SF-1/A

As filed with the U.S. Securities and Exchange Commission on June 2, 2022

Registration Nos. 333-264319

and 333-264319-01

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 2

TO

FORM SF-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

CLECO POWER LLC	CLECO SECURITIZATION I LLC
(Exact name of registrant, sponsor and depositor as specified in its charter)	(Exact name of registrant and issuing entity as specified in its charter)

Louisiana	Louisiana
(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)

1-05663

(Commission File Number)

0000018672	0001910923
(Central Index Key Number)	(Central Index Key Number)

72-0244480	87-4333832
(I.R.S. Employer Identification Number)	(I.R.S. Employer Identification Number)

2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
(318) 484-7400
(Address, including zip code, and telephone number, including area code, of depositor’s principal executive offices) 505 Cleco Drive, Office Number 16
Pineville, Louisiana 71360
(318) 484-4183
(Address, including zip code, and telephone number,
including area code, of issuing entity’s principal executive offices)

Jeremy Kliebert

Vice President Corporate Development and

Associate General Counsel

Cleco Power LLC

2030 Donahue Ferry Road

Pineville, Louisiana 71360-5226

(318) 484-7400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With Copies to:

Timothy S. Taylor
Clinton W. Rancher
Jamie L. Yarbrough
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002-4995
(713) 229-1234 Michael F. Fitzpatrick, Jr.
Adam R. O’Brian
Hunton Andrews Kurth LLP
200 Park Avenue
New York, NY 10166
(212) 309-1000

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.☐

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

This Amendment No. 2 to the Registration Statement on Form SF-1 (File Nos. 333-264319 and 333-264319-01) of Cleco Power LLC and Cleco Securitization I LLC is an exhibits-only filing being made solely to include an amended Form of Indenture between Cleco Securitization I LLC and the Trustee (including the forms of the storm recovery bonds and form of Series Supplement), filed herewith as Exhibit 4.1, an amended Form of Servicing Agreement between Cleco Securitization I LLC and Cleco Power LLC, as Servicer, filed herewith as Exhibit 10.1, the Form of Opinion of Phelps Dunbar, L.L.P. with respect to U.S. constitutional matters and Louisiana constitutional matters, filed herewith as Exhibit 99.2, and the Consent of Manager Nominee, filed herewith as Exhibit 99.3. This Amendment No. 2 does not modify or amend any provision of the prospectus constituting Part I or the other Items of Part II of the registration statement. Accordingly, this Amendment No. 2 consists only of the facing page, this explanatory note, Part II of the Registration Statement, including the signature page, the exhibit index, and the exhibits filed herewith. The prospectus is unchanged and has therefore been omitted from this filing.

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PART II

 

Information Not Required in Prospectus

Item 12.
Other Expenses of Issuance and Distribution

The following table sets forth the various expenses expected to be incurred by the registrants in connection with the issuance and distribution of the securities being registered by this prospectus, other than underwriting discounts and commissions. All amounts are estimated except the Securities and Exchange Commission registration fee.

Securities and Exchange Commission registration fee	$39,397.50
Printing expenses	55,000.00
Trustee fees and expenses	50,000.00
Legal fees and expenses	4,200,000.00
Accounting fees and expenses	250,000.00
Rating Agencies’ fees and expenses	685,000.00
Structuring agent fees and expenses	500,000.00
Miscellaneous fees and expenses	1,205,602.50
Total	$6,985,000.00

Item 13.
Indemnification of Directors and Officers

CLECO SECURITIZATION I LLC

Article IV of the issuing entity's Articles of Organization, as amended to date, and Article VII of its Limited Liability Company Operating Agreement, as amended to date, provide that the management of the issuing entity is vested in its managers.

Article V of the issuing entity's Articles of Organization, as amended to date, provides that except as otherwise provided by the Louisiana Limited Liability Company Law (“LLLCL”) and except as otherwise characterized for tax and financing reporting purposes, the debts, obligations and liabilities of the issuing entity, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the issuing entity, and no member or manager shall be obligated personally for any such debt, obligation or liability of the issuing entity solely by reason of being a member or a manager. Under Section 1315B of the LLLCL, no provision of an LLC's articles of organization or operating agreement limiting or eliminating liability may limit or eliminate the liability of a member or manager for the amount of a financial benefit received by a member or manager to which he is not entitled or for an intentional violation of criminal law. Article V of the issuing entity's Articles of Organization also provides that if the LLLCL is amended to authorize any further elimination or limitation of the personal liability of our member or any manager, the liability of such member or managers will be eliminated or limited to the fullest extent provided by the LLLCL, as amended. Article V further provides that any repeal or modification of Article V will not adversely affect any right or protection of any member or any manager with respect to any events occurring prior to the time of the repeal or modification.

Article X of the issuing entity's Limited Liability Company Operating Agreement, as amended to date, provides that, subject to the determination described below, to the fullest extent permitted by law, the issuing entity shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the issuing entity, by reason of the fact that such person is or was a manager, member, officer, controlling person, employee, legal representative or agent of the issuing entity, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the issuing entity, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful; but such person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such person's fraud, gross negligence or willful misconduct.

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Article X of the issuing entity's Limited Liability Company Operating Agreement, as amended to date, provides that, subject to the determination described below, to the fullest extent permitted by law, the issuing entity shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the issuing entity to procure a judgment in its favor by reason of the fact that such person is or was a member, manager, officer, controlling person, employee, legal representative or agent of the issuing entity, against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by such person in connection with the defense or settlement of the actions or suit if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the issuing entity; but such person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such person's fraud, gross negligence or willful misconduct. Indemnification may not be made for any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the issuing entity or for amounts paid in settlement to the issuing entity, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

Article X of the issuing entity's Limited Liability Company Operating Agreement, as amended to date, provides that the issuing entity shall indemnify any person who is or was a manager, member, officer, controlling person, employee, legal representative or agent of the issuing entity, against expenses, including attorneys' fees, actually and reasonably incurred by him or her in connection with the defense of any action, suit or proceeding referred to above or in defense of any claim, issue or matter therein, to the extent that such person has been successful on the merits.

Article X of the issuing entity's Limited Liability Company Operating Agreement, as amended to date, provides that any indemnification, as well as the advance payment of expenses described below, unless ordered by a court or advanced, must be made by the issuing entity only as authorized in the specific case upon a determination that indemnification of the manager, member, officer, controlling person, employee, legal representative or agent is proper in the circumstances. The determination must be made:

• by the member if the member was not a party to the act, suit or proceeding; or

• if the member was a party to the act, suit or proceeding, then by independent legal counsel in a written opinion.

Article X of the issuing entity's Limited Liability Company Operating Agreement, as amended to date, provides that the expenses of each person who is or was a manager, member, officer, controlling person, employee, legal representative or agent, incurred in defending a civil or criminal action, suit or proceeding may be paid by the issuing entity as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the issuing entity. This shall not affect any rights to advancement of expenses to which personnel other than the member or the managers (other than the Independent Managers, as defined in the Operating Agreement) may be entitled under any contract or otherwise by law.

The indemnification and advancement of expenses authorized in or ordered by a court pursuant to the issuing entity's Limited Liability Company Operating Agreement, as amended to date:

• does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any agreement, decision of the member or otherwise, for either an action of any person who is or was a manager, member, officer, controlling person, employee, legal representative or agent, in the official capacity of such person or an action in another capacity while holding such position, except that indemnification and advancement, unless ordered by a court pursuant to Section 10.05 of the Operating Agreement, may not be made to or on behalf of such person if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action; and

• continues for a person who has ceased to be a member, manager, officer, employee, legal representative or agent and inures to the benefit of the successors, heirs, executors and administrators of such a person.

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CLECO POWER LLC

Article III of Cleco Power's Second Amended and Restated Articles of Organization and Article IV of its Second Amended and Restated Operating Agreement provide that the management of Cleco Power is vested in its managers.

Section 1315A of the LLLCL provides that, subject to specified limitations, the articles of organization or a written operating agreement of a limited liability company (“LLC”) may eliminate or limit the personal liability of a member or members, if management is reserved to the members, or a manager or managers, if management is vested in one or more managers, for monetary damages for breach of any duty provided for in Section 1314 of the LLLCL. Section 1314 of the LLLCL provides that a member, if management is reserved to the members, or a manager, if management is vested in one or more managers, shall be deemed to stand in a fiduciary relationship to the LLC and its members and shall discharge his duties in good faith, with the diligence, care, judgment and skill that an ordinary prudent person in a like position would exercise under similar circumstances. Section 1314 also provides that such a member or manager:

• is protected in discharging his duties in relying in good faith upon specified records, opinions and other information, unless he has knowledge that makes such reliance unwarranted;

• will not be liable for any action taken on behalf of the LLC if he performed the duties of his office in compliance with Section 1314;

• will not be personally liable to the LLC or its members for monetary damages unless he engaged in grossly negligent conduct or conduct that demonstrates a greater disregard of the duty of care than gross negligence;

• in making business judgments, fulfills his duty by making such judgments in good faith, if he does not have a conflict of interest with respect to the business judgment, is informed with respect to the subject of the business judgment to the extent the member or manager reasonably believes to be appropriate under the circumstances and rationally believes that the judgment is in the best interests of the LLC and its members; and

• Section 1314 further provides that a person alleging a breach of the duty owed by a member or manager to an LLC has the burden of proving the alleged breach of duty, including the inapplicability of specified provisions of Section 1314 as to the fulfillment of the duty, and, in a damage action, the burden of proving that the breach was the legal cause of damage suffered by the LLC.

Article V of Cleco Power’s Operating Agreement provides that neither the sole member nor any manager (except with regard to such persons in their capacity as an officer of Cleco Power, and excluding any independent or special independent managers) shall have any fiduciary duty to Cleco Power or any other person, including any creditor of Cleco Power, except as otherwise required by law, and Cleco Power and the sole member of Cleco Power agree to waive, to the fullest extent permitted by law, any claim or cause of action against any such manager that could be asserted for breach of fiduciary duty or duty of loyalty, which shall replace, to the fullest extent permitted by law, such other duties and liabilities of such persons. However, with regard to any independent or special independent manager of Cleco Power (and the CEO when acting as a manager), such persons, in the performance of his or her duties as such, shall owe to Cleco Power and its sole member the same fiduciary duties as would be owed by the directors of a Louisiana corporation to the corporation and its stockholders under the laws of the state of Louisiana. Section 1315A of the LLLCL allows the articles of organization or a written operating agreement of an LLC to provide for the indemnification of a member or members, or a manager or managers, for judgments, settlements, penalties, fines or expenses incurred because he is or was a member or manager. Section 1315B provides that the indemnification provisions of Section 1315A may not limit or eliminate the liability of a member or manager for the amount of a financial benefit received by a member or manager to which he is not entitled or for an intentional violation of criminal law.

Article V of Cleco Power’s Operating Agreement also provides that any manager, including their respective affiliates and representatives (other than any person who is a full time officer or employee of Cleco Power or any of its subsidiaries, and excluding any independent or special independent managers), may engage in or possess an interest in any other business venture of any nature or description, including any business venture that is the same or similar to that of Cleco Power, and such persons shall have no duty to refrain from engaging in businesses or activities separate from Cleco Power or any of its subsidiaries that are the same or similar to, or compete directly

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or indirectly with, those of Cleco Power or its subsidiaries. Furthermore, no such person shall have any obligation to present any business opportunity to Cleco Power or its subsidiaries, even if the opportunity is one that Cleco Power or any of its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no such person shall be liable to Cleco Power or any of its subsidiaries for breach of any fiduciary or other duty by reason of any of the foregoing.

Section 5.03 of Cleco Power’s Operating Agreement provides that Cleco Power shall, to the fullest extent permitted by law, indemnify, defend, and hold harmless the sole member, each of the managers and each officer from any liability, loss, or damage incurred by such person by reason of any act performed or omitted to be performed by such person in connection with the business of Cleco Power (including by reason of the fact that such person is or was serving or has agreed to serve at the request of Cleco Power as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise) and from liabilities or obligations of Cleco Power or the sole member imposed on such person by virtue of any such person’s status as an person who has been indemnified by Cleco Power. However, if the liability, loss, damage or claim arises out of any action or inaction of such indemnified person, Cleco Power shall indemnify such person only if, with respect to any person other than an officer, independent or special independent manager, such action or inaction did not constitute fraud or a willful breach of such person’s obligations under the Operating Agreement or if, with respect to any officer, independent or special independent manager, such person, at the time of such action or inaction, reasonably determined that his or her course of conduct was in, or not opposed to, the best interests of Cleco Power and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful.

Section 5.03 of Cleco Power's Operating Agreement further provides that:

• Cleco Power will advance the full amount of expenses (including reasonable attorneys’ fees) incurred by any person claiming such indemnity as described above;

• Cleco Power may, but will not be obligated to, indemnify and advance expenses to any employee or agent of Cleco Power to the same extent and under the same conditions under which it may indemnify and advance expenses to officers as described above;

• Cleco Power is the indemnitor of first resort and shall be required to advance the full amount of expenses incurred by any such person seeking such indemnification who has rights to indemnification, advancement of expenses and/or insurance provided by a member of Cleco Partners GP LLC or an affiliate thereto;

• the right to indemnification conferred shall not be exclusive of any other right which the sole member or other person indemnified thereunder may have or thereafter acquire;

• Cleco Power shall purchase and maintain insurance, or cause its subsidiaries to purchase and maintain insurance at its or their expenses, to protect itself and any person who is or was serving as a manager, officer or agent of Cleco Power or is or was serving at the request of Cleco Power as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss thereunder;

• any indemnity by Cleco Power shall be provided out of and to the extent of Cleco Power’s assets only, without any ability of Cleco Power to call additional capital for such purpose, and the sole member shall have no personal liability on account thereof nor be required to make additional capital contributions to help satisfy such indemnity, unless such member otherwise agrees in writing or is found by a court of competent jurisdiction in a final decision to have personal liability on account thereof;

• the section does not affect, limit or modify the sole member’s liabilities or obligations under the Operating Agreement or any manager’s, officer’s or employee’s liabilities or obligations under any employment, consulting, confidentiality, non-compete, non-solicit, or similar agreement with Cleco Power or any of its subsidiaries;

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• these indemnification provisions shall apply to the resulting company in any consolidation or merger, as well as any constituent company absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its own persons to the extent provided in Section 5.03 of the Operating Agreement; and

• if any portion of these provisions shall be invalidated on any ground by any court of competent jurisdiction, then Cleco Power shall nevertheless indemnify and hold harmless the sole member, each manager and officer, and any other indemnified person as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by these provisions of Cleco Power’s Operating Agreement that shall not have been invalidated and to the fullest extent permitted by applicable law.

Item 14.
Exhibits

List of Exhibits

EXHIBIT NO.	DESCRIPTION OF EXHIBIT
1.1	Form of Underwriting Agreement*
3.1	Articles of Organization of Cleco Securitization I LLC**
3.2	Form of Amended and Restated Articles of Organization of Cleco Securitization I LLC**
3.3	Limited Liability Company Operating Agreement of Cleco Securitization I LLC**
3.4	Form of Amended and Restated Limited Liability Company Operating Agreement of Cleco Securitization I LLC**
4.1	Form of Indenture between Cleco Securitization I LLC and the Trustee (including the forms of the storm recovery bonds and form of Series Supplement)
5.1	Opinion of Phelps Dunbar, L.L.P. with respect to legality**
8.1	Opinion of Phelps Dunbar, L.L.P. with respect to federal tax matters**
10.1	Form of Servicing Agreement between Cleco Securitization I LLC and Cleco Power LLC, as Servicer
10.2	Form of Purchase and Sale Agreement between Cleco Securitization I LLC and Cleco Power LLC, as Seller**
10.3	Form of Administration Agreement between Cleco Securitization I LLC and Cleco Power LLC, as Administrator**
10.4	Services and Indemnity Agreement by and among Kevin P. Burns, the independent manager of the Cleco Securitization I LLC, Global Securitization Services, LLC, Cleco Power LLC and Cleco Securitization I LLC (the “Services and Indemnity Agreement”)**
10.5	Amendment No. 1 to the Services and Indemnity Agreement**
23.1	Consent of Phelps Dunbar, L.L.P. (included as part of its opinions filed as Exhibit 5.1 and 8.1)**
24.1	Power of Attorney of Cleco Securitization I LLC (included on signature page to this Registration Statement)**
24.2	Power of Attorney of Cleco Power LLC (included on signature page to this Registration Statement)**

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EXHIBIT NO.	DESCRIPTION OF EXHIBIT
25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York Mellon Trust Company National Association**
99.1	Financing Order**
99.2	Form of Opinion of Phelps Dunbar, L.L.P. with respect to U.S. constitutional matters and Louisiana constitutional matters
99.3	Consent of Manager Nominee
107	Filing Fee Table**

*
To be filed by an exhibit to a Current Report on Form 8-K pursuant to Item 601 of Regulation S-K.

**
Previously filed.

Pursuant to Item 601(a)(1)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request.

Item 15.
Undertakings

The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

The undersigned registrants hereby undertake that:

(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pineville, State of Louisiana, on the 2nd day of June, 2022.

CLECO POWER LLC

/s/ William G. Fontenot

William G. Fontenot

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
(i) Principal Executive Officer:
/s/ William G. Fontenot	Chief Executive Officer	June 2, 2022
William G. Fontenot
(ii) Principal Financial Officer:
/s/ Kristin L. Guillory	Chief Financial Officer	June 2, 2022
Kristin L. Guillory
(iii) Principal Accounting Officer:
/s/ F. Tonita Laprarie	Controller & Chief Accounting Officer	June 2, 2022
F. Tonita Laprarie
(iv) Managers:
*	Manager	June 2, 2022
Andrew Chapman
/s/ William G. Fontenot	Manager	June 2, 2022
William G. Fontenot
*	Manager	June 2, 2022
Paraskevas Fronimos
*	Manager	June 2, 2022
Richard Gallot, Jr.
*	Manager	June 2, 2022
Gerald Hanrahan
*	Manager	June 2, 2022
David Randall Gilchrist

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Signature	Title	Date
*	Manager	June 2, 2022
Christopher Leslie
*	Manager	June 2, 2022
Jon Perry
*	Manager	June 2, 2022
Aaron Rubin
*	Manager	June 2, 2022
Peggy Scott
*	Manager	June 2, 2022
Domingo Solis-Hernández
*	Manager	June 2, 2022
Melissa Stark
*	Manager	June 2, 2022
Steven Turner
*	Manager	June 2, 2022
Bruce Wainer

By:	/s/ William G. Fontenot
	William G. Fontenot Attorney-in-fact

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pineville, State of Louisiana, on the 2nd day of June, 2022.

CLECO SECURITIZATION I LLC
By:	/s/ William G. Fontenot
	Name:	William G. Fontenot
	Title:	Manager

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following person in the capacity and on the date indicated.

Signature	Title	Date
Managers:
/s/ William G. Fontenot	Manager	June 2, 2022
William G. Fontenot
*	Manager	June 2, 2022
F. Tonita Laprarie
*	Manager	June 2, 2022
Samantha McKee
*	Manager	June 2, 2022
Stacy Stubbs

By:	/s/ William G. Fontenot
	William G. Fontenot Attorney-in-fact

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EX-4.1

Exhibit 4.1

INDENTURE

by and between

CLECO SECURITIZATION I LLC,

Issuer

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

Indenture Trustee and Securities Intermediary

Dated as of             , 2022

TABLE OF CONTENTS

Page

ARTICLE I Definitions AND RULES OF CONSTRUCTION; Incorporation by Reference	2
SECTION 1.01.   Definitions and Rules of Construction	2
SECTION 1.02.   Incorporation by Reference of Trust Indenture Act	2
ARTICLE II The Storm Recovery Bonds	2
SECTION 2.01.   Form	2
SECTION 2.02.   Denominations:  Storm Recovery Bonds	3
SECTION 2.03.   Execution, Authentication and Delivery	4
SECTION 2.04.   Temporary Storm Recovery Bonds	5
SECTION 2.05.   Registration; Registration of Transfer and Exchange of Storm Recovery Bonds	5
SECTION 2.06.   Mutilated, Destroyed, Lost or Stolen Storm Recovery Bonds	7
SECTION 2.07.   Persons Deemed Owner	7
SECTION 2.08.   Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved	8
SECTION 2.09.   Cancellation	9
SECTION 2.10.   Outstanding Amount; Authentication and Delivery of Storm Recovery Bonds	9
SECTION 2.11.   Book-Entry Storm Recovery Bonds	12
SECTION 2.12.   Notices to Clearing Agency	13
SECTION 2.13.   Definitive Storm Recovery Bonds	13
SECTION 2.14.   CUSIP Number	14
SECTION 2.15.   Letter of Representations	14
SECTION 2.16.   Tax Treatment	14
SECTION 2.17.   State Pledge and Louisiana Commission Pledge	14
SECTION 2.18.   Security Interests	16
ARTICLE III Covenants	16
SECTION 3.01.   Payment of Principal, Premium, if any, and Interest	16
SECTION 3.02.   Maintenance of Office or Agency	17
SECTION 3.03.   Money for Payments To Be Held in Trust	17
SECTION 3.04.   Existence	18
SECTION 3.05.   Protection of Trust Estate	19
SECTION 3.06.   Opinions as to Trust Estate	19
SECTION 3.07.   Performance of Obligations; Servicing; SEC Filings	20
SECTION 3.08.   Certain Negative Covenants	22
SECTION 3.09.   Annual Statement as to Compliance	23
SECTION 3.10.   Issuer May Consolidate, etc., Only on Certain Terms	24
SECTION 3.11.   Successor or Transferee	26
SECTION 3.12.   No Other Business	26
SECTION 3.13.   No Borrowing	26

i

SECTION 3.14.   Servicer’s Obligations	26
SECTION 3.15.   Guarantees, Loans, Advances and Other Liabilities	26
SECTION 3.16.   Capital Expenditures	26
SECTION 3.17.   Restricted Payments	27
SECTION 3.18.   Notice of Events of Default	27
SECTION 3.19.   Further Instruments and Acts	27
SECTION 3.20.   Inspection	27
SECTION 3.21.   Economic Sanctions	28
SECTION 3.22.   Additional Storm Recovery Bonds	28
SECTION 3.23.   Sale Agreement, Servicing Agreement, and Administration Agreement Covenants	30
SECTION 3.24.   Taxes	32
SECTION 3.25.   Notices from Holders	32
SECTION 3.26.   Volcker Rule	32
ARTICLE IV Satisfaction and Discharge; Defeasance	32
SECTION 4.01.   Satisfaction and Discharge of Indenture; Defeasance	32
SECTION 4.02.   Conditions to Defeasance	34
SECTION 4.03.   Application of Trust Money	35
SECTION 4.04.   Repayment of Moneys Held by Paying Agent	36
ARTICLE V Remedies	36
SECTION 5.01.   Events of Default	36
SECTION 5.02.   Acceleration of Maturity; Rescission and Annulment	37
SECTION 5.03.   Collection of Indebtedness and Suits for Enforcement by Indenture Trustee	38
SECTION 5.04.   Remedies; Priorities	40
SECTION 5.05.   Optional Preservation of the Trust Estate	41
SECTION 5.06.   Limitation of Suits	41
SECTION 5.07.   Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest	42
SECTION 5.08.   Restoration of Rights and Remedies	42
SECTION 5.09.   Rights and Remedies Cumulative	42
SECTION 5.10.   Delay or Omission Not a Waiver	43
SECTION 5.11.   Control by Holders	43
SECTION 5.12.   Waiver of Past Defaults	44
SECTION 5.13.   Undertaking for Costs	44
SECTION 5.14.   Waiver of Stay or Extension Laws	44
SECTION 5.15.   Action on Storm Recovery Bonds	44
ARTICLE VI The Indenture Trustee	45
SECTION 6.01.   Duties of Indenture Trustee	45
SECTION 6.02.   Rights of Indenture Trustee	46
SECTION 6.03.   Individual Rights of Indenture Trustee	49
SECTION 6.04.   Indenture Trustee’s Disclaimer	49
SECTION 6.05.   Notice of Defaults	50
SECTION 6.06.   Reports by Indenture Trustee to Holders	50

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SECTION 6.07.   Compensation and Indemnity	51
SECTION 6.08.   Replacement of Indenture Trustee and Securities Intermediary	52
SECTION 6.09.   Successor Indenture Trustee by Merger	53
SECTION 6.10.   Appointment of Co-Trustee or Separate Trustee	54
SECTION 6.11.   Eligibility; Disqualification	55
SECTION 6.12.   Preferential Collection of Claims Against Issuer	55
SECTION 6.13.   Representations and Warranties of Indenture Trustee	55
SECTION 6.14.   Annual Report by Independent Registered Public Accountants	55
SECTION 6.15.   Custody of Trust Estate	56
SECTION 6.16.   FATCA	56
ARTICLE VII Holders’ Lists and Reports	56
SECTION 7.01.   Issuer To Furnish Indenture Trustee Names and Addresses of Holders	56
SECTION 7.02.   Preservation of Information; Communications to Holders	57
SECTION 7.03.   Reports by Issuer	57
SECTION 7.04.   Reports by Indenture Trustee	58
ARTICLE VIII Accounts, Disbursements and Releases	58
SECTION 8.01.   Collection of Money	58
SECTION 8.02.   Collection Account	59
SECTION 8.03.   General Provisions Regarding the Collection Account	62
SECTION 8.04.   Release of Trust Estate	63
SECTION 8.05.   Opinion of Counsel	64
SECTION 8.06.   Reports by Independent Registered Public Accountants	64
ARTICLE IX SUPPLEMENTAL INDENTURES	65
SECTION 9.01.   Supplemental Indentures Without Consent of Holders	65
SECTION 9.02.   Supplemental Indentures with Consent of Holders	66
SECTION 9.03.   Louisiana Commission Condition	67
SECTION 9.04.   Execution of Supplemental Indentures	68
SECTION 9.05.   Effect of Supplemental Indenture	69
SECTION 9.06.   Conformity with Trust Indenture Act	69
SECTION 9.07.   Reference in Storm Recovery Bonds to Supplemental Indentures	69
ARTICLE X MISCELLANEOUS	69
SECTION 10.01.   Compliance Certificates and Opinions, etc.	69
SECTION 10.02.   Form of Documents Delivered to Indenture Trustee	71
SECTION 10.03.   Acts of Holders	71
SECTION 10.04.   Notices, etc., to Indenture Trustee, Issuer and Rating Agencies	72
SECTION 10.05.   Notices to Holders; Waiver	73
SECTION 10.06.   Conflict with Trust Indenture Act	74
SECTION 10.07.   Successors and Assigns	74
SECTION 10.08.   Severability	74
SECTION 10.09.   Benefits of Indenture	74
SECTION 10.10.   Legal Holidays	74
SECTION 10.11.   GOVERNING LAW	74

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SECTION 10.12.   Counterparts	74
SECTION 10.13.   Recording of Indenture	75
SECTION 10.14.   No Recourse to Issuer	75
SECTION 10.15.   Basic Documents	75
SECTION 10.16.   No Petition	75
SECTION 10.17.   Securities Intermediary	76
SECTION 10.18.   Rule 17g-5 Compliance	76
SECTION 10.19.   Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial	76
SECTION 10.20.   Certain Tax Laws	77

EXHIBITS

Exhibit A          Form of Storm Recovery Bonds 

Exhibit B          Form of Series Supplement 

Exhibit C          Servicing Criteria to be Addressed by Indenture Trustee in Assessment of Compliance

APPENDIX

Appendix A    Definitions and Rules of Construction

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TRUST INDENTURE ACT CROSS REFERENCE TABLE

Trust Indenture Act Section		Indenture Section
310	(a)(1)	6.11
	(a)(2)	6.11
	(a)(3)	6.10(b)(i)
	(a)(4)	Not applicable
	(a)(5)	6.11
	(b)	6.11
311	(a)	6.12
	(b)	6.12
312	(a)	7.01 and 7.02
	(b)	7.02(b)
	(c)	7.02(c)
313	(a)	7.04
	(b)(1)	7.04
	(b)(2)	7.04
	(c)	7.03(a) and 7.04
	(d)	Not applicable
314	(a)	3.09, 4.01 and 7.03(a)
	(b)	3.06 and 4.01
	(c)(1)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(2)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(3)	2.10, 4.01, 4.02 and 10.01(a)
	(d)	8.04(b) and 10.01
	(e)	10.01(a)
	(f)	10.01(a)

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Trust Indenture Act Section		Indenture Section
315	(a)	6.01(b)(i) and 6.01(b)(ii)
	(b)	6.05
	(c)	6.01(a)
	(d)	6.01(c)(i), 6.01(c)(ii) and SECTION 6.01(c)(iii)
	(e)	5.13
316	(a) (last sentence)	Appendix A – definition of “Outstanding”
	(a)(1)(A)	5.11
	(a)(1)(B)	5.12
	(a)(2)	Not applicable
	(b)	5.07
	(c)	Appendix A – definition of “Record Date”
317	(a)(1)	5.03(a)
	(a)(2)	5.03(c)(iv)
	(b)	3.03
318	(a)	10.06
	(b)	10.06
	(c)	10.06

This CROSS-REFERENCE table shall not, for any purpose, be deemed to be part of this Indenture.

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This INDENTURE, dated as of                    , 2022, is by and between CLECO SECURITIZATION I LLC, a Louisiana limited liability company, and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, in its capacity as indenture trustee for the benefit of the Holders and in its separate capacity as a securities intermediary.

In consideration of the mutual agreements herein contained, each party hereto agrees as follows for the benefit of the other party hereto and each of the Holders:

RECITALS OF THE ISSUER

The Issuer has duly authorized the execution and delivery of this Indenture and the creation and issuance of Storm Recovery Bonds issuable hereunder, which will be of substantially the tenor set forth in the Series Supplement to this Indenture duly executed and delivered by the Issuer and the Indenture Trustee.

Storm Recovery Bonds shall be non-recourse obligations and shall be secured by the Trust Estate, of which the principal asset is the Storm Recovery Property, and shall be payable solely out of the Storm Recovery Property and other assets in the Trust Estate. If and to the extent that the proceeds of the Storm Recovery Property are insufficient to pay all amounts owing with respect to the Storm Recovery Bonds, then, except as otherwise expressly provided hereunder, the Holders shall have no Claim in respect of such insufficiency against the Issuer or the Indenture Trustee, and the Holders, by their acceptance of the Storm Recovery Bonds, waive any such Claim.

All things necessary to (a) make the Storm Recovery Bonds, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, valid obligations, and (b) make this Indenture a valid agreement of the Issuer, in each case, in accordance with their respective terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That the Issuer, in consideration of the premises herein contained and of the purchase of Storm Recovery Bonds by the Holders and of other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure, equally and ratably without prejudice, priority or distinction, except as specifically otherwise set forth in this Indenture, the payment of the Storm Recovery Bonds, the payment of all other amounts due under or in connection with this Indenture (including all fees, expenses, counsel fees and other amounts due and owing to the Indenture Trustee) and the performance and observance of all of the covenants and conditions contained herein or in the Storm Recovery Bonds, has hereby executed and delivered this Indenture and by these presents does hereby and by the Series Supplement will convey, grant, assign, transfer and pledge, in each case, in and unto the Indenture Trustee, its successors and assigns forever, for the benefit of the Holders, all and singular the property described in the Series Supplement (such property herein referred to as “Trust Estate”).

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AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all Storm Recovery Bonds are to be issued, countersigned and delivered and that all of the Trust Estate is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and any successor, does hereby covenant and agree to and with the Indenture Trustee and its successors in said trust, for the benefit of the Holders, as follows:

ARTICLE I

Definitions AND RULES OF CONSTRUCTION; Incorporation by Reference

SECTION 1.01.        Definitions and Rules of Construction. Capitalized terms used but not otherwise defined in this Indenture shall have the respective meanings given to such terms in Appendix A, which is hereby incorporated by reference into this Indenture as if set forth fully in this Indenture. Not all terms defined in Appendix A are used in this Indenture. The rules of construction set forth in Appendix A shall apply to this Indenture and are hereby incorporated by reference into this Indenture as if set forth fully in this Indenture.

SECTION 1.02.        Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, that provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

“indenture securities” means the Storm Recovery Bonds.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

“obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.

All other Trust Indenture Act terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

ARTICLE II

The Storm Recovery Bonds

SECTION 2.01.        Form. The Storm Recovery Bonds and the Indenture Trustee’s certificate of authentication shall be in substantially the forms set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by the Series Supplement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing the Storm Recovery Bonds, as evidenced by their execution of the Storm Recovery Bonds.

The Storm Recovery Bonds shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the Responsible Officer of the Issuer executing the Storm Recovery Bonds, as evidenced by their execution of the Storm Recovery Bonds.

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Each Storm Recovery Bond shall be dated the date of its authentication.

SECTION 2.02.        Denominations: Storm Recovery Bonds. The Storm Recovery Bonds shall be issuable in the Authorized Denominations specified in the Series Supplement.

The Storm Recovery Bonds shall, at the election of and as authorized by a Responsible Officer of the Issuer, and set forth in the Series Supplement, be issued in one or more tranches, and shall be designated generally as the “Series 2022-A Senior Secured Storm Recovery Bonds” of the Issuer, with such further particular designations added or incorporated in such title for the Storm Recovery Bonds of any particular tranche as a Responsible Officer of the Issuer may determine. All Storm Recovery Bonds shall be identical in all respects except for the denominations thereof, the Holder thereof, the numbering thereon and the legends thereon, unless the Storm Recovery Bonds are comprised of one or more tranches, in which case all of the Storm Recovery Bonds of the same tranche shall be identical in all respects except for the denominations thereof, the Holder thereof, the numbering thereon, the legends thereon and the CUSIP number thereon. All Storm Recovery Bonds and of a particular tranche shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture.

The Storm Recovery Bonds shall be created by the Series Supplement authorized by a Responsible Officer of the Issuer, which shall specify and establish the terms and provisions thereof, including the following (which terms and provisions may differ as between tranches):

(a)           designation of the tranches thereof;

(b)           the principal amount of each tranche;

(c)           the Bond Interest Rate of each tranche thereof or the formula, if any, used to calculate Bond Interest Rate or Bond Interest Rates for each tranche thereof;

(d)           the Payment Dates for each tranche thereof;

(e)           the Scheduled Payment Dates for each tranche;

(f)            the Scheduled Final Payment Date(s) of each tranche;

(g)           the Final Maturity Date of each tranche;

(h)           the authentication and delivery date;

(i)            the Authorized Denominations;

(j)            the Expected Sinking Fund Schedule of each tranche;

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(k)           the place or places for the payment of interest, principal and premium, if different than set forth in Section 2.08;

(l)            any additional Holders;

(m)          the identity of the Indenture Trustee;

(n)           the Trust Estate;

(o)           whether or not the Storm Recovery Bonds are to be Book-Entry Storm Recovery Bonds and the extent to which Section 2.11 should apply; and

(p)           any other terms of the Storm Recovery Bonds (or tranches thereof) that are not inconsistent with the provisions of this Indenture.

SECTION 2.03.        Execution, Authentication and Delivery. The Storm Recovery Bonds shall be executed on behalf of the Issuer by any of its Responsible Officers. The signature of any such Responsible Officer on the Storm Recovery Bonds may be manual, electronic or facsimile.

Storm Recovery Bonds bearing the manual, electronic or facsimile signature of individuals who were at any time Responsible Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Storm Recovery Bonds or did not hold such offices at the date of the Storm Recovery Bonds.

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Storm Recovery Bonds executed by the Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication; and the Indenture Trustee shall authenticate and deliver the Storm Recovery Bonds as in this Indenture provided and not otherwise.

No Storm Recovery Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Storm Recovery Bond a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by the manual, electronic or facsimile signature of one of its authorized signatories, and such certificate upon any Storm Recovery Bond shall be conclusive evidence, and the only evidence, that such Storm Recovery Bond has been duly authenticated and delivered hereunder.

The words “execution,” signed,” signature,” and words of like import in this Indenture shall include images of manually executed signatures transmitted by facsimile, email or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.

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SECTION 2.04.        Temporary Storm Recovery Bonds. Pending the preparation of Definitive Storm Recovery Bonds pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, Temporary Storm Recovery Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Storm Recovery Bonds in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture and the Series Supplement as the officers executing the Storm Recovery Bonds may determine, as evidenced by their execution of the Storm Recovery Bonds.

If Temporary Storm Recovery Bonds are issued, the Issuer will cause Definitive Storm Recovery Bonds to be prepared without unreasonable delay. After the preparation of Definitive Storm Recovery Bonds, the Temporary Storm Recovery Bonds shall be exchangeable for Definitive Storm Recovery Bonds upon surrender of the Temporary Storm Recovery Bonds at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more Temporary Storm Recovery Bonds, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like tranche and principal amount of Definitive Storm Recovery Bonds of authorized denominations. Until so delivered in exchange, the Temporary Storm Recovery Bonds shall in all respects be entitled to the same benefits under this Indenture as Definitive Storm Recovery Bonds.

SECTION 2.05.        Registration; Registration of Transfer and Exchange of Storm Recovery Bonds. The Issuer shall cause to be kept a register (the “Storm Recovery Bond Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Storm Recovery Bonds and the registration of transfers of Storm Recovery Bonds. The Indenture Trustee shall be “Storm Recovery Bond Registrar” for the purpose of registering the Storm Recovery Bonds and transfers of Storm Recovery Bonds as herein provided. Upon any resignation of any Storm Recovery Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Storm Recovery Bond Registrar.

If a Person other than the Indenture Trustee is appointed by the Issuer as Storm Recovery Bond Registrar, the Issuer will give the Indenture Trustee and the Paying Agent, if not the Indenture Trustee, prompt written notice of the appointment of such Storm Recovery Bond Registrar and of the location, and any change in the location, of the Storm Recovery Bond Register, and the Indenture Trustee and any such Paying Agent shall have the right to inspect the Storm Recovery Bond Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely conclusively upon a certificate executed on behalf of the Storm Recovery Bond Registrar by a Responsible Officer thereof as to the names and addresses of the Holders and the principal amounts and number of the Storm Recovery Bonds (separately stated by tranche).

Upon surrender for registration of transfer of any Storm Recovery Bond at the office or agency of the Issuer to be maintained as provided in Section 3.02, provided that the requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Storm Recovery Bonds in any Authorized Denominations, of the same tranche and aggregate principal amount.

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At the option of the Holder, Storm Recovery Bonds may be exchanged for other Storm Recovery Bonds in any Authorized Denominations, of the same tranche and aggregate principal amount, upon surrender of the Storm Recovery Bonds to be exchanged at such office or agency as provided in Section 3.02. Whenever any Storm Recovery Bonds are so surrendered for exchange, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute, and, upon any such execution, the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, the Storm Recovery Bonds that the Holder making the exchange is entitled to receive.

All Storm Recovery Bonds issued upon any registration of transfer or exchange of other Storm Recovery Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Storm Recovery Bonds surrendered upon such registration of transfer or exchange.

Every Storm Recovery Bond presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by: (a) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution that is a member of: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee; and (b) such other documents as the Indenture Trustee may require.

No service charge shall be made to a Holder for any registration of transfer or exchange of Storm Recovery Bonds, but the Issuer or the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge or any fees or expenses of the Indenture Trustee that may be imposed in connection with any registration of transfer or exchange of Storm Recovery Bonds, other than exchanges pursuant to Section 2.04 or Section 2.06 not involving any transfer.

The preceding provisions of this Section 2.05 notwithstanding, the Issuer shall not be required to make, and the Storm Recovery Bond Registrar need not register, transfers or exchanges of any Storm Recovery Bond that has been submitted within fifteen (15) days preceding the due date for any payment with respect to such Storm Recovery Bond until after such due date has occurred.

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SECTION 2.06.        Mutilated, Destroyed, Lost or Stolen Storm Recovery Bonds. If (a) any mutilated Storm Recovery Bond is surrendered to the Indenture Trustee or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Storm Recovery Bond and (b) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Storm Recovery Bond Registrar or the Indenture Trustee that such Storm Recovery Bond has been acquired by a Protected Purchaser, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute, and, upon the Issuer’s written request, the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Storm Recovery Bond, a replacement Storm Recovery Bond of like Series, tranche and principal amount, bearing a number not contemporaneously outstanding; provided, however, that, if any such destroyed, lost or stolen Storm Recovery Bond, but not a mutilated Storm Recovery Bond, shall have become or within seven (7) days shall be due and payable, instead of issuing a replacement Storm Recovery Bond, the Issuer may pay such destroyed, lost or stolen Storm Recovery Bond when so due or payable without surrender thereof. If, after the delivery of such replacement Storm Recovery Bond or payment of a destroyed, lost or stolen Storm Recovery Bond pursuant to the proviso to the preceding sentence, a Protected Purchaser of the original Storm Recovery Bond in lieu of which such replacement Storm Recovery Bond was issued presents for payment such original Storm Recovery Bond, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Storm Recovery Bond (or such payment) from the Person to whom it was delivered or any Person taking such replacement Storm Recovery Bond from such Person to whom such replacement Storm Recovery Bond was delivered or any assignee of such Person, except a Protected Purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.

Upon the issuance of any replacement Storm Recovery Bond under this Section 2.06, the Issuer and/or the Indenture Trustee may require the payment by the Holder of such Storm Recovery Bond of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Storm Recovery Bond Registrar and its counsel) in connection therewith.

Every replacement Storm Recovery Bond issued pursuant to this Section 2.06 in replacement of any mutilated, destroyed, lost or stolen Storm Recovery Bond shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Storm Recovery Bond shall be found at any time or enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Storm Recovery Bonds duly issued hereunder.

The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Storm Recovery Bonds.

SECTION 2.07.        Persons Deemed Owner. Prior to due presentment for registration of transfer of any Storm Recovery Bond, the Issuer, the Indenture Trustee, the Storm Recovery Bond Registrar and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Storm Recovery Bond is registered (as of the day of determination) as the owner of such Storm Recovery Bond for the purpose of receiving payments of principal of and premium, if any, and interest on such Storm Recovery Bond and for all other purposes whatsoever, whether or not such Storm Recovery Bond be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.

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SECTION 2.08.        Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.

(a)           The Storm Recovery Bonds shall accrue interest as provided in the Series Supplement at the applicable Bond Interest Rate, and such interest shall be payable on each applicable Payment Date. Any installment of interest, principal or premium, if any, payable on any Storm Recovery Bond that is punctually paid or duly provided for on the applicable Payment Date shall be paid to the Person in whose name such Storm Recovery Bond (or one or more Predecessor Storm Recovery Bonds) is registered on the Record Date for the applicable Payment Date by check mailed first-class, postage prepaid, to the Person whose name appears as the Registered Holder (or by wire transfer to an account maintained by such Holder) in accordance with payment instructions delivered to the Indenture Trustee by such Holder, and, with respect to Book-Entry Storm Recovery Bonds, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Storm Recovery Bond unless and until such Global Storm Recovery Bond is exchanged for Definitive Storm Recovery Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to such Storm Recovery Bond on a Payment Date, which shall be payable as provided below.

(b)           The principal of each Storm Recovery Bond of each tranche shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date specified in the Series Supplement; provided, that installments of principal not paid when scheduled to be paid in accordance with the Expected Sinking Fund Schedule shall be paid upon receipt of money available for such purpose, in the order set forth in the Expected Sinking Fund Schedule. Failure to pay principal in accordance with such Expected Sinking Fund Schedule because moneys are not available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture; provided, however, that failure to pay the entire unpaid principal amount of the Storm Recovery Bonds of a tranche upon the Final Maturity Date for the Storm Recovery Bonds of such tranche shall constitute an Event of Default under this Indenture as set forth in Section 5.01. Notwithstanding the foregoing, the entire unpaid principal amount of the Storm Recovery Bonds shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of Storm Recovery Bonds representing a majority of the Outstanding Amount of Storm Recovery Bonds have declared the Storm Recovery Bonds to be immediately due and payable in the manner provided in Section 5.02. All payments of principal and premium, if any, on the Storm Recovery Bonds shall be made pro rata to the Holders entitled thereto unless otherwise provided in the Series Supplement. Upon written notice from the Issuer, the Indenture Trustee shall notify the Person in whose name a Storm Recovery Bond is registered at the close of business on the Record Date preceding the Payment Date on which the Issuer expects that the final installment of principal of and premium, if any, and interest on the Storm Recovery Bond will be paid. Such notice shall be mailed no later than five (5) days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Storm Recovery Bond and shall specify the place where such Storm Recovery Bond may be presented and surrendered for payment of such installment.

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(c)           If interest on the Storm Recovery Bonds is not paid when due, such defaulted interest shall be paid (plus interest on such defaulted interest at the applicable Bond Interest Rate to the extent lawful) to the Persons who are Holders on a subsequent Special Record Date, which date shall be at least fifteen (15) Business Days prior to the Special Payment Date. The Issuer shall fix or cause to be fixed any such Special Record Date and Special Payment Date, and, at least ten (10) days before any such Special Record Date, the Issuer shall mail to each affected Holder a notice that states the Special Record Date, the Special Payment Date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.

SECTION 2.09.        Cancellation. All Storm Recovery Bonds surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Storm Recovery Bonds previously authenticated and delivered hereunder that the Issuer may have acquired in any manner whatsoever, and all Storm Recovery Bonds so delivered shall be promptly canceled by the Indenture Trustee. No Storm Recovery Bonds shall be authenticated in lieu of or in exchange for any Storm Recovery Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture. All canceled Storm Recovery Bonds may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time.

SECTION 2.10.        Outstanding Amount; Authentication and Delivery of Storm Recovery Bonds. The aggregate Outstanding Amount of Storm Recovery Bonds that may be authenticated and delivered under this Indenture shall not exceed the aggregate of the amount of Storm Recovery Bonds that are authorized in the Financing Order, together with any Subsequent Financing Order, if any, but otherwise shall be unlimited.

Storm Recovery Bonds may at any time be executed by the Issuer and delivered to the Indenture Trustee for authentication and thereupon the same shall be authenticated and delivered by the Indenture Trustee upon Issuer Request and upon delivery by the Issuer to the Indenture Trustee of the following (and if applicable, subject further to the requirements of Section 3.21):

(a)           Issuer Action. An Issuer Order authorizing and directing the authentication and delivery of the Storm Recovery Bonds by the Indenture Trustee and specifying the principal amount of Storm Recovery Bonds to be authenticated.

(b)           Authorizations. Copies of (i) the Financing Order, which shall be in full force and effect and be Final, (ii) certified resolutions of the Managers or Member of the Issuer authorizing the execution and delivery of the Series Supplement and the execution, authentication and delivery of the Storm Recovery Bonds and (iii) the Series Supplement duly executed by the Issuer.

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(c)           Opinion Letters. An opinion letter or opinion letters, which may be delivered by one or more counsel for the Issuer, for the Servicer, or for the Seller, dated the Closing Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, covering the following opinion points (i) all conditions precedent provided for in this Indenture relating to (A) the authentication and delivery of the Storm Recovery Bonds and (B) the execution of the Series Supplement to this Indenture dated the Closing Date have been complied with, (ii) the execution of the Series Supplement is permitted by this Indenture, (iii) such action has been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto and any other requisite documents, including the execution and filing of such filings (including financing statements and continuation statements) with the appropriate governmental filing office pursuant to the Securitization Act and the Financing Order, as is necessary to perfect and make effective the Lien and the perfected security interest created by this Indenture and the Series Supplement, and, based on a review of a current report of a search of the appropriate governmental filing office, no other Lien that can be perfected solely by the filing of financing statements under the applicable Uniform Commercial Code ranks equal or prior to the Lien of the Indenture Trustee in the Trust Estate, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make effective the Lien, together with the other Opinions of Counsel described in Sections [•] through [•] of the Underwriting Agreement.

(d)           Authorizing Certificate. An Officer’s Certificate, dated the Closing Date, certifying that (i) the Issuer has duly authorized the execution and delivery of this Indenture and the Series Supplement and the execution and delivery of the Storm Recovery Bonds and (ii) the Series Supplement is in the form attached thereto and complies with the requirements of Section 2.02.

(e)           The Trust Estate. The Issuer shall have made or caused to be made all filings with the Louisiana Filing Officer pursuant to the Financing Order and the Securitization Act and all other filings necessary to perfect the Grant of the Trust Estate to the Indenture Trustee and the Lien of this Indenture and the Series Supplement, including UCC financing statements in Louisiana.

(f)            Certificates of the Issuer and the Seller.

(i)            An Officer’s Certificate, dated as of the Closing Date:

(A)           to the effect that (1) the Issuer is not in Default under this Indenture and that the issuance of the Storm Recovery Bonds will not result in any Default or in any breach of any of the terms, conditions or provisions of or constitute a default under the Financing Order or any indenture, mortgage, credit agreement or other agreement or instrument to which the Issuer is a party or by which it or its properties is bound or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it or its properties may be bound or to which it or its properties may be subject and (2) all conditions precedent provided in this Indenture relating to the execution, authentication and delivery of the Storm Recovery Bonds have been complied with;

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(B)            to the effect that: the Issuer has not assigned any interest or participation in the Trust Estate except for the Grant contained in this Indenture and the Series Supplement; the Issuer has the power and right to Grant the Trust Estate to the Indenture Trustee as security hereunder and thereunder; and the Issuer, subject to the terms of this Indenture, has Granted to the Indenture Trustee a first priority perfected security interest in all of its right, title and interest in and to the Trust Estate free and clear of any Lien arising as a result of actions of the Issuer or through the Issuer (except for any Lien created by the Issuer under the Basic Documents in favor of the Holders and in accordance with Section 1231 of the Securitization Act);

(C)            to the effect that the Issuer has appointed the firm of Independent registered public accountants as contemplated in Section 8.06;

(D)            to the effect that the Sale Agreement, the Servicing Agreement, and the Administration Agreement are, to the knowledge of the Issuer (and assuming such agreements are enforceable against all parties thereto other than the Issuer and Cleco Power), in full force and effect and, to the knowledge of the Issuer, that no party is in default of its obligations under such agreements;

(E)            certifying that the Storm Recovery Bonds have received the ratings from the Rating Agencies if required by the Underwriting Agreement as a condition to the issuance of the Storm Recovery Bonds; and

(F)            stating that (i) all conditions precedent provided for in this Indenture relating to (a) the authentication and delivery of the Storm Recovery Bonds, and (b) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture, have been compiled with, (ii) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture is authorized or permitted by this Indenture, and (iii) the Issuer has delivered the documents required under this Section 2.10 and has otherwise satisfied the requirements set out in this Section 2.10, including, but not limited to, complying with Section 2.10(f)(i) hereof.

(ii)           An officer’s certificate from the Seller, dated as of the Closing Date, to the effect that:

(A)           in the case of the Storm Recovery Property identified in the Bill of Sale, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement: the Seller was the original and the sole owner of the Storm Recovery Property, free and clear of any Lien; the Seller had not assigned any interest or participation in the Storm Recovery Property and the proceeds thereof other than to the Issuer pursuant to the Sale Agreement; the Seller has the power, authority and right to own, sell and assign such Storm Recovery Property and the proceeds thereof to the Issuer; the Seller has its chief executive office in the State of Louisiana and is a registered organization as defined in the Louisiana UCC; and the Seller, subject to the terms of the Sale Agreement, has validly sold and assigned to the Issuer all of its right, title and interest in, to and under the Storm Recovery Property and the proceeds thereof, free and clear of any Lien (except for any Lien created by the Issuer under the Basic Documents in favor of the Holders and in accordance with Section 1231 of the Securitization Act) and such sale and assignment is absolute and irrevocable and has been perfected;

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(B)            immediately prior to the conveyance of the Storm Recovery Property identified in the Bill of Sale to the Issuer pursuant to the Sale Agreement, the attached copy of the Financing Order, creating the Storm Recovery Property is true and complete and is in full force and effect; and

(C)            the Required Capital Amount has been deposited or caused to be deposited by the Seller with the Indenture Trustee for crediting to the Capital Subaccount.

(g)           Requirements of Series Supplement. Such other funds, accounts, documents, certificates, agreements, instruments or opinions as may be required by the terms of the Series Supplement.

(h)           Other Requirements. Such other documents, certificates, agreements, instruments or opinions as the Indenture Trustee may reasonably require.

SECTION 2.11.        Book-Entry Storm Recovery Bonds. Unless the Series Supplement provides otherwise, all of the Storm Recovery Bonds shall be issued in Book-Entry Form, and the Issuer shall execute and the Indenture Trustee shall, in accordance with this Section 2.11 and the Issuer Order, authenticate and deliver one or more Global Storm Recovery Bonds, evidencing the Storm Recovery Bonds, which (a) shall be an aggregate original principal amount equal to the aggregate original principal amount of the Storm Recovery Bonds to be issued pursuant to the Issuer Order, (b) shall be registered in the name of the Clearing Agency therefor or its nominee, which shall initially be Cede & Co., as nominee for The Depository Trust Company, the initial Clearing Agency, (c) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency’s or such nominee’s instructions and (d) shall bear a legend substantially to the effect set forth in Exhibit A to the Form of Series Supplement.

Each Clearing Agency designated pursuant to this Section 2.11 must, at the time of its designation and at all times while it serves as Clearing Agency hereunder, be a “clearing agency” registered under the Exchange Act and any other applicable statute or regulation.

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No Holder of Storm Recovery Bonds issued in Book-Entry Form shall receive a Definitive Storm Recovery Bond representing such Holder’s interest in any of the Storm Recovery Bonds, except as provided in Section 2.13. Unless (and until) certificated, fully registered Storm Recovery Bonds (the “Definitive Storm Recovery Bonds”) have been issued to the Holders pursuant to Section 2.13 or pursuant to the Series Supplement relating thereto:

(i)           the provisions of this Section 2.11 shall be in full force and effect;

(ii)          the Issuer, the Servicer, the Paying Agent, the Storm Recovery Bond Registrar and the Indenture Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Storm Recovery Bonds and the giving of instructions or directions hereunder) as the authorized representative of the Holders;

(iii)         to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control;

(iv)        the rights of Holders shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by applicable law and agreements between such Holders and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Letter of Representations, unless and until Definitive Storm Recovery Bonds are issued pursuant to Section 2.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal of and interest on the Book-Entry Storm Recovery Bonds to such Clearing Agency Participants; and

(v)         whenever this Indenture requires or permits actions to be taken based upon instruction or directions of the Holders evidencing a specified percentage of the Outstanding Amount of Storm Recovery Bonds, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Holders and/or the Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Storm Recovery Bonds and has delivered such instructions to a Responsible Officer of the Indenture Trustee.

SECTION 2.12.        Notices to Clearing Agency. Unless and until Definitive Storm Recovery Bonds shall have been issued to Holders pursuant to Section 2.13, whenever notice, payment or other communications to the holders of Book-Entry Storm Recovery Bonds is required under this Indenture, the Indenture Trustee, the Servicer and the Paying Agent, as applicable, shall make all such payments to, and give all such notices and communications specified herein, to the Clearing Agency.

SECTION 2.13.        Definitive Storm Recovery Bonds. If (a) (i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under any Letter of Representations and (ii) the Issuer is unable to locate a qualified successor Clearing Agency, (b) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (c) after the occurrence of an Event of Default hereunder, Holders holding a majority of the Outstanding Amount of Storm Recovery Bonds maintained as Book-Entry Storm Recovery Bonds advise the Indenture Trustee, the Issuer and the Clearing Agency (through the Clearing Agency Participants) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Holders, the Issuer shall notify the Clearing Agency, the Indenture Trustee and all such Holders in writing of the occurrence of any such event and of the availability of Definitive Storm Recovery Bonds to the Holders requesting the same. Upon surrender to the Indenture Trustee of the Global Storm Recovery Bonds by the Clearing Agency accompanied by registration instructions from such Clearing Agency for registration, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver, Definitive Storm Recovery Bonds in accordance with the instructions of the Clearing Agency. None of the Issuer, the Storm Recovery Bond Registrar, the Paying Agent or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. Upon the issuance of Definitive Storm Recovery Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Storm Recovery Bonds as Holders hereunder without need for any consent or acknowledgement from the Holders.

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Definitive Storm Recovery Bonds will be transferable and exchangeable at the offices of the Storm Recovery Bond Registrar.

SECTION 2.14.       CUSIP Number. The Issuer in issuing any Storm Recovery Bonds may use a “CUSIP” number and, if so used, the Indenture Trustee shall use the CUSIP number provided to it by the Issuer in any notices to the Holders thereof as a convenience to such Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Storm Recovery Bonds and that reliance may be placed only on the other identification numbers printed on the Storm Recovery Bonds. The Issuer shall promptly notify the Indenture Trustee in writing of any change in the CUSIP number with respect to any Storm Recovery Bond.

SECTION 2.15.        Letter of Representations. The Issuer shall comply with the terms of each Letter of Representations applicable to the Issuer.

SECTION 2.16.       Tax Treatment. The Issuer and the Indenture Trustee, by entering into this Indenture, and the Holders and any Persons holding a beneficial interest in any Storm Recovery Bond, by acquiring any Storm Recovery Bond or interest therein, (a) express their intention that, solely for the purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purposes of state, local and other taxes, the Storm Recovery Bonds qualify under applicable tax law as indebtedness of the Member secured by the Trust Estate and (b) solely for the purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Storm Recovery Bonds are outstanding, agree to treat the Storm Recovery Bonds as indebtedness of the Member secured by the Trust Estate unless otherwise required by appropriate taxing authorities.

SECTION 2.17.        State Pledge and Louisiana Commission Pledge. Each Storm Recovery Bond shall state that the Securitization Act provides that the State of Louisiana pledges “to and agrees with bondholders, the owners of storm recovery property, and other financing parties that the state will not:

(1) Alter the provisions of this Part [the Securitization Act] which authorize the commission to create a contract right by the issuance of a financing order, to create storm recovery property, and to make the storm recovery charges imposed by a financing order irrevocable, binding, and nonbypassable charges;

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(2) Take or permit any action that impairs or would impair the value of the storm recovery property; or

(3) Except as allowed under this Section [Section 1234 the Securitization Act] and except for adjustments under any true-up mechanism established by the commission, reduce, alter, or impair storm recovery charges that are to be imposed, collected, and remitted for the benefit of the bondholders and other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related storm recovery bonds have been paid and performed in full. Nothing in this Paragraph shall preclude limitation or alteration if and when full compensation is made by law for the full protection of the storm recovery charges collected pursuant to a financing order and full protection of the holders of storm recovery bonds and any assignee or financing party.”

In addition, each Storm Recovery Bond shall state that the Financing Order provides that the Louisiana Commission “covenants, pledges and agrees it thereafter shall not amend, modify, or terminate th[e] Financing Order by any subsequent action, or reduce, impair, postpone, terminate, or otherwise adjust the storm recovery charges approved in th[e] Financing Order, or in any way reduce or impair the value of the storm recovery property created by th[e] Financing Order, except as may be contemplated by a refinancing authorized in strict accordance with the Securitization Act by a subsequent order of the Commission or by the periodic true up adjustments authorized by th[e] Financing Order, until the indefeasible payment in full of the storm recovery bonds and the related financing costs.”

The Issuer hereby acknowledges that the purchase of any Storm Recovery Bond by a Holder or the purchase of any beneficial interest in a Storm Recovery Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of Louisiana and the Louisiana Commission.

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SECTION 2.18.        Security Interests. The Issuer hereby makes the following representations and warranties. Other than the security interests granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, granted, sold, conveyed or otherwise assigned any interests or security interests in the Trust Estate and no security agreement, financing statement or equivalent security or Lien instrument listing the Issuer as debtor covering all or any part of the Trust Estate is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Holders in connection with this Indenture. This Indenture constitutes a valid and continuing Lien on, and first priority perfected security interest in, the Trust Estate in favor of the Indenture Trustee on behalf of the Holders, which Lien and security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing. With respect to the Trust Estate, this Indenture, together with the Series Supplement, creates a valid and continuing first priority perfected security interest (as defined in the UCC) in the Trust Estate, which security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing. The Issuer has good and marketable title to the Trust Estate free and clear of any Lien of any Person (except for any Lien created by the Issuer under the Basic Documents in favor of the Holders and in accordance with Section 1231 of the Securitization Act). The Issuer has taken, or caused the Servicer to take, all action necessary to perfect the security interest in the Trust Estate granted to the Indenture Trustee, for the benefit of the Holders. The Issuer has filed (or has caused the Servicer to file) all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Trust Estate granted to the Indenture Trustee. The Issuer has not authorized the filing of and is not aware, after due inquiry, of any financing statements against the Issuer that include a description of the Trust Estate other than those filed in favor of the Indenture Trustee. The Issuer is not aware of any judgment or tax lien filings against the Issuer. The Collection Account (including all Subaccounts thereof other than the Capital Subaccount) constitutes a “securities account” within the meaning of the UCC and the Capital Subaccount constitutes a “deposit account” within the meaning of the UCC. The Issuer has taken all steps necessary to cause the Securities Intermediary of each such securities account to identify in its records the Indenture Trustee as the Person having a security entitlement against the Securities Intermediary in such securities account, no Collection Account is in the name of any Person other than the Indenture Trustee, and the Issuer has not consented to the Securities Intermediary of the Collection Account to comply with entitlement orders of any Person other than the Indenture Trustee. All of the Trust Estate constituting investment property has been and will have been credited to the Collection Account or a Subaccount thereof, and the Securities Intermediary for the Collection Account has agreed to treat all assets credited to the Collection Account (other than cash) as “financial assets” within the meaning of the UCC and cash will be allocated to the Capital Subaccount. Accordingly, the Indenture Trustee has a first priority perfected security interest in the Collection Account, all funds and financial assets on deposit therein, and all securities entitlements relating thereto. The representations and warranties set forth in this Section 2.18 shall survive the execution and delivery of this Indenture and the issuance of the Storm Recovery Bonds, shall be deemed re-made on each date on which any funds in the Collection Account are distributed to the Issuer as provided in Section 8.04 or otherwise released from the Lien of this Indenture and may not be waived by any party hereto except pursuant to a supplemental indenture executed in accordance with Article IX and as to which the Rating Agency Condition has been satisfied.

ARTICLE III

Covenants

SECTION 3.01.        Payment of Principal, Premium, if any, and Interest. The principal of and premium, if any, and interest on the Storm Recovery Bonds shall be duly and punctually paid by the Issuer, or the Servicer on behalf of the Issuer, in accordance with the terms of the Storm Recovery Bonds and this Indenture and the Series Supplement; provided, that, except on a Final Maturity Date of a tranche or upon the acceleration of the Storm Recovery Bonds following the occurrence of an Event of Default, the Issuer shall only be obligated to pay the principal of such Storm Recovery Bonds on each Payment Date therefor to the extent moneys are available for such payment pursuant to Section 8.02. Amounts properly withheld under the Code, the Treasury regulations promulgated thereunder or other tax laws by any Person from a payment to any Holder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.

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SECTION 3.02.        Maintenance of Office or Agency. The Issuer shall initially maintain in Pineville, Louisiana an office or agency where Storm Recovery Bonds may be surrendered for registration of transfer or exchange. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes, and the office of the Indenture Trustee at the BNY Mellon Trust Company, N.A., Corporate Trust, 2001 Bryan Street, 10th Floor, Dallas Texas 75201, Attn: Transfer Exchange – Cleco Power Office shall serve as the offices provided above in this Section 3.02. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders may be made at the office of the Indenture Trustee located at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders.

SECTION 3.03.        Money for Payments To Be Held in Trust. As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Storm Recovery Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(e) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments with respect to any Storm Recovery Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and Section 8.02.

Each Paying Agent shall meet the eligibility criteria set forth for any Indenture Trustee under Section 6.11. The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:

(a)          hold all sums held by it for the payment of amounts due with respect to the Storm Recovery Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

(b)         give the Indenture Trustee, unless the Indenture Trustee is the Paying Agent, the Louisiana Commission and the Rating Agencies written notice of any Default by the Issuer of which it has actual knowledge in the making of any payment required to be made with respect to the Storm Recovery Bonds;

(c)         at any time during the continuance of any such Default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;

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(d)         immediately, with notice to the Rating Agencies, resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Storm Recovery Bonds if at any time the Paying Agent determines that it has ceased to meet the standards required to be met by a Paying Agent at the time of such determination; and

(e)         comply with all requirements of the Code, the Treasury regulations promulgated thereunder and other tax laws with respect to the withholding from any payments made by it on any Storm Recovery Bonds of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Subject to applicable laws with respect to escheatment of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Storm Recovery Bond and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer upon receipt of an Issuer Request; and, subject to Section 10.14, the Holder of such Storm Recovery Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the written direction and expense of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).

SECTION 3.04.        Existence. The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Louisiana (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the other Basic Documents, the Storm Recovery Bonds, the Trust Estate and each other instrument or agreement referenced herein or therein.

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SECTION 3.05.        Protection of Trust Estate. The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all filings with the Louisiana Filing Officer pursuant to the Financing Order or to the Securitization Act and all financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable, to:

(a)           maintain or preserve the Lien (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof;

(b)           perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;

(c)           enforce any of the Trust Estate;

(d)           preserve and defend title to the Trust Estate and the rights of the Indenture Trustee and the Holders in the Trust Estate against the Claims of all Persons, including a challenge by any party to the validity or enforceability of the Financing Order, the Storm Recovery Property or any Proceeding relating thereto and institute any action or proceeding necessary to compel performance by the Louisiana Commission or the State of Louisiana of any of its obligations or duties under the Securitization Act, the State Pledge, the Louisiana Commission Pledge, or the Financing Order, as the case may be; and

(e)           pay any and all taxes levied or assessed upon all or any part of the Trust Estate.

The Indenture Trustee is specifically permitted and authorized, but not required to file financing statements covering the Trust Estate, including financing statements that describe the Trust Estate as “all assets” or “all personal property” of the Issuer; provided, however, that such authorization shall not be deemed to be an obligation and it being understood that the Indenture Trustee shall not be responsible for filing any such financing statement unless directed to do so in accordance with the provisions of this Section 3.05 and shall have no obligation or any duty to prepare, authorize, execute or file such documents.

SECTION 3.06.        Opinions as to Trust Estate.

(a)           Not later than March 31 of each calendar year beginning with March 31, 2023, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents, including the execution and filing of such filings (including financing statements and continuation statements) with the Louisiana Filing Officer pursuant to the Securitization Act and the Financing Order, as is necessary to maintain the Lien and the perfected security interest created by this Indenture and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to maintain the Lien. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents including the execution and filing of any filings of financing statements and continuation statements with the Louisiana Filing Officer that will, in the opinion of such counsel, be required within the 12-month period following the date of such opinion to maintain the Lien and the perfected security interest created by this Indenture.

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(b)           Prior to the effectiveness of any amendment to the Sale Agreement or the Servicing Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either (i) stating that, in the opinion of such counsel, all filings, including UCC financing statements and other filings with the Louisiana Filing Officer pursuant to the Securitization Act or the applicable Financing Order have been executed and filed that are necessary fully to preserve and protect the Lien and the perfected security interest created by this Indenture, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect the Lien.

SECTION 3.07.        Performance of Obligations; Servicing; SEC Filings.

