S-3

As filed with the Securities and Exchange Commission on November 2, 2007

Registration Nos. 333-
and 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CLECO POWER LLC (Exact name of Registrant and Sponsor as specified in its charter)	CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC (Exact name of Registrant and Issuing Entity as specified in its charter)
Louisiana	Louisiana
(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)
72-0244480	Applied For
(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)
2030 Donahue Ferry Road Pineville, Louisiana 71360-5226 (318) 484-7400 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)	2605 Hwy. 28 East Office Number 12 Pineville, LA 71360-5226 (318) 484-4180 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Wade A. Hoefling
Senior Vice President, General Counsel
and Director of Regulatory Compliance
2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
(318) 484-7400
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)

With copies to:

Timothy S. Taylor
Patrick B. Cowherd
Baker Botts L.L.P.
910 Louisiana
One Shell Plaza
Houston, Texas 77002-4995
(713) 229-1234 Eric Tashman, Esq.
Sidley Austin LLP
555 California Street
San Francisco, California 94104
(415) 772-1214

     Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement as determined by market conditions.

     If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following
box. þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. o                     

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                     

     If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o

     If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o

CALCULATION OF REGISTRATION FEE

Title of		Proposed maximum	Proposed
each class of securities	Amount to be	offering price per	maximum aggregate	Amount of
to be registered	registered	unit (1)	offering price (1)	registration fee
Storm Recovery Bonds Issuable in Series	$1,000,000	100%	$1,000,000	$30.70

(1)

Estimated pursuant to Rule 457 under the Securities Act solely for the purpose of calculating the registration fee.

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus supplement and the accompanying prospectus is not complete and may be changed. The storm recovery bonds may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus supplement and the accompanying prospectus are not an offer to sell these securities and they are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated                     , 2007.

PROSPECTUS SUPPLEMENT

(To Prospectus dated                     , 2007)

$                    

Cleco Katrina/Rita Hurricane Recovery Funding LLC

Issuing Entity

Cleco Power LLC

Seller, Initial Servicer and Sponsor

Senior Secured Storm Recovery Bonds, Series [__]

				Underwriting	Proceeds
	Initial	Interest	Price to	Discounts and	to the	Scheduled Final	Final
Tranche	Principal Balance	Rate	Public	Commissions	Issuing Entity	Payment Date	Maturity Date

     The total price to the public is $           . The total amount of the underwriting discounts and commissions is $ . The total amount of proceeds to the issuing entity before deduction of expenses (estimated to be $           ) is $ .

     Each Senior Secured Storm Recovery Bonds, Series [___], or the “Bonds,” will be entitled to interest on                      and                      of each year. The first scheduled payment date is                      ___, 2008.

     Investing in the Senior Secured Storm Recovery Bonds, Series [___] involves risks. Please read “Risk Factors” on page 12 of the accompanying prospectus.

     Cleco Katrina/Rita Hurricane Recovery Funding LLC, a Louisiana limited liability company and wholly owned subsidiary of Cleco Power LLC, is issuing up to $        aggregate principal amount of Bonds in multiple tranches. Cleco Power LLC is the seller, initial servicer and sponsor with regard to the Bonds. The Bonds are senior secured obligations of the issuing entity and will be secured by the storm recovery property, which includes the right to a special, irrevocable nonbypassable charge, known as a storm recovery charge, paid by all existing and future LPSC-jurisdictional customers of Cleco Power LLC as discussed herein. Storm recovery charges are required to be adjusted semi-annually, and more frequently as necessary, to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the Bonds during the subsequent 12-month period.

     The Bonds represent obligations only of the issuing entity, Cleco Katrina/Rita Hurricane Recovery Funding LLC, and are secured only by the assets of the issuing entity, consisting principally of the storm recovery property and related assets to support its obligations under the storm recovery bonds. For a description of the storm recovery property, please read “The Bonds—The Storm Recovery Property” in this prospectus supplement. The storm recovery property includes the right to impose, collect and receive from Cleco Power’s customers amounts sufficient to make payments on the Bonds, as described further in this prospectus supplement and the accompanying prospectus. Cleco Power LLC and its affiliates, other than the issuing entity, are not liable for any payments on the Bonds. The Bonds are not a debt or general obligation of the State of Louisiana, the Louisiana Public Service Commission or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Louisiana or any governmental agency or instrumentality.

     All matters relating to the structuring and pricing of the Bonds have been considered jointly by Cleco Power LLC and the Louisiana Public Service Commission, acting through its financial advisor. The financial advisor to the Louisiana Public Service Commission is

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Pathfinder Capital Advisors, LLC

     Additional information is contained in the accompanying prospectus. You should read this prospectus supplement and the accompanying prospectus carefully before you decide to invest in the Bonds. This prospectus supplement may not be used to offer or sell the Bonds unless accompanied by the prospectus.

     Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement and the accompanying prospectus are truthful or complete. Any representation to the contrary is a criminal offense.

     The underwriters expect to deliver the Bonds through the book-entry facilities of The Depository Trust Company against payment in New York, New York on           , 2007. There currently is no secondary market for the Bonds, and we cannot assure you that one will develop.

The date of this prospectus supplement is                                               , 2007.

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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS	S-1
SUMMARY OF TERMS	S-2
THE BONDS	S-9
The Collateral	S-9
The Storm Recovery Property	S-9
The Financing Order	S-10
Payment and Record Dates and Payment Sources	S-11
Principal Payments	S-11
Weighted Average Life Sensitivity	S-13
Fees and Expenses	S-14
Distribution Following Acceleration	S-14
Interest Payments	S-15
Optional Redemption	S-15
CREDIT ENHANCEMENT	S-15
True-Up Mechanism for Payment of Scheduled Principal and Interest	S-15
Collection Account and Subaccounts	S-16
How Funds in the Collection Account Will Be Allocated	S-17
THE STORM RECOVERY CHARGES	S-18
UNDERWRITING THE BONDS	S-19
The Underwriters’ Sales Price for the Bonds	S-19
No Assurance as to Resale Price or Resale Liquidity for the Bonds	S-19
Various Types of Underwriter Transactions That May Affect the Price of the Bonds	S-20
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES	S-20
MATERIAL LOUISIANA STATE TAX CONSEQUENCES	S-20
RISK WEIGHTING OF THE BONDS UNDER CERTAIN INTERNATIONAL CAPITAL GUIDELINES	S-20
RATINGS FOR THE BONDS	S-21
LEGAL PROCEEDINGS	S-21
WHERE YOU CAN FIND MORE INFORMATION	S-21
LEGAL MATTERS	S-21
OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS	S-21
Articles of Organization
Limited Liability Company Operating Agreement
Financing Order

i

ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS

     This prospectus supplement and the accompanying prospectus provide information about us, the storm recovery bonds and Cleco Power LLC, as seller, initial servicer and sponsor. This prospectus supplement describes the specific terms of the Bonds. The accompanying prospectus describes terms that apply to all series of storm recovery bonds we may issue, including the Bonds offered hereby.

     References in this prospectus supplement and the accompanying prospectus to the terms “we,” “us,” “our” or “the issuing entity” mean Cleco Katrina/Rita Hurricane Recovery Funding LLC. References to “Cleco Power,” “the sponsor,” “the initial servicer” or “the seller” mean Cleco Power LLC. References to the “Securitization Act” mean Act 64 of 2006, established by the Louisiana Legislature, providing for a financing mechanism through which electric utilities can use securitization financing for storm recovery costs, including the financing of a storm recovery reserve, by issuing “storm recovery bonds.” The Securitization Act is codified at La. R.S. 45:1226-1236. Unless the context otherwise requires, the term “customer” means any existing or future LPSC-jurisdictional customer who remains attached to Cleco Power’s (or its successors) electric transmission or distribution lines, and who, via such lines, receive any type of service from Cleco Power (or its successors) under rate schedules or special contracts approved by the Louisiana commission. We also refer to the Louisiana Public Service Commission as the “Louisiana commission” or the “LPSC.” You can find a glossary of some of the other defined terms we use in this prospectus supplement and the accompanying prospectus on page A-1 of the accompanying prospectus.

     We have included cross-references to sections in this prospectus supplement and the accompanying prospectus where you can find further related discussions. You can also find references to key topics in the table of contents on the previous page and in the table of contents on page (i) of the accompanying prospectus.

     You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. Neither we nor any underwriter, agent, dealer, salesperson, the Louisiana commission or Cleco Power has authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering to sell the Bonds in any jurisdiction where the offer or sale is not permitted. The information in this prospectus supplement is current only as of the date of this prospectus supplement.

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SUMMARY OF TERMS

     The following section is only a summary of selected information and does not provide you with all the information you will need to make your investment decision. There is more detailed information in this prospectus supplement and in the accompanying prospectus. To understand all of the terms of the offering of the Bonds, carefully read this entire document and the accompanying prospectus.

Securities offered:	$[          ] Senior Secured Storm Recovery Bonds, Series [ ]
Issuing entity and capital structure:	Cleco Katrina/Rita Hurricane Recovery Funding LLC is a direct, wholly owned subsidiary of Cleco Power and a limited liability company formed under Louisiana law. We were formed solely to purchase and own storm recovery property, to issue one or more series of storm recovery bonds and to perform activities incidental thereto. Please read “Cleco Katrina/Rita Hurricane Recovery Funding LLC, The Issuing Entity” in the accompanying prospectus.
	In addition to the storm recovery property, the assets of the issuing entity will include a capital investment by Cleco Power in the amount of 0.5% of the Bonds’ initial principal amount (to be held in the capital subaccount). We will also have an excess funds subaccount to retain, until the next payment date, any amounts collected and remaining after all payments on the Bonds have been timely made.
Our address:	2605 Hwy. 28 East, Office Number 12, Pineville, Louisiana 71360
Our telephone number:	(318) 484-4180
Our managers:	The following is a list of our managers as of the date of this prospectus supplement:

Name	Age		Background
Dilek Samil		51	President and Chief Operating Officer of Cleco Power since May 2005. Executive Vice President and Chief Financial Officer of Cleco Power and Cleco Corporation from April 2004 to May 2005. Senior Vice President Finance and Chief Financial Officer of Cleco Power and Cleco Corporation from October 2001 to April 2004. Joined Cleco Corporation in 2001.
Keith D. Crump		46	Vice President-Regulatory, Retail Operations & Resource Planning of Cleco Power since March 2007. Treasurer of Cleco Corporation and Cleco Power from May 2005 to March 2007. Manager of Forecasting and Analytics, Budgeting of Cleco Power from December 2004 to May 2005. Manager of Forecasting and Analytics of Cleco Power from October 2002 to December 2004. Manager of Technical Support Cleco Midstream Resources LLC, an affiliate of Cleco Power from July 1998 to October 2002. Joined Cleco Corporation in 1989.
Terry L. Taylor		52	Assistant Controller of Cleco Power and Cleco Corporation since August 2006. Director of Accounting Services and Affiliate Compliance of Cleco Power and Cleco Corporation from January 2004 to August 2006. Manager Systems Support

S-2

		and Inter-Affiliate Compliance from October 2002 to January 2004. Director of Inter-Affiliate Compliance from March 2002 to October 2002. Joined Cleco Corporation in 2000.
K. Michael Sawrie	57	Manager Finance, Treasury and Shareholder Services of Cleco Power and Cleco Corporation since February 2002. Director of Treasury Services of Cleco Power and Cleco Corporation from May 1998 to February 2002. Joined Cleco Corporation in 1987.

Required ratings:	Aaa/AAA/AAA by Moody’s, S&P and Fitch, respectively. Please read “Ratings for the Bonds” in this prospectus supplement.
Seller, sponsor and initial servicer of the storm recovery property:	Cleco Power is an integrated electric utility that conducts generation, purchase, transmission, distribution and sale operations subject to the jurisdiction of the Louisiana commission and the Federal Energy Regulatory Commission, or FERC, among other regulators, which also engages in energy management activities. Cleco Power is a Louisiana limited liability company and a wholly owned subsidiary of Cleco Corporation, a regional energy services holding company. Cleco Power, acting as the initial servicer, and any successor servicer, referred to in this prospectus supplement and the accompanying prospectus as the “servicer,” will service the storm recovery property securing the Bonds under a servicing agreement with us. Please read “The Seller, Initial Servicer and Sponsor” in the accompanying prospectus. Neither Cleco Power nor Cleco Corporation nor any other affiliate (other than us) is an obligor on the Bonds.
Cleco Power’s address:	2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226
Cleco Power’s telephone number:	(318) 484-7400
Use of proceeds:	Upon the issuance and sale of the Bonds, we will use the net proceeds to pay to Cleco Power the purchase price of Cleco Power’s rights under the financing order, which are storm recovery property.
	The net proceeds from the sale of the storm recovery property (after payment of up front financing costs) will be used by Cleco Power as follows: Cleco Power will use approximately $50 million to fund storm recovery reserves to be held in a segregated restricted account. Cleco Power will use the remaining portion of the proceeds (approximately $132 million as of October 31, 2007), which is reimbursement for storm recovery costs previously expended by Cleco Power from internally-generated funds, for working capital and other general corporate purposes. Please read “Use of Proceeds” in the accompanying prospectus.
Bond structure:	Sinking fund bond, [                    ] tranches; tranches A-1, expected average life [ ] years, A-2, expected average life [ ] years, A-3, expected average life [ ] years, A-4, expected average life [ ] years. . . are scheduled to pay principal semi-annually and sequentially. Please read the Expected Amortization Schedule in this prospectus supplement.
Louisiana commission financial advisor:	Pathfinder Capital Advisors, LLC
Indenture trustee:	[                                                            ]
Indenture trustee’s experience:	[                                                             currently serves as indenture trustee for other securitizations involving pools of utility company receivables that are structurally similar to the storm recovery charges.]

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Average life:	Stable. Extension risk is possible but is expected to be statistically insignificant. Please read “Weighted Average Life Sensitivity” in this prospectus supplement and “The Bonds—Weighted Average Life and Yield Considerations for the Storm Recovery Bonds” in the accompanying prospectus.
Optional redemption:	None. Non-call for the life of the Bonds.
Minimum denomination:	$100,000, or integral multiples of $1,000 in excess thereof, except for one bond of each tranche which may be of a smaller denomination.
Credit/security:	Pursuant to the financing order issued by the Louisiana commission, the irrevocable right to impose, collect and receive a nonbypassable storm recovery charge from all of Cleco Power’s customers (currently approximately 268,000 customers). Storm recovery charges are set and adjusted to collect amounts sufficient to pay principal, interest and other required amounts on a timely basis. Please read “Credit Enhancement—True-Up Mechanism for Payment of Scheduled Principal and Interest” in this prospectus supplement, as well as the chart entitled “Parties to Transactions and Responsibilities,” “The Securitization Act” and “Cleco Power’s Financing Order” in the accompanying prospectus.
	The storm recovery property securing the Bonds consists of all of Cleco Power’s rights and interests under the financing order transferred to us in connection with the issuance of the Bonds, including the irrevocable right to impose, collect and receive nonbypassable storm recovery charges and the right to implement the true-up mechanism. Storm recovery property is a present contract right created by the Securitization Act and the financing order and vested in us, and is protected by the state pledge in the Securitization Act and the Louisiana commission pledge in the financing order described below.
	The Bonds are secured only by our assets, consisting principally of the storm recovery property relating to the Bonds and funds on deposit in the collection account for the Bonds and related subaccounts. The subaccounts consist of a capital subaccount, which will be funded at closing in the amount of 0.5% of the initial aggregate principal amount of the Bonds, a general subaccount, into which the servicer will deposit all storm recovery charge remittances, and an excess funds subaccount, into which we will transfer any excess amounts collected and remaining on a payment date after all payments to bondholders and other parties have been made. Amounts on deposit in each of these subaccounts will be available to make payments on the Bonds on each payment date. For a description of the storm recovery property, please read “The Bonds—The Storm Recovery Property” in this prospectus supplement.
State pledge:	The State of Louisiana has pledged in the Securitization Act that it will not take or permit any action that impairs or would impair the value of the storm recovery property, or, except for adjustments discussed in “Cleco Power’s Financing Order—True-ups” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process” in the accompanying prospectus, reduce, alter or impair the storm recovery charges to be imposed, collected and remitted to storm recovery bondholders until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed in connection with the Bonds have been paid and performed in full. However, nothing will preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory

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	Actions” and “The Securitization Act—Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs” in the accompanying prospectus.
Louisiana commission pledge:	The Louisiana commission has jurisdiction over Cleco Power pursuant to Article 4, Section 21, of the Louisiana Constitution. The Louisiana commission has pledged in the financing order that (i) the financing order is irrevocable until the indefeasible (i.e., not voidable) payment in full of the Bonds and (ii) except in connection with a refinancing or refunding, it may not amend, modify or rescind the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust storm recovery charges approved in the financing order, provided that nothing in clause (ii) shall preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions” and “Cleco Power’s Financing Order—Louisiana Commission Pledge” in the accompanying prospectus.
True-up mechanism for payment of scheduled principal, interest and other required amounts:	Storm recovery charges are required to be adjusted semi-annually to:
	•    correct, over a period of up to 12 months covering the next two succeeding payment dates, any under-collections or over-collections, for any reason, during the preceding six months, and
	•    ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the Bonds during the subsequent 12-month period.
	The servicer may also make interim true-up adjustments more frequently under certain circumstances. Any delinquencies or under-collections in one customer class will be taken into account in the true-up mechanism to adjust the storm recovery charge for all customers of Cleco Power, not just the class of customers from which the delinquency or under-collection arose.
	The financing order provides that the true-up mechanism and all other obligations of the State of Louisiana and the Louisiana commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the Bonds, and are legally enforceable against the State of Louisiana and the Louisiana commission. Please read “The Storm Recovery Charges” in this prospectus supplement and “Cleco Power’s Financing Order” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process” in the accompanying prospectus.
Nonbypassable storm recovery charges:	The nonbypassable storm recovery charges are applied to all existing and future Louisiana commission-jurisdictional customers who remain attached to Cleco Power’s (or its successor’s) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco Power (or its successor) under rate schedules or special contracts approved by the Louisiana commission. Any customer who self-generates or co-generates electricity will be assessed storm recovery charges based upon the total firm and standby load served by Cleco Power. Any customer who completely severs interconnection with Cleco Power may become exempt from continued payment of the storm recovery charges. In the financing order, the Louisiana commission committed to ensure that such obligations are undertaken and performed by Cleco Power or any other entity providing electric transmission and distribution services, or in the event that transmission and distribution services are not provided by a single entity, any

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	entity providing transmission or distribution services to Cleco Power’s Louisiana commission-jurisdictional customers. Please read “The Storm Recovery Charges” in this prospectus supplement and “Cleco Power’s Financing Order” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process” in the accompanying prospectus.
Initial storm recovery charge as a percentage of customer’s total electricity bill:	The initial storm recovery charge would represent approximately 3% of the total bill received by a 1,283 kWh residential customer of Cleco Power as of June 30, 2007.
Priority of Distributions:	On each payment date, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account for the Bonds in the following order of priority:

1.	payment of a pro rata portion (based upon the respective outstanding amount of the Bonds and all other series of storm recovery bonds issued by us under the indenture, if any) of the trustee’s fees, expenses and any outstanding indemnity amounts not to exceed $[                    ] in any 12-month period,
2.	payment of the servicing fee relating to the Bonds, plus any unpaid servicing fees relating to the Bonds from prior payment dates,
3.	payment of a pro rata portion of the administration fee and a pro rata portion of the fees of our independent manager, which will be in an amount specified in an agreement between us and our independent manager,
4.	payment of all of our other ordinary periodic operating expenses relating to the Bonds, such as accounting and audit fees, rating agency fees, legal fees, certain reimbursable costs of the servicer under the servicing agreement,
5.	payment of the interest then due on the Bonds, including any past-due interest,
6.	payment of the principal then required to be paid on the Bonds at final maturity or upon acceleration upon an event of default,
7.	payment of the principal then scheduled to be paid on the Bonds in accordance with the expected sinking fund schedule, including any previously unpaid scheduled principal,
8.	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents relating to the Bonds, including all remaining indemnity amounts owed to the trustee,
9.	replenishment of any amounts drawn from the capital subaccount,
10.	if the balance in the capital subaccount is greater than the initial balance of the capital subaccount after making the foregoing allocations, an amount of investment earnings on the capital subaccount not to exceed [_._]% per annum shall be paid to us; provided that no event of default has occurred and is continuing and that the balance of the capital subaccount is not reduced below the initial balance of the capital subaccount,
11.	allocation of the remainder, if any, to the excess funds subaccount, and
12.	after the Bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, released to us free and clear of the lien of the indenture.

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	The annual servicing fee in clause 2 may not exceed 0.05% of the original principal amount of the Bonds (for so long as Cleco Power is the servicer) and the annual administration fee in clause 3 may not exceed $100,000.
Master trust structure; issuance of additional series:	The indenture has been structured as the functional equivalent, in certain respects, of a master trust in that we may, subject to the terms of the financing order or any subsequent financing order but without your prior review or approval, acquire additional storm recovery property and issue one or more additional series of storm recovery bonds which are backed by such storm recovery property, all of which storm recovery bonds will be paid through collections of additional storm recovery charges from the same group of Cleco Power customers. Please read “Allocations as Between Series of Storm Recovery Bonds” in this Summary of Terms. In addition, Cleco Power may also sell storm recovery property to one or more entities other than us in connection with the issuance of a new series of storm recovery bonds without your prior review or approval. The aggregate outstanding amount of storm recovery bonds that may be authenticated and delivered under the indenture may not exceed the aggregate amount of storm recovery bonds that are authorized under all applicable financing orders. Any new series may include terms and provisions that would be unique to that particular series. We may not issue additional storm recovery bonds nor may Cleco Power sell storm recovery property to other entities issuing storm recovery bonds if the issuance would result in the credit ratings on any outstanding series of storm recovery bonds being reduced or withdrawn. It will be a condition of issuance for each series of storm recovery bonds that the new series be rated “Aaa” by Moody’s, “AAA” by S&P and “AAA” by Fitch, Inc. Please read “The Storm Recovery Bonds—The Storm Recovery Bonds May Be Issued in Various Series or Tranches” in the accompanying prospectus.
Allocations as between series of storm recovery bonds:	The Bonds will not be subordinated in right of payment to any other series of storm recovery bonds. Each series of storm recovery bonds will be secured by its own storm recovery property, which will include the right to impose, collect and receive storm recovery charges calculated in respect of that series, and the right to impose interim and semi-annual true-up adjustments to correct overcollections or undercollections in respect of that series. Each series will also have its own collection account, including any related subaccounts, into which collections of the storm recovery charges relating to that series will be deposited and from which amounts will be withdrawn to pay the related series of storm recovery bonds. Holders of one series of storm recovery bonds will have no recourse to collateral for a different series. In the event that more than one series of storm recovery bonds is issued, the administration fees, independent manager fees and other operating expenses payable by us on any payment date will be assessed to each series on a pro rata basis, based upon the respective outstanding amounts of each series. Please read “The Storm Recovery Bonds—The Security for the Storm Recovery Bonds”, “—The Collection Account for the Storm Recovery Bonds” and “—How Funds in the Collection Account Will Be Allocated” in the accompanying prospectus.
	Although each series will have its own storm recovery property, storm recovery charges relating to the Bonds and storm recovery charges relating to any other series of storm recovery bonds will be collected from the same Cleco Power customers. In the event a Cleco Power customer does not pay in full all amounts owed under any bill including storm recovery charges, the amount remitted will be applied to all charges on the bill based, as to a bill with charges covering more than one month, on the chronological order of billing, and, as to those charges with the same billing date, pro rata. In

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	addition, if more than one series of storm recovery bonds have been issued by us or another subsidiary of Cleco Power, any such partial collections will be allocated among such series of storm recovery bonds, pro rata based upon the amounts billed with respect to each series of storm recovery bonds, provided that late fees and charges may be allocated to the servicer as provided in the applicable tariff. Please read “The Storm Recovery Bonds—Allocations as Between Series” and “The Servicing Agreements—Servicing Procedures—Remittances to the Trustee” in the accompanying prospectus.
20% international risk weighting:	Under the standardized approach provided in the framework established by “International Convergence of Capital Management and Capital Standards: A Revised Framework” (as amended, “Basel II”), the Bonds may attract a risk weighting of 20% on the basis that the Bonds are rated in the highest category by a major rating agency. In the alternative, under the framework established by Basel II, the Bonds may attract the same risk weighting if the Bonds are considered to be “guaranteed” by a non governmental public sector entity.
	If held by financial institutions subject to regulation in countries (other than the United States) that have adopted and continue to use or permit the use of the 1988 International Convergence of Capital Measurement and Capital Standards of the Basel Committee on Banking Supervision (as amended, the “Basel Accord”) for risk weighting, the Bonds may attract the same risk weighting as “claims on” or “claims guaranteed by” non-central government bodies within the United States, which are accorded a 20% risk weighting. We note, however, that the analysis under the Basel Accord may be different than that under Basel II.
	However, we cannot assure you that the Bonds will attract a 20% risk weighting treatment under any national law, regulation or policy implementing Basel II, the Basel Accord or any transitional regime. Investors should consult their regulators before making any investment. Please read “Risk Weighting of the Bonds Under Certain International Capital Guidelines” in this prospectus supplement and “Risk Weighting Under Certain International Capital Guidelines” in the accompanying prospectus.
Tax treatment:	The Bonds will be treated as debt for U.S. federal income tax purposes. Please read “Material Federal Income Tax Consequences for the Storm Recovery Bondholders” in the accompanying prospectus.
ERISA eligible:	Yes; please read “ERISA Considerations” in the accompanying prospectus.
Payment dates and interest accrual:	Interest payable semi-annually,                      and                     . Interest will be calculated on a 30/360 basis. The first scheduled interest and principal payment date is                     , 2008.
	Interest is due on each payment date and principal is due upon the final maturity date for each tranche.
Expected settlement:	, 2007, settling flat. DTC, Clearstream and Euroclear.
Risk factors:	You should consider carefully the risk factors beginning on page 12 of the accompanying prospectus before you invest in the Bonds.

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THE BONDS

     We will issue the Bonds and secure their payment under an indenture that we will enter into with [                                                                                     ], as trustee, referred to in this prospectus supplement and the accompanying prospectus as the “trustee.” We will issue the Bonds in minimum denominations of $100,000, or in integral multiples of $1,000 in excess thereof, except that we may issue one bond in each tranche in a smaller denomination. The expected average life in years, initial principal balance, scheduled final payment date, final maturity date and interest rate for each tranche of the Bonds are stated in the table below.

	Expected
	Average Life	Initial Principal	Scheduled Final	Final	Interest
Tranche	(Years)	Balance	Payment Date	Maturity Date	Rate

     The scheduled final payment date for each tranche of the Bonds is the date when the outstanding principal balance of that tranche will be reduced to zero if we make payments according to the expected sinking fund schedule for that tranche. The final maturity date for each tranche of the Bonds is the date when we are required to pay the entire remaining unpaid principal balance, if any, of all outstanding Bonds of that tranche. The failure to pay principal of any tranche of Bonds by the final maturity date for that tranche is an event of default under the indenture, but the failure to pay principal of any tranche of Bonds by the respective scheduled final payment date will not be an event of default under the indenture. Please read “The Storm Recovery Bonds—Payments of Interest and Principal on the Storm Recovery Bonds” and “—What Constitutes an Event of Default on the Storm Recovery Bonds” in the accompanying prospectus.

The Collateral

     The Bonds will be secured under the indenture by the indenture’s trust estate. The principal asset of the indenture’s trust estate for the Bonds is the storm recovery property relating to the Bonds, which is a present contract right created under the Securitization Act and the financing order issued by the Louisiana commission on September 17, 2007, referred to in this prospectus supplement as the “financing order.” The indenture’s trust estate also consists of:

• our rights under the sale agreement pursuant to which we will acquire the storm recovery property relating to the Bonds, under the administration agreement and under all bills of sale delivered by Cleco Power pursuant to the sale agreement,

• our rights under the servicing agreement and any subservicing, agency or collection agreements executed in connection with the servicing agreement,

• the collection account for the Bonds and all subaccounts of the collection account,

• all of our other property related to the Bonds, other than any cash released to us by the trustee on any payment date from earnings on the capital subaccount,

• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and

• all payments on or under and all proceeds in respect of any or all of the foregoing.

The Storm Recovery Property

     In general terms, the portion of all of the rights and interests of Cleco Power that relate to the Bonds under the financing order, upon transfer to us pursuant to the sale agreement, are referred to in this prospectus supplement as the “storm recovery property.” The storm recovery property includes the right to impose, collect and receive, the applicable storm recovery charges payable by all of Cleco Power’s customers, in an amount sufficient to pay principal and interest and to make other required amounts and charges in connection with the Bonds. During the twelve months ended June 30, 2007, approximately 33% of Cleco Power’s total deliveries (based on MWh) were to industrial customers, approximately 26% were to commercial customers and approximately 39% were to residential customers.

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     We will purchase the storm recovery property from Cleco Power to support the issuance of the Bonds. Storm recovery charges authorized in the financing order that relate to the Bonds are irrevocable and not subject to reduction, impairment, or adjustment by further action of the Louisiana commission, except for semi-annual and interim true-up adjustments to correct overcollections or undercollections and to provide for the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the Bonds. Please read “Credit Enhancement—True-Up Mechanism for Payment of Scheduled Principal and Interest” in this prospectus supplement. All revenues and collections resulting from storm recovery charges provided for in the financing order that relate to the Bonds are part of the storm recovery property. Cleco Power is authorized in the financing order to securitize and to cause the issuance of storm recovery bonds with an aggregate principal amount of approximately $187 million, equal to the sum of:

• Cleco Power’s costs incurred in connection with restoring service to its customers who experienced electric power outages as a result of Hurricanes Katrina and Rita (approximately $132 million, after crediting revenues from an interim storm surcharge, and excluding income tax benefits associated with such costs), plus

• a storm recovery reserve in the amount of approximately $50 million, and

• the upfront and ongoing costs of issuing, supporting and servicing the Bonds.

The storm recovery property relating to the Bonds is described in more detail under “The Sale Agreement—Cleco Power’s Sale and Assignment of the Storm Recovery Property” in the accompanying prospectus.

     Cleco Power, as servicer, will bill and collect storm recovery charges allocable to the Bonds from Cleco Power customers, and will remit the collections to the trustee. Cleco Power will include the storm recovery charges in its bills to its customers and is required to show the storm recovery charges as a separate line item or footnote. Additionally, the servicer is required to send a written statement at least annually to all customers that we are the owner of the rights to the storm recovery property and that the servicer is merely our collection agent.

     Cleco Power will be required to remit the storm recovery charges to the trustee daily each business day based on estimated daily collections, using a weighted average balance of days outstanding on Cleco Power’s retail bills. Until Cleco Power remits the storm recovery charges to the trustee, the storm recovery charges may be commingled with Cleco Power’s other funds. Please read “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer,” and “How a Bankruptcy May Affect Your Investment—Bankruptcy of Cleco Power” in the accompanying prospectus.

     Because the amount of storm recovery charge collections will depend largely on the amount of electricity consumed by Cleco Power’s customers, the amount of collections may vary substantially from month to month. Please read “The Seller, Initial Servicer and Sponsor” in the accompanying prospectus.

     Under the Securitization Act and the indenture, the trustee or the holders of the Bonds have the right to foreclose or otherwise enforce the lien on the storm recovery property. However, in the event of foreclosure, there is likely to be a limited market, if any, for the storm recovery property. Therefore, foreclosure might not be a realistic or practical remedy. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Storm Recovery Property” in the accompanying prospectus.

The Financing Order

     On September 17, 2007, the Louisiana commission issued its financing order applicable to Cleco Power authorizing the issuance of storm recovery bonds with an aggregate principal amount of approximately $187 million, consisting of: (a) approximately $132 million of remaining unamortized storm recovery costs pursuant to a separate order of the Louisiana commission, plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a restricted storm recovery reserve in a segregated restricted account, plus (c) upfront financing costs, which are estimated (for purposes of calculating the aggregate principal amount) at $4.6 million, but will be reviewed in accordance with the financing order to determine that they were prudently and actually incurred costs, plus or minus (d) any adjustment, pursuant to the issuance advice letter, to reflect the cost of any approved swap or hedge or credit enhancement or any change necessary to account for Cleco Power’s collection of interim storm recovery surcharge revenues through the date of pricing of the Bonds in accordance with the financing order. The financing order also authorized (1) Cleco Power’s proposed financing structure; (2) creation of the storm recovery property, including the right to impose and collect storm recovery charges sufficient to pay principal, interest and other amounts related to the Bonds and associated financing costs; (3) a tariff to implement the storm recovery charges; and (4) a tariff to implement a surcredit to provide customers the benefit of all non-ratepayer recoveries and to address ancillary cost recovery relating to the storm recovery cost process. The financing order became final and non-appealable on October 3, 2007.

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     The financing order requires Cleco Power to submit to the Louisiana commission within 60 days after the filing of the issuance advice letter a final accounting of the upfront financing costs which will be reviewed and reconciled by the staff of the Louisiana commission with prudently and actually incurred costs.

     Pursuant to the provisions of the Securitization Act, the financing order is irrevocable and is not subject to reduction, impairment or adjustment by further action of the Louisiana commission, except as contemplated by the periodic true-up adjustments. The financing order provides that the true-up mechanism and all other obligations of the State of Louisiana and the Louisiana commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the Bonds, and are legally enforceable against the State of Louisiana and the Louisiana commission. Please read “Cleco Power’s Financing Order” in the accompanying prospectus.

Payment and Record Dates and Payment Sources

     Beginning [                                        ], 2008, we will make payments of interest on the Bonds semi-annually on [                                          ] and [                                           ] of each year, or, if that day is not a business day, the following business day (each, a “payment date”). So long as the Bonds are in book-entry form, on each payment date, we will make interest and principal payments to the persons who are the holders of record as of the business day immediately prior to that payment date, which is referred to as the “record date.” If we issue certificated storm recovery bonds to beneficial owners of the Bonds as described in “The Storm Recovery Bonds—Definitive Certificated Storm Recovery Bonds” in the accompanying prospectus, the record date will be the last business day of the calendar month immediately preceding the payment date. On each payment date, we will pay amounts on outstanding Bonds from amounts available in the collection account and the related subaccounts held by the trustee in the priority set forth under “Credit Enhancement—How Funds in the Collection Account Will Be Allocated” in this prospectus supplement. These available amounts, which will include amounts collected by the servicer for us with respect to the storm recovery charges, are described in greater detail under “The Storm Recovery Bonds—The Collection Account for the Storm Recovery Bonds” in the accompanying prospectus.

Principal Payments

     On each payment date, we will pay principal of the Bonds to the bondholders equal to the sum, without duplication, of:

• the unpaid principal amount of any Bond whose final maturity date is on that payment date, plus

• the unpaid principal amount of any Bond upon acceleration following an event of default relating to the Bonds, plus

• any overdue payments of principal, plus

• any unpaid and previously scheduled payments of principal, plus

• the principal scheduled to be paid on any Bond on that payment date,

but only to the extent funds are available in the collection account (including all applicable subaccounts) after payment of certain of our fees and expenses and after payment of interest as described below under “—Interest Payments.” To the extent funds are so available, we will make scheduled payments of principal of the Bonds in the following order:

1.	to the holders of the [tranche A-1] Bonds, until the principal balance of that tranche has been reduced to zero,
2.	[additional tranches].

However, we will not pay principal of any tranche of Bonds on any payment date if making the payment would reduce the principal balance of that tranche to an amount lower than the amount specified in the expected amortization schedule below for that tranche on that payment date. Any excess funds remaining in the collection account after payment of principal, interest, applicable fees and expenses and payments to the applicable subaccounts of the collection account will be retained in the excess funds subaccount until applied on a subsequent payment date. The entire unpaid principal balance of each tranche of the Bonds will be due and payable on the final maturity date for the tranche.

     If an event of default under the indenture has occurred and is continuing, the trustee or the holders of a majority in principal amount of the storm recovery bonds of each affected series then outstanding may declare the unpaid principal balance of each such affected series of the storm recovery bonds, together with accrued interest thereon, to be due and payable. However, the nature of our business will result in payment of principal upon an acceleration of the Bonds being made as funds become available. Please read “Risk Factors—Risks Associated With the Unusual Nature of the Storm Recovery Property” and “—You may experience material payment delays or incur a loss on your investment in the storm recovery bonds because the source of funds for payment is limited” in the accompanying prospectus. If there is a shortfall in the amounts available to make principal payments on storm recovery bonds of a series that are due and payable, including upon an acceleration following an

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event of default under the indenture, the trustee will distribute principal from the collection account for that series pro rata to each tranche of storm recovery bonds of that series based on the principal amount then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal payments on storm recovery bonds of a series that are scheduled to be paid, the trustee will distribute principal from the collection account for that series pro rata to each tranche of storm recovery bonds of that series based on the principal amount then scheduled to be paid on the payment date.

     The expected amortization schedule below sets forth the principal balance that is scheduled to remain outstanding on each payment date for each tranche of the Bonds from the issuance date to the scheduled final payment date. Similarly, the expected sinking fund schedule below sets forth the corresponding principal payment that is scheduled to be made on each payment date for each tranche of the Bonds from the issuance date to the scheduled final payment date. In establishing these schedules, we have made the assumptions specified in the bullet points under the weighted average life sensitivity table below under “—Weighted Average Life Sensitivity,” among other assumptions.

Expected Amortization Schedule

Outstanding Principal Balance Per Tranche

Semi-
Annual
Payment	Tranche	Tranche		Tranche	Tranche
Date	A-[__] Balance	A-[__] Balance	A-[__] Balance		A-[__] Balance
Issuance Date
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$
	$	$		$	$

On each payment date, the trustee will make principal payments to the extent the principal balance of each tranche of the Bonds exceeds the amount indicated for that payment date in the table above and to the extent of funds available in the collection account after payment of certain of our fees and expenses and after payment of interest. If sufficient funds are available on each payment date, principal payments will be in the amounts indicated for each payment date in the expected sinking fund schedule below.

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Expected Sinking Fund Schedule

Semi-
Annual
Payment
Date	Tranche A-[__]	Tranche A-[__]	Tranche A-[__]	Tranche A-[__]
Tranche Size
Total Payments

     We cannot assure you that principal payments will be made or that the principal balance of any tranche of the Bonds will be reduced at the rates indicated in the schedules above. Principal payments and the actual reduction in tranche principal balances may occur more slowly. Principal payments and the actual reduction in tranche principal balances will not occur more quickly than indicated in the above schedules, except that the total outstanding principal balance of and interest accrued on the Bonds may be accelerated upon an event of default under the indenture. The Bonds will not be in default if principal is not paid as specified in the schedules above unless the principal of any tranche is not paid in full on or before the final maturity date of that tranche.

Weighted Average Life Sensitivity

     Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The rate of principal payments on each tranche of Bonds, the aggregate amount of each interest payment on each tranche of Bonds and the actual final payment date of each tranche of Bonds will depend on the timing of the servicer’s receipt of storm recovery charges from Cleco Power’s customers. See “Weighted Average Life and Yield Considerations for the Storm Recovery Bonds” in the accompanying prospectus for further information. Changes in the expected weighted average lives of the tranches of the Bonds in relation to variances in actual energy consumption levels (retail electric sales) from forecast levels are shown below. Severe stress cases on electricity consumption result in very minor changes (approximately                      weeks), if any, in the weighted average lives of each tranche.

Weighted Average Life Sensitivity

	Expected	WAL
	Weighted	-[__]%		-[__]%
	Avg. Life	([__] Standard Deviations from Mean)		([__] Standard Deviations from Mean)
	(“WAL”)	WAL	Change	WAL	Change
Tranche	(yrs)	(yrs)	(days)	(yrs)	(days)
A-[__]
A-[__]
A-[__]
A-[__]

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     For the purposes of preparing the above table, we have assumed, among other things, that:

• the forecast error stays constant over the life of the Bonds and is equal to an overestimate of electricity consumption of [___]% ([___] standard deviations from mean) or [___]% ([___] standard deviations from mean) as stated in the chart above;

• the servicer makes timely and accurate filings to true-up the storm recovery charges semi-annually in years one through thirteen and quarterly in the fourteenth and fifteenth years; and

• Cleco Power customers remit all storm recovery charges ___days after such charges are billed.

There can be no assurance that the weighted average lives of the various tranches of the Bonds will be as shown in the above table.

Fees and Expenses

     As set forth in the table below, we are obligated to pay fees to Cleco Power as the initial servicer, the trustee, our independent manager and Cleco Power as administrator. The following table illustrates this arrangement.

Recipient	Source of Payment	Fees and Expenses Payable
Servicer	Storm recovery charge collections and investment earnings on collection account.	0.05% of initial principal amount of Bonds issued per annum, as long as Cleco Power or an affiliate is the servicer, plus external accounting costs
Trustee	Storm recovery charge collections and investment earnings on collection account.	$                     per annum, plus expenses
Independent manager	Storm recovery charge collections and investment earnings on collection account.	$                     per annum, plus expenses
Administrator	Storm recovery charge collections and investment earnings on collection account.	$100,000 per annum
Other operating expenses (accounting, rating agency, legal fees, etc.)	Storm recovery charge collections and investment earnings on collection account.	$                     (estimated)
Sponsor	Storm recovery charge collections and investment earnings on collection account.	Investment earnings on the capital subaccount not to exceed [_._]% per annum

     In accordance with the terms of the financing order and subject to the approval of the trustee, the Louisiana commission may permit a successor servicer to Cleco Power to recover a higher servicer fee if Cleco Power ceases to serve as the servicer and ceases to service the storm recovery property. The annual servicing fee payable to any other servicer not affiliated with Cleco Power shall not at any time exceed 0.6% of the original principal amount of the Bonds unless such higher rate is approved by the Louisiana commission.

Distribution Following Acceleration

     Upon an acceleration of the maturity of the Bonds, the total outstanding principal balance of and interest accrued on the Bonds will be payable without priority of interest over principal or principal over interest and without regard to tranche. Although principal will be due and payable upon acceleration, the nature of our business will result in principal being paid as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Storm Recovery Property” and “—You may experience material payment delays or incur a loss on your investment in the storm recovery bonds because the source of funds for payment is limited” in the accompanying prospectus. Please read “The Securitization Act—

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Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs —State and Louisiana Commission Pledges” and “—Constitutional Matters” in the accompanying prospectus.

Interest Payments

     Holders of storm recovery bonds in each tranche of Bonds will receive interest at the rate for that tranche as set forth in the table on page S‑9.

     Interest on each tranche of Bonds will accrue from and including the date of issuance to but excluding the first payment date, and thereafter from and including the previous payment date to but excluding the applicable payment date until the Bonds have been paid in full, at the interest rate indicated in the table on page S-9. Each of those periods is referred to as an “interest accrual period.” On each payment date, we will pay interest on each tranche of the Bonds equal to the following amounts:

• any interest payable but unpaid on any prior payment date, together with interest on such unpaid interest, if any, and

• accrued interest on the principal balance of each tranche of the Bonds as of the close of business on the preceding payment date, or the date of the original issuance of the Bonds, after giving effect to all payments of principal made on the preceding payment date, if any.

     We will pay interest on the Bonds before we pay principal on the Bonds. Please read “The Storm Recovery Bonds—Payments of Interest and Principal on the Storm Recovery Bonds” in the accompanying prospectus. If there is a shortfall in the amounts available in the collection account to make interest payments on the Bonds, the trustee will distribute interest pro rata to each tranche of Bonds based on the amount of interest payable on each such outstanding tranche. Please read “Credit Enhancement—Collection Account and Subaccounts” in this prospectus supplement. We will calculate interest on tranches of the Bonds on the basis of a 360-day year consisting of twelve 30-day months.

Optional Redemption

     We may not voluntarily redeem any tranche of the Bonds prior to the scheduled final payment date for such tranche.

CREDIT ENHANCEMENT

     Credit enhancement for the Bonds is intended to protect you against losses or delays in scheduled payments on your Bonds. Please read “Risk Factors—You may experience material payment delays or incur a loss on your investment in the storm recovery bonds because the source of funds for payment is limited” in the accompanying prospectus.

True-Up Mechanism for Payment of Scheduled Principal and Interest

     The financing order provides that storm recovery charges will be reviewed and adjusted semi-annually to:

• correct, over a period of up to 12 months covering the next two succeeding payment dates, any under-collections or over-collections, for any reason, during the preceding six months, and

• ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal of and interest on the Bonds and all other required amounts in connection with the Bonds during the subsequent 12-month period.

To the extent any Bonds remain outstanding after the scheduled final payment date of the tranche A-___Bonds, mandatory true-up adjustments will be made quarterly until all Bonds and associated costs are paid in full. In addition, the servicer may also make interim true-up adjustments more frequently at any time during the term of the Bonds:

• if the servicer forecasts that storm recovery charge collections will be insufficient to make all scheduled payments of interest and other financing costs in respect of the Bonds during the current or next succeeding payment period or to bring all principal payments on schedule over the next two succeeding payment dates, and/or

• to replenish any draws upon the capital subaccount.

     Any delinquencies or under-collections in one customer class will be taken into account in the true-up mechanism to adjust the storm recovery charge for all customers of Cleco Power, not just the class of customers from which the delinquency or under-collection arose.

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     The financing order requires the servicer to request Louisiana commission approval of an amendment to the true-up mechanism that it deems necessary or appropriate to address any material deviations between storm recovery charge collections and the periodic revenue requirement. No such change shall cause any of the then-current credit ratings of the Bonds to be suspended, withdrawn or downgraded.

     The financing order provides that the true-up mechanism and all other obligations of the State of Louisiana and the Louisiana commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the Bonds, and are legally enforceable against the State of Louisiana and the Louisiana commission. Please read “The Storm Recovery Charges” below and “Cleco Power’s Financing Order” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process” in the accompanying prospectus.

Collection Account and Subaccounts

     The trustee will establish a collection account for the Bonds to hold the capital contribution from Cleco Power and collected storm recovery charges periodically remitted to the trustee by the servicer. The collection account will consist of various subaccounts, including the following:

• the general subaccount,

• the excess funds subaccount,

• the capital subaccount, and

• other subaccounts, if necessary.

     Withdrawals from and deposits to these subaccounts will be made as described below in this prospectus supplement and under “The Storm Recovery Bonds—The Collection Account for the Storm Recovery Bonds” and “—How Funds in the Collection Account Will Be Allocated” in the accompanying prospectus.

     The General Subaccount. The trustee will deposit collected storm recovery charges remitted to it by the servicer with respect to the Bonds into the general subaccount. On each payment date, the trustee will allocate amounts in the general subaccount as described under “—How Funds in the Collection Account Will Be Allocated” below.

     The Excess Funds Subaccount. The excess funds subaccount will be funded on any payment date with collected storm recovery charges and earnings on amounts in the collection account, other than earnings on amounts allocated to the capital subaccount, in excess of the amount necessary to pay:

• fees and expenses, including any indemnity payments, of the trustee, our independent manager, the servicer and the administrator and other fees, expenses, costs and charges,

• principal and interest payments on the Bonds required to be paid or scheduled to be paid on that payment date, and

• any amount required to replenish any amounts drawn from the capital subaccount.

     The periodic adjustments of the storm recovery charges will be calculated to eliminate any amounts held in the excess funds subaccount. These adjustments generally will occur semi-annually. Under limited circumstances, these adjustments may occur more frequently.

     If amounts available in the general subaccount are not sufficient to pay the fees and expenses due on any payment date, to make required or scheduled payments to the bondholders, and to replenish any amounts drawn from the capital subaccount, the trustee will first draw on any amounts in the excess funds subaccount to make those payments.

     The Capital Subaccount. On the date we issue the Bonds, Cleco Power will deposit $[                    ] into the capital subaccount as a capital contribution to us, which is equal to 0.5% of the initial outstanding principal balance of the Bonds. The capital contribution has been set at a level sufficient to obtain the ratings on the Bonds described below under “Ratings for the Bonds.” If amounts available in the general subaccount and the excess funds subaccount are not sufficient to make required or scheduled payments to the bondholders and to pay the fees and expenses specified in the indenture due on any payment date, the trustee will draw on amounts in the capital subaccount to make those payments. Under the financing order, Cleco Power is permitted to earn a rate of return on its capital contribution equal to the rate of interest payable on the tranche A-___Bonds, which amounts will be paid by means of periodic distributions from us funded solely by the income earned thereon through investment by the trustee in eligible investments and by any deficiency being collected through the true-up adjustments, and further, any actual earnings in excess of that rate will be credited to customers.

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     Other Subaccounts. Other credit enhancements in the form of subaccounts may be utilized for the transaction provided such enhancements are required to obtain the ratings on the Bonds described below under “Ratings for the Bonds,” or to provide benefits greater than their tangible and intangible costs and are approved pursuant to the issuance advice letter process described under “Cleco Power’s Financing Order—Issuance Advice Letter” in the accompanying prospectus.

How Funds in the Collection Account Will Be Allocated

     Amounts remitted by the servicer to the trustee with respect to the Bonds, including any indemnity amounts and all investment earnings on amounts in the general subaccount of the collection account, will be deposited into the general subaccount. Investment earnings on the capital subaccount and the excess funds subaccount will be deposited into the capital subaccount and the excess funds subaccount, respectively.

     On each payment date, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account for the Bonds in the following priority:

1.	payment of a pro rata portion (based upon the respective outstanding amount of the Bonds and all other series of storm recovery bonds issued by us under the indenture, if any) of the trustee’s fees, expenses and any outstanding indemnity amounts not to exceed $[                    ] in any 12-month period,
2.	payment of the servicing fee relating to the Bonds, plus any unpaid servicing fees relating to the Bonds from prior payment dates,
3.	payment of a pro rata portion of the administration fee and a pro rata portion of the fees of our independent manager, which will be in an amount specified in an agreement between us and our independent manager,
4.	payment of all of our other ordinary periodic operating expenses relating to the Bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement,
5.	payment of the interest then due on the Bonds, including any past due interest,
6.	payment of the principal then required to be paid on the Bonds at final maturity or acceleration,
7.	payment of the principal then scheduled to be paid on the Bonds in accordance with the expected sinking fund schedule, including any previously unpaid scheduled principal,
8.	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents relating to the Bonds, including all remaining indemnity amounts owed to the trustee,
9.	replenishment of any amounts drawn from the capital subaccount,
10.	if the balance in the capital subaccount is greater than the initial balance of the capital subaccount after making the foregoing allocations, an amount of investment earnings on the capital subaccount not to exceed [_._]% per annum shall be paid to us; provided that no event of default has occurred and is continuing and that the balance of the capital subaccount is not reduced below the initial balance of the capital subaccount,
11.	allocation of the remainder, if any, to the excess funds subaccount, and
12.	after the Bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, released to us free and clear of the lien of the indenture.

     The annual servicing fee in clause 2 may not exceed 0.05% of the original principal amount of the Bonds (for so long as Cleco Power is the servicer) and the annual administration fee in clause 3 may not exceed $100,000.

     If, on any payment date, funds in the general subaccount are insufficient to make the allocations or payments contemplated by clauses 1 through 10 of the first paragraph of this subsection, the trustee will draw from amounts on deposit in the following subaccounts in the following order up to the amount of the shortfall:

1. from the excess funds subaccount for allocations and payments contemplated in clauses 1 through 10, and

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2. from the capital subaccount for allocations and payments contemplated by clauses 1 through 9.

     If, on any payment date, available collections of storm recovery charges allocable to the Bonds, together with available amounts in the related subaccounts, are not sufficient to pay interest due on all outstanding Bonds on that payment date, amounts available will be allocated pro rata based on the amount of interest payable on each tranche of the Bonds. If, on any payment date, remaining collections of storm recovery charges allocable to the Bonds, together with available amounts in the subaccounts, are not sufficient to pay principal due and payable on all outstanding Bonds on that payment date, amounts available will be allocated pro rata based on the principal amount of each tranche then due and payable. If, on any payment date, remaining collections of storm recovery charges allocable to the Bonds, together with available amounts in the subaccounts, are not sufficient to pay principal scheduled to be paid on all outstanding Bonds, amounts available will be allocated sequentially to each tranche then scheduled to be paid on the payment date. If the trustee uses amounts on deposit in the capital subaccount to pay those amounts or make those transfers, as the case may be, subsequent adjustments to the related storm recovery charges will take into account, among other things, the need to replenish those amounts.

THE STORM RECOVERY CHARGES

     Cleco Power will be the initial servicer of the Bonds. Beginning on the date we issue the Bonds, the initial storm recovery charges listed in the table below will be imposed on Cleco Power’s customers in each storm recovery charge customer class at the applicable rate for the class determined pursuant to the financing order. These storm recovery charges may be adjusted semi-annually, or more frequently under certain circumstances, by the servicer in accordance with its filings with the Louisiana commission. Please read “Cleco Power’s Financing Order” in the accompanying prospectus.

Initial Storm Recovery Charges

Storm Recovery Charge Customer Class	Initial Storm Recovery Charge Rate
Residential	$
General Non-demand	$
General Secondary	$
General Primary	$
General Municipal	$
Large Power	$
OLS (Outdoor Lighting Service)	$

During the twelve months ended June 30, 2007, approximately 32% of Cleco Power’s total deliveries (based on MWh) were to industrial customers (includes General Non-demand, General Secondary, General Primary and Large Power customer classes noted above), approximately 31% were to commercial customers (includes General Non-demand, General Secondary, General Primary and OLS customer classes noted above) and approximately 37% were to residential customers.

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UNDERWRITING THE BONDS

     Subject to the terms and conditions in the underwriting agreement among us, Cleco Power and the underwriters, for whom Credit Suisse Securities (USA) LLC is acting as representative, we have agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal amount of the Bonds listed opposite each underwriter’s name below:

Underwriter Tranche A-[__] Tranche A-[__] Tranche A-[__] Tranche A-[__]

     Under the underwriting agreement, the underwriters will take and pay for all of the Bonds we offer, if any are taken. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

The Underwriters’ Sales Price for the Bonds

     The Bonds sold by the underwriters to the public will be initially offered at the prices to the public set forth on the cover of this prospectus supplement. The underwriters propose initially to offer the Bonds to dealers at such prices, less a selling concession not to exceed the percentage listed below for each tranche. The underwriters may allow, and dealers may reallow, a discount not to exceed the percentage listed below for each tranche.

	Selling	Reallowance
	Concession	Discount
Tranche A-[__]
Tranche A-[__]
Tranche A-[__]
Tranche A-[__]

After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.

No Assurance as to Resale Price or Resale Liquidity for the Bonds

     The Bonds are a new issue of securities with no established trading market. They will not be listed on any securities exchange. The underwriters have advised us that they intend to make a market in the Bonds, but they are not obligated to do so and may discontinue market making at any time without notice. We cannot assure you that a liquid trading market will develop for the Bonds.

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Various Types of Underwriter Transactions That May Affect the Price of the Bonds

     The underwriters may engage in overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the Bonds in accordance with Regulation M under the Securities Exchange Act of 1934. Overallotment transactions involve syndicate sales in excess of the offering size, which create a syndicate short position. Stabilizing transactions are bids to purchase the Bonds, which are permitted, so long as the stabilizing bids do not exceed a specific maximum price. Syndicate covering transactions involve purchases of the Bonds in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the Bonds originally sold by the syndicate member are purchased in a syndicate covering transaction. These overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the Bonds to be higher than they would otherwise be. Neither we, Cleco Power, the trustee, our managers nor any of the underwriters represent that the underwriters will engage in any of these transactions or that these transactions, if commenced, will not be discontinued without notice at any time.

     Certain of the underwriters and their affiliates have in the past provided, and may in the future from time to time provide, investment banking and general financing and banking services to Cleco Power and its affiliates for which they have in the past received, and in the future may receive, customary fees. In addition, each underwriter may from time to time take positions in the Bonds.

     We estimate that the total expenses of the offering will be $[                    ].

     We and Cleco Power have agreed to indemnify the underwriters against some liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

     The underwriters are offering the Bonds, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters, including the validity of the Bonds and other conditions contained in the underwriting agreement, such as receipt of ratings confirmations, officers’ certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject offers in whole or in part.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     In the opinion of Phelps Dunbar, L.L.P., counsel to us and to Cleco Power, interest paid on the Bonds generally will be taxable to a U.S. bondholder as ordinary interest income at the time it accrues or is received in accordance with the U.S. bondholder’s method of accounting for U.S. federal income tax purposes. Phelps Dunbar, L.L.P. has also issued an opinion that, for federal income tax purposes (1) we will not be treated as a taxable entity separate and apart from Cleco Power, our sole member, and (2) based on Revenue Procedure 2005-62, the Bonds will constitute indebtedness of Cleco Power. Each beneficial owner of a Bond, by acquiring a beneficial interest, agrees to treat such Bond as indebtedness of our sole member secured by the collateral for federal (and, to the extent applicable, state) income tax purposes unless otherwise required by appropriate taxing authorities. Please read “Material U.S. Federal Income Tax Consequences for the Storm Recovery Bondholders” in the accompanying prospectus.

MATERIAL LOUISIANA STATE TAX CONSEQUENCES

     In the opinion of Phelps Dunbar LLP, counsel to us and to Cleco Power, interest paid on the storm recovery bonds generally will be taxed for Louisiana income tax purposes consistently with its taxation for U.S. federal income tax purposes and such interest received by a person who is not otherwise subject to corporate or personal income tax in the state of Louisiana will not be subject to tax in Louisiana. Phelps Dunbar LLP has also issued an opinion, based upon the treatment of such issues for federal income tax purposes, that for Louisiana income tax purposes (1) we will not be treated as a taxable entity separate and apart from Cleco Power, our sole member, and (2) the storm recovery bonds will constitute indebtedness of Cleco Power. Please read “Material U.S. Federal Income Tax Consequences” and “Material Louisiana State Tax Consequences” in the accompanying prospectus.

RISK WEIGHTING OF THE BONDS UNDER CERTAIN INTERNATIONAL CAPITAL GUIDELINES

     Under the standardized approach under the framework established by Basel II, the Bonds may attract a risk weighting of 20% on the basis that the Bonds are rated in the highest category by a major rating agency. It is a condition of issuance of the Bonds that the bonds be rated “Aaa” by Moody’s, “AAA” by S&P, and “AAA” by Fitch. In the alternative, under the framework established by Basel II, the Bonds may attract the same risk weighting if the Bonds are considered to be “guaranteed” by a non-governmental public sector entity.

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     If held by financial institutions subject to regulation in countries (other than the United States) that have adopted and continue to use or permit the use of the Basel Accord for risk weighting, the Bonds may attract the same risk weighting as “claims on” or “claims guaranteed by” non-central government bodies within the United States, which are accorded a 20% risk weighting. Please read “Cleco Power’s Financing Order—True-Ups” in the accompanying prospectus. We note, however, that the analysis may be different than that under Basel II.

     We note that the timetable for, and scope of, the implementation of Basel II differs from country to country and it may not always be clear which regime — Basel Accord or Basel II, or any transitional regime — may be applicable at any particular time.

     Before acquiring any Bonds, prospective investors that are banks or bank holding companies, particularly those that are organized under the laws of any country other than the United States or of any state, territory or other political subdivision of the United States, and prospective investors that are U.S. branches and agencies of foreign banks, should consult all applicable laws, regulations and policies, as well as appropriate regulatory bodies and legal counsel, to confirm that an investment in the Bonds is permissible and in compliance with any applicable investment or other limits. We cannot assure you that the Bonds will attract a 20% risk weighting treatment under any national law, regulation or policy implementing Basel II, the Basel Accord or any transitional regime.

RATINGS FOR THE BONDS

     It is a condition of any underwriter’s obligation to purchase the Bonds that each tranche of the Bonds be rated “AAA” by S&P, “AAA” by Fitch and “Aaa” by Moody’s.

     A rating on a security is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time by the rating agency. Each rating should be evaluated independently of any other rating. No person is obligated to maintain its rating on the Bonds, and accordingly, we cannot assure you that a rating assigned to any tranche of the Bonds upon initial issuance will not be revised or withdrawn by a rating agency at any time thereafter. If a rating of any tranche of the Bonds is revised or withdrawn, the liquidity of that tranche may be adversely affected. In general, ratings address credit risk and do not represent any assessment of the likelihood of any particular level of principal payments on the Bonds other than payment in full of each tranche of the Bonds by the applicable final maturity date, as well as the timely payment of interest.

LEGAL PROCEEDINGS

     There are no legal or governmental proceedings pending against us, the sponsor, seller, trustee or servicer, or of which any property of the foregoing is subject, that is material to the holders of the Bonds.

WHERE YOU CAN FIND MORE INFORMATION

     To the extent that we are required to file such reports and information with the Securities and Exchange Commission, we will file annual and current reports and other information with the Securities and Exchange Commission, or the SEC. We are incorporating by reference any future filings which we (file no. 333-[                    ]) or Cleco Power, but solely in its capacity as our sponsor, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all the Bonds, excluding any information that is furnished to, and not filed with, the SEC. These reports will be filed under our own name as issuing entity. Please also read “Where You Can Find More Information” in the accompanying prospectus.

LEGAL MATTERS

     Certain legal matters relating to us and the issuance of the Bonds will be passed upon for Cleco Power and for us by Baker Botts L.L.P., Houston, Texas and Phelps Dunbar, L.L.P., New Orleans, Louisiana, and for the underwriters by Sidley Austin LLP, San Francisco, California. Certain legal matters relating to the federal and state income tax consequences of the issuance of the Bonds will be passed upon for us by Phelps Dunbar, L.L.P.

OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS

NOTICE TO RESIDENTS OF SINGAPORE

     EACH UNDERWRITER ACKNOWLEDGES THAT THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS HAVE NOT BEEN REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE. ACCORDINGLY, EACH UNDERWRITER REPRESENTS, WARRANTS AND AGREES THAT IT HAS NOT OFFERED OR SOLD ANY BONDS OR CAUSED THE BONDS TO BE MADE THE SUBJECT OF

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AN INVITATION FOR SUBSCRIPTION OR PURCHASE, AND WILL NOT OFFER OR SELL ANY BONDS OR CAUSE THE BONDS TO BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, AND HAS NOT CIRCULATED OR DISTRIBUTED, NOR WILL IT CIRCULATE OR DISTRIBUTE THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF BONDS, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE “SFA”), OR ANY PERSON PURSUANT TO SECTION 275(1A), AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR (II) TO A RELEVANT PERSON PURSUANT TO SECTION 275(1) OR ANY PERSON PURSUANT TO SECTION 275(1A) OF THE SFA, AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR (III) OTHERWISE PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, ANY OTHER APPLICABLE PROVISION OF THE SFA.

     WHERE THE BONDS ARE SUBSCRIBED OR PURCHASED UNDER SECTION 275 BY A RELEVANT PERSON WHICH IS:

          (A) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA)) THE SOLE BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR

          (B) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY OF THE TRUST IS AN INDIVIDUAL WHO IS AN ACCREDITED INVESTOR,

          SHARES, DEBENTURES AND UNITS OF SHARES AND DEBENTURES OF THAT CORPORATION OR THE BENEFICIARIES’ RIGHTS AND INTEREST (HOWSOEVER DESCRIBED) IN THAT TRUST SHALL NOT BE TRANSFERRED WITHIN 6 MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED THE BONDS PURSUANT TO AN OFFER MADE UNDER SECTION 275 EXCEPT:

          (1) TO AN INSTITUTIONAL INVESTOR (FOR CORPORATIONS, UNDER SECTION 274 OF THE SFA) OR TO A RELEVANT PERSON DEFINED IN SECTION 275(2) OF THE SFA, OR TO ANY PERSON PURSUANT TO AN OFFER THAT IS MADE ON TERMS THAT SUCH RIGHTS OR INTEREST ARE ACQUIRED AT A CONSIDERATION OF NOT LESS THAN S$200,000 (OR ITS EQUIVALENT IN A FOREIGN CURRENCY) FOR EACH TRANSACTION, WHETHER SUCH AMOUNT IS TO BE PAID FOR IN CASH OR BY EXCHANGE OF SECURITIES OR OTHER ASSETS, AND FURTHER FOR CORPORATIONS, IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA;

          (2) WHERE NO CONSIDERATION IS OR WILL BE GIVEN FOR THE TRANSFER; OR

          (3) WHERE THE TRANSFER IS BY OPERATION OF LAW. THE PROSPECTUS RELATING TO THE BONDS (“PROSPECTUS”) WILL, PRIOR TO ANY SALE OF SECURITIES PURSUANT TO THE PROVISIONS OF SECTION 106D OF THE COMPANIES ACT (CAP.50), BE LODGED, PURSUANT TO SAID SECTION 106D, WITH THE REGISTRAR OF COMPANIES IN SINGAPORE, WHICH WILL TAKE NO RESPONSIBILITY FOR ITS CONTENTS. HOWEVER, NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS HAS BEEN AND NOR WILL THEY BE REGISTERED AS A PROSPECTUS WITH THE REGISTRAR OF COMPANIES IN SINGAPORE. ACCORDINGLY, THE BONDS MAY NOT BE OFFERED, AND NEITHER THIS PROSPECTUS SUPPLEMENT NOR ANY OTHER OFFERING DOCUMENT OR MATERIAL RELATING TO THE BONDS MAY BE CIRCULATED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO THE PUBLIC OR ANY MEMBER OF THE PUBLIC IN SINGAPORE OTHER THAN TO INSTITUTIONAL INVESTORS OR OTHER PERSONS OF THE KIND SPECIFIED IN SECTION 106C AND SECTION 106D OF THE COMPANIES ACT OR ANY OTHER APPLICABLE EXEMPTION INVOKED UNDER DIVISION 5A OF PART IV OF THE COMPANIES ACT. THE FIRST SALE OF SECURITIES ACQUIRED UNDER A SECTION 106C OR SECTION 106D EXEMPTION IS SUBJECT TO THE PROVISIONS OF SECTION 106E OF THE COMPANIES ACT.

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NOTICE TO RESIDENTS OF THE PEOPLE’S REPUBLIC OF CHINA

     THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES LAW OF THE PEOPLE’S REPUBLIC OF CHINA (AS THE SAME MAY BE AMENDED FROM TIME TO TIME) AND ARE NOT TO BE OFFERED OR SOLD TO PERSONS WITHIN THE PEOPLE’S REPUBLIC OF CHINA (EXCLUDING THE HONG KONG AND MACAU SPECIAL ADMINISTRATIVE REGIONS).

NOTICE TO RESIDENTS OF JAPAN

     THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES AND EXCHANGE LAW OF JAPAN (THE “SEL”), AND MAY NOT BE OFFERED OR SOLD IN JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, OTHERS FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN, EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE SEL, AND IN COMPLIANCE WITH THE OTHER RELEVANT LAWS AND REGULATIONS OF JAPAN.

NOTICE TO RESIDENTS OF HONG KONG

     EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT:

          IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL IN HONG KONG, BY MEANS OF ANY DOCUMENT, ANY BONDS OTHER THAN (A) TO PROFESSIONAL INVESTORS WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF THE LAWS OF HONG KONG AND ANY RULES MADE THEREUNDER; OR (B) IN CIRCUMSTANCES THAT DO NOT RESULT IN THE DOCUMENT BEING A “PROSPECTUS” AS DEFINED IN THE COMPANIES ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG OR THAT DO NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THAT ORDINANCE;

          IT HAS NOT ISSUED OR HAD IN ITS POSSESSION FOR THE PURPOSE OF ISSUE, AND WILL NOT ISSUE OR HAVE IN ITS POSSESSION FOR THE PURPOSE OF ISSUE, WHETHER IN HONG KONG OR ELSEWHERE ANY ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE BONDS, WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO BONDS THAT ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” AS DEFINED UNDER THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF THE LAWS OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE.

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

     IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A “RELEVANT MEMBER STATE”), THE UNDERWRITER HAS REPRESENTED AND AGREED THAT WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE (THE “RELEVANT IMPLEMENTATION DATE”) IT HAS NOT MADE AND WILL NOT MAKE AN OFFER OF BONDS TO THE PUBLIC IN THAT RELEVANT MEMBER STATE PRIOR TO THE PUBLICATION OF A PROSPECTUS IN RELATION TO THE BONDS WHICH HAS BEEN APPROVED BY THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE OR, WHERE APPROPRIATE, APPROVED IN ANOTHER RELEVANT MEMBER STATE AND NOTIFIED TO THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE, ALL IN ACCORDANCE WITH THE PROSPECTUS DIRECTIVE, EXCEPT THAT IT MAY, WITH EFFECT FROM AND INCLUDING THE RELEVANT IMPLEMENTATION DATE, MAKE AN OFFER OF BONDS TO THE PUBLIC IN THAT RELEVANT MEMBER STATE AT ANY TIME:

          (A) TO LEGAL ENTITIES WHICH ARE AUTHORIZED OR REGULATED TO OPERATE IN THE FINANCIAL MARKETS OR, IF NOT SO AUTHORIZED OR REGULATED, WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES;

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          (B) TO ANY LEGAL ENTITY WHICH HAS TWO OR MORE OF (1) AN AVERAGE OF AT LEAST 250 EMPLOYEES DURING THE LAST FINANCIAL YEAR; (2) A TOTAL BALANCE SHEET OF MORE THAN €43,000,000 AND (3) AN ANNUAL NET TURNOVER OF MORE THAN €50,000,000, AS SHOWN IN ITS LAST ANNUAL OR CONSOLIDATED ACCOUNTS; OR

          (C) IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE PUBLICATION BY THE ISSUING ENTITY OF A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE.

     FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN “OFFER OF BONDS TO THE PUBLIC” IN RELATION TO ANY BONDS IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE BONDS TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE THE BONDS, AS THE SAME MAY BE VARIED IN THAT MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE AND THE EXPRESSION “PROSPECTUS DIRECTIVE” MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE.

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

     THE UNDERWRITER HAS REPRESENTED AND AGREED THAT:

          (A) IT HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT (THE “FSMA”)) RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE BONDS IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUING ENTITY; AND

          (B) IT HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE BONDS IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM.

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The information in this prospectus is not complete and may be changed. The storm recovery bonds may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated                     , 2007.

PROSPECTUS

Cleco Katrina/Rita Hurricane Recovery Funding LLC

Issuing Entity

SENIOR SECURED STORM RECOVERY BONDS
Issuable in Series

Cleco Power LLC

Seller, Initial Servicer and Sponsor

     You should carefully consider the risk factors beginning on page 12 of this prospectus before you invest in the storm recovery bonds.

     We, the issuing entity, may issue from time to time one or more series of the storm recovery bonds as described in this prospectus. Each series of storm recovery bonds may have one or more tranches. The storm recovery bonds represent only our obligations and are backed only by our assets. Cleco Power LLC and its affiliates, other than us, are not liable for any payments on the storm recovery bonds. The storm recovery bonds are not a debt or general obligation of the State of Louisiana, the Louisiana Public Service Commission or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Louisiana or any governmental agency or instrumentality.

     We are a special purpose entity and own no property other than the collateral described in this prospectus. The collateral is the sole source of payment for the storm recovery bonds.

     There currently is no secondary market for the storm recovery bonds, and we cannot assure you that one will develop.

     We may offer and sell the storm recovery bonds by use of this prospectus. We will provide the specific terms of any offerings in one or more supplements to this prospectus. You should read this prospectus and the related prospectus supplement carefully before you invest in the storm recovery bonds. This prospectus may not be used to offer and sell the storm recovery bonds unless accompanied by a prospectus supplement.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is [                    ], 2007.

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TABLE OF CONTENTS

PROSPECTUS

ABOUT THIS PROSPECTUS	1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION	2
PROSPECTUS SUMMARY	3
Summary of the Storm Recovery Bonds	3
Parties to Transactions and Responsibilities	4
Flow of Funds	5
The Collateral	6
The Storm Recovery Property	6
Interest Payments	7
Principal Payments and Record Dates and Payment Sources	7
Priority of Distributions	7
Floating Rate Storm Recovery Bonds	8
Credit Enhancement	8
State Pledge	10
Louisiana Commission Pledge	10
Optional Redemption	10
Payment and Record Dates	10
Scheduled Final Payment Dates and Final Maturity Dates	10
Ratings for the Storm Recovery Bonds	11
Servicing Compensation	11
Federal Income Tax Status	11
ERISA Considerations	11
RISK FACTORS	12
Risks Associated with Potential Judicial, Legislative or Regulatory Actions	12
Servicing Risks	14
Storm-Related Risks	16
Risks Associated with the Unusual Nature of the Storm Recovery Property	16
Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer	16
Other Risks Associated With an Investment in the Storm Recovery Bonds	19
THE SECURITIZATION ACT	22
Overview	22
Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs	22
Constitutional Matters	23
The Louisiana Commission May Adjust Storm Recovery Charges	24
Storm Recovery Charges Are Nonbypassable	25
The Securitization Act Protects the Bondholders’ Security Interest on Storm Recovery Property	25
The Securitization Act Characterizes the Transfer of Storm Recovery Property as a True Sale	25
CLECO POWER’S FINANCING ORDER	26
THE SELLER, INITIAL SERVICER AND SPONSOR	29
About Cleco Power	29
Cleco Power’s Customer Base and Electric Energy Consumption	29
Percentage Concentration Within Cleco Power’s Large Industrial Customers	30
Forecasting Electricity Consumption	30
Credit Policy; Billing Process; Collections Process; Termination of Service	31
Write-off and Delinquency Experience	32
Delinquencies	32
Average Days Sales Outstanding	33
Average Days Sales Outstanding 2001 Through 2007 YTD	33
CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC, THE ISSUING ENTITY	34
General	34
Our Purpose	34
Our Relationship With Cleco Power	35
Our Managers	35
Manager Fees and Limitation on Liabilities	35
We Are a Separate and Distinct Legal Entity from Cleco Power	35

i

Administration Agreement	36
USE OF PROCEEDS	36
THE STORM RECOVERY BONDS	37
General Terms of the Storm Recovery Bonds	37
Payments of Interest and Principal on the Storm Recovery Bonds	38
Floating Rate Storm Recovery Bonds	40
Redemption of the Storm Recovery Bonds	40
Credit Enhancement for the Storm Recovery Bonds	40
Storm Recovery Bonds Will Be Issued in Book-Entry Form	41
Definitive Certificated Storm Recovery Bonds	43
Registration and Transfer of the Storm Recovery Bonds	44
The Storm Recovery Bonds May Be Issued in Various Series or Tranches	44
The Security for the Storm Recovery Bonds	45
The Collection Account for the Storm Recovery Bonds	46
How Funds in the Collection Account Will Be Allocated	49
Allocation as Between Series	50
Reports to Holders of the Storm Recovery Bonds	51
We and the Trustee May Modify the Indenture	51
What Constitutes an Event of Default on the Storm Recovery Bonds	54
Our Covenants	57
Access to the List of Storm Recovery Bondholders	58
We Must File an Annual Compliance Statement	58
The Trustee Must Provide an Annual Report to All Storm Recovery Bondholders	58
What Will Trigger Satisfaction and Discharge of the Indenture	59
Our Legal Defeasance and Covenant Defeasance Options	59
The Trustee	60
Governing Law	61
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE STORM RECOVERY BONDS	62
THE SALE AGREEMENT	63
Cleco Power’s Sale and Assignment of the Storm Recovery Property	63
Cleco Power’s Representations and Warranties	63
Cleco Power’s Covenants	67
Cleco Power’s Obligation to Indemnify Us and the Trustee and to Take Legal Action	70
Successors to Cleco Power	70
Amendment	71
THE SERVICING AGREEMENT	72
Servicing Procedures	72
Storm Recovery Charge Adjustment Process	73
Servicer Compensation	74
Cleco Power’s Representations and Warranties as Servicer	74
The Servicer Will Indemnify Us, Other Entities and the Louisiana Commission in Limited Circumstances	75
The Servicer Will Provide Statements to Us, the Louisiana Commission and the Trustee	76
The Servicer Will Provide Compliance Reports Concerning the Servicing Agreement	77
Matters Regarding Cleco Power as the Servicer	77
Events Constituting a Default by the Servicer	78
The Trustee’s Rights if the Servicer Defaults	79
The Obligations of a Successor Servicer	79
Amendment	79
HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT	80
MATERIAL FEDERAL INCOME TAX CONSEQUENCES FOR THE STORM RECOVERY BONDHOLDERS	84
General	84
Income Tax Status of the Storm Recovery Bonds and the Issuing Entity	84
Taxation of Storm Recovery Bondholders	84
Definition of United States Person	84
Tax Consequences to U.S. Holders	85
Tax Consequences to Non-U.S. Holders	85
ERISA CONSIDERATIONS	88
Plan Asset Issues for an Investment in the Storm Recovery Bonds	88
Prohibited Transaction Exemptions	88
General Investment Considerations for Prospective Plan Investors in the Storm Recovery Bonds	89

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PLAN OF DISTRIBUTION FOR THE STORM RECOVERY BONDS	90
Distribution	90
Compensation to Underwriters	90
Other Distribution Matters	90
RISK WEIGHTING UNDER CERTAIN INTERNATIONAL CAPITAL GUIDELINES	91
RATINGS FOR THE STORM RECOVERY BONDS	91
WHERE YOU CAN FIND MORE INFORMATION	91
LEGAL MATTERS	92
APPENDIX A GLOSSARY OF DEFINED TERMS	A-1

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ABOUT THIS PROSPECTUS

     This prospectus is part of a registration statement we have filed with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process. By using this process, we may offer the storm recovery bonds in one or more offerings. This prospectus provides you with a general description of the storm recovery bonds we may offer. Each time we offer storm recovery bonds, we will provide a supplement to this prospectus. The prospectus supplement will describe the specific terms of the offering. The prospectus supplement may also add, update or change the information contained in this prospectus. Please carefully read this prospectus, the prospectus supplement and the information, if any, contained in the documents we refer to in this prospectus under the heading “Where You Can Find More Information.”

     References in this prospectus and the prospectus supplement to the terms “we,” “us,” “our” or “the issuing entity” mean Cleco Katrina/Rita Hurricane Recovery Funding LLC. References to “Cleco Power,” “the sponsor,” “the initial servicer” or “the seller” mean Cleco Power LLC. References to the “Securitization Act” mean Act 64 of 2006, established by the Louisiana Legislature, providing for a financing mechanism through which electric utilities can use securitization financing for storm recovery costs, including the financing of a storm recovery reserve, by issuing “storm recovery bonds.” The Securitization Act is codified at La. R.S. 45:1226-1236. Unless the context otherwise requires, the term customer means any existing or future LPSC-jurisdictional customer who remains attached to Cleco Power’s (or its successors) electric transmission or distribution lines, and who, via such lines, receive any type of service from Cleco Power (or its successors) under rate schedules or special contracts approved by the Louisiana commission. We also refer to the Louisiana Public Service Commission as the “Louisiana commission” or the “LPSC.” You can find a glossary of some of the other defined terms we use in this prospectus and the prospectus supplement on page A-1 of this prospectus.

