Cleco Corporate Holdings LLC

08/07/2026 | Press release | Distributed by Public on 08/07/2026 14:10

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 and 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 informational purposes and does not intend for the address to be an active link. The contents of the website are not incorporated into this Quarterly Report on Form 10-Q.
The following discussion and analysis should be read in combination with the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and Cleco's and Cleco Power's Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three and six months ended June 30, 2026, and 2025.
OVERVIEW
Cleco is a regional energy company that conducts substantially all of its operations through its principal business segment, Cleco Power. Cleco Power is a regulated electric utility that owns eight generating units with a total rated capacity of 2,676 MW and serves approximately 298,000 customers in Louisiana through its retail business while also supplying wholesale power within the state.
Cleco's business of generating, transmitting, distributing, and selling electricity is influenced by numerous factors, including growth in customer demand, particularly from large commercial and industrial customers; the ability to safely and reliably operate and maintain its generation, transmission, and distribution systems; and the ability to manage costs while operating within the MISO market and evolving regulatory environment.
Additional factors affecting Cleco Power include regulatory outcomes and cost recovery mechanisms, including future base rate proceedings; execution of grid modernization, reliability, and resiliency initiatives; generation planning and resource adequacy requirements; recovery of costs associated with severe weather events and infrastructure investments; compliance with increasingly stringent environmental, cybersecurity, and other regulatory requirements; and the ability to meet changing customer energy needs.
Cleco's current and near-term areas of focus include supporting continued customer load growth, maintaining system reliability, advancing generation and transmission planning, and executing strategic capital investments designed to support long-term customer and stakeholder needs, and the proposed Cleco Group sale transaction. These
and other significant events and strategic initiatives impacting Cleco and Cleco Power are discussed below.
Equity Purchase Agreement
On April 24, 2026, Cleco Partners entered into an equity purchase agreement to sell Cleco Group to Stonepeak and Bernhard Capital Partners. For more information on this transaction, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 16 - Equity Purchase Agreement ."
Regulatory Structure and Rate Case Outlook
Cleco Power's retail rates are governed by an FRP approved by the LPSC, which allows for annual adjustments based on an ROE. The FRP provides a structured regulatory environment that supports Cleco Power's ability to recover costs and earn a reasonable return while maintaining rate stability for customers.
As of July 1, 2024, Cleco Power's FRP permits a target ROE of 9.7%, with refund obligations for earnings above 10.3%. The FRP also includes a residential revenue decoupling mechanism to stabilize recovery of base revenues.
On June 23, 2026, Cleco Power filed an application with the LPSC for its next base rate case, with anticipated new rates to be effective July 1, 2027. This filing addresses Cleco Power's cost structure, capital investments, and evolving customer needs, including those related to grid modernization, renewable integration, and electrification initiatives.
Corporate Sustainability
Cleco is evaluating renewable and electrification initiatives as part of its long-term resource and infrastructure planning. Currently, management is unable to predict what impact the implementation of these sustainability initiatives will have on the Registrants. For more information on these sustainability goals, see Part I, Item 1, "Business - Human Capital," "- Communities," and "- Oversight and Governance" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025. For more information about Cleco's environmental initiatives, see "- Decarbonization Initiatives" and "- Renewable and Electrification Initiatives."
People
Cleco is committed to providing affordable, reliable, and sustainable electricity. It supports community investment across its service territory and fosters a workplace culture that values a sense of belonging, safety, and innovation.
Planet
Cleco is expanding renewable and electrification initiatives and transitioning away from coal-fired generation. It aims to reduce GHG emissions from its generating fleet by approximately 50%
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
by 2035, with a long-term ambition of net-zero emissions by 2050. These targets depend on factors such as policy developments, load growth, technology, and implementation feasibility.
Principles
Cleco maintains a governance framework supported by policies and practices that promote accountability. A Corporate Sustainability Steering Committee and a Chief Administrative and Sustainability Officer oversee the implementation of sustainability initiatives.
Grid Reliability
Cleco Power is actively advancing grid reliability and operational resilience to support safe and consistent service amid evolving grid demands and environmental conditions. Cleco Power closely monitors system performance and manages grid conditions through targeted infrastructure investments and coordination with MISO. These efforts are intended to support overall grid stability during periods of elevated demand, extreme weather, or transmission constraints. Cleco Power employs operational load management tools when necessary to preserve grid integrity, including in circumstances where MISO may issue system reliability directives. Cleco Power continues to enhance system readiness through grid modernization investments, evaluation of generation availability, and ongoing assessment of changing load patterns, including increased electrification and peak usage growth. Through these initiatives, Cleco Power remains focused on reducing the likelihood, duration, and impact of service interruptions while supporting a resilient and reliable electric system for customers.
Generation Planning
Cleco Power is participating in MISO's ERAS process, and continues to evaluate generation planning alternatives to support future reliability and capacity needs. ERAS provides an expedited interconnection path for certain generation resources, while MISO's Definitive Planning Phase (DPP), remains the primary interconnection process for most projects.
Cleco Power's ability to meet future reliability and capacity requirements may be affected by the timing, cost, and outcome of MISO's interconnection processes, anticipated load growth from large-scale commercial and industrial customers, including data center developments, and financial commitments required for ERAS participation.
Cleco Power continues to monitor these developments and evaluate available options. There can be no assurance that participation in ERAS or DPP will result in favorable outcomes, and delays, cost increases, or other changes could affect Cleco Power's long-term resource planning, resource adequacy, and capital investment decisions.
