Note 9 — Electric Customer Credits

The current amount of Cleco Power’s annual retail earnings is subject to the terms of an FRP established by the LPSC effective February 12, 2010. The FRP allows Cleco Power the opportunity to earn a target return on equity of 10.7%, including returning to retail customers 60% of retail earnings between 11.3% and 12.3% and all retail earnings over 12.3%. The amount of credits due customers, if any, is determined by Cleco Power and the LPSC annually. The ultimate amount of any customer refund is subject to LPSC approval. Cleco Power must file annual monitoring reports no later than October 31 for the 12-month period ending June 30.

On October 31, 2013, Cleco Power filed its monitoring report for the 12 months ended June 30, 2013 which indicated that $2.2 million was due to be returned to customers. On April 9, 2014, the LPSC Staff filed their report indicating agreement with Cleco Power’s refund calculation for the12 months ended June 30, 2013. Cleco Power anticipates approval of the LPSC Staff’s report in the second quarter of 2014 and expects to issue refunds for this filing on customers’ bills in the third quarter of 2014. The accrual for estimated electric customer credits reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013, was $3.7 million and $3.5 million, respectively.

In April 2013, Cleco Power filed an application with the LPSC to extend its current FRP and seek rate recovery of Coughlin. After evaluating various rate options, on March 26, 2014, Cleco Power filed supplemental information supporting its request in this application. The docket is currently in the discovery phase. Cleco Power expects LPSC action on this request by the end of the second quarter of 2014.