In March 2020, WHO declared the outbreak of COVID-19 to be a global pandemic, and the U.S. declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments imposed varying degrees of restrictions on business and social activities to contain COVID-19.

In response to the COVID-19 pandemic, in March 2020 the LPSC issued an executive order prohibiting the disconnection of utilities for nonpayment. On December 4, 2020, Cleco Power made a filing with the LPSC requesting the recovery of expenses incurred as a result of this executive order, as well as the lost revenue associated with the disconnection fees and incremental costs. Cleco Power anticipates approval of the recovery of these expenses in the first quarter of 2023. At September 30, 2022, Cleco Power had a regulatory asset of $3.0 million recorded for expenses incurred related to the executive order, as allowed by the LPSC.

Cleco continues to assess the COVID-19 situation and cannot predict the full impact that COVID-19, or any significant related disruptions, will have on its business, cash flows, liquidity, financial condition, and results of operations.

The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.

Following the formation of Cleco Securitization I and the closing of the storm securitization financing on June 22, 2022, Cleco Power became the primary beneficiary of Cleco Securitization I, and as a result, the financial statements of Cleco Securitization I are consolidated with the financial statements of Cleco Power. For additional information about Cleco Securitization I, see Note 12 — “Variable Interest

The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary for a fair statement of the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco’s and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.


Cleco
(THOUSANDS)	AT SEPT. 30, 2022		AT DEC. 31, 2021
Current
Cleco Katrina/Rita storm recovery surcharge	$	—	$	1,674
Cleco Power’s storm restoration costs - Hurricane Ida	9,350		—
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs and debt service	5,552		—
Total current	14,902		1,674
Non-current
Diversified Lands’ mitigation escrow	22		22
Cleco Cajun’s defense fund	728		723
Cleco Power’s future storm restoration costs	102,586		—
Cleco Power’s storm restoration costs - Hurricane Ida	6,037		—

Total non-current	109,373		745
Total restricted cash and cash equivalents	$	124,275	$	2,419


Cleco Power
(THOUSANDS)	AT SEPT. 30, 2022		AT DEC. 31, 2021
Current
Cleco Katrina/Rita storm recovery surcharge	$	—	$	1,674
Storm restoration costs - Hurricane Ida	9,350		—
Cleco Securitization I’s operating expenses and storm recovery bond issuance costs	5,552		—
Total current	14,902		1,674
Non-current
Future storm restoration costs	102,586		—
Storm restoration costs - Hurricane Ida	6,037		—

Total non-current	108,623		—
Total restricted cash and cash equivalents	$	123,525	$	1,674

In April 2021, after payments for all final administrative and winding up activities of Cleco Katrina/Rita were made, Cleco Katrina/Rita transferred its remaining restricted cash to Cleco Power to be used to benefit retail customers in a manner to be approved by the LPSC. In September 2022, the remaining $1.6 million was refunded to Cleco Power’s retail customers.

On June 22, 2022, the storm securitization financing was completed. In connection with this financing, and as approved by the LPSC, newly funded storm reserves for future storm restoration costs and Hurricane Ida storm restoration costs were established at Cleco Power. The establishment of these reserves resulted in the establishment of corresponding restricted cash and cash equivalents accounts. Additionally, restricted cash and cash equivalents accounts were established for payment of Cleco Securitization I’s estimated operating expenses, storm recovery bond issuance costs, and payment of debt service on those storm recovery bonds. For more information on the storm securitization financing, see Note 17 — “Storm Securitization and Cost Recovery.”

Customer accounts receivable are recorded at the invoiced amount and do not bear interest. Customer accounts receivable are generally considered to become past due 20 days after the billing date. Cleco recognizes write-offs within the allowance for credit losses once all recovery methods have been exhausted. It is the policy of management to review accounts receivable and unbilled revenue monthly using a reserve matrix based on historical bad debt write-offs, as well as current and forecasted economic conditions, to establish a credit loss estimate. Management’s historical credit loss analysis included periods of economic recessions, natural disasters, and temporary changes to collection policies. Due to the critical necessity of electricity, none of these past events have significantly impacted Cleco’s credit loss rates.

As a result of the market price volatility of natural gas experienced throughout 2022, Cleco has experienced significant increases to the pass-through fuel component of retail customer energy bills. Due to these increased customer fuel costs, along with the impacts of a 40-year high inflation rate, Cleco has experienced increases in credit loss reserves. These factors have not been and are not expected to be material to Cleco’s results of operations, financial condition, or cash flows.


Cleco
	FOR THE THREE MONTHS ENDED SEPT. 30, 2022						FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Beginning of period	$	1,190	$	1,638	$	2,828	$	1,302	$	1,638	$	2,940

Current period provision	939		—		939		2,149		—		2,149
Charge-offs	(894)		—		(894)		(2,899)		—		(2,899)
Recovery	263		—		263		946		—		946
Balances, Sept. 30, 2022	$	1,498	$	1,638	$	3,136	$	1,498	$	1,638	$	3,136


	FOR THE THREE MONTHS ENDED SEPT. 30, 2021						FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	ACCOUNTS RECEIVABLE		OTHER*		TOTAL		ACCOUNTS RECEIVABLE		OTHER*		TOTAL
Beginning of period	$	1,334	$	1,638	$	2,972	$	2,758	$	1,638	$	4,396

Current period provision	567		—		567		3,057		—		3,057
Charge-offs	(730)		—		(730)		(5,172)		—		(5,172)
Recovery	586		—		586		1,114		—		1,114
Balances, Sept. 30, 2021	$	1,757	$	1,638	$	3,395	$	1,757	$	1,638	$	3,395


Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30, 2022		FOR THE NINE MONTHS ENDED SEPT. 30, 2022
(THOUSANDS)	ACCOUNTS RECEIVABLE
Beginning of period	$	1,190	$	1,302

Current period provision	939		2,149
Charge-offs	(894)		(2,899)
Recovery	263		946
Balances, Sept. 30, 2022	$	1,498	$	1,498


	FOR THE THREE MONTHS ENDED SEPT. 30, 2021		FOR THE NINE MONTHS ENDED SEPT. 30, 2021
(THOUSANDS)	ACCOUNTS RECEIVABLE
Beginning of period	$	1,334	$	2,758

Current period provision	567		3,057
Charge-offs	(730)		(5,172)
Recovery	586		1,114
Balances, Sept. 30, 2021	$	1,757	$	1,757