     We have included cross-references to sections in this prospectus where you can find further related discussions. You can also find references to key topics in the table of contents on the previous page and in the table of contents on page (i) of the accompanying prospectus supplement.

     You should rely only on the information contained or incorporated by reference in this prospectus and the prospectus supplement. Neither we nor any underwriter, agent, dealer, salesperson, the Louisiana commission or Cleco Power has authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering to sell the storm recovery bonds in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is current only as of the date of this prospectus.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     Some statements contained in this prospectus and the prospectus supplement concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts, including statements in the documents that are incorporated by reference as discussed in this prospectus under the heading “Where You Can Find More Information,” are forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from those expressed or implied by these statements. In some cases, you can identify our forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will,” or other similar words.

     We have based our forward-looking statements on our management’s beliefs, expectations and assumptions based on information available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements.

     The following are some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements:

• state and federal legislative and regulatory actions or developments, changes in or application of laws or regulations applicable to various aspects of Cleco Power’s business;

• non-payment of storm recovery charges by Cleco Power’s customers;

• the accuracy of the servicer’s forecast of electrical consumption or the payment of storm recovery charges;

• changes in market demand and demographic patterns;

• weather variations and other natural phenomena, including, without limitation, hurricanes, affecting Cleco Power’s customers’ energy usage;

• the operating performance of Cleco Power’s facilities;

• the reliability of the systems, procedures and other infrastructure necessary to operate Cleco Power’s business;

• national or regional economic conditions affecting Cleco Power’s customers’ energy usage;

• acts of war or terrorism or other catastrophic events affecting Cleco Power’s customers’ energy usage; and

• other factors we discuss in this prospectus, any prospectus supplement and our other SEC filings.

     You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statement.

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PROSPECTUS SUMMARY

     This summary contains a brief description of the storm recovery bonds and applies to all series of storm recovery bonds we may offer by use of this prospectus. You may find information relating to a specific series of our storm recovery bonds in the prospectus supplement relating to that series. You will find a more detailed description of the terms of the offering of the storm recovery bonds following this summary.

     You should carefully consider the risk factors beginning on page 12 of this prospectus before you invest in the storm recovery bonds.

Summary of the Storm Recovery Bonds

The issuing entity:	Cleco Katrina/Rita Hurricane Recovery Funding LLC is a direct, wholly owned subsidiary of Cleco Power and a limited liability company formed under Louisiana law. We were formed solely to purchase and own storm recovery property, to issue storm recovery bonds and to perform activities incidental thereto. Please read “Cleco Katrina/Rita Hurricane Recovery Funding LLC, The Issuing Entity.” Subsequent financing orders relating to additional series of storm recovery bonds may impose additional or different requirements. Please read “Cleco Power’s Financing Order.”
Our address:	2605 Hwy. 28 East, Office Number 12, Pineville, Louisiana 71360
Our telephone number:	(318) 484-4180
The seller, initial servicer and sponsor of the storm recovery property:	Cleco Power
Cleco Power’s address:	2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226
Cleco Power’s telephone number:	(318) 484-7400
The servicer of the storm recovery property:	Cleco Power is an integrated electric utility that conducts generation, purchase, transmission, distribution and sale operations subject to the jurisdiction of the Louisiana commission and the Federal Energy Regulatory Commission, or FERC, among other regulators, which also engages in energy management activities. Cleco Power is a Louisiana limited liability company and a wholly owned subsidiary of Cleco Corporation, a regional energy services holding company. Cleco Power, acting as the initial servicer, and any successor servicer, referred to in this prospectus supplement and the accompanying prospectus as the “servicer,” will service the storm recovery property securing the storm recovery bonds under a servicing agreement with us. Please read “The Seller, Initial Servicer and Sponsor.” Neither Cleco Power nor Cleco Corporation nor any other affiliate (other than us) is an obligor on the storm recovery bonds.
The trustee:	The trustee for each series of storm recovery bonds will be named in the applicable prospectus supplement.
Transaction overview:	In August and September 2005, Cleco Power was struck by the two worst natural disasters ever to strike its system, Hurricanes Katrina and Rita. The Securitization Act permits electric utilities to recover certain losses sustained as a result these hurricanes through the issuance of storm recovery bonds pursuant to and supported by an irrevocable financing order issued by the Louisiana commission. The Securitization Act also permits the Louisiana commission to impose an irrevocable nonbypassable storm recovery charge on all of an electric utility’s customers that are subject to the Louisiana

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commission’s jurisdiction, for payment of the storm recovery charges. The amount and terms for collections of these storm recovery charges are governed by one or more financing orders issued to an electric utility by the Louisiana commission. The Securitization Act permits an electric utility to transfer its rights and interests under a financing order, including the right to impose, collect and receive storm recovery charges, to a special purpose entity formed by the electric utility to issue debt securities secured by the right to receive revenues arising from the storm recovery charges. Under the Securitization Act, as of the effective date of a financing order, there is created and established for Cleco Power storm recovery property, which is a present contract right in favor of Cleco Power, its transferees and other financing parties. Unless the context infers otherwise, references in this prospectus to the “financing order” are to the financing order issued by the Louisiana commission on September 17, 2007, which is further described below. Any subsequent financing order relating to a separate series of storm recovery bonds will be described in the applicable prospectus supplement.

On September 17, 2007, the Louisiana commission issued a financing order determining that Cleco Power is entitled, pursuant to the Securitization Act, to finance, through the issuance of storm recovery bonds in the aggregate principal amount of approximately $187 million, Cleco Power’s storm recovery costs (including storm recovery reserves and up front financing costs associated with the issuance of storm recovery bonds) as determined by separate order of the Louisiana commission. The financing order also authorized (1) Cleco Power’s proposed financing structure and issuance of the storm recovery bonds; (2) creation of the storm recovery property, including the right to impose and collect storm recovery charges sufficient to pay the storm recovery bonds and associated financing costs; (3) a tariff to implement the storm recovery charges; and (4) a tariff to implement a surcredit to provide Cleco Power customers the benefit of all non-ratepayer recoveries and to address ancillary cost recovery relating to the storm recovery cost process.

The primary transactions underlying the offering of each series of storm recovery bonds are as follows:

•    Cleco Power will transfer and sell the storm recovery property to us in exchange for the net proceeds from the sale of a series of storm recovery bonds,

•    we will sell the series of storm recovery bonds, which will be secured primarily by the related storm recovery property, to the underwriters named in the prospectus supplement and

•    Cleco Power will act as the initial servicer of the storm recovery property.

The storm recovery bonds are not obligations of the trustee, our managers, Cleco Power, Cleco Corporation or of any of their affiliates other than us. The storm recovery bonds are also not obligations of the State of Louisiana, the Louisiana commission or any other governmental agency, authority or instrumentality of the State of Louisiana.

Parties to Transactions and Responsibilities

     The following chart represents a general summary of the parties to the transactions underlying the offering of a series of storm recovery bonds, their roles and their various relationships to the other parties:

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Flow of Funds

     The following chart represents a general summary of the flow of funds:

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The Collateral

     Each series of storm recovery bonds will be secured under the indenture by the indenture’s trust estate relating to that series. The principal asset of the trust estate will be storm recovery property. Under the Securitization Act, as of the effective date of a financing order, there is created and established for Cleco Power storm recovery property, which is a present contract right in favor of Cleco Power, its transferees and other financing parties, to impose, collect and receive storm recovery charges from Cleco Power’s customers. The indenture’s trust estate will also consist of:

• our rights under a sale agreement pursuant to which we will acquire the related storm recovery property, under an administration agreement and under all bills of sale delivered by Cleco Power pursuant to such sale agreement,

• our rights under a servicing agreement and any subservicing, agency, intercreditor or collection agreements executed in connection with such servicing agreement,

• the collection account for the particular series of storm recovery bonds and all subaccounts of the collection account,

• our rights under any interest rate swap agreement or hedging agreement entered into with respect to the issuance of a floating rate tranche of a particular series of storm recovery bonds,

• all of our other property related to the series of storm recovery bonds, other than any cash released to us by the trustee on any payment date from earnings on the capital subaccount,

• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and

• all payments on or under and all proceeds in respect of any or all of the foregoing.

     The collateral for each series of storm recovery bonds will be separate from the collateral for any other series, and holders of one series of storm recovery bonds will have no recourse to collateral for a different series. Please read “The Storm Recovery Bonds—The Security for the Storm Recovery Bonds” in this prospectus.

The Storm Recovery Property

     In general terms, all of the rights and interests of Cleco Power under a financing order that are transferred to us pursuant to a sale agreement are referred to in this prospectus and the prospectus supplement as “storm recovery property.” Storm recovery property includes the right to impose, collect and receive storm recovery charges in amounts sufficient to pay principal and interest and to make other deposits in connection with the related series of storm recovery bonds. Storm recovery charges are payable by Cleco Power’s customers. During the twelve months ended June 30, 2007, approximately 33% of Cleco Power’s total deliveries (based on MWh) were to industrial customers, approximately 26% were to commercial customers and approximately 39% were to residential customers.

     The storm recovery property is the principal collateral securing a series of storm recovery bonds. Storm recovery charges authorized in a financing order are irrevocable and not subject to reduction, impairment, or adjustment by further action of the Louisiana commission, except for semi-annual and interim true-up adjustments to correct overcollections or undercollections and to provide for the expected recovery of amounts sufficient to timely provide payments of scheduled debt service and other required amounts and charges in connection with a series of storm recovery bonds. See “Cleco Power’s Financing Order—True-Ups.” All revenues and collections resulting from storm recovery charges are part of the storm recovery property with respect to a particular series of storm recovery bonds.

     We will purchase storm recovery property from Cleco Power to support the issuance of the related series of storm recovery bonds. Cleco Power as servicer will bill and collect the storm recovery charges from its customers. Cleco Power will include the storm recovery charges in its bills to its customers and is required to show the storm recovery charges as a separate line item or footnote. The servicer is also required to send a written statement at least annually to all customers that we are the owner of the rights to the storm recovery property and that the servicer is merely our collection agent.

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Interest Payments

     Interest on each tranche or series of storm recovery bonds will accrue from the date we issue the tranche or series of storm recovery bonds at the interest rate stated in the related prospectus supplement. On each payment date, we will pay interest on each tranche or series of storm recovery bonds equal to the following amounts:

• if there has been a payment default, any interest payable but unpaid on any prior payment dates, together with interest on such unpaid interest, if any, and

• accrued interest on the principal balance of each tranche or series of storm recovery bonds as of the close of business on the preceding payment date, or the date of the original issuance of each tranche or series of storm recovery bonds, as applicable, after giving effect to all payments of principal made on the preceding payment date, if any.

     We will pay interest on each tranche or series of storm recovery bonds before we pay the principal of each tranche or series of storm recovery bonds. Please read “The Storm Recovery Bonds—Payments of Interest and Principal on the Storm Recovery Bonds” in this prospectus. If there is a shortfall in the amounts available in the applicable collection account to make interest payments, the trustee will distribute interest pro rata to each series and tranche of storm recovery bonds based on the amount of interest payable on each outstanding series and tranche. Unless otherwise specified in the prospectus supplement, we will calculate interest on the basis of a 360-day year of twelve 30-day months.

Principal Payments and Record Dates and Payment Sources

     On each payment date specified in the prospectus supplement for each series of storm recovery bonds, referred to in this prospectus as a “payment date,” we will pay amounts then due or scheduled to be paid on outstanding series of the storm recovery bonds from amounts available in the collection account for that series and the related subaccounts held by the trustee. We will make these payments to the holders of record of the storm recovery bonds on each record date specified in the prospectus supplement, referred to in this prospectus as a “record date.” These available amounts, which will include the applicable storm recovery charges collected by the servicer for us since the last payment date, are described in greater detail under “The Storm Recovery Bonds — The Collection Account for the Storm Recovery Bonds.” The trustee will pay the principal of each tranche of storm recovery bonds in the amounts and on the payment dates specified in the expected amortization schedule described in the related prospectus supplement, but only to the extent storm recovery charge collections received from the servicer and amounts available from trust accounts held by the trustee are sufficient to make principal payments after payment of amounts having a higher priority of payment. Please read “The Storm Recovery Bonds—How Funds in the Collection Account Will Be Allocated.”

Priority of Distributions

     Unless otherwise specified in a prospectus supplement, on each payment date for a series of storm recovery bonds, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account for that series in the following order of priority:

1.	payment of a pro rata portion, based upon the respective outstanding amounts of each series of storm recovery bonds issued by us under the indenture, of the trustee’s fees, expenses and any outstanding indemnity amounts relating to that series of storm recovery bonds not to exceed a specified amount in any 12-month period, which amount will be fixed in the indenture or the supplemental indenture governing that series of storm recovery bonds,
2.	payment of the servicing fee relating to that series of storm recovery bonds, which will be a fixed amount specified in the servicing agreement for that series of storm recovery bonds, plus any unpaid servicing fees relating to that series of storm recovery bonds from prior payment dates,
3.	payment of a pro rata portion of the administration fee, which will be a fixed amount specified in the administration agreement between us and Cleco Power, and a pro rata portion of the fees of our independent manager, which will be in an amount specified in an agreement between us and our independent manager,

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4.	payment of all of our other ordinary periodic operating expenses relating to that series of storm recovery bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the applicable servicing agreement,
5.	payment of the interest then due on that series of storm recovery bonds,
6.	payment of the principal then required to be paid on that series of storm recovery bonds at final maturity or upon redemption or acceleration upon an event of default,
7.	payment of the principal then scheduled to be paid on that series of storm recovery bonds, including any previously unpaid scheduled principal,
8.	payment of any amounts payable to any other credit enhancement providers with respect to that series of storm recovery bonds,
9.	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents relating to that series, including all remaining indemnity amounts owed to the trustee,
10.	replenishment of any amounts drawn from the capital subaccount for that series of storm recovery bonds,
11.	if the balance in the capital subaccount for that series of storm recovery bonds is greater than the initial balance of the capital subaccount for that series of storm recovery bonds after making the foregoing allocations, an amount of investment earnings on the capital subaccount not to exceed a percentage per annum set forth in the prospectus supplement for such series shall be paid to us; provided that no event of default has occurred and is continuing and that the balance of the capital subaccount for that series of storm recovery bonds is not reduced below the initial balance of the capital subaccount for such series,
12.	allocation of the remainder, if any, to the excess funds subaccount for that series of storm recovery bonds, and
13.	after that series of storm recovery bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds account for that series of storm recovery bonds, released to us free and clear of the lien of the indenture.

     The amount of the servicer’s fee referred to in clause 2 above and the amount of the administration fee referred to in clause 3 will be described in the prospectus supplement for the related series of storm recovery bonds. The priority of distributions for the collected storm recovery charges, as well as available amounts in the subaccounts, are described in more detail under “The Storm Recovery Bonds—How Funds in the Collection Account Will Be Allocated,” as well as in the prospectus supplement for each series of the storm recovery bonds.

Floating Rate Storm Recovery Bonds

     If, in connection with the issuance of any tranche of storm recovery bonds paying interest at a floating rate, referred to as a floating rate tranche, we arrange for any interest rate swap transactions, the material terms of those transactions will be described in the related prospectus supplement.

Credit Enhancement

     Unless otherwise specified in the prospectus supplement, credit enhancement for the storm recovery bonds will be as follows:

• The Louisiana commission will approve adjustments to the storm recovery charges, but only upon petition of the servicer, to make up for any shortfall or reduce any excess in collected storm recovery charges. We sometimes refer to these adjustments as “true-up adjustments” or the “true-up mechanism.” Storm recovery charges are required to be adjusted semi-annually to:

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•	correct, over a period of up to 12 months covering the next two succeeding payment dates, any under-collections or over-collections, for any reason, during the preceding six months, and
•	ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the storm recovery bonds during the subsequent 12-month period.
	The servicer may also make interim true-up adjustments more frequently under certain circumstances. Please read “Cleco Power’s Financing Order—True-Ups.”

• Collection Account—Under the indenture, the trustee will hold a collection account for each series of storm recovery bonds, divided into various subaccounts. The primary subaccounts for credit enhancement purposes are:

• the general subaccount—the trustee will deposit into the general subaccount all storm recovery charge collections remitted to it by the servicer with respect to that series of storm recovery bonds and investment earnings on amounts in the general subaccount;

• the capital subaccount—Cleco Power will deposit an amount specified in the prospectus supplement into the capital subaccount for that series of storm recovery bonds on the date of issuance of such series of storm recovery bonds; and

• the excess funds subaccount—any excess amount of collected storm recovery charges and investment earnings on amounts in the excess funds subaccount for that series of storm recovery bonds will be held in the excess funds subaccount.

Each of these subaccounts for each series of storm recovery bonds will be available to make payments on the storm recovery bonds of such series on each payment date. Interest rate swaps and other hedging arrangements may be used to fix synthetically the interest on floating rate storm recovery bonds. Tranche subaccounts for related floating rate storm recovery bonds may also be established in the event interest rate swaps or other hedging arrangements are utilized.

     Additional credit enhancement for any series of storm recovery bonds may include other surety bonds or letters of credit or other forms of credit enhancement. Any additional forms of credit enhancement for a series of storm recovery bonds will be specified in the related prospectus supplement. Credit enhancement for a series of storm recovery bonds is intended to protect you against losses or delays in scheduled payments on such series of storm recovery bonds. We do not anticipate obtaining additional credit enhancement for any series of storm recovery bonds.

Master Trust Structure; Issuance of Additional Series

     The indenture has been structured as the functional equivalent, in certain respects, of a master trust in that we may, subject to the terms of the financing order or any subsequent financing order but without your prior review or approval, acquire additional storm recovery property and issue one or more additional series of storm recovery bonds which are backed by such storm recovery property, all of which storm recovery bonds will be paid through collections of additional storm recovery charges from the same group of Cleco Power customers. In addition, Cleco Power may also sell storm recovery property to one or more entities other than us in connection with the issuance of a new series of storm recovery bonds without your prior review or approval. The trustee will authenticate and deliver a new series of storm recovery bonds, only if, among other conditions, the aggregate amount of the storm recovery bonds outstanding does not exceed the amounts approved under all applicable financing orders and the rating agency condition (described below) has been satisfied. Please read “The Storm Recovery Bonds—The Storm Recovery Bonds May Be Issued in Various Series or Tranches.” In certain respects this structure differs from “master trust” structures that may be used in connection with other securities issued by other issuers. In particular, each series of storm recovery bonds will be secured by its own storm recovery property, which will include the right to impose, collect and receive storm recovery charges calculated in respect of that series, and the right to impose interim and semi-annual true-up adjustments to correct overcollections or undercollections in respect of that series. Each series will also have its own collection account, including any related subaccounts, into which collections of the storm recovery charges relating to that series will be deposited and from which amounts will be withdrawn to pay the related series of storm recovery bonds. The collateral for each series of storm recovery bonds will be separate from the collateral for any other series, and holders of one series of storm recovery bonds will have no recourse to collateral for a different series. Accordingly, no series will be subordinated to any other series except that any tranche of a particular series may be subordinated to other tranches of such series if and to the extent set forth in the applicable prospectus supplement. In the event that more than one series of storm recovery bonds is issued, the administration fees, independent manager fees and other operating expenses payable by us on any

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payment date will be assessed to each series on a pro rata basis, based upon the respective outstanding amounts of each series. Please read “The Storm Recovery Bonds—The Security for the Storm Recovery Bonds”, “—The Collection Account for the Storm Recovery Bonds” and “—How Funds in the Collection Account Will Be Allocated” in this prospectus.

Allocations as Between Series

     Although each series of storm recovery bonds will have its own storm recovery property, storm recovery charges relating to any series of storm recovery bonds and storm recovery charges relating to any other series of storm recovery bonds will be collected from the same Cleco Power customers. In the event a Cleco Power customer does not pay in full all amounts owed under any bill including storm recovery charges, the amount remitted will be applied to all charges on the bill based, as to a bill with charges covering more than one month, on the chronological order of billing, and, as to those charges with the same billing date, pro rata. In addition, if more than one series of storm recovery bonds have been issued by us or another subsidiary of Cleco Power, any such partial collections will be allocated among such series of storm recovery bonds, pro rata based upon the amounts billed with respect to each series of storm recovery bonds, provided that late fees and charges may be allocated to the servicer as provided in the applicable tariff. Please read “The Storm Recovery Bonds—Allocations as Between Series” and “The Servicing Agreements—Servicing Procedures—Remittances to the Trustee” in this prospectus.

State Pledge

     The State of Louisiana has pledged in the Securitization Act that it will not take or permit any action that would impair the value of the storm recovery property, or, except for adjustments discussed in “Cleco Power’s Financing Order—True-ups” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process,” reduce, alter or impair the storm recovery charges to be imposed, collected and remitted to storm recovery bondholders until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed in connection with any series of storm recovery bonds have been paid and performed in full. However, nothing will preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions” in this prospectus.

Louisiana Commission Pledge

     The Louisiana commission has jurisdiction over Cleco Power pursuant to Article 4, Section 21, of the Louisiana Constitution. The Louisiana commission has pledged in the financing order that (i) the financing order is irrevocable until the indefeasible (i.e., not voidable) payment in full of the storm recovery bonds and (ii) it may not amend, modify or rescind the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust storm recovery charges approved in the financing order, provided that nothing in clause (ii) shall preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions.”

Optional Redemption

     The prospectus supplement may provide for redemption of a series of the storm recovery bonds at our option at a redemption price not less than the outstanding principal of and accrued interest on that series of the storm recovery bonds.

Payment and Record Dates

     The payment and record dates for each series of storm recovery bonds will be specified in the related prospectus supplement.

Scheduled Final Payment Dates and Final Maturity Dates

     Failure to pay a scheduled principal payment on any payment date or the entire outstanding amount of the storm recovery bonds of any tranche or series by the scheduled final payment date will not result in a default with respect to that tranche or series. The failure to pay the entire outstanding principal balance of the storm recovery bonds of any tranche or series will

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result in a default only if such payment has not been made by the final maturity date for the tranche or series, or on any date set for redemption of the series. We will specify the scheduled final payment date and the final maturity date of each series and tranche of storm recovery bonds in the related prospectus supplement.

Ratings for the Storm Recovery Bonds

     It will be a condition of issuance for each series of storm recovery bonds that the series be rated “Aaa” by Moody’s Investors Service, Inc., “AAA” by Standard and Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc. and “AAA” by Fitch Ratings, Inc. See “Ratings for the Storm Recovery Bonds” in this prospectus.

Servicing Compensation

     We will pay the servicer on each payment date the servicing fee with respect to all series of the storm recovery bonds. As long as Cleco Power or any affiliated entity acts as servicer, this fee will be 0.05% of the initial principal balance of the storm recovery bonds on an annualized basis. If a successor servicer is appointed, the servicing fee will be negotiated by the successor servicer and the trustee, but will not, unless the Louisiana commission consents, exceed 0.60% of the initial principal balance of the storm recovery bonds on an annualized basis. In no event will the trustee be liable for any servicing fee in its individual capacity.

Federal Income Tax Status

     In the opinion of Phelps Dunbar, L.L.P., counsel to us and to Cleco Power, interest paid on the storm recovery bonds generally will be taxable to a U.S. bondholder as ordinary interest income at the time it accrues or is received in accordance with the U.S. bondholder’s method of accounting for U.S. federal income tax purposes. Phelps Dunbar, L.L.P. has also issued an opinion, that, for federal income tax purposes (1) we will not be treated as a taxable entity separate and apart from Cleco Power, our sole member, and (2) based on Revenue Procedure 2005-62, the storm recovery bonds will constitute indebtedness of Cleco Power. Each beneficial owner of a storm recovery bond, by acquiring a beneficial interest, agrees to treat such storm recovery bond as indebtedness of our sole member secured by the collateral for federal (and, to the extent applicable, state) income tax purposes unless otherwise required by appropriate taxing authorities. Please read “Material Federal Income Tax Consequences for the Storm Recovery Bondholders” in this prospectus.

Louisiana State Income Tax Status

     In the opinion of Phelps Dunbar LLP, counsel to us and to Cleco Power, interest paid on the storm recovery bonds generally will be taxed for Louisiana income tax purposes consistently with its taxation for U.S. federal income tax purposes and such interest received by a person who is not otherwise subject to corporate or personal income tax in the state of Louisiana will not be subject to tax in Louisiana. Phelps Dunbar LLP has also issued an opinion, based upon the treatment of such issues for federal income tax purposes, that for Louisiana income tax purposes (1) we will not be treated as a taxable entity separate and apart from Cleco Power, our sole member, and (2) the storm recovery bonds will constitute indebtedness of Cleco Power. Please read “Material Federal Income Tax Consequences for the Storm Recovery Bondholders” in this prospectus.

ERISA Considerations

     Pension plans and other investors subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA), may acquire the storm recovery bonds subject to specified conditions. The acquisition and holding of the storm recovery bonds could be treated as an indirect prohibited transaction under ERISA. Accordingly, by purchasing the storm recovery bonds, each investor purchasing on behalf of a pension plan, or other investor subject to ERISA, will be deemed to certify that the purchase and subsequent holding of the storm recovery bonds would be exempt from the prohibited transaction rules of ERISA. For further information regarding the application of ERISA, please read “ERISA Considerations.”

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RISK FACTORS

     Please carefully consider all the information we have included or incorporated by reference in this prospectus and the related prospectus supplement, including the risks described below and in “Cautionary Statement Regarding Forward-Looking Information,” before deciding whether to invest in the storm recovery bonds. We will describe material risks of investing in any tranches of floating rate storm recovery bonds in the applicable prospectus supplement.

You may experience material payment delays or incur a loss on your investment in the storm recovery bonds because the source of funds for payment is limited.

     The only source of funds for payment of a series of storm recovery bonds will be our assets relating to such series, which consist of:

• the storm recovery property securing that series of storm recovery bonds, including the right to impose, collect and receive related storm recovery charges;

• the funds on deposit in the accounts held by the trustee;

• our rights under various contracts we describe in this prospectus; and

• any credit enhancement as set forth in the related prospectus supplement.

     The storm recovery bonds are not a charge on the full faith and credit or taxing power of the State of Louisiana or any governmental agency or instrumentality, nor will the storm recovery bonds be insured or guaranteed by Cleco Power, including in its capacity as the servicer, or by its parent, Cleco Corporation, any of their respective affiliates (other than us), the trustee or any other person or entity. Thus, you must rely for payment of a series of storm recovery bonds solely upon the collections of the storm recovery charges relating to such series, funds on deposit in the related accounts held by the trustee relating to such series and any other credit enhancement relating to such series described in the prospectus supplement. Our organizational documents restrict our right to acquire other assets unrelated to the transactions described in this prospectus. Please read “Cleco Katrina/Rita Hurricane Recovery Funding LLC, The Issuing Entity” in this prospectus.

Risks Associated with Potential Judicial, Legislative or Regulatory Actions

We are not obligated to indemnify you for changes in law.

     Neither we nor Cleco Power, nor any affiliate, successor or assignee, will indemnify you for any changes in the law, including any federal preemption or repeal or amendment of the Securitization Act, that might affect the value of your storm recovery bonds. Cleco Power will agree in each sale agreement to institute any legal or administrative action or proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or amendment of the Securitization Act that would be materially adverse to us, the trustee or storm recovery bondholders. However, we cannot assure you that Cleco Power would be able to take this action or that any such action would be successful. Please read “The Sale Agreement—Cleco Power’s Covenants” in this prospectus.

Future judicial action could reduce the value of your investment in the storm recovery bonds.

     The storm recovery property is the creation of the Securitization Act and one or more financing orders that have been or may be issued by the Louisiana commission to Cleco Power pursuant to the Securitization Act. The Securitization Act was enacted in May 2006. There is uncertainty associated with investing in bonds payable from an asset that depends for its existence on legislation because there is limited judicial or regulatory experience implementing and interpreting the legislation. The Securitization Act or any financing order or any provisions thereof might be directly contested in courts or otherwise become the subject of litigation. Because the storm recovery property is a creation of the Securitization Act and a financing order, any judicial determination affecting the validity of or interpreting the Securitization Act or a financing order, the storm recovery property or our ability to make payments on the storm recovery bonds might have an adverse effect on the value of the storm recovery bonds or cause a delay in the recovery of your investment. Please read “The Securitization Act—Constitutional Matters” in this prospectus.

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     Other states have passed laws with financing provisions similar to some provisions of the Securitization Act, and some of these laws have been challenged by judicial actions. To date, none of these challenges has succeeded, but future judicial challenges might be made. An unfavorable decision regarding another state’s law would not automatically invalidate the Securitization Act or the financing order, but it might provoke a challenge to the Securitization Act or a financing order, establish a legal precedent for a successful challenge to the Securitization Act or a financing order or heighten awareness of the political and other risks of the storm recovery bonds, and in that way may limit the liquidity and value of the storm recovery bonds. Therefore, legal activity in other states may indirectly affect the value of your investment in the storm recovery bonds.

The federal government might preempt the Securitization Act without full compensation.

     Congress could pass a law or adopt a rule or regulation negating the existence of or reducing the value of the storm recovery property. If federal legislation preempting the Securitization Act or the financing order is enacted, there is no assurance that the courts would consider it a “taking” under the United States Constitution for which the government would be required to pay just compensation or, if it is considered a “taking,” that any amount provided as compensation would be sufficient to pay the full amount of principal of and interest on the storm recovery bonds or to pay these amounts on a timely basis.

Future state action could reduce the value of your investment in the storm recovery bonds.

     Despite their pledges in the Securitization Act and financing order, respectively, not to take or permit certain actions that would impair the value of the storm recovery property or the storm recovery charges, the Louisiana legislature might attempt to repeal or amend the Securitization Act in a manner that limits or alters the storm recovery property so as to reduce its value. For a description of the State’s pledge, please read “The Securitization Act—Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs” in this prospectus. As of the date of this prospectus, we are not aware of any pending legislation in the Louisiana legislature that would affect any provisions of the Securitization Act.

     It might be possible for the Louisiana legislature to repeal or amend the Securitization Act notwithstanding the State’s pledge if the legislature acts in order to serve a significant and legitimate public purpose, such as protecting the public health and safety, or responding to a national or regional catastrophe affecting Cleco Power’s service territory, or if such action or inaction otherwise is in the valid exercise of the State’s police power. Similarly, it might be possible for the Louisiana commission to repeal or amend the financing order notwithstanding the Louisiana commission’s pledge, if it acts in order to serve a significant and legitimate public purpose. Any such action, as well as the costly and time-consuming litigation that likely would ensue, might adversely affect the price and liquidity, the dates of payment of interest and principal and the weighted average lives of the storm recovery bonds. Moreover, the outcome of any litigation cannot be predicted. Accordingly, you might incur a loss on or delay in recovery of your investment in the storm recovery bonds.

     If an action of the Louisiana legislature or the Louisiana commission adversely affecting the storm recovery property or the ability to collect storm recovery charges were considered a “taking” under the United States or Louisiana Constitutions, the State of Louisiana might be obligated to pay compensation in an amount equal to the estimated value of the storm recovery property at the time of the taking. However, even in that event, there is no assurance that any amount provided as compensation would be sufficient for you to recover fully your investment in the storm recovery bonds or to offset interest lost pending such recovery.

     Nothing in the State’s or Louisiana commission’s pledge precludes any limitation or alteration of the Securitization Act or a financing order if full compensation is made by law for the full protection of the storm recovery charges collected pursuant to a financing order and of the holders of the related series of storm recovery bonds. It is unclear what “full compensation” and “full protection” would be afforded to the holders of storm recovery bonds by the State of Louisiana or the Louisiana commission if such limitation or alteration were attempted.

     Unlike the citizens of some other states, the citizens of the State of Louisiana currently do not have the constitutional right to adopt or revise state laws by initiative or referendum. Thus, absent an amendment to the Louisiana Constitution, the Securitization Act cannot be amended or repealed by direct action of the electorate of the State of Louisiana.

     The enforcement of any rights against the State of Louisiana or the Louisiana commission under their respective pledges may be subject to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against state

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and local governmental entities in Louisiana. These limitations might include, for example, the necessity to exhaust administrative remedies prior to bringing suit in a court, or limitations on type and locations of courts in which the State of Louisiana or the Louisiana commission may be sued.

The Louisiana commission might attempt to take actions that could reduce the value of your investment in the storm recovery bonds.

     The Securitization Act provides that for a financing order issued to create storm recovery property, the financing order must provide that the financing order is irrevocable and that the Louisiana commission may not directly or indirectly, by any subsequent action, rescind or amend a financing order or reduce, alter or impair the storm recovery charges authorized under a financing order, except for the true-up adjustments to the storm recovery charges. In addition, pursuant to its constitutional plenary authority and the Securitization Act, the Louisiana commission had pledged in the financing order that it will not amend, modify, or rescind the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust the storm recovery charges. However, the Louisiana commission retains the power to adopt, revise or rescind rules or regulations affecting Cleco Power or a successor utility. The Louisiana commission also retains the power to interpret the financing order granted to Cleco Power, and in that capacity might be called upon to rule on the meanings of provisions of the order that might need further elaboration. Any new or amended regulations or orders from the Louisiana commission might adversely affect the ability of the servicer to collect the storm recovery charges in full and on a timely basis, the rating of the related storm recovery bonds or their price and, accordingly, the amortization of such storm recovery bonds and their weighted average lives.

     The servicer is required to file with the Louisiana commission, on our behalf, certain periodic true-up adjustments of the storm recovery charges. The Louisiana commission is obligated under the financing order to administratively approve the requested adjustment (including, if applicable, the correction of any mathematical error in such calculations) within 15 days of the date of the request for adjustment. Please read “Cleco Power’s Financing Order—True-Ups” and “—Adjustments to Allocation of Storm Recovery Charges” in this prospectus. True-up adjustment procedures may be challenged in the future. Challenges to or delays in the true-up process might adversely affect the market perception and valuation of the storm recovery bonds. Also, any litigation might materially delay storm recovery charge collections due to delayed implementation of true-up adjustments and might result in missing payments or payment delays and lengthened weighted average life of the related storm recovery bonds.

A municipal entity may seek to acquire portions of Cleco Power’s electric distribution facilities and avoid payment of the storm recovery charges.

     Louisiana law authorizes municipalities to seek to acquire portions of an electric utility’s electric distribution facilities through voluntary transactions or the power of expropriation for use as part of municipally-owned utility systems. There can be no assurance that one or more municipalities will not seek to acquire some or all of Cleco Power’s electric distribution facilities while any series of storm recovery bonds remain outstanding. The Securitization Act specifies that storm recovery charges approved by a financing order shall be collected by an electric utility as well as its “successors or assignees.” In the servicing agreement, Cleco Power has covenanted to assert in an appropriate forum that any municipality that acquires any portion of Cleco Power’s electric distribution facilities by expropriation must be treated as a successor to Cleco Power under the Securitization Act and the financing order and that customers in such municipalities remain responsible for payment of storm recovery charges. However, the involved municipality might assert that it should not be treated as a successor to Cleco Power for these purposes and that its distribution customers are not responsible for payment of storm recovery charges. In any case, we cannot assure you that the storm recovery charges will be collected from customers of municipally-owned utilities who were formerly customers of Cleco Power and that such an occurrence might not affect the timing or receipt of payments with respect to your storm recovery bonds.

Servicing Risks

Your investment in the storm recovery bonds depends on Cleco Power or its successor or assignee, acting as servicer of the storm recovery property.

     Cleco Power, as servicer, will be responsible for, among other things, calculating, billing and collecting the storm recovery charges from its customers, submitting requests to the Louisiana commission to adjust these charges, monitoring the collateral for a series of storm recovery bonds and taking certain actions in the event of non-payment by a customer. The trustee’s receipt

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of collections in respect of the storm recovery charges, which will be used to make payments on the related series of storm recovery bonds, will depend in part on the skill and diligence of the servicer in performing these functions. If the servicer fails to make collections for any reason, then the servicer’s payments to the trustee in respect of the storm recovery charges might be delayed or reduced. In that event, our payments on the storm recovery bonds might be delayed or reduced.

Inaccurate forecasting of electricity consumption or unanticipated delinquencies or charge-offs might reduce scheduled payments on the storm recovery bonds.

     The storm recovery charges are generally assessed based on forecasted customer usage, i.e., kilowatt-hours of electricity consumed by customers. The amount and the rate of storm recovery charge collections will depend in part on actual electricity usage and the amount of collections and charge-offs. If the servicer of these storm recovery bonds inaccurately forecasts electricity consumption or uses inaccurate customer delinquency or charge-off data when setting or adjusting the storm recovery charges, or if the effectiveness of the adjustments is delayed for any reason, there could be a shortfall or material delay in storm recovery charge collections, which might result in missed or delayed payments of principal and interest and lengthened weighted average life of the storm recovery bonds. Please read “Cleco Power’s Financing Order—True-Ups” and “—Adjustments to Allocation of Storm Recovery Charges” in this prospectus.

     Inaccurate forecasting of electricity consumption by the servicer might result from, among other things, unanticipated weather or economic conditions, resulting in less electricity consumption than forecast; general economic conditions being worse than expected, causing customers to leave Cleco Power or reduce their electricity consumption; the occurrence of a natural disaster, such as a hurricane, or an act of terrorism or other catastrophic event; changes in the market structure of the electric industry; customers consuming less electricity than anticipated because of increased energy prices, increased conservation efforts or unanticipated increases in electric usage efficiency; or customers switching to alternative sources of energy, including self-generation of electric power.

     The servicer’s use of inaccurate delinquency or charge-off rates might result also from, among other things, unexpected deterioration of the economy or the declaration of a moratorium on terminating electric service to customers in the event of extreme weather, either of which would cause greater delinquencies or charge-offs than expected or force Cleco Power to grant additional payment relief to more customers, or any other change in law that makes it more difficult for Cleco Power to terminate service to nonpaying customers or that requires Cleco Power to apply more lenient credit standards in accepting customers.

If we have to replace Cleco Power as the servicer, we may experience difficulties finding and using a replacement servicer.

     If Cleco Power ceases to service the storm recovery property related to a series of storm recovery bonds, it might be difficult to find a successor servicer. Under the financing order, the annual servicing fee payable to a successor servicer is capped and the payment of compensation in excess of the cap is dependent upon Louisiana commission approval. Also, any successor servicer might have less experience and ability than Cleco Power and might experience difficulties in collecting storm recovery charges and determining appropriate adjustments to the storm recovery charges and billing and/or payment arrangements may change, resulting in delays or disruptions in collections. A successor servicer might charge fees that, while permitted under the financing order, are substantially higher than the fees paid to Cleco Power as servicer. In the event of the commencement of a case by or against the servicer under the United States Bankruptcy Code or similar laws, we and the trustee might be prevented from effecting a transfer of servicing due to operation of the bankruptcy code. Any of these factors and others might delay the timing of payments and may reduce the value of your investment. Please read “The Servicing Agreement” in this prospectus.

Changes to billing and collection practices might reduce the value of your investment in the storm recovery bonds.

     The financing order specifies the methodology for determining the amount of the storm recovery charges we may impose. The servicer may not change this methodology without approval from the Louisiana commission. However, the servicer may set its own billing and collection arrangements with its customers, provided that these arrangements comply with the Louisiana commission’s customer safeguards. For example, to recover part of an outstanding bill, the servicer may agree to extend a customer’s payment schedule or to charge-off the remaining unpaid portion of the bill, including the storm recovery charges. Also, the servicer may change billing and collection practices, which might adversely impact the timing and amount of customer payments and might reduce storm recovery charge collections, thereby limiting our ability to make scheduled

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payments on the storm recovery bonds. Separately, the Louisiana commission might require changes to these practices. Any changes in billing and collection practices regulations might make it more difficult for the servicer to collect the storm recovery charges and adversely affect the value of your investment in the storm recovery bonds. Please read “The Seller, Initial Servicer and Sponsor—Forecasting Electricity Consumption” in this prospectus.

Limits on rights to terminate service might make it more difficult to collect the storm recovery charges.

     If Cleco Power, as the servicer, is billing customers for storm recovery charges, it may terminate service to the customer for non-payment of storm recovery charges pursuant to the applicable rules of the Louisiana commission. Nonetheless, the rules and regulations of the Louisiana commission, which may change from time to time, regulate and control the right to disconnect service. For example, electric utilities generally may not terminate service to a customer (i) on a holiday or weekend day or (ii) during certain extreme weather conditions. To the extent these customers do not pay for their electric service, Cleco Power will not be able to collect storm recovery charges from these customers.

Storm-Related Risks

Storm damage to the service territory could impair payment of the storm recovery bonds.

     Cleco Power’s service territory was impacted by two severe hurricanes in 2005, disrupting Cleco Power’s operations, depleting its storm recovery reserve and (with storm damage to other utilities) leading the Louisiana legislature to enact the Securitization Act. Future storms could have similar effects. Transmission, distribution and usage of electricity could be interrupted temporarily, reducing the collections of storm recovery charges. There could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity in Cleco Power’s service territory, which could cause the per-kWh storm recovery charge to be greater than expected. Legislative action adverse to the related bondholders might be taken in response, and such legislation, if challenged as violative of the State of Louisiana’s or the Louisiana commission’s pledge, might be defended on the basis of public necessity. Please read “The Securitization Act—Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs—State and Louisiana Commission Pledges” and “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Future State Action Could Reduce the Value of Your Investment in the Storm Recovery Bonds” in this prospectus.

Risks Associated with the Unusual Nature of the Storm Recovery Property

Foreclosure of the trustee’s lien on the storm recovery property for a series of storm recovery bonds might not be practical, and acceleration of the storm recovery bonds of such series before maturity might have little practical effect.

     Under the Securitization Act and the indenture, the trustee or the storm recovery bondholders have the right to foreclose or otherwise enforce the lien on the storm recovery property securing a series of storm recovery bonds. However, in the event of foreclosure, there is likely to be a limited market, if any, for the storm recovery property. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although principal of such series of storm recovery bonds will be due and payable upon acceleration of such series of storm recovery bonds before maturity, storm recovery charges relating to such series likely would not be accelerated and the nature of our business will result in the principal of such series of storm recovery bonds being paid as funds become available. If there is an acceleration of a series of storm recovery bonds, all tranches of such series of storm recovery bonds will be paid pro rata; therefore, some tranches might be paid earlier than expected and some tranches might be paid later than expected.

Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer

     For a detailed discussion of the following bankruptcy risks, please read “How a Bankruptcy May Affect Your Investment” in this prospectus.

The servicer will commingle the storm recovery charges with other revenues it collects, which might obstruct access to the storm recovery charges in case of the servicer’s bankruptcy and reduce the value of your investment in the storm recovery bonds.

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     The servicer will be required to remit collections to us or the trustee each business day based on estimated daily collections, using a weighted average balance of days outstanding on Cleco Power’s retail bills. The servicer will not segregate the storm recovery charges from the other funds it collects from customers or its general funds. The storm recovery charges will be segregated only when the servicer pays them to the trustee.

     Despite this requirement, the servicer might fail to remit the full amount of the storm recovery charges to the trustee or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of storm recovery charge collections available to make payments on the storm recovery bonds.

     The Securitization Act provides that the priority of a security interest perfected in storm recovery property is not impaired by the commingling of the funds arising from storm recovery charges with any other funds of the servicer. In a bankruptcy of the servicer, however, a bankruptcy court might rule that federal bankruptcy law does not recognize our right to collections of the storm recovery charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the storm recovery charges held by the servicer as of the date of bankruptcy would not be available to pay amounts owing on the storm recovery bonds. In this case, we would have only a general unsecured claim against the servicer for those amounts. This decision could cause material delays in payments of principal or interest, or losses, on your storm recovery bonds and could materially reduce the value of your investment in the storm recovery bonds. Please read to “How a Bankruptcy May Affect Your Investment” in this prospectus.

The bankruptcy of Cleco Power or any successor seller might result in losses or delays in payments on the storm recovery bonds.

     The Securitization Act and the financing order provide that as a matter of Louisiana state law:

• the rights and interests of a selling utility under a financing order, including the right to impose, collect and receive storm recovery charges, are contract rights of the seller,

• the seller may make a present transfer of its rights under a financing order, including the right to impose, collect and receive future storm recovery charges that customers do not yet owe,

• the storm recovery property constitutes a present contract right, even though the imposition and collection of storm recovery charges depend on further acts that have not yet occurred, and

• a transfer of the storm recovery property from the seller, or its affiliate, to us, under an agreement that expressly states the transfer is a sale or other absolute transfer, is a true sale of the storm recovery property and not a pledge of the storm recovery property to secure a financing by the seller.

     Please read “The Securitization Act” in this prospectus. These provisions are important to maintaining payments on a series of storm recovery bonds in accordance with their terms during any bankruptcy of Cleco Power. In addition, the transaction has been structured with the objective of keeping us legally separate from Cleco Power and its affiliates in the event of a bankruptcy of Cleco Power or any such affiliates.

     A bankruptcy court generally follows state property law on issues such as those addressed by the state law provisions described above. However, a bankruptcy court does not follow state law if it determines that the state law is contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy court in a Cleco Power bankruptcy refused to enforce one or more of the state property law provisions described above, the effect of this decision on you as a beneficial owner of the storm recovery bonds might be similar to the treatment you would receive in a Cleco Power bankruptcy if the storm recovery bonds had been issued directly by Cleco Power. A decision by the bankruptcy court that, despite our separateness from Cleco Power, our assets and liabilities and those of Cleco Power should be consolidated would have a similar effect on you as a bondholder.

     We have taken steps together with Cleco Power, as the seller, to reduce the risk that in the event the seller or an affiliate of the seller were to become the debtor in a bankruptcy case, a court would order that our assets and liabilities be substantively consolidated with those of Cleco Power or an affiliate. Nonetheless, these steps might not be completely effective, and thus if Cleco Power or an affiliate of the seller were to become a debtor in a bankruptcy case, a court might order that our assets and liabilities be consolidated with those of Cleco Power or an affiliate of the seller. This might cause material delays in payment of, or losses on, your storm recovery bonds and might materially reduce the value of your investment in the storm recovery bonds. For example:

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• without permission from the bankruptcy court, the trustee might be prevented from taking actions against Cleco Power or recovering or using funds on your behalf or replacing Cleco Power as the servicer;

• the bankruptcy court might order the trustee to exchange the storm recovery property for other property, of lower value;

• tax or other government liens on Cleco Power’s property might have priority over the trustee’s lien and might be paid from collected storm recovery charges before payments on the related series of storm recovery bonds;

• the trustee’s lien might not be properly perfected in the collected storm recovery property collections prior to or as of the date of Cleco Power’s bankruptcy, with the result that the storm recovery bonds would represent only general unsecured claims against Cleco Power;

• the bankruptcy court might rule that neither our property interest nor the trustee’s lien extends to storm recovery charges in respect of electricity consumed after the commencement of Cleco Power’s bankruptcy case, with the result that the related series of storm recovery bonds would represent only general unsecured claims against Cleco Power;

• we and Cleco Power might be relieved of any obligation to make any payments on the storm recovery bonds during the pendency of the bankruptcy case and might be relieved of any obligation to pay interest accruing after the commencement of the bankruptcy case;

• Cleco Power might be able to alter the terms of each series of storm recovery bonds as part of its plan of reorganization;

• the bankruptcy court might rule that the storm recovery charges should be used to pay, or that we should be charged for, a portion of the cost of providing electric service;

• the bankruptcy court might rule that the remedy provisions of the applicable sale agreement are unenforceable, leaving us with an unsecured claim for actual damages against Cleco Power that may be difficult to prove or, if proven, to collect in full;

• if the servicer defaults or enters bankruptcy proceedings, it might be difficult to find a successor servicer and payments on your bonds might be suspended;

• the mere fact of a servicer or seller bankruptcy proceeding might have an adverse effect on the resale market for the storm recovery bonds and on the value of the storm recovery bonds;

• the servicer will commingle the storm recovery charges with other revenues it collects, which might obstruct access to the storm recovery charges in case of the bankruptcy of the servicer and reduce the value of your investment in the storm recovery bonds; or

• bondholders of another series of storm recovery bonds might attempt to obtain access to the collateral for your series of storm recovery bonds, resulting in losses or a delay in payment on your storm recovery bonds.

     Please read “How a Bankruptcy May Affect Your Investment.”

The sale of the storm recovery property might be construed as a financing and not a sale in a case of Cleco Power’s bankruptcy which might delay or limit payments on the storm recovery bonds.

     The Securitization Act provides that the characterization of a transfer of storm recovery property as a sale or other absolute transfer will not be affected or impaired by treatment of the transfer as a financing for federal or state tax purposes or financial reporting purposes. We and Cleco Power will treat the transaction as a sale under applicable law, although for financial reporting and federal and state purposes the transaction is intended to be treated as a financing. In the event of a bankruptcy of Cleco Power, a party in interest in the bankruptcy might assert that the sale of the storm recovery property to us was a financing transaction and not a “sale or other absolute transfer” and that the treatment of the transaction for financial reporting and tax purposes as a financing and not a sale lends weight to that position. If a court were to characterize the transaction as a financing, we expect that we would, on behalf of ourselves and the trustee, be treated as a secured creditor of Cleco Power in the bankruptcy proceedings, although a court might determine that we only have an unsecured claim against Cleco Power. See “—The servicer will commingle the storm recovery charges with other revenues it collects, which might obstruct access to the storm recovery charges in case of the bankruptcy of the servicer and reduce the value of your investment in the storm recovery bonds” above. Even if we had a security interest in the storm recovery property, we would not likely have access to the related

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storm recovery charge collections during the bankruptcy and would be subject to the risks of a secured creditor in a bankruptcy case, including the possible bankruptcy risks described in the immediately preceding risk factor. As a result, repayment of a series of storm recovery bonds might be significantly delayed and a plan of reorganization in the bankruptcy might permanently modify the amount and timing of payments to us of the related storm recovery charge collections and therefore the amount and timing of funds available to us to pay storm recovery bondholders.

If the servicer enters bankruptcy proceedings, the collections of the storm recovery charges held by the servicer as of the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the storm recovery bonds.

     In the event of a bankruptcy of the servicer, a party in interest might take the position that the remittance of funds prior to bankruptcy of the servicer, pursuant to the servicing agreement, constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes a preference, any such remittance within 90 days of the filing of the bankruptcy petition could be avoidable, and the funds could be required to be returned to the bankruptcy estate of the servicer. To the extent that storm recovery charges have been commingled with the general funds of the servicer, the risk that a court would hold that a remittance of funds was a preference would increase. Also, if we are considered to be an “insider” of the servicer, any such remittance made within one year of the filing of the bankruptcy petition could be avoidable as well if the court were to hold that such remittance constitutes a preference. In either case, we or the trustee would merely be an unsecured creditor of the servicer. If any funds were required to be returned to the bankruptcy estate of the servicer, we would expect that the amount of any future storm recovery charges would be increased through the true-up mechanism to recover such amount.

Claims against Cleco Power or any successor seller might be limited in the event of a bankruptcy of the seller.

     If the seller were to become a debtor in a bankruptcy case, claims, including indemnity claims, by us against the seller under the sale agreement and the other documents executed in connection with the sale agreement would be unsecured claims and would be disposed of in the bankruptcy case. In addition, the bankruptcy court might estimate any contingent claims that we have against the seller and, if it determines that the contingency giving rise to these claims is unlikely to occur, estimate the claims at a lower amount. A party in interest in the bankruptcy of the seller might challenge the enforceability of the indemnity provisions in a sale agreement. If a court were to hold that the indemnity provisions were unenforceable, we would be left with a claim for actual damages against the seller based on breach of contract principles, which would be subject to estimation and/or calculation by the court. We cannot give any assurance as to the result if any of the above-described actions or claims were made. Furthermore, we cannot give any assurance as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving the seller.

The bankruptcy of Cleco Power or any successor seller might limit the remedies available to the trustee.

     Upon an event of default for a series of storm recovery bonds under the indenture, the Securitization Act permits the trustee to enforce the security interest in the related storm recovery property in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the 19th Judicial District Court of Louisiana to order the sequestration and payment to bondholders of such series of all revenues arising with respect to the related storm recovery property. There can be no assurance, however, that the 19th Judicial District Court of Louisiana would issue this order after a Cleco Power bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee would be required to seek an order from the bankruptcy court lifting the automatic stay to permit this action by the Louisiana court, and an order requiring an accounting and segregation of the revenues arising from the storm recovery property. There can be no assurance that a court would grant either order.

Other Risks Associated With an Investment in the Storm Recovery Bonds

Cleco Power’s indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the storm recovery bonds.

     Cleco Power is obligated under each sale agreement to indemnify us and the trustee, for itself and on behalf of the storm recovery bondholders, only in specified circumstances and will not be obligated to repurchase any storm recovery property in the event of a breach of any of its representations, warranties or covenants regarding the storm recovery property. Similarly,

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Cleco Power is obligated under each servicing agreement to indemnify us, the trustee, for itself and on behalf of the storm recovery bondholders only in specified circumstances. Please read “The Sale Agreement” and “The Servicing Agreement” in this prospectus.

     Neither the trustee nor the storm recovery bondholders will have the right to accelerate payments on a series of storm recovery bonds as a result of a breach under the related sale agreement or servicing agreement, absent an event of default under the indenture relating to such series of storm recovery bonds as described in “The Storm Recovery Bonds—What Constitutes an Event of Default on the Storm Recovery Bonds.” Furthermore, Cleco Power might not have sufficient funds available to satisfy its indemnification obligations under these agreements, and the amount of any indemnification paid by Cleco Power might not be sufficient for you to recover all of your investment in the storm recovery bonds. In addition, if Cleco Power becomes obligated to indemnify storm recovery bondholders, the ratings on the storm recovery bonds will likely be downgraded as a result of the circumstances causing the breach and the fact that storm recovery bondholders will be unsecured creditors of Cleco Power with respect to any of these indemnification amounts.

Alternatives to purchasing electricity through Cleco Power’s distribution facilities may be more widely utilized by customers in the future.

     Broader use of distributed generation by Cleco Power’s customers may result from customers’ changing perceptions of the merits of utilizing existing generation technology or from technological developments resulting in smaller-scale, more fuel efficient, more environmentally friendly and/or more cost effective distributed generation.  Storm recovery charges, which generally are consumption-based, are applied to all existing and future Louisiana commission-jurisdictional customers who remain attached to Cleco Power’s (or its successors) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco Power (or its successors) under rate schedules or special contracts approved by the Louisiana commission. Storm recovery charges will not be imposed on customers who receive no transmission or distribution service from Cleco Power. Any customer who self-generates or co-generates electricity will be assessed strom recovery charges based upon the total firm and standby load served by Cleco. Technological developments and/or more widespread use of distributed generation might allow greater numbers of customers to reduce or eliminate their payment of storm recovery charges.   

Cleco Power’s credit ratings might affect the market value of the storm recovery bonds.

     Although Cleco Power is not an obligor on the storm recovery bonds, a downgrading of the credit ratings on the debt of Cleco Power might have an adverse effect on the market value of your storm recovery bonds. Credit ratings may change at any time. A rating agency has the authority to revise or withdraw its rating based solely upon its own judgment.

The credit ratings are no indication of the expected rate of payment of principal on the storm recovery bonds.

     Each tranche of storm recovery bonds of each series will be rated by one or more established rating agencies. A rating is not a recommendation to buy, sell or hold storm recovery bonds. The ratings merely analyze the probability that we will repay the total principal amount of each tranche of a series of storm recovery bonds at its final maturity date (which is later than the scheduled final payment date) and will make timely interest payments. The ratings are not an indication that the rating agencies believe that principal payments are likely to be paid on time according to the expected sinking fund schedule.

The absence of a secondary market for a series of storm recovery bonds might limit your ability to resell your storm recovery bonds of such series.

     The underwriters for a series of storm recovery bonds might assist in resales of the storm recovery bonds of such series, but they are not required to do so. A secondary market for a series of storm recovery bonds might not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your storm recovery bonds of such series. We do not anticipate that any storm recovery bonds will be listed on any securities exchange. Please read “Plan of Distribution for the Storm Recovery Bonds” in this prospectus.

You might receive principal payments for a series of storm recovery bonds later than you expect.

     The amount and the rate of collection of the storm recovery charges for a series of storm recovery bonds, together with the related storm recovery charge adjustments, will generally determine whether there is a delay in the scheduled repayments of

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storm recovery bond principal for such series. If the servicer collects the storm recovery charges at a slower rate than expected, it might have to request adjustments of the storm recovery charges. If those adjustments are not timely and accurate, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in such series of storm recovery bonds. Please read “The Storm Recovery Bonds” in this prospectus.

We may issue additional series of storm recovery bonds.

     We may issue one or more additional series of storm recovery bonds under the financing order or under a subsequent financing order, and Cleco Power may also sell storm recovery property to one or more entities other than us in connection with the issuance of a new series of storm recovery bonds, in any such case without your prior review or approval. Any new series may include terms and provisions that would be unique to that particular series. We may not issue additional storm recovery bonds if the issuance would result in the credit ratings on any outstanding series of storm recovery bonds being reduced or withdrawn. However, we cannot assure you that a new series would not cause reductions or delays in payments on your storm recovery bonds. In addition, some matters relating to the storm recovery bonds issued by us require the vote of the holders of all series and classes of storm recovery bonds issued by us. Your interests in these votes may conflict with the interests of the beneficial owners of storm recovery bonds of another series or of another class. Thus, these votes could result in an outcome that is materially unfavorable to you.

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THE SECURITIZATION ACT

Overview

     In August and September 2005, Cleco Power was struck by the two worst natural disasters ever to strike its system, Hurricanes Katrina and Rita. Cleco Power has already funded and paid the storm recovery costs relating to these storms. In May 2006, the Louisiana Legislature established Act 64 of 2006, providing for a financing mechanism though which electric utilities can use securitization financing for storm recovery costs, including the financing of a storm recovery reserve, by issuing “storm recovery bonds.” Storm recovery bonds must be approved in a financing order issued by the Louisiana commission. This new provision of Louisiana law, the Securitization Act, is codified at La. R.S. 45:1226-1236. A Louisiana electric utility subject to the jurisdiction of the Louisiana commission must apply to the Louisiana commission for a financing order under the Securitization Act to authorize the issuance of storm recovery bonds. Cleco Power applied for a financing order under the Securitization Act, which was issued by the Louisiana commission on September 17, 2007.

     Under the Securitization Act and the financing order, Cleco Power’s customers will pay storm recovery charges, which are nonbypassable charges included in their monthly charges for electric service. Storm recovery charges will fund payments of principal and interest on the storm recovery bonds, together with related financing costs. Storm recovery charges will be collected by Cleco Power, as initial servicer, or its successor, as provided for in the financing order. Storm recovery charges are required to be adjusted semi-annually, and more frequently as necessary, to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the related series of storm recovery bonds during the subsequent 12-month period.

Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs

We May Issue Storm Recovery Bonds to Recover Cleco Power’s Storm Recovery Costs.

     Under the Securitization Act and the plenary power granted to the Louisiana commission under the Louisiana Constitution, the Louisiana commission may issue financing orders approving the issuance of storm recovery bonds in series, such as the storm recovery bonds issued by us, to recover certain costs of an electric utility, including storm recovery costs, costs associated with the issuance of storm recovery bonds and the cost of funding a storm recovery reserve. Multiple series of storm recovery bonds may be issued under one financing order, and each series of storm recovery bonds will relate to only one financing order. A utility, its successors or a third-party assignee of a utility may issue storm recovery bonds. The Securitization Act requires the proceeds of the storm recovery bonds to be used for the purposes of recovering or financing storm recovery costs, financing costs and costs to replenish or fund a storm recovery reserve, solely as determined by the Louisiana commission. The storm recovery bonds are secured by and payable from storm recovery property, which includes the right to impose, collect and receive storm recovery charges. Storm recovery bonds may have a legal maximum maturity of 16 years. Under Cleco Power’s September 17, 2007 revenue requirement order, storm recovery costs generally are to be functionalized and allocated to customers in the same manner as the corresponding facilities and related expenses are functionalized and allocated in Cleco Power’s base rates. Storm recovery charges can be imposed only when and to the extent that storm recovery bonds are issued.

     The Securitization Act contains a number of provisions designed to facilitate the securitization of storm recovery costs and related upfront and ongoing financing costs.

Creation of Storm Recovery Property.

     As authorized by the Securitization Act, and provided by the financing order, as of the effective date of the financing order, there was created and established for Cleco Power storm recovery property, which is a present contract right in favor of Cleco Power, its transferees and other financing parties, to impose, collect and receive storm recovery charges from Cleco Power’s customers.

A Financing Order is Irrevocable.

     A financing order, once effective, together with the storm recovery charges authorized in the financing order, is irrevocable and not subject to amendment or modification by the Louisiana commission, except for adjustments pursuant to the Securitization Act in order to correct overcollections or undercollections and to ensure the projected recovery of amounts

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sufficient to provide timely payment of debt service and all other upfront and ongoing financing costs in connection with the related series of storm recovery bonds. Although a financing order is irrevocable, the Securitization Act allows for applicants to apply for one or more new financing orders to provide for retiring and refunding storm recovery bonds if such retirement or refunding would result in lower storm recovery charges.

State and Louisiana Commission Pledges.

     The State of Louisiana has pledged in the Securitization Act that it will not take or permit any action that would impair the value of the storm recovery property, or, except for adjustments discussed in “Cleco Power’s Financing Order—True-ups” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process,” reduce, impair, postpone, terminate or otherwise adjust the storm recovery charges to be imposed, collected and remitted to storm recovery bondholders until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed in connection with any series of storm recovery bonds have been paid and performed in full. However, nothing will preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions.”

     The Louisiana commission has jurisdiction over Cleco Power pursuant to Article 4, Section 21, of the Louisiana Constitution. The Louisiana commission has pledged in the financing order that (i) the financing order is irrevocable until the indefeasible (i.e., not voidable) payment in full of the storm recovery bonds and the related financing costs, and (ii) it may not amend, modify or rescind the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust storm recovery charges approved in the financing order, provided that nothing in clause (ii) shall preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions.”

Constitutional Matters

     To date, no federal or Louisiana cases addressing the repeal or amendment of securitization provisions analogous to those contained in the Securitization Act have been decided. There have been cases in which federal courts have applied the Contract Clause of the United States Constitution and Louisiana courts have applied the Contract Clause of the Louisiana Constitution to strike down legislation regarding similar matters, such as legislation reducing or eliminating taxes, public charges or other sources of revenues servicing other types of bonds issued by public instrumentalities or private issuers, or otherwise substantially impairing or eliminating the security for bonds or other indebtedness. Based upon this case law, Phelps Dunbar, L.L.P., counsel to Cleco Power and us, expects to deliver an opinion, prior to the closing of an offering of a series of storm recovery bonds described in a prospectus supplement accompanying this prospectus, to the effect that the State pledge described above unambiguously indicates the State’s intent to be bound with the bondholders and, subject to all of the qualifications, limitations and assumptions set forth in its opinion, supports the conclusion that the State Pledge constitutes a binding contractual relationship between the State and the bondholders for purposes of both the Federal Contract Clause and Louisiana Contract Clause. Subject to all of the qualifications, limitations and assumptions set forth in its opinion, including that any impairment of the contract be “substantial,” Phelps Dunbar L.L.P.’s opinion is expected to state that a reviewing court of competent jurisdiction would hold that the State of Louisiana could not constitutionally repeal or amend the Securitization Act or take any other action contravening the State Pledge and creating an impairment (without, as the Securitization Act requires, providing full compensation for the full protection of the storm recovery charges to be collected pursuant to the financing order and full protection of the bondholders), unless such court would determine that such impairment clearly is a reasonable exercise of the State of Louisiana’s sovereign powers based upon reasonable conditions and of a character reasonable and appropriate to the emergency or other significant and legitimate public purpose justifying such action.

     Phelps Dunbar, L.L.P., subject to all of the qualifications, limitations and assumptions (including the assumption that any impairment would be “substantial”) is expected to set forth in its opinion, that a Louisiana state court reviewing an appeal of Louisiana commission action of a legislative character would conclude that the Louisiana commission pledge (i) creates a binding contractual obligation of the State of Louisiana for purposes of the Federal Contract Clause and the Louisiana Contract Clause and (ii) provides a basis upon which the bondholders could challenge successfully on appeal any such action by the Louisiana commission of a legislative character, including the rescission or amendment of the financing order, that such court determines violates the Louisiana commission pledge in a manner that substantially reduces, limits or impairs the value of the storm recovery property or the storm recovery charges, prior to the time that the bonds are fully paid and discharged, unless

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there is a judicial finding that the Louisiana commission action clearly is exercised for a public end and is reasonably necessary to the accomplishment of that public end so as not to be arbitrary, capricious or an abuse of authority.

     In addition, any action of the Louisiana legislature adversely affecting the storm recovery property or the ability to collect storm recovery charges may be considered a “taking” under the United States or Louisiana Constitutions. Phelps Dunbar, L.L.P. has advised us that it is not aware of any federal or Louisiana court cases addressing the applicability of the Takings Clause of the United States or Louisiana Constitution in a situation analogous to that which would be involved in an amendment or repeal of the Securitization Act. It is possible that a court would decline even to apply a Takings Clause analysis to a claim based on an amendment or repeal of the Securitization Act, since, for example, a court might determine that a Contract Clause analysis rather than a Takings Clause analysis should be applied. Assuming a Takings Clause analysis were applied under the United States Constitution or the Louisiana Constitution, Phelps Dunbar, L.L.P. expects to render an opinion, prior to the closing of an offering of a series of storm recovery bonds described in a prospectus supplement accompanying this prospectus, to the effect that under existing case law, a reviewing court of competent jurisdiction would hold, subject to all of the qualifications, limitations and assumptions set forth in its opinion, if it concludes that the storm recovery property is protected by the Takings Clause of the United States Constitution and Takings Clause of the Louisiana Constitution, that the State would be required to pay just compensation to bondholders, as determined by such court, if the State Legislature repealed or amended the Securitization Act or took any other action contravening the State Pledge, if the court determines doing so constituted a permanent appropriation of a substantial property interest of the bondholders in the storm recovery property and deprived the bondholders of their reasonable expectations arising from their investments in the bonds. In examining whether action of the Louisiana legislature amounts to a regulatory taking, both federal and state courts will consider the character of the governmental action and whether such action substantially advances the State’s legitimate governmental interests, the economic impact of the governmental action on the bondholders, and the extent to which the governmental action interferes with distinct investment-backed expectations. There is no assurance, however, that, even if a court were to award just compensation, it would be sufficient for you to recover fully your investment in the storm recovery bonds.

     In connection with the foregoing, Phelps Dunbar, L.L.P. has advised us that issues relating to the Contract and Takings Clauses of the United States and Louisiana Constitutions are essentially decided on a case-by-case basis and that the courts’ determinations, in most cases, appear to be strongly influenced by the facts and circumstances of the particular case, and has further advised us that there are no reported controlling judicial precedents that are directly on point. The opinions described above will be subject to the qualifications included in them. The degree of impairment necessary to meet the standards for relief under a Takings Clause analysis or Contract Clause analysis could be substantially in excess of what a storm recovery bondholder would consider material.

     In addition, Phelps Dunbar, L.L.P. expects to render an opinion, prior to the closing of an offering of a series of storm recovery bonds described in a prospectus supplement accompanying this prospectus, to the effect that under existing case law, a reviewing court of competent jurisdiction would hold that the Securitization Act is constitutional in all material respects under the United States Constitution and, subject to all of the qualifications, limitations and assumptions set forth in its opinion, that the State Pledge is not an impermissible attempt to “contract away” the police power of the State of Louisiana, and will not be disregarded under the reserved powers doctrine, and that the Securitization Act is constitutional in all material respects under the Louisiana Constitution.

     We and Cleco Power will file a copy of the Phelps Dunbar, L.L.P. opinion as an exhibit to an amendment to the registration statement of which this prospectus is a part, or to one of our periodic filings with the SEC.

     For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions.”

The Louisiana Commission May Adjust Storm Recovery Charges

     The Securitization Act authorizes the Louisiana commission to provide, and the Louisiana commission has provided, in the financing order, that storm recovery charges be adjusted at least semi-annually. The purposes of these adjustments are:

• to correct any overcollections or undercollections during the preceding six months, and

• to ensure the projected recovery of amounts sufficient to provide timely payment of debt service and all other financing costs during the subsequent 12-month period in connection with the related series of storm recovery bonds.

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Storm Recovery Charges Are Nonbypassable

     The Securitization Act provides that the storm recovery charges are nonbypassable subject to the terms of the financing order. Under the financing order, “nonbypassable” means Cleco Power and any other entity providing electric transmission or distribution services are required to collect and must remit, consistent with the financing order, the nonbypassable storm recovery charges that are applied to all existing and future LPSC-jurisdictional customers who remain attached to Cleco Power’s (or its successor’s) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco Power (or its successor) under rate schedules or special contracts approved by the Louisiana commission. Any customer who self-generates or co-generates electricity will be assessed storm recovery charges based upon the total firm and standby load served by Cleco Power. Any customer who completely severs interconnection with Cleco Power may become exempt from continued payment of the storm recovery charges. The Louisiana commission will ensure that such obligations are undertaken and performed by Cleco Power or any other entity providing electric transmission and distribution services, or in the event that transmission and distribution services are not provided by a single entity, any entity providing transmission or distribution services to Cleco Power’s LPSC-jurisdictional customer. If the retail sale and distribution of electricity in Louisiana becomes restructured so that customers may elect to receive their supply service from another provider, such selection of another provider will not allow such customers to bypass the storm recovery charge, so long as they continue to be attached to Cleco Power’s transmission or distribution lines. In the event of such restructuring, those customers who choose another provider for partial or full requirements supply, but remain attached to Cleco Power transmission or distribution lines, would be assessed storm recovery charges at the highest peak demand imposed on the Cleco system by demand metered customers and the highest peak consumption level of customers who are not demand metered, in each case during the twelve months immediately preceding the switch.

The Securitization Act Protects the Bondholders’ Security Interest on Storm Recovery Property

     The Securitization Act provides that a valid and enforceable security interest in storm recovery property will attach only after the issuance of a financing order, the execution and delivery of a security agreement in connection with issuance of each series of storm recovery bonds and the receipt of value for the storm recovery bonds. The security interest attaches automatically at the time when all of the foregoing conditions have been met.

     Upon perfection by filing a financing statement, under Section 1231(D) of the Securitization Act and otherwise in accordance with the Louisiana Uniform Commercial Code, the security interest will be a perfected security interest in the storm recovery property and all proceeds of the property, whether accrued or not, and will have priority in the order of perfection and take precedence over any subsequent lien creditor. The servicer pledges in the servicing agreement to file all necessary continuation statements.

     The Securitization Act provides that priority of transfers of and security interests in storm recovery property will not be impaired by:

• commingling of funds arising from storm recovery charges with other funds, or

• modifications to the financing order resulting from any true-up adjustment.

     Please read “Risk Factors—Risks Associated with the Unusual Nature of the Storm Recovery Property.”

The Securitization Act Characterizes the Transfer of Storm Recovery Property as a True Sale

The Securitization Act provides that an electric utility’s or an assignee’s transfer of storm recovery property is a “true sale” under Louisiana law and is not a secured transaction, and that the transferor’s right, title, and interest in, to, and under the storm recovery property passes to the transferee, if the agreement governing that transfer expressly states that the transfer is a sale or other absolute transfer. Please read “The Sale Agreement” and “Risk Factors—Risks Associated with Potential Bankruptcy .”

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CLECO POWER’S FINANCING ORDER

     Background. In August and September 2005, Cleco Power was struck by the two worst natural disasters ever to strike its system, Hurricanes Katrina and Rita. Cleco Power has already funded and paid the storm recovery costs relating to these storms. In November 2006, Cleco Power applied to the Louisiana commission for an order authorizing Cleco Power to securitize its storm recovery costs, including the financing of a storm recovery reserve. On September 17, 2007, the Louisiana commission issued its final order determining that Cleco Power is entitled, pursuant to the Securitization Act, to finance, through the issuance of storm recovery bonds in the amount of approximately $187 million, equal to the sum of: (a) approximately $132 million of remaining unamortized storm recovery costs, plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a restricted storm recovery reserve in a segregated restricted account, plus (c) upfront financing costs, which are estimated at $4.6 million, and are subject to further review by the Louisiana commission plus or minus (d) any adjustment, pursuant to the issuance advice letter, to reflect the cost of any approved swap or hedge or credit enhancement or any change necessary to account for Cleco Power’s collection of interim storm recovery surcharge revenues through the date of pricing of the storm recovery bonds in accordance with the financing order. Cleco Power’s storm recovery costs (including storm recovery reserves and up front financing costs associated with the issuance of storm recovery bonds) were determined by separate revenue requirement order of the Louisiana commission. The financing order also authorized: (1) Cleco Power’s proposed financing structure and issuance of the storm recovery bonds; (2) creation of the storm recovery property, including the right to impose and collect storm recovery charges sufficient to pay the storm recovery bonds and associated financing costs; (3) a tariff to implement the storm recovery charges; and (4) a tariff to implement a surcredit to provide customers the benefit of all non-ratepayer recoveries and to address ancillary cost recovery relating to the storm recovery cost process. The financing order became final and nonappealable on October 3, 2007 and the revenue requirement order becomes final and nonappealable on November 2, 2007.

     We have filed the financing order with the SEC as an exhibit to the registration statement of which this prospectus forms a part. The following summary does not purport to be complete and is subject to and qualified by reference to the provisions of the financing order.

     The financing order provides that the true-up mechanism and all other obligations of the State of Louisiana and the Louisiana commission set forth in the financing order that relate to a series of storm recovery bonds are direct, explicit, irrevocable and unconditional upon issuance of such series of storm recovery bonds, and are legally enforceable against the State of Louisiana and the Louisiana commission.

     Issuance of Storm Recovery Bonds. The financing order authorizes Cleco Power to cause us to issue storm recovery bonds in an aggregate principal amount of approximately $187 million, including upfront financing costs, which are estimated at $4.6 million.

     Collection of Storm Recovery Charges. The financing order authorizes Cleco Power to collect storm recovery charges from its customers in an amount sufficient at all times to provide for recovery of Cleco Power’s remaining unamortized storm recovery costs and upfront and ongoing financing costs, which include principal and interest and certain ongoing fees and expenses associated with the storm recovery bonds.

     There is no “cap” on the level of storm recovery charges that may be imposed on customers to pay on a timely basis scheduled principal and interest on the storm recovery bonds. There is also no limit on how long storm recovery charges may be imposed; pursuant to the financing order, the charges will be imposed until the storm recovery bonds and all related financing costs have been paid in full.

     Issuance Advice Letter. Within twenty-four hours following the determination of the final terms of a series of storm recovery bonds and prior to their issuance, Cleco Power is required to file with the Louisiana commission an issuance advice letter, which will:

• demonstrate compliance with the requirements of the financing order,

• evidence the actual financial terms on which such series of storm recovery bonds will be issued,

• show the actual dollar amount of the initial storm recovery charges for each customer rate class relating to such series of storm recovery bonds,

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• identify the storm recovery property relating to such series of storm recovery bonds we will purchase,

• identify us,

• certify that, based on information reasonably available, the structuring and pricing of such series of storm recovery bonds will result in the lowest storm recovery bond charges consistent with market conditions and the terms of the financing order, and

• certify that the financing order as proposed by Cleco Power will produce a net present value benefit to customers , and lower customer bills, each as compared to traditional methods of finance.

     Both the issuance advice letter and the accompanying compliance tariff become effective on the date of issuance of a series of storm recovery bonds. A designee of the Louisiana commission’s review of the issuance advice letter will be limited to determining that (i) the final structure, terms and pricing of the storm recovery bonds in the issuance advice letter are consistent with the criteria established in the financing order and (ii) the mathematical calculations are accurate.

     Tariff. We are required, prior to the issuance of any storm recovery charges, to complete and file a tariff in the form attached to the financing order. The tariff establishes the initial storm recovery charges. It also implements the procedures for periodic adjustments to the storm recovery charges.

     True-Ups. The financing order provides that storm recovery charges will be reviewed and adjusted semi-annually to:

• correct, over a period of up to 12 months covering the next two succeeding payment dates, any under-collections or over-collections, for any reason, during the preceding six months, and

• ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal of and interest on the storm recovery bonds and all other required amounts in connection with the storm recovery bonds during the subsequent 12-month period.

     To the extent any storm recovery bonds remain outstanding after the scheduled final payment date of the storm recovery bonds, mandatory true-up adjustments will be made quarterly until all storm recovery bonds and associated costs are paid in full. In addition, the servicer may also make interim true-up adjustments more frequently at any time during the term of the storm recovery bonds, if:

• if the servicer forecasts that storm recovery charge collections will be insufficient to make all scheduled payments of interest and other financing costs in respect of the storm recovery bonds during the current or next succeeding payment period or bring all principal payments on schedule over the next two succeeding payment dates, and/or

• to replenish any draws upon the capital subaccount.

     Any delinquencies or under-collections in one customer class will be taken into account in the true-up mechanism to adjust the storm recovery charge for all customers of Cleco Power, not just the class of customers from which the delinquency or under-collection arose.

     The financing order requires the servicer to request Louisiana commission approval of an amendment to the true-up mechanism that it deems necessary or appropriate to address any material deviations between storm recovery charge collections and the periodic revenue requirement. No such change shall cause any of the then-current credit ratings of the storm recovery bonds to be suspended, withdrawn or downgraded.

     The financing order provides that the true-up mechanism and all other obligations of the State of Louisiana and the Louisiana commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the storm recovery bonds, and are legally enforceable against the State of Louisiana and the Louisiana commission.

     For more discussion of the true-up mechanism, see “The Servicing Agreement— Storm Recovery Charge Adjustment Process” in this prospectus.

     Louisiana Commission Pledge. The State of Louisiana has pledged in the financing order that (i) the financing order is irrevocable until the indefeasible (i.e., not voidable) payment in full of the storm recovery bonds and (ii) it may not amend, modify or rescind the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust

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storm recovery charges approved in the financing order, provided that nothing in clause (ii) shall preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party.

     State Pledge and True-Up Mechanism—Credit Risk. The State of Louisiana has pledged in the Securitization Act that it will not take or permit any action that would impair the value of the storm recovery property, or, except for adjustments discussed in “—True-ups” and “The Servicing Agreement—Storm Recovery Charge Adjustment Process,” reduce, alter or impair the storm recovery charges to be imposed, collected and remitted to storm recovery bondholders until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed in connection with any series of storm recovery bonds have been paid and performed in full. However, nothing will preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the financing order and the full protection of the bondholders and any assignee or financing party. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions.”

