls over Information Technology, initial implementation of MISO and the Merger. The Tax fees for the year ended December 31, 2014 were for services related to tax planning.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee has established a policy requiring its pre-approval of all audit and non-audit services provided by the independent registered public accounting firm. The policy requires the general pre-approval of annual audit services and

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

specific pre-approval of all other permitted services. In determining whether to pre-approve permitted services, the Audit Committee considers whether such services are consistent with SEC rules and regulations. Furthermore, requests for pre-approval for services that are eligible for general pre-approval must be detailed as to the services to be provided. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in

accordance with this pre-approval and the fees for the services performed to date. ~~All of the 2015~~During 2018 and ~~2014~~2017, all audit and non-audit ~~services described above~~fees were pre-approved by the Audit Committee in accordance with the policy described above and pursuant to applicable rules of the SEC.

For the fiscal years ended December 31, ~~2015~~2018, and ~~2014, Deloitte & Touche LLP provided~~2017, professional services provided for Cleco Power that were directly billed to Cleco ~~Corporation, the cost of which was~~Holdings, were allocated to Cleco Power though not billed directly to Cleco Power. The following is Cleco Power’s allocation of professional services provided by PwC:



	2018		2017
Audit fees	$	1,800,442	$	1,589,633
Audit related fees	1,376,597		131,657
Tax fees	382,927		218,727
Other fees	4,723		41,055
Total	$	3,564,689	$	1,981,072

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CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
		FORM 10-K ANNUAL REPORT
	Report of Independent Registered Public Accounting Firms	4849
	Report of Independent Registered Public Accounting Firms	5658
15(a)(1)	Financial Statements of Cleco ~~Corporation~~
	Consolidated Statements of Income for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	4951
	Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	5052
	Consolidated Balance Sheets at December 31, ~~2015,~~2018, and ~~2014~~2017	5153
	Consolidated Statements of Cash Flows for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	5355
	Consolidated Statements of Changes in ~~Common Shareholders’~~ Equity for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	5557
	Financial Statements of Cleco Power
	Cleco Power Consolidated Statements of Income for the years ended December 31, ~~2015, 2014,~~2018, 2017, and ~~2013~~2016	5759
	Cleco Power Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2015, 2014,~~2018, 2017, and ~~2013~~2016	5860
	Cleco Power Consolidated Balance Sheets at December 31, ~~2015,~~2018, and ~~2014~~2017	5961
	Cleco Power Consolidated Statements of Cash Flows for the years ended December 31, ~~2015, 2014,~~2018, 2017, and ~~2013~~2016	6163
	Cleco Power Consolidated Statements of Changes in Member’s Equity for the years ended December 31, ~~2015, 2014,~~2018, 2017, and ~~2013~~2016	6265
	Notes to the Financial Statements	6366
15(a)(2)	Financial Statement Schedules
	Schedule I — Financial Statements of Cleco ~~Corporation~~Holdings (Parent Company Only)
	Condensed Statements of Income for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	~~137~~133
	Condensed Statements of Comprehensive Income for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	~~138~~134
	Condensed Balance Sheets at December 31, ~~2015,~~2018, and ~~2014~~2017	~~139~~135
	Condensed Statements of Cash Flows for the years ended December 31, ~~2015, 2014,~~2018, and ~~2013~~2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	~~140~~136
	Notes to the Condensed Financial Statements	~~141~~137
	Schedule II — Valuation and Qualifying Accounts
	Cleco ~~Corporation~~- Valuation and Qualifying Accounts for the years ended December 31, 2018, and 2017, April 13, 2016 - December 31, 2016 (Successor), and January 1, 2016 - April 12, 2016 (Predecessor)	~~143~~139
	Cleco Power - Valuation and Qualifying Accounts for the years ended December 2018, 2017, and 2016	~~143~~139
	Financial Statement Schedules other than those shown in the above index are omitted because they are either not required or are not applicable or the required information is shown in the Consolidated Financial Statements and Notes thereto
15(a)(3)	List of Exhibits	~~134~~129

The Exhibits designated by an asterisk are filed herewith, except for Exhibits 32.1, 32.2, 32.3, 32.4, which are furnished herewith (and not filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section). The Exhibits not so designated previously have been filed with the SEC and are incorporated herein by reference. The Exhibits designated by two asterisks are management contracts and compensatory plans and arrangements required to be filed as Exhibits to this Report.