(a)           The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Trust Estate and (ii) shall not take any action and shall use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person’s covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly provided in this Indenture, the Series Supplement, the Sale Agreement, the Servicing Agreement, or such other instrument or agreement.

(b)           The Issuer may contract with other Persons selected with due care to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee herein or in an Officer’s Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer to assist the Issuer in performing its duties under this Indenture.

(c)           The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Series Supplement, the other Basic Documents and the instruments and agreements included in the Trust Estate, including filing or causing to be filed all filings with the Louisiana Filing Officer pursuant to the Securitization Act or the Financing Order, all UCC financing statements and all continuation statements required to be filed by it by the terms of this Indenture, the Series Supplement, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein.

(d)           If the Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Issuer shall promptly give written notice thereof to the Indenture Trustee, the Louisiana Commission and the Rating Agencies and shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect to such Servicer Default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the Storm Recovery Property or the Storm Recovery Charges, the Issuer shall take all reasonable steps available to it to remedy such failure.

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(e)           As promptly as possible after the giving of notice of termination to the Servicer and the Rating Agencies of the Servicer’s rights and powers pursuant to Section 7.01 of the Servicing Agreement, the Indenture Trustee shall, at the written direction either (a) of the Holders evidencing a majority of the Outstanding Amount of the Storm Recovery Bonds, or (b) of the Louisiana Commission, appoint a successor Servicer (the “Successor Servicer”) with the Issuer’s prior written consent thereto (which shall not be unreasonably withheld), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer. A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement and the Financing Order relating to a Successor Servicer. If, within thirty (30) days after the delivery of the notice referred to above, a new Servicer shall not have been appointed, the Indenture Trustee may, at the expense of the Issuer, petition the Louisiana Commission or a court of competent jurisdiction to appoint a Successor Servicer. In connection with any such appointment, Cleco Power may make such arrangements for the compensation of such Successor Servicer as it and such successor shall agree, subject to the limitations set forth in Section 6.07 and Section 8.12 of the Servicing Agreement and in the Financing Order.

(f)            Upon any termination of the Servicer’s rights and powers pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify the Issuer, the Louisiana Commission, the Holders and the Rating Agencies. As soon as a Successor Servicer is appointed, the Indenture Trustee shall notify the Issuer, the Louisiana Commission, the Holders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.

(g)           The Issuer shall (or shall cause Cleco Power to) post on its website (which for this purpose may be the website of any direct or indirect parent company of the Issuer) and, to the extent consistent with the Issuer’s and Cleco Power’s obligations under applicable law, file with or furnish to the SEC in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act, the following information (other than any such information filed with the SEC and publicly available to investors unless the Issuer specifically requests such items to be posted) with respect to the Outstanding Storm Recovery Bonds, in each case to the extent such information is reasonably available to the Issuer:

(i)            a statement reporting the balances in the Collection Account and in each Subaccount of the Collection Account as of all Payment Dates (to be included on the next Form 10-D filed) and as of the end of each year (to be included on the next Form 10-K filed);

(ii)           the Semi-Annual Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K, or successor forms thereto);

(iii)          the Monthly Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement;

(iv)          the text (or a link to the website where a reader can find the text) of each filing of a True-Up Adjustment and the results of each such filing;

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(v)           any change in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies;

(vi)          material legislative enactment or regulatory order or rule directly relevant to the Outstanding Storm Recovery Bonds (to be filed or furnished in a Form 8-K); and

(vii)         any reports and other information that the Issuer is required to file with the SEC under the Exchange Act, including but not limited to periodic and current reports related to the Storm Recovery Bonds consistent with the disclosure and reporting regime established in Regulation AB.

Notwithstanding the foregoing, nothing herein shall preclude the Issuer from voluntarily suspending or terminating its filing obligations as Issuer with the SEC to the extent permitted by applicable law. Any such reports or information delivered to the Indenture Trustee for purposes of this Section 3.07(g) is for informational purposes only, and the Indenture Trustee’s receipt of such reports or information shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Indenture Trustee is entitled to conclusively rely on an Officer’s Certificate).

(h)           The Issuer shall direct the Indenture Trustee to post on the Indenture Trustee’s website for investors (based solely on information set forth in the Semi-Annual Servicer’s Certificate) with respect to the Outstanding Storm Recovery Bonds, to the extent such information is set forth in the Semi-Annual Servicer’s Certificate, a statement showing the balance of Outstanding Storm Recovery Bonds that reflects the actual payments made on the Storm Recovery Bonds during the applicable period.

The address of the Indenture Trustee’s website for investors is https://gctinvestorreporting.bnymellon.com. The Indenture Trustee shall immediately notify the Issuer, the Louisiana Commission, the Holders and the Rating Agencies of any change to the address of the website for investors.

(i)            The Issuer shall make all filings required under the Financing Order relating to the transfer of the ownership or security interest in the Storm Recovery Property other than those required to be made by the Seller or the Servicer pursuant to the Basic Documents.

SECTION 3.08.        Certain Negative Covenants. So long as Storm Recovery Bonds are Outstanding, the Issuer shall not:

(a)           except as expressly permitted by this Indenture and the other Basic Documents, or in connection with the issuance of Additional Series, sell, transfer, convey, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Trust Estate, unless in accordance with Article V;

(b)           claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Storm Recovery Bonds (other than amounts properly withheld from such payments under the Code, the Treasury regulations promulgated thereunder or other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate;

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(c)           terminate its existence or dissolve or liquidate in whole or in part, except in a transaction permitted by Section 3.10;

(d)           (i) permit the validity or effectiveness of this Indenture or the other Basic Documents to be impaired, or permit the Lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Storm Recovery Bonds under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien (other than the Lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due) or (iii) permit the Lien of this Indenture not to constitute a valid first priority perfected security interest in the Trust Estate;

(e)           elect to be classified as an association taxable as a corporation for U.S. federal income tax purposes or otherwise take any action, file any tax return or make any election inconsistent with the treatment of the Issuer, for U.S. federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the sole owner of the Issuer;

(f)            change its name, identity or structure or the location of its chief executive office or state of formation, unless at least ten (10) Business Days prior to the effective date of any such change the Issuer delivers to the Indenture Trustee (with copies to the Rating Agencies) such documents, instruments or agreements, executed by the Issuer, as are necessary to reflect such change and to continue the perfection of the security interest of this Indenture;

(g)           take any action that is subject to a Rating Agency Condition without satisfying the Rating Agency Condition;

(h)           except to the extent permitted by applicable law, voluntarily suspend or terminate its filing obligations with the SEC as described in Section 3.07(g); or

(i)            issue any debt obligations other than storm recovery bonds permitted by this Indenture.

SECTION 3.09.        Annual Statement as to Compliance. The Issuer will deliver to the Indenture Trustee, the Louisiana Commission and the Rating Agencies not later than March 31 of each year (commencing with March 31, 2023), an Officer’s Certificate stating, as to the Responsible Officer signing such Officer’s Certificate, that:

(a)           a review of the activities of the Issuer during the preceding twelve (12) months ended December 31 (or, in the case of the first such Officer’s Certificate, since the date hereof) and of performance under this Indenture has been made; and

(b)           to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has in all material respects complied with all conditions and covenants under this Indenture throughout such 12-month period (or such shorter period in the case of the first such Officer’s Certificate), or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Responsible Officer and the nature and status thereof.

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SECTION 3.10.        Issuer May Consolidate, etc., Only on Certain Terms.

(a)           The Issuer shall not consolidate or merge with or into any other Person, unless:

(i)            the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall (A) be a Person organized and existing under the laws of the United States of America or any State, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture and the Series Supplement on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, and (C) assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, Servicing Agreement and the other Basic Document to which the Issuer is a party;

(ii)           immediately after giving effect to such merger or consolidation, no Default, Event of Default or Servicer Default shall have occurred and be continuing;

(iii)          the Rating Agency Condition shall have been satisfied with respect to such merger or consolidation;

(iv)          the Issuer shall have delivered to Cleco Power, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to Cleco Power and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph)) to the effect that the consolidation or merger will not result in a material adverse U.S. federal or state income tax consequence to the Issuer, Cleco Power, the Indenture Trustee or the then-existing Holders;

(v)           any action as is necessary to maintain the Lien and the perfected security interest in the Trust Estate created by this Indenture shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

(vi)          the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such consolidation or merger and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(a) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

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(b)           Except as specifically provided herein, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the Trust Estate, to any Person, unless:

(i)            the Person that acquires the properties and assets of the Issuer, the conveyance or transfer of which is hereby restricted, (A) shall be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Holders, (D) unless otherwise provided in the supplemental indenture referred to in Section 3.10(b)(i)(B), expressly agrees to indemnify, defend and hold harmless the Issuer and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture, the Series Supplement and the Storm Recovery Bonds, (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the SEC (and any other appropriate Person) required by the Exchange Act in connection with the Trust Estate and the Storm Recovery Bonds and (F) if such sale, conveyance, exchange, transfer or disposal relates to the Issuer’s rights and obligations under the Sale Agreement or the Servicing Agreement, assumes all obligations and succeeds to all rights of the Issuer under the Sale Agreement and the Servicing Agreement, as applicable;

(ii)           immediately after giving effect to such transaction, no Default, Event of Default or Servicer Default shall have occurred and be continuing;

(iii)          the Rating Agency Condition shall have been satisfied with respect to such transaction;

(iv)          the Issuer shall have delivered to Cleco Power, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to Cleco Power, and which may be based on a ruling from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph)) to the effect that the disposition will not result in a material adverse U.S. federal or state income tax consequence to the Issuer, Cleco Power, the Indenture Trustee or the then-existing Holders;

(v)           any action as is necessary to maintain the Lien and the perfected security interest in the Trust Estate created by this Indenture shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

(vi)          the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such sale, conveyance, exchange, transfer or other disposition and such supplemental indenture comply with this Indenture and that all conditions precedent herein provided for in this Section 3.10(b) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

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SECTION 3.11.        Successor or Transferee.

(a)           Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.

(b)           Except as set forth in Section 6.07, upon a sale, conveyance, exchange, transfer or other disposition of all the assets and properties of the Issuer in accordance with Section 3.10(b), the Issuer will be released from every covenant and agreement of this Indenture and the other Basic Documents to be observed or performed on the part of the Issuer with respect to the Storm Recovery Bonds and the Storm Recovery Property immediately following the consummation of such acquisition upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Issuer is to be so released.

SECTION 3.12.        No Other Business. The Issuer shall not engage in any business other than financing, purchasing, owning, administering, managing and servicing the Storm Recovery Property and the assets in the Trust Estate and the issuance of the Storm Recovery Bonds in the manner contemplated by the Financing Order and this Indenture and the other Basic Documents and activities incidental thereto.

SECTION 3.13.        No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Storm Recovery Bonds permitted by this Indenture and any other indebtedness expressly permitted by or arising under the Basic Documents.

SECTION 3.14.        Servicer’s Obligations. The Issuer shall enforce the Servicer’s compliance with and performance of all of the Servicer’s material obligations under the Servicing Agreement.

SECTION 3.15.        Guarantees, Loans, Advances and Other Liabilities. Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this Indenture, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

SECTION 3.16.        Capital Expenditures. Other than the purchase of Storm Recovery Property from the Seller under the Sale Agreement, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

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SECTION 3.17.        Restricted Payments. Except as provided in Section 8.04(c), the Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security or (c) set aside or otherwise segregate any amounts for any such purpose; provided, however, that, if no Event of Default shall have occurred and be continuing or would be caused thereby, the Issuer may make, or cause to be made, any such distributions to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer using funds distributed to the Issuer pursuant to Section 8.02(e)(x) to the extent that such distributions would not cause the balance of the Capital Subaccount to decline below the Required Capital Amount. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.

SECTION 3.18.        Notice of Events of Default. The Issuer agrees to give the Indenture Trustee, the Louisiana Commission and the Rating Agencies prompt written notice in the form of an Officer’s Certificate of each Default or Event of Default hereunder as provided in Section 5.01, and upon the actual knowledge of a Responsible Officer of the Issuer thereof each default on the part of the Seller or the Servicer of its obligations under the Sale Agreement or the Servicing Agreement, respectively.

SECTION 3.19.        Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture and to maintain the first priority perfected security interest of the Indenture Trustee in the Trust Estate.

SECTION 3.20.        Inspection. The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee and any representative of the Louisiana Commission, during the Issuer’s normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited annually by Independent registered public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees and Independent registered public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee and the Louisiana Commission shall hold and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by applicable law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Notwithstanding anything herein to the contrary, the preceding sentence shall not be construed to prohibit (a) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuer, provided such parties are rightfully in possession of such information, (b) disclosure of any and all information (i) if required to do so by any applicable statute, law, rule or regulation, (ii) pursuant to any subpoena, civil investigative demand or similar demand or request of any court or regulatory authority exercising its proper jurisdiction, (iii) in any preliminary or final prospectus, registration statement or other document a copy of which has been filed with the SEC, (iv) to any affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same, provided that such parties agree to be bound by the confidentiality provisions contained in this Section 3.20, or (v) to any Rating Agency or (c) any other disclosure authorized by the Issuer.

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SECTION 3.21.        Economic Sanctions.

(a)           The Issuer covenants and represents that neither it nor any of its subsidiaries, managers, officers or affiliates they control are the target or subject of any sanctions enforced by the U.S. Government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively “Sanctions”).

(b)           The Issuer covenants and represents that neither it nor any of its subsidiaries, managers, officers or affiliates they control will directly or indirectly use any payments made pursuant to this Indenture or any of the other Basic Documents, (i) to fund or facilitate any activities of or business with any person who, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate any activities of or business with any country or territory that is the target or subject of Sanctions, or (iii) in any other manner that will result in a violation of Sanctions by any person.

SECTION 3.22.        Additional Storm Recovery Bonds.

(a)           Following the issuance by the Louisiana Commission of any Subsequent Financing Order or pursuant to remaining authority under the Financing Order, the Issuer may, in its sole discretion but subject to the terms contained in this Section 3.22, acquire additional and separate storm recovery bond collateral and issue additional storm recovery bonds under any such subsequent indenture that are backed by such separate additional storm recovery bond collateral. Any additional storm recovery bonds may include terms and provisions unique to such additional storm recovery bonds.

(b)           In addition to all applicable requirements set forth in any subsequent indenture for any additional storm recovery bonds, the following conditions must be satisfied in connection with any issuance of additional storm recovery bonds:

(i) Cleco Power has existing authority under the Financing Order to issue additional storm recovery bonds or Cleco Power requests and receives a Subsequent Financing Order from the Louisiana Commission to recover additional storm recovery costs through the issuance of additional storm recovery bonds;

(ii) Cleco Power must serve as initial servicer and administrator for such series of the additional storm recovery bonds and that the servicer and the administrator cannot be replaced without the requisite approval of the holders of all Storm Recovery Bonds then-Outstanding;

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(iii) satisfaction of the Rating Agency Condition;

(iv) each series of the additional storm recovery bonds (A) has recourse only to the storm recovery property created by the Financing Order or any Subsequent Financing Order, as the case may be, and funds on deposit in the trust accounts held by the trustee under the indenture with respect to such series of the additional storm recovery bonds, (B) is nonrecourse to the Storm Recovery Property securing the Storm Recovery Bonds, and (C) does not constitute a claim against the Issuer if revenue from the storm recovery charges and funds on deposit in the trust accounts with respect to such series of the additional storm recovery bonds are insufficient to pay such other series in full;

(v) the Issuer has provided to the Indenture Trustee and the Rating Agencies then rating any series of the Issuer’s Outstanding Storm Recovery Bonds an opinion of a nationally recognized law firm experienced in such matters to the effect that such issuance would not result in the Issuer’s substantive consolidation with Cleco Power and that there has been a true sale of the storm recovery property for such series of the additional storm recovery bonds, subject to the customary exceptions, qualifications and assumptions contained therein;

(vi) transaction documentation for the other series of the additional storm recovery bonds provides that the indenture trustee on behalf of holders of the storm recovery bonds of the other series will not file or join in filing of any bankruptcy petition against the Issuer;

(vii) if holders of such other series are deemed to have any interest in any of the Trust Estate dedicated to the Recovery Bonds, holders of such additional storm recovery bonds must agree that their interest in the recovery bond collateral dedicated to the additional storm recovery bonds is only a first priority perfected interest in the assets relating to the additional storm recovery bonds, as the case may be, in accordance with the related intercreditor agreement;

(viii) each series of additional storm recovery bonds will have its own bank accounts or trust accounts and funds for each series of additional storm recovery bonds shall be remitted in accordance with the related servicing agreement and related intercreditor agreement;

(ix) no series of additional storm recovery bonds will be issued under this Indenture; and

(x) each series of the additional storm recovery bonds will bear its own indenture trustee fees, servicer fees and administration fees.

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SECTION 3.23.        Sale Agreement, Servicing Agreement, and Administration Agreement Covenants.

(a)           The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement, the Administration Agreement and the other Basic Documents, and to compel or secure the performance and observance by the Seller, the Servicer and the Administrator of each of their respective obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement, the Administration Agreement and the other Basic Documents in accordance with the terms thereof. So long as no Event of Default occurs and is continuing, but subject to Section 3.23(f), the Issuer may exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement; provided, that such action shall not adversely affect the interests of the Holders in any material respect.

(b)           If an Event of Default occurs and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of the Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds of all tranches affected thereby or the Louisiana Commission, shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator and the Servicer, as the case may be, under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, the Administrator or the Servicer of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Servicing Agreement and the Administration Agreement, and any right of the Issuer to take such action shall be suspended.

(c)           Except as set forth in Section 3.23(d), the Administration Agreement, the Sale Agreement and the Servicing Agreement may be amended in accordance with the provisions thereof, so long as the Rating Agency Condition is satisfied in connection therewith, at any time and from time to time, without the consent of the Holders, but with the acknowledgement of the Indenture Trustee; provided, that the Indenture Trustee shall provide such consent upon receipt of an Officer’s Certificate evidencing satisfaction of such Rating Agency Condition, an Opinion of Counsel of external counsel of the Issuer evidencing that such amendment is in accordance with the provisions of such Basic Document and, if the amendment increases Ongoing Financing Costs, satisfaction of the Louisiana Commission Condition (as described in Section 9.03 hereof, or alternatively, if applicable, Section 13(b) of the Administration Agreement, Section 6.01(a)(ii) of the Sale Agreement or Section 8.12 of the Servicing Agreement).

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(d)           Except as set forth in Section 3.23(e), if the Issuer, the Seller, the Administrator, the Servicer or any other party to the respective agreement proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, the terms of the Sale Agreement, the Administration Agreement, or the Servicing Agreement, or waive timely performance or observance by the Seller, the Administrator, the Servicer or any other party under the Sale Agreement, the Administration Agreement, or the Servicing Agreement, in each case in such a way as would materially and adversely affect the interests of any Holder of Storm Recovery Bonds, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, waiver, supplement, termination or surrender and shall promptly notify the Indenture Trustee, the Paying Agent (if not the Indenture Trustee), the Storm Recovery Bond Registrar (if not the Indenture Trustee), the Louisiana Commission and the Holders in writing of the proposed amendment, modification, waiver, supplement, termination or surrender and whether the Rating Agency Condition has been satisfied with respect thereto (or, pursuant to an Issuer Request, the Indenture Trustee shall so notify the Holders on the Issuer’s behalf). The Indenture Trustee shall consent to such proposed amendment, modification, waiver, supplement, termination or surrender only if the Rating Agency Condition is satisfied and only with the (i) prior written consent of the Holders of a majority of the Outstanding Amount of Storm Recovery Bonds or tranche materially and adversely affected thereby and (ii) if such proposed amendment, modification, waiver, supplement, termination or surrender increases Ongoing Financing Costs, satisfaction of the Louisiana Commission Condition (as described in Section 9.03 hereof, or alternatively, if applicable, Section 13(b) of the Administration Agreement, Section 6.01(a)(ii) of the Sale Agreement or Section 8.12 of the Servicing Agreement). If any such amendment, modification, waiver, supplement, termination or surrender shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances.

(e)           If the Issuer or the Servicer proposes to amend, modify, waive, supplement, terminate or surrender, or to agree to any amendment, modification, waiver, supplement, termination or surrender of, the process for True-Up Adjustments, the Issuer shall notify the Indenture Trustee and the Holders and, when required, the Louisiana Commission in writing of such proposal (or, pursuant to an Issuer Request, the Indenture Trustee shall so notify the Holders on the Issuer’s behalf), and the Indenture Trustee shall consent thereto with the prior written consent of the Holders of a majority of the Outstanding Amount of Storm Recovery Bonds or tranche affected thereby and only (i) if the Rating Agency Condition has been satisfied with respect thereto and (ii) if such proposed amendment, modification, waiver, supplement, termination or surrender increases Ongoing Financing Costs, satisfaction of the Louisiana Commission Condition (as described in Section 9.03).

(f)            Promptly following a default by the Seller under the Sale Agreement or by the Administrator under the Administration Agreement , or the occurrence of a Servicer Default under the Servicing Agreement, and at the Issuer’s expense, the Issuer agrees to take all such lawful actions as the Indenture Trustee may request to compel or secure the performance and observance by each of the Seller, the Administrator or the Servicer, of their obligations under and in accordance with the Sale Agreement, the Servicing Agreement and the Administration Agreement, as the case may be, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with such agreements to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of any default by the Seller, the Administrator or the Servicer, respectively, thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance of their obligations under the Sale Agreement, the Servicing Agreement or the Administration Agreement.

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SECTION 3.24.        Taxes. So long as any of the Storm Recovery Bonds are Outstanding, the Issuer shall pay all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Trust Estate; provided, that no such tax need be paid if the Issuer is contesting the same in good faith by appropriate Proceedings promptly instituted and diligently conducted and if the Issuer has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

SECTION 3.25.        Notices from Holders. The Issuer shall promptly transmit any notice received by it from the Holders to the Indenture Trustee.

SECTION 3.26.        Volcker Rule. The Issuer is structured so as not to be a “covered fund” under the regulations adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the “Volcker Rule.”

ARTICLE IV

Satisfaction and Discharge; Defeasance

SECTION 4.01.        Satisfaction and Discharge of Indenture; Defeasance.

(a)           This Indenture shall cease to be of further effect with respect to the Storm Recovery Bonds, and the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Storm Recovery Bonds, when:

(i)            Either:

(A)           all Storm Recovery Bonds theretofore authenticated and delivered (other than (1) Storm Recovery Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (2) Storm Recovery Bonds for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the last paragraph of Section 3.03) have been delivered to the Indenture Trustee for cancellation; or

(B)            either (1) the Scheduled Final Payment Date has occurred with respect to all Storm Recovery Bonds not theretofore delivered to the Indenture Trustee for cancellation or (2) the Storm Recovery Bonds will be due and payable on their respective Scheduled Final Payment Dates within one year, and, in any such case, the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not theretofore delivered to the Indenture Trustee for cancellation, Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due;

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(ii)           the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and

(iii)          pursuant to Section 10.04, the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer and (if required by the Trust Indenture Act or the Indenture Trustee) an Independent Certificate from a firm of registered public accountants, each meeting the applicable requirements of Section 10.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Storm Recovery Bonds have been complied with.

(b)           Subject to Section 4.01(c) and Section 4.02, the Issuer at any time may terminate (i) all its obligations under this Indenture with respect to the Storm Recovery Bonds (“Legal Defeasance Option”) or (ii) its obligations under Section 3.04, Section 3.05, Section 3.06, Section 3.07, Section 3.08, Section 3.09, Section 3.10, Section 3.12, Section 3.13, Section 3.14, Section 3.15, Section 3.16, Section 3.17, Section 3.18 and Section 3.19 and the operation of Section 5.01(c) with respect to the Storm Recovery Bonds (“Covenant Defeasance Option”). The Issuer may exercise the Legal Defeasance Option with respect to the Storm Recovery Bonds notwithstanding its prior exercise of the Covenant Defeasance Option.

If the Issuer exercises the Legal Defeasance Option, the maturity of the Storm Recovery Bonds may not be accelerated because of an Event of Default. If the Issuer exercises the Covenant Defeasance Option, the maturity of the Storm Recovery Bonds may not be accelerated because of an Event of Default specified in Section 5.01(c).

Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option of the Storm Recovery Bonds, the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the obligations that are terminated pursuant to such exercise.

(c)           Notwithstanding Section 4.01(a) and Section 4.01(b), (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Storm Recovery Bonds, (iii) rights of Holders to receive payments of principal, premium, if any, and interest, (iv) Section 4.03 and Section 4.04, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Indenture Trustee payable to all or any of them, each shall survive until the Storm Recovery Bonds as to which this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or Section 4.01(b). Thereafter the obligations, rights, indemnities and immunities in Section 6.07 and Section 4.04 shall survive.

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SECTION 4.02.        Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Storm Recovery Bonds only if:

(a)           the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due;

(b)           the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment plus any deposited cash will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds;

(c)           in the case of the Legal Defeasance Option, ninety-five (95) days after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(e) or Section 5.01(f) occurs that is continuing at the end of the period;

(d)           no Default has occurred and is continuing on the day of such deposit and after giving effect thereto;

(e)           in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;

(f)            in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

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(g)           the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the Legal Defeasance Option or the Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV;

(h)           the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that: (i) in a case under the Bankruptcy Code in which Cleco Power (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of Cleco Power (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event Cleco Power (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of Cleco Power (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of Cleco Power or such other Affiliate; and

(i)            the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option.

Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Storm Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

SECTION 4.03.        Application of Trust Money. All moneys or U.S. Government Obligations deposited with the Indenture Trustee pursuant to Section 4.01 or Section 4.02 shall be held in trust and applied by it, in accordance with the provisions of the Storm Recovery Bonds and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Storm Recovery Bonds for the payment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing Agreement or required by applicable law. Notwithstanding anything to the contrary in this Article IV, the Indenture Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request any moneys or U.S. Government Obligations held by it pursuant to Section 4.02 that, in the opinion of a nationally recognized firm of Independent registered public accountants expressed in a written certification thereof delivered to the Indenture Trustee (and not at the cost or expense of the Indenture Trustee), are in excess of the amount thereof that would be required to be deposited for the purpose for which such moneys or U.S. Government Obligations were deposited; provided, that any such payment shall be subject to the satisfaction of the Rating Agency Condition.

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SECTION 4.04.        Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture or the Covenant Defeasance Option or Legal Defeasance Option with respect to Storm Recovery Bonds, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture shall, upon written demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

ARTICLE V

Remedies

SECTION 5.01.        Events of Default. “Event of Default” means any one or more of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)           default in the payment of any interest on any Storm Recovery Bond when the same becomes due and payable (whether such failure to pay interest is caused by a shortfall in Storm Recovery Charges received or otherwise), and such default shall continue for a period of five (5) Business Days;

(b)           default in the payment of the then unpaid principal of any Storm Recovery Bond on the Final Maturity Date, or, if applicable, any tranche on the Final Maturity Date for such tranche;

(c)           default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than defaults specified in Section 5.01(a) or Section 5.01(b)), and such default shall continue or not be cured, for a period of thirty (30) days after the earlier of (i) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least twenty-five (25) percent of the Outstanding Amount of the Storm Recovery Bonds, a written notice specifying such default and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (ii) the date that the Issuer has actual knowledge of the default;

(d)           any representation or warranty of the Issuer made in this Indenture, the Series Supplement or in any certificate or other writing delivered pursuant hereto or the Series Supplement or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or otherwise cured, within thirty (30) days after the earlier of (i) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least twenty-five (25) percent of the Outstanding Amount of the Storm Recovery Bonds, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (ii) the date the Issuer has actual knowledge of the default;

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(e)           the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Trust Estate in an involuntary case or Proceeding under any applicable U.S. federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days;

(f)            the commencement by the Issuer of a voluntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case or Proceeding under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing; or

(g)           any act or failure to act by the State of Louisiana or any of its agencies (including the Louisiana Commission), officers or employees that violates the State Pledge or the Louisiana Commission Pledge, as the case may be, or is not in accordance with the State Pledge or the Louisiana Commission Pledge.

The Issuer shall deliver to a Responsible Officer of the Indenture Trustee and to the Rating Agencies, within five (5) days after a Responsible Officer of the Issuer has knowledge of the occurrence thereof, written notice in the form of an Officer’s Certificate of any event (i) that is an Event of Default under Section 5.01(a), Section 5.01(b), Section 5.01(f), or Section 5.01(g) or (ii) that with the giving of notice, the lapse of time, or both, would become an Event of Default under Section 5.01(c), Section 5.01(d) or Section 5.01(e), including, in each case, the status of such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

SECTION 5.02.        Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default under Section 5.01(g)) should occur and be continuing, then and in every such case the Indenture Trustee or the Holders representing a majority of the Outstanding Amount of the Storm Recovery Bonds may declare the Storm Recovery Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee and the Louisiana Commission if given by Holders), and upon any such declaration the unpaid principal amount of the Storm Recovery Bonds, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

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At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders representing a majority of the Outstanding Amount of the Storm Recovery Bonds, by written notice to the Issuer, the Louisiana Commission and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

(a)           the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:

(i)            all payments of principal of and premium, if any, and interest on all Storm Recovery Bonds due and owing at such time as if such Event of Default had not occurred and was not continuing and all other amounts that would then be due hereunder or upon the Storm Recovery Bonds if the Event of Default giving rise to such acceleration had not occurred and was not continuing; and

(ii)           all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses; provided, that, the Indenture Trustee shall not be obligated to pay or advance any sums hereunder from its own funds after an Event of Default, disbursements and advances of the Indenture Trustee and its agents and counsel; and

(b)           all Events of Default, other than the nonpayment of the principal of the Storm Recovery Bonds that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

No such rescission shall affect any subsequent Default or impair any right consequent thereto.

SECTION 5.03.        Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

(a)           If an Event of Default under Section 5.01(a) or Section 5.01(b) has occurred and is continuing, subject to Section 10.16, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and, subject to the limitations on recourse set forth herein, may enforce the same against the Issuer or other obligor upon the Storm Recovery Bonds and collect in the manner provided by applicable law out of the property of the Issuer or other obligor upon the Storm Recovery Bonds wherever situated the moneys payable, or the Trust Estate and the proceeds thereof, the whole amount then due and payable on the Storm Recovery Bonds for principal, premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the respective rate borne by the Storm Recovery Bonds or the applicable tranche and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.

(b)           If an Event of Default (other than an Event of Default under Section 5.01(g)) occurs and is continuing, the Indenture Trustee shall, as more particularly provided in Section 5.04, proceed to protect and enforce its rights and the rights of the Holders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture and the Series Supplement or by applicable law, including foreclosing or otherwise enforcing the Lien of the Trust Estate or applying to the Louisiana Commission or a court of competent jurisdiction for sequestration of revenues arising with respect to the Storm Recovery Property.

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(c)           If an Event of Default under Section 5.01(e) or Section 5.01(f) has occurred and is continuing, the Indenture Trustee, irrespective of whether the principal of any Storm Recovery Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in any Proceedings related to such Event of Default or otherwise:

(i)            to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Storm Recovery Bonds and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in such Proceedings;

(ii)           unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee in bankruptcy, a standby trustee or Person performing similar functions in any such Proceedings;

(iii)          to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and

(iv)          to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders allowed in any Proceeding relative to the Issuer, its creditors and its property;

and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.

(d)           Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Storm Recovery Bonds or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

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(e)           All rights of action and of asserting claims under this Indenture, or under any of the Storm Recovery Bonds, may be enforced by the Indenture Trustee without the possession of any of the Storm Recovery Bonds or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders.

SECTION 5.04.        Remedies; Priorities.

(a)           If an Event of Default (other than an Event of Default under Section 5.01(g)) shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):

(i)            institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Storm Recovery Bonds or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, and, subject to the limitations on recovery set forth herein, enforce any judgment obtained, and collect from the Issuer or any other obligor moneys adjudged due, upon the Storm Recovery Bonds;

(ii)           institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate;

(iii)          exercise any remedies of a secured party under the UCC, the Securitization Act or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders;

(iv)          at the written direction of the Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds, either sell all or a portion of the Trust Estate or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by applicable law, or elect that the Issuer maintain possession of all or a portion of the Trust Estate pursuant to Section 5.05 and continue to apply the Storm Recovery Charges as if there had been no declaration of acceleration; and

(v)           exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator or the Servicer under or in connection with, and pursuant to the terms of, the Sale Agreement, the Administration Agreement or the Servicing Agreement;

provided, however, that the Indenture Trustee may not sell or otherwise liquidate any portion of the Trust Estate following such an Event of Default, other than an Event of Default described in Section 5.01(a) or Section 5.01(b), unless (A) the Holders of 100 percent of the Outstanding Amount of the Storm Recovery Bonds consent thereto, (B) the proceeds of such sale or liquidation distributable to the Holders are sufficient to discharge in full all amounts then due and unpaid upon the Storm Recovery Bonds for principal, premium, if any, and interest after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth in Section 8.02(e) or (C) the Indenture Trustee determines that the Trust Estate will not continue to provide sufficient funds for all payments on the Storm Recovery Bonds as they would have become due if the Storm Recovery Bonds had not been declared due and payable, and the Indenture Trustee obtains the written consent of Holders of at least two-thirds (2/3) of the Outstanding Amount of the Storm Recovery Bonds. In determining such sufficiency or insufficiency with respect to clause (B) above and clause (C) above, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose, at Issuer’s expense.

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(b)           If an Event of Default under Section 5.01(g) shall have occurred and be continuing, the Indenture Trustee, for the benefit of the Holders, shall be entitled and empowered, to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge or the Louisiana Commission Pledge, as the case may be, and to collect any monetary damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree. Such remedy shall be the only remedy that the Indenture Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(g).

(c)           If the Indenture Trustee collects any money pursuant to this Article V, it shall pay out such money in accordance with the priorities set forth in Section 8.02(e).

SECTION 5.05.        Optional Preservation of the Trust Estate. If the Storm Recovery Bonds have been declared to be due and payable under Section 5.02 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of all or a portion of the Trust Estate. It is the desire of the parties hereto and the Holders that there be at all times sufficient funds for the payment of principal of and premium, if any, and interest on the Storm Recovery Bonds, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Trust Estate. In determining whether to maintain possession of the Trust Estate or sell or liquidate the same, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.

SECTION 5.06.        Limitation of Suits. No Holder of any Storm Recovery Bond shall have any right to institute any Proceeding, judicial or otherwise, to avail itself of any remedies provided in the Securitization Act or to avail itself of the right to foreclose on the Trust Estate or otherwise enforce the Lien and the security interest on the Trust Estate with respect to this Indenture and the Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a)           such Holder previously has given written notice to the Indenture Trustee of a continuing Event of Default;

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(b)           the Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;

(c)           such Holder or Holders have offered to the Indenture Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;

(d)           the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and

(e)           no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty (60)-day period by the Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds;

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two (2) or more groups of Holders, each representing less than a majority of the Outstanding Amount of the Storm Recovery Bonds, the Indenture Trustee in its sole discretion may file a petition with a court of competent jurisdiction to resolve such conflict or determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

SECTION 5.07.        Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Storm Recovery Bond shall have the right, which is absolute and unconditional, (a) to receive payment of (i) the interest, if any, on such Storm Recovery Bond on the due dates thereof expressed in such Storm Recovery Bond or in this Indenture or (ii) the unpaid principal, if any, of the Storm Recovery Bonds on the Final Maturity Date or Final Maturity Date for such tranche therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

SECTION 5.08.        Restoration of Rights and Remedies. If the Indenture Trustee or any Holder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Holder, then and in every such case the Issuer, the Indenture Trustee and the Holders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Holders shall continue as though no such Proceeding had been instituted.

SECTION 5.09.        Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by applicable law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

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SECTION 5.10.        Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee or any Holder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by applicable law to the Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be.

SECTION 5.11.        Control by Holders. The Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds (or, if less than all tranches are affected, the affected tranche) shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Storm Recovery Bonds of such tranche or tranches or exercising any trust or power conferred on the Indenture Trustee with respect to such tranche or tranches; provided, that:

(a)           such direction shall not be in conflict with any rule of applicable law or with this Indenture or the Series Supplement and shall not involve the Indenture Trustee in any personal liability or expense;

(b)           subject to other conditions specified in Section 5.04, any direction to the Indenture Trustee to sell or liquidate any of the Trust Estate shall be by the Holders representing 100 percent of the Outstanding Amount of the Storm Recovery Bonds;

(c)           if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant to Section 5.05, then any direction to the Indenture Trustee by Holders representing less than 100 percent of the Outstanding Amount of the Storm Recovery Bonds to sell or liquidate the Trust Estate or any portion thereof shall be of no force and effect; and

(d)           the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;

provided, however, that the Indenture Trustee’s duties shall be subject to Section 6.01, and the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Holders not consenting to such action. Furthermore and without limiting the foregoing, the Indenture Trustee shall not be required to take any action for which it reasonably believes that it will not be indemnified to its satisfaction against any cost, expense, loss or liabilities.

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SECTION 5.12.        Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Storm Recovery Bonds as provided in Section 5.02, the Holders representing a majority of the Outstanding Amount of the Storm Recovery Bonds, by written notice to the Indenture Trustee, may waive any past Default or Event of Default and its consequences except a Default (a) in payment of principal of or premium, if any, or interest on any of the Storm Recovery Bonds or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Storm Recovery Bond of all tranches affected. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

SECTION 5.13.        Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Storm Recovery Bond by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Holder, or group of Holders, in each case holding in the aggregate more than ten (10) percent of the Outstanding Amount of the Storm Recovery Bonds of a Series or (c) any suit instituted by any Holder for the enforcement of the payment of (i) interest on any Storm Recovery Bond on or after the due dates expressed in such Storm Recovery Bond and in this Indenture or (ii) the unpaid principal, if any, of any Storm Recovery Bond on or after the Final Maturity Date for the Storm Recovery Bonds or Final Maturity Date for such tranche therefor.

SECTION 5.14.        Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon or plead or, in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 5.15.        Action on Storm Recovery Bonds. The Indenture Trustee’s right to seek and recover judgment on the Storm Recovery Bonds or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Holders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate or any other assets of the Issuer.

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ARTICLE VI

The Indenture Trustee

SECTION 6.01.        Duties of Indenture Trustee.

(a)           If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b)           Except during the continuance of an Event of Default:

(i)            the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and

(ii)           in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c)           The Indenture Trustee may not be relieved from liability for its own negligent action, its own bad faith, its own negligent failure to act or its own willful misconduct, except that:

(i)            this Section 6.01(c) does not limit the effect of Section 6.01(b);

(ii)           the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and

(iii)          the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it hereunder.

(d)           Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to Section 6.01(a), Section 6.01(b) and Section 6.01(c).

(e)           The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.

(f)            Money held in trust by the Indenture Trustee need not be segregated from other funds held by the Indenture Trustee except to the extent required by applicable law or the terms of this Indenture, the Sale Agreement, the Servicing Agreement or the Administration Agreement.

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(g)           No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

(h)           Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the Trust Indenture Act.

(i)            In the event that the Indenture Trustee is also acting as Paying Agent or Storm Recovery Bond Registrar hereunder, the protections of this Article VI shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Storm Recovery Bond Registrar.

(j)            Except for the express duties of the Indenture Trustee with respect to the administrative functions set forth in the Basic Documents, the Indenture Trustee shall have no obligation to administer, service or collect the Storm Recovery Property or to maintain, monitor or otherwise supervise the administration, servicing or collection of the Storm Recovery Charges.

(k)           Under no circumstance shall the Indenture Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Storm Recovery Bonds or the Basic Documents. None of the provisions of this Indenture shall in any event require the Indenture Trustee to perform or be responsible for the performance of any of the Servicer’s obligations under the Basic Documents.

(l)            Commencing with March 15, 2023, on or before March 15th of each fiscal year ending December 31, so long as the Issuer is required to file Exchange Act reports, the Indenture Trustee shall (i) deliver to the Issuer a report (in form and substance reasonably satisfactory to the Issuer and addressed to the Issuer and signed by an authorized officer of the Indenture Trustee) regarding the Indenture Trustee’s assessment of compliance, during the preceding fiscal year ended December 31, with each of the applicable servicing criteria specified on Exhibit C as required under Rule 13a-18 and Rule 15d-18 under the Exchange Act and Item 1122 of Regulation AB and (ii) deliver to the Issuer a report of an Independent registered public accounting firm reasonably acceptable to the Issuer that attests to and reports on, in accordance with Rule 1-02(a)(3) and Rule 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act, the assessment of compliance made by the Indenture Trustee and delivered pursuant to Section 6.01(l)(i).

SECTION 6.02.        Rights of Indenture Trustee.

(a)           The Indenture Trustee may conclusively rely and shall be fully protected in relying on any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in such document.

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(b)           Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel, which counsel may be an employee of or counsel to the Issuer or the Seller and which shall be reasonably satisfactory to the Indenture Trustee, or, in the Indenture Trustee’s sole judgment, external counsel of the Issuer (at no cost or expense to the Indenture Trustee) that such action is required or permitted hereunder. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.

(c)           The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder. The Indenture Trustee shall give prompt written notice to the Issuer, in which case the Issuer shall then give prompt written notice to the Rating Agencies, of the appointment of any such agent, custodian or nominee to whom it delegates any of its express duties under this Indenture; provided, that the Indenture Trustee shall not be obligated to give such notice (i) if the Issuer or the Holders have directed the Indenture Trustee to appoint such agent, custodian or nominee (in which event the Issuer shall give prompt notice to the Rating Agencies of any such direction) or (ii) of the appointment of any agents, custodians or nominees made at any time that an Event of Default of the Issuer has occurred and is continuing.

(d)           The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

(e)           The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Storm Recovery Bonds shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)            The Indenture Trustee shall be under no obligation to take any action or exercise any of the rights or powers vested in it by this Indenture or any other Basic Document, or to institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto, at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture and the Series Supplement or otherwise, unless it shall have received security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred.

(g)           The Indenture Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

(h)           Any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or an Issuer Order.

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(i)            Whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s Certificate.

(j)            The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document.

(k)           In no event shall the Indenture Trustee be responsible or liable for punitive, special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(l)            In no event shall the Indenture Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Indenture Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

(m)          The Indenture Trustee shall not be deemed to have notice of any Default or Event of Default unless it has actual knowledge or written notice of any event which is in fact such a Default is received by a Responsible Officer of the Indenture Trustee at the Corporate Trust Office of the Indenture Trustee, and such notice references the Storm Recovery Bonds and this Indenture.

(n)           The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(o)           Beyond the exercise of reasonable care in the custody thereof, the Indenture Trustee will have no duty as to any Trust Estate in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto. The Indenture Trustee will be deemed to have exercised reasonable care in the custody of the Trust Estate in its possession if the Trust Estate is accorded treatment substantially equal to that which it accords its own property, and the Indenture Trustee will not be liable or responsible for any loss or diminution in the value of any of the Trust Estate by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Indenture Trustee in good faith.

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(p)           The Indenture Trustee will not be responsible for the existence, genuineness or value of any of the Trust Estate or for the validity, sufficiency, perfection, priority or enforceability of the Liens in any of the Trust Estate, except to the extent such action or omission constitutes negligence or willful misconduct on the part of the Indenture Trustee. The Indenture Trustee shall not be responsible for the validity of the title of any grantor to the collateral, for insuring the Trust Estate or for the payment of taxes, charges, assessments or Liens upon the Trust Estate or otherwise as to the maintenance of the Lien of the Trust Estate.

(q)           In the event that the Indenture Trustee is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Indenture Trustee’s sole discretion may cause the Indenture Trustee, as applicable, to be considered an “owner or operator” under any environmental laws or otherwise cause the Indenture Trustee to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Indenture Trustee reserves the right, instead of taking such action, either to resign as Indenture Trustee or to arrange for the transfer of the title or control of the asset to a court appointed receiver. The Indenture Trustee will not be liable to any person for any environmental claims or any environmental liabilities or contribution actions under any federal, state or local law, rule or regulation by reason of the Indenture Trustee’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

SECTION 6.03.        Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Storm Recovery Bonds and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Storm Recovery Bond Registrar, co-registrar or co-paying agent or agent appointed under Section 3.02 may do the same with like rights. However, the Indenture Trustee must comply with Section 6.11 and Section 6.12.

SECTION 6.04.        Indenture Trustee’s Disclaimer.

(a)           The Indenture Trustee shall not be responsible for and makes no representation (other than as set forth in Section 6.13) as to the validity or adequacy of this Indenture or the Storm Recovery Bonds, it shall not be accountable for the Issuer’s use of the proceeds from the Storm Recovery Bonds, and it shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Storm Recovery Bonds or in the Storm Recovery Bonds other than the Indenture Trustee’s certificate of authentication. The Indenture Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the Trust Estate (or for the perfection or priority of the Liens thereon), or for or in respect of the validity or sufficiency of the Storm Recovery Bonds (other than the certificate of authentication for the Storm Recovery Bonds) or the Basic Documents, and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to any Holder, other than as expressly provided in this Indenture. The Indenture Trustee shall not be liable for the default or misconduct of the Issuer, the Seller or the Servicer under the Basic Documents or otherwise, and the Indenture Trustee shall have no obligation or liability to perform the obligations of the Issuer or such Persons.

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(b)           The Indenture Trustee shall not be responsible for (i) the validity of the title of the Issuer to the Trust Estate, (ii) insuring the Trust Estate or (iii) the payment of taxes, charges, assessments or Liens upon the Trust Estate or otherwise as to the maintenance of the Trust Estate. The Indenture Trustee shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture or any of the other Basic Documents. The Indenture Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Trust Estate.

SECTION 6.05.        Notice of Defaults. If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee or a Responsible Officer of the Indenture Trustee has been notified in writing of such Default, the Indenture Trustee shall deliver to each Rating Agency, to the Louisiana Commission (pursuant to Section 10.04(f)) and each Holder of Storm Recovery Bonds notice of the Default within ten (10) Business Days after actual notice of such Default was received by a Responsible Officer of the Indenture Trustee (provided that the Indenture Trustee shall give the Rating Agencies prompt notice of any payment default in respect of the Storm Recovery Bonds). Except in the case of a Default in payment of principal of and premium, if any, or interest on any Storm Recovery Bond, the Indenture Trustee may withhold the notice of the Default if and so long as a committee of its Responsible Officers in good faith determines that withholding such notice is in the interests of Holders. In no event shall the Indenture Trustee be deemed to have knowledge of a Default unless a Responsible Officer of the Indenture Trustee shall have actual knowledge of a Default or shall have received written notice thereof.

SECTION 6.06.        Reports by Indenture Trustee to Holders.

(a)           So long as Storm Recovery Bonds are Outstanding and the Indenture Trustee is the Storm Recovery Bond Registrar and Paying Agent, upon the written request of any Holder or the Issuer, within the prescribed period of time for tax reporting purposes after the end of each calendar year, the Indenture Trustee shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns. If the Storm Recovery Bond Registrar and Paying Agent is other than the Indenture Trustee, such Storm Recovery Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns.

(b)           On or prior to each Payment Date or Special Payment Date therefor, the Indenture Trustee will deliver to each Holder of the Storm Recovery Bonds on such Payment Date or Special Payment Date and the Louisiana Commission a statement as provided and prepared by the Servicer, which will include (to the extent applicable) the following information (and any other information so specified in the Series Supplement) as to the Storm Recovery Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

(i)            the amount of the payment to Holders allocable to principal, if any;

(ii)           the amount of the payment to Holders allocable to interest;

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(iii)          the aggregate Outstanding Amount of the Storm Recovery Bonds, before and after giving effect to any payments allocated to principal reported under Section 6.06(b)(i);

(iv)          the difference, if any, between the amount specified in Section 6.06(b)(iii) and the Outstanding Amount specified in the related Expected Sinking Fund Schedule;

(v)           any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and

(vi)          the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.

(c)           The Issuer shall send a copy of each of the Certificate of Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement and the Annual Accountant’s Report delivered to it pursuant to Section 3.04 of the Servicing Agreement to the Louisiana Commission, the Rating Agencies, the Indenture Trustee and to the Servicer for posting on the 17g-5 Website in accordance with Rule 17g-5 under the Exchange Act. A copy of such certificate and report may be obtained by any Holder by a request in writing to the Indenture Trustee.

(d)          The Indenture Trustee may consult with counsel and the advice or opinion of such counsel with respect to legal matters relating to this Indenture and the Storm Recovery Bonds shall be full and complete authorization and protection from liability with respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. Any reasonable legal fees incurred by the Indenture Trustee shall be payable to the Indenture Trustee from amounts hold in the Collection Account in accordance with the provisions set forth in Section 8.02(e).

SECTION 6.07.        Compensation and Indemnity. The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee’s compensation shall not, to the extent permitted by applicable law, be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts. The Issuer shall indemnify and hold harmless the Indenture Trustee and its officers, directors, employees and agents from and against any and all cost, damage, loss, liability, tax or expense (including reasonable attorneys’ fees and expenses) directly or indirectly incurred by the Indenture Trustee in connection with the administration and the enforcement of this Indenture (including this Section 6.07), the Series Supplement and the other Basic Documents and the Indenture Trustee’s rights, powers, duties and obligations under this Indenture, the Series Supplement and the other Basic Documents and the performance of its duties hereunder and thereunder and obligations under or pursuant to this Indenture, the Series Supplement and the other Basic Documents other than any such tax on the compensation of the Indenture Trustee for its services as Indenture Trustee. The Indenture Trustee shall notify the Issuer as soon as is reasonably practicable of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer shall defend the claim, the Indenture Trustee may have separate counsel, and the Issuer shall pay the reasonable fees and expenses of such counsel. Notwithstanding the foregoing or any other provision of this Indenture, the Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith.

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The payment obligations to the Indenture Trustee pursuant to this Section 6.07 shall survive the termination or satisfaction and discharge of this Indenture and Series Supplement or the earlier resignation or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(e) or Section 5.01(f) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable U.S. federal or state bankruptcy, insolvency or similar law.

SECTION 6.08.        Replacement of Indenture Trustee and Securities Intermediary.

(a)           The Indenture Trustee may resign at any time upon thirty (30) days’ prior written notice to the Issuer subject to Section 6.08(c). The Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds may remove the Indenture Trustee by so notifying the Indenture Trustee in writing not less than thirty-one (31) days prior to the date of removal and may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if:

(i)            the Indenture Trustee fails to comply with Section 6.11;

(ii)           the Indenture Trustee is adjudged a bankrupt or insolvent;

(iii)          a receiver or other public officer takes charge of the Indenture Trustee or its property;

(iv)          the Indenture Trustee otherwise becomes incapable of acting; or

(v)           the Indenture Trustee fails to provide to the Issuer any information reasonably requested by the Issuer pertaining to the Indenture Trustee and necessary for the Issuer or Cleco Power to comply with its respective reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the Issuer’s and the Indenture Trustee’s mutual satisfaction within a reasonable period of time.

Any removal or resignation of the Indenture Trustee shall also constitute a removal or resignation of the Securities Intermediary.

(b)           If the Indenture Trustee gives notice of resignation or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee and Securities Intermediary.

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(c)           A successor Indenture Trustee shall deliver a written acceptance of its appointment as the Indenture Trustee and as the Securities Intermediary to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee and Securities Intermediary, as applicable, under this Indenture and the other Basic Documents. No resignation or removal of the Indenture Trustee pursuant to this Section 6.08 shall become effective until acceptance of the appointment by a successor Indenture Trustee having the qualifications set forth in Section 6.11. Notice of any such appointment shall be promptly given to each Rating Agency by the successor Indenture Trustee. The successor Indenture Trustee shall mail a notice of its succession to Holders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.

(d)           If a successor Indenture Trustee does not take office within sixty (60) days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the Storm Recovery Bonds may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

(e)           If the Indenture Trustee fails to comply with Section 6.11, any Holder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

(f)            Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.

SECTION 6.09.        Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, however, that, if such successor Indenture Trustee is not eligible under Section 6.11, then the successor Indenture Trustee shall be replaced in accordance with Section 6.08. Notice of any such event shall be promptly given to each Rating Agency by the successor Indenture Trustee.

In case at the time such successor or successors by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Storm Recovery Bonds shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee and deliver the Storm Recovery Bonds so authenticated; and, in case at that time any of the Storm Recovery Bonds shall not have been authenticated, any successor to the Indenture Trustee may authenticate the Storm Recovery Bonds either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force that it is anywhere in the Storm Recovery Bonds or in this Indenture provided that the certificate of the Indenture Trustee shall have.

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SECTION 6.10.        Appointment of Co-Trustee or Separate Trustee.

(a)           Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the trust created by this Indenture or the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Holders, such title to the Trust Estate, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Holders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08. Notice of any such appointment shall be promptly given to each Rating Agency and to the Louisiana Commission by the Indenture Trustee.

(b)           Every separate trustee and co-trustee shall, to the extent permitted by applicable law, be appointed and act subject to the following provisions and conditions:

(i)            all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any applicable law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

(ii)           no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

(iii)          the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.

(c)           Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then-separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.

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(d)           Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or its attorney-in-fact with full power and authority, to the extent not prohibited by applicable law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by applicable law, without the appointment of a new or successor trustee.

SECTION 6.11.       Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of Section 310(a)(1) of the Trust Indenture Act, Section 310(a)(5) of the Trust Indenture Act and Rule 3a-7 of the Investment Company Act. The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and shall have a long-term debt rating from each of Moody’s, S&P and Fitch in one of its generic rating categories that signifies investment grade. The Indenture Trustee shall comply with Section 310(b) of the Trust Indenture Act, including the optional provision permitted by the second sentence of Section 310(b)(9) of the Trust Indenture Act; provided, however, that there shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.

SECTION 6.12.        Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. An Indenture Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated therein.

SECTION 6.13.        Representations and Warranties of Indenture Trustee. The Indenture Trustee hereby represents and warrants that:

(a)           the Indenture Trustee is a national banking association validly existing and in good standing under the laws of the United States of America; and

(b)           the Indenture Trustee has full power, authority and legal right to execute, deliver and perform its obligations under this Indenture and the other Basic Documents to which the Indenture Trustee is a party and has taken all necessary action to authorize the execution, delivery and performance of obligations by it of this Indenture and such other Basic Documents.

SECTION 6.14.        Annual Report by Independent Registered Public Accountants. The Indenture Trustee hereby covenants that it will cooperate fully with the firm of Independent registered public accountants performing the procedures required under Section 3.04 of the Servicing Agreement, it being understood and agreed that the Indenture Trustee will so cooperate in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

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SECTION 6.15.        Custody of Trust Estate. The Indenture Trustee shall hold such of the Trust Estate (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit and advices of credit in the State of New York. The Indenture Trustee shall hold such of the Trust Estate as constitute investment property through the Securities Intermediary (which, as of the date hereof, is The Bank of New York Mellon Trust Company, National Association). The initial Securities Intermediary hereby agrees (and each future Securities Intermediary shall agree) with the Indenture Trustee that (a) such investment property (other than cash) shall at all times be credited to a securities account of the Indenture Trustee, (b) the Securities Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all property (other than cash) credited to such securities account shall be treated as a financial asset, (d) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other Person, (e) the Securities Intermediary will not agree with any Person other than the Indenture Trustee to comply with entitlement orders originated by such other Person, (f) such securities accounts and the property credited thereto shall not be subject to any Lien or right of set-off in favor of the Securities Intermediary or anyone claiming through it (other than the Indenture Trustee) and (g) such agreement shall be governed by the internal laws of the State of New York. Terms used in the preceding sentence that are defined in the UCC and not otherwise defined herein shall have the meaning set forth in the UCC. Except as permitted by this Section 6.15 or elsewhere in this Indenture, the Indenture Trustee shall not hold the Trust Estate through an agent or a nominee.

SECTION 6.16.        FATCA. The Issuer agrees (i) to provide the Indenture Trustee with such reasonable information as it has in its possession to enable the Indenture Trustee to determine whether any payments pursuant to the Indenture are subject to the withholding requirements described in Section 1471(b) of the Internal Revenue Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Internal Revenue Code and any regulations, or agreements thereunder or official interpretations thereof (“Applicable Law”), and (ii) that the Indenture Trustee shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law, for which the Indenture Trustee shall not have any liability.

ARTICLE VII

Holders’ Lists and Reports

SECTION 7.01.        Issuer To Furnish Indenture Trustee Names and Addresses of Holders. The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five (5) days after the earlier of (i) each Record Date and (ii) six (6) months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders as of such Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that, so long as the Indenture Trustee is the Storm Recovery Bond Registrar, no such list shall be required to be furnished.

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SECTION 7.02.        Preservation of Information; Communications to Holders.

(a)           The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Storm Recovery Bond Registrar. The Indenture Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished.

(b)           Holders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Holders with respect to their rights under this Indenture or under the Storm Recovery Bonds. In addition, upon the written request of any Holder or group of Holders or of all Outstanding Storm Recovery Bonds evidencing at least ten (10) percent of the Outstanding Amount of the Storm Recovery Bonds, as applicable, the Indenture Trustee shall afford the Holder or Holders making such request a copy of a current list of Holders for purposes of communicating with other Holders with respect to their rights hereunder; provided, that the Indenture Trustee gives prior written notice to the Issuer of such request.

(c)           The Issuer, the Indenture Trustee and the Storm Recovery Bond Registrar shall have the protection of Section 312(c) of the Trust Indenture Act.

SECTION 7.03.        Reports by Issuer.

(a)           The Issuer shall:

(i)            so long as the Issuer or Cleco Power is required to file such documents with the SEC, provide to the Indenture Trustee and the Louisiana Commission, within fifteen (15) days after the Issuer is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) that the Issuer or Cleco Power may be required to file with the SEC;

(ii)           provide to the Indenture Trustee and the Louisiana Commission and file with the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

(iii)          supply to the Indenture Trustee (and the Indenture Trustee shall transmit to all Holders described in Section 313(c) of the Trust Indenture Act) and the Louisiana Commission, such summaries of any information, documents and reports required to be filed by the Issuer pursuant to Section 7.03(a)(i) and Section 7.03(a)(ii) as may be required by rules and regulations prescribed from time to time by the SEC.

Except as may be provided by Section 313(c) of the Trust Indenture Act, the Issuer may fulfill its obligation to provide the materials described in this Section 7.03(a) by providing such materials in electronic format.

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(b)           Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year and will promptly notify the Indenture Trustee regarding any change in fiscal year.

(c)           Delivery of such reports, information and documents to the Indenture Trustee is for informational purposes only and the Indenture Trustee’s receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Indenture Trustee is entitled to rely exclusively on Officer’s Certificates).

SECTION 7.04.        Reports by Indenture Trustee. If required by Section 313(a) of the Trust Indenture Act, within sixty (60) days after March 31 of each year, commencing with March 31, 2023, the Indenture Trustee shall send to each Holder as required by Section 313(c) of the Trust Indenture Act a brief report dated as of such date that complies with Section 313(a) of the Trust Indenture Act. The Indenture Trustee also shall comply with Section 313(b) of the Trust Indenture Act; provided, however, that the initial report if required to be so issued shall be delivered not more than twelve (12) months after the initial issuance of the Storm Recovery Bonds.

A copy of each report at the time of its sending to Holders shall be filed by the Servicer with the SEC and each stock exchange, if any, on which the Storm Recovery Bonds are listed. The Issuer shall notify the Indenture Trustee in writing if and when the Storm Recovery Bonds are listed on any stock exchange.

ARTICLE VIII

Accounts, Disbursements and Releases

SECTION 8.01.        Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the other Basic Documents. The Indenture Trustee shall apply all such money received by it as provided in this Indenture within two (2) Business Days. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, subject to Article VI, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

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SECTION 8.02.        Collection Account.

(a)           On or prior to the Closing Date, the Issuer shall open or cause to be opened with the Indenture Trustee located at the Corporate Trust Office, or at another Eligible Institution, one or more segregated non-interest bearing trust accounts in the Indenture Trustee’s name for the deposit of Storm Recovery Charges and all other amounts received with respect to the Trust Estate (the “Collection Account” and collectively, the “Collection Accounts”). The Indenture Trustee shall hold the Collection Account for the benefit of the Holders, the Indenture Trustee and the other persons indemnified hereunder. Initially the Collection Account shall be divided into three subaccounts, which need not be separate accounts: a general subaccount (the “General Subaccount”); an excess funds subaccount (the “Excess Funds Subaccount”); a capital subaccount (the “Capital Subaccount” and, together with the General Subaccount and the Excess Funds Subaccount, the “Subaccounts”). For administrative purposes, the Subaccounts may be established by the Securities Intermediary as separate accounts. Such separate Subaccounts will be recognized individually as a Subaccount and collectively as the “Collection Account”. Prior to or concurrently with the issuance of the Storm Recovery Bonds, the Member shall deposit into the Capital Subaccount an amount equal to the Required Capital Amount. Unless otherwise provided herein, all amounts in the Collection Account not allocated to any other Subaccount shall be allocated to the General Subaccount. Prior to the initial Payment Date, all amounts in the Collection Account (other than funds deposited into the Capital Subaccount up to the Required Capital Amount) shall be allocated to the General Subaccount. All references to a Collection Account shall be deemed to include reference to all Subaccounts contained therein. Withdrawals from and deposits to each of the foregoing Subaccounts of the Collection Account shall be made as set forth in Sections 8.02(d) and 8.02(e). The Collection Account shall at all times be maintained in an Eligible Account and will be under the sole dominion and exclusive control of the Indenture Trustee, and only the Indenture Trustee shall have access to the applicable Collection Account for the purpose of making deposits in and withdrawals from the applicable Collection Account in accordance with this Indenture. Funds in a Collection Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Collection Account, all deposits therein pursuant to this Indenture and all investments made in Eligible Investments as directed in writing by the Issuer with such moneys, including all income or other gain from such investments, shall be held by the Indenture Trustee in the Collection Account as part of the Trust Estate as herein provided. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.

(b)           The Indenture Trustee hereby confirms that (i) each Collection Account is, or at inception will be established as, a “securities account” as such term is defined in Section 8-501(a) of the UCC, (ii) it is a “securities intermediary” (as such term is defined in Section 8-102(a)(14) of the UCC) and is acting in such capacity with respect to such accounts, (iii) the Indenture Trustee for the benefit of the Holders is the sole “entitlement holder” (as such term is defined in Section 8-102(a)(7) of the UCC) with respect to such accounts and (iv) no other Person shall have the right to give “entitlement orders” (as such term is defined in Section 8-102(a)(8)) with respect to such accounts. The Securities Intermediary hereby further agrees that each item of property (whether investment property, financial asset, security, instrument or cash) received by it will be credited to the applicable Collection Account and shall be treated by it as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC. Notwithstanding anything to the contrary, the State of New York shall be deemed to be the jurisdiction of the Securities Intermediary for purposes of Section 8-110 of the UCC, and the Collection Accounts (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York.

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(c)           The Indenture Trustee shall have sole dominion and exclusive control over all moneys in the applicable Collection Account and shall apply such amounts therein as provided in this Section 8.02.

(d)           Storm Recovery Charge Collections shall be deposited in the applicable General Subaccount as provided in Section 6.12 of the Servicing Agreement. All deposits to and withdrawals from the Collection Account, all allocations to the Subaccounts of the Collection Account and any amounts to be paid to the Servicer under Section 8.02(e) shall be made by the Indenture Trustee in accordance with the written instructions provided by the Servicer in the Monthly Servicer’s Certificate or the Semi-Annual Servicer’s Certificate.

(e)           On each Payment Date for the Storm Recovery Bonds, the Indenture Trustee shall apply all amounts on deposit in the applicable Collection Account, including all Investment Earnings thereon, in accordance with the Semi-Annual Servicer’s Certificate, in the following priority:

(i)            payment of the Indenture Trustee’s fees, expenses and outstanding indemnity amounts shall be paid to the Indenture Trustee (subject to Section 6.07) in an amount not to exceed $100,000.00 in any 12-month period (the “Indenture Trustee Cap”); provided, however, that the Indenture Trustee Cap shall be disregarded and inapplicable upon the acceleration of the Storm Recovery Bonds following the occurrence of an Event of Default;

(ii)           payment of the Servicing Fee with respect to such Payment Date, plus any unpaid Servicing Fees for prior Payment Dates shall be paid to the Servicer;

(iii)          payment of the allocable share of the Administration Fee for such Payment Date shall be paid to the Administrator and the Independent Manager Fee for such Payment Date shall be paid to the Independent Managers, and in each case with any unpaid Administration Fees or Independent Manager Fees from prior Payment Dates;

(iv)          payment of all other ordinary periodic Operating Expenses for such Payment Date not described above shall be paid to the parties to which such Operating Expenses are owed;

(v)           payment of Periodic Interest for such Payment Date with respect to the Storm Recovery Bonds, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable Bond Interest Rate), with respect to the Storm Recovery Bonds shall be paid to the Holders of Storm Recovery Bonds;

(vi)          payment of the principal due to be paid on the Storm Recovery Bonds on the Final Maturity Date for such tranche or as a result of an acceleration upon an Event of Default shall be paid to the Holders of Storm Recovery Bonds;

(vii)         payment of the principal then scheduled to be paid on such Payment Date in accordance with the Expected Sinking Fund Schedule, including any principal that was scheduled to be paid on a prior Payment Date but was not paid as scheduled, with respect to the Storm Recovery Bonds shall be paid to the Holders of Storm Recovery Bonds;

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(viii)        payment of the allocable share of any other unpaid Operating Expenses (including any such amounts owed to the Indenture Trustee, but unpaid due to the limitation in Section 8.02(e)(i)) and any remaining amounts owed pursuant to the Basic Documents shall be paid to the parties to which such Operating Expenses or remaining amounts are owed;

(ix)           replenishment of the amount, if any, by which the Required Capital Amount exceeds the amount in the Capital Subaccount as of such Payment Date shall be allocated to the Capital Subaccount;

(x)            the Return on Invested Capital then due and payable shall be paid to Cleco Power;

(xi)           the balance, if any, shall be allocated to the Excess Funds Subaccount; and

(xii)          after the Storm Recovery Bonds have been paid in full and discharged, and all of the other foregoing amounts are paid in full, together with all amounts due and payable to the Indenture Trustee under Section 6.07 or otherwise, the balance (including all amounts then held in the Capital Subaccount and the Excess Funds Subaccount), if any, shall be paid to the Issuer, free from the Lien of this Indenture and credited (other than an amount equal to the Required Capital Amount plus any unpaid Return on Invested Capital) to Customers through normal ratemaking processes consistent with the Financing Order.

All payments to the Holders pursuant to Section 8.02(e)(v) and Section 8.02(e)(vi) shall be made to such Holders pro rata based on the respective amounts of interest and/or principal owed, unless, the Series Supplement provides otherwise. Payments in respect of principal of and premium, if any, and interest on any tranche of Storm Recovery Bonds will be made on a pro rata basis among all the Holders of such tranche. Periodic principal payments scheduled to be paid on multiple tranches shall be paid in sequential order in accordance with Section 8.02(e)(vii). In the case of an Event of Default, then, in accordance with Section 5.04(c), in respect of any application of moneys pursuant to Section 8.02(e)(v) or Section 8.02(e)(vi), moneys will be applied pursuant to Section 8.02(e)(v) and Section 8.02(e)(vi), as the case may be, in such order, on a pro rata basis, based upon the interest or the principal owed.

