Storm Restoration

6 Months Ended

Jun. 30, 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 $243.0 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 $152.4 million, of the total restoration costs recorded at June 30, 2021. At June 30, 2021, Cleco Power had regulatory assets for non-capital expenses related to Hurricanes Laura, Delta, and Zeta, as allowed by the LPSC, totaling $77.7 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. On May 19, 2021, the LPSC issued an order authorizing Cleco Power to recover $16.0 million annually for interim storm recovery costs. This order is effective until such time that the LPSC issues its order authorizing the recovery of the verified final storm costs and securitization of those costs. Cleco Power began collecting this amount through rates on June 1, 2021.

On August 5, 2021, Cleco Power filed testimony with the LPSC relating to securitization of the final storm costs for Hurricanes Laura, Delta, and Zeta.

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.

Winter Storms Uri and Viola

In February 2021, Winter Storms Uri and Viola reached Louisiana causing Cleco’s service territories to experience 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. Cleco Power’s current estimate of the total storm restoration costs related to Winter Storms Uri and Viola is approximately $10.5 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 $8.4 million, of the estimated total restoration costs recorded at June 30, 2021. At June 30, 2021, Cleco Power had a regulatory asset for the remaining operations and maintenance costs of $2.0 million, as allowed by the LPSC. Cleco Power has requested recovery of these costs through the storm securitization filing that was made with the LPSC on August 5, 2021.

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. On May 11, 2021, Cleco Power received notice of an audit from the LPSC for the fuel costs incurred during the time period required to restore services to Cleco Power’s customers during Winter Storms Uri and Viola. Management is unable to determine the outcome or timing of the audit.

Cleco Cajun's incremental negative impact of Winter Storms Uri and Viola on operations is approximately $11.2 million. The incremental impact to Cleco Cajun’s operations is subject to final settlement.

In February 2021, as a result of Winter Storms Uri and Viola, Cleco Power and Cleco Holdings, on behalf of Cleco Cajun, were required to post collateral with MISO. In March 2021, Cleco Power and Cleco Cajun settled with MISO the purchased power obligations associated with Winter Storms Uri and Viola. MISO returned associated collateral postings of $24.9 million and $6.5 million to Cleco Power and Cleco Holdings, respectively.