~~133~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



EXHIBITS
~~Cleco Corporation~~CLECO			SEC FILE OR REGISTRATION NUMBER	REGISTRATION STATEMENT OR REPORT	EXHIBIT NUMBER
	2(a)	Agreement and Plan of Merger, dated as of October 17, 2014, by and among the Company, Como 1 L.P. and Como 3 Inc.	1-15759	8-K(10/20/14)	2.1
	~~3(a)(1)~~2(b)	~~Amended~~ Purchase and ~~Restated Articles~~Sale Agreement dated as of ~~Incorporation of~~February 6, 2018 by and between NRG Energy, Inc., a Delaware Corporation, as Seller, NRG South Central Generating LLC, a Delaware limited liability company, as the Company ~~dated November 2, 2010~~and Cleco Energy LLC, a Louisiana limited liability company, as Purchaser	1-15759	~~8-K(11/2/10)~~10-Q(3/18)	2.1
	2(c)	Letter Agreement, dated as of February 1, 2019 between NRG Energy, Inc. and Cleco Cajun LLC (f/k/a Cleco Energy LLC) amending, supplementing and modifying the Purchase and Sale Agreement (the “Purchase Agreement”), dated as of February 6, 2018, by and between NRG Energy, Inc. and Cleco Cajun LLC (f/k/a Cleco Energy LLC).	1-15759	8-K(2/8/19)	10.6
	3(a)	Articles of Entity Conversion of Cleco Corporate Holdings LLC, dated as of April 13, 2016	1-15759	8-K(4/19/16)	3.1
	~~3(a)(2)~~3(b)	~~Articles of Amendment to the Amended and Restated Articles of Incorporation~~ Limited Liability Company Agreement of Cleco ~~Corporation, effective~~Corporate Holdings LLC, dated as of April ~~26, 2013~~13, 2016	1-15759	~~10-Q(3/13)~~8-K(4/19/16)	3.2
	~~3(b)(1)~~	~~Bylaws of Cleco Corporation, revised effective October 25, 2014~~	~~1-15759~~	~~10-Q(9/15)~~	~~3.1~~
	4(a)(1)	Indenture of Mortgage dated as of July 1, 1950, between Cleco Power (as successor) and First National Bank of New Orleans, as Trustee	1-05663	10-K(1997)	4(a)(1)
	4(a)(2)	Eighteenth Supplemental Indenture dated as of December 1, 1982, to Exhibit 4(a)(1)	1-05663	10-K(1993)	4(a)(8)
	4(a)(3)	Nineteenth Supplemental Indenture dated as of January 1, 1983, to Exhibit 4(a)(1)	1-05663	10-K(1993)	4(a)(9)
	4(a)(4)	Twenty-Sixth Supplemental Indenture dated as of March 15, 1990, to Exhibit 4(a)(1)	1-05663	8-K(3/15/90)	4(a)(27)
	4(b)(1)	Indenture between Cleco Power (as successor) and Bankers Trust Company, as Trustee, dated as of October 1, 1988	33-24896	S-3(10/11/88)	4(b)
	4(b)(2)	Agreement Appointing Successor Trustee dated as of April 1, 1996, by and among Central Louisiana Electric Company, Inc., Bankers Trust Company, and The Bank of New York	333-02895	S-3(4/29/96)	4(a)(2)
	4(b)(3)	First Supplemental Indenture, dated as of December 1, 2000, between Cleco Utility Group Inc. and the Bank of New York	333-52540	S-3/A(1/26/01)	4(a)(2)
	4(b)(4)	Second Supplemental Indenture, dated as of January 1, 2001, between Cleco Power LLC and The Bank of New York	333-52540	S-3/A(1/26/01)	4(a)(3)
	4(b)(5)	Seventh Supplemental Indenture, dated as of July 6, 2005, between Cleco Power LLC and the Bank of New York Trust Company, N.A.	1-05663	8-K(7/6/05)	4.1
	4(b)(6)	Eighth Supplemental Indenture, dated as of November 30, 2005, between Cleco Power LLC and the Bank of New York Trust Company, N.A.	1-05663	8-K(11/28/05)	4.1
	4(b)(7)	Ninth Supplemental Indenture, dated as of June 3, 2008, between Cleco Power LLC and The Bank of New York Trust Company, N.A.	1-05663	8-K(6/2/08)	4.1
	4(b)(8)	Tenth Supplemental Indenture, dated as of November 13, 2009, between Cleco Power LLC and The Bank of New York Mellon Trust Company, N.A. (as successor trustee)	1-05663	8-K(11/12/09)	4.1
	4(b)(9)	Eleventh Supplemental Indenture, dated as of November 15, 2010, between Cleco Power LLC and The Bank of New York Mellon Trust Company, N.A. (as successor trustee)	1-05663	8-K(11/15/10)	4.1
	4(c)(1)	Indenture of Mortgage dated May 17, 2016 between Cleco Corporate Holdings LLC and Wells Fargo Bank, N.A.	1-15759	8-K(5/17/16)	4.1
	4(c)(2)	First Supplemental Indenture dated May 17, 2016 between Cleco Corporate Holdings LLC and Wells Fargo Bank, N.A	1-15759	8-K(5/17/16)	4.2
	4(c)(3)	Second Supplemental Indenture dated May 17, 2016 between Cleco Corporate Holdings LLC and Wells Fargo Bank, N.A	1-15759	8-K(5/17/16)	4.3
	4(c)(4)	Third Supplemental Indenture dated May 24, 2016 between Cleco Corporate Holdings LLC and Wells Fargo Bank, N.A	1-15759	8-K(5/24/16)	4.2
	4(d)	Agreement Under Regulation S-K Item 601(b)(4)(iii)(A)	1-05663	10-Q(9/99)	4(c)
**	10(a)(1)	~~2000 Long-Term Incentive Compensation Plan~~	~~333-71643-01~~	~~2000 Proxy~~ ~~Statement(3/00)~~	A
**	~~10(a)(2)~~	~~2000 Long-Term Incentive Compensation Plan, Amendment Number 1, Effective as of December 12, 2003~~	~~1-15759~~	~~10-Q(3/05)~~	~~10(a)~~
**	~~10(a)(3)~~	~~2000 Long-Term Incentive Compensation Plan, Amendment Number 2, Effective as of July 23, 2004~~	~~1-15759~~	~~10-Q(9/04)~~	~~10(a)~~
**	~~10(a)(4)~~	~~2000 Long-Term Incentive Compensation Plan, Amendment Number 3, Dated January 28, 2005~~	~~1-15759~~	~~10-Q(3/05)~~	~~10(b)~~
**	~~10(a)(5)~~	~~2000 Long-Term Incentive Compensation Plan, Amendment Number 4, Effective as of January 1, 2009~~	~~1-15759~~	~~10-K(2008)~~	~~10(a)(6)~~
**	~~10(a)(6)~~	~~2000 Long-Term Incentive Compensation Plan, Amendment Number 5, Effective as of December 8, 2008~~	~~1-15759~~	~~8-K(12/9/08)~~	~~10.1~~
**	~~10(a)(7)~~	~~2000 Long-Term Incentive Compensation Plan, Administrative Procedure No. 1~~	~~1-15759~~	~~10-K(2005)~~	~~10(a)(6)~~
**	~~10(a)(8)~~	~~2010 Long-Term Incentive Compensation Plan, effective as of January 1, 2010~~	~~1-15759~~	~~2009 Proxy~~ ~~Statement (3/12/09)~~	C
**	~~10(a)(9)~~	~~Cleco Corporation 2010 Long-Term Incentive Compensation Plan Amendment, effective October 28, 2011~~	~~1-15759~~	~~10-Q(9/11)~~	~~10.4~~
	~~10(a)(11)~~	Form of Notice and Acceptance of Grant of Restricted Stock and Common Stock Equivalent Units and Allocation of Opportunity Shares and Opportunity Common Stock Equivalent Units – 2013 Performance Cycle	~~1-15759~~	~~10-K(2012)~~	~~10(a)(22)~~
	~~10(a)(12)~~	Form of Notice and Acceptance of Grant of Restricted Stock and Common Stock Equivalent Units and Allocation of Opportunity Shares and Opportunity Common Stock Equivalent Units – 2014 Performance Cycle	~~1-15759~~	~~10-K(2013)~~	~~10(a)(19)~~
	~~10(a)(13)~~	Form of Notice and Acceptance of Grant of Restricted Stock and Common Stock Equivalent Units and Allocation of Opportunity Shares and Opportunity Common Stock Equivalent Units – 2015 Performance Cycle	~~1-15759~~	~~10-K(2014)~~	~~10(a)(13)~~
	~~10(a)(14)~~	~~Form of Notice and Acceptance of Grant of Restricted Stock under Cleco Corporation 2010 Long-Term Incentive Compensation Plan~~	~~1-15759~~	~~8-K(2/1/11)~~	~~10.1~~
**	~~10(a)(15)~~	~~Notice and Acceptance of Award of Restricted Stock under Cleco Corporation 2010 Long-Term Incentive Compensation Plan, by and between Cleco Corporation and Bruce A. Williamson~~	~~1-15759~~	~~10-Q(3/12)~~	~~10.1~~
**	~~10(a)(16)~~	~~Form of Notice and Acceptance of Award of Restricted Stock under Cleco Corporation 2010 Long-Term Incentive Compensation Plan, by and between Cleco Corporation and Bruce A. Williamson~~	~~1-15759~~	~~8-K(1/29/13)~~	~~10.1~~
**	~~10(a)(17)~~	~~Form of Notice and Acceptance of Award of Restricted Stock under Cleco Corporation 2010 Long-Term Incentive Compensation Plan, by and between Darren J. Olagues, Judy P. Miller, and Keith D. Crump~~	~~1-15759~~	~~10-K(2012)~~	~~10(a)(27)~~
**	~~10(b)(1)~~	~~Deferred Compensation Plan for Directors~~	~~1-05663~~	~~10-K(1992)~~	~~10(n)~~
**	~~10(b)(2)~~	~~Summary of Director Compensation, Benefits and Policies, last revised on July 29, 2011~~	~~1-15759~~	~~10-Q(9/11)~~	~~10.3~~
**	~~10(c)(1)~~	Supplemental Executive Retirement Plan Amended and Restated January 1, 2009	1-15759	10-K(2008)	10(f)(4)
**	~~10(c)~~10(a)(2)	Supplemental Executive Retirement Plan (Amended and Restated January 1, 2009), Amendment No. 1	1-15759	8-K(12/9/08)	10.3
**	~~10(c)~~10(a)(3)	Cleco Corporation Supplemental Executive Retirement Plan Amendment, effective October 28, 2011	1-15759	10-Q(9/11)	10.2
**	~~10(c)~~10(a)(4)	Cleco Corporation Supplemental Executive Retirement Plan Amended and Restated effective January 1, 2009, Amendment No. 3 (No New Participants)	1-15759	10-K(2014)	10(c)(10)
**	~~10(c)~~10(a)(5)	Cleco Corporate Holdings LLC Supplemental Executive Retirement Plan (Amended and Restated January 1, 2009), Amendment No.4 (Special CEO Benefit)	1-15759	8-K(12/21/17)	10.2
**	10(a)(6)	Supplemental Executive Retirement Trust dated December 13, 2000	1-15759	10-K(2003)	10(e)(1)(c)
**	~~10(c)(6)~~10(a)(7)	Supplemental Executive Retirement Plan Participation Agreement between Cleco Corporation and Dilek Samil	1-15759	10-K(2002)	10(z)(1)
**	~~10(c)(7)~~10(a)(8)	Supplemental Executive Retirement Plan Participation Agreement between Cleco Corporation and Michael H. Madison	1-15759	10-K(2004)	10(v)(3)
**	~~10(d)~~10(b)(1)	~~Separation Agreement between Cleco Corporation and Dilek Samil, dated October 22, 2010~~	~~1-15759~~	~~8-K(10/22/10)~~	~~10.1~~
**	~~10(d)(2)~~	Cleco Corporation Executive Severance Plan, effective October 28, 2011	1-15759	10-Q(9/11)	10.1
**	~~10(d)(3)~~10(b)(2)	Cleco Corporation Executive Severance Plan (As amended and restated) Amendment No. 1	1-15759	8-K(10/24/14)	10.1

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



~~CLECO CORPORATION~~			~~SEC FILE OR~~ ~~REGISTRATION~~ ~~NUMBER~~	~~REGISTRATION~~ ~~STATEMENT OR~~ ~~REPORT~~	~~EXHIBIT~~ ~~NUMBER~~
**	~~10(d)(4)~~10(b)(3)	Cleco Corporation Executive Severance Plan (As amended and restated) Amendment No. 2	1-15759	8-K(12/23/14)	10.1
**	~~10(d)(5)~~10(b)(4)	Cleco Corporation Executive Severance Plan (As amended and restated) Amendment No. 3	1-15759	10-Q(6/15)	10.1
**	~~10(d)~~10(b)(5)	Cleco Corporate Holdings LLC Separation Agreement, dated effective March 23, 2017, by and among Cleco Group LLC, Cleco Corporate Holdings LLC, and Cleco Power LLC and Darren J. Olagues	1-15759	8-K(3/28/17)	10.1
**	10(b)(6)	Executive Employment Agreement, dated April 21, 2011, by and between Cleco Corporation and Bruce A. Williamson	1-15759	8-K(4/27/11)	10.1
**	~~10(d)~~10(b)(7)	~~Retirement~~ Employment Agreement, ~~dated April 21, 2011, by and between Cleco Corporation and Michael H. Madison~~	~~1-15759~~	~~8-K(4/27/11)~~	~~10.2~~
**	~~10(d)(8)~~	~~Waiver of 2012 salary increases by Bruce A. Williamson, President and Chief Executive Officer~~	~~1-15759~~	~~10-K(2011)~~	~~10(e)(14)~~
	~~10(e)~~	~~401(k) Savings and Investment Plan Trust Agreement dated as of August 1, 1997, between UMB Bank, N.A. and Cleco~~	~~1-05663~~	~~10-K(1997)~~	~~10(m)~~
	~~10(f)(1)~~	~~Cleco Corporation Employee Stock Purchase Plan~~	~~333-44364~~	~~S-8(8/23/00)~~	~~4.3~~
	~~10(f)(2)~~	~~Employee Stock Purchase Plan, Amendment No. 1, dated January 22, 2004~~	~~1-15759~~	~~10-K(2003)~~	~~10(s)(1)~~
	~~10(f)(3)~~	~~Employee Stock Purchase Plan, Amendment No. 2,~~ effective as of January 1, ~~2006~~2018, by and between Cleco Corporate Holdings LLC, Cleco Group LLC and Cleco Power LLC and William G. Fontenot	1-15759	~~10-Q(6/05)~~8-K(12/21/17)	~~10(a)~~10.1
**	~~10(f)(4)~~10(b)(8)	Retention Bonus Agreement by and between Cleco Corporate Holdings LLC, Cleco Group LLC, Cleco Power LLC, and Terry Taylor dated as of December 21, 2017	1-15759	8-K(12/21/17)	10.3
**	10(c)(1)	Cleco Corporation Pay for Performance Plan	1-15759	10-K(2011)	10(g)(4)
**	~~10(f)(5)~~10(c)(2)	Cleco Corporation Pay for Performance Plan, As Amended and Restated December 3, 2012	1-15759	10-K(2012)	10(f)(5)
**	~~10(g)~~10(d)(1)	Cleco Corporation Deferred Compensation Plan	333-59696	S-8(4/27/01)	4.3
**	~~10(g)~~10(d)(2)	First Amendment to Cleco Corporation Deferred Compensation Plan	1-15759	10-K(2008)	10(n)(5)
**	~~10(g)~~10(d)(3)	Cleco Corporation Deferred Compensation Plan, Corrective Section 409A Amendment	1-15759	8-K(12/9/08)	10.2
**	~~10(g)~~10(d)(4)	Deferred Compensation Trust dated January 2001	1-15759	10-K(2003)	10(u)
**	~~10(g)~~10(d)(5)	Cleco Corporation Deferred Compensation Plan Amendment, effective October 28, 2011	1-15759	10-Q(9/11)	10.5
**	~~10(h)~~10(d)(6)	Form of Cleco Corporate Holdings LLC Retention Bonus Plan for calendar years 2016 and 2017	1-15759	8-K(7/5/16)	10.1
	10(e)(1)	Note Purchase Agreement dated May 8, 2012 by and among Cleco Power LLC and the Purchasers listed on the signature pages thereto	1-05663	8-K(05/09/12)	10.1
	~~10(h)~~10(e)(2)	~~Term Loan Agreement dated March 20, 2013, by and among Cleco Power LLC, as borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent~~	~~1-15759~~	~~8-K(3/26/13)~~	~~10.1~~
	~~10(h)(3)~~	Amended and Restated Credit Agreement dated as of October 16, 2013, among Cleco Corporation, various financial institutions, and JPMorgan Chase Bank, N.A., as administrative agent	1-15759	8-K(10/17/13)	10.1