(f)            If on any Payment Date, or, for any amounts payable under Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii) and Section 8.02(e)(iv), on any Business Day, funds on deposit in the General Subaccount are insufficient to make the payments contemplated by Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii), Section 8.02(e)(iv), Section 8.02(e)(v), Section 8.02(e)(vi), Section 8.02(e)(vii), Section 8.02(e)(viii) and Section 8.02(e)(ix), the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount, and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii), Section 8.02(e)(iv), Section 8.02(e)(v), Section 8.02(e)(vi), Section 8.02(e)(vii) and Section 8.02(e)(viii). In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by Section 8.02(e)(ix), the Indenture Trustee shall draw any amounts on deposit in the Excess Funds Subaccount to make such allocations to the Capital Subaccount.

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(g)           On any Business Day upon which the Indenture Trustee receives a written request from the Administrator stating that any Operating Expense payable by the Issuer (but only as described in Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii) and Section 8.02(e)(iv)) will become due and payable prior to the next Payment Date, and setting forth the amount and nature of such Operating Expense, as well as any supporting documentation that the Indenture Trustee may reasonably request, the Indenture Trustee, upon receipt of such information, will make payment of such Operating Expenses on or before the date such payment is due from amounts on deposit in the General Subaccount, the Excess Funds Subaccount and the Capital Subaccount, in that order and only to the extent required to make such payment.

SECTION 8.03.        General Provisions Regarding the Collection Account.

(a)           So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order; provided, however, that such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date or Special Payment Date for the related tranche, if applicable, for the Storm Recovery Bonds. All income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Indenture Trustee in such Collection Account, and any loss resulting from such investments shall be charged to the Collection Account. The Issuer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in any Collection Account unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) to such effect. In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely and specific written investment direction. The Indenture Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of written investment direction pursuant to an Issuer Order, in which case such amounts shall remain uninvested.

(b)           Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.

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(c)           If (i) the Issuer shall have failed to give written investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 11:00 a.m. New York City time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Storm Recovery Bonds but the Storm Recovery Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in such Collection Account in Eligible Investments specified in the most recent written investment directions delivered by the Issuer to the Indenture Trustee; provided, that if the Issuer has never delivered written investment directions to the Indenture Trustee, the Indenture Trustee shall not invest or reinvest such funds in any investments.

(d)           The parties hereto acknowledge that the Servicer may, pursuant to the Servicing Agreement, select Eligible Investments on behalf of the Issuer; provided, however, that any such investment direction on behalf of the Issuer must be given in writing to the Indenture Trustee.

(e)           Except as otherwise provided hereunder or agreed in writing among the parties hereto, the Issuer shall retain the authority to institute, participate and join in any plan of reorganization, readjustment, merger or consolidation with respect to the issuer of any Eligible Investments held hereunder, and, in general, to exercise each and every other power or right with respect to each such asset or investment as Persons generally have and enjoy with respect to their own assets and investment, including power to vote upon any Eligible Investments.

SECTION 8.04.        Release of Trust Estate.

(a)           So long as the Issuer is not in Default hereunder and no Default or Event of Default hereunder would occur as a result of such action, the Issuer, through the Servicer, may collect, sell or otherwise dispose of written-off receivables, at any time and from time to time in the ordinary course of business, without any notice to, or release or consent by, the Indenture Trustee, but only as and to the extent permitted by the Basic Documents; provided, however, that any and all proceeds of such dispositions shall become part of the Trust Estate and be deposited to the General Subaccount immediately upon receipt thereof by the Issuer or any other Person, including the Servicer. Without limiting the foregoing, the Servicer, may, at any time and from time to time without any notice to, or release or consent by, the Indenture Trustee, sell or otherwise dispose of any part of the Trust Estate previously written-off as a defaulted or uncollectible account in accordance with the terms of the Servicing Agreement and the requirements of the proviso in the preceding sentence.

(b)           Subject to the payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) and (if required by the Trust Indenture Act) Independent Certificates in accordance with Section 314(c) of the Trust Indenture Act and Section 314(d)(1) of the Trust Indenture Act meeting the applicable requirements of Section 10.01.

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(c)           The Indenture Trustee shall, at such time as there are no Storm Recovery Bonds Outstanding, and all other Financing Costs are paid in full, and all sums due and payable to the Indenture Trustee pursuant to Section 6.07 or otherwise have been paid, release any remaining portion of the Trust Estate from the Lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credited to the Collection Account consistent with Section 8.02(e)(xii).

SECTION 8.05.        Opinion of Counsel. The Indenture Trustee shall receive at least seven (7) days’ notice when requested by the Issuer to take any action pursuant to Section 8.04, accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel of external counsel of the Issuer, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Storm Recovery Bonds or the rights of the Holders in contravention of the provisions of this Indenture and the Series Supplement; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

SECTION 8.06.        Reports by Independent Registered Public Accountants. As of the date hereof, the Issuer shall appoint a firm of Independent registered public accountants of recognized national reputation for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture and the Series Supplement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree, it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Upon any resignation by, or termination by the Issuer of, such firm, the Issuer shall provide written notice thereof to the Indenture Trustee and shall promptly appoint a successor thereto that shall also be a firm of Independent registered public accountants of recognized national reputation. If the Issuer shall fail to appoint a successor to a firm of Independent registered public accountants that has resigned or been terminated within fifteen (15) days after such resignation or termination, the Servicer shall promptly notify the Issuer of such failure in writing. If the Issuer shall not have appointed a successor within ten (10) days thereafter, the Servicer shall promptly appoint a successor firm of Independent registered public accountants of recognized national reputation. The fees of such Independent registered public accountants and its successor shall be payable by the Issuer.

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ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 9.01.        Supplemental Indentures Without Consent of Holders.

(a)           Without the consent of the Holders of any Storm Recovery Bonds but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:

(i)            to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture, or to subject to the Lien of this Indenture additional property;

(ii)           to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Storm Recovery Bonds;

(iii)          to add to the covenants of the Issuer, for the benefit of the Holders, or to surrender any right or power herein conferred upon the Issuer;

(iv)          to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

(v)           to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture, including the Series Supplement, that may be inconsistent with any other provision herein or in any supplemental indenture, including the Series Supplement, or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided, that (A) such action shall not, as evidenced by an Opinion of Counsel of external counsel of the Issuer, adversely affect in any material respect the interests of the Holders and (B) the Rating Agency Condition shall have been satisfied with respect thereto;

(vi)          to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Storm Recovery Bonds and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;

(vii)         to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act and to add to this Indenture such other provisions as may be expressly required by the Trust Indenture Act;

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(viii)        to qualify the Storm Recovery Bonds for registration with a Clearing Agency;

(ix)           to satisfy any Rating Agency requirements; and

(x)            to authorize the appointment of any fiduciary for any tranche of the Storm Recovery Bonds required or advisable with the listing of any tranche of the Storm Recovery Bonds on any stock exchange and otherwise amend this Indenture to incorporate changes requested or required by any government authority, stock exchange authority or fiduciary for any tranche of the Storm Recovery Bonds in connection with such listing.

The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

(b)           The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that (i) such action shall not, as evidenced by an Opinion of Counsel of nationally recognized counsel of the Issuer experienced in structured finance transactions, adversely affect in any material respect the interests of the Holders and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.

SECTION 9.02.        Supplemental Indentures with Consent of Holders. The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds of each tranche to be affected, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Storm Recovery Bond of each tranche affected thereby:

(i)            change the date of payment of any installment of principal of or premium, if any, or interest on any Storm Recovery Bond of such tranche, or reduce the principal amount thereof, the interest rate thereon or premium, if any, with respect thereto;

(ii)           change the provisions of this Indenture and the Series Supplement relating to the application of collections on, or the proceeds of the sale of, the Trust Estate to payment of principal of or premium, if any, or interest on the Storm Recovery Bonds of such tranche, or change any place of payment where, or the coin or currency in which, any Storm Recovery Bond of such tranche or the interest thereon is payable;

(iii)          reduce the percentage of the Outstanding Amount of the Storm Recovery Bonds or of a tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;

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(iv)          reduce the percentage of the Outstanding Amount of the Storm Recovery Bonds required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust Estate pursuant to Section 5.04;

(v)           modify any provision of this Section 9.02 or any provision of the other Basic Documents similarly specifying the rights of the Holders to consent to modification thereof, except to increase any percentage specified herein or to provide that those provisions of this Indenture or the other Basic Documents referenced in this Section 9.02 cannot be modified or waived without the consent of the Holder of each Outstanding Storm Recovery Bond affected thereby;

(vi)          modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest, principal or premium, if any, due and payable on any Storm Recovery Bond on any Payment Date (including the calculation of any of the individual components of such calculation) or change the Expected Sinking Fund Schedule or Final Maturity Date of Storm Recovery Bonds;

(vii)         decrease the Required Capital Amount with respect to any Series;

(viii)        permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Storm Recovery Bond of the security provided by the Lien of this Indenture;

(ix)           cause any material adverse U.S. federal income tax consequence to the Seller, the Issuer, the Managers, the Indenture Trustee or the then-existing Holders; or

(x)            impair the right to institute suit for the enforcement of the provisions of this Indenture regarding payment or application of funds.

It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer shall mail to the Rating Agencies a copy of such supplemental indenture and to the Holders to which such supplemental indenture relates either a copy of such supplemental indenture or a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

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SECTION 9.03.        Louisiana Commission Condition. Notwithstanding anything to the contrary in this Section 9.01 or 9.02, no indenture or indentures supplemental to this Indenture (other than the Series Supplement which shall not be subject to the Louisiana Commission Condition (as described in this Section 9.03)) shall be effective if such supplemental indenture or indentures increases Ongoing Financing Costs, except upon satisfaction of the conditions precedent in this Section 9.03.

(a)           The Issuer may submit the proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be, to the Louisiana Commission by delivering to the Louisiana Commission’s executive counsel a written request for such consent, which request shall contain:

(i)            a reference to Docket No. U-35807 and a statement as to the possible effect of the proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be, on Ongoing Financing Costs;

(ii)           an Officer’s Certificate stating that the proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be, has been approved by all parties to this Indenture, and if applicable, the Holders; and

(iii)          a statement identifying the individual to whom the Louisiana Commission or its staff is to address its consent to the proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be, or request additional time.

(b)           Any proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be, requiring the consent of the Louisiana Commission as provided in this Section 9.03 shall become effective on the later of:

(i)            the date proposed by the parties to the proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be; or

(ii)           thirty-one (31) days after such submission of the proposed amendment, modification, waiver, supplement, termination, surrender or supplemental indenture, as the case may be, to the Louisiana Commission unless the Louisiana Commission issues an order disapproving the amendment within a thirty (30)-day period.

SECTION 9.04.        Execution of Supplemental Indentures. In executing any supplemental indenture permitted by this Article IX or the modifications thereby of the Trust Estate, the Indenture Trustee shall be entitled to receive and be fully protected in relying upon an Opinion of Counsel stating that the execution of such supplemental indenture is authorized and permitted by this Indenture and all conditions precedent, if any, provided for in this Indenture relating to such supplemental indenture or modification have been satisfied. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.

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SECTION 9.05.        Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to each tranche of Storm Recovery Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 9.06.        Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act.

SECTION 9.07.        Reference in Storm Recovery Bonds to Supplemental Indentures. Storm Recovery Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Storm Recovery Bonds so modified as to conform, in the opinion of the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Storm Recovery Bonds.

ARTICLE X

MISCELLANEOUS

SECTION 10.01.  Compliance Certificates and Opinions, etc. 

(a)           Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel the amendment is authorized and permitted and all such conditions precedent, if any, have been complied with and (iii) (if required by the Trust Indenture Act) an Independent Certificate from a firm of registered public accountants meeting the applicable requirements of this Section 10.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i)            a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

(ii)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

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(iii)          a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv)          a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

(b)           Prior to the deposit of any collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each individual signing such certificate as to the fair value (within ninety (90) days of such deposit) to the Issuer of the Trust Estate or other property or securities to be so deposited.

(c)           Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in Section 10.01(b), the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to Section 10.01(b) and this Section 10.01(c), is ten (10) percent or more of the Outstanding Amount of the Storm Recovery Bonds, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one (1) percent of the Outstanding Amount of the Storm Recovery Bonds.

(d)           Whenever any property or securities are to be released from the Lien of this Indenture other than pursuant to Section 8.02(e), the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each individual signing such certificate as to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

(e)           Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signatory thereof as to the matters described in Section 10.01(d), the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities with respect thereto, or securities released from the Lien of this Indenture (other than pursuant to Section 8.02(e)) since the commencement of the then-current calendar year, as set forth in the certificates required by Section 10.01(d) and this Section 10.01(e), equals ten (10) percent or more of the Outstanding Amount of the Storm Recovery Bonds, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one (1) percent of the then Outstanding Amount of the Storm Recovery Bonds.

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(f)            Notwithstanding any other provision of this Section 10.01, the Indenture Trustee may (A) collect, liquidate, sell or otherwise dispose of the Storm Recovery Property and other assets in the Trust Estate as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Collection Account as and to the extent permitted or required by the Basic Documents.

SECTION 10.02.    Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer or the Issuer stating that the information with respect to such factual matters is in the possession of the Servicer or the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely conclusively upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 10.03.    Acts of Holders.

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing, and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 10.03.

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(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)           The ownership of Storm Recovery Bonds shall be proved by the Storm Recovery Bond Register.

(d)           Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Storm Recovery Bond shall bind the Holder of every Storm Recovery Bond issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Storm Recovery Bond.

SECTION 10.04.    Notices, etc., to Indenture Trustee, Issuer and Rating Agencies. Any notice, report or other communication given hereunder shall be in writing and shall be effective (i) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (ii) upon receipt when sent by an overnight courier, (iii) on the date personally delivered to an authorized officer of the party to which sent or (iv) on the date transmitted by facsimile or other electronic transmission with a confirmation of receipt in all cases, addressed as follows:

(a)           in the case of the Issuer, to Cleco Securitization I LLC, 505 Cleco Drive Office Number 16, Pineville, Louisiana 71360-5226, Attention: Manager;

(b)           in the case of the Indenture Trustee, the Paying Agent and the Storm Recovery Bond Registar, to the Corporate Trust Office;

(c)           in the case of Moody’s, to Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 25th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Email: ServicerReports@moodys.com (all such notices to be delivered to Moody’s in writing by email);

(d)           in the case of S&P, to Standard & Poor’s Ratings Group, Inc., Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@spglobal.com (all such notices to be delivered to S&P in writing by email);

(e)           in the case of Fitch, to Fitch, Ratings, Inc., One State Street Plaza, New York, New York 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500; and

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(f)            in the case of the Louisiana Commission, to Galvez Building, 12th Floor, 602 North Fifth Street, Baton Rouge, Louisiana 70802, Attention: Executive Secretary.

Each party hereto may, by notice given in accordance herewith to the other party or parties hereto, designate any further or different address to which subsequent notices, reports and other communications shall be sent.

The Indenture Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by the Issuer by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that (a) subsequent to such transmission of written instructions, the Issuer shall provide the originally executed instructions or directions to the Indenture Trustee in a timely manner, and (b) such originally executed instructions or directions shall be signed by an authorized representative of the Issuer providing such instructions or directions. If the Issuer elects to give the Indenture Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Indenture Trustee in its discretion elects to act upon such instructions, the Indenture Trustee’s understanding of such instructions shall be deemed controlling. The Indenture Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Indenture Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Issuer agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Indenture Trustee, including without limitation the risk of the Indenture Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

SECTION 10.05.    Notices to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid, or otherwise delivered in accordance with DTC’s procedures, to each Holder affected by such event, at such Holder’s address as it appears on the Storm Recovery Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event of Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

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Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder and shall not under any circumstance constitute a Default or Event of Default.

SECTION 10.06.    Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

The provisions of Sections 310 through 317 of the Trust Indenture Act that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

SECTION 10.07.    Successors and Assigns. All covenants and agreements in this Indenture and the Storm Recovery Bonds by the Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.

SECTION 10.08.    Severability. Any provision in this Indenture or in the Storm Recovery Bonds that is prohibited, invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, invalidity, illegality or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition, invalidity, illegality or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 10.09.    Benefits of Indenture. Nothing in this Indenture or in the Storm Recovery Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 10.10.    Legal Holidays. In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Storm Recovery Bonds or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.

SECTION 10.11.    GOVERNING LAW. This Indenture shall be governed by and construed in accordance with the laws of the State of Louisiana, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

SECTION 10.12.    Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The Issuer and Indenture Trustee agree that this Indenture may be electronically signed, that any digital or electronic signatures (including pdf, facsimile or electronically imaged signatures provided by DocuSign or any other digital signature provider as specified in writing to the Indenture Trustee) appearing on this Indenture are the same as handwritten signatures for the purposes of validity, enforceability and admissibility, and that delivery of any such electronic signature to, or a signed copy of, this Indenture may be made by facsimile, email or other electronic transmission. The Issuer agrees to assume all risks arising out of the use of digital signatures and electronic methods of submitting such signatures to the Indenture Trustee, including without limitation the risk of the Indenture Trustee acting upon documents with unauthorized signatures and the risk of interception and misuse by third parties.

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SECTION 10.13.    Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel at the Issuer’s cost and expense, to the effect that such recording is necessary either for the protection of the Holders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. For the avoidance of doubt, the Indenture Trustee shall not be responsible or liable for recording this Indenture.

SECTION 10.14.    No Recourse to Issuer. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Storm Recovery Bonds or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (a) the Issuer, other than from the Trust Estate, (b) any owner of a membership interest in the Issuer (including Cleco Power) or (c) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including Cleco Power) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed in writing. Notwithstanding any provision of this Indenture or the Series Supplement to the contrary, Holders shall look only to the Trust Estate with respect to any amounts due to the Holders hereunder and under the Storm Recovery Bonds and, in the event the Trust Estate is insufficient to pay in full the amounts owed on the Storm Recovery Bonds, shall have no recourse against the Issuer in respect of such insufficiency. Each Holder by accepting a Storm Recovery Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Storm Recovery Bonds.

SECTION 10.15.    Basic Documents. The Indenture Trustee is hereby authorized and directed to execute and deliver the Servicing Agreement and the Sale Agreement and to execute and deliver any other Basic Document that it is requested to acknowledge and accept.

SECTION 10.16.    No Petition. The Indenture Trustee, by entering into this Indenture, and each Holder, by accepting a Storm Recovery Bond (or interest therein) issued hereunder, hereby covenant and agree that they shall not, prior to the date that is one year and one day after the termination of this Indenture, acquiesce, petition or otherwise invoke or cause the Issuer or any Manager to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any bankruptcy or insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the dissolution, winding up or liquidation of the affairs of the Issuer. Nothing in this Section 10.16 shall preclude, or be deemed to estop, such Holder or the Indenture Trustee (a) from taking or omitting to take any action prior to such date in (i) any case or Proceeding voluntarily filed or commenced by or on behalf of the Issuer under or pursuant to any such law or (ii) any involuntary case or Proceeding pertaining to the Issuer that is filed or commenced by or on behalf of a Person other than such Holder and is not joined in by such Holder (or any Person to which such Holder shall have assigned, transferred or otherwise conveyed any part of the obligations of the Issuer hereunder) under or pursuant to any such law or (b) from commencing or prosecuting any legal action that is not an involuntary case or Proceeding under or pursuant to any such law against the Issuer or any of its properties.

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SECTION 10.17.    Securities Intermediary. The Securities Intermediary, in acting under this Indenture, is entitled to all rights, benefits, privileges, protections, immunities and indemnities accorded to The Bank of New York Mellon Trust Company, National Association, in its capacity as Indenture Trustee under this Indenture.

SECTION 10.18.    Rule 17g-5 Compliance.

(a)           The Indenture Trustee agrees that any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Indenture Trustee to any Rating Agency under this Indenture or any other Basic Document to which it is a party for the purpose of determining or confirming the credit rating of the Storm Recovery Bonds or undertaking credit rating surveillance of the Storm Recovery Bonds shall be provided, substantially concurrently, to the Servicer for posting on a password-protected website (the “17g-5 Website”). The Servicer shall be responsible for posting all of the information on the 17g-5 Website.

(b)           The Indenture Trustee will not be responsible for creating or maintaining the 17g-5 Website, posting any information to the 17g-5 Website or assuring that the 17g-5 Website complies with the requirements of this Indenture, Rule 17g-5 under the Exchange Act or any other law or regulation. In no event shall the Indenture Trustee be deemed to make any representation in respect of the content of the 17g-5 Website or compliance by the 17g-5 Website with this Indenture, Rule 17g-5 under the Exchange Act or any other law or regulation. The Indenture Trustee shall have no obligation to engage in or respond to any oral communications with respect to the transactions contemplated hereby, any transaction documents relating hereto or in any way relating to the Storm Recovery Bonds or for the purposes of determining the initial credit rating of the Storm Recovery Bonds or undertaking credit rating surveillance of the Storm Recovery Bonds with any Rating Agency or any of its respective officers, directors or employees. The Indenture Trustee shall not be responsible or liable for the dissemination of any identification numbers or passwords for the 17g-5 Website, including by the Servicer, the Rating Agencies, a nationally recognized statistical rating organization (“NRSRO”), any of their respective agents or any other party. Additionally, the Indenture Trustee shall not be liable for the use of the information posted on the 17g-5 Website, whether by the Servicer, the Rating Agencies, an NRSRO or any other third party that may gain access to the 17g-5 Website or the information posted thereon.

SECTION 10.19.    Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial. Each of the Issuer and the Indenture Trustee and each Holder (by its acceptance of the Storm Recovery Bonds) hereby irrevocably submits to the non-exclusive jurisdiction of (A) any Louisiana State court and any New York State court sitting in The Borough of Manhattan in The City of New York or (B) any U.S. federal court sitting in Louisiana and any U.S. federal court sitting in The Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Indenture and the Storm Recovery Bonds and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the aforesaid courts. Each of the Issuer, the Indenture Trustee and each Holder (by its acceptance of the Storm Recovery Bonds) irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury.

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SECTION 10.20.    Certain Tax Laws. In order to comply with applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) in effect from time to time to which a foreign financial institution, issuer, trustee, paying agent, holder or other institution is or has agreed to be subject related to the Basic Documents, the Issuer agrees (a) to provide to the Indenture Trustee sufficient information about Holders or other applicable parties and/or transactions (including any modification to the terms of such transactions) so as to enable the Indenture Trustee to determine whether it has tax-related obligations under such applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) and (b) that the Indenture Trustee shall be entitled to make any withholding or deduction from payments under the Basic Documents to the extent necessary to comply with such applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) for which the Indenture Trustee shall not have any liability.

{SIGNATURE PAGE FOLLOWS}

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IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and the Securities Intermediary have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, all as of the day and year first above written.

CLECO SECURITIZATION I LLC,
as Issuer
By:
	Name:
	Title:
The Bank of New York Mellon Trust Company, National Association,
as Indenture Trustee and as Securities Intermediary
By:
	Name:
	Title:

Signature Page to Indenture

EXHIBIT A

FORM OF STORM RECOVERY BOND

See attached.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OR ENTITY IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. {_____}	${__________}
Tranche Designation {__}	CUSIP No.: {__________}

THE PRINCIPAL OF THIS SERIES 2022-A, TRANCHE {__} SENIOR SECURED STORM RECOVERY BOND, (THIS “STORM RECOVERY BOND”) WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS STORM RECOVERY BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE. THE HOLDER OF THIS STORM RECOVERY BOND HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES TO LOOK ONLY TO THE TRUST ESTATE, AS DESCRIBED IN THE INDENTURE, FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. ALL OBLIGATIONS OF THE ISSUER OF THIS STORM RECOVERY BOND UNDER THE TERMS OF THE INDENTURE WILL BE RELEASED AND DISCHARGED UPON PAYMENT IN FULL HEREOF OR AS OTHERWISE PROVIDED IN SECTION 3.10(b) OR ARTICLE IV OF THE INDENTURE. THE HOLDER OF THIS STORM RECOVERY BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE PAYMENT IN FULL OF THIS STORM RECOVERY BOND, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO ESTOP, SUCH HOLDER (A) FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH DATE IN (I) ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON BEHALF OF THE ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR (II) ANY INVOLUNTARY CASE OR PROCEEDING PERTAINING TO THE ISSUER THAT IS FILED OR COMMENCED BY OR ON BEHALF OF A PERSON OTHER THAN SUCH HOLDER AND IS NOT JOINED IN BY SUCH HOLDER (OR ANY PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR OTHERWISE CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) UNDER OR PURSUANT TO ANY SUCH LAW OR (B) FROM COMMENCING OR PROSECUTING ANY LEGAL ACTION THAT IS NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY SUCH LAW AGAINST THE ISSUER OR ANY OF ITS PROPERTIES.

NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF LOUISIANA IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THIS TRANCHE {__} SERIES 2022-A SENIOR SECURED STORM RECOVERY BOND

CLECO SECURITIZATION I LLC
SERIES 2022-A SENIOR SECURED STORM RECOVERY BONDS, TRANCHE {__}

BOND INTEREST RATE	ORIGINAL PRINCIPAL AMOUNT	SCHEDULED FINAL PAYMENT DATE	FINAL MATURITY DATE
{____}%	${__________}	{__________}, 20{__}	{__________}, 20{__}

Cleco Securitization I LLC, a limited liability company created under the laws of the State of Louisiana (herein referred to as the “Issuer”), for value received, hereby promises to pay to {__________}, or registered assigns, the Original Principal Amount shown above in annual installments on the Payment Dates and in the amounts specified below or, if less, the amounts determined pursuant to Section 8.02 of the Indenture, in each year, commencing on the date determined as provided below and ending on or before the Final Maturity Date shown above and to pay interest, at the Bond Interest Rate shown above, on each {__________} and {__________} or, if any such day is not a Business Day, the next Business Day, commencing on {__________}, 20{__} and continuing until the earlier of the payment in full of the principal hereof and the Final Maturity Date (each, a “Payment Date”), on the principal amount of this Storm Recovery Bond. Interest on this Storm Recovery Bond will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding such Payment Date or, if no interest has yet been paid, from the date of issuance. Interest will be computed on the basis of {__________}. Such principal of and interest on this Storm Recovery Bond shall be paid in the manner specified below.

The principal of and interest on this Storm Recovery Bond are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Storm Recovery Bond shall be applied first to interest due and payable on this Storm Recovery Bond as provided above and then to the unpaid principal of and premium, if any, on this Storm Recovery Bond, all in the manner set forth in the Indenture.

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual, electronic or facsimile signature, this Storm Recovery Bond shall not be entitled to any benefit under the Indenture referred to below or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually, electronically or in facsimile, by its Responsible Officer.

Date: {__________}, 20{__}	CLECO SECURITIZATION I LLC,
	as Issuer
	By:
		Name:
		Title:

INDENTURE TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

Dated: {__________}, 20{__}

This is one of the Series 2022-A, Tranche {__} Senior Secured Storm Recovery Bonds, designated above and referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,
as Indenture Trustee
By:
	Name:
	Title:

This Senior Secured Storm Recovery Bond, Series 2022-A, tranche {__} is one of a duly authorized issue of Series 2022-A Senior Secured Storm Recovery Bonds of the Issuer (herein called the “Series 2022-A Bonds”), which Series are issuable in one or more tranches. The Series 2022-A Bonds consist of {__} tranches, including the Tranche {__} Series 2022-A Senior Secured Storm Recovery Bonds, which include this Senior Secured Storm Recovery Bond (herein called the “Tranche {__} Storm Recovery Bonds”), all issued and to be issued under that certain Indenture dated as of {         }, 2022 (as supplemented by the Series Supplement (as defined below), the “Indenture”), between the Issuer and The Bank of New York Mellon Trust Company, National Association, in its capacity as indenture trustee (the “Indenture Trustee”, which term includes any successor indenture trustee under the Indenture) and in its separate capacity as a securities intermediary (the “Securities Intermediary”, which term includes any successor securities intermediary under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Series 2022-A Bonds. For purposes herein, “Series Supplement” means that certain Series Supplement dated as of {         }, 2022 between the Issuer and the Indenture Trustee. All terms used in this Tranche {__} Storm Recovery Bond that are defined in the Indenture, as amended, restated, supplemented or otherwise modified from time to time, shall have the meanings assigned to such terms in the Indenture.

All tranches of Series 2022-A Bonds are and will be equally and ratably secured by the Trust Estate pledged as security therefor as provided in the Indenture.

The principal of this Tranche {__} Storm Recovery Bond shall be payable on each Payment Date only to the extent that amounts in the Collection Account for the Series 2022-A Bonds are available therefor, and only until the outstanding principal balance thereof on the preceding Payment Date (after giving effect to all payments of principal, if any, made on the preceding Payment Date) has been reduced to the principal balance specified in the Expected Sinking Fund Schedule that is attached to the Series Supplement as Schedule A, unless payable earlier because an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders representing a majority of the Outstanding Amount of the Series 2022-A Bonds have declared the Series 2022-A Bonds to be immediately due and payable in accordance with Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). However, actual principal payments may be made in lesser than expected amounts and at later than expected times as determined pursuant to Section 8.02 of the Indenture. The entire unpaid principal amount of this Tranche {__} Storm Recovery Bond shall be due and payable on the Final Maturity Date hereof. Notwithstanding the foregoing, the entire unpaid principal amount of the Series 2022-A Bonds shall be due and payable, if not then previously paid, on the date on which an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders of the Series 2022-A Bonds representing a majority of the Outstanding Amount of the Series 2022-A Bonds have declared the Series 2022-A Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). All principal payments on the Tranche {__} Storm Recovery Bonds shall be made pro rata to the Holders of the Tranche{__} Storm Recovery Bonds entitled thereto based on the respective principal amounts of the Tranche {__} Storm Recovery Bonds held by them.

Payments of interest on this Tranche {__} Storm Recovery Bond due and payable on each Payment Date, together with the installment of principal or premium, if any, shall be made by check mailed first-class, postage prepaid, to the Person whose name appears as the Registered Holder of this Tranche {__} Storm Recovery Bond (or one or more Predecessor Tranche {__} Storm Recovery Bonds) on the Storm Recovery Bond Register as of the close of business on the Record Date or in such other manner as may be provided in the Indenture or the Series Supplement, except that (a) upon application to the Indenture Trustee by any Holder owning a Global Storm Recovery Bond evidencing this Tranche {__} Storm Recovery Bond not later than the applicable Record Date, payment will be made by wire transfer to an account maintained by such Holder, and (b) if this Tranche {__} Storm Recovery Bond is held in Book-Entry Form, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Storm Recovery Bond evidencing this Tranche {__} Storm Recovery Bond unless and until such Global Storm Recovery Bond is exchanged for Definitive Storm Recovery Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to this Tranche {__} Storm Recovery Bond on a Payment Date, which shall be payable as provided below. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Storm Recovery Bond Register as of the applicable Record Date without requiring that this Tranche {__} Storm Recovery Bond be submitted for notation of payment. Any reduction in the principal amount of this Tranche {__} Storm Recovery Bond (or any one or more Predecessor Tranche {__} Storm Recovery Bonds) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Tranche {__} Storm Recovery Bond and of any Tranche {__} Storm Recovery Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then-remaining unpaid principal amount of this Tranche {__} Storm Recovery Bond on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice sent no later than five (5) days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of this Tranche {__} Storm Recovery Bond and shall specify the place where this Tranche {__} Storm Recovery Bond may be presented and surrendered for payment of such installment.

The Issuer shall pay interest on overdue installments of interest at the Bond Interest Rate to the extent lawful.

This Tranche {__} Storm Recovery Bond is a “storm recovery bond” as such term is defined in the Securitization Act. Principal and interest on this Tranche {__} Storm Recovery Bond are payable from and secured primarily by the Storm Recovery Property authorized by the Financing Order.

The Securitization Act provides that the State of Louisiana pledges “to and agrees with bondholders, the owners of storm recovery property, and other financing parties that the state will not:

(1) Alter the provisions of this Part [the Securitization Act] which authorize the commission to create a contract right by the issuance of a financing order, to create storm recovery property, and to make the storm recovery charges imposed by a financing order irrevocable, binding, and nonbypassable charges;

(2) Take or permit any action that impairs or would impair the value of the storm recovery property; or

(3) Except as allowed under this Section [Section 1234 the Securitization Act] and except for adjustments under any true-up mechanism established by the commission, reduce, alter, or impair storm recovery charges that are to be imposed, collected, and remitted for the benefit of the bondholders and other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related storm recovery bonds have been paid and performed in full. Nothing in this Paragraph shall preclude limitation or alteration if and when full compensation is made by law for the full protection of the storm recovery charges collected pursuant to a financing order and full protection of the holders of storm recovery bonds and any assignee or financing party.”

In addition, the Financing Order provides that the Louisiana Commission “covenants, pledges and agrees it thereafter shall not amend, modify, or terminate th[e] Financing Order by any subsequent action, or reduce, impair, postpone, terminate, or otherwise adjust the storm recovery charges approved in th[e] Financing Order, or in any way reduce or impair the value of the storm recovery property created by th[e] Financing Order, except as may be contemplated by a refinancing authorized in strict accordance with the Securitization Act by a subsequent order of the Commission or by the periodic true up adjustments authorized by th[e] Financing Order, until the indefeasible payment in full of the storm recovery bonds and the related financing costs.”

The Issuer acknowledges that the purchase of this Tranche {__} Storm Recovery Bond by the Holder hereof or the purchase of any beneficial interest herein by any Person are made in reliance on the foregoing pledges by the State of Louisiana and the Louisiana Commission.

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Tranche {__} Storm Recovery Bond may be registered on the Storm Recovery Bond Register upon surrender of this Tranche {__} Storm Recovery Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by, (a) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee, and (b) such other documents as the Indenture Trustee may require, and thereupon one or more new Tranche {__} Storm Recovery Bonds of Authorized Denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Tranche {__} Storm Recovery Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange, other than exchanges pursuant to Section 2.04 or Section 2.06 of the Indenture not involving any transfer.

Each Holder, by acceptance of a Tranche {__} Storm Recovery Bond, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Tranche {__} Storm Recovery Bonds or under the Indenture or any certificate or other writing delivered in connection therewith, against (a) any owner of a membership interest in the Issuer (including Cleco Power) or (b) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including Cleco Power) in its respective individual or corporate capacities, or of any successor or assign of any of them in their individual or corporate capacities, except as any such Person may have expressly agreed in writing. Each Holder by accepting a Tranche {__} Storm Recovery Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Tranche {__} Storm Recovery Bonds.

Prior to the due presentment for registration of transfer of this Tranche {__} Storm Recovery Bond, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Tranche {__} Storm Recovery Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of principal of and premium, if any, and interest on this Tranche {__} Storm Recovery Bond and for all other purposes whatsoever, whether or not this Tranche {__} Storm Recovery Bond be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders under the Indenture at any time by the Issuer with the consent of the Holders representing a majority of the Outstanding Amount of all Series 2022-A Storm Recovery Bonds at the time outstanding of each tranche to be affected and upon the satisfaction of the Rating Agency Condition and the Louisiana Commission Condition. The Indenture also contains provisions permitting the Holders representing specified percentages of the Outstanding Amount of the Series 2022-A Storm Recovery Bonds, on behalf of the Holders of all the Series 2022-A Storm Recovery Bonds, with the satisfaction of the Louisiana Commission Condition, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Tranche {__} Storm Recovery Bond (or any one of more Predecessor Tranche {__} Storm Recovery Bonds) shall be conclusive and binding upon such Holder and upon all future Holders of this Tranche {__} Storm Recovery Bond and of any Tranche {__} Storm Recovery Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Tranche {__} Storm Recovery Bond. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders issued thereunder, but with the satisfaction of the Louisiana Commission Condition.

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Issuer on a Series 2022-A Storm Recovery Bond and (b) certain restrictive covenants and the related Events of Default, upon compliance by the Issuer with certain conditions set forth in the Indenture, which provisions apply to this Tranche {__} Storm Recovery Bond.

The term “Issuer” as used in this Tranche {__} Storm Recovery Bond includes any successor to the Issuer under the Indenture.

The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders under the Indenture.

The Tranche {__} Storm Recovery Bonds are issuable only in registered form in denominations as provided in the Indenture and the Series Supplement subject to certain limitations therein set forth.

This Tranche {__} Storm Recovery Bond, the Indenture and the Series Supplement shall be construed in accordance with the laws of the State of Louisiana, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Tranche {__} Storm Recovery Bond or of the Indenture shall alter or impair the obligation, which is absolute and unconditional, to pay the principal of and interest on this Tranche {__} Storm Recovery Bond at the times, place and rate and in the coin or currency herein prescribed.

The Issuer and the Indenture Trustee, by entering into the Indenture, and the Holders and any Persons holding a beneficial interest in any Tranche {__} Storm Recovery Bond, by acquiring any Tranche {__} Storm Recovery Bond or interest therein, (a) express their intention that, solely for the purpose of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purpose of state, local and other taxes, the Tranche {__} Storm Recovery Bonds qualify under applicable tax law as indebtedness of the sole owner of the Issuer secured by the Trust Estate and (b) solely for purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Tranche {__} Storm Recovery Bonds are outstanding, agree to treat the Tranche {__} Storm Recovery Bonds as indebtedness of the sole owner of the Issuer secured by the Trust Estate unless otherwise required by appropriate taxing authorities.

ABBREVIATIONS

The following abbreviations, when used above on this Series 2022-A Storm Recovery Bond, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM	as tenants in common
TEN ENT	as tenants by the entireties
JT TEN	as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT	___________________ Custodian ______________________ (Custodian)                                            (minor)
	Under Uniform Gifts to Minor Act (____________________)                                                                                 (State)

Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee ____________

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

(name and address of assignee)

the within Tranche {__} Storm Recovery Bond and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said Tranche {__} Storm Recovery Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated: ________________	________________________________________________________________ Signature Guaranteed:
	________________________________________________________________

The signature to this assignment must correspond with the name of the registered owner as it appears on the within Tranche {__} Storm Recovery Bond in every particular, without alteration, enlargement or any change whatsoever.

NOTE: Signature(s) must be guaranteed by an institution that is a member of: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee.

EXHIBIT B

FORM OF SERIES SUPPLEMENT

See attached.

This SERIES SUPPLEMENT, dated as of {                     }, 2022 (this “Supplement”), is by and between CLECO SECURITIZATION I LLC, a limited liability company created under the laws of the State of Louisiana (the “Issuer”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties under the Indenture dated as of {                       }, 2022 (the “Indenture”), by and between the Issuer and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, in its capacity as Indenture Trustee and in its separate capacity as a Securities Intermediary.

PRELIMINARY STATEMENT

Section 9.01 of the Indenture provides, among other things, that the Issuer and the Indenture Trustee may at any time enter into an indenture supplemental to the Indenture for the purposes of authorizing the issuance by the Issuer of a Series of the Storm Recovery Bonds and specifying the terms thereof. The Issuer has duly authorized the creation of a Series of the Storm Recovery Bonds with an initial aggregate principal amount of ${__________} to be known as Series 2022-A Senior Secured Storm Recovery Bonds (the “Series 2022-A Storm Recovery Bonds”), and the Issuer and the Indenture Trustee are executing and delivering this Supplement in order to provide for the Series 2022-A Storm Recovery Bonds.

All terms used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to them therein, except to the extent such terms are defined or modified in this Supplement or the context clearly requires otherwise. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Supplement shall govern.

GRANTING CLAUSE

With respect to the Series 2022-A Storm Recovery Bonds, the Issuer hereby Grants to the Indenture Trustee, as Indenture Trustee for the benefit of the Secured Parties of the Series 2022-A Storm Recovery Bonds, all of the Issuer’s right, title and interest (whether now owned or hereafter acquired or arising) in and to (a) the Storm Recovery Property created under and pursuant to the Financing Order U-35807-B issued April 1, 2022 (Docket No. U-35807) and the Securitization Law, and transferred by the Seller to the Issuer on the date hereof pursuant to the Sale Agreement (including, to the fullest extent permitted by applicable law, the right to impose, bill, charge, collect and receive the Storm Recovery Charges, the right to obtain periodic adjustments to the Storm Recovery Charges, and all revenues, collections, claims, rights to payments, payments, money and proceeds arising out of the rights and interests created under the Financing Order), (b) all Storm Recovery Charges related to the Storm Recovery Property, (c) the Sale Agreement and the Bill of Sale executed in connection therewith and all property and interests in property transferred under the Sale Agreement and the Bill of Sale with respect to the Storm Recovery Property and the Series 2022-A Storm Recovery Bonds, (d) the Servicing Agreement, the Administration Agreement and any subservicing, agency, administration or collection agreements executed in connection therewith, to the extent related to the Storm Recovery Property and the Series 2022-A Storm Recovery Bonds, (e) the Collection Account for the Series 2022-A Storm Recovery Bonds, all Subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto, (f) all rights to compel the Servicer to file for and obtain periodic adjustments to the Storm Recovery Charges in accordance with the Securitization Act and the Financing Order, (g) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands, causes and choses in action constitute Storm Recovery Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of such items or any other form of property, (h) all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing, and (i) all payments on or under, and all proceeds in respect of, any or all of the foregoing (the “Trust Estate”), it being understood that the following do not constitute the Trust Estate: (x) cash that has been released pursuant to the terms of the Indenture, including Section 8.02(e)(x) of the Indenture and, following retirement of all Outstanding Series 2022-A Storm Recovery Bonds, pursuant to Section 8.02(e)(xii) of the Indenture, (y) amounts deposited with the Issuer on the Closing Date, for payment of costs of issuance with respect to the Series 2022-A Storm Recovery Bonds (together with any interest earnings thereon) or (z) proceeds from the sale of the Series 2022-A Storm Recovery Bonds required to pay the purchase price for the Storm Recovery Property and paid pursuant to the Sale Agreement and upfront Financing Costs, it being understood that such amounts described in clause (x) and clause (y) above shall not be subject to Section 3.17 of the Indenture. This Supplement covers the foregoing described portion of the Storm Recovery Property described in the Financing Order.¹ For the avoidance of doubt, any “storm recovery property” (as defined in the Securitization Act) created with respect to an Additional Series shall not be part of the Trust Estate.

¹ La. R.S. 45:1229(D).

The foregoing Grant is made in trust to secure the Secured Obligations equally and ratably without prejudice, priority or distinction, except as expressly provided in the Indenture, to secure compliance with the provisions of the Indenture with respect to the Series 2022-A Storm Recovery Bonds, all as provided in the Indenture and to secure the performance by the Issuer of all of its obligations under the Indenture. The Indenture and this Supplement constitute a security agreement within the meaning of the Securitization Act and under the UCC to the extent that the provisions of the UCC are applicable hereto. The Issuer authorizes the Indenture Trustee (but the Indenture Trustee is not required) to file financing statements covering the Trust Estate, either as described above or by using more general terms as permitted by Section 9-504 of the Louisiana UCC; provided, however, that such authorization shall not be deemed an obligation.

The Indenture Trustee, as indenture trustee on behalf of the Holders, acknowledges such Grant and accepts the trusts under this Supplement and the Indenture in accordance with the provisions of this Supplement and the Indenture.

SECTION 1.      Designation. The Series 2022-A Storm Recovery Bonds shall be designated generally as the 2022-A Senior Secured Storm Recovery Bonds, and further denominated as tranches {__} through {__}.

SECTION 2.      Initial Principal Amount; Bond Interest Rate; Scheduled Final Payment Date; Final Maturity Date; Required Capital Amount. The Series 2022-A Storm Recovery Bonds of each tranche shall have the initial principal amount, bear interest at the rates per annum (the “Bond Interest Rate”) and shall have the Scheduled Final Payment Dates and the Final Maturity Dates set forth below:

Weighted Average Life	Initial Principal Amount	Bond Interest Rate	Scheduled Final Payment Date	Final Maturity Date
{__}	${__________}	{____}%	{_____}, 20{__}	{_____}, 20{__}
{__}	${__________}	{____}%	{_____}, 20{__}	{_____}, 20{__}

The Bond Interest Rate shall be computed by the Issuer on the basis of a 360-day year of twelve 30-day months.

The Required Capital Amount for the Series 2022-A Storm Recovery Bonds shall be equal to 0.50% of the initial principal amount thereof.

SECTION 3.      Authentication Date; Payment Dates; Expected Sinking Fund Schedule for Principal; Periodic Interest; Book-Entry Storm Recovery Bonds.

(a)           Authentication Date. The Series 2022-A Storm Recovery Bonds that are authenticated and delivered by the Indenture Trustee to or upon the order of the Issuer on {________} (the “Closing Date”) shall have as their date of authentication {________}.

(b)           Payment Dates. The “Payment Dates” for the Series 2022-A Storm Recovery Bonds are {__________} and {__________} of each year or, if any such date is not a Business Day, the next Business Day, commencing on {__________}, 20{__} and continuing until the earlier of repayment of the Series 2022-A Storm Recovery Bonds in full and the Final Maturity Date.

(c)           Expected Sinking Fund Schedule for Principal. Unless an Event of Default shall have occurred and be continuing, on each Payment Date, the Indenture Trustee shall distribute to the Holders of record as of the related Record Date amounts payable pursuant to Section 8.02(e) of the Indenture as principal, in the following order and priority: {(1) to the holders of the Series 2022-A, Tranche {__} Storm Recovery Bonds, until the Outstanding Amount of the Series 2022-A, Tranche {__} Storm Recovery Bonds thereof has been reduced to zero; and (2) to the holders of the Series 2022-A, Tranche {__} Storm Recovery Bonds, until the Outstanding Amount of the Series 2022-A, Tranche {__} Storm Recovery Bonds thereof has been reduced to zero; provided, however, that in no event shall a principal payment pursuant to this Section 3(c) on any tranche on a Payment Date be greater than the amount necessary to reduce the Outstanding Amount of such tranche of Series 2022-A Storm Recovery Bonds to the amount specified in the Expected Sinking Fund Schedule that is attached as Schedule A hereto for such tranche and Payment Date}.

(d)           Periodic Interest. “Periodic Interest” will be payable on each tranche of the Series 2022-A Storm Recovery Bonds on each Payment Date in an amount equal to one-half of the product of (i) the applicable Bond Interest Rate and (ii) the Outstanding Amount of the related tranche of Series 2022-A Storm Recovery Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the related tranche of Series 2022-A Storm Recovery Bonds on such preceding Payment Date; provided, however, that, with respect to the initial Payment Date, or if no payment has yet been made, interest on the outstanding principal balance will accrue from and including the Closing Date to, but excluding, the following Payment Date.

(e)           Book-Entry Storm Recovery Bonds. The Series 2022-A Storm Recovery Bonds shall be Book-Entry Storm Recovery Bonds, and the applicable provisions of Section 2.11 of the Indenture shall apply to the Series 2022-A Storm Recovery Bonds.

SECTION 4.       Authorized Denominations. The Series 2022-A Storm Recovery Bonds shall be issuable in denominations of $2,000 and integral multiples of $1,000 in excess thereof, except for one bond, which may be a smaller denomination (the “Authorized Denominations”).

SECTION 5.      Delivery and Payment for the Series 2022-A Storm Recovery Bonds; Form of the Series 2022-A Storm Recovery Bonds. The Indenture Trustee shall deliver the Series 2022-A Storm Recovery Bonds to the Issuer when authenticated in accordance with Section 2.03 of the Indenture. The Series 2022-A Storm Recovery Bonds of each tranche shall be in the form of Exhibits {__} hereto.

SECTION 6.      Ratification of Indenture. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement, shall be read, taken and construed as one and the same instrument. This Supplement amends, modifies and supplements the Indenture only insofar as it relates to the Series 2022-A Storm Recovery Bonds.

SECTION 7.       Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

SECTION 8.       Governing Law. This Supplement shall be governed by and construed in accordance with the laws of the State of Louisiana, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

SECTION 9.      Issuer Obligation. No recourse may be taken directly or indirectly by the Holders with respect to the obligations of the Issuer on the Series 2022-A Storm Recovery Bonds, under the Indenture or this Supplement or any certificate or other writing delivered in connection herewith or therewith, against (a) any owner of a beneficial interest in the Issuer (including Cleco Power) or (b) any shareholder, partner, owner, beneficiary, officer, director, employee or agent of the Indenture Trustee, the Managers or any owner of a beneficial interest in the Issuer (including Cleco Power) in its individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed. Each Holder by accepting a Series 2022-A Storm Recovery Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Series 2022-A Storm Recovery Bonds.

SECTION 10.  Indenture Trustee Disclaimer. The Indenture Trustee is not responsible for the validity or sufficiency of this Supplement or for the recitals contained herein.

SECTION 11.  Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial. Each of the Issuer and the Indenture Trustee and each Holder (by its acceptance of the Storm Recovery Bonds) hereby irrevocably submits to the non-exclusive jurisdiction of (A) any Louisiana State court and any New York State court sitting in The Borough of Manhattan in The City of New York or (B) any U.S. federal court sitting in Louisiana and any U.S. federal court sitting in The Borough of Manhattan in The City of New York in respect of any suit, action or Proceeding arising out of or relating to this Supplement and the Series 2022-A Storm Recovery Bonds and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the aforesaid courts. Each of the Issuer, the Indenture Trustee and each Holder (by its acceptance of the Storm Recovery Bonds) irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury.

IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Supplement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

CLECO SECURITIZATION I LLC,
as Issuer
By:
	Name:
	Title:
THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee
By:
	Name:
	Title:

SCHEDULE A
TO SERIES SUPPLEMENT

Expected SINKING FUND Schedule

Outstanding Principal Balance

Date	Tranche {__}	Tranche {__}
Closing Date	${__________}	${__________}
{__________}, 2022	${__________}	${__________}
{__________}, 2022	${__________}	${__________}
{__________}, 2022	${__________}	${__________}

EXHIBIT {__}
TO SERIES SUPPLEMENT

FORM OF TRANCHE {__} OF SERIES 2022-A SENIOR SECURED STORM RECOVERY BONDS

{__________}

EXHIBIT C

SERVICING CRITERIA TO BE ADDRESSED
BY INDENTURE TRUSTEE IN ASSESSMENT OF COMPLIANCE

Regulation AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
	General Servicing Considerations
1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.
1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.
1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for the pool assets are maintained.
1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.
1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.
	Cash Collection and Administration
1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.	X
1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	X
1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.
1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	X
1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements.  For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) under the Exchange Act.	X
1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.
1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts.  These reconciliations are:  (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items.  These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.
	Investor Remittances and Reporting
1122(d)(3)(i)	Reports to investors, including those to be filed with the SEC, are maintained in accordance with the transaction agreements and applicable SEC requirements.  Specifically, such reports: (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the SEC as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of pool assets serviced by the servicer.
1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	X
1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the servicer’s investor records, or such other number of days specified in the transaction agreements.	X

C-1 

Regulation AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	X
	Pool Asset Administration
1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents.
1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements.
1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.
1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related pool asset documents.
1122(d)(4)(v)	The servicer’s records regarding the pool assets agree with the servicer’s records with respect to an obligor’s unpaid principal balance.
1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s pool assets (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.
1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.
1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period a pool asset is delinquent in accordance with the transaction agreements.  Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent pool assets, including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).
1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.
1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts):  (A) such funds are analyzed, in accordance with the obligor’s pool asset documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets, or such other number of days specified in the transaction agreements.
1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.
1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.
1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.
1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.
1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.

C-2

APPENDIX A

DEFINITIONS

This is Appendix A to the Indenture.

A. Defined Terms. As used in the Indenture, the following terms have the following meanings:

“17g-5 Website” means the password-protected website on which the Servicer shall post any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Indenture Trustee to any Rating Agency under the Indenture or any other Basic Document to which it is a party for the purpose of determining or confirming the credit rating of the Storm Recovery Bonds or undertaking credit rating surveillance.

“Act” means an instrument or instruments embodying and evidencing a request, demand, authorization, direction, notice, consent, waiver or other action provided by the Indenture to be given or taken by Holders.

“Additional Series” means the issuance by the Issuer of any series of Storm Recovery Bonds issued after the date hereof, upon the satisfaction of the conditions set forth in Section 3.22 of the Indenture.

“Administration Agreement” means the Administration Agreement, dated as of the date hereof, by and between Cleco Power, as Administrator, and the Issuer.

“Administration Fee” is defined in Section 2(a) of the Administration Agreement.

“Administrator” means Cleco Power.

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Law” means Sections 1471 through 1474 of the Internal Revenue Code and any regulations, or agreements thereunder or official interpretations thereof.

“Authorized Denominations” means denominations of $2,000 and integral multiples of $1,000 in excess thereof, which the Series 2022-A Storm Recovery Bonds shall be issuable in, except for one bond, which may be a smaller denomination.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.).

“Basic Documents” means the Indenture, Series Supplement, the Issuer’s Articles of Organization and Initial Report, the LLC Agreement, the Administration Agreement, the Sale Agreement, the Bill of Sale, the Servicing Agreement, each Letter of Representations, the Underwriting Agreement and all other documents and certificates delivered in connection therewith.

Appendix A-1

“Bill of Sale” means a bill of sale substantially in the form of Exhibit A to the Sale Agreement delivered pursuant to Section 2.02(i) of the Sale Agreement.

“Bond Interest Rate” means the rates per annum at which the Storm Recovery Bonds will bear interest, as set forth in the Series Supplement.

“Book-Entry Form” means, with respect to any Storm Recovery Bond, that such Storm Recovery Bond is not certificated and the ownership and transfers thereof shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture and the Series Supplement pursuant to which such Storm Recovery Bond was issued.

“Book-Entry Storm Recovery Bonds” means any Storm Recovery Bonds issued in Book-Entry Form; provided, however, that, after the occurrence of a condition whereupon book-entry registration and transfer are no longer permitted and Definitive Storm Recovery Bonds are to be issued to the Holder of such Storm Recovery Bonds, such Storm Recovery Bonds shall no longer be “Book-Entry Storm Recovery Bonds”.

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York or New Orleans, Louisiana, are, or The Depository Trust Company is, required or authorized by law or executive order to remain closed.

“Capital Subaccount” means the capital subaccount established by the Indenture Trustee pursuant to Section 8.02(a) of the Indenture.

“Claim” means a “claim” as defined in Section 101(5) of the Bankruptcy Code.

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.

“Cleco Power” means Cleco Power LLC.

“Closing Date” means the date on which the Storm Recovery Bonds are originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement.

“Code” means Internal Revenue Code.

“Collection Account” means one or more segregated trust accounts opened by the Issuer in the Indenture Trustee’s name for the deposit of Storm Recovery Charges and all other amounts received with respect to the Trust Estate.

“Covenant Defeasance Option” has the meaning set forth in Section 4.01(b) of the Indenture.

“Customers” means any existing or future Louisiana Commission-jurisdictional customer who remain attached to Cleco Power’s (or its successor’s or assignee’s) electric transmission or distribution lines, and who, via such lines, receive any type of service from Cleco Power (or its successors or assignees) under rate schedules or special contracts approved by the Louisiana Commission.

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

Appendix A-2

“Definitive Storm Recovery Bonds” has the meaning set forth in Section 2.13 of the Indenture.

“Eligible Account” means a segregated non-interest-bearing trust account with an Eligible Institution.

“Eligible Institution” means:

(a) the corporate trust department of the Indenture Trustee, so long as any of the securities of the Indenture Trustee are rated (i) either a short-term credit rating from Moody’s and Fitch of at least “P-1” and “F-1”, respectively or a long-term unsecured debt rating from Moody’s and Fitch of at least “A2” and “A”, respectively, and (ii) have a credit rating from S&P of at least “A”; or

(b) the trust department of a depository institution organized under the laws of the United States of America or any state or domestic branch of a foreign bank whose deposits are insured by the Federal Deposit Insurance Corporation, and has either:

(i)        with respect to specified investments having a maturity of greater than one month, a long-term unsecured debt rating of “AA-” or higher by S&P, “A2” or higher by Moody’s and “A” or higher by Fitch, or

(ii)        a short-term issuer rating of “A-1” or higher by S&P, “P-1” or higher by Moody’s and “F1” or higher by Fitch;

provided, however, that if an Eligible Institution then being utilized for any purposes under the Indenture or the Series Supplement no longer meets the definition of Eligible Institution, then the Issuer shall replace such Eligible Institution within sixty (60) days of such Eligible Institution no longer meeting the definition of Eligible Institution.

“Eligible Investments” means instruments or investment property that evidence:

(a) direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

(b) demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of, bank deposit products of or bankers’ acceptances issued by, any depository institution (including, but not limited to, bank deposit products of the Indenture Trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any State thereof and subject to supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least A-1, P-1 and F-1 or their equivalents by each of S&P, Moody’s and Fitch, or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Storm Recovery Bonds;

(c) commercial paper (including commercial paper of the Indenture Trustee, acting in its commercial capacity, and other commercial paper issued by Cleco Power or any of its affiliates) having, at the time of investment or contractual commitment to invest, a rating of least “A-1”, “P-1” and “F1” or their equivalents by each of S&P, Moody’s and Fitch or such lower rating as not result in the downgrading or withdrawal of the ratings of the Storm Recovery Bonds;

Appendix A-3

(d) investments in money market funds having a rating from Moody’s, S&P and if Fitch provides a rating thereon, Fitch, of “Aaa”, “AAA” and “AAA”, respectively, including funds for which the Indenture Trustee or any of its Affiliates act as investment manager or advisor;

(e) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or its agencies or instrumentalities, entered into with Eligible Institutions;

(f) repurchase obligations with respect to any security or whole loan entered into with an Eligible Institution or with a registered broker-dealer acting as principal and that meets certain ratings criteria set forth below; provided, however, that if an Eligible Institution then being utilized for any purposes under the Indenture or the Series Supplement no longer meets the definition of Eligible Institution (including clauses (e) and (f) of this definition of Eligible Investments), then the Issuer shall replace such Eligible Institution within sixty (60) days of such Eligible Institution no longer meeting the definition of Eligible Institution:

(i)        a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any such broker/dealer being referred to in this definition as a “broker/dealer”), the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s, “A-1+” by S&P and, if Fitch provides a rating thereon, “F1” by Fitch at the time of entering into such repurchase obligation; or

(ii)        an unrated broker/dealer, acting as principal, that is a wholly owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s, “A-1+” by S&P and, if Fitch provides a rating thereon, “F1” by Fitch at the time of purchase so long as the obligations of such unrated broker/dealer are unconditionally guaranteed by such non-bank or bank holding company; and

(g)   any other investment permitted by each of the Rating Agencies;

in each case maturing not later than the Business Day preceding the next Payment Date or Special Payment Date, if applicable (for the avoidance of doubt, investments in money market funds or similar instruments that are redeemable on demand shall be deemed to satisfy the foregoing requirement). Notwithstanding the foregoing: (1) no investments that mature in 30 days or more shall be “Eligible Investments” unless the issuer thereof has either a short-term unsecured debt rating of at least “P-1” from Moody’s or a long-term unsecured debt rating of at least “A1” from Moody’s and also has a long-term unsecured debt rating of at least “A” from S&P; (2) no investments described in clauses (b) through (d) above that have maturities of more than 30 days but less than or equal to 3 months shall be “Eligible Investments” unless the issuer thereof has a long-term unsecured debt rating of at least “A1” from Moody’s and a short-term unsecured debt rating of at least “P-1” from Moody’s; (3) no investments described in clauses (b) through (d) above that have maturities of more than 3 months shall be “Eligible Investments” unless the issuer thereof has a long-term unsecured debt rating of at least “A1” from Moody’s and a short-term unsecured debt rating of at least “P-1” from Moody’s; (4) no investments described in bullet points (b) through (d) above which have a maturity of 60 days or less will be Eligible Investments unless such investments have a rating from S&P of at least “A-1”; and (5) no investments described in bullet points (b) through (d) above which have a maturity of more than 60 days will be Eligible Investments unless such investments have a rating from S&P of at least “AA-”, “A-1+” or “AAAm”.

Appendix A-4

“Event of Default” has the meaning set forth in Section 5.01 of the Indenture.

“Excess Funds Subaccount” means the excess funds subaccount established by the Indenture Trustee pursuant to Section 8.02(a) of the Indenture.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expected Sinking Fund Schedule” means the Schedule A to the Series Supplement.

“Final Maturity Date” means, with respect to each Series of tranche of Storm Recovery Bonds, the final maturity date therefor as specified in the applicable Series Supplement.

“Financing Order” means the Financing Order U-35807-B issued on April 1, 2022 (Docket No. U-35807) pursuant to the Securitization Act.

“Fitch” means Fitch Ratings, Inc. or any successor in interest. References to Fitch are effective so long as Fitch is a rating agency.

“General Subaccount” means the general subaccount established by the Indenture Trustee pursuant to Section 8.02(a) of the Indenture.

“Global Storm Recovery Bonds” means one or more bonds evidencing the Storm Recovery Bonds, which (a) shall be an aggregate original principal amount equal to the aggregate original principal amount of the Storm Recovery Bonds to be issued pursuant to the Issuer Order, (b) shall be registered in the name of the Clearing Agency therefor or its nominee, (c) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency’s or such nominee’s instructions and (d) shall bear a legend substantially to the effect set forth in Exhibit A to the Form of Series Supplement.

“Grant” means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, grant, transfer, create, grant a lien upon, a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture and the Series Supplement. A Grant of the Trust Estate shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for payments in respect of the Trust Estate and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Holders” means the holders of the Storm Recovery Bonds.

“indenture securities” means the Storm Recovery Bonds.

Appendix A-5

“indenture security holder” means a Holder.

“indenture to be qualified” means the Indenture.

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

“Indenture Trustee” means The Bank of New York Mellon Trust Company, National Association, a national banking association, as indenture trustee for the benefit of the Holders, or any other indenture trustee for the benefit of the Holders, under the Indenture.

“Indenture Trustee Cap” has the meaning set forth in Section 8.02(e)(i) of the Indenture.

“Independent” means, when used with respect to any specified Person, that the Person:

(a) is in fact independent of the Issuer, any other obligor upon the Storm Recovery Bonds, the Servicer and any Affiliate of any of the foregoing Persons,

(b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Servicer or any Affiliate of any of the foregoing Persons and

(c) is not connected with the Issuer, any such other obligor, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

“Independent Certificate” means a certificate to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and consented to by the Indenture Trustee, and such certificate shall state that the signer has read the definition of “Independent” in the Indenture and that the signer is Independent within the meaning thereof.

“Independent Manager Fee” is defined in Section 7.03(a) of the LLC Agreement and shall initially be $5,000 per annum.

“Independent Manager” is defined in Appendix A of the LLC Agreement.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Investment Earnings” means investment earnings on funds deposited in the Collection Account net of losses and investment expenses.

“Issuer” means Cleco Securitization I LLC, a Louisiana limited liability company, or any successor thereto pursuant to the Indenture.

“Issuer Order” means a written order signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or the Paying Agent, as applicable.

“Issuer Request” means a written request signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or the Paying Agent, as applicable.

Appendix A-6

“Legal Defeasance Option” has the meaning set forth in Section 4.01(b) of the Indenture.

“Letter of Representations” means any applicable agreement between the Issuer and an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act, pertaining to the Storm Recovery Bonds, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“Lien” means a security interest, lien, charge, pledge, equity or encumbrance of any kind.

“LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Cleco Securitization I LLC, dated as of [●], 2022.

“Louisiana Commission” means the Louisiana Public Service Commission or any successor entity thereto.

“Louisiana Commission Condition” has the meaning set forth in Section 9.03 of the Indenture.

“Louisiana Commission Pledge” means the pledge of the Louisiana Commission found in Part VI(G) of the Financing Order.

“Louisiana Filing Officer” means the clerk of the court of any other parish in Louisiana.

“Louisiana UCC” means the Uniform Commercial Code as in effect in the State of Louisiana.

“Manager” means each manager of the Issuer under the LLC Agreement.

“Member” has the meaning specified in the first paragraph of the LLC Agreement.

“Monthly Servicer’s Certificate” is defined in Section 3.01(b)(i) of the Servicing Agreement.

“Moody’s” means Moody’s Investors Service, Inc. or any successor in interest. References to Moody’s are effective so long as Moody’s is a rating agency.

“NRSRO” means a nationally recognized statistical rating organization.

“obligor” means, on the Storm Recovery Bonds, the Issuer and any other obligor on the Storm Recovery Bonds.

“Officer’s Certificate” means a certificate signed by a Responsible Officer of the Issuer under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, and delivered to the Indenture Trustee.

“Ongoing Financing Costs” means the ongoing financing costs described as such in the Financing Order, including Operating Expenses, any necessary replenishment of the Capital Subaccount, any deficiency between the Capital Subaccount’s income from investment and the amount of return on investment earned by the Seller, and any other costs identified in the Basic Documents; provided, however, that Ongoing Financing Costs do not include the Issuer’s costs of issuance of the Storm Recovery Bonds.

Appendix A-7

“Operating Expenses” means, with respect to the Issuer, all fees, costs and expenses owed by the Issuer with respect to the Storm Recovery Bonds, including all amounts owed by the Issuer to the Indenture Trustee (including any indemnity payments to the Indenture Trustee), the Servicing Fee, the Administration Fee, the costs and expenses incurred by the Seller in connection with the performance of the Seller’s obligations under Section 4.08 of the Sale Agreement, the costs and expenses incurred by the Servicer in connection with the performance of the Servicer’s obligations under Section 5.02(d) of the Servicing Agreement, the fees payable by the Issuer to the independent manager of the Issuer, administrative expenses, including external legal and external accounting fees, ratings maintenance fees, and all other costs and expenses recoverable by the Issuer under the terms of the Financing Order.

“Opinion of Counsel” means one or more written opinions of counsel who may be an employee of or counsel to the Servicer or the Issuer, which counsel shall be reasonably acceptable to the Indenture Trustee, the Louisiana Commission, the Issuer or the Rating Agencies, as applicable, and which shall be in form reasonably satisfactory to the Indenture Trustee, if applicable.

“Outstanding” with respect to Storm Recovery Bonds means, as of the date of determination, all Storm Recovery Bonds theretofore authenticated and delivered under the Indenture except:

(a) Storm Recovery Bonds theretofore canceled by the Storm Recovery Bond Registrar or delivered to the Storm Recovery Bond Registrar for cancellation;

(b) Storm Recovery Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Storm Recovery Bonds; provided, however, that if such Storm Recovery Bonds are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory to the Indenture Trustee; and

(c) Storm Recovery Bonds in exchange for or in lieu of other Storm Recovery Bonds which have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Storm Recovery Bonds are held by a bona fide purchaser;

provided that in determining whether the Holders of the requisite Outstanding Amount of the Storm Recovery Bonds have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Storm Recovery Bonds owned by the Issuer, any other obligor upon the Storm Recovery Bonds, Cleco Power or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be fully protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Storm Recovery Bonds that a Responsible Officer of the Indenture Trustee knows to be so owned shall be so disregarded. Storm Recovery Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Storm Recovery Bonds and that the pledgee is not the Issuer, any other obligor upon the Storm Recovery Bonds, the Servicer or any Affiliate of any of the foregoing Persons.