Decarbonization Initiatives
Management is considering the most economically viable decarbonization strategies and remains committed to addressing Cleco Power's carbon output of its solid fuel generating units.
Renewable and Electrification Initiatives
In July 2022, Cleco Power entered into a long-term agreement to purchase, among other things, the output, capacity, and current and future environmental resource credits of a 240-MW solar electric generation facility to be constructed in DeSoto
Parish, Louisiana and owned by DESRI. In September 2024, the LPSC approved the agreement, including the recovery of $2.1 million of incurred development costs. The LPSC also approved Cleco Power's recovery of future costs to construct, own, operate, and maintain the transmission line necessary to deliver the energy from the solar generation facility to Cleco Power's transmission grid. Cleco Power currently expects the commercial operation date to begin by the end of 2026, subject to satisfaction of applicable conditions and project milestones.
Cleco Power is evaluating potential future resources to diversify its generation portfolio as part of its IRP process and is engaging with customers to assess demand for potential renewable energy offerings. For more information about Cleco Power's IRP, see "- Financial Condition - Regulatory and Other Matters - IRP."
Cleco Power is also pursuing electrification initiatives for its customers such as gas compression, e-trucking, green tariffs, infrastructure for light duty electric vehicles and forklifts, and electric vehicle charging sites, among others. These initiatives are in various stages of evaluation and development and may be subject to future regulatory approval.
DSMART Project
The DSMART project includes modernization of Cleco Power's distribution system by replacing or upgrading distribution line equipment to utilize new and emerging technologies to facilitate automatic fault isolation, service restoration, and fault location. The project provides savings through a reduction in outage restoration time and improved operational efficiencies. The project also improves 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 $111.4 million. The project implementation will be completed in phases, and management expects the total project will be completed by the end of 2028. Cleco Power is currently in the second phase of the project. As of June 30, 2026, Cleco Power has spent $92.7 million on the project.
Grid Resiliency and Hardening
Cleco Power is actively participating in programs to enhance its grid resilience against growing threats of extreme weather and climate change. This may include potential hardening projects aimed at reinforcing or replacing critical infrastructure on Cleco Power's transmission and distribution systems with materials that can better withstand extreme weather events, avoid or mitigate customer outages from such events, and facilitate faster restoration after such events. Cleco Power's grid resiliency plan is a 10-year plan that identifies an estimated 1,400 projects with a total investment of approximately $510.0 million. Phase I of the plan, as approved by the LPSC in November 2025, includes approximately $200.0 million of project investments to be completed over five years. Effective January 1, 2026, Cleco Power began collecting revenues under the LPSC-approved Grid Resiliency Rate Rider, which provides for contemporaneous recovery of prudently incurred costs associated with Phase I, subject to a semi-annual true-up and prudency review by the LPSC. Management anticipates that costs incurred under future phases of the grid resiliency plan will continue to be recovered through this mechanism.
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
Large Load Growth Initiatives
Cleco Power is supporting long-term load growth associated with increasing demand from large-load customers, including data centers, driven predominately by the expansion of artificial intelligence and related digital infrastructure. Cleco Power has executed arrangements related to a data center project within its service territory and continues to evaluate additional opportunities to serve large-load customers, including potential increases in contracted load and opportunities with other prospective customers.
In connection with certain large-load growth and interconnection projects, Cleco Power has received customer advances and cost reimbursements and executed arrangements for project progression, subject to applicable regulatory requirements. As part of these efforts, Cleco Power may incur planning, engineering, procurement, and other initial capital costs to prepare to serve large-load customers in advance of receiving final approval from the LPSC. Cleco Power has structured these arrangements to limit financial and operational exposure prior to approval by the LPSC and has implemented significant contractual and credit protections intended to mitigate risk, including customer funding mechanisms that provide for the upfront payment of required construction-related contributions prior to facilities being placed in service. Because large-load projects are typically associated with a single customer or a limited number of customers, Cleco Power could experience increased customer concentration over time as these facilities become operational.
On April 20, 2026, Cleco Power executed an electric service agreement with a data center developer in connection with a project under development that is intended to serve a future large-load customer. Electric service is expected to
commence in 2027 and increase over time as the project progresses, subject to certain conditions, including required regulatory approvals, and is expected to support approximately 430 MW of load. To support the anticipated load, Cleco Power also entered into related power supply and commercial agreements, including a capacity power purchase agreement with a third party, subject to applicable regulatory and other approvals. On July 1, 2026, Cleco Power filed an application with the LPSC seeking approval of the project. The electric service agreement includes credit support, including a substantial letter of credit in favor of Cleco Power, and other contractual protections, including customer responsibility for costs associated with the capacity power purchase agreement, designed to ensure recovery of applicable costs and limit exposure to Cleco Power's other customers. In addition, the electric service agreement includes termination and cancellation payment provisions that provide further protection to Cleco in the event the project does not proceed as planned.
Other
Cleco Power is working to secure load growth opportunities that include renewing existing franchises, pursuing new franchises, and adding new retail load opportunities with large industrial, commercial, and residential customers. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government, military, wood, paper, health care, information technology, transportation, clean and green fuels, and other manufacturing.