CLECO
CLECO POWER		2018 FORM 10-K



EXHIBITS
CLECO			SEC FILE OR REGISTRATION NUMBER	REGISTRATION STATEMENT OR REPORT	EXHIBIT NUMBER
	~~10(h)(4)~~10(e)(3)	Note Purchase Agreement dated November 13, 2015 by and among Cleco Power LLC and the Purchasers listed on the signature ~~page~~pages thereto	1-15759	8-K(11/13/15)	10.1
	~~10(i)~~10(e)(4)	~~Acadia Power Partners, LLC – Third Amended and Restated Limited Liability Company~~ Note Purchase Agreement dated ~~February 23, 2010~~December 20, 2016 by and among Cleco Power LLC and the Purchasers listed on the signature pages thereto	~~1-15759~~1-05663	~~10-K(2010)~~8-K(12/21/16)	~~10(j)~~10.1
	~~10(j)~~10(e)(5)	~~Form of~~ Note Purchase Agreement dated December 18, 2017 by and among Cleco Power LLC and the ~~Cleco Corporation 2014 Recovery Agreement Pay for Performance Plan, effective December 22, 2014~~Purchasers listed on the signature pages thereto	1-15759	8-K(12/~~23/14)~~21/17)	10.1
	10(e)(6)	Credit Agreement, dated as of April 13, 2016, by and among Cleco Corporation Holdings LLC, Mizuho Bank, Ltd., as administrative agent, and the lenders from time to time party thereto	1-15759	8-K(4/19/16)	10.1
	10(e)(7)	Term Loan Credit Agreement, dated as of June 28, 2016, by and among Cleco Corporate Holdings LLC, Mizuho Bank, Ltd., as administrative agent, and the lenders from time to time party thereto	1-15759	8-K(7/1/16)	10.1
	10(e)(8)	Bridge Loan Agreement, dated as of February 1, 2019 among Cleco Corporate Holdings LLC, the Lenders from time to time party thereto and Mizuho Bank, Ltd. as administrative agent.	1-15759	8-K(2/8/19)	10.1
	10(e)(9)	Term Loan Agreement, dated as of February 1, 2019 among Cleco Corporate Holdings LLC, the Lenders from time to time party thereto and Mizuho Bank, Ltd. as administrative agent.	1-15759	8-K(2/8/19)	10.2
*	~~12(a)~~10(e)(10)	~~Computation~~ Increasing Lender Supplement, dated as of ~~Ratios of Earnings to Fixed Charges~~February 1, 2019, by and ~~of Earnings to Combined Fixed Charges~~between Cleco Corporate Holdings LLC and ~~Preferred Stock Dividends~~Mizuho Bank, Ltd.	1-15759	8-K(2/8/19)	10.3
	10(e)(11)	Increasing Lender Supplement, dated as of February 1, 2019, by and between Cleco Corporate Holdings LLC and The Bank of Nova Scotia.	1-15759	8-K(2/8/19)	10.4
	10(e)(12)	Increasing Lender Supplement, dated as of February 1, 2019, by and between Cleco Corporate Holdings LLC and Credit Agricole Corporate and Investment Bank.	1-15759	8-K(2/8/19)	10.5
	10(e)(13)	Amendment No. 2, dated as of February 1, 2019, to the Term Loan Credit Agreement, dated as of June 28, 2016, by and among Cleco Corporate Holdings LLC (f/k/a Cleco Corporation), the Lenders party thereto and Mizuho Bank, Ltd. as administrative agent.	1-15759	8-K(2/8/19)	10.7
	10(e)(14)	Amendment No. 2, dated as of February 1, 2019, to the Credit Agreement, dated as of April 13, 2016, by and among Cleco Corporate Holdings LLC (f/k/a Cleco Corporation), the Lenders party thereto and Mizuho Bank, Ltd. as administrative agent, issuing bank and swingline lender.	1-15759	8-K(2/8/19)	10.8
	10(f)	Form of Board of Managers Services Agreement, dated as of April 13, 2016	1-15759	8-K(4/19/16)	10.3
	10(g)(1)	2017 Long-Term Incentive Compensation Plan, effective as of January 1, 2017	1-15759	10-Q(3/17)	10.3
	10(g)(2)	Form of Notice and Acceptance of Incentive Award under Cleco Corporate Holdings LLC 2017 Long-Term Incentive Compensation Plan - 2017 Two-Year Performance Cycle	1-15759	10-Q(3/17)	10.4
	10(g)(3)	Form of Notice and Acceptance of Incentive Award under Cleco Corporate Holdings LLC 2017 Long-Term Incentive Compensation Plan - 2017 Three-Year Performance Cycle	1-15759	10-Q(3/17)	10.5
	10(h)	2017 Short-Term Incentive Plan, effective as of January 1, 2017	1-15759	10-Q(3/17)	10.6
*	21	Subsidiaries of the Registrant
*	~~23(a)~~	~~Consent of Independent Registered Public Accounting Firm~~
*	24(a)	Power of Attorney from each ~~Director~~Manager of Cleco ~~Corporation~~Corporate Holdings LLC whose signature is affixed to this Form 10-K for the fiscal year ended December 31, ~~2015~~2018
*	31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
*	31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
*	32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
*	32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
*	95	~~Mine Safety Disclosures~~
*	101.INS	XBRL Instance Document
*	101.SCH	XBRL Taxonomy Extension Schema
*	101.CAL	XBRL Taxonomy Extension Calculation Linkbase
*	101.DEF	XBRL Taxonomy Extension Definition Linkbase
*	101.LAB	XBRL Taxonomy Extension Label Linkbase
*	101.PRE	XBRL Taxonomy Extension Presentation Linkbase