Appendix A-8

“Outstanding Amount” means the aggregate principal amount of all Outstanding Storm Recovery Bonds, or, if the context requires, all Outstanding Storm Recovery Bonds of a tranche, Outstanding at the date of determination.

“Outstanding Storm Recovery Bonds” means the Storm Recovery Bonds Outstanding at the date of determination.

“Paying Agent” means the entity so designated in Section 3.03 of the Indenture or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments of principal of or premium, if any, or interest on the Storm Recovery Bonds on behalf of the Issuer.

“Payment Date” has the meaning set forth in Section 3(b) of the Series Supplement.

“Periodic Interest” means the interest payable on each tranche of the Storm Recovery Bonds on each Payment Date in an amount equal to one-half of the product of (i) the applicable Bond Interest Rate and (ii) the Outstanding Amount of the related tranche of Storm Recovery Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the related tranche of Storm Recovery Bonds on such preceding Payment Date; provided, however, that, with respect to the initial Payment Date, or if no payment has yet been made, interest on the outstanding principal balance will accrue from and including the Closing Date to, but excluding, the following Payment Date.

“Person” means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), business trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof.

“Predecessor Storm Recovery Bonds” means, with respect to any particular Storm Recovery Bond, every previous Storm Recovery Bond evidencing all or a portion of the same debt as that evidenced by such particular Storm Recovery Bond, and, for the purpose of this definition, any Storm Recovery Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Storm Recovery Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Storm Recovery Bond.

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

“Protected Purchaser” means has the meaning specified in Section 8-303 of the Louisiana UCC.

“Rating Agency” means any rating agency rating the Storm Recovery Bonds, at the time of issuance at the request of the Issuer, which initially shall be Moody’s, Fitch and S&P. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, written notice of which designation shall be given to the Indenture Trustee, the Louisiana Commission and the Servicer.

Appendix A-9

“Rating Agency Condition” means, with respect to any action, at least ten (10) Business Days’ prior written notification to each Rating Agency of such action, and written confirmation from each of S&P and Moody’s to the Servicer, the Indenture Trustee and the Issuer that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of the Storm Recovery Bonds and that prior to the taking of the proposed action no other Rating Agency shall have provided written notice to the Issuer that such action has resulted or would result in the suspension, reduction or withdrawal of the then current rating of any such Tranche of the Storm Recovery Bonds; provided, that, if within such ten (10) Business Day period, any Rating Agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (i) the Issuer shall be required to confirm that such Rating Agency has received the Rating Agency Condition request, and if it has, promptly request the related Rating Agency Condition confirmation and (ii) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five (5) Business Days following such second (2^nd) request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency’s right to review or consent).

“Record Date” means one Business Day prior to the applicable Payment Date.

“Registered Holder” means the Person in whose name a Storm Recovery Bond is registered on the Storm Recovery Bond Register.

“Required Capital Amount” means the amount specified as such in the Series Supplement therefor.

“Responsible Officer” means, with respect to the Indenture Trustee, any officer within the Corporate Trust Office of the Indenture Trustee, including any Vice President, Director, Managing Officer, associate, Assistant Vice President, Secretary, Assistant Secretary, or any other officer of the Indenture Trustee having direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, and with respect to the Issuer, any officer, including President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer, of the Issuer, or any Manager.

“Return on Invested Capital” means, for any Payment Date with respect to any Remittance Period, the sum of (i) the rate of return, payable to Cleco Power, on its capital contribution in the Issuer which amount has been deposited by the Issuer into the Capital Subaccount, equal to the rate of interest payable on the longest maturing tranche of Storm Recovery Bonds on the basis of a 360-day year of twelve (12) 30-day months plus (ii) any Return on Invested Capital not paid on any prior Payment Date.

“S&P” means S&P Global Ratings, a division of S&P Global Inc. or any successor in interest. References to S&P are effective so long as S&P is a rating agency.

“Sale Agreement” means the Storm Recovery Property Sale Agreement dated as of the date hereof, relating to the Storm Recovery Property, between the Seller and the Issuer, as the same may be amended and supplemented from time to time.

“Sanctions” has the meaning set forth in Section 3.21(a) of the Indenture.

“Scheduled Final Payment Date” means, with respect to the Storm Recovery Bonds, the date with respect to each tranche when all interest and principal is scheduled to be paid in accordance with the Expected Sinking Fund Schedule, as specified in the Series Supplement. For the avoidance of doubt, the Scheduled Final Payment Date shall be the last Scheduled Payment Date set forth in the Expected Sinking Fund Schedule. The “last Scheduled Final Payment Date” means the Scheduled Final Payment Date of the latest maturing tranche of Storm Recovery Bonds.

Appendix A-10

“Scheduled Payment Dates” means, with respect to each tranche of Storm Recovery Bonds, each Payment Date on which principal for such tranche is to be paid in accordance with the Expected Sinking Fund Schedule for such tranche.

“SEC” means the Securities and Exchange Commission.

“Securities Intermediary” means The Bank of New York Mellon Trust Company, National Association, a national banking association, solely in the capacity of a “securities intermediary” as defined in the NY UCC and Federal Book-Entry Regulations or any successor securities intermediary under the Indenture.

“Securitization Act” means the “Louisiana Electric Utility Storm Recovery Securitization Act,” as amended, codified at La. R.S. 45:1226-1240.

“Seller” means Cleco Power, or its successor, in its capacity as seller of the Storm Recovery Property to the Issuer pursuant to the Sale Agreement.

“Semi-Annual Servicer’s Certificate” is defined in Section 4.01(g)(i) of the Servicing Agreement.

“Series” means any series of Storm Recovery Bonds issued by the Issuer and authenticated by the Trustee pursuant to the Indenture, as specified in the Series Supplement therefor.

“Series Supplement” means an indenture supplemental to the Indenture in the form attached as Exhibit B to the Indenture that authorizes the issuance of Storm Recovery Bonds.

“Servicer” means Cleco Power.

“Servicer Default” is defined in Section 7.01 of the Servicing Agreement.

“Servicing Agreement” means the Storm Recovery Property Servicing Agreement, dated as of the date hereof, by and between the Issuer and Cleco Power, and acknowledged and accepted by the Indenture Trustee, relating to the Storm Recovery Property as the same may be amended and supplemented from time to time.

“Servicing Fee” means the fee payable by the Issuer to the Servicer on each Payment Date with respect to the Storm Recovery Bonds, in an amount specified in Section 6.07 of the Servicing Agreement.

“Special Payment Date” means the date on which, with respect to the Storm Recovery Bonds, any payment of principal of or interest (including any interest accruing upon default) on, or any other amount in respect of, the Storm Recovery Bonds of such Series that is not actually paid within five days of the Payment Date applicable thereto is to be made by the Indenture Trustee to the Holders.

“Special Record Date” means the date at least fifteen (15) Business Days prior to the Special Payment Date.

“Storm Recovery Bond Register” means the register provided by the Issuer pursuant to Section 2.05 of the Indenture.

Appendix A-11

“Storm Recovery Bond Registrar” means the Indenture Trustee for the purpose of registering the Storm Recovery Bond and transfers of Storm Recovery Bonds pursuant to Section 2.05 of the Indenture.

“Storm Recovery Bonds” means any of the Senior Secured Storm Recovery Bonds issued by the Issuer pursuant to the Indenture.

“Storm Recovery Charges” means the nonbypassable amounts to be charged for the use or availability of electric services, approved by the Louisiana Commission in the Financing Order to recover financing costs, that shall be collected by Cleco Power, its successors, assignees or other collection agents as provided for in the Financing Order.

“Storm Recovery Charge Collections” means Storm Recovery Charges actually received by the Servicer to be remitted to the Collection Account.

“Storm Recovery Property” means all of Seller’s rights and interest under the Financing Order (including, without limitation, rights to impose, collect and receive the “storm recovery charges” (as defined in the Securitization Act) approved in such Financing Order) issued by the Louisiana Commission on April 1, 2022 (Docket No. U-35807) pursuant to the Securitization Act, except the rights of Seller to earn and receive a rate of return on its invested capital in the Issuer, to receive administration and servicer fees, to withdraw funds from its restricted storm recovery reserve funded by the proceeds from the sale of the Storm Recovery Property, or to use the Seller’s remaining portion of those proceeds.

“Subaccount” means, individually, the General Subaccount, the Excess Funds Subaccount, and the Capital Subaccount.

“Subsequent Financing Order” means, a financing order of the Louisiana Commission under the Securitization Act issued to Cleco Power subsequent to the Financing Order.

“Successor Servicer” means (i) a successor to Cleco Power pursuant to Section 6.03 of the Servicing Agreement or (ii) a successor Servicer appointed by the Trustee pursuant to Section 7.04 of the Servicing Agreement which in each case will succeed to all the rights and duties of the Servicer under the Servicing Agreement.

“Temporary Storm Recovery Bonds” means Storm Recovery Bonds executed and, upon the receipt of an Issuer Order, authenticated and delivered by the Indenture Trustee pending the preparation of Definitive Storm Recovery Bonds pursuant to Section 2.04 of the Indenture.

“True-Up Adjustment” means an adjustment to the Storm Recovery Charges in accordance with Section 4.01(b), (c), (d) or (e) of the Servicing Agreement.

“Trust Estate” has the meaning set forth in the Series Supplement.

“Trust Indenture Act” means the Trust Indenture Act of 1939 as in force on the Closing Date, unless otherwise specifically provided.

“UCC” means the Uniform Commercial Code as in effect in the relevant jurisdiction.

“Underwriting Agreement” means any underwriting agreement entered into by the Issuer, Cleco Power and the underwriters parties thereto in connection with the issuance of a separate Series of Storm Recovery Bonds in accordance with a Financing Order.

Appendix A-12

B. Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with United States generally accepted accounting principles. To the extent that the definitions of accounting terms in the Indenture are inconsistent with the meanings of such terms under generally accepted accounting principles or regulatory accounting principles, the definitions contained in the Indenture shall control. As used in the Indenture, the term “including” means “including without limitation,” and other forms of the verb “to include” have correlative meanings. All references to any Person shall include such Person’s permitted successors.

C. Computation of Time Periods. Unless otherwise stated in the Indenture, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

D. Reference; Captions. The words “hereof”, “herein” and “hereunder” and words of similar import when used in the Indenture shall refer to the Indenture as a whole and not to any particular provision of the Indenture; and references to “Section”, “subsection”, “Schedule” and “Exhibit” in the Indenture are references to Sections, subsections, Schedules and Exhibits in or to the Indenture unless otherwise specified in the Indenture. The various captions (including the tables of contents) in the Indenture are provided solely for convenience of reference and shall not affect the meaning or interpretation of the Indenture.

E. The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter forms of such terms.

Appendix A-13 

EX-10.1

Exhibit 10.1

STORM RECOVERY PROPERTY SERVICING AGREEMENT

by and between

CLECO SECURITIZATION I LLC

Issuer

and

CLECO POWER LLC

Servicer

Acknowledged and Accepted by

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL
ASSOCIATION, as Indenture Trustee

Dated as of [                            ], 2022

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	1
Section 1.01   DEFINITIONS	1
Section 1.02   OTHER DEFINITIONAL PROVISIONS	2
ARTICLE II APPOINTMENT AND AUTHORIZATION OF SERVICER	2
Section 2.01   APPOINTMENT OF THE SERVICER; ACCEPTANCE OF APPOINTMENT	2
Section 2.02   AUTHORIZATION	2
Section 2.03   DOMINION AND CONTROL OVER STORM RECOVERY PROPERTY	2
ARTICLE III BILLING AND OTHER SERVICES	3
Section 3.01   DUTIES OF THE SERVICER	3
Section 3.02   SERVICING AND MAINTENANCE STANDARDS	6
Section 3.03   ANNUAL REPORTS ON COMPLIANCE WITH REGULATION AB	7
Section 3.04   ANNUAL REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM REPORT	8
Section 3.05   THIRD-PARTY SUPPLIERS	9
ARTICLE IV SERVICES RELATED TO STORM RECOVERY CHARGE ADJUSTMENTS AND ALLOCATION ADJUSTMENTS	9
Section 4.01   STORM RECOVERY CHARGE ADJUSTMENTS	9
Section 4.02   LIMITATION OF LIABILITY	12
ARTICLE V THE STORM RECOVERY PROPERTY	13
Section 5.01   CUSTODY OF STORM RECOVERY PROPERTY RECORDS	13
Section 5.02   DUTIES OF SERVICER AS CUSTODIAN	13
Section 5.03   CUSTODIAN’S INDEMNIFICATION	15
Section 5.04   EFFECTIVE PERIOD AND TERMINATION	15
ARTICLE VI THE SERVICER	15
Section 6.01   REPRESENTATIONS AND WARRANTIES OF THE SERVICER	15
Section 6.02   INDEMNITIES OF THE SERVICER; RELEASE OF CLAIMS	17
Section 6.03   MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, THE SERVICER	21
Section 6.04   ASSIGNMENT OF THE SERVICER’S OBLIGATIONS	23
Section 6.05   LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS	23
Section 6.06   CLECO POWER NOT TO RESIGN AS SERVICER	23
Section 6.07   SERVICING FEE	24
Section 6.08   COMPLIANCE WITH APPLICABLE LAW	24
Section 6.09   SERVICER EXPENSES	25
Section 6.10   APPOINTMENTS	25
Section 6.11   NO SERVICER ADVANCES	25
Section 6.12   REMITTANCES	25
Section 6.13   PROTECTION OF TITLE	26
Section 6.14   MAINTENANCE OF OPERATIONS	26

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ARTICLE VII SERVICER DEFAULT	26
Section 7.01   SERVICER DEFAULT	26
Section 7.02   NOTICE OF SERVICER DEFAULT	28
Section 7.03   WAIVER OF PAST DEFAULTS	28
Section 7.04   APPOINTMENT OF SUCCESSOR	29
Section 7.05   COOPERATION WITH SUCCESSOR	29
ARTICLE VIII MISCELLANEOUS PROVISIONS	30
Section 8.01   AMENDMENT	30
Section 8.02   NOTICES	30
Section 8.03   ASSIGNMENT	31
Section 8.04   LIMITATIONS ON RIGHTS OF OTHERS	31
Section 8.05   SEVERABILITY	31
Section 8.06   SEPARATE COUNTERPARTS	31
Section 8.07   HEADINGS	31
Section 8.08   GOVERNING LAW	32
Section 8.09   PLEDGE TO THE TRUSTEE	32
Section 8.10   NONPETITION COVENANTS	32
Section 8.11   TERMINATION	32
Section 8.12   LPSC CONSENT	32
Section 8.13   LIMITATION OF LIABILITY	33
Section 8.14   RULE 17g-5  COMPLIANCE	33
Section 8.15   TRUSTEE ACTIONS	33

SCHEDULE A TO SERVICING AGREEMENT

EXHIBIT A – MONTHLY SERVICER’S CERTIFICATE

EXHIBIT B – SEMI-ANNUAL SERVICER’S CERTIFICATE

EXHIBIT C-1 SERVICER’S ANNUAL COMPLIANCE CERTIFICATE

EXHIBIT C-2 CERTIFICATE OF COMPLIANCE

ANNEX 1 TO SERVICING AGREEMENT

APPENDIX A – MASTER DEFINITIONS

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STORM RECOVERY PROPERTY SERVICING AGREEMENT dated as of [                ], 2022 (this “Agreement”) by and between CLECO SECURITIZATION I LLC, a Louisiana limited liability company (the “Issuer”), and CLECO POWER LLC, a Louisiana limited liability company (“Cleco Power”), as the servicer of the Storm Recovery Property hereunder (together with each successor to Cleco Power in such capacity pursuant to Section 6.03 or 7.04, the “Servicer”), and acknowledged and accepted by THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as Indenture Trustee.

WHEREAS, pursuant to the Securitization Act and the Financing Order, Cleco Power, in its capacity as seller (the “Seller”), and the Issuer are concurrently entering into the Sale Agreement dated as of the date hereof pursuant to which the Seller is selling and the Issuer is purchasing the Storm Recovery Property created pursuant to the Securitization Act and the Financing Order described therein;

WHEREAS the Servicer is willing to service the Storm Recovery Property purchased from the Seller by the Issuer;

WHEREAS the Issuer, in connection with the ownership of the Storm Recovery Property and in order to collect the Storm Recovery Charges, desires to engage the Servicer to carry out the functions described herein and the Servicer desires to be so engaged;

WHEREAS, the Storm Recovery Charges will be itemized on Customers’ Bills and the SRC Collections initially will be commingled with other funds collected from Customers;

WHEREAS, the Financing Order calls for the Servicer to execute a servicing agreement with the Issuer pursuant to which the Servicer will be required, among other things, to impose and collect applicable Storm Recovery Charges for the benefit and account of the Issuer, to make periodic Storm Recovery Charge Adjustments required or allowed by the Financing Order, and to account for and remit the applicable Storm Recovery Charges to the Trustee on behalf and for the account of the Issuer in accordance with the remittance procedures contained hereunder without any deduction or surcharge of any kind; and

WHEREAS, the Financing Order provides that the LPSC will enforce the obligations imposed by the Financing Order, the LPSC’s applicable substantive rules, and applicable statutory provisions.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01DEFINITIONS. Capitalized terms used but not otherwise defined in this Agreement have the respective meanings set forth in Appendix A hereto.

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Section 1.02OTHER DEFINITIONAL PROVISIONS.

(a)The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Appendix, Annex, Exhibit and Schedule references contained in this Agreement are references to Sections, Appendices, Annexes, Exhibits and Schedules in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.”

(b)The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.

(c)All terms defined in this Agreement have the same defined meanings when used in any certificate or other document made or delivered pursuant to this Agreement unless otherwise defined therein.

ARTICLE II

APPOINTMENT AND AUTHORIZATION OF SERVICER

Section 2.01APPOINTMENT OF THE SERVICER; ACCEPTANCE OF APPOINTMENT. The Issuer hereby appoints the Servicer, and the Servicer hereby accepts such appointment, to perform the Servicer’s obligations pursuant to this Agreement on behalf of and for the benefit of the Issuer or any assignee thereof in accordance with the terms of this Agreement and applicable law. This appointment and the Servicer’s acceptance thereof may not be revoked except in accordance with the express terms of this Agreement.

Section 2.02AUTHORIZATION. With respect to all or any portion of the Storm Recovery Property, the Servicer shall be, and hereby is, authorized and empowered by the Issuer to:

(a)execute and deliver, on behalf of itself or the Issuer, as the case may be, any and all instruments, documents or notices, and

(b)on behalf of itself or the Issuer, as the case may be, make any filing and participate in Proceedings related to the duties of the Servicer hereunder with any governmental authorities, including with the LPSC.

The Issuer shall furnish the Servicer with all executed documents as have been prepared by the Servicer for execution by the Issuer, and with such other documents as may be in the Issuer’s possession, as necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. Upon the written request of the Servicer, the Issuer shall furnish the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its duties hereunder.

Section 2.03DOMINION AND CONTROL OVER STORM RECOVERY PROPERTY. Notwithstanding any other provision contained herein, the Servicer and the Issuer agree that the Issuer shall have dominion and control over the Storm Recovery Property, and the Servicer, in accordance with the terms hereof, is acting solely as the servicing agent of and custodian for the Issuer with respect to the Storm Recovery Property and Storm Recovery Property Documentation. The Servicer hereby agrees that it shall not take any action that is not authorized by this Agreement, the Securitization Act or the Financing Order, that is not consistent with its customary procedures and practices, or that shall impair the rights of the Issuer with respect to the Storm Recovery Property, in each case unless such action is required by law or court or regulatory order.

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ARTICLE III

BILLING AND OTHER SERVICES

Section 3.01DUTIES OF THE SERVICER. The Servicer, as agent for the Issuer (to the extent provided herein), shall have the following duties:

(a)Duties of Servicer Generally. The Servicer shall manage, service, administer and make collections in respect of the Storm Recovery Property. The Servicer’s duties will include:

    (i)calculating and billing the Storm Recovery Charges;

    (ii)obtaining meter reads;

    (iii)accounting for Storm Recovery Charges;

    (iv)investigating and resolving delinquencies (and furnishing required reports with respect to such delinquencies to the Issuer);

    (v)processing and depositing collections and making periodic remittances;

    (vi)furnishing required periodic reports to the Issuer, the Trustee, the LPSC and the Rating Agencies;

    (vii)monitoring Customer payments of Storm Recovery Charges;

    (viii)notifying each Customer of any defaults in its payment obligations and other obligations (including its credit standards), and following such collection procedures as it follows with respect to comparable assets that it services for itself or others;

    (ix)collecting payments of Storm Recovery Charges and payments with respect to Storm Recovery Property from all persons or entities responsible for paying Storm Recovery Charges and other payments with respect to Storm Recovery Property to the Servicer under the Financing Order, the Securitization Act, LPSC Regulations or applicable tariffs and remitting these collections to the Trustee;

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    (x)responding to inquiries by Customers, the LPSC or any other Governmental Authority with respect to the Storm Recovery Property and the Storm Recovery Charges;

    (xi)making all required filings with the LPSC and taking such other action as may be necessary to perfect the Issuer’s ownership interests in and the Trustee’s first priority Lien on the Storm Recovery Property; making all filings and taking such other action as may be necessary to perfect and maintain the perfection and priority of and the other portions of the Trust Estate under the Indenture;

    (xii)selling, as the agent for the Issuer, as its interest may appear, defaulted or written-off accounts in accordance with the Servicer’s usual and customary practices;

    (xiii)taking action in connection with Storm Recovery Charge Adjustments and allocation of the charges among various classes of Customers as is set forth herein and pursuant to the Financing Order;

    (xiv)any other duties specified for a servicer under the Financing Order or other applicable law.

Anything to the contrary notwithstanding, the duties of the Servicer set forth in this Agreement shall be qualified in their entirety by, and the Servicer shall at all times comply with, the Financing Order, the Securitization Act and any LPSC Regulations, and the federal securities laws and the rules and regulations promulgated thereunder, including Regulation AB, as in effect at the time such duties are to be performed. Without limiting the generality of this Section 3.01(a), in furtherance of the foregoing, the Servicer hereby agrees that it shall also have, and shall comply with, the duties and responsibilities relating to data acquisition, usage and bill calculation, billing, customer service functions, collections, payment processing and remittance set forth in the Issuer Annex hereto, as it may be amended from time to time. For the avoidance of doubt, the term “usage” when used herein refers to both kilowatt hour consumption and kilowatt demand.

(b)Reporting Functions.

    (i)Monthly Servicer’s Certificate. On or before the last Servicer Business Day of each month, the Servicer shall prepare and deliver to the Issuer, the Trustee, the LPSC and the Rating Agencies a written report substantially in the form of Exhibit A (a “Monthly Servicer’s Certificate”) setting forth certain information relating to Storm Recovery Charge payments in connection with the Storm Recovery Charges received by the Servicer during the Collection Period preceding such date; provided, however, that, for any month in which the Servicer is required to deliver a Semi-Annual Servicer’s Certificate pursuant to Section 4.01(g)(i), the Servicer shall prepare and deliver the Monthly Servicer’s Certificate no later than the date of delivery of such Semi-Annual Servicer’s Certificate.

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    (ii)Notification of Laws and Regulations. The Servicer shall immediately notify the Issuer, the LPSC, the Trustee and each Rating Agency in writing when it becomes aware of any Requirement of Law or LPSC Regulations, orders or directions hereafter promulgated that have a material adverse effect on the Servicer’s ability to perform its duties under this Agreement.

    (iii)Other Information. Upon the reasonable request of the Issuer, the Trustee, the LPSC or any Rating Agency, the Servicer shall provide to the Issuer, the Trustee, the LPSC or such Rating Agency, as the case may be, any public financial information in respect of the Servicer, or any material information regarding the Storm Recovery Property to the extent it is reasonably available to the Servicer, that may be reasonably necessary and permitted by law for the Issuer, the Trustee, the LPSC or such Rating Agency to monitor the performance by the Servicer hereunder; provided however, that any such request by the Trustee shall not create any obligation for the Trustee to monitor the performance of the Servicer. In addition, so long as any of the Storm Recovery Bonds are Outstanding, the Servicer shall provide to the Issuer, to the LPSC and to the Trustee, within a reasonable time after written request therefor, any information available to the Servicer or reasonably obtainable by it that is necessary to calculate the Storm Recovery Charges applicable to each Customer Class.

    (iv)Preparation of Reports. The Servicer shall prepare and deliver such additional reports as required under this Agreement, including a copy of each Semi-Annual Servicer’s Certificate described in Section 4.01(g)(i), the annual Servicer’s Compliance Certificate and Certificate of Compliance described in Section 3.03, and the Annual Accountant’s Report described in Section 3.04. In addition, the Servicer shall prepare, procure, deliver and/or file, or cause to be prepared, procured, delivered or filed, any reports, attestations, exhibits, certificates or other documents required to be delivered or filed with the SEC (and/or any other Governmental Authority) by the Issuer or the Sponsor under the federal securities or other applicable laws or in accordance with the Basic Documents, including, but without limiting the generality of foregoing, filing with the SEC, if applicable, a copy or copies of (A) the Monthly Servicer’s Certificates described in Section 3.01(b)(i) above (under Form 10-D or any other applicable form), (B) the Semi-Annual Servicer’s Certificates described in Section 4.01(g)(i) (under Form 10-D or any other applicable form), (C) the annual statements of compliance, attestation reports and other certificates described in Section 3.03, and (D) the Annual Accountant’s Report (and any attestation required under Regulation AB) described in Section 3.04. In addition, the appropriate officer or officers of the Servicer shall (in its separate capacity as Servicer) sign the Sponsor’s annual report on Form 10-K (and any other applicable SEC or other reports, attestations, certifications and other documents), to the extent that the Servicer’s signature is required by, and consistent with, the federal securities law and/or any other applicable law.

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(c)Opinions of Counsel.

The Servicer shall deliver to the Issuer, to the LPSC and to the Trustee:

    (i)promptly after the execution and delivery of this Agreement and of each amendment hereto, an Opinion of Counsel either:

        (A)all actions or filings (including filings with the Louisiana UCC Filing Officer in accordance with the rules prescribed under the Securitization Act and the UCC) necessary to perfect the Lien and security interest created by the Indenture have been taken or made, and reciting the details of such actions and filings, or

        (B)no such actions or filings are necessary to perfect such Lien and security interest.

    (ii)on or before March 31 in each calendar year beginning with the first calendar year beginning more than three months after the Sale Date, an Opinion of Counsel, dated as of a date during such calendar year, either:

        (A)all actions or filings (including filings and refilings with the Louisiana UCC Filing Officer in accordance with the rules prescribed under the Securitization Act and the UCC) necessary to maintain perfection of the Lien and security interest created by the Indenture have been taken or made, and reciting the details of such actions and filings, or

        (B)no such actions or filings are necessary to maintain the perfection of such Lien and security interest.

Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify any action necessary (as of the date of such opinion) to be taken in the following year to preserve and protect such Lien and security interests.

Section 3.02SERVICING AND MAINTENANCE STANDARDS. The Servicer shall, on behalf of the Issuer:

(a)manage, service, administer and make collections in respect of the Storm Recovery Property with reasonable care and in material compliance with applicable law and regulations, including all applicable LPSC Regulations and guidelines, using the same degree of care and diligence that the Servicer exercises with respect to similar assets for its own account;

(b)follow standards, policies and practices in performing its duties as Servicer that are customary in the electric transmission and distribution industry or that the LPSC has mandated and that are consistent with the terms and provisions of the Financing Order, tariffs and existing law;

(c)use all reasonable efforts, consistent with the Servicer’s Policies and Practices, to enforce and maintain the Issuer’s and the Trustee’s rights in respect of the Storm Recovery Property;

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(d)calculate Storm Recovery Charges and the allocation of Storm Recovery Charges among Customer Classes in compliance with the Securitization Act, the Financing Order, any LPSC order related to the Storm Recovery Charge allocation and any applicable tariffs;

(e)use all reasonable efforts consistent with the Servicer’s Policies and Practices to collect all amounts owed in respect of the Storm Recovery Property as they become due;

(f)make all filings required under the Securitization Act or the applicable UCC to maintain the perfected security interest of the Trustee in the Storm Recovery Property and the other portions of the Trust Estate under the Indenture and use all reasonable efforts to otherwise enforce and maintain the Trustee’s rights in respect of the Storm Recovery Property and the other portions of the Trust Estate under the Indenture;

(g)petition the LPSC for adjustments to the Storm Recovery Charges that the Servicer determines to be necessary in accordance with the Financing Order; and

(h)keep on file, in accordance with customary procedures, all documents pertaining to the Storm Recovery Property and maintain accurate and complete accounts, records and computer systems pertaining to the related Storm Recovery Property

except where the failure to comply with any of the foregoing would not materially and adversely affect the Issuer’s or the Trustee’s respective interests in the Storm Recovery Property. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of all or any portion of the Storm Recovery Property, which, in the Servicer’s judgment, may include the taking of legal action pursuant to Section 5.02(d) hereof or otherwise.

Section 3.03ANNUAL REPORTS ON COMPLIANCE WITH REGULATION AB.

(a)The Servicer shall deliver to the Issuer, the Trustee and the Rating Agencies, on or before the earlier of (i) March 31 of each year, beginning March 31, 2023, to and including the March 31 succeeding the retirement of all Storm Recovery Bonds or (ii) with respect to each calendar year during which Cleco Power’s annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, the date on which the annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, certificates from a Servicer Responsible Officer (A) containing, and certifying as to, the statements of compliance required by Item 1123 (or any successor or similar items or rule) of Regulation AB, as then in effect (the “Annual Compliance Certificate”), and (B) containing, and certifying as to, the statements and assessment of compliance required by Item 1122(a) (or any successor or similar items or rule) of Regulation AB, as then in effect (the “Certificate of Compliance”). These certificates may be in the form of, or shall include the forms attached hereto as Exhibit C-1 and Exhibit C-2 hereto, with, in the case of Exhibit C-1, such changes as may be required to conform to applicable securities law.

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(b)The Servicer shall use commercially reasonable efforts to obtain from each other party participating in the servicing function any additional certifications as to the statements and assessment required under Item 1122 or Item 1123 of Regulation AB to the extent required in connection with the filing of the annual report on Form 10-K referred to above; provided, however, that a failure to obtain such certifications shall not be a breach of the Servicer’s duties hereunder. The parties acknowledge that the Trustee’s certifications shall be limited to the Item 1122 certifications described in Exhibit A of the Indenture.

(c)The initial Servicer, in its capacity as Sponsor, shall post on its or its parent company’s website and file with or furnish to the SEC, in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act, the information described in Section 3.07(g) of the Indenture to the extent such information is reasonably available to the Sponsor.

Section 3.04ANNUAL REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM REPORT.

(a)The Servicer shall cause a registered independent public accounting firm (which may also provide other services to the Servicer or the Seller) to prepare annually, and the Servicer shall deliver annually to the Issuer, the LPSC, the Trustee and each Rating Agency, on or before the earlier of (a) March 31 of each year, beginning March 31, 2023, to and including the March 31 succeeding the retirement of all Storm Recovery Bonds or (b) with respect to each calendar year during which the Sponsor’s annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, the date on which the annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, a report addressed to the Servicer (the “Annual Accountant’s Report”), which may be included as part of the Servicer’s assessment of compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB during the immediately preceding calendar year ended December 31 (or, in the case of the first Annual Accountant’s Report, to be delivered on or before _______, 2023 the period of time from the Sale Date through December 31, 2022), in accordance with paragraph (b) of Rule 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB, identifying the results of such procedures and including any exceptions noted. In the event such accounting firm requires the Trustee or the Issuer to agree or consent to the procedures performed by such firm, the Issuer shall direct the Trustee in writing to so agree; it being understood and agreed that the Trustee shall deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer, and the Trustee shall not make any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

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(b)The Annual Accountant’s Report shall also indicate that the accounting firm providing such report is independent of the Servicer in accordance with the Rules of the Public Company Accounting Oversight Board, and shall include the attestation report required under Item 1122(b) of Regulation AB (or any successor or similar items or rule), as then in effect. The costs of the Annual Accountant’s Report shall be reimbursable as an Operating Expense under the Indenture and also indicate that the accounting firm providing such report is independent of the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants.

Section 3.05THIRD-PARTY SUPPLIERS. So long as any of the Storm Recovery Bonds are Outstanding, the Servicer shall take reasonable efforts to assure that no Third-Party Supplier bills or collects Storm Recovery Charges on behalf of the Issuer unless permitted by applicable law or regulation and, to the extent permitted by applicable law or regulation, the Rating Agency Condition is satisfied. As long as any of the Storm Recovery Bonds are Outstanding, Servicer will use commercially reasonable efforts to ensure that any Third-Party Supplier provide to the Issuer and to the Trustee, within a reasonable time after written request therefor, any information available to the Third-Party Supplier or reasonably obtainable by it that is necessary to calculate the Storm Recovery Charges.

ARTICLE IV

SERVICES RELATED TO STORM RECOVERY CHARGE ADJUSTMENTS AND
ALLOCATION ADJUSTMENTS

Section 4.01STORM RECOVERY CHARGE ADJUSTMENTS. From time to time, but at least semi-annually, until the retirement of the Storm Recovery Bonds, the Servicer shall identify the need for Storm Recovery Charge Adjustments and shall take reasonable action to obtain and implement such Storm Recovery Charge Adjustments, all in accordance with the following:

(a)Expected Amortization Schedule. The Expected Amortization Schedule for the Storm Recovery Bonds is provided in the Supplement.

(b)Semi-Annual Storm Recovery Charge Adjustments. The Servicer will calculate and make semi-annual Storm Recovery Charge Adjustments as of each Adjustment Date commencing with the first Adjustment Date as follows:

    (i)subtract the preceding period’s Storm Recovery Charge revenues collected and remitted from the preceding period’s Periodic Payment Requirement to calculate the under-collection or over-collection from the preceding period;

    (ii)calculate the amount of the Storm Recovery Charge Adjustment, by (A) correcting any under-collection or over-collection calculated in step (i) over a period of up to 12 months covering the next two succeeding payment dates (in order to mitigate the size and impact of the adjustment), using the rules that (x) principal payments on the Storm Recovery Bonds will be brought on schedule over the next two succeeding Payment Dates, but (y) the resulting periodic billing requirement always must be sufficient to cover ongoing financing costs and interest on the Storm Recovery Bonds on a timely basis, (B) adding any amount carried forward from the previous Storm Recovery Charge Adjustment by the operation of step (A) above during the preceding Storm Recovery Charge Adjustment calculation;

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    (iii)add the amount calculated in step (ii), without duplication, to the upcoming period’s trued-up Periodic Billing Requirement to determine an adjusted Periodic Billing Requirement for the upcoming period;

    (iv)add the amount, if a positive number, equal to the difference of the return to Cleco Power on Cleco Power’s invested capital in the Issuer for the preceding period minus the actual investment earnings thereon from the eligible investments made by the Trustee at the written direction of the Issuer pursuant to the terms of the Indenture for the preceding period, to the amount calculated in step (iii);

    (v)allocate the result from step (iv) using the allocation factors approved by the LPSC in the Financing Order and develop Customer Class-specific Storm Recovery Charge rates based on those allocated dollar amounts; and

    (vi)file those adjusted storm recovery charge rates with the LPSC not less than fifteen (15) days prior to the first billing cycle of the Cleco Power revenue month in which the revised Storm Recovery Charges will be in effect;

provided, however, that to the extent any Storm Recovery Bonds remain outstanding after the Scheduled Final Payment Date of the last tranche or class, Storm Recovery Charge Adjustments shall be made quarterly until the Storm Recovery Bonds and all associated financing costs are paid in full (and any under-collection shall be corrected for the next Payment Date instead of over a period covering the next two succeeding Payment Dates.

(c)Interim Storm Recovery Charge Adjustment Request. The Servicer may also make interim Storm Recovery Charge Adjustments more frequently at any time during the term of the Storm Recovery Bonds: (i) if the Servicer forecasts that SRC Collections will be insufficient to make on a timely basis all scheduled payments of interest and other financing costs in respect of the Storm Recovery Bonds during the current or next succeeding payment period or bring all principal payments on schedule over the next two succeeding payment dates and/or (ii) to replenish any draws upon the capital subaccount. Such adjusted storm recovery charge rates shall be filed with the LPSC not less than fifteen (15) days prior to the first billing cycle of the Cleco Power revenue month in which the revised Storm Recovery Charges will be in effect.

(d)Quarterly Storm Recovery Charge Adjustment Request. If required by the Rating Agencies to obtain the highest credit ratings, the Servicer may make quarterly Storm Recovery Charge Adjustments as and when so required. Such adjusted storm recovery charge rates shall be filed with the LPSC not less than fifteen (15) days prior to the first billing cycle of the Cleco Power revenue month in which the revised Storm Recovery Charges will be in effect.

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(e)Non-Standard Storm Recovery Charge Adjustment. The Servicer shall request LPSC approval of an amendment to the Storm Recovery Charge Adjustment mechanism to make a non-standard Storm Recovery Charge Adjustment (under such procedures as shall be proposed by the Servicer and approved by the LPSC at the time) that it deems necessary or appropriate to address any material deviations between SRC Collections and the periodic revenue requirement. No such change shall cause any of the then-current credit ratings of the Storm Recovery Bonds to be suspended, withdrawn or downgraded.

(f)Notification of Adjustment Requests. Whenever the Servicer files a Storm Recovery Charge Adjustment request with the LPSC, the Servicer shall send a copy of such filing to the Issuer, each Trustee and the Rating Agencies concurrently therewith and such other persons as are entitled to notice under the Financing Order. If any Storm Recovery Charge Adjustment request does not become effective on the applicable date as provided in such filing and in accordance with the Financing Order, the Servicer shall notify the Issuer, each Trustee and the Rating Agencies by the end of the second Servicer Business Day after such applicable date.

(g)Reports.

    (i)Servicer’s Certificate. Not later than five (5) Servicer Business Days prior to each Payment Date or Special Payment Date, the Servicer shall deliver a written report substantially in the form of Exhibit B (the “Semi-Annual Servicer’s Certificate”) to the Issuer, the LPSC, the Trustee and the Rating Agencies, which shall include all of the following information (to the extent applicable and including any other information so specified in the Series Supplement) as to the Storm Recovery Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

        (A)the Storm Recovery Bond Balance and the Projected Storm Recovery Bond Balance as of the immediately preceding Payment Date,

        (B)the amount on deposit in the Capital Subaccount and the Excess Funds Subaccount and the amount required to be on deposit in the Capital Subaccount as of the immediately preceding Payment Date,

        (C)the amount of the payment to Holders allocable to principal, if any,

        (D)the amount of the payment to Holders allocable to interest,

        (E)the aggregate Outstanding Amount of the Storm Recovery Bonds, before and after giving effect to any payments allocated to principal reported under clause (C) above,

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        (F)the difference, if any, between the amount specified in clause (E) above and the Outstanding Amount specified in the Expected Amortization Schedule,

        (G)any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Trustee and to the Servicer, and

        (H)the Servicer’s projection of the amount on deposit in the Excess Funds Subaccount for the Payment Date immediately preceding the next succeeding Adjustment Date.

    (ii)Reports to Customers.

        (A)After each revised Storm Recovery Charge has gone into effect pursuant to a Storm Recovery Charge Adjustment, the Servicer shall, to the extent and in the manner and time frame required by applicable LPSC Regulations, if any, cause to be prepared and delivered to Customers any required notices announcing such revised Storm Recovery Charges.

        (B)The Servicer shall comply with the requirements of the Financing Order and Rate Schedule with respect to the identification of Storm Recovery Charges on Bills. In addition, at least once each year, the Servicer shall notify such Customers, in effect, that the Storm Recovery Property and the Storm Recovery Charges are owned by the Issuer (or its assignee) and not the Seller and that the Servicer is merely the collection agent for the Issuer (or its assignee or pledgee). Such notification shall be delivered to such Customers either by annual Bill inserts with mailed Bills or by statements posted on the “my account” website pages of the Servicer’s internet website.

        (C)The Servicing Fee includes all costs of preparation and delivery incurred in connection with clauses (A) and (B) above, including printing and postage costs.

Section 4.02LIMITATION OF LIABILITY

(a)The Issuer and the Servicer expressly agree and acknowledge that:

    (i)In connection with any Storm Recovery Charge Adjustment, the Servicer is acting solely in its capacity as the servicing agent of the Issuer hereunder.

    (ii)Neither the Servicer nor the Issuer shall be responsible in any manner for, and shall have no liability whatsoever as a result of, any action, decision, ruling or other determination made or not made, or any delay (other than any delay resulting from the Servicer’s failure to file the requests required by Section 4.01 in a timely and correct manner or other breach by the Servicer of its duties under this Agreement that materially and adversely affects the Storm Recovery Charge Adjustments), by the LPSC in any way related to the Storm Recovery Property or in connection with any Storm Recovery Charge Adjustment.

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    (iii)Except only to the extent that the Servicer is liable under Section 6.02, (A) the Servicer shall have no liability whatsoever relating to the calculation of the Storm-Recovery Charges and the adjustments thereto, including as a result of any inaccuracy of any of the assumptions made in such calculation regarding expected electric energy or demand usage volumes, the rate of charge-offs and estimated expenses and fees of the Issuer, so long as the Servicer has not acted in bad faith or in a grossly negligent manner in connection therewith, and (B) the Servicer shall have no liability whatsoever as a result of any Person, including the Holders, not receiving any payment, amount or return anticipated or expected in respect of any Storm Recovery Bond generally.

(b)Notwithstanding the foregoing, this Section 4.02 shall not relieve the Servicer of any liability under Section 6.02 for any misrepresentation by the Servicer under Section 6.01 or for any breach by the Servicer of its obligations under this Agreement.

ARTICLE V

THE STORM RECOVERY PROPERTY

Section 5.01CUSTODY OF STORM RECOVERY PROPERTY RECORDS. To assure uniform quality in servicing the Storm Recovery Property and to reduce administrative costs, the Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Issuer as custodian of any and all documents and records relating to the Storm Recovery Property, which are hereby constructively delivered to the Trustee, as pledgee of the Issuer, with respect to all Storm Recovery Property.

Section 5.02DUTIES OF SERVICER AS CUSTODIAN.

(a)Safekeeping. The Servicer shall hold the Storm Recovery Property Documentation on behalf of the Issuer and Trustee and maintain such accurate and complete accounts, records and computer systems pertaining to the Storm Recovery Property Documentation as shall enable the Issuer and the Trustee, as applicable, to comply with this Agreement, the Sale Agreement and the Indenture. In performing its duties as custodian, including documentation, record keeping, accounts and computer systems, the Servicer shall act with reasonable care, using that degree of care and diligence that the Servicer exercises with respect to comparable assets that the Servicer services for itself or, if applicable, for others. The Servicer shall promptly report to the Issuer, the Trustee, the LPSC and the Rating Agencies any material failure on its part to hold the Storm Recovery Property Documentation and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Issuer or the Trustee of the Storm Recovery Property Documentation. The Servicer’s duties to hold the Storm Recovery Property Documentation set forth in this Section 5.02, to the extent such Storm Recovery Property Documentation has not been previously transferred to a successor Servicer, shall terminate one year and one day after the earlier of the date on which (i) the Servicer is succeeded by a successor pursuant to the provisions of the Agreement and (ii) no Storm Recovery Bonds are Outstanding.

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(b)Maintenance and Access to Records. The Servicer shall maintain the Storm Recovery Property Documentation at 2030 Donahue Ferry Road, Pineville, Louisiana or at such other office as shall be specified to the Issuer, to the LPSC and to the Trustee by written notice at least thirty (30) days prior to any change in location. The Servicer shall make available, as is reasonably required for the Trustee to perform its duties and obligations under the Indenture and the other Basic Documents, for inspection, audit and copying to the Issuer and the Trustee or their respective duly authorized representatives, attorneys or auditors the Servicer’s records regarding the Storm Recovery Property, the Storm Recovery Charges and the Storm Recovery Property Documentation at such times during normal business hours as the Issuer or the Trustee shall reasonably request and which do not unreasonably interfere with the Servicer’s normal operations. Nothing in this Section 5.02(b) shall affect the obligation of the Servicer to observe any applicable law (including any LPSC Regulation) prohibiting disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 5.02(b).

(c)Release of Documents. Upon instruction from the Trustee in accordance with the Indenture, the Servicer shall release any Storm Recovery Property Documentation to the Trustee, the Trustee’s agent or the Trustee’s designee, as the case may be, at such place or places as the Trustee may designate, as soon as practicable.

(d)Litigation to Defend Storm Recovery Property. The Servicer is required to institute any action or proceeding reasonably necessary to compel performance by the LPSC or the State of Louisiana of any of their respective obligations or duties under the Securitization Act or the Financing Order, as the case may be, with respect to the Storm Recovery Charge Adjustment, provided, however, that in circumstances in which the servicing procedures set out in Annex I apply, the provisions of this undertaking do not require the Servicer to act in a manner different from the manner that the servicing procedures require. In any proceedings related to the exercise of the power of eminent domain by any municipality to acquire a portion of Cleco Power’s electric distribution facilities, including upon the expiration of any franchise agreement, the Servicer shall assert that that the court ordering such condemnation must treat such municipality as a successor to Cleco Power under the Securitization Act and the Financing Order and that Customers in such municipalities remain responsible for payment of Storm Recovery Charges. The costs of any such actions or proceedings would be reimbursed by the Issuer to the Servicer from amounts on deposit in the Collection Account as an Operating Expense (and shall not be deemed to constitute a portion of the Servicing Fee) in accordance with the terms of Section 8.02(d) of the Indenture. The amount of any recoveries received by the Servicer as a result of any such action or procedures shall be forwarded to the Trustee for deposit in the Collection Account. The Servicer’s obligations pursuant to this Section 5.02(d) survive and continue notwithstanding that the payment of Operating Expenses pursuant to the Indenture may be delayed.

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Section 5.03CUSTODIAN’S INDEMNIFICATION. THE SERVICER AS CUSTODIAN SHALL INDEMNIFY THE ISSUER, THE INDEPENDENT MANAGERS AND THE TRUSTEE (FOR ITSELF AND FOR THE BENEFIT OF THE STORM RECOVERY BONDHOLDERS) AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PAYMENTS AND CLAIMS, AND REASONABLE COSTS OR EXPENSES, OF ANY KIND WHATSOEVER (COLLECTIVELY, “LOSSES”) THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST EACH SUCH PERSON AS THE RESULT OF ANY NEGLIGENT ACT OR OMISSION IN ANY WAY RELATING TO THE MAINTENANCE AND CUSTODY BY THE SERVICER, AS CUSTODIAN, OF THE STORM RECOVERY PROPERTY DOCUMENTATION; PROVIDED, HOWEVER, THAT THE SERVICER SHALL NOT BE LIABLE FOR ANY PORTION OF ANY SUCH AMOUNT RESULTING FROM THE WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE OF THE ISSUER, THE INDEPENDENT MANAGERS OR THE TRUSTEE, AS THE CASE MAY BE.

INDEMNIFICATION UNDER THIS SECTION 5.03 SHALL SURVIVE RESIGNATION OR REMOVAL OF THE TRUSTEE OR ANY INDEPENDENT MANAGER AND TERMINATION OF THIS AGREEMENT AND SHALL INCLUDE REASONABLE OUT-OF-POCKET FEES AND EXPENSES OF INVESTIGATION AND LITIGATION (INCLUDING REASONABLE ATTORNEY’S FEES AND EXPENSES).

Section 5.04EFFECTIVE PERIOD AND TERMINATION. The Servicer’s appointment as custodian shall become effective as of the Sale Date and shall continue in full force and effect until terminated pursuant to this Section 5.04. If the Servicer shall resign as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of the Servicer shall have been terminated under Section 7.01, the appointment of the Servicer as custodian shall be terminated effective as of the date on which the termination or resignation of the Servicer is effective. Additionally, if not sooner terminated as provided above, the Servicer’s obligations as custodian shall terminate one year and one day after the date on which no Storm Recovery Bonds are Outstanding.

ARTICLE VI

THE SERVICER

Section 6.01REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer makes the following representations and warranties as of the Sale Date, and as of such other dates expressly provided in this Section 6.01, on which the Issuer has relied in acquiring the Storm Recovery Property. The representations and warranties shall survive the execution and delivery of this Agreement, the sale of any of the Storm Recovery Property to the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.

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(a)Organization and Good Standing. The Servicer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Louisiana, with the limited liability company power and authority to own its properties, to conduct its business as such business is presently conducted and to execute, deliver and carry out the terms of this Agreement and had at all relevant times and has the requisite power, authority and legal right to service the Storm Recovery Property and to hold the Storm Recovery Property Documentation as custodian.

(b)Due Qualification. The Servicer is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which it is required to do so (except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the Servicer’s business, operations, assets, revenues or properties or adversely affect the servicing of the Storm Recovery Property).

(c)Power and Authority. The Servicer has the limited liability company power and authority to execute and deliver this Agreement and to carry out the terms thereof; and the execution, delivery and performance of this Agreement have been duly authorized by the Servicer by all necessary limited liability company action.

(d)Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms subject to applicable bankruptcy, receivership, insolvency, reorganization, moratorium, fraudulent transfer or conveyance and other laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a Proceeding in equity or at law.

(e)No Violation. The consummation of the transactions contemplated by this Agreement (to the extent applicable to the Servicer’s responsibilities thereunder) and the fulfillment of the terms will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a material default under, the articles of organization, operating agreement or any material indenture or any material agreement to which the Servicer is a party or by which it or any of its property is bound or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such agreement (other than any Lien that may be granted under the Basic Documents pursuant to Section 1231 of the Securitization Act); or violate any existing law or any existing order, rule or regulation applicable to the Servicer.

(f)Approvals. No approval, authorization, consent, order or other action of, or filing with, any Governmental Authority is required under an applicable law, rule or regulation in connection with the execution and delivery by the Servicer of this Agreement, the performance by the Servicer of the transactions contemplated hereby or the fulfillment by the Servicer of the terms of the Agreement, except those that have been obtained or made or that are required by this Agreement to be made in the future by the Servicer, including the Issuance Advice Letter, filings with the LPSC for adjusting Storm Recovery Charges and allocation of storm recovery charge adjustments pursuant to Section 4.01 and filings with the Louisiana UCC Filing Officer under the Securitization Act and the UCC.

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(g)No Proceedings. Except as disclosed by the Servicer on Schedule A hereto, there are no Proceedings pending or, to the Servicer’s knowledge, threatened before any Governmental Authority having jurisdiction over the Servicer or its properties involving or relating to the Servicer or the Issuer or, to the Servicer’s knowledge, any other Person:

    (i)asserting the invalidity of this Agreement or any of the other Basic Documents;

    (ii)seeking to prevent the issuance of the Storm Recovery Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents;

    (iii)seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability against the Servicer of, this Agreement, any of the other Basic Documents or the Storm Recovery Bonds;

    (iv)relating to the Servicer and which might materially and adversely affect the federal income tax or State income, gross receipts or franchise tax attributes of the Storm Recovery Bonds; or

    (v)seeking to prevent the issuance of the Storm Recovery Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents.

(h)Reports and Certificates. Each report and certificate delivered in connection with any filing made to the LPSC by the Servicer on behalf of the Issuer with respect to Storm Recovery Charges, Storm Recovery Charge Adjustments or allocation of storm recovery charges among Customer Classes will be true and correct in all material respects; provided, however, that to the extent any such report or certificate is based in part upon or contains assumptions, forecasts or other predictions of future events, the representation and warranty of the Servicer with respect thereto will be limited to the representation and warranty that such assumptions, forecasts or other predictions of future events are reasonable based upon historical performance and the facts known to the Servicer on the date such report or certificate is delivered.

Section 6.02INDEMNITIES OF THE SERVICER; RELEASE OF CLAIMS.

(a)THE SERVICER SHALL BE LIABLE IN ACCORDANCE HEREWITH ONLY TO THE EXTENT OF THE OBLIGATIONS SPECIFICALLY UNDERTAKEN BY THE SERVICER UNDER THIS AGREEMENT.

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(b)THE SERVICER SHALL INDEMNIFY THE ISSUER, THE TRUSTEE (FOR ITSELF AND ON BEHALF OF THE STORM RECOVERY BONDHOLDERS) AND THE INDEPENDENT MANAGER AND EACH OF THEIR RESPECTIVE TRUSTEES, MEMBERS, MANAGERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL LOSSES THAT MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON AS A RESULT OF:

    (i)THE SERVICER’S WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE IN THE PERFORMANCE OF ITS DUTIES OR OBSERVANCE OF ITS COVENANTS UNDER THIS AGREEMENT OR THE SERVICER’S RECKLESS DISREGARD OF ITS OBLIGATIONS AND DUTIES UNDER THIS AGREEMENT;

    (ii)THE SERVICER’S BREACH OF ANY OF ITS REPRESENTATIONS OR WARRANTIES IN THIS AGREEMENT; OR

    (iii)LITIGATION AND RELATED EXPENSES RELATING TO ITS STATUS AND OBLIGATIONS AS SERVICER (OTHER THAN ANY PROCEEDINGS THE SERVICER IS REQUIRED TO INSTITUTE UNDER THIS AGREEMENT);

PROVIDED, HOWEVER, THAT THE SERVICER SHALL NOT BE LIABLE FOR ANY LOSSES RESULTING FROM THE BAD FAITH, WILLFUL MISCONDUCT OR NEGLIGENCE OF ANY PERSON INDEMNIFIED PURSUANT TO THIS SECTION 6.02 (EACH, AN “INDEMNIFIED PERSON”) OR RESULTING FROM A BREACH OF A REPRESENTATION OR WARRANTY MADE BY SUCH INDEMNIFIED PERSON TO THE SERVICER IN ANY BASIC DOCUMENT THAT GIVES RISE TO THE SERVICER’S BREACH.

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(c)PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PERSON OF WRITTEN NOTICE OF ITS INVOLVEMENT IN ANY ACTION, PROCEEDING OR INVESTIGATION, SUCH INDEMNIFIED PERSON SHALL, IF A CLAIM FOR INDEMNIFICATION IN RESPECT THEREOF IS TO BE MADE AGAINST THE SERVICER UNDER THIS SECTION 6.02, NOTIFY THE SERVICER IN WRITING OF SUCH INVOLVEMENT. FAILURE BY AN INDEMNIFIED PERSON TO SO NOTIFY THE SERVICER SHALL RELIEVE THE SERVICER FROM THE OBLIGATION TO INDEMNIFY AND HOLD HARMLESS SUCH INDEMNIFIED PERSON UNDER THIS SECTION 6.02 ONLY TO THE EXTENT THAT THE SERVICER SUFFERS ACTUAL PREJUDICE AS DETERMINED BY A COURT OF COMPETENT JURISDICTION AS A RESULT OF SUCH FAILURE. WITH RESPECT TO ANY ACTION, PROCEEDING OR INVESTIGATION BROUGHT BY A THIRD PARTY FOR WHICH INDEMNIFICATION MAY BE SOUGHT BY AN INDEMNIFIED PERSON UNDER THIS SECTION 6.02, THE SERVICER SHALL BE ENTITLED TO ASSUME THE DEFENSE OF ANY SUCH ACTION, PROCEEDING OR INVESTIGATION UNLESS (X) SUCH ACTION, PROCEEDING OR INVESTIGATION EXPOSES THE INDEMNIFIED PERSON TO A RISK OF CRIMINAL LIABILITY OR FORFEITURE, (Y) THE SERVICER AND SUCH INDEMNIFIED PERSON HAVE A CONFLICT OF INTEREST IN THEIR RESPECTIVE DEFENSES OF SUCH ACTION, PROCEEDING OR INVESTIGATION OR (Z) THERE EXISTS AT THE TIME THE SERVICER WOULD ASSUME SUCH DEFENSE AN ONGOING SERVICER DEFAULT. UPON ASSUMPTION BY THE SERVICER OF THE DEFENSE OF ANY SUCH ACTION, PROCEEDING OR INVESTIGATION, THE INDEMNIFIED PERSON SHALL HAVE THE RIGHT TO PARTICIPATE IN SUCH ACTION OR PROCEEDING AND TO RETAIN ITS OWN COUNSEL (INCLUDING LOCAL COUNSEL), AND THE SERVICER SHALL BEAR THE REASONABLE FEES, COSTS AND EXPENSES OF SUCH SEPARATE COUNSEL. THE INDEMNIFIED PERSON SHALL NOT SETTLE OR COMPROMISE OR CONSENT TO THE ENTRY OF ANY JUDGMENT WITH RESPECT TO ANY PENDING OR THREATENED CLAIM, ACTION, SUIT OR PROCEEDING IN RESPECT OF WHICH INDEMNIFICATION MAY BE SOUGHT UNDER THIS SECTION 6.02 (WHETHER OR NOT THE SERVICER IS AN ACTUAL OR POTENTIAL PARTY TO SUCH CLAIM OR ACTION) UNLESS THE SERVICER AGREES IN WRITING TO SUCH SETTLEMENT, COMPROMISE OR CONSENT AND SUCH SETTLEMENT, COMPROMISE OR CONSENT INCLUDES AN UNCONDITIONAL RELEASE OF THE SERVICER FROM ALL LIABILITY ARISING OUT OF SUCH CLAIM, ACTION, SUIT OR PROCEEDING.

(d)THE SERVICER SHALL INDEMNIFY THE TRUSTEE AND ITS RESPECTIVE TRUSTEES, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL LOSSES THAT MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON AS A RESULT OF THE ACCEPTANCE OR PERFORMANCE OF THE TRUSTS AND DUTIES CONTAINED HEREIN AND IN THE INDENTURE, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS (I) SHALL BE DUE TO THE WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE OF THE TRUSTEE OR (II) SHALL ARISE FROM THE TRUSTEE’S BREACH OF ANY OF ITS REPRESENTATIONS OR WARRANTIES SET FORTH IN THE INDENTURE; PROVIDED, HOWEVER, THAT THE FOREGOING INDEMNITY IS EXTENDED TO THE TRUSTEE SOLELY IN ITS INDIVIDUAL CAPACITY AND NOT FOR THE BENEFIT OF THE STORM RECOVERY BONDHOLDERS OR ANY OTHER PERSON. SUCH AMOUNTS WITH RESPECT TO THE TRUSTEE SHALL BE DEPOSITED AND DISTRIBUTED IN ACCORDANCE WITH THE INDENTURE.

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(e)THE SERVICER’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 6.02(b) AND (d) FOR EVENTS OCCURRING PRIOR TO THE REMOVAL OR RESIGNATION OF THE TRUSTEE OR ANY INDEPENDENT MANAGER OR THE TERMINATION OF THIS AGREEMENT SHALL SURVIVE THE RESIGNATION OR REMOVAL OF THE TRUSTEE, ANY INDEPENDENT MANAGER OR THE TERMINATION OF THIS AGREEMENT AND SHALL INCLUDE REASONABLE COSTS, FEES AND EXPENSES OF INVESTIGATION AND LITIGATION (INCLUDING THE ISSUER’S AND THE TRUSTEE’S REASONABLE ATTORNEYS’ FEES AND EXPENSES). INDEMNIFICATION UNDER THIS SECTION 6.02 SHALL SURVIVE ANY REPEAL OF, MODIFICATION OF, OR SUPPLEMENT TO, OR JUDICIAL INVALIDATION OF, THE SECURITIZATION ACT OR ANY FINANCING ORDER.

(f)EXCEPT TO THE EXTENT EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, THE SALE AGREEMENT OR THE FORMATION DOCUMENTS (INCLUDING THE SERVICER’S CLAIMS WITH RESPECT TO THE SERVICING FEES AND EXPENSES REIMBURSEMENT AND THE SELLER’S CLAIM FOR PAYMENT OF THE PURCHASE PRICE OF STORM RECOVERY PROPERTY), THE SERVICER HEREBY RELEASES AND DISCHARGES THE ISSUER (INCLUDING ITS MEMBERS, MANAGERS, EMPLOYEES AND AGENTS, IF ANY), THE INDEPENDENT MANAGER, AND THE TRUSTEE (INCLUDING ITS RESPECTIVE OFFICERS, DIRECTORS AND AGENTS) (COLLECTIVELY, THE “RELEASED PARTIES”) FROM ANY AND ALL CLAIMS WHATSOEVER, WHICH THE SERVICER, IN ITS CAPACITY AS SERVICER OR OTHERWISE, SHALL OR MAY HAVE AGAINST ANY SUCH PERSON RELATING TO THE STORM RECOVERY PROPERTY OR THE SERVICER’S ACTIVITIES WITH RESPECT THERETO OTHER THAN ANY ACTIONS, CLAIMS AND DEMANDS ARISING OUT OF THE WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE OF THE RELEASED PARTIES.

(g)THE SERVICER AND THE ISSUER HEREBY ACKNOWLEDGE THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE TRUSTEE IS A THIRD-PARTY BENEFICIARY OF THIS SECTION 6.02 AND IS ENTITLED TO THE BENEFITS OF THE INDEMNITY FROM THE SERVICER CONTAINED HEREIN AND TO BRING ANY ACTION TO ENFORCE SUCH INDEMNIFICATION DIRECTLY AGAINST THE SERVICER.

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(h)THE SERVICER SHALL INDEMNIFY THE LPSC (FOR THE BENEFIT OF CUSTOMERS), THE ISSUER, THE TRUSTEE (FOR ITSELF AND ON BEHALF OF THE STORM RECOVERY BONDHOLDERS), AND EACH OF THEIR RESPECTIVE TRUSTEES, MEMBERS, MANAGERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL LOSSES THAT MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON AS A RESULT OF ANY INCREASE IN THE SERVICING FEE THAT BECOMES PAYABLE PURSUANT TO SECTION 6.07(b) OF THIS AGREEMENT AS A RESULT OF A DEFAULT RESULTING FROM THE SERVICER’S MISCONDUCT, NEGLIGENCE IN PERFORMANCE OF ITS DUTIES OR OBSERVANCE OF ITS COVENANTS UNDER THIS AGREEMENT OR TERMINATION FOR CAUSE OF CLECO POWER OR AN AFFILIATE SERVICER. THE INDEMNIFICATION OBLIGATION SET FORTH IN THIS PARAGRAPH MAY BE ENFORCED BY THE LPSC BUT IS NOT ENFORCEABLE BY ANY THIRD-PARTY COLLECTOR OR ANY CUSTOMER. ANY INDEMNITY PAYMENTS UNDER THIS PARAGRAPH FOR THE BENEFIT OF CUSTOMERS SHALL BE REMITTED TO THE TRUSTEE PROMPTLY FOR DEPOSIT INTO THE COLLECTION ACCOUNT.

Section 6.03MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, THE SERVICER. Any Person:

(a)into which the Servicer may be merged, converted or consolidated and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, any Person which the LPSC designates in connection with an order relating to such split),

(b)which results from the division of the Servicer into two or more Persons and which succeeds to all or substantially all of the electric transmission and distribution business of the Servicer (or, if the transmission and distribution business is split, any Person which the LPSC designates in connection with an order relating to such split),

(c)which may result from any merger, conversion or consolidation to which the Servicer shall be a party and which succeeds to all or substantially all of the electric transmission and distribution business of the Servicer (or, if the transmission and distribution business is split, any Person which the LPSC designates in connection with an order relating to such split),

(d)which may purchase or otherwise succeed to the properties and assets of the Servicer substantially as a whole and which purchases or otherwise succeeds to all or substantially all of the electric transmission and distribution business of the Servicer (or, if the transmission and distribution business is split, any Person which the LPSC designates in connection with an order relating to such split), or

(e)which may otherwise purchase or succeed to all or substantially all of the electric transmission and distribution business of the Servicer (or, if the transmission and distribution business is split, any Person which the LPSC designates in connection with an order relating to such split),

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which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Servicer under this Agreement and undertake to collect, account and remit amounts in respect of the Storm Recovery Charges from Customers for the benefit and account of the Issuer (or its financing party), shall be the successor to the Servicer under this Agreement without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that:

    (i)immediately after giving effect to such transaction, the representations and warranties made pursuant to Section 6.01 shall be true and correct and no Servicer Default, and no event that, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be continuing;

    (ii)the Servicer shall have delivered to the Issuer, the Rating Agencies, the LPSC and the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that such consolidation, merger, conversion, division or succession and such agreement of assumption comply with this Section 6.03 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with;

    (iii)the Servicer shall have delivered to the Issuer, the Rating Agencies, the LPSC and the Trustee an Opinion of Counsel either

        (A)stating that, in the opinion of such counsel, all filings to be made by the Servicer, including filings with the LPSC pursuant to the Securitization Act and the UCC, that are necessary fully to preserve and protect the interests of each of the Issuer and the Trustee in the Storm Recovery Property have been executed and filed and are in full force and effect, and reciting the details of such filings, or

        (B)stating that, in the opinion of such counsel, no such action is necessary to preserve and protect such interests;

    (iv)the Rating Agencies shall have received prior written notice of such transaction and, if such Person is not an Affiliate of Cleco Power, the Rating Agency Condition shall be satisfied; and

    (v)the Servicer shall have delivered to the Issuer, the LPSC, the Trustee and the Rating Agencies an opinion of independent tax counsel (as selected by, and in form and substance satisfactory to, the Servicer, and which may be based on a ruling from the Internal Revenue Service) to the effect that, for federal income tax purposes, such transaction will not result in a material adverse federal income tax consequence to the Issuer or the Storm Recovery Bondholders.

The Servicer shall not consummate any transaction referred to in clauses (a), (b), (c), (d) or (e) above except upon execution of the above-described agreement of assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above. When any Person acquires the properties and assets of the Servicer substantially as a whole or otherwise becomes the successor to the Servicer in accordance with the terms of this Section 6.03, then upon the satisfaction of all of the other conditions of this Section 6.03, the Servicer shall automatically and without further notice be released from its obligations hereunder.

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Section 6.04ASSIGNMENT OF THE SERVICER’S OBLIGATIONS. The Servicer will not voluntarily assign or outsource its obligations hereunder except with the LPSC’s prior approval and upon a demonstration that the costs under an alternative arrangement will be no more than if the Servicer continued to perform such services itself, or the assignment or outsourcing is to another Affiliate that will provide such services at the same or lower cost than if the Servicer continued to perform such services itself, or the assignment or outsourcing is to a successor entity to the Servicer as the result of a merger or other restructuring that assumes the Servicer’s responsibilities as the servicer and administrator.

Section 6.05LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. Neither the Servicer nor any of the managers, officers, employees or agents of the Servicer shall be liable to the Issuer, its managers, the Storm Recovery Bondholders, the Trustee or any other Person, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the Servicer against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or negligence in the performance of its duties under this Agreement. The Servicer and any manager or officer or employee or agent of the Servicer may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement.