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
RESULTS OF OPERATIONS
Comparison of the Three and Six Months Ended June 30, 2026, and 2025
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30,
CLECO POWER
OTHER
SEGMENTS
CLECO
CLECO POWER
OTHER
SEGMENTS
CLECO
(THOUSANDS) 2026 2025
VARIANCE*
VARIANCE*
VARIANCE*
2026 2025
VARIANCE*
VARIANCE*
VARIANCE*
Operating revenue
Base $ 212,608 $ 190,821 $ 21,787 $ - $ 21,787 $ 397,944 $ 373,407 $ 24,537 $ - $ 24,537
Fuel cost and purchased power recovery
99,968 99,017 951 - 951 217,672 186,559 31,113 - 31,113
Other operations 29,852 30,381 (529) (1,724) (2,253) 60,930 53,837 7,093 (3,569) 3,524
Affiliate revenue 245 245 - - - 491 490 1 (1) -
Operating revenue, net 342,673 320,464 22,209 (1,724) 20,485 677,037 614,293 62,744 (3,570) 59,174
Operating expenses
Recoverable fuel and purchased power
99,720 99,001 (719) - (719) 217,597 186,561 (31,036) - (31,036)
Non-recoverable fuel and purchased power
8,419 2,995 (5,424) - (5,424) 14,883 6,144 (8,739) - (8,739)
Other operations and maintenance
70,401 62,611 (7,790) 173 (7,617) 141,220 120,517 (20,703) 2,296 (18,407)
Depreciation and amortization
51,428 51,048 (380) 13 (367) 101,287 98,831 (2,456) (23) (2,479)
Taxes other than income taxes
16,513 13,825 (2,688) (348) (3,036) 32,653 29,443 (3,210) (503) (3,713)
Total operating expenses
246,481 229,480 (17,001) (162) (17,163) 507,640 441,496 (66,144) 1,770 (64,374)
Operating income 96,192 90,984 5,208 (1,886) 3,322 169,397 172,797 (3,400) (1,800) (5,200)
Interest income
2,644 1,435 1,209 (442) 767 5,376 6,026 (650) (144) (794)
AFUDC - equity funds 1,144 902 242 - 242 2,763 1,434 1,329 - 1,329
Other income, net 2,343 642 1,701 2,991 4,692 3,828 291 3,537 2,928 6,465
Interest charges 29,789 26,249 (3,540) (53) (3,593) 59,463 51,934 (7,529) (110) (7,639)
Federal and state income tax expense 15,503 12,563 (2,940) (339) (3,279) 26,057 24,446 (1,611) (609) (2,220)
Net income $ 57,031 $ 55,151 $ 1,880 $ 271 $ 2,151 $ 95,844 $ 104,168 $ (8,324) $ 265 $ (8,059)
* Favorable/(Unfavorable)
Summary of Consolidated Results
The changes in Cleco's and Cleco Power's results of operations are primarily attributable to the following:
Base
Base revenue increased $21.8 million for the three months ended June 30, 2026, primarily due to $16.8 million of higher retail rates, largely resulting from an increase in the IICR, which is adjusted annually, and $4.2 million of accrued revenue associated with residential revenue under-collections under the residential revenue decoupling mechanism during the current rate period.
Base revenue increased $24.5 million for the six months ended June 30, 2026, primarily due to $27.6 million of higher retail rates, largely resulting from an increase in the IICR, which
is adjusted annually, and $4.2 million of accrued revenue associated with residential revenue under-collections under the residential revenue decoupling mechanism during the current rate period. These increases were partially offset by $5.9 million of lower usage due to milder weather and $4.1 million for the absence of the carrying charge on the related Dolet Hills regulatory asset.
For information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see Part I, Item 1A, "Risk Factors - Operational Risks - Future Electricity Sales" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
The following tables show the components of Cleco Power's base revenue:
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS) 2026 2025 FAVORABLE/
(UNFAVORABLE) 		2026 2025 FAVORABLE/
(UNFAVORABLE)
Electric sales
Residential $ 108,343 $ 99,080 9.3 % $ 190,662 $ 184,471 3.4 %
Commercial 65,675 59,762 9.9 % 129,361 121,667 6.3 %
Industrial 33,571 26,903 24.8 % 68,175 56,972 19.7 %
Other retail 3,778 3,552 6.4 % 7,353 7,069 4.0 %
Total retail 211,367 189,297 11.7 % 395,551 370,179 6.9 %
Sales for resale 1,241 1,524 (18.6) % 2,393 3,228 (25.9) %
Total base revenue
$ 212,608 $ 190,821 11.4 % $ 397,944 $ 373,407 6.6 %
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30,
(MILLION kWh) 2026 2025 FAVORABLE/
(UNFAVORABLE) 		2026 2025 FAVORABLE/
(UNFAVORABLE)
Electric sales
Residential 914 938 (2.6) % 1,718 1,817 (5.4) %
Commercial 702 701 0.1 % 1,308 1,308 - %
Industrial 672 563 19.4 % 1,285 1,101 16.7 %
Other retail 29 31 (6.5) % 57 61 (6.6) %
Total retail 2,317 2,233 3.8 % 4,368 4,287 1.9 %
Sales for resale 29 92 (68.5) % 34 164 (79.3) %
Total retail and wholesale customer sales
2,346 2,325 0.9 % 4,402 4,451 (1.1) %
Cleco Power's residential customers' demand for electricity is affected largely by weather. Weather is generally measured in cooling degree-days and heating degree-days. A high number of cooling degree-days may indicate consumers will use more air conditioning, while a high number of heating degree-days may indicate consumers will use more heating. An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days because alternative heating sources are more readily available, and winter energy is typically priced below the rate
charged for energy used in the summer. Normal heating degree-days and cooling degree-days are calculated for a month by separately calculating the average actual heating and cooling degree-days for that month over a period of 30 years.