~~135~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CLECO POWER			SEC FILE OR REGISTRATION NUMBER	REGISTRATION STATEMENT OR REPORT	EXHIBIT NUMBER
	3(a)	~~First~~ Second Amended and Restated Articles of Organization of Cleco Power LLC, dated as of April ~~30, 2010~~13, 2016	1-05663	~~10-Q(3/10)~~8-K(4/19/16)	~~3.2~~3.3
	3(b)	~~First~~ Second Amended and Restated Articles Operating Agreement of Cleco Power LLC, dated as of April ~~30, 2010~~13, 2016	1-05663	~~10-Q(3/10)~~8-K(4/19/16)	~~3.3~~3.4
	4(a)(1)	Indenture of Mortgage dated as of July 1, 1950, between the Company and First National Bank of New Orleans, as Trustee	1-05663	10-K(1997)	4(a)(1)
	4(a)(2)	Eighteenth Supplemental Indenture dated as of December 1, 1982, to Exhibit 4(a)(1)	1-05663	10-K(1993)	4(a)(8)
	4(a)(3)	Nineteenth Supplemental Indenture dated as of January 1, 1983, to Exhibit 4(a)(1)	1-05663	10-K(1993)	4(a)(9)
	4(a)(4)	Twenty-Sixth Supplemental Indenture dated as of March 15, 1990, to Exhibit 4(a)(1)	1-05663	8-K(3/15/90)	4(a)(27)
	4(b)(1)	Indenture between the Company and Bankers Trust Company, as Trustee, dated as of October 1, 1988	33-24896	S-3(10/11/88)	4(b)
	4(b)(2)	Agreement Appointing Successor Trustee dated as of April 1, 1996, by and among Central Louisiana Electric Company, Inc., Bankers Trust Company, and The Bank of New York	333-02895	S-3(4/29/96)	4(a)(2)
	4(b)(3)	First Supplemental Indenture, dated as of December 1, 2000, between Cleco Utility Group Inc. and the Bank of New York	333-52540	S-3/A(1/26/01)	4(a)(2)
	4(b)(4)	Second Supplemental Indenture, dated as of January 1, 2001, between Cleco Power LLC and The Bank of New York	333-52540	S-3/A(1/26/01)	4(a)(3)
	4(b)(5)	Seventh Supplemental Indenture, dated as of July 6, 2005, between Cleco Power LLC and the Bank of New York Trust Company, N.A.	1-05663	8-K(7/6/05)	4.1
	4(b)(6)	Eighth Supplemental Indenture, dated as of November 30, 2005, between Cleco Power LLC and the Bank of New York Trust Company, N.A.	1-05663	8-K(11/28/05)	4.1
	4(b)(7)	Ninth Supplemental Indenture, dated as of June 3, 2008, between Cleco Power LLC and The Bank of New York Trust Company, N.A.	1-05663	8-K(6/2/08)	4.1
	4(b)(8)	Tenth Supplemental Indenture, dated as of November 13, 2009, between Cleco Power LLC and The Bank of New York Mellon Trust Company, N.A. (as successor trustee)	1-05663	8-K(11/12/09)	4.1
	4(b)(9)	Eleventh Supplemental Indenture, dated as of November 15, 2010, between Cleco Power LLC and The Bank of New York Mellon Trust Company, N.A. (as successor trustee)	1-05663	8-K(11/15/10)	4.1
	4(c)	Agreement Under Regulation S-K Item 601(b)(4)(iii)(A)	333-71643-01	10-Q(9/99)	4(c)
	4(d)	Loan Agreement, dated as of November 1, 2006, between Cleco Power LLC and the Rapides Finance Authority	1-05663	8-K(11/27/06)	4.1
	4(e)	Loan Agreement, dated as of November 1, 2007, between Cleco Power LLC and the Rapides Finance Authority	1-05663	8-K(11/20/07)	4.1
	4(f)	Loan Agreement, dated as of October 1, 2008, between Cleco Power LLC and the Rapides Finance Authority	1-05663	10-Q(3/10)	4.1
	4(g)	Loan Agreement, dated as of December 1, 2008, between Cleco Power LLC and the Louisiana Public Facilities Authority	1-05663	10-Q(3/10)	4.2
**	10(a)~~(1)~~	Supplemental Executive Retirement Plan	1-05663	10-K(1992)	10(o)(1)
	10(b)(1)	~~401(k) Savings and Investment Plan Trust Agreement dated as of August 1, 1997, between UMB Bank, N.A. and the Company~~	~~1-05663~~	~~10-K(1997)~~	~~10(m)~~
	~~10(b)(2)~~	~~401(k) Savings and Investment Plan, Stock Trust Agreement, Amendment Number 1, Effective January 1, 1999~~	~~1-05663~~	~~10-K(2009)~~	~~10(b)(3)~~
	~~10(b)(3)~~	~~401(k) Savings and Investment Plan, Stock Trust Agreement, Amendment Number 2, Effective January 1, 2004~~	~~1-05663~~	~~10-Q(6/04)~~	~~10(b)~~
	~~10(b)(4)~~	~~401(k) Savings and Investment Plan, Stock Trust Agreement, Amendment Number 3, Effective October 1, 2005~~	~~1-05663~~	~~10-Q(9/05)~~	~~10(e)~~
	~~10(b)(5)~~	~~401(k) Savings and Investment Plan, Stock Trust Agreement, Amendment Number 4 (designated as Amendment Number 3 in exhibit 10(b), Effective January 1, 2007~~	~~1-05663~~	~~10-Q(3/07)~~	~~10(b)~~
*	~~10(b)(6)~~	~~401(k) Savings and Investment Plan, As Amended and Restated Generally Effective December 1, 2015~~
	~~10(c)(1)~~	Notes Purchase Agreement dated as of December 16, 2011 among Cleco Power LLC, various financial institutions and Credit Agricole Securities (USA) Inc., JPMorgan Securities Inc. and KeyBanc Capital Markets Inc., as agents.	1-05663	8-K(12/19/11)	10.1
	~~10(c)~~10(b)(2)	Note Purchase Agreement dated May 8, 2012 by and among Cleco Power LLC and the Purchasers listed on the signature pages thereto	1-05663	8-K(05/09/12)	10.1
	~~10(c)~~10(b)(3)	Note Purchase Agreement dated November 13, 2015 by and among Cleco Power LLC and the Purchasers listed on the signature ~~page~~pages thereto	1-05663	8-K(11/13/15)	10.1
	~~10(c)~~10(b)(4)	Note Purchase Agreement dated December 20, 2016 by and among Cleco Power LLC and the Purchasers listed on the signature pages therto	1-05663	8-K(12/21/16)	10.1
	10(b)(5)	Note Purchase Agreement dated December 18, 2017 by and among Cleco Power LLC and the Purchasers listed on the signature pages thereto	1-05663	8-K(12/21/17)	10.1
	10(b)(6)	Term Loan Agreement dated March 20, 2013, by and among Cleco Power LLC, as borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent	1-05663	8-K(3/26/13)	10.1
	~~10(c)(5)~~10(b)(7)	Amended and Restated Credit Agreement dated as of October 16, 2013, among Cleco Power LLC, various financial institutions, and JPMorgan Chase Bank, N.A., as administrative agent	1-05663	8-K(10/17/13)	10.2
	~~10(d)~~10(b)(8)	Credit Agreement, dated as of April 13, 2016, by and among Cleco Power LLC, Mizuho Bank, Ltd., as administrative agent, and the lenders from time to time party thereto	1-05663	8-K(4/19/16)	10.2
	10(c)(1)	Storm Recovery Property Sale Agreement between Cleco Katrina/Rita Hurricane Recovery Funding LLC and Cleco Power LLC, dated March 6, 2008	1-05663	8-K(3/6/08)	10.1
	~~10(d)~~10(c)(2)	Storm Recovery Property Servicing Agreement between Cleco Katrina/Rita Hurricane Recovery Funding LLC and Cleco Power LLC, dated March 6, 2008	1-05663	8-K(3/6/08)	10.2
	~~10(d)~~10(c)(3)	Administration Agreement between Cleco Katrina/Rita Hurricane Recovery Funding LLC and Cleco Power LLC, dated March 6, 2008	1-05663	8-K(3/6/08)	10.3
*	~~12(b)~~10(d)	~~Computation~~ Staffing Agreement, dated as of ~~Ratios of Earnings to Fixed Charges~~April 13, 2016, by and between Cleco Power LLC and Co Issuer Corporate Staffing, LLC	1-05663	8-K(4/19/16)	10.4
**	~~23(b)~~10(e)(1)	~~Consent~~ Cleco Corporate Holdings LLC Separation Agreement by and between Cleco Power LLC, including its parent, Cleco Corporate Holdings LLC, and each of ~~Independent Registered Public Accounting Firm~~their respective subsidiaries and affiliates and Keith D. Crump	1-05663	10-K(2016)	10(j)
**	10(e)(2)	Cleco Corporate Holdings LLC Separation Agreement, dated effective March 23, 2017, by and among Cleco Group LLC, Cleco Corporate Holdings LLC, and Cleco Power LLC and Darren J. Olagues	1-05663	8-K(3/28/17)	10.1
**	10(e)(3)	Employment Agreement, effective as of January 1, 2018, by and between Cleco Corporate Holdings LLC, Cleco Group LLC and Cleco Power LLC and William G. Fontenot	1-05663	8-K(12/21/17)	10.1
**	10(e)(4)	Retention Bonus Agreement by and between Cleco Corporate Holdings LLC, Cleco Group LLC, Cleco Power LLC, and Terry Taylor dated as of December 21, 2018	1-05663	8-K(12/21/17)	10.3
*	31.3	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
*	31.4	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
*	32.3	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
*	32.4	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
*	95	~~Mine Safety Disclosures~~
*	101.INS	XBRL Instance Document
*	101.SCH	XBRL Taxonomy Extension Schema
*	101.CAL	XBRL Taxonomy Extension Calculation Linkbase
*	101.DEF	XBRL Taxonomy Extension Definition Linkbase
*	101.LAB	XBRL Taxonomy Extension Label Linkbase
*	101.PRE	XBRL Taxonomy Extension Presentation Linkbase

~~136~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



~~CLECO CORPORATION (Parent Company Only)~~					~~SCHEDULE I~~ ITEM 16.FORM 10-K SUMMARY

Condensed Statements of Income
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Operating expenses
Administrative and general $ 1,891
$ 1,534
$ 2,501
Merger transaction costs 4,591
17,848
—
Other operating expense 490
178
418
Total operating expenses 6,972
19,560
2,919
Operating loss (6,972 ) (19,560 ) (2,919 )
Equity income from subsidiaries, net of tax 141,636
162,331
155,360
Interest, net (1,731 ) (303 ) (2,380 )
Other income 17
2,457
3,392
Other expense (1,142 ) (158 ) (38 )
Income before income taxes 131,808
144,767
153,415
Federal and state income tax benefit (1,861 ) (9,972 ) (7,270 )
Net income applicable to common stock $ 133,669
$ 154,739
$ 160,685
The accompanying notes are an integral part of the condensed financial statements.

None.

~~137~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CLECO ~~CORPORATION~~HOLDINGS (Parent Company Only)	SCHEDULE I

Condensed 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 condensed financial statements.



Condensed Statements of Income
	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC.31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating expenses
Administrative and general	$	1,269		$	602		$	285		$	319
Merger transaction costs	19,514			5,152			23,301			34,912
Other operating expense	318			260			(382		)	624
Total operating expenses	21,101			6,014			23,204			35,855
Operating loss	(21,101		)	(6,014		)	(23,204		)	(35,855		)
Equity income from subsidiaries, net of tax	149,543			170,706			9,357			21,789
Interest, net	(54,635		)	(53,684		)	(35,151		)	(286		)
Other income	650			3,978			1,948			702
Other expense	(2,337		)	—			—			—
Income (loss) before income taxes	72,120			114,986			(47,050		)	(13,650		)
Federal and state income tax benefit	(22,317		)	(23,094		)	(22,937		)	(9,690		)
Net income (loss)	$	94,437		$	138,080		$	(24,113	)	$	(3,960	)
The accompanying notes are an integral part of the Condensed Financial Statements.