     The broad-based nature of the true-up mechanism and the pledges of the State of Louisiana and the Louisiana commission, along with the bankruptcy remoteness of the issuing entity and the collection account, will serve to minimize, if not effectively eliminate, for all practical purposes and circumstances, any credit risk associated with the storm recovery bonds (i.e., that sufficient funds will be available and paid to discharge all principal and interest on the storm recovery bonds as and when legally due). Please read “The Securitization Act—Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs,” “Cleco Power’s Financing Order—True- Ups,” “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in this prospectus. With respect to the foregoing, interest is due on each payment date and principal is due upon the final maturity date for each tranche.

     Adjustments to Allocation of Storm Recovery Charges. The financing order provides that the allocation factors are reset annually for each customer rate class, in accordance with Cleco Power’s most recent annual base revenue forecast, for the distribution of the periodic billing requirement to each customer rate class. The allocators will be reset in proportion to each customer class’ allocation percentage from the most recent base revenue forecast. The last utilized allocations will be used if no new allocations have been determined at a particular time. Adjustments to the allocation of the storm recovery charges will take place at the same time as one of the semi-annual true-up adjustments described above.

     Any delinquencies or under-collections in one customer class will be taken into account in the true-up mechanism to adjust the storm recovery charge for all customers of Cleco Power, not just the class of customers from which the delinquency or under-collection arose.

     Servicing Agreement. In the financing order, the Louisiana commission authorized Cleco Power, as the servicer, to enter into a servicing agreement described under “The Servicing Agreement” in this prospectus.

     Binding on Successors. The financing order, along with the storm recovery charges authorized in the financing order, is binding on:

• Cleco Power,

• any successor to Cleco Power that provides transmission or distribution service to Cleco Power’s LPSC-jurisdictional service territory,

• if Cleco Power or its successor no longer owns and operates both the transmission and distribution systems, then any entity that provides transmission or distribution service to Cleco Power’s customers.

     Subsequent Financing Orders. We may issue additional series of storm recovery bonds secured by separate storm recovery property under a subsequent financing order of the Louisiana commission. We will describe the material terms of any such financing order in the related prospectus supplement.

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THE SELLER, INITIAL SERVICER AND SPONSOR

About Cleco Power

     Background Information. Cleco Power is an integrated electric utility that conducts generation, transmission and distribution operations subject to the jurisdiction of the Louisiana commission and the Federal Energy Regulatory Commission, among other regulators, and that also engages in energy management activities. Cleco Power is a Louisiana limited liability company and a wholly owned subsidiary of Cleco Corporation, a regional energy services holding company.

     Service Territory. Cleco Power provides integrated electric utility services, including generation, transmission, distribution and sale of electricity, to approximately 268,000 customers in 104 communities in central and southeastern Louisiana.

     Executive Offices. Cleco Power’s principal executive offices are located at 2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226. The phone number at this address is (318) 484-7400.

     Where to Find Information About Cleco Power. Cleco Power, together with Cleco Corporation, a public utility holding company that wholly owns Cleco Power, files periodic reports with the SEC as required by the Exchange Act. Reports filed with the SEC are available for inspection without charge at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. Copies of periodic reports and exhibits thereto may be obtained at the above location at prescribed rates. Information as to the operation of the public reference facilities is available by calling the SEC at 1 800-SEC 0330. Information filed with the SEC can also be inspected at the SEC site on the World Wide Web at http://www.sec.gov. You may access a copy of Cleco Power’s filings at www.cleco.com. Except as provided in any related prospectus supplement, no other information contained on that website constitutes part of this prospectus or any prospectus supplement related to the storm recovery bonds.

Cleco Power’s Customer Base and Electric Energy Consumption

     The following tables show electric billed revenue, average retail customers and sales of electricity for each of Cleco Power’s customer classes for the five preceding years and the six-month period ended June 30, 2007. There can be no assurances that the electric billed revenue, average number of retail customers and retail electricity sales, or the composition of any of the foregoing, will remain at or near the levels reflected in the following tables.

Billed Revenue by Customer Class

($000)	2002		2003		2004		2005		2006
Residential	$	247,876	$	279,548	$	297,955	$	354,783	$	382,028
Commercial	$	116,214	$	135,429	$	146,007	$	175,055	$	213,645
Industrial	$	128,296	$	150,676	$	164,520	$	206,544	$	226,649
Other	$	39,839	$	45,360	$	47,360	$	58,013	$	42,408
Total	$	532,225	$	611,013	$	655,843	$	794,396	$	864,730

Retail Customers by Customer Class

(FERC Form 1)	2002		2003		2004		2005		2006
Residential		222,766		225,223		225,949		227,799		229,457
Commercial		31,406		32,405		31,937		32,161		33,424
Industrial		747		732		692		674		659
Other		6,205		6,254		6,267		6,396		4,817
Total		261,124		264,614		264,845		267,031		268,358

Retail Sales by Customer Class

GWh	2002		2003		2004		2005		2006
Residential		3,400		3,429		3,507		3,516		3,552
Commercial		1,722		1,782		1,854		1,838		2,109
Industrial		2,756		2,786		2,902		2,861		2,963
Other		593		595		597		610		412
Total		8,471		8,592		8,860		8,825		9,036

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Percentage Concentration Within Cleco Power’s Large Industrial Customers

     For the year ended December 31, 2006, Cleco Power’s ten largest customers based on sales represented approximately 22% of Cleco Power’s retail electricity sales. All ten customers are industrial class accounts. There are no material concentrations in the residential and commercial classes.

Forecasting Electricity Consumption

     For all classes, excluding residential and small commercial, Cleco Power forecasts electricity consumption based on trend and reasonable expectations of future growth. Past data for lighting and municipal customers is reviewed for any trends or patterns. Once a reasonable pattern becomes apparent, Cleco Power will assume this growth remains constant through the five forecast years. For Cleco Power’s larger industrial customers, Cleco Power will use three-year historical data and forecast these customers individually. Each individual customer’s historical data is reviewed to determine the most reasonable level to set growth in sales and demand by month.

     Electricity consumption of Cleco Power’s residential and small commercial classes are forecasted using econometric models. The basic process to forecast electricity consumption of the residential and small commercial classes is to first derive a customer forecast. Use-per-consumer is estimated factoring in weather data and historical usage, and it is these two forecasts that calculate sales for the residential and small commercial class.

     Economic drivers for the econometric models are obtained from Woods and Poole Economics, Washington, D.C., an independent firm that specializes in long-term county economic and demographic projections. The data includes both economic and demographic data for the State of Louisiana, as well as national data for a wide variety of economic variables. Weather data is obtained from the National Oceanographic and Atmospheric Administration (NOAA) and often is obtained in the form of cooling degree days and heating degree days. Normal degree days used in forecasts are defined by NOAA and are 30 year averages updated every decade.

     Once per year (typically in the fourth quarter), Cleco Power completes a five-year sales forecast where the econometric models are completely re-estimated and where individual customers are evaluated. The output of this exercise is the sales forecast that underlies Cleco Power’s annual five-year business plan. This forecast is typically the first step in a multi-stage planning process that determines the hourly demand, generation mix, and fuel cost assumptions in the business plan.

Annual Forecast Variance For Ultimate Electric Consumption (GWh)*

Total	2001			2002			2003			2004			2005			2006
Forecast		8,496			8,459			8,423			8,519			8,786			9,026
Actual		8,077			8,471			8,592			8,860			8,825			9,036
Variance		-4.9	%		0.1	%		2.0	%		4.0	%		0.4	%		0.1	%
Residential
Forecast		3,300			3,325			3,342			3,385			3,476			3,570
Actual		3,201			3,400			3,429			3,507			3,516			3,552
Variance		-3.0	%		2.3	%		2.6	%		3.6	%		1.1	%		-0.5	%
Commercial
Forecast		1,754			1,793			1,711			1,780			1,824			1,904
Actual		1,655			1,722			1,782			1,854			1,838			2,109
Variance		-5.6	%		-4.0	%		4.1	%		4.1	%		0.8	%		10.7	%
Industrial
Forecast		2,825			2,830			2,767			2,742			2,869			3,032
Actual		2,640			2,756			2,786			2,902			2,861			2,963
Variance		-6.5	%		-2.6	%		0.7	%		5.8	%		-0.3	%		-2.3	%
Other
Forecast		616			511			603			611			618			519
Actual		581			593			595			597			610			412
Variance		-5.7	%		16.0	%		-1.8	%		-2.3	%		-1.3	%		-20.6	%

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Credit Policy; Billing Process; Collections Process; Termination of Service

     Cleco Power bills its customers directly, and its current credit policies, billing process, and termination of service policies are described below. All information below pertains only to Cleco Power’s customers.

Credit Policy

     Cleco Power is required to provide electric utility service to applicants within its designated service territory once outstanding debts are cleared and any deposit requirements are met. Using information provided by the Customer Information System (CORS, Cleco Power’s Customer Order Request System), Cleco Power determines whether Cleco Power has previously provided service to an applicant. Certain accounts are secured with deposits or guarantees as a precautionary measure. The amount of the deposit for residential customers is $100.00 if property is owned by the customer and $150.00 for rental property and can be up to 2 times the maximum monthly bill. Cleco Power does not accept third party guarantors for commercial accounts. Cleco Power’s current business practices require industrial and commercial customers to provide deposits equal to two times the average monthly bill based on the location history.

     Louisiana commission rules require Cleco Power to pay simple interest at a rate determined annually, at a rate of 5.00% for any cash deposits held by Cleco Power on a customer’s account. Cash deposits are accounted for as an obligation, but are not required to be escrowed, and are available in working capital.

Billing Process

     Cleco Power bills its customers, on average, every 30 days. For the year ended December 31, 2006, Cleco Power mailed an average of 12,000 bills on each business day to its customers. For accounts with potential billing error exceptions, reports are generated for manual review. This review examines accounts that have abnormally high or low bills, potential meter reading errors, possible meter malfunctions and/or unbilled accounts. Louisiana commission rules require that each bill provided to customers shall include a payment due date that shall not be less than 20 days after issuance.

Collection, Termination of Service and Write-Off Policy.

     In 2006, Cleco Power received approximately 44% of payments by mail, 41% from walk-in payments, and 15% electronically, either bank draft or electronic funds transfer. Walk-in payments are handled by a third party, and payment centers are located in each town in Cleco Power’s service territory.

     Customers are sent a bill, which is due and payable upon receipt and is considered past due if not paid within 30 calendar days from the mail date. If the bill is not paid on the last day to pay indicated on the statement, and the customer’s payment history makes the past-due amount eligible for collection activity, a disconnect notice is mailed on the 30th calendar day after the past due date to ensure that consideration is given to any payment that may be en route by mail on the last day to pay. The disconnect notice gives the customer an additional 10 calendar days to pay the bill. On the last day to pay indicated on the disconnect notice, a courtesy call may be attempted by the Customer Service Office. If the bill is not paid or if the customer has not called for extended payment arrangements, a disconnect order will be generated on the next business day. Once the disconnect order has been generated, payment in full is required to stop the termination. If the customer is disconnected, payment in full is required prior to restoration of service. In addition, the customer may be subject to an additional deposit and/or a collection or reconnection fee.

     The rules and regulations of the Louisiana commission, which may change from time to time, regulate and control the right to disconnect service. For example, electric utilities generally may not terminate service to a customer (i) on a holiday or weekend day or (ii) during certain extreme weather conditions.

     Cleco Power provides several payment options to help consumers manage their electric usage and payments. Cleco Power customer service representatives as well as an automated Voice Response Unit (VRU) are available 24 hours a day, 365 days a year to assist customers with payment arrangements. Most customers can receive an extension on their scheduled disconnect date through the VRU or by talking with a customer service representative. Extensions are denied in some cases based on the payment history of the account. Programs such as Budget Pay allow customers to pay an average bill each month while

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spreading the difference over the remaining months, are available to most residential customers. Automated draw draft and internet billing and payments are also available.

     Unpaid final bills are written off after 60 days. Cleco Power does mail a final bill to all customers. If not paid in 45 days, an in-house collection letter is mailed. Once the account is written off, it is turned over to a third-party collection agency on a contingency basis.

Write-off and Delinquency Experience

     The following table shows gross write-offs for electricity and gross write-offs as a percentage of total electric billed revenue for the past five years for Cleco Power’s customers.

Gross Write-Offs as a Percentage of Revenues*

	As of December 31,
	2002			2003			2004			2005			2006
Billed Electric Revenues ($000)	$	540,653,363		$	613,524,248		$	658,874,348		$	798,097,262		$	888,480,907
Gross Charge-Offs ($000)	$	2,037,881		$	2,366,664		$	2,559,644		$	3,217,077		$	4,651,649
Percentage of Billed Revenue		0.377	%		0.386	%		0.389	%		0.403	%		0.524	%

* Numbers not exact due to rounding.

     The following table shows, for its service territory, total Cleco Power net write-offs for electricity and total net write-offs as a percentage of total electric billed revenue for the past five years. Net write-offs include amounts recovered by Cleco Power from deposits, bankruptcy proceedings and payments received after an account has been either written-off by Cleco Power or transferred to one of its external collection agencies.

Net Write-Offs as a Percentage of Revenues*

	As of December 31,
	2002			2003			2004			2005			2006
Billed Electric Revenues ($000)	$	540,653,363		$	613,524,248		$	658,874,348		$	798,097,262		$	888,480,907
Net Charge-Offs ($000)	$	1,071,077		$	1,667,305		$	1,758,670		$	2,434,370		$	3,353,566
Percentage of Billed Revenue		0.198	%		0.272	%		0.267	%		0.305	%		0.377	%

* Numbers not exact due to rounding.

Delinquencies

     The following table sets forth information relating to the delinquency experience of Cleco Power for residential, commercial, industrial and governmental customers on December 31 of each of the four preceding years:

Customer Delinquency Data*

	Dec.			Dec.			Dec.			Dec.
	2003			2004			2005			2006
Commercial, Industrial, Governmental & Residential
Percent of Billed Revenue Not Collected Within:
31-60 days		8.7	%		9.6	%		9.8	%		10.1	%
61-90 days		1.1	%		1.1	%		2.2	%		0.9	%
91 days or more		1.4	%		1.0	%		2.9	%		0.9	%

* Data shows statistics for electric revenues for open accounts for each respective month and is calculated based upon the past due amounts included in current month billings as a percentage of the prior month’s billed revenue. Data is not available for earlier periods.

     Cleco Power does not believe that the delinquency experience with respect to storm recovery charge collections will differ substantially from the approximate rates indicated above.

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Average Days Sales Outstanding

     The following table sets forth information relating to Cleco Power’s average days sales outstanding for all electric consumers in its service territory for the past six years:

Average Days Sales Outstanding

2001 Through 2007 YTD

	Average Days Sales
YEAR	Outstanding
2001	19.24
2002	19.16
2003	19.57
2004	19.25
2005	19.64
2006	19.69
2007 (through September 30, 2007)	18.89

* Numbers not exact due to rounding.

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CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC, THE ISSUING ENTITY

General

     We are a special purpose limited liability company formed under the Louisiana Limited Liability Company Act pursuant to the limited liability company operating agreement executed by our sole member or owner, Cleco Power, and the filing of articles of organization with the Secretary of State of the State of Louisiana. We have filed our limited liability company operating agreement with the SEC as an exhibit to the registration statement of which this prospectus forms a part. We have summarized selected provisions of our limited liability company operating agreement below.

     As of the date of this prospectus, we have not carried on any business activities and have no operating history. Our fiscal year is the calendar year. Immediately following our issuance of the initial series of storm recovery bonds, our assets will include:

• the related storm recovery property,

• our rights under the applicable sale agreement, under the administration agreement and under all bills of sale delivered by Cleco Power pursuant to such sale agreement,

• our rights under the applicable servicing agreement and any subservicing, agency, administration, intercreditor or collection agreements executed in connection with such servicing agreement,

• the applicable collection account and all subaccounts of such collection account,

• our rights under any interest rate swap agreement or hedging agreement entered into with respect to the issuance of a tranche of floating rate storm recovery bonds within such series,

• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and

• all payments on or under and all proceeds in respect of any or all of the foregoing.

     Following the issuance of subsequent series of storm recovery bonds our assets will include similar property related to each such series. The indenture provides that the storm recovery property, as well as our other assets, other than any cash released to us by the trustee semi-annually from earnings on the capital subaccount, will be pledged by us to the trustee. Pursuant to the indenture, the collected storm recovery charges remitted to the trustee by the servicer must be used to pay principal and interest on the related series of storm recovery bonds and our other obligations specified in the indenture.

Our Purpose

     We were created for the specific purposes of:

• purchasing and owning storm recovery property and other storm recovery bond collateral,

• issuing and registering one or more series of storm recovery bonds,

• pledging our interest in storm recovery property and other storm recovery bond collateral to the trustee pursuant to the terms of the indenture in order to secure the related series of storm recovery bonds,

• making payments on the storm recovery bonds,

• distributing amounts released to us, and

• performing other activities that are necessary, suitable or convenient to accomplish these purposes.

     Our limited liability company operating agreement does not permit us to engage in any activities not directly related to these purposes, including issuing securities (other than the storm recovery bonds), borrowing money or making loans to other persons. The list of permitted activities set forth in our limited liability company operating agreement may not be altered, amended or repealed without the affirmative vote of a majority of our managers, which vote must include the affirmative vote of our member and our independent manager.

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Our Relationship With Cleco Power

     On the issue date for each series of the storm recovery bonds, Cleco Power will sell storm recovery property to us pursuant to a sale agreement between us and Cleco Power. Pursuant to a servicing agreement between us and Cleco Power, Cleco Power will serve as the initial servicer of the storm recovery property. We will pay Cleco Power fixed fees for performing these services. Pursuant to an administration agreement between us and Cleco Power, Cleco Power will provide administrative services to us.

Our Managers

     Pursuant to our limited liability company operating agreement, our affairs will be managed by managers, whom we refer to in this prospectus and the prospectus supplement as our “managers.” Cleco Power will appoint our managers from time to time or, in the event Cleco Power transfers its interest in us, the new owner or owners will appoint our managers. Prior to the initial issuance of the initial series of storm recovery bonds, and thereafter at all times we will have at least one independent manager who, among other things, is not and has not been for at least five years prior to the date of his or her appointment:

• a direct or indirect legal or beneficial owner of us, Cleco Power, any of our affiliates or any of Cleco Power’s affiliates,

• a relative, supplier, employee, officer, director or manager (other than as an independent director or manager of us), contractor or material creditor of us, Cleco Power or any of its affiliates, or

• a person who controls Cleco Power or any of its affiliates (whether directly, indirectly or otherwise) or any creditor, employee, officer, director, manager or material supplier or contractor of Cleco Power or its affiliates (other than as an independent director or manager of any other bankruptcy-remote subsidiary of Cleco or its affiliates); provided, that the indirect or beneficial ownership of stock of Cleco Power or its affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an independent manager.

The managers (other than the independent manager) will be employees or officers of Cleco Power. The managers will devote the time necessary to conduct our affairs. Cleco Power, as our sole member, will appoint one independent manager prior to the issuance of the initial series of storm recovery bonds.

     None of our managers has been involved in any legal proceedings which are specified in Item 401(f) of the SEC’s Regulation S-K.

Manager Fees and Limitation on Liabilities

     As of the date of this prospectus, we have not paid any compensation to any manager since the date we were formed. We will not compensate our managers, other than our independent manager, for their services performed on our behalf. The independent manager will be paid a manager’s fee from our assets.

     Our limited liability company operating agreement provides that to the extent permitted by law, our managers will not be liable for our debts, obligations or liabilities.

     Under our limited liability company operating agreement, we indemnify our managers to the fullest extent permitted by law against expenses incurred by them in connection with an action, suit or proceeding if they acted in good faith and in a manner in which they reasonably believed to be in or not opposed to our best interests, except for such judgments, penalties, fines or other expenses that were directly caused by their fraud, gross negligence or willful misconduct.

We Are a Separate and Distinct Legal Entity from Cleco Power

     Under our limited liability company operating agreement, we may not file a voluntary petition for relief under the bankruptcy code without a unanimous vote of our managers (including our independent manager). Cleco Power has agreed that it will not cause us to file a voluntary petition for relief under the bankruptcy code. Our limited liability company operating agreement, except for financing reporting purposes and for federal and state income tax purposes, requires us to:

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• take all reasonable steps to continue our identity as a separate legal entity,

• make it apparent to third persons that we are an entity with assets and liabilities distinct from those of Cleco Power, other affiliates of Cleco Power, our managers or any other person, and

• make it apparent to third persons that we are not a division of Cleco Power or any of its affiliates or any other person.

     Our principal place of business is 2605 Hwy. 28 East, Office Number 12, Pineville, Louisiana 71360, and our telephone number at such address is (318) 484-4180.

Administration Agreement

     Cleco Power will, pursuant to an administration agreement between Cleco Power and us, provide administrative services to us, including services relating to the preparation of financial statements, required filings with the SEC, any tax returns we might be required to file under applicable law, qualifications to do business, and minutes of our managers’ meetings. We will pay Cleco Power a fixed fee of $100,000 per annum, payable in installments of $50,000 on each payment date for performing these services.

USE OF PROCEEDS

     Upon the issuance of storm recovery bonds, we will use the net proceeds from the sale of the bonds (after payment of up front financing costs) to pay to Cleco Power the purchase price of Cleco Power’s rights under the financing order, which are storm recovery property.

     Cleco Power will use approximately $50 million of the net proceeds from its sale of the storm recovery property to fund a storm recovery reserve, which will be kept in a segregated restricted account. The remaining proceeds (after payment of up front financing costs payable by Cleco Power) of approximately $132 million (as of October 31, 2007) are reimbursement to Cleco Power for storm recovery costs Cleco Power has already incurred and paid, and will be used by Cleco Power for working capital and other general corporate purposes.

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THE STORM RECOVERY BONDS

     We will issue the storm recovery bonds under an indenture between us and the trustee to be named in the applicable prospectus supplement. We have filed the form of the indenture with the SEC as an exhibit to the registration statement of which this prospectus forms a part. The particular terms of each series of the storm recovery bonds will be provided in the indenture and a related supplemental indenture. We have summarized selected provisions of the indenture and the storm recovery bonds below. This summary does not purport to be complete and is subject to and qualified by reference to the provisions of the indenture. We will describe the particular terms of each series of the storm recovery bonds in a supplement to this prospectus. You should carefully read the summary below, the applicable prospectus supplement and the terms and provisions of the indenture that may be important to you before investing in the storm recovery bonds. Please read “Where You Can Find More Information” in this prospectus.

General Terms of the Storm Recovery Bonds

     Storm recovery bonds may be issued under the indenture from time to time to finance the purchase by us of storm recovery property. The aggregate principal amount of the storm recovery bonds that may be authenticated and delivered under the indenture and the financing order issued by the Louisiana commission on September 17, 2007 may not exceed $132 million plus (a) the costs of funding storm recovery bonds in one or more series in an aggregate principal of approximately $50 million to create a storm recovery reserve in a segregated restricted account, plus (b) up front financing costs, which are estimated to be approximately $4.6 million. Any series of the storm recovery bonds may include one or more tranches which differ, among other things, as to interest rate and amortization of principal. The terms of all storm recovery bonds of the same series will be identical, unless a series includes more than one tranche, in which case the terms of all storm recovery bonds of the same tranche will be identical. The particular terms of the storm recovery bonds of any series and, if applicable, tranches thereof, will be set forth in the supplemental indenture for that series. The terms of a series of storm recovery bonds, and any tranches thereof, will not be subject to consent of the storm recovery bondholders of any previously issued series. Please read “Risk Factors—Other Risks Associated with an Investment in the Storm Recovery Bonds” in this prospectus. Each series of storm recovery bonds may include one or more tranches that accrue interest at a variable rate, and one or more interest rate swap agreements may be entered into in connection with the issuance of any such variable rate storm recovery bonds. Please read “—Floating Rate Storm Recovery Bonds” below.

     The prospectus supplement for a series of storm recovery bonds will describe the following terms of that series of storm recovery bonds and, if applicable, the tranches of that series:

• the designation of the series and, if applicable, the tranches of that series,

• the principal amount of the series and, if applicable, the tranches of that series,

• the annual rate at which interest accrues or the method or methods of determining such annual rate,

• the payment dates,

• the scheduled final payment date and the final maturity date of the series and, if applicable, the tranches of that series,

• the issuance date of the series,

• the collateral for the series,

• the authorized denominations,

• any provisions for optional redemption of the series or tranche,

• the expected amortization schedule for principal of the series and, if applicable, the tranches of that series,

• any other material terms of the tranche that are not inconsistent with the provisions of the indenture and that will not result in any rating agency’s reducing or withdrawing its rating of any outstanding tranche of storm recovery bonds,

• the identity of the trustee, and

• only if a series includes floating rate storm recovery bonds, the terms of any interest rate swap agreement or other hedging agreement and the identity of any counterparty thereto.

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     The storm recovery bonds are not a debt, liability or other obligation of the State of Louisiana, the Louisiana commission or of any other political subdivision, agency or instrumentality of the State and do not represent an interest in or legal obligation of Cleco Corporation, Cleco Power or any of their affiliates, other than us. None of Cleco Corporation, Cleco Power or any of their affiliates will guarantee or insure the storm recovery bonds. A financing order authorizing the issuance of storm recovery bonds does not constitute a pledge of the full faith and credit of the State of Louisiana, the Louisiana commission or of any other political subdivision of the State. The issuance of the storm recovery bonds under the Securitization Act will not directly, indirectly or contingently obligate the State of Louisiana, the Louisiana commission or any other political subdivision of the State to levy or to pledge any form of taxation for the storm recovery bonds or to make any appropriation for their payment.

Payments of Interest and Principal on the Storm Recovery Bonds

     Interest will accrue on the principal balance of a series of storm recovery bonds at the interest rate specified in or determined in the manner specified in the related prospectus supplement. Interest will be payable to the storm recovery bondholders on each payment date, commencing on the payment date specified in the related prospectus supplement. Interest payments for each series will be made from collections of related storm recovery charges, including amounts available in the excess funds subaccount and, if necessary, the amounts available in the capital subaccount for each series.

     On any payment date with respect to any series, we generally will pay principal of storm recovery bonds only until the outstanding principal balance has been reduced to the principal balance specified for that payment date in the expected amortization schedule for that series, but only to the extent funds are available for that series as described in this prospectus. Accordingly, principal of the series of storm recovery bonds may be paid later, but generally not sooner, than reflected in the expected amortization schedule for such series, except in the case of an applicable optional redemption or acceleration. Please read “Risk Factors—Other Risks Associated With an Investment in the Storm Recovery Bonds” and “Weighted Average Life and Yield Considerations for the Storm Recovery Bonds” in this prospectus.

     The trustee will retain in the excess funds subaccount for that series for payment on later payment dates any collections of storm recovery charges in excess of amounts payable as:

• fees and expenses of the servicer (including the servicing fee), the independent manager and the trustee,

• payments of interest and principal on the storm recovery bonds for that series,

• allocations to the capital subaccount for that series, and

• investment earnings on amounts in the capital subaccount released to us.

     If the trustee receives insufficient collections of storm recovery charges for a series of storm recovery bonds for any payment date, and amounts in the collection account for that series (and the applicable subaccounts of that collection account) are not sufficient to make up the shortfall, principal of that series of storm recovery bonds may be paid later than expected, as described in this prospectus. The failure to make a scheduled payment of principal on the storm recovery bonds of a series because there are not sufficient funds in the collection account for that series does not constitute a default or an event of default with respect to such series under the indenture, except for the failure to make the scheduled payment of principal due upon the final maturity of the storm recovery bonds.

     The trustee will pay on each payment date to the storm recovery bondholders of a particular series to the extent of available funds in the related collection account all payments of principal and interest then due on such storm recovery bonds (other than special payments as defined in the indenture). The trustee will make each such payment to the storm recovery bondholders, other than the final payment, on the applicable record date. If the storm recovery bonds are ever issued in definitive certificated form, however, the final payment with respect to the storm recovery bonds will be made only upon presentation and surrender of such storm recovery bond at the office or agency of the trustee specified in the notice given by the trustee with respect to such final payment. The trustee will mail notice of the final payment to the storm recovery bondholders no later than five days prior to the final payment date, specifying the date set for the final payment and the amount of the payment.

     The storm recovery bonds will originally be issued in book-entry form, and we do not expect that the storm recovery bonds will be issued in definitive certificated form. At the time, if any, we issue the storm recovery bonds of any series in the

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form of definitive storm recovery bonds and not to The Depository Trust Company (“DTC”) or its nominee, the trustee will make payments with respect to that tranche as described below under “—Definitive Certificated Storm Recovery Bonds.” Upon application by a holder of any tranche of storm recovery bonds in the principal amount of $10,000,000 or more to the trustee not later than the applicable record date, the trustee will make payments by wire transfer to an account maintained by the payee in New York, New York.

     On each payment date, the amount to be paid as principal on the storm recovery bonds of each series will equal:

• the unpaid principal amount of each series due on the final maturity date of that series, plus

• the unpaid principal amount of each series upon acceleration following an event of default, plus

• the unpaid principal amount of any storm recovery bonds of each series called for redemption, plus

• the overdue payments of principal, plus

• the unpaid and previously scheduled payments of principal, plus

• the principal scheduled to be paid on each series on that payment date.

     Except as otherwise specified in a prospectus supplement with respect to floating rate storm recovery bonds, the failure to pay accrued interest on a series of storm recovery bonds on any payment date (even if the failure is caused by a shortfall in storm recovery charges received) will result in an event of default for that series of storm recovery bonds unless such failure is cured within five business days. If interest is not paid within that five-day period, the issuing entity will pay such defaulted interest (plus interest on such defaulted interest at the applicable interest rate to the extent lawful) to the persons who are storm recovery bondholders on a special record date (as defined in the indenture). The special record date will be at least fifteen business days prior to the date on which the trustee is to make a special payment (a special payment date). The issuing entity will fix any special record date and special payment date and, at least 10 days before such special record date, the issuing entity will mail to each affected storm recovery bondholder a notice that states the special record date, the special payment date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid. An event of default under one series of storm recovery bonds will not automatically trigger an event of default under other outstanding series of storm recovery bonds. See “—What Constitutes an Event of Default on the Storm Recovery Bonds” below.

     The entire unpaid principal amount of a series of storm recovery bonds will be due and payable:

• on the final maturity date of that series,

• on the date of redemption, if any, and

• if an event of default under the indenture occurs and is continuing and the trustee or the holders of a majority in principal amount of that series of storm recovery bonds have declared that series of storm recovery bonds to be immediately due and payable.

However, the nature of our business will result in payment of principal upon an acceleration of a series of storm recovery bonds being made as funds become available. Please read “Risk Factors— Risks Associated with the Unusual Nature of the Storm Recovery Property” and “—You may experience material payment delays or incur a loss on your investment in the storm recovery bonds because the source of funds for payment is limited.”

     If any special payment date or other date specified herein for distribution of any payments to storm recovery bondholders is not a business day, payments scheduled to be made on such special payment date or other date may be made on the next succeeding business day, and no interest will accrue upon such payment during the intervening period. “Business day” means any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York or New Orleans, Louisiana, are required or authorized by law or executive order to remain closed.

     Neither we nor Cleco Power makes any representation or warranty that any amounts actually collected arising from storm recovery charges will in fact be sufficient to meet payment obligations on related series of storm recovery bonds or that assumptions made in calculating storm recovery charges will in fact be realized.

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Floating Rate Storm Recovery Bonds

     If we issue any tranche of floating rate storm recovery bonds, we may enter into or arrange for one or more interest rate swap transactions. Generally, a swap agreement, on each payment date, will obligate us to pay to the swap counterparty, solely from payments of storm recovery charges, an amount equal to the fixed interest due under the swap agreement on the payment date. The swap agreement will obligate the swap counterparty to pay to us an amount equal to the product of (1) a floating rate comparable to the rate accruing on the floating rate storm recovery bonds and (2) the principal balance of the floating rate storm recovery bonds as of the close of business on the preceding payment date, after giving effect to all payments of principal made to the floating rate storm recovery bondholders on the preceding payment date.

     The related prospectus supplement will include a description of:

• the material terms of any interest rate swap transaction,

• the identity of any interest rate swap counterparty,

• any payments due to be paid by or to us or the trustee under any interest rate swap transaction,

• scheduled deposits in and withdrawals from any tranche subaccount of the collection account with respect to any interest rate swap transaction,

• the formula for calculating the floating rate of interest of any floating rate tranche, and

• the rights of storm recovery bondholders with respect to any interest rate swap transaction, including any right of termination of or amendment to the interest rate swap agreement.

     Under the indenture, we are obligated to perform all of our obligations pursuant to any interest rate swap agreement to which we are a party.

Redemption of the Storm Recovery Bonds

     We will specify the redemption provisions, if any, for any series of the storm recovery bonds in the related prospectus supplement, including the premiums, if any, payable upon redemption. Unless the context requires otherwise, all references in this prospectus to principal of the storm recovery bonds of a series as it relates to redemption include any premium that might be payable on the storm recovery bonds if the storm recovery bonds of the series are redeemed. The trustee will give notice of redemption of any series of the storm recovery bonds to each registered holder of a storm recovery bond of such series by first-class mail, postage prepaid, mailed not less than five days nor more than 45 days prior to the date of redemption or in another manner or at another time as we may specify in the related prospectus supplement. The redemption price will, in each case, include accrued interest to, but excluding, the date of redemption. All storm recovery bonds called for redemption will cease to bear interest on the specified redemption date, provided the redemption price is on deposit with the trustee at that time, and will no longer be considered “outstanding” under the indenture. The storm recovery bondholders will have no further rights to storm recovery bonds called for redemption after the specified redemption date, except to receive from the trustee payment of the redemption price of such storm recovery bonds and unpaid interest accrued to the date fixed for redemption.

Credit Enhancement for the Storm Recovery Bonds

     Credit enhancement with respect to the storm recovery bonds of each series will be provided principally by adjustments to the related storm recovery charges and amounts on deposit in the excess funds subaccount and the capital subaccount for that series. In addition, for any series of the storm recovery bonds or one or more tranches of the storm recovery bonds, additional credit enhancement may be provided. We will describe the amounts and types of credit enhancement, if any, and the provider of credit enhancement with respect to each series of the storm recovery bonds or one or more tranches of the storm recovery bonds in the applicable prospectus supplement. Additional credit enhancement may be in the form of:

• an additional excess funds subaccount,

• subordination,

• a financial guaranty insurance policy,

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• a letter of credit,

• surety bonds,

• bond insurance,

• a credit or liquidity facility,

• a repurchase obligation for certain obligations and warranties,

• a third-party payment or other support,

• a cash deposit or other credit enhancement, or

• any combination of the foregoing, as we may describe in the applicable prospectus supplement.

     If specified in the applicable prospectus supplement, credit enhancement for a series of the storm recovery bonds may cover one or more other series of the storm recovery bonds. We do not anticipate obtaining additional credit enhancement for any series of storm recovery bonds.

Storm Recovery Bonds Will Be Issued in Book-Entry Form

     Unless we specify otherwise in the related prospectus supplement, the storm recovery bonds will be available to investors only in the form of book-entry storm recovery bonds. You may hold your bonds through DTC in the United States, Clearstream Banking, Luxembourg, S.A., referred to as Clearstream, or Euroclear in Europe or in any other manner we describe in the related prospectus supplement. You may hold your storm recovery bonds directly with one of these systems if you are a participant in the system or indirectly through organizations that are participants.

     The Role of DTC, Clearstream and Euroclear. Cede & Co., as nominee for DTC, will hold the global bond or bonds representing the storm recovery bonds. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream customers and Euroclear participants, respectively, through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries. These depositaries will, in turn, hold these positions in customers’ securities accounts in the depositaries’ names on the books of DTC.

     The Function of DTC. DTC is a limited purpose trust company organized under the laws of the State of New York and is a member of the Federal Reserve System. DTC is a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entries, thereby eliminating the need for physical movement of bonds. Direct participants of DTC include securities brokers and dealers, banks, trust companies and clearing corporations and may include other organizations. Indirect access to the DTC system also is available to others, including banks, brokers, dealers and trust companies, as indirect participants, that clear through or maintain a custodial relationship with a participant, either directly or indirectly.

     The Function of Clearstream. Clearstream is incorporated under the laws of Luxembourg. Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thereby eliminating the need for physical movement of securities. Transactions may be settled by Clearstream in any of various currencies, including U.S. dollars. Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream also deals with domestic securities markets in various countries through established depositary and custodial relationships. Clearstream is registered as a bank in Luxembourg and therefore is subject to regulation by the Commission de Surveillance du Secteur Financier, which supervises Luxembourg banks. Clearstream’s customers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations, among others, and may include the underwriters of any series of storm recovery bonds. Clearstream’s U.S. customers are limited to securities brokers and dealers and banks. Clearstream has customers located in various countries. Indirect access to Clearstream is also available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream. Clearstream has established an electronic bridge with Euroclear Bank S.A./N.V. as the operator of the Euroclear System in Brussels to facilitate settlement of trades between Clearstream and Euroclear.

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     The Function of Euroclear. Euroclear was created in 1968 to hold securities for Euroclear participants and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of securities and any risk from lack of simultaneous transfers of securities and cash. Such transactions may be settled in any of various currencies, including U.S. dollars. The Euroclear System includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below. The Euroclear System is operated by Euroclear Bank S.A./N.V. as the Euroclear operator. All operations are conducted by the Euroclear operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear operator. Euroclear participants include central banks and other banks, securities brokers and dealers and other professional financial intermediaries and may include the underwriters of any series of storm recovery bonds. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

     Terms and Conditions of Euroclear. Securities clearance accounts and cash accounts with the Euroclear operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System. These terms and conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in Euroclear are held on a fungible basis without attribution of specific securities to specific securities clearance accounts. The Euroclear operator acts under these rules and laws only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

     The Rules for Transfers Among DTC, Clearstream or Euroclear Participants. Transfers between DTC participants will occur in accordance with DTC rules. Transfers between Clearstream customers or Euroclear participants will occur in the ordinary way in accordance with their respective rules and operating procedures.

     Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream customers or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depositary; however, those cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines, which will be based on European time. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving storm recovery bonds in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream customers and Euroclear participants may not deliver instructions directly to Clearstream’s and Euroclear’s depositaries.

     Because of time-zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date, and those credits or any transactions in those securities settled during that processing will be reported to the relevant Clearstream customer or Euroclear participant on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

     DTC Will Be the Holder of the Storm Recovery Bonds. Storm recovery bondholders that are not participants or indirect participants but desire to purchase, sell or otherwise transfer ownership of, or other interest in, storm recovery bonds may do so only through participants and indirect participants. In addition, storm recovery bondholders will receive all distributions of principal of and interest on the storm recovery bonds from the trustee through the participants, who in turn will receive them from DTC. Under a book-entry format, storm recovery bondholders may experience some delay in their receipt of payments because payments will be forwarded by the trustee to Cede & Co., as nominee for DTC. DTC will forward those payments to its participants, who thereafter will forward them to indirect participants or storm recovery bondholders. It is anticipated that the only “bondholder” will be Cede & Co., as nominee of DTC. The trustee will not recognize storm recovery bondholders as bondholders, as that term is used in the indenture, and storm recovery bondholders will be permitted to exercise the rights of bondholders only indirectly through the participants, who in turn will exercise the rights of storm recovery bondholders through DTC.

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     Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among participants on whose behalf it acts with respect to the storm recovery bonds and is required to receive and transmit distributions of principal and interest on the storm recovery bonds. Participants and indirect participants with whom storm recovery bondholders have accounts with respect to the storm recovery bonds similarly are required to make book-entry transfers and receive and transmit those payments on behalf of their respective storm recovery bondholders. Accordingly, although storm recovery bondholders will not possess storm recovery bonds, storm recovery bondholders will receive payments and will be able to transfer their interests.

     Because DTC can act only on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of a storm recovery bondholder to pledge storm recovery bonds to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of those bonds, may be limited due to the lack of a physical certificate for those storm recovery bonds.

     DTC has advised us that it will take any action permitted to be taken by a storm recovery bondholder under the indenture only at the direction of one or more participants to whose account with DTC the storm recovery bonds are credited. Additionally, DTC has advised us that it will take those actions with respect to specified percentages of the collateral amount only at the direction of and on behalf of participants whose holdings include interests that satisfy those specified percentages. DTC may take conflicting actions with respect to other interests to the extent that those actions are taken on behalf of participants whose holdings include those interests.

     How Storm Recovery Bond Payments Will Be Credited by Clearstream and Euroclear. Distributions with respect to storm recovery bonds held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream customers or Euroclear participants in accordance with the relevant system’s rules and procedures, to the extent received by its depositary. Those distributions will be subject to tax reporting in accordance with relevant U.S. tax laws and regulations. Please read “Material Federal Income Tax Consequences for the Storm Recovery Bondholders” in this prospectus. Clearstream or the Euroclear operator, as the case may be, will take any other action permitted to be taken by a storm recovery bondholder under the indenture on behalf of a Clearstream customer or Euroclear participant only in accordance with its relevant rules and procedures and subject to its depositary’s ability to effect those actions on its behalf through DTC.

     Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the storm recovery bonds among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform those procedures, and those procedures may be discontinued at any time.

Definitive Certificated Storm Recovery Bonds

     The Circumstances That Will Result in the Issuance of Definitive Certificated Storm Recovery Bonds. Unless we specify otherwise in the related prospectus supplement, each tranche of the storm recovery bonds will be issued in fully registered, certificated form to beneficial owners of storm recovery bonds or other intermediaries, rather than to DTC or its nominee, only if:

• DTC or we advise the trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as nominee and depository with respect to the book-entry certificates for the storm recovery bonds and we are unable to locate a qualified successor,

• we advise the trustee in writing that we elect to discontinue use of book-entry-only transfers through DTC and deliver certificated storm recovery bonds to DTC, or

• after the occurrence of an event of default under the indenture, storm recovery bondholders representing at least a majority of the outstanding principal balance of the storm recovery bonds of all affected series advise us, the trustee and DTC through the financial intermediaries and the DTC participants in writing that the continuation of a book-entry system through DTC, or a successor to DTC, is no longer in the storm recovery bondholders’ best interest.

     The Delivery of Definitive Certificated Storm Recovery Bonds. Upon the occurrence of any event described in the immediately preceding paragraph (unless otherwise specified), the trustee will be required to notify all affected beneficial owners of storm recovery bonds of the occurrence of the event and the availability through DTC of definitive certificated storm recovery bonds. Upon surrender by DTC of the global bond or bonds in the possession of DTC that had represented the applicable storm recovery bonds and receipt of instructions for re-registration, the trustee will authenticate and deliver

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definitive certificated storm recovery bonds to the beneficial owners, and the trustee will recognize the holders of the definitive certificate storm recovery bonds as bondholders under the indenture.

     The Payment Mechanism for Definitive Certificated Storm Recovery Bonds. Payments of principal of, and interest on, definitive certificated storm recovery bonds will be made by the trustee, as paying agent, in accordance with the procedures set forth in the indenture. These payments will be made directly to holders of definitive certificated storm recovery bonds in whose names the definitive certificated storm recovery bonds were registered at the close of business on the related record date specified in each prospectus supplement. These payments will be made by check mailed to the address of the holder as it appears on the register maintained by the trustee or, in certain cases, by wire transfer.

     The Transfer or Exchange of Definitive Certificated Storm Recovery Bonds. Definitive certificated storm recovery bonds will be transferable and exchangeable at the offices of the transfer agent and registrar, which will initially be the trustee. No service charge will be imposed for any registration of transfer or exchange, but we and the transfer agent and registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection with the transfer or exchange.

     Final Payments on Definitive Certificated Storm Recovery Bonds. The final payment on any storm recovery bond, however—whether a definitive certificated bond or a bond registered in the name of Cede & Co.—will be made only upon presentation and surrender of the storm recovery bond at the office or agency specified in the notice of final payment to storm recovery bondholders. The trustee will be required to mail that notice to registered bondholders not later than the fifth day of the month of the final payment.

Registration and Transfer of the Storm Recovery Bonds

     If specified in the related prospectus supplement, we may issue one or more tranches of storm recovery bonds in definitive form, which will be transferable and exchangeable as described above under “—Definitive Certificated Storm Recovery Bonds.” Unless otherwise specified in the related prospectus supplement, there will be no service charge for any registration or transfer of the storm recovery bonds, but the trustee may require the owner to pay a sum sufficient to cover any tax or other governmental charge.

     We will issue each tranche of storm recovery bonds in the minimum initial denominations set forth in the related prospectus supplement and, except as otherwise provided in the related prospectus supplement, in integral multiples thereof.

     The trustee will make payments of interest and principal on each payment date to the bondholders in whose names the storm recovery bonds were registered on the applicable record date.

The Storm Recovery Bonds May Be Issued in Various Series or Tranches

     Under the indenture, the trustee will authenticate and deliver an additional series of the storm recovery bonds only on the satisfaction of specified conditions, including the following:

• all parties required to do so by the terms of the relevant documents must have authorized, executed and delivered appropriate documentation required by the indenture and our limited liability company agreement, as amended or restated,

• the seller must have irrevocably assigned all of its right, title and interest in the applicable storm recovery property to us and made the filing required by Section 1230 of the Securitization Act with respect to the assignment,

• the trustee must have received written confirmation from each rating agency that the new series of storm recovery bonds will be rated as set forth in the related prospectus supplement,

• the seller must receive and deliver to us and the trustee:

• an opinion of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) to the effect that we will not be subject to U.S. federal income tax as an entity separate from Cleco Corporation and that the new series of storm recovery bonds will be treated as debt of Cleco Corporation for U.S. federal income tax purposes,

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• an opinion of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) or, if the seller so chooses, a ruling from the IRS, in either case to the effect that, for U.S. federal income tax purposes, the issuance of the new series of storm recovery bonds will not result in gross income to the seller, and

• an opinion of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) to the effect that such issuance of the additional series of storm recovery bonds will not adversely affect the characterization of any then outstanding storm recovery bonds as obligations of Cleco Corporation.

• the opinion of outside tax counsel described above may, if the seller so chooses, be conditioned on the receipt by the seller of one or more letter rulings from the IRS and in rendering such opinion outside tax counsel shall be entitled to rely on the rulings contained in such letter rulings and to rely on the representations made, and information supplied, to the IRS in connection with such letter rulings, and

• we must deliver certain certificates and opinions specified in the indenture to the trustee and, in certain instances, to the Louisiana commission.

The Security for the Storm Recovery Bonds

     To secure the payment of principal, premium, if any, and interest on, and any other amounts owing in respect of, the storm recovery bonds of each series pursuant to the indenture, we will grant to the trustee for the benefit of the storm recovery bondholders of each series a security interest in all of our right, title and interest, whether now owned or later acquired, in and to the following collateral with respect to that series, which collectively constitutes the trust estate under the indenture:

• the storm recovery property related to that series,

• our rights under the applicable sale agreement,

• all bills of sale delivered by Cleco Power pursuant to the applicable sale agreement,

• our rights under the applicable servicing agreement and any subservicing, agency, intercreditor or collection agreements executed in connection with the servicing agreement,

• our rights under the administration agreement,

• our rights in the applicable collection account and all subaccounts of the collection account, including the general subaccount, the capital subaccount and the excess funds subaccount and all cash, securities, instruments, investment property or other assets credited to or deposited in the collection account or any subaccount of the collection account from time to time or purchased with funds from the collection account, and all financial assets and securities entitlements carried therein or credited thereto,

• our rights under any interest rate swap agreement or hedging agreement entered into with respect to the issuance of a floating rate tranche of a particular series of storm recovery bonds,

• all of our other property related to the series of storm recovery bonds, other than any cash released to us by the trustee semi-annually from earnings on the capital subaccount,

• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and

• all payments on or under and all proceeds in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property of any or all of the foregoing, all cash proceeds, accounts, accounts receivable, general intangibles, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, payment intangibles, letter-of-credit rights, investment property, commercial tort claims, documents, rights to payment of any and every kind, and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

     The security interest does not extend to:

• amounts representing investment earnings on the capital subaccount released to us,

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• amounts deposited in the capital subaccount for that series that have been released to us or as we direct following retirement of that series of storm recovery bonds,

• amounts deposited with us on any series issuance date for payment of costs of issuance with respect to the related series of storm recovery bonds (together with any interest earnings thereon), and

• amounts in the segregated trust account held for the benefit of the trustee to pay certain expenses of the trustee.

     The collateral for each series of storm recovery bonds will be separate from the collateral for any other series, and holders of one series of storm recovery bonds will have no recourse to collateral for a different series. Please read “—How Funds in the Collection Account Will Be Allocated.”

     Section 1231 of the Securitization Act provides that a valid and enforceable security interest in storm recovery property will attach and be perfected by the means set forth in Section 1231. Specifically, Section 1231 provides that a valid and enforceable security interest in storm recovery property may be created only after the issuance of a financing order, the execution and delivery of a security agreement in connection with issuance of financing instruments such as the storm recovery bonds and the receipt of value for the instruments. The security interest attaches automatically when all of the foregoing conditions are met. Upon perfection by filing a financing statement under Section 1231 of the Securitization Act and otherwise in accordance with the Louisiana UCC, the security interest will be a continuously perfected security interest in the storm recovery property and all proceeds of the property, whether accrued or not, and will have priority in the order of time of perfection and take precedence over any subsequent lien creditor.

The Collection Account for the Storm Recovery Bonds

     Under the indenture, we will establish a collection account with the trustee or at another eligible institution for each series of storm recovery bonds. The collection account will be under the sole dominion and exclusive control of the trustee. The trustee will hold the collection account for our benefit as well as the benefit of the bondholders of the related series of storm recovery bonds. Funds received from collections of the applicable storm recovery charges will be deposited into the collection account. The collection account for each series of storm recovery bonds will be divided into the following subaccounts, which need not be separate bank accounts:

• the general subaccount,

• the capital subaccount,

• the excess funds subaccount, and

• one or more tranche subaccounts with respect to floating rate storm recovery bonds, if any.

     All amounts in the collection account for each series of storm recovery bonds not allocated to any other subaccount by the servicer will be allocated to the general subaccount. Unless the context indicates otherwise, references in this prospectus and the prospectus supplement to the collection account for any series of storm recovery bonds include all of the subaccounts contained therein. All monies deposited from time to time in the collection account, all deposits therein pursuant to the indenture, and all investments made in eligible investments with these monies will be held by the trustee in the collection account as part of the collateral. The following institutions are eligible institutions for the establishment of the collection account:

• the corporate trust department of the trustee so long as any of the securities of the trustee are rated investment grade by each rating agency, or

• the trust department of a depository institution organized under the laws of the United States of America or any state or domestic branch of a foreign bank, which:

• has deposits insured by the Federal Deposit Insurance Corporation, and has either:

• a long-term unsecured debt rating of “AA-” by S&P and “A2” by Moody’s and, if applicable, the equivalent of the lower of those two ratings by Fitch, or

• a certificate of deposit rating of “A-1+” by S&P and “P-1” by Moody’s and, if applicable, the equivalent of the lower of those two ratings by Fitch, or any other long-term, short-term or certificate of deposit rating acceptable to the rating agencies.

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     Appropriate Investments for Funds in the Collection Account. So long as no default or event of default has occurred and is continuing, all or a portion of the funds in the collection account for each series of storm recovery bonds must be invested by the trustee in accordance with the written direction of the servicer in any of the following, each of which is referred to as an eligible investment:

1.	direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America,
2.	demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any state thereof, or any domestic branch of a foreign bank, and subject to supervision and examination by federal or state banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations, other than any obligations thereof where the rating is based on the credit of a person other than such depository institution or trust company, shall have either (A) a long-term unsecured debt rating from Moody’s and S&P of at least “Aa3” and “AA”, respectively, or (B) a certificate of deposit rating by Moody’s and S&P of at least “P-1” and “A-1+”, respectively,
3.	commercial paper or other short-term obligations of any corporation (other than Cleco Power, Cleco Corporation or any of their affiliates), whose ratings, at the time of the investment or contractual commitment to invest therein, from Moody’s and S&P of at least “P-1” and “A-1+”, respectively,
4.	investments in money market funds having a rating from Moody’s and S&P of “Aaa” and “AAA”, respectively, including funds for which the trustee or any of its affiliates act as investment manager or advisor,
5.	bankers’ acceptances issued by any depository institution or trust company referred to in clause 2 above,
6.	repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company, acting as principal, described in clause 2 above,
7.	repurchase obligations with respect to any security or whole loan entered into with:

a.	depository institution or trust company, acting as principal, described in clause 2 above,
b.	broker/ dealer, acting as principal, registered as a broker or dealer under Section 15 of the Securities Exchange Act of 1934 the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and at least “A-1+” by S&P at the time of entering into this repurchase obligation, or
c.	an unrated broker/ dealer, acting as principal, that is a wholly owned subsidiary of a nonbank or bank holding company the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and at least “A-1+” by S&P at the time of purchase, or

8. any other investment permitted by each of the rating agencies;

     provided, however, that:

a.

any book-entry security, instrument or security having a maturity of one month or less that would be an eligible investment but for its failure, or the failure of the obligor thereon, to have the rating specified above shall be an eligible investment if such book-entry security, instrument or security, or the obligor thereon, has an unsecured short-term debt rating of at least “P-1” by Moody’s, and at least “A-1+” by S&P, and

b.

any book-entry security, instrument or security having a maturity of greater than one month that would be an eligible investment but for its failure, or the failure of the obligor thereon, to have the rating specified above shall be an eligible investment if such book-entry security, instrument or security, or the obligor thereon, has an unsecured long-term debt rating of at least “AA-” by S&P or “Aa3” by Moody’s and an unsecured short-term debt rating of at least “P-1” by Moody’s or the equivalent thereof by S&P,

provided, that unless otherwise permitted by the applicable rating agencies, upon the failure of any Eligible Institution to maintain any applicable rating set forth in this definition or the definition of Eligible Institution, the related investments at that institution shall be reinvested in Eligible Investments at a successor Eligible Institution within 10 days.

     If Fitch provides a rating for any of the securities, instruments or entities described above, then such security, instrument or entity must have a rating from Fitch not less than the equivalent of the lower of the ratings thereon from Moody’s and S&P.

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     These eligible investments may not:

• unless otherwise provided in the prospectus supplement, mature later than the next payment date, or

• be sold, liquidated or otherwise disposed of at a loss prior to the maturity thereof.

     No moneys held in the collection account may be invested, and no investment held in the collection account may be sold, unless the security interest granted and perfected in the collection account will continue to be perfected in the investment or the proceeds of the sale in either case without any further action by any person.

     Remittances to the Collection Account. On each remittance date, the servicer will remit all collected storm recovery charges, any indemnity amounts and any other proceeds of the trust estate securing that series to the trustee for deposit in the related collection account. Indemnity amount means any amount paid by the servicer or Cleco Power to the trustee, for the trustee or on behalf of the storm recovery bondholders, in respect of indemnification obligations pursuant to the applicable servicing agreement or sale agreement. Please read “The Servicing Agreement” and “The Sale Agreement” in this prospectus. To the extent that the combined amounts remitted by a Cleco Power customer are insufficient to satisfy amounts owed in respect of storm recovery charges relating to the storm recovery bonds or any other bonds being serviced by the servicer or for electricity service (other than late fees), the remitted amounts will be allocated pro rata among such storm recovery charges and electricity charges.

     General Subaccount. Collected storm recovery charges and any indemnity amounts remitted to the trustee will be deposited into the general subaccount. On each payment date, the trustee will allocate amounts in the general subaccount among the other subaccounts as described under “—How Funds in the Collection Account Will Be Allocated.” Amounts in the general subaccount will be invested in the eligible investments described above.

     Capital Subaccount. Upon the issuance of each series of the storm recovery bonds, Cleco Power will make a capital contribution to us in an amount stated in the prospectus supplement. We will pay this amount to the trustee for deposit into the capital subaccount which will be invested in eligible investments by the trustee in accordance with the written direction of the servicer. The trustee will draw on amounts in the capital subaccount to the extent that, in allocating funds in accordance with clauses 1 through 9 in “—How Funds in the Collection Account Will Be Allocated,” below, amounts on deposit in the general subaccount and, the excess funds subaccount are insufficient to make scheduled payments on the storm recovery bonds and payments of fees and expenses specified in clauses 1 through 9. The trustee will allocate collected storm recovery charges available on any payment date that are not necessary to pay amounts described in clauses 1 through 9 in “—How Funds in the Collection Account Will Be Allocated,” below, to the capital subaccount in an amount sufficient to replenish any amounts drawn from the capital subaccount and any shortfall of investment earnings on the capital subaccount. If any series of the storm recovery bonds has been retired as of any payment date, the amounts on deposit in the capital subaccount allocable to that series will be released to us, free of the lien of the indenture.

     Excess Funds Subaccount. The trustee will allocate collected storm recovery charges available on any payment date that are not necessary to pay clauses 1 through 10 in “—How Funds in the Collection Account Will Be Allocated,” below, to the excess funds subaccount. The trustee will invest amounts in the excess funds subaccount in eligible investments in accordance with the written direction of the servicer. On each payment date, the trustee will draw on the excess funds subaccount in allocating funds in accordance with clauses 1 through 10 in “—How Funds in the Collection Account Will Be Allocated,” below, to the extent that amounts on deposit in the general subaccount are insufficient to make scheduled payments on the storm recovery bonds and payments of fees and expenses specified in clauses 1 through 10.

     Tranche Subaccount. If specified in the prospectus supplement, upon the issuance of a specified tranche of floating rate storm recovery bonds, a tranche subaccount will be established with respect to that tranche. On or before each payment date, a fixed amount specified in the prospectus supplement will be allocated to that tranche subaccount from the general subaccount and payments to and from any swap counterparty pursuant to the related interest rate swap agreement will be made from or allocated to, as applicable, that tranche subaccount or (in the case of termination payments) from another subaccount as described in the prospectus supplement. On or before each payment date, amounts on deposit in the tranche subaccount will be applied to make payments with respect to the related tranche, as specified in the prospectus supplement.

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How Funds in the Collection Account Will Be Allocated

     Amounts remitted by the servicer to the trustee with respect to a series of storm recovery bonds, including any indemnity amounts and all investment earnings on amounts in the general subaccount of the collection account will be deposited into the general subaccount. Investment earnings on amounts in the capital subaccount and the excess funds subaccount will be deposited into the capital subaccount and the excess funds subaccount, respectively. Unless otherwise specified in the prospectus supplement, on each payment date or other date specified in the prospectus supplement with respect to a particular tranche or series, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account for that series in the following priority:

1.	payment of a pro rata portion, based upon the respective outstanding amounts of each series of storm recovery bonds issued by us under the indenture, of the trustee’s fees, expenses and any outstanding indemnity amounts relating to that series of storm recovery bonds not to exceed a specified amount in any 12-month period, which amount will be fixed in the indenture or the supplemental indenture governing that series of storm recovery bonds,
2.	payment of the servicing fee relating to that series of storm recovery bonds, which will be a fixed amount specified in the servicing agreement for that series of storm recovery bonds, plus any unpaid servicing fees relating to that series of storm recovery bonds from prior payment dates,
3.	payment of a pro rata portion of the administration fee, which will be a fixed amount specified in the administration agreement between us and Cleco Power, and a pro rata portion of the fees of our independent manager, which will be in an amount specified in an agreement between us and our independent manager,
4.	payment of all of our other ordinary periodic operating expenses relating to that series of storm recovery bonds, such as accounting and audit fees, rating agency fees, legal fees, certain reimbursable costs of the servicer under the applicable servicing agreement,
5.	payment of the interest then due on that series of storm recovery bonds,
6.	payment of the principal then required to be paid on that series of storm recovery bonds at final maturity or upon redemption or acceleration upon an event of default,
7.	payment of the principal then scheduled to be paid on that series of storm recovery bonds, including any previously unpaid scheduled principal,
8.	payment of any amounts payable to any credit enhancement providers with respect to that series of storm recovery bonds,
9.	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents relating to that series of storm recovery bonds, including all remaining indemnity amounts owed to the trustee,
10.	replenishment of any amounts drawn from the capital subaccount for that series of storm recovery bonds,
11.	if the balance in the capital subaccount for that series of storm recovery bonds is greater than the initial balance of the capital subaccount for such series after making the foregoing allocations, an amount of investment earnings on the capital subaccount not to exceed a percentage per annum set forth in the prospectus supplement for such series shall be paid to us; provided that no event of default has occurred and is continuing and that the balance of the capital subaccount for that series of storm recovery bonds is not reduced below the initial balance of the capital subaccount for such series,
12.	allocation of the remainder, if any, to the excess funds subaccount for that series of storm recovery bonds, and
13.	after that series of storm recovery bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds subaccount for that series of storm recovery bonds, released to us free and clear of the lien of the indenture.

     The amount of the servicer’s fee referred to in clause 2 above and the amount of the administration fee referred to in clause 3 will be described in the prospectus supplement for the related series of storm recovery bonds.

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     Interest means, for any payment date for any series or tranche of the storm recovery bonds, the sum, without duplication, of:

• an amount equal to the interest accrued on that series or tranche at the applicable interest rate from the prior payment date or, with respect to the first payment date, the amount of interest accrued since the issuance date, with respect to that series or tranche,

• any unpaid interest plus, to the fullest extent permitted by law, any interest accrued on this unpaid interest,

• if the storm recovery bonds have been declared due and payable, all accrued and unpaid interest thereon, and

• with respect to a series or tranche to be redeemed prior to the next payment date, the amount of interest that will be payable as interest on such series or tranche upon such redemption.

     Principal means, with respect to any payment date and any series or tranche of the storm recovery bonds, the sum, without duplication, of:

• the amount of principal due as a result of the occurrence and continuance of an event of default and acceleration of the storm recovery bonds,

• the amount of principal due on the final maturity date of any series or tranche,

• the amount of principal and premium, if any, due as a result of a redemption of the storm recovery bonds prior to such payment date pursuant to the indenture,

• any overdue payments of principal, and

• the amount of principal scheduled to be paid on such payment date in accordance with the expected sinking fund schedule.

     If on any payment date funds in the general subaccount are insufficient to make the allocations or payments contemplated by clauses 1 through 10 of the first paragraph of this subsection with respect to a series of storm recovery bonds, the trustee will draw from amounts on deposit in the following subaccounts in the following order up to the amount of the shortfall:

1.	from the excess funds subaccount for allocations and payments contemplated in clauses 1 through 10, and
2.	from the capital subaccount for allocations and payments contemplated by clauses 1 through 9.

     If, on any payment date, available collections of storm recovery charges allocable to a series of storm recovery bonds, together with available amounts in the related subaccounts, are not sufficient to pay interest due on all outstanding storm recovery bonds of that series on that payment date, amounts available will be allocated pro rata based on the amount of interest payable on each tranche in that series. If, on any payment date, remaining collections of storm recovery charges allocable to a series of storm recovery bonds, together with available amounts in the subaccounts, are not sufficient to pay principal due and payable on all outstanding storm recovery bonds of that series on that payment date, amounts available will be allocated pro rata based on the principal amount of each tranche then due and payable. If, on any payment date, remaining collections of storm recovery charges allocable to a series of storm recovery bonds, together with available amounts in the subaccounts, are not sufficient to pay principal scheduled to be paid on all outstanding storm recovery bonds of that series, amounts available will be allocated pro rata based on the principal amounts of each tranche then scheduled to be paid on the payment date. If the trustee uses amounts on deposit in the capital subaccount to pay those amounts or make those transfers, as the case may be, subsequent adjustments to the storm recovery charges related to that series or tranche will take into account, among other things, the need to replenish those amounts.

Allocation as Between Series

     Although each series will have its own storm recovery property, storm recovery charges relating to each series will be collected through single bills to individual customers that include all charges related to the purchase of electricity, which separately itemize the storm recovery charge component of the bill or the storm recovery charge components applicable to separate series. In the event a customer does not pay in full all amounts owed under any bill including storm recovery charges, the amount remitted shall first be allocated ratably among the storm recovery charges relating to the storm recovery bonds and other fees and charges (including storm recovery charges relating to other storm recovery bonds and other fees and charges)

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other than late fees, and second, any remaining portion of the remittance shall be attributed to late fees. Please read “The Servicing Agreements—Servicing Procedures—Remittances to the Trustee.”

Reports to Holders of the Storm Recovery Bonds

     With respect to each series of the storm recovery bonds, on or prior to each payment date, the trustee will deliver a statement prepared by the servicer to each storm recovery bondholder of that series, to the Louisiana commission and to the rating agencies. This statement will include, to the extent applicable, the following information, as well as any other information so specified in the applicable supplemental indenture, as to the storm recovery bonds of that series with respect to that payment date or the period since the previous payment date, as applicable:

• the amount to be paid to storm recovery bondholders of that series and the related tranches in respect of principal,

• the amount to be paid to storm recovery bondholders of that series and the related tranches in respect of interest,

• the storm recovery bond balance and the projected storm recovery bond balance of that series and the related tranches as of that payment date,

• the amount on deposit in the capital subaccount for that series as of that payment date,

• the amount, if any, on deposit in the excess funds subaccount for that series as of that payment date,

• the amount to be paid to the trustee relating to that series on that payment date,

• the amount to be paid to the servicer relating to that series on that payment date, and

• any other transfers and payments relating to that series made pursuant to the indenture.

We and the Trustee May Modify the Indenture

     Modifications of the Indenture That Do Not Require Consent of Storm Recovery Bondholders. Without the consent of any of the holders of the outstanding storm recovery bonds but with prior notice to the rating agencies and, with respect to amendments that would increase ongoing financing costs, with the consent or deemed consent of the Louisiana commission (other than with respect to the supplemental indenture establishing the initial series of storm recovery bonds), we and the trustee may execute a supplemental indenture for any of the following purposes:

• to correct or amplify the description of the collateral, or to better assure, convey and confirm unto the trustee the collateral, or to subject additional property to the lien of the indenture,

• to evidence the succession, in compliance with the applicable provisions of the indenture, of another entity to us, and the assumption by any applicable successor of our covenants contained in the indenture and in the storm recovery bonds,

• to add to our covenants, for the benefit of the holders of the storm recovery bonds, or to surrender any right or power therein conferred upon us,

• to convey, transfer, assign, mortgage or pledge any property to the trustee,

• to cure any ambiguity, to correct or supplement any provision of the indenture or in any supplemental indenture which may be inconsistent with any other provision of the indenture or in any supplemental indenture, to make any other provisions with respect to matters or questions arising under the indenture or in any supplemental indenture, to change in any manner or eliminate any provisions of the indenture or to modify in any manner the rights of the storm recovery bondholders under the indenture; provided, however, that:

• this action shall not adversely affect in any material respect the interests of any storm recovery bondholder, and

• the rating agency condition shall have been satisfied with respect thereto,

• to evidence and provide for the acceptance of the appointment under the indenture by a successor trustee with respect to the storm recovery bonds and to add to or change any of the provisions of the indenture as shall be necessary to

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	facilitate the administration of the trust estate under the indenture by more than one trustee, pursuant to the requirements specified in the indenture,
•	to qualify the storm recovery bonds for registration with a clearing agency,
•	to modify, eliminate or add to the provisions of the indenture to the extent necessary to effect the qualification of the indenture under the Trust Indenture Act or under any similar federal statute hereafter enacted and to add to the indenture any other provisions as may be expressly required by the Trust Indenture Act,
•	to set forth the terms of any series that has not theretofore been authorized by a supplemental indenture, or
•	to satisfy any rating agency requirements.

     Additional Modifications to the Indenture That Do Not Require the Consent of Storm Recovery Bondholders. We may also, without the consent of any of the storm recovery bondholders but, with respect to amendments that would increase ongoing financing costs, with the consent or deemed consent of the Louisiana commission, execute one or more other agreements supplemental to the indenture as long as:

• the supplemental agreement does not adversely affect in any material respect the interests of any storm recovery bondholder, and

• the rating agency condition shall have been satisfied with respect thereto.

     Modifications to the Indenture That Require the Approval of the Storm Recovery Bondholders. We and the trustee also may, with the consent of the holders of not less than a majority of the outstanding amount of the storm recovery bonds of each series or tranche to be affected by the supplemental indenture and, with respect to amendments that would increase ongoing financing costs, with the consent or deemed consent of the Louisiana commission, execute a supplemental indenture to add any provisions to, or change in any manner or eliminate any of the provisions of, the indenture or modify in any manner the rights of the storm recovery bondholders under the indenture. However, supplemental indenture may not, without the consent of the holder of each outstanding storm recovery bond of each series or tranche affected thereby:

• change the date of payment of any installment of principal of or premium, if any, or interest on any storm recovery bond of such series or tranche, or reduce the principal amount thereof, the interest rate thereon or the redemption price or the premium, if any, with respect thereto,

• change the provisions of the indenture and the related applicable supplemental indenture relating to the application of collections on, or the proceeds of the sale of, the collateral to payment of principal of or premium, if any, or interest on the storm recovery bonds of such series or tranche, or change the coin or currency in which any storm recovery bond or any interest thereon is payable,

• impair the right to institute suit for the enforcement of those provisions of the indenture specified therein regarding payment, reduce the percentage of the aggregate amount of the outstanding storm recovery bonds, or of a series or tranche thereof, the consent of the storm recovery bondholders of which is required for any supplemental indenture, or the consent of the storm recovery bondholders of which is required for any waiver of compliance with those provisions of the indenture specified therein or of defaults specified therein and their consequences provided for in the indenture,

• reduce the percentage of the outstanding amount of the storm recovery bonds of such series or tranche required to direct the trustee to direct us to sell or liquidate the collateral,

• modify any provision of the section of the indenture relating to the consent of storm recovery bondholders of such series or tranche with respect to supplemental indentures, except to increase any percentage specified therein or to provide that those provisions of the indenture or the basic documents specified in the indenture cannot be modified or waived without the consent of each outstanding storm recovery bondholder affected thereby,

• modify any of the provisions of the indenture in a manner so as to affect the amount of any payment of interest, principal or premium, if any, payable on any storm recovery bond of such series or tranche on any payment date or change the redemption dates, expected amortization schedules, series final maturity dates or tranche final maturity dates of any storm recovery bonds of such series or tranche,

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• decrease the required capital amount with respect to such series, modify or alter the provisions of the indenture regarding the voting of the storm recovery bonds held by us, Cleco Power, an affiliate of either of them or any obligor on the storm recovery bonds of such series,

• decrease the percentage of the aggregate principal amount of the storm recovery bonds of such series or tranche required to amend the sections of the indenture which specify the applicable percentage of the aggregate principal amount of the storm recovery bonds necessary to amend the indenture or other related agreements specified therein, or

• permit the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any of the collateral for the storm recovery bonds of such series or tranche or, except as otherwise permitted or contemplated in the indenture, terminate the lien of the indenture on any property at any time subject thereto or deprive the holder of any storm recovery bond of the security provided by the lien of the indenture.

     Enforcement of the Sale Agreement, the Administration Agreement and the Servicing Agreement. The indenture provides that we will take all lawful actions to enforce our rights under the sale agreement, the administration agreement and the servicing agreement applicable to each series of storm recovery bonds. The indenture also provides that we will take all lawful actions to compel or secure the performance and observance by Cleco Power, the administrator and the servicer of their respective obligations to us under or in connection with the sale agreement, the administration agreement and the servicing agreement applicable to each series of storm recovery bonds. So long as no event of default occurs and is continuing, we may exercise any and all rights, remedies, powers and privileges lawfully available to us under or in connection with the sale agreement, the administration agreement and the servicing agreement applicable to each series of storm recovery bonds. However, if we or the servicer propose to amend, modify, waive, supplement, terminate or surrender in any material respect, or agree to any material amendment, modification, supplement, termination, waiver or surrender of, the process for adjusting the storm recovery charges, we must notify the trustee and the Louisiana commission in writing and the trustee must notify the storm recovery bondholders of this proposal. In addition, the trustee may consent to this proposal only with the written consent of the holders of a majority of the principal amount of the outstanding storm recovery bonds of the series or tranches materially and adversely affected thereby and only if the rating agency condition is satisfied. In addition, any proposed amendment of the indenture, the sale agreement or the servicing agreement that would increase ongoing financing costs requires the prior written consent or deemed consent of the Louisiana commission.

     If an event of default occurs and is continuing, the trustee may, and, at the written direction of the holders of a majority of the outstanding amount of the storm recovery bonds of all affected series shall, exercise all of our rights, remedies, powers, privileges and claims against Cleco Power, the administrator and servicer, under or in connection with the related sale agreements, administration agreements and servicing agreements, and any right of ours to take this action shall be suspended.

     Modifications to the Sale Agreement, the Administration Agreement and the Servicing Agreement. With the prior written consent of the trustee, the sale agreement, the administration agreement and the servicing agreement, in each case relating to a particular series of storm recovery bonds, may be amended, so long as the rating agency condition is satisfied in connection therewith, at any time and from time to time, without the consent of the storm recovery bondholders of the related series but, with respect to amendments that would increase ongoing financing costs, with the consent or deemed consent of the Louisiana commission. However, any such amendment may not adversely affect the interest of any storm recovery bondholder in any material respect without the consent of the holders of a majority of the outstanding principal amount of the storm recovery bonds of the affected series. The parties to the servicing agreement acknowledge that the financing order provides that the Louisiana commission, acting through its authorized legal representative and for the benefit of Louisiana ratepayers, may enforce the servicer’s obligations imposed under the servicing agreement pursuant to the financing order to the extent permitted by law.

     Notification of the Rating Agencies, the Louisiana Commission, the Trustee and the Storm Recovery Bondholders of any Modification.

     If we, Cleco Power or the servicer or any other party to the applicable agreement:

• proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any other amendment, modification, waiver, supplement, termination or surrender of, the terms of the sale agreement or the servicing agreement, or

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• waives timely performance or observance by Cleco Power or the servicer under the sale agreement or the servicing agreement,

in each case in a way which would materially and adversely affect the interests of storm recovery bondholders, we must first notify the rating agencies of the proposed amendment. Upon receiving notification regarding the rating agency condition, we must thereafter notify the trustee and the Louisiana commission in writing and the trustee shall notify the storm recovery bondholders of the proposed amendment and whether the rating agency condition has been satisfied with respect thereto. The trustee will consent to this proposed amendment, modification, supplement or waiver only with the written consent of the holders of a majority of the outstanding principal amount of the storm recovery bonds of the series or tranches materially and adversely affected thereby.

What Constitutes an Event of Default on the Storm Recovery Bonds

     An event of default with respect to a series of storm recovery bonds is defined in the indenture as being:

1.	a default in the payment of any interest on any storm recovery bond of that series when the same becomes due and payable and the continuation of this default for five business days,
2.	a default in the payment of the then unpaid principal of any storm recovery bond of that series on the final maturity date for that series or, if applicable, any tranche on the final maturity date for that tranche,
3.	a default in the payment of the redemption price for any storm recovery bond of that series on the redemption date therefor,
4.	a default in the observance or performance of any of our covenants or agreements made in the indenture, other than those specifically dealt with in clause 1, 2 or 3 above, or any of our covenants or agreements made in any credit enhancement agreement permitted under the indenture or any supplemental indenture or any of our representations or warranties made in the indenture or in any certificate or other writing delivered pursuant to the indenture or in connection with the indenture proving to have been incorrect in any material respect as of the time when made (other than a covenant, agreement or representation or warranty expressly included in the indenture solely for the benefit of a different series of storm recovery bonds), and this default continues or is not cured for a period of 30 days after the earlier of (a) written notice of the default is given to us by the trustee or to us and the trustee by the holders of at least 25% of the outstanding principal amount of the storm recovery bonds of the affected series or (b) the date we have actual notice of the default,
5.	the filing of a decree or order for relief by a court having jurisdiction in respect of us or any substantial part of the collateral securing that series in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of us or our property or for any substantial part of the collateral securing that series, or ordering the winding-up or liquidation of our affairs, and such decree or order remains unstayed and in effect for a period of 90 consecutive days,
6.	the commencement by us of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by us to the entry of an order for relief in an involuntary case under any such law, or the consent by us to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of us or our property for any substantial part of the collateral securing that series, or the making by us of any general assignment for the benefit of creditors, or the failure by us generally to pay our debts as such debts become due, or the taking of action by us in furtherance of any of the foregoing,
7.	any act or failure to act by the State of Louisiana or any of its agencies (including the Louisiana commission), officers or employees that violates or is not in accordance with the pledge of the State of Louisiana in Section 1234 of the Securitization Act including, without limitation, the failure of the Louisiana commission to implement the true-up mechanism or the pledge of the Louisiana commission in ordering paragraph 50 of the financing order, or
8.	any other event designated as an event of default in the related series supplement.

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     Remedies Available Following an Event of Default. If an event of default with respect to a series of storm recovery bonds, other than event number 7 above, occurs and is continuing, the trustee or holders of a majority in principal amount of the storm recovery bonds of that series may declare the unpaid principal balance of that series of storm recovery bonds, together with accrued interest, to be immediately due and payable. This declaration may, under the circumstances specified therein, be rescinded by the holders of a majority in principal amount of that series of the storm recovery bonds. The nature of our business will result in payment of principal upon such a declaration being made as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Storm Recovery Property— Foreclosure of the secured parties’ lien on the storm recovery property for a series of storm recovery bonds might not be practical, and acceleration of the storm recovery bonds of such series before maturity might have little practical effect” and “—You may experience material payment delays or incur a loss on your investment in the storm recovery bonds because the source of funds for payment is limited.”

     In addition to acceleration of the storm recovery bonds described above, the trustee may, and upon the written direction of the holders of a majority in principal amount of the storm recovery bonds of the series with respect to which a default has occurred, shall, exercise one or more of the following remedies upon an event of default (other than event number 7 above):

• the trustee may institute proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the storm recovery bonds or under the indenture with respect to the storm recovery bonds, whether by declaration or otherwise, enforce any judgment obtained, and collect from us or the servicer moneys adjudged due,

• the trustee may institute proceedings from time to time for the complete or partial foreclosure of the indenture with respect to the collateral securing that series,

• the trustee may exercise any remedies of a secured party under the Uniform Commercial Code or the Securitization Act or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the trustee and the storm recovery bondholders,

• the trustee may sell the collateral securing that series or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law provided that certain conditions set forth in the indenture are met, and

• the trustee may exercise all of our rights, remedies, powers, privileges and claims against the seller, administrator and the servicer under or in connection with the administration agreement or the applicable sale agreement or servicing agreement.