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 the National Oceanic and Atmospheric Administration to determine degree-days.
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30,
% CHANGE
% CHANGE
2026 2025 NORMAL PRIOR YEAR NORMAL 2026 2025 NORMAL PRIOR YEAR NORMAL
Heating degree-days * * * * * 700 893 888 (21.6) % (21.2) %
Cooling degree-days 1,076 1,141 983 (5.7) % 9.5 % 1,288 1,299 1,083 (0.8) % 18.9 %
*Heating degree days are not presented for the three months ended June 30, 2026, and 2025 because heating-related weather conditions are generally not significant during the period.
Fuel Cost and Purchased Power Recovery/Recoverable Fuel and Purchased Power
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 expenses. For the three and six months ended June 30, 2026, approximately 99.2% and 99.5%, respectively, of Cleco Power's total fuel cost 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. Cleco Power's incremental recoverable fuel and purchased power expenses for the three and six months ended June 30, 2026, were impacted primarily by higher natural gas costs as compared to the three and six months ended June 30, 2025.
Other Operations Revenue
Other operations revenue decreased $2.3 million for the three months ended June 30, 2026, primarily due to the absence of other service agreement revenue associated with the Cleco Cajun Divestiture.
Other operations revenue increased $3.5 million for the six months ended June 30, 2026, primarily due to $4.4 million of higher transmission revenue attributable to higher transmission rates and changes in transmission service arrangements and $3.6 million for higher securitization revenue at Cleco Power. These increases were partially offset by $3.6 million for the
absence of other service agreement revenue associated with the Cleco Cajun Divestiture.
Non-Recoverable Fuel and Purchased Power
Non-recoverable fuel and purchased power increased $5.4 million and $8.7 million for the three and six months ended June 30, 2026, respectively, primarily due to higher transmission costs associated with the regulatory treatment of certain purchased power costs in the Northlake service territory.
Other Operations and Maintenance
Other operations and maintenance expense increased $7.6 million for the three months ended June 30, 2026, primarily due to higher distribution right-of-way maintenance expenses.
Other operations and maintenance expense increased $18.4 million for the six months ended June 30, 2026, primarily due to $12.4 million of higher maintenance expense, largely from routine plant maintenance and distribution right-of-way maintenance expenses. Also contributing to the increase was $6.5 million of higher other operations expense, primarily due to higher generation and distribution operations expenses and higher general liability expenses, partially offset by lower outside service costs for information technology and consulting support.
Taxes Other Than Income Taxes
Taxes other than income taxes increased $3.0 million and $3.7 million for the three and six months ended June 30, 2026, respectively, primarily due to higher property tax rates.
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
Other Income, Net
Other income, net increased $4.7 million and $6.5 million for the three and six months ended June 30, 2026, respectively, primarily due to higher royalty income and favorable market changes in the cash surrender value of company-owned life insurance policies.
Interest Charges
Interest charges increased $3.6 million for the three months ended June 30, 2026, primarily due to higher debt balances associated with Cleco Power's $350.0 million senior notes issued in November 2025 and Cleco Holdings' $250.0 million bank term loan entered into in April 2026. These increases were partially offset by the maturity of Cleco Holdings' $360.0 million 3.743% senior notes in May 2026.
Interest charges increased $7.6 million for the six months ended June 30, 2026, primarily due to higher debt balances, including Cleco Power's $350.0 million senior notes issued in November 2025, the energy transition bonds issued by Cleco Securitization II in March 2025, and Cleco Holdings' $250.0 million bank term loan entered into in April 2026. These increases were partially offset by lower interest associated with Cleco Power debt repayments and maturities, lower interest on revolving credit facility borrowings, and the maturity of Cleco Holdings' senior notes in May 2026.
Income Taxes
For more information on Cleco's and Cleco Power's effective income tax rates, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 9 - Income Taxes - Effective Tax Rates."
Non-GAAP Measure
The financial results in the following table are presented on an accrual basis. EBITDA is a key non-GAAP financial measure used by the CEO to assess the operating performance of Cleco's segment; however, it is not indicative of future performance. Management evaluates the performance of Cleco's segment and allocates resources to it based on segment profit and the requirements to implement strategic initiatives and projects to meet current business objectives. EBITDA is defined as net income adjusted for interest, income taxes, depreciation, and amortization.
Cleco's segment structure and its allocation of corporate expenses were updated to reflect how management makes financial decisions and allocates resources.
The following table sets forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to EBITDA for the Cleco Power reportable segment for the three and six months ended June 30, 2026, and 2025:
FOR THE THREE MONTHS
ENDED JUNE 30, 		FOR THE SIX MONTHS
ENDED JUNE 30,
(THOUSANDS) 2026 2025 2026 2025
Net income
$ 57,031 $ 55,151 $ 95,844 $ 104,168
Add: Depreciation and amortization 51,428 51,048 101,287 98,831
Less: Interest income 2,644 1,435 5,376 6,026
Add: Interest charges 29,789 26,249 59,463 51,934
Add: Federal and state income tax expense 15,503 12,563 26,057 24,446
EBITDA $ 151,107 $ 143,576 $ 277,275 $ 273,353
FINANCIAL CONDITION
Liquidity and Capital Resources
General Considerations and Credit-Related Risks
Credit Ratings and Counterparties
Financing for operational needs and capital expenditures not funded through operating cash flows depends on access to short- and long-term capital markets. Credit ratings are an important factor in maintaining that access and the associated cost of financing. 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. The following table presents the credit ratings of Cleco Holdings and Cleco Power at June 30, 2026:
SENIOR UNSECURED DEBT CORPORATE/LONG-TERM ISSUER
S&P MOODY'S FITCH S&P MOODY'S FITCH
Cleco Holdings BBB- Baa3 BBB-
BBB
Baa3 BBB-
Cleco Power
A-
A3 A- A- A3 BBB+
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.