Except as provided in this Agreement (including but not limited to Section 5.02(c) and 5.02(d) of this Agreement), the Servicer shall not be under any obligation to appear in, prosecute or defend any Proceeding that is not directly related to one of the Servicer’s enumerated duties in this Agreement or related to its obligation to pay indemnification, and that in its reasonable opinion may cause it to incur any expense or liability; provided, however, that the Servicer may, in respect of any Proceeding, undertake any reasonable action that is not specifically identified in this Agreement as a duty of the Servicer but that the Servicer may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties to this Agreement and the interests of the Storm Recovery Bondholders under this Agreement. The Servicer’s costs and expenses incurred in connection with any such Proceeding shall be payable from the Collection Account as an Operating Expense (and shall not be deemed to constitute a portion of the Servicing Fee) in accordance with Section 8.02 of the Indenture. The Servicer’s obligations pursuant to this Section 6.05 shall survive and continue notwithstanding the fact that the payment of Operating Expenses pursuant to the Indenture may be delayed (it being understood that the Servicer may be required initially to advance its own funds to satisfy its obligations hereunder).

Section 6.06CLECO POWER NOT TO RESIGN AS SERVICER. Subject to the provisions of Sections 6.03 and 6.04, Cleco Power shall not resign from the obligations and duties imposed on it as Servicer under this Agreement unless the Servicer delivers to the Issuer, the Trustee, the LPSC and each Rating Agency written notice of such resignation at the earliest practicable time and, concurrently therewith or promptly thereafter, an opinion of Independent legal counsel that the Servicer’s performance of its duties under this Agreement shall no longer be permissible under applicable law. No such resignation shall become effective until a Successor Servicer shall have assumed the servicing obligations and duties hereunder of the Servicer in accordance with Section 7.04.

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Section 6.07SERVICING FEE.

(a)The Issuer agrees to pay the Servicer on each Payment Date, solely to the extent amounts are available therefor in accordance with the Indenture, the Servicing Fee with respect to the Storm Recovery Bonds. For so long as:

    (i)Cleco Power or one of its Affiliates is the Servicer,

    (ii)a successor to Cleco Power or one of its Affiliates is the Servicer due to the operation of the provisions of Section 6.03, or

    (iii)any Person is the Successor Servicer hereunder pursuant to the provisions of Section 6.03 if the predecessor Servicer was Cleco Power or one of its Affiliates,

the amount of the Servicing Fee paid to the Servicer annually shall equal 0.05 % of the Storm Recovery Bond Balance on the Issuance Date and shall be prorated based on the fraction of a calendar year during which the Servicer provides any of the services set forth in this Agreement.

(b)In the event that a Successor Servicer not an Affiliate of Cleco Power is appointed in accordance with Section 7.04, the amount of Servicing Fee paid to the Servicer annually shall be agreed upon by the Successor Servicer and the Trustee but shall in no event exceed 0.60% of the Storm Recovery Bond Balance on the Issuance Date without the consent of the LPSC and shall be prorated based on the fraction of a calendar year during which the Successor Servicer provides any of the services set forth in this Agreement. The foregoing fees set forth in Section 6.07(a) and this Section 6.07(b) constitute a fair and reasonable price for the obligations to be performed by the Servicer. The Servicer shall have indemnification obligations for an increased Servicing Fee under certain circumstances, in accordance with Section 6.02(h).

(c)The Servicing Fee, together with any portion of the Servicing Fee that remains unpaid from prior Payment Dates, will be paid solely to the extent funds are available. The Servicing Fee will be paid prior to the payment of or provision for any amounts in respect of interest on and principal of the Storm Recovery Bonds.

Section 6.08COMPLIANCE WITH APPLICABLE LAW. The Servicer covenants and agrees, in servicing the Storm Recovery Property, to comply in all material respects with all laws applicable to, and binding upon, the Servicer and relating to such Storm Recovery Property the noncompliance with which would have a material adverse effect on the value of the Storm Recovery Property; provided, however, that the foregoing is not intended to, and shall not, impose any liability on the Servicer for noncompliance with any Requirement of Law that the Servicer is contesting in good faith in accordance with its customary standards and procedures. It is expressly acknowledged that the payment of fees to the Rating Agencies shall be at the expense of the Issuer and that, if the Servicer advances such payments to the Rating Agencies, the Issuer shall reimburse the Servicer for any such advances.

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Section 6.09SERVICER EXPENSES. Except as expressly provided elsewhere in this Agreement, the Servicer will not be reimbursed for any expenses incurred by it in connection with its activities hereunder, including taxes imposed on the Servicer and expenses incurred in connection with reports to Storm Recovery Bondholders, and external information technology costs, bank wire fees and internal legal fees related to this Agreement. The Servicer is entitled to receive reimbursement for its out-of-pocket costs for external accounting and external legal services as well as for other items of costs that will be incurred annually to support and service the Storm Recovery Bonds after issuance, as provided in the Financing Order.

Section 6.10APPOINTMENTS. The Servicer may at any time appoint a subservicer or agent to perform all or any portion of its obligations as Servicer hereunder; provided, however, that unless such Person is an Affiliate of Cleco Power, the Rating Agency Condition shall have been satisfied in connection therewith; provided further that the Servicer shall remain obligated and be liable to the Issuer for the servicing and administering of the Storm Recovery Property in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such subservicer or agent and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Storm Recovery Property. The fees and expenses of the subservicer or agent shall be as agreed between the Servicer and its subservicer or agent from time to time, and none of the Issuer, the Trustee or the Storm Recovery Bondholders shall have any responsibility therefor. Any such appointment shall not constitute a Servicer resignation under Section 6.06. In the event any subservicer participates in the “servicing function” within the meaning of Item 1122 of Regulation AB, the Servicer shall be responsible for obtaining from each subservicer and delivering to the Issuer any assessment of compliance and attestation required to be delivered by the Servicer under Section 3.03.

Section 6.11NO SERVICER ADVANCES. The Servicer shall not make any advances of interest on or principal of the Storm Recovery Bonds.

Section 6.12REMITTANCES. (a) The Servicer shall remit Storm Recovery Charges to the Trustee each Servicer Business Day, but in no event later than two Servicer Business Days following such Servicer Business Day, based on estimated daily collections using a weighted average balance of days outstanding on retail bills and prior year write-off experience (the “Daily Remittance”)in all respects as provided in Annex 1 and shall make such adjustments as are set out in Annex 1 to adjust for any estimates of actual Storm Recovery Charges actually remitted to the Trustee. The Servicer will remit those Storm Recovery Charges for any Servicer Business Day no later than the second Servicer Business Day after that Servicer Business Day. Cleco Power will not be required to credit Customers or the Issuer with any earnings accruing to Cleco Power on transferred and untransferred daily collections of Storm Recovery Charges.

(a) Prior to (or concurrently with each remittance to the General Subaccount of the Collection Account pursuant to this Section 6.12, the Servicer shall provide written notice (which may be via electronic means, including electronic mail) to the Trustee and, upon request, to the Issuer of each such remittance (including the exact dollar amount to be remitted). The Servicer shall also, promptly upon receipt, remit to the Collection Account any other proceeds of the Trust Estate that it may receive from time to time. Reconciliations of bank statements shall be as set forth in Exhibit A.

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(b) The Servicer agrees and acknowledges that it holds all Storm Recovery Charge payments collected by it and any other proceeds for the Trust Estate received by it for the benefit of the Trustee and the Holders and that all such amounts will be remitted by the Servicer in accordance with this Section 6.12 without any surcharge, fee, offset, charge or other deduction. The Servicer further agrees not to make any claim to reduce its obligation to remit all Storm Recovery Charge payments collected by it in accordance with this Agreement

(c) Unless otherwise directed to do so by the Issuer, the Servicer shall be responsible for selecting Eligible Investments in which the funds in the Collection Account shall be invested pursuant to Section 8.03 of the Indenture.

Section 6.13PROTECTION OF TITLE. The Servicer shall execute and file all filings, including filings with the Louisiana UCC Filing Officer pursuant to the Securitization Act and the Louisiana UCC, and cause to be executed and filed all filings, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interests of the Issuer and the Trustee in the Storm Recovery Property, including all filings required under the Securitization Act and the Louisiana UCC relating to the transfer of the ownership or security interest in the Storm Recovery Property by the Seller to the Issuer or any security interest granted by the Issuer in the Storm Recovery Property. The Servicer shall deliver (or cause to be delivered) to the Issuer, the LPSC and the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.

Section 6.14MAINTENANCE OF OPERATIONS. To the extent that any interest in the Storm Recovery Property is assigned, sold, or transferred to an assignee, Cleco Power shall enter into a contract with that assignee that requires Cleco Power to continue to operate its electric transmission and distribution system in order to provide electric services to Cleco Power’s Customers; and, further, Cleco Power will undertake to collect, account for and remit amounts in respect of the Storm Recovery Charges for the benefit of such assignee (or its financing party); provided, however, that this provision shall not prohibit Cleco Power from selling, assigning, or otherwise divesting its electric transmission and distribution systems or any part thereof so long as the entity or entities acquiring such system agree to continue operating the facilities to provide electric service to Cleco Power’s LPSC’s jurisdictional Customers.

ARTICLE VII

SERVICER DEFAULT

Section 7.01SERVICER DEFAULT. If any one of the following events (a “Servicer Default”) occurs and is continuing:

(a)any failure by the Servicer to remit to the Collection Account, on behalf of the Issuer, any required remittance by the date that such remittance must be made that continues unremedied for a period of five Servicer Business Days after the date on which written notice thereof shall have been given to the Servicer and the LPSC by the Issuer or the Trustee;

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(b)any failure by the Servicer to duly observe or perform in any material respect any other covenant or agreement of the Servicer set forth in this Agreement (other than as provided in Section 7.01(a) or (c)) or any other Basic Document to which it is a party in such capacity, which failure

    (i)materially and adversely affects the Storm Recovery Property or the timely collection of the Storm Recovery Charges or the rights of the Storm Recovery Bondholders, and

    (ii)continues unremedied for a period of 60 days after the date on which written notice thereof shall have been given to the Servicer by the Trustee, the LPSC (with a copy to the Trustee) or the Issuer or after discovery of such failure by an officer of the Servicer, as the case may be;

(c)any failure by the Servicer duly to perform its obligations under Section 4.01(b) of this Agreement in the time and manner set forth therein, which failure continues unremedied for a period of five Servicer Business Days;

(d)any representation or warranty made by the Servicer in this Agreement or any other Basic Document proves to have been incorrect when made, which has a material adverse effect on the Issuer or the Storm Recovery Bondholders, and which material adverse effect continues unremedied for a period of 60 days after the date on which written notice thereof shall have been given to the Servicer by the Issuer (with a copy to the Trustee) or the Trustee or after discovery of such failure by an officer of the Servicer, as the case may be; or

(e)an Insolvency Event occurs with respect to the Servicer;

then, so long as the Servicer Default shall not have been remedied, the Trustee shall upon the written instruction of the Majority Holders and with the Issuer’s prior written consent (which shall not be unreasonably withheld), terminate all the rights and obligations (other than the indemnification obligations set forth in Section 6.02 hereof and the obligation under Section 7.04 to continue performing its functions as Servicer until a Successor Servicer is appointed) of the Servicer under this Agreement by notice then given in writing to the Servicer (a “Termination Notice”).

In addition, upon a Servicer Default, the Storm Recovery Bondholders and the Trustee shall be entitled to (i) apply to the 19th Judicial District Court for the Parish of East Baton Rouge, Louisiana, for sequestration and payment to the Trustee of revenues arising with respect to the Storm Recovery Property, (ii) foreclose on or otherwise enforce the Lien on and security interests in the Storm Recovery Property and (iii) apply to the LPSC for an order that amounts arising from the Storm Recovery Charges be transferred to a separate account for the benefit of the Storm Recovery Bondholders, in accordance with the Securitization Act.

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On or after the receipt by the Servicer of a Termination Notice, all authority and power of the Servicer under this Agreement, whether with respect to the Storm Recovery Property, the related Storm Recovery Charges or otherwise, shall, upon appointment of a Successor Servicer pursuant to Section 7.04, without further action, pass to and be vested in such Successor Servicer and, without limitation, the Trustee is hereby authorized and empowered to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Termination Notice, whether to complete the transfer of the Storm Recovery Property Documentation and related documents, or otherwise. The predecessor Servicer shall cooperate with the Successor Servicer, the Trustee and the Issuer in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the Successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for remittance, or shall thereafter be received by it with respect to the Storm Recovery Property or the related Storm Recovery Charges. As soon as practicable after receipt by the Servicer of such Termination Notice, the Servicer shall deliver the Storm Recovery Property Documentation to the Successor Servicer. All reasonable costs and expenses (including attorneys’ fees and expenses) incurred in connection with transferring the Storm Recovery Property Documentation to the Successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section shall be paid by the predecessor Servicer upon presentation of documentation of such costs and expenses. All costs and expenses (including attorneys’ fees and expenses) incurred in connection with transferring the Storm Recovery Property Documentation to the Successor Servicer and amending this Agreement to reflect the succession as Servicer other than pursuant to this Section shall be paid by the party incurring such costs and expenses. Termination of Cleco Power’s rights as a Servicer shall not terminate Cleco Power’s rights or obligations in its individual capacity under the Sale Agreement (except rights thereunder deriving from its rights as the Servicer hereunder).

Section 7.02NOTICE OF SERVICER DEFAULT. The Servicer shall deliver to the Issuer, to the Trustee, to the LPSC, and to each Rating Agency promptly after having obtained actual knowledge thereof, but in no event later than two Servicer Business Days thereafter, written notice in an Officers’ Certificate of any event or circumstance which, with the giving of notice or the passage of time, would become a Servicer Default under Section 7.01.

Section 7.03WAIVER OF PAST DEFAULTS. The Trustee, with the written consent of the Majority Holders, may waive in writing in whole or in part any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required remittances to the Trustee of SRC Collections from Storm Recovery Property in accordance with Section 6.12 of this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto.

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Section 7.04APPOINTMENT OF SUCCESSOR.

(a)Upon the Servicer’s receipt of a Termination Notice pursuant to Section 7.01 or the Servicer’s resignation or removal in accordance with the terms of this Agreement, the Servicer shall continue to perform its functions as Servicer under this Agreement and shall be entitled to receive the requisite portion of the Servicing Fee and expenses reimbursement, until a Successor Servicer shall have assumed in writing the obligations of the Servicer hereunder as described below. In the event of the Servicer’s removal or resignation hereunder, the Trustee at the written direction and with the consent of the Majority Holders shall appoint a Successor Servicer with the Issuer’s prior written consent thereto (which consent shall not be unreasonably withheld), and the Successor Servicer shall accept its appointment by a written assumption in form acceptable to the Issuer and the Trustee and provide prompt written notice of such assumption to the Rating Agencies. In no event shall the Trustee be liable for its appointment of a Successor Servicer appointed at the written direction of the Majority Holders. If, within 30 days after the delivery of the Termination Notice, a new Servicer shall not have been appointed and accepted such appointment, the Trustee may petition the LPSC or a court of competent jurisdiction to appoint a Successor Servicer under this Agreement. A Person shall qualify as a Successor Servicer only if:

    (i)such Person is permitted under LPSC Regulations to perform the duties of the Servicer pursuant to the Securitization Act, the Financing Order and this Agreement,

    (ii)either (A) the LPSC has approved the appointment of the Successor Servicer or (B) 45 days have lapsed since the LPSC received notice of appointment of the Successor Servicer and the LPSC has neither approved nor disapproved that appointment,

    (iii)the Rating Agency Condition shall have been satisfied, and

    (iv)such Person enters into a servicing agreement with the Issuer having substantially the same provisions as this Agreement.

(b)Upon appointment, the Successor Servicer shall be the successor in all respects to the predecessor Servicer under this Agreement and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer and shall be entitled to the Servicing Fee and expenses reimbursement and all the rights granted to the predecessor Servicer by the terms and provisions of this Agreement.

(c)The Successor Servicer may not resign unless it is prohibited from serving as Servicer pursuant to this Agreement by law.

Section 7.05COOPERATION WITH SUCCESSOR. The predecessor Servicer covenants and agrees with the Issuer that it will, on an ongoing basis, cooperate with the Issuer and Successor Servicer and provide whatever information is, and take whatever actions are, reasonably necessary to assist the Successor Servicer in performing its obligations hereunder.

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ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.01AMENDMENT.

(a)This Agreement may be amended by the Servicer and the Issuer, with the prior written consent of the Trustee and the satisfaction of the Rating Agency Condition; provided, however, that no amendment that would increase the ongoing financing costs, as defined in the Financing Order, shall be permitted without the prior approval of the LPSC under Section 8.12. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies.

(b)Notwithstanding Section 8.01(a) or anything to the contrary in this Agreement, the Servicer and the Issuer may amend the Issuer Annex in writing with prior written notice given to the Trustee and the Rating Agencies, but without the consent of the Trustee, any Rating Agency or any Holder, solely to address changes to the Servicer’s method of calculating SRC Collections as a result of changes to the Servicer’s current computerized Customer information system; provided that any such amendment shall not have a material adverse effect on the Holders of then Outstanding Storm Recovery Bonds.

Prior to the execution of any amendment to this Agreement, the Issuer and the Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and all conditions precedent, if any, provided for in this Agreement relating to such amendment have been satisfied upon the Opinion of Counsel referred to in Section 3.01. The Issuer and the Trustee may, but shall not be obligated to, enter into any such amendment which affects their own rights, duties or immunities under this Agreement or otherwise. Notwithstanding Section 8.01(a) or anything to the contrary in this Agreement, this Agreement shall be amended automatically to comply with changes in law.

Section 8.02NOTICES. All demands, notices and communications upon or to the Servicer, the Issuer, the LPSC, the Trustee or the Rating Agencies under this Agreement shall be in writing, delivered personally, via facsimile, by reputable overnight courier or by certified mail, return-receipt requested, and shall be deemed to have been duly given upon receipt

(a)in the case of the Servicer, to Cleco Power LLC, 2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226, Attention: Treasurer;

(b)in the case of the Issuer, to Cleco Securitization I LLC, 505 Cleco Drive Office Number 16, Pineville, Louisiana 71360-5226, Attention: Manager;

(c)in the case of the Trustee, at its Corporate Trust Office;

(d)in the case of Moody’s, to Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 25th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Email: ServicerReports@moodys.com (all such notices to be delivered to Moody’s in writing by email);

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(e)in the case of S&P, to Standard & Poor’s Ratings Group, Inc., Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@spglobal.com (all such notices to be delivered to S&P in writing by email); and

(f)in the case of Fitch, to Fitch, Ratings, Inc., One State Street Plaza, New York, New York 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500;

(g)in the case of the Louisiana Commission, to Galvez Building, 12th Floor, 602 North Fifth Street, Baton Rouge, Louisiana 70802, Attention: Executive Secretary;

or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.

Section 8.03ASSIGNMENT. Notwithstanding anything to the contrary contained herein, except as provided in Sections 6.03 and 6.04 and as provided in the provisions of this Agreement concerning the resignation or termination of the Servicer, this Agreement may not be assigned by the Servicer. Any purported assignment not in compliance with this Agreement shall be void.

Section 8.04LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this Agreement are solely for the benefit of the Servicer, the Issuer and, to the extent provided herein or in the other Basic Documents, Customers and the other Persons expressly referred to herein and the Trustee, on behalf of itself and the Storm Recovery Bondholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Storm Recovery Property and other amounts in Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. Notwithstanding anything to the contrary contained herein, for the avoidance of doubt, any right, remedy or claim to which any Customer may be entitled pursuant to the Financing Order and this Agreement may be asserted or exercised only by the LPSC (or by the Attorney General of the State of Louisiana in the name of the LPSC) for the benefit of such Customer.

Section 8.05SEVERABILITY. Any provision, or portion thereof, of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such a construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 8.06SEPARATE COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 8.07HEADINGS. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

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Section 8.08GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Section 8.09PLEDGE TO THE TRUSTEE. The Servicer hereby acknowledges and consents to any pledge, assignment and grant of a security interest by the Issuer to the Trustee pursuant to the Indenture for the benefit of any Storm Recovery Bondholders of all right, title and interest of the Issuer in, to and under the Storm Recovery Property owned by the Issuer and the proceeds thereof and the pledge of any or all of the Issuer’s rights hereunder to the Trustee. Notwithstanding such assignment, in no event shall the Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer, hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which any recourse shall be had solely to the assets of the Issuer.

Section 8.10NONPETITION COVENANTS. Notwithstanding any prior termination of this Agreement or the Indenture, but subject to a court’s rights to order the sequestration and payment of revenues arising with respect to the Storm Recovery Property pursuant to Section 1229(F) of the Securitization Act, the Servicer shall not, prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise invoke or cause the Issuer to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer.

Section 8.11TERMINATION. This Agreement shall terminate when all Storm Recovery Bonds and related financing costs have been retired or redeemed in full and the funds relating thereto have been fully accounted for.

Section 8.12LPSC CONSENT. Except as specifically set forth in Section 7.04, to the extent the consent of the LPSC is required to effect any amendment to or modification of this Agreement or any provision of this Agreement,

(a)the Servicer may request the consent of the LPSC by delivering to the LPSC’s executive director and general counsel a written request for such consent, which request shall contain:

    (i)a reference to Docket No. U-35807 and a statement as to the possible effect of the amendment on ongoing financing costs;

    (ii)an Officers’ Certificate stating that the proposed amendment or modification has been approved by all parties to this Agreement; and

    (iii)a statement identifying the person to whom the LPSC or its staff is to address its consent to the proposed amendment or modification or request additional time;

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(b)The LPSC shall, within 30 days of receiving the request for consent complying with Section 8.12(a) above, either

    (i)provide notice of its consent or its order denying consent to the person specified in Section 8.12(a)(iii) above, or

    (ii)be conclusively deemed, on the 31st day after receiving the request for consent, to have consented to the proposed amendment or modification.

Any amendment or modification requiring the consent of the LPSC as provided in this Section 8.12 shall become effective on the later of (i) the date proposed by the parties to such amendment or modification and (ii) the first day after the expiration of the 30-day period provided for in Section 8.12(b)(ii).

Following the delivery of a notice to the LPSC by the Servicer under Section 8.12(a), the Servicer and the Issuer shall have the right at any time to withdraw from the LPSC further consideration of any notification of a proposed amendment. Such withdrawal shall be evidenced by the Servicer’s giving prompt written notice thereof to the LPSC, the Issuer and the Trustee.

Section 8.13LIMITATION OF LIABILITY. It is expressly understood and agreed by the parties hereto that this Agreement is executed and delivered by the Trustee, not individually or personally but solely as Trustee in the exercise of the powers and authority conferred and vested in it, and that the Trustee, in acting hereunder, is entitled to all rights, benefits, protections, immunities and indemnities accorded to it under the Indenture.

Section 8.14RULE 17g-5 COMPLIANCE. The Servicer agrees that any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Servicer to any Rating Agency under this Agreement or any other Basic Document to which it is a party for the purpose of determining the initial credit rating of the Storm Recovery Bonds or undertaking credit rating surveillance of the Storm Recovery Bonds with any Rating Agency, or satisfy the Rating Agency Condition, shall be substantially concurrently posted by the Servicer on the 17g-5 Website.

Section 8.15TRUSTEE ACTIONS. In acting hereunder, the Trustee shall have the rights, privileges, protections, indemnities and immunities granted to it under the Indenture.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written.

CLECO SECURITIZATION I LLC
as Issuer,
By:
	Name:
	Title:

CLECO POWER LLC,
as Servicer,
By:
	Name:
	Title:

Acknowledged and Accepted:

The Bank of New York Mellon Trust Company, National Association, 

not in its individual capacity but solely as

Trustee on behalf of the Holders 

of the Storm Recovery Bonds

By:
	Name:
	Title:

 Signature Page to Storm Recovery Property Servicing Agreement

SCHEDULE A
TO
STORM RECOVERY PROPERTY SERVICING AGREEMENT

Proceedings pending or, to the Servicer’s best knowledge, threatened before any court, federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties seeking any determination or ruling that might materially and adversely affect the Storm Recovery Property or the performance by the Servicer of its obligations under, or the validity or enforceability against the Servicer of, this Agreement:

[None]

Schedule A-1

EXHIBIT A

FORM OF MONTHLY SERVICER’S CERTIFICATE

MONTHLY SERVICER’S CERTIFICATE 

Pursuant to Section 3.01(b) of the Storm Recovery Property Servicing Agreement dated as of ____________, 2022 by and between Cleco Power LLC, as Servicer, and Cleco Securitization I LLC, as Issuer (the “Servicing Agreement”), the Servicer does hereby certify as follows:

Capitalized terms used but not defined in this Monthly Servicer’s Certificate have their respective meanings as set forth in the Servicing Agreement. References herein to certain sections and subsections are references to the respective sections or subsections of the Servicing Agreement.

Beginning of Billing Period: __________ 

End of Billing Period: __________

Rate Class	a.       SRCAs in Effect	b.       SRCAs Billed1	c.        Estimated SRCA Collections Deemed    Received2	d. Estimated SRCA Collections Remitted3
Residential
General Service – Nondemand
General Service – Demand
General Service – Primary
Municipal General Service
Large Power Service
Lighting Service
Standby Service
Total

¹ Storm restoration charges billed during the period.

² Estimated storm restoration charge collections deemed received based on weighted average balance of days outstanding and prior year write-off experience.

³ Estimated storm restoration charge collections remitted (i.e., estimated storm restoration charges remitted daily, but no later than two Servicer business days of deemed collection date).

CLECO POWER LLC, as Servicer
By:
	Name:
	Title:

cc: CLECO SECURITIZATION I LLC

Exhibit A-1

EXHIBIT B
FORM OF SEMI-ANNUAL SERVICER’S CERTIFICATE

Pursuant to Section 4.01(g)(i) of the Storm Recovery Property Servicing Agreement, dated as of [                         ], 2022 (the “Servicing Agreement”), between CLECO POWER LLC, as servicer and CLECO SECURITIZATION I LLC, the Servicer does hereby certify, for the              , 20    Payment Date (the “Current Payment Date”), as follows:

(a) Capitalized terms used herein have their respective meanings as set forth in the Servicing Agreement or the Indenture. References herein to certain sections and subsections are references to the respective sections of the Servicing Agreement or the Indenture, as the context indicates.

(i) Allocation of collections as of Current Payment Date allocable to principal and interest:

a.       Principal

		Aggregate
i.	Tranche A-1
ii.	Tranche A-2
iii.	Total:

b.       Interest

		Aggregate
i.	Tranche A-1
ii.	Tranche A-2
iii.	Total:

(b) Outstanding Amount of Bonds prior to, and after giving effect to the payment on the current Payment Date and the difference, if any, between the Outstanding Amount specified in the Expected Amortization Schedule (after giving effect to payments to be made on such Payment Date under 1a above) and the principal balance to be Outstanding (following payment on current Payment Date):

(i) Principal Balance Outstanding (as of the date of this certification):

i.	Tranche A-1
ii.	Tranche A-2
iii.	Total:

Exhibit B-1

(ii) Principal Balance to be Outstanding (following payment on current Payment Date):

i.	Tranche A-1
ii.	Tranche A-2
iii.	Total:

(iii) Difference between (b) above and Outstanding Amount specified in Expected Amortization Schedule:

i.	Tranche A-1
ii.	Tranche A-2
iii.	Total:

(c) All other transfers to be made on the current Payment Date, including amounts to be paid to the Trustee and to the Servicer:

(i) Operating Expenses

i.	Trustee Fees and Expenses:
ii.	Servicing Fee:
iii.	Administration Fee:
iv.	Independent Manager Fee:
v.	Other Operating Expenses:
vi.	Total:

(ii) Other Payments

i.	Operating Expenses (payable pursuant to Section 8.02(e)(iv) of the Indenture):
ii.	Funding of Capital Subaccount (to required amount):
iii.	Return on Capital Subaccount payable to Cleco Securitization I LLC from investment earnings on the capital subaccount not to exceed [ . ]% per annum:

iv.	Operating Expenses and Indemnity Amounts payable pursuant to Section 8.02(e)(viii) of the Indenture:
v.	Deposits to Excess Funds Subaccount (including the portion, if any, of investment earnings on the Capital Subaccount in excess of the amounts payable under (iii)):
vi.	Total:

Exhibit B-2

(d) Estimated amounts on deposit in the Capital Subaccount and Excess Funds Subaccount after giving effect to the foregoing payments:

(i) Capital Subaccount

i. Total:

(ii) Excess Funds Subaccount

i. Total:

Exhibit B-3

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Semi-Annual Servicer’s Certificate this day of             .

CLECO POWER LLC,

as Servicer

By:

Name:

Title:

Exhibit B-4

EXHIBIT C-1

FORM OF SERVICER’S ANNUAL COMPLIANCE CERTIFICATE

The undersigned hereby certifies that he/she is the duly elected and acting [                      ] of CLECO POWER LLC, as servicer (the “Servicer”) under the Storm Recovery Property Servicing Agreement dated as of [                         ], 2022 (the “Servicing Agreement”) between the Servicer and CLECO SECURITIZATION I LLC (the “Issuer”) and further that:

1. The undersigned is responsible for assessing the Servicer’s compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”).

2. With respect to each of the Servicing Criteria, the undersigned has made the following assessment of the Servicing Criteria in accordance with Item 1122(d) of Regulation AB, with such discussion regarding the performance of such Servicing Criteria during the fiscal year ended December 31, , and covered by Cleco Power’s annual report on Form 10-K (such fiscal year, the “Assessment Period”):

Regulation AB Reference	Servicing Criteria	Applicable Servicing Criteria
	General Servicing Considerations
1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.	Applicable; assessment below.
1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.	Not applicable; no servicing activities were outsourced.
1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for pool assets are maintained.	Not applicable; documents do not provide for a back-up servicer.
1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.	Not applicable; LPSC rules impose credit standards on retail electric providers who handle customer collections and govern performance requirements of utilities.
1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information	Applicable
	Cash Collection and Administration
1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days of receipt, or such other number of days specified in the transaction agreements.	Applicable

Exhibit C-1-1

1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	Applicable
1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.	Not applicable; no advances by the Servicer are permitted under the transaction agreements.
1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	Applicable, but no current assessment is required since transaction accounts are maintained by and in the name of the Trustee.
1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Exchange Act.	Applicable, but no current assessment required; all “custodial accounts” are maintained by the Trustee.
1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.	Not applicable; all transfers made by wire transfer.
1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.	Applicable; assessment below.
	Investor Remittances and Reporting
1122(d)(3)(i)	Reports to investors, including those to be filed with the SEC, are maintained in accordance with the transaction agreements and applicable SEC requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the SEC as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of pool assets serviced by the Servicer.	Applicable; assessment below.

Exhibit C-1-2

1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	Not applicable; investor records maintained by the Trustee..
1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the Servicer’s investor records, or such other number of days specified in the transaction agreements.	Applicable
1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	Applicable; assessment below.
	Pool Asset Administration
1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents.	Applicable; assessment below.
1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements.	Applicable; assessment below.
1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.	Not applicable; no removals or substitutions of Storm Recovery property are contemplated or allowed under the transaction documents.
1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the Servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related pool asset documents.	Applicable; assessment below.
1122(d)(4)(v)	The Servicer’s records regarding the pool assets agree with the Servicer’s records with respect to an obligor’s unpaid principal balance.	Not applicable; because underlying obligation (Storm Recovery charge) is not an interest bearing instrument
1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s pool asset (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.	Applicable; assessment below

Exhibit C-1-3

1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.	Applicable; limited assessment below. Servicer actions governed by LPSC regulations.
1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent pool assets including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).	Applicable, but does not require assessment since no explicit documentation requirement with respect to delinquent accounts are imposed under the transactional documents due to availability of “true-up” mechanism.
1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.	Not applicable; Storm Recovery charges are not interest bearing instruments.
1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s pool asset documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets, or such other number of days specified in the transaction agreements.	Not Applicable; Servicer does not maintain deposit accounts for obligors.
1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the Servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.	Not applicable; Servicer does not make payments on behalf of obligors.
1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the Servicer’s funds and not charged to the obligor unless the late payment was due to the obligor’s error or omission.	Not applicable; Servicer cannot make advances of its own funds on behalf of customers under the transaction documents.

Exhibit C-1-4

1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the Servicer, or such other number of days specified in the transaction agreements.	Not applicable; Servicer cannot make advances of its own funds on behalf of customers to pay principal or interest on the bonds.
1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.	Applicable; assessment below.
1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.	Not applicable; no external enhancement is required under the transaction documents.

3. To the best of the undersigned’s knowledge, based on such review, the Servicer is in compliance in all material respects with the applicable servicing criteria set forth above as of and for the period ending the end of the fiscal year ended , and covered by Cleco Power’s annual report on Form 10-K. [If not true, include description of any material instance of noncompliance.]

4. A registered independent public accounting firm has issued to us an attestation report in accordance with Section 1122(b) of Regulation AB on its assessment of compliance with the applicable servicing criteria as of and for the period ending the end of the fiscal year ended December 31,                  , and covered by Cleco Power’s annual report on Form 10-K.

Executed as of this                            day of                     ,      .

CLECO POWER LLC
By:
	Name:
	Title:

Exhibit C-1-5

EXHIBIT C-2

FORM OF CERTIFICATE OF COMPLIANCE

The undersigned hereby certifies that he/she is the duly elected and acting [                        ] of Cleco Power LLC as servicer (the “Servicer”) under the Storm Recovery Property Servicing Agreement dated as of [                     ], 2022 (the “Servicing Agreement”) between the Servicer and Cleco Securitization I LLC (the “Issuer”) and further that:

1. A review of the activities of the Servicer and of its performance under the Servicing Agreement during the twelve months ended December 31, 20__ has been made under the supervision of the undersigned pursuant to Section 3.03 of the Servicing Agreement; and

2. To the best of the undersigned’s knowledge, based on such review, the Servicer has fulfilled all of its obligations in all material respects under the Servicing Agreement throughout the twelve months ended December 31,  20__, except as set forth on Annex A hereto.

Executed as of this             day of            ,         

CLECO POWER LLC
By:
	Name:
	Title:

Exhibit C-2-1

ANNEX A

to Certificate of Compliance

LIST OF SERVICER DEFAULTS

The following Servicer Defaults, or events which with the giving of notice, the lapse of time, or both, would become Servicer Defaults known to the undersigned occurred during the year ended December 31, 20__:

Nature of Default Status

ANNEX A-1

ANNEX 1 

TO

STORM RECOVERY PROPERTY SERVICING AGREEMENT

SERVICING PROCEDURES

1. Definitions.

Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Storm Recovery Property Servicing Agreement (the “Agreement”).

2. Data Acquisition.

a. Installation and Maintenance of Meters. The Servicer shall cause to be installed, replaced and maintained meters in such places and in such condition as will enable the Servicer to obtain customer usage measurements consistent with its customary procedures and practices.

b. Meter Reading. The Servicer shall obtain usage measurements for each Customer, either directly or if applicable, from the Applicable MDMA consistent with its customary procedures and practices; provided, however, that the Servicer may estimate any Customer’s usage determined in accordance with applicable LPSC Regulations.

c. Cost of Metering. The Issuer shall not be obligated to pay any costs associated with the routine metering duties set forth in this Section 2, including the costs of installing, replacing and maintaining meters, nor shall the Issuer be entitled to any credit against the Servicing Fee for any cost savings realized by the Servicer as a result of new metering and/or billing technologies.

3. Usage and Bill Calculation.

The Servicer (a) shall obtain a calculation of each Customer’s usage (which may be based on data obtained from such Customer’s meter read or on usage estimates determined in accordance with applicable LPSC Regulations) in accordance with the Servicer’s customary procedures and practices and shall determine therefrom each Customer’s individual Storm Recovery Charges to be included on Bills issued by it to such Customer.

4. Billing.

The Servicer shall implement the Storm Recovery Charges at least forty-five (45) days after the closing date in accordance with the Financing Order and shall thereafter bill each Customer for the respective Customer’s outstanding current and past due Storm Recovery Charges accruing through the date on which such Storm Recovery Charges may no longer be billed under the Rate Schedule, all in accordance with the following:

a. Frequency of Bills; Billing Practices. In accordance with the Servicer’s then-existing policies and practices for its own charges, as such policies and practices may be modified from time to time, the Servicer shall generate and issue a Bill to each Customer, for such Customers’ Storm Recovery Charges once every applicable Billing Period, at the same time, with the same frequency and on the same Bill as that containing the Servicer’s own charges to such Customers. In the event that the Servicer makes any material modification to these practices, it shall notify the Issuer, the Trustee, and the Rating Agencies as soon as practicable, and in no event later than 30 Servicer Business Days after such modification goes into effect; provided, however, that the Servicer may not make any modification that will materially adversely affect the Holders. The initial Storm Recovery Charges shall be billed commencing on the first day of the first Billing Period of the first Cleco revenue month that begins at least forty-five (45) days after the date of issuance of the Storm Recovery Bonds.

ANNEX 1-1

b. Format.

i. Each Bill issued by the Servicer shall contain the charge corresponding to the respective Storm Recovery Charges owed by such Customer for the applicable Billing Period. The Storm Recovery Charges shall be separately identified as required by and in accordance with the terms of the Financing Order and Rate Schedule. The Servicer shall provide Customers with the annual notice required by Section 4.01(g)(ii)(B) of the Agreement.

ii. The Servicer shall conform to such requirements in respect of the format, structure and text of Bills delivered to Customers in accordance with, if applicable, the Financing Order, Rate Schedules, other applicable tariffs and any other LPSC Regulations and any agreement with the LPSC staff. To the extent that Bill format, structure and text are not prescribed by applicable LPSC Regulations or Rate Schedules, the Servicer shall, subject to clause (i) above, determine the format, structure and text of all Bills in accordance with its reasonable business judgment, its Servicer policies and practices with respect to its own charges and prevailing industry standards.

c. Delivery. The Servicer shall deliver all Bills issued by it (i) by United States mail in such class or classes as are consistent with the policies and practices followed by the Servicer with respect to its own charges to its customers or (ii) by any other means, whether electronic or otherwise, that the Servicer may from time to time use to present its own charges to its customers. The Servicer shall pay from its own funds all costs of issuance and delivery of all Bills, including but not limited to printing and postage costs as the same may increase or decrease from time to time.

5. Customer Service Functions.

The Servicer shall handle all Customer inquiries and other Customer service matters according to the same procedures it uses to service Customers with respect to its own charges.

ANNEX 1-2

6. Collections; Payment Processing; Remittance.

a. Collection Efforts, Policies, Procedures.

i. The Servicer shall use reasonable efforts to collect all Billed SRCs from Customers as and when the same become due and shall follow such collection procedures as it follows with respect to comparable assets that it services for itself or others, including with respect to the following:

A. The Servicer shall prepare and deliver overdue notices to Customers in accordance with applicable LPSC Regulations and Servicer Policies and Practices.

B. The Servicer shall apply late payment charges to outstanding Customer balances in accordance with applicable LPSC Regulations and as required by the Financing Order.

C. The Servicer shall deliver verbal and written final notices of delinquency and possible disconnection in accordance with applicable LPSC Regulations and Servicer Policies and Practices.

D. The Servicer shall adhere to and carry out disconnection policies in accordance with the Financing Orders, applicable LPSC Regulations and Servicer Policies and Practices.

E. The Servicer may employ the assistance of collection agents to collect any past-due Storm Recovery Charges in accordance with Servicer Policies and Practices, applicable LPSC Regulations and applicable tariffs.

F. The Servicer shall apply Customer deposits to the payment of delinquent accounts in accordance with applicable LPSC Regulations and Servicer Policies and Practices and according to the priorities set forth in Sections 6(b)(ii), (iii), (iv) and (v) of this Annex I.

ii. The Servicer shall not waive any late payment charge or any other fee or charge relating to delinquent payments, if any, or waive, vary or modify any terms of payment of any amounts payable by a Customer, in each case unless such waiver or action: (A) would be in accordance with the Servicer’s customary practices or those of any successor Servicer with respect to comparable assets that it services for itself and for others; (B) would not materially adversely affect the rights of the Holders; and (C) would comply with applicable law; provided, however, that notwithstanding anything in the Agreement or this Annex I to the contrary, the Servicer is authorized to write off any Billed SRCs, in accordance with Servicer Policies and Practices, that have remained outstanding for one hundred eighty (180) days or more.

iii. The Servicer shall accept payment from Customers in respect of Billed SRCs in such forms and methods and at such times and places as it accepts for payment of its own charges in accordance with, if applicable, the Financing Order, Rate Schedule, other applicable tariffs, other LPSC Regulations and Servicer Policies and Practices.

ANNEX 1-3

b. Payment Processing; Allocation; Priority of Payments.

i. The Servicer shall post all payments received to Customer accounts as promptly as practicable, and, in any event, substantially all payments shall be posted no later than three (3) Servicer Business Days after receipt.

ii. If any Customer does not pay the full amount of any Bill to the Servicer, the amount paid by the Customer will be applied to all charges on the Bill, including without limitation electric service charges and all Storm Recovery Charges (under the Financing Order or future LPSC orders) and all similar securitization charges, based, as to a Bill with charges covering more than one month, on the chronological order of billing, and, as to those charges with the same billing date, pro-rata. In addition, such partial collections representing Storm Recovery Charges and any other similar securitization charges shall be allocated among all such securitization bonds pro-rata based upon the amounts billed with respect to each issuance of securitization bonds, provided that late fees and charges may be allocated to the Servicer as provided in the Rate Schedule.

iii. The Servicer shall apply payments received to each Customer’s account in proportion to the charges contained on the outstanding Bill to such Customer. Any amounts collected by the Servicer that represent partial payments of the total Bill to a Customer shall be allocated as follows: (A) first to amounts owed to the Issuer, Cleco Power and any other Affiliate of Cleco Power which is owed “Storm Recovery Charges” as defined in the Securitization Law (excluding any late fees and interest charges), regardless of age, pro rata in proportion to their respective percentages of the total amount of their combined outstanding charges on such Bill; then (B) all late charges shall be allocated to the Servicer; provided that penalty payments owed on late payments of Storm Recovery Charges shall be allocated to the Issuer in accordance with the terms of the Rate Schedules. If more than one series of Storm Recovery Bonds is outstanding, the Servicer shall allocate amounts owed to the Issuer ratably based on the total amount of Storm Recovery Charges on such bill which were billed in respect of each such series. It is understood that such allocations may be made on a delayed basis in accordance with the reconciliations described in Section 6(e) of this Annex I.

iv. The Servicer shall hold all over-payments for the benefit of the Issuer and Cleco Power and shall apply such funds to future Bill charges in accordance with clauses (ii) and (iii) (as applicable) as such charges become due.

v. For Customers on a Budget Billing Plan, the Servicer shall treat SRC Collections received from such Customers as if such Customers had been billed for their respective Storm Recovery Charges in the absence of the Budget Billing Plan; partial payment of a Budget Billing Plan payment shall be allocated according to clause (ii) or (iii) (as applicable) and overpayment of a Budget Billing Plan payment shall be allocated according to clause (iv).

ANNEX 1-4

c. Accounts; Records.

The Servicer shall maintain accounts and records as to the Storm Recovery Property accurately and in accordance with its standard accounting procedures and in sufficient detail (i) to permit reconciliation between payments or recoveries with respect to the Storm Recovery Property and the amounts from time to time remitted to the Collection Accounts in respect of the Storm Recovery Property and (ii) to permit the estimated SRC Collections held by the Servicer to be accounted for separately from the funds with which they may be commingled, so that the dollar amounts of estimated SRC Collections commingled with the Servicer’s funds may be properly identified and traced. The Servicer will perform periodic reconciliations (not less than annually) of estimated remittances (including the estimated write-off amount) with actual SRC Collections.

d. Investment of SRC Collections Received.

Prior to each Daily Remittance, the Servicer may invest SRC Collections received at its own risk and (except as required by applicable LPSC Regulations) for its own benefit. So long as the Servicer complies with its obligations under Section 6(c) of this Annex I, neither such investments nor such funds shall be required to be segregated from the other investment and funds of the Servicer.

e. Calculation of Daily Remittance.

i. For purposes of calculating the Daily Remittance, (i) all Billed SRCs shall be estimated to be collected the same number of days after billing as is equal to the Days Sales Outstanding then in effect (or on the next Servicer Business Day) and (ii) the Servicer will, on each Servicer Business Day but in no event later than two Servicer Business Days, remit to the Trustee for deposit in the Collection Account an amount equal to the product of the applicable Billed SRCs multiplied by one hundred percent less the system wide write-off percentage (or if available in the ordinary course of business, gross write-off percentage for each revenue class) used by the Servicer to calculate the most recent Periodic Billing Requirement. Such product shall constitute the amount of estimated SRC Collections for such Servicer Business Day.

ii. As part of each Storm Recovery Charge Adjustment, pursuant to Section 4.01 of the Agreement, the Servicer will reconcile the amount of storm recovery charge remittances to the Trustee with the periodic payment requirement (including scheduled principal and interest payments on the storm recovery bonds and ongoing financing costs).The Servicer and the Issuer acknowledge and agree that the Servicer’s actual collections of Storm Recovery Charges on some days might exceed the Servicer’s estimated collections, and that the Servicer’s actual collections of Storm Recovery Charges on other days might be less than the Servicer’s estimated collections. The Servicer and the Issuer further acknowledge and agree that the amount of these variances are likely to be small and are not likely to be biased in favor of over-remittances or under-remittances. Consequently, so long as the Servicer faithfully makes all daily remittances based on weighted average days sales outstanding, as provided for herein, the Servicer and the Issuer agree that no actual or deemed investment earnings shall be payable in respect of such over-remittances or under-remittances.

ANNEX 1-5

iii. On or before the beginning of the first billing cycle in [September] and [March] of each year (or, in the case of any subsequent series, the corresponding date relating to the Storm Recovery Charge Adjustment for such series) in accordance with Section 4.01(b) of the Agreement, the Servicer shall, in a timely manner so as to perform all required calculations under such Section 4.01(b), update the Days Sales Outstanding and the system-wide write-off percentage (or if available in the ordinary course of business, gross write-off percentage for each revenue class) in order to be able to calculate the Periodic Billing Requirement for the next Storm Recovery Charge Adjustment and to calculate any change in the Daily Remittances for the next Calculation Period.

iv. The Servicer and the Issuer acknowledge that, as contemplated in Section 8.01(b) of the Agreement, the Servicer may make certain changes to its current computerized Customer information system, which changes, when functional, would affect the Servicer’s method of calculating the SRC Collections estimated to have been received by the Servicer during each Collection Period as set forth in this Annex I. Should these changes to the computerized Customer information system become functional during the term of the Agreement, the Servicer and the Issuer agree that they shall review the procedures used to calculate the SRC Collections estimated to have been received in light of the capabilities of such new system and shall amend this Annex I in writing to make such modifications and/or substitutions to such procedures as may be appropriate in the interests of efficiency, accuracy, cost and/or system capabilities; provided, however, that the Servicer may not make any modification or substitution that will materially adversely affect the Holders. As soon as practicable, and in no event later than sixty (60) Servicer Business Days after the date on which all Customer accounts are being billed under such new system, the Servicer shall notify the Issuer, the Trustee and the Rating Agencies of the same.

v. All calculations of collections, each update of the Days Sales Outstanding, the system-wide write-off percentage (or if available in the ordinary course of business, gross write-off percentage for each revenue class) and any changes in procedures used to calculate the estimated SRC Collections pursuant to this Section 6(e) shall be made in good faith, and in the case of any update pursuant to clause (iii) above or any change in procedures pursuant to clause (iv) above, in a manner reasonably intended to provide estimates and calculations that are at least as accurate as those that would be provided on the closing date utilizing the initial procedures.

ANNEX 1-6

f. Remittances.

i. The Issuer shall cause to be established the Collection Accounts in the name of the Trustee in accordance with the Indenture.

ii. The Servicer shall make remittances to the Collection Accounts in accordance with Section 6.12 of the Agreement.

iii. In the event of any change of account or change of institution affecting any Collection Account, the Issuer shall provide written notice thereof to the Servicer not later than five (5) Business Days from the effective date of such change.

ANNEX 1-7

APPENDIX A
DEFINITIONS

The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms.

“17g-5 Website” is defined in Section 10.18(a) of the Indenture.

“Adjustment Date” means the date other than an Interim Adjustment Date on which any Storm Recovery Charge Adjustment (other than an interim (non-semi-annual) Storm Recovery Charge Adjustment) and/or any adjustment to allocation of storm recovery charges among Customer Classes, as applicable, becomes effective. The first Adjustment Date will be on or about [               ], 2023 which may be more or less than six months from the Issuance Date, but in no event more than nine months therefrom, and all subsequent Adjustment Dates shall be on or about the same day of the sixth month after each prior adjustment date.

“Administration Agreement” means the Administration Agreement dated as of [                  ], 2022, between Cleco Power, as Administrator, and the Issuer, as the same may be amended and supplemented from time to time.

“Administrator” means Cleco Power as administrator under the Administration Agreement and each successor to or assignee of Cleco Power in the same capacity.

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, control, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.

“Annual Accountant’s Report” has the meaning assigned to that term in Section 3.04 of the Servicing Agreement.

“Applicable MDMA” means with respect to each Customer, any meter data management agent providing meter reading services for that Customer’s account.

“Articles of Organization” means the articles of organization of the Issuer that was filed with the Louisiana Secretary of State on January 5, 2022, as the same may be amended and restated from time to time.

“Basic Documents” means the Issuer LLC Agreement, the Articles of Organization, the Sale Agreement, the Servicing Agreement, the Administration Agreement, the Indenture, the Supplement, the Underwriting Agreement relating to the Storm Recovery Bonds and the Bill of Sale.

“Bill” means each of the regular monthly bills, summary bills, opening bills and closing bills issued to Customers by Cleco Power on its own behalf and in its capacity as Servicer.

APPENDIX A-1

“Bill of Sale” has the meaning assigned to that term in the Sale Agreement.

“Billed SRCs” means the amounts of Storm Recovery Charges billed by the Servicer..

“Billing Period” means the period of approximately thirty (30) days for which the Servicer renders Bills.

“Book-Entry Storm Recovery Bonds” means beneficial interests in the Storm Recovery Bonds, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture.

“Budget Billing Plan” means a payment plan made available by Cleco Power to Customers, who have had service for an established period of time and meet established rating standards, that uses averaged demand in calculating periodic obligations of the Customer.

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York or New Orleans, Louisiana, are, or The Depository Trust Company is, required or authorized by law or executive order to remain closed.

“Calculation Date” means, with respect to the Storm Recovery Bonds, the date on which the calculations and filings set forth in Section 4.01(b) will be made for each Storm Recovery Charge Adjustment. The first Calculation Date will be no later than [              ], 202_.

“Capital Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

“Cleco Power” means Cleco Power LLC, a Louisiana limited liability company, or its successor.

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.

“Collection Account” has the meaning specified in Section 8.02(a) of the Indenture.

“Collection Period” means the period from and including the first day of a calendar month to but excluding the first day of the next calendar month.

“Corporate Trust Office” has the meaning specified in Appendix A to the Indenture.

“Customer Class” means each of the Storm Recovery Charge classes specified in the Rate Schedule SRCA Form of Storm Restoration Cost Adjustment Calculation Appendix B-1 to the Financing Order.

“Customers” means any existing or future LPSC-jurisdictional customer who remain attached to Cleco Power’s (or its successor’s or assignee’s) electric transmission or distribution lines, and who, via such lines, receive any type of service from Cleco Power (or its successors or assignees) under rate schedules or special contracts approved by the LPSC.

APPENDIX A-2

“Daily Remittance” has the meaning specified in Section 6.12.

“Days Sales Outstanding” means the average number of days Cleco Power’s monthly Bills to Customers in its service area remain outstanding during the calendar year immediately preceding the calculation thereof pursuant to Section 4.01(b) of the Agreement. The initial Days Sales Outstanding shall be 20 days until updated pursuant to Section 4.01(b) of the Agreement.

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

“Event of Default” has the meaning specified in Section 5.01 of the Indenture.

“Excess Funds Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

“Excess Remittance” means the amount, if any, calculated for a particular Reconciliation Period, by which all estimated SRC Collections remitted to the Collection Account during such Reconciliation Period exceed actual SRC Collections received by the Servicer during such Reconciliation Period.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expected Amortization Schedule” means, with respect to the Storm Recovery Bonds, or any Tranche thereof, the expected amortization schedule for principal thereof, as specified in the Supplement.

“Financing Order” means the Financing Order U-35807-B issued on April 1, 2022 (Docket No. U-35807) by the LPSC pursuant to the Securitization Act.

“Fitch” means Fitch, Inc.; or any successor thereto.

“Formation Documents” means, collectively, the Articles of Organization, the Issuer LLC Agreement and any other document pursuant to which the Issuer is formed or governed, as the same may be amended and supplemented from time to time.

“General Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

“Governmental Authority” means any nation or government, any federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative function of government.

“Holder” or “Storm Recovery Bondholder” means the Person in whose name a Storm Recovery Bond of any Tranche is registered on the Storm Recovery Bond Register.

APPENDIX A-3

“Indenture” means the Indenture, dated as of [                      ], 2022, between the Issuer, the Trustee and The Bank of New York Mellon Trust Company, National Association, as Securities Intermediary, and the Supplement (including the forms and terms of the Storm Recovery Bonds established thereunder), as the same may be amended and supplemented with respect to the Storm Recovery Bonds, from time to time.

“Independent” means, when used with respect to any specified Person, that the Person:

(a) is in fact independent of the Issuer, any other obligor upon the Storm Recovery Bonds, the Servicer and any Affiliate of any of the foregoing Persons,

(b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Servicer or any Affiliate of any of the foregoing Persons and

(c) is not connected with the Issuer, any such other obligor, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

“Insolvency Event” means, with respect to a specified Person,

(a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days, or

(b) the commencement by such Person of a voluntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

“Interim Adjustment Date” means the effective date of any interim (non-semi-annual) Storm Recovery Charge Adjustment.

“Issuance Advice Letter” means the issuance advice letter submitted to the LPSC by Cleco Power pursuant to the Financing Order in connection with the issuance of the Storm Recovery Bonds.

“Issuance Date” means the date on which the Storm Recovery Bonds, are to be originally issued in accordance with the Indenture and the Supplement.

APPENDIX A-4

“Issuer” means Cleco Securitization I LLC, a Louisiana limited liability company, or any successor thereto pursuant to the Indenture.

“Issuer Annex” means Annex 1 of the Servicing Agreement.

“Issuer LLC Agreement” means the Amended and Restated Limited Liability Company Operating Agreement between the Issuer and Cleco Power, as sole member, effective as of [                              ], 2022, as the same may be amended or supplemented from time to time.

“Lien” means a security interest, lien, charge, pledge, equity or encumbrance of any kind.

“Losses” means collectively, any and all liabilities, obligations, losses, damages, payments, costs or expenses of any kind whatsoever.

“Louisiana UCC Filing Officer” means the recorder of mortgages of Orleans Parish (or any successor by law) or the clerk of the court of any other parish in Louisiana.

“LPSC” means the Louisiana Public Service Commission or any successor entity thereto.

“LPSC Regulations” means any regulations, rules, orders or directives promulgated, issued or adopted by the LPSC.

“Majority Holders” means the Holders of a majority of the Outstanding Amount of the Storm Recovery Bonds.

“Moody’s” means Moody’s Investors Service Inc., or any successor thereto.

“Officers’ Certificate” means a certificate signed, in the case of Cleco Power, by:

(a) any manager, the chairman of the board, the chief executive officer, the president, the vice chairman or any executive vice president, senior vice president or vice president; and

(b) the treasurer, any assistant treasurer, the secretary or any assistant secretary.

“Operating Expenses” means, with respect to the Issuer, all fees, costs and expenses owed by the Issuer with respect to the Storm Recovery Bonds, including all amounts owed by the Issuer to the Trustee (including any indemnity payments to the Trustee), the Servicing Fee, the Administration Fee, the costs and expenses incurred by the Seller in connection with the performance of the Seller’s obligations under Section 4.07 of the Sale Agreement, the fees relating to the Storm Recovery Bonds, payable by the Issuer to the independent manager of the Issuer, administrative expenses, including external legal and external accounting fees, ratings maintenance fees, and all other costs and expenses recoverable by the Issuer under the terms of the Financing Order.

“Opinion of Counsel” means one or more written opinions of counsel who may be an employee of or counsel to the Servicer or the Issuer, which counsel shall be reasonably acceptable to the Trustee, the LPSC, the Issuer or the Rating Agencies, as applicable, and which shall be in form reasonably satisfactory to the Trustee, if applicable.

APPENDIX A-5

“Outstanding” with respect to Storm Recovery Bonds means, as of the date of determination, all Storm Recovery Bonds theretofore authenticated and delivered under the Indenture except:

(a) Storm Recovery Bonds theretofore canceled by the Storm Recovery Bond Registrar or delivered to the Storm Recovery Bond Registrar for cancellation;

(b) Storm Recovery Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Storm Recovery Bonds; provided, however, that if such Storm Recovery Bonds are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory to the Trustee; and

(c) Storm Recovery Bonds in exchange for or in lieu of other Storm Recovery Bonds which have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Trustee is presented that any such Storm Recovery Bonds are held by a bona fide purchaser;

provided that in determining whether the Holders of the requisite Outstanding Amount of the Storm Recovery Bonds or any Tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Storm Recovery Bonds owned by the Issuer, any other obligor upon the Storm Recovery Bonds, Cleco Power or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be fully protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Storm Recovery Bonds that a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Storm Recovery Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Storm Recovery Bonds and that the pledgee is not the Issuer, any other obligor upon the Storm Recovery Bonds, the Servicer or any Affiliate of any of the foregoing Persons.

“Outstanding Amount” means the aggregate principal amount of all Outstanding Storm Recovery Bonds, or, if the context requires, all Outstanding Storm Recovery Bonds of a Tranche of the Storm Recovery Bonds, Outstanding at the date of determination.

“Paying Agent” means the entity so designated in Section 3.03 of the Indenture or any other Person that meets the eligibility standards for the Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments of Principal of or premium, if any, or Interest on the Storm Recovery Bonds on behalf of the Issuer.

“Payment Date” means, with respect to the Storm Recovery Bonds, or, if applicable, each Tranche thereof, the date or dates specified as Payment Dates for such Tranche in the Supplement, provided that if any such date is not a Business Day, the Payment Date shall be the Business Day immediately succeeding such date.

APPENDIX A-6

“Periodic Billing Requirement” means the aggregate dollar amount of Storm Recovery Charges that must be billed during a given period (i.e., semi-annually, or such other applicable period) so that the projected SRC Collections will be timely and sufficient to meet the entire aggregate Periodic Payment Requirement for that period, based upon: (i) forecast usage data for the period; (ii) forecast uncollectibles for the period; and (iii) forecast lags in collection of billed Storm Recovery Charges for the period. In the Storm Recovery Charge Adjustment process, the over or under collection from any period will be added to or subtracted from, as the case may be, the Periodic Billing Requirement for the upcoming period.

“Periodic Payment Requirement” means the required periodic payment for a given period (i.e., semi-annually, or such other applicable period) due under (or otherwise payable with respect to) the Storm Recovery Bonds. As to be more fully specified in the bond financing documents, each periodic payment requirement includes: (a) the principal amortization of the Storm Recovery Bonds in accordance with the Expected Amortization Schedule (including deficiencies of previously scheduled principal for any reason); (b) periodic interest on the Storm Recovery Bonds (including any accrued and unpaid interest); (c) Operating Expenses (including any accrued and unpaid amounts); (d) any necessary replenishment of the Capital Subaccount, and (e) Issuer’s return on the capital investment made by Cleco Power in the Issuer (including any accrued and unpaid amounts so that Cleco Power can earn the return permitted under the Financing Order).

“Person” means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), business trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof.

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

“Projected Storm Recovery Bond Balance” means, as of any date, the anticipated Outstanding Amount of Storm Recovery Bonds, after giving effect to payment of the sum of the payment amounts provided for in the Expected Amortization Schedules for the Storm Recovery Bonds, to be paid on or before such date.

“Rate Schedules” means Rate Schedule SRCA and Rate Schedule SCSA filed by the Seller pursuant to ordering paragraph 10 of the Financing Order.

“Rating Agency” means any rating agency rating the Storm Recovery Bonds, at the time of issuance at the request of the Issuer, which initially shall be Moody’s, Fitch and Standard & Poor’s. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, written notice of which designation shall be given to the Trustee, the LPSC and the Servicer.

APPENDIX A-7

“Rating Agency Condition” means, with respect to any action, at least ten (10) Business Days’ prior written notification to each Rating Agency of such action, and written confirmation from each of S&P and Moody’s to the Servicer, the Trustee and the Issuer that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of the Storm Recovery Bonds and that prior to the taking of the proposed action no other Rating Agency shall have provided written notice to the Issuer that such action has resulted or would result in the suspension, reduction or withdrawal of the then current rating of any such Tranche of the Storm Recovery Bonds; provided, that, if within such ten (10) Business Day period, any Rating Agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (i) the Issuer shall be required to confirm that such Rating Agency has received the Rating Agency Condition request, and if it has, promptly request the related Rating Agency Condition confirmation and (ii) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five (5) Business Days following such second (2^nd) request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency’s right to review or consent).

“Reconciliation Period” means, with respect to any Collection Period, the six-month period ending one month prior to each Adjustment Date.

“Regulation AB” means the rules of the SEC promulgated under Subpart 229.1100—Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time.

“Released Parties” has the meaning specified in Section 6.02(f) of the Servicing Agreement.

“Requirement of Law” means any foreign, federal, state or local laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued or promulgated by any Governmental Authority or common law.

“Responsible Officer” means, with respect to the Trustee, any officer within the Corporate Trust Office of the Trustee, including any Vice President, Director, Managing Officer, associate, Assistant Vice President, Secretary, Assistant Secretary, or any other officer of the Trustee having direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Sale Agreement” means the Storm Recovery Property Sale Agreement dated as of [                         ], 2022 relating to the Storm Recovery Property, between the Seller and the Issuer, as the same may be amended and supplemented from time to time.

“Sale Date” means the date on which the Seller sells, transfers, assigns and conveys the Storm Recovery Property to which this Agreement relates to the Issuer.

“SEC” means the U.S. Securities and Exchange Commission.

“Securitization Act” means Act No. 64 of the Louisiana Regular Session of 2006, the “Louisiana Electric Utility Storm Recovery Securitization Act,” codified at La. R.S. 45:1226-1236.

“Seller” means Cleco Power, or its successor, in its capacity as seller of the Storm Recovery Property to the Issuer pursuant to the Sale Agreement.

APPENDIX A-8

“Semi-annual Servicer’s Certificate” means the statement prepared by the Servicer and delivered to the Trustee with respect to the Storm Recovery Bonds, on or prior to each Payment Date therefor, the form of which is attached to the Indenture as Schedule 1.

“Servicer” means Cleco Power, as the servicer of the Storm Recovery Property, and each successor to or assignee of Cleco Power (in the same capacity) pursuant to Section 6.03, 6.04, or 7.04 of the Servicing Agreement.

“Servicer Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in the City of New Orleans, Louisiana, Chicago, Illinois, St. Paul, Minnesota or in the City of New York, New York, are required or authorized by law or executive order to remain closed, on which the Servicer maintains normal office hours and conducts business.

“Servicer Default” means the occurrence and continuation of one of the events specified in Section 7.01 of the Servicing Agreement.

“Servicer Policies and Practices” means, with respect to the Servicer’s duties under this Agreement, including Annex I, the policies and practices of the Servicer applicable to such duties that the Servicer follows with respect to comparable assets that it services for itself and, if applicable, others.

“Servicer Responsible Officer” means any officer, including President, Executive Vice President, Senior Vice President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer, of the Servicer.

“Servicing Agreement” or this “Agreement” means the Storm Recovery Property Servicing Agreement dated as of [                      ], 2022, between the Issuer and the Servicer, and accepted and acknowledged by the Trustee, relating to the Storm Recovery Property as the same may be amended and supplemented from time to time.

“Servicing Fee” means the fee payable by the Issuer to the Servicer on each Payment Date with respect to the Storm Recovery Bonds, in an amount specified in Section 6.07 of the Servicing Agreement.

“Servicing Standard” means the obligation of the Servicer to calculate, apply, remit and reconcile proceeds of the Storm Recovery Property, including SRC Collections, for the benefit of the Issuer and the Holders (i) with the same degree of care and diligence as the Servicer applies with respect to payments owed to it for its own account, (ii) in accordance with all applicable procedures and requirements established by the LPSC for collection of electric utility tariffs and (iii) in accordance with the other terms of the Servicing Agreement.

“Sponsor” means Cleco Power in its capacity as the Person who organizes and initiates an asset-backed securities transaction by selling or transferring assets, either directly or indirectly, to the Issuer.

“SRC Collections” means amounts constituting good funds collected by Servicer from any Person in respect of Storm Recovery Charges and Storm Recovery Property.

APPENDIX A-9

“Standard & Poor’s” or “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, or any successor thereto.

“State” means any one of the 50 states of the United States of America or the District of Columbia.

“Storm Recovery Bond” means any of the Series 2022-A Senior Secured Storm Recovery Bonds issued by the Issuer pursuant to the Indenture.

“Storm Recovery Bond Balance” means, as of any date, the aggregate Outstanding Amount of Storm Recovery Bonds on such date.

“Storm Recovery Bond Register” has the meaning specified in Section 2.05 of the Indenture.

“Storm Recovery Bond Registrar” means the Trustee, in its capacity as keeper of the Storm Recovery Bond Register, or any successor to the Trustee in such capacity.

“Storm Recovery Charge Adjustment” means each semi-annual adjustment to Storm Recovery Charges related to the Storm Recovery Property made in accordance with Section 4.01 of the Servicing Agreement and the Issuer Annex or in connection with the redemption or refunding by the Issuer of Storm Recovery Bonds.

“Storm Recovery Charges” means the nonbypassable amounts to be charged for the use or availability of electric services, approved by the LPSC in the Financing Order to recover financing costs, that shall be collected by Cleco Power, its successors, assignees or other collection agents as provided for in the Financing Order.

“Storm Recovery Property” means all of Seller’s rights and interest under the Financing Order (including, without limitation, rights to impose, collect and receive the “storm recovery charges” (as defined in the Securitization Act) approved in such Financing Order) issued by the LPSC on April 1, 2022 (Docket No. U-35807) pursuant to the Securitization Act, except the rights of Seller to earn and receive a rate of return on its invested capital in the Issuer, to receive administration and servicer fees, to withdraw funds from its restricted storm recovery reserve funded by the proceeds from the sale of the Storm Recovery Property, or to use the Seller’s remaining portion of those proceeds.

“Storm Recovery Property Documentation” means all documents relating to the Storm Recovery Property, including copies of the Financing Order and all documents filed with the LPSC in connection with any Storm Recovery Charge Adjustment.

“Successor Servicer” means (i) a successor to Cleco Power pursuant to Section 6.03 of the Servicing Agreement or (ii) a successor Servicer appointed by the Trustee pursuant to Section 7.04 of the Servicing Agreement which in each case will succeed to all the rights and duties of the Servicer under the Servicing Agreement.

“Supplement” means the Series Supplement dated of even date herewith to the Indenture between the Issuer and the Trustee that authorizes the Storm Recovery Bonds.

APPENDIX A-10

“Termination Notice” has the meaning specified in Section 7.01 of the Servicing Agreement.

“Third-Party Supplier” is a third-party supplier that is authorized by law to sell electric service to a customer using the transmission or distribution system of Cleco Power.