     If event of default number 7 above occurs, the trustee may to the extent allowed by law institute or participate in proceedings reasonably necessary to compel performance of or to enforce the pledge of either the State of Louisiana or the Louisiana commission and to collect any monetary damages incurred by the storm recovery bondholders or the trustee as a result of such event of default. This is the only remedy the trustee may exercise if this event of default has occurred.

     When the Trustee Can Sell the Collateral. If a series of storm recovery bonds has been declared to be due and payable following an event of default, the trustee may, at the written direction of the holders of a majority in principal amount of the storm recovery bonds of such affected series, either:

• subject to the paragraph immediately below, sell the collateral securing such series,

• elect to have us maintain possession of the collateral securing such series, or

• take such other remedial action as the trustee, at the written direction of the holders of a majority in principal amount of the storm recovery bonds of such series then outstanding and declared to have been due and payable, may direct and continue to apply distributions on the collateral securing such series as if there had been no declaration of acceleration.

     The trustee is prohibited from selling the collateral securing such series of storm recovery bonds following an event of default on such series other than (1) a default for five days or more in the payment of any interest on the storm recovery bonds of such series, (2) a default in the payment of the then unpaid principal of the storm recovery bonds of such series on the final maturity date for that series or if applicable, any tranche on the final maturity date for that tranche, or (3) a default in the payment of the redemption price for any storm recovery bond of such series on the redemption date therefor unless:

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• the holders of 100% of the principal amount of such series of the storm recovery bonds consent to the sale,

• the proceeds of the sale or liquidation are sufficient to pay in full the principal of and premium, if any, and accrued interest on the outstanding storm recovery bonds of such series, or

• the trustee determines (based upon a report from an independent registered accounting firm) that funds provided by the collateral securing such series would not be sufficient on an ongoing basis to make all payments on the storm recovery bonds of such series as these payments would have become due if the storm recovery bonds of such series had not been declared due and payable, and the trustee obtains the written consent of the holders of 66 2/3% of the aggregate outstanding principal amount of the storm recovery bonds of such series.

     Right of Storm Recovery Bondholders to Direct Proceedings. Subject to the provisions for indemnification and the limitations contained in the indenture, the holders of a majority in principal amount of the outstanding storm recovery bonds of the affected series, tranche or tranches will have the right to direct the time, method and place of conducting any proceeding or any remedy available to the trustee or exercising any trust or power conferred on the trustee; provided that, among other things:

• this direction does not conflict with any rule of law or with the indenture,

• the trustee may sell the collateral securing the affected series or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law provided that certain conditions set forth in the indenture are met,

• so long as the conditions specified in the indenture have been satisfied and the trustee elects to retain the collateral securing the affected series pursuant to the indenture and elects not to sell or liquidate that collateral, any direction to the trustee to sell or liquidate the collateral securing the affected series is by the holders of 100% of the principal amount of the affected series of the storm recovery bonds then outstanding, and

• the trustee may take any other action deemed proper by the trustee that is not inconsistent with this direction.

However, in case an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the holders of the storm recovery bonds of any series if:

• it reasonably believes it will not be indemnified to its reasonable satisfaction against the costs, expenses and liabilities which might be incurred by it in complying with this request, or

• it determines that this action might materially adversely affect the rights of any storm recovery bondholder not consenting to the action.

     Waiver of Default. The holders of a majority in principal amount of the storm recovery bonds of a series may, in those cases specified in the indenture, waive any default with respect to that series. However, they may not waive a default in the payment of principal of or premium, if any, or interest on any of the storm recovery bonds or a default in respect of a covenant or provision of the indenture that cannot be modified without the waiver or consent of all of the holders of the outstanding storm recovery bonds of all affected series and tranches.

     Limitation of Proceedings. Under the indenture, no storm recovery bondholder of any series will have the right to institute any proceeding, judicial or otherwise, or to avail itself of the right to foreclose on the storm recovery property or otherwise enforce the lien in the storm recovery property pursuant to Section 1231 of the Securitization Act, unless:

• the holder previously has given to the trustee written notice of a continuing event of default,

• the holders of not less than a majority in principal amount of the outstanding storm recovery bonds of the affected series have made written request of the trustee to institute the proceeding in its own name as trustee,

• the holder or holders have offered the trustee security or indemnity reasonably satisfactory to the trustee against the costs, expenses and liabilities to be incurred in complying with the request,

• the trustee for 60 days after its receipt of the notice, request and offer of indemnity has failed to institute the proceeding, and

• no direction inconsistent with this written request has been given to the trustee during the 60-day period referred to above by the holders of a majority in principal amount of the outstanding storm recovery bonds of the affected series.

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     In addition, each of the trustee, the storm recovery bondholders and the servicer will covenant that it will not, prior to the date that is one year and one day after the termination of the indenture, institute against us or against our managers or our member or members any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law. By purchasing storm recovery bonds, each storm recovery bondholder will be deemed to have made this covenant.

Our Covenants

     Consolidation, Merger or Sale of Assets. We will keep in effect our existence, rights and franchises as a limited liability company under Louisiana law, provided that we may consolidate with, merge into or convert into another entity or sell substantially all of our assets to another entity if:

• the entity formed by or surviving the consolidation, merger or conversion or to whom substantially all of our assets are sold is organized under the laws of the United States or any state thereof and expressly assumes by a supplemental indenture the due and punctual payment of the principal of and premium, if any, and interest on all outstanding storm recovery bonds and the performance of our obligations under the indenture,

• the entity formed by or surviving the consolidation, merger or conversion or to whom substantially all of our assets are sold expressly assumes all obligations and succeeds to all of our rights under the sale agreement, the administration agreement, the servicing agreement and any other basic document specified in the indenture to which we are a party or under which we have rights pursuant to an assignment and assumption agreement executed and delivered to the trustee,

• no default or event of default will have occurred and be continuing immediately after giving effect to the merger, consolidation, conversion or sale,

• prior notice will have been given to the rating agencies and the rating agency condition will have been satisfied with respect to the merger, consolidation, conversion or sale,

• we have received an opinion of independent counsel to the effect that the merger, consolidation, conversion or sale:

• will have no material adverse tax consequence to us or any storm recovery bondholder,

• complies with the indenture and all conditions precedent therein provided relating to the merger, consolidation, conversion or sale, and

• will result in the trustee maintaining a continuing valid first priority perfected security interest in the collateral,

• none of the storm recovery property, the financing order or our rights under the Securitization Act or the financing order are impaired thereby, and

• any action that is necessary to maintain the lien and security interest created by the indenture has been taken.

     Additional Covenants. We will from time to time execute and deliver all documents, make all filings and take any other action necessary or advisable to, among other things, maintain and preserve the lien of the indenture and the priority thereof. We will not, among other things:

• permit the validity of the indenture to be impaired or the lien to be amended, subordinated or terminated or discharged,

• permit any person to be released from any covenants or obligations except as expressly permitted by the indenture,

• permit any lien, charge, claim, security interest, mortgage or other encumbrance, other than the lien of the indenture, to be created on or extend to or otherwise arise upon or burden the collateral or any part thereof or any interest therein or the proceeds thereof,

• except as expressly permitted by the indenture, any supplemental indenture, the sale agreement or the servicing agreement, sell, transfer, exchange or otherwise dispose of any of the collateral unless directed to do so by the trustee in accordance with the indenture,

• claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the storm recovery bonds, other than amounts properly withheld under the Internal Revenue Code of 1986, or assert any

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	claim against any present or former storm recovery bondholder because of the payment of taxes levied or assessed upon us or any part of the collateral,
•	terminate our existence, dissolve or liquidate in whole or in part, except as otherwise permitted by the indenture,
•	take any action which is the subject of a rating agency condition if such action would result in a downgrade, or
•	elect to be classified as an association taxable as a corporation for federal income tax purposes or otherwise take any action inconsistent with our treatment for federal income tax purposes as a disregarded entity not separate from our sole owner.

     We may not engage in any business other than purchasing and owning storm recovery property, issuing storm recovery bonds from time to time, pledging our interest in the collateral to the trustee under the indenture in order to secure the storm recovery bonds, and performing activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto.

     We may not issue, incur, assume or guarantee any indebtedness except for the storm recovery bonds and any obligations under any credit enhancement for any series of the storm recovery bonds. Also, we may not guarantee or otherwise become contingently liable in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire, or agree contingently to acquire, any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other person, other than the eligible investments. We may not, except as contemplated by the indenture, the sale agreement, the servicing agreement and related documents, including our limited liability company operating agreement, make any loan or advance or credit to any person. We will not make any expenditure for capital assets or lease any capital asset other than the storm recovery property purchased from Cleco Power pursuant to, and in accordance with, any sale agreement. We may not make any payments, distributions or dividends to any member in respect of its membership interest except in accordance with the indenture.

     The servicer will deliver to the trustee the annual accountant’s report, compliance certificates and reports regarding distributions and other statements required by the servicing agreement. Please read “The Servicing Agreement” in this prospectus.

Access to the List of Storm Recovery Bondholders

     Any storm recovery bondholder who has owned a storm recovery bond for at least six months may, by written request to the trustee, obtain access to the list of all storm recovery bondholders maintained by the trustee for the purpose of communicating with other storm recovery bondholders with respect to their rights under the indenture or the storm recovery bonds. In addition, a group of storm recovery bondholders each of whom has owned a storm recovery bond for at least six months may also obtain access to the list of all storm recovery bondholders for the same purpose. The trustee may elect not to afford the requesting storm recovery bondholders access to the list of storm recovery bondholders if it agrees to mail the desired communication or proxy, on behalf and at the expense of the requesting storm recovery bondholders, to all storm recovery bondholders.

We Must File an Annual Compliance Statement

     We will be required to file annually with the trustee a written statement, a copy of which we will provide to each of the rating agencies and the Louisiana commission, as to the fulfillment of our obligations under the indenture. In addition, we will furnish to the trustee an opinion of counsel concerning filings made by us on an annual basis and before the effectiveness of any amendment to the sale agreement or the servicing agreement.

The Trustee Must Provide an Annual Report to All Storm Recovery Bondholders

     If required by the Trust Indenture Act, the trustee will be required to mail each year to all storm recovery bondholders a brief report. This report may state, in accordance with the requirements of the Trust Indenture Act, among other items:

• the trustee’s eligibility and qualification to continue as the trustee under the indenture,

• any amounts advanced by it under the indenture,

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• the amount, interest rate and maturity date of specific indebtedness owing by us to the trustee in the trustee’s individual capacity,

• the property and funds physically held by the trustee,

• any additional issue of a series of the storm recovery bonds not previously reported, and

• any action taken by it that materially affects the storm recovery bonds of any series and that has not been previously reported.

What Will Trigger Satisfaction and Discharge of the Indenture

     The storm recovery bonds of any series, all moneys payable with respect to the storm recovery bonds of that series and the indenture as it applies to that series will cease to be of further effect and the lien of the indenture will be released with respect to that series, interest will cease to accrue on the storm recovery bonds of that series and the trustee, on our written demand and at our expense, will execute instruments acknowledging satisfaction and discharge of the indenture with respect to the storm recovery bonds of that series, when:

• either all storm recovery bonds of that series which have already been authenticated or delivered, with certain exceptions set forth in the indenture, have been delivered to the trustee for cancellation or we have irrevocably deposited with the trustee cash, in trust for this purpose, in an amount sufficient to make payments of principal of and interest on the storm recovery bonds of that series and to pay and discharge the entire indebtedness on those storm recovery bonds not previously delivered to the trustee,

• we have paid all other sums payable by us under the indenture with respect to the storm recovery bonds of that series, and

• we have delivered to the trustee an officer’s certificate, an opinion of counsel, and if required by the Trust Indenture Act or the trustee, a certificate from a firm of independent certified public accountants, each stating that there has been compliance with the conditions precedent in the indenture or relating to the satisfaction and discharge of the indenture with respect to the storm recovery bonds of that series.

Our Legal Defeasance and Covenant Defeasance Options

     We may, at any time, terminate:

• all of our obligations under the indenture with respect to the storm recovery bonds of any series, or

• our obligations to comply with some of the covenants in the indenture, including some of the covenants described under “—Our Covenants.”

     The legal defeasance option is our right to terminate at any time our obligations under the indenture with respect to the storm recovery bonds of any series. The covenant defeasance option is our right at any time to terminate our obligations to comply with some of the covenants in the indenture. We may exercise the legal defeasance option with respect to any series of the storm recovery bonds notwithstanding our prior exercise of the covenant defeasance option with respect to that series. If we exercise the legal defeasance option with respect to any series, that series will be entitled to payment only from the funds or other obligations set aside under the indenture for payment thereof on the scheduled final payment date or redemption date therefor as described below. That series will not be subject to payment through redemption or acceleration prior to the scheduled final payment date or redemption date, as applicable. If we exercise the covenant defeasance option with respect to any series, the final payment of the storm recovery bonds of that series may not be accelerated because of an event of default relating to a default in the observance or performance of any of our covenants or agreements made in the indenture.

     We may exercise the legal defeasance option or the covenant defeasance option with respect to any series of the storm recovery bonds only if:

• we irrevocably deposit or cause to be deposited in trust with the trustee cash or U.S. government obligations specified in the indenture for the payment of principal of and premium, if any, and interest on the storm recovery bonds of that

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series to the scheduled final payment date or redemption date therefor, as applicable, the deposit to be made in the defeasance subaccount for that series,

•

we deliver to the trustee a certificate from a nationally recognized firm of independent accountants expressing its opinion that the payments of principal and interest on the U.S. government obligations when due and without reinvestment plus any cash deposited in the defeasance subaccount will provide cash at times and in sufficient amounts to pay in respect of the storm recovery bonds of that series:

• principal in accordance with the expected sinking fund schedule therefor, and/or if that series is to be redeemed, the redemption price on the redemption date therefor, and

• interest when due,

• in the case of the legal defeasance option, 95 days pass after the deposit is made and during the 95-day period no default relating to events of our bankruptcy, insolvency, receivership or liquidation occurs and is continuing at the end of the period,

• no default has occurred and is continuing on the day of this deposit and after giving effect thereto,

• in the case of the legal defeasance option, we deliver to the trustee an opinion of counsel stating that:

• we have received from, or there has been published by, the Internal Revenue Service a ruling, or

• since the date of execution of the indenture, there has been a change in the applicable federal income tax law, and in either case confirming that the holders of the storm recovery bonds of that series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the legal defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred,

• in the case of the covenant defeasance option, we deliver to the trustee an opinion of counsel to the effect that the holders of the storm recovery bonds of that series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the covenant defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred,

• we deliver to the trustee a certificate of one of our managers and an opinion of counsel, each stating that all conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the indenture,

• we deliver to the trustee an opinion of counsel to the effect that (a) in a case under the bankruptcy code in which Cleco Power (or any of its affiliates, other than us) is the debtor, the court would hold that the deposited cash or U.S. government obligations would not be in the bankruptcy estate of Cleco Power (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations); and (b) in the event Cleco Power (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations), were to be a debtor in a case under the bankruptcy code, the court would not disregard the separate legal existence of Cleco Power (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations) and us so as to order substantive consolidation under the bankruptcy code of our assets and liabilities with the assets and liabilities of Cleco Power (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations), and

• each rating agency has notified us and the trustee that the exercise of the proposed defeasance option will not result in a downgrade or withdrawal of the then current rating of any then outstanding storm recovery bonds.

The Trustee

     The trustee for each series of storm recovery bonds will be named in the applicable prospectus supplement. The trustee may resign at any time upon 30 days’ notice by so notifying us. The holders of a majority in principal amount of the storm recovery bonds of all series then outstanding may remove the trustee by so notifying the trustee and us in writing and may appoint a successor trustee. We will remove the trustee by written notice if the trustee ceases to be eligible to continue in this capacity under the indenture, the trustee becomes a debtor in a bankruptcy proceeding or is adjudged insolvent, a receiver, administrator or other public officer takes charge of the trustee or its property or the trustee becomes incapable of acting. If the trustee resigns or is removed or a vacancy exists in the office of trustee for any reason, we will be obligated promptly to

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appoint a successor trustee eligible under the indenture. No resignation or removal of the trustee will become effective until acceptance of the appointment by a successor trustee. The trustee shall at all times satisfy the requirements of certain provisions of the Trust Indenture Act, as amended, and the Investment Company Act of 1940, as amended, and have a combined capital and surplus of at least $50 million and a long-term debt rating of “Baa3” or better by Moody’s, BBB- or better by S&P and, if applicable, BBB- by Fitch. If the trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another entity, the resulting, surviving or transferee entity shall without any further action be the successor trustee. We and our affiliates may, from time to time, maintain various banking, investment banking and trust relationships with the trustee and its affiliates.

     The trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided that its conduct does not constitute willful misconduct, negligence or bad faith. We have agreed to indemnify the trustee and its officers, directors, employees and agents against any and all loss, liability or expense (including reasonable attorney’s fees and expenses) incurred by it in connection with the administration of the trust and the performance of its duties under the indenture, provided that we are not required to pay any expense or indemnify against any loss, liability or expense incurred by the trustee through the trustee’s own willful misconduct, negligence or bad faith.

Governing Law

     The indenture will be governed by the laws of the State of Louisiana.

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WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE STORM RECOVERY BONDS

     The rate of principal payments, the amount of each interest payment and the actual final payment date of each series or tranche of the storm recovery bonds and the weighted average life thereof will depend primarily on the timing of receipt of collected storm recovery charges by the trustee and the true-up mechanism. The aggregate amount of collected storm recovery charges and the rate of principal amortization on the storm recovery bonds will depend, in part, on actual energy usage and energy demands, and the rate of delinquencies and write-offs. The storm recovery charges are required to be adjusted from time to time based in part on the actual rate of collected storm recovery charges. However, we can give no assurance that the servicer will be able to forecast accurately actual electricity usage and the rate of delinquencies and write-offs or implement adjustments to the storm recovery charges that will cause collected storm recovery charges to be received at any particular rate. Please read “Risk Factors—Servicing Risks,” “—Other Risks Associated With an Investment in the Storm Recovery Bonds” and “Cleco Power’s Financing Order—True-Ups” in this prospectus.

     If the servicer receives storm recovery charges at a slower rate than expected, the storm recovery bonds may be retired later than expected. Except in the event of a redemption or the acceleration of the final payment date of the storm recovery bonds after an event of default, however, the storm recovery bonds will not be paid at a rate faster than that contemplated in the expected amortization schedule for each series or tranche of the storm recovery bonds even if the receipt of collected storm recovery charges is accelerated. Instead, receipts in excess of the amounts necessary to amortize the storm recovery bonds in accordance with the applicable expected amortization schedules, to pay interest and related fees and expenses and to fund subaccounts of the collection account will be allocated to the excess funds subaccount. Redemption of any tranche or series of the storm recovery bonds and acceleration of the final maturity date after an event of default in accordance with the terms thereof will result in payment of principal earlier than the related scheduled final payment dates. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a date that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the storm recovery bonds is received in later years, the storm recovery bonds may have a longer weighted average life.

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THE SALE AGREEMENT

     The following summary describes particular material terms and provisions of each sale agreement pursuant to which we will purchase storm recovery property from Cleco Power. We have filed the form of the sale agreement with the SEC as an exhibit to the registration statement of which this prospectus forms a part. This summary does not purport to be complete and is subject to and qualified by reference to the provisions of the applicable sale agreement.

Cleco Power’s Sale and Assignment of the Storm Recovery Property

     Any sale of storm recovery property to us by Cleco Power will be financed through the corresponding issuance of a series of storm recovery bonds. Pursuant to a sale agreement, Cleco Power will on each transfer date sell and assign to us, without recourse, except as provided therein, its rights and interests under the applicable financing order that relate to the series of storm recovery bonds to be issued and sold, which will become storm recovery property upon such transfer pursuant to the Securitization Act. The storm recovery property will represent all rights and interests of Cleco Power under the applicable financing order that relate to the series of storm recovery bonds to be issued and sold, including the right to impose, collect and receive the storm recovery charges and the revenues and collections resulting from such storm recovery charges authorized in the financing order with respect to the related series of the storm recovery bonds. We will apply the net proceeds that we receive from the sale of each series of storm recovery bonds to the purchase of the storm recovery property acquired on that date.

     As provided by the Securitization Act, our purchase of storm recovery property from Cleco Power pursuant to a sale agreement, which will expressly provide that such transfer is a sale, will be a true sale, and all title to the storm recovery property, legal or equitable, will pass to us. Under the Securitization Act, such sale will constitute a true sale under state law whether or not:

• we have any recourse against Cleco Power (except that any such recourse cannot arise from the inability or failure of one or more of Cleco Power’s customers to timely pay all or a portion of the storm recovery charge),

• Cleco Power retains any equity interest in the storm recovery property under state law,

• Cleco Power acts as a collector of storm recovery charges relating to the storm recovery property, or

• Cleco Power treats the transfer as a financing for tax, financial reporting or other purposes.

     Under the Securitization Act, as of the effective date of a financing order, there is created and established for Cleco Power storm recovery property, which is a present contract right in favor of Cleco Power, its transferees and other financing parties.

     Upon the issuance of a financing order, the execution and delivery of the related sale agreement and bill of sale and the filing of a financing statement under the Securitization Act, our purchase of the applicable storm recovery property from Cleco Power will be perfected as against all third persons, including subsequent judicial or other lien creditors.

     The records and computer systems of Cleco Power and Cleco Corporation will reflect each sale and assignment of Cleco Power’s rights and interests under a financing order to us. However, we expect that each series of storm recovery bonds will be reflected as debt on Cleco Corporation’s consolidated financial statements. In addition, we anticipate that each series of storm recovery bonds will be treated as debt of Cleco Corporation for federal income tax purposes. Please read “Material Federal Income Tax Consequences for the Storm Recovery Bondholders.”

Cleco Power’s Representations and Warranties

     In each sale agreement, Cleco Power will make representations and warranties to us, as of the applicable transfer date, to the effect, among other things, that:

1. subject to clause 9 below (assumptions used in calculating the storm recovery charges as of the applicable transfer date), all written information, as amended or supplemented from time to time, provided by Cleco Power to us with respect to the transferred storm recovery property (including the applicable financing order and the issuance advice letter) is correct in all material respects;

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2.

it is the intention of the parties to each sale agreement that, other than for specified tax purposes, each sale, transfer, assignment, setting over and conveyance in the transferred storm recovery property contemplated by the sale agreement constitutes a sale or other absolute transfer of all right, title and interest of Cleco Power in and to the transferred storm recovery property to us; upon execution and delivery of the sale agreement and the related bill of sale and payment of the purchase price, Cleco Power will have no right, title or interest in, to or under the transferred storm recovery property; and that such transferred storm recovery property would not be a part of the estate of Cleco Power in the event of the filing of a bankruptcy petition by or against Cleco Power under any bankruptcy law;

3.

a. Cleco Power is the sole owner of the rights and interests under the financing order being sold to us on the applicable transfer date,

b.

on the applicable transfer date, immediately upon the sale under the sale agreement, the transferred storm recovery property will have been validly sold and transferred to us free and clear of all liens (except for any lien created by us under the basic documents), and

c.

all actions or filings (including filings with the Louisiana UCC Filing Officer in accordance with the rules prescribed under the Securitization Act and the Uniform Commercial Code) necessary in any jurisdiction to give us a perfected ownership interest (subject to any lien created in favor of the storm recovery bondholders by us under the basic documents) in the transferred storm recovery property and to grant to the trustee a first priority perfected security interest in the transferred storm recovery property, free and clear of all liens of Cleco Power or anyone else (except for any lien created by us under the basic documents) have been taken or made;

4.

the applicable financing order has been issued by the Louisiana commission in accordance with the Securitization Act, the applicable financing order and the process by which it was issued comply with all applicable laws, rules and regulations of the State of Louisiana and the federal laws of the United States, and the applicable financing order is final, non-appealable and in full force and effect;

5.

as of the date of issuance of the related storm recovery bonds, those storm recovery bonds will be entitled to the protections provided by the Securitization Act and the applicable financing order, and the applicable financing order and the storm recovery charges authorized therein will have become irrevocable and not subject to reduction, impairment or adjustment by further action of the Louisiana commission, except as permitted by Section 1228(c)(5) of the Securitization Act, the issuance advice letter relating to the transferred storm recovery property to be sold on such a date will have been filed in accordance with the applicable financing order, the initial storm recovery charges and the final terms of the storm recovery bonds set forth in the related issuance advice letter will have become effective;

6. a. under the Securitization Act, the State of Louisiana has pledged that it will not take or permit any action that would impair the value of the storm recovery property transferred under the applicable sale agreement or reduce, alter or impair the related storm recovery charges until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related storm recovery bonds, have been paid and performed in full,

b. under the laws of the State of Louisiana and the federal laws of the United States, the State of Louisiana could not constitutionally take any action of a legislative character, including the repeal or amendment of the Securitization Act, which would substantially limit, alter or impair the storm recovery property or other rights vested in the storm recovery bondholders pursuant to the applicable financing order, or substantially limit, alter, impair or reduce the value or amount of the storm recovery property, unless that action is a reasonable and necessary exercise of the State of Louisiana’s sovereign powers and of a character reasonable and appropriate to the emergency or other significant and legitimate public purpose justifying that action, and, under the takings clauses of the Louisiana and United States Constitutions, the State of Louisiana could not repeal or amend the Securitization Act or take any other action in contravention of its pledge quoted above without paying just compensation to the related storm recovery bondholders, as determined by a court of competent jurisdiction, if doing so would constitute a permanent appropriation of a substantial property interest of those storm recovery bondholders in the storm recovery property and deprive those storm recovery bondholders of their reasonable expectations arising from their investments in the storm recovery bonds or substantially reduce, limit or impair the value of the storm recovery property or the storm recovery charges, prior to the time that the bonds are fully paid and discharged; however, there is no assurance that, even if a court were to award just compensation, it

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would be sufficient to pay the full amount of principal and interest on those storm recovery bonds and under the laws of the State of Louisiana and the United State’s Constitution, the Louisiana commission pledge (i) creates a binding contractual obligation of the State of Louisiana for purposes of the contract clauses of the United States and Louisiana Constitutions, and (ii) the LPSC could not take any action of a legislative character, including the rescission or amendment of the Financing Order, which violates the Louisiana commission pledge in a manner that substantially reduces, limits or impairs the value of the Storm Recovery Property or the Storm Recovery Charges, prior to the time that the Storm Recovery Bonds are paid in full and discharged, unless  the LPSC action clearly is exercised for a public end and is reasonably necessary to the accomplishment of that public end so as not to be arbitrary, capricious or an abuse of authority;

7.	there is no order by any court providing for the revocation, alteration, limitation or other impairment of the Securitization Act, the applicable financing order or issuance advice letter, the transferred storm recovery property or the related storm recovery charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the applicable financing order;
8.	under the laws of the State of Louisiana and the federal laws of the United States in effect on the applicable transfer date, no other approval, authorization, consent, order or other action of, or filing with any court, federal or state regulatory body, administrative agency or other governmental instrumentality is required in connection with the creation or transfer of Cleco Power’s rights and interests related to the applicable series of storm recovery bonds under the applicable financing order and our purchase of the storm recovery property from Cleco Power, except those that have been obtained or made;
9.	based on information available to Cleco Power on the applicable transfer date, the assumptions used in calculating the storm recovery charges in the applicable issuance advice letter are reasonable and made in good faith; however, notwithstanding the foregoing, Cleco Power makes no representation or warranty, express or implied, that amounts actually collected arising from those storm recovery charges will in fact be sufficient to meet the payment obligations on the related storm recovery bonds or that the assumptions used in calculating such storm recovery charges will in fact be realized;

10. a. upon the effectiveness of the applicable issuance advice letter, the transfer of Cleco Power’s rights and interests related to the applicable series of storm recovery bonds under the related financing order and our purchase of the storm recovery property from Cleco Power pursuant to the applicable sale agreement, the transferred storm recovery property will constitute a present contract right vested in us,

b. upon the effectiveness of the applicable issuance advice letter, the transfer of Cleco Power’s rights and interests under the applicable financing order that relate to the series of storm recovery bonds to be issued and sold and our purchase of the storm recovery property from Cleco Power pursuant to the applicable sale agreement, the transferred storm recovery property will include, without limitation:

(1)	the right to impose, bill, charge, collect and receive storm recovery charges authorized in the related financing order that relate to such series of storm recovery bonds and to obtain periodic adjustments to such charges as may be provided in the financing order,
(2)	all rights and interests of Cleco Power under the applicable financing order that relate to such series of storm recovery bonds, and
(3)	all revenues, collections, claims, rights to payments, payments, money, or proceeds arising from the rights and interests resulting from the related storm recovery charges,

c. upon the effectiveness of the applicable issuance advice letter and the transfer of Cleco Power’s rights and interests under the applicable financing order that relate to such series of storm recovery bonds and our purchase of the storm recovery property from Cleco Power on such transfer date pursuant to such sale agreement, the transferred storm recovery property will not be subject to any claims of Cleco Power or Cleco Power’s creditors, other than creditors holding a prior security interest in the storm recovery property perfected under Section 1231 of the Securitization Act;

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11.	Cleco Power is a limited liability company duly organized and in good standing under the laws of the State of Louisiana, with limited liability company power and authority to own its properties and conduct its business as currently owned or conducted;
12.	Cleco Power has the power and authority to obtain the applicable financing order and to execute and deliver the applicable sale agreement and to carry out its terms, to own the transferred storm recovery property under the applicable financing order related to the applicable series of storm recovery bonds, and to sell and assign the transferred storm recovery property under the applicable financing order to us, and the execution, delivery and performance of the applicable sale agreement have been duly authorized by Cleco Power by all necessary limited liability company action;
13.	the applicable sale agreement constitutes a legal, valid and binding obligation of Cleco Power, enforceable against Cleco Power in accordance with its terms, subject to customary exceptions relating to bankruptcy, creditors’ rights and equitable principles;
14.	the consummation of the transactions contemplated by the applicable sale agreement and the fulfillment of the terms thereof do not (a) conflict with or result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of organization or limited liability company operating agreement of Cleco Power, or any indenture, mortgage, credit agreement or other agreement or instrument to which Cleco Power is a party or by which it or its properties is bound; (b) result in the creation or imposition of any lien upon any of Cleco Power’s properties pursuant to the terms of any such indenture or agreement or other instrument (except for any lien created in favor of the storm recovery bondholders by us under the basic documents) or (c) violate any existing law or any existing order, rule or regulation applicable to Cleco Power of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over Cleco Power or its properties;
15.	except for continuation filings under the Uniform Commercial Code and other filings under the Securitization Act and the Uniform Commercial Code, no approval, authorization, consent, order or other action of, or filing with, any court, federal or state regulatory body, administrative agency or other governmental instrumentality is required under any applicable law, rule or regulation in connection with the execution and delivery by Cleco Power of the applicable sale agreement, the performance by Cleco Power of the transactions contemplated by such sale agreement or the fulfillment by Cleco Power of the terms of such sale agreement, except those that have previously been obtained or made and those that Cleco Power, in its capacity as servicer under the related servicing agreement, is required to make in the future pursuant to that servicing agreement;
16.	except as disclosed in this prospectus or a prospectus supplement, there are no proceedings pending, and to Cleco Power’s knowledge, (a) there are no proceedings threatened and (b) there are no investigations pending or threatened before any court, federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over Cleco Power or its properties involving or related to Cleco Power or us or, to Cleco Power’s knowledge, to any other person:

a.	asserting the invalidity of the applicable sale agreement, any of the other basic documents, the related series of storm recovery bonds, the Securitization Act or the applicable financing order,
b.	seeking to prevent the issuance of the related series of storm recovery bonds or the consummation of the transactions contemplated by the applicable sale agreement or any of the other basic documents,
c.	seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by Cleco Power of its obligations under, or the validity or enforceability of, the applicable sale agreement or any of the other basic documents or the related series of storm recovery bonds, or
d.	challenging Cleco Power’s treatment of the related series of storm recovery bonds as debt of Cleco Corporation for federal or state income, gross receipts or franchise tax purposes;

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17. after giving effect to the sale of any transferred storm recovery property under the applicable sale agreement, Cleco Power:

a.	is solvent and expects to remain solvent,
b.	is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purposes,
c.	is not engaged and does not expect to engage in a business for which its remaining property represents an unreasonably small portion of its capital,
d.	reasonably believes that it will be able to pay its debts as they become due, and
e.	is able to pay its debts as they become due and does not intend to incur, or believes that it will incur, indebtedness that it will not be able to repay at its maturity; and

18. Cleco Power is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse effect on Cleco Power’s business, operations, assets, revenues or properties).

     The representations and warranties made by Cleco Power survive the sale of the transferred storm recovery property to us and the pledge thereof on the applicable transfer date to the trustee. Any change in the law occurring after the applicable transfer date that renders any of the representations and warranties untrue does not constitute a breach under the related sale agreement.

Cleco Power’s Covenants

     In each sale agreement, Cleco Power will make the following covenants:

1.	subject to its rights to assign its rights and obligations under the sale agreement, so long as the storm recovery bonds of any series are outstanding, Cleco Power will (i) keep in full force and effect its existence and remain in good standing under the laws of the state of its organization, and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or will be necessary to protect the validity and enforceability of the applicable sale agreement and each other instrument or agreement to which Cleco Power is a party necessary to the proper administration of such sale agreement and the transactions contemplated by such sale agreement and (ii) continue to operate its transmission and distribution system in order to provide electric services to its customers, provided that Cleco Power is not prohibited from selling, assigning or otherwise divesting its transmission and distribution system or any part thereof in accordance with the sale agreement and the applicable financing order;
2.	except for the conveyances under the applicable sale agreement or any lien under Section 1231 of the Securitization Act for our benefit, the storm recovery bondholders and the trustee, Cleco Power may not sell, pledge, assign or transfer to any other person, or grant, create, incur, assume or suffer to exist any lien on, any of the applicable transferred storm recovery property, whether then existing or thereafter created, or any interest therein. Cleco Power may not at any time assert any lien against or with respect to the applicable transferred storm recovery property, and Cleco Power shall defend the right, title and interest of us and of the trustee, as our assignee, in, to and under the transferred storm recovery property against all claims of third parties claiming through or under Cleco Power;
3.	Cleco Power will notify us and the trustee promptly after becoming aware of any lien on any of the transferred storm recovery property, other than the conveyances under the applicable sale agreement, any lien created in favor of the storm recovery bondholders or created by us under the indenture;
4.	Cleco Power agrees to comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any court or federal or state regulatory body, administrative agency or governmental

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instrumentality applicable to it, except to the extent that failure to so comply would not materially adversely affect our or the trustee’s interests in the applicable transferred storm recovery property or under the basic documents or Cleco Power’s performance of its obligations under the applicable sale agreement;

5. so long as any storm recovery bonds of the applicable series are outstanding, Cleco Power:

a.	will treat the storm recovery bonds as our debt and not debt of Cleco Power, except for financial reporting or tax purposes;
b.	will disclose in its financial statements that it is not the owner of the applicable transferred storm recovery property and that our assets are not available to pay creditors of Cleco Power or its affiliates (other than us);
c.	will not own or purchase any storm recovery bonds; and
d.	will disclose the effects of all transactions between us and Cleco Power in accordance with generally accepted accounting principles;

6. so long as any storm recovery bonds of the applicable series are outstanding:

a.	in all proceedings relating directly or indirectly to the applicable transferred storm recovery property, Cleco Power will affirmatively certify and confirm that it has sold all of its rights and interests under the applicable financing order that relate to such series of storm recovery bonds to us (other than for financial reporting or tax purposes), and will not make any statement or reference in respect of such transferred storm recovery property that is inconsistent with our ownership interest (other than for financial reporting or tax purposes),
b.	Cleco Power will not take any action in respect of the applicable transferred storm recovery property except solely in its capacity as servicer thereof pursuant to the related servicing agreement or as contemplated by the basic documents,
c.	Cleco Power will not sell a new series of storm recovery bonds unless the rating agency condition has been satisfied with respect to the series of storm recovery bonds related to that sale agreement;

7.	Cleco Power agrees that, upon the sale by Cleco Power of all of its rights and interests related to the applicable series of storm recovery bonds under the applicable financing order to us pursuant to the applicable sale agreement any payment to the servicer by any person responsible for remitting storm recovery charges to the servicer under the terms of the applicable financing order or the Securitization Act or applicable tariff shall discharge such person’s obligations in respect of such transferred storm recovery property to the extent of such payment, notwithstanding any objection or direction to the contrary by Cleco Power;
8.	Cleco Power will execute and file such filings, and cause to be executed and filed such filings in such manner and in such places as may be required by law fully to preserve, maintain and protect our and the trustee’s interests in the transferred storm recovery property, including all filings required under the Securitization Act and the Uniform Commercial Code relating to the transfer of the ownership of the rights and interests related to the applicable series of storm recovery bonds under the applicable financing order by Cleco Power to us and the pledge of the transferred storm recovery property by us to the trustee. Cleco Power will deliver (or cause to be delivered) to us and the trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing;
9.	Cleco Power will institute any action or proceeding reasonably necessary to compel performance by the Louisiana commission or the State of Louisiana of any of their obligations or duties under the Securitization Act, the applicable financing order or the issuance advice letter relating to the transfer of the rights and interests under the applicable financing order that relate to such series of storm recovery bonds by Cleco Power to us, and Cleco Power agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, in each case as may be reasonably necessary:

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a.

to protect us and the storm recovery bondholders from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation described above under the caption “—Cleco Power’s Representations and Warranties”; or

b.

so long as Cleco Power is also the servicer, to block or overturn any attempts to cause a repeal of, modification of or supplement to the Securitization Act, the applicable financing order, the applicable issuance advice letter or the rights of storm recovery bondholders by legislative enactment (including any action of the Louisiana commission of a legislative character) or constitutional amendment that would be materially adverse to us, the trustee or the storm recovery bondholders. The costs of any such actions or proceedings would be reimbursed by us to Cleco Power from amounts on deposit in the collection account as an operating expense in accordance with the terms of the indenture. Cleco Power’s obligations pursuant to this covenant survive and continue notwithstanding that the payment of operating expenses pursuant to the indenture may be delayed.

10.	so long as any storm recovery bonds of the applicable series are outstanding, Cleco Power will pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, businesses, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on the applicable transferred storm recovery property; provided that no such tax need be paid if Cleco Power or any of its affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if Cleco Power or such affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles;
11.	Cleco Power will comply with all filing requirements imposed upon it in its capacity as seller of the transferred storm recovery property under the applicable financing order, including making any post-closing filings;
12.	even if the applicable sale agreement or the indenture providing for the related series of storm recovery bonds is terminated, Cleco Power will not, prior to the date that is one year and one day after the termination of the indenture, petition or otherwise make or cause us to invoke the process of any court or federal or state regulatory body, administrative agency or governmental instrumentality for the purpose of commencing or sustaining a case against us under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of ours, or any substantial property of ours or ordering the winding up or liquidation of our affairs. We will also agree in each sale agreement not to petition or otherwise induce or cause Cleco Power to invoke such a process for the same period of time;
13.	Cleco Power agrees not to withdraw the filing of any issuance advice letter with the Louisiana commission;
14.	Cleco Power agrees to make all commercially reasonable efforts to keep each tariff in full force and effect at all times;
15.	Promptly after obtaining knowledge thereof, in the event of a breach in any material respect (without regard to any materiality qualifier contained in such representation, warranty or covenant) of any of Cleco Power’s representations, warranties or covenants contained in a sale agreement, Cleco Power shall promptly notify us, the trustee and the rating agencies of such breach. For the avoidance of doubt, any breach with would adversely affect scheduled payments on the storm recovery bonds will be deemed to be a material breach;
16.	Cleco Power shall use the proceeds of the sale of the storm recovery property in accordance with the applicable financing order;
17.	Upon the reasonable request of the issuing entity, Cleco Power shall execute and deliver such further instruments and do such further acts as may be reasonably necessary to carry out more effectually the provisions and purposes of the sale agreement; and
18.	Neither Cleco Power nor we shall take any action, file any tax return, or make any election inconsistent with the treatment of the issuing entity, for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, for purposes of state, local and other taxes, as a disregarded entity that is not separate from Cleco Power (or, if relevant, from another sole owner of the issuing entity).

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Cleco Power’s Obligation to Indemnify Us and the Trustee and to Take Legal Action

     Under each sale agreement, Cleco Power is obligated to indemnify us and the trustee, for itself and on behalf of the storm recovery bondholders and related parties specified therein, against:

1. any and all taxes, other than any taxes imposed on storm recovery bondholders of the related series solely as a result of their ownership of storm recovery bonds, that may at any time be imposed on or asserted against any of those persons under existing law as of the applicable transfer date as a result of the sale and assignment of Cleco Power’s rights and interests under the applicable financing order that relates to such series of storm recovery bonds by Cleco Power to us, the acquisition or holding of the applicable transferred storm recovery property by us or the issuance and sale by us of the related series of storm recovery bonds, including any sales, gross receipts, tangible personal property, privilege, franchise or license taxes, but excluding any taxes imposed as a result of a failure of that person to properly withhold or remit taxes imposed with respect to payments on any storm recovery bond of the related series, in the event and to the extent such taxes are not recoverable financing costs, it being understood that the storm recovery bondholders of the related series will be entitled to enforce their rights against Cleco Power solely through a cause of action brought for their benefit by the trustee in accordance with the terms of the indenture; and

2.	a	any and all amounts of principal of and interest on the related series of storm recovery bonds not paid when due or when scheduled to be paid in accordance with their terms and the amount of any deposits to us required to have been made in accordance with the terms of the basic documents which are not made when so required, in each case as a result of Cleco Power’s breach of any of its representations, warranties or covenants contained in the applicable sale agreement; and
	b.	any and all liabilities, obligations, claims, actions, suits or payments of any kind whatsoever that may be imposed on or asserted against any such person, other than any liabilities, obligations or claims for or payments of principal of or interest on the storm recovery bonds of the related series, together with any reasonable costs and expenses incurred by that person, in each case as a result of Cleco Power’s breach of any of its representations, warranties or covenants contained in the applicable sale agreement.

     However, Cleco Power is not required to indemnify the trustee or related parties against any loss incurred by them through their own willful misconduct, gross negligence or bad faith.

     These indemnification obligations will rank equally in right of payment with other general unsecured obligations of Cleco Power. The indemnities described above will survive the resignation or removal of the trustee and the termination of the applicable sale agreement and include reasonable fees and expenses of investigation and litigation (including reasonable attorneys’ fees and expenses). The representations and warranties described above under the caption “—Cleco Power’s Representations and Warranties” are made under existing law as in effect as of the date of issuance of the related series of storm recovery bonds. Cleco Power will not indemnify any party for any changes of law after the issuance of the related series of storm recovery bonds or for any liability resulting solely from a downgrade in the ratings on such series of storm recovery bonds.

     Cleco Power’s Limited Obligation to Undertake Legal Action. As described in clause 9 above under “—Cleco Power’s Covenants,” each sale agreement will require Cleco Power to institute any action or proceeding reasonably necessary to compel performance by the Louisiana commission or the State of Louisiana of any of their obligations or duties under the Securitization Act, the applicable financing order or any related issuance advice letter with respect to the transferred storm recovery property. Except for the foregoing and subject to Cleco Power’s further covenant to fully preserve, maintain and protect our interests in the storm recovery property, Cleco Power will not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under the applicable sale agreement and that in its opinion may involve it in any expense or liability.

Successors to Cleco Power

     Each sale agreement will provide that any person which succeeds by merger, consolidation, sale or other similar transaction to all or substantially all of the electric transmission and distribution systems of Cleco Power (or, if the transmission and distribution business is split, any person which provides electric transmission or distribution service to Cleco Power’s customers) will be the successor to Cleco Power with respect to Cleco Power’s ongoing obligations under the sale agreement. Each sale agreement will further require that:

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• immediately after giving effect to any transaction referred to in this paragraph, no representation or warranty made in the sale agreement will have been breached in any material respect, and no servicer default, and no event that, after notice or lapse of time, or both, would become a servicer default will have occurred and be continuing,

• the successor to the seller must execute an agreement of assumption to perform every obligation of the seller under the sale agreement,

• the rating agencies specified in the sale agreement will have received prior written notice of the transaction, and

• officers’ certificates and opinions of counsel specified in the sale agreement will have been delivered to us and the trustee.

Amendment

     Each sale agreement may be amended by the parties thereto, if notice of the amendment is provided by us to each rating agency and the rating agency condition has been satisfied, with the consent of the trustee and, with respect to amendments that would increase ongoing financing costs, the consent or deemed consent of the Louisiana commission. If any such amendment would adversely affect the interest of any storm recovery bondholder in any material respect, the consent of the holders of a majority of each affected tranche or series of storm recovery bonds is also required.

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THE SERVICING AGREEMENT

     The following summary describes the material terms and provisions of each servicing agreement pursuant to which the servicer will undertake to service the storm recovery property. This summary does not purport to be complete and is qualified by reference to the provisions of the applicable servicing agreement. We have filed the form of the servicing agreement with the SEC as an exhibit to the registration statement of which this prospectus forms a part.

Servicing Procedures

     General. The servicer, as our agent, will manage, service, administer and make collections in respect of the related storm recovery property. The servicer’s duties will include:

• calculating and billing the related storm recovery charges,

• collecting and remitting to the trustee the storm recovery charges,

• responding to inquiries from customers, the Louisiana commission or any federal, local or other state governmental authority with respect to the related storm recovery property and related storm recovery charges,

• accounting for collected storm recovery charges and late-payment penalties, investigating and resolving delinquencies, processing and depositing collections, making periodic remittances to the trustee and furnishing periodic reports to us, the trustee, the Louisiana commission and the rating agencies,

• monitoring customer payments of storm recovery charges,

• notifying each customer of any defaults in its payment obligations and other obligations (including its credit standards), and enforcing against such customer at the earliest date permitted any remedies provided by applicable law,

• making all filings with the Louisiana commission and taking all other actions necessary to perfect our ownership interests in and the trustee’s lien on the related storm recovery property and other collateral,

• selling, as our agent, defaulted or written-off accounts in accordance with the servicer’s usual and customary practices,

• taking action in connection with true-up adjustments to the related storm recovery charges and allocation of the charges among various classes of customers as described below, and

• any other duties specified for a servicer under applicable law.

     Please read “Cleco Power’s Financing Order” in this prospectus. The servicer is required to notify us, the trustee, the Louisiana commission and the rating agencies in writing of any laws or Louisiana commission regulations promulgated after the execution of the applicable servicing agreement that have a material adverse effect on the servicer’s ability to perform its duties under that servicing agreement. The servicer is also authorized to execute and deliver documents and to make filings and participate in proceedings on our behalf.

     In each servicing agreement, the servicer will agree, among other things, that, in servicing the related storm recovery property, except where the failure to comply with any of the following would not materially adversely affect our or the trustee’s respective interests in the related storm recovery property:

• it will manage, service, administer and make collections in respect of the related storm recovery property with reasonable care and in material compliance with applicable laws and regulations, including all applicable Louisiana commission regulations and guidelines, using the same degree of care and diligence that the servicer exercises with respect to similar assets for its own account,

• it will follow standards, policies and practices in performing its duties as servicer that are customary in the electric transmission and distribution industry or that the Louisiana commission has mandated and consistent with the terms of the applicable financing order, tariffs and existing law,

• it will use all reasonable efforts, consistent with its customary servicing procedures, to enforce and maintain the trustee’s and our rights in respect of the related storm recovery property,

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• it will calculate the related storm recovery charges and the allocation of storm recovery charges among customer classes in compliance with the Securitization Act, the applicable financing order, any Louisiana commission order related to storm recovery charge allocation and any applicable tariffs,

• it will use all reasonable efforts consistent with its customary servicing procedures to collect all amounts owed in respect of the related storm recovery property as they become due,

• it will make all filings required under the applicable Uniform Commercial Code or the Securitization Act to maintain the perfected security interest of the trustee in the collateral and use all reasonable efforts to otherwise enforce and maintain the trustee’s rights in respect of the related storm recovery property and the collateral,

• it will petition the Louisiana commission for adjustments to the related storm recovery charges and allocation of the charges among customer classes that the servicer determines to be necessary in accordance with the applicable financing order, and

• it will keep on file, in accordance with customary procedures, all documents pertaining to the related storm recovery property and will maintain accurate and complete accounts, records and computer systems pertaining to the related storm recovery property.

     The duties of the servicer set forth in each servicing agreement are qualified by any Louisiana commission regulations or orders in effect at the time those duties are to be performed.

     Servicer Obligation to Undertake Legal Action. The servicer is required to institute any action or proceeding reasonably necessary to compel performance by any party of any of their respective obligations or duties under the Securitization Act or the applicable financing order, as the case may be, with respect to the related storm recovery property. The costs of any such actions or proceedings would be reimbursed by us to the servicer from amounts on deposit in the collection account as an operating expense in accordance with the terms of the indenture. The servicer’s obligations pursuant to this covenant survive and continue notwithstanding that the payment of operating expenses pursuant to the indenture may be delayed.

     Remittances to the Trustee. The servicer will remit storm recovery charges to us or the trustee each business day based on estimated daily collections, using a weighted average balance of days outstanding on the Cleco Power’s retail bills. The collections remitted daily will represent the estimated charges per the servicing agreement. The summation of those individual charges on a daily basis will be remitted to us on each business day, net of considerations of the timing lag between billing and collection, and as further adjusted for uncollectible amounts. For example, if the Cleco Power’s retail bills are outstanding, on a weighted average basis for a period of 37 days, then the servicer will remit to us the storm recovery charges billed on a particular date, less an assumed write-off rate, 37 days thereafter. As set forth in the servicing agreement, the servicer would include in this remittance an allowance for the estimated charged-off amount based on the prior annual period. The servicing agreement also provides for an annual reconciliation of estimated remittances (including the estimated charged-off amount) with actual collections of the storm recovery charges.

Storm Recovery Charge Adjustment Process

     Semi-Annual True-Ups. Among other things, each servicing agreement will require the servicer to file true-up adjustment requests semi-annually (or quarterly during the period between the expected final maturity and the legal final maturity of the last bond tranche or class) to correct any under-collections or over-collections during the preceding six months and to ensure the expected recovery of amounts sufficient to provide timely payment of principal and interest on the related series of storm recovery bonds and all other financing costs. For more information on the true-up process, please read “Cleco Power’s Financing Order—True-Ups.” These adjustment requests are to be based on actual collected storm recovery charges and updated assumptions by the servicer as to projected future usage during the next period, expected delinquencies and write-offs and future payments and expenses relating to the applicable storm recovery property and the related series of storm recovery bonds. The servicer agrees to calculate these adjustments to result in:

• the correction of any under-collection or over-collection calculated over a period of up to 12 months

• the storm recovery bond balance equaling the projected storm recovery bond balance and the aggregate reimbursement amount due and owing for the preceding calendar year,

• the replenishment of any amounts drawn from the related capital subaccount, and

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• amortization of the remaining outstanding principal amount in accordance with the expected amortization schedule and payment of interest when due.

     In each servicing agreement, the servicer will agree to file adjustment requests on each calculation date for us as specified in the servicing agreement. In accordance with the applicable financing order, the Louisiana commission has 15 days to approve the adjustments. Any adjustment to the allocation of storm recovery charges must be filed with the Louisiana commission at least 15 days before the date the proposed adjustment will become effective. The Louisiana commission must enter a final order by the proposed adjustment date stated in the filing. The adjustments to the storm recovery charges are expected to occur on each adjustment date. Adjustments to the storm recovery charges will cease with respect to each series of storm recovery bonds on the final adjustment date specified in the prospectus supplement for that series.

     Interim True-Ups. In addition to the annual adjustment process, the servicer will be required under each servicing agreement to seek an interim true-up adjustment with respect to a series of storm recovery bonds more frequently during the term of the bonds to correct any undercollection or overcollection, as provided in the financing order, in order to assure timely payment of storm recovery bonds based on rating agency and bondholder considerations. The servicing agreement also requires the servicer to make mandatory interim true-up adjustments quarterly during the period between the expected final maturity and the legal final maturity of the last bond tranche or class if the servicer forecasts that storm recovery charge collections will be insufficient to make all scheduled payments of principal, interest and other amounts in respect of the storm recovery bonds during the current or next succeeding quarterly period and to replenish any draws upon the capital subaccount.

     In addition to the semi-annual true-up adjustment, the servicer may file for a non-standard true-up adjustment (under such procedures as shall be proposed by the servicer and approved by the Louisiana commission at the time) that it deems necessary or appropriate to address any material deviations between storm recovery charge collections and the periodic revenue requirement. No such change shall cause any of the then-current credit ratings of the storm recovery bonds to be suspended, withdrawn or downgraded.

Servicer Compensation

     The servicer will be entitled to receive an aggregate annual servicing fee for all series outstanding in an amount equal to:

• 0.05% of the aggregate initial principal amount of all outstanding storm recovery bonds, for so long as the servicer remains Cleco Power or any of its permitted successors or assigns or an affiliate (allocated among all outstanding series of storm recovery bonds pro rata based on outstanding principal amount), or

• an amount agreed upon by the successor servicer and the trustee, but, unless the Louisiana commission consents, not more than 0.60% of the aggregate initial principal amount of all outstanding storm recovery bonds if Cleco Power, any permitted successor or assign or an affiliate is not the servicer (allocated among all outstanding storm recovery bonds pro rata based on outstanding principal amount).

     The servicing fee will be paid semi-annually with respect to each series of storm recovery bonds, with half of the annual servicing fee being paid on each semi-annual payment date. The servicing fee for each series of storm recovery bonds, together with any portion of the servicing fee that remains unpaid from prior payment dates, will be paid solely to the extent funds are available therefor as described under “The Storm Recovery Bonds—How Funds in the Collection Account Will Be Allocated” in this prospectus. The servicing fee for each series of storm recovery bonds will be paid prior to the payment of or provision for any amounts in respect of interest on and principal of that series of storm recovery bonds. As long as Cleco Power is the servicer, the Louisiana commission may adjust Cleco Power’s rates to take into account the extent, if any, by which its servicing fees exceed its actual incremental costs in servicing the storm recovery bonds.

Cleco Power’s Representations and Warranties as Servicer

     In each servicing agreement, the servicer will represent and warrant to us and the Louisiana commission (for the benefit of customers), as of the issue date of the related series of bonds, among other things, that:

• the servicer is duly organized, validly existing and in good standing under the laws of the state of its organization (which is Louisiana, when Cleco Power is the servicer), with the limited liability company or corporate, as the case may be, power and authority to conduct its business as presently conducted and to execute, deliver and carry out the terms of the servicing agreement and has the power, authority and legal right to service the storm recovery property,

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• the servicer is duly qualified to do business and is in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which it is required to do so (except where such failure would not be reasonably likely to have a material adverse effect on its business, operations or properties or adversely affect the servicing of the storm recovery property),

• the servicer’s execution, delivery and performance of the servicing agreement have been duly authorized by the servicer by all necessary limited liability company or corporate, as the case may be, action,

• the servicing agreement constitutes a legal, valid and binding obligation of the servicer, enforceable against the servicer in accordance with its terms, subject to customary exceptions relating to bankruptcy, receivership, insolvency, reorganization, moratorium and equitable principles (regardless of whether considered in a proceeding in equity or at law),

• the consummation of the transactions contemplated by the servicing agreement will not conflict with, or result in any breach of, the terms and provisions of nor constitute a default under the servicer’s limited liability company operating agreement or articles of organization, by-laws, or any material indenture as the case may be, or any material agreement to which the servicer is a party or by which it is bound or result in the creation or imposition of any lien upon the servicer’s properties (other than any lien that may be granted under the basic documents or any lien created pursuant to Section 1231 of the Securitization Act) or violate any law or any existing order, rule or regulation applicable to the servicer,

• except for the issuance advice letter and filings with the Louisiana commission for adjusting the amount and allocation of the related storm recovery charges and filings under the Uniform Commercial Code and under the Securitization Act, no governmental approvals, authorizations, consents, orders or other actions or filings are required for the servicer to execute, deliver and perform its obligations under the servicing agreement, except those that have previously been obtained or made,

• except as disclosed in this prospectus or the prospectus supplement, there are no proceedings pending and, to the servicer’s knowledge, there are no proceedings threatened before any court, federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the servicer or its properties:

• seeking any determination or ruling that might materially and adversely affect the performance by the servicer of its obligations under, or the validity or enforceability against the servicer of, the servicing agreement,

• relating to the servicer and that might materially and adversely affect the federal or state income, gross receipts or franchise tax attributes of the related series of storm recovery bonds, or

• seeking to prevent the issuance of the related series of storm recovery bonds or the consummation of any of the transactions contemplated by the servicing agreement or any other underlying agreement,

• each report and certificate delivered in connection with any filing made with the Louisiana commission by the servicer on our behalf with respect to related storm recovery charges or periodic adjustments will constitute a representation and warranty by the servicer that such report or certificate, as the case may be, is true and correct in all material respects; to the extent that such report is based upon or contains assumptions, forecasts or other predictions of future events, the representation and warranty of the servicer with respect thereto will be limited to the representation and warranty that such assumptions, forecasts or other predictions of future events are reasonable based upon historical performance and the facts known to the servicer on the date such report or certificate is delivered.

     The servicer is not responsible for any ruling, action or delay of the Louisiana commission, except those caused by the servicer’s failure to file required applications in a timely and correct manner or other breach of its duties under such servicing agreement. The servicer also is not liable for the calculation of the storm recovery charges and adjustments, including any inaccuracy in the assumptions made in the calculation, so long as the servicer has acted in good faith and has not acted in a grossly negligent manner.

The Servicer Will Indemnify Us, Other Entities and the Louisiana Commission in Limited Circumstances

     Under each servicing agreement, the servicer will agree to indemnify, defend and hold harmless us, the trustee, for itself and on behalf of the storm recovery bondholders of the related series, and related parties specified in the servicing agreement, including our managers, against any costs, expenses, losses, damages and liabilities of any kind whatsoever that may be imposed upon, incurred by or asserted against any of those persons as a result of:

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• the servicer’s willful misconduct, bad faith or negligence in the performance of, or reckless disregard of, its duties or observance of its covenants under the servicing agreement,

• the servicer’s breach of any of its representations or warranties under the servicing agreement, and

• litigation and related expenses relating to its status and obligations as servicer (other than any proceedings the servicer is required to institute under the servicing agreement).

     The servicer will not be liable to any such party, however, for any liabilities, obligations, losses, damages, payments or claims, or reasonable costs or expenses, resulting from the willful misconduct, bad faith or gross negligence of the party seeking indemnification.

     In addition, the servicer will agree to indemnify the Louisiana commission (on behalf of customers) in connection with any increase in servicing fees as described under “—Servicer Compensation” if that increase is the result of a servicer default arising out of the servicer’s willful misconduct, bad faith or negligence in performance of its duties or observance of its covenants under the applicable servicing agreement. Any such indemnity payments made to the Louisiana commission (on behalf of customers) will be remitted to the trustee promptly for deposit in the applicable collection account. The servicer’s obligation to indemnify the Louisiana commission (on behalf of customers) will survive the termination of the servicing agreement.

     In each servicing agreement, the servicer will release us, our managers and the trustee from any and all claims whatsoever relating to the applicable storm recovery property or the servicer’s servicing activities with respect thereto, other than actions, claims, and demands arising from bad faith, willful misconduct or negligence of the parties.

     The Louisiana commission, acting through its authorized legal representative, may enforce the servicer’s obligations imposed pursuant to the financing order for the benefit of ratepayers to the extent permitted by law.

The Servicer Will Provide Statements to Us, the Louisiana Commission and the Trustee

     For each calculation date for a series of storm recovery bonds, which will be either 15 or 90 days before each annual true-up filing is made by the servicer with the Louisiana commission, the servicer will provide to us, the Louisiana commission and the trustee a statement indicating, with respect to the storm recovery property sold pursuant to the related sale agreement, among other things:

• the storm recovery bond balance and the projected storm recovery bond balance for that series as of the immediately preceding payment date,

• the amount on deposit in the capital subaccount for that series and the amount required to be on deposit in the capital subaccount for that series as of the immediately preceding payment date,

• the amount on deposit in the excess funds subaccount for that series as of the immediately preceding payment date,

• the projected storm recovery bond balance for that series on the calculation date and the servicer’s projection of the storm recovery bond balance for that series on the payment date immediately preceding the next succeeding adjustment date,

• the required capital subaccount balance for that series and the servicer’s projection of the amount on deposit in the capital subaccount for that series for the payment date immediately preceding the next succeeding adjustment date, and

• the servicer’s projection of the amount on deposit in the excess funds subaccount for that series for the payment date immediately preceding the next succeeding adjustment date.

     The servicer will prepare and furnish to us, the Louisiana commission and the trustee a statement setting forth the aggregate amount remitted or to be remitted by the servicer to the trustee on or before each such remittance. In addition, on or before each payment date, the servicer will prepare and furnish to us and the trustee a statement setting forth the transfers and payments to be made on that payment date and the amounts thereof. Further, on or before each payment date for each series of storm recovery bonds, the servicer will prepare and furnish to us, the Louisiana commission and the trustee a statement setting

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forth the amounts to be paid to the holders of the storm recovery bonds of that series. The trustee will forward to the bondholders of the related series of storm recovery bonds on each payment date such report prepared by the servicer.

The Servicer Will Provide Compliance Reports Concerning the Servicing Agreement

     Each servicing agreement will provide that a firm of independent certified public accountants at our expense will furnish to us, the Louisiana commission, the trustee and the rating agencies, on or before March 31st of each year, beginning March 31, 2008, a statement as to compliance by the servicer during the preceding twelve months ended December 31, 2007, or the relevant portion thereof, with procedures relating to the servicing of applicable storm recovery property. This report, which is referred to in this prospectus as the “annual accountant’s report,” will state that the accounting firm has performed a review of the servicer’s compliance with the servicing obligations of the applicable servicing agreement, identifying the results of the procedures and including any exceptions noted. The annual accountant’s report will also indicate that the accounting firm providing the report is independent of the servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants. In addition, the report will include an attestation report that attests to, and reports on, the assessment made by the servicer as to its compliance with the servicing criteria set forth in (d) of Item 1122 of Regulation AB. Each servicing agreement also will provide for delivery to us, the Louisiana commission and the trustee, on or before March 31st of each year, a certificate signed by an officer of the servicer. This certificate will state that to the best of such officer’s knowledge, the servicer has fulfilled its obligations under the servicing agreement for the preceding twelve months, or the relevant portion thereof, or, if there has been a default in the fulfillment of any relevant obligation, stating that there has been a default and describing each default. The servicer has agreed to give us, each rating agency and the trustee written notice of any servicer default under the servicing agreement.

     Copies of the above reports will be filed with the Louisiana commission. You may also obtain copies of the above statements and certificates by sending a written request addressed to the trustee.

Matters Regarding Cleco Power as the Servicer

     Each servicing agreement will provide that Cleco Power may not resign from the obligations and duties imposed on it as servicer unless Cleco Power delivers an opinion of independent legal counsel that the performance of its duties under the servicing agreement shall no longer be permissible under applicable law. Written notice of any such determination will be communicated to us, the trustee, the Louisiana commission and each rating agency at the earliest practicable time and shall be evidenced by an opinion of counsel. A resignation by Cleco Power as servicer will not become effective until a successor servicer has assumed the servicing obligations and duties of Cleco Power under the servicing agreement.

     Except as expressly provided in each servicing agreement, neither the servicer, nor any of its directors, officers, employees and agents will be liable to us, our managers, the trustee, you or any other person for any action taken or for refraining from taking any action pursuant to the servicing agreement or for errors in judgment. However, the servicer, its directors, officers, employees, and agents will be liable to the extent this liability is imposed by reason of their willful misconduct, bad faith or negligence in the performance of their duties. The servicer and any of its directors, officers, employees or agents may rely in good faith on the advice of counsel reasonably acceptable to the trustee or on any document submitted by any person respecting any matters under the servicing agreement. In addition, each servicing agreement will provide that the servicer is under no obligation to appear in, prosecute, or defend any legal action, except as provided in the servicing agreement.

     Under each servicing agreement, any person:

• into which the servicer may be merged, converted or consolidated and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of Cleco Power’s customers),

• which results from the division of the servicer into two or more persons and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in Cleco Power’s service territory),

• which may result from any merger, conversion or consolidation to which the servicer shall be a party and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the

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	transmission and distribution business is split, which provides distribution services directly to a majority of the customers in Cleco Power’s service territory),
•	which may purchase or otherwise succeed to the properties and assets of the servicer substantially as a whole and which purchases or succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in Cleco Power’s service territory), or
•	which may otherwise purchase or succeed to the major part of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in Cleco Power’s service territory),

will be the successor of the servicer under the servicing agreement.

     Each servicing agreement will further require that:

• immediately after giving effect to any transaction referred to above, the representations and warranties made by the servicer in the servicing agreement will be true and correct and no servicer default, and no event which, after notice of, lapse of time or both, would become a servicer default, will have occurred and be continuing,

• the successor to the servicer must execute an agreement of assumption to perform every obligation of the servicer under the servicing agreement,

• officers’ certificates and opinions of counsel will have been delivered to us, the Louisiana commission and the trustee stating that the transaction referred to above complies with the servicing agreement and all conditions to transfer under the servicing agreement,

• prior written notice will have been received by the Louisiana commission and rating agencies, and

• the servicer has delivered to the issuing entity, the Louisiana commission, the trustee and the rating agencies a no material adverse tax change opinion of independent tax counsel regarding such transfer.

     So long as the conditions of any such assumptions are met, then the prior servicer will automatically be released from its obligations under the servicing agreement. Each servicing agreement will permit the servicer to appoint any person to perform any or all of its obligations under the servicing agreement. However, unless the appointed person is an affiliate of Cleco Power, the appointment must satisfy the rating agency condition. In all cases where an agent is appointed, the servicer will remain obligated and liable under the servicing agreement.

Events Constituting a Default by the Servicer

     Servicer defaults under each servicing agreement will include, among other things:

• any failure by the servicer to remit to the trustee, on our behalf, any funds actually collected as part of the related storm-recovery property and required to be remitted pursuant to the servicing agreement that continues unremedied for five business days after written notice is received by the servicer and the Louisiana commission from us or from the trustee,

• any failure by the servicer to duly observe or perform in any material respect its obligations to make storm recovery charge adjustment filings in the time and manner set forth in the servicing agreement, which failure continues unremedied for a period of five business days,

• any failure by the servicer to duly observe or perform, in any material respect, any other covenant or agreement of the servicer set forth in the servicing agreement or any other basic document to which it is a party, which failure materially and adversely affects the applicable storm recovery property or the rights of the related bondholders and which continues unremedied for 60 days after written notice of this failure has been given to the servicer by us, the Louisiana commission or the trustee or after discovery of this failure by an officer of the servicer, as the case may be,

• any representation or warranty made by the servicer in the servicing agreement proves to have been incorrect when made, which has a material adverse effect on us or the bondholders and which continues unremedied for 60 days after written notice of this failure has been given to the servicer by us or the trustee or after discovery of this failure by an officer of the servicer, as the case may be, or

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• certain events of bankruptcy, insolvency or liquidation of the servicer.

The trustee, with the written consent of the holders of the majority of the outstanding principal amount of the storm recovery bonds of all affected series, may waive in whole or in part any default by the servicer, except a default in making any required remittances to the trustee.

The Trustee’s Rights if the Servicer Defaults

     In the event of a servicer default that remains unremedied, the trustee may, and upon the instruction of the holders of a majority of the outstanding principal amount of the storm recovery bonds of an affected series, must, by written notice to the servicer, terminate all the rights and obligations of the servicer under that servicing agreement, other than the servicer’s indemnification obligation and obligation to continue performing its functions as servicer until a successor servicer is appointed. Under each servicing agreement, the servicer’s indemnity obligations will survive its replacement as servicer. After the termination of the responsibilities and rights of the predecessor servicer as described above, the trustee will appoint a successor servicer who will succeed to all the rights and duties of the servicer under the applicable servicing agreement and will be entitled to similar compensation arrangements. The predecessor servicer shall cooperate with the successor servicer, the trustee and with us in effecting the termination of the responsibilities and rights of the predecessor servicer under the servicing agreement, including the transfer to the successor servicer for administration by it of all cash amounts that shall at the time be held by the predecessor servicer for remittance, or shall thereafter be received by it with respect to the storm-recovery property or the related storm-recovery charges.

     In addition, when a servicer defaults, the bondholders of the related series of storm recovery bonds (subject to the provisions of the indenture) and the trustee as beneficiary of any lien permitted by the Securitization Act will be entitled to (i) apply to the 19th Judicial District Court for the Parish of East Baton Rouge, Louisiana for sequestration and payment of revenues arising from the applicable storm recovery property, (ii) foreclose on or otherwise enforce the lien on and security interests in, any applicable storm recovery property and (iii) apply to the Louisiana commission for an order that amounts arising from the related storm recovery charges be transferred to a separate account for the benefit of the storm recovery bondholders of such series. Upon a servicer default based upon the commencement of a case by or against the servicer under the bankruptcy or insolvency laws, the trustee may be prevented from effecting a transfer of servicing. Please read “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer” and “How a Bankruptcy May Affect Your Investment” in this prospectus. The trustee may appoint, or petition a court of competent jurisdiction for the appointment of, a successor servicer which satisfies criteria specified by the rating agencies rating the storm recovery bonds of such series.

The Obligations of a Successor Servicer

     If for any reason a third party assumes the role of the servicer under the servicing agreement, the servicing agreement will require the predecessor servicer to cooperate with us, the trustee and the successor servicer in terminating the predecessor servicer’s rights and responsibilities under the servicing agreement, including the transfer to the successor servicer of all cash amounts then held by the predecessor servicer for remittance or subsequently acquired by the predecessor servicer. Each servicing agreement will provide that the predecessor servicer will be liable for all reasonable costs and expenses incurred in transferring servicing responsibilities to the successor servicer in the event the successor servicer is appointed as a result of a servicer default. In all other cases, those costs and expenses will be paid by the party incurring them. A successor servicer may resign only if it is prohibited from servicing by applicable law. The predecessor servicer is obligated, on an ongoing basis, to cooperate with us and the successor servicer and provide whatever information is, and take whatever actions are, reasonably necessary to assist the successor servicer in performing its obligations under the servicing agreement.

Amendment

     Each servicing agreement may be amended by the parties thereto, if the rating agency condition has been satisfied, with the prior written consent of the trustee and, with respect to amendments that would increase ongoing financing costs, the consent or deemed consent of the Louisiana commission. An amendment is subject to the objection of the Louisiana commission within the time periods and subject to the conditions set forth in the servicing agreement. We will notify the rating agencies promptly after the execution of any such amendment.

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HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT

     Challenge to True Sale Treatment. Cleco Power will represent and warrant that the transfer of the storm recovery property in accordance with the applicable sale agreement constitutes a true and valid sale and assignment of that storm recovery property by Cleco Power to us. It will be a condition of closing for the sale of storm recovery property pursuant to a sale agreement that Cleco Power will take the appropriate actions under the Securitization Act, including filing a notice of transfer of an interest in the storm recovery property, to perfect this sale. The Securitization Act provides that a transfer of storm recovery property by an electric utility to an assignee which the parties have in the governing documentation expressly stated to be a sale or other absolute transfer, in a transaction approved in a financing order, shall be treated as an absolute transfer of all the transferor’s right, title and interest, as in a “true sale” under applicable creditors’ rights principles, and not as a pledge or other financing, of the relevant storm recovery property. We and Cleco Power will treat such a transaction as a sale under applicable law. However, we expect that storm recovery bonds will be reflected as debt on Cleco Corporation’s consolidated financial statements. In addition, we anticipate that the storm recovery bonds will be treated as debt of Cleco Corporation for federal income tax purposes. See “The Securitization Act—Cleco Power and Other Utilities May Securitize Storm Recovery Costs and Related Financing and Ongoing Costs” and “Material Federal Income Tax Consequences for the Storm Recovery Bondholders.” In the event of a bankruptcy of a party to a sale agreement, if a party in interest in the bankruptcy were to take the position that the transfer of the storm recovery property to us pursuant to that sale agreement was a financing transaction and not a true sale under applicable creditors’ rights principles, there can be no assurance that a court would not adopt this position. Even if a court did not ultimately recharacterize the transaction as a financing transaction, the mere commencement of a bankruptcy of Cleco Power and the attendant possible uncertainty surrounding the treatment of the transaction could result in delays in payments on the storm recovery bonds.

     In that regard, we note that the bankruptcy court in In re: LTV Steel Company, Inc., et al., 274 B.R. 278 (Bankr. N. D. Oh. 2001) issued an interim order that observed that a debtor, LTV Steel Company, which had previously entered into securitization arrangements with respect both to its inventory and its accounts receivable may have “at least some equitable interest in the inventory and receivables, and that this interest is property of the Debtor’s estate... sufficient to support the entry of” an interim order permitting the debtor to use proceeds of the property sold in the securitization. 274 B.R. at 285. The court based its decision in large part on its view of the equities of the case.

     LTV and the securitization investors subsequently settled their dispute over the terms of the interim order and the bankruptcy court entered a final order in which the parties admitted and the court found that the pre-petition transactions constituted “true sales.” The court did not otherwise overrule its earlier ruling. The LTV memorandum opinion serves as an example of the pervasive equity powers of bankruptcy courts and the importance that such courts may ascribe to the goal of reorganization, particularly where the assets sold are integral to the ongoing operation of the debtor’s business.

     We and Cleco Power have attempted to mitigate the impact of a possible recharacterization of a sale of storm recovery property as a financing transaction under applicable creditors’ rights principles. Each sale agreement will provide that if the transfer of the applicable storm recovery property is thereafter recharacterized by a court as a financing transaction and not a true sale, the transfer by Cleco Power will be deemed to have granted to us on behalf of ourselves and the trustee a first priority security interest in all Cleco Power’s right, title and interest in and to the storm recovery property and all proceeds thereof. In addition, each sale agreement will require the filing of a notice of security interest in the related storm recovery property and the proceeds thereof in accordance with the Securitization Act. As a result of this filing, we would be a secured creditor of Cleco Power and entitled to recover against the collateral or its value. This does not, however, eliminate the risk of payment delays or reductions and other adverse effects caused by a Cleco Power bankruptcy. Further, if, for any reason, a storm recovery property notice is not filed under the Securitization Act or we fail to otherwise perfect our interest in the storm recovery property, and the transfer is thereafter deemed not to constitute a true sale, we would be an unsecured creditor of Cleco Power.

     The Securitization Act provides that the creation, granting, perfection and enforcement of liens and security interests in storm recovery property are governed by the Securitization Act and not by the Louisiana Uniform Commercial Code. Under the Securitization Act, a valid and enforceable lien and security interest in storm recovery property may be created only by a financing order issued under the Securitization Act and the execution and delivery of a security agreement with a holder of storm recovery bonds or a trustee or agent for the holder. The security interest attaches automatically from the time value is received for the storm recovery bonds. Upon perfection through the filing of notice with the Secretary of State of Louisiana pursuant to rules established by the Secretary of State of Louisiana, the security interest shall be a continuously perfected lien and security interest in the storm recovery property, with priority in the order of filing and take precedence over any

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subsequent judicial or other lien creditor. If this notice is filed within ten days after value is received for a series of storm recovery bonds, the security interest will be perfected retroactive to the date value was received, otherwise, the security interest will be perfected as of the date of filing.

     None of this, however, mitigates the risk of payment delays and other adverse effects caused by a Cleco Power bankruptcy. Further, if, for any reason, a storm recovery property notice is not filed under the Securitization Act or we fail to otherwise perfect our interest in the storm recovery property sold pursuant to a sale agreement, and the transfer is thereafter deemed not to constitute a true sale, we would be an unsecured creditor of Cleco Power.

     Consolidation of the Issuing Entity and Cleco Power. If Cleco Power were to become a debtor in a bankruptcy case, a party in interest might attempt to substantively consolidate the assets and liabilities of Cleco Power and us. We and Cleco Power have taken steps to attempt to minimize this risk. Please read “Cleco Katrina/Rita Hurricane Recovery Funding LLC, The Issuing Entity” in this prospectus. However, no assurance can be given that if Cleco Power were to become a debtor in a bankruptcy case, a court would not order that our assets and liabilities be substantively consolidated with those of Cleco Power. Substantive consolidation would result in payment of the claims of the beneficial owners of the storm recovery bonds to be subject to substantial delay and to adjustment in timing and amount under a plan of reorganization in the bankruptcy case.

     Status of Storm Recovery Property as Current Property. Cleco Power will represent in each sale agreement, and the Securitization Act provides, that the storm recovery property sold pursuant to such sale agreement constitutes a present contract right. Nevertheless, no assurance can be given that, in the event of a bankruptcy of Cleco Power, a court would not rule that the applicable storm recovery property comes into existence only as Cleco Power’s customers use electricity.

     If a court were to accept the argument that the applicable storm recovery property comes into existence only as Cleco Power’s customers use electricity, no assurance can be given that a security interest in favor of the bondholders of the related series of storm recovery bonds would attach to the related storm recovery charges in respect of electricity consumed after the commencement of the bankruptcy case or that the applicable storm recovery property has been sold to us. If it were determined that the applicable storm recovery property had not been sold to us, and the security interest in favor of the storm recovery bondholders of the related series did not attach to the applicable storm recovery charges in respect of electricity consumed after the commencement of the bankruptcy case, then we would have an unsecured claim against Cleco Power. If so, there would be delays and/or reductions in payments on the storm recovery bonds of such series. Whether or not a court determined that storm recovery property had been sold to us pursuant to a sale agreement, no assurances can be given that a court would not rule that any storm recovery charges relating to electricity consumed after the commencement of the bankruptcy could not be transferred to us or the trustee.

     In addition, in the event of a bankruptcy of Cleco Power, a party in interest in the bankruptcy could assert that we should pay, or that we should be charged for, a portion of Cleco Power’s costs associated with the electricity, consumption of which gave rise to the storm recovery charge receipts used to make payments on the storm recovery bonds.

     Regardless of whether Cleco Power is the debtor in a bankruptcy case, if a court were to accept the argument that storm recovery property sold pursuant to the applicable sale agreement comes into existence only as customers use electricity, a tax or government lien or other nonconsensual lien on property of Cleco Power arising before that storm recovery property came into existence could have priority over our interest in that storm recovery property. Adjustments to the storm recovery charges may be available to mitigate this exposure, although there may be delays in implementing these adjustments.