~~138~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CLECO ~~CORPORATION~~HOLDINGS (Parent Company Only)	SCHEDULE I

Condensed Balance Sheets
AT DEC. 31,
(THOUSANDS) 2015
2014
Assets
Current assets
Cash and cash equivalents $ 2,236
$ 5,069
Accounts receivable - affiliate 7,669
8,967
Taxes receivable, net 14,746
2,288
Accumulated deferred federal and state income taxes, net —
72,270
Cash surrender value of trust-owned life insurance policies 53,821
51,489
Prepayments —
1,229
Interest receivable —
555
Other current assets —
12
Total current assets 78,472
141,879
Equity investment in investees 1,516,310
1,549,063
Tax credit fund investment, net 13,741
7,251
Accumulated deferred federal and state income taxes, net 123,690
71,397
Total assets $ 1,732,213
$ 1,769,590

Liabilities and shareholders’ equity

Liabilities
Current liabilities
Accounts payable $ 908
$ 4,386
Accounts payable - affiliate 5,389
59,014
Other current liabilities 10,975
12,123
Total current liabilities 17,272
75,523
Postretirement benefit obligations 5,848
8,337
Other deferred credits 587
2,071
Long-term debt 33,665
56,389
Total liabilities 57,372
142,320
Commitments and contingencies (Note 5)

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 $ 1,732,213
$ 1,769,590
The accompanying notes are an integral part of the condensed financial statements.



Condensed Statements of Comprehensive Income
	SUCCESSOR								PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Net income (loss)	$	94,437	$	138,080		$	(24,113	)	$	(3,960	)
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $1,868, tax benefit of $2,764, and tax expense of $938 and $367, respectively)	5,296		(4,421		)	1,500			587
Amortization of interest rate derivatives to earnings (net of tax expense of $0, $0, $0, and $37, respectively)	—		—			—			60
Total other comprehensive income (loss), net of tax	5,296		(4,421		)	1,500			647
Comprehensive income (loss), net of tax	$	99,733	$	133,659		$	(22,613	)	$	(3,313	)
The accompanying notes are an integral part of the Condensed Financial Statements.

~~139~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CLECO ~~CORPORATION~~HOLDINGS (Parent Company Only)	SCHEDULE I

Condensed Statements of Cash Flows
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS) 2015
2014
2013
Operating activities
Net cash provided by operating activities $ 128,909
$ 108,754
$ 159,430
Investing activities

Contributions to tax credit fund (9,966 ) (55,315 ) (51,011 )
Return of equity investment in tax credit fund 2,128
2,579
1,619
Premiums paid on trust-owned life insurance (3,607 ) (2,831 ) (3,705 )
Net cash used in investing activities (11,445 ) (55,567 ) (53,097 )
Financing activities

Draws on credit facility 57,000
97,000
48,000
Payments on credit facility (80,000 ) (45,000 ) (68,000 )
Repurchase of common stock —
(12,449 ) —
Dividends paid on common stock (97,283 ) (95,044 ) (86,376 )
Other financing (14 ) —
—
Net cash used in financing activities (120,297 ) (55,493 ) (106,376 )
Net decrease in cash and cash equivalents (2,833 ) (2,306 ) (43 )
Cash and cash equivalents at beginning of period 5,069
7,375
7,418
Cash and cash equivalents at end of period $ 2,236
$ 5,069
$ 7,375

Supplementary cash flow information

Interest paid, net of amount capitalized $ 130
$ 189
$ 217
Income taxes paid (refunded), net $ 1,464
$ 15,013
$ (46,928 )
Supplementary non-cash investing and financing activity

Issuance of common stock - ESPP $ —
$ 220
$ 318
Non-cash contribution to subsidiary, net of tax $ —
$ 142,880
$ —
Non-cash distribution from subsidiary, net of tax $ 33,661
$ 138,080
$ —
The accompanying notes are an integral part of the condensed financial statements.



Condensed Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2018		2017
Assets
Current assets
Cash and cash equivalents	$	76,938	$	48,732
Accounts receivable - affiliate	8,374		6,880
Other accounts receivable	2,755		209
Taxes receivable, net	7,046		15,172
Cash surrender value of trust-owned life insurance policies	59,894		62,839
Total current assets	155,007		133,832
Equity investment in subsidiaries	3,247,809		3,226,780
Tax credit fund investment, net	—		4,355
Accumulated deferred federal and state income taxes, net	101,015		105,575
Other deferred charges	4,532		1,037
Total assets	$	3,508,363	$	3,471,579

Liabilities and member's equity
Liabilities
Current liabilities
Accounts payable	$	1,322	$	4,354
Accounts payable - affiliate	18,047		5,621
Interest accrued	7,576		7,621
Deferred compensation	10,753		12,132
Other current liabilities	273		272
Total current liabilities	37,971		30,000
Postretirement benefit obligations	3,894		4,404
Long-term debt, net	1,341,758		1,340,818
Total liabilities	1,383,623		1,375,222
Commitments and contingencies (Note 6)
Member's equity
Membership interest	2,069,376		2,069,376
Retained earnings	53,578		29,902
Accumulated other comprehensive loss	1,786		(2,921		)
Total member's equity	2,124,740		2,096,357
Total liabilities and member's equity	$	3,508,363	$	3,471,579
The accompanying notes are an integral part of the Condensed Financial Statements.

~~140~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CLECO HOLDINGS (Parent Company Only)	SCHEDULE I



Condensed Statements of Cash Flows
	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Operating activities
Net cash provided by operating activities	$	97,614		$	124,817		$	36,811		$	34,904
Investing activities
Contributions to tax credit fund	—			(630		)	—			—
Return of equity investment in tax credit fund	2,775			7,502			901			476
Contribution to subsidiary	(1,250		)	—			(50,000		)	—
Other investing	442			—			—			—
Net cash provided by (used in) investing activities	1,967			6,872			(49,099		)	476
Financing activities
Draws on credit facility	—			73,000			—			3,000
Payments on credit facility	—			(73,000		)	—			(10,000		)
Issuance of long-term debt	—			—			1,350,000			—
Repayment of long-term debt	—			—			(1,350,000		)	—
Payment of financing costs	(25		)	(269		)	(3,755		)	—
Dividends paid on common stock	—			—			(572		)	(24,579		)
Contribution from member	—			—			100,720			—
Distributions to member	(71,350		)	(84,065		)	(88,765		)	—
Net cash (used in) provided by financing activities	(71,375		)	(84,334		)	7,628			(31,579		)
Net increase (decrease) in cash and cash equivalents	28,206			47,355			(4,660		)	3,801
Cash and cash equivalents at beginning of period	48,732			1,377			6,037			2,236
Cash and cash equivalents at end of period	$	76,938		$	48,732		$	1,377		$	6,037

Supplementary cash flow information
Interest paid, net of amount capitalized	$	53,798		$	52,026		$	26,264		$	126
Income taxes paid (refunded), net	$	2		$	(6	)	$	4,263		$	1
Supplementary non-cash investing and financing activity
Non-cash contribution to subsidiary, net of tax	$	3,865		$	—		$	—		$	—
The accompanying notes are an integral part of the Condensed Financial Statements.



CLECO
CLECO POWER		2018 FORM 10-K



CLECO ~~CORPORATION~~HOLDINGS (Parent Company Only) Notes to the Condensed Financial Statements



Note 1 — Summary of Significant Accounting Policies

The condensed financial statements represent the financial information required by SEC Regulation S-X 5-04 for Cleco ~~Corporation,~~Holdings, which requires the inclusion of parent company only financial statements if the restricted net assets of consolidated subsidiaries exceed 25% of total consolidated net assets as of the last day of its most recent fiscal year. As of December 31, ~~2015~~2018, Cleco ~~Corporation’s~~Holdings’ restricted net assets of consolidated subsidiaries were ~~$733.1 million~~$1.25 billion and exceeded 25% of its total consolidated net assets.

Cleco ~~Corporation’s~~Holdings’ only major, first-tier subsidiary is Cleco Power. Cleco Power contains the LPSC-jurisdictional generation, transmission, and distribution electric utility operations serving Cleco’s traditional retail and wholesale customers.

Prior to March 2014, when Evangeline owned and operated Coughlin, Midstream was also considered a first-tier subsidiary of Cleco Corporation. Subsequent to the transfer of Coughlin from Evangeline to Cleco Power in March 2014, Midstream was no longer considered a first-tier subsidiary.

The accompanying financial statements have been prepared to present the results of operations, financial condition, and cash flows of Cleco ~~Corporation~~Holdings on a stand-alone basis as a holding company. Investments in subsidiaries and other investees are presented using the equity method. These financial statements should be read in conjunction with Cleco’s consolidated financial statements.