“Tranche” means any one of the tranches of Storm Recovery Bonds, as specified in the Supplement.

“Trust Estate” has the meaning specified in the Supplement.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., as indenture trustee, or its successor or any successor Trustee under the Indenture.

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

“Underwriting Agreement” has the meaning specified in the Indenture.

APPENDIX A-11

EX-99.2

Exhibit 99.2

[Letterhead of Phelps Dunbar, L.L.P.]

June __, 2022

To the Parties Listed on
Schedule 1 Attached Hereto

12922-538

Re: Cleco Securitization I LLC:
Constitutional Issues

Ladies and Gentlemen:

We have acted as counsel to Cleco Securitization I LLC (the “Issuer”), a Louisiana limited liability company, and Cleco Power LLC (the “Utility”), a Louisiana limited liability company, in connection with the following (collectively the “Transaction”):

(i)            the issuance of Order No. U-35807-B (the “Financing Order”) approved by the Louisiana Public Service Commission (the “LPSC”) on March 30, 2022, and issued on April 1, 2022, pursuant to the Louisiana Electric Utility Storm Recovery Securitization Act, La. R.S. 45:1226-1240 (the “Securitization Act”) and other constitutional and statutory authority;

(ii)           the sale of the rights and interests of the Utility in and to certain storm recovery property as defined in and created under the Securitization Act and the Financing Order to the Issuer pursuant to that certain Storm Recovery Property Sale Agreement, dated as of June __, 2022, between the Utility and the Issuer (the “Sale Agreement”); and

(iii)          the concurrent issuance of debt securities (the Issuer’s Series 2022-A Senior Secured Storm Recovery Bonds) (the “Bonds”) by the Issuer secured by (among other things) a security interest in the storm recovery property pursuant to that certain Indenture dated as of June __, 2022, as supplemented by the Series Supplement dated as of June __, 2022 (collectively, the “Indenture”), between the Issuer and The Bank of New York Mellon Trust Company N.A., as trustee acting on behalf of the holders of the Bonds (the “Bondholders”).

Capitalized terms that are defined in the Indenture but are not defined herein shall have the meanings ascribed to them in the Indenture. The Indenture, the Sale Agreement, the Servicing Agreement, and the Administration Agreement are referred to herein collectively as the “Transaction Documents.”

To the Parties Listed on
Schedule 1 Attached Hereto
June ___, 2022
Page -2-

Opinions Requested

You have requested our opinion as to:

(a) whether the Bondholders could challenge successfully under the “contract clause” of the United States Constitution (Article I, Section 10, Clause 1 of the United States Constitution, the “Federal Contract Clause”), which provides in pertinent part that “[n]o State shall . . . pass any . . . Law impairing the obligation of contracts,” or under the “contract clause” of the Louisiana Constitution (Article I, Section 23 of the Louisiana Constitution of 1974, the “Louisiana Contract Clause”), which provides in pertinent part that “[n]o . . . law impairing the obligation of contracts shall be enacted,” the constitutionality of any action by the State of Louisiana, including the LPSC, of a legislative character, including the repeal or amendment of the Securitization Act or the Financing Order, that a reviewing court of competent jurisdiction would determine repeals, amends or violates the Legislative Pledge (as defined below) contained in the Securitization Act or the LPSC Pledge (as defined below) authorized by the Securitization Act and contained in the Financing Order in a manner that substantially reduces, limits or impairs the value of the Bonds or substantially reduces, limits or impairs the Storm Recovery Property or the rights and remedies of the Bondholders (any such event being an “impairment”) prior to the time the Bonds are fully paid and discharged; and

(b) whether, under the Fifth Amendment to the United States Constitution (made applicable to the State of Louisiana through the Due Process Clause of the Fourteenth Amendment to the United States Constitution), which provides in pertinent part, “nor shall private property be taken for public use, without just compensation” (the “Federal Takings Clause”), or under Article I, Section 4 of the Louisiana Constitution, which provides in pertinent part that “[p]roperty shall not be taken or damaged by the state or its political subdivisions except for public purposes and with just compensation paid to the owner or into court for his benefit” (the “Louisiana Takings Clause”), a reviewing court of competent jurisdiction would find a compensable taking if the State of Louisiana, including the LPSC, takes action of a legislative character that repeals, amends or violates the Legislative Pledge or the LPSC Pledge or takes other action in contravention of either of the Pledges (as defined below) that the court concludes permanently appropriates the Storm Recovery Charges or otherwise substantially reduces, limits or impairs the value of the Storm Recovery Property, the Bonds or another substantial property interest of the Bondholders and deprives such Bondholders of their reasonable expectations arising from their investments in the Bonds (any such event being a “taking”).

You also have requested our opinion as to whether the Securitization Act is constitutional in all material respects under the United States and Louisiana Constitutions.

To the Parties Listed on
Schedule 1 Attached Hereto
June ___, 2022
Page -3-

Assumptions

In connection with rendering the opinions set forth below, we have examined and relied upon originals or copies, certified or otherwise identified to our satisfaction, of (i) the Sale Agreement, (ii) the Indenture, (iii) the Registration Statement on Form SF-1 of the Utility, as sponsor, and the Issuer, as issuing entity, (iv) the Securitization Act, (v) the Financing Order, and (vi) such other documents relating to the Transaction as we have deemed necessary or advisable as the basis for such opinions.

In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. In making our examination of documents, for purposes of this Opinion we have assumed (a) that the parties to such documents have the power, corporate or other, to enter into and perform all obligations thereunder, and (b) the due authorization by all requisite action, corporate or other, and the execution and delivery by such parties of such documents, including the Transaction Documents, and the validity and binding effect thereof. We further have assumed for purposes of this Opinion that the Financing Order was duly authorized and issued by the LPSC in accordance with all applicable Louisiana statutes, rules and regulations; the Financing Order and the process by which it was issued comply with all applicable Louisiana statutes, rules and regulations; the Financing Order is in full force and effect and is final and nonappealable; and the Securitization Act was duly enacted by the Louisiana Legislature in accordance with all applicable Louisiana laws and is in full force and effect (which matters are addressed by a separate opinion to you dated of even date herewith).

We have assumed for purposes of this Opinion that any legislation enacted by the Louisiana Legislature or supplemental order adopted by the LPSC impairing the value of the Bonds would constitute a “substantial” modification of the provisions of the Securitization Act or the Financing Order that provide support for the Bonds (and is done without providing full compensation for the Bondholders). The determination of whether particular governmental action of a legislative character constitutes a substantial impairment of a particular contract is a fact-specific analysis, and nothing in this Opinion expresses any opinion as to how a court would resolve the issue of “substantial impairment” with respect to the Bonds in relation to any particular action of a legislative character by the Legislature or the LPSC being challenged.¹

¹ See infra note 78. The degree of impairment necessary to meet the standards for relief under the Takings Clauses or Contract Clauses analysis set forth in this opinion could be substantially in excess of what a Bondholder would consider material.

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We have made no independent investigation of the facts referred to herein, and with respect to such facts we have relied, for purposes of rendering the opinions set forth below, and except as otherwise expressly stated herein, exclusively on the statements contained and matters provided for in the Transaction Documents, the Registration Statement, and such other documents relating to the Transaction as we have deemed advisable, including the factual representations, warranties and covenants contained therein as made by the respective parties thereto.

The Legislative Pledge

The Securitization Act contains the following pledge (the “Legislative Pledge”) by the State of Louisiana, for the benefit of Bondholders, defined as a person who holds a storm recovery bond as defined in the Securitization Act:

The state pledges to and agrees with bondholders, the owners of the storm recovery property, and other financing parties that the state will not:

(1)       Alter the provisions of this [Securitization Act] which authorize the commission to create a contract right by the issuance of a financing order, to create storm recovery property, and to make the storm recovery charges imposed by a financing order irrevocable, binding, and nonbypassable charges;

(2)       Take or permit any action that impairs or would impair the value of storm recovery property; or

(3)       Except as allowed under this Section and except for adjustments under any true-up mechanism established by the commission, reduce, alter, or impair storm recovery charges that are to be imposed, collected, and remitted for the benefit of the bondholders and other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related storm recovery bonds have been paid and performed in full. Nothing in this Paragraph shall preclude limitation or alteration if and when full compensation is made by law for the full protection of the storm recovery charges collected pursuant to a financing order and full protection of the holders of storm recovery charges collected pursuant to a financing order and full protection of the holders of storm recovery bonds and any assignee or financing party.²

² La. R.S. 45:1234(B). The concluding sentence proviso does not undermine the contractual nature of the Legislative Pledge as evaluated below. It merely acknowledges that the Legislative Pledge is not absolute and provides the terms upon which the States’s undertakings therein can be changed. See infra note 18.

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As explicitly authorized by Securitization Act Section 1234(C), the Legislative Pledge has been included in the Bonds.

The Financing Order and LPSC Pledge

The Financing Order contains the following Ordering Paragraphs (the “LPSC Pledge”, and together with the Legislative Pledge collectively the “Pledges”):

51.       Irrevocable. After the earlier of the transfer of the storm recovery property to the SPE [the Issuer] or issuance of the storm recovery bonds authorized by this Financing Order, this Financing Order is irrevocable until the indefeasible payment in full of such bonds and the related financing costs. The Commission covenants, pledges, and agrees it thereafter shall not amend, modify, or terminate this Financing Order by any subsequent action, or reduce, impair, postpone, terminate, or otherwise adjust the storm recovery charges approved in this Financing Order, or in any way reduce or impair the value of the storm recovery property created by this Financing Order, except as may be contemplated by a refinancing authorized in strict accordance with the Securitization Act by a subsequent order of the Commission or by the periodic true-up adjustments authorized by this Financing Order, until the indefeasible payment in full of the storm recovery bonds and the related financing costs.

52.       Duration. Consistent with Ordering Paragraph 5, this Financing Order and the storm recovery charges authorized hereby shall remain in effect until the storm recovery bonds and all financing costs related thereto have been indefeasibly paid or recovered in full. Consistent with Section 1228(C)(8), this Financing Order shall remain in effect and unabated notwith-standing the reorganization, bankruptcy, or other insolvency proceedings, or the merger or sale, of Cleco [the Utility] or its successors or assigns….

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53.       Contract. The Commission acknowledges that the storm recovery bonds approved by this Financing Order will be issued and purchased in express reliance upon this Financing Order and the Commission’s covenant and pledge herein of irrevocability and the vested contract right created hereby. The provisions of this Financing Order shall create a contractual obligation of irrevocability by the Commission in favor of the owners from time to time of the storm recovery bonds, and any such bondholders may by suit or other proceedings enforce and compel the performance of this Financing Order against the Commission in accordance with the indenture. It is expressly provided that such remedy as to individual commissioners of the Commission is strictly limited to a claim solely for prospective relief of declaratory and injunctive relief only; there shall be no other cause or right of action for damages or otherwise against the individual commissioners. The purchase of the storm recovery bonds, which reference in their related documentation the covenant and pledge provided in this Financing Order, is acknowledged by the Commission to be adequate consideration by the owners of the bonds for the Commission’s covenant of irrevocability contained in this Financing Order. The Commission acknowledges that it would be unreasonable, arbitrary, and capricious for the Commission to take any action contrary to the covenant and pledge set forth in this Financing Order after the issuance of the storm recovery bonds.

…

55.       Inclusion of Pledges. The SPE, as issuer of the storm recovery bonds, is authorized, pursuant to Section 1234(C) of the Securitization Act and this Financing Order, to include the State of Louisiana pledge contained in Section 1234 of the Securitization Act and the Commission pledge contained in Ordering Paragraph 51 with respect to the storm recovery property and storm recovery charges in the bonds and related bond documentation. This Financing Order is subject to the State pledge.

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As explicitly authorized by the Financing Order and by Securitization Act Section 1234(C), the LPSC Pledge in Financing Order Ordering Paragraph 51 has been included in the Bonds.³

Outline of Analysis

If Louisiana were to take action of a legislative character, either by the Louisiana Legislature or the LPSC, including the repeal, rescission or amendment of the Securitization Act or the Financing Order, that a court determines violates either of the Pledges in a manner that substantially reduces, limits or impairs the value of the Storm Recovery Property including the Storm Recovery Charges, such action would raise issues under the Federal Takings Clause, the Louisiana Takings Clause, the Federal Contract Clause and the Louisiana Contract Clause. Additionally, with respect to such action by the LPSC, such action would raise questions on direct appeal to Louisiana state courts of arbitrariness, capriciousness, abuse of authority and unreasonableness. The jurisprudence of the Louisiana Supreme Court clearly states that protection of private property, due process, impairment of contracts and similar constitutional concerns are a part of the judicial review process regarding LPSC orders. The jurisprudence of the United States Supreme Court and the Louisiana Supreme Court also establishes that any challenge to such action of a legislative character would raise the issue of whether the Pledges themselves are invalid and void under the “reserved powers” doctrine as beyond the State’s power to create irrevocable contract rights of this nature. In addition to considering the foregoing issues, at your request we also address issues pertaining to possible injunctive relief in federal or state court.

We address these issues in the following order:

● The LPSC’s Powers

● Irrevocability of the LPSC Pledge

● Federal Takings Clause

● Louisiana Takings Clause

● Federal Contract Clause

● Louisiana Contract Clause

● Reserved Powers Doctrine

● Jurisprudential Considerations and Injunctions

● The Constitutional Claims on Direct Review

● Conclusion: Reserved Powers Doctrine; Legislative Pledge; Takings Clauses; LPSC Pledge; Securitization Act

³ Even absent this statutory language, the Transaction Documents should be regarded as including the terms of the Securitization Act. Franklin California Tax-Free Trust v. Comm. of Puerto Rico, 85 F. Supp. 3d 577, 604 (D. P.R. 2015) (“Franklin”), jurisdiction declined over appeal of district court’s order denying motions to dismiss Contract Clause and Takings Clause claims, and affirmed on other grounds, 805 F.3d 322, 333 (1st Cir. 2015), affirmed on other grounds, 136 S. Ct. 1938 (2016).

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The LPSC’s Powers

The LPSC is a creature of the Louisiana Constitution of 1974. It is a commission in the State’s executive branch given the power and duty by Article IV, Section 21(B) of that Constitution to “regulate all . . . public utilities.” “This provision gives the [LPSC] constitutional jurisdiction over public utilities and has been interpreted as granting the [LPSC] independent and plenary power to regulate public utilities.”⁴ Thus the LPSC is unlike the utility commissions in most other states, which are statutory creatures subject to the authority of the respective state legislatures. Because the LPSC is a constitutional creature, the Legislature may not curtail its constitutional powers.⁵ Thus, the LPSC’s broad power in regulating utilities “is as complete in every respect as the regulatory power that would have been vested in the legislature in the absence of Article IV Section 21(B),” and “the legislature’s acts or omissions can not [sic] subtract from the Commission’s exclusive, plenary power to regulate all common carriers and public utilities.”⁶ The LPSC pursues its constitutional function “through the adoption and enforcement of reasonable rules and orders fundamental to these purposes.”⁷ The LPSC’s plenary regulatory power exists by a self-executing constitutional provisions,⁸ and its quite broad powers and functions cause it to perform duties of prosecutor, legislator and judge.⁹ Further, the Louisiana Constitution explicitly authorizes the Legislature in Article IV, Section 21 to grant to the LPSC other regulatory authority as provided by statute.¹⁰

⁴ Entergy Louisiana, LLC v. LPSC, 2016-0424 (La. 2017), 221 So.3d 801, 804 (citations omitted) (“ELL”); Global Tel*Link, Inc. v. LPSC, 1997-0645 (La. 1998), 707 So.2d 28, 33 (citation omitted) (“Global Tel*Link”); accord Opelousas Trust Authority v. Cleco Corp., 2012-0622 (La. 2012), 105 So.3d 26, 36 (“Opelousas”). 

⁵ The Daily Advertiser v. Trans-LA, 612 So.2d 7, 10 (La. 1993). 

⁶ Eagle Water, Inc. v. LPSC, 947 So.2d 28, 32-33 (La. 2007); Global Tel*Link, 707 So.2d at 33; Bowie v. LPSC, 627 So.2d 164, 166 (La. 1993) (“Bowie”). 

⁷ Global Tel*Link, 707 So.2d at 33 (citation omitted). 

⁸ Bowie, 627 So.2d at 166. 

⁹ Standard Oil Co. of Louisiana v. LPSC, 97 So. 859, 568 (La. 1923). 

¹⁰ Opelousas, 105 So.3d at 38.

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The Louisiana Supreme Court, recognizing the constitutional authority of the LPSC, has evolved a standard of judicial review deferential to LPSC orders. First, there is a presumption that LPSC orders are legal and proper, and it is the “high burden” of the party challenging an LPSC order to prove that it is defective.¹¹ Beyond this, the Louisiana Supreme Court has opined first that LPSC orders “should not be overturned absent a showing of arbitrariness, capriciousness, or abuse of authority by the” LPSC; secondly, that “courts should be reluctant to substitute their own views for those of the expert body charged with the legislative function;” and, finally, that “a decision of the [LPSC] will not be overturned absent a finding that it is clearly erroneous or that it is unsupported by the record.”¹² This standard is more deferential than the presumption of regularity usually accorded legislative statutes.¹³ This deferential standard “extends also to the [LPSC]’s interpretation of its own rules and past orders.” ¹⁴

The LPSC acts in a legislative capacity in exercising its ratemaking authority. Ratemaking is recognized as a legislative function. Thus the LPSC’s ratemaking orders have statutory effect.¹⁵

Irrevocability of the LPSC Pledge

Based on our analysis of relevant constitutional, legislative and judicial authority, as set forth in this Opinion, and subject to all of the qualifications, limitations and assumptions set forth in this Opinion (including the qualification regarding the “reserved powers” doctrine), in our opinion the LPSC has the authority to issue and enter into the LPSC Pledge (including the commitment therein regarding irrevocability for the duration of the Bonds). Within its constitutional mandate to regulate public utilities, the LPSC is of equal constitutional dignity with the Louisiana Legislature.¹⁶ As presented above, the LPSC’s power to regulate utilities is broad, independent, plenary and complete in every respect on a par with traditional state legislative power. The Louisiana Supreme Court has characterized the constitutional plenary grant of authority to the LPSC as full, entire, complete, absolute, perfect, and unqualified.¹⁷ Furthermore, as noted above, under the Louisiana Constitution Article IV, Section 21(B) the LPSC expressly has such other regulatory authority as provided by law, such as the Securitization Act. The Securitization Act explicitly authorizes the LPSC to issue the Financing Order with a pledge that the LPSC will not amend, modify or terminate the Financing Order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust the Storm Recovery Charges.¹⁸ Thus, in our opinion, with respect to the Transaction the LPSC has the same power as would be vested in the Louisiana Legislature if not for the constitutional grant to the LPSC in Article IV, Section 21(B) of the Louisiana Constitution to enter into the LPSC Pledge (and the same power to do so as possessed by the legislatures in other states where the public utility commission is not a constitutional entity).

¹¹ ELL, 221 So.3d at 805 (citations omitted); Global Tel*Link, 707 So.2d at 33-34 (citations omitted); Vacuum Track Carriers of Louisiana, Inc. v. LPSC, 2008-2340, 12 So.3d 932, 936 (La. 2009); Voicestream GSMI Operating Co., LLC v. LPSC, 943 So.2d 349, 358 (La. 2006) (“Voicestream”). See infra note 203. 

¹² Entergy Gulf States, Inc. v. LPSC, 1998-1235 (La. 1999), 730 So.2d 890, 897 (citations and internal quotation marks omitted); Charles Hopkins DBA Old River Water Company v. LPSC, 2010-CA-0255 (La. 2010), 41 So.3d 479); Gordon v. Council of City of New Orleans, 9 So.3d 63, 72 (La. 2009); Voicestream, 943 So.2d at 362. 

¹³ Dixie Elec. Membership Corp. v. LPSC, 441 So.2d 1208, 1210 (La. 1983); accord Voicestream; cf. infra note 194. 

¹⁴ Id. (citations omitted). Compare City of Arlington, Texas v. F.C.C., 569 U.S. 290, 133 S. Ct. 1863, 81 USLW 4299 (U.S. 2013) (courts must defer to an agency’s interpretation of a statutory ambiguity that concerns the scope of the agency’s jurisdiction). But see infra at notes 205-206 and 224-225. 

¹⁵ Louisiana Power & Light Co. v. LPSC, 377 So.2d 1023, 1028 (La. 1979); see infra note 69. 

¹⁶ See supra notes 5-6, 8. 

¹⁷ Daily Advertiser, 612 So.2d at 16 (quoting Black’s Law Dictionary). 

¹⁸ La. R.S. 45:1228(C)(5). The Securitization Act further provides that nothing shall preclude limitation or alteration of the Financing Order if and when full compensation is made for the full protection of the storm recovery charges collected pursuant to the Financing Order and the full protection of the holders of storm recovery bonds and any assignee or financing parties. The equivalent statement is made with respect to the Legislative Pledge. La. R.S. 45:1234(B)(3); see supra note 2.

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Nonetheless, it is generally understood and established that a legislative body (whether a state legislature or the LPSC) cannot abridge the power to act of a succeeding legislative body. The “reserved powers” doctrine limits a legislative body’s ability to bind itself contractually in a manner that surrenders an essential attribute of its sovereignty. Under this doctrine, if a contract limits a state’s reserved powers – powers that cannot be contracted away –such contract is void. The application of this reserved powers doctrine, discussed below in detail,¹⁹ will be the critical determination in any challenge to an action by the Louisiana Legislature or the LPSC that violates the Pledges.

In particular, for the reasons discussed below, in our view the consequences of action by the LPSC that rescinds or amends the Financing Order or otherwise creates an impairment or taking are most likely to be reviewed in proceedings on direct appeal of such action, as provided in the Securitization Act and the Louisiana Constitution. Such LPSC action and judicial review would require consideration of issues under the general principles for judicial review of LPSC orders, as well as the constitutional analysis under the reserved powers doctrine and the Federal Takings Clause, the Louisiana Takings Clause, the Federal Contract Clause and the Louisiana Contract Clause. Although, as discussed below, analysis of these constitutional issues has been subsumed by the Louisiana Supreme Court into its overall evaluation of whether an LPSC order should be overturned due to a showing of arbitrariness, capriciousness, abuse of authority or unreasonableness, in order to provide you a full understanding of our analysis, we address below each of the constitutional provisions in turn first, before addressing the standard of judicial review of LPSC action and its interaction with constitutional challenges.

¹⁹ See infra pages 25-26, 29-30, 37-38, and 59-64.

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Federal Takings Clause

The Federal Takings Clause provides: “nor shall private property be taken for public use, without just compensation.”²⁰ That provision is made applicable to state action by the Fourteenth Amendment of the United States Constitution²¹, no matter which branch of state government effects the taking.²² The Federal Takings Clause covers both tangible and intangible property,²³ and applies to personal property²⁴ as well as real property. The right to ownership of money is a recognized property right under Louisiana law.²⁵

The United States Supreme Court has stated broadly that “contracts . . . are property and create vested rights” for the purposes of the Federal Takings Clause.²⁶ However, it has clarified subsequently that “the fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking.”²⁷ “Contracts may create rights of property, but when contracts deal with a subject matter which lies within the control of Congress, they have a congenital infirmity. Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them.”²⁸

²⁰ U.S. Const., Amend V. 

²¹ Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) (Webb’s); Chicago, Burlington & Quincy Railroad Co. v. City of Chicago, 166 U.S. 226, 240 (1897). 

²² Stop the Beach Renourishment, Inc. v. Florida Dep’t. of Envtl Prot., 560 U.S. 702, 713-15 (2010). 

²³ Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) (“Monsanto”); Tahoe-Sierra Preservation Counsel, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 307 n.1 (2002). See James v. Campbell, 104 U.S. 356, 358 (1881) (patent rights); Eastern Enters. v. Apfel, 524 U.S. 498, 523-24 (1998) (plurality) (applying regulatory takings framework to financial obligation to fund health benefits); Armstrong v. United States, 364 U.S. 40, 44, 46 (1960) (materialman’s lien); Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 596-602 (1935) (real estate lien protected); see also infra note 26. 

²⁴ Horne v. Dep’t of Agriculture, 576 U.S. 351, 357 (2015) (physical taking of fruit) (“Horne”). 

²⁵ Lafaye v. City of New Orleans, No. 20-41 (E.D. La. 03/09/2021) (court slip op. at 15), 2021 WL 886118; see Phillips v. Washington Legal Foundation, 524 U.S. 156, 172 (1998) (under Texas law); Ballinger v. City of Oakland, 24 F.4th 1287, 1294 (9th Cir. 02/01/2022) (money can be the subject of a per se taking if it is a “specific, identifiable pool of money”). State law or existing rules, and not the United States Constitution, creates the protected property right. Monsanto, 467 U.S. at 1001; Webb’s, 449 U.S. at 161; Board of Regents v. Roth, 408 U.S. 564, 577 (1972). 

²⁶ Lynch v. United States, 292 U.S. 571, 577, 579 (1934) (In general, under the Fifth Amendment, “[v]alid contracts are property, whether the obligor be a private individual, a municipality, a state, or the United States.”); U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1, 19 n.16 (1977) (dicta); accord King v. United States, No. 18-1115, __ Fed.Cl. __, 2022 WL 1055628, at *16 (Fed. Cl. 04/08/2022). The Supreme Court has also held that legislation that terminates a property interest can be considered a taking for which compensation is due. Hodel v. Irving, 481 U.S. 704 (1987) (federal law escheating certain fractional interests in tribal property to an Indian tribe was a compensable taking). But see infra note 61. 

²⁷ Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224 (1986) (“Connolly”). 

²⁸ Id. at 223-24.

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In addressing challenges pursuant to the Federal Takings Clause to state action of a legislative character, the Supreme Court has relied on an ad hoc factual inquiry into the circumstances of each particular case (except for a limited category of “per se” regulatory challenges, with an exception for emergencies).²⁹ The Supreme Court has identified three factors that have particular significance in determining whether a regulatory taking has occurred: (i) the economic impact of the regulation on the claimant; (ii) the extent to which the regulation has interfered with distinct investment-backed expectations; and (iii) the character of the governmental action.³⁰

²⁹ Horne, 576 U.S. at 364; Connolly, 475 U.S. at 224; Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124 (1978); Monsanto 467 U.S. at 1005. Federal Takings Clause cases can generally be divided into two distinct categories: physical takings, where the government physically occupies or takes title to private property, and regulatory takings, where the government regulates the use of private property. Yee v. City of Escondido, 503 U.S. 519, 522-23 (1992). The United States Supreme Court has identified two types of regulatory actions that constitute per se regulatory taking that create a categorical obligation for the government to compensate a property owner: regulations that involve a permanent physical invasion of property and regulations that permanently deprive the owner of all economically beneficial use of the property. Lingle v. Chevron USA, Inc., 544 U.S. 528, 538 (2005). (Louisiana follows the same analysis under the Louisiana Constitution. See Robert v. State, 327 So.3d 546, 560-63 (La. App. 4th Cir. 2021).) Outside of this latter type of regulatory takings, which does not require complex analysis to warrant compensation, Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992), the third type of other regulatory action requires the ad hoc factual inquiry noted in the text. See infra note 39. Horne emphasizes the different treatment of precedents for physical taking versus regulatory taking, Horne, 576 U.S. at 361. The Supreme Court further has recognized an exception to the requirement of compensation when a taking by the government is necessitated by an imminent emergency requiring immediate government action, even when the economic impact is severe. The emergency exception to the just compensation requirement of the Federal Takings Clause appears in several Supreme Court decisions involving the government’s activities during military hostilities. United States v. Caltex (Philippines), Inc., 344 U.S. 149, 154 (1952) (relying, in part, on the common law, which had “long recognized that in time of imminent peril - such as when fire threatened a whole community - the sovereign could, with immunity, destroy the property of a few that the property of many and the lives of many more could be saved,” the court found no taking when the U.S. military destroyed private oil facilities in the Philippines to prevent the Japanese from taking control of the facilities during World War II; Nat’l Bd. of Young Men’s Christian Ass’ns v. United States, 395 U.S. 85 (1969) (no compensable taking where private property destroyed by rioters when U.S. troops take shelter there in the course of battle); United States v. Cent. Eureka Mining Co., 357 U.S. 155 (1958) (no compensable taking when government forced gold mines to cease operations to conserve mining resources for war effort); United States v. Pacific Railroad, 120 U.S. 227 (1887) (no compensation required due to exigencies of war when the military destroyed private bridges to prevent the advance of the enemy); American Mfrs. Mut. Ins. Co. v. United States, 453 F.2d 1380, 1381 (Ct. Cl. 1972) (compensation not required when private vessel was “destroyed as part of the fortunes of war and by actual and necessary military operations in attacking and defending against enemy forces”). Compare United States v. Pewee Coal Co., 341 U.S. 114 (1951) (plurality opinion) (compensable taking when occupation is physical rather than regulatory, emergency notwithstanding). The emergency exception is not limited to wartime activities, however. See, e.g., Dames & Moore v. Regan, 453 U.S. 654 (1981) (no compensable taking resulting from President’s executive order nullifying attachments on Iranian assets and permitting those assets to be transferred out of the country); Miller v. Schoene, 276 U.S. 272 (1928) (no due process violation where trees destroyed to prevent disease from spreading to other trees); Bowditch v. Boston, 101 U.S. 16, 18-19 (1879) (discussing common law and natural law supporting government immunity for destroying property to prevent imminent fueling of an ongoing fire). The emergency exception is not limited to the physical destruction of property by the government, see Cent. Eureka Mining, 357 U.S. at 168, but the Supreme Court did not mention the exception in finding a taking by wartime physical occupation of property, see Pewee, 341 U.S. at 116-17 (plurality opinion), which constitutes a per se taking. Arguably a permanent appropriation of property by the government would be generally inconsistent with the concept of an “emergency” in this context. See Cent. Eureka Mining, 357 U.S. at 168 (describing wartime restrictions as “temporary in character”). Compare infra note 235 (impairment of contracts due to emergencies). 

³⁰ Connolly, 475 U.S. at 225. “In discerning whether a taking has occurred, the first two factors are the main determinants,” and “the third ‘may be relevant.’” Heights Apartments, LLC v. Walz, 30 F.4th 720, 734 (8th Cir. 04/05/2022) (quoting Lingle v. Chevron USA, Inc., 544 U.S. 528, 538-39 (2005)).

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The first factor concerns whether the interference with property is so excessive as to require just compensation. This inquiry is a highly fact-sensitive analysis. It incorporates the principle enunciated by Justice Holmes: “Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.”³¹ “[N]ot every destruction or injury to property by governmental action has been held to be a ‘taking’ in the constitutional sense.”³² Diminution in property value alone, thus, does not constitute a taking; there must be serious economic harm.

The second factor relates to whether the claimant reasonably relied to the claimant’s economic detriment on the expectation that the government would not act as it did. It is applied as “a way of limiting takings recoveries to owners who could demonstrate that they bought their property in reliance on a state of affairs that did not include the challenged regulatory regime.”³³ The burden of showing such interference is a heavy one.³⁴ Thus, a reasonable investment-backed expectation “must be more than a ‘unilateral expectation or an abstract need.’”³⁵ Further, “legislation adjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations.”³⁶ “[T]he fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking. . . . This is not to say that contractual rights are never property rights or that the Government may always take them for its own benefit without compensation.”³⁷ In order to sustain a claim under the Federal Takings Clause, the private party must show that it had a “reasonable expectation” at the time the contract was entered that it “would proceed without possible hindrance” arising from changes in government policy.³⁸

³¹ Penn Coal Co. v. Mahon, 260 U.S. 393, 413 (1922); Loveladies Harbor, Inc. v. U.S., 28 F.3d 1171, 1176-77 (Fed. Cir. 1994) (“Loveladies”), abrogated on other grounds by Bass Enterprises Prod. Co. v. United States, 381 F.3d 1360, 1369-70 (Fed Cir. 2004). 

³² Armstrong v. U.S., 364 U.S. 40, 48 (1960); Yee, supra note 29, 503 U.S. at 522-23. 

³³ Loveladies, 28 F.3d at 1177. Accord Anaheim Gardens, L.P. v. United States, 953 F.3d 1344, 1349-51 (Fed. Cir. 2020) (where sophisticated investor voluntarily bought property after challenged legislation enacted, the “complete lack of investment-back expectations overwhelmingly outweighs” the other Penn Central factors). Compare infra notes 80 and 116 (reasonable reliance in Federal Contract Clause claims). But cf. Palm Beach Isles Associates v. U.S., 231 F.3d 1354, 1364 (Fed. Cir. 2000) (clarifying Loveladies dictum by holding that in a categorical regulatory taking, in which all economically viable use and economic value has been taken by the regulatory imposition, the property owner is entitled to recovery without regard to consideration of investment-backed expectations. In such a case, “reasonable investment-backed expectations” are not a proper part of the analysis, just as they are not in a physical takings case). See also Avenal v. U.S., 100 F.3d 933 (Fed. Cir. 1996) (holders of oyster bed leases, which are “property,” did not have reasonable investment-backed expectations so as to be entitled to compensation due to the impact of a government freshwater diversion project, because they knew when they acquired the leases that their property rights were subject to inevitable changes that the long-anticipated project would bring about). 

³⁴ Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 493 (1987). 

³⁵ Monsanto, 467 U.S. at 1005 (quoting Webb’s, 449 U.S. at 161); accord Dennis Melancon, Inc. v. City of New Orleans, 703 F.3d 262 (5th Cir. 2012) (“Melancon”) (rejecting takings claim based on unilateral expectation that highly regulated framework of taxicab licensing would not be changed). 

³⁶ Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 16 (1976). 

³⁷ Connolly, 475 U.S. at 224. 

³⁸ Chang v. U.S., 859 F.2d 893, 897 (Fed Cir. 1988). See State v. Perez Enterprises, LLC, No. S-1-SC-38510, 2021-NMSC-022, 489 P.3d 925 (N.M. 06/07/2021) (state’s emergency public health orders limiting and closing businesses due to COVID-19 pandemic do not support a regulatory takings compensation claim because such orders are reasonable exercise of the police power).

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The third factor requires the court to examine “the purpose and importance of the public interest underlying a regulatory imposition” and “inquire into the degree of harm created by the claimant’s prohibited activity, its social value and location, and the ease with which any harm stemming from it could be prevented.”³⁹

Connolly is the leading case examining whether a particular legislative action rises to the level of an unconstitutional taking. Connolly concerned a challenge to statutory amendments imposing upon certain employers a substantial withdrawal penalty to be remitted to the pension trust upon withdrawal from a multi-employer pension plan. This withdrawal penalty had not existed at the time the trust was formed and the trust agreements were confected among the employers and their employees.

The United States Supreme Court proceeded with an examination of the three factors it had determined govern its review of regulatory takings claims (in reverse order). In considering the first factor, “the economic impact of the regulation on the claimant,” the Supreme Court found that the regulation clearly imposed a financial hardship upon the employers.⁴⁰ However, the Supreme Court also found that “[t]here is nothing to show that the withdrawal liability actually imposed on an employer will always be out of proportion to its experience with the plan.”⁴¹ Given the proportionate impact of the regulation upon the employers, the Supreme Court concluded that this factor did not suggest a compensable “taking” had occurred.⁴²

³⁹ Bass Enterprises Prod. Co. v. United States, 381 F.3d 1360, 1370 (Fed. Cir. 2004). See South Grande View Dev. Co. v. City of Alabaster, Alabama, 1 F.4th 1299, 1311 (11th Cir. 2021) (the “character of the government action” factor is another way to examine the severity of the government interference with property rights in a Federal Takings Clause claims); see also Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 323 (2002) (cases involving regulatory takings necessarily entail that courts conduct complex factual assessments of the “purposes and economic effects of government actions”); Yee, 503 U.S. at 522-23; Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 484 (1987). 

⁴⁰ Connolly, 475 U.S. at 225. 

⁴¹ Connolly, 475 U.S. at 226. 

⁴² Id.

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Regarding the second factor, the extent to which the regulation interfered with “reasonable investment-backed expectations”,⁴³ the employers’ argument was that certain rights and liabilities had been established by the original trust documents, “and that the imposition of withdrawal liability upsets those reasonable expectations.”⁴⁴ The Supreme Court found, however, that “[p]ension plans were the objects of legislative concern long before the passage of ERISA in 1974,” and furthermore that under ERISA “the purpose of imposing withdrawal liability was to ensure that employees would receive the benefits promised them.”⁴⁵ Given this long-standing regulatory regime, “[p]rudent employers then had more than sufficient notice not only that the pension plans were currently regulated, but also that withdrawal itself might trigger additional financial obligations.”⁴⁶ As the Supreme Court admonished, “[t]hose who do business in the regulated field cannot object if the legislative scheme is buttressed by subsequent amendments to achieve the legislative end.”⁴⁷

In examining the third factor, the “character of the governmental action,” the Supreme Court found it significant that the regulation “does not physically invade or permanently appropriate any of the employer’s assets for its own use,” but rather “safeguards the participants in multiemployer pension plans” by imposing upon a withdrawing employer a financial obligation to pay.⁴⁸ The Supreme Court observed that “[t]his interference with the property rights of an employer arises from a public program that adjusts the benefits and burdens of economic life to promote the common good and, under our cases, does not constitute a taking requiring Government compensation.”⁴⁹ Based upon its consideration of the three factors, the Supreme Court concluded that the imposition of withdrawal liability by Congress did not result in a compensable “taking” under the Fifth Amendment.

⁴³ Id. at 226-27. 

⁴⁴ Id. at 226. 

⁴⁵ Id. at 227. 

⁴⁶ Id. Because many factors could have an impact on the market price of the Bonds, maintenance of the market price of the Bonds might be considered a unilateral expectation of the Bondholders and not a reasonable investment-back expectation. 

⁴⁷ Id. (internal quotation marks and citations omitted); accord Melancon, 703 F.3d at 272-75. Nonetheless, the “fact that a property interest arises in a highly regulated environment does not per se render that property interest incognizable under the fifth amendment.” King v. United States, No. 18-1115, __ Fed.Cl. __, 2022 WL 1055628, at *22 (Fed. Cl. 04/08/2022). 

⁴⁸ Connolly, 475 U.S. at 225. 

⁴⁹ Id. (citations omitted).

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It is difficult to apply the jurisprudence under the Federal Takings Clause to a hypothetical taking arising by the otherwise proper exercise by the State of Louisiana of its police power that to some degree abrogates (or impairs) contracts such as the Pledges otherwise binding on the State. (There is, of course, the significant likelihood of overlap, with such a taking also constituting an impairment.)⁵⁰ One argument by analogy is based upon the opinion in United States v. Security Industrial Bank.⁵¹ The plaintiffs were creditors challenging a bankruptcy reform statute with the argument that its change in the bankruptcy code to allow debtors to avoid the creditors’ liens on the debtors’ property constituted an unconstitutional taking. The government argued that the statute simply imposed a general economic regulation which in effect transferred a property interest from one private party to another private party, and did not involve the government acquiring for itself the property in question. The Supreme Court stressed that its cases show that the Federal Takings Clause analysis is not limited to outright acquisitions by the Government for itself, and explained (quoting an earlier case which did involve a classic taking by the Government for itself): “The total destruction by the Government of all value of these liens, which constitute compensable property, has every possible element of a Fifth Amendment ‘taking’ and is not a mere ‘consequential incidence’ of a valid regulatory measure.”⁵² To avoid the “substantial doubt” as to whether the statutory enactment destroying the liens (property interests) comported with the Federal Takings Clause, the Supreme Court as a matter of statutory construction held that the legislation only applied to lien interests established after the enactment date.⁵³

Louisiana Takings Clause

The Louisiana Takings Clause provides:

Every person has the right to acquire, own, control, use, enjoy, protect, and dispose of private property. This right is subject to reasonable statutory restrictions and the reasonable exercise of the police power.

⁵⁰ See infra notes 148 and 172; Melendez v. City of New York, 16 F.4th 992, 1020 n.45 (2d Cir. 10/28/2021) (recognition of some overlap in the protections afforded to private contracts by the Takings Clause and Contract Clause may explain how compensation came to figure in a subsequent balancing approach to Contract Clause). 

⁵¹ 459 U.S. 70 (1982). 

⁵² Id. at 412 (citation omitted). See Hodel v. Irving, 481 U.S. 704 (1987) (federal statute escheating certain fractional interests in tribal property to an Indian tribe was a compensable taking, as total abrogation of a property right.) 

⁵³ Id. The U.S. Constitution is concerned with the means used as well as the ends. Horne, 576 U.S. at 362.

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Property shall not be taken or damaged by the state or its political subdivisions except for public purposes and with just compensation paid to the owner or into court for his benefit.⁵⁴

Louisiana recognizes an action for compensation for takings arising from State action, i.e., inverse condemnation. This action arises from the self-executing nature of the Louisiana Takings Clause.⁵⁵ This procedural remedy is available even though the Louisiana Legislature has not provided a specific statutory procedure for such claims.⁵⁶ This action applies to all taking or damaging of property without just compensation, regardless of whether such property is corporeal or incorporeal (tangible or intangible).⁵⁷ The Louisiana Supreme Court has adopted a three-prong analysis to determine whether a compensable taking has occurred: “[i]n accordance with this analysis, the court must: (1) determine if a recognized species of property right has been affected; (2) if it is determined that property is involved, decide whether the property has been taken or damaged in a constitutional sense; and (3) determine whether the taking or damaging is for a public purpose.”⁵⁸

Application of this standard has been uneven, however, and in many cases the reviewing court has appeared to recognize the second factor as the dispositive one. Moreover, of those cases decided under the Louisiana Takings Clause, none has considered regulations that affect an incorporeal movable right akin to the Storm Recovery Property, as opposed to some incorporeal right associated with immovable (real) property. These aspects of the Louisiana jurisprudence, combined with the absence of any actual concrete action to evaluate, makes resolving the hypothetical question presented difficult.

⁵⁴ La. Const. Art. I, Sec. 4. See infra note 213. 

⁵⁵ State, Through DOTD v. Chambers Investment Co., Inc., 595 So.2d 598, 602 (La. 1992) (“Chambers”); Tucker v. Parish of St. Bernard, 2010 WL 3283093 (E.D. La. 8/7/2010). 

⁵⁶ Chambers, 595 So.2d at 602. 

⁵⁷ Id. 

⁵⁸ Avenal v. State of Louisiana through DNR, 2003-3521 (La. 2004), 886 So.2d 1085, 1104 (citations omitted) (“Avenal”).

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Nonetheless, some useful principles may be distilled from the extant Louisiana jurisprudence. In the modern era, the Louisiana Supreme Court, in resolving inverse condemnation issues, has focused upon the extent to which the State has guaranteed a particular return on investment, and the extent of the taking.⁵⁹ Other cases, including those concerning the LPSC’s regulation of public utilities, have relied upon the Louisiana Takings Clause being expressly subject to “reasonable statutory restrictions and the reasonable exercise of the police power,” to reject inverse condemnations claims based upon a traditional exercise of the police power in a regulated industry.⁶⁰

In conclusion, in our view the jurisprudence does not directly address the applicability of the Federal Takings Clause or the Louisiana Takings Clause in the context of the proper exercise by Louisiana of its police power to abrogate or impair the Pledges as contracts otherwise binding on the State. A challenge to a taking with respect to the Transaction will be based primarily on the application of the second of the three Connolly factors -- the extent to which the state action has interfered with distinct investment-backed expectations.⁶¹ The expectations of the Bondholders regarding the Storm Recovery Property and the Storm Recovery Charges will need to be proven in fact to have been specifically created and promoted by the Pledges. This factor of expectations overlaps with the key factor under the Contract Clauses of reliance by the contracting party on the abridged contractual term. Indeed, we believe the Federal and Louisiana Contract Clauses would provide a clearer basis for challenging an impairment of the Storm Recovery Property.

⁵⁹ See Avenal, 886 So.2d at 1106, 1107 (coastal restoration project did not constitute compensable damaging of leases of oyster fishermen where, inter alia, leases did not guarantee commercial viability, and restoration project did not completely and permanently destroy economic value of leases); see also Annison v. Hoover, 517 So.2d 420, 432 (La. App. 1 Cir. 1987) (“We hold that a regulatory program that adversely affects property values does not constitute a taking unless it destroys a major portion of the property’s value.”) (citations omitted); writ denied, 519 So.2d 148 (La. 1988). 

⁶⁰ See, e.g., Louisiana Power & Light Co. v. LPSC, 343 So.2d 1040, 1043 (La. 1977) (order inhibiting duplicative utility facilities was a reasonable exercise of LPSC’s constitutional jurisdiction, and therefore not a compensable taking); Belle Co. LLC v. State of Louisiana through DEQ, 2008-2382 (La. App. 1 Cir. 2009), 25 So.3d 847, writ denied, 18 So.3d 1288 and 1291 (La. 2009). 

⁶¹ See Avenal, 886 So.2d at 1107 n.28 (discussing Federal Takings Clause analysis). Although the factors set forth in Chambers under the Louisiana Takings Clause do not expressly include that Connolly factor, we believe it would be considered in the analysis. See supra note 59. Compare Urban Developers LLC v. City of Jackson, 468 F.3d 281, 303 (5th Cir. 2006) (“It is an unsettled question, of course, the extent to which many jurisdictions will recognize as protected by the Takings Clause a property right in contract”) and Brandmeyer v. Regents of the Univ. of California, No. 20-cv-02886-SK, 2020 WL 6816788, at *6-7 (N.D. Cal. 11/10/2020) (plaintiffs’ attempt to disguise their breach of contract claim as a takings violation is unavailing) with Franklin, supra note 3, 85 F. Supp. 3d 577, 611 (“contracts are a form of property for purposes of the [Federal] Takings Clause”); see also supra note 26.

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Federal Contract Clause

The Federal Contract Clause mandates: “No State shall . . . pass any . . . Law impairing the Obligation of Contracts . . . .”⁶² The United States Supreme Court, however, has long held that this seemingly absolute prohibition is not absolute at all. Although the language of the Federal Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the state to safeguard the vital interests of its people.⁶³ The United States Supreme Court has explained why the Contract Clause provides no absolute protection of contracts from the effects of state legislation as follows:

Although the Contract Clause appears literally to proscribe “any” impairment, this Court observed in Blaisdell that “the prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula.” Thus, a finding that there has been a technical impairment is merely a preliminary step in resolving the more difficult question whether that impairment is permitted under the Constitution. In the instant case, as in Blaisdell, we must attempt to reconcile the strictures of the Contract Clause with the “essential attributes of sovereign power,” necessarily reserved by the States to safeguard the welfare of their citizens.⁶⁴

The law is well-settled that the Federal Contract Clause limits the power of the states to modify their own contracts as well as to regulate those between private parties, although the Federal Contract Clause operates differently on private contracts on the one hand and government contracts on the other. The Supreme Court has indicated that impairment of a state’s own contracts faces more stringent examination under the Federal Contract Clause than do laws regulating contractual relationships between private parties, although private parties’ contracts are not subject to unlimited modification under the police power.⁶⁵

⁶² U.S. Const. Art. I, Sec. X, Cl. 1. The United States Supreme Court has referred to this constitutional provision both as the “Contract Clause,” see, e.g., United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 14 (1977), and the “Contracts Clause”, see, e.g., Sveen v. Melin, 138 S. Ct 1815, 1821 (2018). In this opinion, we employ the former more traditional appellation, except when quoted text does otherwise. 

⁶³ Sveen v. Melin, 138 S. Ct. 1815, 1822 n.3, 201 L. Ed. 2d 180 (2018), infra note 66; Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 410 (1983); see Borman, LLC v. 18718 Borman LLC, 777 F.3d 816, 825-26 (6th Cir. 2015) (applying Energy Reserves framework to debt contracts, in the same manner as other contracts, with no additional constitutional protection to debt contracts, and noting the Supreme Court flatly rejects that public purpose here is limited to crises or emergency or temporary situations, and further noting an impairment takes on constitutional dimensions only when it interferes with reasonably expected contractual benefits). See also Segura v. Frank, 630 So.2d 714, 728 (La. 1994) and infra notes 111, 119, and 235; compare supra note 29 (emergency exception to Federal Takings Clause). 

⁶⁴ United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 21, 25 (1977) (“U.S. Trust”) (“As with laws impairing the obligations of private contracts, an impairment [of a state contract] may be constitutional if it is reasonable and necessary to serve an important public purpose.”) See infra notes 83 and 101. The United States Supreme Court has recently declined to address the contention that the modern test departs from the Federal Contract Clause’s original meaning and earliest applications. Sveen, infra note 66, 584 U.S. at 1822 n.3. 

⁶⁵ See infra notes 67, 100, 108, 109, 111, and 172.

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The Supreme Court has recently restated and summarized its test under the Federal Contract Clause in Sveen v. Melin:

At the same time, not all laws affecting pre-existing contacts violate the Clause. To determine when such a law crosses the constitutional line, this Court has long applied a two-step test. The threshold issue is whether the state law has “operated as a substantial impairment of a contractual relationship.” In answering that question, the Court has considered the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to the means and ends of the legislation. In particular, the Court has asked whether the state law is drawn in an “appropriate” and “reasonable” way to advance “a significant and legitimate public purpose.”⁶⁶

The Supreme Court has developed in modern cases a multi-part analysis confirmed in Sveen to determine whether a particular legislative action violates the Federal Contract Clause. (Variously characterized by courts as having either two, three or four parts, we segregate the analysis for clarity herein without concern for numbering.) Initially, a court must determine whether state law has, in fact, substantially impaired any contract. This first inquiry itself contains three components: whether a contract exists, whether a change in state regulation impairs that contractual relationship, and whether the impairment is substantial. As the second inquiry, if the state action constitutes a substantial impairment of the contract, a court must determine whether that impairment is nonetheless permissible as a legitimate exercise of the state’s sovereign powers. Also, a claimant must show that the contractual relationship is not an invalid attempt to restrict or limit a state’s “reserved powers.” As the final inquiry, a court must determine if the impairment is upon reasonable conditions and of a character appropriate to the public purpose justifying its adoption. Only if there is a contract, which has been substantially impaired, and there is no legitimate public purpose justifying the impairment on a reasonable and appropriate level, is there a violation of the Federal Contract Clause. The following portions of this subpart evaluate these inquiries with respect to the Legislative Pledge and the LPSC Pledge.

⁶⁶ Sveen v. Melin, 138 S. Ct. 1815, 1821-22, 201 L. Ed. 2d 180 (2018) (“Sveen”). See infra notes 85 and 99.

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The threshold inquiry is whether these Pledges constitute a contract existing between the State and the Bondholders.⁶⁷ The courts have maintained the well-established presumption that, absent some clear indication that a legislature intends to bind itself contractually, “a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise.”⁶⁸ This presumption is based on the fact that the legislature’s principal function is not to make contracts, but to make laws that establish the policy of the state. Thus, a person asserting the creation of a contract with the State must overcome this well-founded presumption. This same presumption is applicable to the LPSC Pledge when considered in the context of the LPSC’s ratemaking actions, which are of a legislative character.⁶⁹

This general presumption can be overcome where the language of the statute indicates an intention to create contractual rights. In determining whether a contract has been created by statute, “it is of first importance to examine the language of the statute.”⁷⁰ The courts have ruled that a statute creates a contractual relationship between a state and private parties if the statutory language contains sufficient words of contractual undertaking. A contract is created when the language and circumstances evince a legislative intent to create private rights of a contractual nature enforceable against the state.

⁶⁷ For purposes of Federal Contract Clause analysis, the question whether a contract was made is a federal question. General Motors Corp. v. Romein, 503 U.S. 181, 187 (1992). Clearly the Transaction includes private parties’ contracts between the Bondholders and the Issuer that could be impaired, even if the Pledges themselves were found not to be contracts of the State. But while in theory an impairment of the Storm Recovery Property could be successfully challenged (albeit potentially under a more difficult to overcome standard of review, see infra note 100) even if the Pledges are not contracts binding on the State, we believe that a finding that the Pledges are not valid and binding contractual obligations under the reserved powers doctrine likely also would be fatal to a Contract Clauses claim on the Transaction’s purely private contracts. See infra pages 25-26, 29-30, 37-38, and 59-64. 

⁶⁸ National R.R. Passenger Corp. v. Atchison, Topeka & Sante Fe Ry Co., 470 U.S. 451, 466 (1985) (“National R.R.”) (citation omitted); see also General Motors Corp. v. Romein, 503 U.S. 181, 187-89 (1992). 

⁶⁹ New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 371 (see infra note 136); Louisville & Nashville R.R. Co. v. Garrett, 231 U.S. 298, 305, 318 (1913) (order of railroad commission fixing rates is a law passed by the state, within the meaning of the Federal Contract Clause); Louisiana Power & Light Co. v. LPSC, 377 So.2d 1023, 1028 (La. 1979); Louisiana Gas Service v. LPSC, 162 So.2d 555, 563 (La. 1964); United Gas Pipe Line Co. v. LPSC, 130 So.2d 652, 657 (La. 1961); see Community House, Inc. v. City of Boise, Idaho, 623 F.3d 945, 960 (9th Cir. 2010) (discussing four factors used in determining whether an act is legislative in its character and effect); cf. New Orleans Waterworks Co. v. Louisiana Sugar Ref. Co., 125 U.S. 18, 30 (1888) (“[N]ot only must the obligation of a contract have been impaired, but it must have been impaired by a law of the state. The prohibition is aimed at the legislative power of the state, and not at the decisions of its courts, or the acts of administrative or executive boards or officers, or the doings of corporations or individuals.”); accord Tidal Oil Co. v. Flanagan, 263 U.S. 444, 451 (1924) (emphasis deleted); supra note 15 and infra notes 135, 172, and 179. 

⁷⁰ Dodge v. Board of Educ., 302 U.S. 74, 78 (1937).

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In U.S. Trust, discussed in more detail below, the United States Supreme Court affirmed the trial court’s finding, which was not contested on appeal, that a statutory covenant of two states for the benefit of the holders of certain bonds gave rise to a contractual obligation between such states and the bondholders.⁷¹ The covenant at issue limited the ability of the Port Authority of New York and New Jersey to subsidize rail passenger transportation from revenues and reserves pledged as security for such bonds. In finding the existence of a contract between such states and bondholders, the Supreme Court stated “[t]he intent to make a contract is clear from the statutory language: ‘The 2 States covenant and agree with each other and with the holders of any affected bonds. . . .’”⁷² Later, in National R.R., the Supreme Court discussed the U.S. Trust covenant and noted: “[r]esort need not be had to a dictionary or case law to recognize the language of contract”⁷³ in such covenant.

National R.R. considered several factors in determining that the legislative act at issue in that case did not create a contractual obligation with the government. That act did not speak of a contract between the government and the private party, nor did it in any respect provide for the execution of a written contract by the government. Significantly, that act “expressly reserved” Congress’ right to “repeal, alter or amend this Act at any time.”⁷⁴ Finally, great weight was given to the pervasiveness of prior government regulation of this area, which “absent some affirmative indication to the contrary,” plus in that case “coupled with [that act’s] express reservation of the power to repeal,” strongly cut against finding that such act creates binding contractual rights. ⁷⁵

⁷¹ Infra at note 101. 

⁷² United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 18 (1977) (emphasis added). The issue of the existence of a contract between the two states and the bondholders was not disputed on appeal, but the Supreme Court expressly reviewed the language itself and the surrounding circumstances and concluded there was no doubt the covenant was properly characterized as a contractual obligation of the two states to secure the marketability of those bonds. It could be contended that the factual situation in U.S. Trust is distinguishable from the facts involved in the issuance of the storm recovery bonds. In U.S. Trust the bonds were issued by a governmental agency, while the storm recovery bonds are not. However, the authority to issue the storm recovery bonds is completely dependent under the Securitization Act upon the LPSC issuing an order, and thus the issuance of the storm recovery bonds is fully state-sanctioned in a manner closely analogous to the situation in U.S. Trust. 

⁷³ National R.R., 470 U.S. at 470. Similarly, in Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 104-05 (1938), the United States Supreme Court determined in a materially different context that the Indiana Teachers’ Tenure Act created a contract between the state and specified teachers because the statutory language demonstrated a clear legislative intent to contract. The Supreme Court based its decision, in part, on the legislature’s use of the word “contract” throughout the statute to describe the legal relationship between the state and such teachers. See also Elliot v. Board of Sch. Teachers of Madison Consol. Schs., 876 F.3d 926 (7th Cir. 2017) (overturning law impairing statutory tenure entitlements). 

⁷⁴ National R.R., 470 U.S. at 456, 467, 469. 

⁷⁵ Id. at 469. The mere use of the word “contract” in a statute will not necessarily evince the requisite legislative intent. As the Court cautioned in National R.R., the use of the word “contract” alone would not signify the existence of a contract with the government. Id. at 470. In National R.R., the Court found that use of the word “contract” in the Rail Passenger Service Act defined only the relationship between the newly-created nongovernmental corporation (Amtrak) and the railroads, not the relationship between the United States and the railroads. The Court determined that “[l]egislation outlining the terms on which private parties may execute contracts does not on its own constitute a statutory contract.” Id. at 467.

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The Louisiana Supreme Court has not specifically addressed whether the Securitization Act and specifically the Legislative Pledge, or an LPSC order akin to the Financing Order containing the LPSC Pledge, should be construed as binding contractual obligations. With respect to the Securitization Act, one negative factor is that there is no explicit contractual instrument executed by the Louisiana Legislature or the State, and the LPSC is not a party to any contract among the Transaction Documents. But a very positive factor is that the language of the Legislative Pledge plainly manifests the Louisiana Legislature’s intent to bind the State, using similar language to the covenant considered in U.S. Trust. The Securitization Act provides that the State “pledges to and agrees with” bondholders. The text of the Securitization Act thus contrasts favorably with the act found wanting (as to creating a contract) in National R.R. The Legislative Pledge expressly includes the word “pledges” and “agrees,” and authorizes the pledge of the State to be included in the Transaction Documents. This statutory language is an offer by the State to be bound if bondholders, in purchasing the bonds, accept its offer.⁷⁶ Here the (admittedly) heavy and longstanding regulation of utilities is not coupled with and reinforced by an express reservation of the power to repeal; instead the Legislative Pledge is an express commitment not to enact countervailing legislation. This language unambiguously demonstrates that the Legislative Pledge is intended to create a contractual relationship between the State and the Bondholders.

As quoted above,⁷⁷ the LPSC Pledge contains language even more decisively demonstrating the LPSC’s intent to create a contractual relationship. Conclusions of Law Paragraph 28 of the Financing Order states that the Storm Recovery Property created by the Financing Order is a vested contract right and creates a contractual obligation of irrevocability by the LPSC in favor of financing parties.

⁷⁶ The definition of the Legislature’s term -- “pledge” -- is “to bind by a solemn promise.” CONCISE OXFORD DICTIONARY OF CURRENT ENGLISH 914 (8th ed. 1990). Melancon, 703 F.3d at 275-77 (contrasting United States Supreme Court findings of statutory language demonstrating an intent to extend an offer of a contractual nature); Franklin, supra note 3, 85 F. Supp. 3d 577, 604. 

⁷⁷ Supra pages 5-6.

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The next step of the analysis is determining whether an impairment is substantial. The United States Supreme Court has provided little specific guidance as to what constitutes a substantial contract impairment. The determination of whether a particular legislative act constitutes a substantial impairment of a particular contract is a fact-specific analysis. Nothing in this Opinion expresses any opinion as to how a court will resolve the issue of substantial impairment with respect to a particular state (including LPSC) action of a legislative character regarding the Storm Recovery Property. We have assumed for purposes of this Opinion that any impairment resulting from the legislative action being challenged under the Federal Contract Clause would be substantial.⁷⁸ The factors that contribute to that determination are briefly reviewed as follows:

⁷⁸ See supra note 1. We note, however, that in U.S. Trust, supra note 64 and infra note 101, the United States Supreme Court found a substantial impairment where the States of New York and New Jersey repealed outright an “important security provision” securing repayment of bonds without any form of compensation to the bondholders, even in the absence of a finding of the extent of financial loss suffered by the bondholders as a result of the repeal. The effect of the repeal of the covenant limiting subsidies of mass transit was difficult to quantify because the bonds recovered much of their market price following an initial decline in value and retained an “A” rating. 431 U.S. 1, 18-19 (1977). See also Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 429-35 (1934). Soon after U.S. Trust was decided, the New York Court of Appeals relied upon the decision to apply the Contract Clause to invalidate a state statute revoking an authorized toll increase and imposing a new restrictive procedure for toll increases because New York had enacted a statutory pledge not to interfere with authorized toll increases and not to limit or alter the rights vested in the authority to the detriment of bondholders. Patterson v. Carey, 363 N.E. 2d 1146, 1152-53 (1977). In Patterson, the tolls were the sole source of revenue for repayment of the bonds issued to finance the highway, similar to the Storm Recovery Charges’ role in repayment of the Bonds. Id. at 1150-51. In Board of Comm’rs v. Department of Natural Resources, 496 So.2d 281, 294-95 (La. 1986), the Louisiana Supreme Court found a state law did not operate as a substantial impairment of government bonds where there was no modification of a contractual right, a remedy or a security device, no showing of any danger of a default upon the bonds, no decline in the value of the bonds in the market, and no showing that the legislative act took from the bonds the quality of an acceptable investment for a rational investor. In State ex rel. Porterie v. Walmsley, 162 So. 826 (La. 1935), the Louisiana Supreme Court also found a statute changing the membership of a board did not impair the contract rights of bondholders because the statute did not disturb the mode of payment of both principal and interest on bonds issued by that board and thus did not impair the means, which at the time of their creation, the law afforded for their enforcement. Cf. Baptiste v. Kennealy, 490 F. Supp. 3d 353 (D. Mass. 2020) (not possible to determine conclusively the extent of the impairment because not clear when the COVID-19 temporary moratorium on residential evictions will end).

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In determining whether an impairment is substantial, the United States Supreme Court has looked to several objective factors. Sveen summarized that in “answering that question, the [Supreme] Court has considered the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights.”⁷⁹ Of greatest concern appears to be the contracting parties’ actual reliance on the abridged contractual term.⁸⁰ Specifically, the Supreme Court has examined contracts to determine whether the abridged right is one that was “reasonably relied” on by the complaining party, or one that “substantially induced” that party “to enter into the contract.” When assessing the presence of the requisite reliance, the Supreme Court has looked to objective evidence of reliance. For example, the Supreme Court has examined the terms of the original contract to determine whether the contract – either explicitly or implicitly – indicated that the abridged term was subject to impairment by the legislature. The Supreme Court has also directed that in assessing the parties’ expectations, and in so determining the extent of the impairment, it must be considered whether the industry the complaining party has entered has been regulated in the past. Pervasiveness of prior regulation suggests that – absent some affirmative indication to the contrary – the complaining party had no legitimate expectation that regulation would cease.⁸¹ Finally, in determining the parties’ reliance, the cases have focused on the character of the abridged right – whether it was by its nature “the central undertaking” or “primary consideration” of the parties.⁸² The Supreme Court has also examined how a contract has been changed, i.e., whether a covenant was abolished or “merely modified.” The Supreme Court has also directed that, in determining whether there has been a substantial impairment, a court should determine whether the abridged right was “replaced by an arguably comparable security provision.”⁸³

Assuming the impairment is substantial, the next inquiry is whether state action nonetheless is permissible. The “reserved powers” doctrine limits a state’s ability to bind itself contractually in a manner that surrenders an essential attribute of its sovereignty. Under this doctrine, if a contract limits a state’s “reserved powers” – powers that cannot be contracted away – such contract is void. That is, even if Louisiana intended to be contractually bound, it must be within the state’s power to create that contractual obligation. It is established that a state cannot contract away its police powers, and regulation of utilities is one of the police powers of the state. The possible application of this doctrine to the Transaction is discussed in detail below.⁸⁴

⁷⁹ Sveen, 138 S. Ct. at 1822 (citations omitted). Sveen stopped its analysis at step one because it found the statute at issue did not substantially impair pre-existing contractual arrangements. “Not every statute which affects the value of a contract … impair[s] its obligation.” Id. at 1824 (citation omitted). 

⁸⁰ City of Charleston v. Public Service Commission of West Virginia, 57 F.3d 385, 392 (4th Cir. 1995). See Sveen, 138 S. Ct. at 1823 (insured cannot reasonably rely on a beneficiary designation remaining in place after a divorce). Compare supra note 33 (reasonable reliance in Federal Takings Clause cases). 

⁸¹ American Express Travel Related Services Inc. v. Sidomen-Eristoff, 669 F.3d 359, 369 (3d Cir. 2012); see Lipscomb v. Columbus Municipal Separate School District, 269 F.3d 494, 510 (5th Cir. 2001); see also Veix v. Sixth Ward Bldg & Loan Ass’n, 310 U.S. 32 (1940) (relying on fact that savings and loan associations had been subject to continuous statutory regulation from the outset of the industry); infra note 96; c.f. supra note 33 and infra notes 80 and 116. 

⁸² City of Charleston, supra note 80, at 392-94. 

⁸³ United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 19 (1977); supra note 64 and infra note 101. See also City of Shreveport v. Cole, 129 U.S. 36, 9 S. Ct. 210, 2 L. Ed. 589 (1889); Ralls County Court v. United States, 105 U.S. 733, 26 L. Ed. 1220 (1881). 

⁸⁴ See infra pages 37-38 and pages 59-64.

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Assuming that a substantial impairment by the State of contractual rights under the Pledges is not rejected by a reviewing court under the “reserved powers” doctrine (by means of the court voiding the Pledges under that doctrine), then the substantial impairment must be justified by the State as a legitimate exercise of the State’s police powers in order to be successfully defended against a challenge pursuant to the Federal Contract Clause. The United States Supreme Court’s test is whether the state law is drawn in an appropriate and reasonable way to advance a significant and legitimate public purpose, such that the legislation’s adjustment of the rights and responsibilities of the contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption.⁸⁵ In Blaisdell,⁸⁶ referred to by the United States Supreme Court in U.S. Trust as “the leading case in the modern era of [Federal] Contract Clause interpretation,” the closely divided Supreme Court found that the economic exigencies of the time (the Great Depression) justified a Minnesota law which (i) authorized county courts to extend the period of redemption from foreclosure sales on mortgages previously made “for such additional time as the court may deem to be just and equitable,” subject to certain limitations, and (ii) limited actions for deficiency judgments.⁸⁷ The Supreme Court stated that the “reserved powers” doctrine could not be construed to “permit the state to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them.” On the other hand, the Supreme Court also indicated that the Federal Contract Clause could not be construed:

to prevent limited and temporary interpositions with respect to the enforcement of contracts if made necessary by a great public calamity such as fire, flood, or earthquake. The reservation of state power appropriate to such extraordinary conditions may be deemed to be as much a part of all contracts as is the reservation of state power to protect the public interest in other situations to which we have referred. And, if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood, or earthquake, that power cannot be said to be nonexistent when the urgent public need demanding such relief is produced by other and economic causes.⁸⁸

⁸⁵ Sveen, 138 S. Ct. at 1822; Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244; U.S. Trust, 431 U.S. at 22; see supra note 66 and infra note 99. In Melendez v. City of New York, 16 F.4th 992, 1031 n.62 (2d Cir. 10/28/2021), the court noted that the opinions in U.S. Trust and Energy Reserves, infra note 90, both appear to use “appropriate” and “necessary” interchangeably to identify the relevant standard of review, and thus assumed Sveen did not pronounce any different standard of review by using “appropriate” from that identified in U.S. Trust and Allied Structural. 