     Estimation of Claims; Challenges to Indemnity Claims. If Cleco Power were to become a debtor in a bankruptcy case, claims, including indemnity claims, by us or the trustee against Cleco Power as seller under the applicable sale agreement and the other documents executed in connection therewith would be unsecured claims and would be subject to being discharged in the bankruptcy case. In addition, a party in interest in the bankruptcy may request that the bankruptcy court estimate any contingent claims that we or the trustee have against Cleco Power. That party may then take the position that these claims should be estimated at zero or at a low amount because the contingency giving rise to these claims is unlikely to occur. If a court were to hold that the indemnity provisions were unenforceable, we would be left with a claim for actual damages against Cleco Power based on breach of contract principles. The actual amount of these damages would be subject to estimation and/or calculation by the court.

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     No assurances can be given as to the result of any of the above-described actions or claims. Furthermore, no assurance can be given as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving Cleco Power.

     Enforcement of Rights by the Trustee. Upon an event of default under the indenture, the Securitization Act permits the trustee to enforce the security interest in the storm recovery property sold pursuant to the applicable sale agreement in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the Louisiana commission or the 19th Judicial District Court for the Parish of East Baton Rouge, Louisiana to order the sequestration and payment to holders of storm recovery bonds of all revenues arising from the applicable storm recovery charges. There can be no assurance, however, that the Louisiana commission or a district court judge would issue this order after a seller bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee may under the indenture seek an order from the bankruptcy court lifting the automatic stay with respect to this action by the Louisiana commission or a district court judge and an order requiring an accounting and segregation of the revenues arising from the storm recovery property sold pursuant to the applicable sale agreement. There can be no assurance that a court would grant either order.

     Bankruptcy of the Servicer. The servicer is entitled to commingle the storm recovery charges that it receives with its own funds until each date on which the servicer is required to remit funds to the trustee as specified in the applicable servicing agreement. The Securitization Act provides that the relative priority of a lien created under the Securitization Act is not defeated or adversely affected by the commingling of storm recovery charges arising with respect to the related storm recovery property with funds of the electric utility. In the event of a bankruptcy of the servicer, a party in interest in the bankruptcy might assert, and a court might rule, that the storm recovery charges commingled by the servicer with its own funds and held by the servicer, prior to and as of the date of bankruptcy were property of the servicer as of that date, and are therefore property of the servicer’s bankruptcy estate, rather than our property. If the court so rules, then the court would likely rule that the trustee has only a general unsecured claim against the servicer for the amount of commingled storm recovery charges held as of that date and could not recover the commingled storm recovery charges held as of the date of the bankruptcy.

     However the court rules on the ownership of the commingled storm recovery charges, the automatic stay arising upon the bankruptcy of the servicer could delay the trustee from receiving the commingled storm recovery charges held by the servicer as of the date of the bankruptcy until the court grants relief from the stay. A court ruling on any request for relief from the stay could be delayed pending the court’s resolution of whether the commingled storm recovery charges are our property or are property of the servicer, including resolution of any tracing of proceeds issues.

     Each servicing agreement will provide that the trustee, as our assignee, together with the other persons specified therein, may vote to appoint a successor servicer that satisfies the rating agency condition. Each servicing agreement will also provide that the trustee, together with the other persons specified therein, may petition the Louisiana commission or a court of competent jurisdiction to appoint a successor servicer that meets this criterion. However, the automatic stay in effect during a servicer bankruptcy might delay or prevent a successor servicer’s replacement of the servicer. Even if a successor servicer may be appointed and may replace the servicer, a successor may be difficult to obtain and may not be capable of performing all of the duties that Cleco Power as servicer was capable of performing. Furthermore, should the servicer enter into bankruptcy, it may be permitted to stop acting as servicer.

     Bankruptcy of Cleco Power. Cleco Power is not required to segregate the storm recovery charges it collects from its general funds. The Securitization Act provides that our rights to storm recovery property are not affected by the commingling of these funds with other funds. In a bankruptcy of Cleco Power, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Securitization Act and does not recognize our right to receive the collected storm recovery charges that are commingled with other funds of Cleco Power prior to or as of the date of bankruptcy, including storm recovery charges associated with other series of storm recovery bonds. If so, the collected storm recovery charges held by Cleco Power as of the date of bankruptcy would not be available to us to pay amounts owing on the storm recovery bonds. In this case, we would have only a general unsecured claim against Cleco Power for those amounts.

     In addition, the bankruptcy of Cleco Power may cause a delay in or prohibition of enforcement of various rights against Cleco Power, including rights to require payments by Cleco Power, rights to retain preferential payments made by Cleco Power prior to bankruptcy, rights to require Cleco Power to comply with financial provisions of the Securitization Act or other state laws, rights to terminate contracts with Cleco Power and rights that are conditioned on the bankruptcy, insolvency or financial condition of Cleco Power.

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     Other risks relating to bankruptcy may be found in “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer.”

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MATERIAL FEDERAL INCOME TAX CONSEQUENCES FOR THE STORM RECOVERY BONDHOLDERS

General

     The following is a summary of the material federal income tax consequences to storm recovery bondholders and is based on the opinion of Phelps Dunbar, L.L.P., special federal income tax counsel to us and to Cleco Power, referred to in this prospectus as special tax counsel. Special tax counsel is of the opinion that the description of material federal income tax consequences in this summary is accurate in all material respects. The opinion of special tax counsel is based on some assumptions and is limited by some qualifications stated in this discussion or in the opinion. This discussion is based on current provisions of the Internal Revenue Code, currently applicable Treasury Regulations and judicial and administrative rulings and decisions. Legislative, judicial or administrative changes could alter or modify the statements and conclusions in this discussion. Any legislative, judicial or administrative changes or new interpretations may be retroactive and could affect tax consequences to storm recovery bondholders.

     This discussion applies to storm recovery bondholders who acquire storm recovery bonds at original issue for cash equal to the issue price of those bonds and hold the bonds as capital assets. This discussion does not address all of the tax consequences relevant to a particular storm recovery bondholder in light of that holder’s circumstances, and some storm recovery bondholders may be subject to special tax rules and limitations not discussed below (e.g., life insurance companies, tax-exempt organizations, financial institutions, dealers in securities, S corporations, taxpayers subject to the alternative minimum tax provisions of the Internal Revenue Code, broker-dealers and persons who hold the storm recovery bonds as part of a hedge, straddle, “synthetic security” or other integrated investment, risk reduction or constructive sale transaction). Except as described below, this discussion also does not address the tax consequences to nonresident aliens, foreign corporations, foreign partnerships or foreign trusts that are subject to U.S. federal income tax on a net basis on income with respect to the storm recovery bonds because that income is effectively connected with the conduct of a U.S. trade or business. In addition, except as described below, this discussion does not address any tax consequences under state, local or foreign tax laws. Consequently, you should consult your tax adviser to determine the federal, state, local and foreign income and any other tax consequences of the purchase, ownership and disposition of the storm recovery bonds.

Income Tax Status of the Storm Recovery Bonds and the Issuing Entity

     Based upon guidance from the IRS and certain representations from us, including a representation by us that we will not make, or allow there to be made, any election to the contrary, special tax counsel has rendered its opinion that for U.S. federal income tax purposes we will not be considered an entity separate from Cleco Corporation and the storm recovery bonds will be treated as debt obligations of Cleco Corporation.

Taxation of Storm Recovery Bondholders

     Based on the assumptions and subject to the qualifications stated herein, it is the opinion of special tax counsel that the material federal income tax consequences to storm recovery bondholders are as follows:

Definition of United States Person

     For purposes of the discussion below, a United States person is:

• an individual who is a citizen or resident of the United States for U.S. federal income tax purposes,

• a corporation, including an entity treated as a corporation, created or organized in or under the laws of the United States, or any state, including the District of Columbia, or any political subdivision thereof,

• an estate, the net income of which is subject to United States federal income taxation regardless of its source, or

• a trust, if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust or if the trust has a valid election in effect under applicable Treasury regulations to be treated as a United States person.

     A U.S. holder means a storm recovery bondholder that is a United States person. Except in the case of a partnership, a non-U.S. holder means a storm recovery bondholder other than a U.S. holder. In the case of a storm recovery bondholder that is a

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partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes), the tax consequences will generally affect the partners rather than the partnership, but special considerations not set forth herein may apply.

Tax Consequences to U.S. Holders

     Payments of Interest. Interest on the storm recovery bonds will be taxable as ordinary income when received or accrued by U.S. holders, depending upon their method of accounting. Generally, interest on the storm recovery bonds will constitute “investment income” for purposes of Internal Revenue Code limitations on the deductibility of investment interest expense.

     Original Issue Discount. This discussion assumes that the storm recovery bonds will not be considered to be issued with original issue discount (“OID”). OID is generally defined as any excess of the stated price the U.S. holder will receive upon redemption of the bond at the bond’s maturity, less the price the U.S. holder pays to purchase the bond, if this difference is equal to or greater than a de minimis amount (such de minimis amount being defined as 0.25% of a bond’s stated redemption price at maturity multiplied by the number of complete years until the bond’s maturity date multiplied by a fraction, the numerator of which is the amount of the payment and the denominator of which is the debt instrument’s stated redemption price at maturity). If the storm recovery bonds are issued with OID, U.S. holders generally will be subject to the special tax accounting rules for OID obligations provided under the applicable Internal Revenue Code and Treasury Regulations provisions. U.S. holders of storm recovery bonds issued with OID should be aware that they generally must include OID in income for U.S. federal income tax purposes as it accrues economically, on a day-by-day basis, even if the U.S. holders do not actually receive cash distributions related to that income until a later date. If any series or portion of storm recovery bonds is issued with OID, prospective U.S. holders will be so informed in the related prospectus supplement, and should thereafter consult their tax adviser to determine the federal, state, local and foreign income and any other tax consequences

     Sale or Other Taxable Disposition of the Storm Recovery Bonds. If there is a sale, exchange, redemption, retirement or other taxable disposition of a storm recovery bond, a U.S. holder generally will recognize gain or loss equal to the difference between (a) the amount of cash and the fair market value of any other property received (other than amounts attributable to, and taxable as, accrued stated interest) and (b) the holder’s adjusted tax basis in the storm recovery bond. The adjusted tax basis in the storm recovery bond generally will equal its cost, reduced by any payments reflecting principal previously received with respect to the bond. Gain or loss generally will be capital gain or loss if the storm recovery bond is held as a capital asset.

     Backup Withholding. Payments made on and proceeds from the sale of a storm recovery bond may be subject to backup withholding unless a U.S. holder complies with certain identification requirements. Any amounts withheld from a payment to a U.S. holder will be allowed as a credit against such U.S. holder’s federal income tax liability, provided that the required information is timely furnished to the IRS.

Tax Consequences to Non-U.S. Holders

     Withholding. Under present U.S. federal income tax law, and subject to the discussion below concerning backup withholding, payments of principal, premium (if any) and interest on a storm recovery bond by us or any paying agent to any non-U.S. holder, and gain realized on the sale or exchange of a storm recovery bond by a non-U.S. holder, will be exempt from U.S. federal income or withholding tax, provided that:

• such non-U.S. holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of voting stock of Cleco Corporation, is not a controlled foreign corporation related, directly or indirectly, to Cleco Corporation, through stock ownership and is not a bank receiving interest pursuant to a loan agreement entered into in the ordinary course of its trade or business,

• the statement requirement described below has been fulfilled with respect to the beneficial owner,

• such non-U.S. holder is not an individual who is present in the U.S. for 183 days or more in the taxable year of disposition, or such individual does not have a “tax home” (as defined in the Internal Revenue Code) or an office or other fixed place of business in the U.S. and such holder is not subject to the rules under the Internal Revenue Code applicable to expatriates, and

• such payments and gain are not effectively connected with the conduct by such non-U.S. holder of a trade or business in the U.S.

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     The statement requirement referred to in the preceding discussion will be fulfilled if the beneficial owner of a storm recovery bond certifies on an appropriate form (generally IRS Form W-8BEN), under penalties of perjury, that it is not a U.S. person and provides its name and address, and (a) the beneficial owner files that form with the withholding agent or (b) a securities clearing organization, bank or other financial institution holding customers’ securities in the ordinary course of its trade or business holds the storm recovery bond on behalf of the beneficial owner, files with the withholding agent a statement that it has received that form from the beneficial owner and furnishes the withholding agent with a copy thereof. With respect to any storm recovery bond held by a foreign partnership, under current law, this certification may be provided by the foreign partnership. However, unless a foreign partnership has entered into a withholding agreement with the IRS, each partner that is a non-U.S. holder will be required to supply this certification in order to avoid withholding with respect to such partner’s share of interest paid to the foreign partnership. Prospective investors, including foreign partnerships and their partners, should consult their tax advisers regarding possible additional reporting requirements.

     If a non-U.S. holder of a storm recovery bond is engaged in a trade or business in the U.S., and if interest on the storm recovery bond is effectively connected with the conduct of such trade or business, the non-U.S. holder, although exempt from the withholding tax discussed in the preceding paragraphs, will generally be subject to regular U.S. federal income tax on interest and on any gain realized on the sale or exchange of the storm recovery bond in the same manner as if it were a U.S. holder. In lieu of the certificate described in the preceding paragraph, such a non-U.S. holder will be required to provide to the withholding agent an appropriate form (generally IRS Form W-8ECI), executed under penalties of perjury, in order to claim an exemption from withholding tax. In addition, if such a non-U.S. holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.

     Estate Tax. A storm recovery bond held by an individual who is not a citizen or resident of the U.S. at the time of his death generally will not be subject to U.S. federal estate tax as a result of such individual’s death, provided that at the time of death:

• the individual did not own, actually or constructively, 10% or more of the total combined voting power of all classes of Cleco Corporation’s voting stock, and

• payments with respect to a storm recovery bond would not have been effectively connected with the conduct by such individual of a trade or business in the U.S..

     Backup Withholding and Information Reporting. Payments on a storm recovery bond may be subject to information reporting. Backup withholding will not apply to payments made on or proceeds from the sale of a storm recovery bond if the statement requirement described above is met, provided in each case that the payor does not have actual knowledge or reason to know that the payee is a U.S. person. Any amounts withheld from a payment to a non-U.S. holder under the backup withholding rules will be allowed as a credit against such non-U.S. holder’s U.S. federal income tax liability and may entitle such non-U.S. holder to a refund, provided that the required information is furnished to the IRS. Non-U.S. holders of a storm recovery bond should consult their tax advisers regarding the application of information reporting and backup withholding in their particular situations, the availability of an exemption therefrom and the procedure for obtaining such an exemption, if available.

     Material Louisiana State Tax Consequences

     The discussion below is based upon Louisiana tax statutes and regulations in effect as of the date hereof. Administrative or legislative action taken, or administrative interpretations or rulings or judicial decisions promulgated or issued, subsequent to the date of this prospectus may result in tax consequences different than those described below.

     Louisiana imposes a personal income tax on resident individuals and/or nonresident individuals with taxable income derived from sources in the state. Louisiana also imposes a corporate net income tax on corporations and a business franchise tax on corporations doing business or owning property in the state.

     Assuming that the storm recovery bonds will be treated as debt obligations of Cleco Power for U.S. federal income tax purposes, it is the opinion of Phelps Dunbar LLP that interest on the storm recovery bonds received by a person who is not otherwise subject to corporate or personal income tax in the state of Louisiana will not be subject to tax in Louisiana. Further, it is the opinion of Phelps Dunbar LLP that for Louisiana income tax purposes (1) we will not be treated as a taxable entity separate and apart from Cleco Power, and (2) the storm recovery bonds will be considered indebtedness of Cleco Power,

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assuming, in each case, that such treatment applies for U.S. federal income tax purposes. These opinions are not binding on any taxing authority or any court, and there can be no assurance that contrary positions may not be taken by any taxing authority.

     The discussion under “Material Louisiana State Tax Consequences” is for general information only and may not be applicable depending upon a bondholder’s particular situation. It is recommended that prospective bondholders consult their own tax advisors with respect to the tax consequences to them of the acquisition, ownership and disposition of the bonds, including the tax consequences under federal, state, local, non-U.S. and other tax laws and the effects of changes in such laws.

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ERISA CONSIDERATIONS

     ERISA and Section 4975 of the Internal Revenue Code, as amended (“Code”), impose restrictions on:

• employee benefit plans, as defined in Section 3(3) of ERISA, that are subject to Title I of ERISA;

• plans, as defined in Section 4975(e)(1) of the Code, that are subject to Section 4975 of the Code, including, but not limited to, individual retirement accounts and certain types of Keogh plans;

• any entities whose underlying assets include plan assets by reason of that plan’s investment in those entities, each of the entities described in the first three bullet points being referred to as a “plan;” and

• persons who, based on their specific relationship to a plan, are “parties in interest” under Section 3(14) of ERISA or “disqualified persons” under Section 4975(e)(2) of the Code (collectively referred to as “parties in interest”). Parties in interest with respect to a plan include, but are not limited to, fiduciaries, persons providing services to the plan, employers any of whose employees are covered by the plan, and employee organizations any of whose members are covered by the plan.

     Moreover, based on the reasoning of the United States Supreme Court in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993), an insurance company’s general account may be deemed to include assets of the plans investing in the general account, such as through the purchase of an annuity contract. ERISA also imposes specific duties on persons who are fiduciaries of plans subject to ERISA, and ERISA and Section 4975 of the Code prohibit specified transactions between a plan and parties in interest with respect to the plan. Violations of these rules may result in the imposition of excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code.

Plan Asset Issues for an Investment in the Storm Recovery Bonds

     Pursuant to Department of Labor Regulation Section 2510.3-101, as modified by the Pension Protection Act of 2006 (the “plan asset regulation”), in general, when a plan acquires an equity interest in an entity such as a trust, corporation, partnership or other specified entity, and such interest does not represent a “publicly offered security” or a security issued by an investment company registered under the Investment Company Act of 1940, as amended, the plan’s assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established either that the entity is an “operating company” or that equity participation in the entity by “benefit plan investors” is not “significant.” In general, an “equity interest” is defined under the plan asset regulation as any interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is little statutory or regulatory guidance on this subject, and there can be no assurances in this regard, it appears that the storm recovery bonds should not be treated as an equity interest for purposes of the plan asset regulation. Accordingly, our assets should not be treated as the assets of plans investing in the storm recovery bonds.

     If the storm recovery bonds were deemed to be equity interests in us and none of the exceptions contained in Section 2510.3-101 of the regulations were applicable, then our assets would be considered to be assets of any plans that purchase the storm recovery bonds. The extent to which the storm recovery bonds are owned by benefit plan investors will not be monitored. If our assets were deemed to constitute “plan assets” pursuant to Section 2510.3-101 of the regulations, as modified by Section 3(42) of ERISA, transactions we might enter into, or may have entered into in the ordinary course of business, might constitute non-exempt prohibited transactions under ERISA and or Section 4975 of the Internal Revenue Code.

     In addition, the acquisition or holding of the storm recovery bonds by or on behalf of a plan could give rise to a prohibited transaction if we or the trustee, Cleco Power, any underwriter or certain of their affiliates has, or acquires, a relationship to an investing plan. Each purchaser of the storm recovery bonds will be deemed to have represented and warranted that its purchase and holding of the storm recovery bonds will not result in a prohibited transaction.

Prohibited Transaction Exemptions

     It should be noted, however, that without regard to the treatment of the storm recovery bonds as equity interests under the plan asset regulation, Cleco Power, the underwriters and/or their affiliates, as providers of services to plans or otherwise, may be deemed to be parties in interest with respect to many plans. The purchase and holding of the storm recovery bonds by or on behalf of one or more of these plans could result in a prohibited transaction within the meaning of Section 406 of ERISA or

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Section 4975 of the Code. However, the purchase and holding of the storm recovery bonds may be subject to one or more administrative class exemptions from the prohibited transaction rules of ERISA and Section 4975 of the Code.

     Examples of Prohibited Transaction Class Exemptions. Potentially applicable prohibited transaction class exemptions (“PTCEs”), issued by the Department of Labor, include the following:

• PTCE 84-14, which exempts certain transactions effected on behalf of a Plan by a “qualified professional asset manager” (“QPAM”), with such exemption referred to as the “QPAM exemption;”

• PTCE 90-1, which exempts certain transactions between insurance company pooled separate accounts and parties in interest;

• PTCE 91-38, which exempts certain transactions between bank collective investment funds and parties in interest;

• PTCE 95-60, which exempts certain transactions between insurance company general accounts and parties in interest; and

• PTCE 96-23, which exempts certain transactions effected on behalf of a plan by an “in-house asset manager.”

     It should be noted, however, that even if the conditions specified in one or more of these exemptions are met, the scope of relief provided by these exemptions may not necessarily cover all acts that might be construed as prohibited transactions.

     Prior to making an investment in the storm recovery bonds of any series, each fiduciary causing the storm recovery bonds to be purchased by, on behalf of, or using plan assets of a plan that is subject to the prohibited transaction rules of ERISA or Section 4975 of the Code, including without limitation, an insurance company general account, shall be deemed to have represented and warranted that, a class exemption from the prohibited transaction rules applies, so that the use of plan assets of the plan to purchase and hold the storm recovery bonds does not and will not constitute or otherwise result in a nonexempt prohibited transaction in violation of Section 406 of ERISA or Section 4975 of the Code.

General Investment Considerations for Prospective Plan Investors in the Storm Recovery Bonds

     Prior to making an investment in the storm recovery bonds, prospective plan investors should consult with their legal advisors concerning the impact of ERISA and the Code and the potential consequences of this investment with respect to their specific circumstances. Moreover, each plan fiduciary should take into account, among other considerations:

• whether the fiduciary has the authority to make the investment,

• whether the investment constitutes a direct or indirect transaction with a party in interest,

• the composition of the plan’s portfolio with respect to diversification by type of asset,

• the plan’s funding objectives,

• the tax effects of the investment, and

• whether, under the general fiduciary standards of investment prudence and diversification, an investment in the storm recovery bonds is appropriate for the plan, taking into account the overall investment policy of the plan and the composition of the plan’s investment portfolio.

     Governmental plans and some church plans are generally not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code. However, these plans may be subject to substantially similar rules under state or other federal law and may also be subject to the prohibited transaction rules of Section 503 of the Code.

     The sale of the storm recovery bonds to a plan shall not be deemed a representation by Cleco Power, the underwriters, or us that this investment meets all relevant legal requirements with respect to plans generally or any particular plan.

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PLAN OF DISTRIBUTION FOR THE STORM RECOVERY BONDS

Distribution

     The storm recovery bonds of each series may be sold to or through the underwriters by a negotiated firm commitment underwriting and public reoffering by the underwriters. The storm recovery bonds may also be sold to or through any other underwriting arrangement as may be specified in the related prospectus supplement or may be offered or placed either directly or through agents. We intend that the storm recovery bonds may be offered through various methods from time to time. We also intend that offerings may be made concurrently through more than one of these methods or that an offering of a particular series of the storm recovery bonds may be made through a combination of these methods.

     The distribution of the storm recovery bonds may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to the prevailing market prices or in negotiated transactions or otherwise at varying prices to be determined at the time of sale.

     The storm recovery bonds may be offered through one or more different methods, including offerings through underwriters. It is not anticipated that storm recovery bonds bearing interest at a fixed rate will be listed on any securities exchange. Storm recovery bonds bearing interest at a floating rate may be listed on a securities exchange. Information regarding any such listing will be provided in the applicable prospectus supplement. The underwriters may, from time to time, buy and sell storm recovery bonds, but there can be no assurance that a secondary market for any series of the storm recovery bonds will develop or, if one does develop, that it will continue.

Compensation to Underwriters

     In connection with the sale of any series of storm recovery bonds, underwriters or agents may receive compensation in the form of discounts, concessions or commissions. Underwriters may sell storm recovery bonds to particular dealers at prices less a concession. Underwriters may allow, and these dealers may reallow, a concession to other dealers. Underwriters, dealers and agents that participate in the distribution of the storm recovery bonds of a series may be deemed to be underwriters. Any discounts or commissions received by the underwriters from us and any profit on the resale of the storm recovery bonds by them may be deemed to be underwriting discounts and commissions under the Securities Act of 1933. These underwriters or agents will be identified, and any compensation received from us will be described, in the related prospectus supplement.

Other Distribution Matters

     Under agreements which may be entered into by Cleco Power, us and the trustee, underwriters and agents who participate in the distribution of storm recovery bonds may be entitled to indemnification by Cleco Power and us against liabilities specified therein, including under the Securities Act of 1933.

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RISK WEIGHTING UNDER CERTAIN INTERNATIONAL CAPITAL GUIDELINES

     Under the standardized approach under the framework established by Basel II, the storm recovery bonds may attract a risk weighting of 20% on the basis that the storm recovery bonds are rated in the highest category by a major rating agency. It is a condition of issuance of a series of storm recovery bonds that the bonds be rated “Aaa” by Moody’s, “AAA” by S&P, and “AAA” by Fitch. In the alternative, under the framework established by Basel II, a series of storm recovery bonds may attract the same risk weighting if such series are considered to be “guaranteed” by a non-governmental public sector entity.

     If held by financial institutions subject to regulation in countries (other than the United States) that have adopted and continue to use or permit the use of the Basel Accord for risk weighting, the storm recovery bonds may attract the same risk weighting as “claims on” or “claims guaranteed by” non-central government bodies within the United States, which are accorded a 20% risk weighting. We note, however, that the analysis may be different than that under Basel II.

     We note that the timetable for, and scope of, the implementation of Basel II differs from country to country and it may not always be clear which regime — Basel Accord or Basel II, or any transitional regime — may be applicable at any particular time.

     Before acquiring any storm recovery bonds, prospective investors that are banks or bank holding companies, particularly those that are organized under the laws of any country other than the United States or of any state, territory or other political subdivision of the United States, and prospective investors that are U.S. branches and agencies of foreign banks, should consult all applicable laws, regulations and policies, as well as appropriate regulatory bodies and legal counsel, to confirm that an investment in such series of storm recovery bonds is permissible and in compliance with any applicable investment or other limits. We cannot assure you that any series of storm recovery bonds will attract a 20% risk weighting treatment under any national law, regulation or policy implementing Basel II, the Basel Accord or any transitional regime.

RATINGS FOR THE STORM RECOVERY BONDS

     It is a condition to issuance of the storm recovery bonds that each series or tranche be rated in the highest rating category by each of Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., Moody’s Investors Service Inc. and Fitch, Inc.

     Limitations of Security Ratings. A security rating is not a recommendation 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. No person is obligated to maintain the rating on any series or tranche of storm recovery bonds and, accordingly, we can give no assurance that the ratings assigned to any series or tranche of the storm recovery bonds upon initial issuance will not be lowered or withdrawn by a rating agency at any time thereafter. If a rating of any series or tranche of storm recovery bonds is revised or withdrawn, the liquidity of this series or tranche may be adversely affected. In general, ratings address credit risk and do not represent any assessment of any particular rate of principal payments on the storm recovery bonds other than the payment in full of each series or tranche of storm recovery bonds by the applicable series final maturity date or tranche final maturity date, as well as the timely payment of interest.

WHERE YOU CAN FIND MORE INFORMATION

     This prospectus is part of a registration statement we and Cleco Power have filed with the SEC relating to the storm recovery bonds. This prospectus and each prospectus supplement describe the material terms of some of the documents we have filed as exhibits to the registration statement. However, this prospectus and each prospectus supplement do not contain all of the information contained in the registration statement and the exhibits. Any statements contained in this prospectus or any prospectus supplement concerning the provisions of any document filed as an exhibit to the registration statement or otherwise filed with the SEC are not necessarily complete. Each statement concerning those provisions is qualified in its entirety by reference to the respective exhibit. Information filed with the SEC can be inspected at the SEC’s Internet site located at http://www.sec.gov. You may also read and copy the registration statement, the exhibits and any other documents we file with the SEC at the SEC’s Public Reference Room located at 100F Street, N.E, Washington, D.C. 20549. You may obtain further information regarding the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain a copy of our filings with the SEC at no cost, by writing to or telephoning us at the following address:

Cleco Katrina/Rita Hurricane Recovery Funding LLC
2605 Hwy. 28 East, Office Number 12

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Pineville, Louisiana 71360
(318) 484-4180

     We or Cleco Power as sponsor will also file with the SEC all of the periodic reports we are required to file under the Securities Exchange Act of 1934 and the rules, regulations or orders of the SEC thereunder.

     The SEC allows us to “incorporate by reference” into this prospectus information we file with the SEC. This means we can disclose important information to you by referring you to the documents containing the information. The information we incorporate by reference is considered to be part of this prospectus, unless we update or supersede that information by the information contained in a prospectus supplement or information that we file subsequently that is incorporated by reference into this prospectus. We are incorporating into this prospectus any future filings, which we or Cleco Power, but solely in its capacity as our sponsor, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the offering of the storm recovery bonds is completed, excluding any information that is furnished to, and not filed with, the SEC. These reports will be filed under our own name as issuing entity. Any statement contained in this prospectus, in any prospectus supplement or in a document incorporated or deemed to be incorporated by reference in this prospectus or any prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus and any prospectus supplement to the extent that a statement contained in this prospectus, any prospectus supplement or in any separately filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus or the prospectus supplement.

LEGAL MATTERS

     Certain legal matters relating to us and the issuance of storm recovery bonds will be passed upon for Cleco Power and for us by Baker Botts L.L.P., Houston, Texas and Phelps Dunbar, L.L.P., New Orleans, Louisiana. Certain legal matters relating to the U.S. federal income tax consequences of the issuance of the storm recovery bonds will be passed upon for us by Phelps Dunbar, L.L.P.. Underwriters will be advised about certain legal matters relating to the issuance of storm recovery bonds by counsel named in the applicable prospectus supplement.

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APPENDIX A

GLOSSARY OF DEFINED TERMS

     The following definitions are used in this prospectus and in any accompanying prospectus supplement:

Adjustment request with regard to the storm recovery charges means a request filed by the servicer with the Louisiana commission requesting modifications to the storm recovery charges.

Bankruptcy Code means Title 11 of the United States Code, as amended.

Basel Accord means the 1988 International Convergence of Capital Measurement and Capital Standards of the Basel Committee on Banking Supervision, as amended.

Basic documents means, with respect to any series of storm recovery bonds, the administration agreement, sale agreement, servicing agreement, indenture and any supplements thereto or bills of sale given by the seller and the notes evidencing the storm recovery bonds.

Business day means any day other than a Saturday, a Sunday or a day on which banking institutions in New Orleans, Louisiana or New York, New York are, or DTC is, authorized or obligated by law, regulation or executive order to remain closed.

Capital subaccount means that subaccount of the collection account into which the seller will contribute capital in an amount equal to 0.50% of the principal amount of such series of storm recovery bonds issued by us unless otherwise specified in the applicable prospectus supplement.

Clearstream means Clearstream Banking, Luxembourg, S.A.

Collection account means the segregated trust account relating to a series of storm recovery bonds designated the collection account for that series and held by the trustee under the indenture.

Customers means any existing or future LPSC-jurisdictional customer who remain attached to Cleco Power’s (or its successors) electric transmission or distribution lines, and who, via such lines, receive any type of service from Cleco Power (or its successors) under rate schedules or special contracts approved by the Louisiana commission.

DTC means The Depository Trust Company, New York, New York, and its nominee holder, Cede & Co.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Euroclear means the Euroclear System.

Excess funds subaccount means that subaccount of the collection account into which funds collected by the servicer in excess of amounts necessary to make the payments specified on a given payment date.

Financing order, as used in this prospectus, means an order issued by the Louisiana commission to Cleco Power which, among other things, governs the amount of storm recovery bonds that may be issued and terms for collections of related storm recovery charges.

Fitch means Fitch Ratings.

General subaccount means that subaccount that will hold funds held in the collection account that are not held in the other subaccounts of the collection account.

Indenture means the indenture to be entered into between the issuing entity and the trustee, providing for the issuance of storm recovery bonds, as the same may be amended and supplemented from time to time by one or more indentures supplemental thereto.

Internal Revenue Code means the Internal Revenue Code of 1986, as amended.

IRS means the Internal Revenue Service of the United States.

Issuing Entity means Cleco Katrina/Rita Hurricane Recovery Funding LLC.

kWh means kilowatt-hour.

Louisiana commission, or LPSC, means the Louisiana Public Service Commission.

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Louisiana UCC Filing Officer means the recorder of mortgages of Orleans Parish (or any successor by law) or the clerk of court of any other parish.

Moody’s means Moody’s Investors Service, Inc.

MWh means megawatt-hour.

Nonbypassable refers to the right of the servicer to collect the storm recovery charges from all existing and future customers of Cleco Power, subject to certain limitations specified in the Financing Order.

Payment date means the date or dates on which interest and principal are to be payable on a series of storm recovery bonds.

Rating agencies means Moody’s, S&P and Fitch.

Rating agency condition means, with respect to any action, the notification in writing to each rating agency of such action and the confirmation by S&P to the trustee and Cleco Katrina/Rita Hurricane Recovery Funding LLC that such action will not result in a reduction or withdrawal of the then rating by such rating agency of any outstanding series or tranche of storm recovery bonds.

Record date means the date or dates with respect to each payment date on which it is determined the person in whose name each storm recovery bond is registered will be paid on the respective payment date.

Regulation AB means the rules of the SEC promulgated under Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time.

S&P means Standard and Poor’s, a Division of The McGraw-Hill Companies.

Sale agreement means a sale agreement to be entered into between the issuing entity and Cleco Power, pursuant to which Cleco Power sells and the issuing entity buys storm recovery property.

SEC means the U.S. Securities and Exchange Commission.

Securitization Act means Act 64 of 2006, codified at La. R.S. 45:1226-1236, the Louisiana legislation adopted in May 2006, providing for a financing mechanism through which electric utilities can use securitization financing for storm recovery costs.

Servicer means Cleco Power, acting as the initial servicer, and any successor or assignee servicer, which will service the applicable storm recovery property under a servicing agreement with the issuing entity.

Servicing agreement means a servicing agreement to be entered into between the issuing entity and Cleco Power, as the same may be amended and supplemented from time to time, pursuant to which Cleco Power, as the initial servicer, undertakes to service storm recovery property.

Storm recovery charges means, with regard to Cleco Power, the amounts authorized to be imposed on all customers and collected, through a nonbypassable mechanism, by the servicer, to recover qualified costs pursuant to a financing order.

Storm recovery costs means the costs of an electric utility recoverable through the issuance of storm recovery bonds, the costs of issuing, supporting and servicing the storm recovery bonds.

Storm recovery property means, with regard to Cleco Power, all of Cleco Power’s right, title, and interest in and to a financing order that are transferred to the issuing entity pursuant to a sale agreement. Storm recovery property includes the right to impose, collect and receive storm recovery charges in amounts sufficient to pay principal and interest on the related series of storm recovery bonds and make deposits to the various subaccounts within the collection account relating to such series.

Treasury Regulations means proposed or issued regulations promulgated from time to time under the Internal Revenue Code.

True-up provision means a mechanism required by the financing order whereby the servicer will apply to the Louisiana commission for adjustments to the applicable storm recovery charges based on actual collected storm recovery charges and updated assumptions by the servicer as to future collections of storm recovery charges. The Louisiana commission will approve properly filed adjustments. Any corrections for mathematical errors will be reflected in the next true-up.

Trust Indenture Act means the Trust Indenture Act of 1939, as amended.

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[LOGO]

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.*

     The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions:

Registration Fee	$	30.70
Financial advisory fees		**
Trustee’s fees and expenses		**
Legal fees and expenses		**
Independent accountant’s fees and expenses		**
Printing and engraving expenses		**
Rating agency fees		**
LPSC application and related fees (including fees of its financial advisor)		**
Miscellaneous expenses		**
Total	$	**

*	All amounts, other than the Registration Fee, are estimates of expenses to be incurred in connection with the issuance and distribution of a series of securities in an aggregate principal amount assumed for these purposes to be equal to $1,000,000 of securities registered by this Registration Statement.
**	To be provided by amendment.

Item 15. Indemnification of Directors and Officers.

     Cleco Power LLC

     Article IV of Cleco Power’s Articles of Organization and Section 7 of its Operating Agreement provide that the management of Cleco Power is vested in its managers.

     Section 1315A of the Louisiana Limited Liability Company Law (“LLLCL”) provides that, subject to specified limitations, the articles of organization or a written operating agreement of a limited liability company (“LLC”) may eliminate or limit the personal liability of a member or members, if management is reserved to the members, or a manager or managers, if management is vested in one or more managers, for monetary damages for breach of any duty provided for in Section 1314 of the LLLCL. Section 1314 of the LLLCL provides that a member, if management is reserved to the members, or a manager, if management is vested in one or more managers, shall be deemed to stand in a fiduciary relationship to the LLC and its members and shall discharge his duties in good faith, with the diligence, care, judgment and skill that an ordinary prudent person in a like position would exercise under similar circumstances. Section 1314 also provides that such a member or manager:

• is protected in discharging his duties in relying in good faith upon specified records, opinions and other information, unless he has knowledge that makes such reliance unwarranted;

• will not be liable for any action taken on behalf of the LLC if he performed the duties of his office in compliance with Section 1314;

• will not be personally liable to the LLC or its members for monetary damages unless he engaged in grossly negligent conduct or conduct that demonstrates a greater disregard of the duty of care than gross negligence;

• in making business judgments, fulfills his duty by making such judgments in good faith, if he does not have a conflict of interest with respect to the business judgment, is informed with respect to the subject of the business judgment to the extent the member or manager reasonably believes to be appropriate under the circumstances and rationally believes that the judgment is in the best interests of the LLC and its members; and

• Section 1314 further provides that a person alleging a breach of the duty owed by a member or manager to an LLC has the burden of proving the alleged breach of duty, including the inapplicability of specified provisions of Section

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1314 as to the fulfillment of the duty, and, in a damage action, the burden of proving that the breach was the legal cause of damage suffered by the LLC.

     Article V of Cleco Power’s Articles of Organization provides that no member or manager will be personally liable for any monetary damages for breach of any duty provided for in Section 1314 of the LLLCL, except as otherwise provided in Section 1315B of the LLLCL. Under Section 1315B, no provision of an LLC’s articles of organization or operating agreement limiting or eliminating liability may limit or eliminate the liability of a member or manager for the amount of a financial benefit received by a member or manager to which he is not entitled or for an intentional violation of criminal law. Article V of Cleco Power’s Articles of Organization also provides that if the LLLCL is amended to authorize any further elimination or limitation of the personal liability of our member or any manager, the liability of such member or managers will be eliminated or limited to the fullest extent provided by the LLLCL, as amended. Article V further provides that any repeal or modification of Article V will not adversely affect any right or protection of any member or any manager with respect to any events occurring prior to the time of the repeal or modification.

     Section 1315A of the LLLCL allows the articles of organization or a written operating agreement of an LLC to provide for the indemnification of a member or members, or a manager or managers, for judgments, settlements, penalties, fines or expenses incurred because he is or was a member or manager. Section 1315B provides that the indemnification provisions of Section 1315A may not limit or eliminate the liability of a member or manager for the amount of a financial benefit received by a member or manager to which he is not entitled or for an intentional violation of criminal law.

     Section 13 of Cleco Power’s Operating Agreement provides that Cleco Power will indemnify any person who was or is, or is threatened to be made, a party to or otherwise involved in any pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative or investigative (any such threatened, pending or completed proceeding is referred herein as a “Proceeding”) by reason of the fact that he is or was one of Cleco Power’s managers, officers, employees or agents or is or was serving at Cleco Power’s request as a director, manager, officer, employee or agent of another business, foreign or nonprofit corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (whether the basis of his involvement in such Proceeding is alleged action in an official capacity or in any other capacity while serving as such), to the fullest extent permitted by applicable law in effect from time to time, and to such greater extent as applicable law may from time to time permit, from and against expenses, including attorney’s fees, judgments, fines, amounts paid or to be paid in settlement, liability and loss, ERISA excise taxes, actually and reasonably incurred by him or on his behalf or suffered in connection with such Proceeding or any claim, issue or matter therein. However, subject to certain exceptions set forth in Section 13, Cleco Power will indemnify any such person claiming indemnity in connection with a Proceeding initiated by such person only if such Proceeding was authorized by Cleco Power’s board of managers.

     Section 13 of Cleco Power’s Operating Agreement further provides that:

• Cleco Power will from time to time pay, in advance of final disposition, all Expenses (as defined in Section 13) incurred by or on behalf of any person claiming indemnity thereunder in respect of any Proceeding;

• the right to indemnification provided therein is a contract right and no amendment, alteration or repeal of Section 13 will restrict the indemnification rights granted by Section 13 as to any person claiming indemnification with respect to acts, events and circumstances that occurred, in whole or in part, before such amendment, alteration or repeal;

• any such indemnification may continue as to any person who has ceased to be a manager, officer, employee or agent and will inure to the benefit of the heirs, executors and legal representative of such person; and

• the rights to indemnification and to receive advancement of Expenses contemplated by Section 13 are not exclusive of any other rights to which any person may at any time be otherwise entitled, provided that such other indemnification may not apply to a person’s willful or intentional misconduct.

Section 13 also sets forth certain procedural and evidentiary standards applicable to the enforcement of a claim thereunder.

     Section 13 also provides that Cleco Power:

• may procure or maintain insurance or other similar arrangement, at our expense, to protect ourselves and any manager, officer, employee or agent of ours or any other corporation, partnership, joint venture, trust or other

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enterprise against any expense, liability or loss asserted against or incurred by such person, whether or not we would have the power to indemnify such person against such expense or liability; and

•

shall indemnify our managers and officers to the extent they are not covered by the insurance, whether or not such persons would otherwise be entitled to indemnification under Section 13, to the extent (i) of deductibles payable under such policies, (ii) of amounts exceeding payments required to be made by an insurer or (iii) that prior policies of manager’s and officer’s liability insurance would have provided for payment to such officer or manager (but no person will be entitled to indemnification for willful or intentional misconduct).

     Cleco Katrina/Rita Hurricane Recovery Funding LLC

     Article IV of the issuing entity’s Articles of Organization and Article VII of its Operating Agreement provide that the management of the issuing entity is vested in its managers.

     Article V of the issuing entity’s Articles of Organization provides that except as otherwise provided by the LLLCL and except as otherwise characterized for tax and financing reporting purposes, the debts, obligations and liabilities of the issuing entity, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the issuing entity, and no member or manager shall be obligated personally for any such debt, obligation or liability of the issuing entity solely by reason of being a member or a manager. Under Section 1315B of the LLLCL, no provision of an LLC’s articles of organization or operating agreement limiting or eliminating liability may limit or eliminate the liability of a member or manager for the amount of a financial benefit received by a member or manager to which he is not entitled or for an intentional violation of criminal law. Article V of the issuing entity’s Articles of Organization also provides that if the LLLCL is amended to authorize any further elimination or limitation of the personal liability of our member or any manager, the liability of such member or managers will be eliminated or limited to the fullest extent provided by the LLLCL, as amended. Article V further provides that any repeal or modification of Article V will not adversely affect any right or protection of any member or any manager with respect to any events occurring prior to the time of the repeal or modification.

     Article X of the issuing entity’s operating agreement provides that, subject to the determination described below, to the fullest extent permitted by law, the issuing entity shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the issuing entity, by reason of the fact that such person is or was a manager, member, officer, controlling person, employee, legal representative or agent of the issuing entity, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the issuing entity, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful; but such person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such person’s fraud, gross negligence or willful misconduct.

     Article X of the issuing entity’s operating agreement provides that, subject to the determination described below, to the fullest extent permitted by law, the issuing entity shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the issuing entity to procure a judgment in its favor by reason of the fact that such person is or was a member, manager, officer, controlling person, employee, legal representative or agent of the issuing entity, against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by such person in connection with the defense or settlement of the actions or suit if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the issuing entity; but such person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such person’s fraud, gross negligence or willful misconduct. Indemnification may not be made for any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the issuing entity or for amounts paid in settlement to the issuing entity, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

     Article X of the issuing entity’s operating agreement provides that the issuing entity shall indemnify any person who is or was a manager, member, officer, controlling person, employee, legal representative or agent of the issuing entity, against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense of any

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action, suit or proceeding referred to above or in defense of any claim, issue or matter therein, to the extent that such person has been successful on the merits.

     Article X of the issuing entity’s operating agreement provides that any indemnification, as well as the advance payment of expenses described below, unless ordered by a court or advanced, must be made by the issuing entity only as authorized in the specific case upon a determination that indemnification of the manager, member, officer, controlling person, employee, legal representative or agent is proper in the circumstances. The determination must be made:

• by the member if the member was not a party to the act, suit or proceeding; or

• if the member was a party to the act, suit or proceeding, then by independent legal counsel in a written opinion.

     Article X of the issuing entity’s operating agreement provides that the expenses of each person who is or was a manager, member, officer, controlling person, employee, legal representative or agent, incurred in defending a civil or criminal action, suit or proceeding may be paid by the issuing entity as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the issuing entity. This shall not affect any rights to advancement of expenses to which personnel other than the member or the managers (other than the Independent Managers, as defined in the operating agreement) may be entitled under any contract or otherwise by law.

     The indemnification and advancement of expenses authorized in or ordered by a court pursuant to the issuing entity’s operating agreement:

• does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any agreement, decision of the member or otherwise, for either an action of any person who is or was a manager, member, officer, controlling person, employee, legal representative or agent, in the official capacity of such person or an action in another capacity while holding such position, except that indemnification and advancement, unless ordered by a court pursuant to Section 10.05 of the operating agreement, may not be made to or on behalf of such person if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action; and

• continues for a person who has ceased to be a member, manager, officer, employee, legal representative or agent and inures to the benefit of the successors, heirs, executors and administrators of such a person.

Item 16. Exhibits.

     See Index to Exhibits at page II-10.

Item 17. Undertakings.

• As to Rule 415:

     Each undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this Registration Statement:

          (i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

          (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and

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          (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

provided, however, that the undertakings set forth in clauses (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in this Registration Statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this Registration Statement; and provided further, however, that the undertakings set forth in clauses (1)(i) and (1)(ii) above do not apply if the information required to be included in a post-effective amendment by those clauses is provided pursuant to Item 1100(c) of Regulation AB.

          (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

          (4) That, for the purpose of determining liability under the Securities Act to any purchaser, if the Registrants are relying on Rule 430B:

          (i) Each prospectus filed by the Registrants pursuant to Rule 424(b)(3) shall be deemed to be part of this Registration Statement as of the date the filed prospectus was deemed part of and included in this Registration Statement; and

          (ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in this Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuing entity and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to the purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

          (5) That, for the purpose of determining liability of the Registrants under the Securities Act to any purchaser in the initial distribution of the securities, each Registrant undertakes that in a primary offering of securities of such Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the Registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser:

          (i) Any preliminary prospectus or prospectus of the undersigned Registrants relating to the offering required to be filed pursuant to Rule 424;

          (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the Registrants or used or referred to by the Registrants;

          (iii) The portion of any other free writing prospectus relating to the offering containing material information about the Registrants or the securities provided by or on behalf of the Registrants; and

          (iv) Any other communication that is an offer in the offering made by the Registrants to the purchaser.

As to documents subsequently filed that are incorporated by reference:

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     The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of the Registrants’ annual report pursuant to section 13(a) or section 15(d) of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     As to indemnification:

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of each Registrant pursuant to the provisions described under Item 15 above, or otherwise, each Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a Registrant of expenses incurred or paid by a director, officer or controlling person of such Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each Registrant will, unless in the opinion of its respective counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

     As to qualification of trust indentures:

     The Registrants hereby undertake to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.

     As to incorporating by reference subsequent Exchange Act documents by third parties:

     The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of an annual report pursuant to section 13(a) or section 15(d) of the Exchange Act of a third party that is incorporated by reference in this Registration Statement in accordance with Item 1100(c)(1) of Regulation AB shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     As to providing certain information through an Internet Web site:

     The Registrants hereby undertake that, except as otherwise provided by Item 1105 of Regulation AB, information provided in response to that Item pursuant to Rule 312 of Regulation S-T through the specified Internet address in the prospectus is deemed to be a part of the prospectus included in this Registration Statement. In addition, the Registrants hereby undertake to provide to any person without charge, upon request, a copy of the information provided in response to Item 1105 of Regulation AB pursuant to Rule 312 of Regulation S-T through the specified Internet address as of the date of the prospectus included in this Registration Statement if a subsequent update or change is made to the information.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pineville, State of Louisiana, on the 2nd day of November, 2007.

CLECO POWER LLC     (Registrant)
By:	/s/ Michael H. Madison
	Michael H. Madison
	Chief Executive Officer

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael H. Madison, Wade A. Hoefling and Kathleen F. Nolen, and each of them severally, his true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute in his name, place and stead, in any and all capacities, any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority, to do and perform in the name and on behalf of the undersigned, in any and all capacities, each and every act and thing necessary or desirable to be done in and about the premises, to all intents and purposes and as fully as they might or could do in person, hereby ratifying, approving and confirming all that said attorneys-in-fact and agents or their substitutes may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on the 2nd day of November, 2007 in the capacities indicated.

Signature	Title
/s/ Michael H. Madison Michael H. Madison	Chief Executive Officer and Manager (Principal Executive Officer and Manager)
/s/ Kathleen F. Nolen Kathleen F. Nolen	Senior Vice President, Chief Financial Officer & Treasurer (Principal Financial Officer)
/s/ R. Russell Davis R. Russell Davis	Vice President and Chief Accounting Officer (Principal Accounting Officer)
/s/ Sherian G. Cadoria Sherian G. Cadoria	Manager
/s/ Richard B. Crowell Richard B. Crowell	Manager

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Signature	Title
/s/ J. Patrick Garrett J. Patrick Garrett	Manager
/s/ F. Ben James, Jr. F. Ben James, Jr.	Manager
/s/ Elton R. King Elton R. King	Manager
/s/ William L. Marks William L. Marks	Manager
/s/ Robert T. Ratcliff, Sr. Robert T. Ratcliff, Sr.	Manager
/s/ William H. Walker, Jr. William H. Walker, Jr.	Manager
/s/ W. Larry Westbrook W. Larry Westbrook	Manager

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pineville, State of Louisiana, on the 2nd day of November, 2007.

CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC             (Registrant)
By:	/s/ Keith D. Crump
	Keith D. Crump
	Manager

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael H. Madison, Wade A. Hoefling and Kathleen F. Nolen, and each of them severally, his true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute in his name, place and stead, in any and all capacities, any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority, to do and perform in the name and on behalf of the undersigned, in any and all capacities, each and every act and thing necessary or desirable to be done in and about the premises, to all intents and purposes and as fully as they might or could do in person, hereby ratifying, approving and confirming all that said attorneys-in-fact and agents or their substitutes may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on the 2nd day of November, 2007 in the capacities indicated.

Signature	Title
/s/ Dilek Samil Dilek Samil	Manager
/s/ Keith D. Crump Keith D. Crump	Manager
/s/ Terry L. Taylor Terry L. Taylor	Manager
/s/ K. Michael Sawrie K. Michael Sawrie	Manager

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INDEX TO EXHIBITS

Exhibit
Number	Document Description
1.1*	Form of Underwriting Agreement
2.1**	Joint Agreement of Merger of Cleco Utility Group Inc. with and into Cleco Power LLC, dated December 15, 2000 (Exhibit 2 to Pre-Effective Amendment No. 1 to Registration Statement on Form S-3 filed with the SEC on January 26, 2001 (Registration Number 333-52540))
3.1**	Articles of Organization and Initial Report of Cleco Power LLC, dated December 11, 2000 (Exhibit 3(a) to Pre-Effective Amendment No. 1 to Registration Statement on Form S-3 filed with the SEC on January 26, 2001 (Registration Number 333-52540))
3.2**	Operating Agreement of Cleco Power LLC, revised effective October 24, 2003 (Exhibit 3(b) to Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, filed with the SEC on November 6, 2003 (SEC File No. 1-5663))
3.3	Articles of Organization of Cleco Katrina/Rita Hurricane Recovery Funding LLC
3.4	Limited Liability Company Operating Agreement of Cleco Katrina/Rita Hurricane Recovery Funding LLC
4.1***	Form of Indenture
4.2***	Form of the Storm Recovery Bonds (included in Exhibit 4.3)
4.3*	Form of Supplemental Indenture relating to the issuance of a series of storm recovery bonds
5.1***	Opinion of Phelps Dunbar, L.L.P. relating to legality of the storm recovery bonds
8.1***	Opinion of Phelps Dunbar, L.L.P. with respect to federal tax matters
23.1***	Consent of Phelps Dunbar, L.L.P. (included in Exhibits 5.1 and 8.1)
24.1	Power of Attorney (Cleco Power LLC) included on page II-7
24.2	Power of Attorney (Cleco Katrina/Rita Hurricane Recovery Funding LLC) included on page II-9
25.1*	Statement of Eligibility Under the Trust Indenture Act on Form T-1 of Trustee
99.1	Financing Order
99.2*	Opinion of Phelps Dunbar, L.L.P. with respect to the constitutionality of certain matters
99.3***	Form of Storm Recovery Property Sale Agreement
99.4***	Form of Storm Recovery Property Servicing Agreement
99.5***	Form of Administration Agreement

*	To be filed by amendment or as an exhibit to a Current Report on Form 8-K pursuant to Item 601(b)(1) of Regulation S-K.
**	Incorporated by reference herein as indicated.
***	To be filed by amendment.

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EX-3.3

Exhibit 3.3

ARTICLES OF ORGANIZATION
OF
CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC

     The undersigned member (the “Member”) of Cleco Katrina/Rita Hurricane Recovery Funding LLC (the “Company”) hereby adopts the following Articles of Organization (these “Articles”) of the Company pursuant to the Louisiana Limited Liability Company Law La. R.S. 12:1301, et seq., (as amended from time to time, the “LLC Law”). Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in Appendix A attached hereto.

ARTICLE I

Name

     The name of the Company is:

Cleco Katrina/Rita Hurricane Recovery Funding LLC

ARTICLE II

Purpose

     2.1 Purposes. The purposes for which the Company is formed are limited to:

     (a) purchase, acquire, own, hold, administer, service or enter into agreements regarding the receipt and servicing of Storm Recovery Property and the other Storm Recovery Bond Collateral, along with certain other related assets;

     (b) manage, sell, assign, pledge, collect amounts due on or otherwise deal with the Storm Recovery Property and the other Storm Recovery Bond Collateral and related assets to be so acquired in accordance with the terms of the Basic Documents;

     (c) negotiate, authorize, execute, deliver, assume the obligations under, and perform its duties under, the Basic Documents and any other agreement or instrument or document relating to the activities set forth in clauses (a) and (b) above; provided, that (i) each party to any such agreement, document or instrument under which significant obligations are imposed upon the Company shall covenant that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of each Series of the Storm Recovery Bonds and any other amounts owed under the Indenture, acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding-up or liquidation of the affairs of the Company; and (ii) the Company shall be permitted to incur additional indebtedness or other liabilities payable to service providers and trade creditors in the ordinary course of business in connection with the foregoing activities;

     (d) invest proceeds from Storm Recovery Property, the other Storm Recovery Bond Collateral and other assets and any capital and income of the Company in accordance with the applicable agreements or instruments entered into in connection with the issuance of Storm Recovery Bonds or as otherwise determined by the Managers and not inconsistent with these Articles, the Company’s Operating Agreement and the Securitization Law;

     (e) file with the SEC one or more registration statements, including any pre-effective or post-effective amendments thereto and any registration statement filed pursuant to Rule 462(b) under the Securities Act (including any prospectus supplement, prospectus and exhibits contained therein) and file such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents necessary or desirable to register the Storm Recovery Bonds under the securities or “Blue Sky” laws of various jurisdictions;

     (f) authorize, execute, deliver and issue Storm Recovery Bonds from time to time;

     (g) pledge its interest in Storm Recovery Property and other Storm Recovery Bond Collateral to the Indenture Trustee under the Indenture in order to secure the Storm Recovery Bonds; and

     (h) engage in any lawful act or activity and exercise any powers permitted to limited liability companies formed under the laws of the State of Louisiana that, in either case, are incidental to, or necessary, suitable or convenient for, the accomplishment of the above-mentioned purposes.

     2.2 Activities and Powers. The Company shall engage only in activities related to the purposes set forth in Section 2.1 hereof or required or authorized by the terms of the Basic Documents or other agreements referenced above. The Company shall have all powers reasonably incidental, necessary, suitable or convenient to effect the foregoing purposes, including all powers granted under the LLC Law. The Company, any Manager, including any Independent Manager (as defined in the Company’s Operating Agreement), or any officer of the Company, acting singly or collectively, on behalf of the Company, may enter into and perform the Basic Documents and all registration statements, documents, agreements, certificates or financing statements contemplated thereby or related thereto, all without any further act, vote or approval of any Member, Manager or other Person, notwithstanding any other provision of the Company’s Operating Agreement, the LLC Law, or other applicable law, rule or regulation. The authorization set forth in the preceding sentence shall not be deemed a restriction on the power and authority of any Manager or any officer to enter into other agreements or documents on behalf of the Company as authorized pursuant to these Articles, the Company’s Operating Agreement and the LLC Law. The Company shall possess and may exercise all the powers and privileges granted by the LLC Law or by any other law, these Articles or the Company’s Operating Agreement, together with any powers incidental thereto, insofar as such powers and privileges are incidental, necessary, suitable or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.

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ARTICLE III

Member

     3.1 Initial Member. The name and address of the initial sole Member of the Company is:

Cleco Power LLC
2030 Donahue Ferry Road
Pineville, LA 71360-5226

     3.2 Restriction on Member. The Member shall not apply for judicial dissolution of the Company, and the Member is not permitted to and shall not withdraw from or otherwise cease to be a member of the Company for any reason whatsoever, including that the Member itself shall not dissolve or otherwise terminate its legal existence, unless an acceptable new member of the Company is substituted for the Member in compliance with the Basic Documents, Securitization Law and Financing Order, until all Storm Recovery Bonds and all financing costs have been paid in full.

ARTICLE IV

Managers

     4.1 Authority of Managers. The Company shall be managed by or under the authority of the Managers. The Member shall appoint Managers from time to time, provided that, except as provided in Section 7.06 of the Company’s Operating Agreement, no later than the issuance of the first series of Storm Recovery Bonds, the Member shall appoint an Independent Manager and the Company shall thereafter have an Independent Manager at all times. The initial Managers shall be the persons listed on the Initial Report of the Company filed with the Louisiana Secretary of State. The Managers, acting in accordance with the management provisions in Article VII of the Company’s Operating Agreement, shall have all powers necessary or appropriate to manage the business and affairs of the Company including, by way of illustration and not by way of limitation, the power to do any of the following:

(a)	purchase, acquire, own, hold, administer, service or enter into agreements regarding the receipt and servicing of Storm Recovery Property and the other Storm Recovery Bond Collateral, along with certain other related assets;
(b)	manage, sell, assign, pledge, collect amounts due on or otherwise deal with the Storm Recovery Property and the other Storm Recovery Bond Collateral and related assets to be so acquired in accordance with the terms of the Basic Documents;
(c)	negotiate, authorize, execute, deliver, assume the obligations under, and perform its duties under, the Basic Documents and any other agreement or instrument or document relating to the activities set forth in clauses (a) and (b) of this Section 4.1, subject to the terms and conditions set forth in Section 2.1(c);

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(d)	invest proceeds from Storm Recovery Property and other assets and any capital and income of the Company in accordance with the applicable agreements or instruments entered into in connection with the issuance of Storm Recovery Bonds or as otherwise determined by the Managers and not inconsistent with these Articles, the Company’s Operating Agreement and the Securitization Law;
(e)	file with the SEC one or more registration statements, including any pre-effective or post-effective amendments thereto and any registration statement filed pursuant to Rule 462(b) under the Securities Act (including any prospectus supplement, prospectus and exhibits contained therein) and file such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents necessary or desirable to register the Storm Recovery Bonds under the securities or “Blue Sky” laws of various jurisdictions;
(f)	authorize, execute, deliver and issue Storm Recovery Bonds from time to time;
(g)	pledge the Company’s interest in Storm Recovery Property and other Storm Recovery Bond Collateral to the Indenture Trustee under the Indenture in order to secure the Storm Recovery Bonds; and
(h)	exercise any additional powers permitted to limited liability companies formed under the laws of the State of Louisiana that are incidental to, or necessary, suitable or convenient for, the accomplishment of the above-mentioned powers.

     4.2 Powers Reserved to the Member. Subject to the terms and conditions in the Company’s Operating Agreement, the Member shall have exclusive power and authority to approve the election or removal of the Managers and any amendment to these Articles or the Company’s Operating Agreement.

     4.3 Limitation on Managers as Agents. The authority of the Managers is subject to restrictions set forth in the Company’s Operating Agreement. In addition, all rights, powers and authority of any Manager serving in the capacity of an Independent Manager shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in the Company’s Operating Agreement.

ARTICLE V

Limitation of Member’s and Manager’s Liability

     Except as otherwise provided by the LLC Law and except as otherwise characterized for tax and financing reporting purposes, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, Special Member or Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, a Special Member or a Manager. If the LLC Law is amended to authorize any further elimination or limitation of the personal liability of the Member, a Special Member or any Manager, then the liability of the Member, a Special Member or any Manager shall be eliminated or limited to the fullest extent permitted by the LLC Law, as so amended. Any repeal or modification of this Article V by the Company shall not adversely affect any right or protection of the Member, any

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Special Member or any Manager under this Article V with respect to any act or omission occurring prior to the time of such repeal or modification.

ARTICLE VI

Right to Rely on Authority

     In accordance with the provisions of La. R.S. 12:1305(C)(5), any Manager is authorized to execute certificates which establish the membership of any Member, the authenticity of any records of the Company, and the authority of any person (including the certifying Manager or any other Manager or other officer) to act on behalf of the Company, including without limitation by providing a statement of those persons with the authority to take the actions referred to in La. R.S. 12:1318(B). Persons dealing with the Company may rely upon these certificates. Without limiting the foregoing, Dilek Samil, Keith D. Crump, Terry L. Taylor and K. Michael Sawrie, as Managers, are authorized to issue such certificates.

ARTICLE VII

Company Representatives

     Each Manager and officer has the consent of the Member to represent the Company interest to any state agency, board or commission or to represent the Company interest at any hearing or proceeding held by any state agency, board or commission, including, without limitation, the LPSC.

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     THUS DONE AND PASSED, on this 29th day of October, 2007, before me, the undersigned Notary Public, duly commissioned and qualified in and for Rapides Parish, Louisiana, by the personal appearance of Dilek Samil, a duly authorized representative of Cleco Power LLC who acknowledged and declared under oath, in the presence of the two undersigned witnesses, that said representative signed these Articles of Organization as said representative’s own free act and deed for the purposes stated herein.

WITNESSES:		CLECO POWER LLC
/s/ Judy P. Miller
Print Name:	Judy P. Miller	By:	/s/ Dilek Samil
			Name:	Dilek Samil
			Title:	President and COO
/s/ Linda V. Smith
Print Name:	Linda V. Smith

/s/ Sharon G. Chelette
NOTARY PUBLIC
Print Name:	Sharon G. Chelette
Bar Roll/Notarial Id. No.:		50306
My Commission Expires:		at death

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APPENDIX A

DEFINITIONS

     The following terms have the following meanings:

     “Administration Agreement” means the Administration Agreement to be entered into by and between Cleco Power LLC and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Basic Documents” means the Indenture, the Administration Agreement, the Sale Agreement, these Articles of Organization and the Company’s Initial Report, the Company’s Operating Agreement, the Servicing Agreement, each Series Supplement, each Letter of Representations, each Underwriting Agreement and all other documents and certificates delivered in connection therewith.

     “Closing Date” means the date to be determined for closing and issuance of the Storm Recovery Bonds.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Financing Order” means the Financing Order approved and issued by the LPSC pursuant to the Securitization Law in Cleco Power LLC’s Docket No. U-29157 (Phase III), or any subsequent Financing Order issued by the LPSC pursuant to the Securitization Law pertaining to Cleco Power LLC and the Company.

     “Governmental Authority” means any nation or government, any federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative function of government.

     “Indenture” means the Indenture to be entered into by and between the Company and an Indenture Trustee as originally executed and as from time to time supplemented or amended by one or more Series Supplements or indentures supplemental thereto entered into pursuant to the applicable provisions of the Indenture, as so supplemented or amended, or both, and shall include the forms and terms of the Storm Recovery Bonds established thereunder.

     “Indenture Trustee” means a third party financial company or bank to be designated as indenture trustee for the benefit of the Secured Parties, or any successor indenture trustee under the Indenture.

     “Letter of Representations” means any applicable agreement between the Company and an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act, pertaining to the Storm Recovery Bonds, as the same may be amended, supplemented, restated or otherwise modified from time to time.

     “LPSC” means the Louisiana Public Service Commission, or any Governmental Authority succeeding to the duties of such agency.

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     “Manager” means each manager, including any Independent Manager, of the Company under the Company’s Operating Agreement.

     “Operating Agreement” means the Operating Agreement entered into or to be entered into by the Member of the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or Governmental Authority, and includes successors permitted by the Basic Documents.

     “Sale Agreement” means the Storm Recovery Property Purchase and Sale Agreement to be entered into by and between Cleco Power LLC and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “SEC” means the U.S. Securities and Exchange Commission.

     “Secured Parties” means, with respect to each Series, the Indenture Trustee, the relevant bondholders and any credit enhancer described in the applicable Series Supplement.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Securitization Law” means Act No. 64 of the Louisiana Regular Session of 2006, the “Louisiana Electric Utility Storm Recovery Securitization Act,” codified at La. R.S. 45:1226-1236.

     “Series” means each series of Storm Recovery Bonds issued and authenticated pursuant to the Indenture and a related Series Supplement.

     “Series Supplement” means an indenture supplemental to the Indenture that authorizes the issuance of a particular Series of Storm Recovery Bonds.

     “Servicing Agreement” means the Storm Recovery Property Servicing Agreement to be entered into by and between the Company and Cleco Power LLC, as servicer, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Storm Recovery Bond Collateral” means the applicable Storm Recovery Property and related properties and rights, including, without limitation, the Sale Agreement and certain deposit accounts and securities accounts, which are encumbered by the Company as collateral for Storm Recovery Bonds.

     “Storm Recovery Bonds” means one or more Series of Storm Recovery Bonds authorized by a Financing Order and issued under the Indenture.

     “Storm Recovery Charge” means any storm recovery charges, as defined in Section 1227(15) of the Securitization Law, authorized pursuant to a Financing Order.

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     “Storm Recovery Property” means all storm recovery property as defined in Section 1227(17) of the Securitization Law created pursuant to a Financing Order and sold or otherwise conveyed to the Company.

     “Underwriters” means the underwriters who purchase any of the Storm Recovery Bonds from the Company and sell such Storm Recovery Bonds in a public offering.

     “Underwriting Agreement” means an Underwriting Agreement to be entered into by and among Cleco Power LLC, the Underwriters and the Company, as the same may be amended, supplemented or modified from time to time.

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ACKNOWLEDGMENT

STATE OF LOUISIANA

PARISH OF RAPIDES

     BE IT KNOWN that on this 29th day of October, 2007, before me the undersigned Notary Public duly commissioned and qualified in and for Rapides Parish, Louisiana, personally came and appeared Dilek Samil, a duly authorized representative of Cleco Power LLC, known to me to be the identical person who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses that said representative executed the above and foregoing instrument as said representative’s own free will, as said representative’s own act and deed, and for the uses and purposes therein expressed.

WITNESSES:
/s/ Judy P. Miller
Print Name:	Judy P. Miller	/s/ Dilek Samil
		Name:	Dilek Samil
		Title:	President and COO
/s/ Linda V. Smith
Print Name:	Linda V. Smith

/s/ Sharon G. Chelette
NOTARY PUBLIC
Print Name:	Sharon G. Chelette
Bar Roll/Notarial Id. No.:		50306
My Commission Expires:		at death

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INITIAL REPORT
OF
CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC

1. The location and municipal address of the registered office of the limited liability company is:

2605 Hwy. 28 East
Office Number 12
Pineville, LA 71360

2. The limited liability company’s registered agent and his or her municipal address is:

Mark D. Pearce
2030 Donahue Ferry Road
Pineville, LA 71360-5226

3. The initial sole member of the limited liability company is:

Cleco Power LLC
2030 Donahue Ferry Road
Pineville, LA 71360-5226

4. The initial managers of the limited liability company and their municipal addresses are:

Dilek Samil	Keith D. Crump
2030 Donahue Ferry Road	2030 Donahue Ferry Road
Pineville, LA 71360-5226	Pineville, LA 71360-5226
Terry L. Taylor	K. Michael Sawrie
2030 Donahue Ferry Road	2030 Donahue Ferry Road
Pineville, LA 71360-5226	Pineville, LA 71360-5226

CLECO POWER LLC
By:	/s/ Dilek Samil
	Name:	Dilek Samil
	Title:	President and COO

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AFFIDAVIT OF ACKNOWLEDGMENT
AND ACCEPTANCE BY REGISTERED AGENT

TO:	THE SECRETARY OF STATE
	STATE OF LOUISIANA
	STATE OF LOUISIANA
	PARISH OF RAPIDES

     On this 29th day of October, 2007, before me, a Notary Public duly commissioned and qualified in and for Rapides Parish, Louisiana, personally came and appeared Mark D. Pearce, to me known, who being duly sworn, stated as follows:

     I hereby acknowledge and accept the appointment of registered agent for and on behalf of Cleco Katrina/Rita Hurricane Recovery Funding LLC, which is a Louisiana limited liability company.

/s/ Mark D. Pearce 

Mark D. Pearce

Registered Agent

Sworn to and subscribed before me,
the undersigned Notary Public, on
this 29th day of October, 2007.

/s/ Sharon G. Chelette
NOTARY PUBLIC
Print Name:	Sharon G. Chelette
Bar Roll/Notarial Id. No.:		50306
My Commission Expires:		at death

EX-3.4

Exhibit 3.4

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC

Dated and Effective as of

October 29, 2007

TABLE OF CONTENTS

	Page
ARTICLE I GENERAL PROVISIONS		1
SECTION 1.01 Definitions		1
SECTION 1.02 Sole Member; Registered Office and Agent		1
SECTION 1.03 Other Offices		3
SECTION 1.04 Name.		3
SECTION 1.05 Purpose; Nature of Business Permitted; Powers		3
SECTION 1.06 Limited Liability Company Operating Agreement; Articles of Organization; Initial Report		5
SECTION 1.07 Separate Existence		5
SECTION 1.08 Limitation on Certain Activities		9
SECTION 1.09 No State Law Partnership		10
ARTICLE II CAPITAL		10
SECTION 2.01 Initial Capital		10
SECTION 2.02 Additional Capital Contributions		10
SECTION 2.03 Capital Account		10
SECTION 2.04 Interest		10
ARTICLE III ALLOCATIONS; BOOKS		11
SECTION 3.01 Allocations of Income and Loss		11
SECTION 3.02 Company to be Disregarded for Tax Purposes		11
SECTION 3.03 Books of Account; Fiscal Year		12
SECTION 3.04 Access to Accounting Records		12
SECTION 3.05 Annual Tax Information		12
SECTION 3.06 Internal Revenue Service Communications		12
ARTICLE IV MEMBER		12
SECTION 4.01 Powers		12
SECTION 4.02 Other Ventures		13
SECTION 4.03 Actions by the Member		13
SECTION 4.04 Certificates for Membership Interest		13
SECTION 4.05 Restrictions on the Member		13
ARTICLE V OFFICERS		13
SECTION 5.01 Designation; Term; Qualifications		13
SECTION 5.02 Removal and Resignation		15
SECTION 5.03 Vacancies		15
SECTION 5.04 Reimbursement of Expenses		15
i

	Page
ARTICLE VI MEMBERSHIP INTEREST		15
SECTION 6.01 General		15
SECTION 6.02 Distributions		15
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up		16
SECTION 6.04 Redemption		16
SECTION 6.05 Voting Rights		16
SECTION 6.06 Transfer of Membership Interests		16
SECTION 6.07 Admission of Transferee as Member		17
ARTICLE VII MANAGERS		17
SECTION 7.01 Managers		17
SECTION 7.02 Powers of the Managers		18
SECTION 7.03 Compensation, Reimbursement of Expenses		19
SECTION 7.04 Removal of Managers		19
SECTION 7.05 Resignation of Manager		20
SECTION 7.06 Vacancies		20
SECTION 7.07 Meetings of the Managers		20
SECTION 7.08 Electronic Communications		20
SECTION 7.09 Committees of Managers		20
SECTION 7.10 Limitations on Independent Managers		21
ARTICLE VIII EXPENSES		21
SECTION 8.01 Expenses		21
ARTICLE IX PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP		22
SECTION 9.01 Existence		22
SECTION 9.02 Dissolution		22
SECTION 9.03 Accounting		22
SECTION 9.04 Articles of Dissolution		23
SECTION 9.05 Winding Up		23
SECTION 9.06 Order of Payment of Liabilities Upon Dissolution		23
SECTION 9.07 Limitations on Payments Made in Dissolution		23
SECTION 9.08 Limitation on Liability		23
SECTION 9.09 No Capital Contributions Upon Liquidation		23
ARTICLE X INDEMNIFICATION		23
SECTION 10.01 Indemnity		23
SECTION 10.02 Indemnity for Actions By or In the Right of the Company		24
SECTION 10.03 Indemnity If Successful		24
SECTION 10.04 Expenses		24
SECTION 10.05 Advance Payment of Expenses		25
SECTION 10.06 Other Arrangements Not Excluded		25
ii

	Page
ARTICLE XI MISCELLANEOUS PROVISIONS		25
SECTION 11.01 No Bankruptcy Petition; Dissolution		25
SECTION 11.02 Amendments		26
SECTION 11.03 LPSC Condition		27
SECTION 11.04 Governing Law		28
SECTION 11.05 Headings		28
SECTION 11.06 Severability		28
SECTION 11.07 Assigns		28
SECTION 11.08 Enforcement by Independent Managers		28
SECTION 11.09 Creditors		28
SECTION 11.10 Waiver of Partition; Nature of Interest		28
EXHIBITS, SCHEDULES AND APPENDICES
Schedule A Schedule of Capital Contributions of Member
Schedule B Initial Managers
Schedule C Initial Officers
Exhibit A Management Agreement
Appendix A Definitions
iii

LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC

          This LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Agreement”) of CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC, a Louisiana limited liability company (the “Company”), is made and entered into as of October 29, 2007 by CLECO POWER LLC, a Louisiana limited liability company (including any additional or successor members of the Company other than Special Members, the “Member”), and the Company.

          WHEREAS, in accordance with the Limited Liability Company Law of the State of Louisiana, La. R.S. 12:1301, et seq., as amended (as amended from time to time, the “LLC Law”), the Member desires to enter into this Agreement to provide for the formation of the Company, to set forth the rights, powers and interests of the Member with respect to the Company and its Membership Interest (as defined in Section 6.01 below) therein, and to provide for the management of the business and operations of the Company; and

          WHEREAS, the Member has caused to be filed Articles of Organization and an Initial Report with the Secretary of State of the State of Louisiana to form the Company under and pursuant to the LLC Law.

          NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Member, intending to be legally bound, hereby agrees as follows:

ARTICLE I

GENERAL PROVISIONS

          SECTION 1.01 Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in Appendix A, attached hereto and made a part hereof.

          SECTION 1.02 Sole Member; Registered Office and Agent.

          (a) The initial sole member of the Company shall be Cleco Power LLC, a Louisiana limited liability company, or any successor as sole member pursuant to Sections 1.02(c), 6.06 and 6.07. The initial registered office and initial registered agent of the Company in the State of Louisiana are stated in the Company’s Initial Report. The Managers may change said registered office and registered agent from one location to another in the State of Louisiana in accordance with the LLC Law. The Managers shall provide notice of any such change to the Indenture Trustee.

          (b) Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon the transfer or assignment by the Member of all of its Membership Interest and the admission of the transferee or an additional member of the Company pursuant to Sections 6.06 and 6.07), each Person serving at that

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time as an Independent Manager pursuant to the terms of this Agreement shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. The Special Members shall automatically without any action of any Person cease to be a member of the Company upon the admission to the Company of a substitute Member. No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement, and (ii) such successor has also accepted his or her appointment as Independent Manager pursuant to this Agreement. Upon the occurrence of any event that causes there to be no Member of the Company (and thus the only member of the Company being one or more Special Members), the Personal Representative of such former Member shall be authorized to seek the admittance of a substitute Member of the Company pursuant to Sections 6.06, 6.07 and 9.01, which substitute Member shall be such Personal Representative or its nominee or designee. Pending such admission of the Personal Representative or its nominee or designee, as the case may be, as a substitute Member, such former Member (or if such former Member no longer exists, its Personal Representative), shall retain the Membership Interest of such former Member, including without limitation, all economic rights associated with such interest (which economic rights shall continue to represent the sole economic rights associated with any ownership interest in the Company). Upon the admission to the Company of a substitute Member, such substitute Member shall acquire, upon terms agreed to by the former Member (or its Personal Representative) and the substitute Member, all right, title and interest in and to such former Member’s Membership Interest and each Special Member’s limited liability company interest in the Company who ceases being a member at such time. Each Special Member shall be a member of the Company that, except to the minimum extent required by the LLC Law, has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets (and no Special Member shall be treated as a member of the Company for federal income tax purposes). A Special Member’s capital contribution to the Company shall be the services of the Special Member. A Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the LLC Law, each Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including the merger, consolidation or conversion of the Company. In order to implement the admission to the Company of each Special Member, each Person acting as an Independent Manager pursuant to this Agreement shall execute a counterpart to the Management Agreement in the form attached hereto as Exhibit A. Prior to his or her admission to the Company as Special Member, each Person acting as an Independent Manager pursuant to this Agreement shall not be a member of the Company. A “Special Member” means, upon such Person’s admission to the Company as a member of the Company pursuant to this Section 1.02(b), a Person acting as Independent Manager, in such Person’s capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this Agreement. For purposes of this Agreement, a Special Member is not included within the defined term “Member.”

     (c) Except as set forth in paragraph (b) above pertaining to the automatic admission of a Special Member as a member of the Company, and except as set

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forth in Section 6.07(b), the Company may admit additional members with the unanimous affirmative vote of the Managers, which vote must include the affirmative vote of the Independent Managers, and the written agreement of the Member. Notwithstanding the preceding sentence, it shall be a condition to the admission of any additional member other than a Special Member under paragraph (b) above that the sole Member shall have received an opinion (in form and substance reasonably satisfactory to the Member and the Indenture Trustee) of Independent tax counsel (as selected by the Member) that the admission of such additional member shall not cause the Company to be treated, for federal income tax purposes, as having more than a “sole owner” and that the Company shall not be treated, for federal income tax purposes, as an entity separate from such “sole owner.” The admission of a new Member as a transferee of a Member is further provided for in Sections 6.06 and 6.07.