Note 2 — ~~Debt~~Business Combinations

At ~~December 31, 2015, and~~ ~~2014~~,On April 13, 2016, Cleco ~~Corporation had~~ no ~~short-term debt outstanding.~~

At ~~December 31, 2015, Cleco Corporation’s long-term debt outstanding was~~ ~~$34.0 million, of which none was due within one year, compared to~~ ~~$57.0 million~~ ~~of long-term debt at~~ ~~December 31, 2014, of which none was due within one year. The long-term debt at~~ ~~December 31, 2015, and~~ ~~2014~~ ~~was the result of outstanding draws on~~Holdings completed its ~~$250.0 million credit facility.~~

At ~~December 31, 2015~~, Cleco Corporation had $34.0 million of borrowings outstanding under its $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 credit facility are considered to be long-term because the credit facility expires in 2018. The borrowing costs under the facility are equal to LIBOR plus 1.075% or ABR plus 0.075%, plus facility fees of 0.175%. At December 31, 2015, Cleco Corporation was in compliancemerger with ~~the covenants in its credit facility.~~



~~Note 3 — Cash Distributions and Equity Contributions~~

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco Corporation by Cleco Power under specified circumstances. The most restrictive covenant requires Cleco Power’s total indebtedness to be less than or equal to ~~65%~~ ~~of total capitalization. At December 31,~~ ~~2015~~, ~~$884.3 million~~ ~~of member’s equity was unrestricted.~~

~~The following table summarizes the cash distributions Cleco Corporation received from affiliates during~~ ~~2015~~, ~~2014, and~~ ~~2013~~:

AT DEC. 31,
(THOUSANDS) 2015
2014
2013
Cleco Power $ 135,000
$ 115,000
$ 105,000
Perryville 500
975
700
Attala 350
750
400
Total $ 135,850
$ 116,725
$ 106,100

Cleco Corporation made no contributions to affiliates during 2015 and 2013. Cleco Corporation made a $138.1 million non-cash contribution to Cleco Power during 2014 related to the transfer of Coughlin from Evangeline to Cleco Power.



~~Note 4 — Income Taxes~~

~~Cleco Corporation (Parent Company Only) Condensed Statements of Income reflect income tax benefits of~~ ~~$1.9 million~~, ~~$10.0 million, and~~ ~~$7.3 million~~ ~~for the years ended December 31,~~ ~~2015~~, ~~2014, and~~ ~~2013, respectively. In addition to these amounts, income tax expense of~~ ~~$79.6 million~~, ~~$77.1 million, and~~ ~~$86.8 million~~ ~~is reflected in equity income of subsidiaries, net of tax for the years ended December 31,~~ ~~2015~~, ~~2014, and~~ ~~2013, respectively.~~



~~Note 5 — Commitments and Contingencies~~

For information regarding commitments and contingencies related to Cleco Corporation, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees.”



~~Note 6 — Agreement and Plan of Merger~~

~~On October 17, 2014, Cleco Corporation entered into the Merger Agreement 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 2016 Merger, and Cleco Corporation converting to 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~~wholly owned subsidiary of Cleco Partners. ~~Pursuant to the Merger Agreement, at~~At the effective time of the 2016 Merger, each outstanding share of Cleco Corporation common stock, par value $1.00 per share (other than shares that ~~are~~were owned by Cleco Corporation, Cleco Partners, Merger Sub, or any other direct or indirect ~~wholly-owned~~wholly owned subsidiary of Cleco Partners or Cleco Corporation), ~~will be~~were cancelled and converted into the right to receive $55.37 per share in cash, without interest, with all dividends payable before the effective time of the ~~Merger.~~

The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired on May 4, 2015. On June 12, 2015, the Committee on Foreign Investment in the U.S. cleared the Merger to proceed without further review. On July 17, 2015, Cleco Power, Perryville, Attala, and Cleco Partners received approval of the Merger from FERC. On

~~141~~



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

July 28, 2015, the FCC’s consent to Cleco Corporation’s request to transfer certain licenses to Cleco Power became final. On December 1, 2015, the FCC granted Cleco Corporation’s request for an extension to transfer the licenses until June 11, 2016.

~~On February 10, 2015, Cleco Power filed an application with the LPSC seeking approval of the~~2016 Merger. An ALJ hearing on the proposed Merger was held in November 2015, and on February 17, 2016, the ALJ issued a recommendation stating that the transaction as structured at the time of the hearing was not in the public interest. However, the ALJ ruled that, if the LPSC, within its broad discretion over mergers and acquisitions, determined that the transaction was in the public interest, approval should be conditioned on (1) the regulatory commitments made by Cleco Power and Cleco Partners be

~~made a part of the transaction; and (2) consideration of double~~

leveraging and tax issues be deferred for consideration in a future ratemaking proceeding, no later than 2017. On February 24, 2016, the LPSC denied the application to approve the Merger. Management is currently evaluating options relating to the Merger. If the Merger Agreement is terminated due to lack of regulatory approval, neither Cleco Corporation nor Cleco Partners would be required to pay a termination fee. If the Merger is completed, Cleco Corporation will pay an additional $12.0 million in contingency fees to its financial advisors.

For more information regarding the 2016 Merger, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 204 — ~~Agreement~~Business Combinations.”



Note 3 — Debt

At December 31, 2018, and ~~Plan~~2017, Cleco Holdings had no short-term debt outstanding.

At December 31, 2018, Cleco Holding’s long-term debt outstanding was $1.34 billion, of ~~Merger.~~which none was due within one year.

On July 31, 2018, Cleco Holdings amended its $300.0 million bank term loan agreement and its $100.0 million revolving credit facility agreement to release any and all collateral from all of its debt obligations under those agreements. As a result of the release of collateral, Moody’s and Fitch replaced Cleco Holdings’ senior secured debt rating with a senior unsecured debt rating. For more information on Cleco’s credit ratings and their impacts, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — “Litigation, Other

Commitment and Contingencies, and Disclosures about Guarantees — Risks and Uncertainties.”

In connection with the Cleco Cajun Transaction, Cleco Holdings increased its credit facility capacity by $75.0 million, for a total credit facility of $175.0 million. All other terms remained the same. Also in connection with the Cleco Cajun Transaction on February 4, 2019, Cleco Holdings made a $75.0 million draw on its credit facility, which was repaid on February 5, 2019.

The principal amounts payable under long-term debt agreements for each year through 2023 and thereafter are as follows:



AMOUNTS PAYABLE UNDER LONG-TERM DEBT ARRANGEMENTS	(THOUSANDS)
For the year ending Dec. 31,
2019	$	—
2020	$	—
2021	$	300,000
2022	$	—
2023	$	165,000
Thereafter	$	885,000



Note 4 — Cash Distributions and Equity Contributions

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco Holdings by Cleco Power by requiring Cleco Power’s total indebtedness to be less than or equal to 65% of total capitalization. In addition, the 2016 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 ratings.

The following table summarizes the cash distributions Cleco Holdings received from affiliates during 2018, 2017, and 2016:



	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018		FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016
Cleco Power	$	121,400	$	135,000	$	85,000	$	25,000
Perryville	225		6,850		150		200
Attala	217		7,160		100		$	125
Total	$	121,842	$	149,010	$	85,250	$	25,325

During the year ended December 31, 2018, Cleco Holdings made $1.8 million and $2.1 million in non-cash equity contributions to Perryville and Attala, respectively. During the year ended December 31, 2017, Cleco Holdings made no non-cash equity contributions to affiliates. During the

~~142~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K

successor period April 13, 2016, through December 31, 2016, Cleco Holdings made no non-cash equity contributions to affiliates.

During the year ended December 31, 2018, Cleco Holdings made $1.3 million of contributions to Cleco Cajun. During the year ended December 31, 2017, Cleco Holdings made no contributions to affiliates. During the successor period April 13, 2016, through December 31, 2016, Cleco Holdings made a contribution of $50.0 million to Cleco Power. During the predecessor period January 1, 2016, through April 12, 2016, Cleco Holdings made no contributions to affiliates.

During both years ended December 31, 2018, and 2017, Cleco Holdings received no equity contributions from Cleco Group. During the successor period April 13, 2016, through December 31, 2016, Cleco Holdings received $100.7 million of equity contributions from Cleco Group.

During the years ended December 31, 2018, and 2017, Cleco Holdings made $71.4 million and $84.1 million, respectively, of distribution payments to Cleco Group. During the successor period April 13, 2016, through December 31, 2016, Cleco Holdings made $88.8 million of distribution payments to Cleco Group.

CLECO CORPORATION SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS) BALANCE AT
BEGINNING OF PERIOD

ADDITIONS
CHARGED
TO COSTS AND EXPENSES

UNCOLLECTIBLE
ACCOUNT WRITE OFFS LESS RECOVERIES

BALANCE AT
END OF
PERIOD ⁽¹⁾

Allowance for Uncollectible Accounts
Year Ended Dec. 31, 2015 $ 922
$ 2,986
$ 1,234
$ 2,674
Year Ended Dec. 31, 2014 $ 849
$ 1,980
$ 1,907
$ 922
Year Ended Dec. 31, 2013 $ 1,105
$ 1,232
$ 1,488
$ 849
⁽¹⁾ Deducted in the consolidated balance sheet



Note 5 — Income Taxes

Cleco Holdings’ (Parent Company Only) Condensed Statements of Income reflect income tax expense (benefit) for the following line items:



	SUCCESSOR									PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2018			FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016
Federal and state income tax expense (benefit)	$	(22,317	)	$	(23,094	)	$	(22,937	)	$	(9,690	)
Equity income from subsidiaries - Federal and state income tax expense	$	51,699		$	30,173		$	115		$	13,158

For information regarding the TCJA, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 11 — Income Taxes — TCJA.”

(THOUSANDS)
BALANCE AT
BEGINNING OF
PERIOD

ADDITIONS
DEDUCTIONS

BALANCE AT
END OF
PERIOD⁽¹⁾

Unrestricted Storm Reserve
Year Ended Dec. 31, 2015 $ 3,322
$ —
$ 521
$ 2,801
Year Ended Dec. 31, 2014 $ 1,236
$ 4,133
$ 2,047
$ 3,322
Year Ended Dec. 31, 2013 $ 1,792
$ —
$ 556
$ 1,236
Restricted Storm Reserve

Year Ended Dec. 31, 2015 $ 14,916
$ 1,261
$ —
$ 16,177
Year Ended Dec. 31, 2014 $ 17,646
$ 1,414
$ 4,144
$ 14,916
Year Ended Dec. 31, 2013 $ 16,285
$ 1,593
$ 232
$ 17,646
⁽¹⁾ Included in the consolidated balance sheet



Note 6 — Commitments and Contingencies

For information regarding commitments and contingencies related to Cleco Holdings, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees.”