⁸⁶ Home Bldg & Loan Ass’n v. Blaisdell, 290 U.S. 398 (1934) (citations omitted) (“Blaisdell”). 

⁸⁷ The mortgagor was required to continue to pay the reasonable income or rental value of the property, as determined by the court, toward payment of taxes, insurance, interest and principal. The law stated that it was to remain in effect only during the current emergency and no later than May 1, 1935; no redemption period could be extended beyond the expiration of the law. Blaisdell, 290 U.S. at 415-18. 

⁸⁸ Id. at 439-40.

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In upholding the Minnesota law, the Supreme Court relied on the following: (1) the state legislature declared that an economic emergency existed which threatened the loss of homes and lands which furnish those persons in possession with necessary shelter and means of subsistence; (2) the law was not enacted for the benefit of a favored group but for the protection of a basic interest of society; (3) the relief provided by the law was appropriately tailored to the emergency; (4) the conditions on which the period of redemption was extended by the law were reasonable; and (5) the law was temporary in operation and limited to the duration of the emergency on which it was based.⁸⁹ Subsequently, the Supreme Court stated in its Energy Reserves⁹⁰ opinion that “a significant and legitimate public purpose” is required to justify a substantial impairment of contract. Similarly, the Supreme Court had earlier stated that, to be justifiable, an impairment must deal with “a broad, generalized economic or social problem.”⁹¹

⁸⁹ Allied Structural, 438 U.S. at 242; Blaisdell, 290 U.S. at 444-45; Melendez v. City of New York, 16 F.4th 992, 1023-24, 1038-40 (2d Cir. 10/28/2021) (“Melendez”) (challenged law not temporary). 

⁹⁰ Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983) (“Energy Reserves”); see infra note 235. 

⁹¹ Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 250 (1978). Compare Heights Apartments, LLC v. Walz, 30 F.4th 720, 729 n.8 (8th Cir. 04/05/2021) (reversing dismissal of Contract Clause challenge to eviction moratorium executive orders response to COVID-19 pandemic; finding Ninth Circuit’s decision in Apt. Ass’n of L.A. County “unpersuasive”) and Melendez, supra note 89, 16 F.4th at 1040 n.70 (2d Cir. 10/28/2021) (reversing dismissal of Contract Clause challenge to lease guaranty relief law response to COVID-19 pandemic), with Apt. Ass’n of L.A. County v. City of Los Angeles, 10 F.4th 905 (9th Cir. 8/25/2021) (“Los Angeles”) (upholding district court ruling that plaintiff had not shown the required likelihood of success on the merits to obtain a preliminary injunction because eviction moratorium is likely a reasonable response to the problems identified by local officials in COVID-19 pandemic). See also discussion infra at note 235.

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To evaluate the public purpose necessitating the impairment, the context in which the law is enacted is considered. In Blaisdell, the Supreme Court held that the state legislation was justified as a response to the quintessential economic emergency, the Great Depression.⁹² By contrast, in Allied Structural,⁹³ the Supreme Court held that general concern about pensions was not by itself a sufficient emergency; nor had the government declared an official emergency.⁹⁴ Finally, in Energy Reserves, the Supreme Court considered that the Kansas statute at issue had been enacted to protect consumers from the escalation of natural gas prices caused by recent deregulation.⁹⁵ Judgment of this factor’s application to hypothetical action by the Louisiana Legislature or the LPSC of a legislative character is impossible without knowledge of the context in which that legislation or supplemental order is adopted; in any event, a more urgent context likely would receive greater deference from the courts than would a non-emergency.⁹⁶

⁹² Blaisdell, 290 U.S. at 444. Compare Campanelli v. Allstate Life Ins. Co., 322 F.3d 1086, 1099 (9th Cir. 2003) (holding in the wake of the Northridge Earthquake that “[p]rotecting the rights of victims” was a “significant and legitimate public purpose”); Vesta Fire Ins. Corp. v. Florida, 141 F.3d 1427, 1434 (11th Cir. 1998) (holding in the wake of Hurricane Andrew that “protection and stabilization of the Florida economy, particularly the real estate market,” was a “significant and legitimate public purpose”), abrogated on other grounds by South Grande View Dev. Co. v. City of Alabaster, Alabama, 1 F.4th 1299, 1310-12 (11th Cir. 2021); State v. All Prop. & Cas. Ins. Carriers Authorized & Licensed To Do Bus. In State, 937 So.2d 313, 326 (La. 2006) (holding in the wake of Hurricanes Katrina and Rita that “legislative extension of the prescriptive period for damage claims is based upon a significant and legitimate public purpose”) (see infra note 125); cf Welch v. Brown 551 F. App’x 804, 811 (6th Cir. 2014) (agreeing with cases that “addressing a fiscal emergency is a legitimate public purpose”). See also discussion infra at note 235. In several cases contemporaneous with Blaisdell, the United States Supreme Court struck down other laws lacking one or more of Blaisdell’s five factors passed in response to the economic emergency created by the Great Depression, thus reinforcing the notion that, to be justified, the impairment must be the result of a reasonable, necessary and tailored response to a broad and significant public concern. See Treigle v. Acme Homestead Ass’n, 297 U.S. 189 (1936); W. B. Worthen Co. v. Kavanaugh, 295 U.S. 56 (1935); W. B. Worthen Co. v. Thomas, 292 U.S. 42 (1934); see also Baptiste v. Kennealy, 490 F. Supp. 3d 353 (D. Mass. 2020), supra note 78 (denying a preliminary injunction, finding that plaintiffs were unlikely to prove that a temporary moratorium on residential evictions was not a reasonable and appropriate response to significant and legitimate public purpose of the growing threat of COVID-19 pandemic), and supra notes 235-236. The tailoring of the response must be reasonable, not necessarily narrow. Heights Apartments, LLC v. Walz, 30 F.4th 720, 731 (8th Cir. 04/05/2022). 

⁹³ Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) (“Allied Structural”). 

⁹⁴ Id. at 249. 

⁹⁵ Energy Reserves, 459 U.S. at 416-17. The United States Supreme Court has upheld state statutes which were aimed at protecting the public at large: protecting homeowners from loss of their homes via foreclosure, Blaisdell; providing for the general welfare of citizens by the reclamation of overflowed infertile lands and the erection of dams, levees and dikes for that purpose, Manigault v. Springs, 199 U.S. 473 (1905); preserving fresh water, Hudson Valley Water Company v. McCarter, 209 U.S. 349 (1908); protecting employee pensioners, Allied Structural; and protecting insurance policyholders, Sveen. 

⁹⁶ Emergency does not create power and does not increase granted power, but mitigation of economic emergencies is recognized in controlling precedent as a public purpose that can support contract impairment. Melendez, 16 F.4th at 1022-23, 1036-37. Nonetheless it is clear that the United States Supreme Court has flatly rejected the argument that such public purpose need be addressed only to an emergency or temporary situation. Energy Reserves, 459 U.S. at 412 (“Furthermore, since [Blaisdell], the Court has indicated that the public purpose need not be addressed to an emergency or temporary situation.”); Borman, LLC v. 18718 Borman LLC, 777 F.3d 816, 825 (6th Cir. 2015); Los Angeles, 10 F.4th at 916. Decisions subsequent to Blaisdell affirmed state legislation of a non-emergency nature modifying private contractual rights based upon proof of a public purpose and the legislative amendment being responsive to that purpose, but on occasion struck down as unconstitutional state laws with a disproportionate adverse effect on creditors. Veix v. Sixth Ward Bldg. & Loan Ass’n, supra note 81, is notable because it upheld a non-emergency statutory revision of the right to redeem savings and loan ownership shares. 310 U.S. 32 (1940). The Court relied upon older authority, which affirmed statutes providing for modification of utility contract rates, and the fact that savings and loan associations had been subject to continuous statutory regulation from the outset of the industry, indicating a heightened role for legislative action and a lower expectation of absolute freedom of contract. None of these decisions addressed an express covenant with the state itself such as is presented by the Pledges. See infra discussion at note 235.

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The United States Supreme Court has also noted, on the question of justification, whether the challenged law was passed to protect broad societal interests or merely to benefit some to the detriment of others. In Blaisdell, the Supreme Court approved a law treating all debtors and creditors alike. The statute had not been passed “for the mere advantage of particular individuals but for the protection of a basic interest of society.”⁹⁷ This conclusionary statement, however, was not explained in the opinion. Again by contrast, in Allied Structural the Supreme Court criticized a law that affected only some employers (those closing offices in Minnesota) and that took aim “only at those who had in the past been sufficiently enlightened as voluntarily to agree to establish pension plans for their employees.”⁹⁸

An important factor is whether the contracts impaired have only private parties or whether the state is a party too. In cases of regulation that concern only private contracts, the courts, when considering the reasonableness of the measures taken to effect the public purpose, will “defer to legislative judgment as to the necessity and reasonableness of a particular measure.”⁹⁹ However, a different rule “perhaps”¹⁰⁰ applies when the state itself is a party to the contract, as reflected in the analysis adopted in United States Trust Co. of New York v. New Jersey.¹⁰¹ In U.S. Trust, the states of New York and New Jersey, to entice investors to purchase bonds issued by the Port Authority of New York and New Jersey, entered into a statutory covenant which provided that the states “covenant and agree” with the bondholders that certain rents and fees collected by the Port Authority would be used only for limited purposes; in essence, these states pledged that a particular revenue stream would provide security for repayment of the bonds.¹⁰² Subsequently, however, New Jersey repealed that statutory covenant, and the Port Authority accordingly diverted the previously dedicated revenues to other purposes.¹⁰³

The United States Supreme Court found that this action impaired the bondholders’ contract with the Port Authority and the pledge given by New Jersey and New York. In so concluding, the Court first noted that all Federal Contract Clause cases, as a matter of principle, require the courts to “reconcile the strictures of the [Federal] Contract Clause with the essential attributes of sovereign power necessarily reserved by the States to safeguard the welfare of their citizens.”¹⁰⁴ However, when a state impairs its own obligations, the focus of this analysis shifts:

⁹⁷ Blaisdell, 290 U.S. at 445. 

⁹⁸ Allied Structural, 438 U.S. at 250. The United States Supreme Court later emphasized its recognition that the invalidated law may even have been directed at only one particular employer. Energy Reserves, 459 U.S. at 412 n.13. See also United Healthcare Ins. Co. v. Davis, 602 F.3d 618, 631 (5th Cir. (La.) 2010) (holding Louisiana statute invalid under the Federal Contract Clause as economic protectionism; statute narrowly focused on benefitting specific in-state company and was not a broad exercise of the State’s police power). Compare, e.g., Los Angeles, 10 F.4th at 914 (eviction moratorium’s elements are reasonable attempts to address COVID-19 pandemic broadly). 

⁹⁹ Energy Reserves, 459 U.S. at 43 (internal quotation marks and citation omitted). See supra notes 66 and 85. 

¹⁰⁰ National R.R., 470 U.S. at 471 n.24 (emphasis added); see supra notes 65 and 67 and infra notes 108, 109, 111, 131, 172, and 194. 

¹⁰¹ United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977) (“U.S. Trust”); supra notes 64, 71-72 and 83. 

¹⁰² Id. at 9-12. 

¹⁰³ Id. 431 U.S. at 12-14. 

¹⁰⁴ Id. at 21 (internal quotation marks and citations omitted).

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The initial inquiry concerns the ability of the State to enter into an agreement that limits its power to act in the future. As early as Fletcher v. Peck, the Court considered the argument that “one legislature cannot abridge the powers of a succeeding legislature.” It is often stated that “the legislature cannot bargain away the police power of a State.” This doctrine requires a determination of the State’s power to create irrevocable contract rights in the first place, rather than an inquiry into the purpose or reasonableness of the subsequent impairment. In short, the [Federal] Contract Clause does not require a State to adhere to a contract that surrenders an essential attribute of its sovereignty.¹⁰⁵

Considering the pledge of New York and New Jersey, the Supreme Court found that this pledge was a purely financial obligation, and thus comprised an enforceable obligation that could be protected under the Federal Contract Clause.¹⁰⁶ In so holding, the Supreme Court distinguished situations in which a promise or obligation of the state would require an abridgement of the police power: “For example, a revenue bond might be secured by the State’s promise to continue operating the facility in question; yet such a promise surely could not validly be construed to bind the State never to close the facility for health or safety reasons.”¹⁰⁷

After concluding that enforcing the pledge of New York and New Jersey would not abridge those states’ police power, the Supreme Court then proceeded to consider whether the impairment of the bonds resulting from the states’ action was nonetheless reasonable and necessary to serve a public purpose. The Supreme Court noted, however, that contrary to situations where only private contracts are concerned, “complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.”¹⁰⁸ The Supreme Court then conducted its own review of the public purposes underlying the repeal of the pledge, and found that repeal of the pledge was neither necessary to the achievement of those purposes nor reasonable in light of the circumstances.¹⁰⁹ The Supreme Court specifically noted that “a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well.”¹¹⁰

¹⁰⁵ Id. at 23 (citations omitted); see pages 37-38 and pages 59-64. 

¹⁰⁶ U.S. Trust at 24-25 (“Whatever the propriety of a State’s binding itself to a future course of conduct in other contexts, the power to enter into effective financial contracts cannot be questioned.”). 

¹⁰⁷ Id. at 25. 

¹⁰⁸ Id. at 26. See infra note 111. See discussion of the general principle of U.S. Trust and Allied Structural as applicable to private, as well as public, contracts in Melendez, 16 F.4th at 1018 n.43, 1021 n.46, and 1027-29. 

¹⁰⁹ U.S. Trust. at 29-31. The Supreme Court noted that although when the bills to repeal the covenant were pending “a national energy crisis was developing,” the need for mass transportation was “not a new development and the likelihood that publicly owned commuter railroads would produce substantial deficits was well known” when the covenant was adopted. Id. at 13-14, 31-32. An impairment is not a reasonable one if the problem sought to be resolved by the impairment of the contract existed at the time the contractual obligation was incurred. Univ. of Hawaii Prof’l Assembly v. Cayetano, 183 F.3d 1096, 1107 (9th Cir. 1999). Compare Faitoute Iron & Steel Co. v. City of Ashbury Park, 316 U.S. 502 (1942) (In the context of a municipal insolvency during the Great Depression, a state has the right to use its police power to create a reasonable process for the payment of unsecured municipal debts, and as part of the exercise of that power, a state can modify the term for the payment of those debts without violating constitutional prohibition against contract impairment). In U.S. Trust, the Supreme Court noted that the “only time in this century that alteration of a municipal bond contract has been sustained by this Court” was in Faitoute Iron. U.S. Trust, 431 U.S. at 27. In Energy Reserves, the Supreme Court noted that in “almost every case” the Supreme Court “has held a governmental unit to its contractual obligation when it enters financial or other markets.” Energy Reserves, 459 U.S. at 412, n.14. 

¹¹⁰ U.S. Trust, 431 U.S. at 31.

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Both the Energy Reserves and Allied Structural decisions expressly indicate that when a state is a contracting party the “stricter standard” of justification set forth in the U.S. Trust opinion should be applicable.¹¹¹ Furthermore, the United States Supreme Court’s opinion in United States v. Winstar Corp,¹¹² even though not a Federal Contract Clause case, is consistent with U.S. Trust in imposing a more rigorous standard of justification where the government is a contracting party. One issue in Winstar was whether the contract claim was barred by the “sovereign acts” doctrine, i.e., the government’s “public and general” acts cannot amount to a breach of contract. Although the legislation alleged to constitute a contractual breach had as its purposes “preventing the collapse of the [thrift] industry, attacking the root causes of the crisis, and restoring public confidence”,¹¹³ the Supreme Court held a “sovereign acts” defense was unavailable: “[w]hile our limited inquiry into the background and evolution of the thrift crisis leaves us with the understanding that Congress acted to protect the public in the FIRREA legislation, the extent to which this reform relieved the Government of its own contractual obligations precludes a finding that the statute is a ‘public and general’ act for purposes of the sovereign acts defense.”¹¹⁴

¹¹¹ Energy Reserves, 459 U.S. at 412, 413 n.14; Allied Structural, 438 U.S. at 244 n.15; supra notes 65, 67, 100, 108, and 109 and infra notes 131, 172, and 194; United Steel Paper & Forestry Rubber Mfg. v. Virgin Islands, 842 F.3d 201, 212 (3d Cir. 2016) (“when a State is a contracting party, its ‘legislative judgment is subject to stricter scrutiny than when the legislation affects only private contracts’”) (citation omitted); United Auto., Aerospace, Agricultural Implement Workers of Am. Int’l Union v. Fortuño, 633 F.3d 37, 43 (1st Cir. 2011); United Healthcare Ins. Co. v. Davis, 602 F.3d 618, 627 at n.6 (5th Cir. (La.) 2010). Compare Buffalo Teachers Federation v. Tobe, 464 F.3d 362, 369-71 (2d Cir. 2006) (expressly not deciding whether the higher standard is warranted when a subsidiary of the state rather than the state itself is the contract counterparty, and noting that this so-called stricter or “heightened scrutiny” is not as exacting as that commonly understood as strict scrutiny; the court held it was not necessary to determine what level of deference to apply because the challenged action was reasonable and necessary even under the less deferential standard). Compare note 131. But see supra notes 65 and 100, noting that in the later case of National R.R. the Supreme Court concluded that no alleged impairment by the Government of its own contract existed and therefore there was “no need to consider whether an allegation of a government breach of its own contract warrants application” of a more rigorous standard of review, and suggested only that the Government’s impairment of its own obligations “perhaps” should be treated differently. 470 U.S. at 471 and n.24 (emphasis added); see also infra notes 172 and 194 and the dissent in U.S. Trust, which noted the absence of prior authority adopting this rational. U.S. Trust, 431 U.S. at 59 (Brennan, J., dissenting); accord JAMES W. ELY, JR., THE CONTRACT CLAUSE, A CONSTITUTIONAL HISTORY 7-29 (page 222), University Press of Kansas 2016. 

¹¹² 518 U.S. 839 (1996). 

¹¹³ Id. at 856. 

¹¹⁴Id. at 903.

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To recapitulate, whether or not a state is a party to the contract at issue, the critical determination of whether an impairment occurs involves a court’s evaluation of the parties’ expectations and actual reliance on the abridged contractual term. In making that determination, the Supreme Court has looked to several objective factors. In determining the parties’ reliance, elimination of escalator clauses in natural gas contracts, lowering the interest rate and delaying the maturity date in bond contracts, and elimination of the unlimited right to reinstate ownership of land after default, each has been held not to constitute substantial impairment of contract rights, in part because the rights abridged were not in their nature essential to the underlying contract and thus fundamental to a party’s reliance. In contrast, statutes causing “a fundamental change” in a pension contract, repealing a statutory covenant the purpose of which “was to invoke the constitutional protection of the [Federal] Contract Clause as security against repeal,” and unilaterally modifying a contract right upon which the parties “especially” relied, i.e., “the right to compensation at the contractually specified level” in a public employment contract, have been held substantial impairments because the rights impaired by subsequent legislation were “important,” “basic,” and “central” to the underlying contract.¹¹⁵ While a determination of impairment will be a fact intensive inquiry, a critical component will be the Bondholders’ ability to submit convincing evidence that they were in fact substantially induced to purchase the Bonds on the basis of the rights set forth in the Pledges.¹¹⁶

 ¹¹⁵ City of Charleston, 57 F.3d at 392-393 (citations omitted). Accord BellSouth Telecommunications, LLC v. City of New Orleans, 31 F. Supp. 3d 819 (E.D. La. 2014) (the City has no authority to unilaterally increase amount utility owes under irrevocable franchise contract for the use of rights-of-way). 

¹¹⁶ In discussing the earlier case of El Paso v. Simmons, 379 U.S. 497 (1965), which held that a law shortening the time within which a defaulted land claim could be reinstated did not violate the Federal Contract Clause, the Allied Structural opinion highlighted that the basis for the El Paso holding was the United States Supreme Court’s quoted conclusion that “[w]e do not believe that it can seriously be contended that the buyer was substantially induced to enter into these contracts on the basis” of the altered law. 438 U.S. at 244 n.14. In Board of Comm’rs v. Department of Natural Resources, 496 So.2d 281, 294 (La. 1986), the Louisiana Supreme Court doubted the right of a successor bondholder, who purchased the bonds after and with full knowledge of the allegedly impairing legislative enactment, to have a cause of action for impairment. See supra notes 33, 78, 80, and 82.

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Louisiana Contract Clause

The Louisiana Contract Clause provides that: “No . . . law impairing the obligation of contracts shall be enacted.”¹¹⁷ The Louisiana Supreme Court has described this constitutional provision as “virtually identical” and “substantially equivalent” to the Federal Contract Clause.¹¹⁸ Thus the Federal Contract Clause and the Louisiana Contract Clause are essentially equal, and neither represents a more significant limitation than the other. Although the language of the Louisiana Contract Clause is facially absolute, as with the Federal Contract Clause, its prohibition must be accommodated to the inherent police power of the state to safeguard the vital interests of its people.¹¹⁹ The Louisiana Supreme Court has detailed as “the appropriate [Louisiana] Contract Clause standard” the multiple-step analysis as enunciated by the Supreme Court in Energy Reserves, and discussed in detail above:¹²⁰

Under this four-step analysis, the court must determine whether the state law has, in fact, impaired a contractual relationship. The party complaining of unconstitutionality has the burden of demonstrating, first, that the statute alters contractual rights or obligations. Second, if an impairment is found, the court must determine whether the impairment is of constitutional dimension. Third, if the state regulation constitutes a substantial impairment, the court must determine whether a significant and legitimate public purpose justifies the regulation. Fourth, if a significant and legitimate public purpose exists, the court must determine whether the adjustment of the rights and responsibilities of the contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption.¹²¹

 ¹¹⁷ La. Const. Art. I, Sec. 23. 

¹¹⁸ Smith v. Board of Trustees, 851 So.2d 1100, 1108 (La. 2003); Concerned Citizens of Eastover, LLC v. Eastover Neighborhood Improvement and Security District, 214 So.3d 156, 161 (La. App. 4th Cir. 2017) (“Eastover”); Morial v. Smith & Wesson Corp., 785 So.2d 1, 12 (La. 2001) (“Morial”); Segura v. Frank, 630 So.2d 714, 728 (La. 1994) (“Segura”); see Insurance Carriers infra note 125; see, e.g. Metropolitan Life Ins. Co. v. Morris, 159 So. 388 (La. 1935) (applying Blaisdell to uphold a Louisiana mortgage moratorium law). 

¹¹⁹ Segura, 630 So.2d at 728; accord Higginbotham v. City of Baton Rouge, 183 So. 168, 171 (La. 1938); Eastover, 214 So.3d at 161; see supra note 63. 

¹²⁰ Supra pages 20 and 25. 

¹²¹ Eastover, 214 So.3d at 162.

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It is a fundamental principle that laws existing at the time a contract is entered into are incorporated into and form a part of the contract as though expressly written therein. It is also well established that the value of a contract cannot be diminished by subsequent legislation.¹²² The repeal of legislation by subsequent legislation is unconstitutional if it impairs the enforcement of the obligations of contracts.¹²³ An obligation of contract is impaired in a constitutional sense if the means by which a contract at the time of its execution could be enforced, that is, by which the parties could be obliged to perform it, are rendered less efficacious by legislation operating directly upon those means.¹²⁴

The Louisiana Supreme Court has evaluated two Louisiana legislative acts under the Federal and Louisiana Contract Clauses in the context of governmental responses to major hurricanes. In State of Louisiana v. All Property and Casualty Insurance Carriers Authorized and Licensed to do Business in the State of Louisiana,¹²⁵ the Louisiana Supreme Court exercised its supervisory authority in an expedited manner to find the two 2006 Louisiana legislative acts at issue constitutional. In response to Hurricanes Katrina and Rita, the Louisiana Legislature enacted two statutes which extended the prescriptive period (statute of limitations) within which Louisiana citizens could file certain claims under their insurance policies for losses occasioned by those hurricanes from one year to (essentially) two years, i.e., a one year extension. The Louisiana Attorney General filed suit seeking a declaratory judgment as to the constitutionality of the legislative acts. The trial court rejected the insurance company defendants’ arguments asserting violations of the Federal and Louisiana Contract Clauses.¹²⁶ The question at issue was whether the two acts altering the contractual provisions of insurance policies regarding the time period in which to bring a claim were constitutional. The Louisiana Supreme Court held that no unconstitutional impairment had occurred.

¹²² D’Antonio v. Board of Levee Commissioners of the Orleans Levee District, 80 So.2d 81, 83 (La. 1955). 

¹²³Ranger v. the City of New Orleans, 34 La. Ann. 1149 (1882); see State ex rel. Portierie v. Walmsley, 162 So. 826 (La. 1935). 

¹²⁴ Wolff v. New Orleans, 103 U.S. 358, 365, 367 (1880). 

¹²⁵ No. 2006-CD-2030, 937 So.2d 313 (La. 2006) (“Insurance Carriers”). 

¹²⁶ The defendants’ other arguments, regarding standing, procedural due process, and federal supremacy clause preemption as it relates to federal flood insurance, were all rejected as well.

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The Louisiana Supreme Court first stated that the Louisiana Contract Clause and the Federal Contract Clause are virtually identical and substantially equivalent. The Louisiana Supreme Court then noted that under the pertinent United States Supreme Court jurisprudence, the prohibitions in the Contract Clauses remain subject to the inherent police power of the state. The Louisiana Supreme Court then reiterated that the appropriate analysis under both the Federal Contract Clause and the Louisiana Contract Clause is the “four-step” analysis enunciated in Energy Reserves:

first, the court must determine whether the state law would, in fact, impair a contractual relationship; second, if an impairment is found, the court must determine whether the impairment is of a constitutional dimension; third, if the state regulation constitutes a substantial impairment, the court must determine whether a significant and legitimate public purpose justifies the regulation; finally, if a significant and legitimate public purpose exists, the court must determine whether the adjustment of the rights and responsibilities of the contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption.¹²⁷

Regarding the first inquiry, the Louisiana Supreme Court readily held that the extension of the prescriptive period would, in fact, constitute an impairment of the contractual relationship between the defendant insurers and their policyholders. Next, the Louisiana Supreme Court provided some analysis of the question as to whether the impairment is one of constitutional dimension. The Louisiana Supreme Court’s analysis was first to determine the severity of the impairment, which in turn was measured by determining the extent to which the insurers’ contractual expectations would be frustrated by the operation of the two legislative acts. The Louisiana Supreme Court noted that a contractual impairment may be “substantial” under Energy Reserves, even if the impairment does not rise to the level of total destruction of contractual expectations. On the other hand, it also emphasized several times the relevance of whether the industry the complaining party has entered has been regulated in the past. Nonetheless, even noting that the Louisiana insurance industry is pervasively regulated, the Louisiana Supreme Court found that the contractual obligations of the defendant insurers were more than minimally altered and thus the impairments were of a constitutional dimension. “However, we also find that the impairments constitute considerably less than total destruction of the insurers’ contractual expectations. Consequently, when we inquire into the public purpose underlying the legislation, we will give considerable deference to the legislature’s judgment.”¹²⁸

 ¹²⁷ Insurance Carriers, 937 So.2d at 324, quoting Segura, 630 So.2d at 729; Energy Reserves, 459 U.S. at 410-413. As noted above, supra page 20, the courts are inconsistent as to whether the test has two factors, three factors (with subparts) or four factors. See Mary Garvey Algero, Will A Decision That Has the Potential to Do so Much Good for the People of Louisiana Set a Harmful Precedent, 53 Loy. L.Rev. 47, 60 (2007). Cf. supra note 85. 

¹²⁸ Insurance Carriers, 937 So.2d at 325. See infra note 194.

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Under the third inquiry, the Louisiana Supreme Court easily found this legislative extension of the prescriptive period for damage claims to be based upon a significant and legitimate public purpose, in response to the worst natural disaster to ever occur in the United States. It reiterated that:

the public purpose requirement is primarily designated to prevent a state from embarking on a policy motivated by a simple desire to escape its financial obligations or to injure others through the repudiation of debts or the destruction of contracts of [sic] [or] the denial of needs to enforce them.¹²⁹

In the critical fourth inquiry, the Louisiana Supreme Court concluded that the Louisiana Legislature’s adjustment of the rights and responsibilities of the contracting parties was both appropriate and reasonable. The Legislature’s extension of the prescriptive period for filing claims in these type of insurance cases was limited in both time and scope. The extension was only for one additional year (noting that the pertinent time periods in the states neighboring Louisiana all are greater than one year), and was limited to certain types of claims. The Legislature addressed this significant public concern in an appropriate manner in order to avoid mass confusion and an increase in filings in our courts.¹³⁰ The Louisiana Supreme Court reiterated that, while of constitutional dimension, the substantial impairment in this case was of the type that may be anticipated in this highly regulated insurance industry.

Although the Louisiana Supreme Court in Insurance Carriers conducted its analysis on the basis that the contractual relationships impaired were private ones between the defendant insurers and their policyholders, and that the State itself was not a contracting party, the holding was expressly made on the basis that the legislative acts were constitutional even under the stricter standard of review applicable when the State is a party to the contract.¹³¹ The insurance carriers argued that the State should be considered a party to the contract because of the State’s position as a property owner and property insurance policyholder who may benefit from the extension of time, and in addition because the State would be assigned the remaining rights of many Louisiana policyholders under the state program known as the Louisiana Recovery Authority (The Road Home Program). The Louisiana Supreme Court rejected that assertion, and considered the State’s interest as an affected property owner as incidental and not sufficient to trigger the stricter standard of review. As noted, however, it expressly held that its conclusion that the legislative acts violate neither the Federal nor the Louisiana Contract Clauses would be unchanged even under the stricter standard of review.

¹²⁹Id. at 325, citing Segura, 630 So.2d at 731, citing Blaisdell. 

¹³⁰ Insurance Carriers, 937 So.2d at 327, n.13. Similarly, after the Northridge earthquake, California created a statute extending the time for policyholders to bring claims under their policies. The statute survived scrutiny under the Contract Clause even though it revived claims otherwise time-barred under existing policies. Courts found the statute sufficiently limited in scope, balancing the interference with existing policies against California’s need to protect policyholders. The statute revived claims only for one year, applied only to claims arising out of the Northridge earthquake and applied only to policyholders who met certain qualifications. Moreover, the statute affected the policy’s remedies, not its core provisions. Hellinger v. Farmers Group, Inc., 91 Cal. App. 4th 1049, 1066 (2001); see also Campanelli v. Allstate Life Ins. Co., 322 F.3d 1086, 1098-99 (9th Cir. 2003) (noting that this particular impairment is less severe because the revived and extended limitations period is mandated by statute and not bargained for and because the insurance industry is heavily regulated); 20th Century Ins. Co. v. Superior Court, 90 Cal. App. 4th 1247 (2001). 

¹³¹ Insurance Carriers, 937 So.2d at 326-27; supra note 111.

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Reserved Powers Doctrine

As mentioned previously, a fundamental defense to claims under both the Federal and Louisiana Takings Clauses and the Federal and Louisiana Contract Clauses is that the state action of a legislative character, notwithstanding that property value has been taken and contractual rights impaired, nonetheless is permissible as an exercise of inherent, reserved police power of the state (and any contrary irrevocable contract right purportedly created by the state is void). Connolly requires consideration of whether legislation destroying existing contractual rights nonetheless is not a taking because of the subject matter involved, especially when occurring in a regulated field where distinct investment-backed expectations should not be recognized. With respect to the Federal Contract Clause, U.S. Trust provides that the reserved powers doctrine requires a determination of the state’s power to create irrevocable contract rights in the first place (before reaching the inquiry into the purpose or reasonableness of the subsequent impairment).¹³²

 ¹³² U.S. Trust, 431 U.S. at 23, supra note 105; Melendez, supra note 89, 16 F.4th at 1017 n.40 (2d. Cir. 10/28/2021) (“police power [is] the linchpin for the balancing principle that now cabins the Contracts Clause’s impairment prohibition”); Matsuda v. City and County of Honolulu, 512 F.3d 1148, 1153 (9th Cir. 2008) (explaining that the “initial task” in applying the reserved powers doctrine “is to determine whether the state had the power to create irrevocable contract rights in the first place”); see infra note 134 and pages 59-64.

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Moreover, the Louisiana Constitution in Article VI, Section 9(B) provides that “the police power of the state shall never be abridged.” Although expressed only as a limitation on Article VI of the Constitution concerning the powers of local governmental bodies versus the State, this provision has been interpreted to express a fundamental constitutional precept concerning the ability of the Legislature to surrender the police power.¹³³ This principle is applicable to attempts to surrender or abridge the ratemaking power, constitutionally vested in the LPSC.¹³⁴ Ratemaking by the LPSC is undeniably an aspect of the police power for the promotion of the public welfare.¹³⁵ Additionally, United States Supreme Court precedent supports the extension of this principle to the LPSC’s regulation of utilities, to the extent such an extension is not already implicit in existing Louisiana jurisprudence.¹³⁶ The Louisiana Supreme Court has established that contracts entered into by regulated public utilities with respect to fees and rates the utility will charge remain subject to supervision and adjustment by the LPSC, which may modify or even abrogate such contracts.¹³⁷

Although the police power of the state is best defined on a case by case basis, it has been generally described as the state’s “inherent power to govern persons and things, within constitutional limits, for promotion of general health, safety, welfare and morals.”¹³⁸ Nonetheless, the police power extends only to measures that are reasonable. A measure taken under the state’s police power is reasonable when the action is, under all the circumstances, reasonably necessary and designed to accomplish a purpose properly falling within the scope of the police power. Further, an exercise of the state’s police power “does not justify an interference with constitutional rights which is entirely out of proportion to any benefit redounding to the public.”¹³⁹ Thus the non-abridgement clause of the Louisiana Constitution has been construed in a manner consistent with the “reserved powers” doctrine articulated by the United States Supreme Court in U.S. Trust.¹⁴⁰

 ¹³³ City of New Orleans v. Board of Comm’rs of the Orleans Levee District, 640 So.2d 237, 249 (La. 1994) (“the principle that the exercise of the police power of the state shall never be abridged needs no constitutional reservation to support it”, so the failure of the 1974 Louisiana Constitution to restate the precept as a general provision, as previous Louisiana Constitutions had done, does not detract from the principle); Board of Comm’rs v. Department of Natural Resources, 496 So.2d 281, 289 (La. 1986) (“Board of Comm’rs”) (“It is a general principle of judicial interpretation of a state constitution, as well as a specific prohibition of our constitution, that the legislature may not irrevocably alienate, surrender or abridge the right to exercise the police power.”) (citations omitted); accord Ex Parte Steckler, 154 So. 41, 44 (La. 1934) (“a fundamental rule in our form of state government is that the Legislature cannot surrender irrevocably any of the state’s police power.”) (citations omitted). See Melendez, supra note 89, 16 F.4th at 1020-21 (2d Cir. 10/28/2021). Similarly, the Louisiana Constitution in Article 1, Section 4 expressly makes the Louisiana Takings Clause subject to the reasonable exercise of the police power. Supra note 54 and infra notes 213 and 237. 

¹³⁴ See supra pages 8-9; Baton Rouge Waterworks Co. v. LPSC, 100 So. 710, 711 (La. 1924) (“It is conceded on well-recognized authority that the ratemaking power, whether exercised by agreement or by the fiat of law, is within the police power of the state as one of the state’s highest attributes of sovereignty, and that this power can never be abridged nor irrevocably surrendered where there is, as in this state, constitutional inhibition.”); accord City of Baton Rouge v. Baton Rouge Waterworks Co., 30 F.2d 895 (5th Cir. 1929); City of New Orleans v. O’Keefe, 280 F. 92 (5th Cir. 1922); State v. City of New Orleans, 151 La. 24, 30, 91 So. 533, 535 (La. 1922) (“cannot surrender irrevocably or bargain away the authority to fix or control rates for public utilities”); compare United Gas Corp. v. City of Monroe, 109 So.2d 433 (La. 1958) (city’s contract fixing rates for a term binding on parties where Legislature has delegated ratemaking power to municipalities but always reserves the power to revoke or compel a change in such rate); City of New Orleans v. Great S. Tel & Tel. Co., 3 So. 533, 534 (La. 1888) (City’s grant of franchise authority to utility had become an “irrevocable contract, and the city is powerless to set it aside or to interpolate new or more onerous considerations therein”); accord BellSouth Communications, LLC v. City of New Orleans, 31 F. Supp. 3d 819 (E.D. La. 2014). See infra note 213. 

¹³⁵ Gulf States Utilities Co. v. LPSC, 633 So2d 1258, 1264 (La. 1994); Conoco, 520 So.2d at 408; see supra notes 15 and 69 (ratemaking is an act and function legislative, and not judicial, in kind, within the police power of the state), and infra note 136 (the establishment of a rate is an act legislative and not judicial in nature, NOPSI at 371). 

¹³⁶ New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 109 S. Ct. 2506, 105 L. Ed. 2d 298 (1989) (“NOPSI”) (“The regulation of utilities is one of the most important of the functions traditionally associated with the police power of the states.”) (citations and internal quotation marks and brackets omitted); see supra notes 15 and 69; Pacific Gas & Elec. v. State Energy Resources Conservation, 461 U.S. 190, 206 (1983). 

¹³⁷ Opelousas, 105 So.3d at 32. 

¹³⁸ Morial, 785 So.2d at 15 (citations omitted) (emphasis added). 

¹³⁹ Morial, 785 So.2d at 15-16. 

¹⁴⁰ See Board of Comm’rs, 496 So.2d at 293 (“Into all contracts, whether made between states and individuals or between individuals only, there enters the condition, regardless of whether it is carried into express stipulation, that the state may not bargain away or otherwise be prevented from exercising its police power, viz., the exercise of the sovereign right of the government to protect the lives, health, morals, comfort and general welfare of the people.”) (citations omitted). See infra pages 59-64.

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Jurisprudential Considerations and Injunctions

A plaintiff Bondholder challenging an alleged impairment of contract or taking may be expected to seek an injunction. Considering first the prospect of preliminary injunctive relief in federal court, the United States Supreme Court requires federal courts to adhere to the principle that a “preliminary injunction is an extraordinary remedy never awarded as of right.”¹⁴¹ The function of preliminary injunctive relief is to preserve the latest uncontested status quo prior to the action which is the subject of the legal challenge.¹⁴² In order to obtain injunctive relief in federal court, the plaintiff must show that enforcement of the unconstitutional legislation or other action of a legislative character is imminent.¹⁴³ A plaintiff seeking a preliminary injunction (in the court’s discretion) then must establish (1) the likelihood of success on the merits, (2) the likelihood plaintiff will suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in plaintiff’s favor, and (4) that an injunction is in the public interest.¹⁴⁴ For a preliminary injunction to be issued, the United States Supreme Court in Winter v. NRDC, Inc. emphasized the fourth requirement, stating that in exercising their sound discretion as courts of equity, federal courts should pay particular regard for the public consequences in employing the extraordinary remedy of injunction.¹⁴⁵ Although there are some older cases stating that these four requirements may be applied on a “sliding scale,” the Fifth Circuit (which territorial jurisdiction includes Louisiana) has recently suggested that those decisions may have been implicitly overruled by that 2008 Supreme Court decision.¹⁴⁶ Instead, in recent years, the Fifth Circuit has repeatedly said that a “preliminary injunction is an extraordinary remedy which should not be granted unless the party seeking it has clearly carried the burden of persuasion on all four requirements.”¹⁴⁷ In particular, in considering irreparable harm courts evaluate whether (i) there is sufficient causal connection between the alleged injury and the conduct to be enjoined, (ii) irreparable injury is likely in the absence of an injunction, (iii) the threat of harm to plaintiff is immediate, and (iv) litigation can offer monetary compensation instead.¹⁴⁸

 ¹⁴¹ Winter v. NRDC, Inc., 555 U.S. 7, 24 (2008) (“Winter”). 

¹⁴² University of Texas v. Camenisch, 451 U.S. 390, 395 (1981) (“The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.”); Wenner v. Texas Lottery Comm’n, 123 F.3d 321, 326 (5th Cir. 1997) (“Preliminary injunctions commonly favor the status quo and seek to maintain things in their initial condition so far as possible until after a full hearing permits final relief to be fashioned.”) (citations omitted) 

¹⁴³ Morales v. TWA, 504 U.S. 374, 381 (1992). 

¹⁴⁴ Winter, 555 U.S. at 20. See also, e.g., Illinois Republican Party v. Pritzker, 973 F.3d 760, 762-63 (7th Cir. 2020) (abrogating earlier circuit authority indicating lesser requirement with respect to likelihood of success on the merits). 

¹⁴⁵ Winter, at 23-26. 

¹⁴⁶ Atchafalaya Basinkeeper v. U.S. Army Corp of Eng’rs, 894 F.3d 692, 696 n.1 (5th Cir. 2018). 

¹⁴⁷ Jordan v. Fisher, 823 F.3d 805, 809 (5th Cir. 2016) (quoting Bluefield Water Ass’n, Inc. v. City of Starkville, 577 F.3d 250, 253 (5th Cir. 2009)); see also, e.g., Def. Distributed v. U.S. Dep’t of State, 838 F.3d 451, 456-57 (5th Cir. 2016) (quoting PCI Transp., Inc. v. Fort Worth & W.R.R., 418 F.3d 535, 545 (5th Cir. 2005) (same)), cert. denied, 138 S. Ct. 638 (2018). Accord Apt. Ass’n of L.A. County v. City of Los Angeles, 10 F.4th 905, 912 (9th Cir. 2021) (affirming denial of preliminary injunction against City’s eviction moratorium during COVID-19; applying the same standard and four factors and asserting likelihood of success on the merits is the most important factor). 

¹⁴⁸ Sampson v. Murray, 415 U.S. 61, 90 (1974); Idaho v. Coeur d’Alene Tribe, 794 F.3d 1039, 1046 (9th Cir. 2015) (purely economic harms are generally not irreparable, as money lost may be recovered later, in ordinary course of litigation); Melancon, 703 F.3d at 279-80; Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 982 (9th Cir. 2011). Irreparable harm must be likely in the absence of an injunction, not merely possible. Winter, 555 U.S. at 22. As noted below, infra notes 154, 163-166, and 172, the availability of injunctive and declaratory relief might be limited where the State’s actions constitute an unconstitutional taking, or merely a breach of contract (as opposed to an impairment of contract), for which the aggrieved party can recoup money damages at law. See also supra note 50.  Furthermore, federal courts have found that a delay in the receipt of payments until final judgment is not the type of “irreparable harm” which justifies a preliminary injunction, absent special countervailing circumstances such as the possibility that such delay could result in the claimant’s insolvency or the closure of the claimant’s business.  See, e.g., Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 and n.1 (7th Cir. 1984); Melancon, 703 F.3d at 279; cf. Ridgely v. Federal Emergency Management Agency, 512 F.3d 727 (5th Cir. 2008) (discussing standards for injunction in due process claim and requiring that government’s procedures be constitutionally inadequate); Alabama Ass’n of Realtors v. Dept. of Health and Human Services, 2021 U.S. Lexis 3679, 2021 WL 3783142, 141 S. Ct. 2485 (U.S. 2021) (per curiam) (equities favor millions of landlords at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery, vacating stay of judgment that voided nationwide moratorium on eviction as exceeding the authority of the Centers for Disease Control and Prevention); Centurion Reinsurance Co. v. Singer, 810 F.2d 140, 146 (7th Cir. 1987) (discussing dissipation of assets); Dresser-Rand Co. v. Virtual Automation Inc., 361 F.3d 831, 848-49 (5th Cir. 2004) (holding that district court did not abuse its discretion in denying injunctive relief despite one factor in analysis being that defendant’s insolvency may render incapable of responding in damages). Because delay in scheduled expected payments may not suffice alone (see, e.g., Roland Mach, Co. supra at 386), other factors that make a remedy at law inadequate may be needed. See Janvey v. Alguire, 647 F.3d 585, 600 (5th Cir. 2011) (monetary asset dissipation; noting that some courts have found that a remedy at law is inadequate if legal redress may be obtained only by pursuing a multiplicity of actions); U.S. Trust, 431 U.S. at 19 (difficulty in calculating damages: “[N]o one can be sure precisely how much financial loss the bondholders suffered” from the repeal of the state pledge); United States v. Miami Univ., 294 F.3d 797, 819 (6th Cir. 2002). Importantly, injunctive relief might be available if sovereign immunity would preclude a suit for damages. See supra note 58 and infra note 172; Idaho v. Couer d’Alene Tribe, 794 F.3d 1039, 1046 (9th Cir. 2015) (affirming grant of preliminary injunction where Indian tribe’s sovereign immunity likely would bar the plaintiff from recovering monetary damages incurred during the course of litigation caused by the tribe’s violation of statute and contract); New Jersey Retail Merchants Ass’n v. Sidamon-Eristoff, 669 F.3d 374, 388 (3d Cir. 2012) (upholding preliminary injunction in Contract Clause case where, in the absence of injunction, merchants would have to pay money to the state that could not be recovered later due to sovereign immunity). Furthermore, an argument may be asserted that when an alleged deprivation of a constitutional right is involved, no further showing of irreparable injury is necessary. Opulent Life Church v. City of Holly Springs, 697 F.3d 279, 295 (5th Cir. 2012) (irreparable harm requirement satisfied by alleged violation of First Amendment rights); see infra note 198. But see Brown v. Sec’y, U.S. Dep’t of Health and Human Services, 4 F.4th 1220, 1225 (11th Cir. 07/14/2021) (restricting constitutional irreparable injuries to First Amendment violations and right of privacy claims, finding no irreparable injury to allow a preliminary injunction against COVID-19 eviction moratorium), vacated as moot, 20 F.4th 1385 (11th Cir. 12/29/2021).

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These equitable factors affecting the appropriateness of preliminary injunctive relief are highly fact specific. We would expect a federal court to issue a preliminary injunction only if it was persuaded by the strength of the showing by the Bondholders that the Bondholders both were strongly likely to prevail on the merits and would suffer irreparable injury absent such injunction. Thus, addressing the factors discussed above, the Bondholders would need to advance a persuasive theory based upon a substantial factual showing why a preliminary injunction was needed to prevent irreparable injury prior to trial and decision on the merits by the federal district court.

The requirements for a permanent injunction in federal court are essentially the same as for a preliminary injunction, except that the plaintiff must demonstrate actual success on the merits (prevailing at trial).¹⁴⁹ The factors used in determining whether to grant permanent injunctive relief are (1) the threat of irreparable harm to the plaintiff, (2) the balance of harms with any injury an injunction might inflict on other parties, (3) actual success on the merits, and (4) the public interest.¹⁵⁰ Ultimately the decision to grant or deny injunctive relief is within the discretion of the district court.¹⁵¹ Also in the court’s discretion, declaratory relief might be available.¹⁵²

Challenges to an alleged impairment or taking may face jurisprudential issues of ripeness, immunity, and abstention.¹⁵³ A claim under the Federal Takings Clause is not ripe for consideration until the state government entity charged with implementing the legislative action has reached a final decision. Additionally, as discussed below, even after a final decision injunctions are not available against a state government to remedy an alleged Federal Takings Clause violation when a suit for compensation can be brought against the sovereign after the taking.¹⁵⁴ Furthermore, as described below, Louisiana’s procedures for challenging an order of the LPSC altering or impairing the value of the Financing Order are both adequate and available, which may lead to abstention by federal courts as discussed below.

 ¹⁴⁹ Amoco Production Co. v. Village of Gambell, 480 U.S. 531, 546 n.12 (1987); eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2008); Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 979-80 (9th Cir. 2011). 

¹⁵⁰ Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506-07 (1959); Dresser-Rand Co. v. Virtual Automation Inc., 361 F.3d 831, 847-48 (5th Cir. 2004). 

¹⁵¹ eBay Inc. v. MercExchange, L.L.C., 547 U.S. at 391. 

¹⁵² 28 U.S.C. § 2201; Wilton v. Sevin Falls Co., 515 U.S. 277, 282-83 (1995). 

¹⁵³ The LPSC’s role in issuing the Financing Order approving the Storm Recovery Charges requires consideration of another possible jurisdictional limitation, under the Johnson Act, codified at 28 U.S.C. § 1342. The Johnson Act provides that federal district courts “shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a ratemaking body of a State political subdivision, where: 

(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and 

(2) The order does not interfere with interstate commerce; and 

(3) The order has been made after reasonable notice and hearing; and 

(4) A plain, speedy and efficient remedy may be had in the courts of such State.” 28 U.S.C. § 1342. 

First, this provision applies only to orders “affecting rates” charged by a public utility; thus, federal jurisdiction over an action by the LPSC affecting regulation other than ratemaking would not be barred by the Johnson Act. Note the Johnson Act does not divest a federal district court of jurisdiction where the challenge is to a statute and not a rate order. South Carolina Electric & Gas Co. v. Randall, 331 F. Supp. 3d 485, 493 (D. S.C. 2018). Even as to orders affecting rates, however, the order must not interfere with interstate commerce. In the case of an LPSC supplemental order that effected an impairment or taking, or any rescission, amendment or violation of the Pledge, the order would virtually by definition affect interstate commerce, as it would affect the value of the Bonds, either directly or indirectly through manipulation of the Storm Recovery Charges. Compare Nucor Corp. v. Nebraska Public Power Dist., 891 F.2d 1343, 1348 (8th Cir. 1989) (Johnson Act inapplicable where challenged rate overcharge of nearly $7 million affected cost of goods of plaintiff, who sold those goods in interstate commerce), cert. denied, 498 U.S. 813, 111 S. Ct. 50, 112 L. Ed. 2d 60 (1990). The Securitization Act [La. R.S. 45:1226(B), (C) and 1234(C)], and the Financing Order [Findings of Fact Paragraphs 38, 100 and 101] explicitly seek low-cost capital in reliance upon the securities financial markets and therefore interstate commerce, implicating the core intent of the Federal Contract Clause “to encourage trade and credit by promoting confidence in the stability of contractual relations”, U.S. Trust, 431 U.S. at 16. For these reasons, although in determining whether an order constitutes interference with interstate commerce each case must be dealt with on its own facts and circumstances, in our view the Johnson Act should not comprise a bar to federal jurisdiction. 

¹⁵⁴ Supra notes 50 and 148 and infra notes 163-166 and 172; Monsanto, supra note 23, 467 U.S. at 1016, accord Melancon, 703 F.3d at 279-280.

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The United States Supreme Court in Knick v. Township of Scott¹⁵⁵ recently overruled precedent that had held that a Federal Takings Clause claim is not ripe for judicial consideration in federal court until the plaintiff had sought and been denied compensation through whatever procedures and mechanism state law provides for doing so. Under Knick, a property owner has an actionable federal takings claim as soon as a government takes his property without paying for it.¹⁵⁶ If a state or local government takes property without compensation, “the property owner can bring a federal suit at that time” directly under 42 U.S.C. §1983¹⁵⁷ “without first bringing any sort of state lawsuit, even when state court actions addressing the underlying behavior are available.”¹⁵⁸

 ¹⁵⁵ 588 U.S. ___, 139 S. Ct. 2162 (2019) (“Knick”), overruling Williamson County Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172 (1985) (“Williamson”). 

¹⁵⁶ Knick, 139 S. Ct. at 2167 and 2170. 

¹⁵⁷ See infra note 172. 

¹⁵⁸ Knick, 139 S. Ct. at 2172-73; Lafaye v. City of New Orleans, No. 20-41 (E.D. La. 03/09/2021), court slip op. at 12, 2021 WL 886118.

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Nonetheless the limitation remains that a claim under the Federal Takings Clause is not ripe for consideration until the state government charged with implementing the legislative action has reached a final decision. “When a plaintiff alleges a regulatory taking in violation of the Fifth Amendment, a federal court should not consider the claim until the government has reached a ‘final’ decision.”¹⁵⁹ This finality requirement is “relatively modest.”¹⁶⁰ Once the government has adopted its final position, administrative exhaustion of state remedies is not a ripeness prerequisite for a federal takings claim. The availability of any particular compensation remedy, such as an inverse condemnation claim under state law, cannot infringe or restrict the property owner’s federal constitutional claim for compensation.¹⁶¹ For the purpose of ripeness, ordinary finality is sufficient once the government has reached a conclusive position.¹⁶²

The United States Supreme Court has made it clear, however, that if the state has an adequate procedure for obtaining compensation for the taking, there typically will be “no basis to enjoin the government’s action in effecting a taking,” so an injunction will be “generally unavailable” in federal court in a federal takings claim.¹⁶³ Thus injunctions are not available against a state government to remedy an alleged Federal Takings Clause violation when a suit for compensation can be brought against the sovereign after the taking.¹⁶⁴ “So long as the property owner has some way to obtain compensation after the fact,”¹⁶⁵ injunctive relief is not available in federal court.¹⁶⁶ Louisiana provides for inverse condemnation proceedings by aggrieved property owners even in the case of nonphysical regulatory takings.¹⁶⁷

 ¹⁵⁹ Peyman Pakdel v. City and County of San Francisco, 594 U.S. _____, 141 S. Ct. 2226, 2228, 2021 WL 2637819 (2021) (per curiam) (“Pakdel”). 

¹⁶⁰ Pakdel, 141 S. Ct. at 2230. A plaintiff’s failure to properly pursue administrative procedures still may render a takings claim unripe if avenues still remain for the government to clarify or change its decision. Id. at 2231. 

¹⁶¹ Id. at 2228, 2229 (quoting Knick, 139 S. Ct. at 2171). 

^162] Id. at 2231. Similarly, harm occurs, and a claim is ripe under the Federal Contract Clause, upon passage of the legislation when a law interferes with valid expectancy interests, creating an “actual, concrete, and particularized” injury. Lazar v. Kronckce, 862 F.3d 1186, 1198-99 (9th Cir. 2017). See Franklin, supra note 3, 85 F. Supp. 3d at 611 (facial Federal Takings Clause became ripe the moment the challenged statute was enacted). 

¹⁶³ Knick, 139 S. Ct. at 2176. 

¹⁶⁴ “Given the availability of post-taking compensation, barring the government from acting will ordinarily not be appropriate.” Id. at 2177. As long as just compensation remedies are available, injunctive relief will be foreclosed. Id. at 2179. See supra notes 148 and 154 and infra note 172. 

¹⁶⁵ Knick, 139 S. Ct. at 2168. 

¹⁶⁶ Baptiste v. Kennealy, 490 F. Supp. 3d 353 (D. Mass. 2020) (landlords denied preliminary injunction against state legislation establishing a temporary moratorium on residential evictions during Covid pandemic). See generally Severance v. Patterson, 566 F.3d 490, 498 (5th Cir. 2009) (“inadequate procedures are those that almost certainly will not justly compensate the claimant”) (quoting Samaad v. City of Dallas, 940 F.2d 925, 934 (5th Cir. 1991), abrogated on other grounds by Stop the Beach Renourishment, Inc. v. Florida Dep’t of Envtl Prot., 560 U.S. 702, 728 (2010). But see infra note 169 (sovereign immunity bars monetary relief under Federal Contract Clause). 

¹⁶⁷ The procedural situation can become complicated. If the challenged action causing the taking is an action of the Legislature, the pertinent question will be whether there exists an administrative/judicial procedure for decisions of the state agency or department charged with enforcing such action. If no such procedure exists, then immediate resort may be had to a suit for just compensation in state district court. If the challenged action is an action of the LPSC, then the Bondholder will first have to proceed through a final resolution of the state procedure for reviewing such orders, including appeal to the state district court and then the Louisiana Supreme Court. See Firth v. Southwest Ouachita Waterworks, Inc., 207 So.3d 1121 (La. App. 2d Cir. 2016) (where there is concurrent jurisdiction between the district court and the LPSC, the doctrine of primary jurisdiction applies, and the district court is obligated to stay any judicial proceedings related to plaintiff’s claims that fall outside the exclusive jurisdiction of the LPSC until the LPSC proceeding is ended). The saga of Liberty Mutual Insurance Company is illustrative, even recognizing the overruling of Williamson. Liberty Mutual claimed, inter alia, that certain rate decisions of the Louisiana Insurance Rating Commission (“LIRC”) deprived it of its property interests. Liberty Mutual filed suit in federal district court seeking compensation under the Federal Takings Clause. The federal Fifth Circuit ordered the claim dismissed as unripe, following Williamson. Liberty Mutual Ins. Co. v. Louisiana Dep’t of Insurance, 62 F.3d 115, 117 (5th Cir. 1995). Liberty Mutual then proceeded to prosecute an inverse condemnation claim in state court. The Louisiana First Circuit court dismissed this claim as well, noting that while Louisiana law clearly recognizes an action for inverse condemnation, Liberty Mutual had still failed to avail itself of the administrative and judicial remedies available for challenging the order of the LIRC, which are a prerequisite to any suit for just compensation. Liberty Mutual Ins. Co. v. LIRC, 1997-1043 (La. App. 1 Cir. 1998), 713 So.2d 1250, 1253-55, writ denied, 1998-2072 (La. 1998), 728 So.2d 396. Liberty Mutual then filed suit again in federal court, and the federal district court dismissed this second suit, noting that Liberty Mutual had still failed to invoke the administrative and judicial remedies available to challenge the LIRC’s rate decisions. The federal Fifth Circuit affirmed this dismissal, and found that because the statute of limitations governing inverse condemnation proceedings had run, the dismissal should be with prejudice. Liberty Mutual Ins. Co. v. Brown, 380 F.3d 793, 796-798 (5th Cir. 2004). See infra note 191; but see Larkin Dev. North, L.L.C. v. City of Shreveport, 297 So.3d 980 (La. App. 2d Cir. 2020) (discussing administrative review and exhaustion doctrine in takings claims).

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Furthermore, the Eleventh Amendment of the United States Constitution erects a jurisdictional bar of sovereign immunity to the LPSC or the Louisiana Legislature being sued in a federal court. This jurisdictional bar to federal court applies regardless of the nature of the relief sought. It is clear that the Eleventh Amendment bars a Bondholder from suing the State in federal court unless the State consents or Congress has clearly and validly abrogated the State’s sovereign immunity.¹⁶⁸ Thus, under the Eleventh Amendment the State (including the LPSC, and state officials) would be immune from suit or damages resulting from an alleged constitutional violation of the Federal Contract Clause.¹⁶⁹ It is not entirely clear whether the State can assert sovereign immunity to bar a federal suit claiming compensation under the Federal Takings Clause brought directly against the State, although that is the prevailing rule.¹⁷⁰ As to damages, Louisiana has waived its right to sovereign immunity concerning claims sounding in tort or contract in state court and seeking to recover for damage to property under the Louisiana Constitution.¹⁷¹ As noted, to the extent that any impairment also constitutes a taking under the Federal or Louisiana Takings Clauses so as to require the State to pay just compensation, the availability of such compensation would constitute an adequate remedy at law and equitable (injunctive) relief and declaratory relief might be unavailable.¹⁷²

 ¹⁶⁸ Hall v. Louisiana, 974 F. Supp. 2d 944 (M.D. La. 2013) (“Hall”); Walden v. Nevada, 945 F.3d 1088, 1092-93 (9th Cir. 2019) 

¹⁶⁹ See, e.g., North Carolina v. Temple, 134 U.S. 22, 25, 30 (1890) (holding that North Carolina enjoys sovereign immunity from claimed violation of Federal Contract Clause) (citing Ex Parte Ayers, 123 U.S. 443 (1887)). The Eleventh Amendment bars suit against a state agency or department or state officials that is in fact a suit against a state, regardless of whether it seeks damages or injunctive relief. Hall, 974 F. Supp. 2d at 952; Hughes v. Johnson, No. 15-7165, 2016 WL 6124211 (E.D. La. 10/20/2016), court slip op. at 10 (“Hughes”). The LPSC, and individual commissioners sued in their official capacity, have been found entitled to Eleventh Amendment immunity, along with the State of Louisiana, in a suit claiming an unconstitutional taking under the Louisiana Constitution. Union Pacific R.R. Co. v. LPSC, 662 F.3d 366 (5th Cir. 2011). The jurisprudential factors determining whether an entity such as the LPSC is covered by the State of Louisiana’s Eleventh Amendment immunity suggest that all Louisiana executive departments have Eleventh Amendment immunity. Vogt v. Board of Comm’rs of the Orleans Levee District, 294 F.3d 684, 692 (5th Cir. 2002); Champagne v. Jefferson Parish Sheriff’s Office, 188 F. 3d 312, 313 (5th Cir. 1999). The LPSC is the executive head of the Department of Public Service, within the executive branch. La. R.S. 36:721; see La. Const. art. IV, sec. 21 (the LPSC is in the executive branch). A suit against individual officers for injunctive relief might be available under Ex Parte Young, as discussed below infra notes 181-183. See also Union Pacific, 622 F.3d at n.5. 

¹⁷⁰ A state’s waiver of sovereign immunity in one form or against one class of claims cannot necessarily be construed to be waiver of sovereign immunity in other forms or against other claims. McElrath v. United States, 102 U.S. 426, 440 (1880). Federal courts continue to bar federal takings claims against states brought in federal district court, and every court of appeals to have faced the question has held that the Eleventh Amendment bars federal takings claims against states in federal district court when the state courts remain open to adjudicate such claims, and that Knick (which did not involve Eleventh Amendment immunity, as that suit involved a town without sovereign immunity, unlike a state) did not abrogate state sovereign immunity in federal court. Zito v. North Carolina Coastal Res. Comm’n, 8 F.4th 281, 284-85, 290-91 (4th Cir. 2021); Ladd v. Marchbanks, 971 F.3d 574 (6th Cir. 2020), cert. denied, 141 S. Ct. 1390 (2021) (“Ladd”); Bay Point Props., Inc. v. Mississippi Transp. Comm’n, 937 F.3d 454, 456-57 (5th Cir. 2019), cert. denied, 140 S. Ct. 2566 (2020); Williams v. Utah Dep’t of Corr., 928 F.3d 1209, 1214 (10th Cir. 2019). See Hutto v. South Carolina Retirement System, 773 F.3d 536, 553 (4th Cir. 2014) (claims under the Federal Takings Clause are not exempt from the protection of the Eleventh Amendment). Jachetta v. U.S., 653 F.3d 898, 910 (9th Cir. 2011); Seven Up Pete Venture v. Schweitzer, 523 F.3d 948 (9th Cir. 2008), cert. denied, 129 S. Ct. 258, 172 L. Ed. 2d 147, 77 USLW 3058 (U.S. 2008); DLX, Inc. v. Kentucky, 381 F.3d 511 (6th Cir. 2004), overruled on other grounds by San Remo Hotel L.P. v. City & County of San Francisco, 545 U.S. 323 (2005); Harbert Int’l, Inc. v. James, 157 F.3d 1271 (11th Cir. 1998); John & Marie Stella Kennedy Mem’l Found. v. Mauro, 21 F.3d 667 (5th Cir. 1994). Nonetheless a modicum of uncertainty remains as to whether a State’s declaration of sovereign immunity against a federal takings claim should have effect. City of Monterrey v. Del Monte Dunes at Monterrey Ltd., 526 U.S. 687, 713-714 (1999) (assuming arguendo that the “sovereign immunity rationale retains its vitality in cases where [the Fifth] Amendment is applicable”). 

¹⁷¹ See, e.g., La. Const. Art. XII, Sec. 10; La. R.S. 13:5111. The State of Louisiana has not waived its Eleventh Amendment immunity from federal court jurisdiction. Blanchard v. Newton, 865 F.Supp.2d 709, 715-716 (M.D. La. 2012). Indeed, Louisiana has explicitly asserted its sovereign immunity by statute. La. R.S.13:5106(A) (“[N]o suit against the state or state agency or political subdivision shall be instituted in any court other than a Louisiana state court”); Hughes, court slip op. at 9. Of course, sovereign immunity may not stand in the way of recovery in state court. Jachetta v. U.S., 653 F.3d 898, 909 (9th Cir. 2011); Larkin Dev. North, LLC v. City of Shreveport, 297 So.3d 980, 990 (2d Cir. 2020). 

¹⁷² Knick, 139 S. Ct. at 2176-77, 2179; Monsanto, 467 U.S. at 1016; Pharm. Research & Mfrs of Am. v. Williams, 525 F. Supp. 3d 946 (D. Minn. 2021). See supra notes 50 and 148. In cases where the state is a party to the contract, the question arises as to whether the state action is a breach of contract, rather than an impairment of contract. The distinction turns upon the availability of a remedy in damages. See, e.g., TM Park Avenue Assoc. v. Pataki, 214 F.3d 344, 348-49 (2d Cir. 2000). “If a contract is merely breached and the duty to pay damages remains, then the obligation of the contract remains and there has been no impairment.” Id., at 349; accord Horwitz-Mathews, Inc. v. City of Chicago, 78 F.3d 1248, 1250-51 (7th Cir. 1996). See supra note 148. In any event, state officials in their official capacities are routinely afforded Eleventh Amendment immunity. Bennett v. City of Atlantic City, 288 F. Supp. 2d 675, 679-80 (D.N.J. 2003) (collecting cases). But it should be noted that a claim for damages against a state officer can be made in federal court through the artifice of an “individual capacity” suit, in this case against the individual commissioners of the LPSC and/or the pertinent state enforcement officer. Alden v. Maine, 527 U.S. 706, 757, 119 S. Ct. 2240, 144 L. Ed. 2d 636 (1999) (“Even a suit for money damages may be prosecuted against a state officer in his individual capacity for unconstitutional or wrongful conduct fairly attributable to the officer himself, so long as the relief is sought not from the state treasury but from the officer personally.”). It is unclear in this forecasted context, however, which individual state official would be suitably involved in, for instance, the conduct of the repeal of the Securitization Act by the State. See infra notes 181-183. Moreover, in such “individual capacity” lawsuits, a defendant enjoys absolute immunity from damages if his conduct can be characterized as “legislative” in character. Bogan v. Scott-Harris, 523 U.S. 44, 49, 118 S. Ct. 966, 140 L. Ed. 2d 79 (1998). Lower level “enforcement” officials, on the other hand, enjoy only “qualified immunity;” that is, they are immune from a damages claim in federal court unless their conduct amounts to a violation of a clearly established constitutional right and is otherwise objectively unreasonable. Harlow v. Fitzgerald, 457 U.S. 800, 818-19, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982). The only plausible cause of action pertaining to the Transaction to address such a violation with a damages remedy would be 42 U.S.C. § 1983 (and 28 U.S.C. § 1343), which sounds in tort for purposes of the sovereign immunity analysis. Knick establishes that the settled rule that exhaustion of state remedies is not a prerequisite to an action under § 1983 applies to a Federal Takings Claim. Knick, 139 S. Ct. at 2167, 2172-73; Lafaye v. City of New Orleans, No. 20-41 (E.D. La. 03/09/2021), court slip op. at 12, 14, 2021 WL 886118. But it remains unclear whether or not § 1983 provides a cause of action to assert an alleged Federal Contract Clause claim in the first instance, or instead if recourse to § 1983 with respect to the Federal Contract Clause is limited to discrete instances where a state has denied the opportunity to seek judicial adjudication. Heights Apartments, LLC v. Walz, 30 F.4th 720, 727-28 (8th Cir. 04/05/2022) (assuming, without deciding, the uncontested issue of whether a cause of action for a Contract Clause violation may be brought under § 1983; noting circuit split); Kaminski v. Coulter, 865 F.3d 339 (6th Cir. 2017) (noting unresolved circuit split, and joining the Fourth Circuit in holding that an alleged Federal Contract Clause violation cannot give rise to a cause of action under § 1983); Melancon, 703 F.3d at n.14. Congress has not, however, abrogated the states’ sovereign immunity in federal court for claims arising under § 1983. Ladd v. Marchbanks, supra note 170, 971 F.3d at 578 and n.4; Hughes, supra note 169, at 9; Hall, supra note 168, 974 F. Supp. 2d at 953. (Louisiana in any event cannot prevent a suit in state court under § 1983 by a sovereign immunity defense. Alden, 527 U.S. at 756.) However, given the character of the anticipated state action, the individual state actors very likely would be entitled to absolute immunity, as their conduct would be the exercise of legislative judgment, or at least qualified immunity. See Louisiana Farms v. Louisiana Dep’t of Wildlife and Fisheries, 95-845 (La. App. 3 Cir. 1996), 685 So.2d 1086, 1092-99, writ denied, 97-0486, 97-0507 (La. 1997), 692 So.2d 420, 422. See infra notes 176-179. We also note the possible applicability of Louisiana’s discretionary function immunity statute, which protects state officers from liability when making policy or exercising discretionary functions. La. R.S. 9:2798.1; Minvielle v. Iberia Parish Gov’t, 317 So.3d 588, 595-98 (La. App. 3d Cir. 2019) (takings claim barred by discretionary immunity statute because legislative functions are exactly the type of discretionary functions covered; discretion grounded in social, economic, or political activity shielded); Commerce & Industry Ins. Co. v. Grinnell Corp., 280 F.3d 566, 570-72 (5th Cir. 2002); Blanchard v. Newton, 865 F.Supp.2d 709, 717 (M.D. La. 2012).