          SECTION 1.03 Other Offices. Subject to Section 1.07(a), the Company may have such other offices that may at any time be established by the Managers for the Company at any place or places within or outside the State of Louisiana. The Managers shall provide notice to the Indenture Trustee of any change in the location of the Company’s office.

          SECTION 1.04 Name. The name of the Company shall be “Cleco Katrina/Rita Hurricane Recovery Funding LLC.” The name of the Company may be changed from time to time by the Managers with prior agreement by the Member and 10 days’ prior written notice to the Indenture Trustee, and the filing of appropriate articles of amendment to the Articles of Organization with the Louisiana Secretary of State as required by the LLC Law.

          SECTION 1.05 Purpose; Nature of Business Permitted; Powers. The purposes for which the Company is formed are limited to:

     (a) purchase, acquire, own, hold, administer, service or enter into agreements regarding the receipt and servicing of Storm Recovery Property and the other Storm Recovery Bond Collateral, along with certain other related assets;

     (b) manage, sell, assign, pledge, collect amounts due on or otherwise deal with the Storm Recovery Property and the other Storm Recovery Bond Collateral and related assets to be so acquired in accordance with the terms of the Basic Documents;

     (c) negotiate, authorize, execute, deliver, assume the obligations under, and perform its duties under, the Basic Documents and any other agreement or instrument or document relating to the activities set forth in clauses (a) and (b) of this Section 1.05; provided, that (i) each party to any such agreement under which material obligations are imposed upon the Company shall covenant that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of each Series of the Storm Recovery Bonds and any other amounts owed under the Indenture, acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the

3

property of the Company, or ordering the winding up or liquidation of the affairs of the Company; and (ii) the Company shall be permitted to incur additional indebtedness or other liabilities payable to service providers and trade creditors in the ordinary course of business in connection with the foregoing activities;

     (d) invest proceeds from Storm Recovery Property, the other Storm Recovery Bond Collateral and other assets and any capital and income of the Company in accordance with the applicable agreements or instruments entered into in connection with the issuance of Storm Recovery Bonds or as otherwise determined by the Managers and not inconsistent with the Company’s Articles of Organization, this Agreement and the Securitization Law;

     (e) file with the SEC one or more registration statements, including any pre-effective or post-effective amendments thereto and any registration statement filed pursuant to Rule 462(b) under the Securities Act (including any prospectus supplement, prospectus and exhibits contained therein) and file such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents necessary or desirable to register the Storm Recovery Bonds under the securities or “Blue Sky” laws of various jurisdictions;

     (f) authorize, execute, deliver and issue Storm Recovery Bonds from time to time;

     (g) pledge its interest in Storm Recovery Property and other Storm Recovery Bond Collateral to the Indenture Trustee under the Indenture in order to secure the Storm Recovery Bonds; and

     (h) engage in any lawful act or activity and exercise any powers permitted to limited liability companies formed under the laws of the State of Louisiana that, in either case, are incidental to, or necessary, suitable or convenient for, the accomplishment of the above-mentioned purposes.

     The Company shall engage only in activities related to the purposes set forth in this Section 1.05 or required or authorized by the terms of the Basic Documents or other agreements referenced above. The Company shall have all powers reasonably incidental, necessary, suitable or convenient to effect the foregoing purposes, including all powers granted under the LLC Law. The Company, any Manager, including any Independent Manager, or any officer of the Company, acting singly or collectively, on behalf of the Company, may enter into and perform the Basic Documents and all registration statements, documents, agreements, certificates or financing statements contemplated thereby or related thereto, all without any further act, vote or approval of any Member, Manager or other Person, notwithstanding any other provision of this Agreement, the LLC Law, or other applicable law, rule or regulation. The authorization set forth in the preceding sentence shall not be deemed a restriction on the power and authority of any Manager or any officer to enter into other agreements or documents on behalf of the Company as authorized pursuant to this Agreement, the Company’s Articles of Organization and the LLC Law. The Company shall possess and may exercise all the powers and privileges granted by the LLC Law or by any other law, this Agreement or the Company’s Articles of Organization,

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together with any powers incidental thereto, insofar as such powers and privileges are incidental, necessary, suitable or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.

          SECTION 1.06 Limited Liability Company Operating Agreement; Articles of Organization; Initial Report. This Agreement shall constitute an “operating agreement” within the meaning of the LLC Law. The Member has caused Articles of Organization and an Initial Report of the Company to be executed and filed in the office of the Secretary of State of the State of Louisiana on October 30, 2007 (such execution and filing being hereby ratified and approved in all respects).

          SECTION 1.07 Separate Existence. The Member and the Managers shall take all steps necessary to continue the identity of the Company as a separate legal entity and, except for financial reporting purposes (to the extent required by generally accepted accounting principles) and for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, to make it apparent to third Persons that (a) the Company is an entity with assets and liabilities distinct from those of the Member, Affiliates of the Member or any other Person, and (b) the Company is not a division of any of the Affiliates of the Company or any other Person. In that regard, and without limiting the foregoing in any manner, the Company shall:

     (a) maintain office space separate and clearly delineated from the office space of any Affiliate;

     (b) maintain the assets of the Company in such a manner that it is not costly or difficult to segregate, identify or ascertain its individual assets from those of any other Person, including any Affiliate;

     (c) conduct all transactions with Affiliates on an arm’s-length basis;

     (d) not guarantee, become obligated for or pay the debts of any Affiliate or hold the credit of the Company out as being available to satisfy the obligations of any Affiliate or other Person (nor, except as contemplated in the Basic Documents, indemnify any Person for losses resulting therefrom), nor, except as contemplated in the Basic Documents, have any of its obligations guaranteed by any Affiliate or hold the Company out as responsible for the debts of any Affiliate or other Person or for the decisions or actions with respect to the business and affairs of any Affiliate, nor seek or obtain credit or incur any obligation to any third party based upon the creditworthiness or assets of any Affiliate or any other Person (i.e. other than based on the assets of the Company) nor allow any Affiliate to do such things based on the credit or assets of the Company;

     (e) except as expressly otherwise permitted hereunder or under any of the Basic Documents, not permit the commingling or pooling of the Company’s funds or other assets with the funds or other assets of any Affiliate;

     (f) maintain separate deposit and other bank accounts and funds (separately identifiable from those of the Member or any other Person) to which no Affiliate has any

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access, which accounts shall be maintained in the name and, to the extent not inconsistent with applicable federal tax law, with the tax identification number of the Company;

     (g) maintain full books of accounts and records (financial or other) and financial statements separate from those of its Affiliates or any other Person (except as described herein with respect to tax purposes and financial reporting), prepared and maintained in accordance with generally accepted accounting principles (including, all resolutions, records, agreements or instruments underlying or regarding the transactions contemplated by the Basic Documents or otherwise) and audited annually by an Independent accounting firm which shall provide such audit to the Indenture Trustee;

     (h) pay its own liabilities out of its own funds, including fees and expenses of the administrator pursuant to the Administration Agreement and the Servicer pursuant to any Servicing Agreement;

     (i) compensate at prudent and reasonable levels (either directly or through reimbursement of the Company’s allocable share of any shared expenses) all employees, consultants and agents and Affiliates, to the extent applicable, for services provided to the Company by such employees, consultants and agents or Affiliates, in each case, from the Company’s own funds, and maintain a sufficient number of employees in light of its contemplated operations;

     (j) allocate fairly and reasonably the salaries of and the expenses related to providing the benefits of officers or other employees shared with the Member, any Special Member, any Affiliate or any Manager;

     (k) allocate fairly and reasonably any overhead shared with the Member, any Special Member, any Affiliate or any Manager;

     (l) pay from its own bank accounts for accounting and payroll services, rent, lease and other expenses (or the Company’s allocable share of any such amounts provided by one or more other Affiliates) and not have such operating expenses (or the Company’s allocable share thereof) paid by any Affiliates, provided, that the Member shall be permitted to pay the initial organization expenses of the Company and certain of the expenses related to the transactions contemplated by the Basic Documents as provided therein;

     (m) maintain adequate capitalization to conduct its business and affairs considering the Company’s size and the nature of its business and intended purposes and, after giving effect to the transactions contemplated by the Basic Documents, refrain from engaging in a business for which its remaining property represents an unreasonably small capital;

     (n) conduct all of the Company’s business (whether in writing or orally) solely in the name of the Company through the Company’s Managers, employees, officers and agents and hold the Company out as an entity separate from any Affiliate;

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     (o) not make or declare any distributions of cash or property to the Member except in accordance with appropriate limited liability company formalities and only consistent with sound business judgment to the extent that it is permitted pursuant to the Basic Documents and not violative of any applicable law;

     (p) otherwise practice and adhere to all limited liability company procedures and formalities to the extent required by this Agreement, all other appropriate constituent documents or applicable law;

     (q) not appoint an Affiliate or any employee of an Affiliate as an agent of the Company, except as otherwise permitted in the Basic Documents (although such Persons can qualify as a Manager or as an officer of the Company);

     (r) not acquire obligations or securities of or make loans or advances to or pledge its assets for the benefit of the Member or any Affiliate;

     (s) not permit the Member or any Affiliate to acquire obligations of or make loans or advances to the Company;

     (t) except as expressly provided in the Basic Documents, not permit the Member or any Affiliate to guarantee, pay or become liable for the debts of the Company nor permit any such Person to hold out its creditworthiness as being available to pay the liabilities and expenses of the Company nor, except for the indemnities in this Agreement and the Basic Documents, indemnify any Person for losses resulting therefrom;

     (u) maintain separate minutes of the actions of the Member and the Managers, including the transactions contemplated by the Basic Documents;

     (v) cause (i) all written and oral communications, including letters, invoices, purchase orders, and contracts, of the Company to be made solely in the name of the Company, (ii) the Company to have its own tax identification number (to the extent not inconsistent with applicable federal tax law), stationery, checks and business forms, separate from those of any Affiliate, (iii) all Affiliates not to use the stationery or business forms of the Company, and cause the Company not to use the stationery or business forms of any Affiliate, and (iv) all Affiliates not to conduct business in the name of the Company, and cause the Company not to conduct business in the name of any Affiliate;

     (w) direct creditors of the Company to send invoices and other statements of account of the Company directly to the Company and not to any Affiliate and cause the Affiliates to direct their creditors not to send invoices and other statements of accounts of such Affiliates to the Company;

     (x) cause the Member to maintain as official records all resolutions, agreements, and other instruments underlying or regarding the transactions contemplated by the Basic Documents;

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     (y) disclose, and cause the Member to disclose, in its financial statements the effects of all transactions between the Member and the Company in accordance with generally accepted accounting principles, and in a manner which makes it clear that (i) the Company is a separate legal entity, (ii) the assets of the Company (including the Storm Recovery Property transferred to the Company pursuant to the Sale Agreement) are not assets of any Affiliate and are not available to pay creditors of any Affiliate, and (iii) neither the Member nor any other Affiliate is liable or responsible for the debts of the Company;

     (z) treat and cause the Member to treat the transfer of Storm Recovery Property from the Member to the Company as a sale under state law (except for financial reporting and tax purposes);

     (aa) except as described herein with respect to tax purposes and financial reporting, describe and cause each Affiliate to describe the Company, and hold the Company out, as a separate legal entity and not as a division or department of any Affiliate, and promptly correct any known misunderstanding regarding the Company’s identity separate from any Affiliate or any Person;

     (bb) so long as any of the Storm Recovery Bonds are outstanding, treat the Storm Recovery Bonds as debt for all purposes and specifically as debt of the Company, other than for financial reporting, state or federal regulatory or tax purposes;

     (cc) solely for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Storm Recovery Bonds are outstanding, treat the Storm Recovery Bonds as indebtedness of the Member secured by the Storm Recovery Bond Collateral unless otherwise required by appropriate taxing authorities;

     (dd) file its own tax returns, if any, as may be required under applicable law, to the extent (i) not part of a consolidated group filing a consolidated return or returns or (ii) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;

     (ee) maintain its valid existence in good standing under the laws of the State of Louisiana and maintain its qualification to do business under the laws of such other jurisdictions as its operations require;

     (ff) not form, or cause to be formed, any subsidiaries;

     (gg) comply with all laws applicable to the transactions contemplated by this Agreement and the Basic Documents; and

     (hh) cause the Member and the Managers to observe in all material respects all limited liability company procedures and formalities, if any, required by its constituent documents and the laws of its state of formation and all other appropriate jurisdictions.

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          SECTION 1.08 Limitation on Certain Activities. Notwithstanding any other provisions of this Agreement, the Company, and the Member or Managers on behalf of the Company, shall not:

     (a) engage in any business or activity other than as set forth in Article I hereof;

     (b) without the affirmative vote of its Member and the affirmative vote of all Managers, including all Independent Managers then serving, (i) file a voluntary petition for relief under the Bankruptcy Code or similar law, (ii) file a petition or answer seeking reorganization, arrangement, composition, readjustment of debt or similar relief under any statute, law or regulation, or the appointment of a receiver, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, (iii) file an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding seeking reorganization, arrangement, composition, readjustment of debt or similar relief under any statute, law or regulation, or the entry of any order appointing a receiver, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, (iv) make a general assignment for the benefit of creditors, (v) file or otherwise initiate the filing of a motion in any bankruptcy or other insolvency proceeding in which the Member or any of its Affiliates is a debtor to substantively consolidate the assets and liabilities of any such debtor with the assets and liabilities of the Company, or (vi) take any company action in furtherance of any voluntary bankruptcy filing or institution of any voluntary insolvency or bankruptcy proceeding;

     (c) without the affirmative vote of all Managers, including all Independent Managers, and then only to the extent permitted by the Basic Documents, convert, merge or consolidate with any other Person or sell, mortgage, pledge or otherwise transfer all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other Person;

     (d) take any action, file any tax return, or make any election inconsistent with the treatment of the Company, for purposes of federal income taxes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the Member;

     (e) incur any indebtedness or assume or guarantee any indebtedness of any Person (other than the indebtedness incurred under the Basic Documents); or

     (f) to the fullest extent permitted by law, without the affirmative vote of its Member and the affirmative vote of all Managers, including all Independent Managers, institute, execute, consent to or acquiesce in any dissolution, liquidation, or winding up of the Company.

It is the fiduciary duty of each Manager, including the Independent Managers, to maintain the bankruptcy remoteness of the Company and the separateness of the Company and the Member.

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A Manager, including the Independent Managers, shall have no personal liability to the Member or any Special Member for monetary damages for breach of any fiduciary duty provided for in La. R.S. 12:1314, except liability solely for the amount of a financial benefit received by such Manager to which he or she is not entitled or for an intentional violation of a criminal law.

          SECTION 1.09 No State Law Partnership. No provisions of this Agreement shall be deemed or construed to constitute a partnership (including a limited partnership) or joint venture, or to constitute the Member or any Special Member as a partner or joint venturer of or with any Manager or the Company, for any purposes.

ARTICLE II

CAPITAL

          SECTION 2.01 Initial Capital. The initial capital of the Company shall be the sum of cash contributed to the Company by the Member (the “Capital Contribution”) in the amount set out opposite the name of the Member on Schedule A hereto, as amended from time to time and incorporated herein by this reference.

          SECTION 2.02 Additional Capital Contributions. The assets of the Company are expected to generate a return sufficient to satisfy all obligations of the Company under this Agreement and the Basic Documents and any other obligations of the Company. It is expected that no capital contributions to the Company will be necessary after the purchase of the initial Storm Recovery Property, except for capital contributions in connection with the issuance of additional Series of Storm Recovery Bonds. On or prior to the date of issuance of each Series of Storm Recovery Bonds, the Member shall make an additional contribution to the Company in an amount equal to at least 0.50% of the initial principal amount of such Series (or such other amount permitted by any Financing Order) or such greater amount as agreed to by the Member in connection with the issuance by the Company of any Series of Storm Recovery Bonds which amount the Company, in accordance with the Indenture, shall deposit into the Capital Subaccount (as defined in the Indenture) established by the Indenture Trustee. No capital contribution by the Member to the Company will be made for the purpose of mitigating losses on Storm Recovery Property that has previously been transferred to the Company, and all capital contributions shall be made in accordance with all applicable limited liability company procedures and requirements, including proper record keeping by the Managers and the Company. Each capital contribution will be acknowledged by a written receipt signed by any one of the Managers. The Member and the Managers acknowledge and agree that, notwithstanding anything in this Agreement to the contrary, such additional contribution will be managed by an investment manager selected by the Indenture Trustee who shall invest such amounts only in specified eligible investments, and all income earned thereon shall be allocated or paid by the Indenture Trustee in accordance with the provisions of the Indenture.

          SECTION 2.03 Capital Account. A Capital Account shall be established and maintained for the Member on the Company’s books (the “Capital Account”).

          SECTION 2.04 Interest. No interest shall be paid or credited to the Member on its Capital Account or upon any undistributed profits left on deposit with the Company. Except

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as provided herein or by law, the Member shall have no right to demand or receive the return of its Capital Contribution. Except as required by law, a Special Member shall have no right to demand or receive the return of his or her Capital Contribution or the value thereof.

ARTICLE III

ALLOCATIONS; BOOKS

          SECTION 3.01 Allocations of Income and Loss.

          (a) Book Allocations. The net income and net loss of the Company shall be allocated entirely to the Member.

          (b) Tax Allocations. Because the Company is not making (and will not make) an election to be treated as an association taxable as a corporation under Section 301.7701-3(a) of the Internal Revenue Service Treasury Regulations, and because the Company is a business entity that has a single owner and is not a corporation, it is expected to be disregarded as an entity separate from its owner for federal income tax purposes under Section 301.7701-3(b)(1) of the Internal Revenue Service Treasury Regulations. Accordingly, all items of income, gain, loss, deduction and credit of the Company for all taxable periods will be treated for federal income tax purposes, and for state and local income and other tax purposes to the extent permitted by applicable law, as realized or incurred directly by the Member. To the extent not so permitted, all items of income, gain, loss, deduction and credit of the Company shall be allocated entirely to the Member as permitted by applicable tax law, and the Member shall pay (or indemnify the Company, the Indenture Trustee and each of their officers, managers, employees or agents for, and defend and hold harmless each such person from and against its payment of) any taxes levied or assessed upon all or any part of the Company’s property or assets based on existing law as of the date hereof, including any sales, gross receipts, general corporation, personal property, privilege, franchise or license taxes (but excluding any taxes imposed as a result of a failure of such person to properly withhold or remit taxes imposed with respect to payments on any Storm Recovery Bond). The Indenture Trustee (on behalf of the Secured Parties) shall be a third party beneficiary of the Member’s obligations set forth in this Section 3.01, it being understood that bondholders shall be entitled to enforce their rights against the Member under this Section 3.01 solely through a cause of action brought for their benefit by the Indenture Trustee.

          SECTION 3.02 Company to be Disregarded for Tax Purposes. The Company shall comply with the applicable provisions of the Internal Revenue Code and the applicable Internal Revenue Service Treasury Regulations thereunder in the manner necessary to effect the intention of the parties that the Company be treated, for federal income tax purposes, as a disregarded entity that is not separate from the Member pursuant to Internal Revenue Service Treasury Regulations Section 301.7701-1 et seq. and that the Company be accorded such treatment until its dissolution pursuant to Article IX hereof and shall take all actions, and shall refrain from taking any action, required by the Internal Revenue Code or Internal Revenue Service Treasury Regulations thereunder in order to maintain such status of the Company. In addition, for federal income tax purposes, the Company may not claim any credit on, or make

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any deduction from the principal or premium, if any, or interest payable in respect of, the Storm Recovery Bonds (other than amounts properly withheld from such payments under the Internal Revenue Code or other tax laws) or assert any claim against any present or former bondholder by reason of the payment of the taxes levied or assessed upon any part of the Storm Recovery Bond Collateral.

          SECTION 3.03 Books of Account; Fiscal Year.

          (a) Books of Account. At all times during the continuance of the Company, the Company shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with generally accepted accounting principles. In addition, the Company shall keep all records required to be kept pursuant to the LLC Law, including those listed in La. R.S. 12:1319.

          (b) Fiscal Year. The Company shall use the accounting year and taxable year of the Member. At the time of execution of this Agreement, the accounting year and income tax year of the Member is the calendar year.

          SECTION 3.04 Access to Accounting Records. All books and records of the Company shall be maintained at any office of the Company or at the Company’s principal place of business, and the Member, and its duly authorized representative, shall have access to them at such office of the Company and the right to inspect and copy them at reasonable times.

          SECTION 3.05 Annual Tax Information. The Managers shall cause the Company to deliver to the Member all information necessary for the preparation of the Member’s federal income tax return.

          SECTION 3.06 Internal Revenue Service Communications. The Member shall communicate and negotiate with the Internal Revenue Service on any federal tax matter on behalf of the Member and the Company.

ARTICLE IV

MEMBER

          SECTION 4.01 Powers. Subject to the provisions of this Agreement and the LLC Law, the Company shall be managed by or under the authority of the Managers. Without prejudice to such general powers granted to the Managers, it is hereby expressly declared that the Member shall have the power to select and remove the Managers and all officers, agents and employees of the Company, prescribe such powers and duties for them as may be consistent with the LLC Law and other applicable law and this Agreement, fix their compensation, and require from them security for faithful service; provided, that prior to issuance of any Storm Recovery Bonds, the Member shall appoint at least one Independent Manager, and thereafter, except as provided in Section 7.06, at all times the Company shall have at least one Independent Manager. The initial Independent Manager shall be added to Schedule B hereto as provided in Section 7.01(a) upon the execution and delivery of the Management Agreement in the form attached hereto as Exhibit A; no further action is required regarding the appointment of such Independent Manager.

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          SECTION 4.02 Other Ventures. Subject to the limitations imposed on Independent Managers set forth in Article VII, it is expressly agreed that the Member, the Managers and any Affiliates, officers, directors, managers, stockholders, partners or employees of the Member, may engage in other business ventures of any nature and description, whether or not in competition with the Company, independently or with others, and the Company shall not have any rights in and to any independent venture or activity or the income or profits derived therefrom.

          SECTION 4.03 Actions by the Member. All actions of the Member may be taken by written resolution of the Member which shall be signed on behalf of the Member by an authorized officer of the Member and filed with the records of the Company.

          SECTION 4.04 Certificates for Membership Interest. The Membership Interests shall not be represented by any certificate of membership or other evidence of membership other than the Articles of Organization and this Agreement.

          SECTION 4.05 Restrictions on the Member. The Member shall not apply for judicial dissolution of the Company, and the Member is not permitted to and shall not withdraw from or otherwise cease to be a member of the Company for any reason whatsoever, including that the Member itself shall not dissolve or otherwise terminate its legal existence, unless an acceptable new member of the Company is substituted for the Member in compliance with the Basic Documents, Securitization Law and Financing Order, until all Storm Recovery Bonds and all financing costs have been paid in full.

ARTICLE V

OFFICERS

          SECTION 5.01 Designation; Term; Qualifications.

          (a) Officers. The Managers may, from time to time, designate one or more Persons to be officers of the Company. Any officer so designated shall have such title and authority and perform such duties as the Managers may, from time to time, delegate to them. Each officer shall hold office for the term for which such officer is designated and until its successor shall be duly designated and shall qualify or until its death, resignation or removal as provided in this Agreement. Any Person may hold any number of offices. No officer need be a Manager, a Louisiana resident, or a United States citizen. The Member hereby appoints the Persons identified on Schedule C to be the initial officers of the Company.

          (b) President. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Managers, shall be responsible for the general and active management of the business of the Company and shall see that all orders and resolutions of the Managers are carried into effect. The President or any other officer authorized by the President or the Managers may execute all contracts, except: (i) where required or permitted by law or this Agreement to be otherwise signed and executed,

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including Section 1.08; and (ii) where signing and execution thereof shall be expressly delegated by the Managers to some other officer or agent of the Company.

          (c) Vice President. In the absence of the President or in the event of the President’s inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Managers, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents, if any, shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

          (d) Secretary and Assistant Secretary. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Managers and record all proceedings of the meetings of the Company and of the Managers in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or shall cause to be given, notice of all meetings of the Member, if any, and special meetings of the Managers, and shall perform such other duties as may be prescribed by the Managers or the President, under whose supervision the Secretary shall serve. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Managers (or if there be no such determination, then in order of their designation), may, and shall in the absence of the Secretary or in the event of the Secretary’s inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

          (e) Treasurer and Assistant Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all funds, securities, receipts and disbursements of the Company, and shall deposit or cause to be deposited all moneys and other valuable effects in the name and to the credit of the Company in such banks, trust companies or other depositories as shall, from time to time, be designated by the Managers, or by the Treasurer if so authorized by the Managers. The Treasurer shall render or cause to be rendered to the President and the Managers, whenever requested, an account of all of the Treasurer’s transactions and of the financial condition of the Company. The Treasurer shall perform such other duties as may be assigned from time to time by the President or the Managers. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Managers (or if there be no such determination, then in the order of their designation), shall, in the absence of the Treasurer or in the event of the Treasurer’s inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

          (f) Tax Officer. One or more Tax Officers shall have the authority to communicate with the Internal Revenue Service and with state and local tax authorities, may sign tax returns, shall pay or cause to be paid taxes and shall have the authority to settle tax liabilities in the name or on behalf of the Company.

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          (g) Officers as Agents. The officers of the Company, to the extent their powers as set forth in this Agreement or otherwise vested in them by action of the Managers are not inconsistent with this Agreement, are agents of the Company for the purpose of the Company’s business and, subject to Section 1.08, the actions of the officers taken in accordance with such powers shall bind the Company.

          (h) Duties of Managers and Officers. Except to the extent otherwise provided herein, each Manager and officer of the Company shall have a fiduciary duty of loyalty and care similar to that of directors and officers of business corporations organized under the Business Corporation Law of the State of Louisiana.

          SECTION 5.02 Removal and Resignation. Any officer of the Company may be removed as such, with or without cause, by the Managers at any time. Any officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Managers.

          SECTION 5.03 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Managers.

          SECTION 5.04 Reimbursement of Expenses. The officers of the Company will not receive compensation from the Company for their services. To the extent permitted by applicable law, the Company may reimburse any officer of the Company, directly or indirectly, for reasonable out-of-pocket expenses prudently incurred by such officer in connection with his or her services rendered to the Company. Such reimbursement shall be determined by the Managers without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.

ARTICLE VI

MEMBERSHIP INTEREST

          SECTION 6.01 General. “Membership Interest” means all of the limited liability company interest of the Member in the Company. The Membership Interest constitutes movable (personal) property and, subject to Section 6.06, shall be freely transferable and assignable in whole but not in part upon registration of such transfer and assignment on the books of the Company in accordance with the procedures established for such purpose by the Managers of the Company.

          SECTION 6.02 Distributions. The Member shall be entitled to receive, out of the assets of the Company legally available therefor, distributions payable in cash in such amounts, if any, as the Managers shall declare. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate La. R.S. 12:1327 or any other applicable law or any Basic Document.

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     SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up.

          (a) In the event of any liquidation, dissolution or winding up of the Company, the Member shall be entitled to all remaining assets of the Company available for distribution to the Member after satisfaction (whether by payment or reasonable provision for payment) of all liabilities, debts and obligations of the Company.

          (b) Neither the sale of all or substantially all of the property or business of the Company, nor the merger or consolidation of the Company into or with another Person or other entity, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purpose of this Section 6.03.

     SECTION 6.04 Redemption. The Membership Interest shall not be redeemable.

     SECTION 6.05 Voting Rights.

          (a) Subject to the terms of this Agreement, the Member shall have the sole right to vote on all matters as to which members of a limited liability company shall be entitled to vote pursuant to the LLC Law and other applicable law, except as provided in paragraph (b) below.

          (b) The Managers may approve the following matters, without the requirement of a vote or approval of the Members:

               (i) the pledge or other transfer of all or substantially all of the assets of the Company pursuant to the Basic Documents;

               (ii) the incurrence of indebtedness by the Company pursuant to the Basic Documents; and

               (iii) the execution, delivery and performance by the Company of the Basic Documents.

     SECTION 6.06 Transfer of Membership Interests.

          (a) The Member may transfer its Membership Interest, in whole but not in part, but the transferee shall not be admitted as a Member except in accordance with Section 6.07. Until the transferee is admitted as a Member, the Member shall continue to be the sole member of the Company (subject to Section 1.02) and to be entitled to exercise any rights or powers of a Member of the Company with respect to the Membership Interest transferred.

          (b) To the fullest extent permitted by law, any purported transfer of any Membership Interest in violation of the provisions of this Agreement shall be wholly void and shall not effectuate the transfer contemplated thereby. Notwithstanding anything contained herein to the contrary and to the fullest extent permitted by law, the Member may not transfer any Membership Interest in violation of any provision of this Agreement or of any Basic Document or in violation of any applicable federal or state securities laws.

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     SECTION 6.07 Admission of Transferee as Member.

          (a) A transferee of a Membership Interest desiring to be admitted as a Member must execute a counterpart of, or an agreement adopting, this Agreement and, except as permitted by paragraph (b) below, shall not be admitted without unanimous affirmative vote of the Managers, which vote must include the affirmative vote of all of the Independent Managers. Upon admission of the transferee as a Member, the transferee shall have the rights, powers and duties and shall be subject to the restrictions and liabilities of the Member under this Agreement and the LLC Law. The transferee shall also be liable, to the extent of the Membership Interest transferred, for the unfulfilled obligations, if any, of the transferor Member to make capital contributions to the Company, but shall not be obligated for liabilities unknown to the transferee at the time such transferee was admitted as a Member and that could not be ascertained from this Agreement. Except as set forth in paragraph (b) below, whether or not the transferee of a Membership Interest becomes a Member, the Member transferring the Membership Interest is not released from any liability to the Company under this Agreement or the LLC Law.

          (b) The approval of the Managers, including the Independent Managers, shall not be required for the transfer of the Membership Interest from the Member to any successor pursuant to the terms of the Sale Agreement or the admission of such Person as a Member, subject to the satisfaction of the condition in Section 1.02(c) hereof. Once the transferee of a Membership Interest pursuant to this paragraph (b) becomes a Member, the prior Member shall be released from any liability to the Company under this Agreement and the LLC Law.

ARTICLE VII

MANAGERS

     SECTION 7.01 Managers.

          (a) Subject to Sections 1.08 and 4.01, the business and affairs of the Company shall be managed by or under the direction of two or more Managers designated by the Member. Subject to the terms of this Agreement, the Member may determine at any time in its sole and absolute discretion the number of Managers. Subject in all cases to the terms of this Agreement, the authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, upon notice to all Managers; provided, that, except as provided in Section 7.06, no later than the issuance of the first series of Storm Recovery Bonds, the Member shall appoint an Independent Manager and the Company shall thereafter have an Independent Manager at all times. The initial number of Managers shall be four. Each Manager designated by the Member shall hold office until a successor is elected and qualified or until such Manager’s earlier death, resignation, expulsion or removal. Each Manager, including any Independent Manager, shall execute and deliver the Management Agreement in the form attached hereto as Exhibit A. Managers need not be a Member. The initial Managers designated by the Member are listed on Schedule B hereto. The initial Independent Manager will be appointed and added to Schedule B no later than the issuance of the first series of Storm Recovery Bonds, and at

17

such time the number of Managers shall be changed to five (without the need to amend this Agreement). Each Manager, including each Independent Manager, is hereby deemed to be a “manager” within the meaning of La. R.S. 12:1301(12).

          (b) Each Manager shall be designated by the Member and shall hold office for the term for which designated (or, if no term is designated, for the duration provided in paragraph (a) above) and until a successor has been designated.

          (c) The Managers shall be obliged to devote only as much of their time to the Company’s business as shall be reasonably required in light of the Company’s business and objectives. A Manager shall perform his or her duties as a Manager in good faith, in a manner he or she reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent Person in a like position would use under similar circumstances.

          (d) Except as otherwise provided in this Agreement, the Managers shall act by the affirmative vote of a majority of the Managers at a meeting or as provided in paragraph (e) below. Each Manager shall have the authority to sign duly authorized agreements and other instruments on behalf of the Company without the joinder of any other Manager.

          (e) Subject to the terms of this Agreement, any action may be taken by the Managers without a meeting and without prior notice if authorized by the written consent of a majority of the Managers (or such greater number as is required by this Agreement), which written consent shall be filed with the records of the Company.

          (f) Subject to Section 7.10, every Manager is an agent of the Company for the purpose of its business, and the act of every Manager, including the execution in the Company name of any instrument for carrying on the business of the Company, binds the Company, unless such act is in contravention of this Agreement or unless the Manager so acting otherwise lacks the authority to act for the Company and the Person with whom he or she is dealing has knowledge of the fact that he or she has no such authority.

     SECTION 7.02 Powers of the Managers

          (a) Subject to the terms of this Agreement, the Managers may exercise all powers of the Company and do all such lawful acts and things as are not prohibited by the LLC Law, other applicable law or this Agreement and shall have the right and authority to conduct, manage and control the affairs and business of the Company, and to make such rules and regulations therefor consistent with the LLC Law and other applicable law and this Agreement, including, without limitation, the right and authority to take all actions which the Managers deem incidental, necessary, suitable or convenient for the day-to-day management and conduct of the Company’s business. Without limiting the generality of the foregoing, the Managers shall have the right and authority to change the registered agent and registered office of the Company in Louisiana from one location to another; and subject to Section 1.07(a), to fix and locate from time to time one or more other offices of the

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Company within or without the State of Louisiana for the conduct of the business of the Company. All duly authorized instruments, contracts, agreements and documents providing for the acquisition or disposition of property of the Company shall be valid and binding on the Company if executed by one or more of the Managers. The Managers are authorized to approve the matters specified in Section 6.05(b) without the requirement of a vote or approval of the Member.

          (b) The Independent Managers may not delegate their duties, authorities or responsibilities hereunder. If any Independent Manager resigns, dies or becomes incapacitated, or such position is otherwise vacant, no action requiring the unanimous affirmative vote of the Managers shall be taken until a successor Independent Manager is appointed by the Member and qualifies and approves such action.

          (c) Except as provided in this Agreement, including Section 1.08, in exercising their rights and performing their duties under this Agreement, any Independent Manager shall have a fiduciary duty of loyalty and care similar to that of a director of a business corporation organized under the Business Corporation Law of the State of Louisiana.

          (d) No Independent Manager shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.

     SECTION 7.03 Compensation, Reimbursement of Expenses

          (a) The Company shall pay each Independent Manager an annual fee in an amount to be determined from time to time by the Managers other than the Independent Managers (the “Independent Manager Fee”), including by contract between the Company and any Independent Manager. Such fees shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.

          (b) Except as provided above in Section 7.03(a), the Managers will not receive compensation from the Company for their services. To the extent permitted by applicable law, the Company may reimburse any Manager, directly or indirectly, for reasonable out-of-pocket expenses prudently incurred by such Manager in connection with his or her services rendered to the Company. Such reimbursement shall be determined by the Managers without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.

     SECTION 7.04 Removal of Managers.

          (a) Subject to Section 4.01 and 7.05, the Member may remove any Manager with or without cause at any time, whether at a meeting called expressly for that purpose or by any other method allowed for Member action.

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          (b) Subject to Sections 4.01 and 7.05, any removal of a Manager shall become effective on such date as may be specified by the Member and in a notice delivered to any remaining Managers or the Manager designated to replace the removed Manager (except that it shall not be effective on a date earlier than the date such notice is delivered to the remaining or newly-elected Manager).

          SECTION 7.05 Resignation of Manager. A Manager, other than an Independent Manager, may resign as a Manager at any time by 30 days’ prior written notice to the Member. An Independent Manager may not withdraw or resign as a Manager of the Company without the consent of the Member. No resignation or removal of an Independent Manager, and no appointment of a successor Independent Manager, shall be effective until such successor (i) shall have accepted his or her appointment as an Independent Manager by a written instrument, which may be a counterpart signature page to the Management Agreement, and (ii) shall have executed a counterpart to this Agreement.

          SECTION 7.06 Vacancies. Subject to Section 4.01, any vacancies among the Managers shall be filled by the Member in its discretion. In the event of a vacancy in the position of Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent Manager. The Managers shall have no right to fill any vacancies in the Board of Managers.

          SECTION 7.07 Meetings of the Managers. The Managers may hold meetings, both regular and special, within or outside the State of Louisiana. Regular meetings of the Managers may be held without notice at such time and at such place as shall from time to time be determined by the Managers. Special meetings of the Managers may be called by the President on not less than one day’s notice to each Manager by telephone, facsimile, mail, telegram or any other means of communication, and special meetings shall be called by the President or Secretary in like manner and with like notice upon the written request of any one or more of the Managers.

          SECTION 7.08 Electronic Communications. The Managers, or any committee designated by the Managers, may participate in meetings of the Managers, or any committee, by means of telephone conference or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in Person at the meeting. If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.

          SECTION 7.09 Committees of Managers.

     (a) The Managers may, by resolution passed by a majority of the Managers, designate one or more committees, each committee to consist of one or more of the Managers. The Managers may designate one or more Managers as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

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     (b) In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another Manager to act at the meeting in the place of any such absent or disqualified member.

     (c) Any such committee, to the extent provided in a resolution of the Managers, shall have and may exercise all the powers and authority of the Managers in the management of the business and affairs of the Company. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Managers. Each committee shall keep regular minutes of its meetings and report the same to the Board of Managers at its next official meeting.

          SECTION 7.10 Limitations on Independent Managers. All rights, powers and authority of the Independent Managers shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement.

ARTICLE VIII

EXPENSES

          SECTION 8.01 Expenses. Except as otherwise provided in this Agreement or the Basic Documents, the Company shall be responsible for all expenses and the allocation thereof, including without limitation:

          (a) all expenses incurred by the Member or its Affiliates in organizing the Company;

          (b) all expenses related to the business of the Company and all routine administrative expenses of the Company, including the maintenance of books and records of the Company, the preparation and dispatch to the Member of checks, financial reports, tax returns and notices required pursuant to this Agreement;

          (c) all expenses incurred in connection with any litigation or arbitration involving the Company (including the cost of any investigation and preparation) and the amount of any judgment or settlement paid in connection therewith;

          (d) all expenses for indemnity or contribution payable by the Company to any Person;

          (e) all expenses incurred in connection with the collection of amounts due to the Company from any Person;

          (f) all expenses incurred in connection with the preparation of amendments to this Agreement;

          (g) all expenses incurred in connection with the liquidation, dissolution and winding up of the Company; and

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          (h) all expenses otherwise allocated in good faith to the Company by the Managers.

ARTICLE IX

PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP

          SECTION 9.01 Existence.

               (a) The Company shall have a perpetual existence. So long as any of the Company’s Storm Recovery Bonds shall remain outstanding, the Member shall not be entitled to consent to the dissolution of the Company.

               (b) Notwithstanding any provision of this Agreement, the bankruptcy of the Member or Special Member will not cause such Member or Special Member to cease to be a member of the Company, and upon the occurrence of such an event, the business of the Company shall continue without dissolution. Upon the occurrence of any event that causes the last remaining Member of the Company to cease to be a member of the Company, to the fullest extent permitted by law, the Personal Representative of such member is hereby authorized to and shall continue the Company in conjunction with the Special Members as provided in Section 1.02(b) and promptly and in any event within 90 days after the occurrence of the event that terminated the continued membership of such member in the Company, shall seek the admission of the Personal Representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company in the Company.

          SECTION 9.02 Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of the earliest of the following events:

     (a) subject to Section 1.08(f), the election to dissolve the Company made in writing by the Member and each Manager, including the Independent Managers, as permitted under the Basic Documents and after the discharge in full of the Storm Recovery Bonds; or

     (b) the entry of a decree of judicial dissolution of the Company pursuant to La. R.S. 12:1335.

The occurrence of any event that causes the last remaining Member of the Company to cease to be a Member of the Company shall not, absent the occurrence of an event specified in paragraph (a) or (b) above, cause the dissolution of the Company, which shall continue its business and existence with the admission of new members as required by Section 1.02(b).

          SECTION 9.03 Accounting. In the event of the dissolution, liquidation and winding-up of the Company, a proper accounting shall be made of the Capital Account of the Member and of the net income or net loss of the Company from the date of the last previous accounting to the date of dissolution.

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          SECTION 9.04 Articles of Dissolution. As soon as possible following the occurrence of any of the events specified in Section 9.02 and the commencement of the winding up of the Company, the Person winding-up the business and affairs of the Company, as an authorized Person, shall cause to be executed Articles of Dissolution and file the Articles of Dissolution as required by the LLC Law.

          SECTION 9.05 Winding Up. Upon the occurrence of any event specified in Section 9.02, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Managers shall be responsible for overseeing the winding-up and liquidation of the Company, shall take full account of the liabilities of the Company and its assets, shall either cause its assets to be sold or distributed, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section 9.06.

          SECTION 9.06 Order of Payment of Liabilities Upon Dissolution. After determining that all debts and liabilities of the Company, including all contingent, conditional or unmatured liabilities of the Company, in the process of winding-up, including, without limitation, debts and liabilities to the Member in the event it is a creditor of the Company to the extent otherwise permitted by law, have been paid or adequately provided for, the remaining assets shall be distributed in cash or in kind to the Member.

          SECTION 9.07 Limitations on Payments Made in Dissolution. Except as otherwise specifically provided in this Agreement, the Member shall only be entitled to look solely to the assets of the Company for the return of its positive Capital Account balance and shall have no recourse for its Capital Contribution and/or share of net income (upon dissolution or otherwise) against any Manager.

          SECTION 9.08 Limitation on Liability. Except as otherwise provided by the LLC Law and except as otherwise characterized for tax and financial reporting purposes, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member or Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or a Manager.

          SECTION 9.09 No Capital Contributions Upon Liquidation. Notwithstanding anything to the contrary in this Agreement, upon a liquidation of the Company no Member shall have any obligation to make any contribution to the capital of the Company other than any capital contributions such Member agreed to make in accordance with this Agreement.

ARTICLE X

INDEMNIFICATION

          SECTION 10.01 Indemnity. Subject to Section 10.04 hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether

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civil, criminal, administrative or investigative, except an action by or in the right of the Company, by reason of the fact that such Person is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent of the Company, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with the action, suit or proceeding if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such Person’s conduct was unlawful; but such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person’s fraud, gross negligence or willful misconduct.

          SECTION 10.02 Indemnity for Actions By or In the Right of the Company. Subject to the provisions of Section 10.04 hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member, Manager, officer, controlling Person, employee, legal representative or agent of the Company, against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by such Person in connection with the defense or settlement of the actions or suit if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company; but such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person’s fraud, gross negligence or willful misconduct. Indemnification may not be made for any claim, issue or matter as to which such Person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the Person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

          SECTION 10.03 Indemnity If Successful. The Company shall indemnify any Person who is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent of the Company, against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense of any action, suit or proceeding referred to in Sections 10.01 and 10.02 or in defense of any claim, issue or matter therein, to the extent that such Person has been successful on the merits.

          SECTION 10.04 Expenses. Any indemnification under Sections 10.01 and 10.02, as well as the advance payment of expenses permitted under Section 10.05 unless ordered by a court or advanced pursuant to Section 10.05 below, must be made by the Company only as authorized in the specific case upon a determination that indemnification of the Manager, Member, officer, controlling Person, employee, legal representative or agent is proper in the circumstances. The determination must be made:

          (a) by the Member if the Member was not a party to the act, suit or proceeding; or

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          (b) if the Member was a party to the act, suit or proceeding, then by Independent legal counsel in a written opinion.

          SECTION 10.05 Advance Payment of Expenses. The expenses of each Person who is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent, incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such Person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such Person is not entitled to be indemnified by the Company. The provisions of this Section 10.05 shall not affect any rights to advancement of expenses to which personnel other than the Member or the Managers (other than the Independent Managers) may be entitled under any contract or otherwise by law.

          SECTION 10.06 Other Arrangements Not Excluded. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this Article X:

          (a) does not exclude any other rights to which a Person seeking indemnification or advancement of expenses may be entitled under any agreement, decision of the Member or otherwise, for either an action of any Person who is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent, in the official capacity of such Person or an action in another capacity while holding such position, except that indemnification and advancement, unless ordered by a court pursuant to Section 10.05 above, may not be made to or on behalf of such Person if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action; and

          (b) continues for a Person who has ceased to be a Member, Manager, officer, employee, legal representative or agent and inures to the benefit of the successors, heirs, executors and administrators of such a Person.

ARTICLE XI

MISCELLANEOUS PROVISIONS

          SECTION 11.01 No Bankruptcy Petition; Dissolution.

          (a) To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenant and agree (or shall be deemed to have hereby covenanted and agreed) that, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of every Series of Storm Recovery Bonds and any other amounts owed under the Indenture, it will not acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company; provided, however, that nothing in this

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Section 11.01 shall constitute a waiver of any right to indemnification, reimbursement or other payment from the Company pursuant to this Agreement. This Section 11.01 is not intended to apply to the filing of a voluntary bankruptcy petition on behalf of the Company which is governed by Sections 1.08 and 7.02(d) of this Agreement.

          (b) To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenants and agrees (or shall be deemed to have hereby covenanted and agreed) that, until the termination of the Indenture and the payment in full of any Series of the Storm Recovery Bonds and any other amounts owed under the Indenture, the Member, such Special Member and such Manager will not consent to, or make application for, or institute or maintain any action for, the dissolution of the Company under La. R.S. 12:1334, 12:1335, 12:1335.1 or otherwise.

          (c) In the event that the Member, any Special Member or any Manager takes action in violation of this Section 11.01, the Company agrees that it shall file an answer with the court or otherwise properly contest the taking of such action and raise the defense that the Member, the Special Member or Manager, as the case may be, has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.

          (d) The provisions of this Section 11.01 shall survive the termination of this Agreement and the resignation, withdrawal or removal of the Member, any Special Member or any Manager. Nothing herein contained shall preclude participation by the Member, any Special Member or a Manager in assertion or defense of its claims in any such proceeding involving the Company.

          SECTION 11.02 Amendments.

          (a) The power to alter, amend or repeal this Agreement shall be only on the written consent of the Member, provided, that:

(i)

the Company shall not alter, amend or repeal any provision of Sections 1.05, 1.07, 1.08, 3.01(b), 3.02, 4.01, 4.05, 6.06, 6.07, 7.01, 7.02, 7.05, 7.10, 9.01, 9.02, Article X, Sections 11.01, 11.02, 11.03 or 11.08 of this Agreement or the definition of an Independent Manager contained herein or the requirement that at all times after the appointment of the initial Independent Manager the Company have at least one Independent Manager without, in each case, the affirmative vote of a majority of the Managers, which vote must include the affirmative vote of all Independent Managers; and

(ii)

the Company may amend Sections 5.04 and 7.03 of this Agreement, provided that if the contemplated amendment is reasonably anticipated to increase Ongoing Financing Costs, the Company must obtain the consent of the LPSC pursuant to Section 11.03.

          (b) The Company’s power to alter or amend the Articles of Organization shall be vested in the Member. Upon obtaining the approval of any

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amendment, supplement or restatement as to the Articles of Organization, the Member on behalf of the Company shall cause Articles of Amendment or an Amended and Restated Articles of Organization to be prepared, executed and filed in accordance with the LLC Law.

          SECTION 11.03 LPSC Condition. No amendment of Sections 5.04 or 7.03 of this Agreement that is reasonably anticipated to increase Ongoing Financing Costs shall be effective unless the process set forth in this Section 11.03 has been followed.

           (a) At least 31 days prior to the effectiveness of any amendment or modification subject to this Section 11.03 and after obtaining the other necessary approvals set forth in Section 11.02 above, the Member shall have delivered to the LPSC’s Executive Secretary and Executive Counsel written notification of any proposed amendment or modification, which notification shall contain:

(i)	a reference to Docket No. U-29157;
(ii)	an Officer’s Certificate stating that the proposed amendment or modification has been approved by the Company and the Member or the Special Member, if the Special Member has become a substitute member as provided in Section 1.02(b) hereof; and
(iii)	a statement identifying the person to whom the LPSC or its staff is to address any response to the proposed amendment or modification or to request additional time.

           (b) The LPSC or its staff shall, within 30 days of receiving the notification complying with Section 11.03(a) above, either:

(i)	provide notice of its consent or lack of consent to the person specified in Section 11.03(a)(iii) above, or
(ii)	be conclusively deemed to have consented to the proposed amendment or modification,

unless, within 30 days of receiving the notification complying with Section 11.03(a) above, the LPSC or its staff delivers to the office of the person specified in Section 11.03(a)(iii) above a written statement requesting an additional amount of time not to exceed 30 days in which to consider whether to consent to the proposed amendment. If the LPSC or its staff requests an extension of time in the manner set forth in the preceding sentence, then the LPSC shall either provide notice of its consent or lack of consent to the person specified in Section 11.03(a)(iii) above no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment on the last day of such extension of time. Any amendment requiring the consent of the LPSC shall become effective on the later of (x) the date proposed by the parties to such amendment and (y) the first day after the expiration of the 30-day period provided for in this Section 11.03(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.

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          (c) Following the delivery of a notice to the LPSC by the Managers under Section 11.03(a) above, the Managers shall have the right at any time to withdraw from the LPSC further consideration of any notification of a proposed amendment. Such withdrawal shall be evidenced by the prompt written notice thereof by the Managers to the LPSC, the Indenture Trustee and the Servicer.

          SECTION 11.04 Governing Law. THE VALIDITY OF THIS AGREEMENT IS TO BE DETERMINED UNDER, AND THE PROVISIONS OF THIS AGREEMENT ARE TO BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF LOUISIANA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.

          SECTION 11.05 Headings. Article, Section and subsection headings and captions are for reference purposes only and will not be considered to affect context.

          SECTION 11.06 Severability. If any part of this Agreement is found by a court of competent jurisdiction to be void, against public policy or otherwise unenforceable, that part shall be reformed by the court to the extent necessary to make such provision enforceable. If the entire provision is deemed unenforceable by the court, the provision shall be deleted. In either event, this Agreement and each of the remaining provisions of it, as so amended, shall remain in full force and effect.

          SECTION 11.07 Assigns. This Agreement is to be binding upon, and inure to the benefit of, the Member and its permitted successors and assigns.

          SECTION 11.08 Enforcement by Independent Managers. Notwithstanding any other provision of this Agreement, the Member agrees that this Agreement constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by the Independent Managers in accordance with its terms. The Independent Managers are intended beneficiaries of this Agreement.

          SECTION 11.09 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company.

          SECTION 11.10 Waiver of Partition; Nature of Interest. Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each of the Member and the Special Members hereby irrevocably waives any right or power that such Person might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding-up or termination of the Company. The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to this Agreement.

[SIGNATURE PAGE FOLLOWS]

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          IN WITNESS WHEREOF, this Agreement is hereby executed by the Company and the undersigned as the sole Member of the Company and is effective as of the date first written above.

CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC
By:	/s/ Keith D. Crump
	Name:	Keith D. Crump
	Title:	Vice President - Regulatory, Retail Operations and Resource Planning

CLECO POWER LLC
By:	/s/ Dilek Samil
	Name:	Dilek Samil
	Title:	President and COO

Signature Page to
Limited Liability Company Operating Agreement

SCHEDULE A

SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER

		MEMBERSHIP
MEMBER’S	CAPITAL	INTEREST	CAPITAL
NAME	CONTRIBUTION	PERCENTAGE	ACCOUNT
Cleco Power LLC	$1,000	100%	$1,000

SCHEDULE A

1

SCHEDULE B

INITIAL MANAGERS

Dilek Samil

Keith D. Crump

Terry L. Taylor

K. Michael Sawrie

SCHEDULE B

1

SCHEDULE C

INITIAL OFFICERS

Name	Office
Dilek Samil	President
Keith D. Crump	Vice President
Terry L. Taylor	Secretary
K. Michael Sawrie	Treasurer

SCHEDULE C

1

EXHIBIT A

MANAGEMENT AGREEMENT

October 29th, 2007

Cleco Katrina/Rita Hurricane Recovery Funding LLC
2605 Hwy. 28 East
Office Number 12
Pineville, LA 71360

Re: Management Agreement — Cleco Katrina/Rita Hurricane Recovery Funding LLC

Ladies and Gentlemen:

     For good and valuable consideration, each of the undersigned Persons, who have been designated as managers of Cleco Katrina/Rita Hurricane Recovery Funding LLC, a Louisiana limited liability company (the “Company”), in accordance with the Limited Liability Company Operating Agreement of the Company, dated as of October 29, 2007 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “LLC Agreement”), hereby agree as follows:

     1. Each of the undersigned accepts such Person’s rights and authority as a Manager under the LLC Agreement and agrees to perform and discharge such Person’s duties and obligations as a Manager under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such Person’s successor as a Manager is designated or until such Person’s resignation or removal as a Manager in accordance with the LLC Agreement. Each of the undersigned agrees and acknowledges that he or she has been designated as a “manager” of the Company within the meaning of the Louisiana Limited Liability Company Law, La. R.S. 12:1301(12).

     2. If the undersigned Manager has been appointed as an Independent Manager, such Person acknowledges and agrees that he or she will become a Special Member in the circumstances provided in Section 1.02(b) of the LLC Agreement, and further acknowledges and agrees to perform and discharge his or her duties and obligations as an Independent Manager under the LLC Agreement, including, without limitation, the provisions of Sections 1.02(b), 1.08, 7.02 and 11.01 of the LLC Agreement.

     3. Until one year and one day has passed since the date that the last obligation under the Basic Documents was paid, to the fullest extent permitted by law, each of the undersigned agrees, solely in his or her capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining a case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the

EXHIBIT A

1

Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.

     4. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     Capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.

     This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

/s/ Dilek Samil Dilek Samil

/s/ Keith D. Crump Keith D. Crump

/s/ Terry L. Taylor Terry L. Taylor

/s/ K. Michael Sawrie K. Michael Sawrie

Name:

Independent Manager

EXHIBIT A

2

APPENDIX A

DEFINITIONS

     The following terms have the following meanings:

     “Administration Agreement” means the Administration Agreement to be entered into by and between Cleco Power LLC and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Affiliate” or “Affiliates” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

     “Articles of Organization” means the Articles of Organization (together with the Initial Report) filed with the Secretary of State of the State of Louisiana on October 30, 2007 pursuant to which the Company was formed.

     “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.), as amended from time to time.

     “Basic Documents” means the Indenture, the Administration Agreement, the Sale Agreement, the Company’s Articles of Organization and Initial Report, this Agreement, the Servicing Agreement, each Series Supplement, each Letter of Representations, each Underwriting Agreement and all other documents and certificates delivered in connection therewith.

     “Closing Date” means the date to be determined for closing and issuance of the Storm Recovery Bonds.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Financing Order” means the Financing Order U-29157-B approved and issued by the LPSC pursuant to the Securitization Law in Cleco Power LLC’s Docket No. U-29157 (Phase III), or any subsequent Financing Order issued by the LPSC pursuant to the Securitization Law pertaining to Cleco Power LLC and the Company.

     “Governmental Authority” means any nation or government, any federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative function of government.

     “Indenture” means the Indenture to be entered into by and between the Company and an Indenture Trustee as originally executed and as from time to time supplemented or amended by one or more Series Supplements or indentures supplemental thereto entered into pursuant to the

APPENDIX A

1

applicable provisions of the Indenture, as so supplemented or amended, or both, and shall include the forms and terms of the Storm Recovery Bonds established thereunder.

     “Indenture Trustee” means a third party financial company or bank to be designated as indenture trustee for the benefit of the Secured Parties, or any successor indenture trustee under the Indenture.

     “Independent” means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Company, any other obligor on the Storm Recovery Bonds, the seller of the Storm Recovery Property pursuant to the Sale Agreement, the Servicer and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Company, any such other obligor, the seller of the Storm Recovery Property pursuant to the Sale Agreement, the Servicer or any Affiliate of any of the foregoing Persons and (c) is not connected with the Company, any such other obligor, the seller of the Storm Recovery Property pursuant to the Sale Agreement, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or manager (other than as an independent director or manager) or person performing similar functions.

     “Independent Manager” means a Manager that is a natural person and is not and has not been for at least five years from the date of his or her appointment (i) a direct or indirect legal or beneficial owner of the Company or the Member or any of their respective Affiliates, (ii) a relative, supplier, employee, officer, director (other than as an independent director), manager (other than as an independent manager), contractor or material creditor of the Company or the Member or any of their respective Affiliates or (iii) a Person who controls (whether directly, indirectly or otherwise) the Member or its Affiliates or any creditor, employee, officer, director, manager or material supplier or contractor of the Member or its Affiliates; provided, that the indirect or beneficial ownership of stock of the Member or its Affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an Independent Manager.

     “Letter of Representations” means any applicable agreement between the Company and an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act, pertaining to the Storm Recovery Bonds, as the same may be amended, supplemented, restated or otherwise modified from time to time.

     “LPSC” means the Louisiana Public Service Commission, or any Governmental Authority succeeding to the duties of such agency.

     “Manager” means each manager, including any Independent Manager, of the Company under this Agreement.

     “Membership Interest” shall have the meaning set forth in Section 6.01 of this Agreement.

APPENDIX A

2

     “Ongoing Financing Costs” mean Operating Expenses and all other financing costs, as defined in Section 1227(5) of the Securitization Law, paid or to be paid from Storm Recovery Charges.

     “Operating Expense” means all unreimbursed fees, costs and expenses of the Company, including all amounts owed by the Company to the Indenture Trustee or any Manager, any servicing fees, administration fees, legal and accounting fees, rating agency fees, and costs and expenses of the Company.

     “Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or Governmental Authority, and includes successors permitted by the Basic Documents.

     “Personal Representative” means, as to a natural person, the succession representative, executor, administrator, guardian, conservator, or other legal representative thereof and, as to a person other than a natural person, the legal representative or successor thereof.

     “Sale Agreement” means the Storm Recovery Property Purchase and Sale Agreement to be entered into by and between Cleco Power LLC and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “SEC” means the U.S. Securities and Exchange Commission.

     “Secured Parties” means, with respect to each Series, the Indenture Trustee, the relevant bondholders and any credit enhancer described in the applicable Series Supplement.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Securitization Law” means Act No. 64 of the Louisiana Regular Session of 2006, the “Louisiana Electric Utility Storm Recovery Securitization Act,” codified at La. R.S. 45:1226-1236.

     “Series” means each series of Storm Recovery Bonds issued and authenticated pursuant to the Indenture and a related Series Supplement.

     “Series Supplement” means an indenture supplemental to the Indenture that authorizes the issuance of a particular Series of Storm Recovery Bonds.

     “Servicer” means Cleco Power LLC, as initial Servicer under the Servicing Agreement, or any successor Servicer to the extent permitted under the Servicing Agreement.

     “Servicing Agreement” means the Storm Recovery Property Servicing Agreement to be entered into by and between the Company and Cleco Power LLC, as servicer, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Storm Recovery Bond Collateral” means the applicable Storm Recovery Property and related properties and rights, including, without limitation, the Sale Agreement and certain

APPENDIX A

3

deposit accounts and securities accounts, which are encumbered by the Company as collateral for Storm Recovery Bonds.

     “Storm Recovery Bonds” means one or more Series of Storm Recovery Bonds authorized by a Financing Order and issued under the Indenture.

     “Storm Recovery Charge” means any storm recovery charges, as defined in Section 1227(15) of the Securitization Law, authorized pursuant to a Financing Order.

     “Storm Recovery Property” means all storm recovery property as defined in Section 1227(17) of the Securitization Law created pursuant to a Financing Order and sold or otherwise conveyed to the Company.

     “Underwriters” means the underwriters who purchase any of the Storm Recovery Bonds from the Company and sell such Storm Recovery Bonds in a public offering.

     “Underwriting Agreement” means an Underwriting Agreement to be entered into by and among Cleco Power LLC, the Underwriters and the Company, as the same may be amended, supplemented or modified from time to time.

APPENDIX A

4

EX-99.1

Exhibit 99.1

LOUISIANA PUBLIC SERVICE COMMISSION

ORDER NO. U-29157-B

CLECO POWER, LLC EX PARTE

Docket No. U-29157 — In re: Application of Cleco Power LLC for recovery in rates of amortization of
storm damage costs incurred as a result of Hurricanes Katrina and Rita

FINANCING ORDER

CLECO POWER LLC

TABLE OF CONTENTS

I. BACKGROUND AND JURISDICTION	5
A. Background	5
B. Jurisdiction	7
II. DISCUSSION AND STATUTORY OVERVIEW	9
III. DESCRIPTION OF PROPOSED TRANSACTION	12
IV. FINDINGS OF FACT	16
A. Identification and Procedure	16
1. Identification of Applicant and Application	16
2. Procedural History	16
B. Financing Costs and Amount to be Securitized	17
1. Storm Recovery Costs	17
2. Upfront and Ongoing Financing Costs	18
3. Adjustments to the Amount Financed for Interim Collections	19
4. Amount to be Securitized	20
5. Designee Appointment; Issuance Advice Letter Approval Process	20
6. Customer Benefits	22
C. Structure of the Proposed Financing	23
1. The Special Purpose Entity (The “SPE”)	23
2. Structure and Documents	24
3. Credit Enhancement and Arrangements to Enhance Marketability	25
4. Storm Recovery Property	26
5. Servicer and the Servicing Agreement	27
6. Storm Recovery Bonds: Maturity and Issuance	30
7. Security for Storm Recovery Bonds	31
(a) The General Subaccount	31
(b) The Capital Subaccount	31
(c) The Excess Funds Subaccount	32
(d) Other Subaccounts	32
8. General Provisions	33
9. Storm Recovery Charges—Imposition and Collection; Nonbypassability; Pledges	33
10. Periodic Payment and Billing Requirements; Allocations	35
11. Calculation and True-Up of Storm Recovery Charges	36
12. Additional True-Up Provisions	38
13. Commission Participation and Designee	39
14. Storm Recovery Bond Transaction Structure	39
D. Use of Proceeds	41
E. Customer Credits for Post Financing Order Insurance Proceeds or Government Grants	42
F. Non-Precedential	42
V. CONCLUSIONS OF LAW	43
A. Jurisdiction	43
B. Statutory Requirements	43

Order No. U-29157-B
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C. Storm Recovery Costs and Financing Costs	43
D. Sale of Storm Recovery Property	44
E. Storm Recovery Bonds	44
F. Storm Recovery Property	45
G. Storm Recovery Charges	46
H. Security Interest in Storm Recovery Property	46
I. True-Up of Storm Recovery Charges	47
J. Irrevocability and State and Commission Pledges	47
VI. COMMISSION ACTION: ORDERING PARAGRAPHS	49
A. Approval	49
B. Storm Recovery Charges	52
C. Storm Recovery Bonds	54
D. Financial and Other Advisors	57
E. Servicing	58
F. Use of Proceeds; Application of Post Financing Order Insurance Proceeds and Grants	60
G. Commission Pledge	60
H. Miscellaneous Provisions	62

Order No. U-29157-B
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LIST OF APPENDICES

Appendix A	Form of Issuance Advice Letter
	Attachment 1
		Schedule A	Total Securitization Principal Amount
		Schedule B	Estimated Upfront Costs
	Attachment 2
		Schedule A	Bonds Revenue Requirement Information
		Schedule B	Ongoing Costs
		Schedule C	Calculation of Storm Recovery Charges
		Schedule D	Net Present Value Benefit
		Schedule E	Typical Residential Bill Comparison
	Attachment 3		Initial Allocation to SRCA Rate Classes
	Attachment 4		Company’s Certification
	Attachment 5		Commission Designee’s Concurrence
	Attachment 6		Service List
Appendix B-1	Rider SRCA (Rate Schedule SRCA — Storm Restoration Cost Adjustment) and Allocation Methodology illustrated
Appendix B-2	Rider SCSA (Rate Schedule SCSA — Storm Cost Surcredit Adjustment
Appendix C	Estimate of Upfront and Ongoing Financing Costs
Appendix D	Form of True-Up Calculation

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TABLE OF ACRONYMS

“Cleco” or “Company”	Part IA
“Commission” or “LPSC”	Part IA
“Designee”	Finding of Fact Paragraph 23
“Issuance Advice Letter”	Funding of Fact Paragraph 24
“Pathfinder”	Part IA
“Rider SCSA”	Part IA
“Rider SRCA”	Part III
“Securitization Act”	Part IA
“Securitization Application”	Part IA
“Securitization Application Testimony”	Part III
“Stipulated Settlement”	Finding of Fact Paragraph 9
“SPE”	Finding of Fact Paragraph 35
“U-29157 Revenue Requirement Order”	Part IA

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Financing Order

LOUISIANA PUBLIC SERVICE COMMISSION

ORDER NO. U-29157-B

CLECO POWER LLC EX PARTE

Docket No. U-29157 — In re: Application of Cleco Power LLC for Recovery in Rates of Amortization of
Storm Damage Costs Incurred as a Result of Hurricanes Katrina and Rita

(Decided at the September 12, 2007 Business and Executive Session.)

FINANCING ORDER

I. BACKGROUND AND JURISDICTION

A. Background

     This Financing Order addresses the request of Cleco Power LLC (“Cleco” or “the Company”), under Act No. 64 of the Louisiana Regular Session of 2006, the “Louisiana Electric Utility Storm Recovery Securitization Act” (the “Securitization Act”), codified at La. R.S. 45:1226-1236: (1) to finance, through the issuance of storm recovery bonds in the amount of approximately $187 million, the remaining unamortized storm recovery costs of Cleco (as of September 1, 2007) as authorized by separate order in this LPSC Docket No. U-29157 (including storm recovery reserves and upfront financing costs associated with the issuance of storm recovery bonds); (2) to approve the proposed financing structure and issuance of storm recovery bonds; (3) to approve the creation of storm recovery property, including the right to impose and collect storm recovery charges sufficient to pay the storm recovery bonds and associated financing costs; (4) to approve a tariff to implement the storm recovery charges; and (5) to approve another tariff to implement a surcredit to provide customers the benefit of all non-ratepayer recoveries and to address ancillary costs recovery relating to the storm recovery cost process.

     As discussed in this Financing Order, the Louisiana Public Service Commission (“Commission” or “LPSC”) finds that Cleco’s application for approval of the securitization transaction should be approved. The Commission also finds that the securitization transaction approved in this Financing Order meets all applicable requirements of the Securitization Act. Accordingly, in accordance with the terms of this Financing Order, the Commission: (1) approves and authorizes the securitization transaction requested by Cleco; (2) authorizes the issuance of storm recovery bonds in one or more series in an aggregate principal amount of approximately $187 million, equal to the sum of: (a) approximately $132 million of remaining unamortized storm recovery costs, pursuant to the separate Order No. U-29157-A approved by the Commission in this LPSC Docket No. U-29157 (Phase II) on September 12, 2007 (the “U-29157 Revenue Requirement Order”), plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a storm recovery reserve in a segregated

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Financing Order

restricted account, plus (c) upfront financing costs, which are estimated at $4.6 million and are subject to further review, plus or minus (d) any adjustment, pursuant to the Issuance Advice Letter (as described below), to reflect any approval credit enhancement or the interim storm revenues, (3) approves the structure of the proposed securitization; (4) approves the creation of storm recovery property, including the right to impose and collect storm recovery charges in an amount to be calculated as provided in this Financing Order; and (5) approves the form of tariff, Appendix B-1 (Rider SRCA) to this Financing Order, to implement those storm recovery charges, and the form of tariff, Appendix B-2 (Rider SCSA) to this Financing Order, to implement a surcredit covering the non-ratepayer recoveries and ancillary cost recovery relating to the storm recovery costs process.

     Cleco shall update the initial principal amount of the storm recovery bonds pursuant to the Issuance Advice Letter to reflect the actual approved storm damage costs not reimbursed by the interim storm revenues through the date of the financing, rounded up to the nearest $1 million. The rounding amount will be an addition to the restricted storm recovery reserve. Therefore, in the Issuance Advice Letter discussed herein, Cleco shall update the actual remaining unamortized deferred storm damages and the amount of the interim storm revenues collected through the date of financing, and adjust if appropriate the amount of the storm recovery bonds to reflect the actual issuance date of the storm recovery bonds and other relevant current information in accordance with the terms of this Financing Order.

     The amount to be securitized reflects that Cleco has received no insurance proceeds or government grants prior to the date of this Financing Order relating to these storm recovery costs. Cleco is not expected to receive any such insurance proceeds. If Cleco receives insurance or certain permanent governmental grant proceeds after the date of this Financing Order, these amounts shall be returned to customers through the Storm Cost Surcredit Adjustment Rider (“Rider SCSA”), attached as Appendix B-2. The surcredit will be adjusted to provide customers the principal and carrying charges at a 12.2% grossed-up rate of return on the unamortized amounts of any community development block grants and other non-ratepayer recoveries once such amounts are received or are reasonably estimable over the remaining life of the storm recovery bonds.

     Cleco is authorized to cause its wholly owned subsidiary, referred to herein as the “SPE,” (as further defined below), to issue storm recovery bonds to finance the updated aggregate principal amount reflected in the Issuance Advice Letter in accordance with the terms of this Financing Order.

     Cleco submitted evidence demonstrating that the proposed securitization is reasonably expected to result in lower overall costs or would avoid or mitigate rate impacts to customers as compared to traditional methods of financing or recovering utility storm recovery costs (including storm recovery reserves). Based on the amount that Cleco requests to be financed, Cleco’s financial analysis and testimony indicates that customers will realize significant benefits from securitization through lower surcharges as compared to traditional methods of financing or recovering utility storm recovery costs. Accordingly, the Commission concludes that the

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Financing Order

benefits for customers set forth in Cleco’s evidence are indicative of the benefits that customers will realize from the financing approved hereby, and that these benefits are significant as compared to traditional methods of financing.

     Cleco provided a general description of the proposed transaction structure in the testimony and exhibits submitted in support of the Petition For Financing Order dated November 3, 2006 (together with the Application filed November 4, 2005, and refiled on January 27, 2006, the “Securitization Application”). The proposed transaction structure is consistent with the Securitization Act. Certain details of the final transaction structure, such as any overcollateralization requirements to support payment of the storm recovery bonds, and the final terms of the storm recovery bonds, will depend in part upon the requirements of the nationally-recognized credit rating agencies which will rate the storm recovery bonds, and in part upon the market conditions that exist at the time the storm recovery bonds are taken to the financial market.

     The Commission recognizes the final transaction structure and pricing terms of the storm recovery bonds will affect customer costs. Accordingly, this Financing Order provides for a process by which the Commission’s Staff and advisors, including the Commission’s financial advisor, Pathfinder Capital Advisors LLC (“Pathfinder”), the Commission’s special counsel and any other Commission legal counsel, may review and comment on the bond structure and pricing. This Financing Order also provides for a procedure by which the Commission, acting through a Commission designee, shall approve through a concurrence process (or disapprove, with reasons) the final structure and pricing of the storm recovery bonds without further Commission action. The Commission appoints Executive Secretary Lawrence C. St. Blanc to be the Commission’s designee under this Financing Order. This participation and approval process proposed by Cleco is in the best interest of customers and provides the necessary timeliness and finality to the issuance process.

     Before the storm recovery bonds may be issued, Cleco must submit to the Commission an issuance advice letter in which it certifies, based upon the actual market conditions at the time of pricing, that all proposed terms of pricing and issuance of the storm recovery bonds are within the parameters established in this Financing Order. As part of this submission, Cleco will also certify to the Commission that to the best knowledge, information and belief of Cleco, its officers, agents and employees after reasonable inquiry, the structuring and pricing of storm recovery bonds, as described in the form of the Pricing Advice Certificate attached thereto, have resulted in the lowest storm recovery charges consistent with market conditions at the time of pricing and the terms of this Financing Order. The form of certification that must be submitted by Cleco is set out in Attachment 4 in Appendix A to this Financing Order. The Commission, by order, may stop the issuance of the storm recovery bonds authorized by this Financing Order if Cleco fails to make this certification.

B. Jurisdiction

The Louisiana Constitution, Article IV, Section 21(B), provides:

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Financing Order

The commission shall regulate all common carriers and public utilities and have such other regulatory authority as provided by law. It shall adopt and enforce reasonable rules, regulations, and procedures necessary for the discharge of its duties, and shall have other powers and perform other duties as provided by law.

Louisiana Revised Statute 45:1163(A)(1) provides:

(A)(1): The commission shall exercise all necessary power and authority over any street, railway, gas, electric light, heat, power, waterworks, or other local public utility for the purpose of fixing and regulating the rates charged or to be charged by and service furnished by such public utility.

Louisiana Revised Statutes 45:1168 provides in pertinent part:

No public utility shall issue any security, or assume any obligation or liability as guarantor, endorser, surety, or otherwise in respect of any security of any other public utility... or of any other person until it has been authorized to do so by order of the commission.

Louisiana Revised Statute 45:1176 provides in pertinent part:

The Commission...shall investigate the reasonableness and justness of all contacts, agreements and charges entered into or paid by such public utilities with or to other persons, whether affiliated with such public utility or not.

Sections 1228 and 1236 of the Securitization Act provide in pertinent part:

1228(B). The commission may grant an application under Subsection A of this Section in whole or in part by a financing order, and with such modifications thereto and upon such terms and conditions as the commission prescribes.... If the commission issues a financing order approving any issue of storm recovery bonds under [the Securitization Act], the commission may consider whether the proposed structuring, expected pricing, and financing costs of the storm recovery bonds are reasonably expected to result in lower overall costs or would avoid or mitigate rate impacts to customers as compared with traditional methods of financing or recovering storm recovery costs. The commission may determine what degrees of flexibility to afford to the electric utility in establishing the terms and conditions of the storm recovery bonds, including but not limited to repayment schedules, interest rates, and other financing costs.

1236. Nothing in this [Securitization Act] is intended to be nor shall be construed to constitute any limitation, derogation, or diminution of the jurisdiction or authority of the commission provided by law, including that provided in or exercised by the Public Service Commission pursuant to the Constitution of Louisiana .....

The Company is an electric public utility, as defined in La. R.S. 45:121. The SPE (as defined below) to be used in the financing transaction sought by Cleco’s Securitization Application will be a wholly owned subsidiary of the Company. As a result of all of the foregoing, the Commission has jurisdiction and authority over the Securitization Application.

[The remainder of this page is blank intentionally.]

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II. DISCUSSION AND STATUTORY OVERVIEW

     In August and September 2005, Cleco was struck by the two worst natural disasters ever to strike its system, Hurricanes Katrina and Rita. Cleco has already funded and paid most of the storm recovery costs using internally-generated funds. Cleco has requested that the Commission grant authorization to securitize the recovery of its remaining unamortized storm recovery costs.

     In May 2006, the Louisiana Legislature established by Act 64 of 2006 a new financing vehicle by which electric utilities can use securitization financing for storm recovery costs, including the financing of a storm recovery reserve, through the issuance of “storm recovery bonds.” Storm recovery bonds must be approved in a financing order. This new provision of Louisiana law, the Securitization Act, is codified at La. R.S. 45:1226-1236.¹

     If storm recovery bonds are approved and issued, the customers of Cleco must pay the principal of the storm recovery bonds, together with interest and related financing costs through storm recovery charges. Storm recovery charges, to the extent provided in the Securitization Act and this Financing Order, are nonbypassable charges paid by Cleco’s LPSC-jurisdictional customers as a component of the monthly charge for electric service. Storm recovery charges will be collected by Cleco, as initial servicer, or its successor as provided for in this Financing Order.

     The Securitization Act permits the Commission to consider whether the proposed structuring, expected pricing, and financing costs of the storm recovery bonds are reasonably expected to result in lower overall costs or would avoid or mitigate rate impacts to customers as compared with traditional methods of financing or recovering storm recovery costs.² The primary benefits of the proposed structure arise from replacing traditional debt and equity of the utility with highly rated debt. For instance, the total amount of revenues to be collected under this Financing Order is less than the revenue requirement that would be recovered using traditional financing methods. These benefits will be certified by Cleco.

     In this proceeding, Cleco’s financial analysis and testimony shows that the financing, as proposed by Cleco, will produce significant benefits through lower surcharges to customers as compared to traditional financing methods for recovering utility storm recovery costs. Assuming that the storm recovery bonds are issued in a manner consistent with the base case presented by Cleco, subject to a 7.78% weighted-average annual interest rate (calculated using the amount requested to be securitized by Cleco), the benefit is approximately $75 million on a present-value basis compared to traditional financing. Using worse-case market conditions in relation to the amount initially sought to be securitized, Cleco’s financial analysis demonstrates that the benefit will be approximately $45 million on a net-present value basis under this Financing Order compared to the amount that would be recovered under traditional financing methods, assuming that the storm recovery bonds are issued at an 5.72% weighted-average annual interest rate. Cleco will be required to update the benefit analysis of the net present value

1	All references to Sections are to the Securitization Act unless otherwise indicated.
2	§ 1228(B).

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of the savings to be included as Attachment 2 in the final Issuance Advice Letter to verify that the final amount securitized provides savings compared to traditional financing methods.

     This Financing Order contains terms ensuring³ that the storm recovery charges authorized herein to be imposed and collected will be nonbypassable and will be applied to all existing and future LPSC-jurisdictional customers who remain attached to Cleco’s (or its successor’s or assignee’s) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco or its successors or assignees under rate schedules or special contracts approved by the Commission, even if a customer has chosen to switch to self-generation or co-generation.

     This Financing Order also includes a mechanism requiring that storm recovery charges be reviewed and adjusted semi-annually (i.e., every six months),⁴ to correct over-collections or under-collections during the preceding period and to ensure the projected recovery of amounts sufficient to provide timely payment of debt service on the storm recovery bonds and related financing costs. In addition to the semi-annual reviews, following the scheduled final maturity, quarterly reviews and adjustments may be required in order to assure the payment of debt service on the storm recovery bonds and related financing costs. These provisions will help to ensure that the amount of storm recovery charges paid by customers is neither more nor less than the amount necessary to cover the costs of this financing.

     The State of Louisiana has pledged to and agreed with the storm recovery bondholders, the owners of the storm recovery property, and other financing parties that the State of Louisiana will not:

     (1) Alter the provisions of the Securitization Act which authorize the Commission to create a contract right by the issuance of this Financing Order, to create storm recovery property, and to make the storm recovery charges imposed by a financing order irrevocable, binding, and nonbypassable charges;

     (2) Take or permit any action that impairs or would impair the value of the storm recovery property created pursuant to this Financing Order; or

     (3) Except for adjustments under any true-up mechanism established by the Commission, reduce, alter, or impair storm recovery charges that are to be imposed, collected, and remitted for the benefit of the bondholders and other financing parties, as applicable, until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the storm recovery bonds have been paid and performed in full.