On May 29, 2026, Fitch upgraded its rating for Cleco Power's senior unsecured debt from BBB+ to A- and its corporate/long-term issuer rating from BBB to BBB+. Fitch revised its rating primarily due to Cleco Power's strong financial performance following the completion of the securitization financing of Cleco Securitization II. Fitch also updated Cleco Power's rating outlook from positive to stable.
Cleco Holdings and Cleco Power pay fees and interest under their bank credit agreements based on the highest rating held. If Cleco Holdings' or Cleco Power's credit ratings were to be downgraded, Cleco Holdings or Cleco Power, respectively, could be required to pay additional fees and incur higher interest rates for borrowings under their respective revolving credit facilities.
Cleco Holdings and Cleco Power may be required to provide credit support with respect to bilateral transactions and contracts that they have entered into or may enter into in the future. The amount of credit support required may change based on margining formulas, changes in credit agency ratings, or liquidity ratios.
Cleco Power participates in the MISO market. MISO requires participants to provide credit support which may increase or decrease due to the timing of the settlement schedules and MISO margining formulas. For more information about MISO, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Regulatory and Other Matters -
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
Transmission Rates" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025. For more information about credit support see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 12 - Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees."
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.
In recent years, inflationary pressures have increased substantially. 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. For information on the impacts of inflation and market price volatility of natural gas on credit loss reserves
related to customer accounts receivable, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 1 - Summary of Significant Accounting Policies - Reserves for Credit Losses."
Fair Value Measurements
Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. For more information, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 5 - Fair Value Accounting Instruments."
Cash Generation and Cash Requirements
Restricted Cash and Cash Equivalents
For information on Cleco's and Cleco Power's restricted cash and cash equivalents, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 1 - Summary of Significant Accounting Policies - Restricted Cash and Cash Equivalents."
Working Capital and Debt
At June 30, 2026, and December 31, 2025, Cleco Power had a working capital surplus of $155.7 million and $164.4 million, respectively, resulting in a decrease of $8.7 million in working capital.
At June 30, 2026, and December 31, 2025, Cleco had a working capital surplus of $174.7 million and a working capital deficit of $74.2 million, respectively, resulting in an increase of $248.9 million in working capital.
The following table contains the working capital variances for the period ended June 30, 2026, and December 31, 2025.
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
CLECO POWER OTHER
SEGMENTS 		CLECO
(THOUSANDS) AT JUNE 30, 2026 AT DEC. 31, 2025
VARIANCE(1)
VARIANCE(1)
VARIANCE(1)
Current assets
Cash and cash equivalents $ 220,802 $ 162,660 $ 58,142 $ (1,737) $ 56,405
Restricted cash and cash equivalents 25,314 33,865 (8,551) - (8,551)
Customer accounts receivable
55,206 53,053 2,153 - 2,153
Accounts receivable - affiliate 1,081 9 1,072 (43) 1,029
Receivable - Cleco Cajun Divestiture - - - (108,445) (108,445)
Other accounts receivable 49,696 67,449 (17,753) (40) (17,793)
Unbilled revenue 55,292 47,453 7,839 - 7,839
Fuel inventory, at average cost 90,573 84,951 5,622 - 5,622
Materials and supplies, at average cost 208,321 183,085 25,236 - 25,236
Energy risk management assets(2)
2,454 2,452 2 - 2
Accumulated deferred fuel(2)
30,819 25,711 5,108 - 5,108
Cash surrender value of company/trust-owned life insurance policies 6,921 7,813 (892) 4,678 3,786
Prepayments 62,852 60,702 2,150 (1,950) 200
Regulatory assets 26,408 37,923 (11,515) - (11,515)
Other current assets 2,435 353 2,082 2,800 4,882
Total current assets(2)
838,174 767,479 70,695 (104,737) (34,042)
Current liabilities
Short-term debt - - - (25,000) (25,000)
Long-term debt due within one year
305,628 254,943 (50,685) 359,883 309,198
Accounts payable(2)
127,790 133,283 5,493 3,941 9,434
Accounts payable - affiliate 9,966 13,038 3,072 (9,163) (6,091)
Customer deposits 55,364 58,787 3,423 - 3,423
Provision for customer refund
20,796 20,900 104 - 104
Taxes payable 85,597 28,454 (57,143) 10,063 (47,080)
Interest accrued 22,975 13,891 (9,084) 2,063 (7,021)
Energy risk management liabilities(2)
8,313 10,890 2,577 - 2,577
Regulatory liabilities 7,681 10,199 2,518 - 2,518
Deferred compensation - - - 17,372 17,372
Postretirement benefit obligations 16,511 22,530 6,019 - 6,019
Energy transition reserves 4,655 10,730 6,075 - 6,075
Other current liabilities 17,216 25,414 8,198 3,252 11,450
Total current liabilities(2)
682,492 603,059 (79,433) 362,411 282,978
Working capital surplus $ 155,682 $ 164,420 $ (8,738) $ 257,674 $ 248,936
(1) Favorable/(Unfavorable)
(2) Energy risk management assets, Accumulated deferred fuel, Accounts payable, and Energy risk management liabilities do not include FTRs. FTR activity is not included in working capital.
