Note 16 — Storm Restoration, Securitization, and Cost Recovery

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 $239.9 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 $150.4 million, of the total restoration costs recorded at March 31, 2022. At March 31, 2022, Cleco Power had regulatory assets for non-capital expenses related to Hurricanes Laura, Delta, and Zeta, as allowed by the LPSC, totaling $73.0 million.

On May 19, 2021, the LPSC issued an order authorizing Cleco Power to recover $16.0 million annually for interim storm recovery costs. Cleco Power began collecting this amount

through rates on June 1, 2021. This order is in effect until such time that the securitization financing closes, which is expected in mid-2022. For more information on the storm securitization, see “— Storm Securitization and Cost Recovery.”

Winter Storms Uri and Viola

In February 2021, Winter Storms Uri and Viola caused Cleco’s service territory to experience extreme and unprecedented winter weather that resulted in damage to Cleco Power’s distribution assets and caused electricity generation supply shortages, natural gas supply shortages, and increases in prices of natural gas in the U.S., primarily due to prolonged freezing temperatures. Cleco Power’s total storm restoration costs related to Winter Storms Uri and Viola is $10.1 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 $8.1 million, of the estimated total restoration costs recorded at March 31, 2022. At March 31, 2022, Cleco Power had a

regulatory asset for non-capital expenses of $1.9 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. For more information on the storm securitization, see “— Storm Securitization and Cost Recovery.”

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 with the May 2021 bills. 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. Cleco Power has responded to several data requests. Management is unable to determine the outcome or timing of the audit.

Hurricane Ida

In August 2021, Cleco Power’s distribution and transmission systems sustained substantial damage from Hurricane Ida.

Cleco Power’s total storm restoration costs related to Hurricane Ida is approximately $92.6 million. The damage to equipment from the hurricane 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 $52.5 million, of the total restoration costs recorded at March 31, 2022. At March 31, 2022, Cleco Power had a regulatory asset for non-capital expenses related to Hurricane Ida, as allowed by the LPSC, totaling $37.8 million.

On September 28, 2021, Cleco Power made a supplemental filing to its application for storm restoration costs securitization to recover costs related to Hurricane Ida. For more information on the storm securitization, see “— Storm Securitization and Cost Recovery.”

Storm Securitization and Cost Recovery

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, and Winter Storms Uri and Viola, totaling $342.0 million, including the establishment of a newly funded $100.0 million storm reserve to cover future storm costs. On September 28, 2021, Cleco Power filed supplemental testimony with the LPSC relating to storm securitization requesting an additional $100.0 million for a separate storm reserve to cover costs associated with Hurricane Ida.

On March 24, 2022, Cleco Power and the LPSC Staff filed a settlement agreement allowing securitization of $424.1 million. This amount includes the balance of storm costs of $220.1 million, after adjustments and collections through rates for interim storm recovery, for Hurricanes Laura, Delta, and Zeta and Winter Storms Uri and Viola; $95.0 million for a reserve for Hurricane Ida storm costs; $100.0 million for a reserve to cover future storm costs; and $9.0 million for estimated upfront securitization costs and ongoing costs. On March 30, 2022, the LPSC approved the settlement agreement. On April 1, 2022, the LPSC issued the financing order authorizing Cleco Power to issue storm recovery bonds in the aggregate principal amount of up to $425.0 million. Cleco Power expects the securitization financing to close by mid-2022.

Cleco Power, in line with other impacted utilities, will seek available funds from the U.S. government for customer relief of costs incurred from the storms. Cleco Power cannot predict the likelihood that any funding from the U.S. government ultimately will be approved.