Storm Restoration

3 Months Ended

Mar. 31, 2021

Unusual or Infrequent Items, or Both [Abstract]

Note 17 — Storm Restoration

Hurricanes Laura, Delta, and Zeta

In August and October 2020, Cleco Power’s distribution and transmission systems sustained substantial damage from three separate hurricanes.

Cleco Power’s total storm restoration costs related to the hurricanes is approximately $240.7 million. The damage to equipment from the hurricanes required replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 63%, or approximately $150.8 million, of the total restoration costs recorded at March 31, 2021. At March 31, 2021, Cleco Power had regulatory assets for non-capital expenses related to Hurricanes Laura, Delta, and Zeta, as allowed by the LPSC, totaling $75.4 million.

On December 4, 2020, Cleco Power filed an application with the LPSC requesting an interim rate recovery for return on certain storm restoration costs associated with the hurricanes until securitization of such costs can be completed. Cleco Power has responded to multiple sets of data requests related to this filing. 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 assets, electricity generation supply shortages, natural gas supply shortages, and increases in 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 approximately $10.2 million. The damage to equipment from the storms required replacement, as well as repair of the existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 80%, or approximately $8.3 million, of the estimated total restoration costs recorded at March 31, 2021. At March 31, 2021, Cleco Power recorded a regulatory asset for the remaining operations and maintenance costs of $1.9 million, as allowed by the LPSC.

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 incremental fuel and purchased power costs incurred as a result of Winter Storms Uri and Viola is approximately $55.0 million. On March 29, 2021, Cleco Power received approval from the LPSC to recover $50.0 million of these costs over a period of 12 months beginning in May 2021. These amounts are subject to final settlement.

Cleco Cajun currently estimates the incremental negative impact of Winter Storms Uri and Viola on operations to be approximately $11.2 million. The incremental impact to Cleco Cajun’s operations is an estimate and subject to final settlement.

In February 2021, Cleco Power posted collateral in the amount of $25.0 million with MISO. Also in February 2021, Cleco Holdings, on behalf of Cleco Cajun, posted collateral in the amount of $8.8 million with MISO. These incremental collateral postings were a result of the increase in net

purchased power costs relating to Winter Storms Uri and Viola exceeding respective unsecured credit capacity with MISO. In March 2021, Cleco Power and Cleco Cajun settled the majority of those purchased power obligations with MISO, and MISO returned associated collateral postings of $24.9 million and $6.5 million to Cleco Power and Cleco Holdings, respectively.