Summary of Consolidated Results
The $248.9 million increase in Cleco's working capital is primarily due to:
•a $309.2 million decrease in long-term debt due within one year primarily due to repayment of Cleco Holdings' $360.0 million 3.743% senior notes at maturity, partially offset by the reclassification of Cleco Power's $50.0 million senior notes to long-term debt due within one year. For more information on Cleco's debt, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 7 - Debt,"
•a $56.4 million increase in cash and cash equivalents,
•a $25.2 million increase in material and supplies inventory primarily due to higher purchases of transmission and distribution inventory in order to support future needs at Cleco Power,
•a $17.4 million decrease in deferred compensation primarily due to the reclassification of long-term deferred compensation,
•an $11.5 million decrease in other current liabilities primarily due to a Dolet Hills ARO adjustment and long-term incentive plan compensation payments in March 2026,
•a $9.4 million decrease in accounts payable primarily due to the settlement of contractor and information technology accruals, lower MISO accruals, and short-term incentive compensation payments in March 2026, partially offset by higher gas purchase accruals and reliability bonus accruals,
•a $7.8 million increase in unbilled revenue primarily due to higher customer usage resulting from warmer weather at the end of June 2026,
•a $6.1 million decrease in energy transition reserves primarily due to the changes in forecasted costs resulting in a reclassification of amounts to long-term,
•a $6.0 million decrease in postretirement benefit obligations primarily due to pension contributions paid in 2026, partially offset by interest and service costs,
•a $5.6 million increase in fuel inventory primarily due to higher petroleum coke and limestone inventory, partially offset by lower coal and natural gas inventory,
•a $5.1 million increase in accumulated deferred fuel primarily due to additional fuel cost deferrals through a fuel
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
surcharge related to the January 2026 winter storm and the settlement of option premiums, partially offset by the timing of collections at Cleco Power, and
•a $4.9 million increase in other current assets primarily due to an adjustment to long-term incentive compensation.
These increases in working capital were partially offset by:
•a $108.4 million decrease in the Cleco Cajun Divestiture receivable primarily due to the receipt of the remaining sale proceeds on May 29, 2026,
•a $47.1 million increase in taxes payable primarily due to higher federal and state income taxes and property tax accruals,
•a $25.0 million increase in short-term debt primarily due to borrowings on Cleco Holdings' revolving credit facility,
•a $17.8 million decrease in other account receivable primarily due to lower customer reimbursement, pole attachment, and CIAC receivables, as well as the timing of collections from joint owners at Cleco Power, partially offset by higher MISO accruals,
•an $11.5 million decrease in regulatory assets primarily due to the amortization of the Dolet Hills carrying charge and Northlake transmission costs, and the reclassification of the Dolet Hills ARO regulatory asset for decommissioning to long-term,
•an $8.6 million decrease in restricted cash and cash equivalents,
•a $7.0 million increase in interest accrued primarily due to the timing of interest payments on long-term debt, and
•a $6.1 million increase in accounts payable - affiliate primarily due to a federal tax refund received at Cleco Holdings.
Debt
For more information on Cleco Power's long-term debt due within one year, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 7 - Debt."
Liquidity
The following tables present the total liquidity for Cleco and Cleco Power at June 30, 2026, and December 31, 2025:
Cleco
(THOUSANDS) AT JUNE 30, 2026 AT DEC. 31, 2025
Cash and cash equivalents $ 227,461 $ 171,056
Cleco Power revolving credit facility(1)
300,000 300,000
Cleco Holdings revolving credit facility
175,000 175,000
Less: Outstanding revolving draws
25,000 -
Total liquidity $ 727,461 $ 646,056
(1) At June 30, 2026, and December 31, 2025, Cleco Power had no outstanding draws under its revolving credit facility.
Cleco Power
(THOUSANDS) AT JUNE 30, 2026 AT DEC. 31, 2025
Cash and cash equivalents $ 220,802 $ 162,660
Revolving credit facility(1)
300,000 300,000
Total liquidity $ 520,802 $ 462,660
(1) At June 30, 2026, and December 31, 2025, Cleco Power had no outstanding draws under its revolving credit facility.
Credit Facilities
At June 30, 2026, Cleco had two separate revolving credit facilities, one for Cleco Holdings in the amount of $175.0 million with $25.0 million of outstanding borrowings and one for Cleco Power in the amount of $300.0 million with no outstanding borrowings. The total of all revolving credit facilities maintains a maximum aggregate capacity of $475.0 million.
Cleco Holdings' revolving credit facility provides funding for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and matures in May 2029. Under covenants contained in Cleco Holdings' revolving credit facility, Cleco is required to maintain total indebtedness, not including securitization indebtedness, less than or equal to 65% of total capitalization. At June 30, 2026, Cleco Holdings was in compliance with the covenants of its revolving credit facility. At June 30, 2026, the borrowing costs under Cleco Holdings' revolving credit agreement were equal to SOFR plus 1.725% or ABR plus 0.625%, plus commitment fees of 0.275% on the unused portion of the facility. If Cleco Holdings' credit ratings were to be downgraded one level by the credit rating agencies, Cleco Holdings may be required to pay incremental interest and commitment fees of 0.125% and 0.05%, respectively, under the pricing levels of its revolving credit facility.
