Note 19 — Storm Restoration

Hurricanes Laura, Delta, and Zeta

In August and October 2020, Cleco’s service territories were impacted by three separate hurricanes. While the hurricanes did not have a material impact on Cleco Cajun, Cleco Power’s distribution and transmission systems sustained substantial damage.

On August 27, 2020, Hurricane Laura made landfall in southwest Louisiana as a Category 4 storm, causing catastrophic damage to portions of Cleco Power’s service territory and causing power outages for approximately 140,000 of Cleco Power’s electric customers located primarily in central and southwest Louisiana. By September 18, 2020, power was restored to 100% of customers who could receive power.

Cleco Power’s total storm restoration costs related to Hurricane Laura is approximately $180.3 million. Cleco Power continues to work to restore the distribution and transmission systems to their pre-storm condition. The damage to equipment from the storm required replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 62%, or approximately $112.5 million, of the total restoration costs recorded at December 31, 2020. Approximately $9.4 million of the repair-related restoration cost associated with Hurricane Laura was offset against Cleco Power’s existing storm damage reserve, and $54.4 million of costs was recorded as a regulatory asset, as allowed by the LPSC.

On October 9, 2020, Hurricane Delta made landfall in southwest Louisiana as a Category 2 storm resulting in power outages for approximately 132,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By October 16, 2020, power was restored to 100% of customers who could receive power. Cleco Power’s total storm restoration costs related to Hurricane Delta is approximately $50.7 million. The damage to equipment from the storm required

replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 65%, or approximately $32.9 million, of the total restoration costs recorded at December 31, 2020. At December 31, 2020, Cleco Power recognized $17.1 million as a regulatory asset for deferred, non-capital Hurricane Delta storm restoration costs, as allowed by the LPSC.

On October 28, 2020, Hurricane Zeta made landfall in southeast Louisiana as a Category 2 storm resulting in power outages for approximately 73,000 of Cleco Power’s electric customers located primarily in southeast Louisiana. By October 31, 2020, service was restored to 100% of customers who could receive power. Cleco Power’s total storm restoration costs related to Hurricane Zeta is approximately $8.6 million. The damage to equipment from the storm required replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 57%, or approximately $4.9 million, of the total restoration costs recorded at December 31, 2020. At December 31, 2020, Cleco Power recognized $3.5 million as a regulatory asset for deferred, non-capital Hurricane Zeta storm restoration costs, as allowed by the LPSC.

On December 4, 2020, Cleco Power filed an application with the LPSC requesting an interim rate recovery for return on the storm restoration costs associated with the hurricanes until such time securitization of such costs can be completed. Cleco Power, in line with other impacted utilities, will seek available funds from the U.S. government for relief of costs incurred from Hurricanes Laura, Delta, and Zeta. Cleco Power cannot predict the likelihood that any reimbursement from the U.S. government ultimately will be approved. In addition to securitization, other recovery options are being analyzed.

Winter Storms Uri and Viola

In February 2021, Cleco’s service territories experienced extreme and unprecedented winter weather that resulted in

damage to Cleco Power’s distribution and transmission assets, electricity generation supply shortages, natural gas supply shortages and increased wholesale prices of natural gas in the United States, primarily due to prolonged freezing temperatures.

On February 14, 2021, Winter Storm Uri reached Louisiana resulting in power outages for approximately 11,000 of Cleco Power’s electric customers located primarily in south Louisiana. By February 17, 2021, power was restored to 100% of customers who could receive power. On February 17, 2021, Winter Storm Viola reached Louisiana resulting in power outages for approximately 43,000 of Cleco Power’s electric customers located primarily in central and south Louisiana. By February 22, 2021, power was restored to 100% of customers who could receive power. Cleco Power’s current estimate of the total storm restoration costs related to Winter Storms Uri and Viola is between $9.0 million and $10.0 million. Cleco Power continues its restoration efforts as damage to its distribution and transmission assets is still being assessed. Cleco Power anticipates the establishment of a regulatory asset for non-capital expenses incurred related to Winter Storms Uri and Viola, subject to LPSC approval.

On February 16, 2021, Cleco was notified by the regional reliability coordinator, MISO, that extremely cold temperatures were causing an increase in demand for power, which resulted in an overload of the power grid. The electricity generation shortages necessitated MISO to implement controlled outages in certain of its service areas. To help protect the stability of the power grid and prevent prolonged outages, MISO instructed Cleco to reduce demand on the power grid by initiating periodic outages to customers across Louisiana. The periodic power outages were minimal and suspended within one hour of initiation at the direction of MISO because the power

shortage was no longer threatening the reliability of the power grid.

Cleco Power’s current estimate of incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola is between $45.0 million and $55.0 million. As a result of of the increase in net purchased power costs exceeding its unsecured credit capacity with MISO, on February 24, 2021, Cleco Power posted collateral in the amount of $21.0 million with MISO. Cleco Power expects to settle the majority of its purchase power obligations with MISO associated with the winter storms and eliminate associated collateral postings by March 9, 2021. These amounts are preliminary estimates and are subject to final settlement. Management expects to seek recovery of these costs through Cleco Power’s FAC. Recovery of these costs are subject to LPSC review and the LPSC could disallow timely and full recovery of these costs.

Cleco Cajun currently estimates the incremental negative impact of Winter Storms Uri and Viola on operations to be between $10.0 million and $15.0 million. As a result of of the increase in net purchased power costs exceeding its unsecured credit capacity with MISO, on February 24, 2021, Cleco Cajun posted collateral in the amount of $5.0 million with MISO. Cleco Cajun expects to settle the majority of its power purchase obligations with MISO associated with the winter storms and eliminate associated collateral postings by March 9, 2021. The incremental impact to Cleco Cajun’s operations is a preliminary estimate and subject to final settlement.

Management is still assessing the expected impact that these winter storms and related events will have on the Registrants’ financial condition, results of operations, cash flows, or liquidity.