     In addition, the Commission has covenanted in this Financing Order that after the earlier of the transfer of storm recovery property to an assignee or the issuance of storm recovery bonds authorized by this Financing Order, this Financing Order is irrevocable until the indefeasible payment in full of the storm recovery bonds and the related financing costs. “Indefeasible” in

3	As permitted by § 1227(15).
4	As provided by § 1228(C)(4).

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this context does not refer to the potential defeasance in the future of the storm recovery bonds, but rather that the payment and satisfaction of the bonds and costs are permanent and cannot be revoked or made void. Except in connection with a refinancing or refunding⁵ or to implement the true-up mechanism adopted by the Commission, the Commission may not amend, modify, or terminate this Financing Order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust storm recovery charges approved in this Financing Order.

     Nothing in the State of Louisiana and Commission agreements described above precludes a limitation or alteration in this Financing Order and the storm recovery property if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to this Financing Order and the full protection of the bondholders and any assignee or financing party.

     Storm recovery property constitutes an existing, present contract right susceptible of ownership, sale, assignment, transfer, and security interest, and the property will continue to exist until the storm recovery bonds issued pursuant to this Financing Order are paid in full and all financing costs of the bonds have been recovered in full. In addition, the interests of an assignee or secured party in storm recovery property (as well as the revenues and collections arising from the property) are not subject to setoff, counterclaim, surcharge, or defense by Cleco or any other person or in connection with the bankruptcy of Cleco or any other entity. Except to the extent provided in the Securitization Act, the creation, attachment, granting, perfection, and priority of security interests in storm recovery property to secure storm recovery bonds is governed solely by the Securitization Act and not by the Louisiana Uniform Commercial Code.

     The Commission may adopt a financing order providing for the retiring and refunding of storm recovery bonds. Cleco has not requested and this Financing Order does not grant any authority to refinance storm recovery bonds authorized by this Financing Order. This Financing Order does not preclude Cleco from filing a request for a financing order to retire or refund the storm recovery bonds approved in this Financing Order upon a showing that the customers of Cleco would benefit and that such a financing is consistent with the terms of the outstanding storm recovery bonds.

     To facilitate compliance and consistency with applicable statutory provisions, this Financing Order adopts the definitions in Section 1227 of the Securitization Act.

⁵ As permitted in § 1228(F).

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Description of Proposed Transaction

III. DESCRIPTION OF PROPOSED TRANSACTION

     A brief summary of the proposed transaction is provided in this section. A more detailed description is included in Section IV.C, titled “Structure of the Proposed Financing,” and in all the testimony and exhibits supporting the Securitization Application (the “Securitization Application Testimony”).

     To facilitate the proposed securitization, Cleco proposes that a special purpose storm recovery funding entity, the SPE, be created as a wholly owned subsidiary of Cleco to which will be transferred the storm recovery property, which includes the right to impose, collect, and receive storm recovery charges along with the other rights arising pursuant to this Financing Order. Upon the effectiveness of this Financing Order, these rights are storm recovery property, a vested contract right of Cleco.

     The SPE will issue storm recovery bonds and will transfer the net proceeds from the sale of the storm recovery bonds to Cleco in consideration for the transfer of the storm recovery property. The SPE will be organized and managed in a manner designed to achieve the objective of maintaining the SPE as a bankruptcy-remote entity that would not be affected by the bankruptcy of Cleco or any other affiliates of Cleco or any of their respective successors or assignees. In addition, the SPE will have at least one independent manager whose approval will be required for major actions or organizational changes by the SPE.

     The storm recovery bonds will be issued pursuant to an indenture with all trust property thereunder administered by an indenture trustee. The storm recovery bonds will be secured by and payable solely out of the storm recovery property created pursuant to this Financing Order and other collateral described in Cleco’s Securitization Application Testimony. That collateral will be pledged by the SPE to the indenture trustee for the benefit of the holders of the storm recovery bonds and to secure payments due with respect to the bonds and certain costs and expenses relating to the bonds.

     Pursuant to a servicing agreement, Cleco will act as the initial servicer of the storm recovery charges for the SPE, and will undertake to collect such charges from the customers of Cleco and remit these collections to the indenture trustee on behalf and for the account of the SPE. The servicer will be responsible for making any required or allowed true-ups of the storm recovery charges. If the servicer defaults on its obligations under the servicing agreement, the indenture trustee may appoint a successor servicer.

     Projected storm recovery charges will be calculated to be sufficient at all times to pay the scheduled principal, interest and other related financing costs for the storm recovery bonds (including, when necessary, to bring principal payments on schedule over the next two succeeding payment dates). The initial storm recovery charges will be calculated pursuant to the Rider Rate Schedule SRCA shown in Appendix B-1 (“Rider SRCA”) to this Financing Order. Semi-annual, or, following the scheduled final maturity of the bonds, quarterly true-ups will be required and performed to ensure that the amount projected to be collected from storm

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Description of Proposed Transaction

recovery charges is sufficient to service the storm recovery bonds. The methodology for calculating the storm recovery charges and making true-up adjustments is illustrated in Appendix B-1 and Appendix D. This methodology includes the allocation of revenue requirements among customer classes approved by the Commission in this Financing Order.

     The Commission determines that Cleco’s proposed transaction structure for the storm recovery charges should be utilized. This structure is designed based on resetting allocators for the storm recovery transaction annually in accordance with the class-by-class allocations resulting from Cleco’s annual base revenue forecast, with any over or under collection from any period added to or subtracted from, as the case may be, the anticipated revenue requirement for the upcoming period, subject to further modification in accordance with rating agency requirements and the true-up mechanism adopted in this Financing Order.

     The Commission has considered what degree of flexibility to afford to Cleco in establishing the terms and conditions of the storm recovery bonds, including but not limited to upfront and ongoing financing costs, scheduled and legal maturity of the storm recovery bonds within the recommended duration, variable versus fixed interest rates, the type and form of the transaction’s securities registration (such as form of registration, and public vs. private offering), and selection of certain transaction participants. Cleco will be granted flexibility in such matters, subject to the terms of this Financing Order and the Issuance Advice Letter process.

     In its Securitization Application Testimony, Cleco requested the authority to securitize and to cause the issuance of storm recovery bonds in an aggregate principal amount of approximately $187 million, equal to the sum of: (a) approximately $132 million of remaining unamortized storm recovery costs (calculated as of September 1, 2007), plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a restricted storm recovery reserve in a segregated restricted account, plus (c) upfront financing costs, which are estimated at $4.6 million, and which are subject to further review (as provided in the next paragraph). Cleco has received no pertinent permanent governmental grant or insurance proceeds prior to the issuance of this Financing Order.

     The Commission finds that Cleco should be permitted to securitize its storm recovery costs (including storm recovery reserve costs) and upfront financing costs, as Cleco requests, in accordance with the terms of this Financing Order. The Commission is mindful of the fact that several of the components of these upfront financing costs will vary depending upon the size of the final issuance of the storm recovery bonds. Specifically, the Commission realizes that the SEC registration fee, the rating agency fees and underwriters’ fees typically are proportional to the principal amount of the bonds. In addition, the SEC formula for calculating registration fees changes from time to time. Further, other upfront financing costs, such as legal and accounting fees and expenses, printing expenses and trustee costs will not be known until the issuance of the bonds or even thereafter, when final invoices are submitted. Accordingly, in the Issuance Advice Letter Cleco should update the financing costs securitized to reflect any change in the estimates of the SEC registration fee, the rating agency fees and underwriters’ fees, as a result of a change in the size of the bond financing or a change in the SEC registration fee

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Description of Proposed Transaction

formula, and should otherwise update the estimates in light of then current information. The final upfront financing costs will also include the costs of the Commission’s financial advisor and any legal counsel or regulatory consultants’ fees. Cleco’s total upfront financing costs are estimated at $4.6 million, and that amount will be used for purposes of calculating the aggregate principal amount of the storm recovery bonds. These amounts are preliminary and will be subject to further review on the following basis. Within sixty days after the filing of the Issuance Advice Letter, the initial upfront financing costs will be reviewed and reconciled to prudently and actually incurred costs. Any prudently incurred amounts in excess of the $4.6 million estimated amount included in the principal amount financed will be netted against the restricted storm recovery reserve. If prudent and actual upfront financing costs are less than the estimated upfront financing costs included in the principal amount financed, the periodic billing requirement for the first semi-annual true-up adjustment will be reduced by the amount of such unused funds (together with income earned thereon through investment by the indenture trustee in eligible investments) and such unused funds (together with income earned thereon through investment by the indenture trustee in eligible investments) shall be available for payment of debt service on the bond payment date next succeeding such true-up adjustment. If the Commission finds that a portion of the upfront financing costs actually incurred by the SPE were not prudent, then the Company shall reimburse that portion as part of the first semi-annual true-up adjustment by paying in that amount into the collection account held by the indenture trustee.

In addition, Cleco has requested that the ongoing financing costs incurred by the SPE in connection with the administration and servicing of the storm recovery bonds should not be included in the principal amount of the storm recovery bonds, but instead should be recovered through the storm recovery charges, subject to the periodic true-up of those charges as provided in this Financing Order. Many of these ongoing costs will not be known until they are incurred. Cleco will be the initial servicer and administrator. The annual servicing fee payable to Cleco following the issuance of the storm recovery bonds will be fixed at 0.05% of the initial principal amount of the storm recovery bonds, subject to the mechanism referred to in Finding of Fact Paragraph 55. The annual administration fee compensation to Cleco for providing administrative and support services to the SPE will be fixed at $100,000.00. In addition, Cleco, as initial servicer and administrator, shall be entitled to receive reimbursement for its out-of-pocket costs for external accounting services as well as for other items of costs that will be incurred annually to support and service the storm recovery bonds after issuance. The servicing fee and any expenses incurred by Cleco under the servicing agreement shall be recoverable in any Cleco rate case in the manner provided in Ordering Paragraph 26. In the event that a servicer default occurs, the indenture trustee for the storm recovery bonds will be permitted to appoint a successor servicer with the consent of the SPE, which shall not be unreasonably withheld. The compensation of the successor servicer will be what is required to obtain the services and will not exceed 0.60% of the initial principal amount of the storm recovery bonds per year unless Cleco can reasonably demonstrate to the Commission that the services cannot be obtained at that compensation level under the market conditions at that time. Furthermore, the Commission finds that Cleco may earn a rate of return on its capital investment in the SPE equal to the rate of

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Description of Proposed Transaction

interest payable on the longest maturity tranche of the storm recovery bonds, to be paid by means of periodic distributions from the SPE funded solely by the income earned thereon through investment by the indenture trustee in eligible investments and by any deficiency being collected through the true-up adjustments, and further, any actual earnings in excess of that rate will be credited to customers. Cleco will not be reimbursed for its capital contributions from the proceeds of the storm recovery bonds. The Commission finds that Cleco should be permitted to recover its ongoing financing costs, as Cleco requests, in accordance with the terms of this Financing Order.

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Findings of Fact

IV. FINDINGS OF FACT

A. Identification and Procedure

1.  Identification of Applicant and Application

1.	Cleco is a Louisiana limited liability company, providing integrated electric utility services, including the generation, purchase, transmission, distribution, and sale of electricity, to approximately 268,000 retail customers in 104 communities in central and southeastern Louisiana.
2.	Cleco is a wholly owned subsidiary of Cleco Corporation, a Louisiana corporation.

2. Procedural History

3.	On November 4, 2005, Cleco submitted an application to the Commission requesting approval of a surcharge designed to recover, over time, the Company’s storm damage costs incurred as a result of Hurricanes Katrina and Rita. The Company proposed two phases for this proceeding. Phase 1 was a request for interim approval of recovery of storm recovery costs. Phase 2 is a request for approval of a storm recovery surcharge, based upon actual, finalized costs of storm recovery with a reconciliation of any interim recovery to the Commission’s final decision. At the time of the filing in November 2005, Cleco estimated its total storm damage costs to be $161.76 million. The Phase 1 rate increase request was $33 million on an annualized basis. This total included $24.7 million for the recovery of the estimated storm damage costs plus $8.3 million to rebuild Cleco’s storm recovery reserve. Cleco stated that immediate rate recovery of $33 million was needed in order to maintain the Company’s financial integrity because it is undertaking the construction of a new 600 MW generating facility, Rodemacher 3, at an estimated cost in excess of approximately $1 billion.
	Notice of Cleco’s application was published in the November 4, 2005 edition of our Official Bulletin. Following publication, interventions were filed by Boise Cascade, LLC, DeGussa Engineered Carbons, LP, Marathon Oil Company and Cabot Corporation. On January 27, 2006, Cleco re-filed its application, and notice of that re-filing was published in the Commission’s Official Bulletin on January 27, 2006. Parties who had previously filed interventions were not required to re-file for Intervenor status, but additional interventions were permitted. Entergy Louisiana, Inc. and Entergy Gulf States, Inc. filed interventions. The matter was referred to Chief Administration Law Judge the Honorable Valerie Meiners to serve as the Presiding Administrative Law Judge.
4.	On February 22, 2006, the Commission approved interim recovery of Cleco’s storm recovery costs as reflected in Order No. U-29157, dated April 18, 2006. The Commission allowed through an interim storm surcharge an interim recovery of $23.44 million, on an annualized basis, which includes $16.18 million annual recovery of estimated storm costs and $7.26 million recovery of annual carrying

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costs associated with the total $161 million estimated storm recovery costs in Phase I.  The total portion of the interim surcharge revenues billed and collected for the recovery of estimated storm costs shall be credited against the total storm recovery costs ultimately found recoverable by the Commission in the U-29157 Revenue Requirement Order in this Phase II of Cleco’s storm cost recovery docket.

5.	In Order No. U-29157 the Company was directed to vigorously and actively pursue securitization of its storm damage amounts. Pursuant to the Partial Stipulated Settlement dated March 2, 2007, between Cleco and the Commission Staff, securitization financing was separated into a subsequent financing phase (this Phase III).
6.	On September 12, 2007, the Commission approved the provisions of the U-29157 Revenue Requirement Order (concluding Phase II) determining that Cleco is entitled to recover $132 million of remaining unamortized storm recovery costs and $50 million to fund storm recovery reserves.
7.	In its Securitization Application Testimony for a financing order under Section 1228(A) of the Securitization Act, Cleco sought to securitize and to cause the issuance of storm recovery bonds in an aggregate principal amount of approximately $190 million, equal to the sum of: (a) approximately $135 million of remaining unamortized storm recovery costs (calculated as of June 2007) plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a restricted storm recovery reserve in a segregated restricted account, plus (c) upfront financing costs, which are estimated to be approximately $4.6 million but which are subject to further review and adjustment as provided in this Financing Order.
8.	The Securitization Application includes the schedules, attachments, and testimony and related exhibits.
9.	Cleco and the Commission Staff have filed a Motion for a stipulation hearing with supporting testimony, and have entered into an Uncontested Proposed Partial Stipulated Settlement Agreement dated August 17, 2007 for Phase III (together with the Partial Stipulated Settlement dated March 9, 2007, for Phase II, collectively the “Stipulated Settlement”). Hearings were held on the Securitization Application and the Stipulated Settlement on August 27, 2007.
10.	On September 12, 2007, the Commission approved this Financing Order (and the U-29157 Revenue Requirement Order, concluding Phases II and III, as well as Phase I).

B. Financing Costs and Amount to be Securitized

1. Storm Recovery Costs

11. Storm recovery costs are defined by Sections 1227(13) and (16) to include costs incurred by Cleco in activities connected to the restoration of service

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	associated with electric power outages affecting its customers as a result of storms and, if the Commission deems appropriate, the costs to fund and finance any storm recovery reserves.
12.	Pursuant to the U-29157 Revenue Requirement Order, the Commission determined that Cleco has incurred storm recovery costs in the aggregate remaining amount of approximately $132 million (as of September 1, 2007), after crediting the revenues collected by Cleco under the interim storm surcharge. These costs constitute storm recovery costs under the Securitization Act and are eligible for recovery pursuant to this Financing Order.
13.	Cleco has proposed securitizing the gross amount of storm recovery costs before any reduction for the income tax benefits and other tax effects relating to the incurrence of such costs. The tax benefits or other tax effects include (1) the local franchise taxes and (2) with respect to deferred taxes (a) the deduction of storm related operation and maintenance expenses, (b) the tax depreciation relating to the capitalized storm costs, and (c) the casualty loss tax deduction. Cleco has agreed that all the allowed benefits associated with these deferred taxes inure to the benefit of customers and will be reflected in Exhibit B-2 (Rider SCSA).
14.	Pursuant to the U-29157 Revenue Requirement Order, the Commission determined that the level of storm recovery reserves in the amount of approximately $50 million is appropriate. The storm recovery reserve costs constitute storm recovery costs under the Securitization Act and are eligible for recovery pursuant to this Financing Order.

2. Upfront and Ongoing Financing Costs

15.

Upfront financing costs are those that will be incurred in advance of, or in connection with, the issuance of the storm recovery bonds, and will be recovered or reimbursed from storm recovery bond proceeds. Consistent with Section 1227(5)(c), upfront financing costs include, without limitation, underwriting costs (fees and expenses), rating agency fees, costs of obtaining additional credit enhancements (if any) and of hedges and swaps (if any), fees and expenses of Cleco’s legal advisors, accountants and financial advisor, SEC registration fees, original issue discount, external servicing costs, fees and expenses of the Commission’s financial advisor(s), legal counsel and regulatory consultants (in connection with securitization), fees and expenses of the trustee and its counsel (if any), servicer set-up costs, printing and filing costs, set-up costs relating to the SPE, non-legal securitization proceeding costs and expenses of Cleco and miscellaneous administrative costs.

16.

Ongoing financing costs are those that will be incurred annually to support and service the storm recovery bonds after issuance, and will be recovered or paid from storm recovery charges. Consistent with Section 1227(5)(c), the ongoing financing costs include, among other costs, servicing fees, administrative fees, fees

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	and expenses of the trustee and its counsel (if any), external accountants’ fees, ongoing costs of additional credit enhancement (if any) and of entering into hedge and swap transactions (if any), independent manager’s fees, rating agency fees, printing and filing costs, true-up administration fees, fees and expenses of Cleco and the SPE’s counsel, and other miscellaneous costs.
17.	The actual upfront financing costs and certain ongoing financing costs will not be known until on or about the date the storm recovery bonds are issued; other upfront and ongoing financing costs may not be known until such costs are incurred. Except for trustee services, it will not be practical for Cleco or the SPE to solicit proposals for other ongoing services.
18.	Cleco has provided estimates of upfront financing costs totaling approximately $4.6 million in Appendix C. Cleco has also provided in Appendix C estimates of ongoing financing costs for the first year following the issuance of the storm recovery bonds to be approximately $280,000.00, assuming Cleco is the servicer. Cleco shall update the estimate of ongoing financing costs prior to the pricing of any series of storm recovery bonds as part of the Issuance Advice Letter process.
19.	Within 60 days of the filing of the Issuance Advice Letter, Cleco will submit to the Commission a final accounting of its upfront financing costs which will be reviewed and reconciled by the Commission to prudently and actually incurred costs. If prudent and actual upfront financing costs exceed the upfront financing costs included in the principal amount financed, the portion in excess will be netted against and withdrawn from the restricted storm recovery reserve. If the prudent and actual upfront financing costs are less than the upfront financing costs included in the principal amount financed, the billing requirement for the first semi-annual true-up adjustment shall be reduced by the amount of such unused funds (together with income earned thereon through investment by the indenture trustee in eligible investments) and such unused funds (together with income earned thereon through investment by the indenture trustee in eligible investments) shall be available for payment of debt service on the bond payment date next succeeding such true-up adjustment. If the Commission finds that a portion of the upfront financing costs actually incurred by the SPE were not prudent, then the Company shall reimburse that portion as part of the first semi-annual true-up adjustment by paying that amount into the collection account held by the indenture trustee.

3. Adjustments to the Amount Financed For Interim Collections

20. Cleco should be authorized, as part of the Issuance Advice Letter process, to adjust the initial principal amount of the storm recovery bonds to reflect the final total portion of interim surcharge revenues collected that are credited against the total recoverable storm costs in accordance with Finding of Fact Paragraph 4. The initial principal amount of the storm recovery bonds shall be

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adjusted for the actual remaining unamortized storm damage costs not yet reimbursed through the date of the financing, rounded up to the nearest $1 million. The rounding amount will be an addition to the restricted storm recovery reserve.

4. Amount to be Securitized

21. Cleco should be authorized to cause storm recovery bonds to be issued by its SPE in an aggregate principal amount of approximately $187 million, equal to the sum of: (a) approximately $132 million of remaining storm recovery costs pursuant to the U-29157 Revenue Requirement Order, plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a restricted storm recovery reserve in a segregated restricted account, plus (c) upfront financing costs which are set (for this purpose) at $4.6 million (but are subject to further review as provided in Finding of Fact Paragraph 19), plus or minus (d) any adjustment, pursuant to the Issuance Advice Letter, to reflect any approved swap or hedge or credit enhancement or the interim storm revenues pursuant to Finding of Fact Paragraph 20.

5. Designee Appointment; Issuance Advice Letter Approval Process

22.	Because the actual structure and pricing of the storm recovery bonds and the precise amounts of upfront and ongoing financing costs will not be known at the time that this Financing Order is issued, Cleco has proposed a process by which the terms of the storm recovery bonds can be reviewed by Commission Staff, its advisors and the Commission designee as they are developed and finalized and by which the final transaction terms and costs can be approved.
23.	Cleco has requested that the Commission appoint a designee (the “Designee”) who is authorized to approve through a concurrence process the final terms, structure and pricing of the transaction as set forth in the final Issuance Advice Letter. The Designee’s review of and concurrence with the Issuance Advice Letter, based upon the advice of the Commission’s Staff, financial advisor and special counsel, will be limited to determining that (i) the final structure, terms and pricing of the storm recovery bonds in the Issuance Advice Letter are consistent with the criteria established in this Financing Order and (ii) the mathematical calculations are accurate. The Commission finds that the appointment of a Designee is a reasonable method to protect customers and to assure Cleco and the investing public that all approvals in connection with the issuance of the storm recovery bonds have been obtained as further provided in Finding of Fact Paragraphs 31 and 32. Mr. Lawrence C. St. Blanc is appointed as Designee (subject to Ordering Paragraph 8).
24.	Following determination of the final terms and structure of the storm recovery bonds and prior to the issuance of such bonds, Cleco must file with the Commission for each series of bonds issued, and no later than twenty-four hours

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	after the pricing of that series of bonds, an “Issuance Advice Letter”. The Issuance Advice Letter will include the estimated total upfront financing costs of the bonds set at $4.6 million, the updated estimated ongoing financing costs of administering and supporting the bonds, the required principal amount of the bonds (including the adjustment for the collection of interim storm revenues as provided in Finding of Fact Paragraph 20), as well as the bond structure and terms and the interest rates on the bonds. The Issuance Advice Letter will be completed to report the actual dollar amount of the initial storm recovery charges and other information specific to the storm recovery bonds to be issued. The Issuance Advice Letter shall be provided substantially in the form of Appendix A to this Financing Order.
25.	Cleco will submit a draft Issuance Advice Letter to the Commission Staff, financial advisor and special counsel for review no later than two weeks prior to the expected date of initial marketing of the storm recovery bonds. Within one week after receipt of the draft Issuance Advice Letter, Commission Staff will provide to Cleco any comments that Staff may have regarding the adequacy of the information provided, in comparison to the required elements of the Issuance Advice Letter.
26.	A second draft Issuance Advice Letter shall be submitted to the Commission Staff within 48 hours before the pricing of the storm recovery bonds.
27.	A final Issuance Advice Letter shall be submitted to the Commission Staff within 24 hours after the pricing of the storm recovery bonds, which shall contain certificates from the Company and its bookrunning underwriter(s) that include certifications as discussed in Finding of Fact Paragraphs 29, 30 and 96.
28.	The Commission Staff, the Designee and the Commission financial advisor and special counsel shall provide prompt input to Cleco on Issuance Advice Letter filings so that any potential objections or issues regarding the information provided, including but not limited to the structuring and pricing of the storm recovery bonds, can be addressed as soon as practicable. The Commission acknowledges that the rejection of any pricing of the bonds after an underwriting agreement is executed could have adverse consequences to Cleco in its future financing activities.
29.	The completion and filing of an Issuance Advice Letter in the form of the issuance advice letter attached as Appendix A, including the certification from Cleco discussed in Finding of Fact Paragraph 30, is necessary to ensure that all proposed terms of pricing and issuance of any securitization actually undertaken by Cleco are within the parameters established in this Financing Order. Cleco further will update the benefit analysis of the net present value of the savings resulting from securitization, as compared to traditional methods of financing storm recovery costs, in the final Issuance Advice Letter.

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30.	The certification statement contained in Cleco’s certification letter shall be worded precisely as the statement in the form of Attachment 4 in the issuance advice letter approved by the Commission: that to the best knowledge, information and belief of Cleco, its officers, agents and employees after reasonable inquiry, the structuring and pricing of storm recovery bonds, as described in the Issuance Advice Letter, have resulted in the lowest storm recovery charges consistent with market conditions at the time of pricing and the terms of this Financing Order. Other aspects of the certification letter may be modified to describe the particulars of the storm recovery bonds’ facts and the actions that were taken during the transaction.
31.	Within 24 hours of receipt of the final Issuance Advice Letter, the Designee shall either (a) approve the transaction by executing a Concurrence and delivering a copy to Cleco, or (b) reject the Issuance Advice Letter and state the reasons therefor. The Designee’s review of the Issuance Advice Letter shall be limited to the matters specified in Finding of Fact Paragraph 23. The Designee shall approve the transaction using the form of Concurrence attached as Attachment 5 to the Issuance Advice Letter. A change in market conditions from the date and time of the actual pricing of the storm recovery bonds shall not constitute grounds for rejecting the Issuance Advice Letter.
32.	The Designee’s approval of the transaction as described in the Issuance Advice Letter through the Concurrence shall be final, irrevocable and incontestable. The Designee’s approval of the transaction shall, pursuant to the Commission’s authority under this Financing Order and without the need for further action by the Commission, constitute the affirmative, binding and conclusive authorization for Cleco and the SPE to execute the issuance of the storm recovery bonds on the terms set forth in the Issuance Advice Letter.

6. Customer Benefits

33.

The Securitization Act permits the Commission to consider whether the proposed structuring, expected pricing, and financing costs of the storm recovery bonds are reasonably expected to result in lower overall costs or would avoid or mitigate rate impacts to customers as compared with traditional methods of financing or recovering storm recovery costs. The primary benefits of the proposed structure arise from replacing traditional debt and equity of the utility with highly rated, lower interest bearing debt. In this proceeding, we find that Cleco’s financial analysis and testimony shows, and Cleco will certify in the final Issuance Advice Letter, pursuant to Attachment 2 thereof, that the financing as proposed by Cleco will produce a net present value benefit to customers, and lower customer bills, each as compared to traditional methods of financing or recovering utility storm recovery costs.

34.

The Securitization Act recognizes that this securitization financing is a valid public purpose. The Commission acknowledges that the lower interest rate obtainable on

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the storm recovery bonds requires that the Commission’s obligations under this Financing Order be direct, irrevocable, unconditional and legally enforceable against the Commission.

C. Structure of the Proposed Financing

1. The Special Purpose Entity (The “SPE”)

35. For purposes of this securitization, Cleco will create the “SPE”, a special purpose storm recovery funding entity which will, as contemplated by Section 1228(D)(2), be a Louisiana limited liability company with Cleco as its sole member, unless Cleco determines that in order to satisfy rating agency conditions it would be preferable to form the SPE under the laws of the State of Delaware. The SPE will be formed for the limited purpose of acquiring storm recovery property (which could include any storm recovery property authorized by the Commission in a subsequent financing order), issuing storm recovery bonds in one or more series and in one or more tranches for each series (which could include storm recovery bonds authorized by the Commission in a subsequent financing order), and performing other activities relating thereto or otherwise authorized by this Financing Order. The SPE will not be permitted to engage in any other activities and will have no assets other than storm recovery property and related assets to support its obligations under the storm recovery bonds. Obligations relating to the storm recovery bonds will be the SPE’s only significant liabilities. These restrictions on the activities of the SPE and restrictions on the ability of Cleco to take action on the SPE’s behalf are imposed to achieve the objective of ensuring that the SPE will be bankruptcy remote and not affected by a bankruptcy of Cleco. The SPE will be managed by a board of managers with rights and duties similar to those of a board of directors of a corporation. As long as the storm recovery bonds remain outstanding, the SPE will have at least one independent manager with no organizational affiliation with Cleco other than acting as independent managers for any other bankruptcy-remote subsidiary of Cleco or its affiliates. The SPE will not be permitted to amend the provisions of the organizational documents that ensure bankruptcy-remoteness of the SPE without the prior unanimous consent of its managers.¹ Similarly, the SPE will not be permitted to institute bankruptcy or insolvency proceedings or to consent to the institution of bankruptcy or insolvency proceedings against it, or to dissolve, liquidate, consolidate, convert, or merge, without the prior unanimous consent of its managers. Additionally, Cleco shall not apply for judicial dissolution of the SPE, and Cleco is not permitted to and shall not withdraw from or otherwise cease to be a member of the SPE for any reason whatsoever, including that Cleco

¹ § 1228(D)(2). If formed under Delaware law, the SPE will have substantially identical provisions to ensure bankruptcy-remoteness.

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	itself shall not dissolve or otherwise terminate its legal existence, unless an acceptable new member of the SPE is substituted for Cleco, until all storm recovery bonds and all financing costs have been paid in full. Other restrictions to ensure bankruptcy-remoteness may also be included in the organizational documents of the SPE as required by the rating agencies. In addition, the Commission will waive any rights it may have to rescind this Financing Order under La. R.S. 12:1308.2(E) if the SPE becomes delinquent in filing its annual report required under La. R.S. 12:1308.1. Cleco may create more than one SPE, in which event the rights, structure and restrictions described in this Financing Order with respect to the SPE would be applicable to each such issuer of storm recovery bonds to the extent of the storm recovery property sold to it and the storm recovery bonds issued by it.
36.	The initial capital of the SPE will be a nominal amount of $100.00. Concurrently with the issuance of the bonds, not less than 0.50% of the original principal amount of each series of storm recovery bonds will be invested by Cleco in the SPE. Adequate funding of the SPE will minimize the possibility that Cleco would have to extend funds to the SPE in a manner that could jeopardize the bankruptcy remoteness of the SPE, and is a factor in treating the financing as a borrowing by Cleco for federal income tax purposes. A sufficient level of capital is necessary to minimize the risk that the SPE would not be treated as bankruptcy remote from Cleco and, therefore, assist in achieving the lowest reasonable cost to customers for the storms’ damage.
37.	The use and proposed structure of the SPE and the limitations related to its organization and management are necessary to minimize risks related to the proposed securitization transaction and to minimize the storm recovery charges. Therefore, the use and proposed structure of the SPE should be approved. The Commission will not exercise any authority to approve or not approve any independent manager of the SPE selected by the Company.

2. Structure and Documents

38.

The SPE will issue storm recovery bonds in one or more series, and in one or more tranches for each series, in an aggregate amount not to exceed the principal amount approved pursuant to this Financing Order and will pledge to the indenture trustee, as collateral for payment of the storm recovery bonds, the storm recovery property, including the SPE’s right to receive the storm recovery charges as and when collected, and certain other collateral described in Cleco’s Securitization Application Testimony.

39.

Concurrent with the issuance of any of the storm recovery bonds, Cleco will transfer to the SPE all of Cleco’s rights under this Financing Order, including rights to impose, collect, and receive storm recovery charges approved in this Financing Order. This transfer will be structured

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	so that it will qualify as a true sale within the meaning of Section 1230(1). By virtue of the transfer, the SPE will acquire all of the right, title, and interest of Cleco in the storm recovery property arising under this Financing Order.
40.	The revenue calculation of the storm recovery charges authorized by this Financing Order will be designed to be at all times sufficient to pay the principal of and interest on the storm recovery bonds, together with related financing costs. The storm recovery bonds will be issued pursuant to the indenture administered by the indenture trustee. The indenture will include provisions for a collection account for each series and subaccounts for the collection and administration of the storm recovery charges and payment or funding of the principal and interest on the storm recovery bonds and other financing costs in connection with the storm recovery bonds, as described in Cleco’s Securitization Application Testimony. Any storm recovery charge revenues not required for the current payment of principal and interest due on the bonds, together with related financing costs, including but not limited to the funding of any overcollateralization or reserve account, will be available to pay such amounts in a future period.
41.	Cleco will submit to Commission Staff, financial advisor and special counsel proposed forms of an Indenture, a Limited Liability Company Operating Agreement (for the SPE), a Purchase and Sale Agreement, an Administration Agreement, and a Servicing Agreement, which will set out in substantial detail certain terms and conditions relating to the transaction and security structure. Cleco proposes that each of the agreements will be executed substantially in the form submitted to the Commission Staff, subject to review and comments by the Commission Staff and advisors consistent with this Financing Order and Finding of Fact Paragraph 93.
42.	Cleco will also submit a proposed form of prospectus and term sheet to be used in connection with the offering and sale of the storm recovery bonds. These offering materials will be subject to review and comment by Commission Staff, financial advisor and special counsel consistent with this Financing Order and Finding of Fact Paragraph 93.

3. Credit Enhancement and Arrangements to Enhance Marketability

43.	Due to current financial market conditions, Cleco has requested authority to consider the use of floating rate bonds, and any hedges or swaps which might be used in connection therewith.
44.	In current market conditions, it is uncertain whether floating rate bonds will be more effectively sold, or whether the benefits of an interest-rate swap within the storm recovery bond structure will outweigh the costs of researching and preparing the swap and result in lower storm recovery charges.

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45.	An interest-rate swap within the storm recovery bond structure could expose customers to higher risks in relation to the storm recovery charges and the ability of the swap counterparty to meet its obligations.
46.	The Company’s possible use of floating rate debt and the associated interest rate swaps or hedges is reasonable and should be approved, and Cleco should be permitted to recover the upfront and ongoing financing costs of swap or hedges, provided that Cleco demonstrates to the satisfaction of the Commission Staff, the Commission’s financial advisor and the Commission’s special counsel that such use provides benefits greater than their reasonably estimated risks.
47.	The Company proposes to use additional forms of credit enhancement (including letters of credit, reserve or overcollateralization accounts, surety bonds, bond insurance, or guarantees) and other mechanisms designed to promote the credit quality and marketability of the storm recovery bonds if such arrangements are reasonably expected to result in net benefits to customers. Cleco also asked that the costs of any swaps or hedges or credit enhancements as well as the costs of arrangements to enhance marketability be included in the amount of upfront financing costs to be financed. Cleco should be permitted to recover the upfront financing and ongoing financing costs of credit enhancements and arrangements to enhance marketability, provided that the Commission’s financial advisor and Cleco agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs. If the use of swaps or hedges or credit enhancements or other arrangements are proposed by Cleco, Cleco shall obtain and provide the Commission’s financial advisor with copies of costs / benefit analyses performed by or for Cleco that support the request to use such arrangements. The costs of credit enhancement provided for herein are not included in the estimate of $4.6 million of upfront financing costs, and will not be included in the adjustment calculations described in Finding of Fact Paragraph 19. This finding does not apply to the collection account, or its subaccounts, which are otherwise approved in this Financing Order.
48.	Cleco’s proposed use of credit enhancements and arrangements to reduce interest rate risk or enhance marketability is reasonable and should be approved, provided that Cleco certifies that the enhancements or arrangements provide benefits greater than their costs and that such certifications are agreed to through the Concurrence by the Designee.

4. Storm Recovery Property

49. Pursuant to Section 1227(17), the storm recovery property consists of the following:

(1) all rights and interests of Cleco or the successor or assignee of Cleco under this Financing Order, including the right to impose, bill, charge, collect, and receive storm recovery charges authorized in

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this Financing Order and to obtain periodic adjustments to such charges as are provided in this Financing Order, and

(2)

all revenues, collections, claims, rights to payments, payments, money, or proceeds arising from the rights and interests specified in the first numbered bullet of this Paragraph, regardless of whether such revenues, collections, claims, rights to payment, payments, money, or proceeds are imposed, billed, received, collected, or maintained together with or commingled with other revenues, collections, rights to payment, payments, money, or proceeds.

50.	As of the effective date of this Financing Order, there is created and established for the benefit of Cleco storm recovery property, which, pursuant to Section 1229(A) and Section 1230(3), is incorporeal movable property in the form of a vested contract right and is a contractual obligation of irrevocability by the Commission in favor of Cleco, its transferees and other financing parties.
51.	Pursuant to Sections 1228(C)(7) and Section 1229(B), the storm recovery property created by this Financing Order will continue to exist until the storm recovery bonds issued pursuant to this Financing Order are paid in full and all financing costs of the bonds have been recovered in full.
52.	Storm recovery property and all other collateral will be held (in pledge) and administered by the indenture trustee pursuant to the indenture, as described in Cleco’s Securitization Application Testimony. This proposal will help ensure the desired triple-A ratings by two or more rating agencies and therefore lower storm recovery charges and should be approved.

5. Servicer and the Servicing Agreement

53. Cleco will execute a servicing agreement with the SPE. The servicing agreement may be amended, renewed or replaced by another servicing agreement. Cleco will be the initial servicer. Cleco will not voluntarily assign or outsource this responsibility except with the Commission’s prior approval and upon a demonstration that the costs under an alternative arrangement will be no more than if Cleco continued to perform such services itself, or there is another affiliate that will provide such services at the same or lower cost than if Cleco continued to perform such services itself, or there is a successor entity to Cleco as the result of a merger or other restructuring that assumes Cleco’s responsibilities as the servicer and administrator. However, Cleco may be succeeded as servicer by another entity under certain circumstances detailed in the servicing agreement. Pursuant to the servicing agreement, the servicer is required, among other things, to impose and collect the applicable storm recovery charges for the benefit and account of the SPE or its assigns or pledgees, to make the periodic true-up adjustments of storm recovery charges required or allowed by this

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Financing Order, and to account for and remit the applicable storm recovery charges to or for the account of the SPE or its assigns or pledgees in accordance with the remittance procedures contained in the servicing agreement without any charge, deduction or surcharge of any kind (other than the servicing fee specified in the servicing agreement). Under the terms of the servicing agreement, if any servicer fails to perform its servicing obligations in any material respect, the indenture trustee acting under the indenture to be entered into in connection with the issuance of the storm recovery bonds, or the indenture trustee’s designee, may, or, upon the instruction of the requisite percentage of holders of the outstanding amount of storm recovery bonds, shall appoint an alternate party to replace the defaulting servicer, with the SPE’s consent (which shall not be unreasonably withheld), in which case the replacement servicer will perform the obligations of the servicer under the servicing agreement. The obligations of the servicer under the servicing agreement and the circumstances under which an alternate servicer may be appointed are more fully described in the servicing agreement. The rights of the SPE under the servicing agreement will be included in the collateral pledged by the SPE to the indenture trustee under the indenture for the benefit of holders of the storm recovery bonds. In the event that there is more than one Cleco-related issuer of storm recovery bonds (i.e., more than one SPE, as noted in Finding of Fact Paragraph 35 above), Cleco will act as initial servicer under a servicing agreement with each such issuer.

54.

The servicer shall remit storm recovery charges to the SPE or the indenture trustee each business day based on estimated daily collections, using a weighted average balance of days outstanding on Cleco’s retail bills. The collections remitted each business day will represent the estimated charges according to the servicing agreement. Cleco will track the amount billed for storm recovery charges by customer. The summation of those individual charges on a daily basis will be remitted to the SPE on each business day, net of considerations of the timing lag between billing and collection, and as further adjusted for uncollectible amounts. For example, if Cleco’s retail bills are outstanding, on a weighted average basis, for a period of 37 days, then the servicer will remit the storm recovery charges billed on a particular date, less an assumed write-off rate, 37 days after that date. As set forth in the servicing agreement, the servicer will include in the calculation of this remittance an allowance for the estimated charged-off amount based on the prior annual period. The servicing agreement also will provide for an annual reconciliation of estimated remittances (including the estimated charged-off amount) with actual collections of storm recovery charges. Cleco will not be required to credit customers with any earnings accruing to Cleco on transferred and untransferred daily collections of storm recovery charges. In the first 12 months that the storm recovery charges are in place, Cleco will track its remittance performance in accordance with the servicing agreement.

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55.	The servicer will be entitled to an annual servicing fee fixed at 0.05% of the initial principal amount of the storm recovery bonds, subject to the mechanism described in Ordering Paragraph 26, which ensures that both the customers and the Company are protected in the event the costs of servicing are greater or lesser than the fixed servicing fee. That methodology (the fixed fee and mechanism contained in that Ordering Paragraph) ensures that the annual servicing fee will include only those costs related to the servicing function and that customers will not be charged twice for the same costs. Ongoing external information technology costs, bank wire fees, and legal fees related to the servicing agreement are part of this servicing fee. In addition, Cleco, as initial servicer, shall be entitled to receive reimbursement for its out-of-pocket costs for external accounting as well as for other items of costs that will be incurred annually to support and service the storm recovery bonds after issuance. The Commission approves the servicing fee as described herein as reasonable. The Commission also approves, in the event of a default by Cleco as the initial servicer resulting in the appointment of a successor non-affiliate servicer, a higher annual servicing fee not to exceed 0.60% of the initial principal amount of the storm recovery bonds, unless Cleco demonstrates to the Commission that a higher servicing fee must be paid in order to obtain the services based on the prevailing market conditions at that time and the Commission approves such higher fee at such time as provided in Ordering Paragraph 42. To the extent a higher servicing fee is caused by the replacement appointment of a non-affiliate servicer due to the negligence, misconduct or termination for cause of Cleco or affiliate servicer, the servicing agreement will provide (for the benefit of the Commission) that Cleco shall bear the increased portion, and not its customers. In addition to the servicing fee, Cleco will be entitled to an annual administration fee for providing administrative and support services to the SPE fixed at $100,000.00 (with no escalation). The Commission approves the administration fee as described herein as reasonable.
56.	The obligations to continue to provide service and to collect and account for storm recovery charges will be binding upon Cleco and any other entity that provides transmission and distribution electric services or, in the event that transmission and distribution electric services are not provided by a single entity, any other entity providing electric transmission or distribution services to Cleco’s LPSC jurisdictional customers. The Commission will enforce the obligations imposed by this Financing Order, the Commission’s applicable substantive rules, and applicable statutory provisions.
57.	To the extent that any interest in the storm recovery property created by this Financing Order is assigned, sold or transferred to an assignee, such as the SPE, Cleco will enter into a contract with that assignee that will require Cleco (or its successor under such contract) to continue to operate Cleco’s electric

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	transmission and distribution system providing service to Cleco’s LPSC-jurisdictional customers.
58.	No provision of this Financing Order shall prohibit Cleco from selling, assigning or otherwise divesting any of its transmission system or distribution system or any portion thereof providing service to Cleco’s LPSC-jurisdictional customers, by any method whatsoever, including those specified in Ordering Paragraph 57 pursuant to which an entity becomes a successor, so long as the entities acquiring either such system or portion thereof agree to continue operating such facilities to provide service to LPSC-jurisdictional customers. Nothing in this Financing Order is intended to limit or impair any authority of the Commission concerning the transfer of ownership or control of Cleco or its assets.
59.	The servicing agreement described in Findings of Fact Paragraphs 53 through 58 is reasonable, will reduce risk associated with the proposed financing and should, therefore, result in lower storm recovery charges and greater benefits to customers and should be approved.

6. Storm Recovery Bonds: Maturity and Issuance

60.

The scheduled final maturity date of any series of storm recovery bonds will not exceed 14 years from the date of issuance of such series, and their legal final maturity will not be more than two years after the scheduled final maturity date. The scheduled and legal final maturity date and interest rate (floating or fixed) of each series and tranche within a series and amounts in each series will be finally determined by Cleco, consistent with market conditions and indications of the rating agencies, at the time the storm recovery bonds are priced, but subject to Cleco’s compliance with the Issuance Advice Letter process. Pursuant to Section 1228(E), but subject to the limitations set forth in this Financing Order, Cleco will retain sole discretion regarding whether or when to assign, sell, or otherwise transfer any rights arising under this Financing Order, or to cause the issuance of any storm recovery bonds authorized in this Financing Order. The SPE will issue the storm recovery bonds no earlier than the third business day after pricing of the storm recovery bonds.

61.

The Commission finds that the proposed bond structure allocating the revenue requirements for each customer class annually in accordance with the class-by-class allocations resulting from Cleco’s most recent annual base revenue forecast as contemplated by Finding of Fact Paragraph 79, subject to further modification in accordance with rating agency requirements and the true-up mechanism approved in this Financing Order, is in the public interest and should be adopted.

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7. Security for Storm Recovery Bonds

62. The payment of the storm recovery bonds and related charges authorized by this Financing Order is to be secured by the storm recovery property created by this Financing Order and by certain other collateral as described in the Securitization Application Testimony. The storm recovery bonds will be issued pursuant to the indenture administered by the indenture trustee. The indenture will include provisions for a collection account for each series and subaccounts for the collection and administration of the storm recovery charges and payment or funding of the principal and interest on the storm recovery bonds and other costs, including fees and expenses, in connection with the storm recovery bonds, as described in Cleco’s Securitization Application Testimony. Pursuant to the indenture, the SPE will establish a collection account as a trust account to be held by the indenture trustee as collateral to ensure the payment of the principal, interest, and other costs approved in this Financing Order related to the storm recovery bonds in full and on a timely basis. The collection account will include the general subaccount, the capital subaccount, and the excess funds subaccount, and may include other subaccounts. A form of the indenture will be filed with the Commission, as described in Finding of Fact Paragraph 41.

(a) The General Subaccount

63. The indenture trustee will deposit the storm recovery charge remittances that the servicer remits to the indenture trustee for the account of the SPE into one or more segregated trust accounts and allocate the amount of those remittances to the general subaccount. The indenture trustee will on a periodic basis apply monies in this subaccount to pay expenses of the SPE, to pay principal and interest on the storm recovery bonds, and to meet the funding requirements of the other subaccounts. The funds in the general subaccount will be invested by the indenture trustee in short-term high-quality investments meeting rating agency requirements as provided in the indenture, and such funds (including, to the extent necessary, investment earnings) will be applied by the indenture trustee to pay principal and interest on the storm recovery bonds and all other components of the periodic payment requirement (as defined in Finding of Fact Paragraph 77), and otherwise in accordance with the terms of the indenture and this Financing Order.

(b) The Capital Subaccount

64. When a series of storm recovery bonds is issued, Cleco will make a capital investment to the SPE for that series, which the SPE will deposit into the capital subaccount. The amount of the capital investment will be not less than 0.50% of the original principal amount of each series of storm recovery bonds. The capital subaccount will serve as collateral to ensure timely payment of principal and interest on the storm recovery bonds and all other components of the periodic

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payment requirement. The funds in this subaccount will be invested by the indenture trustee in short-term high-quality investments meeting rating agency requirements as provided in the indenture. Any amounts in the capital subaccount will be available to be used by the indenture trustee to pay principal and interest on the storm recovery bonds and all other components of the periodic payment requirement if necessary due to a shortfall in storm recovery charge collections. Any funds drawn from the capital subaccount to pay these amounts due to a shortfall in the storm recovery charge collections will be replenished through future storm recovery charge remittances. Upon payment of the principal amount of all storm recovery bonds and the discharge of all obligations that may be paid by use of storm recovery charges, all amounts in the capital subaccount will be released to the SPE for distribution to and retention by Cleco (except any excess earnings).

65.

The capital investment to the SPE will be funded by Cleco. Proceeds from the sale of the storm recovery bonds will not be used to reimburse Cleco the amount of the capital contribution. Cleco shall be permitted to earn a rate of return on invested capital in the SPE equal to the rate of interest payable on the longest maturing tranche of the storm recovery bonds, to be paid by means of periodic distributions from the SPE funded solely by the income earned thereon through investment by the indenture trustee in eligible investments and by any deficiency being collected through the true-up adjustments, and further, any actual earnings in excess of that rate will be credited to customers.

(c) The Excess Funds Subaccount

66. The excess funds subaccount will hold any storm recovery charge remittances and investment earnings on the collection account in excess of the amounts needed to pay current principal and interest on the storm recovery bonds and to pay other periodic payment requirements (including, but not limited to, replenishing the capital subaccount). Any balance in or allocated to the excess funds subaccount on a true-up adjustment date will be subtracted from the periodic billing requirement (as defined in Finding of Fact Paragraph 78) for purposes of the true-up adjustment. The money in this subaccount will be invested by the indenture trustee in short-term high-quality investments meeting rating agency requirements as set forth in the indenture, and such money (including investment earnings thereon) will be used by the indenture trustee to pay principal and interest on the storm recovery bonds and other periodic payment requirements.

(d) Other Subaccounts

67. Other credit enhancements required by rating agencies or otherwise proposed by Cleco in the form of reserve or overcollateralization or other subaccounts may be utilized for the transaction if such enhancements are

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required to secure a triple-A debt rating, or to provide benefits greater than their tangible and intangible costs as demonstrated pursuant to Finding of Fact Paragraph 47 and are approved pursuant to the Issuance Advice Letter process. Such credit enhancements are not part of the $4.6 million estimate of upfront financing costs and will not be included in the adjustment calculations described in Finding of Fact Paragraph 19.

8. General Provisions

68.

The collection account and the subaccounts described above are intended to provide for full and timely payment of scheduled principal and interest on the storm recovery bonds and all other components of the periodic payment requirement. If the amount of storm recovery charges remitted to the general subaccount is insufficient to make all scheduled payments of principal and interest on the storm recovery bonds and to make payment on all of the other components of the periodic payment requirement, the excess funds subaccount and the capital subaccount will be drawn down, in that order, to make those payments. Any reduction or deficiency in the capital subaccount due to such withdrawals must be replenished to the capital subaccount on a periodic basis through the true-up process. In addition to the foregoing, there may be such additional accounts and subaccounts as are necessary to segregate amounts received from various sources, or to be used for specified purposes. Such accounts will be administered and utilized as set forth in the servicing agreement and the indenture. Upon the maturity of the storm recovery bonds and the discharge of all obligations in respect thereof, remaining amounts in the collection account, other than amounts that were in the capital subaccount (including earnings thereon), will be released to the SPE and equivalent amounts will be credited by Cleco to customers consistent with Ordering Paragraph 31.

69.

The use of a collection account and its subaccounts in the manner proposed by Cleco is reasonable, will lower risks associated with the securitization and thus lower the costs to customers, and should, therefore, be approved.

9. Storm Recovery Charges—Imposition and Collection; Nonbypassability; Pledges

70. Cleco seeks authorization to impose on and to collect from its customers, storm recovery charges in an amount sufficient to provide for the timely recovery of its costs approved in this Financing Order (including payment of principal and interest on the storm recovery bonds and financing costs related to the storm recovery bonds). Cleco seeks to impose and collect the storm recovery charges until the storm recovery bonds issued pursuant to this Financing Order are paid in full and all financing costs of the bonds have been recovered in full. The term of the storm recovery bonds will be consistent with Finding of Fact Paragraph 60.

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71.	Storm recovery charges will be separately identified on bills. The servicer shall send a written statement at least annually to all customers to the effect that the SPE (or its assignee) is the owner of the rights to the storm recovery property and that the servicer is merely the collection agent for the SPE (or its assignee or pledgee). Cleco will work with the Commission Staff, financial advisor and special counsel to develop the appropriate notice that should appear on customer bills as well as the language for and timing of the annual bill inserts.
72.	If any customer does not pay the full amount of any bill to Cleco, the amount paid by the customer will be applied to all charges on the bill, including without limitation electric service charges and all storm recovery charges, based, as to a bill with charges covering more than one month, on the chronological order of billing, and, as to those charges with the same billing date, pro-rata. In addition, if there is more than one owner of storm recovery property, or if the sole or any owner of storm recovery property (or pledgee or pledgees) has issued multiple series of bonds, such partial collections representing storm recovery charges shall be allocated among such owners (or pledgee or pledgees), and among such series of storm recovery bonds, pro-rata based upon the amounts billed with respect to each series of storm recovery bonds, provided that late fees and charges may be allocated to the servicer as provided in the tariff. The foregoing allocations will facilitate a proper balance between the competing claims to this source of revenue in an equitable manner.
73.	Cleco, acting as servicer, and any subsequent servicer, will collect nonbypassable storm recovery charges that are applied to all existing and future LPSC-jurisdictional customers who remain attached to Cleco’s (or its successor’s or assignee’s) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco under rate schedules or special contracts approved by the Commission. Cleco has proposed that the storm recovery charge be nonbypassable within the meaning of Internal Revenue Procedure 2005-62. Cleco proposes that storm recovery charges for customers choosing to self-generate or co-generate will be assessed on the total amount, in the aggregate, of their firm and standby load served by Cleco. Any customer who completely severs interconnection with Cleco may become exempt from continued payment of the storm recovery charges. The Exhibit JRC-18 in the testimony of J. Robert Cleghorn describes this charge with greater specificity. The Commission finds that such nonbypassability provision is appropriate to ensure an equitable allocation of storm recovery costs among customers and to secure the desired triple-A rating for the storm recovery bonds.
74.	Pursuant to Section 1227(15) and constitutional and other statutory authority, the Commission herein provides that, if restructuring of retail sales and distribution of electricity in Louisiana subsequently provides that customers may choose to receive their supply service from another provider, such selection of another

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	provider will not allow such customers to bypass the storm recovery charge, so long as they continue to be attached to Cleco’s transmission or distribution lines. In the event of such restructuring, those customers who choose another provider for partial or full requirements supply, but remain attached to Cleco’s transmission or distribution lines, would be assessed the storm charge at the highest peak demand imposed on the Cleco system by demand metered customers and the highest peak consumption level of customers who are not demand metered, in each case during the twelve months immediately preceding the switch.
75.	Cleco’s proposal related to imposition and collection of storm recovery charges is reasonable and is necessary to ensure collection of storm recovery charges sufficient to support recovery of the costs approved in this Financing Order and should be approved. It is reasonable to approve the form of Appendix B-1 (Rider SRCA) and Appendix B-2 (Rider SCSA) to this Financing Order and require that these tariff provisions be filed before any storm recovery bonds are issued pursuant to this Financing Order. The storm recovery charges imposed by this Financing Order are irrevocable, binding and nonbypassable charges.
76.	Cleco’s Securitization Application Testimony included support that the rating and credit quality of the storm recovery bonds would be enhanced by the provision of a Commission pledge, as permitted under Section 1228(C)(5), as well as the State pledge set forth in Section 1234, protecting the storm recovery charges.

10. Periodic Payment and Billing Requirements; Allocations

77.

The periodic payment requirement is the required periodic payment for a given period (i.e., semi-annually, or such other applicable period) due under (or otherwise payable with respect to) the storm recovery bonds. Each periodic payment requirement includes: (a) the principal amortization of the storm recovery bonds in accordance with the expected amortization schedule (including deficiencies of previously scheduled principal for any reason); (b) periodic interest on the storm recovery bonds (including any accrued and unpaid interest); and (c) ongoing financing costs consisting of, without limitation, the servicing fee, rating agencies’ fees, trustee fees, legal and accounting fees, other ongoing fees and expenses, and the costs, if any, of maintaining any credit enhancements or hedges or swaps. The initial periodic payment requirement for the storm recovery bonds issued pursuant to this Financing Order should be updated in the Issuance Advice Letter.

78.

The periodic billing requirement represents the aggregate dollar amount of storm recovery charges that must be billed during a given period (i.e., semi-annually, or such other applicable period) so that the projected storm recovery charge collections will be sufficient to meet the entire aggregate periodic payment requirement for that period, given: (i) forecast usage data for the period; (ii)

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	forecast uncollectibles for the period; and (iii) forecast lags in collection of billed storm recovery charges for the period. In the true-up process, the over or under collection from any period will be added to or subtracted from, as the case may be, the periodic billing requirement for the upcoming period.
79.	Cleco proposed resetting allocation factors annually for each customer rate class, in accordance with Cleco’s most recent annual base revenue forecast, for the distribution of the periodic billing requirement to each customer rate class, in the testimony of J. Robert Cleghorn. The allocators will be reset in proportion to each customer class’ allocation percentage from the most recent base revenue forecast. The last utilized allocations will be used if no new allocations have been determined at a particular time.
80.	The Commission adopts the allocator reset methodology proposed by Cleco and reflected in the Securitization Application Testimony, Finding of Fact Paragraph 79 and illustrated by Appendix B-1 hereto.

11. Calculation and True-Up of Storm Recovery Charges

81. Pursuant to Section 1228(C)(4), the servicer of the storm recovery bonds will make mandatory semi-annual adjustments (i.e., every six months) to the storm recovery charges to:

(a)	correct, over a period of up to 12 months covering the next two succeeding payment dates as provided in Finding of Fact Paragraph 84, any under-collections or over-collections, for any reason, during the preceding six months; and
(b)	to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal of and interest on the storm recovery bonds and all other financing costs during the subsequent 12-month period, consistent with the methodology described in Finding of Fact Paragraph 84.

However, to the extent any storm recovery bonds remain outstanding after the scheduled maturity date of the last bond tranche or class, mandatory true-up adjustments shall be made quarterly until all bonds and associated costs are paid in full (and any under-collection shall be corrected for the next payment date instead of over a period covering the next two succeeding payment dates). The form of true-up notice is attached as Appendix D to this Financing Order.

82.	The Commission Staff will have 15 days after the date of the true-up filing in which to confirm the mathematical accuracy of the servicer’s adjustment.
83.	True-up filings will be based upon the cumulative differences, regardless of the reason, between the periodic payment requirement (including scheduled principal and interest payments on the storm recovery bonds and ongoing financing costs) and the amount of storm recovery charge remittances to the

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indenture trustee. True-up procedures are necessary to ensure full recovery of amounts sufficient to meet on a timely basis the periodic payment requirement over the scheduled life of the storm recovery bonds. In order to assure adequate storm recovery charge revenues to fund the periodic payment requirement and to avoid large over-collections and under-collections over time, the servicer will reconcile the storm recovery charges using Cleco’s most recent forecast of electricity deliveries and estimates of ongoing financing costs. The calculation of the storm recovery charges will also reflect both a projection of uncollectible storm recovery charges and a projection of payment lags between the billing and collection of storm recovery charges based upon Cleco’s most recent experience regarding collection of storm recovery charges.

84.

The servicer will make true-up adjustments in the following manner:

(a)	subtract the previous period’s storm recovery charge revenues collected and remitted from the previous period’s periodic payment requirement to calculate the under-collection or over-collection from the preceding period;
(b)	calculate the amount of this true-up adjustment, by (i) correct any under-collection or over-collection calculated in step (a) over a period of up to 12 months covering the next two succeeding payment dates (in order to mitigate the size and impact of the adjustment), using the rules that (x) principal payments on the storm recovery bonds will be brought on schedule over the next two succeeding payment dates, but (y) the resulting periodic billing requirement always must be sufficient to cover operating expenses and interest on the storm recovery bonds on a timely basis, plus (ii) add any amount carried forward from the previous true-up adjustment by the operation of step (b)(i) during the preceding true-up adjustment calculation;
(c)	add the amount calculated in step (b) to the upcoming period’s trued-up periodic billing requirement to determine an adjusted periodic billing requirement for the upcoming period;
(d)	add the amount, if a positive number, equal to the difference of the return on Cleco’s invested capital in the SPE for the previous period minus the actual investment earnings thereon from the indenture trustee’s eligible investments for the previous period;
(e)	allocate the result from step (d) using the allocation factors approved by the Commission in this Financing Order and develop customer class specific storm recovery charge rates based on those allocated dollar amounts; and
(f)	file those adjusted storm recovery charge rates with the LPSC not less than 15 days prior to the first billing cycle of the month in which the revised storm recovery charges will be in effect.

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85.	As discussed Finding of Fact Paragraphs 79-80, the allocation of payment responsibility among customer classes in calculating the storm recovery charges is presented in Cleco’s Securitization Application Testimony and illustrated in Appendix B-1. Pursuant to the mandatory semi-annual true-up procedure, the calculations will change, after the initial Rate Schedule Rider SRCA period calculated from the effective date of Rider SRCA through the first payment date, over two payment dates. The servicer will calculate the initial storm recovery charges consistent with Finding of Fact Paragraphs 77 through 85.
86.	The servicer may also make interim true-up adjustments more frequently at any time during the term of the storm recovery bonds: (i) if the servicer forecasts that storm recovery charge collections will be insufficient to make all scheduled payments of interest and other financing costs in respect of the storm recovery bonds during the current or next succeeding payment period or bring all principal payments on schedule over the next two succeeding payment dates and/or (ii) to replenish any draws upon the capital subaccount. Each such interim true-up shall use the methodology identified in Finding of Fact Paragraphs 81 through 85 applicable to the semi-annual true-up.
87.	Semi-annual, interim and quarterly true-up adjustments shall be filed not less than 15 days prior to the first billing cycle of the month in which the revised storm recovery charges will be in effect.

12. Additional True-Up Provisions

88.	The true-up adjustment filing will set forth the servicer’s calculation of the true-up adjustment to the storm recovery charges. The Commission will have 15 days after the date of a true-up adjustment filing in which to confirm the mathematical accuracy of the servicer’s adjustment. Any true-up adjustment filed with the Commission should be effective on its proposed effective date, which shall be not less than 15 days after filing. Any necessary corrections to the true-up adjustment, due to mathematical errors in the calculation of such adjustment or otherwise, will be made in future true-up adjustment filings. Any interim true-up may take into account the periodic payment requirement for the next succeeding 12 months if required by the servicing agreement.
89.	The true-up mechanism described in this Financing Order and contained in Appendix D to this Financing Order is reasonable and will reduce risks related to the storm recovery bonds, resulting in lower storm recovery charges and greater benefits to customers and should be approved.
90.	To improve the credit quality of the storm recovery bonds in light of the expected final maturity of approximately 14 years for the longest maturity tranche of the storm recovery bonds, the true-up methodology approved in this Financing Order requires that any delinquencies or under-collections in one customer class will be taken into account in the application of the true-up

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	mechanism to adjust the storm recovery charge for all customers of Cleco, not just the class of customers from which the delinquency or under-collection arose. The Commission finds that this cross-collateralization methodology will enhance the credit quality of the storm recovery bonds and lower storm recovery charges.
91.	The servicer shall request Commission approval of an amendment to the true-up mechanism described herein – a non-standard true-up (under such procedures as shall be proposed by the servicer and approved by the Commission at the time) —that it deems necessary or appropriate to address any material deviations between storm recovery charge collections and the periodic revenue requirement. No such change shall cause any of the then-current credit ratings of the storm recovery bonds to be suspended, withdrawn or downgraded.
92.	The broad-based nature of the true-up mechanism and the pledges of the State of Louisiana and the Commission, along with the bankruptcy remoteness of the SPE and the collection account, will serve to minimize, if not effectively eliminate, for all practical purposes and circumstances, any credit risk associated with the storm recovery bonds (i.e., that sufficient funds will be available and paid to discharge all principal and interest on the storm recovery bonds as and when legally due). The Company has agreed to appropriately include this statement in the marketing materials for the storm recovery bonds.

13. Commission Participation and Designee

93. The Commission’s Designee, the Commission Staff, its special counsel, and its financial advisor must be allowed to see and have input roles in the documentary process as contemplated by Finding of Fact Paragraphs 41 and 42; participate in the selection of underwriters and other transaction participants; participate in the rating agency process; participate in investor meetings; and participate in the transactional elements relating to the structuring, marketing and pricing of the storm recovery bonds, including advance planning and strategy sessions, road-shows, and marketing presentations. In order to facilitate this involvement, the Company has agreed to provide for the timely flow of information and updates, hold periodic update meetings and/or conference calls, provide periodic reports from underwriters, and answer requests for confirmatory information and data.

14. Storm Recovery Bond Transaction Structure

94. Cleco has proposed a transaction structure that is expected to include (but is not limited to):

(a)	the use of the SPE as issuer of the storm recovery bonds, limiting the risks to bondholders of any adverse impact resulting from a bankruptcy proceeding of its parent Cleco or any affiliate;
(b)	the right to impose and collect storm recovery charges that are nonbypassable and which must be trued-up at least semi-annually, and

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	more frequently under certain circumstances, in order to ensure projected recovery of amounts sufficient to provide timely payment of all financing costs;
(c)	additional collateral in the form of a collection account, which includes a capital subaccount funded in cash in an amount equal to not less than 0.50% of the original principal amount of the storm recovery bonds, and other subaccounts resulting in greater certainty of payment of interest and principal to investors, all of which are consistent with the IRS requirements to assure the desired federal income tax treatment for the storm recovery bond transaction;
(d)	protection of the holders of storm recovery bonds against potential defaults by any servicer that is responsible for billing and collecting the storm recovery charges from existing or future customers;
(e)	the treatment for federal income tax purposes to include: (i) the transfer of the rights under this Financing Order to the SPE not resulting in gross income to Cleco, and the future revenues under the storm recovery charges being included in Cleco’s gross income under its usual method of accounting, (ii) the issuance of the storm recovery bonds and the transfer of the proceeds of the storm recovery bonds to Cleco not resulting in gross income to Cleco, and (iii) the storm recovery bonds constituting borrowings of Cleco;
(f)	the marketing of the storm recovery bonds using proven underwriting and marketing processes, through which market conditions and investors’ preferences, with regard to the timing of the issuance, the terms and conditions, related maturities, interest rate type and prices and other aspects of the structuring and pricing will be determined, evaluated and factored into the structuring and pricing of the storm recovery bonds;
(g)	a scheduled final maturity of the last tranche of storm recovery bonds that does not exceed 14 years from the date of issuance of the storm recovery bonds (although the legal final maturity of that last tranche of the storm recovery bonds may extend to 16 years from the date of issuance of the storm recovery bonds);
(h)	resetting allocation factors for each customer class, in accordance with Cleco’s most recently completed annual base revenue forecast, subject to further modification in accordance with rating agency requirements and the operation of the true-up mechanism; and
(i)	participation of Commission Staff, its special counsel and its financial advisor, Pathfinder, in review of all related financing documents and the structuring, marketing and pricing of the storm recovery bonds.

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95.

Cleco’s proposed transaction structure is consistent with the Securitization Act and necessary to enable the storm recovery bonds to obtain the highest possible bond credit rating and lower overall costs or mitigate rate impacts to customers.

96.

In the final Issuance Advice Letter, each of the Company’s bookrunning underwriter(s) will provide a certificate confirming that, based on its review of the final terms of the storm recovery bonds, the marketing, pricing and structuring (including the sizing and principal amortization of each class of storm recovery bonds) have resulted in the lowest yield for investors consistent with market conditions at the time of pricing and the terms of this Financing Order. Each such bookrunning underwriter’s certification will be filed with Commission Staff under seal as trade secret, proprietary, and confidential.

D. Use of Proceeds

97.	Upon the issuance of storm recovery bonds, the SPE will use the net proceeds from the sale of the bonds (after payment of upfront financing costs payable by the SPE) to pay to Cleco the purchase price for Cleco’s rights under this Financing Order, which are storm recovery property.
98.	The net proceeds from the sale of the storm recovery property (after payment of upfront financing costs payable by Cleco) will be used by Cleco as follows: Cleco will use approximately $50 million to fund restricted storm recovery reserves to be held in a segregated restricted account. Cleco will use the remaining portion of the proceeds (approximately $132 million), which is reimbursement for storm recovery costs previously expended by Cleco from internally-generated funds, for working capital and other general corporate purposes.
99.	Cleco shall deposit the approximately $50 million of the funds provided by the SPE relating to the restricted storm recovery reserve in a segregated restricted account. Cleco may withdraw funds from the restricted reserve to pay any excess upfront financing costs as described in Finding of Fact Paragraph 19, and otherwise as provided in the U-29157 Revenue Requirement Order.
100.	Cleco has acknowledged that this restricted reserve is discretionary by the Commission, both as a general ratemaking matter and pursuant to the Securitization Act, that the Commission has exercised its discretion in this case solely to achieve ratepayer savings through securitization of this amount, and that the Commission’s exercise of its discretion in this Financing Order in this regard is non-precedential, as further provided in Finding of Fact Paragraph 103.
101.	The use of proceeds from the sale of the bonds in violation of this Financing Order shall subject the Company to proceedings pursuant to applicable statutes, orders and the rules and regulations of the Commission but shall not be grounds to rescind, alter, modify or amend this Financing Order and shall not affect the validity, finality and irrevocability of this Financing Order or the storm recovery

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property irrevocably created hereby or the approvals of the transactions by the Designee granted by authority of this Financing Order.

E. Customer Credits for Post Financing Order Insurance Proceeds or Government Grants

102. To the extent Cleco receives insurance proceeds or receives grants from the State of Louisiana or the government of the United States of America after the date of this Financing Order, the purpose of which is to provide for recovery of storm recovery costs that have been securitized, Cleco has proposed that such amounts be credited to customers through Rider SCSA under terms and conditions approved by the Commission. The use of such insurance proceeds and grants is appropriate.

F. Non-Precedential; Final

103. This Financing Order is warranted based solely on the unique facts presented in this case. This Financing Order shall have no precedential effect as to Cleco or any other public utility in any future proceedings in future dockets involving issues similar to those resolved herein, and shall be without prejudice to the right of any party to take any position on any such similar issues in future proceedings in future dockets, or appeals therefrom. For the avoidance of doubt, however, the immediately preceding sentence and Finding of Fact Paragraph 100 have no affect or limitation on Ordering Paragraphs 50 through 52.

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Conclusions of Law

V. CONCLUSIONS OF LAW

A. Jurisdiction

1.	Cleco is an electric utility as defined in La. R.S. 45:121 and Section 1227(4).
2.	Cleco is entitled to file, and the Securitization Application constitutes, an application for a financing order pursuant to Section 1228(A).
3.	The Commission has jurisdiction and authority over Cleco’s application pursuant to Article 4, Section 21 of the Louisiana Constitution, R.S. 45:1163, 45:1168 and 45:1176, Sections 1228(B) and 1236 of the Securitization Act, and other applicable law.
4.	The Commission has authority to approve this Financing Order under Section 1228(B) and the Commission’s constitutional plenary power.

B. Statutory Requirements

5.	Notice of Cleco’s Securitization Application was provided in compliance with Article 4, Section 21(D)(1) of the Louisiana Constitution.
6.	The transaction structure proposed by Cleco is consistent with the Securitization Act.
7.	The proceeds of the storm recovery bonds approved in this Financing Order will be used to reimburse or finance the Commission-approved storm recovery costs, financing costs, and the costs to fund storm recovery reserves, pursuant to Section 1227(5), (14), (16), and (18). Pursuant to Section 1228(A), the proceeds may not be used for any other purpose. The use of proceeds from the sale of the bonds in violation of this Financing Order shall subject the Company to proceedings pursuant to applicable statutes, orders and the rules and regulations of the Commission but shall not be grounds to rescind, alter, modify or amend this Financing Order and shall not affect the validity, finality and irrevocability of this Financing Order until the indefeasible payment in full of the storm recovery bonds and all financing costs related thereto, or the storm recovery property irrevocably created hereby or the approval of the transactions by the Designee granted in the Concurrence by authority of this Financing Order.
8.	This Financing Order meets the requirements for a financing order under the Securitization Act.
9.	Pursuant to Section 1228(C)(8), this Financing Order will remain in full force and effect and unabated notwithstanding the reorganization, bankruptcy or other insolvency proceedings, or merger or sale of Cleco, its successors, or assignees.

C. Storm Recovery Costs and Financing Costs

10. The storm recovery costs in the amount of $132 million identified in the LPSC U-29157 Revenue Requirement Order constitute storm recovery costs under the Securitization Act and are eligible for recovery.

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11.	The level of storm recovery reserves in the amount of approximately $50 million identified in the LPSC U-29157 Revenue Requirement Order is appropriate, constitutes storm recovery costs under the Securitization Act and is eligible for recovery.
12.	The upfront financing costs described in the Securitization Application Testimony, and the estimate in Appendix C set at $4.6 million, are reasonable and eligible for recovery under this Financing Order, subject to review as set forth in this Financing Order.
13.	The ongoing financing costs described in the testimony and estimated in Appendix C are reasonable and eligible for recovery under this Financing Order.
14.	The SPE will be an assignee as defined by Section 1227(2) when storm recovery property is transferred to the SPE pursuant to Section 1228(D)(3).
15.	The issuer, the holders of storm recovery bonds, the indenture trustee, and any collateral agent will each be a “financing party” as defined in Section 1227(7).

D. Sale of Storm Recovery Property

16.	Cleco shall transfer the storm recovery property to the SPE in accordance with Section 1228(C)(3).
17.	If and when Cleco transfers its rights under this Financing Order to the SPE under an agreement that expressly states that the transfer is a sale or other absolute transfer in accordance with the true-sale provisions of Section 1230, then, pursuant to that statutory provision, that transfer shall be a true sale of an interest in storm recovery property and not a security interest in the transferor’s right, title, and interest in, to, and under the storm recovery property. As provided by Section 1230, this true sale shall apply regardless of whether, without limitation, the purchaser has any recourse against the seller,7 or any other term of the parties’ agreement, including the seller’s retention of a partial or residual interest in the storm recovery property, Cleco’s role as the collector of storm recovery charges relating to the storm recovery property, or the treatment of the transfer as a financing for tax, financial reporting, or other purposes.
18.	As provided in Section 1230(6), the priority of a sale of storm recovery property under the Securitization Act is not impaired by any later modification of the Financing Order or storm recovery property or by the commingling of funds arising from storm recovery property with other funds. Further, storm recovery property that has been transferred to an assignee or financing party, and any proceeds of that property will be held for and delivered to the assignee or financing party by Cleco or any other servicer as a mandatary and fiduciary.

E. Storm Recovery Bonds

19.	The SPE may issue bonds in accordance with this Financing Order.
20.	The storm recovery bonds issued pursuant to this Financing Order will be “storm recovery bonds” within the meaning of Section 1227(14), and the storm recovery bonds

⁷ Except, pursuant to Section 1230(2)(c), that no recourse shall result from the inability or failure of customers to timely pay the storm recovery charges.

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	and holders thereof will be entitled to all of the protections provided under the Securitization Act.
21.	As provided in Section 1229(F), if Cleco defaults on any required payment of charges arising from storm recovery property specified in a financing order, the district court of the domicile of the Commission, upon application by an interested party, and without limiting any other remedies available to the applying party, shall order the sequestration and payment of the revenues arising from the storm recovery property to the financing parties or their representatives. Any such order shall remain in full force and effect notwithstanding any reorganization, bankruptcy, or other insolvency proceedings with respect to the electric utility or its successors or assignees.
22.	As provided in Section 1233, storm recovery bonds are not a debt or a general obligation of the state or any of its political subdivisions, agencies, or instrumentalities and are not a charge on their full faith and credit. An issue of storm recovery bonds does not, directly or indirectly or contingently, obligate the state or any agency, political subdivision, or instrumentality of the state to levy any tax or make any appropriation for payment of the bonds, other than for paying storm recovery charges in their capacity as LPSC jurisdictional electric customers of Cleco.
23.	As provided in Section 1227(14), the storm recovery bonds shall be nonrecourse to the credit or any assets of Cleco other than the storm recovery property as specified in this Financing Order and any rights under any ancillary agreement.

F. Storm Recovery Property

24.

The storm recovery property created by this Financing Order is “storm recovery property” within the meaning of Section 1227(17). As provided in Section 1229(A) and (E) and Section 1230(3), the storm recovery property created by this Financing Order constitutes an existing, present, vested contract right constituting an individualized, separate incorporeal movable susceptible of ownership, sale, assignment, transfer, and security interest, including without limitation for purposes of contracts concerning the sale of property and security interests in property, notwithstanding that the value of the property and the imposition and collection of storm recovery charges depends on future acts such as Cleco performing its servicing functions relating to the collection of storm recovery charges and on future electricity consumption. Such property shall exist whether or not the revenues or proceeds arising from the property have been billed, have accrued, or have been collected and notwithstanding the fact that the value or amount of the property is or may be dependent on the future provision of service to customers by Cleco or its successors or assignees and the future consumption by customers of electricity.

25.

As provided in Section 1229(D), the description of this storm recovery property in any contract is sufficient only if such description refers to this Financing Order and such contract states that it covers all or part of the storm recovery property described in this Financing Order.

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26.	All revenues and collections resulting from the storm recovery charges will constitute proceeds only of the storm recovery property arising from this Financing Order, in accordance with Section 1231(A).
27.	Pursuant to Section 1230(3), the storm recovery property created by this Financing Order as of this Financing Order’s effective date is incorporeal movable property in the form of a vested contract right and creates a contractual obligation of irrevocability by the Commission in favor of Cleco, its transferees and other financing parties.
28.	The rights and interests of Cleco or its successor transferred to the SPE in the Storm Recovery Property Sale Agreement and the related Bill of Sale, including the right to impose, bill, and collect storm recovery charges, are storm recovery property.
29.	As provided in Section 1229(G), the interest of an assignee or secured party in storm recovery property is not subject to setoff, counterclaim, surcharge, or defense by Cleco or any other person or in connection with the reorganization, bankruptcy or other insolvency of Cleco or any other entity.

G. Storm Recovery Charges

30.	Amounts that are required to be paid to the servicer as storm recovery charges under this Financing Order or the tariffs approved hereby are “storm recovery charges” as defined in Section 1227(15), whether or not such charges are set out as a separate line item on the customer’s bill. When customers pay the storm recovery charges necessary to cover the repayment of storm recovery bonds, they are paying for the use of electric service. The storm recovery charges under the Financing Order are irrevocable, binding and nonbypassable charges.
31.	The specification of the time period over which charges may be imposed and collected in Finding of Fact Paragraph 70 and the specification of the maximum legal final maturity for the storm recovery bonds in Finding of Fact Paragraph 60 satisfies Section 1228(C)(1).
32.	Any payment of storm recovery charges by a customer to Cleco, as servicer, or to another entity responsible for collecting storm recovery charges from customers under this Financing Order or the tariffs approved hereunder, will discharge the customer’s obligations in respect of that payment.
33.	The allocation of partial payments proposed in Finding of Fact Paragraph 72 satisfies Section 1228(C)(6).
34.	Cleco, as servicer, will collect the storm recovery charges associated with the storm recovery property only for the benefit of the SPE as owner or the financing parties, the indenture trustee or the holders of the storm recovery bonds in accordance with the servicing agreement.