Cleco Power's revolving credit facility provides funding for working capital and other financing needs. The revolving credit facility includes restrictive financial covenants and matures in May 2029. Under covenants contained in Cleco Power's revolving credit facility, Cleco Power is required to maintain total indebtedness, not including securitization indebtedness, less than or equal to 65% of total capitalization. At June 30, 2026, Cleco Power was in compliance with the covenants of its revolving credit facility. At June 30, 2026, the borrowing costs under Cleco Power's revolving credit agreement were equal to SOFR plus 1.35% or ABR plus 0.25%, plus commitment fees of 0.15% on the unused portion of the facility. If Cleco Power's credit ratings were to be downgraded one level by the credit rating agencies, Cleco Power may be required to pay incremental interest and commitment fees of 0.125% and 0.025%, respectively, under the pricing levels of its revolving credit facility.
If Cleco Holdings or Cleco Power were to not comply with certain covenants in their respective revolving credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities, and the lenders under the respective credit facility or debt agreement could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its revolving credit facility or other debt agreements, Cleco Holdings would be considered in default under its revolving credit facility.
Concentrations of Credit Risk
At June 30, 2026, and 2025, 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 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 5 - Fair Value Accounting Instruments - Concentrations of Credit Risk."
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
Debt and Distribution Limitations
The 2016 Merger Commitments include provisions for limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group, 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. At June 30, 2026, Cleco Holdings was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. 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. At June 30, 2026, Cleco Power was in compliance with the provisions of the 2016 Merger Commitments that would restrict the amount of distributions available. The 2016 Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. For more information on the 2016 Merger Commitments, see Part I, Item 1A, "Risk Factors - Structural Risks - Holding Company" and "- Regulatory Risks - Regulatory Compliance" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Cleco - Cash Flows
Cash Flows Comparison for the Six Months Ended June 30, 2026, and 2025
FOR THE SIX MONTHS ENDED JUNE 30,
CLECO POWER
CLECO
(THOUSANDS)
2026
2025
VARIANCE
2026
2025
VARIANCE
Operating activities
Net income, adjusted for non-cash items(1)
$ 200,247 $ 236,586 $ (36,339) $ 199,337 $ 231,132 $ (31,795)
Changes in assets and liabilities
Postretirement benefit obligations
(8,244) (18,269) 10,025 (10,752) (19,624) 8,872
Regulatory assets and liabilities, net
3,687 (12,516) 16,203 4,681 (11,522) 16,203
Deferred fuel recoveries
(6,585) (19,872) 13,287 (6,585) (19,872) 13,287
Taxes accrued
55,946 26,438 29,508 46,618 16,426 30,192
Other operating items with immaterial variances(2)
(106,180) (102,220) (3,960) (122,436) (129,494) 7,058
Net cash provided by operating activities $ 138,871 $ 110,147 $ 28,724 $ 110,863 $ 67,046 $ 43,817
Investing activities
Additions to property, plant, and equipment $ (176,498) $ (141,430) $ (35,068) $ (177,673) $ (141,470) $ (36,203)
CIAC, net of refunds 101,362 (1,838) 103,200 101,362 (1,838) 103,200
Proceeds from the sale of discontinued operations - - - 113,046 - 113,046
Other investing items with immaterial variances(2)
2,391 703 1,688 2,391 703 1,688
Net cash (used in) provided by investing activities $ (72,745) $ (142,565) $ 69,820 $ 39,126 $ (142,605) $ 181,731
Financing activities
Draws on revolving credit facilities $ - $ 105,000 $ (105,000) $ 130,000 $ 145,000 $ (15,000)
Payments on revolving credit facilities - (130,000) 130,000 (105,000) (130,000) 25,000
Issuances of long-term debt - 305,000 (305,000) 249,525 305,000 (55,475)
Repayment of long-term debt (11,957) (183,135) 171,178 (371,957) (183,135) (188,822)
Other financing items with immaterial variances(2)
(136) (12,311) 12,175 (260) (12,311) 12,051
Net cash (used in) provided by financing activities
$ (12,093) $ 84,554 $ (96,647) $ (97,692) $ 124,554 $ (222,246)
(1) Non-cash items primarily include depreciation and amortization, unearned compensation, AFUDC, deferred income taxes, and market-driven changes in the cash surrender value of company/trust-owned life insurance.
(2) For purposes of this analysis, management considered variances to be immaterial if they remained within plus or minus $10.0 million.
Summary of Consolidated Results
Net Operating Cash Flows
Net cash provided by operating activities increased primarily due to cash flows from net income, adjusted for non-cash items. This increase was primarily attributable to changes in net income and deferred income taxes. For more information on net income, see "- Results of Operations - Comparison of the Six Months Ended June 30, 2026, and 2025 - Summary of Consolidated Results." For more information on deferred income taxes, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 9 - Income Taxes."
Year-over-year changes in working capital accounts also materially impact the net cash provided by operating activities. For more information on these changes in working capital, see "- Working Capital."
Net Investing Cash Flows
Net cash provided by investing activities increased primarily due to the receipt of the remaining sale proceeds from the Cleco Cajun Divestiture and higher CIAC, net of refunds. The increase in CIAC was driven primarily by transactions with a related party, as well as the timing of receipts and increased customer-funded construction activity. These increases were partially offset by higher additions to property, plant, and equipment, net of AFUDC.
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
For more information on related party transactions, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 1 - Summary of Significant Accounting Policies - Related-Party Transactions."
Net Financing Cash Flows
For more information on financing activities, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 7 - Debt."