CLECO POWER SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS) BALANCE AT
BEGINNING OF PERIOD

ADDITIONS
CHARGED
TO COSTS AND EXPENSES

UNCOLLECTIBLE
ACCOUNT WRITE-OFFS LESS RECOVERIES

BALANCE AT
END OF
PERIOD ⁽¹⁾

Allowance for Uncollectible Accounts
Year Ended Dec. 31, 2015 $ 922
$ 2,986
$ 1,234
$ 2,674
Year Ended Dec. 31, 2014 $ 849
$ 1,980
$ 1,907
$ 922
Year Ended Dec. 31, 2013 $ 1,105
$ 1,232
$ 1,488
$ 849
⁽¹⁾ Deducted in the consolidated balance sheet

(THOUSANDS) BALANCE AT BEGINNING OF PERIOD
ADDITIONS
DEDUCTIONS

BALANCE AT
END OF
PERIOD⁽¹⁾

Unrestricted Storm Reserve
Year Ended Dec. 31, 2015 $ 3,322
$ —
$ 521
$ 2,801
Year Ended Dec. 31, 2014 $ 1,236
$ 4,133
$ 2,047
$ 3,322
Year Ended Dec. 31, 2013 $ 1,792
$ —
$ 556
$ 1,236
Restricted Storm Reserve

Year Ended Dec. 31, 2015 $ 14,916
$ 1,261
$ —
$ 16,177
Year Ended Dec. 31, 2014 $ 17,646
$ 1,414
$ 4,144
$ 14,916
Year Ended Dec. 31, 2013 $ 16,285
$ 1,593
$ 232
$ 17,646
⁽¹⁾ Included in the consolidated balance sheet

~~143~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



CLECO					SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS)	BALANCE AT BEGINNING OF PERIOD		ADDITIONS CHARGED TO COSTS AND EXPENSES		UNCOLLECTIBLE ACCOUNT WRITE OFFS LESS RECOVERIES		BALANCE AT END OF PERIOD ⁽¹⁾
Allowance for Uncollectible Accounts
SUCCESSOR
Year Ended Dec. 31, 2018	$	1,457	$	977	$	1,620	$	814
Year Ended Dec. 31, 2017	$	7,199	$	4,179	$	9,921	$	1,457
Period Apr. 13, 2016 to Dec. 31, 2016	$	3,336	$	4,348	$	485	$	7,199
PREDECESSOR
Period Jan. 1, 2016 to Apr. 12, 2016	$	2,674	$	1,163	$	501	$	3,336
⁽¹⁾ Deducted in the consolidated balance sheet



(THOUSANDS)	BALANCE AT BEGINNING OF PERIOD		ADDITIONS		DEDUCTIONS		BALANCE AT END OF PERIOD⁽¹⁾
Unrestricted Storm Reserve
SUCCESSOR
Year Ended Dec. 31, 2018	$	4,186	$	—	$	514	$	3,672
Year Ended Dec. 31, 2017	$	2,607	$	4,000	$	2,421	$	4,186
Period Apr. 13, 2016 to Dec. 31, 2016	$	2,536	$	71	$	—	$	2,607
PREDECESSOR
Period Jan. 1, 2016 to Apr. 12, 2016	$	2,801	$	—	$	265	$	2,536
Restricted Storm Reserve
SUCCESSOR
Year Ended Dec. 31, 2018	$	14,469	$	1,016	$	—	$	15,485
Year Ended Dec. 31, 2017	$	17,385	$	1,084	$	4,000	$	14,469
Period Apr. 13, 2016 to Dec. 31, 2016	$	16,515	$	870	$	—	$	17,385
PREDECESSOR
Period Jan. 1, 2016 to Apr. 12, 2016	$	16,177	$	338	$	—	$	16,515
⁽¹⁾ Included in the consolidated balance sheet



CLECO POWER					SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS)	BALANCE AT BEGINNING OF PERIOD		ADDITIONS CHARGED TO COSTS AND EXPENSES		UNCOLLECTIBLE ACCOUNT WRITE-OFFS LESS RECOVERIES		BALANCE AT END OF PERIOD ⁽¹⁾
Allowance for Uncollectible Accounts
Year Ended Dec. 31, 2018	$	1,457	$	977	$	1,620	$	814
Year Ended Dec. 31, 2017	$	7,199	$	4,179	$	9,921	$	1,457
Year Ended Dec. 31, 2016	$	2,674	$	5,511	$	986	$	7,199
⁽¹⁾ Deducted in the consolidated balance sheet



(THOUSANDS)	BALANCE AT BEGINNING OF PERIOD		ADDITIONS		DEDUCTIONS		BALANCE AT END OF PERIOD⁽¹⁾
Unrestricted Storm Reserve
Year Ended Dec. 31, 2018	$	4,186	$	—	$	514	$	3,672
Year Ended Dec. 31, 2017	$	2,607	$	4,000	$	2,421	$	4,186
Year Ended Dec. 31, 2016	$	2,801	$	71	$	265	$	2,607
Restricted Storm Reserve
Year Ended Dec. 31, 2018	$	14,469	$	1,016	$	—	$	15,485
Year Ended Dec. 31, 2017	$	17,385	$	1,084	$	4,000	$	14,469
Year Ended Dec. 31, 2016	$	16,177	$	1,208	$	—	$	17,385
⁽¹⁾ Included in the consolidated balance sheet



CLECO
CLECO POWER		2018 FORM 10-K



Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



		CLECO ~~CORPORATION~~CORPORATE HOLDINGS LLC
		(Registrant)

	By:	/s/ ~~Bruce A. Williamson~~William G. Fontenot
		(~~Bruce A. Williamson)~~William G. Fontenot)
		(~~Chairman,~~ President ~~and~~& Chief Executive Officer)

Date: February 26, ~~2016~~2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



SIGNATURE	TITLE	DATE

/s/ ~~Bruce A. Williamson~~William G. Fontenot	~~Chairman,~~ President ~~and~~& Chief Executive Officer	February 26, ~~2016~~2019
(~~Bruce A. Williamson)~~ William G. Fontenot)	(Principal Executive Officer)
/s/ ~~Thomas R. Miller~~Kazi K. Hasan	~~Senior Vice President -~~ Chief Financial Officer ~~& Treasurer~~	February 26, ~~2016~~2019
(~~Thomas R. Miller)~~Kazi K. Hasan)	(Principal Financial Officer)
/s/ ~~Terry L. Taylor~~Tonita Laprarie	Controller &and Chief Accounting Officer	February 26, ~~2016~~2019
(~~Terry L. Taylor)~~Tonita Laprarie)	(Principal Accounting Officer)



	DIRECTORSMANAGERS
	~~Vicky A. Bailey~~Andrew M. Chapman
	~~Elton R. King~~Richard W. Dinneny
	~~Logan W. Kruger~~
	~~William L. Marks~~
	~~Peter M. Scott III~~
	~~Shelley Stewart,~~Richard J. Gallot, Jr.
	~~William H. Walker,~~David R. Gilchrist
	Gerald C. Hanrahan, Jr.
	Christopher J. Leslie
	Jon R. R. Perry
	Aaron J. Rubin
	Peggy B. Scott
	Steven J. Turner
	Bruce D. Wainer



*By:	/s/ ~~Bruce A. Williamson~~William G. Fontenot	February 26, ~~2016~~2019
	(~~Bruce A. Williamson,~~William G. Fontenot, as Attorney-in-Fact)

~~144~~



CLECO ~~CORPORATION~~
CLECO POWER		~~2015~~2018 FORM 10-K



Signatures



		CLECO POWER LLC
		(Registrant)

	By:	/s/ ~~Bruce A. Williamson~~William G. Fontenot
		(~~Bruce A. Williamson)~~William G. Fontenot)
		(Chief Executive ~~Officer and Sole Manager)~~Officer)

Date: February 26, ~~2016~~2019



SIGNATURE	TITLE	DATE

/s/ ~~Bruce A. Williamson~~William G. Fontenot	Chief Executive Officer ~~and Sole Manager~~	February 26, ~~2016~~2019
(~~Bruce A. Williamson)~~ William G. Fontenot)	(Principal Executive Officer)
/s/ ~~Thomas R. Miller~~Kazi K. Hasan	~~Senior Vice President -~~ Chief Financial Officer ~~& Treasurer~~	February 26, ~~2016~~2019
(~~Thomas R. Miller)~~Kazi K. Hasan)	(Principal Financial Officer)
/s/ ~~Terry L. Taylor~~Tonita Laprarie	Controller and Chief Accounting Officer	February 26, ~~2016~~2019
(~~Terry L. Taylor)~~Tonita Laprarie)	(Principal Accounting Officer)

~~145~~141



PERIOD	THOUSAND MWh	PERCENT OF TOTAL ENERGY REQUIREMENTS
2015	12,564	100.2
2014	9,858	74.9
2013	9,736	83.8
2012	9,143	81.3
2011	10,025	86.5



	FOR THE YEAR ENDED DEC. 31,
				2014 CHANGE
	2014	2013	NORMAL	PRIOR YEAR		NORMAL
Cooling degree-days	2,780	2,954	2,776	(5.9	)%	0.1	%
Heating degree-days	1,833	1,559	1,589	17.6	%	15.4	%



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.