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This jurisdictional bar of sovereign immunity, however, can be circumvented through use of the legal fiction set forth in Ex Parte Young.¹⁷³ Under the Ex Parte Young “exception” to the Eleventh Amendment, a state officer may be sued in his official capacity in federal court as long as the relief sought is properly characterized as prospective only, i.e., declaratory and injunctive relief,¹⁷⁴ and provided that the complaint alleges an ongoing violation of federal law.¹⁷⁵

¹⁷³ 209 U.S. 123, 28 S. Ct. 441, 52 L.Ed. 714 (1908). 

¹⁷⁴ Mayfield v. Texas Dep’t. of Criminal Justice, 529 F. 3d 599 (5th Cir. 2008); Town of Barnstable v. O’Connor, 786 F.3d 130 (1st Cir. 2015) (“Barnstable”) (pivotal question is whether the relief serves directly to bring an end to a present violation of federal law, as opposed to relief that would have much the same effect as a full-fledged award of damages) (internal quotation marks and citations omitted); Hughes, supra note 169 at 10; Terrebonne Parish NAACP v. Jindel, 154 F. Supp. 3d 354 (M.D. La. 2015) (Louisiana governor and attorney general sued in their official capacity are “persons” under § 1983); but see supra note 172 and infra note 181. Conversely, under the Eleventh Amendment a federal court is without jurisdiction to impose a damages award upon any state agency or department (including state officials sued in their official capacities) for any past violation of federal law, including any unconstitutional “taking” or “impairment of contracts.” See Hutto v. South Carolina Retirement System, 773 F.3d 536, 549 (4th Cir. 2014); DLX, Inc. v. Kentucky, 381 F.3d 511, 526-28 (6th Cir. 2004) (discussing issue) overruled on other grounds by San Remo Hotel L.P. v. City and County of San Francisco, 545 U.S. 323 (2005); Seven Up Pete Venture v. Schweitzer, 523 F.3d 948 (9th Cir. 2008); Blanchard v. Newton, 865 F.Supp.2d 709, 715 (M.D. La. 2012). Thus ‘“Ex Parte Young cannot be used to obtain an injunction requiring the payment of funds from the State’s treasury.’” Ladd, supra note 170, 971 F.3d at 581 (6th Cir. 2020) (quoting Virginia Office for Protection & Advocacy v. Stewart, 563 U.S. 247, 256-57 (2011)). 

¹⁷⁵ Verizon Maryland, Inc. v. Public Service Comm’n of Maryland, 535 U.S. 635, 645, 122 S. Ct. 1753, 152 L. Ed. 2d 871 (2002) (noting Ex Parte Young was a suit against state regulatory commissioners to enjoin a commission order requiring a reduction in rates); Planned Parenthood Gulf Coast, Inc. v. Phillips, 24 F.4th 442, 451 (5th Cir. 01/20/2022); State Employees Bargaining Agent Coalition v. Rowland, 494 F.3d 71 (2d Cir. 2007); ACLU Foundation of Louisiana v. Blanco, 523 F. Supp. 2d 476 (E.D. La. 2007). But see infra note 179. Moreover, a declaration of the past, as well as the future, ineffectiveness of a state commission’s action is not barred because it does not impose upon the state a monetary loss resulting from a past breach of a legal duty on the part of defendant state officials. Barnstable, 786 F.3d at 139.

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In addition to sovereign immunity, the jurisdiction bar of legislative immunity from suit also is applicable here. It is well established that state legislators acting within the scope of their legislative duties are immune from civil suits for damages. Given the character of the anticipated State action under discussion, the individual State actors very likely also would be entitled to absolute immunity, as their conduct would be the exercise of state legislative judgment, or at least qualified immunity.¹⁷⁶ This legislative immunity doctrine bars claims for damages against state legislators in their individual (personal) capacities. State legislators are entitled to absolute immunity from 42 USC §1983 liability for all actions characterized as legislative.¹⁷⁷ Legislative immunity applies to legislators sued in their individual capacities, not to the legislative body itself.¹⁷⁸ Indeed, legislative immunity not only shields state legislators from suits for damages (not a mere defense to liability), but also shields officials in the executive branch (such as the LPSC) when their actions are of a legislative character, and further bars not only claims for damages but may also apply to bar claims for injunctive relief brought against state officials in their official capacities otherwise allowed under the Ex Parte Young exception to sovereign immunity.¹⁷⁹

¹⁷⁶ See Hall, supra note 168, 974 F. Supp. 2d at 954-57; Louisiana Farms v. Louisiana Dep’t of Wildlife and Fisheries, 95-845 (La. App. 3 Cir. 1996), 685 So.2d 1086, 1092-99, writ denied, 97-0486, 97-0507 (La. 1997), 692 So.2d 420, 422. 

¹⁷⁷ See supra notes 15, 69, 135, 172, and 179. 

¹⁷⁸ Sable v. Myers, 563 F.3d 1120, 1123 (10th Cir. 2009); Minton v. St. Bernard Parish Sch. Bd., 803 F.2d 129, 133 (5th Cir. 1986). 

¹⁷⁹ Community House, Inc. v. City of Boise, Idaho, 623 F.3d 945, 959 (9th Cir. 2010) (“the importance of absolute legislative immunity to our system of government cannot be overstated”, 623 F.3d at 964); State Employees Bargaining Agent Coalition v. Rowland, 494 F.3d 71 (2d Cir. 2007); Hall, supra note 168, 974 F. Supp. 2d at 954-57 (holding state officials with functionally legislative duties have absolute legislative immunity against injunctive as well as damage suits in their official capacities, in addition to immunity from damages claims in their individual personal capacities, and discussing the arguably contradictory precedents). See supra notes 69 and 169. The Financing Order in Ordering Paragraph 53 as part of the LPSC Pledge prohibits any cause or right of action for damages against the individual commissioners in reliance thereon.

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Accordingly, while suit against the LPSC in federal court likely would be barred by the Eleventh Amendment, a suit against the individual LPSC commissioners or senior LPSC officers (in their official capacities) charged with enforcing LPSC actions, seeking declaratory and injunctive relief to remedy violations of the Federal Contract Clause and Federal Takings Clause might be maintained in federal court under Ex Parte Young, subject to the potential limitations discussed herein.¹⁸⁰

 ¹⁸⁰ Verizon Maryland, Inc., supra note 175, 535 U.S. at 645-46, 122 S. Ct. at 1760-61. But see, e.g., supra notes 172 and 179 and infra note 183, and Hall, supra note 168, 974 F. Supp. 2d at 955 (state officials with functionally legislative duties have absolute legislative immunity against injunctive as well as damage suits in their official capacities).

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In addition, as to any action taken by the Louisiana Legislature, while the Legislature itself would be immune from suit in federal court under sovereign immunity, a suit for prospective injunctive relief against violations of the federal constitution might be maintained in federal court under the Ex Parte Young exception against any state executive branch officer (if any exists in this context)¹⁸¹ charged with enforcement of the legislative action¹⁸², subject to the potential limitations discussed above.¹⁸³

 ¹⁸¹ The Ex Parte Young exception to the Eleventh Amendment applies only where the party defendant in a suit to enjoin the enforcement of an act alleged to be unconstitutional has some connection with the enforcement of the act or is specifically charged with the duty to enforce the statute and is threatening to exercise that duty. Hall, supra note 168, 974 F. Supp. 2d at 954. Thus, a governor cannot be enjoined by virtue of his general duty to enforce the laws, and an attorney general cannot be enjoined where he has no specific statutory authority to enforce the statute at issue. Hutto v. South Carolina Retirement Systems, 773 F.3d 536, 550 (4th Cir. 2014). See infra notes 172 and 174. 

¹⁸² Verizon Maryland, Inc. v. Public Service Comm’n of Maryland, 535 U.S. 635, 645-46, 122 S. Ct 1753, 1760-61 (2002); Keystone Bituminous Coal Assoc. v. DeBenedictis, 480 U.S. 470, 107 S. Ct. 1232, 94 L. Ed. 2d 472 (1987) (suit under Federal Takings Clause and Federal Contract Clause seeking to enjoin Pennsylvania officer from enforcing allegedly unconstitutional state statute); Lipscomb v. Columbus Municipal Separate School District; 269 F.3d 494 (5th Cir. 2001) (“Lipscomb”); Terrebonne Parish NAACP, supra note 174. 

¹⁸³ See, e.g., supra at notes 148, 169, 172, and 174.

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However, a suit in federal district court seeking an injunction or declaratory relief, at least with respect to LPSC action, before appeal proceedings in Louisiana state courts are final would cause such prospective challenge to be questioned as undue interference with state proceedings and thus appropriate for federal court abstention.¹⁸⁴ One type of federal court abstention that would be applicable is referred to as “Burford abstention” after the seminal case of Burford v. Sun Oil Co.¹⁸⁵ “Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result and the case then at bar or (2) where the exercise of federal review of the question in the case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”¹⁸⁶ There is a significant possibility that a federal district court would decide to abstain from deciding constitutional claims of the Bondholders in favor of the Louisiana state court appeal process, particularly with reference to action by the LPSC. First, although the claims address federal constitutional violations, the case itself is of minimal federal significance; no comprehensive federal scheme is involved, and the constitutional violations arise from the impairment or deprivation of state-derived property rights, specifically, those rights recognized by the Securitization Act.¹⁸⁷ Second, Louisiana provides a rapid and adequate system of judicial review of LPSC orders through a single district court, and then directly to the Louisiana Supreme Court.¹⁸⁸ Third, federal review would extend beyond the four corners of the LPSC supplemental order, and would have to include the Transaction Documents, related documents, and state constitutional law, to determine whether the factors to be considered warrant a conclusion that the federal constitution was violated.¹⁸⁹ Finally, because the relief requested would of necessity require the federal court to countermand the decision of the LPSC, charged with balancing the interests of the public and utilities in exercising its regulatory/ratemaking function, in favor of third parties (the Bondholders), federal adjudication could be considered to “unduly intrude into the processes of state government or undermine the state’s ability to maintain desired uniformity” of treatment of its citizens who are customers of various utilities.¹⁹⁰ Under such circumstances, there is a significant possibility that a federal district court would abstain from adjudicating the matter in favor of the state court system of administrative/judicial review.¹⁹¹

¹⁸⁴ NOPSI, 491 U.S. at 359 (“thus, there are some classes of cases in which the withholding of authorized equitable relief because of undue interference with state proceedings is the normal thing to do.”)(internal quotation marks and citation omitted). See State of Louisiana v. All Property and Casualty Insurance Carriers Authorized and Licensed to do Business in the State of Louisiana, No. 06-519 (M.D. La. Aug. 17, 2006) (order granting remand to state court). 

¹⁸⁵ 319 U.S. 315 (1943) (“Burford”); Occidental Chemical Corp. v. LPSC, 494 F. Supp. 2d 401, 414 (M.D. La. 2007). 

¹⁸⁶ NOPSI, 491 U.S. at 361 (internal quotation marks omitted, quoting Colorado River Water Conservation District v. U.S., 424 U.S. 800, 814 (1976)). 

¹⁸⁷ Compare Burford, 319 U.S. at 331 (claim that Texas oil and gas regulations deprived plaintiffs of due process was of minimal federal importance). 

¹⁸⁸ See infra note 200; compare Alabama Pub. Serv. Comm’n v. Southern R. Co., 341 U.S. 341, 71 S. Ct. 762, 95 L. Ed. 1002 (1951) (finding Burford abstention appropriate where state provided statutory right of appeal to single court, and appellate court had power to review and set aside any commission order). 

¹⁸⁹ Contrast NOPSI, 491 U.S. at 363 (“[N]o inquiry beyond the four corners of the Council’s retail rate order is needed to determine whether it is facially pre-empted by FERC’s allocative decree and relevant provisions of the Federal Power Act.”). 

¹⁹⁰ NOPSI, 491 U.S. at 363. 

¹⁹¹ Note the Insurance Carriers case discussed above followed a remand to state court by the federal district court after a hearing, following removal by one defendant insurance company of the state court declaratory judgment suit. See supra notes 125 and 167.

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If Louisiana legislation did allegedly violate the Federal or Louisiana Contract Clauses, then the Bondholders also could file suit for injunction in a Louisiana state district court as an exercise of original jurisdiction, the traditional mode of challenging unconstitutional legislative acts.¹⁹² Louisiana courts have recognized that it is a constitutional and proper exercise of a state district court’s original jurisdiction to issue preliminary and permanent injunctions to enjoin state officers from violating the United States and Louisiana constitutions.¹⁹³ Any subsequent legislative enactment modifying the Securitization Act or the Transaction will be presumed to be constitutional and the party challenging the validity of the statute will have the burden of overcoming that firmly established presumption by proving it is unconstitutional.¹⁹⁴

 ¹⁹² See Pope v. State of Louisiana, 1999-2559 (La. 2001), 792 So.2d 713; Marine Shale Processors, Inc. v. State of Louisiana, Dep’t of Envtl Quality, 551 So.2d 643 (La. App. 1 Cir. 1989), cert. denied, 553 So.2d 465 (La. 1989), overruled on other grounds by Matter of American Waste and Pollution Control Co., 580 So.2d 392 (La. App. 1 Cir. 3/11/91), reversed 588 So.2d 367 (La. 1991). In contrast, the United States Supreme Court has made clear that due to the Eleventh Amendment and states’ sovereign immunity federal courts cannot enjoin state officials from violating state law (including a state constitution), Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 121 (1989); Ladd supra note 170, 971 F.3d at 582 (6th Cir. 2020). We express no opinion as to the preferable forum. 

¹⁹³ See Star Enterprise v. State through Dep’t of Revenue, 95-1980 (La. App. 1 Cir. 1996), 676 So.2d 827, 833, writ denied, 96-1983 (La. 1997), 689 So.2d 1383. Cf. Whole Woman’s Health v. Jackson, 142 S. Ct. 522, 538 (2021) (per curiam) (noting that “many federal constitutional rights are as a practical matter asserted typically as defenses to state-law claims, not in federal pre-enforcement cases). Louisiana state courts also have jurisdiction for declaratory judgments. La. Code Civ. Proc. art. 1871. Louisiana state courts describe the factors a court must consider before issuing an injunction as whether the party shows (1) that the injury or loss it will suffer is irreparable, (2) that it is entitled to the relief sought, and (3) that it is likely to prevail on the merits. La. Code Civ. Proc. art. 3601. See also Louisiana Granite Yard Inc. v. LA Granite Countertops, LLC, 45,482 (La. App. 2 Cir. 2010), 47 So.3d 573, 581; Denta-Max v. MaxiCare Louisiana, Inc., 95-2128 (La. App. 4 Cir. 1996), 671 So.2d 995 (same). The right to a permanent injunction must be proved before a preliminary injunction may issue in Louisiana state court. Equitable Petroleum v. Cent. Transmission, 431 So.2d 1084 (La. App. 2d Cir. 1983). 

¹⁹⁴ West Baton Rouge Parish Council v. Tullier, 2018-1722 (La. App. 1 Cir. 2021), 317 So.3d 782, 788-89; Carver v. La. Dep’t of Public Safety, 2017-1340 (La. 2018), 239 So.3d 226, 230-31; Krielow v. Louisiana Dep’t. of Agriculture, 2013-1106 (La. 2013), 125 So.3d 384, at 388; Insurance Carriers, 937 So.2d at 319; Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976); c.f. National R.R., 470 U.S. at 463. See also United Auto., Aerospace, Agricultural Implement Workers of Am. Int’l Union v. Fortuño, 633 F.3d 37, 42-45 (1st Cir. 2011) (holding that even if the state is alleged to have impaired a public contract to which it is a party, the plaintiff has the burden to prove that the impairment was not reasonable and necessary to serve an important government purpose, otherwise governments would be forced to endure costly discovery each time a plaintiff advanced a plausible allegation of a substantial impairment). See Cranston Police Retirees Action Comm. v. City of Cranston, 208 A.3d 557, 573-74 (R.I. 2020) (collecting cases discussing whether burden of production shifts to the state regarding reasonableness and necessity after a finding of substantial impairment). Compare supra notes 13 and 111. However, this presumption of constitutionality does not apply when a statute infringes on a fundamental right. State v. Spell, 2021-KK-00876 (La. 05/13/2022), ___ So.3d ___ (court slip op. at 5) (free exercise of religion) (citing United States Supreme Court and Louisiana Supreme Court cases).

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Additionally, if an LPSC supplemental order did allegedly violate the Federal or Louisiana Contract Clauses, the Louisiana Supreme Court has specifically recognized the authority of a district court having appellate jurisdiction over an LPSC order to entertain a petition for preliminary injunctive relief and to preliminarily enjoin the order under review, where such injunction is necessary to avoid irreparable injury or enjoin a constitutional violation.¹⁹⁵ Significantly, preliminary injunctive relief is recognized as particularly useful in a rate decrease case initiated by the LPSC.¹⁹⁶ The Louisiana Supreme Court also stated that a showing of irreparable injury is not necessary when the deprivation of a constitutional right is involved.¹⁹⁷ The breadth of that assertion has been challenged, however.¹⁹⁸

It would be advisable for Bondholders to intervene and raise any constitutional issues as an intervenor in the LPSC’s proceedings involving any supplemental order pertaining to the Financing Order. The Securitization Act specifies that challenges involving legal rights affected by the LPSC orders within the scope of the Securitization Act are to be heard, as an exercise of appellate jurisdiction, by the same district court in East Baton Rouge Parish that would otherwise review LPSC orders.¹⁹⁹ Judicial review of LPSC orders is governed by Article IV, Section 21(E) of the Louisiana Constitution, which provides a right of appeal to the East Baton Rouge Parish district court, and thereafter directly to the Louisiana Supreme Court, in a manner to be prescribed by the Legislature.²⁰⁰ Under the Securitization Act, an aggrieved party or intervenor before the LPSC has a remedy regarding a supplemental order (pertaining to this Financing Order), by filing an appeal to the district court no later than fifteen days after the order becomes effective. The district court is obliged under the Securitization Act to afford the case precedence over all other civil cases in the court and to move it to trial as speedily as possible. Appeal from the district court’s decision is taken directly to the Louisiana Supreme Court.

¹⁹⁵ South Central Bell Telephone Company v. LPSC, 555 So.2d 1370 (La. 1990) (“SCB”) 

¹⁹⁶ Id. at 1373; see also Entergy Gulf States, Inc. v. LPSC, 730 So.2d 890, 897 (La. 1999). 

¹⁹⁷ SCB, 555 So.2d at 1373 (“when a violation of state property guarantees is shown, a court may enjoin the constitutional violation”); accord Faubourg Marigny Improvement Ass’n v. City of New Orleans, 195 So.3d 606, 616-17 (La. App. 4th Cir. 2016) (jurisprudential rule requires three findings before plaintiff can circumvent the irreparable harm requirement: conduct to be enjoined violates a prohibitory law (including the constitution); the injunction seeks to restrain conduct, not order it; and plaintiff meets the low burden of making a prima facie showing that he is entitled to the relief sought); Zeringue v. St. James Parish School Board, 130 So.3d 356, 359 (La. App. 5th Cir. 2013) (entitled to injunctive relief without the requisite showing of irreparable injury when the conduct sought to be restrained is unconstitutional). This exception to the irreparable harm requirement applies only when the injunction sought is prohibitory, not mandatory. Yokum v. Pat O’Brien’s Bar, 99 So.3d 74, 81 (La. App. 4th Cir. 2012). 

¹⁹⁸ Kruger v. Garden District Association, 779 So.2d 986 (La. App. 4 Cir. 2001) (“we take a restrictive review of this judicially created exception” to the need of showing irreparable injury, perhaps limiting exception to vested “state property” rights); compare Elrod v. Burns, 427 U.S. 347 (1976) (violation of First Amendment rights produces irreparable injury); Mitchell v. Cuomo, 748 F.2d 804 (2d Cir. 1984) (violation of Eighth Amendment rights produces irreparable injury); Yokum, supra note 197. But see supra note 148. 

¹⁹⁹ La. R.S. 45:1228(H). See Daily Advertiser v. Trans-La (A Division of Atmos Energy Corp.), 612 So.2d 7, 12 (La. 1993) (antitrust, contract, breach of fiduciary duty and fraud claims that concerned manipulation of fuel adjustment clauses fell within original jurisdiction of LPSC, and district court had no original jurisdiction over such claims); CLECO v. LPSC, 601 So.2d 1383, 1386 (La. 1992) (discussing jurisdictional divide between district court and LPSC adjudicatory jurisdiction); Louisiana Power & Light v. LPSC, 343 So.2d 1040, 1042 (La. 1977) (“LP&L”) (discussing requirement to contest validity of LPSC action before LPSC); Frith v. Southwest Ouachita Waterworks, Inc., 207 So.3d 1121 (La. App. 2d Cir. 2016) (doctrine of primary jurisdiction obligated state district court to stay judicial proceedings related to plaintiffs’ claims that fall outside LPSC’s exclusive jurisdiction until the LPSC proceeding over plaintiffs’ other claims is ended); compare Cajun for Clean Water, LLC v. Cecelia Water Corp., 206 So.3d 1118 (La. App. 3d Cir. 2016) (state district court, and not LPSC, has original jurisdiction for damages claims). 

²⁰⁰ Louisiana Power and Light Co. v. LPSC, 369 So.2d 1054, 1058 (La. 1979) (Louisiana Constitution “makes it clear that any judgment of a district court sitting in review of actions” by the LPSC is directly appealable to the Louisiana Supreme Court). See Marco Outdoor Advertising, Inc. v. Regional Transit Authority, 489 F.3d 669 (5th Cir. 2007) (dismissing federal claim because Louisiana state courts provide an adequate procedural remedy for the alleged deprivation of contract property interest); supra note 188. Although we are not aware of a reported judicial decision addressing this question, we believe that the Securitization Act’s venue provision will likely apply in this context, instead of the venue stated in La. R.S. 45:1198.1 which provides that whenever the LPSC seeks the judicial enforcement of an order entered by it, the suit shall be brought in the parish of the domicile of the utility not in compliance with the order. Cf. Opelousas, supra note 4, 105 So.3d at 30-35 (discussing but not deciding alternative venue arguments in challenge to utility’s rates).

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The Constitutional Claims on Direct Review

An order by the LPSC that rescinds or amends the Financing Order or otherwise creates an impairment or taking will be subject, as discussed above, to a right of appeal established by the Louisiana Constitution in Article IV, Section 21(E). This constitutional right of appeal is provided to aggrieved parties and intervenors before the LPSC to the state district court in East Baton Rouge Parish. The Constitution provides a right of direct appeal to the Louisiana Supreme Court from any judgment by the district court in connection with the judicial review of any action taken by the LPSC.²⁰¹ The appellate review by the Louisiana Supreme Court of orders of the LPSC extends to both the law and the facts.²⁰²

As also discussed above, the Louisiana Supreme Court, recognizing the constitutional authority of the LPSC, has established in a long line of cases a standard of judicial review deferential to LPSC orders. First, there is a presumption that LPSC orders are legal and proper, and it is the high burden of the party attacking an LPSC order to prove that it is defective.²⁰³ The Louisiana Supreme Court has summarized this deferential standard of review by observing that “an order of the [LPSC] should not be overturned on review unless it is arbitrary, capricious, abusive of its authority, or not reasonably based upon the evidence presented.”²⁰⁴ However, the LPSC is not entitled to deference in its interpretation of legislative statutes and judicial decisions.²⁰⁵ Also, when an LPSC order adopts an agreement (a joint proposal by LPSC Staff and a utility) between a utility and the LPSC, the court cannot unjustifiably disregard the parties’ intentions or the plain language of the agreement to uphold the LPSC’s later interpretation of the initial order, in contrast to the normal deference accorded to the LPSC’s interpretation of its own past orders.²⁰⁶

 ²⁰¹ See supra note 200. 

²⁰² Louisiana Power & Light Co. v. LPSC, 237 So.2d 673, 675 (La. 1970). 

²⁰³ ELL, 221 So.3d at 805 (La. 2017) (citations omitted); Gordon v. Council of City of New Orleans, 9 So.3d 63, 72 (La. 2009) (“Gordon”); Global Tel* Link, 707 So.2d at 33-34; LP&L, 343 So.2d at 1044. See supra note 11. 

²⁰⁴ Gordon, 9 So.3d at 72; Charles Hopkins DBA Old River Water Company v. LPSC, 2010-CA-0255, 41 So.3d 479 (La. 2010) (“Old River”); Washington St. Tammany Electric Coop. v. LPSC, 959 So.2d 450, 455 (La. 2007); Eagle Water, Inc. v. LPSC, 947 So.2d 28, 33 (La. 2007); Voicestream, 943 So.2d 349, 358 (La. 2006); Entergy Gulf States, Inc. v. LPSC, 730 So.2d 890, 897 (La. 1999). 

²⁰⁵ Gordon, 9 So.3d at 72; Citgo Petroleum v. LPSC, 815 So.2d 19, 23 (La. 2002); Washington – St. Tammany Electrical Coop. v. LPSC, 671 So.2d 908, 912 (La. 1996). Compare supra note 14. 

²⁰⁶ Entergy Gulf States v. LPSC, 766 So.2d 521, 527 (La. 2000); Entergy Gulf States, Inc. v. LPSC, 730 So.2d 890, 897-98 (La. 1999).

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Despite this general deferential standard, the Louisiana Supreme Court has, in a series of decisions, demonstrated a willingness to overturn LPSC actions that unreasonably impinge the property rights of third parties. These decisions have in large measure applied a general rule of reasonableness.²⁰⁷ As discussed below in detail, these decisions on reasonableness are influenced by the consideration of whether an unconstitutional impairment or taking has occurred, but subsume the constitutional analysis into the concept of reasonableness. In part, this style of analysis derives from the jurisprudential balance regarding the state’s police power, as “the police power extends only to measures that are reasonable.”²⁰⁸ Similarly, the concluding inquiry of the analysis of a Federal Contract Clause case under the Energy Reserves test ends with the court’s judgment as to the reasonableness of the governmental action. The Louisiana Supreme Court’s apparent difference in language in its line of cases reviewing LPSC actions on appeal by emphasis on “unreasonableness” in practice reflects, explicit or not, the fourth step of the Energy Reserves test as to whether the challenged legislation is based upon “reasonable” conditions and is of “appropriate” character. Further, an exercise of the state’s police power “does not justify an interference with constitutional rights which is entirely out of proportion to any benefit redounding to the public.”²⁰⁹ Thus the Louisiana Supreme Court’s standard of review of LPSC actions incorporates the constitutional principles involved in the Contract Clause and Takings Clauses jurisprudence, regardless of whether the Court’s opinion contains an express enumeration of the traditional constitutional analysis.

 ²⁰⁷ Global Tel* Link, 707 So.2d at 33 (an LPSC order is arbitrary and capricious only when the record does not and could not reasonably support its findings); Old River, supra at note 204, at 5 (same); GSU, infra at note 222, at 1264 (unreasonable LPSC order); Central Louisiana Electric Company v. Louisiana Public Service Commission, 373 So.2d 123, 132 (La. 1979) (same effect); Railway Express Agency v. Louisiana Public Service Commission, 145 So.2d 18, 33 (La. 1962) (where the findings and conclusions of the LPSC do not conform to the law and are not supported by the evidence –– so that the order of the LPSC is unreasonable –– the court may reverse or vacate the LPSC’s order). See also, Eagle Water, Inc. v. LPSC, 947 So.2d 28, 33 n.4 (La. 2007) (vacating LPSC order as arbitrary and capricious because record evidence necessary to support LPSC’s decision was absent). 

²⁰⁸ Morial v. Smith & Wesson Corp., 785 So.2d 1, 17-18 (La. 2001) (“Morial”). See supra notes 85 and 132. 

²⁰⁹ Morial, 785 So.2d at 15. Compare Standard Oil Co. of Louisiana v. LPSC, 97 So. 859, 864 (La. 1923) (in those extreme cases in which some fundamental right is invaded or denied, the courts may intervene to compel a recognition of constitutional guarantees).

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An important case illustrating this combination of analyses is Louisiana Gas Service Co. v. LPSC.²¹⁰ The case arose out of a contract between the Town of Arcadia and a water company wherein the town asked the water company to construct facilities for industry the town was trying to attract. The water company and the town then jointly applied for and received from the LPSC an increase in the water rates charged to the citizens of the town, as such increase was needed to finance the new construction. Subsequently, however, some residents of the town complained, and the town went back to the LPSC and requested that the rates be lowered. The LPSC lowered the rates, and the water company appealed. The Louisiana Supreme Court, in the first instance, found that the town had breached its contract with the water company. Then, the Louisiana Supreme Court went on to address the LPSC’s order:

We are cognizant that under its powers . . . the [LPSC] was not inhibited from acting in the public interest; it was not bound by the contract between the Water Company and the Town of Arcadia. However, the Commission’s action in reducing the water rates to be paid by the citizens of the Town of Arcadia – provoked at the instance of some citizens – and causing the violation of the obligation of contract was unreasonable and is subject to reversal.

* * * * *

The final order of the Commission . . . had the effect of bringing about an annual loss of $13,500.00 to the Water Company . . . . The Water Company was precluded from securing the minimum $28,500.00 additional revenue required after it had expended and parted with $116,000.00 for expansion. We find that the final action of the [LPSC] was unreasonable and arbitrary and constituted an abuse of power subject to reversal by the court.²¹¹

The Louisiana Supreme Court expressly noted in Louisiana Gas Service that “the present suit is not in a real sense a rate case . . . . Here, we are concerned with a contractual obligation, and a determination must be made as to whether such obligation was impaired, and if so whether it could have been impaired.”²¹² The Louisiana Supreme Court’s analysis in Louisiana Gas Service initially begins with the Louisiana Contract Clause (under the Louisiana Constitution of 1921) and the well-recognized principle that “the rate-making power, whether exercised by agreement or by the fiat of law, is within the police power of the state as one of the state’s highest attributes of sovereignty, and that this power can never be abridged nor irrevocably surrendered where there is, as in this state, constitutional inhibition.”²¹³ Nonetheless, “[t]hough the obligation of contracts must yield to the proper exercise of the police power, and vested [contract] rights cannot inhibit the proper exertion of the power, it must be exercised for an end which is in fact public and the means adopted must be reasonably adapted to the accomplishment of that end and must not be arbitrary or oppressive.”²¹⁴ The Louisiana Supreme Court expressly found that the contract existed and was impaired. Nonetheless, as noted above, the Louisiana Supreme Court’s ultimate holding in vacating the LPSC’s order was based on the conclusion that the LPSC’s action in reducing rates was unreasonable.

²¹⁰ 162 So.2d 555 (La. 1964) (“Louisiana Gas Service”). 

²¹¹ Id. at 564 (citations omitted) (emphasis added). 

²¹² Louisiana Gas Service, 162 So.2d at 562. 

²¹³ Id. at 563 (citations omitted). See supra notes 19 and 134. 

²¹⁴ Id.

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The Louisiana Supreme Court took the same approach of merging the constitutional analysis into the reasonableness analysis under the judicial review of LPSC orders in Conoco, Inc. v. LPSC.²¹⁵ In Conoco, an oil company helped to finance the construction of a pipeline in return for the pipeline company’s promise that the oil company, as a shipper on the pipeline, would be charged a set fee. The LPSC, however, ordered that the oil company pay a fee higher than the agreed-upon fee, namely the same fee charged to all other oil companies who used the pipeline. The oil company appealed the order.

The Louisiana Supreme Court began by noting that any person entering into contracts with a public utility is subject to the uncertainty of regulatory authority, and specifically noted that Louisiana’s constitutional prohibition against the impairment of contracts does not vary this precept.²¹⁶ However, the Louisiana Supreme Court went on, citing the Louisiana Takings, Contract, and Due Process Clauses, to opine that just because the LPSC had the authority to fix the pipeline fees “does not mean the [LPSC] is free to change the rates without carefully considering whether such a change deprives Conoco of due process and whether such a change is necessary to promote public good.”²¹⁷ Thus, the Louisiana Supreme Court held that “[a] valid contract cannot be modified by the [LPSC] without a clear finding that the abrogation is exercised for a public end and is reasonably necessary to the accomplishment of that end.”²¹⁸ As the LPSC had not made the required findings, the Louisiana Supreme Court reversed and remanded.

 ²¹⁵ 520 So.2d 404 (La. 1988) (“Conoco”). 

²¹⁶ Id. at 407. 

²¹⁷ Id. at 408. 

²¹⁸ Conoco, 520 So.2d. at 409.

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The Louisiana Supreme Court framed the ratemaking case in Conoco as presenting two issues: first, whether the contract is impaired by the tariff, and second, if the contract is impaired, should the contract yield to the LPSC’s order, presenting a conflict between the police power of the State to regulate public utilities and the constitutional restrictions against the impairment of obligations. Although contractual obligations must yield to the ratemaking power of the State when the public interest requires it, the constitutional restrictions against the impairment of obligations require that contracts not be abrogated without careful consideration of all the circumstances and a clear showing that the public interest requires it. The ratemaking power should yield to valid contracts whenever that is possible and consistent with the public good.²¹⁹ The Louisiana Supreme Court’s concluding analysis again returned to the reasonableness standard:

Nevertheless, the fact that contracts may be adjusted in appropriate circumstances does not mean that it is always proper to do so. Though the obligations of contracts must yield to a proper exercise of the police power, that power must be exercised for an end which is in fact public, and the means must be reasonably adapted to the accomplishment of that end and must not be arbitrary or oppressive. Moreover, the [LPSC’s] power and authority to fix rates is limited always by due process concerns. Property, including obligations under valid contracts, cannot be taken without due process. . . . [The LPSC’s] rationale has some merit to it, but unfortunately it is flawed because it leaves out a crucial component of the calculation. That component is Conoco’s constitutional rights to its property and right not to have its contract impaired absent necessity. . . . [W]e also hold the rate-making aspect of the police power is limited by restrictions against impairing contracts. A valid contract cannot be modified by the [LPSC] without a clear finding that the abrogation is exercised for a public end and is reasonably necessary to the accomplishment of that end. In the case at hand, we find that the [LPSC] failed to consider whether [the oil company] has received just compensation for its role in constructing the pipeline.²²⁰

The Louisiana Supreme Court’s holding was to vacate the LPSC’s order because the LPSC acted unreasonably and arbitrarily, under the standard that there was an absence of a clear finding by the LPSC that the abrogation of Conoco’s contract was exercised for public end and was reasonably necessary to the accomplishment of that end.²²¹

 ²¹⁹ Id. at 407. 

²²⁰ Id. at 408-409 (emphasis added). 

²²¹ Conoco, 520 So.2d. at 409.

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In Gulf States Utilities Company v. Louisiana Public Service Commission,²²² the Court summarized its impairment of contract jurisprudence as applied to the LPSC’s ratemaking powers. In a ratemaking case, a utility’s fuel adjustment clause was modified. The Louisiana Supreme Court began by noting that the LPSC’s constitutional jurisdiction affords broad, independent and regulatory powers over public utilities. Citing Conoco and Louisiana Gas Service, the proper exercise of police power was presented as the power to regulate reasonably the actions of its citizens in order to protect or promote the public welfare. Contracts may not be abrogated by the exercise of police power unless it is for public end and the result is reasonably adapted to that end with careful consideration of all circumstances and a clear showing that the public interest requires such abrogation. Finally, the means by which a contract is impaired pursuant to state powers must not be arbitrary, unreasonable or oppressive.²²³ In reinstating the modification order by the LPSC, the Louisiana Supreme Court distinguished Louisiana Gas Service as vastly different:

In that case the [LPSC] approved new rates which were expressly designed to provide revenues for specific capital improvement that the parties then constructed in reliance on the revenues. The LPSC’s subsequent disallowance of the rate increase constituted detriment to the parties and was an arbitrary and unreasonable abuse of power.²²⁴

We particularly note that the Louisiana Supreme Court, although it expressly decided Conoco in light of the Louisiana Contract Clause, did not give the LPSC order under review the extreme deference that the precedents suggest is owed to the government’s action when a Federal or Louisiana Contract Clause claim is adjudicated. Rather, Conoco sets forth a heavy burden for the LPSC to meet in entering orders that “modify” (not “substantially impair”) contractual obligations. When Conoco is read in tandem with Louisiana Gas Service, the resulting principle is that in the narrow context of judicial review of LPSC orders, property rights and related constitutional protections are incorporated into the “reasonableness” review of the courts, rather than analyzed in light of the particular limitations of the separate and distinct claims for constitutional violations. Again, federal and state court jurisprudence under the Federal Contract Clause and the Louisiana Contract Clause asks only whether the challenged legislature action is appropriate and reasonable.

²²² 633 So.2d 1258 (La. 1994) (“GSU”). 

²²³ Id. at 1258-59 (citations omitted). 

²²⁴ Id. at 1264 (emphasis added).

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Subsequently, the Louisiana Supreme Court applied this principle in Bowie v. LPSC.²²⁵ Bowie involved the application of an LPSC rule, which restricted the merger by or transfer of assets of a utility, to a transfer of stock in the utility. The Louisiana Supreme Court, after finding that the subject matter of the rule fell within the constitutional jurisdiction of the LPSC to regulate utilities, nonetheless interpreted the rule more narrowly than had the LPSC, and based upon this interpretation found it inapplicable to the case before the bar. The Louisiana Supreme Court cited two reasons for declining to defer to the LPSC’s construction of its own rule: “First, because the [LPSC]’s action infringes to some extent upon the stock owner’s rights to contract and to dispose of their private property, the rule must be strictly construed and only applications plainly warranted by its language may be made;” and “[s]econd, even if the rules could be interpreted to apply to transfers of closely held corporate stock, under the circumstances of the present case the [LPSC]’s orders depriving such persons of the right to dispose of private property would constitute arbitrary action and a violation of the guarantees of due process.”²²⁶

Thus Bowie, like Louisiana Gas Service and Conoco, clearly states that protection of private property, due process, and similar constitutional concerns are part of the judicial review process where LPSC orders are concerned. More importantly, Bowie is a demonstration that the deference accorded legislative pronouncements under Federal and Louisiana Contract Clause analyses has not been applied by the Louisiana Supreme Court on direct review of an LPSC action.

The LPSC acknowledges in Ordering Paragraph 53 of the Financing Order that it would be unreasonable, arbitrary, and capricious for the LPSC to take any action contrary to the covenant and pledge set forth in the Financing Order after issuance of the Bonds.

Conclusion and Opinions

The outcome of any claim that an otherwise proper exercise by the State of Louisiana’s police power that interferes with the value of the Storm Recovery Property is an unconstitutional impairment or taking and is unreasonable, arbitrary, capricious, and an abuse of authority would likely depend on multiple factors, such as the state interest furthered by that interference, the extent of financial loss to Bondholders caused by that interference, and the extent to which courts would consider that Bondholders had a reasonable expectation that changes in government policy, statutes and orders would not interfere with their investment. In our view, the most important determination will be whether the reserved powers doctrine invalidates the Pledges.²²⁷ The State having intended to bind itself irrevocably for the term of the Bonds by the Pledges, was it valid for the State to do so?

 ²²⁵ 627 So.2d 164 (La. 1993), supra note 6. 

²²⁶ Id. at 169. 

²²⁷ Louisiana is not unique in this regard. The reserved powers doctrine is equally critical to this issue regarding subsequent action by a state legislature harmful to securitization transactions in other states. The Financing Order provides in Conclusions of Law Paragraph 4 that the LPSC has authority to approve the Financing Order under the Securitization Act and the LPSC’s constitutional plenary power.

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Reserved Powers Doctrine

The reserved powers doctrine as applied to the Pledges and the Transaction requires an initial inquiry concerning the ability of the State of Louisiana (through the Legislature and the LPSC) to enter into agreements that limit its power to act in the future. The reserved powers doctrine has long established that a state is without power to enter into binding contracts forbidding the exercise of its police power in the future.²²⁸ It has also been long recognized that attempts to define the police power have been unsuccessful, and that it is not always easy to tell on which side of the line separating contracts that relate to property rights protected by the Constitution from those not so protected a particular case is to be put.²²⁹ Nonetheless, while the scope of these reserved powers has not been precisely defined by the courts, as a general proposition it is undeniable that the State’s utility ratemaking power is within the reserved police power.²³⁰ The historical application of the reserved powers doctrine attempted a distinction among the powers of the State – the police power and the power of eminent domain could not be contracted away, but the State could bind itself in the future non-exercise of the taxing and spending powers.²³¹ The core nature of the police power as applied to contracts of a sort themselves injurious to public morals or public safety or health, such as prohibitions of lotteries, liquor sales and unsafe commercial operations, admittedly are not implicated by the Transaction. The Pledges certainly cannot be construed to contract away any power to regulate health or safety matters pertaining to the transmission of electricity. But the Supreme Court in Blaisdell expressly recognized that the reserved police power extends to economic matters, and cited the State’s legislative power to regulate, and thus to modify, utility rates as an illustration.²³²

 ²²⁸ U.S. Trust, 431 U.S. at 23-24; Melendez supra note 89, 16 F.4th at 1020-21 (2d Cir. 10/28/2021) (discussing history of cases); United Healthcare Ins. Co. v. Davis, 602 F.3d 618 at n.7 (5th Cir. (La. ) 2010); State ex rel. Porterie v. Walmsley, 162 So. 826, 837 (La. 1935). See supra pages 25-26, 29-30, and 37-38. 

²²⁹ Stone v. Mississippi, 101 U.S. 814, at 818, 820-21 (1879); see Matsuda v. City and County of Honolulu, 512 F.3d 1148 (9th Cir. 2008). 

²³⁰ Supra notes 132-134. Compare In re Halo Wireless, Inc., 684 F.3d 581 (5th Cir. 2012) (state public utility proceedings are within the exception to the bankruptcy automatic stay for governmental units enforcing the state’s police and regulatory power). 

²³¹ U.S. Trust, 431 U.S. at 24 (a state’s “power to enter into effective financial contracts cannot be questioned”). Compare Stone v. Mississippi, 101 U.S. 814, 817-18 (1880) (state cannot contract away its police powers); West River Bridge Co. v. Dix, 47 U.S. 507, 532-33 (1848) (state cannot contract away its power of eminent domain). 

²³² Blaisdell, 290 U.S. at 438.

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Ultimately, the Supreme Court has acknowledged that “formalistic distinctions” as to the nature of the state’s power being exercised are not dispositive, but they contain an element of truth.²³³ The issue is not the State’s reserved power to regulate (change) ordinary utility rates generally, but rather the possible future claim by the State of the police power to regulate (adversely change) the Transaction (including such aspects as the specific dedicated charges and the true-up mechanism) ̶ without compensation.²³⁴ It is difficult to predict in advance a circumstance involving an impairment of the Pledges that involves the State’s ability to legislate for the general public welfare or morals or to preserve health and safety, as opposed to an impairment justified by a future economic exigency within the State of Louisiana.²³⁵ Thus the subject matter here is financial, albeit not the State’s own debt. The goal (end) of any State action violating the Pledges will be the critical aspect to be tested. By analogy, purely financial obligations of a state do not fall within the reserved powers doctrine, and thus are subject to the Federal Contract Clause.²³⁶ In the same way, for consideration a state may, in the exercise of reasonable discretion, surrender a part of the state’s power of taxation.²³⁷

 ²³³ U.S. Trust, 431 U.S. at 24. 

²³⁴ Lipscomb, 269 F.3d at 504; United Gas Corp. v City of Monroe, 109 So.2d 433 (La. 1958) (contract upheld between city and utility, but remains subject to legislature’s police power). 

²³⁵ The Federal Contract Clause jurisprudence provides that an impairment in response to an economic emergency must be a reasonable and specific response to the conditions, justifiable by a significant and legitimate public purpose dealing with a broad, generalized economic problem. Energy Reserves, 459 U.S. at 411; Allied Structural, 438 U.S. at 250; see supra notes 91-92; Treigle v. Acme Homestead Ass’n, 297 U.S. 189 (1936) (Louisiana law that modified the existing withdrawal rights of the members of a building and loan association held invalid under the Federal Contract Clause); W. B. Worthen Co. v. Kavanaugh, 295 U.S. 56 (1935) (“W. B. Worthen”); Blaisdell, 290 U.S. at 426. In Treigle and W. B. Worthen, the Supreme Court struck down other laws passed in response to the Great Depression’s economic emergency, contemporaneously to upholding the law in Blaisdell. In W. B. Worthen, the United States Supreme Court reversed the decision of the Arkansas Supreme Court upholding the validity of legislative enactments (accompanied by a legislative declaration of an emergency) which the United States Supreme Court viewed as taking “from the mortgage [securing bonds issued by municipal improvement districts pursuant to state law] the quality of an acceptable investment for a rational investor” by making it much more difficult and time consuming to foreclose upon the collateral posted as security for the mortgage. 295 U.S. at 60. In this instance, the Bondholders have the counter-argument that the Pledges and the Transaction themselves are in direct response to significant natural disasters (hurricanes and winter storms). But on the other hand, as the Supreme Court has clarified, “the existence of an emergency and the limited duration of a relief measure … cannot be regarded as essential in every case.” U.S. Trust, 431 U.S. at 23 n.19, quoted in Los Angeles, supra note 91, 10 F.4th at 916 (rejecting Federal Contract Clause claim challenging COVID-19 pandemic eviction moratorium’s restrictions on the grounds for eviction, rent deferment, and elimination of late fees and interest). Compare supra note 29 (emergency exception to Federal Takings Clause) and supra notes 63 and 96 (Federal Contract Clause and emergencies) and Heights Apartments, LLC v. Walz, 30 F.4th 720, 730 (8th Cir. 04/05/2022) (emphasizing that challenged executive orders mandating COVID-19 eviction moratorium had no definite termination dates). 

²³⁶ Lipscomb, 269 F.3d at 505, 512 [“[p]urely financial obligations … do not surrender aspects of the State’s sovereignty, and thus are subject to the Contract Clause”). The ability to create financial inducements to encourage investment in the state is a valid exercise, not a surrender, of the State’s police power. See Lipscomb, 269 F.3d at 512 (although “renewable forever” leases of state school lands eventually resulted in nominal rents, State’s offer of such leases did not^-surrender an essential attribute of State sovereignty but instead served the public interest by bringing in “rental income and encourage[ing] development that allowed the imposition of property taxes for the benefit of schools”); Local Div. 589, Amalgamated Transit Union v. Massachusetts, 666 F.2d 618, 642 (1st Cir. 1981) (per curiam) (describing U.S. Trust as presenting “a paradigm of the type of protection that the Contract Clause was designed to offer — a protection given to those who invested money, time and effort against loss of their investment through explicit repudiation”). The United States Supreme Court has recognized that “[w]hatever the propriety of a State’s binding itself to a future course of conduct in other contexts, the power to enter into effective financial contracts cannot be questioned.” U.S. Trust, 431 U.S. at 24. See supra notes 106 and 231. As noted by the Supreme Court, “[i]n almost every case, the Court has held a government unit to its contractual obligations when it enters financial or other markets.” Energy Reserves, 459 U.S. at 412 n.14 (citing U.S. Trust, 431 U.S. at 25-28; W. B. Worthen, 295 U.S. 56 (1935); and Murray v. Charleston, 96 U.S. 432 (1878)). In W. B. Worthen, discussed supra note 235, the United States Supreme Court reversed a decision of the Arkansas Supreme Court upholding the validity of legislative enactments affecting bonds mortgages which were accompanied by a legislative “declaration of an emergency, which was stated to endanger the peace, health and safety of a multitude of citizens.” In Murray, the United States Supreme Court reversed a judgment of the Supreme Court of South Carolina upholding an ordinance of the City of Charleston which permitted the City to withhold, as a tax, a portion of the interest that was otherwise payable with respect to bonds issued by the City. This “tax” was held to violate the Federal Contract Clause: “no municipality of a State can, by its own ordinances, under the guise of taxation, relieve itself from performing to the letter all that it has expressly promised to its creditors.” 96 U.S. at 448. 

²³⁷ Stone v. Mississippi, 101 U.S. 814, 820 (1879). By example, in Liter v. City of Baton Rouge, 245 So.2d 398 (La. 1971), the constitutionality of sales and use taxes by a political subdivision (city) was challenged on the basis that the language of the taxing authority granted to the political subdivision was so plenary and extraordinary as to be equivalent to the surrender and abandonment of the Legislature’s taxing power. The Louisiana Supreme Court held that the grant was a permissible delegation. It was then further urged by the challengers that the statute was unconstitutional as amounting to a surrender of the Legislature’s taxing power because the statute authorized the funding of the sales tax revenues into bonds, and that when they are so funded they cannot be modified or reduced. The statute declared that, when the obligations payable from the sales tax revenues shall have been issued, the statute and the ordinance or resolution imposing the tax shall be irrevocable until such obligations shall have been paid in full and shall not be subject to amendment in any manner which would impair or jeopardize the rights of the holders. It was argued that these provisions amounted to an impermissible surrender of the taxing power. The Louisiana Supreme Court rejected this argument: “We are of the opinion that pledge of taxes for a limited time does not amount to a ‘surrender’ of the taxing power as that term is used in the constitution. Of course, if the irrevocability were unlimited or the period is so long to make it virtually unlimited, then it is conceivable that such an enactment might be held to constitute at least a partial surrender of the taxing power. That situation is, however, not presented here.” Id. at 405. Compare State et rel. Porterie v. Walmsley, 162 So.826, 839 and 864 (La. 1935) (special tax supporting payment of bonds).

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Indeed, the ratemaking power is not a state power whose future action must always be unfettered by prior state actions. As an example, the LPSC has full authority to fix a rate subject to an automatic revision dependent upon a future event.²³⁸ Moreover, the prohibition against retroactive ratemaking is another example of a limitation on future LPSC action attempting to change a prior LPSC ratemaking order. It is a fundamental doctrine that utility rates are exclusively prospective in application. One result of this doctrine is that the LPSC may not order a rate increase that is retroactive so as to contravene a prior ratemaking order, in order to recoup prior utility losses.²³⁹ Of greater applicability to our analysis, prohibited retroactive ratemaking also occurs when a utility is required to refund revenues collected pursuant to its lawfully established rates. A utility is entitled to rely on a final ratemaking order, and the revenues collected under the lawfully imposed rates become the property of the utility and cannot rightfully be made the subject of a refund.²⁴⁰ Of course, normally the utility’s reliance on the final ratemaking order is limited until a new rate in lieu thereof is fixed by the LPSC for prospective effectiveness;²⁴¹ normal ratemaking orders do not contain provisions akin to the LPSC Pledge in the Financing Order.

 ²³⁸ United Gas Pipe Line Company v. LPSC, 164 So.2d 343, 332 (La. 1964). 

²³⁹ SCB, supra note 195, 555 So.2d at 1374. 

²⁴⁰ Opelousas, supra note 4, 105 So.2d at 38; Entergy Gulf States, Inc. v. LPSC, 730 So.2d 890, 920 (La. 1999). 

²⁴¹ Id. (Entergy Gulf)

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The critical questions thus become whether the LPSC has the inherent power to irrevocably agree that it will not modify a rate for a specified period of time (more precisely, that it will not modify its pledge to automatically adjust the Storm Recovery Charges periodically to fully service the Bonds), and whether the Legislature has the power to further authorize that action (as it does in the Securitization Act).²⁴² In the Transaction, the LPSC has clearly expressed its intent in the Financing Order to do so; the question is whether that action is permissible under the reserved powers doctrine. One factor impacting this question is that the Financing Order is in response to the significant damage caused by multiple storms and, with its storm reserve, the great likelihood of future storm damage, and the Securitization Act, including its authorization of the Pledges, was in response to Hurricanes Katrina and Rita (and the likelihood of future storms such as those addressed by this Financing Order), the former causing one of the largest natural disasters in American history. Thus the Pledges can be viewed as an expression of the State’s police power. Every ratemaking order inherently surrenders some reserved power, due to the prohibition on retroactive ratemaking. An express agreement by the LPSC to make the Storm Recovery Charges and the Financing Order irrevocable for a period of time to induce investors to provide lower cost financing rationally promotes the core police power of obtaining reasonably reliable electric service at the lowest reasonable cost for Louisiana ratepayers.

 ²⁴² See supra notes 18, 132-134.

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The Pledges plainly manifest the intent of the Louisiana Legislature and the LPSC, respectively, to bind the State. One distinguishing factor weighing against the Bondholders is that the Bonds are being issued by a private entity and are not payable by the State or an agency, board or commission of the State or a political subdivision, while in many of the cited cases, such as U.S. Trust, the bonds at issue were issued by a state agency, authority or similar state entity. However, the Securitization Act mandates that Storm Recovery Property, being used to pay and secure the Bonds, can only be created pursuant to a Financing Order issued by the LPSC – a governmental agency – pursuant to the express provisions of the Securitization Act – an enactment of the sovereign Louisiana Legislature. The issuance of the Pledges and of the Financing Order clearly rests on authority of the State and thus the issuance of the Bonds is state-sanctioned in a manner closely analogous to the situation in U.S. Trust.

In our view, the Legislative Pledge and the LPSC Pledge are clearly an inducement offered by the State to investors to purchase the Bonds. In other words, the Pledges constitute an agreement by the State not to reduce or otherwise impair the Storm Recovery Charges that will fund repayment of and provide the financial security for the Bonds, in order to foster the capital markets’ acceptance of such Bonds at a significantly lower interest rate for the benefit of its citizens/ratepayers. As such, we believe the Pledges are analogous to the type of “financial contract” involved in U.S. Trust, a promise that revenues and reserves securing the bonds at issue there would not be depleted beyond a certain level. The courts must consider the Bondholders’ reasonable expectations with respect to changes in the law. The foreseeability of the change in the law is of great, and perhaps controlling, importance in Contract Clauses analysis.²⁴³ The strong history of state regulation of utility rates is not sufficient to justify voiding the Pledges under the reserved powers doctrine when the state action leaves the private party to the impaired contract without the gains it reasonably expected from the contract.²⁴⁴ The Pledges are strongly worded statements specifically crafted to forestall an expectation of change in the law that would interfere with the collection of the Storm Recovery Charges. The ratemaking aspect of the police power is limited by constitutional restrictions against impairing contracts.²⁴⁵

Opinions

In our opinion, subject to all of the qualifications, limitations and assumptions set forth in this Opinion, the Pledges do not constitute an impermissible attempt to “contract away” the police power of the State of Louisiana, and will not be disregarded under the reserved powers doctrine so as to preclude a reviewing court of competent jurisdiction from holding that violation of the terms of the Pledges, in applicable factual circumstances, is reversible by the courts.

 ²⁴³ Chrysler Corp. v. Kolosso Auto Sales, Inc., 148 F.3d 892, 894 (7th Cir. 1998). 

²⁴⁴ Lipscomb, 269 F.3d at 504; Chrysler, 148 F.3d at 895. 

²⁴⁵ Conoco, 520 So.2d at 409.

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Legislative Pledge

Further, it is our opinion that the Legislative Pledge by the Louisiana Legislature not to take any action that impairs the value of the Storm Recovery Property or alter the pertinent provisions of the Securitization Act unambiguously indicates the State’s intent to be bound with the Bondholders and, subject to all of the qualifications, limitations and assumptions set forth in this Opinion, supports the conclusion that the Legislative Pledge constitutes a binding contractual relationship between the State and the Bondholders for purposes of the Federal and Louisiana Contract Clauses. In our opinion, subject to all of the qualifications, limitations and assumptions set forth in this Opinion (including the assumption that any impairment be “substantial”), a reviewing court of competent jurisdiction would hold that the State of Louisiana could not constitutionally repeal or amend the Securitization Act or take any other action contravening the Legislative Pledge and creating an impairment (without, as the Securitization Act requires, providing full compensation by law for the full protection of the Storm Recovery Charges to be collected pursuant to the Financing Order and full protection of the Bondholders), unless such court would determine that such impairment clearly is a reasonable and necessary exercise of the State of Louisiana’s sovereign powers based upon reasonable conditions and of a character reasonable and appropriate to the emergency or other significant and legitimate public purpose justifying such action.

Takings Clauses

Furthermore, it is our opinion, subject to all of the qualifications, limitations and assumptions set forth in this Opinion, that a reviewing court of competent jurisdiction would hold, if it concludes that the Storm Recovery Property is protected by the Takings Clauses, that the State would be required to pay just compensation to Bondholders, as determined by such court, if the Louisiana Legislature repealed or amended the Securitization Act or took any other action contravening the Legislative Pledge, if the court determines doing so constituted a permanent appropriation of a substantial property interest of the Bondholders in the Storm Recovery Property and deprived the Bondholders of their reasonable expectations arising from their investments in the Bonds. As previously noted, takings of financial interests can be particularly difficult to establish in a manner that distinguishes them from constitutionally permissible economic regulation. There is no assurance, however, that, any such award of compensation would be sufficient to pay the full amount of principal of and interest on the Bonds.

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LPSC Pledge

Further, it is our opinion, subject to all of the qualifications, limitations and assumptions (including the assumption that any impairment would be “substantial”) set forth in this Opinion, that a Louisiana state court reviewing an appeal of LPSC action of a legislative character would conclude that the LPSC Pledge (i) creates a binding contractual obligation of the State of Louisiana for purposes of the Federal Contract Clause and the Louisiana Contract Clause and (ii) provides a basis upon which the Bondholders could challenge successfully on appeal any such action by the LPSC of a legislative character, including the rescission or amendment of the Financing Order, that such court determines violates the LPSC Pledge in a manner that substantially reduces, limits or impairs the value of the Storm Recovery Property including the Storm Recovery Charges, prior to the time that the Bonds are fully paid and discharged, unless there is a judicial finding that the LPSC action clearly is exercised for a public end and is reasonably necessary to the accomplishment of that public end so as not to be arbitrary, capricious or an abuse of authority.

Securitization Act

It is our opinion that the Securitization Act is constitutional in all material respects under the United States Constitution. Furthermore, as stated previously on page 64, it is also our opinion, subject to all of the qualifications, limitations and assumptions set forth in this Opinion, that the Legislative Pledge, and the Legislature’s supplemental grant of power to the LPSC²⁴⁶ to make the Financing Order irrevocable, contained in the Securitization Act do not constitute an impermissible attempt to “contract away” the police power of the State of Louisiana, and will not be disregarded under the reserved powers doctrine, and that the Securitization Act is constitutional in all material respects under the Louisiana Constitution.

General Matters

The opinions expressed above do not constitute a prediction or guaranty of the outcome of any particular litigation, and there can be no assurance that an action will not be brought in federal or state court challenging the provisions of the Securitization Act or the Financing Order relating to the Bonds. Moreover, the foregoing opinions should not be construed to imply assurance that a repeal of or amendment to the Securitization Act or the Financing Order will not be sought or enacted or adopted, or that any other action by the State of Louisiana (including the Louisiana Legislature or the LPSC) will not occur, any of which might constitute a violation of the Pledges. Furthermore, the conclusions set forth herein are normally decided in the context of a litigated proceeding. Given the absence of judicial precedent directly on point, and the relative novelty of the security for the Bondholders, the outcome of any litigation cannot be predicted with certainty. In the event of any State (including LPSC) action of a legislative character which adversely impacts the rights of the Bondholders, time-consuming and costly litigation may ensue, adversely affecting, at least temporarily, the price and liquidity of the Bonds.

 ²⁴⁶ See supra note 10.

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We emphasize that judicial analysis of issues relating to LPSC orders and to the Federal Contract Clause, the Federal Takings Clause, the Louisiana Contract Clause, and the Louisiana Takings Clause, and the retroactive effect to be given to judicial decisions, has typically proceeded on a case-by-case basis and that the courts’ determinations, in most instances, are usually strongly influenced by the facts and circumstances of the particular case.²⁴⁷ We are not aware of any reported controlling judicial precedents directly on point with respect to the issues and questions raised above. Our analysis is necessarily a reasoned application of judicial decisions involving similar or analogous circumstances. Moreover, the application of equitable principles (including the availability of injunctive relief or the issuance of a stay pending appeal) is subject to the discretion of the court which is asked to apply them. We cannot predict the facts and circumstances which will be present in the future and may be relevant to the exercise of such discretion. The foregoing opinions are based upon our evaluation of existing judicial decisions and arguments related to the factual circumstances likely to exist at the time of a Federal Contract Clause, Federal Takings Clause, Louisiana Contract Clause, or Louisiana Takings Clause challenge to a law passed by the Legislature, or a challenge on similar grounds coupled with a challenge as arbitrary and capricious to a supplemental order adopted by the LPSC; such precedents and such circumstances could change materially from those discussed above in this opinion. Consequently, there can be no assurance that a court will follow our reasoning or reach the conclusions that we believe current judicial precedent supports. A trial or appellate court could reach a different conclusion that would not necessarily be reversible error. It is our and your understanding that none of the foregoing opinions (whether expressed as our “opinion” or “view” or as “we believe”, or other words of similar effect) is intended to be a prediction or guaranty as to what a particular court would actually hold nor a recommendation as to the forum or form of relief to seek; rather each such opinion is only an expression as to the decision a court should reach, in a properly prepared and presented case, relying on the facts on which we have relied and giving them proper weight and authority, and properly applying the law and what we believe to be the applicable legal principles under the existing judicial precedents. The recipients of this letter should take these considerations into account in analyzing the risks associated with the subject Transaction. We also make no determination whether or not this opinion is sufficient for your purposes.

 ²⁴⁷ Blaisdell, supra note 86, 290 U.S. at 430 (“Every case must be determined on its own circumstances”); Buffalo Teachers Federation v. Tobe, 464 F.3d 362, 373 and 375 (2d Cir. 2006) (Contract Clause cases involve individual inquiries, for no two cases are alike, and Takings Clause analysis requires an intensive ad hoc inquiry into the circumstances of each particular case).

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Both the Securitization Act and the Financing Order permit the limitation or alteration by the LPSC of the Financing Order and the Storm Recovery Charges if and when full compensation is made for the full protection of the Storm Recovery Charges and the full protection of the holders of the Bonds and any assignee or financing party.

We are members of the Bar of the State of Louisiana, and express no opinion as to matters which may be governed by the laws of any jurisdiction other than Louisiana and the federal laws of the United States of America.

The opinions contained herein are given only as of the date of this opinion letter. No opinion is expressed herein as to the effect of any future acts of the parties or changes in existing law. We undertake no responsibility and disclaim any obligation to supplement this opinion or otherwise advise you or any other person of any change after the date hereof in the law (whether constitutional, statutory, regulatory, or judicial) or the facts presently in effect, even though such change may alter the scope or substance of the opinions herein expressed or affect the legal or factual statements or assumptions herein. We shall have no obligation to revise or reissue this opinion with respect to any transaction which occurs after the date hereof, and we undertake no responsibility or obligation to consider this opinion’s applicability or correctness to any person other than its addressees. This letter expresses our legal opinion as to the foregoing matters based on our professional judgment at this time; it is not, however, to be construed as a guaranty, nor is it a warranty that a court considering such matters would not rule in a manner contrary to the opinions set forth above.

This opinion is furnished to you solely for your benefit in connection with the issuance of the Bonds and may be relied upon only by you, and is not to be used, circulated, quoted, relied upon or otherwise referred to for any other purpose or by any other person without our prior express written permission, except that a copy of this letter may be posted by, or at the direction of, the Issuer or an addressee to an internet website required under Rule 17g-5 promulgated under the Securities Exchange Act of 1934, as amended, and maintained in connection with the ratings on the Bonds solely for the purpose of compliance with such rule or undertakings pursuant thereto made by the Issuer.  Such permission to post a copy of this letter to such website shall not be construed to entitle any person (including, without limitation, any credit rating agency, any governmental or regulatory agency and all purchasers of the Bonds other than the underwriter(s) named in Schedule II of the Underwriting Agreement dated June __, 2022 by and among the Issuer, Cleco Power, and J.P. Morgan Securities LLC, as Representative) who is not an addressee hereof to rely on this opinion letter.

Yours very truly, 

Phelps Dunbar, L.L.P.

Schedule I

S&P Global Ratings, a division of S&P Global Inc. 

Attention: Asset Backed Surveillance Department 

55 Water Street, 41^st Floor 

New York, New York 10041

Moody’s Investors Service, Inc. 

Attention: ABS Monitoring Department 

7 World Trade Center
250 Greenwich Street 

New York, New York 10007

Fitch, Inc. 

Attention: ABS Surveillance 

1 State Street Plaza 

New York, New York 10004

J.P. Morgan Securities LLC, as Representative 

383 Madison Avenue 

New York, New York 10017

The Bank of New York Mellon Trust Company, National Association, as Trustee

Louisiana Public Service Commission
602 North Fifth Street 

Baton Rouge, Louisiana 70821

EX-99.3

Exhibit 99.3

Consent of Manager Nominee

Cleco Power LLC and Cleco Securitization I LLC (the “Issuer”) have filed a Registration Statement on Form SF-1 (Registration Nos. 333-264319 and 333-264319-01; as subsequently amended, the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the public offering of $425.0 million aggregate principal amount of the Issuer’s Series 2022-A Senior Secured Storm Recovery Bonds. In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a person about to become a manager of the Issuer as identified in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.

/s/ Kevin P. Burns

Kevin P. Burns

Dated: June 2, 2022