Contractual Obligations
Cleco, in the normal course of business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco's Condensed Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the Condensed Consolidated Financial Statements. For more information regarding Cleco's Contractual Obligations, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Contractual Obligations" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Off-Balance Sheet Commitments and Guarantees
For information about off-balance sheet commitments and guarantees, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 12 - Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees."
Regulatory and Other Matters
Environmental Matters
Cleco is subject to extensive environmental regulation by federal, state, and local authorities and is required to comply with numerous environmental laws and regulations, and to obtain and comply with numerous governmental permits in operating its facilities. In addition, existing environmental laws, regulations, and permits could be revised or reinterpreted; new laws and regulations could be adopted or become applicable to Cleco or its facilities; and future changes in environmental laws and regulations could occur, including potential regulatory and enforcement developments related to air emissions, water and/or waste management. Cleco may incur significant additional costs to comply with these revisions, reinterpretations, and requirements. Cleco Power could then seek recovery of additional environmental compliance costs as riders through the LPSC's EAC or FRP. If Cleco fails to comply with these revisions, reinterpretations, and requirements, it could be subject to civil or criminal liabilities and fines.
Cleco is currently evaluating possible impacts various environmental rules may have on its generating units. For a discussion of other Cleco environmental matters, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 12 - Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees - Litigation - LPSC Audits and Reviews - Environmental Audit" in this Quarterly Report on Form 10-Q and Part I, Item 1, "Business - Environmental Matters" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Retail and Wholesale Rates
For information on Cleco Power's base rates, fuel rates, and environmental rates, see Part I, Item 1, "Business - Regulatory Matters, Industry Developments, and Franchises - Rates" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
For information on Cleco Power's FRP, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 4 - Regulatory Matters - Ratemaking - FRP."
For information on Cleco Power's FAC and the most recent fuel audit, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 12 - Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees - Litigation - LPSC Audits and Reviews - Fuel Audits."
For information on Cleco Power's EAC, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 12 - Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees - Litigation - LPSC Audits and Reviews - Environmental Audit."
For information on Cleco Power's wholesale rates, see Part II, Item 8, "Financial Statements and Supplementary Data - Notes to the Financial Statements - Note 14 - Regulation and Rates - Wholesale Rates" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Transmission Rates
For information about the risks associated with Cleco's participation in MISO, see Part I, Item 1A, "Risk Factors - Regulatory Risks - MISO" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Cleco Power is actively participating in programs to enhance its grid resilience against growing threats of extreme weather and climate change. For more information on Cleco Power's grid resiliency plan, see Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - Grid Resiliency and Hardening."
For information on transmission rates of Cleco, 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" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Market Structure
Wholesale Electric Markets
RTO
For information on Cleco's operations within MISO and for information on regulatory aspects of wholesale electric markets 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 - Market Structure - Wholesale Electric Markets" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Electric Reliability Organization (ERO)
NERC, subject to oversight by FERC, is the ERO responsible for developing and enforcing mandatory reliability standards
CLECO
CLECO POWER
2026 2ND QUARTER FORM 10-Q
for users, owners, and operators of the bulk power system. NERC, as the ERO, delegates authority to SERC.
A NERC Operations and Planning Reliability Standards audit is conducted at least every three years for Cleco Power. The next audit is scheduled to begin in 2028.
A NERC Critical Infrastructure Protection (CIP) audit is also conducted at least every three years for Cleco Power. The next audit is scheduled to begin in 2028.
Management is unable to predict the final 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. For a discussion of risks associated with FERC's regulation of Cleco Power's transmission system, see Part I, Item 1A, "Risk Factors - Regulatory Risks - Reliability and CIP Standards Compliance" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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 application of the rule has led to competition with neighboring utilities for retail customers at the borders of Cleco Power's service areas.
IRP
Cleco Power continues to advance its integrated resource planning process to ensure it can meet forecasted customer demand on a reliable, economic, and sustainable basis. Following the filing of an interim IRP with the LPSC on September 5, 2025, and a subsequent request to initiate its next four-year IRP cycle on October 22, 2025, the LPSC approved Cleco Power's request to combine the two efforts into a single filing. Cleco Power is actively preparing the combined IRP, which is expected to be submitted to the LPSC in October 2026.
Service Quality Plan (SQP)
Cleco Power remains committed to maintaining strong performance in customer service, reliability, vegetation management, and other key operational areas historically governed by the SQP. While the LPSC-approved SQP expired in December 2020, Cleco Power has continued to adhere to the plan's principles and reporting practices. A proposed
amended and extended SQP was submitted to the LPSC in October 2024; however, the proposal has not yet been finalized. Consequently, Cleco Power continued reporting under the framework of the prior SQP in its March 2026 filing. In connection with its 2027 rate case, Cleco Power has proposed a new SQP and remains engaged with the LPSC regarding its review and approval.
Franchises
For information on franchises, see Part I, Item 1, "Business - Regulatory Matters, Industry Developments, and Franchises - Franchises" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Recent Authoritative Guidance
For a discussion of recent authoritative guidance, see Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements - Note 2 - Recent Authoritative Guidance."
CRITICAL ACCOUNTING ESTIMATES
The preparation of Cleco's and Cleco Power's Condensed Consolidated Financial Statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that could have a material impact on the results of operations, financial condition, or cash flows of the Registrants.
For more information on Cleco's critical accounting estimates, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" in the Registrants' Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
CLECO POWER - NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
Cleco Power meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q and is, therefore, permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Cleco Power has omitted from this Quarterly Report on Form 10-Q the information called for by Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).
Cleco Corporate Holdings LLC published this content on August 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 07, 2026 at 20:11 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]