Cleco
	CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(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)
Asset Description
Institutional money market funds	$	89,584	$	—	$	89,584	$	—	$	63,701	$	—	$	63,701	$	—
FTRs	7,673		—		—		7,673		10,776		—		—		10,776
Total assets	$	97,257	$	—	$	89,584	$	7,673	$	74,477	$	—	$	63,701	$	10,776
Liability Description
Long-term debt	$	1,463,989	$	—	$	1,463,989	$	—	$	1,601,816	$	—	$	1,601,816	$	—
FTRs	275		—		—		275		827		—		—		827
Total liabilities	$	1,464,264	$	—	$	1,463,989	$	275	$	1,602,643	$	—	$	1,601,816	$	827



Cleco Power
	CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(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)
Asset Description
Institutional money market funds	$	87,363	$	—	$	87,363	$	—	$	58,680	$	—	$	58,680	$	—
FTRs	7,673		—		—		7,673		10,776		—		—		10,776
Total assets	$	95,036	$	—	$	87,363	$	7,673	$	69,456	$	—	$	58,680	$	10,776
Liability Description
Long-term debt	$	1,429,989	$	—	$	1,429,989	$	—	$	1,544,816	$	—	$	1,544,816	$	—
FTRs	275		—		—		275		827		—		—		827
Total liabilities	$	1,430,264	$	—	$	1,429,989	$	275	$	1,545,643	$	—	$	1,544,816	$	827



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



	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)
Balance, Dec. 31, 2013	$	17,928
Unrealized gains	570
Purchases	294
Balance, Dec. 31, 2014	$	18,792
Realized gains	9
Unrealized gains	(148		)
Purchases	679
Sales	(1,442		)
Balance, Dec. 31, 2015	$	17,890



	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.



	SERP LIABILITY
(THOUSANDS)	2015		2014
Cleco
Current	$	3,238	$	3,031
Non-current	$	69,049	$	70,871
Cleco Power
Current	$	1,000	$	813
Non-current	$	21,321	$	19,006



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	$	—



2014 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	1,225,960		$	—		$	—		$	1,225,960
Tolling operations	—			5,467			(5,467		)	—
Other operations	64,893			2,163			(1		)	67,055
Electric customer credits	(23,530		)	—			—			(23,530		)
Affiliate revenue	1,326			56,031			(57,357		)	—
Operating revenue, net	$	1,268,649		$	63,661		$	(62,825	)	$	1,269,485
Depreciation and amortization	$	144,026		$	2,479		$	—		$	146,505
Merger transaction costs	$	—		$	17,848		$	—		$	17,848
Interest charges	$	74,673		$	(1,538	)	$	471		$	73,606
Interest income	$	1,707		$	(410	)	$	471		$	1,768
Federal and state income tax expense (benefit)	$	76,974		$	(9,858	)	$	—		$	67,116
Net income	$	154,316		$	424		$	(1	)	$	154,739
Additions to property, plant, and equipment	$	206,607		$	1,029		$	—		$	207,636
Equity investment in investees	$	14,532		$	8		$	—		$	14,540
Total segment assets	$	4,232,942		$	248,043		$	(112,567	)	$	4,368,418



(THOUSANDS)
Years ending December 31,
2016	$	3,735
2017	2,480
Total minimum lease payments	$	6,215
Less: executory costs	1,554
Net minimum lease payments	$	4,661
Less: amount representing interest	236
Present value of net minimum lease payments	$	4,425
Current liabilities	$	2,607
Non-current liabilities	$	1,818



							2015
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)	1ST QUARTER		2ND QUARTER		3RD QUARTER		4TH QUARTER
Operating revenue, net	$	295,457	$	289,074	$	345,468	$	279,403
Operating income	$	62,722	$	69,884	$	102,572	$	52,162
Net income applicable to common stock	$	26,922	$	30,234	$	54,663	$	21,850
Basic earnings per average common share outstanding	$	0.45	$	0.50	$	0.90	$	0.36
Diluted earnings per average common share outstanding	$	0.44	$	0.50	$	0.90	$	0.36
Dividends on common stock	$	0.40	$	0.40	$	0.40	$	0.40
Market sales price per share
High	$	55.24	$	54.88	$	54.76	$	53.75
Low	$	53.69	$	53.59	$	53.02	$	48.47



Name	2015 Base Salary		2015 % Change
Mr. Williamson	$	745,000	0	%
Mr. Miller	$	309,000	3.0	%
Mr. Olagues	$	401,700	3.0	%
Ms. Miller	$	298,700	3.0	%
Mr. Hoefling	$	298,700	3.0	%
Average % Change			2.4	%



Performance Level		Fully DilutedEarnings Per Share *	% of Financial Target Award Paid
	<$	2.155	0	%
Threshold	$	2.155	50	%
Target	$	2.330	100	%
Maximum	$	2.563	200	%
2015 Result	$	2.29	90	%



Performance Level	% Generation Fleet Availability		% of EAF Target Award Paid
	<81.83%		0%
Threshold	81.83% to 83.93%		50%
Target	83.94% to 86.06%		100%
	86.07% to 88.22%		150%
Maximum	>88.22%		200%
2015 Result	85.41	%	100%



LTIP Historical Performance	2013		2014		2015
TSR for the Three-Year Performance Period ended December 31	65	%	62	%	41	%
Percentile Rank in the Proxy Peer Group (100% is highest; 0% is lowest)	81	%	60	%	40	%
LTIP Award Percentage	163	%	120	%	65	%



	2015 LTIP
Name	Threshold Value		Target Value (Column E)		Maximum Value
Mr. Williamson	$	526,178	$	1,461,526	$	2,923,051
Mr. Miller	$	69,677	$	193,481	$	386,962
Mr. Olagues	$	132,833	$	368,904	$	737,808
Ms. Miller	$	67,351	$	187,051	$	374,102
Mr. Hoefling	$	67,351	$	187,051	$	374,102



	Option Awards				Stock Awards
Name	Number of Securities Underlying Unexercised Options - # Exercisable	Number of Securities Underlying Unexercised Options - # Unexercisable	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)⁽¹⁾	Market Value of Shares or Units of Stock That Have Not Vested ($)⁽²⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)⁽³⁾	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽²⁾
A	B	C	D	E	F	G		H	I
Mr. Williamson	0	0			15,000	$	783,150	110,694	$	5,779,334
Mr. Miller	0	0			0	$	0	12,375	$	646,099
Mr. Olagues	0	0			1,500	$	78,315	26,006	$	1,357,773
Ms. Miller	0	0			1,250	$	65,263	13,893	$	725,354
Mr. Hoefling	0	0			0	$	0	13,985	$	730,157



Name	Executive officer contributions in 2015 ($)⁽¹⁾		Company contributions in 2015 ($)		Aggregate earnings in 2015 ($) ⁽²⁾		Aggregate withdrawals/ distributions in 2015 ($)		Aggregate balance at December 31, 2015 ($)⁽³⁾
A	B		C		D		E		F
Mr. Williamson	$	0	$	0	$	0	$	0	$	0
Mr. Miller	$	0	$	0	$	0	$	0	$	0
Mr. Olagues	$	0	$	0	$	0	$	0	$	0
Ms. Miller	$	5,000	$	0	$	0	$	0	$	119,696
Mr. Hoefling	$	46,183	$	0	$	0	$	0	$	1,186,904



Name⁽¹⁾	Fees Earned or Paid in Cash and/ or Stock ($)		Stock Awards ($)⁽³⁾		Option Awards ($)⁽⁴⁾	Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
A	B		C		D	E		F		G		H
Vicky A. Bailey	$	75,000	$	75,000		$	0	$	0	$	0	$	150,000
Elton R. King ⁽²⁾	$	89,891	$	75,000		$	0	$	0	$	11,881	$	176,772
Logan W. Kruger	$	89,768	$	75,000		$	0	$	0	$	11,776	$	176,544
William L. Marks	$	99,768	$	75,000		$	0	$	0	$	11,776	$	186,544
Peter M. Scott III	$	92,268	$	75,000		$	0	$	0	$	11,776	$	179,044
Shelley Stewart, Jr.	$	89,768	$	75,000		$	0	$	0	$	8,338	$	173,106
William H. Walker, Jr.	$	75,000	$	75,000		$	0	$	0	$	11,893	$	161,893



Name	Dividends on Restricted Stock		Deferred Units on Deferred Restricted Stock		Spousal/ Companion Travel		Total Other Compensation
Ms. Bailey	$	0	$	0	$	0	$	0
Mr. King	$	11,776	$	0	$	105	$	11,881
Mr. Kruger	$	11,776	$	0	$	0	$	11,776
Mr. Marks	$	11,776	$	0	$	0	$	11,776
Mr. Scott	$	11,776	$	0	$	0	$	11,776
Mr. Stewart	$	8,338	$	0	$	0	$	8,338
Mr. Walker	$	0	$	11,776	$	117	$	11,893



	Amount and Nature of Beneficial Ownership of Common Stock
	Direct	⁽¹⁾	Options Exercisable Within 60 Days	⁽²⁾	Other	⁽³⁾	Percent of Class
Directors and Nominees
Vicky A. Bailey	3,004		0		0		*
Elton R. King	65,576		0		0		*
Logan W. Kruger	12,908		0		0		*
William L. Marks	45,006		0		1,450		*
Peter M. Scott III	10,864		0		1,800		*
Shelley Stewart, Jr.	8,215		0		0		*
William H. Walker, Jr.	61,064		0		50,154	⁽⁴⁾	*
Named Executive Officers
Bruce A. Williamson ⁽⁵⁾	204,078		0		0		*
Thomas R. Miller	11,810		0		0		*
Darren J. Olagues	59,313		0		0		*
Wade A. Hoefling	47,016		0		0		*
Judy P. Miller	33,893		0		0		*
All directors, nominees, and executive officers as a group (18 persons, including those listed above)	763,675		0		58,154		1.35%



	2015		2014
Audit	$	1,392,621	$	1,411,447
Audit related	38,425		6,425
Tax	—		23,363
Other fees	—		—
Total	$	1,431,046	$	1,441,235

FOR THE YEAR ENDED DEC. 31,

(THOUSANDS)

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