H. Security Interest in Storm Recovery Property

35. Pursuant to Section 1229(C), the storm recovery property may be encumbered by a security interest to secure storm recovery bonds issued pursuant to this Financing Order.

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36.	As provided in Section 1231(C), a valid and enforceable security interest in favor of the bondholders or a trustee on their behalf attaches after: (1) this Financing Order is issued, (2) a security agreement with a financing party in connection with the issuance of storm recovery bonds is executed and delivered, and (3) value for the storm recovery bonds is received.
37.	As provided in Section 1231(D), a security interest in storm recovery property is perfected only if it has attached and a financing statement indicating the storm recovery property collateral covered thereby has been filed in accordance with the Louisiana Uniform Commercial Code as provided in the Securitization Act. The filing of such a financing statement shall be the only method of perfecting a lien or security interest on storm recovery property.
38.	The priority of a security interest perfected under the Securitization Act is not defeated or impaired by any later modification of the Financing Order or storm recovery property or by the commingling of funds arising from storm recovery property with other funds.

I. True-Up of Storm Recovery Charges

39.	The methodology approved in this Financing Order (including without limitation as described in Finding of Fact Paragraphs 81 through 86) and appended as Appendix D to calculate and adjust the storm recovery charges constitutes a true-up mechanism which satisfies Section 1228(C)(4).
40.	The allocation of payment responsibility among customer classes which is included in the methodology approved in this Financing Order and illustrated in Appendix B-1 is appropriate.
41.	The true-up mechanism, and all other obligations of the State of Louisiana and the Commission set forth in this Financing Order, are direct, explicit, irrevocable and unconditional upon issuance of the storm recovery bonds and are legally enforceable against the State of Louisiana and the Commission.

J. Irrevocability and State and Commission Pledges

42. Pursuant to Section 1234 of the Securitization Act, the State of Louisiana has pledged to and agreed with the bondholders, the owners of the storm recovery property, and other financing parties that the State of Louisiana will not:

(1)	Alter the provisions of the Securitization Act which authorize the Commission to create a contract right by the issuance of this Financing Order, to create storm recovery property, and to make the storm recovery charges imposed by a financing order irrevocable, binding, and nonbypassable charges;
(2)	Take or permit any action that impairs or would impair the value of the storm recovery property created pursuant to this financing order; or

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(3) Except for adjustments under any true-up mechanism established by the Commission, reduce, alter, or impair storm recovery charges that are to be imposed, collected, and remitted for the benefit of the bondholders and other financing parties, as applicable, until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the storm recovery bonds have been paid and performed in full. Nothing in this paragraph shall preclude limitation or alteration if and when full compensation is made by law for the full protection of the storm recovery charges collected pursuant to this Financing Order and full protection of the bondholders and any assignee or financing party.

43.

Pursuant to Section 1228(C)(5), the Commission provides and pledges that after the earlier of the transfer of storm recovery property to an assignee or the issuance of storm recovery bonds authorized by this Financing Order, this Financing Order is irrevocable until the indefeasible (i.e., not voidable) payment in full of the storm recovery bonds and the financing costs. Except in connection with a refinancing or refunding as described in Section 1228(F), or to implement any true-up mechanism adopted by the Commission as described in Section 1228(C)(4), the Commission may not amend, modify, or terminate this Financing Order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust storm recovery charges approved in this Financing Order, provided that nothing shall preclude limitation or alteration if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to this Financing Order and the full protection of the bondholders and any assignee or financing party.

44.

The SPE has the continuing irrevocable right at the request of Cleco to cause the issuance of storm recovery bonds in one or more series in accordance with this Financing Order for an effective period commencing with the date of this Financing Order and extending 24 months following the latest of (i) the date on which this Financing Order becomes final and not appealable; (ii) the date on which the U-29157 Revenue Requirement Order becomes final and not appealable; or (iii) the date on which any other regulatory approvals necessary to issue the storm recovery bonds are obtained and not appealable.

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Commission Action: Ordering Paragraphs

VI. COMMISSION ACTION: ORDERING PARAGRAPHS

     This matter was considered at the Commission’s Open Session held on September 12, 2007. On motion of Commissioner Sittig, seconded by Commissioner Bossiere, and approved by a vote of 5-0, the Commission adopted this Financing Order for Cleco Power LLC authorizing all of the activities necessary to undertake the securitization of the storm damage, storm reserve and financing costs amount and undertake all of the other actions contained in this Financing Order. Based upon the record, the Findings of Fact and Conclusions of Law set forth herein, and for the reasons stated above and in the record, the Commission orders the following:

     IT IS THEREFORE ORDERED THAT:

A. Approval

1.	Approval of Application. The application of Cleco for the issuance of a financing order under the Securitization Act is approved, as provided in this Financing Order.
2.	Authority to Finance and Issue Storm Recovery Bonds. Cleco is authorized to securitize and to cause the issuance of storm recovery bonds with an aggregate principal amount of approximately $187 million, equal to the sum of: (a) approximately $132 million of remaining unamortized storm recovery costs pursuant to the U-29157 Revenue Requirement Order, plus (b) the costs of funding storm recovery reserves in the amount of approximately $50 million to create a restricted storm recovery reserve in a segregated restricted account, plus (c) upfront financing costs, which are set (for purposes of calculating the aggregate principal amount) at $4.6 million, but will be reviewed in accordance with Ordering Paragraph 3, plus or minus (d) any adjustment, pursuant to the Issuance Advice Letter, to reflect any approved swap or hedge or credit enhancement or the change necessary to account for Cleco’s collection of interim surcharge revenues through the date of pricing of the storm recovery bonds in accordance with Finding of Fact Paragraph 4 and Ordering Paragraph 25. The initial principal amount of the storm recovery bonds shall be adjusted for the actual recoverable storm damage costs not yet reimbursed by the interim surcharge revenues through the date of the financing, rounded up to the nearest $1 million, in accordance with Finding of Fact Paragraph 20. The rounding amount will be an addition to the restricted reserve.
3.	Authority to Adjust for Upfront Financing Costs. Within 60 days after the filing of the Issuance Advice Letter, Cleco will submit to the Commission a final accounting of its upfront financing costs which will be reviewed and reconciled by the Commission Staff to prudently and actually incurred costs. Any prudently incurred amounts in excess of the $4.6 million estimated amount included in the principal amount financed will be netted against and withdrawn from the restricted storm recovery reserve. If the prudent and actual upfront financing costs are less than the estimated upfront financing costs included in the principal amount financed, the periodic billing requirement for the first semi-annual true-up adjustment shall be reduced by the amount of such unused funds (together with income earned thereon through investment by the indenture

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	trustee in eligible investments) and such unused funds (together with income earned thereon through investment by the indenture trustee in eligible investments) shall be available for payment of debt service on the bond payment date next succeeding such true-up adjustment. If the Commission finds that a portion of the upfront financing costs actually incurred by the SPE were not prudent, then the Company shall reimburse that portion as part of the first semi-annual true-up adjustment by paying that amount into the collection account held by the indenture trustee.
4.	Recovery of Storm Recovery Charges; Regulatory Change. Cleco shall impose, and the servicer shall collect, the nonbypassable storm recovery charges that are applied to all existing and future LPSC-jurisdictional customers who remain attached to Cleco’s (or its successor’s or assignee’s) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco under rate schedules or special contracts approved by the Commission. Storm recovery charges for customers choosing to self-generate or co-generate will be assessed as provided in Ordering Paragraph 15. Further, if restructuring of retail sales and distribution of electricity in Louisiana subsequently provides that customers may choose to receive their supply service from another provider, such selection of another provider will not allow such customers to bypass the storm recovery charge, so long as they continue to be attached to Cleco’s transmission or distribution lines. In the event of such restructuring, those customers who choose another provider for partial or full requirements supply, but remain attached to Cleco’s transmission or distribution lines, will be assessed the storm charge at the highest peak demand imposed on the Cleco system by demand metered customers and the highest peak consumption level by customers who are not demand metered, in each case during the twelve months immediately preceding the switch. In the event that there is a fundamental change in the manner of Louisiana’s regulation of public utilities, and parties other than the servicer are authorized to bill and collect the storm recovery charges, the storm recovery charges shall be billed, collected and remitted to the servicer in a manner that will not cause any of the then current credit ratings of the storm recovery bonds to be suspended, withdrawn or downgraded.
5.	Recovery Period for Storm Recovery Charges. The storm recovery charges shall become effective as provided in Ordering Paragraph 9 and thereafter shall be imposed and collected until the storm recovery bonds issued pursuant to this Financing Order and all financing costs have been paid in full. The term of the storm recovery bonds will be consistent with Ordering Paragraph 35.
6.	Issuance Advice Letter. Cleco shall submit a draft Issuance Advice Letter to the Commission, substantially in the form of Appendix A to this Financing Order, for review no later than two weeks prior to the expected date of the initial marketing of the storm recovery bonds. Within one week after receipt of the draft Issuance Advice Letter, Commission Staff shall provide Cleco comments and recommendations regarding the adequacy of the information provided. Within not more than 48 hours before pricing the storm recovery bonds, Cleco shall submit an updated draft Issuance Advice Letter,

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	substantially in the form of Appendix A to this Financing Order, reflecting then current information and calculations. Within 24 hours after pricing of the storm recovery bonds and prior to issuance of the storm recovery bonds, Cleco shall file with the Commission a final Issuance Advice Letter substantially in the form of Appendix A to this Financing Order. The Issuance Advice Letter shall be completed and evidence the actual dollar amount of the initial storm recovery charges and other information specific to the storm recovery bonds to be issued, as set forth in Appendix A. As part of the Issuance Advice Letter, Cleco, through an officer of Cleco, shall provide a certification in the form provided in the Issuance Advice Letter approved by the Commission consistent with Finding of Fact Paragraph 30, and each bookrunning underwriter shall provide a certification consistent with Finding of Fact Paragraph 96. Each bookrunning underwriter certification will be filed with the Commission Staff under seal as trade secret, proprietary, and confidential. As part of the final Issuance Advice Letter as Attachment 2 thereof, Cleco will provide an update of the net present value of the savings resulting from the transaction, as compared to traditional methods of financing storm recovery costs. In addition, if floating interest rate bonds, or any hedges or swaps in connection therewith, or additional credit enhancements or arrangements to reduce interest rate risks or enhance marketability are used, the Issuance Advice Letter shall include certification that the floating rate debt, the hedges or swaps, or the additional credit enhancements or other arrangements are reasonably expected to provide benefits as required by this Financing Order.
7.	Designee Approval of Issuance Advice Letter. Within 24 hours of receipt of the Issuance Advice Letter, the Designee shall either (a) approve the transaction by executing a Concurrence and delivering a copy to Cleco, or (b) reject the Issuance Advice Letter and state the reasons therefore. The Designee’s review of and concurrence with the Issuance Advice Letter shall be limited to determining that (i) the final structure, terms and pricing of the storm recovery bonds in the Issuance Advice Letter are consistent with the criteria established in this Financing Order and (ii) the mathematical calculations are accurate. The Designee shall approve the transaction using the form of Concurrence attached as Attachment 5 to the Issuance Advice Letter (Appendix A). The Designee’s approval of the transaction through the Concurrence shall be final, irrevocable and incontestable. The Designee’s approval of the transaction shall, pursuant to the Commission’s authority under this Financing Order and without the need for further action by the Commission, constitute affirmative, binding and conclusive authorization for Cleco and the SPE to execute the issuance of the storm recovery bonds on the terms set forth in the Issuance Advice Letter. A change in market conditions from the date and time of the actual pricing of the storm recovery bonds shall not constitute grounds for rejecting the Issuance Advice Letter.
8.	Commission Designee. Mr. Lawrence C. St. Blanc, Executive Secretary of the Commission, is hereby appointed to act as Designee in accordance with the terms of this Financing Order. In the event of his absence or incapacity, Ms. Eve Kahao Gonzalez, General Counsel, shall act as substitute Designee. In the event of her absence or

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	incapacity, the Commission shall promptly appoint a substitute Designee. The Designee shall act in accordance with the terms of this Financing Order.
9.	Approval of Initial Storm Recovery Charges. The initial storm recovery charges, as
	set forth in the Issuance Advice Letter, shall become effective automatically on the date of issuance of the storm recovery bonds (which shall not occur prior to the third business day after pricing of the storm recovery bonds).
10.	Approval of Tariffs. The Forms of Tariffs (Rider SRCA and Rider SCSA) attached as Appendices B-1 and B-2 to this order are approved. Prior to the issuance of any storm recovery bonds under this Financing Order, Cleco shall file tariffs that conform to the form of Appendices B-1 and B-2 attached to this Financing Order.
11.	Creation of Storm Recovery Property. Subject to Ordering Paragraph 55, storm recovery property within the meaning of Section 1227(17) is hereby created in favor of Cleco as described in Conclusions of Law Paragraph 24, Finding of Fact Paragraphs 49 through 52, and elsewhere in this Financing Order. This storm recovery property includes without limitation the irrevocable right to impose, bill, charge, collect, and receive the storm recovery charges authorized by this Financing Order and to obtain periodic adjustments to such charges as provided in this Financing Order.

B. Storm Recovery Charges

12.	Imposition and Collection. Cleco is authorized to impose on, and the servicer is authorized to collect from, all customers of Cleco storm recovery charges in an amount projected to be sufficient at all times to provide for the recovery of the aggregate periodic payment requirements (including payment of scheduled principal and interest on the storm recovery bonds) by means of the projected periodic billing requirement, as approved in this Financing Order. The initial amount of such storm recovery charges shall be as set forth in the Issuance Advice Letter of Cleco, calculated in the manner required by this Financing Order. Thereafter, the amount of such storm recovery charges shall be periodically corrected or “trued-up,” as required or permitted by this Financing Order. The storm recovery charges related to a series of storm recovery bonds shall be imposed and collected until all storm recovery bonds and all financing costs have been paid in full.
13.	Allocation of Payment Responsibility. Cleco’s proposed method of allocating the payment requirements for the storm recovery bonds and financing costs, which includes cross-collateralization among customer classes, is approved.
14.	Bondholder’s Rights and Remedies. Upon the transfer by Cleco of the storm recovery property to the SPE and the SPE’s pledge of such property to the indenture trustee, the bondholders shall have as collateral all of the rights of Cleco with respect to such storm recovery property pledged under such documents, including, without limitation, the right to exercise any and all rights and remedies with respect thereto, and to assess and collect any amounts payable by any customer in respect of the storm recovery property.

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15.	Nonbypassability. Cleco and any other entity providing electric transmission or distribution services are required to collect and must remit, consistent with this Financing Order, the nonbypassable storm recovery charges that are applied to all existing and future LPSC-jurisdictional customers who remain attached to Cleco’s (or its successor’s) electric transmission or distribution lines, and who, via such lines, receive any type service from Cleco (or its successor) under rate schedules or special contracts approved by the Commission. The storm recovery charges shall be nonbypassable within the meaning of Internal Revenue Service Revenue Procedure 2005-62. Cleco proposes that storm recovery charges for customers choosing to self-generate or co-generate will be assessed on the total amount, in the aggregate, of their firm and standby load served by Cleco. Any customer who completely severs interconnection with Cleco may become exempt from continued payment of the storm recovery charges. Consistent with Ordering Paragraph 45, the Commission will ensure that such obligations are undertaken and performed by Cleco or any other entity providing electric transmission and distribution services, or in the event that transmission and distribution services are not provided by a single entity, any entity providing transmission or distribution services to Cleco’s LPSC-jurisdictional customers.
16.	True-Ups. True-ups of the storm recovery charges shall be undertaken and conducted as described in this Financing Order. True-up filings shall be made substantially in the form of Appendix D to this Financing Order. The servicer shall file the true-up adjustments in a compliance filing and shall give notice of the filing to all parties in this docket. The Commission covenants and agrees that it shall act to ensure that the true-up mechanism is used in order to ensure the projected recovery of amounts sufficient to provide timely payment of all principal and financing costs (including, when necessary, to bring all principal payments on schedule over the next two succeeding payment dates). Cleco shall return all over-collateralization and other excess recoveries to customers in the final year true up.
17.	Remittances. While Cleco is the servicer, the storm recovery charges shall be remitted by Cleco to the SPE (or the indenture trustee) as described in this Financing Order every servicer business day in accordance with the servicing agreement and Finding of Fact Paragraph 54.
18.	Partial Payments. If any customer does not pay the full amount of any bill to Cleco, the amount paid by the customer will be applied to all charges on the bill, including without limitation electric service charges and all storm recovery charges, based, as to a bill with charges covering more than one month, on the chronological order of billing, and, as to those charges with the same billing date, pro-rata. If there is more than one owner of storm recovery property, or if the sole or any owner of storm recovery property (or pledgee or pledgees) has issued multiple series of bonds, such partial collections representing storm recovery charges shall be allocated among such owners (or pledgee or pledgees), and among such series of storm recovery bonds, pro-rata based upon the

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	amounts billed with respect to each series of storm recovery bonds, provided that late fees and charges may be allocated to the servicer as provided in the tariff.
19.	Line Item. Cleco shall separately identify storm recovery charges on bills in a manner consistent with Finding of Fact Paragraph 71.
20.	Ownership Notification. Any entity that bills storm recovery charges to customers must include a written statement, at least annually, to the effect that the SPE (or its assignee) is the owner of the rights to the storm recovery charge, and that Cleco is merely the collection agent for the SPE (or its assignee or pledgee). The language for and timing of these annual bill inserts will be developed jointly by the Company and the Commission Staff and the Commission’s financial advisor. Any failure of Cleco or a successor servicer to comply with this paragraph shall not invalidate, impair, or affect this Financing Order, or any storm recovery property, storm recovery charge, or storm recovery bonds.
21.	No Setoff. As provided in Section 1229(G), the interest of the SPE or another assignee or a secured party in storm recovery property shall not be subject to setoff, counterclaim, surcharge, or defense by Cleco or any other person or in connection with the reorganization, bankruptcy or other insolvency of Cleco or any other entity.

C. Storm Recovery Bonds

22.	Issuance. The SPE is authorized to issue storm recovery bonds as specified in this Financing Order. The principal amount of the bonds shall be as set forth in the Issuance Advice Letter, delivered to the Commission and approved by its Designee in compliance with this Financing Order.
23.	Sale of Storm Recovery Property. Cleco shall transfer the storm recovery property to the SPE in accordance with Section 1228(C)(3).
24.	Commission Participation in Bond Issuance. To ensure that the pricing and structuring of the storm recovery bonds will produce maximum benefits for customers, including the pricing of the storm recovery bonds consistent with market conditions at the date and time of pricing and the terms of this Financing Order, the Commission has determined that Commission Staff including the Commission’s Designee, the Commission’s special counsel and other legal counsel and the Commission’s financial advisor will participate with Cleco in the structuring, marketing and pricing of the storm recovery bonds through the process described in Finding of Fact Paragraph 93, Ordering Paragraph 58, and the Issuance Advice Letter process. The Designee’s submission of the Concurrence shall be sufficient evidence for all purposes the whole and complete compliance by the Company with the requirements of this Paragraph.
25.	Principal Amount. The principal amount of the storm recovery bonds shall be an amount sufficient to recover Cleco’s remaining unamortized storm recovery costs and fund Cleco’s storm recovery reserve, as updated in the Issuance Advice Letter at the time of pricing of the bonds, and recover Cleco’s upfront financing costs set (for purposes of

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	this calculation) at $4.6 million (but subject to subsequent review as provided in this Financing Order).
26.	Ongoing Financing Costs. The ongoing financing costs, as described in Appendix C to this Financing Order, shall be recovered on a current basis through the storm recovery charges. The initial amount of the ongoing financing costs shall be revised and updated in the Issuance Advice Letter to reflect any change in the expected principal amount of the storm recovery bonds and other relevant information available at the time of pricing the bonds. Any changes to the initial estimated ongoing financing costs shall be revised and updated on a timely basis, by the servicer, in connection with the true-up process authorized in this Financing Order. The servicer fee for Cleco is fixed at 0.05% of the initial principal amount of the storm recovery bonds. The amount payable to Cleco as an administration fee, under the administration agreement, for providing administrative and support services to the SPE, is fixed at $100,000.00 per year (with no escalation). In addition, Cleco, as initial servicer, shall be entitled to receive reimbursement for its out-of-pocket costs for external accounting, as well as for other items of cost that will be incurred annually to support and service the storm recovery bond after issuance consistent with Finding of Fact Paragraph 55. Only actual ongoing financing costs associated with these external services will be collected from customers. The revenues collected by Cleco, or by any affiliate of Cleco, acting as servicer under the servicing agreement will be included as an identified revenue credit and thus reduce revenue requirements for the benefit of the LPSC-jurisdictional customers of Cleco in its next rate case following collection of such revenues. The expenses of acting as the servicer likewise will be included as a cost of service in such rate case for Cleco.
27.	Transaction Structure. The transaction structure as described in this Financing Order is approved. The forms of documents described in Finding of Fact Paragraphs 41 and 42 shall be subject to the Commission Staff’s review as contemplated by Ordering Paragraph 24.
28.	Not an Obligation of the State. The storm recovery bonds must contain on their face the following statement: “Neither the full faith and credit nor the taxing power of the State of Louisiana is pledged to the payment of the principal of, or interest on, this bond.”
29.	Refinancing. Cleco may apply for a subsequent financing order to refund storm recovery bonds issued under this Financing Order pursuant to Section 1228(F).
30.	Collateral. All storm recovery property and other collateral shall be held in pledge and administered by the indenture trustee pursuant to the indenture as described in Cleco’s Securitization Application. The SPE shall establish a collection account with the indenture trustee as described in the Securitization Application and Finding of Fact Paragraphs 62 through 67.
31.	Distribution Following Repayment. Upon payment of the principal amount of all storm recovery bonds authorized in this Financing Order and the discharge of all obligations in respect thereof that may be paid by use of storm recovery charges, all amounts in the

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	collection account, including investment earnings, other than amounts that were in the capital subaccount (including earnings thereon) dealt with in Ordering Paragraph 32, shall be released by the indenture trustee to the SPE for distribution to Cleco. Cleco shall notify the Commission within 30 days after the date that these funds are eligible to be released of the amount of such funds available for crediting to the benefit of customers, and such amounts shall be credited to Cleco’s customers in the manner to be prescribed by the Commission.
32.	Funding of Capital Subaccount. The capital investment by Cleco to the SPE to be deposited into the capital subaccount shall, with respect to each series of storm recovery bonds, be funded by Cleco and not from the proceeds of the sale of storm recovery bonds. Upon payment of the principal amount of all storm recovery bonds and the discharge of all obligations in respect thereof, all amounts in the capital subaccount shall be released to the SPE for distribution to and retention by Cleco (except any excess earnings). Cleco shall be permitted to earn a rate of return on invested capital in the SPE equal to the rate of interest payable on the longest maturing tranche of the storm recovery bonds, to be paid by periodic distributions from the SPE funded solely by the income earned thereon through investment by the indenture trustee in eligible investments and by any deficiency being collected through the true-up adjustment, and further, any actual earnings in excess of that rate will be credited to customers.
33.	Original Issue Discount. The SPE may determine to provide for original issue discount on the storm recovery bonds.
34.	Credit Enhancement. Cleco may provide for various forms of credit enhancement including letters of credit, an overcollateralization subaccount or other reserve accounts, surety bonds, bond insurance, and guarantees, and other mechanisms designed to promote the credit quality or marketability of the storm recovery bonds. The SPE may issue variable interest rate bonds or enter into an interest-rate swap or hedge arrangement in connection therewith, provided that the Commission’s financial advisor and Cleco agree in advance that such selection provides benefits greater than their reasonably expected risks pursuant to Finding of Fact 46 and are approved pursuant to the Issuance Advice Letter process. Cleco may include the costs of credit enhancements or other arrangements to promote credit quality or marketability as financing costs, provided that the Commission’s financial advisor and Cleco agree in advance that such enhancements or arrangements provide benefits greater than their tangible and intangible costs pursuant to Finding of Fact Paragraphs 47 and 67. The costs of interest rate swaps or hedge arrangements or credit enhancements are not part of the $4.6 million estimate of upfront financing costs and shall not be included in the adjustment calculations under Ordering Paragraph 3. If the use of swaps or hedges or credit enhancements or other arrangements is proposed by Cleco, Cleco shall obtain and provide the Commission’s financial advisor with copies of costs/benefit analyses performed by or for Cleco that support the request to use such arrangements. Cleco shall not be required to enter any arrangements to promote credit quality or marketability unless all related costs and

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liabilities can be included in financing costs recoverable as upfront costs or through Rider SRCA. This Ordering Paragraph does not apply to the collection account or its subaccounts approved in this Financing Order.

35.	Life of Bonds. The scheduled final maturity of any series of the storm recovery bonds authorized by this Financing Order shall not exceed 14 years from the date of issuance of the storm recovery bonds. The legal final maturity of any series of the bonds shall not exceed 16 years from the date of issuance of the storm recovery bonds.
36.	Allocations. The Commission approves with respect to the storm recovery charges resetting allocation factors for apportioning the periodic revenue requirement for each customer class in accordance with Cleco’s most recently completed annual base revenue forecast, subject to further modification in accordance with rating agency requirements and the true-up mechanism approved in this Financing Order.
37.	Use of the SPE. Cleco shall use the SPE, a special purpose storm recovery funding entity as proposed in its Securitization Application, in conjunction with the issuance of any storm recovery bonds authorized under this Financing Order. The SPE shall be funded with an amount of capital that is sufficient for the SPE to carry out its intended functions and to avoid the possibility that Cleco would have to extend funds to the SPE in a manner that could jeopardize the bankruptcy remoteness of the SPE, as well as to assure that the storm recovery bonds will be treated as borrowings of Cleco for federal income tax purposes. The SPE will be formed under Louisiana law unless rating agency requirements require formation under Delaware law to achieve the desired ratings. The Commission shall not exercise any authority to approve or not approve any independent manager of the SPE selected by Cleco.
38.	Voluntary Bankruptcy of the SPE; Dissolution. Pursuant to Section 1228(D)(2), the SPE (if it is formed under Louisiana law) is authorized to include in its organizational documents a provision that in order for a person to file a voluntary bankruptcy petition on its behalf, there must first be prior unanimous consent of the SPE’s managers. Such provision concerning the voluntary bankruptcy of the SPE shall constitute a legal, valid, and binding agreement of Cleco as the member of the SPE and is enforceable against such member. Further, a person shall have authority under the laws of Louisiana to file a voluntary bankruptcy petition on behalf of the SPE only after compliance with such provision. Additionally, Cleco shall not apply for judicial dissolution of the SPE, and Cleco is not permitted to and shall not withdraw from or otherwise cease to be a member of the SPE for any reason whatsoever, including that Cleco itself shall not dissolve or otherwise terminate its legal existence, unless an acceptable new member of the SPE is substituted for Cleco, until all storm recovery bonds and all financing costs have been paid in full.

D. Financial and Other Advisors

39. This Commission will have the sole authority to select and retain its financial advisor and any outside special legal counsel and regulatory consultants for approval of the bond

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issuance. The costs of such financial advisors, legal counsel and any regulatory consultants will be paid as financing costs from storm recovery bond proceeds or storm recovery charges.

E. Servicing

40.	Servicing Agreement. Cleco shall act as initial servicer as described in this Financing Order and shall enter into the servicing agreement with the SPE and perform the servicing duties approved in this Financing Order.
41.	Servicing Fees. The servicer shall be entitled to collect servicing fees in accordance with the provisions of the servicing agreement, provided that the annual servicing fee payable to Cleco while it is serving as servicer (or to any other servicer affiliated with Cleco) shall be fixed at 0.05% of the original principal amount of the storm recovery bonds, plus reimbursement for its out-of-pocket costs for external accounting services and other items of costs consistent with, and subject to the mechanism described in, Finding of Fact Paragraph 55 and Ordering Paragraph 26. The annual servicing fee payable to any other servicer not affiliated with Cleco shall not at any time exceed per year 0.60% of the original principal amount of the storm recovery bonds unless such higher rate is approved by the Commission pursuant to Ordering Paragraph 42. As provided in Finding of Fact Paragraph 55, in the event that Cleco is replaced as initial servicer, pursuant to the terms of the servicing agreement, the servicing fee shall be an amount that the indenture trustee finds reasonably necessary to pay, in order to engage a utility or other qualified unrelated third party to undertake such duties as servicer, whether or not it has any other commercial relationship to the customers to whom the storm recovery charges must be billed, not to exceed 0.60% of the initial principal amount of the storm recovery bonds unless Cleco demonstrates to the Commission that a higher servicing fee must be paid in order to obtain the services based on the prevailing market conditions at that time and the Commission approves such higher fee at that time as provided in Ordering Paragraph 42.
42.	Replacement of Cleco as Servicer. Upon the occurrence of an event of default under the servicing agreement relating to servicer’s performance of its servicing functions with respect to the storm recovery charges, the financing parties may replace Cleco as the servicer in accordance with the terms of the servicing agreement with the SPE’s consent (which shall not be unreasonably withheld). If the servicing fee of the replacement servicer will exceed the applicable maximum servicing fee specified in Ordering Paragraph 41, the replacement servicer shall not begin providing service until (i) the date the Commission approves the appointment of such replacement servicer or unless (ii) the Commission does not act to either approve or disapprove the appointment within 45 days after notice of appointment of the replacement servicer is provided to the Commission. No entity may replace Cleco as the servicer in any of its servicing functions with respect to the storm recovery charges and the storm recovery property authorized by this Financing Order, if the replacement would cause any of the then current credit ratings of the storm recovery bonds to be suspended, withdrawn,

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or downgraded. To the extent a higher servicing fee is caused by the replacement appointment of a servicer not affiliated with Cleco due to the negligence, misconduct or termination for cause of Cleco or an affiliate servicer, the servicing agreement shall provide (for the benefit of the Commission) that Cleco shall bear the increased portion, and not its customers.

43. Amendment of Agreements. The parties to the servicing agreement, indenture, sale agreement and administration agreement may amend the terms of such agreements; provided, however, that no amendment to any such agreement that would increase the ongoing financing costs shall be permitted without the prior approval of the Commission. Any amendment that does not increase the ongoing financing costs shall be effective without prior Commission authorization. Any amendment to any such agreement that may have the effect of increasing ongoing financing costs shall be provided by the SPE to the Commission along with a statement as to the possible effect of the amendment on the ongoing financing costs. The amendment shall become effective on the later of (i) the date proposed by the parties to the amendment or (ii) 31 days after such submission to the Commission unless the Commission issues an order disapproving the amendment within a 30-day period.

44. Collection Terms. The servicer shall remit collections of the storm recovery charges to the indenture trustee for the SPE’s account as described in this Financing Order every servicer business day in accordance with the terms of the servicing agreement and Finding of Fact Paragraph 54.

45. Contract to Provide Service. As a part of the sale agreement with the SPE, and pursuant to Section 1228(C)(9), Cleco shall undertake that, in consideration of the SPE’s purchase of Cleco’s rights under the Financing Order, Cleco will continue to operate its system to provide transmission and distribution delivery service to its LPSC jurisdictional customers; and, to the extent that any interest in storm recovery property created by this Financing Order is assigned, sold or transferred to another assignee, Cleco shall enter into a contract with that assignee that requires Cleco to continue to operate its transmission and delivery system to provide service to Cleco’s LPSC-jurisdictional customers; and further (in each case) Cleco will undertake to collect, account and remit amounts in respect of the storm recovery charges for the benefit and account of such assignee (or its financing party); provided, however, that this provision shall not prohibit Cleco from selling, assigning, or otherwise divesting its transmission system or distribution system (or any portions thereof) providing service to Cleco’s LPSC-jurisdictional customers, by any method whatsoever, including those specified in Ordering Paragraph 57 pursuant to which an entity becomes a successor, so long as the entities acquiring either such system or portion thereof agree to continue operating such facilities to provide service to LPSC-jurisdictional customers.

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F. Use of Proceeds; Application of Post Financing Order Insurance Proceeds and Grants

46. Use of Proceeds. The SPE will use the net proceeds from the sale of the bonds (after payment of upfront financing costs payable by the SPE) to pay to Cleco the purchase price of the storm recovery property. Such net proceeds (after payment of upfront financing costs payable by Cleco) will be used by Cleco as follows: Cleco will use approximately $50 million to fund restricted storm recovery reserves held in a segregated restricted account. Cleco will use the remaining portion of the proceeds (approximately $132 million) for working capital and general corporate purposes. This use of proceeds is approved and proceeds may not be used for any other purpose. The use of proceeds from the sale of the bonds in violation of this Financing Order shall subject the Company to proceedings pursuant to applicable statutes, orders and the rules and regulations of the Commission but shall not be grounds to rescind, alter, modify or amend this Financing Order and shall not affect the validity, finality and irrevocability of this Financing Order or the storm recovery property irrevocably created hereby or the approvals of the transactions by the Designee granted by authority of this Financing Order.

47. Restricted Storm Recovery Reserve. The Commission directs Cleco to deposit the approximately $50 million of the funds provided by the SPE relating to the restricted storm recovery reserve in a segregated restricted account. Cleco will then have access to this restricted reserve to repay to itself any excess upfront financing costs in accordance with Ordering Paragraph 3, and otherwise as provided in the U-29157 Revenue Requirement Order (as supplemented from time to time). The amount deposited shall include the rounding amount under Ordering Paragraph 2.

48. Tax Reconciliation. Cleco will securitize the gross amount of storm recovery costs before any reduction for the income tax benefits or other tax effects relating to the incurrence of such costs. All such tax benefits or other tax effects shall be flowed to the benefit of customers through the operation of Rider SCSA.

49. Post-Financing Order Insurance and Grant Proceeds. To the extent Cleco receives insurance proceeds or receives grants from the State of Louisiana or the government of the United States of America after the date of this Financing Order, the purpose of which is to provide for permanent recovery of storm recovery costs that have been securitized, Cleco shall credit such amounts to customers through Rider SCSA under terms and conditions approved by the Commission.

G. Commission Pledge

50. Irrevocable. After the earlier of the transfer of the storm recovery property to the SPE or issuance of the storm recovery bonds authorized by this Financing Order, this Financing Order is irrevocable until the indefeasible payment in full of such bonds and the related financing costs. The Commission covenants, pledges and agrees it thereafter shall not amend, modify, or rescind this Financing Order by any subsequent action, or reduce, impair, postpone, terminate, or otherwise adjust the storm recovery charges

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approved in this Financing Order, or in any way reduce or impair the value of the storm recovery property created by this Financing Order, except as may be contemplated by a refinancing authorized in strict accordance with the Securitization Act by a subsequent order of the Commission or by the periodic true up adjustments authorized by this Financing Order, until the indefeasible payment in full of the storm recovery bonds and the related financing costs.

51. Duration. This Financing Order and the charges authorized hereby shall remain in effect until the storm recovery bonds and all financing costs related thereto have been indefeasibly paid or recovered in full. This Financing Order shall remain in effect and unabated notwithstanding the reorganization, bankruptcy, or other insolvency proceedings, or the merger or sale, of Cleco or its successors or assignees. Any successor to Cleco, whether pursuant to any reorganization, bankruptcy, or other insolvency proceeding or whether pursuant to any merger or acquisition, sale, or other business combination, or transfer by operation of law, as a result of electric utility restructuring or otherwise, shall perform and satisfy all obligations of, and have the same rights under this Financing Order as, Cleco in the same manner and to the same extent as Cleco, including collecting and paying to the person entitled to receive the revenues, collections, payments, or proceeds of the storm recovery property.

52. Contract. The Commission acknowledges that the storm recovery bonds approved by this Financing Order will be issued and purchased in express reliance upon this Financing Order and the Commission’s covenant and pledge herein of irrevocability and the vested contract right created hereby. The provisions of this Financing Order shall create a contractual obligation of irrevocability by the Commission in favor of the owners from time to time of the storm recovery bonds, and any such bondholders may by suit or other proceedings enforce and compel the performance of this Financing Order against the Commission in accordance with the indenture. It is expressly provided that such remedy as to individual commissioners of the Commission is strictly limited to a claim solely for prospective relief of declaratory and injunctive relief only; there shall be no other cause or right of action for damages or otherwise against the individual commissioners. The purchase of the bonds, which reference in their related documentation the covenant and pledge provided in this Financing Order, is acknowledged by the Commission to be adequate consideration by the owners of the bonds for the Commission’s covenant of irrevocability contained in this Financing Order. The Commission acknowledges that it would be unreasonable, arbitrary and capricious for the Commission to take any action contrary to the covenant and pledge set forth in this Financing Order after the issuance of the storm recovery bonds.

53. Full Compensation. Nothing in this Financing Order shall preclude limitation or alteration of this Financing Order if and when full compensation is made for the full protection of the storm recovery charges approved pursuant to this Financing Order and the full protection of the holders of storm recovery bonds and any assignee or financing party.

Order No.U-29157-B

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54. Inclusion of Pledges. The SPE, as issuer of the storm recovery bonds, is authorized, pursuant to Section 1234(C) of the Securitization Act and this Financing Order, to include the State of Louisiana pledge contained in Section 1234 of the Securitization Act and the Commission pledge contained in Ordering Paragraph 50 with respect to the storm recovery property and storm recovery charges in the bonds and related bond documentation. This Financing Order is subject to the State pledge.

H. Miscellaneous Provisions

55. Continuing Issuance Right. The SPE has the continuing irrevocable right at the request of Cleco to cause the issuance of storm recovery bonds in one or more series in accordance with this Financing Order for an effective period commencing with the date of this Financing Order and extending 24 months following the latest of (i) the date on which this Financing Order becomes final and not appealable; (ii) the date on which the U-29157 Revenue Requirement Order becomes final and not appealable; or (iii) the date on which any other regulatory approvals necessary to issue the storm recovery bonds are obtained and not appealable. If the storm recovery bonds authorized by this Financing Order are not issued during this effective period, the storm recovery property created by this Financing Order shall cease to exist. If at any time during the effective period of this Financing Order there is a severe disruption in the financial markets of the United States, the effective period shall automatically be extended (if necessary) to a date which is not less than 90 days after the date such disruption ends. Pursuant to Section 1228(E), nothing in this Financing Order compels Cleco to cause the issuance of storm recovery bonds.

56. Internal Revenue Service Private Letter or Other Rulings. Cleco is not required by this Financing Order to obtain a ruling from the IRS. Cleco is precluded from seeking a ruling from the IRS by IRS Revenue Procedure 2006-3, which states that the IRS will no longer issue any letter rulings or determination letters on questions of whether investor-owned utilities realize income upon certain occurrences, which includes the circumstance in which the utility obtains the right to “recover certain costs pursuant to State specified cost recovery legislation.” Cleco shall obtain an opinion of tax counsel sufficient in Cleco’s judgment to support the issuance of the storm recovery bonds.

57. Binding on Successors. This Financing Order, together with the storm recovery charges authorized in it, shall be binding on Cleco and any successor to Cleco that provides electric transmission and distribution service to Cleco’s LPSC-jurisdictional customers,¹ and if Cleco or its successor no longer owns and operates both the transmission and distribution systems, then any entity that provides transmission or distribution service to Cleco’s LPSC-jurisdictional customers shall be bound by this Financing Order. This Financing Order is also binding on any other entity responsible for billing and collecting storm

⁸ Any such successor shall perform and satisfy all obligations of and have the same rights under this Financing Order as Cleco, including collecting and paying to the person entitled to receive them the revenues, collections, payments, or proceeds of the storm recovery property created by this Financing Order.

Order No.U-29157-B

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Commission Action: Ordering Paragraphs

recovery charges on behalf of the SPE and on any successor to the Commission. In this paragraph, a “successor” means any entity that succeeds by any means whatsoever to any interest or obligation of its predecessor or transferor, including by way of bankruptcy, reorganization or other insolvency proceeding, merger, acquisition, division, consolidation or other business combination, conversion, assignment, sale, transfer, lease, management contract, pledge or other security, by operation of law, as a result of electric utility restructuring, governmental reorganization, or otherwise. Nothing in this Financing Order is intended to limit or impair any authority of the Commission concerning the transfer of ownership or control of Cleco or its assets.

58. Flexibility; Underwriting. Subject to compliance with the requirements of this Financing Order and consistent with Section 1228(B), Cleco shall be afforded flexibility in establishing the terms and conditions of the storm recovery bonds, including repayment schedules, term, scheduled and legal maturity (within the limits established herein), payment dates, collateral, credit enhancement (within the limits provided herein), required debt service, reserves, interest rates (including floating or fixed), use of interest-rate hedges or swaps in connection with floating rate debt, use of original issue discount, indices, the type and form of the transaction’s securities registration, selection of certain transaction participants (consistent with this Paragraph), upfront and ongoing financing costs, and the ability of Cleco, at its option, to cause one or more series of storm recovery bonds to be issued or to create more than one SPE for purposes of issuing such storm recovery bonds. Cleco will solicit proposals for services related to upfront financing costs (such as underwriter, underwriter’s counsel, and trustee services) from qualified parties, and the actual participants to the transaction will be selected by Cleco based upon such criteria that Cleco, the Commission Staff, and the Commission’s financial advisor jointly deem appropriate. If a negotiated bid offering is used, Cleco will ask underwriters for proposals that include marketing the storm recovery bonds emphasizing the underlying humanitarian story of Hurricanes Katrina and Rita and exploring unique marketing opportunities. In Cleco’s solicitation of proposals from underwriters, Cleco will inquire, not only as to the gross underwriters spread proposed by the underwriter, but also how the underwriter would allocate the proposed gross spread between fixed and incentive compensation. Cleco, working with the Commission Staff and the Commission’s financial adviser, then will decide jointly which underwriter(s) should be selected for the storm recovery bond and what compensation system would be appropriate. The Commission specifically affords to Cleco and the Commission Staff and the Commission’s financial advisor flexibility to determine jointly whether a competitive bid process or negotiated bid offering is preferential for the storm recovery bonds. Although it is currently assumed that the storm recovery bonds will be issued through a negotiated bid offering, if Cleco and the Commission Staff and the Commission’s financial advisor jointly agree in advance that the sale of the storm recovery bonds through a competitive bid process may enhance marketability, and the benefits of sale through a competitive bid process provides benefits greater than their tangible and intangible costs, the storm

Order No.U-29157-B

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recovery bonds may be sold through a competitive bid process. A preliminary determination regarding this choice will be made before underwriters for a possible negotiated transaction are selected. Satisfaction of the requirements of this Paragraph shall be evidenced as provided in Ordering Paragraph 24.

59. Waiver. The Commission waives any rights it may have to rescind this Financing Order under La. R.S. 12:1308.2(E) if the SPE becomes delinquent in filing its annual report required under La. R.S. 12:1308.1.

60. Regulatory Approvals. All regulatory approvals within the jurisdiction of the Commission that are necessary for the imposition of the storm recovery charges associated with the costs that are the subject of the Securitization Application, and for the financing and all related transactions contemplated in the Securitization Application, are granted.

61. Effect. This Financing Order constitutes a legal financing order for Cleco under the Securitization Act. The Commission finds this Financing Order complies with the provisions of the Securitization Act. A financing order gives rise to rights, interests, obligations and duties as expressed in the Securitization Act. It is the Commission’s express intent to give rise to those rights, interests, obligations and duties by issuing this Financing Order. This Financing Order, including without limitation all of the foregoing findings of fact and conclusions of law, is final administrative action.

62. Further Commission Action. The Commission will act pursuant to this Financing Order as expressly authorized by the Securitization Act to ensure that expected storm recovery charge revenues are sufficient to pay at all times the scheduled principal and interest on the storm recovery bonds issued pursuant to this Financing Order and all other financing costs in connection with the storm recovery bonds (including, when necessary, to bring all principal payments on the storm recovery bonds on schedule over the next two succeeding payment dates).

63. Further Actions by Others. Cleco is directed to take all actions as are required to effectuate the transactions approved in this Financing Order, subject to compliance with the criteria established in this Financing Order. Cleco, the SPE, the Commission Staff, the Commission Designee, and Intervenors are directed to take all other actions required by this Financing Order.

64. Effectiveness of Order. This Financing Order is effective immediately.

65. All Other Motions, etc., Denied. All motions, requests for entry of specific findings of fact and conclusions of law, and any other requests for general or specific relief not expressly granted herein, or in the Order U-29157 Revenue Requirement Order, are denied for want of merit.

66. Revenue Requirement Order. To the extent that the terms of this Financing Order and the terms of the U-29157 Revenue Requirement Order are inconsistent or conflict, the terms of this Financing Order shall control.

[The remainder of this page is blank intentionally.]

Order No.U-29157-B

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Commission Action: Ordering Paragraphs

67. Interim Relief Termination. Consistent with Order No. U-29157 dated April 18, 2006, once the tariffs filed by Cleco to implement this Financing Order take effect under Ordering Paragraph 9, collections authorized pursuant to interim storm relief will terminate automatically.

This order is effective immediately.

BY ORDER OF THE COMMISSION
BATON ROUGE, LOUISIANA

September 17, 2007

/S/ JACK “JAY” A. BLOSSMAN

DISTRICT I

CHAIRMAN JACK “JAY” A. BLOSSMA

/S/ LAMBERT C. BOISSIERE, III

DISTRICT III

VICE CHAIRMAN LAMBERT C. BOISSIERE, III

/S/ C. DALE SITTIG

DISTRICT IV

COMMISSIONER C. DALE SITTIG

/S/ JAMES M. FIELD

DISTRICT II

COMMISSIONER JAMES M. FIELD

/S/ FOSTER L. CAMPBELL

DISTRICT V

COMMISSIONER FOSTER L. CAMPBELL

/S/ LAWRENCE C. ST. BLANC

LAWRENCE C. ST. BLANC

SECRETARY

Order No.U-29157-B

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APPENDIX A
financing order
Page 1 OF 18

ISSUANCE ADVICE LETTER

[          ], 2007

ADVICE                     

LOUISIANA PUBLIC SERVICE COMMISSION

SUBJECT: ISSUANCE ADVICE LETTER FOR STORM RECOVERY BONDS
Pursuant to the Financing Order adopted in Docket No. U-29157, Application of Cleco Power LLC for recovery in rates of amortization of storm damage costs incurred as a result of Hurricanes Katrina and Rita, Order No. U-29157-B (the “Financing Order”), CLECO POWER LLC (“Applicant”) hereby submits, no later than twenty-four hours after the pricing of this series of Storm Recovery Bonds, the information referenced below. This Issuance Advice Letter is for the Cleco Katrina/Rita LLC Storm Recovery Bonds Series A, tranches [A-1, A-2, A-3 and A-4]. Any capitalized terms not defined in this letter shall have the meanings ascribed to them in the Financing Order.

PURPOSE

This filing establishes the following:

(a)	the total amount of approved costs being securitized;
(b)	confirmation of compliance with issuance standards;
(c)	the actual terms and structure of the storm recovery bonds being issued;
(d)	the initial storm recovery charges for retail users; and
(e)	the identification of the SPE.

COSTS BEING SECURITIZED

The total amount of approved costs being securitized (the “Securitized Costs”) is presented in Attachment 1.

COMPLIANCE WITH ISSUANCE STANDARDS

The Financing Order requires Applicant to confirm, using the methodology approved therein, that the actual terms of the storm recovery bonds result in compliance with the standards set forth in the Financing Order. These standards are:

1.	The securitization of approved costs will provide significant benefits to ratepayers, greater than would be achieved absent the issuance of storm recovery bonds (See Attachment 2, Schedule D);
2.	The amount securitized (see Attachment 1, Schedule A) will not exceed the present value of the conventional financing revenue requirement over the life of the proposed storm recovery bonds associated with the Securitized Costs when the present value calculation is made using a discount rate equal to the proposed interest rate on the storm recovery (See Attachment 2, Schedule D);
3.	The total amount of revenues to be collected under the Financing Order is less than the revenue requirement that would be recovered using conventional financing methods (See Attachment 2, Schedule C and D);
4.	The storm recovery bonds will be issued in one or more tranches having scheduled final payment dates of up to [___] years and legal final maturities not exceeding 16 years from the date of issuance of the bonds (See Attachment 2, Schedule A);

APPENDIX A
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Page 2 of 18

5.	The storm recovery will be issued with an original issue discount on several of the tranches to promote marketability while providing yields that match market conditions; the original discount will be fully reflected in the interest rates used to calculate ratepayer benefits; and
6.	The structuring and pricing of the storm recovery bonds are certified by the Applicant to result in the lowest storm recovery bond charges consistent with market conditions and the terms (including the amortization structure ordered by the Commission, if any) set out in the Financing Order (See Attachment 4).

ACTUAL TERMS OF ISSUANCE

Storm Recovery Bond Series: Series A
Storm Recovery Bond Issuer: Cleco Katrina/Rita LLC
Trustee: [      ]
Closing Date: [     ], 2007
Bond Ratings: S&P AAA, Fitch AAA, Moody’s Aaa
Amount Issued: [                    ]
Storm Recovery Bond Issuance Costs: See Attachment 1, Schedule B.
Storm Recovery Bond Support and Servicing: See Attachment 2, Schedule B.

Tranche	Interest Rate	Scheduled Final Payment Date	Legal Final Maturity
A-1
A-2
A-3
A-4

Weighted Average Effective Annual Interest Rate of the Storm Recovery Bonds1:		%
Life of Bonds:
Weighted Average Life of Bonds:
Call Provisions (including premium, if any):	None
Amortization Schedule:	Attachment 2, Schedule A
Scheduled Final Payment Dates:	Attachment 2, Schedule A
Legal Final Maturity Dates:	See Table Above
Payments to Investors:	Semiannually, Beginning [, 200_]
Initial annual Servicing Fee as a percent of original Storm Recovery Bond principal balance:		.05%

¹ This refers to the same number as the Weighted Average Yield as shown on page [17].

APPENDIX A
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INITIAL STORM RECOVERY CHARGE

Table I below shows the current assumptions for each of the variables used in the calculation of the initial Storm Recovery Charges.

TABLE I
Input Values For Initial Storm Recovery Charges

Applicable period: from
Forecasted retail kWh/kW sales for the applicable period2:
Storm Recovery Bond debt service for the applicable period3:	$
Percent of billed amounts expected to be charged-off:		%
Forecasted % of Billings Paid in the Applicable Period:		%
Forecasted retail kWh/kW sales billed and collected for the applicable period4:
Forecasted annual ongoing transaction expenses (Excluding Storm Recovery Bond principal and interest):	$
Current Storm Recovery Bond outstanding balance:	$
Target Storm Recovery Bond outstanding balance as of [ ]:	$
Total Periodic Billing Requirement for applicable period:	$

Allocation of the periodic billing requirement (the “PBR”) among customer classes: See Attachment 3.

Based on the foregoing, the initial Storm Recovery Charges calculated for retail users are as follows:

TABLE II

Rate Class	Initial Storm Recovery Charge
Residential
General Non-demand
General Secondary
General Primary
General Municipal
Large Power
OLS

IDENTIFICATION OF SPE

The owner of the Storm Recovery Property (the “SPE”) will be: Cleco Katrina/Rita LLC, a [Louisiana] limited liability company.

EFFECTIVE DATE

In accordance with the Financing Order, the Storm Recovery Charge shall be automatically effective upon the Applicant’s receipt of payment in the amount of $[] from Cleco Katrina/Rita LLC following Applicant’s execution and delivery to Cleco Katrina/Rita LLC of the Bill of Sale transferring Applicant’s rights and interests under the Financing Order and other rights and interests that will become Storm Recovery Property upon transfer to Cleco Katrina/Rita LLC as described in the Financing Order.

2	See Attachment 3, column 5, for billing determinants by rate class.
3	Cash paid to service debt within the applicable period – not an accrued amount.
4	Assumed collection curve for each rate class is []% in the first month following billing; []% in the second month following billing and []% charged-off.

APPENDIX A
financing order
Page 4 of 18

NOTICE

Copies of this filing are being furnished to the parties on the attached service list (See Attachment 5). Notice to the public is hereby given by filing and keeping this filing open for public inspection at Applicant’s corporate headquarters.

AUTHORIZED OFFICER

The undersigned is an officer of Applicant and authorized to deliver this Issuance Advice Letter on behalf of Applicant.

Respectfully submitted,


CLECO POWER LLC
 

By:  

Name:  

Title:  

APPENDIX A
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Page 5 of 18

ATTACHMENT 1
SCHEDULE A
CALCULATION OF SECURITIZED COSTS

Amount permitted to be securitized by Financing Order5:
Recovery of Storm Costs:	$
Reserve Amount:	$
Interest, carrying cost, and amortization adjustments [___] through [___]
Adjustments for any insurance or government grants	$
Estimated up-front costs (Attachment 1, Schedule B)	$
TOTAL SECURITIZATION PRINCIPAL AMOUNT6	$

5	Includes carrying costs related to [] anticipated issuance date.
6	Amount due to rounding $[___]

APPENDIX A
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Page 6 of 18

Attachment 1 Schedule B
Estimated Up-Front Costs

Underwriters’ Fees	$
SEC Registration Fee	$
Rating Agency Fees	$
Legal Fees and Expenses for Counsel	$
Accountant’s/Auditor’s Fees	$
Commission’s Financial Advisor Fees	$
Trustee Fee and Counsel	$
Servicer Set-up Costs	$
Printing and Filing Costs	$	7
Company’s Advisor’s Fee	$
SPE Setup Costs	$
Non-legal Securitization Costs (including marketing)	$
Miscellaneous Administrative Costs	$
Original Issue Discount	$
[Debt Retirement Transaction Costs]	$
Total Estimated Up-Front Costs	$

Note: Any difference between the Estimated Up-front Costs securitized and the actual up-front costs incurred will be resolved through the true-up process described in the Financing Order.

⁷ Includes approximately $[___] of estimated marketing costs.

APPENDIX A
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ATTACHMENT 2
SCHEDULE A
STORM RECOVERY BOND REVENUE REQUIREMENT INFORMATION

SERIES A, TRANCHE A-1

Payment	Principal
Date	Balance	Interest	Principal	Total Payment

ATTACHMENT 2
SCHEDULE A
STORM RECOVERY BOND REVENUE REQUIREMENT INFORMATION

SERIES A, TRANCHE A-2

Payment	Principal
Date	Balance	Interest	Principal	Total Payment

APPENDIX A
financing order
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ATTACHMENT 2
SCHEDULE A
STORM RECOVERY BOND REVENUE REQUIREMENT INFORMATION

SERIES A, TRANCHE A-3

Payment	Principal
Date	Balance	Interest	Principal	Total Payment

APPENDIX A
financing order
Page 9 of 18

ATTACHMENT 2
SCHEDULE A
STORM RECOVERY BOND REVENUE REQUIREMENT INFORMATION

SERIES A, TRANCHE A-4

Payment	Principal
Date	Balance	Interest	Principal	Total Payment

APPENDIX A
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Page 10 of 18

ATTACHMENT 2
SCHEDULE B
ONGOING COSTS

	ANNUAL AMOUNT
Servicing Fee (0.05% of Storm Recovery Bonds principal amount)
Trustee Fees and Expenses
Administrative expenses (outside legal, accounting)
Administration Fee
Independent Managers’ Fees
Rating Agency Fees
TOTAL ONGOING COSTS (with Cleco as servicer)
Ongoing Servicer Fee (Third Party as Servicer) (0.60% of principal amount)
TOTAL ONGOING COSTS (Third Party as Servicer)

Note: The amounts shown for each category of operating expense on this attachment are the expected expenses for the first year of the storm recovery bonds. Storm recovery charges will be adjusted at least annually to reflect any changes in Ongoing Costs through the true-up process described in the Financing Order.

APPENDIX A
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Page 11 of 18

ATTACHMENT 2
SCHEDULE C
CALCULATION OF STORM RECOVERY CHARGES

			Total Nominal Storm	Present Value of
	Storm Recovery Bond		Recovery Charge	Storm Recovery
Year	Payments8	Ongoing Costs9	Requirement10	Charges11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Total

8	From Attachment 2, Schedule A.
9	From Attachment 2, Schedule B.
10	Sum of storm recovery bond payments and ongoing costs.
11	The discount rate used is the weighted average effective annual interest rate of the storm recovery bonds ([___]%). The present value calculation takes into account the timing of the payment dates.

APPENDIX A
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Page 12 of 18

ATTACHMENT 2
SCHEDULE D
COMPLIANCE WITH SECURITIZATION ACT

NET PRESENT VALUE BENEFIT:⁸

	Conventional Financing
	Through Traditional	Securitization	Savings/(Cost) of
	Surcharge (CTC)13	Financing14	Securitization Financing
Nominal
Present Value

Attachment 2
Schedule E
Typical Residential Bill Comparison — 1,283 kWh

		Phase 2
Description	Phase 1	Securitized	Change
(a)	(b)	(c)	(d)
1 Billing without Storm Recovery
2 Storm Recovery
3 Adjusted Total Bill
4 % Change before Strom Recovery
5 % Change from Phase 1 Recovery
6 ADIT Surcredit
7 Adjusted Total Bill
8 % Change from Phase 1 Recovery
9 Base Rate Reduction
10 Adjusted Total Bill
11 % Change from Phase 1 Recovery

12	Calculated in accordance with the methodology used in Appendix D to the Financing Order.
13	Surcharge carrying cost at [___]% and Surcharge term of [___] years. The discount rate used is the weighted average effective annual interest rate of the storm recovery bonds ([___]%).
14	From Attachment 2, Schedule C.

APPENDIX A
financing order
Page 13 of 18

Attachment 3

CLECO POWER LLC
Initial Allocation to SRCA Rate Classes

Line			Total	General Service Class				General	Power	Lighting
No.		Description	Retail	Residential	Nondemand	Demand	Primary	Service	Service	Service
		(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)
S T O R M R E C O V E R Y — S E C U R I T I Z A T I O N — Nov 2007 through Oct 2008
Billing Requirement Allocation
	1	Forecasted Base Revenue
	2	Revenue Allocators
	3	Securitization Revenue Requirement
	4	True Up Adjustment
	5	Securitization Recovery
Billing Determinants
	6	Customer Bills
	7	Billing Demands -
	8	All MWh
STORM SURCHARGE FACTORS
	9	Customer Charge
	10	Demand Charge -
	11	Energy Charges
Securitization Recovery — Proof of Revenue Recovery
	12	Customer Chg Recovery
	13	Demand Chg Recovery
	14	KWh Chg Recovery
	15	Total Expected Recovery
	16	Difference

APPENDIX A
financing order
Page 14 of 18

ATTACHMENT 4

COMPANY’S CERTIFICATION

[Cleco Letterhead]

[To be filed not later than the date of pricing of the Storm Recovery Bonds]
[DATE]

Lawrence C. St. Blanc
Galvez Building, 12^th Floor
602 North Fifth Street
PO Box 91154
Baton Rouge, Louisiana 70821-9154

Re: Storm Recovery Rate Order; Docket No. U-29157-B

Dear Mr. St. Blanc:

Pursuant to the Louisiana Public Service Commission’s (“LPSC”) Order in the above-captioned Docket (the “Order”), Cleco Power LLC (“Cleco Power”) hereby transmits for filing this Pricing Advice Certificate. Any capitalized terms not defined herein shall have the meanings ascribed thereto in the Order.

In the Order, the LPSC requires Cleco Power to file a Company Certification when pricing terms for a series of the storm recovery bonds (the “Storm Recovery Bonds”) have been approved by Cleco. The proposed terms of pricing and issuance of the Storm Recovery Bonds are as follows:

• Name of Storm Recovery Bonds:                     

• Name of SPE to which the Storm Recovery Property will be assigned:                     

• Name of Trustee:                     

• Closing Date:                     

• Principal Amount of Storm Recovery Bonds Issued:                     

• Bond Ratings:                    

• Scheduled and Legal Final Maturities:                     

• Amount of Upfront Transaction Costs securitized:                     

• Interest Rates and Expected Amortization Schedule: See Attachment 1

• Distributions to Investors (quarterly or semi-annually):                    

• Annual Servicing Fee as a percent of initial principal balance:                     

• Weighted Average Interest Rate¹⁵:                     

• Weighted Average Effective Annual Interest Rate¹⁶:                     

• Initial Balance of Capital Subaccount:                     

The following actions were taken in connection with the design, structuring and pricing of the bonds:

• [Included credit enhancement in the form of the true-up mechanism and an equity contribution of 0.50% of the original principal amount.]

• [Eliminated the overcollateralization account.]

15	Weighted by modified duration and principal amount.
16	Annualized and weighted by modified duration and principal amount giving effect to compounding and including up-front costs.

APPENDIX A
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• [Registered the storm recovery bonds with the Securities and Exchange Commission to facilitate greater liquidity.]

• [Achieved Aaa/AAA/AAA ratings from each of the three major rating agencies.]

• [Selection of underwriters that have relevant experience and execution capabilities was affirmed by the Company’s Financial Advisor, the Commission Staff and the Commission’s Financial Advisor.]

• [The marketing presentations were developed to emphasize the unique credit quality and security related to these bonds, and provide comparative analysis to other competing securities, as well as highlighting the human interest story as outlined in the Financing Order.

• [Provided the termsheet and [preliminary prospectus/offering memorandum] by e-mail to prospective investors.]

• [Allowed sufficient time for investors to review the termsheet and preliminary prospectus and to ask questions regarding the transaction.]

• [Held one-on-one and group conference calls with investors, along with meetings with potential investors to describe the legislative, political and regulatory framework and the bond structure with a focus on [corporate/agency/other crossover buyers] specifically targeted to achieve the transaction objectives.]

• [Arranged issuance of rating agency pre-sale reports during the marketing period.]

• [During the period that the bonds were marketed, held daily market update discussions with the underwriting team to develop recommendations for pricing.]

• [Had multiple conversations with all of the members of the underwriting team during the marketing phase in which we stressed the requirements of the Financing Order.]

• [Developed and implemented a marketing plan designed to incent each of the underwriters to aggressively market the bonds to their customers and to reach out to a broad base of potential investors, including investors who have not previously purchased this type of security.]

• [Provided potential investors with access to an internet roadshow for viewing on repeated occasions at investors’ convenience. Similar roadshow information was also presented in one-on-one and group meetings with investors.]

• [Adapted the storm recovery bond offering to market conditions and investor demand at the time of pricing. Variables impacting the final structure of the transaction were evaluated including the length of average lives and maturity of the bonds and interest rate requirements at the time of pricing so that the structure of the transaction would correspond to investor preferences and rating agency requirements for AAA ratings.]

• [Worked with the Commission’s Financial Advisor to develop bond allocations, underwriter compensation and preliminary price guidance designed to achieve lowest Storm Recovery rates.]

Cleco Power hereby certifies that to the best knowledge, information and belief of Cleco Power, its officers, agents and employees after reasonable inquiry, the selection of a negotiated sale of the Storm Recovery Bonds, through [a public offering]/ [or a limited public offering under Rule 144A of the SEC], has resulted in the highest possible bond ratings and the lowest possible interest and transaction costs consistent with market conditions and the terms of the Order.

Cleco Power herby certifies that: (i) all proposed terms of pricing and issuance of the Storm Recovery Bonds are within the parameters established in the Order, and (ii) to the best knowledge, information and belief of the Company, its officers, agents and employees after reasonable inquiry, the structuring and pricing of Storm Recovery Bonds, as described in this Company Certification, has resulted in the lowest storm recovery charges consistent with market conditions at the time of pricing and the terms of the Order.

Respectfully submitted,
Cleco Power LLC by
Chief Financial Officer

APPENDIX A
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Page 16 of 18

ATTACHMENT 5

COMMISSION DESIGNEE’S CONCURRENCE

[Letterhead]

Date:                     , 2007

Louisiana Public Service Commission
Galvez Building, 12^th Floor
602 North 5^th Street
Baton Rouge, Louisiana 70802

Pursuant to the Financing Order of the Louisiana Public Service Commission (“LPSC”) dated                     , 2007, LPSC Docket No. U-29157 (Phase III)

I,                                         , (the “Designee”), in accordance with Act No. 64 of the Louisiana Regular Session of 2006, the “Louisiana Electric Utility Storm Recovery Securitization Act,” codified at La. R.S. 45:1226–1236, and the Financing Order, for the purpose of (a) establishing that the structuring and pricing of the Storm Recovery Bonds will result in the lowest Storm Recovery Charges consistent with market conditions and the terms of the Financing Order and (b) approving at the time of pricing of the Storm Recovery Bonds, the terms and conditions of the Storm Recovery Bonds, servicing fees, if any, with respect to the collection of such Storm Recovery Charges and the pledging, assignment and sale of the Storm Recovery Bonds in connection with the initial Storm Recovery Charge, HEREBY CONCUR as follows:

1.

I have received and reviewed in accordance with the Financing Order a copy of the Company’s Certification, a copy of which is attached hereto, and find that such certificate is in proper form as evidenced by such Financing Order. I have also reviewed other information as I have deemed necessary to provide this certification. Any capitalized terms not defined herein shall have the meanings ascribed thereto in the Financing Order.

2.

The following are the terms of the Storm Recovery Bonds:

Name of Storm Recovery Bonds:                    
SPE:                    
Closing Date:                    

Amount Issued:                    
Interest Rates and Expected Amortization Schedule: See Attachment 7, Schedule A
Distributions to Investors (quarterly or semi-annually):                    
Weighted Average Interest Rate¹²:                    
Annualized Weighted Average Yield¹³:                    
Capital Amount:                    

12	Weighted by modified duration and principal amount.
13	Weighted by modified duration and principal amount.

APPENDIX A
financing order
Page 17 of 18

3. The final structure, terms and pricing of the Storm Recovery Bonds in the Issuance Advice Letter are consistent with the criteria established in the Financing Order, and the mathematical calculations are accurate. Accordingly the terms and conditions of the Storm Recovery Bonds and the schedule of payments of principal and interest on the Storm Recovery Bonds are approved.

Respectfully submitted,

By:

Name:

Title:

APPENDIX A
financing order
Page 18 of 18

ATTACHMENT 6

SERVICE LIST

Service List
Docket No.: U-29157

All Commissioners
Brandon Frey- LPSC Supervising Attorney
Donnie Marks— LPSC Utilities Division
Brian McManus— LPSC Economics Division

SC-	Paul Zimmering, Stone, Pigman, Walther, Wittmann, LLC, 546 Carondelet St., New Orleans, LA 70130; email: PZimmering@stonepigman.com; P: (504) 581-3200; F: (504) 581-3361
C-	Steve Baron, J. Kennedy & Associates, 570 Colonial Park Dr., Suite 305, Roswell, GA 30075; Phone (770) 992-2027; Fax (770) 992-0806; Email: sbaron@jkenn.com
	Terry G. Friddle, Pathfinder Capital Advisors, LLC, 100 N. Tryon Street, Suite 4700, Charlotte, NC 28202; Phone (704) 331-3787; Fax (704) 344-8378; Email:
	tfriddle@pathfindercap.com
	Bruce Gebhardt, Pathfinder Capital Advisors, LLC, 82 Lookout Road, Tuxedo Park, NY 10987; Phone (845) 351-5747; Fax (845) 351-7239; Email: gebhardt@pathfindercap.com
AA-	Alan C. Wolf, Phelps Dunbar, 365 Canal Street, New Orleans, LA 70130-6534; Phone (504) 566-1311; Fax (504) 568-9130; Email: wolfa@phelps.com
	John O. Shirley, Phelps Dunbar LLP, City Plaza, 445 North Blvd., Ste. 701, P. O. Box 4412, Baton Rouge, LA 70821-4412 P: (225) 346-0285 F: (225) 381-9197 Email: shirleyj@phelps.com (Co-counsel)
I-	Katherine W. King, Gordon D. Polozola, J. Randy Young, Kean, Miller, Hawthorne, D’Armond, McCowan & Jarman, LLP, P. O. Box 3513, Baton Rouge LA 70821; Phone (225) 387-0999;
	Fax (225) 388-9133; Email: Katherine.king@Keanmiller.com on behalf of Boise Cascade, LLC
	David L. Guerry, Jamie Hurst Watts, Long Law Firm, LLP, One United Plaza, Suite 500, 4041 Essen Lane, Baton Rouge LA 70809; Phone (225) 922-5110; Fax (225) 922-5105; Email: dlg@Longlaw.com on behalf of DeGussa, Cabot Corporation
	John H. Chavanne, Chavanne Enterprises, 111 West Main Street, Suite 2B, P. O. Box 807, New Roads LA 70760-0807; Phone (225) 638-8922; Fax (225) 638-8933 on behalf of Marathon Oil
	T. Michael Twomey, Entergy Services, Inc., 4809 Jefferson Highway, Mail Unit L-JEF-357, Jefferson, LA 70121-3126; P: (504) 840-2657; Fax (504) 840-2681; Email:
	ttwomey@entergy.com on behalf of Entergy

APPENDIX B-1
financing order
Page 1 of 3

APPENDIX B-1

SEE ATTACHED RIDER SRCA (RATE SCHEDULE SRCA — STORM
RESTORATION COST ADJUSTMENT) AND ALLOCATION
METHODOLOGY ILLUSTRATED

[FOLLOWS THIS PAGE]

APPENDIX B-1
financing order
Page 2 of 3

CLECO POWER LLC

RATE SCHEDULE SRCA
PAGE 2 OF 27
EFFECTIVE: ??/??/2007

STORM RESTORATION COST ADJUSTMENT
SECURITIZATION PHASE

(1)	APPLICATION
	This adjustment clause is applicable to electric service furnished under all rate schedules incorporating Adjustment Clause SRCA.
(2)	STORM RESTORATION COST ADJUSTMENT
	There shall be added to each monthly bill for service an adjustment, in the form of a new and separate charge, to recover applicable storm restoration costs as approved by the Louisiana Public Service Commission.
	Rate Schedule SRCA shall be subject to true-up in accordance with the schedule prescribed in the LPSC’s financing order with such true-up being made at least semi-annually. Applicable late fees and charges will be allocated to the servicer.
	For customers with kilowatt-hour meters or for lighting customers on a fixed kWh usage per month, the SRCA adjustment factor will be billed on a per kilowatt-hour (kWh) basis. This adjustment per kWh will be rounded to the nearest $0.00001.
	For customers with a demand meter, the SRCA adjustment factor will be billed based on the applicable billing demand established in any given billing month. This adjustment per kW will be rounded to the nearest $0.001.
	Applicable SRCA adjustment factors for each customer class are as follows:

Customer Class	Per Customer	Per kWh factors	Per kW factors
Residential Service	$2.00 per month	$0.00113 per kWh
General Service — Non Demand	$2.00 per month	$0.00180 per kwh
General Service — Secondary			$0.643 per kW
General Service — Primary			$0.697 per kW
School & Church — Non Demand	$2.00 per month	$0.00180 per kWh
School & Church — Demand			$0.643 per kW
Municipal Electric Service	$2.00 per month	$0.00145 per kWh
Large Power Service			$0.571 per Kw
Standby Power Service			$0.571 per Kw
Unmetered & Outdoor Lighting Service		$0.00549 per kWh

EFFECTIVE: ??/??/2007

Supercedes: SRCA (5/1/2006)

APPENDIX B-1
financing order
Page 3 of 3

CLECO POWER LLC
Allocation of Annual Billing Requirement and Rate Determination
Municipal

																	Municipal			Large
		Total						General Service Class									General			Power			Lighting
Line	Description	Retail			Residential			Nondemand			Demand			Primary			Service			Service			Service
No.	(a)	(b)			(c)			(d)			(e)			(f)			(g)			(h)			(i)
STORM RECOVERY — SECURITIZATION — Nov 2007 though Oct 2008
Billing Requirment Allocation
1	Forecasted Base Revenue	$	316,885,960		$	159,341,784		$	21,104,772		$	76,789,458		$	31,648,263		$	3,201,066		$	17,749,240		$	7,051,377
2	Revenue Allocators		100.00	%		50.28	%		6.66	%		24.23	%		9.99	%		1.01	%		5.60	%		2.23	%
3	Securitization Revenue Requirement	$	19,749,800		$	9,930,199		$	1,315,337		$	4,785,377		$	1,973,005		$	199,473		$	1,105,989		$	440,421
4	True Up Adjustment		0			0			0			0			0			0			0			0
5	Securitization Recovery	$	19,749,800		$	9,930,199		$	1,315,337		$	4,785,377		$	1,973,005		$	199,473		$	1,105,989		$	440,421
Billing Determinants
6	Customer Bills		3,360,024			2,878,786			347,928			100,240			1,447			31,587			36
7	Billing Demands -		12,221,976									7,451,098			2,832,878						1,938,000
8	All MWh		9,266,568			3,676,038			344,922			2,249,257			1,613,960			96,801			1,205,229			80,362
STORM SURCHARGE FACTORS
9	Customer Charge				$	2.00		$	2.00								$	2.00
10	Demand Charge -										$	0.643		$	0.697					$	0.571
11	Energy Charges				$	0.00113		$	0.00180								$	0.00141					$	0.00549
Securitization Recovery — Proof of Revenue Recovery
12	Customer Chg Recovery	$	6,516,602		$	5,757,573		$	695,855		$	0		$	0		$	63,174		$	0		$	0
13	Demand Chg Recovery	$	7,872,170		$	0		$	0		$	4,791,056		$	1,974,516		$	0		$	1,106,598		$	0
14	KWh Chg Recovery	$	5,352,459		$	4,153,923		$	620,859		$	0		$	0		$	136,490		$	0		$	441,187
15	Total Expected Recovery	$	19,741,231		$	9,911,496		$	1,316,714		$	4,791,056		$	1,974,516		$	199,664		$	1,106,598		$	441,187
16	Difference	$	(8,570	)	$	(18,703	)	$	1,377		$	5,679		$	1,511		$	191		$	609		$	766

APPENDIX B-2
financing order
Page 1 of 2

APPENDIX B-2

SEE ATTACHED RIDER SCSA (RATE SCHEDULE SCSA — STORM COST SURCREDIT ADJUSTMENT)

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APPENDIX B-2
financing order
Page 2 of 2

CLECO POWER LLC

RATE SCHEDULE SCSA
PAGE 2 OF 1
EFFECTIVE: ??/??/2007

STORM COST SURCREDIT ADJUSTMENT
SECURITIZATION PHASE

(1)	APPLICATION
	This adjustment clause is applicable to electric service furnished under all rate schedules incorporating Adjustment Clause SCSA.
(2)	STORM COST SURCREDIT ADJUSTMENT
	Each monthly bill for service under this rate schedule shall be reduced monthly to reflect the carrying costs on the Accumulated Deferred Income Taxes resulting from the storm cost recovery in Rate Schedule SRCA, as well as any monies received by Cleco from non-ratepayers sources. Such adjustments shall be approved by the Louisiana Public Service Commission.
	Rate Schedule SCSA shall be subject to true-up in accordance with the schedule prescribed in the LPSC’s applicable order with such true-up being made at least annually.
	For customers with kilowatt-hour meters or for lighting customers on a fixed kWh usage per month, the SCSA adjustment factor will be billed on a per kilowatt-hour (kWh) basis. This adjustment per kWh will be rounded to the nearest $0.00001.
	For customers with a demand meter, the SCSA adjustment factor will be billed based on the applicable billing demand established in any given billing month. This adjustment per kW will be rounded to the nearest $0.001.
	Applicable SRCA adjustment factors for each customer class are as follows:

Customer Class	Per kWh factors	Per kW factors
Residential Service	$(0.00111) per kWh
General Service — Non Demand	$(0.00157) per kwh
General Service — Secondary		$(0.264) per kW
General Service — Primary		$(0.286) per kW
School & Church — Non Demand	$(0.00157) per kWh
School & Church — Demand		$(0.264) per kW
Municipal Electric Service	$(0.00085) per kWh
Large Power Service		$(0.235) per Kw
Standby Power Service		$(0.235) per Kw
Unmetered & Outdoor Lighting Service	$(0.00225) per kWh

EFFECTIVE: ??/??/2007

 Supercedes: None 

APPENDIX C
financing order
PAGE 1 OF 2

APPENDIX C

SEE ATTACHED ESTIMATE OF UPFRONT FINANCING COSTS

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APPENDIX C
financing order
PAGE 2 OF 2

Estimate of Upfront and Ongoing Financing Costs

Estimate of Annual Securitization Costs
Servicing fee	$	95,000
Administration fee		100,000
Independent manager fee		5,000
Administrative expenses (outside legal, accounting)		50,000
Ratings maintenance		20,000
Trustee		10,000
Total Estimated Annual Securitization Costs	$	280,000
Estimate of Upfront Securitization Costs
Legal	$	2,000,000
Underwriters’ fees		850,000
Consultants’		800,000
SPE set-up cost		25,000
LPSC’s advisor		250,000
Rating agencies		350,000
Accountants		125,000
Marketing		100,000
Printing and engraving		35,000
Trustee		25,000
SEC Registration Fee		5,833
Total Estimated Upfront Securitization Costs	$	4,565,833

APPENDIX D
financing order
PAGE 1 OF 2

Mr. Lawrence C. St. Blanc
Galvez Building, 12^th Floor
602 North Fifth Street
PO Box 91154
Baton Rouge, Louisiana 70821-9154

Re: Storm Recovery Financing Order No. U-29157-B; Cleco Power LLC Periodic True-up Adjustment

Dear Mr. St. Blanc:

Pursuant to the Louisiana Public Service Commission’s (“LPSC”) Order No. U-29157-B (the “Financing Order”) in Docket U-29157, Cleco Power LLC (“Cleco”) as servicer hereby transmits for filing and approval the periodic true-up adjustment of the recovery of approved securitized storm recovery amounts and the resulting changed storm recovery charges as set out on Cleco Rate Schedule SRCA - Storm Restoration Cost Adjustment — Securitization Phase. This periodic true-up adjustment covers the period from [Month/Yr] through [Month/Yr].

In support of this revised rate schedule, Cleco provides the following attachments for review:

1.	Revised Rate Schedule SRCA,
2.	Updated allocation to customer rate classes of periodic payment requirement adjusted for the periodic true-up amount and resulting rate changes, and
3.	Detailed workpapers showing the calculation of the true-up amount based on the criteria as set out in Finding of Fact 84 of the Financing Order approved by the LPSC in this docket.

Each semi-annual true-up adjustment shall be filed with the LPSC not less than fifteen (15) days prior to its proposed effective date. The LPSC will have fifteen (15) days after the date of a true-up adjustment filing in which to confirm the mathematical accuracy of the servicer’s adjustment. Any mathematical correction not made prior to the effective date of the adjusted storm recovery charge will be made in future true-up adjustment filings and will not delay the effectiveness of the adjusted storm recovery charge.

Please advise if the LPSC has questions concerning this matter.

Respectfully submitted,

Cleco Power LLC
General Manager, Regulatory Strategy

APPENDIX D
financing order
PAGE 2 OF 2

Revised Tariff and Supporting Workpapers